Home' OzForex : Annual Report 2014 Contents 57
OzForex Annual Report 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
ii) Principles of consolidation
The consolidated financial report comprises the assets and liabilities of all subsidiaries of OzForex Group Limited
("the Company") as at 31 March 2014 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has the power to direct the relevant activities, exposure
to significant variable returns and the ability to utilise power to affect the Group's own returns. The determination
of control is based on current facts and circumstances and is continuously assessed.
The acquisition method of accounting is used to account for business combinations by the Group
(refer to note 1(xvii)).
Intercompany transactions, balances and unrealised gains on transactions between group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Investments in subsidiaries are accounted for at cost in the separate financial statements of OzForex Limited
in accordance with AASB Separate Financial Statements.
iii) Segment reporting
Operating segments are identified on the basis of internal reports to senior management about components
of the Group that are regularly reviewed by senior management and the board of directors who have been
identified as the chief operating decision makers, in order to allocate resources to the segment and to assess
its performance. Information reported to senior management and the board of directors for the purposes of
resource allocation and assessment of performance is specifically focused on core products and services offered,
comprising five reportable segments as disclosed in note 2. Information about products and services and
geographical segments is based on the financial information used to produce the Group's financial statements.
iv) Foreign currency translations
Functional and presentation currency
Items included in the financial statements of foreign operations are measured using the currency of the primary
economic environment in which the foreign operation operates (the functional currency). The Group's financial
statements are presented in Australian dollars, which is the OzForex Group Limited's functional currency and
the Group's presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement, except when deferred in other comprehensive
income as a result of meeting net investment hedge accounting requirements.
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the
• Income and expense for each income statement and statement of comprehensive income are translated
at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions), and
• All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are reclassified to profit and loss, as part of the
gain or loss on sale.
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