Annual Report 2016
85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
– continued
Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies
other than the functional currency of that entity (foreign currencies) are recognised at the rates of
exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary
items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they
arise except for:
• exchange differences on foreign currency borrowings relating to assets under construction
for future productive use, which are included in the cost of those assets when they are
regarded as an adjustment to interest costs on those foreign currency borrowings;
• exchange differences on transactions entered into in order to hedge certain foreign currency
risks (see the accounting policies below); and
• exchange differences on monetary items receivable from or payable to a foreign operation
for which settlement is neither planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised initially in other comprehensive
income and reclassified from equity to profit or loss on repayment of the monetary items.
For the purposes of presenting the consolidated financial statements, the assets and liabilities of
the Group’s foreign operations are translated into the presentation currency of the Group (i.e. HK$)
using exchange rates prevailing at the end of each reporting period. Income and expenses items
are translated at the average exchange rates for the year. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in equity under the heading of
currency translation reserve (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation),
all of the exchange differences accumulated in equity in respect of that operation attributable to the
owners of the Company are reclassified to profit or loss.
Goodwill and fair value adjustments to identifiable assets acquired arising on an acquisition of a
foreign operation are treated as assets and liabilities of that foreign operation and retranslated at
the rate of exchange prevailing at the end of each reporting period. Exchange differences arising
are recognised in other comprehensive income.
