36 annual report 2012  kAThMANdu (d) FOREIGN CuRRENCY TRANSLATION (i) Functional and presentation currency (ii) Group companies (ii) Transactions and non-controlling interests (C) SEGMENT REPORTING an operating segment is a component of an entity that  engages in business activities which earns revenue and  incurs expenses and where the chief decision maker reviews  the operating results on a regular basis and makes decisions  on resource allocation. the Group is organised into three  operating segments, depicting the three geographical regions  the Group operates in. Goodwill and fair value adjustments arising on the acquisition  of a foreign entity are treated as assets and liabilities of the  foreign entity and translated at the closing rate. on consolidation, exchange differences arising from the  translation of the net investment in foreign operations, and  of borrowings and other currency instruments designated  as hedges of such investments, are taken to shareholders’  equity. When a foreign operation is partially disposed of or  sold, exchange differences that were recorded in equity are  recognised in the income statement as part of the gain or loss on sale. all resulting exchange differences are recognised as a separate  component of equity. the Group treats transactions with non-controlling interests as  transactions with equity owners of the Group. For purchases  from non-controlling interests, the difference between any  consideration paid and the relevant share acquired of the  carrying value of net assets of the subsidiary is recorded in  equity. Gains or losses on disposals to non-controlling interests  are also recorded in equity. Inter-company transactions, balances and unrealised gains  on transactions between Group companies are eliminated.  unrealised losses are also eliminated. accounting policies of  subsidiaries have been changed where necessary to ensure  consistency with the policies adopted by the Group. Income and expenses for each income statement are  translated at average exchange rates (unless this average 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 rate on the dates of the  transactions); and assets and liabilities for each balance sheet presented are  translated at the closing rate at the date of that balance sheet; the results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary  economy) that have a functional currency different from the  presentation currency are translated into the presentation  currency as follows: the excess of the consideration transferred over the amount of  any non-controlling interest in the acquiree and the acquisition  date fair value of any previous equity interest in the acquiree  over the fair value of the Group’s share of the identifiable net  assets acquired is recorded as goodwill. If this is less than  the fair value of the net assets of the subsidiary acquired in  the case of a bargain purchase, the difference is recognised  directly in the income statement. the acquisition method of accounting is used to account  for business combinations by the Group. the consideration  transferred for the acquisition of a subsidiary is the fair values  of the assets transferred, the liabilities incurred and the equity  interests issued by the Group. the consideration transferred  includes the fair value of any asset or liability resulting from  a contingent consideration arrangement. acquisition-related  costs are expensed as incurred. Identifiable assets acquired  and liabilities and contingent liabilities assumed in a business  combination are measured initially at their fair values at the  acquisition date. on an acquisition-by-acquisition basis,  the Group recognises any non-controlling interest in the  acquiree either at fair value or at the non-controlling interest’s  proportionate share of the acquiree’s net assets. Foreign currency transactions are translated into the functional  currency using the exchange rates prevailing at the dates of  the transaction. 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 equity  as qualifying cash flow hedges. translation differences on  monetary financial assets and liabilities are reported as part of  the fair value gain or loss. Items included in the financial statements of each of the  subsidiaries’ operations are measured using the currency  of the primary economic environment in which it operates  (‘functional currency’). the financial statements are presented  in new Zealand dollars, which is the Company’s functional  currency and Group’s presentation currency. and operating policies generally accompanying a shareholding  of more than one half of the voting rights. the existence and  effect of potential voting rights that are currently exercisable or  convertible are considered when assessing whether the Group  controls another entity. Subsidiaries are fully consolidated from  the date on which control is transferred to the Group. they are  de-consolidated from the date that control ceases.