WE MAKE THINGS HAPPEN
WE MAKE THINGS HAPPEN
WE MAKE THINGS HAPPEN
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TM<br />
W E M A K E<br />
<strong>THINGS</strong> <strong>HAPPEN</strong><br />
Annual Report 2008<br />
Cover Photo by Olivia Lum
Contents<br />
Message from Group CEO, President and Managing Director 02<br />
Growing Geographical Presence 06<br />
Group Financial Highlights & Review 08<br />
Board of Directors 12<br />
Senior Management 14<br />
Advisors 15<br />
Heads of Strategic Business Units 16<br />
Human Capital 18<br />
Corporate Social Responsibility 19<br />
Awards and Accolades 20<br />
20 Years in Review - Key Milestones 22<br />
Spirit of Innovation 26<br />
Research & Development 30<br />
EPC and O&M 36<br />
Capital Management 40<br />
Sustainable Growth Model 44
About Hyflux<br />
At Hyflux, we are dedicated to turning innovations into leading<br />
environmental solutions to mitigate global water scarcity and rapid<br />
depletion of natural resources.<br />
From seawater desalination, water recycling, wastewater and potable water<br />
treatment to renewable resources management, Hyflux is committed to<br />
providing cost-effective, reliable and sustainable water management and<br />
services to water-stressed cities and industrial customers.<br />
Hyflux is internationally recognised for our capabilities in proprietary<br />
membrane technologies, engineering, procurement & construction (“EPC”)<br />
and operations & maintenance (“O&M”).<br />
Our operations span a wide geographical footprint, from Southeast Asia,<br />
China, India to the Middle East and North Africa (“MENA”) region.<br />
OUR VISION<br />
To be the leading company the world seeks for innovative and effective<br />
environmental solutions.<br />
OUR VALUES - BEST<br />
Boldness<br />
Dare to dream, dare to do and dare to excel<br />
Entrepreneurship<br />
Nurture the entrepreneurial spirit, embrace<br />
challenge and master change<br />
Satisfaction<br />
Exceed internal and external customer<br />
satisfaction, take pride in work and deliver<br />
excellence<br />
Testimony<br />
Be the face behind the brand, excel in<br />
business conduct and embrace best<br />
practices in corporate governance<br />
OUR MISSION<br />
To provide efficient and cost-effective solutions to meet our clients’ needs<br />
through innovation and technological advancement.<br />
Photo by Olivia Lum
Message from<br />
Group CEO, President<br />
and Managing Director
“The journey ahead will remain tough. But, as<br />
we stay focused on strengthening what we have<br />
put in place, continue to challenge ourselves<br />
and continue to break technological boundaries,<br />
we can make things happen. I believe Hyflux<br />
will emerge stronger and poised to tap new<br />
opportunities ahead.”<br />
Olivia Lum, Group CEO, President and Managing Director
4<br />
Hyflux Ltd annual report 2008<br />
Message from Group CEO, President and Managing Director (cont’d)<br />
“Hyflux will continue to focus on project execution, quality<br />
growth and balance sheet strength. At the same time, we will<br />
expand our recurring earning streams.“<br />
A Record FY2008 – Reflection<br />
of Innovation and Teamwork<br />
FY2008 was a record year for our<br />
Group. We registered a net profit<br />
after tax and minority interests of<br />
S$59 million on the back of a record<br />
revenue base of S$554 million. Our<br />
order book as at 31 December 2008<br />
stood at S$1.15 billion. These were<br />
achieved through our strict discipline<br />
of quality execution and delivery<br />
within schedule and budget as well as<br />
prudence in cost management.<br />
FY2008 was also a challenging year for<br />
Hyflux. The bleak economic outlook<br />
has continued to affect all sectors<br />
in our economy and the general<br />
risk appetite of lending institutions.<br />
Accessibility to funding for all<br />
companies has become even more<br />
challenging. However, at Hyflux, we<br />
have been focusing on a few very<br />
critical areas.<br />
The Group’s financial position remains<br />
strong. Return on equity climbed<br />
to 19% while net gearing remained<br />
at 0.54 times. In line with Hyflux’s<br />
sustainable business model, the<br />
Group divested five of our water and<br />
wastewater treatment plants to Hyflux<br />
Water Trust. This enabled the Group<br />
to recycle the capital to fund new<br />
projects and businesses.<br />
We have also been focusing on<br />
building a very strong order book. Our<br />
customers now span widely across our<br />
key markets in Southeast Asia, China,<br />
India and the Middle East and North<br />
Africa (“MENA”) region.<br />
We believe Hyflux will emerge stronger<br />
as a result of our strong business<br />
fundamentals, prudent cost structure<br />
and proven framework supported by<br />
cutting-edge membrane technologies<br />
and teams of committed and<br />
experienced staff.<br />
Executing our Order Book<br />
China and MENA will remain our key<br />
markets as the Group continues to<br />
deepen our market penetration in<br />
these regions.<br />
In FY2008, the Group continued to<br />
enjoy strong growth in the municipal<br />
sector. Revenue from the municipal<br />
sector surged more than five folds to<br />
S$477 million, as compared<br />
to S$89 million in FY2007. This<br />
sector accounted for 86% of the<br />
Group’s revenue.<br />
Revenue from the industrial sector,<br />
however, has contracted by 25% to<br />
S$76 million in FY2008 and accounted<br />
for 14% of the Group’s revenue. Going<br />
forward, while we expect industrial<br />
sales to reflect the weakening<br />
economic climate in China, we believe<br />
the positive momentum in the<br />
municipal sector should help sustain<br />
the Group’s growth.<br />
China<br />
China remains a stable and growing<br />
footprint for the Group. We will not<br />
be complacent but will continue<br />
to deepen our market penetration<br />
and expand our presence in China.<br />
Our business enquiries continue<br />
to be robust. This is a reflection of<br />
ongoing emphasis by the Chinese<br />
Government in improving accessibility<br />
and availability of potable water to<br />
more people in China while pushing<br />
for higher wastewater treatment<br />
compliance. Hyflux will remain<br />
disciplined and selective in growing<br />
our order book. We have secured<br />
RMB945 million worth of new water<br />
and wastewater treatment projects<br />
in the Jiangsu, Shandong, Tianjin and<br />
Hebei provinces in FY2008 and are<br />
poised to tap the growth potential in<br />
other municipals.<br />
Middle East and North Africa<br />
(“MENA”)<br />
Our landmark win to build the world’s<br />
largest membrane-based seawater<br />
desalination plant with a daily capacity<br />
of 500,000 m 3 in Magtaa, Algeria,<br />
worth US$500 million, has propelled<br />
Hyflux’s ranking upwards in the global<br />
seawater desalination arena in FY2008.<br />
On top of this, Hyflux is building<br />
another seawater desalination plant<br />
with a daily capacity of 200,000 m 3<br />
in Tlemcen, Algeria. With these two<br />
projects, we will leverage on our<br />
market knowledge and network to<br />
identify more bankable projects in<br />
Algeria. Our plants in Algeria will be<br />
a global showcase for the Group.<br />
Moving Forward<br />
Hyflux will remain focused on<br />
staying ahead of the curve and<br />
will continue to strengthen our<br />
membrane technology platform and<br />
infrastructure competency as well as<br />
investment in human capital.
Hyflux Ltd annual report 2008 5<br />
Message from Group CEO, President and Managing Director (cont’d)<br />
(L-R): Olivia Lum, Group CEO,<br />
President & Managing Director;<br />
Sam Ong, Group Deputy CEO<br />
& CFO<br />
The Group will continue to invest<br />
effectively in strengthening our inhouse<br />
research & development (“R&D”)<br />
expertise. This organic growth is an<br />
integral part of Hyflux’s competitive<br />
edge as it enables a continuous<br />
and systematic process in achieving<br />
speed-to-market advantage, resulting<br />
in a seamless flow from R&D to<br />
commercialisation.<br />
Our focus on prudent spending<br />
and efficient cost structure is part of<br />
the Group’s business strategy. This<br />
disciplined approach will put Hyflux<br />
in good stead, especially during these<br />
challenging times. As such, while<br />
many companies have implemented<br />
retrenchment or introduced salary<br />
reductions, the Group intends to hire<br />
progressively to support our strategic<br />
growth areas, particularly in the<br />
operations and maintenance (“O&M”)<br />
division. We foresee increases in staffing<br />
needs as more completed projects are<br />
added to our O&M portfolio.<br />
While 2009 will be challenging, we<br />
are optimistic of the huge growth<br />
potential of the water sector in our<br />
key markets. Hyflux will continue to<br />
focus on project execution, quality<br />
growth and balance sheet strength.<br />
At the same time, we will expand<br />
our recurring earning streams, which<br />
include long-term O&M contracts.<br />
We Make Things Happen<br />
2009 is also a momentous year<br />
for Hyflux. This year marks our 20 th<br />
anniversary milestone. In the past 20<br />
years, we have seen the company<br />
grow from a humble beginning with<br />
a staff strength of three in Singapore<br />
to close to 1,900 worldwide. We also<br />
take great pride that, to date, Hyflux’s<br />
membrane products and systems<br />
have been installed in more than 1,000<br />
plants in over 300 locations worldwide.<br />
I would like to thank each of you –<br />
our shareholders, directors, partners,<br />
customers and staff – for supporting<br />
us through the past 20 years of success<br />
and growth. For our shareholders, we<br />
are proposing a first and final dividend<br />
of 3.43 cents per share, almost<br />
doubling that of FY2007.<br />
To our Hyflux staff, I thank each of you<br />
from the bottom of my heart. Your<br />
innovative spirit, commitment and<br />
unwavering dedication have made<br />
Hyflux what it is today.<br />
Yes, the journey ahead will remain<br />
tough. But, as we stay focused on<br />
strengthening what we have put in<br />
place, continue to challenge ourselves<br />
and continue to break technological<br />
boundaries, we can make things<br />
happen. I believe Hyflux will emerge<br />
stronger and poised to tap new<br />
opportunities ahead.<br />
Together, let us make things happen!<br />
Olivia Lum<br />
Group CEO, President and Managing<br />
Director<br />
Divider Photo: Yoong Kang Chee
6<br />
Hyflux Ltd annual report 2008<br />
Growing Geographical Presence<br />
SINGAPORE HEADQUARTERS<br />
Hyflux Building<br />
202 Kallang Bahru<br />
Singapore 339339<br />
MALAYSIA OFFICE<br />
B11-LG-2, Block B<br />
Megan Corporate Park<br />
Jalan 1/125E, Taman Desa Petaling<br />
57100 Kuala Lumpur<br />
Malaysia<br />
CHINA OFFICES<br />
99 Juli Road<br />
Zhangjiang Hi-Tech Park<br />
Pudong, Shanghai 201203<br />
People’s Republic of China<br />
No. 1517-1519<br />
Tianjin Central Plaza<br />
188 Jiefangbei Road<br />
Heping District, Tianjin 300042<br />
People’s Republic of China<br />
Belgium<br />
Switzerland<br />
Sweden<br />
Algeria<br />
Netherlands<br />
Germany<br />
Namibia<br />
Dubai<br />
Hyflux membranes and<br />
systems have been<br />
installed in more than<br />
1,000 plants in over<br />
300 locations worldwide.<br />
Middle East and North Africa (“MENA”)*<br />
Country Industry Membranes<br />
Algeria Seawater Desalination Kristal TM<br />
Dubai Sewage Treatment Kristal TM<br />
Namibia Textile Wastewater Kristal TM<br />
Europe*<br />
Country Industry Membranes<br />
Belgium Food & Beverage InoCep TM<br />
Germany Dairy & Milk InoCep TM<br />
(2 locations)<br />
Germany Food & Beverage InoCep TM<br />
Germany Wastewater Treatment InoCep TM<br />
Sweden Chemical Industry InoCep TM<br />
Switzerland Dairy & Milk InoCep TM<br />
The Netherlands Drinking Water Kristal TM<br />
The Netherlands Drinking Water InoCep TM<br />
The Netherlands Food & Beverage InoCep TM<br />
The Netherlands Oil Recycling InoCep TM<br />
The Netherlands Wastewater Treatment InoCep TM
Hyflux Ltd annual report 2008 7<br />
Growing Geographical Presence (cont’d)<br />
India<br />
Malaysia<br />
Singapore<br />
China<br />
Hyflux Offices<br />
Hyflux Membranes and<br />
Systems Installations<br />
ALGERIA OFFICE<br />
47 rue Said HALES<br />
El Mouradia<br />
16308 Alger<br />
Algérie<br />
INDIA OFFICE<br />
Unit 7A & 7B<br />
Doshi Towers<br />
156 Poonamallee High Road<br />
Kilpauk, Chennai - 600010<br />
India<br />
Indonesia<br />
THE NETHERLANDS OFFICE<br />
Lage Dijk 29B<br />
5705 BX Helmond<br />
PO Box 2128<br />
5700 DA Helmond<br />
The Netherlands<br />
This map is not to scale<br />
China*<br />
Southeast Asia*<br />
Province Industry Membranes Country Industry Membranes<br />
Zhejiang Pharmaceutical FerroCep TM<br />
Anhui Pharmaceutical FerroCep TM Indonesia River Water Treatment Kristal TM<br />
Beijing Ultra-pure Water Kristal TM<br />
Malaysia Brine Regenerant Recovery Kristal TM<br />
Guangdong Desalination & Wastewater Kristal TM<br />
Malaysia River Water Treatment Kristal TM<br />
Guangdong Pharmaceutical FerroCep TM Singapore Industrial Water Reclamation Kristal TM<br />
Guangxi Pharmaceutical FerroCep TM Singapore Petroleum Wastewater Kristal TM<br />
Hebei Pharmaceutical FerroCep TM Singapore Sewage Treatment Kristal TM<br />
Henan Pharmaceutical FerroCep TM<br />
Hubei Pharmaceutical FerroCep TM<br />
Inner Mongolia Pharmaceutical<br />
FerroCep TM<br />
India*<br />
Jiangsu Industrial Wastewater FerroCep TM<br />
Country Industry Membranes<br />
Jiangsu Lube-Oil Purification PoroCep TM<br />
Liaoning L-lactic Acid PoroCep TM India Oil FerroCep TM<br />
Liaoning Pharmaceutical FerroCep TM India Pharmaceutical InoCep TM<br />
Ningxia L-lactic Acid PoroCep TM<br />
Ningxia Pharmaceutical FerroCep TM<br />
Shandong Pharmaceutical FerroCep TM<br />
Shanghai Pharmaceutical FerroCep TM<br />
Shanxi Pharmaceutical FerroCep TM<br />
Shenzhen Pharmaceutical FerroCep TM<br />
Sichuan Pharmaceutical FerroCep TM<br />
Tianjin Seawater Desalination Kristal TM<br />
Xinjiang Pharmaceutical FerroCep TM<br />
* Global key installations
8<br />
Hyflux Ltd annual report 2008<br />
Group Financial Highlights & Review<br />
Key Financial Data<br />
(For year ended 31 December)<br />
S$’000 2004 2005 2006 2007 2008<br />
Revenue 88,655 131,504 142,379 192,786 554,224<br />
Profit Before Tax 28,844 50,374 20,178 38,693 70,375<br />
Profit After Tax 27,876 49,303 15,357 36,645 62,218<br />
Profit After Tax and Minority Interests (“PATMI”) 26,104 46,393 15,473 32,949 59,036<br />
Shareholders’ Equity 112,647 189,563 199,601 239,772 297,547<br />
Total Assets 305,048 401,087 443,398 549,500 846,555<br />
Net Assets 116,022 197,286 218,066 247,067 307,899<br />
Net Asset Value per share (cents) * 35.68 36.84 38.47 45.70 56.70<br />
Earnings per share (cents) 5.55 9.24 3.00 6.32 11.25<br />
Dividend per share (cents) 1.27 1.35 1.35 1.89 3.43<br />
Return on Revenue (%) 29.4% 35.3% 10.9% 17.1% 10.7%<br />
Return on Equity (%) 23.2% 24.5% 7.8% 13.7% 19.8%<br />
* Net Asset Value excludes Minority Interests<br />
Group Revenue by Country & Region<br />
350.0<br />
300.0<br />
300.0<br />
S$ million<br />
250.0<br />
200.0<br />
150.0<br />
100.0<br />
50.0<br />
0.0<br />
15.8<br />
72.9<br />
2004<br />
58.0<br />
73.5<br />
37.6<br />
104.8<br />
27.6<br />
157.0<br />
8.2<br />
31.2<br />
2005 2006 2007<br />
2008<br />
223.0<br />
Singapore and Others<br />
China<br />
MENA<br />
All figures are quoted in Singapore Dollars
Hyflux Ltd annual report 2008 9<br />
Group Financial Highlights & Review (cont’d)<br />
(For year ended 31 December)<br />
Profit After Tax and Minority Interests<br />
+187%<br />
increase in revenue<br />
(2007: S$193 million vs 2008:<br />
S$554 million)<br />
S$ ‘000<br />
70,000<br />
60,000<br />
50,000<br />
40,000<br />
30,000<br />
20,000<br />
10,000<br />
0<br />
26,104<br />
46,393<br />
15,473<br />
32,949<br />
59,036<br />
2004 2005 2006 2007 2008<br />
+79%<br />
increase in PATMI<br />
(2007: S$33 million vs 2008:<br />
S$59 million)<br />
Earnings Per Share<br />
11.25 cents<br />
earnings per share<br />
cents<br />
12.00<br />
10.00<br />
8.00<br />
6.00<br />
4.00<br />
2.00<br />
0.00<br />
5.55<br />
9.24<br />
3.00<br />
6.32<br />
11.25<br />
2004 2005 2006 2007 2008<br />
3.43 cents<br />
dividend per share<br />
More than 5 times<br />
increase in revenue<br />
from municipal sector<br />
Net Asset Value Per Share<br />
cents<br />
60.00<br />
50.00<br />
40.00<br />
30.00<br />
20.00<br />
10.00<br />
0.00<br />
35.68 36.84 38.47<br />
2004<br />
45.70<br />
56.70<br />
2005 2006 2007 2008<br />
27 times<br />
increase in revenue<br />
from MENA region
10<br />
Hyflux Ltd annual report 2008<br />
Group Financial Highlights & Review (cont’d)<br />
Group Revenue<br />
by Country<br />
6%<br />
Financial Review<br />
(For year ended 31 December)<br />
S$ million 2008 2007 % change<br />
Revenue 554.2 192.8 +187%<br />
Profit Before Tax 70.4 38.7 +82%<br />
Profit After Tax and Minority Interests 59.0 32.9 +79%<br />
Earnings per share – basic (cents) 11.25 6.32 +78%<br />
40%<br />
54%<br />
14%<br />
4%<br />
82%<br />
2008<br />
2007<br />
China<br />
MENA<br />
Singapore and Others<br />
Overview<br />
In FY2008, net profit after tax and<br />
minority interests for the Group surged<br />
by 79% to S$59.0 million. Accordingly,<br />
basic earnings per share jumped by<br />
78% to 11.25 cents.<br />
Revenue<br />
Group revenue for FY2008 increased<br />
by more than two folds to S$554.2<br />
million as compared to S$192.8 million<br />
in FY2007. The FY2008 revenue is the<br />
highest-ever achieved by the Group.<br />
Revenue from the municipal sector<br />
increased more than five times to<br />
S$476.8 million from S$89.0 million,<br />
representing 86% of the Group’s<br />
revenue. This is mainly attributed to<br />
the significant contracts won in China<br />
and Algeria.<br />
Fundamentals for the municipal<br />
sector remain strong and this sector<br />
looks set to continue to be the largest<br />
contributor to the Group’s revenue.<br />
China and Middle East and North<br />
Africa (“MENA”) region will remain the<br />
key growth markets as we continue<br />
to deepen market penetration while<br />
focusing on order book execution.<br />
Revenue from the industrial sector,<br />
however, decreased by 25% to S$76.4<br />
million from S$102.3 million a year<br />
earlier. This was largely attributed to<br />
the slowdown in economic activities<br />
in China.<br />
Based on geographical breakdown,<br />
China and MENA accounted for<br />
54% and 40% of the total revenue<br />
respectively for FY2008.<br />
In the MENA region, the Group is<br />
building two reverse osmosis seawater<br />
desalination plants in Algeria on a<br />
Design-Build-Own-Operate-Transfer<br />
(“DBOOT”) basis. The first plant in<br />
Tlemcen, with a designed capacity<br />
of 200,000 m 3 /day, is scheduled for<br />
completion in early 2010. In April<br />
2008, Hyflux won the bid to build<br />
the world’s largest reverse osmosis<br />
seawater desalination plant in Magtaa,<br />
at the point of announcement, with a<br />
designed capacity of 500,000 m 3 /day. The<br />
plant, with an estimated Engineering,<br />
Procurement & Construction (“EPC”)<br />
value of US$500 million, held its<br />
on-site ground breaking ceremony<br />
on 16 December 2008. The plant is<br />
scheduled to be completed in 2011.<br />
At the same time, the Group has<br />
secured long-term operations and<br />
maintenance (“O&M”) contracts for<br />
our operational plants in China and<br />
Singapore. As at 31 December 2008,<br />
we have added 5 more operational<br />
plants to our O&M portfolio, increasing<br />
the number of total operating plants<br />
to more than 15 from 11 in FY2007.<br />
Together with the new plants in<br />
Algeria, these O&M contracts will<br />
emerge as steady recurring earnings<br />
stream for the next 20-30 years.<br />
The Group’s order book as at<br />
31 December 2008 stood at S$1.15<br />
billion, a 34% increase from S$863<br />
million as at 31 December 2007.<br />
In addition, we have also grown our<br />
O&M order book significantly, reaching<br />
S$335 million as at 31 December 2008.<br />
The O&M order book will be realised<br />
progressively over the respective plant<br />
concession periods.
Hyflux Ltd annual report 2008 11<br />
Group Financial Highlights & Review (cont’d)<br />
Costs and Expenses<br />
Raw materials and consumables costs<br />
increased from S$107.2 million in<br />
FY2007 to S$387.8 million in FY2008.<br />
Higher material costs incurred were<br />
a reflection of significant increase in<br />
contracts secured and executed during<br />
the year.<br />
Personnel expenses increased to<br />
S$52.6 million in FY2008 from S$33.9<br />
million in FY2007. This is in tandem<br />
with the business growth.<br />
Non-current assets increased from<br />
S$209.9 million as at 31 December<br />
2007 to S$462.4 million as at 31<br />
December 2008. Intangible assets<br />
and financial and lease receivables<br />
increased by S$26.0 million and<br />
S$184.6 million respectively, in line<br />
with the progress of construction of<br />
water plants in China. In addition, the<br />
increase in non-trade amount due<br />
from related parties was a result of<br />
higher shareholder loans granted<br />
to associates.<br />
Group Revenue<br />
by Sector<br />
2008<br />
14%<br />
Finance expenses increased marginally<br />
to S$10.2 million in FY2008 from S$8.9<br />
million in FY2007.<br />
Other operating expenses increased<br />
to S$30.4 million in FY2008 from<br />
S$9.4 million in FY2007 due to higher<br />
professional fees, selling and<br />
travelling expenses.<br />
The tax charge in FY2008 reflected the<br />
tax exemptions and incentives enjoyed<br />
by certain entities in the Group.<br />
Overall, the net impact of the above<br />
resulted in net profit after tax and<br />
minority interests for the Group of<br />
S$59.0 million in FY2008.<br />
Earnings Per Share<br />
Accordingly, basic and fully diluted<br />
earnings per share increased more<br />
than one time to 11.25 cents and<br />
10.99 cents respectively, compared to<br />
a year earlier. The increase was<br />
due to the higher profit achieved<br />
in FY2008.<br />
Balance Sheet Review<br />
In line with the improved profit in<br />
FY2008, the Group’s shareholders’<br />
equity increased from S$239.8 million<br />
as at 31 December 2007 to S$297.5<br />
million as at 31 December 2008.<br />
Similarly, current assets increased from<br />
S$339.6 million as at 31 December<br />
2007 to S$384.2 million as at 31<br />
December 2008.<br />
Current liabilities increased from<br />
S$106.1 million as at 31 December<br />
2007 to S$324.5 million as at<br />
31 December 2008, mainly due<br />
to increases in trade related<br />
payables, current portion of the<br />
interest-bearing loans and other<br />
working capital borrowings.<br />
Non-current liabilities increased from<br />
S$196.3 million as at 31 December<br />
2007 to S$214.2 million as at 31<br />
December 2008, resulting mainly<br />
from the increase in bank borrowings<br />
during the financial year to support the<br />
Group’s expansion.<br />
Cashflow and Liquidity<br />
The Group’s cash position as at 31<br />
December 2008 was S$90.7 million,<br />
down by S$30.3 million as compared<br />
to the previous financial year. This was<br />
because FY2007 included a oneoff<br />
proceeds from the Initial Public<br />
Offerings of Hyflux Water Trust.<br />
In FY2008, the Group generated cash<br />
of S$29.9 million from its operations,<br />
mainly due to the increase in operating<br />
profit. Cash used in investing activities<br />
for the financial year was largely due<br />
to capital expenditure to support the<br />
Group’s expansion and loans granted<br />
to associates. Cash from financing<br />
activities was mainly due to the<br />
proceeds from borrowings for funding<br />
of the Group’s investment.<br />
53%<br />
86%<br />
Municipal<br />
Industrial<br />
Others<br />
1%<br />
2007<br />
46%
12<br />
Hyflux Ltd annual report 2008<br />
Board of Directors<br />
Olivia Lum<br />
Group CEO, President & Managing Director<br />
Ms Lum started corporate life as a chemist<br />
with Glaxo Pharmaceutical and left in 1989<br />
to start up Hydrochem (S) Pte Ltd, the<br />
precursor to Hyflux Ltd.<br />
Managing the Group for 20 years now,<br />
Ms Lum is the driving force behind<br />
Hyflux’s growth and business expansion,<br />
responsible for policy and strategy<br />
formulation and corporate direction.<br />
A former Nominated Member of the<br />
Singapore Parliament, Ms Lum holds<br />
several positions in the public service.<br />
Presently, she sits on the board of a<br />
number of companies. She is a member<br />
of the National University of Singapore<br />
Board of Trustees, Temasek Life Sciences<br />
Laboratory Limited as well as National<br />
University Health System Pte Ltd. In<br />
addition to her commitments in Hyflux,<br />
Ms Lum is also a member of the Singapore-<br />
Tianjin Economic & Trade Council, and the<br />
Singapore-Jiangsu Cooperation Council.<br />
Among the many accolades Ms Lum<br />
has received for her entrepreneurial<br />
achievements are: the Winner of the<br />
Regional Growth Award by Nihon Keizai<br />
Shimbun Inc. at the 11th Nikkei Asia Prize<br />
2006, and most recently the Rising Asia –<br />
The Next 10 Years Award by the Singapore<br />
Institute of International Affairs (SIIA) and<br />
AXN ASIA. She was also awarded the<br />
Asiamoney’s Corporate Executive of the<br />
Year 2005 in Singapore.<br />
Ms Lum holds an Honours degree in<br />
Science from the National University<br />
of Singapore.<br />
Teo Kiang Kok<br />
Non-Executive Non-Independent Director<br />
Mr Teo has been a Non-Executive<br />
Non-Independent Director of Hyflux Ltd<br />
since December 2000. He is currently<br />
a member of the Nominating, Audit,<br />
Remuneration, Risk Management and<br />
Executive Committees.<br />
A lawyer with more than 20 years of<br />
experience, Mr Teo is a senior partner<br />
of the law firm, Shook Lin & Bok LLP. He<br />
heads Shook Lin & Bok LLP’s corporate &<br />
corporate finance and China practices.<br />
Mr Teo serves on the boards of a number<br />
of other companies including Memtech<br />
International Limited, Jadason Enterprises<br />
Ltd and Ocean Sky International Ltd.<br />
Mr Teo holds an Honours degree in<br />
Law from the University of Hull and is<br />
a Barrister-at-Law from Lincoln’s Inn.<br />
Lee Joo Hai<br />
Non-Executive Independent Director<br />
Mr Lee has been a Non-Executive<br />
Independent Director of Hyflux Ltd since<br />
December 2000. He is the Chairman of<br />
the Audit Committee and a member<br />
of the Nominating, Remuneration, Risk<br />
Management and Executive Committees.<br />
Mr Lee is a CPA and a member of the<br />
Institute of Certified Public Accountants of<br />
Singapore and the Institute of Chartered<br />
Accountants in England and Wales. He is<br />
currently a senior partner in BDO Raffles,<br />
a public accounting firm and has in excess<br />
of 20 years of experience in accounting<br />
and auditing.<br />
Mr Lee also sits on the board of other<br />
listed companies, including Lung Kee<br />
(Bermuda) Holdings Ltd and Food<br />
Junction Holdings Ltd.<br />
Gay Chee Cheong<br />
Non-Executive Independent Director<br />
Mr Gay has been a Non-Executive<br />
Independent Director of Hyflux Ltd since<br />
August 2001. He is also the Chairman of
Hyflux Ltd annual report 2008 13<br />
Board of Directors (cont’d)<br />
the Nominating Committee, as well as a<br />
member of the Remuneration, Audit and<br />
Executive Committees.<br />
Mr Gay co-founded and was the CEO of 2G<br />
Capital Private Limited, a private investment<br />
company investing in equities and private<br />
companies in the Asia Pacific economies.<br />
The company was awarded Highest Net<br />
Profit in 2006 and Net Profit Excellence in<br />
2007 in the annual SME 500 ranking.<br />
Mr Gay was the Group Executive Director<br />
of JIT Electronics Pte Ltd for four years,<br />
responsible for corporate development,<br />
business strategy and investments of the<br />
JIT Group. He established operational<br />
subsidiaries in Singapore, China and<br />
Hungary and served concurrently as their<br />
respective Managing Directors. He initiated<br />
and was responsible for the public listing of<br />
JIT Electronics in November 1997 and the<br />
subsequent merger of JIT with Flextronics<br />
International valued at $1.16 billion in<br />
August 2000.<br />
Mr Gay was awarded the Singapore<br />
Armed Forces Overseas Training Award<br />
(Graduating) and attended the Royal<br />
Military Academy (RMA), Sandhurst<br />
and Royal Military College of Science,<br />
Shrivenham, United Kingdom. At RMA,<br />
Sandhurst, Mr Gay won the Nigeria Prize for<br />
Best Overseas Student Officer and at the<br />
Singapore Command and Staff College, the<br />
Top Student Prize.<br />
Mr Gay holds Honours degrees in<br />
Electronics Engineering from the Royal<br />
Military College of Science, Shrivenham,<br />
United Kingdom, and in Economics from<br />
University of London. He also has a Masters<br />
of Business Administration from the<br />
National University of Singapore.<br />
Christopher Murugasu<br />
Non-Executive Non-Independent Director<br />
Mr Murugasu has been a Non-Executive<br />
Non-Independent Director of Hyflux Ltd<br />
since February 2005.<br />
Mr Murugasu is also a member of the<br />
Risk Management and Remuneration<br />
Committees.<br />
Previously Senior Vice President for<br />
Corporate Services at Hyflux, he was<br />
responsible for the Group’s human<br />
resources, procurement and general<br />
administration functions. Prior to joining<br />
Hyflux, Mr Murugasu had accumulated<br />
over 15 years of experience in the public<br />
sector as well as with a foreign bank.<br />
He holds an Honours degree in Computing<br />
Science from Imperial College, United<br />
Kingdom, and a Master’s degree from<br />
the London School of Economics,<br />
United Kingdom.<br />
Raj Mitta<br />
Non-Executive Independent Director<br />
Mr Mitta has been a Non-Executive<br />
Independent Director of Hyfux Ltd since<br />
April 2007. He is the Chairman of Risk<br />
Management Committee.<br />
Mr Mitta is currently the Chairman of<br />
Essential Value Associates Pte Ltd, a<br />
boutique high-powered consultancy firm,<br />
providing hands-on personal counseling<br />
on issues of managing change and<br />
strategic implementation with the result of<br />
driving lasting change in organisations and<br />
developing high growth businesses with<br />
quality governance and sustainability.<br />
Mr Mitta’s client list includes multinationals<br />
like PepsiCo, Gillette, Kelloggs, and the<br />
Governments of Singapore, Malaysia,<br />
Indonesia, Philippines, Australia and<br />
India. He has also worked with regional<br />
conglomerates like Hutchisons (HK),<br />
Jardines (HK), Bakrie Group (Indonesia),<br />
Reliance (India), Amex, Citicorp, British<br />
Airways and telecom operators like<br />
Optus, Orange, Singapore Telecom<br />
and Deutsche Telekom.<br />
Prior to his experience of over 14 years<br />
in consulting, Mr Mitta held senior<br />
marketing roles with Pepsico (US and<br />
Cyprus) and Mars Inc. (UK). Mr Mitta is a<br />
seasoned negotiator and deal maker with<br />
well developed cross cultural sensitivity<br />
developed through living and working<br />
across diverse countries.<br />
Mr Mitta holds a Bachelors degree in<br />
Chemical Engineering from the University<br />
of Bombay, and a Masters in Business<br />
Administration from the Indian Institute of<br />
Management, Ahmedabad; in India.<br />
Professor Tan Teck Meng<br />
Non-Executive Independent Director<br />
Professor Tan has been a Non-Executive<br />
Independent Director of Hyflux Ltd<br />
since April 2007. He is the Chairman<br />
of Remuneration Committee and a<br />
member of the Audit Committee.<br />
Professor Tan is currently Professor<br />
of Accounting in the School of<br />
Accountancy at Singapore Management<br />
University and a Council Member of the<br />
Accounting Standards Council.<br />
Professor Tan also sits on the board<br />
of a number of companies including:<br />
Singapore Reinsurance Corporation<br />
Limited; and Kim Eng Holdings Limited<br />
among others.<br />
Professor Tan has a Bachelor of<br />
Accountancy (BAcc) Degree from the<br />
University of Singapore and a Masters<br />
of Commerce (MCom) (Honours) from<br />
the University of New South Wales in<br />
Australia. In 1996, he was awarded<br />
an Honorary PhD by Liaoning<br />
University (China).<br />
He holds Fellowships in the Institute<br />
of Certified Public Accountants of<br />
Singapore (FCPA), Australian Society<br />
of CPAs (FCPA), Institute of Chartered<br />
Secretaries and Administrators (FCIS),<br />
and Chartered Management Institute,<br />
UK (FCMI).<br />
Ahmed Butti Ahmed<br />
Non-Executive Independent Director<br />
Mr Ahmed has been a Non-Executive<br />
Independent Director of Hyflux Ltd since<br />
April 2008.<br />
Mr Ahmed is currently the Director General<br />
of Dubai Customs and CEO of the Ports,<br />
Customs and Freezone Corporation<br />
(PCFC) Authority.<br />
Mr Ahmed serves as Chairman for several<br />
companies including Imdaad (facilities<br />
management), Palm Utilities (district<br />
cooling & water treatment) and Dubai<br />
Security Services. In addition, he also<br />
serves as a board member for Dubai World,<br />
Tamweel and Federal Customs Authority.<br />
He holds a Masters degree in Science from<br />
Denver University, USA.<br />
Standing (L-R): Lee Joo Hai, Ahmed Butti Ahmed, Gay Chee Cheong, Raj Mitta<br />
Seated (L-R): Christopher Murugasu, Olivia Lum, Professor Tan Teck Meng , Teo Kiang Kok<br />
Photo: Yoong Kang Chee
14<br />
Hyflux Ltd annual report 2008<br />
Senior Management<br />
Standing (L-R): Lee Soon Eng, Senior MD, Global Operations; Foo Hee Kiang, Group EVP, Capital Markets & Industry<br />
Relations; Sam Ong, Group Deputy CEO & CFO; Fong Chun Hoe, Group EVP & Chief Manufacturing Officer<br />
Seated (L-R): Cho Wee Peng, Group EVP & Chief Investment Officer; Olivia Lum, Group CEO, President & Managing<br />
Director; Winnifred Heap, Group EVP, Capital Markets<br />
Photo: Yoong Kang Chee
Hyflux Ltd annual report 2008 15<br />
Advisors<br />
(L-R): Chen Bao Liu, Senior Advisor; Hoe Kum Yoke, Advisor; Gu Jia Long, Senior Advisor; Freddy Soon, Advisor
16<br />
Hyflux Ltd annual report 2008<br />
Heads of Strategic Business Units<br />
Back row (L-R): Poh Teck Heok, MD, Energy; Hacene Debbah, GM, Algeria; Gary Kee, CEO, Hyflux Water Trust<br />
Management Pte Ltd; Ge Wen Yue, MD, China Industrial Products<br />
Front row (L-R): Michael Siew, GM, Operations & Maintenance; Kang Thian Jian, MD, Electrical, Instrumentation<br />
& Control and System Manufacturing & Project Management; Chia Yew Choon, MD, Manufacturing<br />
Photo: Yoong Kang Chee
Hyflux Ltd annual report 2008 17<br />
Heads of Strategic Business Units (cont’d)<br />
Back row (L-R): Dr Rinse Terpstra, MD & Chief Technology Officer, Hyflux CEPAration BV; Cindi Ng, GM, Consumer<br />
Products; Benjamin Tan, MD, MENA; Gireesh Bhat, GM, India Industrial Products<br />
Front row (L-R): Peter Wu, MD, China Structured Projects & Operations & Maintenance; Wong Khai Theen, MD,<br />
Business Development; Goh Eng Kwang, MD, China EPC; Yang Ai Chian, Senior VP, Legal (Business); Allan Toh,<br />
GM, Southeast Asia Industrial Products<br />
Photo: Yoong Kang Chee
18<br />
Hyflux Ltd annual report 2008<br />
Human Capital<br />
Our Hyflux Family<br />
Together with a closely-knit workforce around<br />
the world, we will make things happen.<br />
Photo: Jolyn Sng<br />
Back row (L-R): Lim Siong Pew, VP, Corporate Quality & Environmental, Health & Safety; Gregory Ong, Director, IT<br />
Front row (L-R): Susan Lee, VP, HR Singapore; Doreen Houghton, VP, Purchasing & Logistics<br />
Photo: Yoong Kang Chee<br />
Photo: Willy Yeo<br />
Photo: Elsie Koh<br />
To support Hyflux’s growth strategies<br />
and innovative platforms, the Group<br />
has been investing – continuously and<br />
systematically – in our human capital.<br />
Our manpower strength has grown in<br />
tandem with our business operations.<br />
In the last two years, the Group’s staff<br />
had expanded by two folds, increasing<br />
to 1,899 as at December 2008.<br />
To meet the needs of our recurring<br />
O&M operations, and also to support<br />
our own expansion into the renewable<br />
resources management business, the<br />
Group will continue to invest in both<br />
the breadth and depth of our staff<br />
strength globally.<br />
As described by Hyflux’s Group Deputy<br />
CEO & CFO, Sam Ong: “They work<br />
with diligence, practicality, prudence<br />
and respect. More importantly, they<br />
are committed and work with the<br />
company at heart.”<br />
So, together with Hyflux’s closely-knit<br />
workforce around the world, we will<br />
make things happen.<br />
Educational Qualifications<br />
20%<br />
2%<br />
8%<br />
Group photo of Hyflux Group CEO,<br />
Board of Directors and the five CEO<br />
Award recipients. Front row (L-R): Hacene<br />
Debbah, GM, North Africa; Edwin Lau,<br />
Investment Manager; Dr Li Dong Fei, VP,<br />
Process Technology; Li Qiuyu, Deputy GM<br />
– Legal/Contract (China); Dr Wei Xi, Senior<br />
Research Fellow<br />
In addition, as part of our human<br />
capital investment, the inaugural<br />
CEO Award was launched in 2008 to<br />
recognise outstanding individuals. A<br />
total of five staff from our Singapore,<br />
Algeria and China offices were<br />
honoured not only for their significant<br />
work contributions, but also for<br />
their team spirit, as well as their<br />
commendable personal attributes<br />
such as humility, sincerity and integrity.<br />
36%<br />
Below Diploma<br />
Diploma<br />
Degree<br />
2008<br />
Masters<br />
PhD<br />
34%
Hyflux Ltd annual report 2008 19<br />
Corporate Social Responsibility<br />
We have laid strong foundations for these Corporate Social<br />
Responsibility programmes and are well positioned for deeper and<br />
even more meaningful engagement to improve the well-being of<br />
our community.<br />
At Hyflux, we believe in the importance<br />
of engaging in sustainable practices<br />
in our community, particularly in the<br />
areas of education, entrepreneurship,<br />
and the environment (the “three E’s”).<br />
In addition, we also support selected<br />
programmes that help improve the<br />
welfare of the elderly and children in<br />
our community.<br />
Through ongoing corporate<br />
volunteerism, financial support, and<br />
partnerships with governmental,<br />
educational and non-profit<br />
organisations, we helped address<br />
many emerging and challenging<br />
issues in the communities in which<br />
we operate.<br />
Education<br />
As part of the Group’s initiative in<br />
the realm of education, we teamed<br />
up with Singapore polytechnics<br />
and educational institutions to<br />
provide awards and scholarships<br />
for outstanding students in the<br />
fields of Business, Chemistry and<br />
Environmental Studies. Some<br />
scholarships also include attachment<br />
and internship opportunities at the<br />
Hyflux headquarters.<br />
Entrepreneurship<br />
In the area of entrepreneurship,<br />
Hyflux supported global student<br />
entrepreneurship programmes. Our<br />
Senior Management team hosted<br />
students from China, Japan, England,<br />
Canada, the U.S. and other parts of<br />
the world to share Hyflux’s success<br />
story and their personal working<br />
experiences.<br />
Environment<br />
For our environment engagement<br />
programme, the Group worked with<br />
several environmental organisations<br />
and institutions such as the National<br />
Environmental Agency (NEA) and the<br />
Singapore Institute of International<br />
Affairs (SIIA) on projects to help raise<br />
public awareness on topics such<br />
as climate change and renewable<br />
resource management.<br />
Community Welfare<br />
There are many elderly people<br />
and children who are in need of<br />
special care services in our society.<br />
We supported fund raising events<br />
that benefit senior citizens’ homes,<br />
childcare, and in-patient care<br />
organisations.<br />
We have laid strong foundations for<br />
these Corporate Social Responsibility<br />
programmes and are well positioned<br />
for deeper and even more meaningful<br />
engagement to improve the wellbeing<br />
of our community.<br />
(Top-Bottom): Assisi Hospice Charity<br />
Christmas Dinner; National Environment<br />
Agency Youth Eco Concert; Visit to Hyflux<br />
by National University of Singapore<br />
Entrepreneurship Society, BizAsia<br />
Programme
20<br />
Hyflux Ltd annual report 2008<br />
Awards and Accolades<br />
Innovation<br />
Frost and Sullivan – Technology<br />
Innovation of the Year Award 2007,<br />
Desalination Technologies<br />
(Asia Pacific)<br />
The award recognised Hyflux for<br />
the development of our proprietary<br />
Kristal TM membrane technology. The<br />
Kristal TM membrane has a proven<br />
track record in the treatment of water<br />
and wastewater for industrial and<br />
municipal markets, as well as in water<br />
recycling and seawater desalination.<br />
Frost and Sullivan – Technology<br />
Innovation of the Year Award<br />
2007, Residential Water Treatment<br />
Equipment Market (Southeast Asia)<br />
Hyflux was recognised for our lifestyle<br />
consumer product known as<br />
dragon-fly TM .<br />
Global Water Awards 2006 –<br />
Water Company of the Year<br />
Hyflux was named “Water Company of<br />
the Year” – the highest honour at the<br />
Global Water Awards 2006. This award,<br />
given by the Global Water Intelligence,<br />
UK, recognised the significant<br />
contribution of Hyflux to the private<br />
water industry. The judges’ verdict:<br />
“Hyflux has brought a professionalism<br />
and entrepreneurial spirit to the water<br />
industry which sets a new standard for<br />
competitors worldwide.”<br />
Global Water Awards 2006 –<br />
Distinction Award for Desalination<br />
Plant of the Year<br />
In 2006, the SingSpring Desalination<br />
Plant was awarded the Distinction<br />
Award for “Desalination Plant<br />
of the Year” at the Global Water<br />
Awards given by the Global Water<br />
Intelligence, UK. The judges noted:<br />
“The Tuas plant is a brilliant work of<br />
engineering which has challenged the<br />
global perception that desalination is a<br />
high cost source of water.”<br />
International Aquatech Innovation<br />
Awards 2006, Category Winner<br />
Hyflux’s joint venture in Europe -<br />
Hyflux CEPAration, won in the Water<br />
Treatment / Point of Use category,<br />
for our InoCep TM ceramic membrane.<br />
The judging panel consisted of<br />
an international jury of experts,<br />
and InoCep TM won amidst strong<br />
competition from Europe, North<br />
America and Asia for its originality,<br />
practicality (technical, economical,<br />
feasibility) and sustainability<br />
(environment, security, energy<br />
and efficiency).
Hyflux Ltd annual report 2008 21<br />
Awards and Accolades (cont’d)<br />
Business Excellence<br />
SIAS Investors’ Choice Awards –<br />
Most Transparent Company Award<br />
2004, 2005, 2008<br />
Hyflux won the “Most Transparent<br />
Company Award” in the services/<br />
utilities/agriculture category of the<br />
Securities Investors Association<br />
(Singapore) Investors’ Choice Awards<br />
in 2004, 2005 and 2008.<br />
Forbes Asia – Best Under A Billion<br />
2005 & 2006<br />
Forbes Asia’s annual “Best Under<br />
A Billion” selections showcase the<br />
region’s most dynamic publicly<br />
traded firms with sales under<br />
US$1 billion a year and track records<br />
of sustained growth and profitability.<br />
For two consecutive years, Hyflux was<br />
named as one of Asia’s top 200 small<br />
& midsize companies.<br />
Fastest Growing 50 – Fastest<br />
Growing 50 Certification<br />
Awards 2005<br />
Hyflux was recognised as one of the<br />
50 fastest growing companies in<br />
Singapore. The Awards were ranked by<br />
DP Information Group, and supported<br />
by Ernst & Young, IE Singapore, and<br />
SPRING Singapore.<br />
Community<br />
Friend of the Arts Award 2007<br />
Hyflux received the “Friend of the Arts<br />
Award” given by the National Arts<br />
Council in 2007 in recognition of our<br />
contributions towards the promotion,<br />
organisation, and participation of<br />
artistic activities.<br />
Arts Supporter Award 2008<br />
Hyflux was presented with the<br />
National Arts Council – “Arts<br />
Supporter Award 2008”. The award<br />
recognises sponsors who have<br />
contributed towards Singapore’s<br />
arts scene.<br />
Sam Ong, Hyflux Group Deputy CEO &<br />
CFO received the “Best Under A Billion”<br />
award conferred by Forbes Asia
22<br />
Hyflux Ltd annual report 2008<br />
20 Years in Review - Key Milestones<br />
1997<br />
1989<br />
1989<br />
Founded as<br />
water trading<br />
company<br />
known as<br />
Hydrochem (S)<br />
Pte Ltd<br />
Early 1990s<br />
Distribution &<br />
provision of water<br />
treatment systems<br />
1994<br />
Entered China Market<br />
1994<br />
Singapore:<br />
Varta-Toshiba<br />
Batteries Pte Ltd<br />
Supply & installation<br />
of nanofiltration<br />
water recycling plant<br />
1997<br />
Singapore:<br />
Siemens<br />
Matsushita/<br />
EPCOS (S)<br />
Pte Ltd<br />
Supply &<br />
installation<br />
of ultra-pure<br />
dicing water<br />
system,<br />
chemical<br />
delivery<br />
system<br />
and waste<br />
treatment<br />
system<br />
(multi-phase<br />
project)<br />
1998<br />
Malaysia:<br />
Ramatex Industrial<br />
Sdn Bhd<br />
Supply & installation of<br />
raw water nanofiltration<br />
treatment system<br />
China:<br />
Hewlett Packard<br />
(Shanghai) Co. Ltd.<br />
Supply & installation of<br />
pure water treatment<br />
system<br />
Hyundai Electronics<br />
(Shanghai) Co. Ltd.<br />
Supply & installation of<br />
pure water treatment<br />
system<br />
1999<br />
Birth of Kristal TM<br />
membranes<br />
1999<br />
Singapore:<br />
Jurong Bird Park<br />
Supply &<br />
installation of<br />
reclamation plant<br />
filtration and<br />
reverse osmosis<br />
systems for pond<br />
top-up and<br />
other uses<br />
Key Corporate Developments<br />
Key Project Wins<br />
Key Awards and Accolades<br />
Initial Years<br />
A Strong Home Base<br />
Project win: Singapore Jurong Bird Park<br />
Hydrochem office
Hyflux Ltd annual report 2008 23<br />
20 Years in Review - Key Milestones (cont’d)<br />
2002<br />
2000<br />
Malaysia:<br />
Flextronics International<br />
Supply, installation &<br />
commissioning of water<br />
treatment plant<br />
Malayan Sugar<br />
Manufacturing<br />
Supply & installation<br />
of brine regenerant<br />
recovery plant<br />
China:<br />
Amway (China) Co. Ltd.<br />
Supply & installation of<br />
purified water treatment<br />
system and high purity<br />
distribution piping<br />
2001<br />
Listed on Singapore<br />
Exchange Limited (“SGX”)<br />
2001<br />
Singapore:<br />
Public Utilities Board<br />
Bedok NEWater Plant<br />
Supply & installation of<br />
high grade industrial<br />
water reclamation<br />
process plant<br />
Wyeth Nutritional (S)<br />
Pte Ltd<br />
Supply & installation of<br />
mechanical piping and<br />
electrical connections for<br />
water treatment plant<br />
Wyeth Pharmeutical (S)<br />
Pte Ltd<br />
Supply & installation of<br />
process and utility piping<br />
& fittings and process<br />
equipment<br />
2002<br />
Singapore:<br />
Public Utilities Board<br />
Chestnut Avenue Waterworks<br />
Supply of membrane filtration system for the<br />
expansion of potable water treatment works;<br />
one of the largest membrane-based water<br />
treatment plants at that time<br />
Public Utilities Board<br />
Seletar NEWater Plant<br />
Design & construction of high grade water<br />
reclamation plant; utilisation of Hyflux<br />
proprietary membrane Kristal TM 300 for<br />
municipal recycling<br />
China:<br />
Molex Interconnect (Shanghai) Co. Ltd.<br />
Supply & installation of pure water treatment<br />
system<br />
Namibia:<br />
Ramatex Textiles Namibia (Pty) Ltd<br />
Supply & installation of ultrafiltration,<br />
nanofiltration & reverse osmosis plants<br />
Installation at Bedok NEWater Plant<br />
First-generation<br />
Kristal TM membrane
24<br />
Hyflux Ltd annual report 2008<br />
20 Years in Review - Key Milestones (cont’d)<br />
2003<br />
2003<br />
Singapore:<br />
Public Utilities Board<br />
SingSpring Desalination<br />
Plant<br />
Design, construction,<br />
operations &<br />
maintenance of one of<br />
Asia’s largest seawater<br />
reverse osmosis plants at<br />
136,000 m 3 /day capacity.<br />
This is Singapore’s<br />
first Public Private<br />
Partnership.<br />
2003<br />
Euromoney named<br />
SingSpring financing<br />
project “Asia Pacific Water<br />
Deal of the Year”<br />
Asiamoney named<br />
Hyflux “Best Small<br />
Company in Singapore”<br />
Smart Investor magazine<br />
named Hyflux “Most<br />
Admired SESDAQ<br />
Company”<br />
2004<br />
Entered Middle Eastern Markets<br />
Launch of membrane R&D centre, one of Asia’s largest<br />
2004<br />
Indonesia:<br />
Cargill<br />
Supply of containerised ultrafiltration and reverse<br />
osmosis system for river water treatment<br />
China:<br />
Famatong Connector (China) Co., Ltd<br />
Supply & installation of pure water treatment system<br />
and sewage recovery system<br />
People’s Government of Tianjin City, Dagang District<br />
Tianjin Dagang Desalination Plant<br />
Awarded contract to build China’s largest membranebased<br />
seawater reverse osmosis plant at Tianjin<br />
Dagang on a Design-Build-Own-Operate-Transfer<br />
(“DBOOT”) basis<br />
2005<br />
China:<br />
Huaneng International<br />
Power Co., Ltd<br />
Supply & installation of reverse<br />
osmosis system<br />
Dubai:<br />
Nakheel LLC<br />
Design, construction,<br />
operations & maintenance<br />
of sewage treatment plant<br />
and industrial wastewater<br />
treatment plants<br />
2005<br />
Hyflux CEO Olivia Lum named<br />
“Businessman of the Year 2004”<br />
at the Singapore Business<br />
Awards 2005<br />
Expanding Into Regional Markets<br />
(L-R): Kanagarethinam Ravichandran, GM,<br />
Sales & Marketing (India) and Kishor Dobariya,<br />
GM, Technology & Business Development are<br />
responsible for Hyflux’s trust into India.<br />
Groundbreaking of Tianjin Dagang<br />
Desalination Plant<br />
(L-R): Lim Choon Noi, GM, Lube<br />
Oil and Dr Tan Yi, VP, Technology<br />
Development, are part of Eflux’s<br />
core team<br />
Photo: Yoong Kang Chee<br />
(L-R): Hyflux Group CEO Olivia Lum<br />
and Algerian Minister of Energy<br />
& Mines, Dr Chakib Khelil, at the<br />
signing ceremony for the Magtaa<br />
project
Hyflux Ltd annual report 2008 25<br />
20 Years in Review - Key Milestones (cont’d)<br />
2008<br />
2006<br />
Acquired CEPAration BV (The Netherlands)<br />
Hyflux’s oil recycling company - Eflux<br />
Singapore Pte Ltd<br />
Entered India Market<br />
2006<br />
Algeria:<br />
Algeria Energy Company<br />
Tlemcen Desalination Plant<br />
Awarded contract to build 200,000<br />
m 3 /day seawater reverse osmosis<br />
desalination plant in Tlemcen on a<br />
DBOOT basis<br />
2006<br />
“Water Company of the Year” and<br />
Distinction Award for “Desalination<br />
Plant of the Year” at the Global Water<br />
Awards 2006<br />
2007<br />
Launch of Hyflux Water<br />
Trust (“HWT”), the first<br />
pure-play water trust in Asia<br />
Joint Venture with<br />
Marmon Water LLC for<br />
our consumer products<br />
business<br />
2007<br />
“Technology Innovation<br />
of the Year” (Desalination<br />
Technologies) awarded by<br />
Frost & Sullivan<br />
2008<br />
Participated in inaugural Singapore<br />
International Water Week<br />
2008<br />
Algeria:<br />
Algeria Energy Company<br />
Magtaa Desalination Plant<br />
Awarded contract to build world’s largest<br />
seawater reverse osmosis desalination plant<br />
in Magtaa on a DBOOT basis<br />
2008<br />
“Most Transparent Company Award”<br />
at SIAS 9th Investors’ Choice Awards (was<br />
also awarded in 2004 and 2005)<br />
Hyflux Water Trust’s Initial Public Offering<br />
(“IPO”) won the Highly Commended Award<br />
for “Water Deal of the Year” at the Global<br />
Water Awards 2008<br />
Global Player<br />
(L-R): Kelly Leong, VP, Finance & Administration<br />
(Malaysia); Yeow Kok Kon, GM, Energy-Biofuel,<br />
oversees the development of the Palm Oil Membrane<br />
System (POMS) business in Malaysia.<br />
Photo: Yoong Kang Chee<br />
(R): Dr Govindharaju Venkidachalam, VP, Technology Research<br />
& Acquisition, receiving the Frost & Sullivan’s “Technology<br />
Innovation of the Year (Desalination Technologies)” award<br />
Hyflux participated in the inaugural<br />
Singapore International Water Week<br />
as one of the Founding Sponsors
Spirit of<br />
Innovation
At Hyflux, we make things happen.
28<br />
Hyflux Ltd annual report 2008<br />
Innovation (cont’d)<br />
Hyflux continuously strives to deliver testimonial solutions for the<br />
sustainability of water and other natural resources.<br />
Spirit of Innovation<br />
Research &<br />
Development<br />
Engineering,<br />
Procurement &<br />
Construction (“EPC”)<br />
and Operations &<br />
Maintenance (“O&M”)<br />
Capital<br />
Management<br />
Positive<br />
Environmental<br />
Fundamentals<br />
Dynamic Water<br />
Company<br />
Sustainable Growth<br />
At the core of Hyflux’s culture is a spirit<br />
of innovation and entrepreneurship.<br />
It inspires the Group in the<br />
advancement of our technological<br />
developments, achievement<br />
of operational excellence and<br />
commercialisation of our applications.<br />
These competencies help to solidify<br />
Hyflux’s position as a dynamic global<br />
player. The Group continuously strives<br />
to deliver testimonial solutions for<br />
the sustainability of water and other<br />
natural resources, backed by strong<br />
financial capabilities.<br />
Research & Development<br />
Hyflux’s research programmes identify<br />
innovative ways to achieve cost and<br />
energy efficiencies in the recycling<br />
of water and other renewable energy<br />
resources in our key markets in<br />
Southeast Asia, China, India and the<br />
Middle East and North Africa<br />
(“MENA”) region.<br />
At the heart of the Group’s ongoing<br />
research is the development of<br />
cutting-edge membrane technologies,<br />
serving the needs of our municipal<br />
and industrial clients, from water and<br />
wastewater treatment, water recycling,<br />
seawater desalination, to oil recycling,<br />
palm oil clarification and other liquid<br />
separation requirements.<br />
Our in-house Research & Development<br />
(“R&D”) capabilities enable Hyflux to<br />
achieve speed-to-market advantage,<br />
and further drive technological<br />
advances in membrane applications.
Hyflux Ltd annual report 2008 29<br />
Innovation (cont’d)<br />
Engineering, Procurement &<br />
Construction and Operations<br />
& Maintenance<br />
Over the years, Hyflux has honed<br />
Engineering, Procurement &<br />
Construction (“EPC”) capabilities to<br />
support the increasingly demanding<br />
designs of our water plants.<br />
Our reliable 24/7 Operations &<br />
Maintenance (“O&M”) services –<br />
delivered to our own plants or to<br />
clients’ plants – is growing into a<br />
meaningful stream of steady and<br />
recurring revenue. Given the scalability<br />
of our operations, we derive significant<br />
cost advantages in the execution of<br />
our order book.<br />
Capital Management<br />
In addition to our technological<br />
capabilities and technical knowhow,<br />
the Group takes a multilateral<br />
approach to our capital management<br />
with the establishment of a<br />
business trust and synergistic<br />
partnerships worldwide.<br />
The business trust – Hyflux Water Trust<br />
– launched in December 2007, enables<br />
the Group to recycle capital to fund<br />
new projects.<br />
Synergistic partnerships, formed<br />
through our participation in Algeria,<br />
value-add to our Design-Build-Own-<br />
Operate-Transfer (“DBOOT”) projects in<br />
the country.<br />
Under the current challenging<br />
economic climate, it is ever more<br />
critical for companies to achieve<br />
cost efficiencies through greater<br />
resource optimisation. Hyflux’s<br />
capital management model has<br />
been specifically developed to<br />
capture market opportunities while<br />
maintaining cost effectiveness in the<br />
global arena.<br />
A Dynamic Company<br />
In recent years, growing water<br />
pollution concerns have greatly<br />
accelerated the need for quicker<br />
delivery of water treatment strategies.<br />
The desalination and water treatment<br />
industry is indeed one of the most<br />
crucial infrastructure sectors, serving<br />
the need for clear, clean water globally.<br />
Hyflux’s proven track record and<br />
technological excellence meet this<br />
global need and are the key driving<br />
forces behind our landmark projects in<br />
Singapore, China and Algeria.<br />
Our EPC order book stood at S$1.15<br />
billion in FY2008, reflecting the<br />
Group’s capacity and capability to<br />
secure large water plants worldwide.<br />
Our strong EPC order book will<br />
provide the Group with immediate<br />
financial visibility as we focus on order<br />
book execution.<br />
Upon the plants’ completion and<br />
operations, our O&M contracts are<br />
the basis of robust recurring earnings,<br />
generating stable and recurring<br />
revenue for the next 20-30 years.<br />
SingSpring Desalination Plant –<br />
Singapore’s first<br />
Designed capacity: 136,000 m 3 /day<br />
Completion: September 2005<br />
Tianjin Dagang Desalination Plant –<br />
China’s largest<br />
Designed capacity: 100,000 m 3 /day<br />
Expected completion: 2nd Half 2009<br />
Tlemcen Desalination Plant –<br />
First project win in Algeria<br />
Designed capacity: 200,000 m 3 /day<br />
Expected completion: 2010<br />
Divider (L-R): Dr Wei Xi, Senior Research Fellow; Yap Kiam Wu, Senior Manager, Water Technology; Dr Shieh<br />
Jyh-Jeng, VP, Research; Leslie Chapple, Group Technology Director; Dr Li Dong Fei, VP, Process Technology;<br />
Dr Rinse Terpstra, MD & Chief Technology Officer, Hyflux CEPAration BV; Dr Wang Shaofeng, Senior Research<br />
Fellow; Roland Low, Director, Technology Commercialisation; Dr Peng Zanguo, Research Fellow; Dr<br />
Govindharaju Venkidachalam; VP, Technology Research & Acquisition; Dr Zhou Tong, Senior Research Fellow<br />
Divider Photo: Yoong Kang Chee<br />
World’s largest membrane-based<br />
seawater desalination plant in<br />
Magtaa, Algeria<br />
Designed capacity: 500,000 m 3 /day<br />
Expected completion: 2011
Research &<br />
Development
Our network of R&D centres span across Singapore,<br />
China and The Netherlands, enabling the Group to<br />
broaden and tap into a worldwide base of ongoing<br />
membrane developments.
32<br />
Hyflux Ltd annual report 2008<br />
Research & Development (cont’d)<br />
Hyflux’s in-house R&D is continuously pushing for new membrane<br />
applications, membrane products and systems.<br />
Research & Development (“R&D”) is<br />
an integral part of Hyflux’s overall<br />
business strategy in driving sustainable<br />
growth for ourselves and our clients<br />
around the world.<br />
Hyflux undertakes research into both<br />
organic and inorganic membranes.<br />
The Group’s extensive range of<br />
environmentally-friendly membrane<br />
products and systems is a result of the<br />
cross-fertilisation of our R&D efforts,<br />
while leveraging on the strength of<br />
our technology commercialisation<br />
infrastructure, from the perspective of<br />
cost competitiveness, clients’ needs<br />
and growth opportunities.<br />
Our R&D Programmes<br />
As part of the Group’s continuous<br />
emphasis and effort in reducing<br />
development cycle, the team utilises<br />
appropriate and latest technologies<br />
to achieve speed-to-market<br />
advantage. A recent investment<br />
includes an advanced simulation<br />
programme, which analyses the<br />
effects of temperature and pressure on<br />
materials used, and the computation<br />
of fluid dynamics. These added data<br />
points are designed to better assist<br />
our researchers in accelerating the<br />
development process.<br />
Some of the Group’s key development<br />
efforts include:<br />
• Membrane applications in water<br />
and other liquid separation<br />
• Module development<br />
• Process development for pre and/or<br />
filtration processes<br />
• Development of specialty materials<br />
such as L-lactic acid<br />
Dr Li Dong Fei, VP, Process Technology,<br />
doing a test at Hyflux’s R&D lab<br />
Photo: Yoong Kang Chee<br />
The Hyflux team, led by Group Deputy CEO & CFO Sam Ong (fourth from left), visiting a client’s plant where<br />
our Palm Oil Membrane System (POMS) has been installed.<br />
Photo: Peng Yi Jin
Hyflux Ltd annual report 2008 33<br />
Research & Development (cont’d)<br />
Our R&D ActivitIes<br />
Small- and largescale<br />
pilot plants<br />
Process<br />
development /<br />
optimisation<br />
Niche applications<br />
development<br />
Engineering design<br />
Sustained Growth<br />
Through R&D<br />
Collaboration with<br />
academia, research<br />
institutes and<br />
research partners<br />
Product<br />
development<br />
Characterisation<br />
and analytical<br />
methods<br />
development<br />
Materials &<br />
membrane research<br />
Our R&D Centres<br />
In 2004, Hyflux launched one of<br />
Asia’s largest membrane and materials<br />
technology centres in Singapore<br />
to spearhead the development of<br />
leading-edge membrane technology<br />
and environmental engineering<br />
solutions.<br />
Our network of R&D centres span<br />
across Singapore, China and The<br />
Netherlands, enabling the Group to<br />
broaden and tap into a worldwide<br />
base of ongoing membrane<br />
developments through linkages and<br />
collaboration with internationallyrecognised<br />
research experts,<br />
universities and various research<br />
institutions.<br />
Our Membrane Modules<br />
and Systems Manufacturing<br />
Facility<br />
The Group has set up a manufacturing<br />
facility in Yangzhou, China, to supply<br />
membrane modules and systems to<br />
our plants worldwide. This enables<br />
us to have better control over the<br />
quality and speed with which Hyflux’s<br />
membrane modules are deployed to<br />
our respective plants on time and in<br />
pristine working conditions.<br />
Our Membrane Production<br />
Facilities<br />
In recent years, Hyflux has been<br />
streamlining and improving our<br />
membrane production processes<br />
to ensure quality consistency from<br />
product development to module<br />
making. As a result, we are now able<br />
to meet the rapidly growing in-house<br />
demand, especially from our seawater<br />
desalination plant in Tianjin, China,<br />
and the two sizable desalination<br />
plants in Algeria.<br />
In addition, Hyflux is also now<br />
better positioned to meet growth<br />
opportunities in the global<br />
membrane market.<br />
Divider (L-R): Dr Shieh Jyh-Jeng, VP, Research; Roland Low, Director, Technology Commercialisation; Dr Govindharaju Venkidachalam, VP,<br />
Technology Research & Acquisition<br />
Divider Photo: Yoong Kang Chee
34<br />
Hyflux Ltd annual report 2008<br />
Research & Development (cont’d)<br />
Our Membrane Products and Applications<br />
Hyflux’s in-house R&D is continuously<br />
pushing for new membrane<br />
applications, membrane products and<br />
systems. Our R&D efforts have led to<br />
the successful commercialisation of<br />
our membrane products and systems:<br />
Kristal Polymer Hollow Fibre<br />
Membrane<br />
One of the pioneer products, Kristal<br />
polymeric hollow fibre membrane<br />
is fully designed and developed<br />
by Hyflux using our proprietary<br />
membrane technology. It is used in<br />
the treatment of aqua-based industrial<br />
waste stream, water purification,<br />
wastewater recycling, and seawater<br />
desalination pretreatment.<br />
Our flagship and award-winning<br />
Kristal membrane has been utilised in<br />
the ultrafiltration process in the Seletar<br />
NEWater Plant in Singapore and will be<br />
installed in our landmark desalination<br />
plants in Tianjin, China and Magtaa and<br />
Tlemcen in Algeria. With the operation<br />
of the Magtaa plant, Kristal will be<br />
the most widely utilised ultrafiltration<br />
pretreatment membrane for seawater<br />
desalination in the world.<br />
FerroCep Stainless Steel<br />
Tubular Membrane<br />
The tubular cross-flow technology<br />
and stainless steel construction<br />
are the main reasons why Hyflux’s<br />
FerroCep is the membrane of<br />
choice for handling difficult industrial<br />
streams with high viscosity and solid<br />
contents under extreme conditions.<br />
It is ideal for fermentation broths like<br />
amino acids, antibiotics, vitamins<br />
and clarification. This inert and highly<br />
durable inorganic membrane can<br />
withstand elevated temperatures and<br />
pressures, concentrated solvents or<br />
extreme pH conditions.<br />
InoCep Ceramic Hollow<br />
Fibre Membrane<br />
The award-winning InoCep<br />
membrane is able to tolerate high<br />
temperatures and extreme pH<br />
conditions as well as high solids<br />
content. It is ideal for waste/<br />
wastewater treatment and can be used<br />
to resolve separation bottlenecks in a<br />
wide range of industries, such as the<br />
metal/steel mill, chemical process, food<br />
& beverage, and biopharmaceutical<br />
industries. The robust design of<br />
the InoCep membrane combines<br />
the advantages of high chemical,<br />
mechanical and thermal resistance, as<br />
well as the compactness and low cost<br />
of that of polymeric hollow fibres.<br />
PoroCep Polypropylene<br />
Hollow Fibre Membrane<br />
This membrane is the preferred<br />
choice for microfiltration, where both<br />
performance and cost are critical. It<br />
combines higher particle retention<br />
with higher flux, and ensures excellent<br />
permeate quality and minimal pressure<br />
drop, all within a small compact<br />
design. The PoroCep membrane<br />
offers advantages such as broad<br />
chemical compatibility, wide pH range,<br />
great thermal stability and mechanical<br />
strength. The PoroCep membrane is<br />
InoCep TM Kristal TM FerroCep TM
Hyflux Ltd annual report 2008 35<br />
Research & Development (cont’d)<br />
hence ideal for pre-filtration in a wide<br />
variety of highly demanding industrial<br />
water, wastewater and chemical<br />
treatment operations.<br />
Hyflux Advanced Membrane<br />
System (“HAMS”)<br />
Our proprietary Hyflux Advanced<br />
Membrane System (“HAMS”) has<br />
been developed as a “green” solution<br />
to recover base oil from used oil.<br />
It substantially reduces energy<br />
consumption during the recycling of<br />
used oil into high-grade commercial<br />
base oil.<br />
Palm Oil Membrane System<br />
(“POMS”)<br />
Hyflux has developed a first-of-itskind<br />
membrane system for palm oil<br />
clarification. The Palm Oil Membrane<br />
System (“POMS”) is a sustainable palm<br />
oil processing system that substantially<br />
steps up crude palm oil recovery and<br />
reduces wastewater discharge.<br />
Our Consumer Products<br />
Besides serving our municipal and<br />
industrial clients, the Group has also<br />
incorporated both our proprietary and<br />
licensed technologies into our suite of<br />
consumer products. This ranges from<br />
the innovative “air-to-water” machine<br />
that converts moisture to pure water<br />
for indoor use, to contemporary water<br />
filtration appliances for home and<br />
office use, as well as our portable<br />
outdoor devices suitable for adventure,<br />
emergency and military use.<br />
In addition, Hyflux has also set up<br />
a joint R&D centre with Marmon<br />
Water LLC, one of the world’s largest<br />
manufacturers of residential and<br />
commercial water treatment systems.<br />
This joint venture will develop new<br />
water treatment and filtration products<br />
for the Asian market.<br />
(L-R): Leslie Chapple, Group Technology<br />
Director; Willy Yeo, AVP, Business<br />
Development<br />
Photo: Yoong Kang Chee<br />
(L-R): Cindi Ng, GM, Consumer Products;<br />
Steve Dakolios, VP & GM, Hyflux Marmon<br />
Development Pte Ltd; Michael Repasky,<br />
Product Manager, Hyflux Marmon<br />
Development Pte Ltd<br />
Photo: Yoong Kang Chee<br />
Gurgle F38<br />
PoroCep TM Dragon-fly TM Pitcher P18
Engineering,<br />
Procurement & Construction and<br />
Operations & Maintenance
Hyflux is the partner-of-choice for the entire<br />
value chain: from the onset of design to plant<br />
testing and commissioning.
38<br />
Hyflux Ltd annual report 2008<br />
EPC and O&M (cont’d)<br />
Having built and commissioned numerous plants, Hyflux has<br />
amassed invaluable in-depth experience in operating and<br />
maintaining commercial plants of various sizes and applications<br />
in different locations worldwide.<br />
Tommy Chia, Project Director, Algeria,<br />
inspecting our plant in Tlemcen.<br />
Photo: Tommy Chia<br />
Our EPC Capabilities<br />
An ISO 9001-2008 certified company,<br />
Hyflux is the partner-of-choice for<br />
the entire value chain from the<br />
onset of design to plant testing and<br />
commissioning. This enables Hyflux<br />
to shorten the design-to-product<br />
cycle while achieving a seamless and<br />
integrated process flow. At the same<br />
time, Hyflux is rapidly expanding<br />
our portfolio of renewable resources<br />
management with the oil recycling,<br />
palm oil and L-lactic acid plants as<br />
recent completions.<br />
Our water portfolio boasts a<br />
robust pipeline of more than<br />
40 plants, including the world’s<br />
largest membrane-based seawater<br />
desalination plant with a designed<br />
capacity of 500,000 m 3 /day in<br />
Magtaa, Algeria.<br />
Pilot Plants To Commissioning<br />
Hyflux has built up a core team to<br />
spearhead the upscaling of our water<br />
and liquid separation solutions on a<br />
commercial level. This typically entails<br />
the development of a pilot test plant<br />
(which includes process design,<br />
construction and testing) - either<br />
shipped to our clients’ premises or<br />
conducted in our laboratories with our<br />
clients’ approval.<br />
Testing and commissioning are the key<br />
emphasis and critical path within the<br />
EPC value chain leading up to the final<br />
stage in launching the plants. Hyflux’s<br />
specialist teams conduct guaranteed<br />
Securing Water Plants With Larger Capacities Over the Years (Designed Capacity)<br />
Langfang, China<br />
Wastewater Recycling Plant (2006)<br />
(80,000 m 3 /day)<br />
Seletar, Singapore<br />
NEWater Plant - Wastewater<br />
Recycling (2002)<br />
(40,000 m 3 /day)<br />
Bedok, Singapore<br />
NEWater Plant - Wastewater<br />
Recycling (2001)<br />
(32,000 m 3 /day)<br />
500,000 m 3 /day<br />
200,000 m 3 /day<br />
100,000<br />
m 3 /day<br />
Magtaa, Algeria<br />
Desalination Plant (2008)<br />
(500,000 m 3 /day)<br />
Tlemcen, Algeria<br />
Desalination Plant (2006)<br />
(200,000 m 3 /day)<br />
Tuas, Singapore<br />
SingSpring Desalination Plant (2003)<br />
(136,000 m 3 /day)<br />
Tianjin Dagang, China<br />
Desalination Plant (2004)<br />
(100,000 m 3 /day)
Hyflux Ltd annual report 2008 39<br />
EPC and O&M (cont’d)<br />
Full Suite of EPC and O&M Services<br />
Industry Players<br />
Design &<br />
Development<br />
(R&D)<br />
Manufacturing<br />
of Components<br />
Systems<br />
Assembly<br />
Project<br />
Management<br />
Operations &<br />
Maintenance<br />
•<br />
•<br />
•<br />
•<br />
•<br />
Engineeering<br />
Consultants<br />
Component<br />
Suppliers<br />
Project Managers<br />
System Integrators<br />
Operators<br />
TM<br />
performance and plant availability<br />
tests to ensure that the plants meet<br />
the stringent safety standards.<br />
Our Recurring O&M<br />
Earnings Base<br />
Having built and commissioned<br />
numerous plants, Hyflux has amassed<br />
invaluable in-depth experience in<br />
operating and maintaining commercial<br />
plants of various sizes and applications<br />
in different locations worldwide.<br />
Our multi-disciplinary teams,<br />
comprising experienced industry<br />
veterans, provide ongoing 24/7<br />
operations and maintenance (“O&M”)<br />
services and support to our global<br />
clients. Our ability to operate and<br />
maintain plants at optimal levels,<br />
while continuously striving for higher<br />
operational efficiencies, has won us<br />
international recognition.<br />
Our SingSpring Desalination Plant –<br />
Singapore’s first membrane-based<br />
seawater desalination facility – has<br />
achieved high levels of energy and<br />
operational efficiencies. The plant<br />
has received a Distinction Award for<br />
“Desalination Plant of the Year” at the<br />
prestigious Global Water Awards 2006.<br />
This bears testimony to our holistic<br />
approach towards design, with equally<br />
strong emphasis on life cycle cost<br />
and efficiency.<br />
O&M is now emerging as a meaningful<br />
contributor to the Group’s earnings<br />
base. We expect our O&M business<br />
to grow further as more pipeline<br />
plants are being completed. The<br />
O&M business will provide the Group<br />
with a steady and growing stream of<br />
recurring revenue as the majority of<br />
the O&M contracts are locked-in over<br />
the 20-30 year concession period.<br />
EPC and O&M<br />
Order Book<br />
Increasing EPC and<br />
O&M Order Book<br />
S$m<br />
1500<br />
1000<br />
500<br />
0<br />
166<br />
435<br />
2006 2007 2008<br />
EPC<br />
O&M*<br />
254<br />
863<br />
335<br />
1,145<br />
Divider (L-R): Bruce Sim, VP, Engineering; Gan Teck Ee, GM, Inorganic Membrane Production;<br />
Jennifer Hoalim, GM, Inorganic Membrane Production; Lee Chee Khian, Director, Corporate<br />
Commercial & Contracts<br />
Divider Photo: Yoong Kang Chee<br />
* To be recognised over the next<br />
20-30 years
Capital<br />
Management
Hyflux’s capital management mechanism allows<br />
the Group to unlock the intrinsic value of our water<br />
assets to ensure an optimal capital structure for<br />
long-term business growth.
42<br />
Hyflux Ltd annual report 2008<br />
Capital Management (cont’d)<br />
Through Hyflux Water Trust, Hyflux can recycle our capital for the<br />
Group’s business expansion.<br />
Langfang Water Recycling Plant<br />
Designed Capacity: 40,000 m 3 /day<br />
Completion: Nov 2008<br />
Hyflux’s success is also supported by<br />
our prudent capital management<br />
approach which has enabled the<br />
Group to invest and strengthen our<br />
competitive position in strategic<br />
markets such as China and Algeria.<br />
Our capital management mechanism<br />
allows the Group to unlock the intrinsic<br />
value of our water assets to ensure an<br />
optimal capital structure for long-term<br />
business growth.<br />
Capital Recycling - Hyflux<br />
Water Trust<br />
In 2007, Hyflux launched the first<br />
pure-play global water business trust<br />
– Hyflux Water Trust (“HWT”). It is a<br />
business trust listed on the Singapore<br />
Exchange Limited, sponsored by<br />
Hyflux and managed by Hyflux Water<br />
Trust Management Pte Ltd.<br />
Through HWT, Hyflux can recycle<br />
our capital for the Group’s business<br />
expansion. For investors, HWT provides<br />
a recurring and visible yielding<br />
investment option as it continues to<br />
access Hyflux’s project pipeline while<br />
leveraging on our already established<br />
network, market reach and experience,<br />
know-how, membrane technologies<br />
and Operations & Maintenance<br />
(“O&M”) expertise.<br />
Symbiotic Strength between<br />
Hyflux and HWT<br />
HWT provides investors with an<br />
opportunity to invest in water-related<br />
infrastructure assets in China, India, the<br />
MENA region, and other high-growth<br />
markets globally.<br />
The plants operate under long-term<br />
concession agreements, which give<br />
HWT exclusive rights to provide<br />
water-related services to industrial<br />
Liaoyang Wastewater Treatment Plant<br />
Designed capacity: 20,000 m 3 /day<br />
Completion: Dec 2007
Hyflux Ltd annual report 2008 43<br />
Capital Management (cont’d)<br />
Our Capital Management Model<br />
Capital Recycling<br />
Synergistic<br />
Partnerships<br />
Cost-Effective<br />
Capital Raising<br />
and municipal users in their respective<br />
concession areas. The 20-30 year<br />
concessions provide long term, steady<br />
and predictable distribution to the<br />
unitholders.<br />
HWT has certain Rights Of First Offer<br />
And First Refusal (“ROFOAR”) to<br />
purchase existing and future waterrelated<br />
infrastructure assets from<br />
Hyflux, subject to the terms and<br />
conditions in the ROFOAR Deed.<br />
At the time of printing, HWT has a<br />
portfolio of 17 plants in China across<br />
three asset types, comprising water<br />
treatment, wastewater treatment<br />
and water recycling plants - with<br />
a combined designed capacity of<br />
580,000 m 3 /day. These plants are<br />
largely located in high growth, coastal<br />
provinces in China.<br />
Strategic Investors & Joint<br />
Partnerships Fuelling Growth<br />
Another growth strategy involves<br />
forming joint ventures with local<br />
partners and municipal governments,<br />
with pre-determined project financing.<br />
For example, Hyflux entered into<br />
two synergistic partnerships for our<br />
seawater desalination projects in<br />
Algeria. The first being a15% equity<br />
partnership with KLSE-listed Malakoff<br />
Berhad and the Algeria Energy<br />
Company (“AEC”), the government<br />
company involved in handling the<br />
power and water privatisation exercise<br />
in Algeria.<br />
This synergistic Public Private<br />
Partnership enabled the Group to<br />
leverage on the municipal networks in<br />
Algeria while extending Hyflux’s global<br />
growth strategy in the municipal<br />
sector.<br />
Breakdown of<br />
membrane markets<br />
for 2009<br />
US$2.6b<br />
US$4.0b<br />
RO Systems and Modules<br />
Microfiltration (“MF”) Systems<br />
Ultrafiltration (“UF”) Systems<br />
Source: The Mcilvaine Company<br />
US$2.5b<br />
Divider (L-R): Goh Soo Fung, VP, Finance; Peggy Lim, Director, Compliance & Secretariat;<br />
Joyce Ong, Director, Accounting; Joscelyn Tan, Director, Legal (Corporate Finance)<br />
Divider Photo: Yoong Kang Chee
Sustainable<br />
Growth Model
Hyflux is well positioned to benefit from the<br />
promising growth prospects of the water sector.
46<br />
Hyflux Ltd annual report 2008<br />
Sustainable Growth Model (cont’d)<br />
The global demand for clean water offers tremendous business<br />
opportunities in the key markets we currently operate in, particularly<br />
China and Algeria.<br />
Proven business model. Sound<br />
management expertise. Technological<br />
leadership. Experienced engineering<br />
know-how. Positive macro economics.<br />
These are the key contributing factors<br />
to Hyflux’s phenomenal growth in the<br />
past 20 years.<br />
Hyflux is therefore well positioned to<br />
benefit from the promising growth<br />
prospects of the water sector.<br />
Water Industry: An Attractive<br />
Proposition<br />
According to GWI Desal Markets 2007,<br />
the projected growth of installed<br />
desalination capacity worldwide is<br />
expected to grow by 9.3% per annum<br />
to 2015.<br />
The global demand for clean<br />
water offers tremendous business<br />
opportunities in the key markets we<br />
currently operate in, particularly China<br />
and Algeria. The Chinese and Algerian<br />
Governments have implemented<br />
stimulus packages to support<br />
infrastructure developments to resolve<br />
severe water shortages.<br />
Entrenched China Presence<br />
The Chinese Government has put<br />
in place its 11th Five-Year Plan,<br />
committed to an investment of RMB<br />
Increasing Growth of Installed Desalination Capacity Worldwide<br />
• The Middle East<br />
remains the<br />
largest market for<br />
desalination<br />
• China is expected to grow to<br />
become the third largest market<br />
for desalination<br />
• The Chinese Government plans to<br />
accelerate the use of desalinated<br />
seawater during its 11th Five-Year<br />
Plan Period (2006-2010)<br />
• Expected volumes for China in the<br />
medium term are 800,000m 3 to<br />
1 million m 3 of seawater throughput<br />
per day<br />
60%<br />
• Current state of China’s water<br />
infrastructure is seen as a major<br />
limitation on its economic growth<br />
36%<br />
Asia<br />
11%<br />
Africa<br />
13%<br />
5%<br />
(
Hyflux Ltd annual report 2008 47<br />
Sustainable Growth Model (cont’d)<br />
Algeria’s Growth<br />
Potential<br />
Historical and Future<br />
Desalination Capacity<br />
2.0<br />
Our core team in China (L-R): Stephen Yee, GM, Hyflux Investment Consultancy Management Service<br />
(Tianjin) Co., Ltd (“HMC”); Gan Boon Len, GM, EPC China; Choo Wing Tai, GM, Sinolac (Huludao); Robert<br />
Lim, VP, Business Development; Gan Ying Hao, GM, HMC; Tan Yu Ming, GM, O&M, China<br />
Photos: Yoong Kang Chee, Jenson Goh<br />
1 trillion. In addition to urban needs, it<br />
aims to provide potable drinking water<br />
to all rural residents by 2010.<br />
Hyflux is one of the early pioneers<br />
in China’s water sector since 1994.<br />
Hyflux currently employs over 1,000<br />
local Chinese employees, including<br />
a dedicated network of sales and<br />
business development personnel. We<br />
have acquired in-depth knowledge of<br />
the local regulatory and commercial<br />
policies, as well as strong relations with<br />
local governments.<br />
As a result, Hyflux today, has a robust<br />
pipeline of more than 40 water and<br />
wastewater treatment, water recycling<br />
and desalination plants in 26 provinces<br />
in China.<br />
Entering the Algerian Market<br />
Hyflux entered the Algerian market<br />
in 2004.<br />
Since 2005, the Algerian Government<br />
has implemented plans to build<br />
desalination plants to meet its needs<br />
for clean water for industrial and<br />
consumer use.<br />
As one of the most water-stressed<br />
countries in the world, Algeria presents<br />
huge growth opportunities in seawater<br />
desalination for the Group.<br />
In April 2008, Hyflux won the bid –<br />
amidst intense competition from<br />
international players – to build the<br />
world’s largest membrane-based<br />
seawater desalination plant in Algeria.<br />
This landmark win has helped the<br />
Group to surge ahead in the global<br />
water landscape.<br />
Growing Presence in India<br />
We made our foray into the Indian<br />
market in 2006.<br />
Hyflux’s presence in India has also<br />
been growing steadily over the years.<br />
We have made good progress in<br />
the sale of membrane products and<br />
customised membrane solutions to<br />
major industries.<br />
Leveraging on our strength and the<br />
growing demand for clean water in<br />
India, we are also actively pursuing<br />
seawater desalination and water<br />
treatment opportunities in the country.<br />
Capcaity, million m 3 /d<br />
1.5<br />
1.0<br />
0.5<br />
0<br />
1991<br />
to<br />
1995<br />
1996<br />
to<br />
2000<br />
Proposed<br />
Contracted<br />
Source: GWI DesalData<br />
Capacity Expenditure by<br />
Technology<br />
US$3.19b<br />
Source: GWI DesalData<br />
2001 2006<br />
to onwards<br />
2005<br />
US$0.19b<br />
US$0.29b<br />
MED - Multiple Effect Distillation<br />
MSF - Multi-Stage Flash Distillation<br />
RO - Reverse Osmosis<br />
Divider (L-R): Adrian Chong, Director, Internal Audit; Kum Mun Lock, VP, Investment; Cheong Aik Hock, VP,<br />
Legal; Nah Tien Liang, Director, Investment<br />
Divider Photo: Yoong Kang Chee
Financial Statements<br />
Directors’ Report 49<br />
Statement by Directors 55<br />
Independent Auditor’s Report 56<br />
Balance Sheets 58<br />
Consolidated Income Statement 60<br />
Consolidated Statement of Changes in Equity 61<br />
Consolidated Cash Flow Statement 63<br />
Notes to the Financial Statements 65<br />
Corporate Governance Statement 119<br />
Supplementary Information 131<br />
Statistics of Shareholdings 133<br />
Substantial Shareholders 134<br />
Notice of Annual General Meeting 135<br />
Notice of Books Closure 148<br />
Hyflux Group of Companies 152<br />
Photo by Olivia Lum
Hyflux Ltd annual report 2008 49<br />
Directors’ Report<br />
We are pleased to submit this annual report to the members of the Company together with the audited financial<br />
statements for the financial year ended 31 December 2008.<br />
Directors<br />
The directors in office at the date of this report are as follows:<br />
Olivia Lum<br />
Group CEO, President and Managing Director<br />
Teo Kiang Kok<br />
Lee Joo Hai<br />
Gay Chee Cheong<br />
Christopher Murugasu<br />
Raj Mitta<br />
Professor Tan Teck Meng<br />
Ahmed Butti Ahmed (Appointed on 25 April 2008)<br />
Directors’ interests<br />
According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act),<br />
particulars of interests of directors who held office at the end of the financial year (including those held by their spouses<br />
and infant children) in shares, debentures and share options in the Company and in related corporations (other than<br />
wholly-owned subsidiaries) are as follows:<br />
Holdings in the name of Other holdings in which<br />
the director, spouse or the director is deemed<br />
infant children<br />
to have an interest<br />
Name of director and corporation in which At beginning At end At beginning At end<br />
interests are held of the year of the year of the year of the year<br />
The Company<br />
Ordinary shares<br />
Olivia Lum 124,984,141 167,484,141 52,500,000 10,000,000<br />
Gay Chee Cheong 450,000 450,000 – –<br />
Christoper Murugasu 469,375 469,375 120,000 120,000<br />
Professor Tan Teck Meng 10,000 10,000 51,000 51,000<br />
Share options<br />
Olivia Lum 5,250,000 5,250,000 – –<br />
Teo Kiang Kok 250,000 250,000 – –<br />
Lee Joo Hai 250,000 250,000 – –<br />
Gay Chee Cheong 200,000 200,000 – –<br />
Christoper Murugasu 360,937 360,937 – –
50<br />
Hyflux Ltd annual report 2008<br />
Directors’ Report (cont’d)<br />
Directors’ interests (cont’d)<br />
By virtue of Section 7 of the Act, Olivia Lum is deemed to have interests in the shares held by the Company in all its<br />
subsidiaries, at the beginning and at the end of the financial year.<br />
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,<br />
debentures or share options of the Company, or of related corporations, either at the beginning of the financial year, or<br />
date of appointment if later, or at the end of the financial year.<br />
There were no changes in any of the above-mentioned interests in the Company between the end of the financial year<br />
and 21 January 2009.<br />
Except as disclosed under the “Share Options” section of this report, neither at the end of, nor at any time during the<br />
financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the<br />
directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or<br />
any other body corporate.<br />
Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in note 43 to the financial<br />
statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by<br />
reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a<br />
member, or with a company in which he has a substantial financial interest.<br />
Share options<br />
The Hyflux Employee Share Option Scheme (the Scheme) was approved and adopted by the members of the Company<br />
at an Extraordinary General Meeting held on 27 September 2001. The Scheme provides an opportunity for employees<br />
and directors of the Company and its subsidiaries, other than substantial shareholders of the Company, to participate in<br />
the equity of the Company.<br />
On 24 November 2003, the members of the Company approved a modification to the Scheme which allowed Olivia<br />
Lum, Group CEO, President and Managing Director, a substantial shareholder of the Company, to participate in the<br />
Scheme. The maximum entitlement of Olivia Lum is 10% of the total number of shares which may be issued by the<br />
Company under the Scheme.<br />
The Scheme is administered by the Remuneration Committee, comprising five directors. It shall continue to be in force<br />
at the discretion of the Remuneration Committee for a period of 10 years from 27 September 2001. However, the period<br />
may be extended with the approval of the members of the Company and to be consistent at a general meeting of the<br />
Company and of any relevant authorities which may then be required.
Hyflux Ltd annual report 2008 51<br />
Directors’ Report (cont’d)<br />
Share options (cont’d)<br />
Details of options granted to directors of the Company pursuant to the Scheme are as follows:<br />
Aggregate options Aggregate options<br />
options granted (including exercised since Aggregate<br />
granted bonus issue) since commencement options<br />
during the commencement of of the Scheme outstanding as<br />
financial the scheme to end to end of to end of<br />
Name of director year of financial year financial year financial year<br />
Olivia Lum – 6,375,000 (1,125,000) 5,250,000<br />
Teo Kiang Kok – 250,000 – 250,000<br />
Lee Joo Hai – 250,000 – 250,000<br />
Gay Chee Cheong – 200,000 – 200,000<br />
Christopher Murugasu – 862,500 (501,563) 360,937<br />
Total – 7,937,500 (1,626,563) 6,310,937<br />
Except as disclosed in this report, since the commencement of the Scheme to the end of the financial year:<br />
•<br />
•<br />
•<br />
•<br />
•<br />
No options have been granted to the controlling shareholders of the Company and their associates;<br />
No participant has received 5% or more of the options available under the Scheme;<br />
No options have been granted to directors and employees of the holding company and its subsidiaries;<br />
No options that entitle the holder to participate, by virtue of the options, in any share issue of any other corporation<br />
have been granted; and<br />
The exercise price of the options is set at the market price, as defined in the Scheme, at the time of grant. No options<br />
have been granted as a discount.
52<br />
Hyflux Ltd annual report 2008<br />
Directors’ Report (cont’d)<br />
Share options (cont’d)<br />
At the end of the financial year, details of the options granted under the scheme on the unissued ordinary shares of the Company, are as follows:<br />
Option No of holders<br />
Date of grant Balance as at Options lapsed/ Options Balance as at as at Exercise<br />
of options 01/01/2008 granted forfeited exercised 31/12/2008 31/12/2008 price Exercise period<br />
$<br />
15/10/2001 488,562 – (938) (163,000) 324,624 54 0.2688 15/10/2002 – 27/09/2011<br />
11/01/2002 750 – – – 750 1 0.4123 11/01/2003 – 27/09/2011<br />
28/03/2002 26,906 – – – 26,906 2 0.5436 28/03/2003 – 27/09/2011<br />
08/04/2002 8,750 – – – 8,750 1 0.5401 08/04/2003 – 27/09/2011<br />
08/07/2002 750 – – – 750 1 0.5664 08/07/2003 – 27/09/2011<br />
01/08/2002 1,125 – – – 1,125 1 0.5888 01/08/2003 – 27/09/2011<br />
16/09/2002 875 – (875) – – – 0.4869 16/09/2003 – 27/09/2011<br />
07/01/2003 193,500 – – (168,000) 25,500 4 0.5995 07/01/2004 – 27/09/2011<br />
07/04/2003 149,750 – – (37,000) 112,750 3 0.7253 07/04/2004 – 27/09/2011<br />
16/10/2003 731,500 – – (180,000) 551,500 9 1.0581 16/10/2004 – 27/09/2011<br />
08/12/2003 1,050,000 – – – 1,050,000 2 1.0197 08/12/2004 – 27/09/2011<br />
29/12/2003 445,500 – (4,500) (100,000) 341,000 14 1.0627 29/12/2004 – 27/09/2011<br />
14/05/2004 240,000 – – (120,000) 120,000 1 0.9600 14/05/2005 – 27/09/2011<br />
07/02/2005 2,585,000 – (116,000) (282,000) 2,187,000 37 1.8600 07/02/2006 – 27/09/2011<br />
03/05/2005 180,000 – (180,000) – – – 2.3227 03/05/2006 – 27/09/2011<br />
09/05/2005 4,500,000 – – – 4,500,000 1 2.3067 09/05/2006 – 27/09/2011<br />
01/06/2005 45,000 – (18,000) (9,000) 18,000 1 2.5493 01/06/2006 – 27/09/2011<br />
08/06/2005 45,000 – – (18,000) 27,000 1 2.6507 08/06/2006 – 27/09/2011<br />
28/03/2006 1,848,000 – (220,000) (396,000) 1,232,000 13 2.6620 28/03/2007 – 27/09/2011<br />
18/10/2006 1,600,000 – (400,000) (140,000) 1,060,000 3 2.3620 18/10/2007 – 27/09/2011<br />
07/12/2006 3,056,000 – (284,000) (238,000) 2,534,000 57 2.3720 07/12/2007 – 27/09/2011<br />
05/04/2007 730,000 – (300,000) (20,000) 410,000 4 2.6240 05/04/2008 – 27/09/2011<br />
23/05/2007 980,000 – (80,000) (20,000) 880,000 4 2.6080 23/05/2008 – 27/09/2011<br />
25/09/2007 3,430,000 – (490,000) – 2,940,000 35 2.7920 25/09/2008 – 27/09/2011<br />
26/05/2008 – 3,610,000 (210,000) – 3,400,000 62 3.6280 26/05/2009 – 27/09/2011<br />
31/10/2008 – 6,995,000 – – 6,995,000 113 1.4720 31/10/2009 – 27/09/2011<br />
22,336,968 10,605,000 (2,304,313) (1,891,000) 28,746,655 424
Hyflux Ltd annual report 2008 53<br />
Directors’ Report (cont’d)<br />
Warrants<br />
By a Warrant Subscription Agreement dated 23 November 2004 supplemented by a Supplemental Warrant Subscription<br />
Agreement dated 25 April 2008 (Agreements) entered into between the Company and Istithmar World PJSC (formerly<br />
known as Istithmar PJSC) (Istithmar), Istithmar is entitled to subscribe for 41,216,863 ordinary shares in the Company,<br />
subject to the terms and conditions of the Agreements and the Warrant Instrument. The exercise period is from April 2008<br />
to April 2010.<br />
The exercise price is equivalent to the higher of (a) S$1.95 and (b) the lower of 70% of the volume-weighted average price<br />
for trades in the Company’s shares transacted on the Singapore Exchange on the market day immediately preceding the<br />
exercise date or in the 30 calendar day period immediately preceding the exercise date.<br />
Audit Committee<br />
The members of the Audit Committee during the year and at the date of this report are:<br />
Lee Joo Hai<br />
Gay Chee Cheong<br />
Teo Kiang Kok<br />
Professor Tan Teck Meng<br />
(Chairman)<br />
The members of the Audit Committee, collectively, have expertise and extensive experience in legal, accounting, financial<br />
management and business, and are qualified to discharge the Audit Committee’s responsibilities.<br />
The primary functions of the Audit Committee are as follows:<br />
1. assists the Board in discharging its statutory responsibilities on financial and accounting matters;<br />
2. reviews the financial and operating results and accounting policies of the Group;<br />
3. reviews significant financial reporting issues and judgements relating to financial statements for each financial year,<br />
interim and annual results announcement before submission to the Board for approval;<br />
4. reviews the adequacy of the Company’s internal control (financial and operational) and risk management policies<br />
and systems established by the Management;<br />
5. reviews the audit plans and reports of the external and internal auditors and consider the effectiveness of the<br />
actions taken by the Management on the auditors’ recommendations;<br />
6. appraises and report to the Board on the audits undertaken by the external and internal auditors, the adequacy of the<br />
disclosure of information, and the appropriateness and quality of the system of management and internal controls;<br />
7. reviews the independence of external auditors annually and consider the appointment or re-appointment of<br />
external auditors and matters relating to the resignation or removal of the auditors and approve the remuneration<br />
and terms of engagement of the external auditors; and<br />
8. reviews interested person transactions, as defined in the Listing Manual of the SGX-ST.
54<br />
Hyflux Ltd annual report 2008<br />
Directors’ Report (cont’d)<br />
Audit Committee (cont’d)<br />
The Audit Committee has held 4 meetings since the last directors’ report. In fulfilling its responsibilities, the Audit<br />
Committee receives regular reports from the Management and the external auditors, KPMG LLP. The Audit Committee<br />
has full access to and co-operation of the Management and meets with KPMG LLP in private at least once a year, and<br />
more frequently, if necessary.<br />
The Audit Committee has explicit authority within the scope of its responsibilities to seek any information it requires<br />
or investigate any matter within its terms of reference. The Audit Committee has adequate resources to enable it to<br />
discharge its responsibilities properly.<br />
The Group has put in place a confidential communication programme as endorsed by the Audit Committee. Employees<br />
may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other<br />
matters and to ensure that arrangements are in place for the independent investigations of such matters and for<br />
appropriate follow up actions. The details of the confidential communication policies and arrangements have been<br />
made available to all employees.<br />
The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended<br />
to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming<br />
Annual General Meeting of the Company.<br />
The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.<br />
On behalf of the Board of Directors<br />
Olivia Lum<br />
Director<br />
Teo Kiang Kok<br />
Director<br />
10 March 2009
Hyflux Ltd annual report 2008 55<br />
Statement by Directors<br />
In our opinion:<br />
(a)<br />
the financial statements set out on pages 58 to 118 are drawn up so as to give a true and fair view of the state of<br />
affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows<br />
of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act,<br />
Chapter 50 and Singapore Financial Reporting Standards; and<br />
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts<br />
as and when they fall due.<br />
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.<br />
On behalf of the Board of Directors<br />
Olivia Lum<br />
Director<br />
Teo Kiang Kok<br />
Director<br />
10 March 2009
56<br />
Hyflux Ltd annual report 2008<br />
Independent Auditors’ Report<br />
Members of the Company<br />
Hyflux Ltd<br />
We have audited the financial statements of Hyflux Ltd (the Company) and its subsidiaries (the Group), which comprise<br />
the balance sheets of the Group and the Company as at 31 December 2008, the income statement, statement of<br />
changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant<br />
accounting policies and other explanatory notes, as set out on pages 58 to 118. The financial statements for the year<br />
ended 31 December 2007 were audited by another firm of Certified Public Accountants whose report dated 14 March<br />
2008 expressed an unmodified opinion on those financial statements.<br />
Management’s responsibility for the financial statements<br />
Management is responsible for the preparation and fair presentation of these financial statements in accordance with<br />
the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This<br />
responsibility includes:<br />
(a)<br />
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that<br />
assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised<br />
and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and<br />
balance sheets and to maintain accountability of assets;<br />
(b) selecting and applying appropriate accounting policies; and<br />
(c)<br />
making accounting estimates that are reasonable in the circumstances.<br />
Auditors’ responsibility<br />
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our<br />
audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical<br />
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are<br />
free from material misstatement.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial<br />
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material<br />
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor<br />
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order<br />
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion<br />
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting<br />
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall<br />
presentation of the financial statements.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Hyflux Ltd annual report 2008 57<br />
Independent Auditors’ Report (cont’d)<br />
Members of the Company<br />
Hyflux Ltd<br />
Opinion<br />
In our opinion:<br />
(a)<br />
the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in<br />
accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of<br />
the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and<br />
cash flows of the Group for the year ended on that date; and<br />
(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries<br />
incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions<br />
of the Act.<br />
KPMG LLP<br />
Public Accountants and<br />
Certified Public Accountants<br />
Singapore<br />
10 March 2009
58<br />
Hyflux Ltd annual report 2008<br />
Balance Sheets<br />
As at 31 December 2008<br />
Group<br />
company<br />
note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current assets<br />
Property, plant and equipment 3 56,857 62,573 8 7,612<br />
Intangible assets 4 66,523 40,499 1,826 4,182<br />
Investment property 5 2,244 2,373 – –<br />
Investments in subsidiaries 6 – – 131,073 134,377<br />
Investment in joint venture 7 – – 2,375 1,125<br />
Investments in associates 8 94,716 85,783 12,608 12,277<br />
Long-term investments 9 908 7,917 899 899<br />
Financial and lease receivables 10 194,204 9,570 – –<br />
Lease prepayments 11 4,939 – – –<br />
Trade receivables 12 2,872 – – –<br />
Due from related parties (non-trade) 13 36,326 – 19,832 18,833<br />
Deferred tax assets 14 2,799 1,218 – –<br />
462,388 209,933 168,621 179,305<br />
Current assets<br />
Gross amounts due for contract work 15 93,987 93,257 – 9,527<br />
Inventories 16 33,827 20,641 – 17,498<br />
Financial and lease receivables 10 3,248 187 – –<br />
Trade receivables 12 41,017 46,110 16 1,148<br />
Other receivables and deposits 17 41,313 34,773 1,574 3,377<br />
Prepayments 1,868 3,549 913 1,327<br />
Due from related parties (trade) 18 43,939 15,216 19,605 22,673<br />
Due from related parties (non-trade) 13 23,394 4,787 339,969 155,412<br />
Cash and fixed deposits 19 90,740 121,047 18,242 6,074<br />
Assets classified as held for sale 20 10,834 – – –<br />
384,167 339,567 380,319 217,036<br />
Current liabilities<br />
Trade payables 214,651 55,022 26 1,172<br />
Other payables and accruals 21 22,252 17,747 4,208 3,304<br />
Progress payments from customers 13,343 25,989 – 2,080<br />
Interest-bearing loans and borrowings 22 50,245 5,245 49,524 5,000<br />
Finance lease liabilities 22 99 104 – –<br />
Due to related parties (trade) 23 6,458 – 58 845<br />
Due to related parties (non-trade) 24 11,530 1,796 114,590 36,741<br />
Tax payable 5,925 202 – –<br />
Liabilities classified as held for sale 20 1 – – –<br />
324,504 106,105 168,406 49,142<br />
Net current assets 59,663 233,462 211,913 167,894<br />
The accompanying notes form an integral part of these financial statements.
Hyflux Ltd annual report 2008 59<br />
Balance Sheets (cont’d)<br />
As at 31 December 2008<br />
Group<br />
company<br />
note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current liabilities<br />
Interest-bearing loans and borrowings 22 207,819 193,266 206,170 190,596<br />
Finance lease liabilities 22 73 187 – –<br />
Deferred tax liabilities 14 6,260 2,875 159 159<br />
214,152 196,328 206,329 190,755<br />
Net assets 307,899 247,067 174,205 156,444<br />
Equity attributable to<br />
equity holders of the Company<br />
Share capital 25 99,118 95,820 99,118 95,820<br />
Capital reserve 26 7,204 1,064 – –<br />
Foreign currency translation reserve 27 9,257 (1,815) – –<br />
Hedging reserve 28 (13,496) (4,222) – –<br />
Employee share option reserve 29 12,971 9,419 12,971 9,419<br />
Accumulated profits 182,493 139,506 62,116 51,205<br />
297,547 239,772 174,205 156,444<br />
Minority interests 10,352 7,295 – –<br />
Total equity 307,899 247,067 174,205 156,444<br />
The accompanying notes form an integral part of these financial statements.
60<br />
Hyflux Ltd annual report 2008<br />
Consolidated Income Statement<br />
Year ended 31 December 2008<br />
note 2008 2007<br />
$’000 $’000<br />
Revenue 30 554,224 192,786<br />
Changes in inventories of finished goods and work-in-progress 3,710 1,246<br />
Raw materials and consumables (387,767) (107,244)<br />
Personnel expenses (52,606) (33,852)<br />
Depreciation, amortisation and impairment (9,718) (7,198)<br />
Finance income 31 4,770 2,548<br />
Finance expenses 32 (10,222) (8,878)<br />
Fair value loss on derivative financial instruments (680) (3,532)<br />
Share of (loss)/profit of associates, net of tax (1,400) 1,277<br />
Other operating expenses (30,388) (9,369)<br />
Other income 494 108<br />
Gain on sale of partial interest in a joint venture 38 – 8,185<br />
Net loss on sale of property, plant and equipment (42) (4)<br />
Negative goodwill arising on acquisition of a subsidiary 37 – 2,620<br />
Profit before taxation 33 70,375 38,693<br />
Taxation 34 (8,157) (2,048)<br />
Profit for the year 62,218 36,645<br />
Attributable to:<br />
Equity holders of the Company 59,036 32,949<br />
Minority interests 3,182 3,696<br />
62,218 36,645<br />
Earnings per share (cents)<br />
Basic earnings per share 35 11.25 6.32<br />
Diluted earnings per share 35 10.99 6.23<br />
The accompanying notes form an integral part of these financial statements.
Hyflux Ltd annual report 2008 61<br />
Consolidated Statement of Changes in Equity<br />
Year ended 31 December 2008<br />
T total<br />
attributable<br />
Foreign employee to equity<br />
currency share holders<br />
S share Capital translation Hedging option Accumulated of the Minority Total<br />
Group capital reserve reserve reserve reserve profits Company interests equity<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
At 1 January 2008 95,820 1,064 (1,815) (4,222) 9,419 139,506 239,772 7,295 247,067<br />
Net fair value loss on derivative<br />
financial instruments – – – (406) – – (406) – (406)<br />
Cash flow hedges<br />
– Foreign currency exchange losses – – – (9,885) – – (9,885) – (9,885)<br />
– Transfer to income statement – – – 1,017 – – 1,017 – 1,017<br />
Foreign currency translation differences – – 11,072 – – – 11,072 484 11,556<br />
Net income/(expense) recognised<br />
directly in equity – – 11,072 (9,274) – – 1,798 484 2,282<br />
Profit for the year – – – – – 59,036 59,036 3,182 62,218<br />
Total recognised income/(expense)<br />
for the year – – 11,072 (9,274) – 59,036 60,834 3,666 64,500<br />
Issue of shares for cash under<br />
Employee Share Option Scheme 3,298 – – – – – 3,298 – 3,298<br />
Cost of share-based payment – – – – 3,552 – 3,552 – 3,552<br />
Transfer to capital reserve – 6,140 – – – (6,140) – – –<br />
Dividends – – – – – (9,909) (9,909) – (9,909)<br />
Dividends paid to minority shareholders – – – – – – – (609) (609)<br />
At 31 December 2008 99,118 7,204 9,257 (13,496) 12,971 182,493 297,547 10,352 307,899<br />
The accompanying notes form an integral part of these financial statements.
62<br />
Hyflux Ltd annual report 2008<br />
Consolidated Statement of Changes in Equity (cont’d)<br />
Year ended 31 December 2008<br />
T total<br />
attributable<br />
Foreign employee to equity<br />
currency share holders<br />
S share Capital translation Hedging option Accumulated of the Minority Total<br />
Group capital reserve reserve reserve reserve profits Company interests equity<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
At 1 January 2007 91,142 987 (4,550) (7,839) 6,288 113,573 199,601 18,465 218,066<br />
Recognised in income statement on<br />
maturity of financial instruments – – – 3,617 – – 3,617 – 3,617<br />
Foreign currency translation differences – – 2,735 – – – 2,735 33 2,768<br />
Net income recognised<br />
directly in equity – – 2,735 3,617 – – 6,352 33 6,385<br />
Profit for the year – – – – – 32,949 32,949 3,696 36,645<br />
Total recognised income for the year – – 2,735 3,617 – 32,949 39,301 3,729 43,030<br />
Issue of shares for cash under<br />
Employee Share Option Scheme 4,678 – – – – – 4,678 – 4,678<br />
Cost of share-based payment – – – – 3,131 – 3,131 – 3,131<br />
Transfer to capital reserve – 77 – – – – 77 – 77<br />
Acquisition of minority interest – – – – – – – (14,899) (14,899)<br />
Dividends – – – – – (7,016) (7,016) – (7,016)<br />
At 31 December 2007 95,820 1,064 (1,815) (4,222) 9,419 139,506 239,772 7,295 247,067<br />
The accompanying notes form an integral part of these financial statements.
Hyflux Ltd annual report 2008 63<br />
Consolidated Cash Flow Statement<br />
Year ended 31 December 2008<br />
note 2008 2007<br />
$’000 $’000<br />
Operating activities<br />
Profit before taxation 70,375 38,693<br />
Adjustments for:<br />
Cost of share-based payment 3,552 3,131<br />
Fair value loss on derivative financial instruments 680 3,532<br />
Gain on sale of partial interest in a joint venture – (8,185)<br />
Net loss on sale of property, plant and equipment 42 4<br />
Share of loss/(profit) of associates 1,400 (1,277)<br />
Depreciation, amortisation and impairment 9,718 7,198<br />
Finance expenses 10,222 8,878<br />
Finance Income (4,770) (2,548)<br />
Negative goodwill arising on acquisition of a subsidiary – (2,620)<br />
Impairment of trade and other receivables 3,088 45<br />
Provision for inventory obsolescence and inventory written down 366 657<br />
Goodwill arising from acquisition of interests from minority interests written off – 242<br />
Operating cash flows before working capital changes 94,673 47,750<br />
Changes in working capital:<br />
Inventories (13,543) (10,105)<br />
Gross amounts due for contract work (730) (44,834)<br />
Trade receivables 241 (12,925)<br />
Finance and lease receivables (169,044) 65,261<br />
Lease prepayments (909) –<br />
Other receivables, deposits and prepayments (7,744) (13,572)<br />
Due from related parties (trade) (23,300) (2,153)<br />
Trade payables 159,629 20,165<br />
Other payables and accruals 4,506 4,341<br />
Progress payments from customers (12,646) 22,631<br />
Derivative financial instruments – 111<br />
Cash generated from operations 31,133 76,670<br />
Income taxes paid (1,276) (2,138)<br />
Cash flows from operating activities 29,857 74,532<br />
The accompanying notes form an integral part of these financial statements.
64<br />
Hyflux Ltd annual report 2008<br />
Consolidated Cash Flow Statement (cont’d)<br />
Year ended 31 December 2008<br />
note 2008 2007<br />
$’000 $’000<br />
Investing activities<br />
Purchase of property, plant and equipment (18,792) (30,393)<br />
Acquisition of intangible assets (30,006) (278)<br />
Acquisition of a subsidiary, net of cash acquired 37 – (36,012)<br />
Acquisition of associates (5,869) (90,949)<br />
Acquisition of long-term investments – (1,919)<br />
Sale of partial interest in a joint venture, net of cash disposed of 38 – 16,059<br />
Proceeds from sale of property, plant and equipment 791 78<br />
Dividend received from associates 2,451 1,158<br />
Due from related parties (non-trade) (45,199) –<br />
Interest received 4,770 2,047<br />
Cash flows from investing activities (91,854) (140,209)<br />
Financing activities<br />
Proceeds from issuance of new shares under Employee Share Option Scheme 3,298 4,678<br />
Proceeds from borrowings 100,510 168,291<br />
Repayment of borrowings (49,825) (27,532)<br />
Repayment of finance lease liabilities (119) (286)<br />
Interest paid (12,100) (8,878)<br />
Interest received from derivatives – 501<br />
Dividends paid to equity holders of the Company (9,909) (7,016)<br />
Dividends paid to minority interests of subsidiaries (609) –<br />
Cash flows from financing activities 31,246 129,758<br />
Net (decrease)/increase in cash and cash equivalents (30,751) 64,081<br />
Cash and cash equivalents at beginning of year 121,047 55,827<br />
Effect of exchange rate changes 1,184 1,139<br />
Cash and cash equivalents at end of year 19 91,480 121,047<br />
The accompanying notes form an integral part of these financial statements.
Hyflux Ltd annual report 2008 65<br />
Notes to the Financial Statements<br />
As at 31 December 2008<br />
These notes form an integral part of the financial statements.<br />
The financial statements were authorised for issue by the Board of Directors on 10 March 2009.<br />
1 Domicile and activities<br />
Hyflux Ltd (the Company) is incorporated in the Republic of Singapore and has its registered office at 202 Kallang<br />
Bahru, Singapore 339339.<br />
The principal activities of the Company are those relating to investment holding. The Company’s principal activities<br />
relating to the manufacturing of membrane systems were transferred to a subsidiary on 1 January 2008.<br />
The principal activities of its subsidiaries comprise the following:<br />
Water<br />
– Seawater desalination, raw water purification, wastewater cleaning, water recycling, water reclamation and ultra<br />
pure water production for municipal and industrial clients as well as home consumer filtration and purification<br />
products; and<br />
– Design, build and sale of water treatment plants, wastewater treatment plants and water recycling plants<br />
under concession arrangements.<br />
Renewable Resources Management<br />
– Development of membrane applications in resource recovery, waste recycling and energy reclamation,<br />
including applications such as used oil recovery and recycling.<br />
– Development and commercialisation of specialty materials, such as L-lactic acid from natural renewable resources.<br />
– Separation, concentration and purification treatments for manufacturing process streams.<br />
The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group)<br />
and the Group’s interests in associates and joint venture.<br />
2 Summary of significant accounting policies<br />
2.1 Basis of preparation<br />
The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).<br />
The financial statements have been prepared on the historical cost basis except where otherwise described in<br />
the accounting policies below.<br />
The financial statements are presented in Singapore dollars which is the Company’s functional currency.<br />
The functional currency of its principal subsidiaries is Chinese Reminbi. All financial information presented in<br />
Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.<br />
The preparation of financial statements in conformity with FRS requires management to make judgements,<br />
estimates and assumptions that affect the application of accounting policies and the reported amounts of<br />
assets, liabilities, income and expenses. Actual results may differ from these estimates.<br />
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates<br />
are recognised in the period in which the estimate is revised and in any future periods affected.
66<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.1 Basis of preparation (cont’d)<br />
Information about significant areas of estimation uncertainty and critical judgements in applying accounting<br />
policies that have the most significant effect on the amount recognised in the financial statements are<br />
described in note 44.<br />
There were no changes in accounting policies during the year.<br />
The accounting policies used by the Group have been applied consistently to all periods presented in these<br />
financial statements.<br />
2.2 Consolidation<br />
Business combinations<br />
Business combinations are accounted for under the purchase method. The cost of an acquisition is measured<br />
at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of<br />
exchange, plus costs directly attributable to the acquisition.<br />
The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent<br />
liabilities over the cost of acquisition is credited to income statement in the period of the acquisition.<br />
Subsidiaries<br />
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the<br />
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,<br />
potential voting rights presently exercisable are taken into account. The financial statements of subsidiaries are<br />
included in the consolidated financial statements from the date that control commences until the date that<br />
control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with<br />
the policies adopted by the Group.<br />
Joint ventures<br />
Joint ventures are those entities over whose activities the Group has joint control, established by contractual<br />
agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are<br />
accounted for using proportionate consolidation. The financial statements of joint ventures are proportionately<br />
consolidated from the date that joint control commences until the date that joint control ceases. Adjustments<br />
have been made to the financial statements of joint ventures to align their accounting policies with those<br />
adopted by the Group.
Hyflux Ltd annual report 2008 67<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.2 Consolidation (cont’d)<br />
Associates<br />
Associates are those entities in which the Group has significant influence, but not control, over their financial<br />
and operating policies. Significant influence is presumed to exist when the Group holds between 20% and<br />
50% of voting power of another entity. When the Group holds more than 50% of the voting power of another<br />
entity, the entity is considered an associate if control is intended to be temporary, which must be evidenced by<br />
the intention to dispose of it within twelve months from acquisition date and management is actively seeking<br />
a buyer. Associates are accounted for using the equity method. The consolidated financial statements include<br />
the Group’s share of the income, expenses and equity movements of associates after adjustments to align the<br />
accounting policies with those of the Group, from the date that significant influence commences until the<br />
date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the<br />
carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition<br />
of further losses is discontinued except to the extent that the Group has an obligation or has made payments<br />
on behalf of the investee.<br />
Transactions eliminated on consolidation<br />
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group<br />
transactions, are eliminated in preparing the consolidated financial statements.<br />
Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest<br />
in the joint ventures. Unrealised losses are eliminated in the same way as unrealised gains except that losses are<br />
recognised immediately when they represent a reduction in the net realisable value of assets or an impairment<br />
loss. Balances with joint ventures are eliminated to the extent of the Group’s interest in the joint ventures.<br />
Unrealised gains arising from transactions with associates are eliminated against the investment to the extent<br />
of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains,<br />
but only to the extent that there is no evidence of impairment.<br />
Accounting for subsidiaries, joint ventures and associates by the Company<br />
Investments in subsidiaries, joint ventures and associates are stated in the Company’s balance sheet at cost less<br />
accumulated impairment losses.<br />
2.3 Foreign currencies<br />
Foreign currency transactions<br />
Transactions in foreign currencies are translated to the respective functional currencies of Group entities<br />
at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign<br />
currencies at the reporting date are retranslated to the functional currency at the exchange rate at the<br />
reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at<br />
fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value<br />
was determined.<br />
Foreign currency differences arising on retranslation are recognised in the income statement, except for<br />
differences arising on the retranslation of monetary items that in substance form part of the Group’s net<br />
investment in a foreign operation (see below), available-for-sale equity instruments and financial liabilities<br />
designated as hedges of highly probable forecasted transactions (see note 2.7).
68<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.3 Foreign currencies (cont’d)<br />
Foreign operations<br />
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing<br />
at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at<br />
exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the<br />
acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign<br />
operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the<br />
date of acquisition were used.<br />
Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign<br />
operation is disposed of, in part or in full, the relevant amount in the foreign exchange translation reserve is<br />
transferred to the income statement.<br />
Net investment in a foreign operation<br />
Exchange differences arising from monetary items that in substance form part of the Company’s net investment<br />
in a foreign operation are recognised in the Company’s income statement. Such exchange differences are<br />
reclassified to equity in the consolidated financial statements. When the foreign operation is disposed of, the<br />
cumulative amount in equity is transferred to the income statement as an adjustment to the profit or loss<br />
arising on disposal.<br />
2.4 Property, plant and equipment<br />
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.<br />
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed<br />
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the<br />
asset to a working condition for its intended use, and the cost of dismantling and removing the items and<br />
restoring the site on which they are located. Purchased software that is integral to the functionality of the<br />
related equipment is capitalised as part of that equipment.<br />
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as<br />
separate items (major components) of property, plant and equipment.<br />
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount<br />
of the item if it is probable that the future economic benefits embodied within the part will flow to the Group<br />
and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment<br />
are recognised in the income statement as incurred.<br />
Property, plants and equipment under construction are not depreciated. Depreciation on other property, plant<br />
and equipment is recognised in the income statement on a straight-line basis over their estimated useful lives<br />
(or lease term, if shorter) of each part of an item of property, plant and equipment.<br />
The estimated useful lives are as follows:<br />
Plant and machinery – 4 to 10 years<br />
Motor vehicles – 4 to 5 years<br />
Computers – 1 to 5 years<br />
Office equipment – 4 to 5 years<br />
Leasehold properties and improvements – 4 to 5 years or over the lease period<br />
Furniture and fittings – 4 to 5 years<br />
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each<br />
reporting date.
Hyflux Ltd annual report 2008 69<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.5 Intangible assets<br />
Goodwill<br />
Goodwill and negative goodwill arise on the acquisition of subsidiaries, joint ventures and associates.<br />
Acquisitions prior to 1 January 2001<br />
Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the<br />
identifiable assets and liabilities of the acquiree.<br />
Goodwill and negative goodwill on acquisitions were written off against accumulated profits in the year<br />
of acquisition.<br />
Goodwill and negative goodwill that have previously been taken to reserves are not taken to the income<br />
statement when (a) the business is disposed of or (b) the goodwill is impaired.<br />
Acquisitions occurring between 1 January 2001 and 1 January 2005<br />
Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the<br />
identifiable assets and liabilities of the acquiree.<br />
Goodwill arising on the acquisition of subsidiaries and joint ventures is presented in intangible assets. Goodwill<br />
arising on the acquisition of associates is presented together with investments in associates.<br />
Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of not<br />
more than 20 years. On 1 January 2005, the Group discontinued amortisation of this goodwill. This remaining<br />
goodwill balance is subject to testing for impairment, as described in note 2.9.<br />
Negative goodwill was derecognised by crediting accumulated profits on 1 January 2005.<br />
Acquisitions on or after 1 January 2005<br />
Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the<br />
identifiable assets, liabilities and contingent liabilities of the acquiree.<br />
Goodwill arising on the acquisition of subsidiaries and joint ventures is presented in intangible assets. Goodwill<br />
arising on the acquisition of associates is presented together with investments in associates.<br />
Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as<br />
described in note 2.9. Negative goodwill is recognised immediately in the income statement.<br />
Acquisition of minority interest<br />
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the<br />
additional investment over the carrying amount of the net assets acquired at the date of exchange.
70<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.5 Intangible assets (cont’d)<br />
Research and development costs<br />
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge<br />
and understanding, is recognised in the income statement as an expense when it is incurred.<br />
Development activities involve a plan or design for the production of new or substantially improved products<br />
and processes. Development expenditure is capitalised only if development costs can be measured reliably,<br />
the products or process is technically and commercially feasible, future economic benefits are probable, and<br />
the Group intends to and has sufficient resources to complete development and to use or sell the asset.<br />
The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly<br />
attributable to preparing the asset for its intended use. Other development expenditure is recognised in the<br />
income statement as an expense when it is incurred.<br />
Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.<br />
Amortisation is charged to the income statement using the straight-line method over the estimated useful lives<br />
of not more than 15 years, from the date on which they are available for use.<br />
Capitalised development expenditure that is not available for use is reviewed for impairment annually or as and<br />
when indicators of impairment are identified as described in note 2.9.<br />
Other intangible assets<br />
Other intangible assets with finite useful lives are measured at cost less accumulated amortisation and<br />
impairment losses. They are amortised in the income statement on a straight-line basis over their estimated<br />
useful lives ranging from 10 to 20 years, from the date on which they are available for use.<br />
Other intangible assets that are not available for use are tested for impairment annually or as and when indicators<br />
of impairment are identified as described in note 2.9.<br />
Subsequent expenditure<br />
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic<br />
benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.<br />
2.6 Investment properties<br />
Investment properties are properties held either to earn rental income or capital appreciation or both. They do<br />
not include properties for sale in the ordinary course of business, used in the production or supply of goods or<br />
services, or for administrative purposes.<br />
Investment properties are measured at cost less accumulated depreciation and impairment losses. Rental<br />
income from investment properties is accounted for in the manner described in note 2.14.<br />
Depreciation on investment properties is recognised in the income statement on a straight-line basis over the<br />
lease terms.<br />
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each<br />
reporting date.
Hyflux Ltd annual report 2008 71<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.7 Financial instruments<br />
Non-derivative financial instruments<br />
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables,<br />
cash and cash equivalents, financial liabilities, and trade and other payables.<br />
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair<br />
value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition,<br />
non-derivative financial instruments are measured as described below.<br />
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument.<br />
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire<br />
or if the Group transfers the financial asset to another party without retaining control or transfers substantially all<br />
the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade<br />
date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if<br />
the Group’s obligations specified in the contract expire or are discharged or cancelled.<br />
Cash and cash equivalents comprise cash balances and bank deposits.<br />
Available-for-sale financial assets<br />
The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to<br />
initial recognition, they are measured at fair value and changes therein, other than for impairment losses, are<br />
recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is<br />
transferred to the income statement.<br />
Where an investment in equity security classified as available-for-sale does not have a quoted market price<br />
in an active market and other methods of determining fair value do not result in a reasonable estimate, the<br />
investment is measured at cost less impairment losses.<br />
Others<br />
Other non-derivative financial instruments are measured at amortised cost using the effective interest method,<br />
less any impairment losses.<br />
Derivative financial instruments<br />
Derivative financial instruments are held to hedge its foreign currency and interest rate risk exposures.<br />
Embedded derivatives are separated from the host contract and accounted for separately if the economic<br />
characteristics and risks of the host contract and the embedded derivative are not closely related, a separate<br />
instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the<br />
combined instrument is not measured at fair value through profit or loss.<br />
Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised<br />
in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair<br />
value, and changes therein recognised immediately in the income statement. However, where derivatives<br />
qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being<br />
hedged as described below.
72<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.7 Financial instruments (cont’d)<br />
Hedging<br />
Cash flow hedges<br />
Changes in the fair value of a derivative hedging instrument designated as a cash flow hedge are recognised<br />
directly in the equity to the extent that the hedge is effective. To the extent that the hedge is ineffective,<br />
changes in fair value are recognised in the income statement.<br />
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or<br />
exercised, hedge accounting is discontinued prospectively. The comulative gain or loss previously recognised<br />
in the equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset,<br />
the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In<br />
other cases, the amount recognised in equity is transferred to the income statement in the same period that<br />
the hedged item affects profit or loss.<br />
Changes in the fair value of a non-derivative financial instrument designated as a cash flow hedge of foreign<br />
currency risk exposures are accounted for in the same manner as a derivative hedging instrument designated<br />
as a cash flow hedge where it qualifies for hedge accounting.<br />
Fair value hedges<br />
Changes in fair value of a derivative hedging instrument designated as a fair value hedge are recognised in the<br />
income statement. The hedged item also is stated at fair value in respect of the risk being hedged; the gain<br />
or loss attributable to the hedged risk is recognised in the income statement and the carrying amount of the<br />
hedged item is adjusted.<br />
Economic hedges<br />
Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and<br />
liabilities dominated in foreign currencies. Changes in the fair value of such derivatives are recognised in the<br />
income statement as part of foreign currency gains and losses.<br />
Impairment of financial assets<br />
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that<br />
it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more<br />
events have had a negative effect on the estimated future cash flows of that asset.<br />
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference<br />
between its carrying amount and the present value of the estimated future cash flows discounted at the<br />
original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated<br />
by reference to its current fair value.<br />
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial<br />
assets are assessed collectively in groups that share similar credit risk characteristics.<br />
All impairment losses are recognised in the income statement. Any cumulative loss in respect of an availablefor-sale<br />
financial asset recognised previously in equity is transferred to the income statement.<br />
Impairment losses in respect of financial assets measured at amortised cost are reversed if the subsequent<br />
increase in fair value can be related objectively to an event occurring after the impairment loss was recognised.
Hyflux Ltd annual report 2008 73<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.7 Financial instruments (cont’d)<br />
Impairment of financial assets (cont’d)<br />
Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are<br />
not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised<br />
directly in equity.<br />
Impairment losses recognised in a previous interim period in respect of available-for-sale equity securities and<br />
financial assets carried at cost are not reversed even if the impairment losses would have been reduced or<br />
avoided had the impairment assessment been made at a subsequent reporting or balance sheet date.<br />
Share capital<br />
Ordinary shares are classified as equity.<br />
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as<br />
a deduction from equity, net of any tax effects.<br />
Estimation of fair values<br />
The following summarises the significant methods and assumptions used in estimating the fair values of<br />
financial instruments of the Group and Company.<br />
Derivatives<br />
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market<br />
price is not available, fair value is estimated by discounting the difference between the contractual forward<br />
price and the current forward price for the residual period to maturity of the contract using a risk-free interest<br />
rate (based on government bonds).<br />
The fair value of interest rate swaps is based on broker quotes. These quotes are tested for reasonableness<br />
by discounting estimated future cash flows based on the terms and maturity of each contract using market<br />
interest rates for a similar instrument at the measurement date.<br />
Non-derivative financial liabilities<br />
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future<br />
principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance<br />
leases, the market rate of interest is determined by reference to similar lease agreements.<br />
Other financial assets and liabilities<br />
The carrying amounts of financial assets and liabilities with a maturity of less than one year (inlcuding trade<br />
and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate<br />
their fair values because of the short period to maturity. All other financial assets and liabilities are discounted<br />
to determine their fair values.
74<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.8 Leases<br />
When entities within the Group are lessees of a finance lease<br />
Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as<br />
finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are<br />
capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent<br />
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that<br />
asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments<br />
are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated<br />
to each period during the lease term so as to produce a constant periodic rate of interest on the remaining<br />
balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments<br />
over the remaining term of the lease when the lease adjustment is confirmed.<br />
When entities within the Group are lessees of an operating lease<br />
Where the Group has the use of assets under operating leases, payments made under the leases are recognised<br />
in the income statement on a straight-line basis over the term of the lease. Lease incentives received are<br />
recognised in the income statement as an integral part of the total lease payments made. Contingent rentals<br />
are charged to the income statement in the accounting period in which they are incurred.<br />
When entities within the Group are lessors of a finance lease<br />
Amounts due from lessees under finance leases are recorded in the balance sheet as receivables at the<br />
amounts of the Group’s net investment in the leases, less any impairment losses. Finance lease income is<br />
allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment<br />
outstanding in respect of the leases.<br />
At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions<br />
even though the arrangement is not in the legal form of a lease.<br />
When entities within the Group are lessors of an operating lease<br />
Assets subject to operating leases are included in investment property and are stated at cost less accumulated<br />
depreciation and impairment losses. Rental income (net of any incentives given to lessees) is recognised on a<br />
straight-line basis over the lease term.<br />
2.9 Impairment – non-financial assets<br />
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are<br />
reviewed at each reporting date to determine whether there is any indication of impairment. If any such<br />
indication exists, the assets’ recoverable amounts are estimated. For goodwill and intangible assets which<br />
are not yet available for use, the recoverable amount is estimated at each reporting date, and as and when<br />
indicators of impairment are identified.<br />
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its<br />
estimated recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates<br />
cash flows that largely are independent from other assets and groups. Impairment losses are recognised in<br />
the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged<br />
to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the<br />
carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other<br />
assets in the unit (group of units) on a pro rata basis.
Hyflux Ltd annual report 2008 75<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.9 Impairment – non-financial assets (cont’d)<br />
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value<br />
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value<br />
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks<br />
specific to the asset or cash-generating unit.<br />
An impairment loss in respect of goodwill is not reversed, even if it relates to an impairment loss recognised in<br />
an interim period that would have been reduced or avoided had the impairment assessment been made at a<br />
subsequent reporting or balance sheet date. In respect of other assets, impairment losses recognised in prior<br />
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.<br />
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable<br />
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed<br />
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment<br />
loss had been recognised.<br />
2.10 Gross amounts due for contract work<br />
Gross amounts due for contract work represent the gross unbilled amount expected to be collected from<br />
customers for contract work performed to date. It is measured at cost plus profit recognised to date less<br />
progress billings and recognised losses. Cost includes all expenditure related directly to specific projects<br />
and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal<br />
operating capacity.<br />
Gross amounts due for contract work are presented as part of assets in the balance sheet. If payments<br />
received from customers exceed the income recognised, the difference is presented as part of liabilities in<br />
the balance sheet.<br />
2.11 Inventories<br />
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average<br />
cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the<br />
inventories to their present location and condition. In the case of manufactured inventories and work-inprogress,<br />
cost includes an appropriate share of production overheads based on normal operating capacity.<br />
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of<br />
completion and selling expenses.<br />
2.12 Non-current assets held for sale<br />
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered<br />
primarily through sale rather than through continuing use are classified as held for sale. Immediately before<br />
classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance<br />
with the Group’s accounting policies. Thereafter generally the assets (or disposal groups) are measured at the<br />
lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is<br />
first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss<br />
is allocated to inventories, financial assets, deferred tax assets and investment properties, which continue to<br />
be measured under different rules in accordance with the Group’s accounting policies. Impairment losses on<br />
initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in the<br />
income statement. Gains are not recognised in excess of any cumulative impairment loss.
76<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.13 Employee benefits<br />
Defined contribution plans<br />
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income<br />
statement as incurred.<br />
Short-term benefits<br />
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the<br />
related service is provided.<br />
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing<br />
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service<br />
provided by the employee and the obligation can be estimated reliably.<br />
Share-based payments<br />
The share option programme allows Group employees to acquire shares of the Company. The fair value of options<br />
granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured<br />
at grant date and spread over the vesting period during which the employees become unconditionally entitled<br />
to the options. At each balance sheet date, the Company revises its estimates of the number of options that<br />
are expected to become exercisable. It recognises the impact of the revision of original estimates in employee<br />
expense and in a corresponding adjustment to equity over the remaining vesting period.<br />
The proceeds received net of any directly attributable transactions costs are credited to share capital when the<br />
options are exercised.<br />
2.14 Revenue recognition<br />
Construction contracts<br />
As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are<br />
recognised in the income statement in proportion to the stage of completion of the contract. Contract revenue<br />
includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive<br />
payments to the extent that it is probable that they will result in revenue and can be measured reliably.<br />
The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed<br />
to date bear to the estimated total contact costs. When the outcome of a construction contract cannot be<br />
estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be<br />
recoverable. An expected loss on a contract is recognised immediately in the income statement.<br />
Operating and maintenance income<br />
Revenue from the provision of operating and maintenance services is recognised when the services are rendered.<br />
Sale of goods<br />
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of<br />
returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks<br />
and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the<br />
associated costs and possible return of goods can be estimated reliably, there is no continuing management<br />
involvement with the goods, and the amount of revenue can be measured reliably.
Hyflux Ltd annual report 2008 77<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.14 Revenue recognition (cont’d)<br />
Finance income<br />
Finance income represents the interest income on the financial receivable arising from a service concession<br />
arrangement, and is recognised in the income statement using the effective interest method.<br />
Finance lease income<br />
Finance lease income is recognised on the accrual basis, taking into account the effective yield of the asset.<br />
Others<br />
Rental income receivable under operating leases is recognised in the income statement on a straight-line basis<br />
over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to<br />
be received. Contingent rentals are recognised as income in the accounting period in which they are earned.<br />
Interest income is recognised as it accrues, using the effective interest method.<br />
2.15 Government grants<br />
When there is reasonable assurance that government grants will be received to compensate the Group for the<br />
cost of an asset, they are deducted against the carrying amount of the asset.<br />
2.16 Finance expenses<br />
Finance expenses comprise interest expense on borrowings and are recognised in the income statement using<br />
the effective interest method, except to the extent that they are capitalised as being directly attributable to the<br />
acquisition, construction or production of an asset which necessarily takes a substantial period of time to be<br />
prepared for its intended use or sale.<br />
2.17 Income tax expense<br />
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income<br />
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised<br />
in equity.<br />
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or<br />
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.<br />
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the<br />
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation<br />
purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill,<br />
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects<br />
neither accounting nor taxable profit, and differences relating to investments in subsidiaries, joint ventures and<br />
associates to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at<br />
the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws<br />
that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset<br />
if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied<br />
by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current<br />
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.<br />
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available<br />
against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting<br />
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
78<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
2 Summary of significant accounting policies (cont’d)<br />
2.18 Service concession arrangements<br />
The Group has entered into service concession arrangements with the various governing bodies or agencies<br />
of the government of the People’s Republic of China (the grantors) to supply treated water from water<br />
treatment plants, and operate wastewater treatment plants and water recycling plants. Under the concession<br />
arrangements, the Group will construct and/or operate the plants for concession periods of between 20<br />
to 30 years and transfer the plants to the grantors at the end of the concession periods. Such concession<br />
arrangements fall within the scope of INT FRS 112 and are accounted for as follows:<br />
Financial receivables<br />
The Group recognised a financial receivable arising from a service concession arrangement when it has a<br />
right to receive a fixed and determinable amount of payments during the concession period irrespective of<br />
the usage of the concession infrastructure. The financial receivable is accounted for in accordance with the<br />
accounting policy set out in note 2.7.<br />
When the Group receives a payment during the concession period, it will apportion such payment between<br />
(i) a repayment of the financial receivable (if any), which will be used to reduce the carrying amount of the<br />
financial receivable on its balance sheet, (ii) interest income, which will be recognised as finance income in its<br />
income statement and (iii) revenue from operating and maintaining the infrastructure to be recognised in its<br />
income statement.<br />
Intangible assets<br />
The Group recognises an intangible asset arising from a service concession arrangement when it has a right to<br />
charge for usage of the concession infrastructure but does not have any contractual rights under the concession<br />
agreements to receive a fixed and determinable amount of payments during the concession period. Intangible<br />
assets received as consideration for providing construction services in a service concession arrangement are<br />
measured at fair value upon initial recognition, estimated by reference to the fair value of the construction<br />
services provided. When the Group receives an intangible asset and a financial asset as consideration for<br />
providing construction services in a service concession arrangement, the Group estimates the fair value of<br />
intangible assets as the difference between the fair value of the construction services provided and the fair<br />
value of the financial asset received. Subsequent to initial recognition, the intangible asset is measured at cost<br />
less accumulated amortisation and impairment losses.<br />
The estimated useful life of an intangible asset in a service concession arrangement is the period when it is<br />
available for use to the end of the concession period.<br />
Revenue recognition<br />
Revenue relating to construction services under a service concession arrangement is recognised in accordance<br />
with the Group’s accounting policy on recognising revenue on construction contracts (see note 2.14). Operation<br />
or service revenue is recognised in the period in which the services are provided by the Group. When the Group<br />
provides more than one service in a service concession arrangement, the consideration received is allocated<br />
by reference to the relative fair values of the services delivered.
Hyflux Ltd annual report 2008 79<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
3 Property, plant and equipment<br />
Leasehold<br />
properties<br />
plant and Motor office and Furniture Construction<br />
Group machinery vehicles Computers equipment improvements and fittings -in-progress Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 11,692 2,700 3,697 1,448 9,925 744 15,795 46,001<br />
Additions 3,053 595 2,051 344 13,063 291 15,719 35,116<br />
Assets acquired in business combinations 17,010 39 – – – 49 3,772 20,870<br />
Transfers 3,854 – – – – – (3,854) –<br />
Disposals (17,283) (299) (44) (25) (614) (73) (4,585) (22,923)<br />
Translation differences on consolidation 65 16 8 27 34 2 18 170<br />
At 31 December 2007 18,391 3,051 5,712 1,794 22,408 1,013 26,865 79,234<br />
Additions 2,573 524 1,765 377 1,956 429 11,168 18,792<br />
Transfers 1,278 – – – 2,303 – (3,581) –<br />
Transfer to lease prepayments – – – – (2,747) – – (2,747)<br />
Transfer to financial receivables – – – – – – (16,234) (16,234)<br />
Disposals (1,610) (527) (283) (42) – (14) – (2,476)<br />
Translation differences on consolidation 308 90 229 25 859 7 274 1,792<br />
At 31 December 2008 20,940 3,138 7,423 2,154 24,779 1,435 18,492 78,361<br />
Accumulated depreciation<br />
At 1 January 2007 5,667 1,467 2,350 869 1,989 256 – 12,598<br />
Depreciation charge for the year 1,958 470 813 204 1,256 95 – 4,796<br />
Disposals (141) (174) (14) (25) (409) (32) – (795)<br />
Translation differences on consolidation 30 8 5 8 10 1 – 62<br />
At 31 December 2007 7,514 1,771 3,154 1,056 2,846 320 – 16,661<br />
Depreciation charge for the year 2,730 472 1,260 222 1,506 134 – 6,324<br />
Transfer to lease prepayments – – – – (185) – – (185)<br />
Disposals (930) (481) (186) (35) – (11) – (1,643)<br />
Translation differences on consolidation 83 43 158 15 46 2 – 347<br />
At 31 December 2008 9,397 1,805 4,386 1,258 4,213 445 – 21,504<br />
Carrying amount<br />
At 1 January 2007 6,025 1,233 1,347 579 7,936 488 15,795 33,403<br />
At 31 December 2007 10,877 1,280 2,558 738 19,562 693 26,865 62,573<br />
At 31 December 2008 11,543 1,333 3,037 896 20,566 990 18,492 56,857
80<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
3 Property, plant and equipment (cont’d)<br />
plant and office Leasehold Furniture Construction<br />
Company machinery Computers equipment improvements and fittings -in-progress Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 4,239 886 96 733 16 993 6,963<br />
Additions 1,321 169 1 11 10 3,609 5,121<br />
Transfers 3,854 – – – – (3,854) –<br />
Disposals – – – – – (660) (660)<br />
At 31 December 2007 9,414 1,055 97 744 26 88 11,424<br />
Transfer to subsidiaries (9,414) (37) (97) (744) (15) (88) (10,395)<br />
At 31 December 2008 – 1,018 – – 11 – 1,029<br />
Accumulated depreciation<br />
At 1 January 2007 1,835 777 2 1 1 – 2,616<br />
Depreciation charge for the year 985 177 19 13 2 – 1,196<br />
At 31 December 2007 2,820 954 21 14 3 – 3,812<br />
Depreciation charge for the year – 80 – – 1 – 81<br />
Transfer to subsidiaries (2,820) (16) (21) (14) (1) – (2,872)<br />
At 31 December 2008 – 1,018 – – 3 – 1,021<br />
Carrying amount<br />
At 1 January 2007 2,404 109 94 732 15 993 4,347<br />
At 31 December 2007 6,594 101 76 730 23 88 7,612<br />
At 31 December 2008 – – – – 8 – 8<br />
During the year, borrowing costs incurred amounting to $382,000 (2007: $938,000) have been capitalised in construction-in-progress of the Group at rates<br />
ranging from 3.38% to 6.16% (2007: 5.59% to 6.51%) per annum.<br />
The carrying amount of property, plant and equipment of the Group includes balances totalling $247,000 (2007: $357,000) in respect of property, plant and<br />
equipment held under finance leases.
Hyflux Ltd annual report 2008 81<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
4 Intangible assets<br />
intellectual<br />
service<br />
Goodwill on property Development Licensing concession<br />
Group consolidation rights costs fees arrangements Total<br />
$’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 4,288 4,682 22,484 5,748 6,404 43,606<br />
Additions – 49 11,606 746 – 12,401<br />
Acquisition through<br />
business combination – – – – 3,559 3,559<br />
Government grants – – (2,187) – – (2,187)<br />
Disposals – (16) (142) (1,022) (9,963) (11,143)<br />
Translation differences<br />
on consolidation – 77 4 – – 81<br />
At 31 December 2007 4,288 4,792 31,765 5,472 – 46,317<br />
Additions – – 9,404 104 19,980 29,488<br />
Acquisition of minority interest 518 – – – – 518<br />
Translation differences<br />
on consolidation – (77) 68 (9) (654) (672)<br />
At 31 December 2008 4,806 4,715 41,237 5,567 19,326 75,651<br />
Accumulated amortisation<br />
and impairment losses<br />
At 1 January 2007 – 639 2,955 1,030 – 4,624<br />
Amortisation charge for the year – 51 1,557 357 308 2,273<br />
Disposals – – (77) (697) (308) (1,082)<br />
Translation differences<br />
on consolidation – – 3 – – 3<br />
At 31 December 2007 – 690 4,438 690 – 5,818<br />
Amortisation charge for the year – 67 1,319 312 269 1,967<br />
Impairment loss – – 1,298 – – 1,298<br />
Translation differences<br />
on consolidation – 7 47 (2) (7) 45<br />
At 31 December 2008 – 764 7,102 1,000 262 9,128<br />
Carrying amount<br />
At 1 January 2007 4,288 4,043 19,529 4,718 6,404 38,982<br />
At 31 December 2007 4,288 4,102 27,327 4,782 – 40,499<br />
At 31 December 2008 4,806 3,951 34,135 4,567 19,064 66,523
82<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
4 Intangible assets (cont’d)<br />
intellectual<br />
property Development Licensing<br />
Company rights costs fees Total<br />
$’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 1,762 259 1,479 3,500<br />
Additions 17 8 888 913<br />
At 31 December 2007 1,779 267 2,367 4,413<br />
Additions 2 – – 2<br />
Transfer to subsidiaries (17) (267) (2,230) (2,514)<br />
At 31 December 2008 1,764 – 137 1,901<br />
Accumulated amortisation<br />
At 1 January 2007 32 56 4 92<br />
Amortisation charge for the year 15 26 98 139<br />
At 31 December 2007 47 82 102 231<br />
Amortisation charge for the year 16 9 14 39<br />
Transfer to subsidiaries (2) (91) (!02) (195)<br />
At 31 December 2008 61 – 14 75<br />
Carrying amount<br />
At 1 January 2007 1,730 203 1,475 3,408<br />
At 31 December 2007 1,732 185 2,265 4,182<br />
At 31 December 2008 1,703 – 123 1,826<br />
Impairment testing for cash-generating units (CGUs) containing goodwill<br />
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the<br />
lowest level within the Group at which the goodwill is monitored for internal management purposes.<br />
The aggregate carrying amounts of goodwill allocated to each unit identified according to business segment are<br />
as follows:<br />
industrial Others Total<br />
$’000 $’000 $’000<br />
Singapore 1,525 192 1,717<br />
The Netherlands 3,089 – 3,089<br />
4,614 192 4,806
Hyflux Ltd annual report 2008 83<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
4 Intangible assets (cont’d)<br />
The recoverable amount of the CGUs were based on their values in use. Values in use were determined by<br />
discounting the future cash flows generated from the continuing use of the units and were based on the following<br />
key assumptions:<br />
•<br />
•<br />
•<br />
•<br />
Cash flows were projected based on financial budgets approved by management covering a five-year period.<br />
The anticipated annual revenue growth included in the cash flow projections was 2% to 5% for the years 2009<br />
to 2013.<br />
No terminal value was assumed.<br />
A pre-tax discount rate of 12% (2007: 8%) was applied in determining the recoverable amounts of the CGUs and<br />
reflect specific risks relating to the relevant segments.<br />
The values assigned to the key assumptions represent management’s assessment of future trends in the industries<br />
and are based on both external sources and internal sources (historical data).<br />
5 Investment property<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Cost<br />
At 1 January and 31 December 3,348 3,348<br />
Accumulated depreciation<br />
At 1 January 975 846<br />
Depreciation charge for the year 129 129<br />
At 31 December 1,104 975<br />
Carrying amount<br />
At 1 January 2,373 2,502<br />
At 31 December 2,244 2,373<br />
The fair value of the investment property, estimated by the directors of the Company, as at 31 December 2008 is<br />
approximately $2,794,000 (2007: $3,115,000).<br />
6 Investments in subsidiaries<br />
company<br />
2008 2007<br />
$’000 $’000<br />
Unquoted equity securities, at cost 109,802 113,106<br />
Impairment losses (3,238) (3,238)<br />
106,564 109,868<br />
Loans to subsidiaries 24,509 24,509<br />
131,073 134,377<br />
The loans to subsidiaries are unsecured and interest-free, and settlement is neither planned nor likely to occur in the<br />
foreseeable future. As these balances are, in substance, part of the Company’s net investments in the subsidiaries,<br />
they are stated at cost less impairment losses, if any.
84<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
6 Investments in subsidiaries (cont’d)<br />
Details of major subsidiaries are as follows:<br />
country of<br />
effective equity held<br />
Name of subsidiary incorporation by the Group<br />
2008 2007<br />
% %<br />
Held by the Company<br />
Eflux Singapore Pte Ltd Singapore 100 100<br />
Hydrochem (S) Pte Ltd Singapore 100 100<br />
Hydrochem Engineering (S) Pte Ltd Singapore 100 100<br />
Hyflux Consumer Products Pte Ltd Singapore 100 100<br />
Hyflux Engineering Pte Ltd Singapore 100 100<br />
Hyflux Filtech (Singapore) Pte Ltd Singapore 71 71<br />
Hyflux Membrane Manufacturing (S) Pte Ltd Singapore 100 100<br />
Hyflux Water Trust Management Pte Ltd Singapore 100 100<br />
SinoSpring Utility Ltd British Virgin Islands 100 100<br />
Held through subsidiaries<br />
Eflux SK Pte Ltd Singapore 51 51<br />
Hydrochem Engineering (Shanghai) Co., Ltd People’s Republic of China 100 100<br />
Hyflux Aquosus (Singapore) Pte Ltd Singapore 100 100<br />
Hyflux CEPAration B.V. The Netherlands 70 51<br />
Hyflux CEPAration N.V. The Netherlands 70 51<br />
Hyflux Filtech Shanghai Co., Ltd People’s Republic of China 71 71<br />
Hyflux Hi-Tech (Product) Yangzhou Co., Ltd People’s Republic of China 100 100<br />
Hyflux Lifestyle Products (S) Pte Ltd Singapore 100 100<br />
Hyflux NewSpring Construction Engineering<br />
(Shanghai) Co., Ltd People’s Republic of China 100 100<br />
Hyflux Newspring (Dezhou) Co., Ltd People’s Republic of China 100 100<br />
Hyflux Newspring (Funing) Co., Ltd People’s Republic of China 100 100<br />
Hyflux NewSpring (GuanYun) WTP Co., Ltd People’s Republic of China – 100<br />
Hyflux Newspring (Guan Yun) WWTP Co., Ltd People’s Republic of China 100 100<br />
Hyflux Newspring (Leping) Co., Ltd People’s Republic of China 100 100<br />
Hyflux Unitech Shanghai Co., Ltd People’s Republic of China 71 71<br />
Tianjin Dagang NewSpring Co., Ltd People’s Republic of China 100 100<br />
KPMG LLP, Singapore is the auditor of all significant Singapore-incorporated subsidiaries.The foreign-incorporated<br />
subsidiary that is considered significant is Hyflux NewSpring Construction Engineering (Shanghai) Co., Ltd (HNS).<br />
HNS is audited by Shanghai HDDY Certified Public Accountants Co., Ltd, People’s Republic of China.
Hyflux Ltd annual report 2008 85<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
7 Investment in joint venture<br />
company<br />
2008 2007<br />
$’000 $’000<br />
Unquoted equity securities, at cost 2,375 1,125<br />
Details of the joint venture are as follows:<br />
country of<br />
effective equity held<br />
Name of joint venture incorporation by the Group<br />
2008 2007<br />
% %<br />
Hyflux Marmon Development Pte Ltd Singapore 50 50<br />
The joint venture is not considered significant.<br />
The summarised financial information of the joint venture, which are adjusted for the percentage of ownership held<br />
by the Group, are as follows:<br />
2008 2007<br />
$’000 $’000<br />
Assets and liabilities<br />
Non-current assets 1,387 456<br />
Current assets 318 419<br />
Total assets 1,705 875<br />
Current/Total liabilities (104) (106)<br />
Results<br />
Revenue 97 37<br />
Expenses (501) (399)<br />
Loss before income tax (404) (362)<br />
8 Investments in associates<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Quoted equity securities 58,680 62,230 – –<br />
Unquoted equity securities 36,036 23,553 12,608 12,277<br />
94,716 85,783 12,608 12,277<br />
Fair value of investment in an associate for which<br />
there is published price quotation 33,075 76,545 – –
86<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
8 Investments in associates (cont’d)<br />
Investments in associates at 31 December 2008 include goodwill of $2,400,000 (2007: $1,800,000).<br />
Unquoted equity securities of the Group with carrying amount of $7,759,000 (2007: $10,162,000) have been pledged<br />
as collaterals for banking facilities granted to an associate.<br />
Details of major associates are as follows:<br />
country of<br />
effective equity held<br />
Name of associates incorporation by the Group<br />
2008 2007<br />
% %<br />
Held by Company<br />
SingSpring Trust Singapore 30.0 30.0<br />
Held through subsidiaries<br />
Hyflux Water Trust Singapore 31.5 31.5<br />
Lube Oil Re-fining Co., LLC Kingdom of Saudi Arabia 41.5 41.5<br />
New Spring (Huludao) Co., Ltd People’s Republic of China 49.0 49.0<br />
Ningxia Hypow Bio-Technology Co., Ltd People’s Republic of China 25.0 25.0<br />
Sinolac (Singapore) Pte Ltd * Singapore 27.5 19.5<br />
Tlemcen Desalination Investment Corporation France 30.0 20.0<br />
*Accounted for as a long-term investment in the previous year.<br />
KPMG LLP, Singapore is the auditor of all significant Singapore-incorporated associates. The foreign-incorporated<br />
associates are not considered significant.<br />
The summarised financial information of the associates, which are adjusted for the percentage of ownership held<br />
by the Group, are as follows:<br />
2008 2007<br />
$’000 $’000<br />
Assets and liabilities<br />
Total assets 249,336 185,948<br />
Total liabilities 127,405 78,995<br />
Results<br />
Revenue 12,113 10,258<br />
(Loss)/profit after income tax (1,400) 1,277<br />
9 Long-term investments<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Available-for-sale unquoted equity securities, at cost 908 7,917 899 899
Hyflux Ltd annual report 2008 87<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
10 Financial and lease receivables<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Non-current<br />
Financial receivables 193,618 9,570<br />
Lease receivables 586 –<br />
194,204 9,570<br />
Current<br />
Financial receivables 2,964 187<br />
Lease receivables 284 –<br />
3,248 187<br />
At 31 December 2008, the Group has receivables under finance leases as follows:<br />
present<br />
value of<br />
minimum<br />
minimum<br />
lease Unearned lease<br />
payment finance payment<br />
receivables income receivables<br />
$’000 $’000 $’000<br />
Group<br />
Within 1 year 329 (45) 284<br />
After 1 year but within 5 years 739 (153) 586<br />
1,068 (198) 870<br />
Under the terms of the lease arrangements, no contingent rents are recognised and there are no unguaranteed<br />
residual values accruing to the Group.<br />
The weighted average effective interest rate of the lease receivables at 31 December 2008 is 5.5% per annum.<br />
11 Lease prepayments<br />
Lease prepayments relate to payments made for land use rights and are charged to the income statement on a<br />
straight-line basis over the lease term ranging from 20 to 30 years.<br />
12 Trade receivables<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current<br />
Trade receivables 2,872 – – –<br />
Current<br />
Trade receivables 45,026 48,012 16 1,148<br />
Impairment losses (4,009) (1,902) – –<br />
41,017 46,110 16 1,148
88<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
12 Trade receivables (cont’d)<br />
Included in current trade receivables of the Group are notes receivables of $2,007,000 (2007: $4,372,000) relating to<br />
bank documents secured from customers for settlement of payment within the next six months.<br />
Concentration of credit risk relating to trade receivables is limited due to the Group’s many varied customers. The<br />
Group’s historical experience in the collection of accounts receivable falls within the recorded impairment losses.<br />
Due to these factors, the Group believes that no additional credit risk beyond amounts provided for collection losses<br />
is inherent in the Group’s trade receivables.<br />
Impairment losses<br />
The change in impairment losses in respect of trade receivables during the year is as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
At 1 January 1,902 2,009<br />
Impairment loss recognised 2,759 1,022<br />
Impairment loss written off (18) (105)<br />
Impairment loss reversed (706) (977)<br />
Translation differences on consolidation 72 (47)<br />
At 31 December 4,009 1,902<br />
The impairment loss recognised/reversed is included as part of other operating expenses in the income statement.<br />
13 Due from related parties (non-trade)<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current<br />
Due from:<br />
– subsidiaries – – 19,832 18,833<br />
– associates 36,326 – – –<br />
36,326 – 19,832 18,833<br />
Current<br />
Due from:<br />
– subsidiaries – – 339,908 152,505<br />
– joint venture 11 11 – –<br />
– associates 23,383 4,776 61 2,907<br />
23,394 4,787 339,969 155,412<br />
Outstanding balances with related parties are unsecured. There is no allowance for impairment losses arising from<br />
the outstanding balances.<br />
The non-current non-trade amounts due from subsidiaries are interest-free, have no fixed terms of repayment and<br />
are not expected to be repaid within the next 12 months.<br />
The non-current non-trade amounts due from associates bear interest at rates ranging from 4.23% to 6.84% per<br />
annum at 31 December 2008 and are repayable between 2011 to 2014.<br />
The current non-trade amounts due from related parties are interest-free and are expected to be repaid within the<br />
next 12 months.
Hyflux Ltd annual report 2008 89<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
14 Deferred tax<br />
Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as follows:<br />
Disposal of<br />
At Recognised partial interest Translation At Recognised Translation At<br />
1 January in income in a joint differences on 31 December in income differences on 31 December<br />
Group 2007 statement venture consolidation 2007 statement consolidation 2008<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Deferred tax liabilities<br />
Property, plant and equipment 2,517 679 (1,911) – 1,285 (573) – 712<br />
Intangible assets 1,912 1,241 (1,563) – 1,590 3,958 – 5,548<br />
Total 4,429 1,920 (3,474) – 2,875 3,385 – 6,260<br />
Deferred tax assets<br />
Derivative financial instruments (293) – 293 – – – – –<br />
Tax value of unutilised tax losses<br />
carried forward (505) (695) – (18) (1,218) (1,689) 108 (2,799)<br />
Total (798) (695) 293 (18) (1,218) (1,689) 108 (2,799)
90<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
14 Deferred tax (cont’d)<br />
Deferred tax liabilities of the Company are attributable to the following:<br />
company<br />
2008 2007<br />
$’000 $’000<br />
Deferred tax liabilities<br />
Property, plant and equipment 95 95<br />
Intangible assets 64 64<br />
Total 159 159<br />
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets<br />
against current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined<br />
after appropriate offsetting are included in the balance sheet as follows:<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Deferred tax liabilities 6,260 2,875 159 159<br />
Deferred tax assets 2,799 1,218 – –<br />
Deferred tax assets have not been recognised in respect of the following temporary differences:<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Unutilised tax losses 13,361 15,196 – 1,562<br />
Unabsorbed capital allowances – 1,569 – –<br />
13,361 16,765 – 1,562<br />
The tax losses and capital allowances are subject to agreement by the tax authorities and compliance with tax<br />
regulations in the respective countries in which the Company and certain subsidiaries operate. The temporary<br />
differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect<br />
of these items due to the uncertainty of the availability of future taxable profit against which the Group and the<br />
Company can utilise the benefits.<br />
15 Gross amounts due for contract work<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Costs incurred and attributable profits 391,823 169,474 – 14,038<br />
Progress billings (297,836) (76,217) – (4,511)<br />
93,987 93,257 – 9,527
Hyflux Ltd annual report 2008 91<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
16 Inventories<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Raw materials and consumables 24,046 14,570 – 12,924<br />
Work-in-progress 4,201 3,955 – 2,860<br />
Finished goods 5,580 2,116 – 1,714<br />
33,827 20,641 – 17,498<br />
During the year, write-down of inventories amounting to $366,000 (2007: $657,000) was made by the Group. The<br />
write-down was recognised as part of other operating expenses in the income statement.<br />
17 Other receivables and deposits<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Other receivables 7,987 23,562 1,539 1,017<br />
Impairment losses – (1,658) – –<br />
7,987 21,904 1,539 1,017<br />
Deposits 2,931 6,248 3 3<br />
Advances to suppliers 29,798 5,941 – 2,336<br />
Staff advances 597 680 32 21<br />
41,313 34,773 1,574 3,377<br />
Other receivables are unsecured and interest-free, and are repayable on demand.<br />
Impairment losses<br />
The change in impairment losses in respect of other receivables during the year is as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
At 1 January 1,658 1,725<br />
Impairment loss written off (1,658) –<br />
Translation differences on consolidation – (67)<br />
At 31 December – 1,658
92<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
18 Due from related parties (trade)<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Due from:<br />
– subsidiaries – – 19,605 22,673<br />
– joint venture 20 – – –<br />
– associates 44,954 15,216 – –<br />
44,974 15,216 19,605 22,673<br />
Impairment losses (1,035) – – –<br />
43,939 15,216 19,605 22,673<br />
Outstanding balances with related parties are unsecured.<br />
The change in impairment losses during the year is as follow:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
At 1 January – –<br />
Impairment loss recognised 1,035 –<br />
At 31 December 1,035 –<br />
The impairment loss recognised is included as part of other operating expenses in the income statement.<br />
19 Cash and fixed deposits<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Cash at bank and in hand 63,201 50,076 3,686 3,175<br />
Fixed deposits with financial institutions 27,539 70,971 14,556 2,899<br />
90,740 121,047 18,242 6,074<br />
Cash and fixed deposits of disposal group 740 –<br />
Cash and cash equivalent in the<br />
consolidated cash flow statement 91,480 121,047<br />
The effective interest rates relating to fixed deposits with financial institutions at the balance sheet date for the<br />
Group and the Company range from 0.01% to 4.10% (2007: 0.30% to 5.20%) per annum. Interest rates reprice within<br />
1 year.
Hyflux Ltd annual report 2008 93<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
20 Assets classified as held for sale<br />
A wastewater treatment facility in the People’s Republic of China is presented as held for sale following the decision<br />
of the Group’s management on 16 December 2008 to sell this disposal group. The sale is expected to occur on or<br />
after 30 June 2009 but no later than 31 December 2009. The carrying amount of the disposal group classified as held<br />
for sale is $10,833,000 at 31 December 2008.<br />
Details of the disposal group classified as held for sale at 31 December 2008 are as follows:<br />
Group<br />
2008<br />
$’000<br />
Assets<br />
Financial receivables 9,041<br />
Lease prepayments 1,053<br />
Cash and fixed deposits 740<br />
10,834<br />
Liabilities<br />
Other payable and accruals 1<br />
21 Other payables and accruals<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Other payables 12,649 10,071 3,477 2,917<br />
Accrued expenses 9,603 7,676 731 387<br />
22,252 17,747 4,208 3,304<br />
22 Interest-bearing loans and borrowings, and finance lease liabilities<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current<br />
Secured bank loans 1,432 2,670 – –<br />
Unsecured bank loans 206,387 190,596 206,170 190,596<br />
207,819 193,266 206,170 190,596<br />
Finance lease liabilities 73 187 – –<br />
207,892 193,453 206,170 190,596<br />
Current<br />
Secured bank loans 721 – – –<br />
Unsecured bank loans 49,524 5,245 49,524 5,000<br />
50,245 5,245 49,524 5,000<br />
Finance lease liabilities 99 104 – –<br />
50,344 5,349 49,524 5,000
94<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
22 Interest-bearing loans and borrowings, and finance lease liabilities (cont’d)<br />
Secured bank loans of the Group are secured by a lien over the inventory and receivables of a subsidiary with carrying<br />
amounts of $172,000 and $199,000 (2007: $252,000 and $1,410,000), respectively and are partially guaranteed by a<br />
director of the subsidiary and a fellow subsidiary.<br />
Unsecured bank loans of the Company totalling $230,596,000 (2007: $190,596,000) are guaranteed by certain<br />
subsidiaries of the Group.<br />
In 2008, the Company established a $300 million unsecured Multicurrency Debt Issuance Programme pursuant to<br />
which the Company may, from time to time, issue notes (Notes) denominated in Singapore dollars and/or any other<br />
currencies. Each series of Notes may be issued at par or at a discount or premium to par; bearing interest at fixed,<br />
floating, variable, hybrid or such other rates, and may have maturities of such tenor, as may be agreed between the<br />
Company and the relevant dealer(s).<br />
As at 31 December 2008, no Notes were issued by the Company.<br />
Finance lease liabilities<br />
At 31 December 2008, the Group has obligations under finance leases that are payable as follows:<br />
2008 2007<br />
Group principal Interest Payments Principal Interest Payments<br />
$’000 $’000 $’000 $’000 $’000 $’000<br />
Payable within 1 year 99 20 119 104 31 135<br />
Payable after 1 year but<br />
within 5 years 73 8 81 187 13 200<br />
Total 172 28 200 291 44 335<br />
Terms and debt repayment schedule<br />
Terms and conditions of outstanding loans and borrowings are as follows:<br />
Weighted<br />
average<br />
effective 2008 2007<br />
interest rate Year of Carrying Carrying<br />
per annum maturity amount amount<br />
% $’000 $’000<br />
Group<br />
S$ floating rate loans 2.37 2009-2011 72,496 17,245<br />
US$ floating rate loans 4.38 2009-2011 183,198 178,596<br />
Euro floating rate loans 4.70 2009-2017 2,370 2,670<br />
Finance lease liabilities 6.40 2009-2011 172 291<br />
258,236 198,802<br />
Company<br />
S$ floating rate loans 2.37 2009-2011 72,496 17,000<br />
US$ floating rate loans 4.38 2009-2011 183,198 178,596<br />
255,694 195,596
Hyflux Ltd annual report 2008 95<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
22 Interest-bearing loans and borrowings, and finance lease liabilities (cont’d)<br />
Terms and debt repayment schedule (cont’d)<br />
The following are the expected contractual undiscounted cash outflows of financial liabilities, including interest<br />
payments and excluding the impact of netting agreements:<br />
Carrying<br />
amount<br />
cash flows<br />
After 1 year<br />
contractual Within 1 but within More than<br />
Group cash flows year 5 years 5 years<br />
$’000 $’000 $’000 $’000 $’000<br />
2008<br />
Non-derivative financial liabilities<br />
Variable interest rate loans 258,064 277,853 59,547 217,746 560<br />
Finance lease liabilities 172 200 119 81 –<br />
Trade and other payables * 245,288 245,288 245,288 – –<br />
503,524 523,341 304,954 217,827 560<br />
2007<br />
Non-derivative financial liabilities<br />
Variable interest rate loans 198,511 221,528 12,469 208,291 768<br />
Finance lease liabilities 291 335 135 200 –<br />
Trade and other payables * 66,889 66,889 66,889 – –<br />
265,691 288,752 79,493 208,491 768<br />
carrying<br />
amount<br />
cash flows<br />
After 1 year<br />
contractual Within 1 but within<br />
Company cash flows year 5 years<br />
$’000 $’000 $’000 $’000<br />
2008<br />
Non-derivative financial liabilities<br />
Variable interest rate loans 255,694 275,160 58,705 216,455<br />
Trade and other payables * 118,151 118,151 118,151 –<br />
373,845 393,311 176,856 216,455<br />
2007<br />
Non-derivative financial liabilities<br />
Variable interest rate loans 195,596 218,184 12,065 206,119<br />
Trade and other payables * 41,675 41,675 41,675 –<br />
237,271 259,859 53,740 206,119<br />
* Excludes accrued expenses.
96<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
23 Due to related parties (trade)<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Due to:<br />
– subsidiaries – – 58 845<br />
– associates 6,458 – – –<br />
6,458 – 58 845<br />
Outstanding balances with related parties are unsecured.<br />
24 Due to related parties (non-trade)<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Due to:<br />
– subsidiaries – – 112,704 36,741<br />
– associates 11,530 1,796 1,886 –<br />
11,530 1,796 114,590 36,741<br />
Outstanding balances with related parties are unsecured, interest-free and are repayable on demand.<br />
25 Share capital<br />
Group and Company<br />
2008 2007<br />
number of Number of<br />
shares shares<br />
(‘000) (‘000)<br />
Fully paid ordinary shares, with no par value<br />
At 1 January 523,380 518,885<br />
Issue of shares under Employee Share Option Scheme 1,891 4,495<br />
At 31 December 525,271 523,380<br />
Ordinary share capital<br />
During the financial year, the Company issued 1,891,000 ordinary shares pursuant to its Employee Share Option<br />
Scheme (see note 29).<br />
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one<br />
vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Hyflux Ltd annual report 2008 97<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
25 Share capital (cont’d)<br />
Warrant<br />
By a Warrant Subscription Agreement dated 23 November 2004 supplemented by a Supplemental Warrant<br />
Subscription Agreement dated 25 April 2008 (Agreements) entered into between the Company and Istithmar World<br />
PJSC (formerly known as Istithmar PJSC) (Istithmar), Istithmar is entitled to subscribe for 41,216,863 ordinary shares<br />
in the Company, subject to the terms and conditions of the Agreements and the Warrant Instrument. The exercise<br />
period is from April 2008 to April 2010.<br />
The exercise price is equivalent to the higher of (a) $1.95 and (b) the lower of 70% of the volume-weighted average<br />
price for trades in the Company’s shares transacted on the Singapore Exchange on the market day immediately<br />
preceding the exercise date or in the 30 calendar day period immediately preceding the exercise date.<br />
Capital management<br />
The primary objective of the Group’s capital management is to support the Group’s growth strategy and maximise<br />
shareholder value with the optimal capital structure.<br />
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To<br />
maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital<br />
to shareholders or issue new shares. There were no changes in the Group’s approach to capital management during<br />
the year.<br />
The Group monitors capital using a gearing ratio, which is net debt divided by total capital. The Group includes<br />
within net debt, interest-bearing loans and borrowings, finance lease liabilities, less cash and cash equivalents. Total<br />
equity of the Group represents capital for the Group.<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Interest-bearing loans and borrowings 258,064 198,511<br />
Finance lease liabilities 172 291<br />
Less: Cash and cash equivalents (90,740) (121,047)<br />
Net debt 167,496 77,755<br />
Total equity 307,899 247,067<br />
Gearing ratio 54% 31%<br />
Certain subsidiaries of the Group are required by the Foreign Enterprise Law of the People’s Republic of China (PRC) to<br />
contribute to and maintain a non-distributable Statutory Reserve Fund (SRF) whose utilisation is subject to approval<br />
by the relevant PRC authorities (see note 26). This externally imposed capital requirement has been complied with<br />
by the relevant subsidiaries for the financial year ended 31 December 2008. Other than this, the Group and its<br />
subsidiaries are not subject to externally imposed capital requirements.
98<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
26 Capital reserve<br />
The capital reserve comprises:<br />
(a)<br />
capital gain arising from the payment of the Group’s subscription to the share capital of a subsidiary by a<br />
minority interest; and<br />
(b) Statutory Reserve Fund (SRF)<br />
In accordance with the Foreign Enterprise Law in the PRC, the Group’s subsidiaries in the PRC are required<br />
to make appropriation to a SRF. At least 10% of the statutory after tax profits as determined in accordance<br />
with the applicable PRC accounting standards and regulations must be allocated to the SFR annually until the<br />
cumulative total of the SRF reaches 50% of the subsidiaries’ registered capital. Subject to approval from the<br />
relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital<br />
of the subsidiaries. The SRF is not available for dividend distribution to shareholders.<br />
27 Foreign currency translation reserve<br />
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of<br />
the financial statements of foreign operations whose functional currencies are different from the presentation<br />
currency of the consolidated financial statements.<br />
28 Hedging reserve<br />
The hedging reserve comprises:<br />
(a)<br />
the effective portion of the cumulative net change in the fair value of cash flow hedging instruments relating<br />
to forecast hedged transactions; and<br />
(b) the Group’s share of the hedging reserve of an associate.<br />
29 Employee share option reserve<br />
The employee share option reserve represents the equity-settled share options granted to employees. This<br />
reserve is made up of the cumulative value of services received from employees recorded over the vesting period<br />
commencing from the grant date of equity-settled share options.<br />
Employee share option scheme<br />
The Hyflux Employee Share Option Scheme (the Scheme) was approved and adopted by the members of the<br />
Company at an Extraordinary General Meeting held on 27 September 2001. The Scheme provides an opportunity for<br />
employees and directors of the Company and its subsidiaries, other than substantial shareholders of the Company,<br />
to participate in the equity of the Company.<br />
On 24 November 2003, the members of the Company approved a modification to the Scheme which allowed Olivia<br />
Lum, Group CEO, President and Managing Director, a substantial shareholder of the Company, to participate in the<br />
Scheme. The maximum entitlement of Olivia Lum is 10% of the total number of shares which may be issued by the<br />
Company under the Scheme.
Hyflux Ltd annual report 2008 99<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
29 Employee share option reserve (cont’d)<br />
Employee share option scheme (cont’d)<br />
The Scheme is administered by the Remuneration Committee comprising five directors. It shall continue to be in force<br />
at the discretion of the Remuneration Committee for a period of ten years from 27 September 2001. However, the<br />
period may be extended with the approval of the members of the Company at a general meeting of the Company<br />
and of any relevant authorities which may then be required. The contractual life of the option is ten years and there<br />
are no cash settlement alternatives.<br />
The fair value of services received in return for share options granted are measured by reference to the fair value<br />
of share options granted. The estimate of the fair value of the services received is measured based on a Black-<br />
Scholes Standard Option Valuation Model, taking into account the terms and conditions upon which the options<br />
were granted.<br />
Fair Value of share options and assumptions for options granted in 2007 and 2008<br />
Date of grant of options 5/4/2007 23/5/2007 25/9/2007 26/5/2007 31/10/2008<br />
Share price $2.620 $2.660 $2.780 $3.710 $1.560<br />
Exercise price $2.624 $2.608 $2.792 $3.628 $1.472<br />
Expected volatility 34% 34% 37% 37% 47%<br />
Expected option life 90 days 90 days 100 days 100 days 100 days<br />
Expected dividends 0.52% 0.52% 0.49% 0.54% 1.26%<br />
Risk-free interest rate 2.44% 2.18% 2.27% 1.52% 1.61%<br />
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may<br />
not necessarily be the actual outcome.<br />
There are no market conditions associated with the share option grants. Service conditions and non-market<br />
performance conditions are not taken into account in the measurement of the fair value of the services to be<br />
received at the grant date.<br />
No other features of the option grant were incorporated into the measurement of fair value.
100<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
29 Employee share option reserve (cont’d)<br />
Employee share option scheme (cont’d)<br />
At the end of the financial year, details of options granted under the Scheme on the unissued ordinary shares of the Company are as follows:<br />
O option no of holders<br />
Date of grant Balance as at Options lapsed/ Options Balance as at as at Exercise<br />
of options 01/01/2008 granted forfeited exercised 31/12/2008 31/12/2008 price Exercise period<br />
$<br />
15/10/2001 488,562 – (938) (163,000) 324,624 54 0.2688 15/10/2002 – 27/09/2011<br />
11/01/2002 750 – – – 750 1 0.4123 11/01/2003 – 27/09/2011<br />
28/03/2002 26,906 – – – 26,906 2 0.5436 28/03/2003 – 27/09/2011<br />
08/04/2002 8,750 – – – 8,750 1 0.5401 08/04/2003 – 27/09/2011<br />
08/07/2002 750 – – – 750 1 0.5664 08/07/2003 – 27/09/2011<br />
01/08/2002 1,125 – – – 1,125 1 0.5888 01/08/2003 – 27/09/2011<br />
16/09/2002 875 – (875) – – – 0.4869 16/09/2003 – 27/09/2011<br />
07/01/2003 193,500 – – (168,000) 25,500 4 0.5995 07/01/2004 – 27/09/2011<br />
07/04/2003 149,750 – – (37,000) 112,750 3 0.7253 07/04/2004 – 27/09/2011<br />
16/10/2003 731,500 – – (180,000) 551,500 9 1.0581 16/10/2004 – 27/09/2011<br />
08/12/2003 1,050,000 – – – 1,050,000 2 1.0197 08/12/2004 – 27/09/2011<br />
29/12/2003 445,500 – (4,500) (100,000) 341,000 14 1.0627 29/12/2004 – 27/09/2011<br />
14/05/2004 240,000 – – (120,000) 120,000 1 0.9600 14/05/2005 – 27/09/2011<br />
07/02/2005 2,585,000 – (116,000) (282,000) 2,187,000 37 1.8600 07/02/2006 – 27/09/2011<br />
03/05/2005 180,000 – (180,000) – – – 2.3227 03/05/2006 – 27/09/2011<br />
09/05/2005 4,500,000 – – – 4,500,000 1 2.3067 09/05/2006 – 27/09/2011<br />
01/06/2005 45,000 – (18,000) (9,000) 18,000 1 2.5493 01/06/2006 – 27/09/2011<br />
08/06/2005 45,000 – – (18,000) 27,000 1 2.6507 08/06/2006 – 27/09/2011<br />
28/03/2006 1,848,000 – (220,000) (396,000) 1,232,000 13 2.6620 28/03/2007 – 27/09/2011<br />
18/10/2006 1,600,000 – (400,000) (140,000) 1,060,000 3 2.3620 18/10/2007 – 27/09/2011<br />
07/12/2006 3,056,000 – (284,000) (238,000) 2,534,000 57 2.3720 07/12/2007 – 27/09/2011<br />
05/04/2007 730,000 – (300,000) (20,000) 410,000 4 2.6240 05/04/2008 – 27/09/2011<br />
23/05/2007 980,000 – (80,000) (20,000) 880,000 4 2.6080 23/05/2008 – 27/09/2011<br />
25/09/2007 3,430,000 – (490,000) – 2,940,000 35 2.7920 25/09/2008 – 27/09/2011<br />
26/05/2008 – 3,610,000 (210,000) – 3,400,000 62 3.6280 26/05/2009 – 07/09/2011<br />
31/10/2008 – 6,995,000 – – 6,995,000 113 1.4720 31/10/2009 – 27/09/2011<br />
22,336,968 10,605,000 (2,304,313) (1,891,000) 28,746,655 424<br />
The weighted average share price at the date of exercise of the options in 2008 was $3.157 (2007: $2.593) per share.
Hyflux Ltd annual report 2008 101<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
30 Revenue<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Revenue from construction contracts 544,972 181,906<br />
Operating and maintenance income 8,231 6,562<br />
Sale of goods 520 1,264<br />
Finance income from service concession arrangements – 1,387<br />
Finance lease income 415 1,630<br />
Licence fee 86 37<br />
554,224 192,786<br />
31 Finance income<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Interest income from:<br />
– fixed deposits with financial institutions 780 1,425<br />
– associates 3,990 1,123<br />
4,770 2,548<br />
32 Finance expenses<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Interest expense:<br />
– bank loans 10,586 8,092<br />
– finance lease liabilities 18 27<br />
– associates – 1,697<br />
10,604 9,816<br />
Finance expense capitalised in property, plant and equipment (382) (938)<br />
10,222 8,878
102<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
33 Profit before Taxation<br />
The following items have been included in arriving at profit before taxation:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Net foreign currency exchange gain (10,119) (8,805)<br />
Rental income from investment property (336) (228)<br />
Goodwill arising from acquisition of minority interest written off – 242<br />
Non-audit fees paid/payable to<br />
– auditors of the Company – 156<br />
– other auditors – –<br />
Operating expenses arising from rental of investment property 79 59<br />
Operating lease expenses 3,421 2,689<br />
Professional fees paid to firms in which a director is member 100 69<br />
Contribution to defined contribution plans, included in personnel expenses 3,558 2,419<br />
Cost of share-based payments, included in personnel expenses 3,552 3,131<br />
The Group engages subcontractors in its normal course of business and subcontractors’ costs have been included<br />
in raw materials and consumables.<br />
34 Taxation<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Current tax expense<br />
Current year 7,646 1,065<br />
Overprovided in prior years (1,185) (242)<br />
6,461 823<br />
Deferred tax expense<br />
Origination and reversal of temporary differences 1,279 1,587<br />
Reduction in tax rate – (362)<br />
Underprovided in prior years 417 –<br />
1,696 1,225<br />
Income tax expense 8,157 2,048
Hyflux Ltd annual report 2008 103<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
34 Taxation (cont’d)<br />
Reconciliation of effective tax rate<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Profit before taxation 70,375 38,693<br />
Tax calculated using Singapore tax rate of 18% (2007: 18%) 12,668 6,965<br />
Effect of reduction in tax rate – (362)<br />
Effect of different tax rates in other countries 893 2,205<br />
Income not subject to tax (5,103) (6,222)<br />
Expenses not deductible for tax purposes 11,016 2,560<br />
Effect of partial tax exemption and tax reliefs (9,936) (5,874)<br />
Deferred tax assets not recognised – 3,018<br />
Recognition of previously unrecognised deferred tax assets (613) –<br />
Overprovided in prior years (768) (242)<br />
8,157 2,048<br />
A subsidiary was granted Pioneer Status in respect of the production and sale of membrane systems. Accordingly,<br />
subject to the terms and conditions of the Pioneer Status, the subsidiary’s profits from sale of membrane systems are<br />
exempted from income tax during the qualifying period.<br />
In accordance with the “Income Tax Law of the People’s Republic of China for Enterprises with Foreign Investment<br />
and Foreign Enterprises”, certain subsidiaries are entitled to full exemption from Enterprise Income Tax (EIT) for<br />
the first two years and a 50% reduction in EIT for the next three years, commencing from the profitable year after<br />
offsetting all tax losses carried forward from the previous five years. In addition, one of the subsidiaries was also<br />
granted Hi-Technology Status which is subjected to a tax rate of 15%.<br />
Subsidiaries incorporated in the British Virgin Islands (BVI) are exempted from all income taxes in BVI in accordance<br />
with local tax laws.<br />
35 Earnings per share<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Basic earnings per share is based on:<br />
Net profit attributable to ordinary shareholders 59,036 32,949<br />
Group<br />
2008 2007<br />
number of Number of<br />
shares shares<br />
(‘000) (‘000)<br />
Issued ordinary shares at beginning of the year 523,380 518,885<br />
Effects of share options exercised 1,372 2,371<br />
Weighted average number of ordinary shares in issue during the year 524,752 521,256
104<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
35 Earnings per share (cont’d)<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Diluted earnings per share is based on:<br />
Net profit attributable to ordinary shareholders 59,036 32,949<br />
For the purpose of calculating the diluted earnings per ordinary share, the weighted average number of ordinary<br />
shares in issue is adjusted to take into account the dilutive effect arising from the dilutive share options and warrants,<br />
with the potential ordinary shares weighted for the period outstanding.<br />
The effects of the exercise of share options and warrants on the weighted average number of ordinary shares in<br />
issue are as follows:<br />
Group<br />
2008 2007<br />
number of Number of<br />
shares shares<br />
(‘000) (‘000)<br />
Weighted average number of:<br />
– Ordinary shares used in the calculation of basic earnings per share 524,752 521,256<br />
– Potential ordinary shares issuable under share options 3,464 7,696<br />
– Potential ordinary shares issuable under warrants 9,189 –<br />
Weighted average number of ordinary issued and potential shares<br />
assuming full conversion 537,405 528,952<br />
36 Segment reporting<br />
Segment information is presented in respect of the Group’s business and geographical segments. The primary<br />
format, business segments, is based on the Group’s management and internal reporting structure.<br />
Inter-segment pricing is determined on mutually agreed terms.<br />
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can<br />
be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, loans and expenses, and<br />
income tax assets and liabilities.<br />
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment,<br />
and intangible assets other than goodwill.
Hyflux Ltd annual report 2008 105<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
36 Segment reporting (cont’d)<br />
Business segments<br />
The Group comprises the following main business segments:<br />
The municipal segment is a supplier of comprehensive range of innovative water and fluid treatment solutions to<br />
municipalities and governments, including commissioning, operation and maintenance of a wide range of water<br />
treatment and liquid separation plants on a turnkey or Design-Build-Own-Operate-Transfer arrangements.<br />
The industrial segment is in the business of liquid separation applications for the manufacturing sector such as the<br />
pharmaceutical, biotechnology, food processing and petrochemical oil-related industries.<br />
Geographical segments<br />
The Group operates in two principle geographical areas, People’s Republic of China and Middle East and North Africa.<br />
In preparing information on the basis of geographical segments, segment revenue is based on the geographical<br />
location of customers. Segment assets are based on the geographical location of the assets.
106<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
36 Segment reporting (cont’d)<br />
Business segments<br />
municipal industrial others total<br />
$’000 $’000 $’000 $’000<br />
2008 2007 2008 2007 2008 2007 2008 2007<br />
Total external revenue 476,758 88,971 76,383 102,347 1,083 1,468 554,224 192,786<br />
Segment results 75,308 27,304 770 10,253 1,377 (1,188) 77,455 36,369<br />
Gain on sale of partial interest in a joint venture – 8,185<br />
Negative goodwill arising from acquisition of a subsidiary – 2,620<br />
Fair value of derivative financial instruments (680) (3,532)<br />
Other unallocated income 494 108<br />
Unallocated expenses (42) (4)<br />
Results from operating activities 77,227 43,746<br />
Finance income 4,770 2,548<br />
Finance expenses (10,222) (8,878)<br />
Share of (loss)/profit of associates, net of tax 180 2,082 (1,580) (805) – – (1,400) 1,277<br />
Profit before taxation 70,375 38,693<br />
Taxation (8,157) (2,048)<br />
Profit for the year 62,218 36,645<br />
Assets and liabilities<br />
Segment assets 561,868 267,824 165,785 112,588 51,569 13,097 779,222 393,509<br />
Unallocated assets 67,333 155,991<br />
Total assets 846,555 549,500<br />
Segment liabilities 219,936 69,036 37,380 33,094 5,117 1,031 262,433 103,161<br />
Unallocated liabilities 276,223 199,272<br />
Total liabilities 538,656 302,433<br />
Other segment information<br />
Capital expenditure 6,883 12,636 11,904 21,050 5 1,430 18,792 35,116<br />
Depreciation, amortisation and impairment 6,111 4,347 1,502 995 2,105 1,856 9,718 7,198
Hyflux Ltd annual report 2008 107<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
36 Segment reporting (cont’d)<br />
Geographical segments<br />
middle East People’s<br />
and North Republic Singapore<br />
Africa of China and others Total<br />
$’000 $’000 $’000 $’000<br />
2008<br />
Revenue from external customers 223,011 299,965 31,248 554,224<br />
Segment assets 92,936 499,493 186,793* 779,222<br />
Capital expenditure 227 11,185 7,380* 18,792<br />
2007<br />
Revenue from external customers 8,230 156,933 27,623 192,786<br />
Segment assets 6,877 194,665 191,967* 393,509<br />
Capital expenditure – 14,501 20,615* 35,116<br />
* Segment assets and capital expenditure relating to Singapore amounted to $173,289,000 (2007: $189,000,000) and $7,380,000<br />
(2007: $19,582,000), respectively.
108<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
37 Acquisitions of subsidiary and Minority Interest<br />
In June 2007, the Group acquired 100% interest in Langfang Hyflux Newspring Co., Ltd (formerly known as the<br />
Langfang Wastewater Treatment Plant Co., Ltd), a company incorporated in the People’s Republic of China which is in<br />
the business of water recycling and machinery, telecommunications and automotive component manufacturing. The<br />
company’s contribution to the Group’s consolidated net profit for the year ended 31 December 2007 was insignificant.<br />
The Group’s revenue and net profit for the year ended 31 December 2007 would not be significantly different from<br />
those recognised in the consolidated income statement had the acquisition occured on 1 January 2007.<br />
In December 2007, a subsidiary which is an investment holding company became a wholly owned subsidiary of the<br />
Company after the Company acquired the 20% interests held by its minority shareholder. The Group recognised a<br />
goodwill arising from acquisition of minority interest of $242,000.<br />
The effects of the acquisition of subsidiaries/business are set out below:<br />
2008 2007<br />
$’000 $’000<br />
Cash and cash equivalents – 4,594<br />
Current assets – 36,231<br />
Non-current assets – 24,228<br />
Current liabilities – (9,516)<br />
Non-current liabilities – (12,553)<br />
Net identifiable assets and liabilities – 42,984<br />
Positive goodwill on acquisition – 242<br />
Negative goodwill on acquisition – (2,620)<br />
Purchase consideration paid, satisfied in cash – 40,606<br />
Cash acquired – (4,594)<br />
Net cash outflow – 36,012<br />
There was no acquisition of subsidiary in the current financial year.<br />
38 Sale of partial interest in a joint venture<br />
In February 2007, the Company divested 20% of its interest in a Singapore-incorporated joint venture which is in the<br />
business of operation of seawater desalination plant and sale of treated water. The investment was reclassified from<br />
a joint venture to an associate subsequent to the sale.<br />
The effects of the disposal of the joint venture are as follow:<br />
2008 2007<br />
$’000 $’000<br />
Current assets – 4,248<br />
Non-current assets – 39,667<br />
Current liabilities – (2,827)<br />
Non-current liabilities – (31,699)<br />
Gain on disposal – 8,185<br />
Total cash consideration * – 17,574<br />
Cash and cash equivalents disposed – (1,515)<br />
Net cash inflow – 16,059<br />
* Net of professional fees incurred of $143,000
Hyflux Ltd annual report 2008 109<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
39 Financial risk management<br />
Overview<br />
Effective risk management is a fundamental aspect of the Group’s business operations. The management continually<br />
monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is<br />
achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and<br />
the Group’s activities.<br />
The Risk Management Committee oversees how management monitors compliance with the Group’s risk<br />
management policies and procedures and reviews the adequacy of the risk management framework in relation to<br />
the risks faced by the Group.<br />
Credit risk<br />
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its<br />
obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables,<br />
financial and lease receivables and amounts due from related parties.<br />
The Group has a credit policy in place which establishes credit limits for all customers and monitors their balances<br />
on an ongoing basis.<br />
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade<br />
and other receivables, financial and lease receivables and amounts due from related parties. The main components<br />
of this allowance are a specific loss component that relates to individually significant exposures, and a collective<br />
loss component established for groups of similar assets in respect of losses that have been incurred but not yet<br />
identified. The collective loss allowance is determined based on historical data of payment statistics for similar<br />
financial assets.<br />
The allowance account in respect of trade and other receivables is used to record impairment losses unless the<br />
Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered<br />
irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the<br />
impaired financial asset.<br />
To minimise the Group’s counter-party risk, cash and fixed deposits are placed with banks and financial institutions<br />
which are regulated and of good credit ratings.<br />
The maximum exposure to credit risk for trade and other receivables, financial and lease receivables and amounts<br />
due from related parties at 31 December 2008 (by type of customer) is:<br />
Group<br />
company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Municipal 293,504 54,265 – –<br />
Industrial 51,496 21,605 – –<br />
Others 7,987 21,904 380,961 199,083<br />
352,987 97,774 380,961 199,083
110<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
39 Financial risk management (cont’d)<br />
Impairment losses<br />
The ageing of trade and other receivables, financial and lease receivables and amounts due from related parties at<br />
31 December 2008:<br />
2008 2007<br />
impairment<br />
impairment<br />
Gross losses Gross losses<br />
$’000 $’000 $’000 $’000<br />
Group<br />
Not past due 329,173 – 73,349 –<br />
Past due 0 to 60 days 18,173 6 5,062 –<br />
Past due 61 to 120 days 2,765 67 7,192 –<br />
More than 120 days 7,920 4,971 15,731 3,560<br />
358,031 5,044 101,334 3,560<br />
Company<br />
Not past due 380,961 – 199,083 –<br />
Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of the<br />
Group’s loans and receivables not past due at 31 December 2008 as these loans and receivables are mainly due from<br />
governing bodies or agencies of the government of the People’s Republic of China, or customers that have a good<br />
record with the Group. Management believes that no impairment allowance is necessary on the Company’s loans<br />
and receivables as at 31 December 2008.<br />
Liquidity risk<br />
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by<br />
management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. For long-term<br />
projects which require long-term funding, the Group may arrange project financing or other long-term financing<br />
programme as appropriate.<br />
Market risk<br />
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices<br />
will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk<br />
management is to manage and control market risk exposures within acceptable parameters, while optimising the<br />
return on risk.<br />
Interest rate risk<br />
The Group’s exposure to changes in interest rates relates primarily to its interest-earning financial assets and<br />
interest-bearing financial liabilities.<br />
Where applicable on a need be basis, the group uses interest rate swaps to hedge its interest rate exposure.
Hyflux Ltd annual report 2008 111<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
39 Financial risk management (cont’d)<br />
Sensitivity analysis<br />
A change of 75 basis point (bp) in interest rates at the reporting date would increase/(decrease) equity and profit<br />
or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular foreign<br />
currency rates, remain constant.<br />
Group<br />
profit or loss before tax<br />
equity<br />
75 bp 75 bp 75 bp 75 bp<br />
increase decrease increase decrease<br />
$’000 $’000 $’000 $’000<br />
31 December 2008<br />
Variable rate instruments (1,935) 1,935 – –<br />
31 December 2007<br />
Variable rate instruments (1,489) 1,489 – –<br />
Company<br />
31 December 2008<br />
Variable rate instruments (1,918) 1,918 – –<br />
31 December 2007<br />
Variable rate instruments (1,467) 1,467 – –<br />
Foreign currency risk<br />
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in<br />
currencies other than the respective functional currencies of Group entities. The currency giving rise to this risk is<br />
primarily US dollars.<br />
The Group monitors its exposure in respect of trade receivables, trade payables and borrowings denominated in<br />
foreign currencies, as well as forecast sales and purchases over the next 12 months. When necessary, the Group will<br />
use forward exchange contracts to hedge its foreign currency risk.<br />
In respect of other monetary assets and liabilities held in currencies other than the US dollars, the Group ensures that<br />
the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, where necessary,<br />
to address short term imbalances.<br />
The Group and the Company also hold cash and short-term deposits denominated in foreign currencies for working<br />
capital purposes.
112<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
39 Financial risk management (cont’d)<br />
Foreign currency risk (cont’d)<br />
The Group’s and Company’s significant exposures to foreign currency are as follows:<br />
31 December 2008 31 December 2007<br />
us dollars<br />
US dollars<br />
$’000 $’000<br />
Group<br />
Trade and other receivables 72,527 20,121<br />
Cash and fixed deposits 16,138 20,325<br />
Interest-bearing loans and borrowings (183,198) (178,596)<br />
Trade and other payables (24,012) (2,532)<br />
(118,545) (140,682)<br />
Company<br />
Trade and other receivables 204,457 119,480<br />
Cash and fixed deposits 3,181 2,331<br />
Interest-bearing loans and borrowings (183,198) (178,596)<br />
Trade and other payables (50,678) (10,942)<br />
(26,238) (67,727)<br />
Sensitivity analysis<br />
A 10% strengthening of Singapore dollars against the following currencies at the reporting date would increase/<br />
(decrease) equity and profit or loss before tax by the amounts shown below. This analysis assumes that all other<br />
variables, in particular interest rates, remain constant.<br />
Group<br />
company<br />
profit<br />
profit<br />
or loss<br />
or loss<br />
equity before tax Equity before tax<br />
$’000 $’000 $’000 $’000<br />
31 December 2008<br />
US dollars 17,743* (5,889) – 2,624<br />
31 December 2007<br />
US dollars – 14,068 – 6,773<br />
A 10% weakening of Singapore dollars against the above currencies would have had the equal but opposite effect<br />
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.<br />
* This amount would impact the profit or loss before tax over a three year period upon realisation of hedging reserve.
Hyflux Ltd annual report 2008 113<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
39 Financial risk management (cont’d)<br />
Sensitivity analysis (cont’d)<br />
The aggregate net fair values of recognised financial assets and liabilities which are not carried at fair value in the<br />
balance sheet at 31 December are represented in the following table:<br />
2008 2007<br />
carrying Fair Carrying Fair<br />
Group amount value amount value<br />
$’000 $’000 $’000 $’000<br />
Financial assets<br />
Due from associates (non-trade) 36,326 37,356 – –<br />
Unrecognised gain 1,030 –<br />
It is not practicable to reliably estimate the following:<br />
(i)<br />
(ii)<br />
The fair value of available-for-sale unquoted investments due to the lack of quoted market prices in an<br />
active market, significant range of reasonable fair value estimates, and the inability to reasonably assess the<br />
probabilities of the various estimates; and<br />
The fair value of non-current non-trade amounts due from subsidiaries as the timing of the future cash flows<br />
arising from these balances cannot be determined reliably.<br />
40 Commitments<br />
(i)<br />
The Group has various operating lease agreements for office equipment, offices and rental of land. Most leases<br />
contain renewable options and some of leases contain escalation clauses. The lease terms typically do not<br />
contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing.<br />
At 31 December 2008, the Group has commitments for future minimum lease payments under non-cancellable<br />
leases as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Within 1 year 3,352 2,370<br />
After 1 year but within 5 years 12,882 8,616<br />
After 5 years 35,002 19,030<br />
51,236 30,016<br />
(ii)<br />
At 31 December 2008, the Group has outstanding commitments in respect of uncalled capital of approximately<br />
US$128,120,000 (2007: US$70,000,000) in subsidiaries, joint venture and associates.<br />
(iii) At 31 December 2008, the Group has outstanding capital commitments of $7,630,000 (2007: $Nil).<br />
(iv) The Group leases out its investment property. Non-cancellable operating lease rentals are receivable as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Within 1 year 336 336<br />
After 1 year but within 5 years – 336<br />
336 672
114<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
41 Dividends<br />
Group and Company<br />
2008 2007<br />
$’000 $’000<br />
Ordinary dividends paid:<br />
Final tax-exempt (one-tier) dividend in respect of the previous financial year<br />
of 1.89 cents (2007: 1.35 cents) per share 9,909 7,016<br />
Subsequent to the balance sheet date, the directors of the Company proposed a final tax-exempt (one-tier) dividend<br />
of 3.43 cents per share totaling of $18,017,000 in respect of the financial year ended 31 December 2008 for approval<br />
by the shareholders at the forthcoming Annual General Meeting. The dividend has not been provided for in these<br />
financial statements.<br />
42 Contingent liabilities<br />
The Company has given formal undertakings to provide financial support to certain subsidiaries with deficit<br />
shareholders’ equity for at least the next twelve months from the balance sheet date.<br />
43 Related parties<br />
Key management personnel compensation<br />
Key management personnel of the Group are those persons having the authority and responsibility for planning,<br />
directing and controlling the activities of the Group.<br />
Key management personnel compensation comprises:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Directors’ fees 574 457<br />
Short-term employee benefits 2,519 2,286<br />
Share-based payments 800 1,600<br />
3,893 4,343<br />
Comprise amounts paid/payable to:<br />
– Directors of the company 1,443 2,057<br />
– Other key management personnel 2,450 2,286<br />
3,893 4,343<br />
The directors of the company also participate in the Hyflux Employee Share Option Scheme. Details of options<br />
granted to the directors under the Scheme are described in note 29.
Hyflux Ltd annual report 2008 115<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
43 Related parties (cont’d)<br />
Other related party transactions<br />
Other than as disclosed elsewhere in the financial statements, transactions carried out in the normal course of<br />
business on terms agreed with related parties are as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Joint venture<br />
Management fee 88 –<br />
Rental income 36 24<br />
Associates<br />
Revenue from construction contracts 70,823 70,725<br />
Revenue from maintenance contracts 6,778 904<br />
Management fees income 1,106 1,000<br />
Rental income – 334<br />
44 Accounting estimates and judgementS<br />
Estimates and judgements are continually evaluated and are based on historical experience and other factors,<br />
including expectations of future events that are believed to be reasonable under the circumstances.<br />
The Group believes the following critical accounting policies involve significant judgements and estimates used in<br />
the preparation of the financial statements.<br />
Impairment of non-financial assets<br />
The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting<br />
date. Goodwill and other intangible assets that are not available for use are tested for impairment annually or as and<br />
when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the<br />
carrying amounts may not be recoverable.<br />
When value in use calculations are undertaken, management must estimate the expected future cash flows from<br />
the asset or cash cash-generating unit and choose a suitable discount rate in order to calculate the present value<br />
of those cash flows. Further details of the key assumptions applied in the impairment assessment of goodwill are<br />
given in note 4.
116<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
44 Accounting estimates and judgementS (cont’d)<br />
Impairment of loans and receivables<br />
The Group evaluates whether there is any objective evidence that loans and receivables are impaired and determines<br />
the amount of impairment loss as a result of the inability of the debtors to make required payments. The Group<br />
considers factors such as the ageing of the loans and receivables, credit-worthiness of the debtors, the probability<br />
of insolvency or significant financial difficulties of the debtor, default or significant delay in payments, and historical<br />
write-off experience. If the financial conditions of the debtors were to deteriorate, actual write-offs would be higher<br />
than estimated.<br />
Development costs<br />
Development costs are capitalised in accordance with the accounting policy in note 2.5. Initial capitalisation of<br />
costs is based on management’s judgement that technological and economical feasibility is confirmed, usually<br />
when a product development project has reached a defined milestone according to an established project<br />
management model.<br />
Capitalised development costs are amortised on a straight-line basis over the estimated useful lives. Significant<br />
judgement is required in estimating the useful lives, which could be affected by factors such as technological<br />
developments.<br />
Construction contracts<br />
The Group recognises contract revenue by reference to the stage of completion of the contract activity at the balance<br />
sheet date, when the outcome of a construction contract can be estimated realiably. The stage of completion<br />
is measured by reference to the proportion that contract costs incurred for work performed to date bear to the<br />
estimated total contract costs. Significant judgement is required to estimate the total contract costs<br />
and the recoverable variation works that will affect the stage of completion.<br />
Service concession arrangements<br />
Revenue for construction services provided under the concession arrangements and the corresponding financial<br />
receivables and/or intangible assets arising are recognised based on the percentage of completion method during<br />
the construction phase.<br />
The percentage of completion method during the construction phase is measured by reference to the proportion<br />
that construction costs incurred to date bear to the estimated total construction costs. Significant judgement is<br />
required in determining the stage of completion, the extent of the construction costs incurred and the estimated<br />
total construction costs.<br />
Significant judgement is also exercised in determining the fair values of the financial receivables and/or intangible<br />
assets. Discount rates, estimates of future cash flows and other factors are used in the valuation process. The<br />
assumptions used and estimates may result in different fair value estimates.
Hyflux Ltd annual report 2008 117<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
45 New accounting standards and interpretations not yet adopted<br />
The Group has not applied the following accounting standards (including their consequential amendments) and<br />
interpretations that have been issued as of the balance sheet date but are not yet effective:<br />
•<br />
•<br />
•<br />
•<br />
•<br />
•<br />
•<br />
•<br />
•<br />
FRS 1 (revised 2008) Presentation of Financial Statements<br />
FRS 23 (revised 2007) Borrowing Costs<br />
Amendments to FRS 32 Financial Instruments: Presentation and FRS 1 Presentation of Financial Statements –<br />
Puttable Financial Instruments and Obligations Arising on Liquidation<br />
Amendments to FRS 101 First-time Adoption of Financial Reporting Standards and FRS 27 Consolidated and<br />
Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate<br />
Amendments to FRS 102 Share-based Payment – Vesting Conditions and Cancellations<br />
FRS 108 Operating Segments<br />
Improvements to FRSs 2008<br />
INT FRS 113 Customer Loyalty Programmes<br />
INT FRS 116 Hedges of a Net Investment in a Foreign Operation<br />
FRS 1 (revised 2008) will become effective for the Group’s financial statements for the year ending 31 December<br />
2009. The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in<br />
equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement<br />
of comprehensive income or in two statements (a separate income statement and a statement of comprehensive<br />
income). Components of comprehensive income are not permitted to be presented in the statement of changes in<br />
equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period<br />
following a change in accounting policy, the correction of an error or the reclassification of items in the financial<br />
statements. FRS 1 (revised 2008) does not have any impact on the Group’s financial position or results.<br />
FRS 23 (revised 2007) will become effective for financial statements for the year ending 31 December 2009. FRS 23<br />
(revised 2007) removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs<br />
directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.<br />
The Group’s current policy to capitalise borrowing costs is consistent with the requirement in the revised FRS 23.<br />
The amendments to FRS 32 and FRS 1 on puttable financial instruments will become effective for the Group’s financial<br />
statements for the year ending 31 December 2009. The amendments allow certain instruments that would normally<br />
be classified as liabilities to be classified as equity if and only if they meet certain conditions. The Group does not<br />
issue such puttable financial instruments and thus the application of these amendments is not expected to have any<br />
significant impact on the Group’s financial statements.
118<br />
Hyflux Ltd annual report 2008<br />
Notes to the Financial Statements (cont’d)<br />
As at 31 December 2008<br />
45 New accounting standards and interpretations not yet adopted (cont’d)<br />
The amendments to FRS 101 and FRS 27 on the cost of an investment in a subsidiary, jointly controlled entity or<br />
associate will become effective for the Company’s financial statements for the year ending 31 December 2009. The<br />
amendments remove the definition of “cost method” currently set out in FRS 27, and instead require an entity to<br />
recognise all dividend from a subsidiary, jointly controlled entity or associate as income in its separate financial<br />
statements when its right to receive the dividend is established. The application of these amendments is not expected<br />
to have any significant impact on the Company’s financial statements.<br />
The amendments to FRS 102 on vesting conditions and cancellations will become effective for the Group’s financial<br />
statements for the year ending 31 December 2009. The amendments clarify the definition of vesting conditions<br />
and provide the accounting treatment for non-vesting conditions and cancellations. The application of these<br />
amendments is not expected to have any significant impact on the Group’s financial statements.<br />
FRS 108 will become effective for the Group’s financial statements for the year ending 31 December 2009.<br />
FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments<br />
based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to<br />
allocate resources to the segment and to assess its performance. The Group does not expect the new operating<br />
segments to be significantly different from the business segments currently disclosed but expects more information<br />
to be disclosed under FRS 108.<br />
Improvements to FRSs 2008 will become effective for the Group’s financial statements for the year ending 31 December<br />
2009, except for the amendment to FRS 105 Non-current Assets Held for Sale and Discontinued Operations which<br />
will become effective for the year ending 31 December 2010. Improvements to FRSs 2008 contain amendments to<br />
numerous accounting standards that result in accounting changes for presentation, recognition or measurement<br />
purposes and terminology or editorial amendments. The Group is in the process<br />
of assessing the impact of these amendments.<br />
INT FRS 113 will become effective for the Group’s financial statements for the year ending 31 December 2009. INT<br />
FRS 113 concludes that where entities grant award credits as incentives to customers to buy their goods or services<br />
(e.g. loyalty points or free products), such customer loyalty programmes should be accounted for by taking a multiple<br />
sales approach, i.e. by deferring some of the revenue received from the initial sales transaction, to be recognised as<br />
revenue as and when the entity provides the goods or services promised under the customer loyalty programmes. The<br />
application of this Interpretation is not expected to have any significant impact on the Group’s financial statements.<br />
INT FRS 116 will become effective for the Group’s financial statements for the year ending 31 December 2009. INT FRS<br />
116 provides guidance on identifying foreign currency risks and hedging instruments that qualify for hedge accounting<br />
in the hedge of a net investment in a foreign operation. It also explains how an entity should determine the amounts to<br />
be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. The application of this<br />
Interpretation is not expected to have any significant impact on the Group’s financial statements.<br />
Other than the changes in disclosures relating to FRS 1 and FRS 108, the initial application of these standards<br />
(including their consequential amendments) and interpretations is not expected to have any material impact on the<br />
Group’s financial statements.<br />
The Group has not considered the impact of accounting standards issued after the balance sheet date.<br />
46 Comparative information<br />
The financial statements for the year ended 31 December 2007 were audited by another firm of Certified Public<br />
Accountants.
Hyflux Ltd annual report 2008 119<br />
Corporate Governance Statement<br />
Hyflux continues to place great importance on the governance of the Company and its subsidiaries, which it believes<br />
is vital to its well being and success. Hyflux is committed to best practice corporate governance and processes that will<br />
enhance the Group’s effectiveness, ensure the appropriate degree of accountability and transparency and an increase in<br />
long term value and return to shareholders.<br />
The Group subscribes to the Code of Corporate Governance 2005 (“Code”) and believes that this forms a sound platform<br />
for supporting good corporate governance practices.<br />
This statement outlines the main corporate governance practices of the Group with specific reference made to the<br />
principles and guidelines of the Code, forming part of the Continuing Obligations set out in the Singapore Exchange<br />
Securities Trading Limited’s (“SGX-ST”) Listing Manual.<br />
Hyflux will continue to review and refine its practices especially in light of the Audit Committee Guidance Committee<br />
(“ACGC”) guidebook, and other standards of best practice that develop in the market, consistent with the needs and the<br />
circumstances of the Group.<br />
In developing the appropriate corporate governance practices, the Group takes into account all applicable legislation<br />
and recognised standards. Hyflux is committed to instilling and maintaining good corporate governance at all times.<br />
The Board is pleased to report that throughout the reporting period for the financial year ended 31 December 2008,<br />
Hyflux complied with the Code’s principles and guidelines.<br />
BOARD MATTERS<br />
BOARD’S CONDUCT OF ITS AFFAIRS:<br />
Principle 1:<br />
Effective Board to lead and control the Company<br />
Role of the Board<br />
The primary role of the Board is to protect and enhance long term shareholders value and on ensuring that the Company<br />
is run in accordance with best international management and corporate governance practices, appropriate to the needs<br />
and development of the Company.<br />
The Board is responsible for general oversight of the Company’s activities and performance and for setting the Company’s<br />
overall strategic direction. It provides leadership and guidance on corporate strategy, business directions, risk policy and<br />
implementation of corporate objectives, thereby taking responsibility for the overall corporate governance of the Group.<br />
In delegating responsibility for the day-to-day operation and leadership of the Company to the Executive Director<br />
and Chief Executive Officer and the Management team, the Board has processes and systems in place to ensure that<br />
significant issues, risks and major strategic decisions are monitored and considered at Board level.<br />
To assist in the execution of its responsibilities, the Board has established several Board Committees namely; Audit<br />
Committee, Nominating Committee, Remuneration Committee, Risk Management Committee and Executive Committee.<br />
These Committees function within clearly defined terms of reference, which are reviewed on a regular basis.
120<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
Matters which are specifically reserved to the full Board for decision are those involving material acquisitions, disposal<br />
of assets, corporate or financial restructuring, share issuances, dividends and other returns to shareholders, conflict<br />
of interest for substantial Shareholder or Director, and matters which require Board approval as specified under the<br />
Company’s interested person transaction policy.<br />
The Board held four meetings in the 2008 financial year. The Board may convene additional meetings to address any<br />
specific significant matters that may arise from time to time.<br />
A summary of attendance by Directors at Board and Board Committee Meetings for the financial year ended 31 December<br />
2008 is set out as follows:<br />
Board of<br />
Directors<br />
Audit Committee<br />
Nominating<br />
Committee<br />
Remuneration<br />
Committee<br />
Risk<br />
Management<br />
Committee<br />
Name<br />
No. of<br />
Meetings<br />
Held<br />
No. of<br />
Meetings<br />
Attended<br />
No. of<br />
Meetings<br />
Held<br />
No. of<br />
Meetings<br />
Attended<br />
No. of<br />
Meetings<br />
Held<br />
No. of<br />
Meetings<br />
Attended<br />
No. of<br />
Meetings<br />
Held<br />
No. of<br />
Meetings<br />
Attended<br />
No. of<br />
Meetings<br />
Held<br />
No. of<br />
Meetings<br />
Attended<br />
Olivia Lum 4 4 4 4* 1 1* 1 1* 3 2*<br />
Teo Kiang Kok 4 4 4 4 1 1 1 1 3 3<br />
Lee Joo Hai 4 4 4 4 1 1 1 1 3 3<br />
Gay Chee Cheong 4 4 4 4 1 1 1 1 NA NA<br />
Christopher<br />
Murugasu<br />
Professor Tan<br />
Teck Meng<br />
4 4 NA NA NA NA 1 1 3 3<br />
4 3 4 4 NA NA NA NA NA NA<br />
Raj Mitta 4 3 NA NA NA NA NA NA 3 3<br />
Ahmed Butti<br />
Ahmed 1 3 2 NA NA NA NA NA NA NA NA<br />
Legend:<br />
NA Not applicable<br />
1<br />
Mr Ahmed Butti Ahmed was appointed to the Board on 25 April 2008<br />
* Attendance by invitation
Hyflux Ltd annual report 2008 121<br />
Corporate Governance Statement (cont’d)<br />
BOARD COMPOSITION AND GUIDANCE<br />
Principle 2:<br />
Strong and independent element on the Board<br />
The eight members’ board of the Company in office and their memberships in the respective Board Committees for the<br />
financial year ended 31 December 2008 are set out as follows:<br />
Name<br />
Board<br />
Audit<br />
Committee<br />
Nominating<br />
Committee<br />
Remuneration<br />
Committee<br />
Risk<br />
Management<br />
Committee<br />
Executive<br />
Committee<br />
Ms Olivia Lum Executive Director Chairman<br />
Mr Teo Kiang<br />
Kok<br />
Mr Lee Joo Hai<br />
Non-Executive,<br />
Non-Independent<br />
Director<br />
Non-Executive,<br />
Independent Director<br />
Member Member Member Member Member<br />
Chairman Member Member Member Member<br />
Mr Gay Chee<br />
Cheong<br />
Non-Executive,<br />
Independent Director<br />
Member Chairman Member Member<br />
Mr Christopher<br />
Murugasu<br />
Non-Executive,<br />
Non-Independent<br />
Director<br />
Member<br />
Member<br />
Professor Tan<br />
Teck Meng<br />
Non-Executive,<br />
Independent Director<br />
Member<br />
Chairman<br />
Mr Raj Mitta<br />
Mr Ahmed<br />
Butti Ahmed<br />
Non-Executive,<br />
Independent Director<br />
Non-Executive,<br />
Non-Independent<br />
Director<br />
Chairman<br />
The Board considers an Independent Director as one who has no relationship with the Company, its related Companies<br />
or its officers that could interfere or be reasonably perceived to interfere, with the exercise of the Director’s independent<br />
business judgment.<br />
While all the Directors have equal responsibilities for the performance of the Group, Non-Executive members of the<br />
Board exercise no management function in the Company or any of its subsidiaries. The role of Non-Executive Directors<br />
is primarily to ensure that the strategies proposed by the Management are fully discussed, vigorously examined, taking<br />
into consideration the long term interest of the shareholders, employees, customers, suppliers and the communities in<br />
which the Group conducts its business.<br />
The Board believes the composition of the Board requires consideration of a number of factors, including the mix in skills,<br />
abilities and expertise, the mix in the length of time Directors have had on the Board, as well as experience on other boards.<br />
The general policy of the Company is to seek to have the Board comprised of at least half Independent Directors.
122<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
The Board is of the view that there is presently a good balance between the Executive and Non-Executive Directors and<br />
a strong and independent element on the Board. The present board size and number of Board Committees facilitate<br />
effective decision making and is appropriate for the nature and scope of the Group’s business and operations.<br />
The Board consists of respected business leaders and professionals whose collective core competencies and experience<br />
are extensive, diverse and relevant to the Group. The names, qualifications and relevant skills, experience and expertise<br />
of the Directors can be found on pages 12 and 13 of this report. As evidenced by this information, the Directors bring to<br />
the Board a broad range of experience and expertise.<br />
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (“CEO”)<br />
Principle 3:<br />
Clear division of responsibilities at the top of the Company<br />
The Board does not have a chairman on the Board of Directors. Responsibilities for various functions and departments<br />
in the Group are well defined. The Board is of the opinion that the process of decision making by the Board has been<br />
independent, based on collective decisions without any individual exercising any considerable concentration of power<br />
or influence.<br />
BOARD MEMBERSHIP<br />
Principle 4:<br />
Formal and transparent process for appointment of new Directors to the Board<br />
The Nominating Committee (“NC”) has been tasked by the Board to identify, select and recommend individuals with<br />
the appropriate skills, expertise and experience for appointment, thereby ensuring a balanced and effective board at<br />
all times.<br />
Newly appointed Directors are provided with a training and induction programme, so as to familiarise him with the<br />
Group’s structure and its business.<br />
The NC comprises of three Directors:<br />
Mr Gay Chee Cheong (Chairman).<br />
Mr Lee Joo Hai.<br />
Mr Teo Kiang Kok.<br />
The primary function and duties of the NC are outlined as follows:<br />
1. to make recommendations to the Board on all board appointments and re-nominations having regard to the Director’s<br />
contribution and performance (e.g. attendance, preparedness, participation, candour, and any other salient factors);<br />
2. to ensure that all Directors would be required to submit themselves for re-nomination and re-election at regular<br />
intervals and at least once in every three years;<br />
3. to determine annually whether a Director is independent, in accordance with the independence guidelines in<br />
the Code;<br />
4. to review whether a Director is able to and has adequately carried out his duties as a Director of the Company in<br />
particular where the Director concerned has multiple board representations; and<br />
5. to consider how the Board’s performance may be evaluated and to propose objective performance criteria.<br />
The NC conducts an annual review of Directors’ independence and based on the Code’s criteria for independence, the<br />
NC is of the view that, in respect of the financial year ended 31 December 2008; Professor Tan Teck Meng, Mr Gay Chee<br />
Cheong, Mr Lee Joo Hai, Mr Raj Mitta, are deemed independent.
Hyflux Ltd annual report 2008 123<br />
Corporate Governance Statement (cont’d)<br />
The NC has recommended the nomination of Directors retiring by rotation under the Company’s Articles of Association,<br />
namely, Mr Teo Kiang Kok and Mr Christopher Murugasu.<br />
In reviewing the nomination of the retiring Directors, the NC considered the performance and contribution of each of<br />
the retiring Directors, having regard not only to their attendance and to participation at Board and Board Committee<br />
meetings but also the time and efforts devoted to the Group’s business and affairs.<br />
BOARD PERFORMANCE<br />
Principle 5:<br />
Formal assessment of the effectiveness of the Board and contributions by each Director<br />
The Code recommends that the NC be responsible for assessing the Board as a whole and the individual Director’s<br />
contribution. The NC believes that it is more appropriate and effective to assess the Board as a whole, bearing in mind<br />
that each member of the Board contributes in different ways to the success of the Group.<br />
The NC in conducting the evaluation and appraisal process focuses on a set of performance criteria which includes<br />
the evaluation of the size and composition of the Board, the Board’s access to information, Board processes and<br />
accountability, Board performance in relation to discharging its principal responsibilities and the Directors’ standards<br />
of conduct.<br />
The Board is of the view that the financial indicators set out in the Code as a guide for the evaluation of the Board<br />
and its Directors, may not be appropriate; as they are more relevant as a form of measurement of the Management’s<br />
performance. The NC conducted a Board performance evaluation to assess the effectiveness of the Board in respect of<br />
the financial year ended 31 December 2008 and is satisfied that sufficient effort, time and attention has been given by<br />
the Directors to the affairs of the Group.<br />
ACCESS TO INFORMATION<br />
Principle 6:<br />
Board members to have complete, adequate and timely information<br />
The Board has separate and independent access to members of the senior management team of the Group, the<br />
Company Secretary and the external auditors at all times. The Directors also have unrestricted access to the Company’s<br />
records and information, all minutes of meetings held by the Board and Board Committees, and management accounts<br />
to enable them to carry out their duties.<br />
The Company Secretary attends all Board and Board Committee meetings. The Company Secretary administers, attends<br />
and prepares minutes of the Board and Board Committee meetings, and assists in ensuring that Board procedures are<br />
followed and reviewed in accordance with the Company’s Articles of Association so that the Board functions effectively<br />
and the relevant rules and regulations applicable to the Company are complied with. The Company Secretary’s role is<br />
to advise the Board on all governance matters, ensuring that legal and regulatory requirements as well as board policies<br />
and procedures are complied with.<br />
Should Directors, whether as a group or individually, require professional advice, the Company shall upon the direction<br />
of the Board, appoint a professional advisor selected by the Group or the individual, approved by the Management, to<br />
render the service. The costs of such service shall be borne by the Company.
124<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
PROCEDURES FOR DEVELOPING REMUNERATION POLICIES<br />
Principle 7:<br />
Formal and transparent procedure for fixing remuneration packages of Directors and senior management<br />
The Remuneration Committee (“RC”) comprises of five Directors :<br />
Professor Tan Teck Meng (Chairman).<br />
Mr Gay Chee Cheong.<br />
Mr Lee Joo Hai.<br />
Mr Teo Kiang Kok.<br />
Mr Christopher Murugasu.<br />
The RC is committed to the principles of accountability and transparency; and to ensuring that remuneration<br />
arrangements demonstrate a clear link between reward and performance.<br />
The RC is responsible for ensuring a formal and transparent procedure for developing policy on executive remuneration,<br />
and for fixing the remuneration packages of individual Directors and members of the senior management team.<br />
The RC’s review covers all aspects of remuneration including but not limited to, Directors’ fees, salaries, allowances,<br />
bonus, employees share options and benefits in kind and specific remuneration package for each Director.<br />
In structuring a compensation framework for Executive Director and senior management employees, the RC seeks to<br />
link a proportion of the compensation to the Group’s performance. Its recommendations are made in consultation with<br />
the Executive Committee and submitted for endorsement by the Board. No Director is involved in deciding his own<br />
remuneration. The RC, when deemed necessary, may obtain expert advice with regards to remuneration matters.<br />
LEVEL AND MIX OF REMUNERATION<br />
Principle 8:<br />
The level of remuneration for Directors should be adequate, not excessive, and linked to performance<br />
The remuneration policy of the Company is to provide compensation packages at market rates, which reward<br />
performance and attract, retain and motivate Directors and members of the senior management team.<br />
The Executive Director does not receive Directors’ fees. The Executive Director and senior management employees’<br />
remuneration packages are based on service contracts and their remuneration is determined by having due regard to<br />
the performance of the individuals, the Group as well as market trends.<br />
Non-Executive Directors are paid yearly Directors’ fees of an agreed amount based on their contributions, taking into<br />
account factors such as effort and time spent, responsibilities of the Directors and the need to pay competitive fees to<br />
attract, motivate and retain Directors.<br />
DISCLOSURE ON REMUNERATION<br />
Principle 9:<br />
Clear disclosure of remuneration policy, level and mix of remuneration, and the procedure for setting the<br />
remuneration<br />
An appropriate and attractive level of remuneration has been set to attract, retain and motivate Directors and employees.<br />
The remuneration package for Executive Director and employees consists of both fixed and variable components. The<br />
variable component is determined based on the performance of the individual employee and the Group’s performance<br />
in the relevant financial year. Annual increments and adjustments to remuneration are reviewed and approved taking<br />
into account the outcome of the annual appraisal of the employees.
Hyflux Ltd annual report 2008 125<br />
Corporate Governance Statement (cont’d)<br />
Non-Executive Directors are paid Directors’ fees that are subject to shareholders’ approval at the Company’s Annual<br />
General Meeting (“AGM”). The RC recommends a total Directors’ fees of $ 574,110 be paid to Non-Executive Directors for<br />
the financial year ended 31 December 2008. This will be tabled for the shareholders’ approval at the forthcoming AGM.<br />
Details of the Directors receiving remuneration from the Group for the year ended 31 December 2007 and 2008 are set<br />
out as follows:<br />
number of Directors<br />
Remuneration band 2008 2007<br />
S$500,000 and above 0 0<br />
S$250,000 to below S$500,000 1 1<br />
Below S$250,000 7 7<br />
The following table sets out the summary compensation for Directors and top five key executives for the financial year<br />
ended 31 December 2008:<br />
Allowances<br />
and other<br />
Directors salary Bonus Fees benefits Total<br />
Between S$250,000 to S$500,000<br />
Olivia Lum 89% 7% 0% 3% 100%<br />
Below S$250,000<br />
Gay Chee Cheong 0% 0% 100% 0% 100%<br />
Lee Joo Hai 0% 0% 100% 0% 100%<br />
Teo Kiang Kok 0% 0% 100% 0% 100%<br />
Christopher Murugasu 0% 0% 100% 0% 100%<br />
Professor Tan Teck Meng 0% 0% 100% 0% 100%<br />
Raj Mitta 0% 0% 100% 0% 100%<br />
Ahmed Butti Ahmed 0% 0% 100% 0% 100%<br />
Allowances<br />
and other<br />
Top five key executives salary Bonus Fees benefits Total<br />
S$500,000 and above<br />
Ong Eng Keang Sam 62% 31% 0% 7% 100%<br />
Between S$250,000 to S$500,000<br />
Cho Wee Peng 71% 29% 0% 0% 100%<br />
Fong Chun Hoe 83% 17% 0% 0% 100%<br />
Tan Eng Seng Benjamin 68% 17% 0% 15% 100%<br />
Wu Siu Kin Peter 68% 21% 0% 11% 100%<br />
Immediate family member of a Director<br />
Below S$250,000<br />
Teo Yuan Cheng Casey 96% 4% 0% 0% 100%<br />
Immediate Family Members of Directors<br />
There are no immediate family members of Directors or controlling shareholders in employment with the Group and<br />
whose remuneration exceeds S$150,000 during financial year ended 31 December 2008.
126<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
ACCOUNTABILITY<br />
Principle 10: Board should present a balanced and understandable assessment of the Company’s performance, position<br />
and prospects<br />
The Board promotes timely and balanced disclosure of all material matters concerning the Group. It updates shareholders<br />
on the operations and financial position of the Group through quarterly, half yearly and full year results announcements<br />
as well as timely announcements of other matters as prescribed by the SGX-ST’s Listing Manual requirements and other<br />
relevant rules and regulations.<br />
The Board is accountable to shareholders for the management of the Group and the Management is accountable to the<br />
Board by providing the Board with the necessary information for the discharge of its duties.<br />
AUDIT COMMITTEE<br />
Principle 11: Establishment of Audit Committee with written terms of reference<br />
The Audit Committee (“AC”) comprises the following members:<br />
Mr Lee Joo Hai (Chairman).<br />
Mr Gay Chee Cheong.<br />
Mr Teo Kiang Kok.<br />
Professor Tan Teck Meng.<br />
In accordance with the principles in the Code, the AC comprises of Non-Executive Directors, majority of whom are<br />
independent. The members of AC, collectively, have expertise and extensive experience in legal, accounting, financial<br />
management and business, and are qualified to discharge the AC’s responsibilities.<br />
The primary functions of the AC are as follows:<br />
1. assists the Board in discharging its statutory responsibilities on financial and accounting matters;<br />
2. reviews the financial and operating results and accounting policies of the Group;<br />
3. reviews significant financial reporting issues and judgments relating to financial statements for each financial year,<br />
interim and annual results announcement before submission to the Board for approval;<br />
4. reviews the adequacy of the Company’s internal control (financial and operational) and risk management policies<br />
and systems established by the Management;<br />
5. reviews the audit plans and reports of the external and internal auditors and consider the effectiveness of the<br />
actions taken by the Management on the auditors’ recommendations;<br />
6. appraises and reports to the Board on the audits undertaken by the external and internal auditors, the adequacy<br />
of the disclosure of information, and the appropriateness and quality of the system of management and internal<br />
controls;<br />
7. reviews the independence of external auditors annually and consider the appointment or re-appointment of<br />
external auditors and matters relating to the resignation or removal of the auditors and approve the remuneration<br />
and terms of engagement of the external auditors; and<br />
8. reviews interested person transactions, as defined in the Listing Manual of the SGX-ST.
Hyflux Ltd annual report 2008 127<br />
Corporate Governance Statement (cont’d)<br />
In fulfilling its responsibilities, the AC receives regular reports from the Management and the external auditors, KPMG.<br />
The AC has full access to and co-operation of the Management and meets with KPMG in private at least once a year, and<br />
more frequently, if necessary.<br />
The AC has explicit authority within the scope of its responsibilities to seek any information it requires or investigate any<br />
matter within its terms of reference. The AC has adequate resources to enable it to discharge its responsibilities properly.<br />
The Group has put in place a confidential communication programme as endorsed by the AC. Employees may, in<br />
confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters<br />
and to ensure that arrangements are in place for the independent investigations of such matters and for appropriate<br />
follow up actions. The details of the confidential communication policies and arrangements have been made available<br />
to all employees.<br />
INTERNAL CONTROLS<br />
Principle 12: The Board to ensure that the Management maintains a sound system of internal controls to safeguard the<br />
shareholders’ investments and the company’s assets<br />
The AC is fully aware of the need to put in place a system of internal controls within the Group to safeguard the<br />
shareholders’ interests and the Group’s assets, and to manage risks. The system is intended to provide reasonable but<br />
not absolute assurance against material misstatements or loss, and to safeguard assets and ensure maintenance of<br />
proper accounting records, reliability of financial information, compliance with appropriate legislation, regulation and<br />
best practice, and the identification and containment of business risks.<br />
The Group regularly reviews and improves its business and operational activities to identify areas of significant business<br />
risks as well as taking appropriate measures to control and mitigate these risks. The Group reviews all significant control<br />
policies and procedures and highlights all significant matters to the AC and the Board. The financial risk management<br />
objectives and policies are outlined in the financial statements. Risk Management alone does not guarantee that business<br />
undertakings will not fail. However, by identifying and managing risks that may arise, the Group is in a position to make<br />
more informed decisions and will benefit from a better balance between risk and reward. This will assist in protecting<br />
and creating shareholders’ value.<br />
Based on the information provided to the AC, it is not aware of any issues causing it to believe that the system of internal<br />
controls and risk management as inadequate.<br />
INTERNAL AUDIT<br />
Principle 13: Setting up independent internal audit function<br />
The Group has put in place a dedicated team of internal auditors. The internal audit function includes reviewing the<br />
effectiveness of the material internal controls of the Group. The Internal Audit Director reports directly to the Chairman<br />
of the AC and has an appropriate standing within the Group. The AC meets with the Internal Auditor in private at least<br />
once a year. The AC also ensures that the internal audit function is adequately resourced, and reviews annually the<br />
adequacy of the internal audit function. The internal audit team meets the standards set by nationally and internationally<br />
recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The<br />
Institute of Internal Auditors.<br />
Within this framework, the internal audit function provides reasonable assurance that the risks incurred by the Group in<br />
each major activity will be identified, analysed and managed by the Management. The Internal Auditor will also make<br />
recommendations to enhance the effectiveness and security of the Group’s operations.
128<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
COMMUNICATION WITH SHAREHOLDERS<br />
Principle 14: Regular, effective and fair communication with shareholders<br />
Principle 15: Shareholders’ participation at AGM<br />
The Company is committed to regular and proactive communication with its shareholders. It aims to provide shareholders<br />
with clear, balanced useful and material information on a timely basis to ensure that shareholders receive a balanced and<br />
up-to-date view of the Group’s performance and business.<br />
Where there is inadvertent disclosure made to a selected group, the Company will make the same disclosure publicly as<br />
soon as practicable. Communication is made through:<br />
1. annual reports that are prepared and issued to all shareholders. The Board makes every effort to ensure that the<br />
annual report includes all relevant information about the Group, including future development and other disclosures<br />
required by the Companies’ Act, Chapter 50, and Singapore Statements of Accounting Standards;<br />
2. quarterly and full-year financial statements comprising a summary of the financial information and affairs of the<br />
Group for the relevant period;<br />
3. explanatory memoranda for AGM and extraordinary general meetings;<br />
4. press releases on major developments of the Group;<br />
5. disclosures to the SGX-ST via SGXNET; and<br />
6. the Group’s website at http://www.hyflux.com at which shareholders can access information of the Group at all<br />
times.<br />
In addition, shareholders are encouraged to attend the Company’s AGM to ensure a high level of accountability and to<br />
stay informed of the Group’s strategies and growth.<br />
In accordance with the principles in the Code, the full Board of Directors and the external auditor in office are required<br />
to attend the Company’s AGM and will address any question raised at the meeting. The Group fully supports the Code’s<br />
principle to encourage active shareholder participation.
Hyflux Ltd annual report 2008 129<br />
Corporate Governance Statement (cont’d)<br />
RISK MANAGEMENT COMMITTEE<br />
The Risk Management Committee (“RMC”) comprises the following members:<br />
Mr Raj Mitta (Chairman).<br />
Mr Christopher Murugasu.<br />
Mr Lee Joo Hai.<br />
Mr Teo Kiang Kok.<br />
The functions of the RMC are as follows:<br />
1. to review with the Management, and, where needed, with external consultants on areas of risk that may affect the<br />
viability and smooth operations of the Company, as well as the Management’s risk mitigation efforts, with the view<br />
of safeguarding shareholder’s interest and Group assets;<br />
2. to direct and work with Management to develop and review policies and processes to address and manage<br />
identified areas of risk in a systematic and structured manner;<br />
3. to make recommendations to the Board in relation to business risks that may affect the Company, as and when<br />
these may arise;<br />
4. to review new investments; and<br />
5. to perform any other functions as may be agreed by the Board.<br />
Executive Committee<br />
The Executive Committee is an executive arm of the Board and the Board Committees.<br />
The members of the Executive Committee are:<br />
Ms Olivia Lum (Chairman).<br />
Mr Lee Joo Hai.<br />
Mr Teo Kiang Kok.<br />
Mr Gay Chee Cheong.<br />
The main functions of the Executive Committee are:<br />
1. to make recommendations to the Board and the Board Committees on the businesses and the affairs of the<br />
Company and its subsidiaries and affiliates;<br />
2. to participate in the deliberations of the Board and the Board Committees as appropriate, subject to such direction<br />
as the Chairman of the Board or the Board Committee may give;<br />
3. to implement the decisions of the Board and the Board Committees; and<br />
4. to undertake assignments as the Board or any Board Committee may direct from time to time.
130<br />
Hyflux Ltd annual report 2008<br />
Corporate Governance Statement (cont’d)<br />
Management Committee<br />
The members of the Management Committee for financial year ending 31 December 2009 are:<br />
Ms Olivia Lum (Chairman).<br />
Mr Sam Ong.<br />
Mr Cho Wee Peng.<br />
Mr Fong Chun Hoe.<br />
Mr Foo Hee Kiang.<br />
Ms Winnifred Heap.<br />
Mr Lee Soon Eng.<br />
DEALING IN SECURITIES<br />
The Company has adopted its own internal compliance code pursuant to the SGX-ST’s best practices on dealings in<br />
securities and these are applicable to all its officers in relation to their dealings in the Company’s securities. Its officers<br />
are advised not to deal in the Company’s shares during the period commencing two weeks or one month before the<br />
announcement of the Company’s interim or full year results respectively, or if they are in possession of unpublished price<br />
sensitive information of the Company. In addition, its Directors and officers are expected to observe insider trading laws<br />
at all times even when dealing in securities within the permitted trading period.<br />
The Group has complied with the Best Practices Guide on Securities Transactions issued by the SGX-ST.<br />
MATERIAL CONTRACTS<br />
There are no material contracts of the Company or its subsidiaries involving the interests of the Managing Director, each<br />
Director or Controlling shareholders, either still subsisting at the end of the financial year or entered into since the end<br />
of the previous financial year.<br />
INTERESTED PARTY TRANSACTION<br />
The Group has established procedures to ensure that all transactions with interested persons are reported on a timely<br />
manner to the AC and that the transactions are at arm’s length basis. All interested person transactions are subject to<br />
review by the AC to ensure compliance with the established procedures.
Hyflux Ltd annual report 2008 131<br />
Supplementary Information<br />
Material Contracts<br />
There were no material contracts of the Company or its subsidiaries involving the interests of the Chief Executive Officer<br />
(as defined in the SGX-ST Listing Manual), each Director or Controlling shareholder, either still subsisting at the end of<br />
the financial year or entered into since the end of the previous financial year.<br />
Interested party transaction<br />
The Group has established procedures to ensure that all transactions with interested persons are reported on a timely<br />
manner to the Audit Committee and that the transactions are at arm’s length basis. All interested person transactions are<br />
subject to review by the Audit Committee to ensure compliance with the established procedures.<br />
Aggregate value of all interested<br />
person transactions during the financial<br />
year under review (excluding transactions Aggregate value of all interested<br />
conducted under shareholders’ mandate person transactions conducted under<br />
Name of pursuant to Rule 920 under shareholders’ mandate pursuant to<br />
interested person sGX-ST Listing Manual) Rule 920 under SGX-ST Listing Manual<br />
BDO Raffles Consultants S$23,000 in respect of the internal audit NIL<br />
Pte Ltd<br />
services rendered<br />
Shook Lin & Bok S$77,000 in respect of trademark application NIL<br />
services rendered
132<br />
Hyflux Ltd annual report 2008<br />
Supplementary Information (cont’d)<br />
Major properties held for development<br />
Approximate expected Group’s<br />
site area Intended total lettable Stage of date of effective<br />
Description Location (sqm) use area (sqm) completion completion interest (%)<br />
Factory and 8 Tuas South Lane 77,172 Industrial 5,575 52% of phase 1 1 April 2009 100<br />
warehouse Singapore 637302 (upon completion (total 3 phases) (phase 1 only)<br />
of phase 1)<br />
Approximate Group’s<br />
site area total lettable effective<br />
Description Location (sqm) Existing use area (sqm) interest (%) Tenure<br />
Major properties held for investment<br />
Office 40 Changi South 2,426 Office 1,328 100 60 years<br />
Street 1<br />
commencing<br />
Singapore 486764<br />
from 1 December<br />
1996<br />
Other major properties<br />
Office and 5 Changi South 10,472 Office and 5,630 100 60 years<br />
factory Street 1, factory commencing<br />
Singapore 486764<br />
from 1 March<br />
1997<br />
Factory No. 99 Juli Road 8,297 Office and 7,647 100 50 years<br />
Zhangjiang factory commencing<br />
High-Tech Park<br />
from 26 April<br />
Pudong Shanghai, 2001<br />
China 201203<br />
Office and 8# Factory in 18,040 Office and 23,115 100 50 years<br />
factory EPZ, 9# Yang factory commencing<br />
Zi Jiang South from 2007<br />
Road, Yangzhou<br />
Jiangsu Province,<br />
China<br />
Office 1307-1309 Centre 384 Office 232 100 50 years<br />
Plaza 188,<br />
commencing<br />
Jiefangbei HePing,<br />
from 12 June<br />
District Tianjin, 1994<br />
China 300042<br />
Office and No. 99 Tai Zhen 25,959 Office and 12,980 100 50 years<br />
factory Road, Bin Jiang factory commencing<br />
Industrial Park, from 25<br />
Taizhou Economic March 2007<br />
Development Zone,<br />
Taizhou City, Jiangsu<br />
Province, China
Hyflux Ltd annual report 2008 133<br />
Statistics of Shareholdings<br />
As at 10 March 2009<br />
Share Capital<br />
Class of shares:<br />
Voting rights:<br />
Ordinary shares<br />
One vote per share<br />
Total number of issued shares: 525,287,360<br />
Distribution of Shareholdings<br />
no. of<br />
Size of Shareholdings S shareholders % No. of Shares %<br />
1-999 331 4.10 153,451 0.03<br />
1,000-10,000 6,799 84.15 25,846,676 4.92<br />
10,001-1,000,000 928 11.49 33,103,965 6.30<br />
1,000,001 and above 21 0.26 466,183,268 88.75<br />
Total 8,079 100.00 525,287,360 100.00<br />
Twenty Largest Shareholders<br />
S/No. Name no. of Shares %<br />
1. Olivia Lum 167,484,141 31.88<br />
2. DBS Nominees Pte Ltd 80,172,159 15.26<br />
3. Citibank Nominees Singapore Pte Ltd 57,467,153 10.94<br />
4. HSBC (Singapore) Nominees Pte Ltd 47,358,648 9.02<br />
5. Merrill Lynch (Singapore) Pte Ltd 28,196,574 5.37<br />
6. United Overseas Bank Nominees Pte Ltd 25,377,336 4.83<br />
7. Nomura Singapore Limited 10,437,000 1.99<br />
8. Raffles Nominees Pte Ltd 9,232,381 1.76<br />
9. Murugasu Deirdre 8,014,178 1.53<br />
10. DBSN Services Pte Ltd 5,598,904 1.07<br />
11. DB Nominees (S) Pte Ltd 5,047,323 0.96<br />
12. Morgan Stanley Asia (Singapore) Securities Pte Ltd 3,332,186 0.63<br />
13. ABN Amro Nominees Singapore Pte Ltd 2,745,000 0.52<br />
14. Foo Hee Kiang 2,629,912 0.50<br />
15. UOB Kay Hian Pte Ltd 2,544,937 0.48<br />
16. Tommie Goh Thiam Poh 2,370,375 0.45<br />
17. Phillip Securities Pte Ltd 2,208,592 0.42<br />
18. Yong Siew Yoon 2,000,000 0.38<br />
19. Koh Lip Lin 1,590,789 0.30<br />
20. DBS Vickers Securities (Singapore) Pte Ltd 1,190,000 0.23<br />
total 464,997,588 88.52<br />
Approximately 66% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied<br />
with Rule 723 of the Listing Manual of SGX-ST.
134<br />
Hyflux Ltd annual report 2008<br />
Substantial Shareholders<br />
As at 10 March 2009<br />
Name of Shareholder Direct Interest Deemed Interest %<br />
Olivia Lum 167,484,141 10,000,000* 33.78<br />
* Shares held in the name of nominees
Hyflux Ltd annual report 2008 135<br />
Notice of Annual General Meeting<br />
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Hyflux Ltd (“Company”) will be held at 202 Kallang Bahru,<br />
Hyflux Building, Singapore 339339 on 28 April 2009 at 2.00p.m. for the following purposes:<br />
(A) AS ORDINARY BUSINESS<br />
Resolution 1<br />
To receive and adopt the Directors’ Report and the Audited Accounts for the year ended 31 December 2008 together<br />
with the Auditors’ Report thereon.<br />
Resolution 2<br />
To declare a first and final dividend of 3.43 Singapore cents per ordinary share (one-tier tax exempt) for the year ended<br />
31 December 2008 (previous year: 1.89 Singapore cents per ordinary share).<br />
Resolution 3<br />
To re-elect Mr Teo Kiang Kok who retires in accordance with Article 89 of the Company’s Articles of Association and who,<br />
being eligible, offers himself for re-election.<br />
Resolution 4<br />
To re-elect Mr Christopher Murugasu who retires in accordance with Article 89 of the Company’s Articles of Association<br />
and who, being eligible, offers himself for re-election.<br />
Resolution 5<br />
To approve the payment of Directors’ fees of S$574,110 for the year ended 31 December 2008 (previous year:<br />
S$456,667).<br />
Resolution 6<br />
To re-appoint Messrs KPMG LLP as external auditors and to authorise the Directors to fix their remuneration.<br />
(B) AS SPECIAL BUSINESS<br />
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any<br />
modifications:<br />
Resolution 7<br />
That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore<br />
Exchange Securities Trading Limited, the Directors be authorised and empowered to:<br />
(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or<br />
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to<br />
be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants,<br />
debentures or other instruments convertible into shares,<br />
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may<br />
in their absolute discretion deem fit; and
136<br />
Hyflux Ltd annual report 2008<br />
Notice of Annual General Meeting (cont’d)<br />
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in<br />
pursuance of any Instrument made or granted by the Directors while this Resolution was in force, provided that:<br />
(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or<br />
granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed<br />
fifty per centum (50%) of the issued shares in the capital of the Company (as calculated in accordance with<br />
sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be issued other than<br />
on a pro rata basis to existing shareholders of the Company shall not exceed twenty per centum (20%) of the<br />
issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);<br />
(2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for<br />
the purpose of determining the aggregate number of shares and Instruments that may be issued under subparagraph<br />
(1) above, the percentage of issued shares and Instruments shall be based on the number of issued<br />
shares in the capital of the Company at the time of the passing of this Resolution, after adjusting for:<br />
(a) new shares arising from the conversion or exercise of the Instruments or any convertible securities;<br />
(b) new shares arising from the exercising share options or vesting of share awards outstanding and subsisting<br />
at the time of the passing of this Resolution; and<br />
(c) any subsequent consolidation or subdivision of shares.<br />
(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of<br />
the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless<br />
such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of<br />
Association of the Company; and<br />
(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force (i) until<br />
the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual<br />
General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares<br />
to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance<br />
of such shares in accordance with the terms of the Instruments.<br />
Resolution 8<br />
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to offer<br />
and grant options under the Hyflux Employees’ Share Option Scheme (“Scheme”) and to issue from time to time such<br />
number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options<br />
granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise,<br />
provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the<br />
Scheme shall not exceed fifteen per centum (15%) of the issued shares in the capital of the Company from time to time<br />
and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the<br />
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting<br />
of the Company is required by law to be held, whichever is the earlier.
Hyflux Ltd annual report 2008 137<br />
Notice of Annual General Meeting (cont’d)<br />
Resolution 9<br />
That the Directors of the Company be and are hereby authorised to make purchases of issued and fully-paid ordinary<br />
shares in the capital of the Company from time to time (whether by way of market purchases or off-market purchases<br />
on an equal access scheme) of up to ten per centum (10%) of the issued ordinary shares in the capital of the Company<br />
(ascertained as at the date of the last Annual General Meeting of the Company or at the date of the EGM, whichever is<br />
the higher, but excluding any shares held as treasury shares) at the price of up to but not exceeding the Maximum Price<br />
as defined in the Company’s Circular dated 4 April 2008 and in accordance with the Guidelines on Share Purchase set out<br />
in Appendix 1 of the said Circular and this mandate shall, unless revoked or varied by the Company in general meeting,<br />
continue in force until the conclusion of the next annual general meeting of the Company is held or is required by law<br />
to be held, whichever is earlier.<br />
To transact any other ordinary business which may properly be transacted at an Annual General Meeting.<br />
By Order of the Board<br />
Lim Poh Fong<br />
Company Secretary<br />
Singapore, 9 April 2009<br />
Notes:<br />
1. A Member entitled to attend and vote at the Annual General Meeting (the“Meeting”) is entitled to appoint a proxy to attend and<br />
vote in his/her stead. A proxy need not be a Member of the Company. The instrument appointing a proxy must be deposited at<br />
the Registered Office of the Company at 202 Kallang Bahru, Hyflux Building, Singapore 339339 not less than 48 hours before the<br />
time appointed for holding the Meeting.<br />
2. In relation to Resolution 3, Mr Teo Kiang Kok, will upon re-election as a Director of the Company, remain as a member of the Audit,<br />
Remuneration, Nominating and Risk Management Committees and is considered a non-executive and independent director.<br />
3. In relation to Resolution 4, Mr Christopher Murugasu will, upon re-election as a Director of the Company, remain as a member<br />
of the Remuneration and Risk Management Committees and is considered a non-executive and non-independent director.<br />
4. Ordinary Resolution 7 has been proposed for voting and passed annually at the Company’s AGM since 2002. Pursuant to Section<br />
161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited,<br />
and upon passing of this Ordinary Resolution, the Directors will be empowered from the date of this Meeting until the date of<br />
the next AGM, or the date by which the next AGM is required by law to be held or such authority is varied or revoked by the<br />
Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and<br />
to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the issued shares in the capital<br />
of the Company, of which up to 20% may be issued other than on a pro rata basis to existing shareholders. In determining the<br />
aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated<br />
based on the issued shares in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new<br />
shares arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share options or<br />
the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent<br />
consolidation or subdivision of shares. It is further noted that the 50% limit proposed by this Ordinary Resolution is below the<br />
limit permitted by the Listing Manual.<br />
5. Ordinary Resolution 8 has been proposed for voting and passed annually since 2002. The Directors believe that an appropriate<br />
remuneration package is required to recruit, retain and reward talents for performance. Pursuant to Section 161 of the<br />
Companies Act, Cap. 50 and upon passing of this Ordinary Resolution, the Directors will be empowered from the date of<br />
this Meeting until the next AGM, or the date by which the next AGM is required by law to be held or such authority is varied<br />
or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the<br />
exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration<br />
of the Scheme) 15% of the issued shares in the capital of the Company from time to time.<br />
6. Ordinary Resolution 9 relates to the renewal of the share purchase mandate, which was originally approved by the shareholders<br />
on 25 April 2008. Ordinary Resolution 9, if passed, will empower the Directors of the Company from the date of this Meeting<br />
until the next AGM, or the date by which the next AGM is required by law to be held, whichever is the earlier, to purchase<br />
ordinary shares of the Company by way of market purchases or off-market purchases of up to 10% of the total number of<br />
issued shares in the capital of the Company at the Maximum Price as defined in the Company’s Circular dated 4 April 2008.<br />
The Company did not purchase any shares of the Company in the financial year ended 31 December 2008.
138<br />
Hyflux Ltd annual report 2008<br />
Appendix 1<br />
SUMMARY SHEET FOR RENEWAL OF SHARES PURCHASE MANDATE<br />
The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions<br />
expressed in this Appendix. If you are in doubt as to the action that you should take, you should consult your stockbroker<br />
or other professional adviser immediately.<br />
(A) Shares Purchased In The Previous Twelve Months<br />
Pursuant to the Shares Purchase Mandate obtained at the Annual General Meeting on 25 April 2008, the<br />
Company had not bought back any ordinary shares in the capital of the Company (“Shares”) by way of market<br />
or off-market acquisitions.<br />
(B) Renewal of The Shares Purchase Mandate<br />
The Ordinary Resolution No. 9 if passed at the Annual General Meeting, will renew the Shares Purchase Mandate<br />
approved by the Shareholders of the Company from the date of the Annual General Meeting until the date that the<br />
next annual general meeting of the Company is held or is required by law to be held, whichever is the earlier.<br />
(C) Rationale For The Shares Purchase Mandate<br />
Short-term speculation may at times cause the market price of the Company’s Shares to be depressed below the<br />
true value of the Company and the Group. The proposed Shares Purchase Mandate will provide the Directors with<br />
the means to restore investors’ confidence and to protect existing Shareholders’ investments in the Company in a<br />
depressed share-price situation through judicious Shares purchases to enhance the earnings per Share and/or the<br />
net asset value per Share. The Shares purchases will enhance the net asset value per Share if the Shares purchases<br />
are made at a price below the net asset value per Share.<br />
The proposed Shares Purchase Mandate will also provide the Company with an expedient and cost-effective<br />
mechanism to facilitate the return of surplus cash reserves to the shareholders, as and when the Directors are of the<br />
view that this would be in the best interests of the Company and the shareholders.<br />
The Directors will only make a Shares purchase as and when the circumstances permit and only if the Directors<br />
are of the view that such purchases are in the best interests of the Company and the shareholders. The Directors<br />
will decide whether to purchase Shares only after taking into account, among other things, the market conditions<br />
at such time, the Company’s financial condition and whether such purchases will cause the Company to become<br />
insolvent (i.e. the Company is unable to pay its debts as they become due in the ordinary course of business, or the<br />
value of the Company’s assets is less than the value of its liabilities including contingent liabilities), and whether<br />
such purchases represent the most efficient and cost-effective approach to enhance Share value. Shares purchases<br />
will only be made if the Directors believe that such purchases are likely to benefit the Company and increase<br />
economic value for shareholders.<br />
The Directors will ensure that the Shares purchases will not have any effect on the listing of the Company’s<br />
securities including the Shares listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”). Rule<br />
723 of the Listing Manual of the SGX-ST requires at least ten per cent. (10%) of any class of a company’s listed<br />
securities to be held by the public at all times. The Directors shall safeguard the interests of public shareholders<br />
before undertaking any Shares purchases. Before exercising the Shares Purchase Mandate, the Directors shall at all<br />
times take due cognisance of (a) the then shareholding spread of the Company in respect of the number of Shares<br />
held by substantial shareholders and by non-substantial shareholders and (b) the volume of trading on the SGX-ST<br />
in respect of the Shares immediately before the exercise of any Shares purchase.
Hyflux Ltd annual report 2008 139<br />
Appendix 1 (cont’d)<br />
Currently, 346,733,844 Shares (66%) of a total of 525,318,360 Shares issued by the Company are held by 8,075<br />
public shareholders. The Company is of the view that there is sufficient number of Shares in issue held by public<br />
shareholders which would permit the Company to undertake Shares purchases of up to ten per cent. (10%) of its<br />
issued ordinary share capital without affecting the listing status of the Shares on the SGX-ST. The Company will<br />
ensure that the Shares purchases will not cause market illiquidity or affect orderly trade.<br />
(D) Financial Impact Of The Proposed Shares Purchases<br />
1. The purchased Shares shall be cancelled immediately on purchase or acquisition unless held in treasury<br />
in accordance with Section 76H of the Companies Act (Cap. 50) (the “Act”). Section 76H of the Act allows<br />
purchased Shares to be:<br />
(i)<br />
(ii)<br />
held by the Company; or<br />
dealt with, at any time, in accordance with Section 76K of the Act, as Treasury Shares.<br />
Section 76K of the Act allows the Company to:<br />
(i)<br />
(ii)<br />
sell the Shares (or any of them) for cash;<br />
transfer the Shares (or any of them) for the purposes of or pursuant to an employees’ share scheme;<br />
(iii) transfer the Shares (or any of them) as consideration for the acquisition of shares in or assets of another<br />
company or assets of a person; or<br />
(iv) cancel the Shares (or any of them).<br />
The aggregate number of Shares held as Treasury Shares shall not at any time exceed ten per cent. (10%) of<br />
the total number of Shares at that time. Any Shares in excess of this limit shall be disposed of or cancelled in<br />
accordance with Section 76K of the Act within six (6) months.<br />
Any Shares purchase will:<br />
(i)<br />
(ii)<br />
reduce the amount of the Company’s share capital where the Shares were purchased or acquired out of<br />
the capital of the Company;<br />
reduce the amount of the Company’s profits where the Shares were purchased or acquired out of the<br />
profits of the Company; or<br />
(iii) reduce the amount of the Company’s share capital and profits proportionately where the Shares were<br />
purchased or acquired out of both the capital and the profits of the Company;<br />
by the total amount of the purchase price paid by the Company for the Shares cancelled.<br />
The Company cannot exercise any right in respect of Treasury Shares. In particular, the Company cannot<br />
exercise any right to attend or vote at meetings and for the purposes of the Act, the Company shall be treated<br />
as having no right to vote and the Treasury Shares will be treated as having no voting rights.<br />
2. The financial effects on the Company and the Group arising from the proposed purchases of the Company’s Shares<br />
which may be made pursuant to the proposed Shares Purchase Mandate will depend on, inter alia, the aggregate<br />
number of Shares purchased and the consideration paid at the relevant time.
140<br />
Hyflux Ltd annual report 2008<br />
Appendix 1 (cont’d)<br />
3. Based on the existing issued and paid-up share capital of the Company as at 23 March 2009 (the “Latest Practicable<br />
Date”), the proposed purchases by the Company of up to a maximum of ten per cent. (10%) of its issued share capital<br />
under the Shares Purchase Mandate will result in the purchase of 52,531,836 Shares.<br />
4. An illustration of the impact of Shares purchases by the Company pursuant to the Shares Purchase Mandate on the<br />
Group’s and the Company’s financial position is set out below based on the following assumptions:<br />
(a) audited accounts of the Group and the Company as at 31 December 2008;<br />
(b) in full exercise of the Shares Purchase Mandate, 525,318,360 Shares were purchased;<br />
(c)<br />
the maximum price for the market purchases is $1.5603, which is five per cent. (5%) above the average closing<br />
prices of the Shares over the last five market days preceding the Latest Practicable Date on which the transactions<br />
in Shares were recorded on the SGX-ST; and<br />
(d) the maximum amount of funds required for the Shares purchases in the aggregate is $ 81,965,424.<br />
Market Purchases and Off-Market Purchases and held as Treasury Shares or cancelled<br />
company Company<br />
Group before Group after before after<br />
shares Shares Shares Shares<br />
purchase purchase purchase purchase<br />
($’000) ($’000) ($’000) ($’000)<br />
As at 31 December 2008<br />
Shareholders’ funds 297,547 215,582 174,205 92,240<br />
Net assets value 297,547 215,582 174,205 92,240<br />
Current assets 384,167 302,202 380,319 298,354<br />
Current liabilities 324,504 324,504 168,406 168,406<br />
Cash and cash equivalents 90,740 8,775 18,242 (63,723)<br />
Number of shares (‘000) 525,271 472,739 525,271 472,739<br />
Financial Ratios<br />
Net assets value per Share (cents) 56.65 45.60 33.16 19.51<br />
Earnings per Share (cents) 11.25 12.50 3.97 4.41<br />
Gearing (%) 0.56 1.16 1.36 3.46<br />
Current ratio 1.18 0.93 2.26 1.77<br />
5. Shareholders should note that the financial effects set out above are based on the audited financial accounts<br />
of the Group and the Company for the financial year ended 31 December 2008 and are for illustration only. The<br />
results of the Group and the Company for the financial year ended 31 December 2008 may not be representative<br />
of future performance.<br />
6. The Company intends to use its internal sources of funds to finance its purchases of the Shares. The Company does<br />
not intend to obtain or incur any borrowings to finance its purchases of the Shares. The Directors do not propose to<br />
exercise the Shares Purchase Mandate in a manner and to such extent that the working capital requirements of the<br />
Group would be materially affected.<br />
7. The Company will take into account both financial and non-financial factors, among other things, the market<br />
conditions at such time, the Company’s financial condition, the performance of the Shares and whether such Shares<br />
purchases would represent the most efficient and cost-effective approach to enhance the Share value. Shares<br />
purchases will only be made if the Board believes that such purchases are likely to benefit the Company and increase<br />
economic value for shareholders.
Hyflux Ltd annual report 2008 141<br />
Appendix 1 (cont’d)<br />
(E) Consequences of Shares Purchases Under The Singapore Code on Take-overs and Mergers<br />
1. In accordance with The Singapore Code on Take-overs and Mergers (the “Take-over Code”), a person will be required<br />
to make a general offer for a public company if:<br />
(a)<br />
he acquires 30 per cent. (30%) or more of the voting rights of the company; or<br />
(b) he already holds between 30 per cent. (30%) and 50 per cent. (50%) of the voting rights of the company, and<br />
he increases his voting rights in the company by more than one per cent. (1%) in any six-month period.<br />
2. As at the Latest Practicable Date and before the proposed Shares Purchase Mandate, the substantial shareholders’<br />
and Directors’ interests are as follows:<br />
Direct Interest Deemed Interest Total Interest<br />
number number number<br />
Directors of Shares % of Shares % of Shares %<br />
Olivia Lum 167,484,141 31.88 10,000,000 1.90 177,484,141 33.78<br />
Teo Kiang Kok – – – – – –<br />
Lee Joo Hai – – – – – –<br />
Gay Chee Cheong 450,000 0.08 – – 450,000 0.08<br />
Christopher Murugasu 469,375 0.09 120,000 ¹ 0.02 589,375 0.11<br />
Professor Tan Teck Meng 10,000 0.002 51,000 0.01 61,000 0.012<br />
Raj Mitta – – – – – –<br />
Ahmed Butti Ahmed – – – – – –<br />
NOTES:<br />
1 Christopher Murugasu is deemed interested in the Shares held by his spouse, Bernadette Oei Lian Hua.<br />
In the event the Company undertakes Shares purchases of up to ten per cent. (10%) of the issued share capital of<br />
the Company as permitted by the Shares Purchase Mandate, the shareholdings and voting rights of Ms Olivia Lum<br />
may be increased from 33.78% to 37.62%. Ms Olivia Lum’s shareholdings and voting rights may thus be increased<br />
by more than one per cent (1%) within a 6-month period. Accordingly, Ms Olivia Lum may be required to make a<br />
general offer to the other Shareholders under Rule 14.1(b) of the Take-over Code.<br />
3. The Securities Industry Council has granted approval in-principle to exempt Ms Olivia Lum from the requirement<br />
to make a general offer under Rule 14.1(b) of the Take-over Code after any Shares purchase subject to the<br />
following conditions:<br />
(a)<br />
the Circular contains advice to the effect that by voting for the Shares Purchase Mandate, Shareholders are<br />
waiving their rights to a general offer at the required price from Ms Olivia Lum and parties acting in concert<br />
with her, if any; the names of Ms Olivia Lum and her concert parties, if any, and the voting rights of such persons<br />
at the time of resolution and after the proposed Shares Purchases are disclosed in the Circular;<br />
(b) the resolution to authorise the Shares Purchase Mandate is approved by a majority of those Shareholders<br />
present and voting at the meeting on a poll who could not become obliged to make an offer for the Company<br />
as a result of the Shares Purchase;<br />
(c)<br />
Ms Olivia Lum and her concert parties, if any, do not vote for and/or recommend Shareholders to vote in favour<br />
of the resolution to approve the Shares Purchase Mandate; and
142<br />
Hyflux Ltd annual report 2008<br />
Appendix 1 (cont’d)<br />
(d) Ms Olivia Lum and her concert parties, if any, have not acquired and will not acquire any Shares between the<br />
date on which they know that the announcement of the approval of the Shares Purchase Mandate is imminent<br />
and the earlier of:<br />
(i)<br />
(ii)<br />
the date on which the Shares Purchase Mandate expires; and<br />
the date the Company announces that it has bought back such number of Shares as authorised under<br />
the Shares Purchase Mandate approved at the latest annual general meeting or the date the Company<br />
decides to cease buying back its Shares, as the case may be,<br />
if such acquisitions, taken together with shares bought by the Company under the Shares Purchase Mandate, would<br />
cause their aggregate voting rights in the Company to increase by more than 1% in the any 6–month period.<br />
If the Company ceases to buy back its Shares and the increase in the voting rights held by Ms Olivia Lum and her<br />
concert parties, if any, as a result of the Company purchasing Shares at the time of such cessation is less than 1% in any<br />
6-month period, Ms Olivia Lum and her concert parties, if any, will be allowed to acquire Shares. However, any increase<br />
in Ms Olivia Lum and her concert parties’ percentage voting rights as a result of the Company’s repurchase of its Shares<br />
will be taken into account together with any Company Shares acquired by Ms Olivia Lum and her concert parties, if<br />
any, (by whatever means) in determining whether Ms Olivia Lum and her concert parties, if any, have increased their<br />
aggregate voting rights in the Company by more than 1% in any 6-month period.<br />
The Directors hereby confirm that the Substantial Shareholders are not acting in concert with any other person to<br />
assist any Shareholder (or his concert party or parties) to obtain or consolidate control of the Company and that the<br />
proposed Shares Purchases are not for any such purpose.<br />
It should be noted that approving the Shares Purchase Mandate will constitute a waiver by the Shareholders<br />
in respect of their right to a general offer by the Substantial Shareholders at the Required Price.<br />
(F) Miscellaneous<br />
1. Any Shares purchases undertaken by the Company shall be at a price of up to but not exceeding the Maximum<br />
Price. The Maximum Price is a sum which shall not exceed the sum constituting five per cent. (5%) above the<br />
average closing price of the Shares over the period of five (5) trading days in which transactions in the Shares on<br />
the SGX-ST were recorded, in the case of a Market Purchase, before the day on which such purchase is made, and, in<br />
the case of an Off-Market Purchase, immediately preceding the date of offer by the Company, as the case may be,<br />
and adjusted for any corporate action that occurs after the relevant five (5) day period.<br />
2. In making Share purchases, the Company will comply with the requirements of the SGX-ST Listing Manual,<br />
in particular, Rule 886 with respect to notification to the SGX-ST of any Shares purchases. Rule 886 is<br />
reproduced below:<br />
“(1) An issuer must notify the Exchange of any share buy-back as follows:<br />
(a)<br />
In the case of a market acquisition, by 9.00 am on the market day following the day on which it purchased<br />
shares,<br />
(b) In the case of an off market acquisition under an equal access scheme, by 9.00 am on the second market<br />
day after the close of acceptances of the offer.<br />
(2) Notification must be in the form of Appendix 8.3.1 (or 8.3.2 for an issuer with a dual listing on another<br />
stock exchange).”
Hyflux Ltd annual report 2008 143<br />
Appendix 1 (cont’d)<br />
3. Shares purchases will be made in accordance with the “Guidelines on Shares Purchases” as set out in Appendix I of the<br />
Company’s Circular to Shareholders dated 4 April 2008, a copy of which is annexed. All information required under<br />
the Act relating to the Shares Purchase Mandate is contained in the said Guidelines.<br />
4. The SGX-ST Listing Manual does not expressly prohibit any purchase of shares by a listed company during any<br />
particular time or times. However, as a listed company would be considered an “insider” in relation to any proposed<br />
purchase or acquisition of its shares, the Company will undertake not to purchase or acquire Shares pursuant to the<br />
proposed Share Purchase Mandate at any time after a price sensitive development has occurred or has been the<br />
subject of a decision until the price sensitive information has been publicly announced. In particular, the Company<br />
will not purchase or acquire any Shares during the period commencing one month immediately preceding the<br />
announcement of the Company’s full-year and half year results and the period of two weeks immediately preceding<br />
the announcement of its quarterly results.<br />
(G) Directors’ Responsibility Statement<br />
The Directors of the Company collectively and individually accept full responsibility for the accuracy of the information<br />
given herein and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the<br />
facts stated in this Appendix are accurate and that there are no material facts the omission of which would make any<br />
statement in this Appendix misleading.<br />
(H) Shareholders Who Will Abstain From Voting<br />
Ms Olivia Lum and her concert parties will abstain from voting at the Annual General Meeting in respect of Ordinary<br />
Resolution 9 relating to the Shares Purchase Mandate.<br />
(I)<br />
Directors’ Recommendation<br />
The Directors of the Company, other than Ms Olivia Lum who has abstained from making any recommendation, are<br />
of the opinion that the renewal of the proposed Shares Purchase Mandate is in the best interests of the Company.<br />
Accordingly, the Directors of the Company recommend that shareholders vote in favour of Ordinary Resolution No. 9.<br />
(J)<br />
Taxation<br />
Shareholders who are in doubt as to their respective tax positions or any tax implications, or who may be subject to<br />
tax in a jurisdiction outside Singapore, should consult their own professional tax advisers.<br />
(K) Documents For Inspection<br />
Copies of the following documents may be inspected at the registered office of the Company at 202 Kallang<br />
Bahru, Hyflux Building, Singapore 339339 during normal business hours up to and including the date of the Annual<br />
General Meeting:<br />
(a)<br />
the Memorandum and Articles of Association of the Company; and<br />
(b) the audited financial statements of the Company for the financial year ended 31 December 2008.
144<br />
Hyflux Ltd annual report 2008<br />
Appendix 2<br />
GUIDELINES ON SHARES PURCHASES<br />
1. Shareholders’ Approval<br />
(a)<br />
Purchases of Shares by the Company must be approved in advance by the Shareholders at a general meeting<br />
of the Company, by way of a general mandate.<br />
(b) A general mandate authorising the purchase of Shares by the Company representing up to ten per cent. (10%)<br />
of the issued ordinary shares in the capital of the Company (excluding any Shares held as Treasury Shares) will<br />
expire on the earlier of:<br />
(i)<br />
(ii)<br />
the conclusion of the next annual general meeting of the Company;<br />
the expiration of the period within which the next annual general meeting of the Company is required by<br />
law to be held; or<br />
(iii) the time when such mandate is revoked or varied by an ordinary resolution of the Shareholders of the<br />
Company in general meeting.<br />
(c)<br />
The authority conferred on the Directors by the Shares Purchase Mandate to purchase Shares shall be renewed<br />
at the next annual general meeting of the Company.<br />
(d) When seeking Shareholders’ approval for the renewal of the Shares Purchase Mandate, the Company shall<br />
disclose details pertaining to the purchases of Shares made during the previous 12 months, including the total<br />
number of Shares purchased, the purchase price per Share or the highest and lowest price for such purchases<br />
of Shares, where relevant, and the total consideration paid for such purchases.<br />
2. Mode Of Purchase<br />
Shares Purchases can be effected by the Company in either one of the following two ways or both:<br />
(a)<br />
by way of market purchases of Shares on the Official List of SGX-ST, which means a purchase transacted through<br />
the Central Limit Order Book trading system; or<br />
(b) by way of off-market acquisitions on an equal access scheme in accordance with Section 76C of the Act.<br />
3. Funding Of Shares Purchases<br />
(a)<br />
In purchasing the Shares, the Company may only apply funds legally permitted for such purchase in accordance<br />
with its Articles of Association, and the relevant laws and regulations enacted or prescribed by the relevant<br />
competent authorities in Singapore.<br />
(b) Any purchase by the Company may be made out of capital or profits that are available for distribution as<br />
dividends, so long as the Company is solvent (as defined by Section 76F(4) of the Act) .<br />
(c)<br />
The Company may not purchase its Shares on the Official List of SGX-ST for a consideration other than cash or<br />
for settlement otherwise than in accordance with the trading rules of the SGX-ST.
Hyflux Ltd annual report 2008 145<br />
Appendix 2 (cont’d)<br />
4. Trading Restrictions<br />
The number of Shares which can be purchased pursuant to the Shares Purchase Mandate is such number of Shares<br />
which represents up to a maximum of ten per cent. (10%) of the issued ordinary shares in the capital of the Company<br />
(excluding Treasury Shares) as at date of the last annual general meeting of the Company.<br />
5. Price Restrictions<br />
Any Shares Purchase undertaken by the Company shall be at the price of up to but not exceeding the Maximum Price.<br />
“Maximum Price” means the maximum price at which the Shares can be purchased pursuant to the Shares Purchase<br />
Mandate, which shall not exceed the sum constituting five per cent. (5%) above the average closing price of the Shares<br />
over the period of five (5) trading days in which transactions in the Shares on the SGX-ST were recorded, in the case<br />
of a Market Purchase, before the day on which such purchase is made, and, in the case of an Off-Market Purchase,<br />
immediately preceding the date of offer by the Company, as the case may be, and adjusted for any corporate action that<br />
occurs after the relevant five (5) day period.<br />
6. Off-Market Purchases<br />
(a)<br />
For purchases of Shares made by way of an Off-Market Purchase, the Company shall issue an offer document<br />
to all Shareholders. The offer document shall contain, inter alia, the following information:<br />
(i)<br />
(ii)<br />
the terms and conditions of the offer;<br />
the period and procedures for acceptances;<br />
(iii) the reasons for the proposed Shares Purchase;<br />
(iv) the consequences, if any, of Shares purchase by the Company that will arise under the Singapore Code on<br />
Take-overs and Mergers or any other applicable take-over rules;<br />
(v)<br />
whether the purchase of Shares, if made, would have any effect on the listing of the Company’s securities<br />
on the Official List of SGX-ST; and<br />
(vi) details of any purchase of Shares made by the Company in the previous 12 months whether through<br />
Market Purchases or Off-Market Purchases, including the total number of Shares purchased, the purchase<br />
price per Share or the highest and lowest prices paid for such purchases of Shares, where relevant, and the<br />
total consideration paid for such purchases.<br />
(b) All Offeree Shareholders shall be given a reasonable opportunity to accept any offer made by the Company to<br />
purchase their Shares under the Shares Purchase Mandate.<br />
(c)<br />
The Company may offer to purchase Shares from time to time under the Shares Purchase Mandate subject to<br />
the requirement that the terms of any offer to purchase Shares by the Company shall be pari passu in respect<br />
of all Offeree Shareholders save under the following circumstances:<br />
(i)<br />
(ii)<br />
where there are differences in consideration attributable to the fact that an offer relate to Shares with<br />
different dividend entitlements;<br />
where there are differences in consideration attributable to the fact that an offer relate to Shares with<br />
different amounts remaining unpaid; and<br />
(iii) where there are differences in an offer introduced solely to ensure that every Shareholder is left with a<br />
whole number of Shares in board lots of 1,000 Shares after the Shares Purchases, in the event there are<br />
Offeree Shareholders holding odd numbers of Shares.
146<br />
Hyflux Ltd annual report 2008<br />
Appendix 2 (cont’d)<br />
7. Status Of Purchased Shares<br />
The purchased Shares shall be cancelled immediately on purchase or acquisition unless held in treasury in<br />
accordance with Section 76H of the Act. Section 76H of the Act allows purchased Shares to be:<br />
(i)<br />
(ii)<br />
held by the Company; or<br />
dealt with, at any time, in accordance with Section 76K of the Act, as Treasury Shares.<br />
Section 76K of the Act allows the Company to:<br />
(i)<br />
(ii)<br />
sell the Shares (or any of them) for cash;<br />
transfer the Shares (or any of them) for the purposes of or pursuant to an employees’ share scheme;<br />
(iii) transfer the Shares (or any of them) as consideration for the acquisition of shares in or assets of another company<br />
or assets of a person; or<br />
(iv) cancel the Shares (or any of them).<br />
The aggregate number of Shares held as Treasury Shares shall not at any time exceed ten per cent. (10%) of the total<br />
number of Shares at that time. Any Shares in excess of this limit shall be disposed of or cancelled in accordance with<br />
Section 76K of the Act within six (6) months.<br />
Any Shares Purchase will:<br />
(i)<br />
(ii)<br />
reduce the amount of the issued shares in the capital of the Company where the Shares were purchased or<br />
acquired out of the capital of the Company;<br />
reduce the amount of the Company’s profits where the Shares were purchased or acquired out of the profits<br />
of the Company; or<br />
(iii) reduce the amount of the Company’s share capital and profits proportionately where the Shares were<br />
purchased or acquired out of both the capital and the profits of the Company;<br />
by the total amount of the purchase price paid by the Company for the Shares cancelled.<br />
The Company cannot exercise any right in respect of Treasury Shares. In particular, the Company cannot exercise<br />
any right to attend or vote at meetings and for the purposes of the Act, the Company shall be treated as having no<br />
right to vote and the Treasury Shares will be treated as having no voting rights.<br />
8. Notification To Accounting and Corporate Regulatory Authority (“ACRA”)<br />
(a)<br />
Within thirty (30) days of the passing of a Shareholders’ resolution to approve any purchase of Shares, the<br />
Company shall lodge a copy of such resolution with ACRA.<br />
(b) The Company shall notify ACRA within thirty (30) days of a purchase of Shares. Such notification shall include<br />
details of the date of the purchase, the total number and nominal value of Shares purchased by the Company,<br />
the issued shares in the capital of the Company as at the date of the Shareholders’ resolution approving the<br />
purchase, the Company’s issued shares in the capital after the purchase and the amount of consideration paid<br />
by the Company for the purchase.
Hyflux Ltd annual report 2008 147<br />
Appendix 2 (cont’d)<br />
9. Notification To The SGX-ST<br />
(a)<br />
For purchases of Shares made by way of an Off-Market Purchase, the Company shall notify the SGX-ST in respect<br />
of any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not<br />
later than 9.00 a.m. on the second trading day after the close of acceptances of an offer, or within such time<br />
period that may be prescribed by the SGX-ST from time to time.<br />
(b) For purchases of Shares made by way of a Market Purchase, the Company shall notify the SGX-ST in respect of<br />
any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not later<br />
than 9.00 a.m. on the trading day following the date of market acquisition by the Company, or within such time<br />
period that may be prescribed by the SGX-ST from time to time.<br />
10. Suspension Of Purchase<br />
(a)<br />
The Company may not undertake any Shares Purchase prior to the announcement of any price-sensitive<br />
information by the Company, until such time as the price sensitive information has been publicly announced or<br />
disseminated in accordance with the requirements of the Listing Manual.<br />
(b) The Company may not effect any repurchases of Shares on the SGX-ST during the period commencing two<br />
weeks before the announcement of the Company’s financial statements for each of the first three quarters of<br />
its financial year, or one month before half year or financial year, as the case may be, and ending on the date of<br />
announcement of the relevant results.
148<br />
Hyflux Ltd annual report 2008<br />
Notice of Books Closure<br />
NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of Hyflux Ltd (“Company”) will be<br />
closed at 5.00 p.m. on 8 May 2009 for the preparation of dividend warrants.<br />
Duly completed registrable transfers received by the Company’s Share Registrar, Boardroom Corporate & Advisory Services<br />
Pte. Ltd., 3 Church Street #08-01 Samsung Hub, Singapore 049483 up to 5..00 p.m. on 8 May 2009 will be registered<br />
to determine shareholders’ entitlements to the said dividend. Members whose Securities Accounts with The Central<br />
Depository (Pte) Limited are credited with shares at 5.00 p.m. on 8 May 2009 will be entitled to the proposed dividend.<br />
Payment of the dividend, if approved by the members at the Annual General Meeting to be held on 28 April 2009, will<br />
be made on 22 May 2009.
HYFLUX LTD<br />
Company Registration No. 200002722Z<br />
(Incorporated in the Republic of Singapore with limited liability)<br />
PROXY FORM<br />
(Please see notes overleaf before completing this Form)<br />
I/We<br />
of<br />
IMPORTANT:<br />
1. For investors who have used their CPF monies to buy Hyflux Ltd’s shares, this Report<br />
is forwarded to them at the request of the CPF Approved Nominees and is sent solely<br />
FOR INFORMATION ONLY.<br />
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all<br />
intents and purposes if used or purported to be used by them.<br />
3. CPF investors who wish to attend the Meeting as an observer must submit their requests<br />
through their CPF Approved Nominees within the time frame specified. If they also<br />
wish to vote, they must submit their voting instructions to the CPF Approved Nominees<br />
within the time frame specified to enable them to vote on their behalf.<br />
(Name & NRIC No.)<br />
(Address)<br />
being a member/members of Hyflux Ltd (“Company”), hereby appoint:<br />
Name NRIC/Passport No. Proportion of Shareholdings<br />
No. of Shares %<br />
Address<br />
and/or (delete as appropriate)<br />
Name NRIC/Passport No. Proportion of Shareholdings<br />
No. of Shares %<br />
Address<br />
or failing the person, or either or both of the persons, referred to above , the Chairman of the Meeting as my/our proxy/proxies to vote for<br />
me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on 28 April 2009 at 2.00 p.m. and at any<br />
adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder.<br />
If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the<br />
proxy/ proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding<br />
a poll and to vote on a poll.<br />
To be used on a show of To be used in the event of<br />
No. Resolutions<br />
hands<br />
a poll<br />
For * Against * No. of Votes No. of Votes<br />
For ** Against **<br />
Ordinary Business<br />
1 Adoption of Directors’ Report and Audited Accounts<br />
2 Declaration of Dividends<br />
3 Re-election of Mr Teo Kiang Kok as Director<br />
4 Re-election of Mr Christopher Murugasu as Director<br />
5 Approval of Directors’ fees<br />
6 Re-appointment of Auditors<br />
Special Business<br />
7 Authority to issue shares up to 50 per centum (50%) of the<br />
issued shares in the capital of the Company<br />
8 Authority to issue shares under Hyflux Employees’ Share<br />
Option Scheme<br />
9 Renewal of Share Purchase Mandate<br />
* Please indicate your vote “For” or “Against”, with an “X” within the box provided.<br />
** If you wish to exercise all your votes “For” or “Against”, please indicate with an “X” within the box provided. Alternatively, please indicate the<br />
number of votes as appropriate.<br />
Dated this day of 2009<br />
Signature of Shareholder(s) or, Common Seal of Corporate Shareholder<br />
Total number of<br />
Shares held
Notes :<br />
1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in<br />
Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you only have Shares registered in<br />
your name in the Register of Members, you should insert that number of Shares. However, If you have Shares entered against your name in the<br />
Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered<br />
against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument<br />
appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.<br />
2. A Shareholder of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend<br />
and vote instead of him. A proxy need not to be a Shareholder of the Company. Where a Shareholder appoints two proxies, the proportion of<br />
the shareholding concerned to be represented by each proxy shall be specified in the proxy form. If no percentage is specified, the first named<br />
proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the<br />
first named proxy.<br />
3. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 202 Kallang Bahru, Singapore<br />
339339 not less than 48 hours before the time appointed for the Meeting.<br />
fold along this line(1)<br />
Affix<br />
Postage<br />
Stamp<br />
The Company Secretary<br />
Hyflux LTD<br />
Hyflux Building<br />
202 Kallang Bahru<br />
Singapore 339339<br />
fold along this line(2)<br />
4. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the<br />
instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer<br />
or attorney duly authorised. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of<br />
attorney or a duly certified copy thereof must (falling previous registration with the Company) be lodged with the instrument of proxy, falling<br />
which the instrument may be treated as invalid.<br />
5. A corporation which is a Shareholder may authorise, by resolution of its directors or other governing body, such person as it thinks fit to act as<br />
its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.<br />
6. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or<br />
where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing<br />
a proxy or proxies. In addition, in the case of Shareholders whose Shares are entered in the Depository Register, the Company may reject<br />
any instrument appointing a proxy or proxies lodged if such Shareholders are not shown to have Shares entered against their name in the<br />
Depository Register 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte)<br />
Limited to the Company.<br />
7. Completion and return of this instrument appointing a proxy shall preclude a member from attending and voting at the Meeting. Any<br />
appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company<br />
reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.
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152<br />
Hyflux Ltd annual report 2008<br />
Hyflux Group of Companies<br />
Singapore<br />
• Eflux Philippines Pte Ltd<br />
• Eflux Singapore Pte Ltd<br />
• Eflux SK Pte Ltd<br />
• Eflux Vietnam Pte Ltd<br />
• Energy Life Pte Ltd<br />
• Hydrochem (S) Pte Ltd<br />
• Hydrochem Engineering (S) Pte Ltd<br />
• Hyflux Aquosus (Singapore) Pte Ltd<br />
• Hyflux Asset Management Pte Ltd<br />
• Hyflux Capital (Singapore) Pte Ltd<br />
• Hyflux Consumer Products Pte Ltd<br />
• Hyflux Engineering Pte Ltd<br />
• Hyflux EPC Pte Ltd<br />
• Hyflux Filtech (Singapore) Pte Ltd<br />
• Hyflux Filtration (S) Pte Ltd<br />
• Hyflux International Engineering<br />
Pte Ltd<br />
• Hyflux IP Resources Pte Ltd<br />
• Hyflux Lifestyle Products (S) Pte Ltd<br />
• Hyflux Management And Consultancy<br />
Pte Ltd<br />
• Hyflux Marmon Development Pte Ltd<br />
• Hyflux Membrane Manufacturing (S)<br />
Pte Ltd<br />
• Hyflux SIP Pte Ltd<br />
• Hyflux Utility (India) Pte Ltd<br />
• Hyflux Water Trust Management<br />
Pte Ltd<br />
• IndoSpring Utility (S) Pte Ltd<br />
• Marmon Hyflux Investments Pte Ltd<br />
• MenaSpring Utility (S) Pte Ltd<br />
• NewSpring Utility Pte Ltd<br />
• Sinolac (Singapore) Pte Ltd<br />
China<br />
• Beijing Shouren Water Engineering<br />
& Technology<br />
• Eflux (Taizhou) Co., Ltd<br />
• Hydrochem Engineering (Shanghai)<br />
Co., Ltd<br />
• Hyflux Design Engineering (Shanghai)<br />
Co., Ltd<br />
• Hyflux Engineering (Shanghai) Co., Ltd<br />
• Hyflux Filtech (Shanghai) Co., Ltd<br />
• Hyflux Hi-tech Product (Yangzhou)<br />
Co., Ltd<br />
• Hyflux Investment Management &<br />
Consultancy (Tianjin) Co., Ltd<br />
• Hyflux NewSpring (Dafeng North)<br />
Co., Ltd<br />
• Hyflux NewSpring (Dezhou) Co., Ltd<br />
• Hyflux NewSpring (Funing) Co., Ltd<br />
• Hyflux NewSpring (Jiawang) Co., Ltd<br />
• Hyflux NewSpring (Leping) Co., Ltd<br />
• Hyflux NewSpring<br />
(LiaoYangGongChangLing) Co., Ltd<br />
• Hyflux NewSpring (Nantong) WT Co., Ltd<br />
• Hyflux NewSpring (Taoyuan) Co., Ltd<br />
• Hyflux NewSpring Construction<br />
Engineering (Shanghai) Co., Ltd<br />
• Hyflux NewSpring Sewage Disposal<br />
(Jiawang) Co., Ltd<br />
• Hyflux NewSpring Waste Water<br />
Treatment (Funing) Co., Ltd<br />
• Hyflux NewSpring Waste Water<br />
Treatment (Guanyun) Co., Ltd<br />
• Hyflux NewSpring Waste Water<br />
Treatment (LePing) Co., Ltd<br />
• Hyflux NewSpring Waste Water<br />
Treatment (Rudong) Co., Ltd<br />
• Hyflux NewSpring Water Treatment<br />
(Linyi) Co., Ltd<br />
• Hyflux NewSpring Water Treatment<br />
(Minguang) Co., Ltd<br />
• Hyflux Salt Industry Technology<br />
Development (Tianjin) Co., Ltd<br />
• Hyflux Unitech (Shanghai) Co., Ltd<br />
• Kunshan Eco Water Systems Co., Ltd<br />
• NewSpring Huludao Co., Ltd<br />
• Ningxia Hypow Bio-technology Co., Ltd<br />
• Sinolac (Huludao) Biotech Co., Ltd<br />
• Taizhou Kairunda Used Oil Collection<br />
Co., Ltd<br />
• Tianjin Dagang NewSpring Desalination<br />
Co., Ltd<br />
Hong Kong<br />
• Hyflux Utility (DF) Limited<br />
• Hyflux Utility (HLD) Limited<br />
• Hyflux Utility (LP) Limited<br />
• Hyflux Utility (PJ) Limited<br />
• Hyflux Utility (TJ) Limited<br />
• Hyflux Utility (TY) Limited<br />
• Hyflux Utility (YK) Limited<br />
• Hyflux Utility (YL) Limited<br />
• Hyflux Utility Water Limited<br />
• Hyflux Utility WT (CGL) Limited<br />
• Hyflux Utility WT (LY) Limited<br />
• Hyflux Utility WT (MG) Limited<br />
• Hyflux Utility WT (XC) Limited<br />
• Hyflux Utility WT (YKG) Limited<br />
• Hyflux Utility WT (YL) Limited<br />
• Hyflux Utility WWT (GY) Limited<br />
• Hyflux Utility WWT (XC) Limited<br />
• Hyflux Utility WWT (YKG) Limited<br />
• Hyflux Utility WWT (YL) Limited<br />
• Hyflux Utility WWT (YT) Limited<br />
• Hyflux Utility WWTP (GY) Limited<br />
British Virgin Islands<br />
• Hyflux Advanced Technology Ltd<br />
• Hyflux International Ltd<br />
• Hyflux Water Projects Ltd<br />
• IndoSpring Utility Ltd<br />
• SinoSpring Utility Ltd<br />
• Spring China Utility Ltd<br />
• Spring Environment Ltd<br />
• Spring Utility Ltd<br />
Europe<br />
France<br />
• Tlemcen Desalination Investment<br />
Company<br />
Netherlands<br />
• Hyflux Ceparation B.V.<br />
• Hyflux Ceparation Technologies B.V.<br />
Netherlands Antilles<br />
• Hyflux Ceparation N.V.<br />
India<br />
• Ahmedabad Recycled Water Company<br />
Private Limited<br />
• Eflux Oil India Private Limited<br />
• Hyflux Engineering (India) Private Limited<br />
• Hyflux Lifestyle Products (India) Private<br />
Limited<br />
Malaysia<br />
• Hyflux Malaysia Sdn Bhd<br />
MENA<br />
Saudi Arabia<br />
• Lube Oil Re-refining Company<br />
United Arab Emirates<br />
• Hyflux (Middle East) FZCO<br />
• Palm Water LLC<br />
Algeria<br />
• Almiyah Attilemcania SPA<br />
• Hyflux – TJSB Algeria<br />
• Hyflux Engineering Algeria<br />
• Hyflux Operations & Maintenance Algeria<br />
• Tahlyat Myah Magtaa SPA<br />
Vietnam<br />
• Eflux Success Blossom Company Ltd<br />
Cayman Islands<br />
• Hyflux Asset Investment (CWF) Ltd<br />
• Hyflux Asset Management (CWF) Ltd
Corporate Information<br />
Audit Committee<br />
Lee Joo Hai (Chairman)<br />
Teo Kiang Kok<br />
Gay Chee Cheong<br />
Professor Tan Teck Meng<br />
Nominating Committee<br />
Gay Chee Cheong (Chairman)<br />
Lee Joo Hai<br />
Teo Kiang Kok<br />
Remuneration Committee<br />
Professor Tan Teck Meng (Chairman)<br />
Gay Chee Cheong<br />
Teo Kiang Kok<br />
Lee Joo Hai<br />
Christopher Murugasu<br />
Risk Management Committee<br />
Raj Mitta (Chairman)<br />
Christopher Murugasu<br />
Lee Joo Hai<br />
Teo Kiang Kok<br />
Executive Committee<br />
Olivia Lum (Chairman)<br />
Lee Joo Hai<br />
Teo Kiang Kok<br />
Gay Chee Cheong<br />
Management Committee<br />
for financial year ending<br />
31 December 2009:<br />
Olivia Lum<br />
Sam Ong<br />
Cho Wee Peng<br />
Fong Chun Hoe<br />
Foo Hee Kiang<br />
Winnifred Heap<br />
Lee Soon Eng<br />
Company Secretary<br />
Lim Poh Fong<br />
Registered Office<br />
Hyflux Building<br />
202 Kallang Bahru<br />
Singapore 339339<br />
Tel : +65 6214 0777<br />
Fax : +65 6214 1211<br />
Share Registrar and Share<br />
Transfer Office<br />
Boardroom Corporate & Advisory<br />
Services Pte Ltd<br />
3 Church Street<br />
#08-01 Samsung Hub<br />
Singapore 049483<br />
Auditors<br />
KPMG LLP<br />
16 Raffles Quay #22-00<br />
Hong Leong Building<br />
Singapore 048581<br />
Partner-in-Charge (since 2008):<br />
Tham Sai Choy<br />
Bankers<br />
Arab Bank Plc<br />
80 Raffles Place<br />
#32-20 UOB Plaza 2<br />
Singapore 048624<br />
Arab Banking Corporation (B.S.C.)<br />
9 Raffles Place<br />
#60-03 Republic Plaza<br />
Singapore 048619<br />
Bangkok Bank Public Company Limited<br />
180 Cecil Street<br />
Bangkok Bank Building<br />
Singapore 069546<br />
Bank of China<br />
4 Battery Road<br />
Bank of China Building<br />
Singapore 049908<br />
Bank of Taiwan, Singapore Branch<br />
80 Raffles Place<br />
#28-20 UOB Plaza 2<br />
Singapore 048624<br />
BNP Paribas, Singapore branch<br />
20 Collyer Quay<br />
Tung Centre<br />
Singapore 049319<br />
Calyon, Singapore Branch<br />
168 Robinson Road<br />
#22-01 Capital Tower<br />
Singapore 068912<br />
Chang Hwa Commercial Bank Ltd,<br />
Singapore Branch<br />
No.1 Finlayson Green, #08-00<br />
Singapore 049246<br />
CIMB Bank Berhad (ex-Bumiputra-<br />
Commercial Bank ), Singapore Branch<br />
50 Raffles Place<br />
#09-01 Singapore Land Tower<br />
Singapore 048623<br />
DBS Bank Ltd<br />
6 Shenton Way<br />
DBS Building Tower One<br />
Singapore 068809<br />
Deutsche Bank AG, Singapore Branch<br />
One Raffles Quay<br />
#16-00 South Tower<br />
Singapore 048583<br />
Hua Nan Commercial Bank, Ltd.,<br />
Singapore Branch<br />
80 Robinson Road, #14-03<br />
Singapore 068898<br />
Land Bank of Taiwan, Singapore Branch<br />
80 Raffles Place<br />
#34-01 UOB Plaza 1<br />
Singapore 048624<br />
Mega International Commercial Bank Co.,<br />
Ltd. (ex-ICBC), Singapore Branch<br />
80 Raffles Place<br />
#23-20 UOB Plaza II<br />
Singapore 048624<br />
Mizuho Corporate Bank, Ltd., Singapore<br />
Branch<br />
168 Robinson Road<br />
Capital Towers #13-00<br />
Singapore 068912<br />
Natixis, Singapore Branch<br />
50 Raffles Place<br />
#41-01 Singapore Land Tower<br />
Singapore 048623<br />
Oversea-Chinese Banking Corporation<br />
Limited<br />
65 Chulia Street<br />
OCBC Centre<br />
Singapore 049513<br />
Rabobank International,<br />
Singapore Branch<br />
77 Robinson Road<br />
#09-00 SIA Building<br />
Singapore 068896<br />
Standard Chartered Bank<br />
6 Battery Road, Level 23<br />
Singapore 049909<br />
State Bank of India<br />
6 Shenton Way<br />
#22-08 DBS Building Tower 2<br />
Singapore 068809<br />
The Bank of East Asia Limited,<br />
Singapore Branch<br />
137 Market Street<br />
BEA Building<br />
Singapore 048943<br />
United Overseas Bank Limited<br />
1 Raffles Place<br />
OUB Centre<br />
Singapore 048616
WWW.HYFLUX.COM<br />
TM<br />
Hyflux Building<br />
202 Kallang Bahru<br />
Singapore 339339