HYFLUX LTD AND SUBSIDIARIES

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2002 02. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (C) SUBSIDIARIES AND ASSOCIATED COMPANIES Investments in subsidiaries and associated companies are stated in the financial statements of the Company at cost. Provision is made where there is a decline in value that is other than temporary. A subsidiary is a company in which the Group, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. An associated company is a company, not being a subsidiary, in which the Group has an interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence. (D) LONG-TERM INVESTMENTS Investments held for long-term purposes are stated at cost. Provision for impairment for long-term investments is made when there is a decline, other than temporary, in value of the investments. (E) FIXED ASSETS Fixed assets are stated at cost, net of depreciation and any impairment loss. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account. Depreciation is provided on all fixed assets at the following rates to write off the cost, less estimated residual value of each asset on a straight-line basis over their estimated useful lives: Plant and machinery Motor vehicles Computers Office equipment Leasehold properties and improvements Furniture and fittings Renovation 4 - 5 years 4 - 5 years 1 - 4 years 4 - 5 years Over the lease period 4 - 10 years 4 - 5 years Construction-in-progress represents buildings and plants under construction and is stated at cost. This includes cost of construction, plant and equipment and other direct costs. Construction-in-progress is not depreciated until such time as the relevant assets are completed and put into operational use. (F) INTANGIBLES (I) INTELLECTUAL PROPERTY RIGHTS The initial cost of acquiring intellectual property rights is capitalised and amortised on a straight-line basis over the period of their expected benefits, which normally does not exceed 5 years. (II) RESEARCH AND DEVELOPMENT EXPENDITURE Research and development costs are charged against income in the period incurred except for development costs that are expected to have future benefits. Development costs that have been capitalised are amortised on a straight-line basis over the period of their expected benefits, which normally does not exceed 5 years. (III) LICENSING FEES The initial cost of acquiring licenses is capitalised and amortised on a straight-line basis over the period of the licensing agreement.
HYFLUX LTD AND SUBSIDIARIES P.18.19 02. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (G) STOCKS Stocks are valued at the lower of cost and net realisable value. Costs include materials, all direct expenditure and all costs in bringing the stocks to their present location and condition, determined on a first-in, first-out basis. Net realisable value represents the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow-moving stocks. (H) WORK-IN-PROGRESS Work-in-progress is stated at cost plus attributable profit net of progress billings and provision for foreseeable losses. (I) TRADE AND OTHER DEBTORS Trade and other debtors which generally have 30 - 90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Receivables from related parties are recognised and carried at cost less provision for doubtful debts. (J) CASH AND CASH EQUIVALENTS Cash and cash equivalents are defined as cash on hand and cash with banks, including bank overdrafts, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in values. (K) IMPAIRMENT OF ASSETS Fixed assets, intangibles and investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss account for items of fixed assets, intangibles and investments carried at cost. The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit. Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment loss recognised for an asset no longer exists or has decreased. The reversal is recorded in the profit and loss account or as a revaluation increase. (L) TRADE AND OTHER CREDITORS Trade and other creditors which are normally settled on 30 - 90 day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received. Payables to related parties are carried at cost. (M) PROVISION FOR WARRANTY Provision for warranty claims is made on the basis of estimated cost to fulfil warranty obligations. The provision represents the best estimate of the Group’s liability to repair or replace products still under warranty at the balance sheet date.
Page 1 and 2: DIRECTORS Olivia Lum Ooi Lin Deirdr
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Page 9 and 10: HYFLUX LTD AND SUBSIDIARIES P.06.07
Page 11 and 12: STATEMENT BY DIRECTORS HYFLUX LTD A
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Page 19: NOTES TO THE FINANCIAL STATEMENTS F
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Page 61 and 62: PROXY FORM (PLEASE SEE NOTES OVERLE
Page 63 and 64: HYFLUX LTD 40 Changi South Street 1

HYFLUX LTD AND SUBSIDIARIES

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