ConsolidatedCash Flow StatementYear Ended December 31, <strong>2008</strong>Attributable net assets of subsidiaries divested and acquired during the year are as follows:Notes to theFinancial StatementsYear Ended December 31, <strong>2008</strong>Group<strong>2008</strong> 2007DisposalsNon-current assets 22,067 104,928Net current (liabilities) / assets (9,650) 3,791Non-current liabilities (2,044) (5,761)Minority interests (8,257) (1,824)2,116 101,134(Loss) / profit on disposal (597) 5,284Realisation of currency translation reserve 824 (1,113)Total consideration received 2,343 105,305Net cash at bank of subsidiaries disposed of (219) (6,920)Cash inflow on divestment 2,124 98,385AcquisitionsNon-current assets – 17Net current assets – 484Minority interests – (150)Total consideration payable – 351Net cash at bank of subsidiaries acquired – (511)Cash inflow on acquisitions – (160)S$’000S$’000These notes form an integral part of the financial statements.The financial statements were authorised for issue by the Board of Directors on February 26, 2009.1. DOMICILE AND ACTIVITIES<strong>Sembcorp</strong> Industries Ltd (the “Company”) is a company incorporated in the Republic of Singapore and has its registeredoffice at 30 Hill Street #05-04, Singapore 179360.Prior to January <strong>2008</strong>, the principal activities of the Company were those of an investment holding company, as wellas the corporate headquarters, which gives strategic direction and provides management services to its subsidiaries.In January <strong>2008</strong>, the Company entered into an internal restructuring with its wholly-owned subsidiary, <strong>Sembcorp</strong>Utilities Pte Ltd, for the acquisition of the entire assets, liabilities and businesses of <strong>Sembcorp</strong> Utilities & Terminals(“SUT”) and Propylene Purification Unit (“PPU”) divisions, including their current employees.Following the above acquisition, the principal activities of the Company includes:a. investment holding, as well as the corporate headquarters, which gives strategic direction and providesmanagement services to its subsidiaries; andb. production and supply of utilities services, terminalling and storage of petroleum products and chemicals.The principal activities of key subsidiaries are as follows:i. UtilitiesThis business focuses on the provision of centralised utilities, energy and water. It offers industrial utilities andservices such as energy, steam, industrial water and wastewater treatment to energy intensive users. It operates inSingapore, the United Kingdom, China, Vietnam and the United Arab Emirates.ii.MarineThis business focuses principally on repair, building and conversion of ships and rigs, and offshore engineering.iii. EnvironmentThe business provides integrated waste management services and undertakes waste-to-resource businesses in theAsia Pacific region.iv. Industrial ParksThe business focuses principally on developing, marketing and managing industrial parks and townships in Asia.The consolidated financial statements relate to the Company and its subsidiaries (referred to as the “Group”) and theGroup’s interests in associates and joint ventures.The accompanying notes form an integral part of these financial statements.118 Delivering Essential Solutions <strong>Sembcorp</strong> Industries <strong>Annual</strong> <strong>Report</strong> <strong>2008</strong> 119
Notes to theFinancial StatementsYear Ended December 31, <strong>2008</strong>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Basis of PreparationThe financial statements are prepared in accordance with Singapore Financial <strong>Report</strong>ing Standards (“FRS”).The financial statements are presented in Singapore dollars and rounded to the nearest thousand (“S$’000”),unless otherwise indicated. They are prepared on the historical cost basis except where otherwise described in theaccounting policies below.The preparation of financial statements in conformity with FRS requires management to make judgements,estimates and assumptions that affect the application of accounting policies and reported amounts of assets,liabilities, income and expenses. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimates are revised and in any future periods affected.Information about significant areas of estimation uncertainty and critical judgements in applying accountingpolicies that have the most significant effect on the amount recognised in the financial statements are discussedin Note 43.With effect from January 1, <strong>2008</strong>, the Group adopted the following new or amended FRS and Interpretations toFRS (“INT FRS”) which are relevant to the Group’s operations:INT FRS 111INT FRS 114FRS 102 – Group and Treasury Share TransactionsFRS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirementsand their InteractionThe adoption of the above INT FRS did not result in substantial changes to the Group’s accounting policies. Theaccounting policies set out below have been applied consistently by the Group. The accounting policies used by theGroup have been applied consistently to all periods presented in these financial statements.b. Consolidationi. SubsidiariesSubsidiaries are those companies that are controlled by the Group. Control exists when the Group has thepower, directly or indirectly, to govern the financial and operating policies of a company so as to obtainbenefits from its activities.The existence and effect of potential voting rights that are presently exercisable or presently convertible areconsidered when assessing whether the Group controls another company.Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairment losses. Thefinancial statements of subsidiaries are included in the consolidated financial statements from the date thatcontrol commences until the date that control ceases.All business combinations are accounted for using the purchase method with effect from January 1, 2004upon the adoption of FRS 103. Prior to January 1, 2004, business combinations were accounted for either bythe purchase method, or if they were between entities under common control, by the historical cost methodsimilar to the pooling-of-interest method.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)b. Consolidation (cont’d)i. Subsidiaries (cont’d)Under the purchase method, the cost of an acquisition is measured at the fair value of the assets given, equityinstruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributableto the acquisition. The excess of the Group’s interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities over the cost of acquisition is credited to the income statement in the period of theacquisition.ii.Business combinations that involve entities under common control are excluded from the scope of FRS 103. Suchcombinations are accounted at historical cost in a manner similar to the pooling-of-interests method, in thepreparation of the consolidated financial statements. Under this method of accounting, the difference betweenthe value of the share capital issued and the value of shares received is taken to the merger reserve.The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets andliabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minorityinterest are allocated against the interests of the parent.AssociatesAssociates are companies in which the Group has significant influence, but not control, over the financial andoperating policies.The existence and effect of potential voting rights that are presently exercisable or presently convertible areconsidered when assessing whether the Group has significant influence over another company.In the Group’s financial statements, they are accounted for using the equity method of accounting from theday that significant influence commences until the date that significant influence ceases. When the Group’sshare of losses exceeds the carrying amount of the associate (including any other unsecured receivables,that in substance, form part of the Group’s net investment in the associate), recognition of further losses isdiscontinued unless the Group has incurred obligations or made payments on its behalf to satisfy obligationsof the associate that the Group has guaranteed or otherwise committed on behalf of.The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingentliabilities over the cost of acquisition is credited to the income statement in the period of the acquisition.Where the audited financial statements are not available, the share of results is arrived at from unauditedmanagement financial statements made up mainly to the end of the accounting year to December 31.iii. Joint VenturesJoint ventures are those enterprises whose activities the Group has joint control over, established by contractualagreement.The existence and effect of potential voting rights that are presently exercisable or presently convertible areconsidered when assessing whether the Group has joint control over the enterprise.For incorporated joint ventures, the Group accounts for the joint ventures in the same manner as associates,from the date joint control commences until the day that the joint control ceases.For unincorporated joint ventures, the proportionate share in the unincorporated joint ventures’ individualincome, expenses, assets and liabilities are included in financial statements of the Group with items of a similarnature on a line-by-line basis.120 Delivering Essential Solutions <strong>Sembcorp</strong> Industries <strong>Annual</strong> <strong>Report</strong> <strong>2008</strong> 121
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