Page 140 - Annual Report 2014

2.2 Consolidation Overview
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern
Strategy
the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes
into consideration potential voting rights that are currently exercisable. Performance

Investments in subsidiaries are stated in the Company’s statement of financial position at cost less impairment losses. Governance
Subsidiaries are consolidated with the Company in the Group’s financial statements.
Financials
Acquisitions of subsidiaries from related corporations controlled by the ultimate holding company, Temasek Holdings (Private)
Limited (“Temasek”), are accounted for as reconstructions of businesses under common control using the historical cost
method similar to the “pooling of interest” method.

Under the historical cost method, the acquired assets and liabilities were recorded at their existing carrying amounts. The
consolidated financial statements included the results of operations, and the assets and liabilities, of the pooled enterprises as
part of the Group for the whole of the current and preceding periods.

To the extent that the par value of the shares issued in consideration for these transactions exceeded the par value of the
shares held by the related corporations, the difference was recognised as a merger reserve in the Group’s financial statements.

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end
of the financial year.

Assets and liabilities of foreign subsidiaries are translated into Singapore dollars at rates of exchange closely approximate to
those ruling at the reporting date. Income, expenses and cash flows are translated at average rates prevailing during the period.
Translation differences are recognised in other comprehensive income, and are presented within equity in the foreign currency
translation reserve. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the
translation difference is allocated to the non-controlling interests. When a foreign subsidiary is disposed of such that control
is lost, the cumulative amount in the foreign currency translation reserve related to that foreign subsidiary is transferred to the
income statement as an adjustment to the profit or loss arising on disposal. When the Group disposes of only part of its interest
in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is
reattributed to non-controlling interests.

All significant intra-group transactions, balances and unrealised gains/losses are eliminated on consolidation. Unrealised gains
are eliminated in full. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no
evidence of impairment. Otherwise they are recognised immediately in the income statement.

2.3 Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The costs of self-constructed assets
include the cost of materials and direct labour, an appropriate proportion of overheads, the costs of dismantling and removing
the assets and restoring the site on which they are located and capitalised borrowing costs.

Subsequent expenditure relating to existing property, plant and equipment is added to the carrying amount of the asset when
it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset,
will flow to the Group. All other subsequent expenditure is recognised as an expense in the year in which it is incurred.

Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference
between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the income statement
on the date of retirement or disposal.

StarHub Ltd | Annual Report 2014 137