ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) F4 Associates and joint ventures (continued) Basis of consolidation (continued) (v) Investments in associates and joint ventures Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% or more of the voting power of another entity. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Investments in associates and joint ventures are accounted for by the Group using the equity method (except for those acquired by the Group’s Corporate Venture Capital Unit) and are recognised initially at cost, which includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income (OCI) from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interest, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation to fund the investee’s operations or has made payments on behalf of the investee. For investments in associates acquired by the Group’s Corporate Venture Capital Unit, the Group has elected to measure its investments in associates at FVTPL in accordance with SFRS(I) 9 Financial Instruments . In the Company’s separate financial statements, investments in associates and joint ventures are accounted for at cost, less accumulated impairment losses. (vi) Transactions eliminated on consolidation All significant inter-company balances and transactions are eliminated on consolidation. / ST ENG I NEER I NG 274