Full Annual Report 2006 - Singapore Technologies Engineering

THE WINNING SPIRIT ST Engineering AR 2006 126
Notes to the Financial Statements 31 DECEMBER 2006
(Currency – Singapore dollars unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(aa) Significant accounting estimates and judgements (continued)
• Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in
determining the group-wide provision for income taxes. There are certain transactions and computations for which
the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities
for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were initially recognised, such differences will impact the income
tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the
Group’s tax payables at 31 December 2006 was $213,931,000 (2005: $208,764,000).
(ii) Critical judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made certain judgements, apart from
those involving estimations, which have significant effect on the amounts recognised in the financial statements.
3. SHARE CAPITAL
• Impairment of investments and financial assets
The Group follows the guidance of FRS 39 on determining when an investment or financial asset is other-thantemporarily
impaired. This determination requires significant judgement, the Group evaluates, among other factors,
the duration and extent to which the fair value of an investment or financial asset is less than its cost; and the
financial health of and near-term business outlook for the investment or financial asset, including factors such as
industry and sector performance, changes in technology and operational and financing cash flow.
GROUP AND COMPANY
2006 2005
$’000 $’000
Issued and fully paid:
At beginning of the year
2,914,495,627 (2005: 2,892,164,909) ordinary shares 291,450 289,217
Transfer from share premium account 117,197 –
Issued during the year
31,758,004 (2005: 22,330,718) ordinary shares 66,279 2,233
At end of the year
2,946,253,631 (2005: 2,914,495,627) ordinary shares 474,926 291,450
Included in share capital is a special share issued to the Minister for Finance (Incorporated). The special share enjoys all the
rights attached to the ordinary shares. In addition, the special share carries the right to approve any resolution to be passed by
the Company, either in general meeting or by its Board of Directors, on certain matters specified in the Company’s Articles of
Association. The special share may be converted at any time into an ordinary share.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares
carry one vote per share without restriction.
On 30 January 2006, in accordance with the Companies (Amendment) Act 2005, the concepts of “par value” and “authorised
capital” were abolished and on that date, the shares of the company ceased to have a par value. The amount standing to the
credit of the Company’s share premium account became part of the Company’s share capital.
The Singapore Technologies Engineering Share Option Plan (“ESOP”) and the Singapore Technologies Engineering
Performance Share Plan (“PSP”) of the Company were approved by its members at an Extraordinary General Meeting held
on 23 November 2000. The ESOP and PSP are administered by the Executive Resource and Compensation Committee
(“ERCC”) comprising three directors, Mr Peter Seah Lim Huat, Mr Venkatachalam Krishnakumar and Dr Philip Nalliah Pillai.