Notes to the Financial Statements - SingTel

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Notes to the Financial StatementsFor the financial year ended 31 March 20112.20 Revenue RecognitionRevenue for the Group is recognised based on the fair value for the sale of goods and services rendered, net of goods andservices tax, rebates and discounts, and after eliminating sales within the Group. Revenue includes the gross income receivedand receivable from revenue sharing arrangements entered into with overseas telecommunication companies in respect oftraffic exchanged.For phone cards and prepaid cards which have been sold, provisions for unearned revenue are made for services which havenot been rendered as at the end of the reporting period. Expenses directly attributable to the unearned revenue are deferreduntil the revenue is recognised.Revenue from the provision of information technology and engineering services, and fibre rollout are recognised based onthe percentage of completion of the projects using cost-to-cost basis. Revenue from information technology and engineeringservices where the services involve substantially the procurement of computer equipment and third party software forinstallation is recognised upon full completion of the project.Revenue from the sale of equipment is recognised upon the transfer of significant risks and rewards of ownership of the goodsto the customer which generally coincides with delivery and acceptance of the goods sold.Dividend income is recorded gross in the income statement when the right to receive payment is established.Interest income is recognised on a time proportion basis using the effective interest method.Rental income from operating leases is recognised on a straight-line basis over the term of the lease.2.21 Employees’ Benefits2.21.1 Defined contribution plansDefined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separateentities such as the Central Provident Fund. The Group has no legal or constructive obligation to pay further contributions ifany of the funds does not hold sufficient assets to pay all employee benefits relating to employee services in the current andpreceding financial years.The Group’s contributions to the defined contribution plans are recognised in the income statement as expenses in the financialyear to which they relate.2.21.2 Employees’ leave entitlementsEmployees’ entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision ismade for the estimated liability of annual leave and long service leave as a result of services rendered by employees up to theend of the reporting period.114 SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES
Notes to the Financial StatementsFor the financial year ended 31 March 20112.21.3 Share-based compensationPerformance sharesThe performance share plans of the Group are accounted for either as equity-settled share-based payments or cash-settledshare-based payments. Equity-settled share-based payments are measured at fair value at the date of grant, whereas cashsettledshare-based payments are measured at current fair value at the end of each reporting period. The performance shareexpense is amortised and recognised in the income statement on a straight-line basis over the vesting period.At the end of each reporting period, the Group revises its estimates of the number of performance shares that the participantsare expected to receive based on non-market vesting conditions. The difference is charged or credited to the income statement,with a corresponding adjustment to equity or liability for equity-settled and cash-settled share-based payments respectively.The dilutive effect of Share Plan 2004 is reflected as additional share dilution in the computation of diluted earnings per share.Share optionsAs the share options were granted before 22 November 2002, FRS 102, Share-based Payment, is not applicable. No compensationexpense is recognised for the outstanding share options under the share option schemes.The proceeds received, net of any directly attributable transaction costs, from the exercise of share options are credited to‘Share Capital’.The dilutive effect of outstanding share options is reflected as additional share dilution in the computation of diluted earningsper share.2.22 Borrowing CostsBorrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costsincurred in arranging borrowings, and finance lease charges. Borrowing costs are generally expensed as incurred, except tothe extent that they are capitalised if they are directly attributable to the acquisition, construction, or production of a qualifyingasset.2.23 Customer Acquisition CostsCustomer acquisition costs, including related sales and promotion expenses and activation commissions, are expensed asincurred.2.24 Pre-incorporation ExpensesPre-incorporation expenses are expensed as incurred.ANNUAL REPORT 2010/2011 115
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Notes to the Financial Statements - SingTel

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