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Annual Report 02/03

Table of contents

  • Page 1
    Annual Report 02/03

  • Page 2

  • Page 3
    ...Development Promoting Travel and Tourism Alliance Matters Community Relations Awards and Accolades Subsidiaries and Associated Companies Our People Environment List of Awards Risk Management Corporate Governance Financials 121 Notice of Annual General Meeting and Closure of Books SIA Annual Report...

  • Page 4
    ... number of fully paid shares in issue at 31 March. Includes 4.0 cents per share tax-exempt dividend. Dividend cover is profit attributable to shareholders divided by net dividends. The corporatization of Singapore Airlines Cargo took effect from 1 July 2001. The Company's revenue for financial year...

  • Page 5
    ... employee ($) Value added per employee ($) R1 30,243 347,684 144,397 29,422 318,904 126,375 + 2.8 + 9.0 + 14.3 Based on average staff strength of passenger operations. Passenger load includes excess baggage carried. GLOSSARY Passenger Revenue passenger-km Available seat-km Load factor Unit cost...

  • Page 6
    ... also Chairman of the Wah Chang Group of companies and the Singapore Management University. He is a director of the main Board of Standard Chartered Bank and the Government of Singapore Investment Corporation, and a member of the Regional Advisory Board of the London Business School. Mr Ho graduated...

  • Page 7
    ... positions, including heading several regional offices and the Divisions of Planning, Marketing, and Finance. He was promoted to Senior Executive VicePresident (Administration) in May 2001 and Chief Executive Officer in June 2003. Mr Chew is Chairman of SMRT Corporation Ltd and of Singapore Aircraft...

  • Page 8
    ...capacity. We also pressed ahead with new products and services and continued building alliances on the cargo side of the business. Our results for the half-year reflected how well we had capitalized on the early recovery from 9-11. Profit attributable to shareholders was $774 million, an improvement...

  • Page 9
    ...months of the new financial year by over 30 per cent. However, at the time of preparing this report, Singapore had been removed from the World Health Organization's list of SARS-affected countries and there is some improvement in business confidence. Stringent cost management was essential to ensure...

  • Page 10
    Corporate Data Top Management, from left to right Bey Soo Khiang Huang Cheng Eng Cheong Choong Kong Michael Tan Jiak Ngee Chew Choon Seng BOARD OF DIRECTORS Chairman BOARD FINANCE COMMITTEE Chairman REGISTRAR KPMG 138 Robinson Rd #17-00 The Corporate Office Singapore 068906 AUDITORS Ernst & ...

  • Page 11
    ...Vice-President (Technical and Human Resources) President Singapore Airlines Cargo Pte Ltd Financial Calendar 31 March 2003 Bey Soo Khiang Executive Vice-President (Marketing and the Regions) Hwang Teng Aun Chief Executive Officer Singapore Airport Terminal Services Ltd Financial year-end 23 May...

  • Page 12
    ...• SIA and VISA International launch the Singapore Airlines Splendour Card, offering customers discounts at more than 300 outlets and attractions in Singapore. • Delivery of seventh B777-200ER aircraft. June • Official opening of SATS Inflight Catering Centre 1 by Minister for Manpower, Dr Lee...

  • Page 13
    ... of B747-400F freighter, the twelfth in SIA Cargo's fleet. March • SIA Board of Directors appoints Mr Chew Choon Seng, Senior Executive Vice-President (Administration) as a Director with immediate effect. Mr Chew had been named as CEO-Designate in January 2003. SIA Annual Report 02/03 11

  • Page 14
    ... ended, the outlook for the industry was uncertain. 12 SIA Annual Report 02/03 NETWORK The highlight of the year in terms of network expansion came with the launch of Las Vegas services in August 2002. The famed entertainment and conference centre, which is also an important gateway to America...

  • Page 15
    ... busy December period, supplementary flights to Sydney, Melbourne and Christchurch were also mounted. As part of a restructuring of services to South Africa, operations to Durban were terminated in January 2003, when B777-200ER aircraft gradually replaced B747-400s, allowing capacity to better match...

  • Page 16
    ... Limited, for a six-year lease. This was the sixteenth B747-400 to be involved in a sale and leaseback transaction. SIA disposed of seven aircraft during the year: two A310-300s and five A340-300Es. As at 31 March 2003, SIA's passenger fleet stood at 96 aircraft, with an average age of five years...

  • Page 17
    ...2002 on a free trial basis. It allows passengers to send messages of up to 160 characters to email addresses and mobile phone numbers around the world. The previous features of KrisWorld are still available, but with even more choice. Using the audio-video on demand feature, customers in all classes...

  • Page 18
    ..., which creates the Book the Cook dishes and many others on the SIA inflight menu, welcomed two new faces in March 2003. In line with SIA's policy of keeping its ideas as fresh as the food it serves, Mathew Moran from Sydney and New York's Alfred Portale joined the panel. At the same time, the panel...

  • Page 19
    ... world. Customers travelling to Japan, Korea and the USA found it easier to stay in touch from June 2002, when SIA started offering free mobile phone rental to First and Raffles Class passengers travelling to those destinations, and discounted rental for Economy Class passengers. SIA Annual Report...

  • Page 20
    ... 'Best Frequent Flyer Programme' by readers of Business Traveller Asia Pacific and 'Most Popular Airline Frequent Flyer Programme' in the TIME Readers' Travel Choice Awards. KrisFlyer boasts 69 partners around the world, ranging from airlines, hotels and a travel agency to credit cards, an insurance...

  • Page 21
    ... on Star Alliance carriers, including Singapore Airlines. In September, a significant step was taken towards ensuring a more seamless travel experience with one of SIA's key codeshare and Star Alliance partners, Lufthansa. Customers flying into Frankfurt on SIA flights can check the departure gate...

  • Page 22
    Change of CEO In January 2003, the Board of Directors announced that Mr Chew Choon Seng would succeed Dr Cheong Choong Kong as Chief Executive Officer on the latter's retirement in June 2003, after 29 years with the Company. Fifty-six-year-old Mr Chew, who joined SIA in 1972, has moved extensively ...

  • Page 23
    ... Investor Relations magazine at its annual Asia Awards, including Best Annual Report, Best Communication of Shareholder Value, and the Grand Prix award for Best Overall Investor Relations. These and all other major awards won by SIA during the year are listed in this report. SIA Annual Report 02...

  • Page 24
    ... airline, according to official IATA statistics. The young company strengthened the foundations for strong organisational practices in a number of areas, including information and operational security, risk management, financial controls and responsibility for overseas offices. Freighter services...

  • Page 25
    ... the year in review, six new airlines were signed up as clients for ground handling and catering services: Hainan Airlines, Xiamen Airlines, Australian Airlines, Swiss Air Lines, Air Macau and Pacific Airlines. SATS also began operating Qantas' Regionalised Load Control Centre at Singapore Changi...

  • Page 26
    ... the year in review, SilkAir operated 114 scheduled flights a week from Singapore to 25 destinations throughout the region. Unfortunately, growth had to be reversed at the start of the new 2003/04 financial year. Like its parent, SilkAir was badly affected by the SARS outbreak and was forced to cut...

  • Page 27
    ... Flying College At the beginning of the year in review, the Singapore Flying College took over the management and operations of advanced training, previously a responsibility of SIA's Flight Crew Training Centre. To accommodate this training, a new branch of the College was set up in Maroochydore...

  • Page 28
    ...by its subsidiaries and associated companies. Cabin crew made up the largest single component of the airline's workforce, with 6,891 employed as at the end of the financial year. SIA employed 1,888 pilots in its technical crew workforce. Staff numbers for the Group represented an increase of 3.6 per...

  • Page 29
    ... Travel Best Transpac Business Class Korea Herald (South Korea) Readers' Best Brand Awards 2002 Best Foreign Airline Decem ber 2002 Asiamoney magazine Best-Managed Companies survey in 2002 Overall Best Managed Company in Singapore Best Corporate Strategy Best Financial Management Best Operational...

  • Page 30
    ..., the risk reporting structure of the Group was formalized by the formation of various Risk Management Committees as follows: Company Risk Management Committees Each of the main operating companies established a Risk Management Committee to drive and oversee the practice of risk management within...

  • Page 31
    ... carry on its business of air transportation, it has to comply with a host of regulations in Singapore and elsewhere. These regulations deal mainly with safety issues - from airworthiness of aircraft to training of crew to operation of aircraft. RISK FOCUSED APPROACH The existing cross-company and...

  • Page 32
    ... SIA Group of companies. 1. BOARD OF DIRECTORS 1.1 The Board's primary role is to protect and enhance long-term shareholder value. It sets the overall strategy for the SIA Group and supervises executive management. To fulfil this role, the Board is responsible for the overall corporate governance...

  • Page 33
    ... of responsibilities between the Chairman and the Chief Executive Officer, which ensures a balance of power and authority within the Company. These positions are held by Mr Koh Boon Hwee, Dr Cheong Choong Kong (as CEO until 9 June 2003) and Mr Chew Choon Seng (as CEO from 9 June 2003) respectively...

  • Page 34
    ... or others; • the Group's systems of internal controls, including financial, operational, compliance and risk management, that Management and the Board have established; and • the Group's internal and external auditing, accounting and financial reporting processes. 32 SIA Annual Report 02/03

  • Page 35
    ... (a) Financial Reporting The Committee reviewed with Management the interim and annual financial statements and financial announcements required by Singapore Exchange Securities Trading Limited (SGX-ST) before endorsing to the Board for approval. The reviews focused on changes in accounting policies...

  • Page 36
    ... management, financial risk management, and review of share buy back procedures. 4.2 The Committee holds meetings at quarterly intervals, and comprises the following members: Chairman Members : : Fock Siew Wah Cheong Choong Kong (until 9 June 2003) Chew Choon Seng (from 9 June 2003) Charles B Goode...

  • Page 37
    ... programmes comply with regulatory requirements and accord with the best practices of the aviation industry; reviewing regular reports on safety and reliability performances; reviewing accident investigation findings and recommendations; and advising Management and reporting to the Board on safety...

  • Page 38
    ... Four Directors, namely Koh Boon Hwee (in respect of all the Board Committees he sits on), Cheong Choong Kong, Chew Choon Seng and Lim Boon Heng have further agreed to waive their fees entirely. The total Directors' fees payable will amount to $206,167 (2001-02: $462,579). 36 SIA Annual Report 02...

  • Page 39
    ...and 61 of the Report by the Board of Directors. 9.4 The remuneration of the Company's key executives for 2002-03 is as follows: Stock options granted during the year Fee % Between $1,000,001 to $1,250,000 Salary % Fixed % Bonus Variable# % Number Benefits % Total % Exercise Price $ Michael Tan Jiak...

  • Page 40
    ... and consulting services designed to add value and improve the Group's operations. It helps the Group accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. 38 SIA Annual Report 02/03

  • Page 41
    ...and available to address questions at General Meetings. 14. SECURITIES TRANSACTIONS 14.1 The Company has clear policies and guidelines for dealings in the securities of the Company by Directors and employees, which are in conformity with the SGX-ST Best Practices Guide. SIA Annual Report 02/03 39

  • Page 42
    ...by the Board of Directors Statement by the Directors Pursuant to Section 201(15) Auditors' Report Profit and Loss Accounts Balance Sheets Statements of Changes in Equity Cash Flow Statements Notes to the Financial Statements Additional Information Half-Yearly Results of the Group Five-Year Financial...

  • Page 43
    ... improved to $1,065 million (+68.6 per cent) • Earnings per share of 87.4 cents (+68.4 per cent) • Shareholders' funds $10,709 million (+8.8 per cent) • Net asset value of $8.79 per share (+8.8 per cent) • Net debt equity ratio remain unchanged at 0.07 time SIA Annual Report 02/03 41

  • Page 44
    ... the SIA Engineering Company group (-$63 million) and the Singapore Airport Terminal Services group (-$37 million). Singapore Airlines Cargo was a notable exception, recording an operating profit of $63 million, compared with last year's $91 million loss. Although revenue reached an all-time high of...

  • Page 45
    ... 2003 grew 9.5 per cent from a year ago, to $719 million. his was largely the result of aircraft purchases. The net debt equity ratio remain unchanged at 0.07 time. The Group's profitability ratios are as follows: 2002-03 % 2001-02 % Change % points Return on turnover Return on total assets Return...

  • Page 46
    ... million), liquidation of Star Kingdom Investment Limited (-$8.6 million), liquidation of Auspice Limited (+$191.4 million), surplus on sale of Equant N.V. shares (+$29.0 million) and transfer of 51 per cent Cargo Community Network Pte Ltd to SIA Cargo Ltd (+$0.7 million). 44 SIA Annual Report 02...

  • Page 47
    ... Review Revenue The Company's revenue increased 8.2 per cent to $8,047.0 million. 2002-03 $ million 2001-02 $ million (Restated) Change % Passenger revenue Excess baggage revenue Non-scheduled services Bellyhold revenue from SIA Cargo Direct operating revenue Indirect operating revenue Total...

  • Page 48
    ... Review Company Route Performance A review of the Company's passenger route performance is shown below: By Route Region R2 Passenger Revenue ($ million) Passenger Load Factor (%) 2002-03 2001-02 Change % 2002-03 2001-02 Change R1 East Asia Americas Europe South West Pacific West Asia and Africa...

  • Page 49
    ... under Americas region. Includes excess baggage revenue. Passenger revenue by area of original sale is defined as revenue originating in the area from which the sale is made. East Asia covers Brunei, Hong Kong, Indonesia, Japan, Korea, Malaysia, People's Republic of China, Philippines, Singapore...

  • Page 50
    Financial Review Passenger Yield, Unit Cost and Breakeven Load Factor 2002-03 2001-02 (Restated) Change Yield (¢/pkm) Unit cost (¢/ask) Breakeven load factor (%) 9.1 6.7 73.6 9.0 6.4R1 71.1R1 + + + 1.1 % 4.7 % 2.5 points R1 Restated to exclude cargo operating costs to allow meaningful year-...

  • Page 51
    ... accommodation costs, loss on exchange, comprehensive aviation insurance, departmental expenses such as airport lounge expenses, non-information technology contract and professional fees and SIA Engineering recharges, expenses on nonscheduled services, aircraft licence and recoveries. SIA Annual...

  • Page 52
    ... million. A change in fuel price of one US cent per American gallon would affect the Company's annual fuel costs of its passenger operations by SGD19 million, before accounting for US Dollar exchange rate movements and changes in volume of fuel consumed. Fuel Productivity of Passenger Fleet 10.0 10...

  • Page 53
    ... the cut in corporate tax rate from 24.5 to 22.0 per cent. Issued Share Capital and Share Options There was no buyback of the Company's shares during the period under review. On 1 July 2002, the Company made a fourth grant of share options to employees. Staff accepted 13,658,152 share options (99...

  • Page 54
    ... Singapore Airlines Cargo Private Limited (SIA Cargo), and SilkAir (Singapore) Private Limited. The following review of their performances excludes adjustments for inter-company transactions. Singapore Airport Terminal Services Group 2002-03 $ million 2001-02 $ million Change % Total revenue Total...

  • Page 55
    ... points from 2001-02. Basic earnings per share was 20.5 cents, a decrease of 8.0 per cent over the year ended 31 March 2002. Singapore Airlines Cargo 2002-03 $ million 2001-02 $ million Change % Total revenue Total expenditure Operating profit Profit after tax 2,520.5 2,457.6 62.9 66.6 2,039...

  • Page 56
    ...of goods and services Value added by the Group Add: Surplus on disposal of aircraft, spares and spare engines Share of profits of joint venture companies Share of profits/(losses) of associated companies Provision for diminution in value of Air New Zealand Limited Liquidation of Asian Frequent Flyer...

  • Page 57
    ... 1500 1000 500 0 -500 Dollar 1998-99 1999-00 2000-01 2001-02 2002-03 Value Added per $ Employment Costs Value Added per $ Revenue Value Added per $ Investment in Fixed Assets Retained in the Business Employees Suppliers of Capital Government Group Staff Strength and Productivity 50,000 40...

  • Page 58
    ... operations. Passenger load includes excess baggage carried. In 2002-03, average staff strength of subsidiary companies was 15,825, up 608. Head count increased in SIAEC Group (+331), SATS Group (+100) and Singapore Airlines Cargo (+66). The Group's staff strength rose by 821 to 30,243 employees...

  • Page 59
    ... principal activity of the Company consists of passenger air transportation. 5 Directors of the Company (a) The names of the directors in office at the date of this report are: Koh Boon Hwee Cheong Choong Kong Edmund Cheng Wai Wing Chew Choon Seng Fock Siew Wah Charles B Goode Ho Kwon Ping Lim Boon...

  • Page 60
    ... company: Direct Interest 1.4.2002/ date of appointment Deemed interest 1.4.2002/ date of 21.4.2003 appointment Name of Director 31.3.2003 31.3.2003 21.4.2003 Interest in Singapore Airlines Limited Ordinary shares of $0.50 each Cheong Choong Kong 480,800 Edmund Cheng Wai Wing - Chew Choon Seng...

  • Page 61
    ..., or debentures of, the Company or any other body corporate, other than pursuant to the Singapore Airlines Limited Employee Share Option Plan. (c) Since the end of the previous financial year no director has received or has become entitled to receive benefits under contracts required to be disclosed...

  • Page 62
    ... 57.1% to 66.7%. Total cost of acquisition was $6.0 million cash and the net tangible assets acquired was $4.5 million. Star Kingdom Investment Limited was liquidated on 31 October 2002. 9 Options on Shares in the Company The Singapore Airlines Limited Employee Share Option Plan ("the Plan"), which...

  • Page 63
    ... review Name of participant Options granted during financial year under review Options lapsed Aggregate options outstanding at end of financial year under review Cheong Choong Kong Chew Choon Seng 228,000 152,000 $12.82 $12.82 936,000 454,000 - _ - _ 936,000 454,000 10 Options on Shares...

  • Page 64
    Report by the Board of Directors 10 Options on Shares in Subsidiary Companies (continued) (b) SIA Engineering Company Limited ("SIAEC") The SIA Engineering Company Limited Employee Share Option Plan ("SIAEC ESOP"), which comprises the Senior Executive Share Option Scheme and the Employee Share ...

  • Page 65
    ...results of the operations of the Group or of the Company for the financial year in which this report is made. 12 Subsequent Events (a) On 3 April 2003, five Pratt and Whitney 4056 engines were sold to UT Finance Corporation. (b) SIA retired the last three aircraft in its A340-300 fleet by mid-April...

  • Page 66
    ... as at 31 March 2003, the results of the business, the changes in equity and the cash flows of the Group and of the Company for the financial year ended on that date; and (ii) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and...

  • Page 67
    ... profit and loss accounts, statements of changes in equity and cash flow statements of the Company and of the Group for the financial year ended 31 March 2003, and notes thereto. These financial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion...

  • Page 68
    ... fixed assets Aircraft maintenance and overhaul costs Commission and incentives Landing, parking and overflying charges Handling charges Rentals on lease of aircraft Material costs Inflight meals Advertising and sales costs Insurance expenses Company accommodation and utilities Other passenger costs...

  • Page 69
    ...Capital reserve SHARE CAPITAL AND RESERVES MINORITY INTERESTS DEFERRED ACCOUNT DEFERRED TAXATION LONG-TERM LIABILITIES Represented by: FIXED ASSETS Aircraft, spares and spare engines Land and buildings Others GOODWILL ON CONSOLIDATION SUBSIDIARY COMPANIES ASSOCIATED COMPANIES JOINT VENTURE COMPANIES...

  • Page 70
    ... financial year ended 31 March 2003 (in $ million) The Group Share capital Capital Share redemption premium reserve Foreign currency Capital translation reserve reserve General reserve Notes Total Balance at 31 March 2001 Currency translation differences Share buyback Capital reduction Dividends...

  • Page 71
    Statements of Changes in Equity For the financial year ended 31 March 2003 (in $ million) The Company Notes Share capital Capital Share redemption premium reserve General reserve Total Balance at 31 March 2001 Share buyback Capital reduction Dividends received from share buyback Net gains and ...

  • Page 72
    ... of share options Capital reduction Share buyback Dividends received from share buyback Net Cash (used in)/provided by Financing Activities Net Cash Outflow Cash and Cash Equivalents at beginning of Financial Year Effect of exchange rate changes Cash and Cash Equivalents at end of Financial Year...

  • Page 73
    ... interest in Country Foods Pte Ltd ("CF") by Singapore Airport Terminal Services Limited ("SATS") has been shown in the statement as a single item. The effects on the individual assets and liabilities are set out below. 2002-03 Fixed assets Stocks Trade debtors Cash and bank balances Creditors...

  • Page 74
    ... reserves is added to the value of investments in associated companies shown on the consolidated balance sheet. An assocate in airline business adopts different accounting policies for its treatment of frequent flyer programmes and aircraft maintenance and overhaul. It is not practicable for such...

  • Page 75
    ... the asset to working condition for its intended use. The cost of all aircraft is stated net of manufacturers' credit, with subsequent expenditure stated at cost. Aircraft and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value of the fixed asset traded...

  • Page 76
    ... as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash on hand and in banks, demand deposits and short-term deposits which are held to maturity are carried at cost. For...

  • Page 77
    ...return conditions for sale and leaseback aircraft are accrued equally over the remaining lease terms. (p) Employee Benefits Equity compensation plan The Group has in place the Singapore Airlines Limited Employee Share Option Plan, the Singapore Airport Terminal Services Limited Employee Share Option...

  • Page 78
    ...31 March 2003 3 Segment Information (in $ million) Business segments The Group's businesses are organized and managed separately according to the nature of the services provided. The following tables present revenue and profit information regarding business segments for the financial years ended 31...

  • Page 79
    Notes to the Financial Statements 31 March 2003 Engineering services 2002-03 2001-02 Others 2002-03 2001-02 Total of segments 2002-03 2001-02 Elimination* 2002-03 2001-...1,128.4 43.2 (137.7) 970.1 1.8 115.5 (38.1) - - (0.7) - - 1,090.3 43.2 (137.7) 969.4 1.8 115.5 SIA Annual Report 02/03 77

  • Page 80
    ... years ended 31 March 2003 and 2002. Revenue information on other operations, which consist principally of airport terminal services and engineering services, are derived in Singapore. By area of original sale 2002-03 2001-02 East Asia Europe South West Pacific Americas West Asia and Africa...

  • Page 81
    Notes to the Financial Statements 31 March 2003 6 Operating Profit (in $ million) Operating profit for the financial year is arrived at after charging/(crediting): The Group 2002-03 2001-02 The Company 2002-03 2001-02 Interest income from short-term investments Dividend income from short-term ...

  • Page 82
    ...in $ million) The Group 2002-03 2001-02 The Company 2002-03 2001-02 Surplus on liquidation of Asian Frequent Flyer Pte Ltd Provision for diminution in value of investment in Air New Zealand Limited Recognition of deferred gain on divestment of Eagle Services Asia Private Limited Surplus on disposal...

  • Page 83
    ... announced a reduction in the corporate tax rate from 24.5% to 22.0% with effect from Year of Assessment 2003. In accordance with SAS 12 (2001) Income Taxes, and SAS 10 (2000) Events After the Balance Sheet Date, this was considered a non-adjusting subsequent event for the financial year ended 31...

  • Page 84
    ...124.7 184.2 124.7 184.2 57.0 181.7 27.6 211.8 57.0 181.7 27.6 211.8 The directors propose that a final tax exempt (one-tier) dividend of 9.0 cents per share amounting to $109.6 million (2001-02: $124.7 million), be paid for the financial year ended 31 March 2003. 82 SIA Annual Report 02/03

  • Page 85
    ... financial year. In the previous financial year, pursuant to the capital reduction approved by shareholders and sanction of the High Court of Singapore, the Company reduced the par value of each issued ordinary share and the Special Share from $1.00 to $0.50. As a result, $609.0 million was returned...

  • Page 86
    ..."), the Group grant options to senior executives and all other employees. Options are granted for a term no longer than 10 years from the date of grant. The exercise price of the options will be the average of the closing prices of the Company's ordinary shares on the SGX-ST for the five market days...

  • Page 87
    ... of the applicable exercise period or the period of 5 years from the date of retirement or cessation of employment, whichever is earlier; and (b) 144,350 share options not exercised by departed employees who have completed their fixed term contracts during the financial year. The said options, if...

  • Page 88
    ... of the applicable exercise period or the period of 5 years from the date of retirement or cessation of employment, whichever is earlier; and (b) 119,900 share options not exercised by departed employees who have completed their fixed term contracts during the financial year. The said options, if...

  • Page 89
    ...reduction in Singapore corporate tax rate Transferred to Singapore Airlines Cargo Pte Ltd (Over)/under provision in respect of prior years Balance at 31 March The deferred taxation arises as a result of: Deferred tax liabilities An excess of net book value over tax written down value of fixed assets...

  • Page 90
    ...option exercisable in the 10.5th year. The Company intends to hold the aircraft until the end of the lease periods. Sub-leasing is allowed under the lease agreements. In 2001-02, as part of Cargo Division's corporatization, SIA sub-leased both aircraft to Singapore Airlines Cargo Pte Ltd ("SIA Cargo...

  • Page 91
    ...lease agreement whereby the subsidiary companies sold and leased back certain fixed ground support equipment with net book value of $159.7 million. The gain arising from this sale and leaseback transaction is deferred and amortized over the lease period of 18 years commencing October 2002. Under the...

  • Page 92
    ... Statements 31 March 2003 18 Fixed assets (in $ million) The Group 1 April 02 Additions Disposals/ Transfers Provision for impairment 31 March 03 Cost Aircraft Aircraft spares Aircraft spare engines Freehold land and buildings Leasehold land and buildings Plant and equipment Office and computer...

  • Page 93
    ... 31 March 2003 18 Fixed assets (in $ million) (continued) The Company 1 April 02 Additions Disposals/ Transfers Provision for impairment 31 March 03 Cost Aircraft Aircraft spares Aircraft spare engines Freehold land and buildings Leasehold land and buildings Plant and equipment Office and computer...

  • Page 94
    Notes to the Financial Statements 31 March 2003 18 Fixed assets (in $ million) (continued) The Group 31 March 2003 2002 The Company 31 March 2003 2002 Net book value of fixed assets acquired under finance leases: - aircraft - plant and equipment 456.4 159.7 616.1 485.9 - 485.9 - - - - - - ...

  • Page 95
    ... ## The value is $2. (784.4) 222.5 (282.4) (844.3) 2,827.4 During the financial year, Singapore Flying College Pte Ltd issued 62,949 preference shares of $1.00 at a premium of $999 each to the Company for cash and to acquire fixed assets. Star Kingdom Investment Limited was liquidated on 31...

  • Page 96
    ... Star Private Limited Aerolog Express Pte Ltd Country Foods Pte Ltd SIA Engineering Company Limited Singapore Jamco Private Limited SIAEC Services Pte Ltd SIAEC Global Pte Ltd Singapore Airlines Cargo Pte Ltd Tradewinds Tours & Travel Private Limited Singapore Aviation and General Insurance Company...

  • Page 97
    ...a cash payment of $20.0 million paid on 29 April 2003. There was no change in the Company's 49.0% equity stake in VAL. Asian Frequent Flyer Pte Ltd was liquidated on 23 October 2002. On 27 February 2003, SATS acquired an additional 5.0% equity interest in Evergreen Air Cargo Services Corporation for...

  • Page 98
    ...Frequent Flyer Pte Ltd Asia Leasing Limited RCMS Properties Private Limited Quality service training Singapore # # 50 50 Air transportation Liquidated Aircraft leasing Hotel ownership and management Inflight catering services Inflight catering services Investment holding company UK Singapore...

  • Page 99
    ... the Financial Statements 31 March 2003 21 Associated Companies (in $ million) (continued) Country of incorporation and place of business Percentage of Cost equity held by (in $ million) the Group 2003 2002 2003 2002 Principal activities Combustor Airmotive Services Pte Ltd Servicing of aircraft...

  • Page 100
    ... Enterprise Pte Ltd and by SIAEC in Singapore Aero Engine Services Private Limited was $10.9 million and $8.0 million respectively. During the financial year, International Engine Component Overhaul Pte Ltd returned $0.9 million to SIAEC pursuant to a capital reduction exercise. 98 SIA Annual Report...

  • Page 101
    ... to Taikoo (Xiamen) Aircraft Engineering Company Limited of US$0.5 million (2002: US$0.5 million) is unsecured, interest free and is expected to be repayable in 2003-04, subject to further review with the investee company; and (c) Shareholders' loan to Hong Kong Aero Engine Services Limited of US...

  • Page 102
    ...for stock obsolescence is as follows: The Group 31 March 2003 2002 2003 The Company 31 March 2002 Balance at 1 April Provided during the year Provision utilized during the year Balance at 31 March Stocks written-off directly to profit and loss account Stocks are stated at: Cost Net realizable value...

  • Page 103
    ... the year Balance at 31 March 0.7 2.1 2.8 1.8 (1.1) 0.7 - - - - - - 27 Cash and Bank Balances (in $ million) The Group 31 March 2003 2002 2003 The Company 31 March 2002 Fixed deposits Cash and bank 528.2 291.7 819.9 531.5 560.1 1,091.6 306.2 122.5 428.7 438.0 416.9 854.9 SIA Annual Report...

  • Page 104
    ...Depreciation of fixed assets Provision for impairment of fixed assets Income from short-term investments Exchange differences Write-down of loan to associated companies Amortization of deferred gain on sale and leaseback transactions Operating profit before working capital changes Increase/(decrease...

  • Page 105
    ... confer on the Company an option to purchase the related aircraft or engines. Sub-leasing is allowed under all the lease arrangements. SilkAir (Singapore) Private Limited ("SilkAir") has 1 A320-232 aircraft under operating lease with fixed rental rates. The lease term is two years. It holds the...

  • Page 106
    ... revenue in various currencies. The Group's airline operations carry certain financial and commodity risks, including the effects of changes in jet fuel prices, foreign currency exchange rates, interest rates and the market value of its investments. The Group's overall risk management approach...

  • Page 107
    .... The Group has a number of foreign exchange contracts outstanding as of 31 March 2003 that have been entered into as a hedge of forecast sales denominated in UK Sterling Pound, Japanese Yen, Euro, Swiss Franc, Australian Dollar, New Zealand Dollar, Indian Rupee, Hong Kong Dollar, Taiwan Dollar...

  • Page 108
    ... by reference to stock exchange quoted market bid prices at the close of the business on the balance sheet date. For investments where there is no quoted market price, fair value is based on either acquisition cost or the attributable net assets of those corporations. The fair value of loans and...

  • Page 109
    ... venture company Services rendered to joint venture companies 321.8 (1.8) 8.6 (2.3) (4.9) 296.4 (1.1) 12.7 (1.7) - 34 Subsequent Events (a) On 3 April 2003, five Pratt and Whitney 4056 engines were sold to UT Finance Corporation. (b) SIA retired the last three aircraft in its A340-300 fleet by...

  • Page 110
    ... end of the previous financial year, the Company and its subsidiaries did not enter into any material contracts involving interests of the Chief Executive Officer, directors or controlling shareholders and no such material contracts subsist at the end of the financial year. 108 SIA Annual Report...

  • Page 111
    ... and provision for diminution in value of longterm investments. Such items are now shown after operating profit. The change is to better reflect the performance of operating activities. Figures for the previous year were adjusted to allow year-on-year comparisons. SIA Annual Report 02/03 109

  • Page 112
    ... Share of profits of joint venture companies Share of profits/(losses) of associated companies Profit before tax and exceptional item Liquidation of Asian Frequent Flyer Pte Ltd Gain on sale of long term investments Provision for diminution in value of investment in Air New Zealand Limited...

  • Page 113
    ...Capital expenditure PER SHARE DATA Earnings before tax (cents) Earnings after tax (cents) Cash earnings ($) R3 Net asset value ($) SHARE PRICE R4 High Low Closing DIVIDENDS Gross dividends (cents per share) Dividend cover (times) PROFITABILITY RATIOS (%) Return on shareholders' funds Return on total...

  • Page 114
    ... companies, and proceeds from sale of aircraft and other fixed assets. Seat capacity per employee is available seat capacity divided by average staff strength of passenger operations. Passenger load carried per employee is defined as passenger load and excess baggage carried divided by average staff...

  • Page 115
    Ten-Year Statistical Record 1999-00 1998-99 1997-98 1996-97 1995-96 1994-95 1993-94 8,200.7 7,485.9 714.8 1,641.5 1,267.1 2,816.5 3,303.7... 4,773.6 72.5 - - - 7,789.3 11,167.3 69.8 73.6 46.0 62.5 483.4 2,973.4 64.3 4,231.3 71.8 - - - 7,058.8 10,155.6 69.5 76.0 49.8 65.5 SIA Annual Report 02/03 113

  • Page 116
    .... Company revenue, expenditure, profit before and after tax in these charts for 2000-01 and prior years show the combined results of both passenger and cargo operations. Passenger and Cargo Carried Revenue Passenger-km (Million) Passenger Number (Thousand) Passenger and Cargo Carried 8,000 Cargo...

  • Page 117
    ...Number as at 31 March 2003 Seats in age in Leased standard years (y) and Owned Finance Operating Total configuration months (m) Expiry of operating lease 2003-04 2004-05 On firm On order option Aircraft type Aircraft operated by SIA: B747-400 B777-200 B777-200A B777-200ER B777-300 A310-300 R2 A340...

  • Page 118
    Group Corporate Structure at 31 March 2003 Singapore Airlines Limited 87% Singapore Airport Terminal Services Limited SilkAir (Singapore) Private Limited Abacus Travel Systems Pte Ltd SIA Engineering Company Limited Singapore Airlines (Mauritius) Ltd Singapore Aviation and General Insurance ...

  • Page 119
    ...Cargo Services Ltd Taj-Madras Flight Kitchen Private Limited Evergreen Air Cargo Services Corporation Asia Airfreight Terminal Company Ltd Evergreen Airline Services Corporation MacroAsia-Eurest Catering Services Inc. Singapore Airport Duty-Free Emporium (Private) Limited 100% 100% SIAEC Global Pte...

  • Page 120
    ... at 29 May 2003 Authorised share capital: Issued and fully paid capital: Class of shares: Voting Rights: S$3,000,000,000.50 S$609,072,311.50 a) 3,000,000,000 ordinary shares of par value of S$0.50 each b) One special share of par value of S$0.50 each c) 3,000,000,000 Air Services Agreements (ASA...

  • Page 121
    ...2003 Major Shareholders Number of shares % 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) Temasek Holdings (Private) Limited Raffles Nominees Pte Ltd DBS Nominees Pte Ltd HSBC (Singapore) Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd DB Nominees (S) Pte Ltd United...

  • Page 122
    ... 02 Dec 02 Jan 03 Feb 03 Mar 03 1,000 Turnover ST Index Closing Price The Group 2002-03 2001-02 Share Price ($) Highest closing price Lowest closing price 31 March closing price Market Value Ratios R1 Price/Earnings Price/Book value Price/Cash earnings R2 R1 R2 14.40 8.55 8.75 14.90 7.00 14.40...

  • Page 123
    ... dividend at the Thirty-First Annual General Meeting to be held on 26 July 2003. Subject as aforesaid, shareholders whose Securities Account with The Central Depository (Pte) Limited ("CDP") are credited with ordinary shares in the capital of the Company as at 5.00 p.m. on the Books Closure Date...

  • Page 124
    ... the year ended 31 March 2003. Mr Koh Boon Hwee (in respect of the Board Committees he sits on), Mr Cheong Choong Kong, Mr Chew Choon Seng and Mr Lim Boon Heng will further waive all their fees entirely. The Directors have agreed to these waivers to underline the difficult operating conditions the...

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