Singapore Airlines 2004 Annual Report Download - page 77

Download and view the complete annual report

Please find page 77 of the 2004 Singapore Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

75
SIA Annual Report 03/04
Notes to the Financial Statements
31 March 2004
2 Accounting Policies (continued)
(u) Frequent flyer programme
The Company operates a frequent flyer programme called (“KrisFlyer”) that provides travel awards to programme
members based on accumulated mileage. A portion of passenger revenue attributable to the award of frequent
flyer benefits is estimated and deferred until they are utilized. These are included under “deferred revenue” on the
balance sheet. Any remaining unutilized benefits are recognized as revenue upon expiry.
From 2003-04, deferred revenue for unutilized benefits is recognized as revenue based on an estimate of miles
awarded that will not be utilized before expiry. In accordance with FRS 8, Net Profit or Loss for the Period,
Fundamental Errors and Changes in Accounting Policies, the change is applied prospectively without adjustments to
previously reported amounts. This change has increased current year’s revenue of the Group and the Company by
approximately $28.2 million.
(v) Training and development costs
Training and development costs, including start-up program costs, are charged to the profit and loss account in the
financial year in which they are incurred.
(
w
)Capitalized loan interest
Borrowing costs incurred to finance progress payments for aircraft and building projects are capitalized until the
aircraft are commissioned for operation or the projects are completed. All other borrowing costs are recognized as
expenses in the period in which they are incurred. $0.1 million (2002-03: $2.9 million) of the Company’s borrowing
costs were capitalized during the year.
(x) Impairment of assets
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is
any indication of impairment. An impairment loss is recognized whenever the carrying amount of an asset exceeds
its recoverable amount. The impairment loss is charged to the profit and loss account unless it reverses a previous
revaluation credited to equity, in which case it is charged to equity. An impairment loss is reversed if there has been
a change in estimates used to determine the recoverable amount.
(y) Segmental reporting
Business Segment
The Group’s businesses are organized and managed separately accordingly to the nature of the services provided.
The significant business segments of the Group are airline operations, airport terminal services and engineering
services.
Geographical segment
The analysis of revenue by area of original sale from airline operations is derived by allocating revenue to the area in
which the sale was made. Revenue from other operations, which consist principally of airport terminal services and
engineering services, is derived in Singapore and therefore, is not shown.
Assets, which consist principally of flight and ground equipment, support the entire worldwide transportation
system, are mainly located in Singapore. An analysis of assets and capital expenditure of the Group by geographical
distribution has therefore not been included.