Singapore Airlines 2007 Annual Report Download - page 82

Singapore Airlines 80 Annual Report 2006-07
1 General
Singapore Airlines Limited (“the Company”) is a limited liability company incorporated in the Republic of Singapore which
is also the place of domicile. The Company is a subsidiary company of Temasek Holdings (Private) Limited, incorporated
in the Republic of Singapore.
The registered offi ce of the Company is at Airline House, 25 Airline Road, Singapore 819829.
The principal activities of the Group consist of passenger and cargo air transportation, airport terminal services,
engineering services, training of pilots, air charters and tour wholesaling and related activities. The principal activity of
the Company consists of passenger air transportation.
The fi nancial statements for the fi nancial year ended 31 March 2007 were authorised for issue in accordance with a
resolution of the Board of Directors on 11 May 2007.
2 Accounting Policies
The accounting policies have been consistently applied by the Group and the Company and are consistent with those
used in the previous fi nancial year.
(a) Basis of accounting
The fi nancial statements of the Group and of the Company, which are expressed in Singapore dollars (SGD or $), are
prepared under the historical cost convention except as disclosed in the accounting policies below, and in accordance
with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act, Cap. 50.
(b) Signifi cant accounting estimates
Estimates and assumptions concerning the future are made in the preparation of the fi nancial statements. They
affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses,
and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet
date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next fi nancial year are discussed below.
(i) Impairment of fi xed assets – aircraft fl eet
Impairment is recognised when events and circumstances indicate that the aircraft may be impaired and the
carrying amounts of the aircraft exceed the recoverable amounts. In determining the recoverable amounts of the
aircraft, certain estimates regarding the current fair market value of the aircraft are made. The current fair market
value is determined based on desktop valuations from an independent appraisal for fl eet with similar operational
lives.
(ii) Depreciation of fi xed assets – aircraft fl eet
Aircraft are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their
estimated residual values at the end of their operational lives. Certain estimates regarding the operational lives
and residual values of the fl eet are made by the Company based on past experience and these are in line with the
industry. The operational lives and residual values are reviewed on an annual basis. The carrying amount of the
Group’s and the Company’s aircraft fl eet at 31 March 2007 was $12,381.7 million (2006: $11,685.6 million) and
$9,735.9 million (2006: $8,694.6 million) respectively.
(iii) Passenger revenue recognition
Passenger sales are recognised as operating revenue when the transportation is provided. The value of unused
tickets is included as sales in advance of carriage in the balance sheet and recognised in revenue at the end of
two years. This is estimated based on historical trends and experiences of the Company whereby ticket uplift
occurs mainly within the fi rst two years. The carrying amount of the Group’s and the Company’s sales in
advance of carriage at 31 March 2007 was $1,392.9 million (2006: $1,191.6 million) and $1,365.1 million
(2006: $1,164.4 million) respectively.
(iv) Frequent fl yer programme
The Company operates a frequent fl yer 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
fl yer benefi ts is deferred until they are utilised. The deferment of the revenue is estimated based on historical
trends of breakage and redemption, which is then used to project the expected utilisation of these benefi ts. Any
remaining unutilised benefi ts are recognised as revenue upon expiry. The carrying amount of the Group’s and the
Company’s deferred revenue at 31 March 2007 was $388.3 million (2006: $309.9 million).
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007