Singapore Airlines 2008 Annual Report Download - page 100

Singapore Airlines Annual Report 2007-08
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2 Accounting Policies (continued)
(aa) Employee benefits (continued)
(i) Equity compensation plans (continued)
The Group has also implemented the Singapore Airlines Limited Restricted Share Plan and Performance Share
Plan, the Singapore Airport Terminal Services Limited Restricted Share Plan and Performance Share Plan and the
SIA Engineering Company Limited Restricted Share Plan and Performance Share Plan for awarding of fully paid
ordinary shares to key senior management and senior executives, when and after pre-determined performance or
service conditions are accomplished.
Details of the plans are disclosed in Note 14 to the financial statements.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the
options or awards at the date on which the share options or awards are granted. In valuing the share options,
no account is taken of any performance conditions, other than conditions linked to the price of the shares of the
Company.
This cost is recognised in the profit and loss account, with a corresponding increase in the share-based
compensation reserve, over the vesting period in which the service conditions are fulfilled, ending on the date
on which the relevant employees become fully entitled to the award (“the vesting date”). Non-market vesting
conditions are included in the estimation of the number of shares under options that are expected to become
exercisable on the vesting date. At each balance sheet date, the Group revises its estimates of the number of
shares under options that are expected to become exercisable on the vesting date and recognises the impact of
the revision of the estimates in the profit and loss account, with a corresponding adjustment to the share-based
compensation reserve over the remaining vesting period.
No expense is recognised for options or awards that do not ultimately vest, except for options or awards where
vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The share-based compensation reserve is transferred to general reserve upon cancellation or expiry of the vested
options or awards. When the options are exercised or awards are released, the share-based compensation reserve
is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the
reissuance of treasury shares.
(ii) Defined contribution plans
As required by law, the companies in Singapore make contributions to the Central Provident Fund (“CPF”) scheme
in Singapore, a defined contribution pension scheme. Certain of the Group’s companies and overseas stations
outside Singapore make contributions to their respective countries’ pension schemes. Such contributions are
recognised as an expense in the period in which the related service is performed.
(iii) Defined benefit plans
The Group contributes to several defined benefit pension and other post-employment benefit plans for employees
stationed in certain overseas countries. The cost of providing benefits includes the Group’s contribution for the
year plus any unfunded liabilities under the plans, which is determined separately for each plan. Contributions
to the plans over the expected average remaining working lives of the employees participating in the plans are
expensed as incurred.
(ab) Aircraft maintenance and overhaul costs
The Group recognises aircraft maintenance and overhaul expenses (except heavy maintenance visits and engine
overhaul expenses) on an incurred basis. For engine rectification costs covered by “power-by-hour” third-party
maintenance agreements, expenses are capitalised on the basis of hours flown in accordance to the contractual terms.
(ac) 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.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2008