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ANNUAL REPORT
2008/09

Table of contents

  • Page 1
    ANNUAL REPORT 2008/ 09

  • Page 2
    ... a new Business Class seat specially designed for regional and medium-haul routes, and the introduction of iPod connectivity on its Airbus A330-300 and A340-500 aircraft. Riyadh and Kuwait were added to the Singapore Airlines network. To unlock shareholder value and maintain its focus on airline and...

  • Page 3
    ... Board Of Directors Chairman's Letter To Shareholders Corporate Data Significant Events The Year In Review Network Fleet Products And Services People Development Environment Supporting Our Communities Subsidiaries List Of Awards Statement On Risk Management Corporate Governance Report Financials...

  • Page 4
    ... shares Capital reserve Foreign currency translation reserve Share-based compensation reserve Fair value reserve General reserve Equity attributable to equity holders of the Company Return on equity holders' funds (%) Total assets Total debt Total debt equity ratio (times) R3 Value added Per Share...

  • Page 5
    ...Singapore Airlines and SIA Cargo Overall load Overall capacity Overall load factor Number of passengers carried x distance ï¬,own (in km) Number of available seats x distance ï¬,own (in km) Revenue passenger-km expressed as a percentage of available seat-km Passenger revenue from scheduled services...

  • Page 6
    ...in Finance, Planning and Marketing, at head office and overseas. Mr Chew has been a member of the Board of Governors of the International Air Transport Association (IATA) since June 2003. He was named Outstanding CEO for 2007 by the judges of the 23rd Singapore Business Awards in March 2008. Age 62...

  • Page 7
    ... is the Managing Partner of Allen & Gledhill LLP and has over 30 years of experience in the practice of law, specialising in banking, corporate and financial services work. His other directorships include Director of Cerebos Pacific Limited and Director of Hap Seng Plantations Holdings Berhad. He...

  • Page 8
    .... Many leading, iconic corporations required government-assisted life support. Demand fell sharply, across all cabin classes. So too did the price of jet fuel. This has led, and will lead, to some losses on our pre-purchased fuel hedges in the short term, but Singapore Airlines always adheres to...

  • Page 9
    ... potential to fill seats. Our cargo teams are also working hard to establish a presence in new markets. My key message to all shareholders this year is that Singapore Airlines is not immune from the impact of the global economic downturn. As an airline that serves many business customers, we will...

  • Page 10
    ... AUDITORS Ernst & Young LLP Public Accountants and Certified Public Accountants One Rafï¬,es Quay North Tower #18-01 Singapore 048583 AUDIT PARTNER Kevin Kwok (appointed since FY 2005-06) Chairman Lucien Wong Yuen Kuai Members Chia Pei-Yuan Christina Ong BOARD SAFETY & RISK COMMITTEE Chairman...

  • Page 11
    ... (until 10 August 2008) SENIOR MANAGEMENT, MAJOR SUBSIDIARIES William Tan Seng Koon President and Chief Executive Officer SIA Engineering Company Limited Chin Yau Seng Chief Executive SilkAir (Singapore) Private Limited Goh Choon Phong President Singapore Airlines Cargo Pte Ltd Clement Woon Hin...

  • Page 12
    ...on board as a reviewer for KrisWorld Entertainment Guide. All-Business Class service on the A340-500 aircraft starts on the Singapore-Los Angeles route. The Airline becomes the first carrier in Changi Airport to offer Automated Document Check - a facility which quickly processes all visa and travel...

  • Page 13
    ... one year anniversary of commercial A380 services. More than 700,000 customers were carried since Singapore Airlines became the first carrier to ï¬,y the aircraft. Network adjustments are made to rationalise capacity with demand. Preferred Seat Selection option is offered to Economy Class customers...

  • Page 14
    ... medium-haul routes. The Airline also introduced the all-Business Class service on the Airbus A340-500 aircraft. The A340-500 features seats with slight modifications on the award-winning Business Class seats unveiled in 2006, while the A330-300 boasts new incline lie-ï¬,at Business Class seats. In...

  • Page 15
    ...with customers as London and Tokyo were added to Singapore Airlines' A380 network. NETWORK The year in review saw mixed development in Singapore Airlines' global network as demand changed course. More capacity was added in the early part of the year to satisfy strong demand from Asia and South West...

  • Page 16
    ... configuration to an all-Business Class service for the non-stop ï¬,ights to Newark and Los Angeles. The passenger ï¬,eet operated by the Airline, as at 31 March 2009, comprised 103 aircraft, with an average age of six years and two months. The ï¬,eet of Singapore Airlines Cargo, as at 31 March...

  • Page 17
    ...NEW REGIONAL AND MEDIUMHAUL BUSINESS CLASS PRODUCT With the entry into service of the new Airbus A330-300 aircraft, customers were introduced to a new incline lie-ï¬,at Business Class seat specially designed for regional and medium-haul routes. The Business Class cabin on the A330-300 consists of 30...

  • Page 18
    ... list of KrisFlyer partner airlines. KrisFlyer members now have more ways to earn miles with the addition of Jumeirah Hotels & Resorts and the Preferred Hotel Group, as well as the launch of the American Express Singapore Airlines KrisFlyer Gold Credit Card in Malaysia and Taiwan, and the ICICI Bank...

  • Page 19
    ... on a request basis. This new service is available online, and customers can purchase a Preferred Seat anytime before check-in commences 48 hours before ï¬,ight departure. Preferred Seat Selection is available on all ï¬,ights except short-haul routes within Southeast Asia, and ï¬,ights served...

  • Page 20
    ...available to ground staff. More than 500 cabin crew also underwent customer service and tourism-related courses. In addition to structured classroom training, the Airline continues to leverage on SKIES, the learning management system, to introduce other learning approaches for staff, including stand...

  • Page 21
    ... specialist in Singapore. The Airline was voted top private employer of choice in 2008 in a survey of fresh local university graduates. As at 31 March 2009, the staff strength of SIA Group was 30,666, an increase of 0.7% over the previous year. 14,515 (47.3%) were employed by the Airline, with 7,433...

  • Page 22
    ... the world, there is still a focus on future challenges posed by global warming. Governments and businesses have not lost interest in measures to combat climate change. The Singapore Airlines Group has not reduced its focus on long-term environmental improvements in its operations, and continues to...

  • Page 23
    ...their products cleaner, greener and quieter. During the year in review, Singapore Airlines took delivery of 12 new aircraft - three A380s, five B777-300ERs and four A330300s. These new aircraft are quieter, boast substantially lower fuel burn per-seat-kilometre, and have lower carbon emissions. The...

  • Page 24
    ... to perform cleft lip and palate surgery for children in developing countries. The Airline's staff also continued to support various communities through donations and community work, including contributions to MINDS, and visits to orphanages and aged care centres. Helping to promote appreciation...

  • Page 25
    ... this airline segment. SATS continued to grow its presence outside of Singapore. In October 2008, it acquired a 100% equity stake in ground handler Menzies Aviation (Hong Kong) which was subsequently renamed SATS HK. This acquisition is in line with SATS' plan to focus on its customers and increase...

  • Page 26
    ... overhaul business. For line maintenance at Changi Airport, 17 new contracts were secured or renewed. As of 31 March 2009, its Fleet Management contracts cover a total of 175 aircraft, comprising 111 in service and the remaining awaiting deliveries to customer airlines. SIA ENGINEERING COMPANY...

  • Page 27
    SINGAPORE AIRLINES CARGO SIA Cargo reported a $245 million operating loss in the year in review. The financial year proved to be a challenging one for the air freight industry, with volatile fuel prices and currency exchange rates, and the onset of the global economic downturn. SIA Cargo continued ...

  • Page 28
    ... seats in Economy Class. The airline's dedication to product and service excellence continues to garner international recognition. It was voted 'Best Regional Airline' for the ninth time in the 19th TTG Asia Travel Awards 2008. SilkAir also received the top award in the 'Foreign Route' airline...

  • Page 29
    ... - Best Brands in Airlines - Singapore Which? Award 2008 (UK) • Best Airline Changi Airline Awards 2008 • Top 10 Airlines by Passenger Carriage 2008 FinanceAsia magazine (Hong Kong) Financeasia.com • 2008 Business Travel Poll Best Managed Company ExecutiveTravel Magazine (USA) Executive Travel...

  • Page 30
    ... and Australia - Safety & Condition of Aircraft - Service On Board, Cabin Crew - Service On The Ground, Lounges - Cabin Comfort, Seat Pitch Global Traveler (USA) • Best Airline in the World 2008 (5th consecutive year) ABS-CBN News Channel (Philippines) Executive Class Top 10 List in Travel 2008...

  • Page 31
    ...ed. Group-wide Crisis Management Scenario Exercises were also conducted to ensure planned responses are adequate and effective. 4. BOARD OF DIRECTORS COMMENTS ON THE PRACTICE OF RISK MANAGEMENT IN SINGAPORE AIRLINES Having reviewed the risk management practices and activities of Singapore Airlines...

  • Page 32
    ... be relevant to the business. As at 31 March 2009, the Board comprises the following members: Position held on the Board Date of first appointment Date of last to the Board re-election as Director Nature of Appointment Name of Director Stephen Lee Ching Yen Chew Choon Seng Chia Pei-Yuan Euleen...

  • Page 33
    ... shareholder, Temasek Holdings (Private) Limited ("Temasek"). Mr Chew Choon Seng is the Chief Executive Officer ("CEO") of the Company. All Directors have demonstrated objectivity in their deliberations in the interests of the Company. Management briefs new Directors on the Company's business and...

  • Page 34
    CORPORATE GOVERNANCE REPORT For the period 1 April 2008 to 31 March 2009 Board Executive Committee (ExCo) The members of the ExCo were Mr Stephen Lee (Chairman), Mr Chew Choon Seng, Ms Euleen Goh and Mr James Koh. The ExCo oversees the execution by Management of the overall strategy, policies, ...

  • Page 35
    ... recommendations on remuneration policies and packages for key executives, and administer the Company's EVA-based Incentive Plan, Performance Share Plan and Restricted Share Plan for key senior executives and the Company's Employee Share Option Plan. The award of shares to senior executives is based...

  • Page 36
    ... and his contribution to the success and development of the Company. The BCIRC has the discretion to review and amend performance conditions and target(s) where it feels appropriate and as relevant to the business conditions. Non-executive Directors of the Group are not eligible to participate...

  • Page 37
    ... based on criteria such as absolute and relative total shareholders' return to be achieved over a three-year performance period. The SIA Restricted Share Plan (RSP) The RSP is targeted at a broader base of senior executives and enhances the Company's ability to recruit and retain talented senior...

  • Page 38
    ... - Includes EVA-based incentive payment and profit-sharing bonus paid in the financial year ended 31 March 2009. Shares awarded under the PSP and RSP are subject to performance targets and other terms and conditions being met under the respective share plans. Director's fees were retained by the...

  • Page 39
    ...'s performance and prospects. Management provides the Board with monthly management accounts for the Board's review. The Company has clear policies and guidelines for dealings in securities by Directors and employees, as recommended by the SGX-ST's Best Practices Guide. The Company imposes a trading...

  • Page 40
    ...the following: (a) Financial Reporting The AC reviewed the interim and annual financial statements and financial announcements required by SGX-ST for recommendation to the Board for approval. The review focused on changes in accounting policies and practices, major judgmental and risk areas, signi...

  • Page 41
    ...management policies. The Risk Management Report can be found on page 29. Communication with Shareholders (Principles 14 and 15) The Company believes in prompt disclosure of pertinent information. It values dialogue with shareholders, and holds analyst and media briefings when announcing half-yearly...

  • Page 42
    CORPORATE GOVERNANCE REPORT For the period 1 April 2008 to 31 March 2009 The Board members always endeavour to attend shareholder meetings where shareholders are given the opportunity to raise questions and clarify issues they may have relating to the resolutions to be passed, with the Board. The ...

  • Page 43
    MEMBERSHIP AND ATTENDANCE OF SINGAPORE AIRLINES LIMITED BOARD OF DIRECTORS AND BOARD COMMITEE MEMBERS For the period 1 April 2008 to 31 March 2009 Board No. of meetings held No. of meetings attended No. of meetings held No. of meetings attended No. of meetings held No. of meetings attended No. ...

  • Page 44
    ... Fund National Wages Council Title Chairman President Managing Director Director Director Director Director Director Director Board Member Board Member Member Directorships for the past 3 years Company 1. 2. Singapore Business Federation Fraser & Neave Ltd Title Chairman Director CHEW CHOON SENG...

  • Page 45
    ... for the past 3 years Company 1. 2. 3. 4. International Air Transport Association Singapore Aircraft Leasing Enterprise Pte Ltd Singapore Airport Terminal Services Limited Singapore International Foundation Title Chairman, Board of Governors Chairman Deputy Chairman Member, Board of Governors CHIA...

  • Page 46
    ..., Board of Governors Director Director Director Director Director Director Directorships for the past 3 years Company 1. 2. 3. 4. 5. 6. 7. Financial Industry Competency Standards Committee International Enterprise Singapore CapitaLand Financial Limited MOH Holdings Pte Ltd Standard Chartered Bank...

  • Page 47
    ... Management Limited Housing & Development Board Singapore Deposit Insurance Corporation Limited CapitaLand Limited CapitaLand Hope Foundation Hotel Plaza Limited Singapore Cooperation Enterprise UOL Group Limited Presidential Council for Religious Harmony Title Chairman Chairman Chairman Director...

  • Page 48
    ...UK Current Directorships Company 1. 2. 3. 4. The Carphone Warehouse Group plc Virgin Atlantic Limited Virgin Atlantic Airways Limited Virgin Travel Group Limited Title Director Director Director Director Directorships for the past 3 years Company 1. 2. ITV plc Tomkins plc Title Director Director...

  • Page 49
    ... Singapore SingHealth Foundation Title Chairman Director Director Director Director Director Director Director Board Member Member, Board of Trustees Trustee Directorships for the past 3 years Company 1. 2. Mabanaft Singapore Pte Ltd Singapore Technologies Engineering Ltd Title Director Director...

  • Page 50
    ...216 217 Financial Review Report By The Board Of Directors Auditors' Report Consolidated Profit And Loss Account Balance Sheets Statements Of Changes In Equity Consolidated Cash Flow Statement Notes To The Financial Statements Additional Information Quarterly Results Of The Group Five-Year Financial...

  • Page 51
    ... to equity holders of the Company $1,062 million (-48.2 per cent) Basic earnings per share 89.6 cents (-46.8 per cent) Equity attributable to equity holders of the Company $13,931 million (-7.9 per cent) Net asset value $11.78 per share (-7.8 per cent) Total debt equity ratio 0.12 times (+0.01 times...

  • Page 52
    ...in jet fuel price. The increase was partially offset by lower staff cost, due mainly to lower provision for profit-sharing bonus as a result of weaker operating performance. The Group earned a profit attributable to equity holders of $1,062 million for the financial year ended 31 March 2009, $988...

  • Page 53
    Performance of the Group (continued) Group Earnings (continued) Profitability ratios of the Group are as follows: 2008-09 % 2007-08 % Change % points Return on turnover Return on total assets Return on equity holders' funds 7.2 4.5 7.3 13.4 8.1 13.6 - - - 6.2 3.6 6.3 51

  • Page 54
    ... from a year ago. Net asset value per share decreased 7.8 per cent to $11.78. Equity holders' funds decreased 7.9 per cent to $13,931 million as at 31 March 2009, mainly arising from the payment of dividends during the year and decrease in fair value reserve. During the year, dividends paid included...

  • Page 55
    Performance of the Group (continued) Financial Position of the Group (continued) For the financial year ended 31 March 2009, the Board recommends a total distribution of 40 cents per share, comprising 20 cents interim dividend paid on 4 December 2008 and a recommended final dividend of 20 cents ...

  • Page 56
    ...Holdings Ltd Surplus on sale of investment in Taikoo (Xiamen) Aircraft Engineering Company Limited Total value added available for distribution Applied as follows: To employees - Salaries and other staff costs To government - Corporation taxes To suppliers of capital - Interim and proposed dividends...

  • Page 57
    ... indicates the portion retained in the business for future capital requirements. Value Added Total value added for 2008-09 fell 21.3 per cent (-$1,511 million) to $5,571 million. The decrease was mainly attributable to higher purchase of goods and services (-$1,397 million) and lower interest income...

  • Page 58
    FINANCIAL REVIEW Performance of the Group (continued) Group Average Staff Strength and Productivity The Group's average staff strength increased by 1,746 to 31,834 employees. A breakdown is as follows: 2008-09 2007-08 % Change Singapore Airlines Singapore Airport Terminal Services Group SIA ...

  • Page 59
    ... points to 2.9 percentage points in 2008-09. A review of the Company's operating performance by route region is as follows: By Route Region R1 (2008-09 against 2007-08) Revenue Available Passengers Carried Passenger KM Seat KM Change (thousand) % Change % Change East Asia Americas Europe South...

  • Page 60
    ...income Surplus on disposal of aircraft, spares and spare engines Dividends from subsidiary companies Dividends from long-term investments, gross Other non-operating items Profit before taxation Taxation expense Adjustment for reduction in Singapore corporate tax rate Profit after taxation n.m. not...

  • Page 61
    ... Revenue The Company's revenue increased 2.3 per cent to $13,050 million as follows: 2008-09 $ million 2007-08 $ million Change % Passenger revenue Excess baggage revenue Non-scheduled services Bellyhold revenue from Singapore Airlines Cargo Direct operating revenue Indirect operating revenue Total...

  • Page 62
    FINANCIAL REVIEW Performance of the Company (continued) Revenue (continued) A breakdown of passenger revenueR1 by route region and area of original sale is shown below: By Route Region ($ million) 2008-09 2007-08 % Change By Area of Original Sale R2 ($ million) 2008-09 2007-08 % Change East Asia ...

  • Page 63
    ... cost, foreign exchange hedging and revaluation gain, comprehensive aviation insurance cost, airport lounge expenses, non-information technology contract and professional fees, expenses incurred to mount non-scheduled services, aircraft licence fees and recoveries. A breakdown by fuel cost...

  • Page 64
    ... operating performance. Depreciation charges increased $212 million mainly due to (i) capitalisation of expenditure for heavy maintenance visits on aircraft and engine overhauls, and (ii) progressive delivery of B777-300ER aircraft (commissioning of five B777-300ER aircraft during the year) and one...

  • Page 65
    Performance of the Company (continued) Fuel Productivity and Sensitivity Analysis (continued) A change in the price of fuel of one US dollar per barrel affects the Company's annual fuel cost by about $46 million, before accounting for USD exchange rate movements, and changes in volume of fuel ...

  • Page 66
    FINANCIAL REVIEW Performance of the Company (continued) Average Staff Strength and Productivity The Company's average staff strength was 14,343, an increase of 272 over last year. The distribution of employee strength by category and location is as follows: 2008-09 2007-08 % Change Category Senior ...

  • Page 67
    ... Group's revenue increased by $104 million to $1,062 million, mainly on account of revenue contribution from Singapore Food Industries, which was acquired in February 2009. SATS Group also started to consolidate results of Country Food Macau and SATS Hong Kong from 3rd quarter of the financial year...

  • Page 68
    .... Net asset value per share increased to $1.14, $0.09 higher (+8.9 per cent) than at 31 March 2008. Return on equity holders' funds at 22.1 per cent was 1.8 percentage points lower than the last financial year. Basic earnings per share rose 2.1 per cent to 24.2 cents. Singapore Airlines Cargo 2008...

  • Page 69
    Performance of Subsidiary Companies (continued) Singapore Airlines Cargo (continued) Revenue decreased by $348 million (-10.5 per cent) due mainly to significant drop in yields and load factor. Expenditure increased by $28 million (+0.9 per cent), mainly a result of higher jet fuel price. Overall ...

  • Page 70
    ..., the Company or any other body corporate, other than pursuant to the Singapore Airlines Limited Employee Share Option Plan, the Singapore Airlines Limited Restricted Share Plan and the Singapore Airlines Limited Performance Share Plan. 3 Directors' Interests In Ordinary Shares, Share Options And...

  • Page 71
    ...2009 Name of Director Conditional award of restricted shares Chew Choon Seng Conditional award of performance shares Chew Choon Seng Interest in SIA Engineering Company Limited Ordinary shares Chew Choon Seng Interest in Singapore Airport Terminal Services Limited Ordinary shares Chew Choon Seng...

  • Page 72
    ... the Plan, all options to be issued will have a term no longer than 10 years from the date of grant. The exercise price of the option will be the average of the closing prices of the Company's ordinary shares on the Singapore Exchange Securities Trading Limited ("SGX-ST") for the five market days...

  • Page 73
    5 Options on Shares in the Company (continued) (i) Employee Share Option Plan (continued) Under the Employee Share Option Scheme, options will vest two years after the date of grant. Under the Senior Executive Share Option Scheme, options will vest: (a) (b) (c) one year after the date of grant for ...

  • Page 74
    ... of financial year under review Chew Choon Seng - - 1,194,000 - - 1,194,000 The particulars of options on shares in subsidiary companies are as follows: (a) Singapore Airport Terminal Services Limited ("SATS") The Singapore Airport Terminal Services Limited Employee Share Option Plan ("SATS...

  • Page 75
    ...2016 2.7.2009 - 1.7.2017 1.7.2010 - 30.6.2018 * Following approval by SATS' shareholders of the declaration of a special dividend of $0.05 on 26 July 2007, the Remuneration and Human Resource Committee administering the SATS ESOP approved a reduction of $0.05 in the exercise prices of the share...

  • Page 76
    REPORT BY THE BOARD OF DIRECTORS 5 Options on Shares in the Company (continued) (i) Employee Share Option Plan (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 ...

  • Page 77
    ...shareholders of the Company on 28 July 2005, in addition to the Employee Share Option Plan. Depending on the achievement of pre-determined targets over a two-year period for the RSP and a three-year period for the PSP, the final number of restricted shares and performance shares awarded could range...

  • Page 78
    REPORT BY THE BOARD OF DIRECTORS 5 Options on Shares in the Company (continued) (ii) Restricted Share Plan ("RSP") and Performance Share Plan ("PSP") (continued) Number of Performance shares Balance at 1.4.2008/date of grant Balance at 31.3.2009 Date of grant Cancelled PSP 27.7.2006 1.8.2007 1.7....

  • Page 79
    ... Performance Share Plan ("PSP") (continued) The particulars of RSP and PSP in subsidiary companies are as follows: (a) Singapore Airport Terminal Services Limited ("SATS") The SATS RSP and SATS PSP were approved by the shareholders of SATS on 19 July 2005. The basis upon which a share may be awarded...

  • Page 80
    REPORT BY THE BOARD OF DIRECTORS 5 Options on Shares in the Company (continued) (ii) Restricted Share Plan ("RSP") and Performance Share Plan ("PSP") (continued) (b) SIA Engineering Company Limited ("SIAEC") The SIAEC RSP and SIAEC PSP were approved by the shareholders of SIAEC on 25 July 2005. The ...

  • Page 81
    ... Report on Corporate Governance. 7 Auditors The auditors, Ernst & Young LLP, Certified Public Accountants, have expressed their willingness to accept re-appointment. On behalf of the Board, STEPHEN LEE CHING YEN Chairman CHEW CHOON SENG Chief Executive Officer Dated this 14th day of May 2009...

  • Page 82
    ...fair view of the state of affairs of the Group and of the Company as at 31 March 2009 and the results, changes in equity and cash ï¬,ows of the Group and the changes in equity of the Company for the financial year ended on that date; and at the date of this statement there are reasonable grounds to...

  • Page 83
    ...31 March 2009, the statements of changes in equity of the Group and the Company and the profit and loss account and cash ï¬,ow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial...

  • Page 84
    ... of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2009 and the results, changes in equity and cash ï¬,ows of the Group and the changes in equity of the Company for the year ended on that...

  • Page 85
    ...engines Dividends from long-term investments, gross Other non-operating items Share of profits of joint venture companies Share of profits of associated companies PROFIT BEFORE TAXATION TAXATION Taxation expense Adjustment for reduction in Singapore statutory tax rate PROFIT FOR THE FINANCIAL YEAR...

  • Page 86
    ... shares Capital reserve Foreign currency translation reserve Share-based compensation reserve Fair value reserve General reserve MINORITY INTERESTS TOTAL EQUITY DEFERRED ACCOUNT DEFERRED TAXATION LONG-TERM LIABILITIES Represented by: PROPERTY, PLANT AND EQUIPMENT Aircraft, spares and spare engines...

  • Page 87
    ...31 March 2009 (in $ million) The Group 2008 The Company 2008 Notes 2009 2009 Less: CURRENT LIABILITIES Sales in advance of carriage Deferred revenue Current tax payable Trade and other creditors Amounts owing to subsidiary companies Amounts owing to associated companies Finance lease commitments...

  • Page 88
    STATEMENTS OF CHANGES IN EQUITY For the financial year ended 31 March 2009 (in $ million) The Group Notes Share capital Treasury shares Capital reserve Balance at 1 April 2008 Currency translation differences Net fair value changes on available-for-sale assets Net fair value changes on cash ...

  • Page 89
    Attributable to Equity Holders of the Company Foreign currency translation reserve Share-based compensation reserve Fair value reserve General reserve Total Minority interests Total equity (130.7) (7.2) - 136.4 - 443.4 (5.9) (855.6) (242.7) - 12,931.7 - 15,125.2 (7.2) (5.9) (855.6) (242.7)...

  • Page 90
    STATEMENTS OF CHANGES IN EQUITY For the financial year ended 31 March 2009 (in $ million) The Group Notes Share capital Treasury shares Capital reserve Balance at 1 April 2007 Currency translation differences Net fair value changes on available-for-sale assets Net fair value changes on cash ...

  • Page 91
    Attributable to Equity Holders of the Company Foreign currency translation reserve Share-based compensation reserve Fair value reserve General reserve Total Minority interests Total equity (59.5) (71.2) - 97.3 - (45.5) (26.9) 291.6 224.2 - 13,567.9 - 15,100.0 (71.2) (26.9) 291.6 224.2 50.7...

  • Page 92
    ... Share options lapsed Purchase of treasury shares Treasury shares reissued pursuant to equity compensation plans Dividends Balance at 31 March 2009 14 14 12 13 15 (d) 15 (d) The Company Notes Balance at 1 April 2007 Net fair value changes on available-for-sale assets Net fair value changes...

  • Page 93
    ....8) 11,623.3 13,535.7 (1.5) (693.1) (694.6) 1,218.7 524.1 47.3 2.6 (64.1) 39.2 (1,185.8) 12,899.0 Share capital Treasury shares Share-based compensation reserve Fair value reserve General reserve Total 1,494.9 322.8 (155.9) 20.2 1,682.0 (33.2) (33.2) 71.2 49.7 (21.9) (0.4) 98.6 (18.1) (22...

  • Page 94
    ... and spare engines Surplus on disposal of non-current assets Dividends from long-term investments, gross Other non-operating items Share of profits of joint venture companies Share of profits of associated companies Operating profit before working capital changes (Decrease)/Increase in trade and...

  • Page 95
    ... Proceeds from exercise of share options Capital reduction Proceeds from issuance of shares Purchase of treasury shares NET CASH USED IN FINANCING ACTIVITIES NET CASH (OUTFLOW)/INFLOW CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR Effect of exchange rate changes CASH AND CASH EQUIVALENTS...

  • Page 96
    ...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 and food operations, engineering services, training of pilots, air charters and tour wholesaling and related activities...

  • Page 97
    ..., either in one single statement, or in two linked statements. This is a disclosure standard with no impact on the financial position or financial performance of the Group. FRS 108: Operating Segments FRS 108 requires the disclosure of segment information based on the information reviewed by the...

  • Page 98
    ... the Group manages that risk. INT FRS 113: Customer Loyalty Programmes The interpretation addresses accounting for loyalty award credits granted to customers who buy other goods or services, and the accounting for the Company's obligations to provide free or discounted goods or services to customers...

  • Page 99
    ... statements. The Group's investments in associated companies are accounted for using the equity method. Under the equity method, the investment in associated company is measured in the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associated company...

  • Page 100
    ... unaudited management financial statements to the end of the accounting period. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. (e) Intangible assets (i) Goodwill Goodwill acquired in a business combination is initially measured at cost being...

  • Page 101
    ...: Brands: 17 years Customer relationships: 5 years Licences: 14 years (f) Foreign currencies The management has determined the currency of the primary economic environment in which the Company operates i.e., functional currency, to be SGD. Sales prices and major costs of providing goods and services...

  • Page 102
    ... exchange basis are stated at amounts paid plus the fair value of the fixed asset traded-in. Expenditure for heavy maintenance visits on aircraft and engine overhauls, is capitalised at cost. Expenditure for engine overhaul costs covered by "power-by-hour" (fixed rate charged per hour) maintenance...

  • Page 103
    ... values. For used freighter aircraft, the Group depreciates them over the remaining life (15 years less age of aircraft) to 20% residual value. Major inspection costs relating to heavy maintenance visits and engine overhauls (including inspection costs provided under "power-by-hour" maintenance...

  • Page 104
    ..., differences between sales proceeds and net book values are taken to the balance sheet as deferred gain on sale and leaseback transactions, included under deferred account and amortised over the minimum lease terms. Major improvements and modifications to leased aircraft due to operational...

  • Page 105
    ... remaining lease term period or the average expected life between major overhauls (estimated to be 4 to 10 years). (iii) Operating lease - as lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Aircraft leased...

  • Page 106
    ... FINANCIAL STATEMENTS 31 March 2009 2 Accounting Policies (continued) (l) Financial assets (continued) All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases...

  • Page 107
    ... investments Long-term investments held by the Group are classified as available-for-sale. As there is no active market for the trading of these investments and fair value cannot be reliably measured, these investments are stated at cost. The accounting policy for this category of financial assets...

  • Page 108
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 2 Accounting Policies (continued) (q) Impairment of non-financial assets (continued) An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value-in-use and is determined for an ...

  • Page 109
    ... if the increase in fair value of the debt instrument can be objectively related to an event occurring after the impairment loss was recognised in the profit and loss account. (s) Financial liabilities Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes...

  • Page 110
    ... TO THE FINANCIAL STATEMENTS 31 March 2009 2 Accounting Policies (continued) (s) Financial liabilities (continued) Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs. Subsequent to...

  • Page 111
    ... is made for engine overhaul, repairs and maintenance of aircraft (excluding line maintenance) based on past experience of the level of repairs. Provision for return costs to meet contractual return aircraft minimum conditions, at the end of the lease terms for the aircraft under operating leases...

  • Page 112
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 2 Accounting Policies (continued) (z) Taxation (continued) (ii) Deferred tax Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying...

  • Page 113
    ... of airport terminal and food operations, engineering services, training of pilots, air charters and tour wholesaling and related activities. Revenue for the Group excludes dividends from subsidiary companies and intra-group transactions. Passenger and cargo sales are recognised as operating...

  • Page 114
    ... 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 senior executives and key senior management...

  • Page 115
    ... the expected average remaining working lives of the employees participating in the plans are expensed on accrual basis. (ad) Aircraft maintenance and overhaul costs The Group recognises aircraft maintenance and overhaul expenses (except heavy maintenance visits and engine overhaul expenses) on an...

  • Page 116
    ... to available market information and are the mark-to-market values of these swap contracts. As the Group hedges in InterContinental Exchange ("ICE") gasoil and Mean of Platts Singapore Jet Kerosene ("MOPS") jet-fuelICE gasoil regrade, the ICE gasoil futures contract price and the MOPS price are used...

  • Page 117
    ...asset or liability. (ai) Segmental reporting (i) Business segment The Group's businesses are organised and managed separately according to the nature of the services provided. The significant business segments of the Group are airline operations, airport terminal and food operations and engineering...

  • Page 118
    ...lives and residual values are reviewed on an annual basis. The carrying amount of the Group's and the Company's aircraft ï¬,eet at 31 March 2009 was $12,448.2 million (2008: $12,545.9 million) and $10,212.6 million (2008: $10,193.7 million) respectively. (iii) Passenger revenue recognition Passenger...

  • Page 119
    ... of the Group's and the Company's deferred revenue at 31 March 2009 was $500.8 million (2008: $435.7 million). (v) Aircraft maintenance and overhaul expenditure under power-by-hour agreements The Group has entered into several power-by-hour ("PBH") engine maintenance agreements with engine original...

  • Page 120
    ... segments The Group's businesses are organised 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 March 2009 and 2008 and certain assets and liabilities...

  • Page 121
    Engineering services 2008-09 2007-08 Others 2008-09 2007-08 Total of segments 2008-09 2007-08 Elimination* 2008-09 2007-08 Consolidated 2008-09 2007-08 358.5 686.8 1,045.3 289.7 719.9 1,009.6 60.5 133.4 193.9 ...

  • Page 122
    ... Information (in $ million) (continued) Business segments (continued) Airline operations 2009 2008 Airport terminal and food operations 2009 2008 OTHER INFORMATION AT 31 MARCH Segment assets Investments in and loans to associated and joint venture companies Goodwill on consolidation Long-term...

  • Page 123
    Engineering services 2009 2008 Others 2009 2008 Total of segments 2009 2008 Elimination* 2009 2008 Consolidated 2009 2008 957.2 530.4 14.6 1,502.2 202.1 0.9 43.8 246.8 73.1 0.9 36.6 5.9 (5.2) 960.9 438.0 14.6 1,413.5 231.2 0.1 42.1 273.4 58.5 1.4 33.1 6.4 (13.8) 200.3 0.7 0.3 201.3 49.5 3.5 ...

  • Page 124
    ...presents revenue information on airline operations by geographical areas for the financial years ended 31 March 2009 and 2008. By area of original sale 2008-09 2007-08 East Asia Europe South West Pacific Americas West Asia and Africa Systemwide Non-scheduled services and incidental revenue 5,814...

  • Page 125
    ... gain on sale and operating leaseback transactions Bad debts written off Impairment of trade debtors Surplus on disposal of non-current assets Professional fees paid to a firm of which a director is a member Remuneration for auditors of the Company Audit fees Non-audit fees Exchange (gain)/loss...

  • Page 126
    ...prior years Share of joint venture companies' taxation Share of associated companies' taxation Deferred taxation Movement in temporary differences Overprovision in respect of prior years (38.5) (9.3) (47.8) 190.0 Adjustment to deferred tax for reduction in Singapore statutory corporate tax rate (138...

  • Page 127
    ...point reduction in statutory corporate tax rate from Year of Assessment 2010. The financial effect of the reduction in tax rate was reï¬,ected in the current financial year. The aggregate adjustment of the prior year's deferred tax assets and liabilities was $138.2 million for the Group. The Group...

  • Page 128
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 11 Earnings Per Share The Group 2008-09 Basic Diluted Basic 2007-08 Diluted Profit attributable to equity holders of the Company (in $ million) Adjustment for dilutive potential ordinary shares of subsidiary companies (in $ million) Adjusted net pro...

  • Page 129
    ... million) The Group and the Company 2008-09 2007-08 Dividends paid: Special dividend of 50.0 cents per share tax exempt (one-tier) in respect of 2006-07 Final dividend of 80.0 cents per share tax exempt (one-tier) in respect of 2007-08 (2007-08: 35.0 cents per share tax exempt [one-tier] in respect...

  • Page 130
    ...TO THE FINANCIAL STATEMENTS 31 March 2009 13 Share Capital (in $ million) The Group and the Company Number of shares Amount 2009 2008 2009 2008 Issued and fully paid share capital Ordinary shares Balance at 1 April Share options exercised during the year Shares cancelled during the year pursuant to...

  • Page 131
    ... holding of shares after the capital reduction to the nearest multiple of 200 shares. Share option plans The Singapore Airlines Limited Employee Share Option Plan ("SIA ESOP"), the Singapore Airport Terminal Services Limited Employee Share Option Plan ("SATS ESOP") and the SIA Engineering Company...

  • Page 132
    ... FINANCIAL STATEMENTS 31 March 2009 13 Share Capital (in $ million) (continued) Share option plans (continued) Information with respect to the number of options granted under the respective Employee Share Option Plans is as follows: SIA ESOP 2008-09 Number of options Weighted average exercise price...

  • Page 133
    ... Risk-free interest rate (%) Expected life of options (years) Exercise price ($) Share price at date of grant ($) * Management's forecast in line with dividend policy 22.58 - 28.24 2.66 - 3.12 5.5 - 7.0 14.83 14.60 23.47 - 28.80 2.64 - 2.81 5.5 - 7.0 18.22* 18.70 Following approval by the Company...

  • Page 134
    ...TO THE FINANCIAL STATEMENTS 31 March 2009 13 Share Capital (in $ million) (continued) Share option plans (continued) Fair values of SIA, SATS and SIAEC ESOP (continued) July 2008 Grant July 2007 Grant SATS ESOP Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected...

  • Page 135
    13 Share Capital (in $ million) (continued) Share option plans (continued) Terms of share options outstanding as at 31 March 2009: SIA ESOP Exercisable period Exercise price Number outstanding Number exercisable 28.3.2001 - 27.3.2010 28.3.2002 - 27.3.2010 28.3.2003 - 27.3.2010 28.3.2004 - 27.3.2010...

  • Page 136
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 13 Share Capital (in $ million) (continued) Share option plans (continued) SIA ESOP (continued) Exercisable period Exercise price Number outstanding Number exercisable 2.7.2011 - 1.7.2017 1.7.2009 - 30.6.2018 1.7.2010 - 30.6.2018 1.7.2011 - 30.6.2018 ...

  • Page 137
    13 Share Capital (in $ million) (continued) Share option plans (continued) SATS ESOP (continued) Exercisable period Exercise price Number outstanding Number exercisable 1.7.2006 - 30.6.2012 1.7.2004 - 30.6.2013 1.7.2005 - 30.6.2013 1.7.2006 - 30.6.2013 1.7.2007 - 30.6.2013 1.7.2005 - 30.6.2014 1.7....

  • Page 138
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 13 Share Capital (in $ million) (continued) Share option plans (continued) SIAEC ESOP (continued) Exercisable period Exercise price Number outstanding Number exercisable 2.7.2002 - 1.7.2011 2.7.2003 - 1.7.2011 2.7.2004 - 1.7.2011 2.7.2005 - 1.7.2011 ...

  • Page 139
    ... based on stretched long-term corporate objectives. Performance Conditions SIA At both Company and Group level • EBITDAR# Margin • Absolute Total Shareholder Return (TSR) outperform Cost of Equity (COE) • Value Added per $ Employment Cost • Relative TSR against selected airline peer index...

  • Page 140
    ...the model used for the July 2008 and August 2007 awards: July 2008 Award RSP PSP August 2007 Award RSP PSP SIA Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected term (years) Share price at date of grant ($) Management's forecast in line with dividend policy 20...

  • Page 141
    ...-market conditions, achievement factors are determined based on inputs from the Board Compensation & Industrial Relations Committee for the purpose of accrual for the RSP until the achievement of the targets can be accurately ascertained. The details of the shares awarded under the new share plans...

  • Page 142
    .... SATS RSP and SATS PSP November 2008 Award RSP July 2008 Award PSP RSP SATS Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected term (years) Share price at date of grant ($) Management's forecast in line with dividend policy 22.00 - 25.40 1.10 - 1.90...

  • Page 143
    ... plans (continued) Fair values of RSP and PSP (continued) SATS RSP and SATS PSP (continued) November 2007 Award RSP PSP July 2007 Award RSP PSP SATS Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected term (years) Share price at date of grant ($) Management...

  • Page 144
    .... SIAEC RSP and SIAEC PSP July 2008 Award RSP PSP July 2007 Award RSP PSP SIAEC Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected term (years) Share price at date of grant ($) Management's forecast in line with dividend policy 21.59 - 24.82 1.30 - 2.35...

  • Page 145
    ... plans (continued) Fair values of RSP and PSP (continued) SIAEC RSP and SIAEC PSP (continued) Number of Performance shares Balance at 1.4.2008 / date of grant Balance at 31.3.2009 Date of grant Cancelled SIAEC PSP 3.7.2006 2.7.2007 1.7.2008 31,100 61,200 128,500 220,800 31,100 61,200 128,500...

  • Page 146
    ... FINANCIAL STATEMENTS 31 March 2009 14 Treasury Shares (in $ million) The Group and the Company 31 March 2009 2008 Balance at 1 April Purchase of treasury shares Treasury shares reissued pursuant to equity compensation plans: - For cash on exercise of employee share options - Transferred from share...

  • Page 147
    ...financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency. (c) Share-based compensation reserve Share-based compensation reserve represents the equity-settled share options and awards granted to employees. The reserve is made...

  • Page 148
    ... value changes Share of associated companies' net (loss)/gain on fair value reserve Recognised in the carrying value of non-financial assets on occurrence of capital expenditure commitments Recognised in the profit and loss account on occurrence of: Fuel hedging contracts recognised in "Fuel costs...

  • Page 149
    ... Company Balance sheet 31 March 2009 2008 The deferred taxation arises as a result of: Deferred tax liabilities Differences in depreciation Revaluation of fuel hedging contracts to fair value Revaluation of currency hedging contracts to fair value Revaluation of available-for-sale financial assets...

  • Page 150
    ... THE FINANCIAL STATEMENTS 31 March 2009 18 Long-Term Liabilities (in $ million) The Group 31 March 2009 2008 The Company 31 March 2009 2008 Notes payable Current Non-current Loans Current Non-current Finance lease commitments Current Non-current Other liabilities Current Non-current Total long-term...

  • Page 151
    ...interest rates ranged from 1.95% to 3.85% (2007-08: nil) per annum. The Group 31 March 2009 2008 Not later than one year Later than one year but not later than five years Later than five years 32.7 9.2 2.1 44.0 0.6 1.6 1.8 4.0 Finance leases Singapore Airlines Cargo Pte Ltd ("SIA Cargo") holds...

  • Page 152
    ... to purchase the leased assets at nominal values at the end of the lease term. Future lease payments under these finance leases are as follows: The Group 31 March 2009 Minimum Payments Repayment of Principal Minimum Payments 2008 Repayment of Principal Not later than one year Later than one year...

  • Page 153
    ... be incurred by the end of the lease terms. An analysis of provision for return costs for aircraft is as follows: The Group 31 March 2009 2008 The Company 31 March 2009 2008 Balance at 1 April Provision during the year Provision utilised during the year Balance at 31 March Current Non-current 134...

  • Page 154
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 19 Property, Plant and Equipment (in $ million) The Group Aircraft Aircraft spares Aircraft spare engines Cost At 1 April 2007 Additions Disposals / Transfers At 31 March 2008 Additions Acquisition of subsidiary companies Transfer to investment ...

  • Page 155
    Freehold land Freehold buildings Leasehold land and buildings Plant and equipment Office and computer equipment Advance and progress payments Total 15.7 15.7 1.4 17.1 155.3 (4.2) 151.1 0.7 14.0 165.8 1,367.0 5.1 (43.0) 1,329.1 10.3 81.7 (16.3) (11.3) 1,393.5 1,153.7 85.5 (23.3) 1,215.9 50...

  • Page 156
    ... TO THE FINANCIAL STATEMENTS 31 March 2009 19 Property, Plant and Equipment (in $ million) (continued) The Company Aircraft spare engines Aircraft Aircraft spares Cost At 1 April 2007 Additions Disposals / Transfers At 31 March 2008 Additions Disposals / Transfers At 31 March 2009 Accumulated...

  • Page 157
    Freehold land Freehold buildings Leasehold land and buildings Plant and equipment Office and computer equipment Advance and progress payments Total 15.7 15.7 15.7 159.1 (8.0) 151.1 151.1 357.5 0.3 (6.1) 351.7 (10.0) 341.7 364.4 49.6 (5.7) 408.3 18.4 (3.1) 423.6 285.7 35.2 (13.5) 307.4 40...

  • Page 158
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 19 Property, Plant and Equipment (in $ million) (continued) The Group 31 March 2009 2008 Net book value of property, plant and equipment acquired under finance leases: - aircraft - plant and equipment - leasehold buildings 797.9 56.4 854.3 858.1 0.2 ...

  • Page 159
    20 Intangible Assets (in $ million) The Group Goodwill arising on consolidation Computer software Brands Customer relationships Licences Total Cost At 1 April 2007 Additions: - Internal development - Acquisition of subsidiary companies At 31 March 2008 Additions: - Internal development - ...

  • Page 160
    ... "Farmhouse Fare" brand name has an estimated useful life of 17 years. The customer relationships relate to the economic benefits that are expected to derive from trading with the existing customers in the Singapore and United Kingdom ("UK") operations. The relationships include catering and supply...

  • Page 161
    20 Intangible Assets (in $ million) (continued) The Company Computer software 31 March 2009 2008 Cost At 1 April Additions: - Internal development At 31 March Accumulated amortisation At 1 April Amortisation At 31 March Net book value 293.0 15.2 308.2 252.0 41.0 293.0 214.0 29.3 243.3 64.9 185...

  • Page 162
    ...owing by subsidiary companies Market value of quoted equity investments ## 284.6 2,679.6 The value is $2. During the financial year, SIAEC signed an agreement with Cebu Pacific Air to set up an aircraft heavy maintenance facility at Clark International Airport in the Philippines. SIAEC will own...

  • Page 163
    ...Acquisition of subsidiary companies SATS Hong Kong Limited ("SATS HK") On 11 November 2008, SATS acquired 100.0% of Menzies Aviation (Hong Kong) Ltd ("MAHK") for a cash consideration of $5.2 million. The purchase consideration was based on the net asset value of MAHK, on a cash-free, debt-free basis...

  • Page 164
    ... TO THE FINANCIAL STATEMENTS 31 March 2009 22 Subsidiary Companies (in $ million) (continued) Acquisition of subsidiary companies (continued) SATS Hong Kong Limited ("SATS HK") (continued) Goodwill arising on acquisition The excess of carrying values of the net identifiable assets over purchase...

  • Page 165
    ... of subsidiary companies (continued) Singapore Food Industries Limited ("SFI") (continued) Total cost of business combination The total cost of the business combination is as follows: Consideration for 100.0% equity interest: - Cash paid - Directly attributable professional fees - Deferred cash...

  • Page 166
    ... and the book value of the share of the net assets acquired is recognised in goodwill. The subsidiary companies at 31 March are: Percentage of equity held by the Group 2009 2008 Principal activities Country of incorporation and place of business Singapore Airport Terminal Services Limited Aero...

  • Page 167
    ... and management services for agri-food business Supply of food product Investment holding Contract manufacturing of food products Manufacture and sale of frozen foodstuff Providing abattoir services Abattoir related activities Auctioneers of pigs Airport cargo delivery management services United...

  • Page 168
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 22 Subsidiary Companies (in $ million) (continued) Percentage of equity held by the Group 2009 2008 Principal activities Country of incorporation and place of business SIA Engineering Company Limited Aircraft Maintenance Services Australia Pty Ltd* ...

  • Page 169
    ... of equity held by the Group 2009 2008 Principal activities Country of incorporation and place of business SIA (Mauritius) Ltd@@ Pilot recruitment Mauritius 100.0 100.0 All the Singapore-incorporated subsidiary companies are audited by Ernst & Young LLP, Singapore * Audited by member firms...

  • Page 170
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 23 Associated Companies (in $ million) (continued) The customer-related intangible assets arose from the acquisition of associated companies and the Group had engaged an independent third party to perform a fair valuation of these separately identifi...

  • Page 171
    ... by the Group 2009 2008 Principal activities Country of incorporation and place of business Service Quality (SQ) Centre Pte Ltd@ Quality service training Virgin Atlantic Limited*+ Tiger Aviation Pte Ltd @ Singapore United Kingdom Singapore - do Indonesia Hong Kong Pakistan Singapore India People...

  • Page 172
    ...FINANCIAL STATEMENTS 31 March 2009 23 Associated Companies (in $ million) (continued) Percentage of equity held by the Group 2009 2008 Principal activities Country of incorporation and place of business PWA International Limited^^+++ Repair, overhaul and re-manufacture of aircraft turbine engine...

  • Page 173
    ...2008-09 Results Revenue (Loss)/Profit for the period 7,702.1 (28.2) 9,643.9 368.7 24 Joint Venture Companies (in $ million) The Group 31 March 2009 2008 Investment in joint venture companies (unquoted, at cost) Share of post-acquisition reserves - general reserve - foreign currency translation...

  • Page 174
    ...joint venture companies at 31 March are: Percentage of equity held by the Group 2009 2008 Principal activities Country of incorporation and place of business SembCorp Network Pte Ltd*+ International Engine Component Overhaul Pte Ltd**+ Singapore Aero Engine Services Private Limited** + Provision...

  • Page 175
    ... cost and are expected to be received over a period of 2 to 10 years. As at 31 March 2009 and 31 March 2008, the entire balance of other receivables is denominated in USD. The remaining non-current assets relate to capital expenditure incurred for the setting up of associated companies which...

  • Page 176
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 27 Inventories (in $ million) The Group 31 March 2009 2008 The Company 31 March 2009 2008 Technical stocks and stores Catering and general stocks Work-in-progress Total inventories at lower of cost and net realisable value 383.4 70.8 49.0 503.2 440...

  • Page 177
    ... company Balance at 31 March Bad debts written off directly to profit and loss account, net of debts recovered 17.1 12.3 (0.6) 7.0 35.8 14.4 2.9 (0.2) 17.1 4.4 7.2 11.6 4.3 0.1 4.4 2.4 1.1 1.2 0.2 As at 31 March 2009, the composition of trade debtors held in foreign currencies by the Group...

  • Page 178
    ... comprise investments in money market funds, commercial papers and credit-linked notes. During the financial year, the Group recorded an impairment loss in the profit and loss account of $9.7 million (2007-08: nil) pertaining to unquoted non-equity investments. The interest rates for quoted and...

  • Page 179
    ... periods of between one day and one year depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The weighted average effective interest rate for short-term deposits is 1.14% (2007-08: 2.95%) per annum. 32 Trade and Other Creditors...

  • Page 180
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 33 Bank Overdrafts (in $ million) Included in the Group's bank overdrafts is a secured banking facility of $1.8 million (2008: nil) offered to certain subsidiary companies. It is secured on the property, plant and equipment and other assets of these ...

  • Page 181
    .... SilkAir (Singapore) Private Limited ("SilkAir") has four A320-232 and two A319-132 aircraft under operating leases with fixed rental rates. The lease terms for the two A319-132 aircraft are 5.5 years, which SilkAir holds an option to extend the leases for one year. The lease terms for two...

  • Page 182
    ... aircraft lease. This non-cancellable lease has a remaining lease term of six years and five months. The lease rental is fixed throughout the lease term. Future minimum lease receivables under non-cancellable operating leases are as follows: The Group 31 March 2009 2008 Not later than one year...

  • Page 183
    ...competition authorities SIA Cargo is one of several airlines to have received notice of criminal and/or regulatory investigations by competition authorities in the US, European Union ("EU"), Switzerland, Australia, New Zealand and South Africa regarding whether surcharges, rates or other competitive...

  • Page 184
    ..., no provision has been made in the financial statements. (c) Passengers: Civil actions in the US The Company and several airlines have been named in civil anti-trust class-action law suits in the US alleging an unlawful agreement to fix surcharges on transpacific ï¬,ights to and from the US...

  • Page 185
    ... Financial Risk Management Objectives and Policies (in $ million) The Group operates globally and generates 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...

  • Page 186
    .... A change in price of one US dollar per barrel of jet fuel affects the Group's annual fuel costs by USD 35.8 million (2007-08: USD 36.0 million), assuming no change in volume of fuel consumed. (b) Foreign currency risk The Group is exposed to the effects of foreign exchange rate ï¬,uctuations...

  • Page 187
    ... March 2009. The market risk associated with these investments is the potential loss resulting from a decrease in market prices. (e) Counterparty risk Surplus funds are invested in interest-bearing bank deposits and other high quality short-term liquid investments. Counterparty risks are managed by...

  • Page 188
    ... TO THE FINANCIAL STATEMENTS 31 March 2009 36 Financial Risk Management Objectives and Policies (in $ million) (continued) (e) Counterparty risk (continued) The Group Percentage Outstanding of total balance financial assets 2009 2008 2009 2008 The Company Percentage Outstanding of total balance...

  • Page 189
    ... 3-4 years 4-5 years Total 2009 The Group Notes payable Finance lease commitments Bank overdrafts Loans Trade and other creditors Amounts owing to associated companies Derivative financial instruments: Currency hedging contracts Fuel hedging contracts Cross currency swap contracts Interest rate...

  • Page 190
    ... FINANCIAL STATEMENTS 31 March 2009 36 Financial Risk Management Objectives and Policies (in $ million) (continued) (f) Liquidity risk (continued) More than 5 years Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years Total 2008 The Group Notes payable Finance lease commitments Loans Trade...

  • Page 191
    ...Financial Risk Management Objectives and Policies (in $ million) (continued) (g) Credit risk (continued) The maximum exposure to credit risk for the Group and the Company are as follows: The Group 31 March 2009 2008 The Company 31 March 2009 2008 Long-term investments Other non-current assets Trade...

  • Page 192
    ...assets hedging cost and loss Loans and receivables Total 2009 The Group Assets Long-term investments Other non-current assets Trade debtors Deposits and other debtors Amounts owing by associated companies Investments Cash and bank balances Total financial assets Total non-financial assets Total...

  • Page 193
    ... for amortised assets hedging cost Total The Company Assets Long-term investments Other non-current assets Trade debtors Deposits and other debtors Amounts owing by subsidiary companies Investments Cash and bank balances Total financial assets Total non-financial assets Total assets Liabilities...

  • Page 194
    ...assets hedging cost and loss Loans and receivables Total 2008 The Group Assets Long-term investments Other non-current assets Trade debtors Deposits and other debtors Amounts owing by associated companies Investments Cash and bank balances Total financial assets Total non-financial assets Total...

  • Page 195
    ... for amortised assets hedging cost Total The Company Assets Long-term investments Other non-current assets Trade debtors Deposits and other debtors Amounts owing by subsidiary companies Investments Cash and bank balances Total financial assets Total non-financial assets Total assets Liabilities...

  • Page 196
    ... a forced or liquidation sale. Financial instruments carried at fair value The Group and Company have carried all investment securities that are classified as available-for-sale financial assets and all derivative instruments at their fair values. The fair values of jet fuel swap contracts are the...

  • Page 197
    ... the market interest rates. (c) Derivative financial instruments and hedging activities Derivative financial instruments included in the balance sheets are as follows: The Group 31 March 2009 2008 The Company 31 March 2009 2008 Assets* Currency hedging contracts Fuel hedging contracts Cross...

  • Page 198
    ... TO THE FINANCIAL STATEMENTS 31 March 2009 37 Financial Instruments (in $ million) (continued) (c) Derivative financial instruments and hedging activities (continued) Cash ï¬,ow hedges The Group enters into fuel hedging contracts in order to hedge the financial risk related to the price of jet...

  • Page 199
    ... fair value reserve in respect of these contracts. As at 31 March 2009, the Company had interest rate cap contracts at a strike rate of 6.50% (2008: nil), maturing in 7 to 10 years, to hedge against risk of increase in aircraft lease rentals. The Group also has interest rate swap contracts in place...

  • Page 200
    ... from the rates applicable at 31 March 2009, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation. Jet fuel price risk The jet fuel price risk sensitivity analysis...

  • Page 201
    ....8) Effect of weakening of SGD Increase in profit before taxation Increase in equity Interest rate risk 11.6 16.1 21.8 18.1 13.9 12.1 23.4 13.8 The interest rate sensitivity analysis is based on the following assumptions Changes in market interest rates affect the interest income or finance...

  • Page 202
    ... FINANCIAL STATEMENTS 31 March 2009 37 Financial Instruments (in $ million) (continued) (d) Market risk sensitivity analysis (continued) Interest rate risk (continued) Under these assumptions, an increase or decrease in market interest rates of one basis point for all currencies in which the Group...

  • Page 203
    ... in the objectives, policies or processes relating to the management of the Company's capital structure. During the previous financial year, the Company made a cash distribution to shareholders totalling approximately $2.2 billion by way of a special dividend and the cancellation of one for every...

  • Page 204
    ... statements, these were the following significant related party transactions which were carried out in the normal course of business on terms that prevail in arm's length transactions during the financial year: The Group 2008-09 2007-08 The Company 2008-09 2007-08 Purchases of services from...

  • Page 205
    ...nancial year under review Chew Choon Seng Bey Soo Khiang Huang Cheng Eng Mak Swee Wah Ng Chin Hwee - - 1,194,000 762,000 747,000 362,750 214,025 342,000 414,750 156,650 67,000 1,194,000 420,000 332,250 206,100 147,025 Conditional awards granted to directors and key executives of the Company...

  • Page 206
    NOTES TO THE FINANCIAL STATEMENTS 31 March 2009 40 Reclassifications Certain comparative figures have been reclassified to conform with current year's presentation. As a result of the reclassification, the Group and the Company's long-term liabilities increased by $90.2 million and $66.1 million...

  • Page 207
    ... Airlines Company Ltd MediaCorp Press Ltd PT Bank Danamon Indonesia TBK Temasek Holdings (Private) Limited Tiger Airways Pte Ltd Capitaland Limited Group Orchard Turn Retail Investment Pte Ltd Singapore Technologies Engineering Ltd Group Miltope Corporation ST Aerospace Engineering Pte Ltd Singapore...

  • Page 208
    QUARTERLY RESULTS OF THE GROUP 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total TOTAL REVENUE 2008-09 2007-08 ($ million) ($ million) 4,131.7 3,622.1 4,379.3 3,967.1 4,164.0 4,276.1 3,321.3 4,107.2 15,996.3 15,972.5 TOTAL....2 PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 2008-09 2007-08...

  • Page 209
    ... Holdings Ltd Surplus on sale of investment in Taikoo (Xiamen) Aircraft Engineering Company Limited Staff compensation and restructuring of operations Profit before taxation Profit attributable to equity holders of the Company BALANCE SHEET ($ million) Share capital Treasury shares Capital reserve...

  • Page 210
    ...) Dividend cover (times) PROFITABILITY RATIOS (%) Return on equity holders' funds R4 Return on total assets R5 Return on turnover R6 PRODUCTIVITY AND EMPLOYEE DATA Value added ($ million) Value added per employee ($) R7 Revenue per employee ($) R7 Average employee strength S$ per US$ exchange rate...

  • Page 211
    ...-09 SINGAPORE AIRLINES FINANCIAL R1 Total revenue Total expenditure Operating profit Profit before taxation Profit after taxation Capital disbursements R2 Passenger - yield - unit cost - breakeven load factor OPERATING PASSENGER FLEET Aircraft Average age PASSENGER PRODUCTION Destination cities...

  • Page 212
    ...at 31 March 2009). R1 R2 SIA Cargo was corporatised on 1 July 2001. Company revenue, expenditure, profit before and after taxation in these charts for 2000-01 and prior years show the combined results of both passenger and cargo operations. The numbers for 2001-02 include cargo operations for the...

  • Page 213
    ...of operating lease 2009-10 2010-11 On firm order On option Singapore Airlines: B747-400 B777-200 B777-200A B777-200ER B777-300 B777-300ER A340-500 A380-800 A330-300 B787-9 R1 A350-900 XWB R1 Sub-total SIA Cargo: B747-400F SilkAir: A319-100 A320-200 Sub-total Total N.A. not applicable R1 7 11 15...

  • Page 214
    ...% 51% Cargo Community Network Pte Ltd 25% Great Wall Airlines Company Limited 100% Cargo Community (Shanghai) Co. Ltd 51% Aerospace Component Engineering Services Pte Ltd Aviation Partnership (Philippines) Corporation International Engine Component Overhaul Pte Ltd Singapore Aero Engine Services Pte...

  • Page 215
    ... Ground Services Company Ltd Maldives Inï¬,ight Catering Pte Limited Taj Madras Flight Kitchen Private Limited Tan Son Nhat Cargo Services Ltd Evergreen Air Cargo Services Corporation Singapore Airport Duty-Free Emporium Evergreen Airline Services Corporation MacroAsia-Eurest Catering Services...

  • Page 216
    INFORMATION ON SHAREHOLDINGS As at 26 May 2009 No. of Issued Shares: No. of Issued Shares (excluding Treasury Shares): No./Percentage of Treasury Shares: Class of Shares: 1,186,547,791 1,182,649,308 3,898,483 (0.33%) Ordinary shares One Special share held by the Minister for Finance (Incorporated) 1...

  • Page 217
    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 DBS Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd DBSN Services Pte Ltd United Overseas Bank Nominees Pte Ltd HSBC (Singapore) Nominees Pte Ltd Rafï¬,es Nominees ...

  • Page 218
    ... price Market Value Ratios R1 Price/Earnings Price/Book value Price/Cash earnings R2 11.16 0.85 4.24 9.26 1.22 5.31 16.34 9.39 10.00 20.20 14.12 15.60 R1 R2 Based on closing price on 31 March and Group numbers. Cash earnings is defined as profit attributable to equity holders of the Company...

  • Page 219
    ... per ordinary share for the year ended 31 March 2009. To re-elect the following Directors who are retiring by rotation in accordance with Article 82 of the Company's Articles of Association and who, being eligible, offer themselves for re-election: (a) Mr Stephen Lee Ching Yen (b) Mr Chew Choon Seng...

  • Page 220
    ... 5 per cent of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited ("SGX-ST")) for the...

  • Page 221
    ... to serve as Chairman of the Board Executive Committee and Board Compensation and Industrial Relations Committee, as well as a member of the Board Safety and Risk Committee. Mr Chew Choon Seng will, upon re-election, continue to serve as a member of the Board Executive Committee. Ms Euleen Goh Yiu...

  • Page 222
    ... Year 2009-10. The amount of the Directors' fees is computed based on the anticipated number of Board and Committee meetings for Financial Year 2009-10, assuming full attendance by all of the current eight non-executive Directors, at the fee rates shown in the Annual Report. The amount also caters...

  • Page 223
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  • Page 224
    ... Address Airline House 25 Airline Road Singapore 819829 Company Secretary Ethel Tan Tel: 6541 4030 Fax: 6546 7469 Email: [email protected] Investor Relations Tel: 6541 4885 Fax: 6542 9605 Email: [email protected] Public Affairs Tel: 6541 5880 Fax: 6545 6083 Email...