Singapore Airlines 2014 Annual Report Download - page 133

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ANNUAL REPORT FY2013/14
3 Significant Accounting Judgments and Estimates (continued)
(b) Key sources of estimation uncertainty (continued)
(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
equipment manufacturers. The monthly payments are based on the number of flying hours flown. A portion of the
cost is expensed at a fixed rate per hour during the term of the PBH agreement. The remaining payments made
are recorded as an advance payment, to the extent that it is to be utilised through future maintenance activities,
if any, or capitalised upon completion of an overhaul.
The proportion of the amount to be expensed off and capitalised is determined based on the best estimate as if the
engine maintenance and overhaul costs are accounted for under the time and material basis. The carrying amount
of the advance payment relating to PBH agreements for the Group and the Company at 31 March 2014 was
$409.9 million (2013: $549.3 million) and $354.9 million (2013: $493.7 million) respectively. The maintenance
and repair costs covered by PBH agreements which are expensed off during the year amounted to $54.1 million
(FY2012/13: $47.7 million) for the Group and $46.9 million (FY2012/13: $45.2 million) for the Company.
(vi) Income taxes
The Group is subjected to income taxes in numerous jurisdictions. Significant judgment is involved in determining
the provision for income taxes. There are certain transactions and computations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recognised, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made. The carrying amounts of the Group’s current tax
payable and deferred taxation at 31 March 2014 was $201.1 million (2013: $160.1 million) and $1,788.9 million
(2013: $1,948.2 million) respectively. The carrying amounts of the Company’s current tax payable and deferred
taxation at 31 March 2014 was $161.8 million (2013: $130.2 million) and $1,516.2 million (2013: $1,618.6
million) respectively.
4 Segment Information (in $ million)
For management purposes, the Group is organised into business units based on the nature of the services provided, and
has four reportable operating segments as follows:
(i) The airline operations segment provides passenger air transportation.
(ii) The engineering services segment is in the business of providing airframe maintenance and overhaul services, line
maintenance, technical ground handling services and fleet management programme. It also manufactures aircraft
cabin equipment, refurbishes aircraft galleys, provides technical and non-technical handling services and repair and
overhaul of hydro-mechanical aircraft equipment.
(iii) The cargo operations segment is involved in air cargo transportation and related activities.
(iv) Other services provided by the Group, such as training of pilots, air charters and tour wholesaling, has been aggregated
under the segment “Others”.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss
which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.