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Headquarters
Singapore Telecommunications Limited
31 Exeter Road
Comcentre
Singapore 239732
Republic of Singapore
Tel:
Fax:
Website:
+65 6838 3388
+65 6732 8428
www.singtel.com
Copyright © 2012
Singapore Telecommunications Limited
(CRN:199201624D)
All rights reserved
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Printed on environmentally friendly paper
>
SHaping
communicaTionS
making
Bold moVeS
Singapore TelecommunicaTionS limiTed
annual reporT 2012
For more than 130 years, we have been shaping the way
our customers live, work and play via state-of-the-art
technology. With a mobile customer base of over
400 million across Asia and Africa, we put the customer
at the centre of everything we do.
The communications industry is rapidly evolving in today’s
digital age and SingTel has a history of making bold
moves, especially in times of change. We leverage our
unique advantages to shape customers’ lifestyles beyond
how they communicate, to help them transact, be informed
and be entertained. We aim to win in the new era.
SingTel is Asia’s leading communications group,
providing a diverse range of innovative services
including fixed, mobile, data, internet, ICT and TV.
CONTENTS
Key Figures
Chairman’s Statement
In Dialogue with GCEO
Board of Directors
Management Committee
Senior Management
Organisation Structure
Key Awards and Accolades
Operating and Financial Review
Key Operating Companies
Corporate Social Responsibility
Our People
Corporate Governance
Investor Relations
Risk Management Philosophy
and Approach
Financial Statements
Interested Person Transactions
Shareholder Information
Corporate Information
SingTel Contact Points
1
8
10
14
18
20
21
22
24
47
48
52
56
72
74
80
195
196
198
199
445 mILLION
MObilE CuSTOMER baSE
GLOSSARY
connect. control. converge.
MOBILE
NETWORK
VEhICLE
BREAKDOWN
SIM CARD
MANAGEMENT
PORTAL
VEhICLE
GARAGE
Save What’s most important
CLOUD
COMPUTING
COMPUTERS
TOUChPAD
DEVICES
MOBILE
PhONES
limitless power of light
FIBRE
BROADBAND
NETWORK
OPTIMAL
GAMING
ExPERIENCE
FASTER
UPLOAD
& DOWNLOAD
MULTIPLE
ACCESS
ULTRA
FAST SPEEDS
a new concept in TV and choice
TELEVISION
MUSIC
MOVIES
DOCUMENTARIES
WORLD
ChANNELS
SOCIAL
NETWORK
APPLICATIONS
ON-DEMAND
CONTENT
appsolute excitement all around
VOICE
ACTIVATION
MOBILE
PhONES
MOVIES
FOOD
TAxI
DIRECTIONS
Helping the community
PEOPLE
ENVIRONMENT
MARKETPLACE
COMMUNITY
a c2 design Studio production
We are a long-term strategic investor in these
regional mobile operators – aiS (Thailand),
Globe (the Philippines), PbTl (bangladesh),
Telkomsel (indonesia) and Warid (Pakistan).
Through airtel (india), we also have a significant
presence in 17 african countries and Sri lanka.
(1) Burkina Faso, Chad, Democratic Republic of Congo,
Republic of Congo, Gabon, Ghana, Kenya, Madagascar,
Malawi, Niger, Nigeria, Rwanda, Seychelles,
Sierra Leone, Tanzania, Uganda and Zambia
Covering more than
2 billion people across
asia and africa
SINGAPORE
AUSTRALIA
AfRIcA(1)
BANGLAdESh
INdIA
INdONESIA
PAkISTAN
PhILIPPINES
ThAILANd
KEY FIGURES
OPERATING REVENUE
FY2012
FY2011
NET PROFIT
FY2012
FY2011
UNDERLYING NET PROFIT
FY2012
FY2011
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
(S$ m)
18,825
18,071
(S$ m)
3,989
3,825
(S$ m)
3,676
3,800
+4%
Operating revenue grew on mobile
service revenue growth from
Singapore, further lifted by the
stronger Australian Dollar.
+4%
Net profit, which included
the exceptional net tax credit
on transfer of assets to an
associate, increased 4 per cent.
Underlying net profit declined due to
lower associates’ contributions, with
lower earnings from Airtel arising from
3G investments in India, weaker regional
currencies and fair value losses.
-3%
FREE CASH FLOW
(S$ m)
FY2012
FY2011
3,462
4,038
-14%
Free cash flow declined on higher
capital expenditure and special
dividends from AIS in the previous year.
RETURN ON INVESTED CAPITAL (ROIC) (1)
(%)
FY2012
FY2011
16.9
17.6
-0.7%
point
ROIC declined on lower contributions
from associates.
DIVIDEND PER SHARE
(cents)
FY2012
FY2011
15.8
15.8
10.0
Ordinary Dividend
Ordinary Dividend
Special Dividend
PROPORTIONATE EBITDA (2)
Singapore
Australia
22%
31%
Regional Mobile Associates 45%
Others
1%
Through its investments in key markets
overseas, the Group has diversified its
earnings base. Overseas operations
contributed 78 per cent to proportionate
EBITDA, up 2 percentage points from
a year ago.
Notes:
(1) ROIC refers to ratio of earnings before
interest and tax (EBIT) to average net
capitalisation, which is the aggregate
of net debt, shareholders’ funds and
minority interests.
(2) Percentages may not add up due to
rounding.
1
C
Connect.
Control. Converge.
SingTel’s M2M (Machine-to-Machine)
solution offers real-time control
over costs and operations
2
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Save What’s
Most Important
A smart way to store,
access and share
important documents
from anywhere
OPTUS SMART SAFE™
3
Limitless
Power of Light
Stream videos, surf the internet,
store and share memories,
all at the same time
STORE & SHARE
4
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
A New Concept
in TV and Choice
Pause, rewind and
record “live” TV
5
APPsolute
Excitement
All Around
6
Apps for food, movies,
events, deals and almost
anything under the sun
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Helping the
Community
Making a difference,
touching lives
7
CHAIRMAN’S STATEMENT
8
>
WE OPERATE IN A WORLD WHERE THE
SERVICES OF TELECOMMUNICATIONS
COMPANIES AND INTERNET PLAYERS
ARE RAPIDLY MERGING ONTO THE
MOBILE INTERNET PLATFORM.
Dear Shareholders,
The SingTel Group has delivered another year of resilient
financial performance while repositioning ourselves
for
transformation.
We operate in a world where the services of telecommunications
companies and internet players are rapidly merging onto the
mobile internet platform. In this digital age, consumers are
increasingly turning to the mobile internet for information,
entertainment and to transact, as smartphones and tablets
become more prevalent.
Our industry is changing and subject to many forces. We are
facing new competitors in the form of over-the-top players
offering free services that ride on our networks, intensifying price
competition, growing policy risks and regulatory intervention
across the countries the Group operates in.
TRANSFORMATION IS AN IMPERATIVE
The Board and Management have put in place a compelling
strategy and restructured the Group to capitalise on the
opportunities this new digital world presents. We have valuable
assets in our subscriber base, customer relationships and
extensive networks, which form the foundation for us to
develop new products and services. Underlying our ambition
is a fundamental promise to our customers: to shape
communications that will enhance their lives and empower
their businesses into the future.
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Today, the fastest growing area in global telecommunications
is mobile data. This gives us the opportunity to disrupt adjacent
markets as well as extend our customer relationships and grow
our share of their wallets. Our recent acquisition of US-based
Amobee, which we will develop to become a global advertising
platform, is an example of this.
the best customer experience. However,
We remain committed to enhancing our infrastructure to
the
deliver
exponential growth
in mobile data requires significant
investments in spectrum and network capacity. To justify
continued investments, the industry needs to shift away from
offering unlimited data plans and deliver sustainable returns
for operators.
A COMMITTED BOARD
The Board and Management are focused on the Group’s
transformation. This agenda also drives the Board’s talent
management and succession planning efforts. We are mindful
that our transformation is a journey which will require time
before meaningful results can be seen.
We have devoted considerable time to understanding the new
digital space and I am particularly appreciative that my fellow
Directors made the time to spend a week in a structured Silicon
Valley immersion programme.
>
Our transformation is the top
priority and this is the common
goal that will guide the Group’s
23,000 employees. Their
commitment and passion will
build the future for SingTel.
PEOPLE AND THE COMMUNITY
People are our key assets. Our transformation is the top priority
and this is the common goal that will guide the Group’s 23,000
employees. Their commitment and passion will build the future
for SingTel.
In addition to financial performance, we are mindful of our
commitment to our employees, the environment and the
communities where we operate. Last year, we responded
as a Group by making donations and providing assistance to
help relief efforts following natural disasters in Thailand and
the Philippines.
The Board views strong governance as the foundation for the
long-term success of the Group. We firmly believe that integrity
and upholding the highest standards of corporate governance
are essential to delivering the Group’s strategy.
In conclusion, I would like to thank my fellow Directors,
Management and all employees of the Group for their dedication
and commitment to SingTel.
This year, we placed a higher priority on risk and established
a separate Risk Committee in May. Every year, following the
conclusion of our annual strategic planning exercise, we
review the skill sets required to support our strategic agenda
and maintain the necessary diversity in the composition of the
Board. This forms the basis of Board renewal and recruitment. In
addition, an independent external consultant is appointed to help
evaluate the effectiveness of the Board, the Board Committees
and the contribution of each Director. The Board, led by the
Lead Independent Director, also assesses the effectiveness of
the Chairman.
Simon Israel
Chairman
9
IN DIALOGUE WITH GCEO
>
OUR THREE UNITS UNDER THE NEW ORGANISATION –
GROUP CONSUMER, GROUP DIGITAL L!FE AND GROUP ICT –
ARE STRUCTURED ALONG CUSTOMER SEGMENTS INSTEAD OF
GEOGRAPHICAL LINES, ENABLING US TO SHARPEN OUR CUSTOMER
FOCUS AND TAKE FULL ADVANTAGE OF OUR SCALE.
Q: DESCRIBE FY2012 FOR SINGTEL FROM YOUR
PERSPECTIVE.
A: Let me start by saying that I am very proud of the
management team and our 23,000 employees. We faced
multiple challenges in FY2012 from currency fluctuations
to the emergence of new disruptive competitors seeking
to take a bite of our profit pie. Despite all that, the SingTel
Group continued to deliver resilient financial results while
enhancing our range of product and service offerings to
our customers.
As one example, during the year, we rolled out 4G or
Long Term Evolution (LTE) services, giving our customers
in Singapore unprecedented broadband speeds. Optus
its 3G coverage with the
extended and enhanced
commencement of a spectrum migration programme and
started offering 4G connectivity in the Newcastle region
of New South Wales. Be it LTE or new generation fibre
services, customers today are spoilt for choice when it
comes to broadband access.
We are committed to giving the best value and experience to
our customers. For our enterprise customers, we expanded
our portfolio of cloud-based solutions to help them
reduce costs and improve productivity. For consumers,
we widened our range of digital offerings to simplify their
communications and enhance their lives. Our continued
market leadership position reflects the success of our
strongly executed strategy.
Optus celebrated a milestone – its 20th anniversary and
10th year as part of the SingTel Group. The role Optus plays
in the Australian communications landscape is a significant
one. Optus has long advocated for a regulatory framework
that delivers a level playing field and improves competition
in the fixed-line market. This will be achieved in part by
the rollout of the National Broadband Network which will
10
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
transform the telecoms marketplace in Australia by creating
a platform for a vibrant and competitive fixed-line sector.
In the emerging markets, our regional mobile associates
recorded strong growth in customer numbers. Telkomsel
crossed the 100 million customer mark. In less than two
years after acquiring mobile operations in Africa, Airtel
now has 50 million customers in that continent. Competition
has eased in many of our markets and prices have
stabilised. Our associates are also tapping into the growth
opportunity in mobile data services by introducing data
bundles, smartphones and investing in their networks.
Beyond the operational achievements
in our various
markets, we also established new priorities for ourselves
with a definitive move to realign the Group’s structure by
customer segments as we progress into the new era. The
new structure became effective on 1 April 2012.
Q: THE GROUP MADE A SIGNIFICANT CHANGE IN
ITS ORGANISATION STRUCTURE. WHAT IS THE
MOTIVATION BEHIND THIS?
A: Our
industry
is undergoing significant changes.
Our competition has expanded beyond
traditional
telecommunications companies to also include players in
the digital space, like device companies, content owners
and numerous other firms with web-based service operating
models (often described as “over-the-top” or “OTT” players).
These companies are expanding beyond their traditional
boundaries and entering each other’s turf to battle for an
increased share of the consumer and enterprise wallets.
With these changes, our relationship with customers
is becoming less exclusive, and we run the risk of being
marginalised if we do nothing. At the same time, these
changes present new opportunities for us to expand our
share of the customer’s wallet. To succeed, we need to
stay focused on leveraging our many unique strengths and
sustainable advantages.
As we look at our competitive landscape, it is clear we
need to engage our customers differently. Our three
units under the new organisation – Group Consumer,
Group Digital L!fe and Group ICT – are structured along
customer segments
lines,
enabling us to sharpen our customer focus and take full
advantage of our scale. We aspire to be a truly global
business with strong local customer insights, supported
by global delivery capabilities.
instead of geographical
Q: HOW DOES THE NEW GROUP DIGITAL L!FE UNIT
FIT INTO THE OVERALL STRATEGY?
A: Over the past few years, we have accumulated an interesting
portfolio of digital assets. The formation of Group Digital
L!fe will sharpen our focus in this space and raise our game
against non-traditional competitors.
Our unique assets allow us to shape the future of a
connected society and truly make a difference to our
customers. Among other things, these assets include:
(cid:3)
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replicate, such as shops, online stores and billing
relationships which give trusted telcos the edge
(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:30)
(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:81)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3) (cid:83)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:75)(cid:72)(cid:79)(cid:83)(cid:3) (cid:88)(cid:86)(cid:3)
(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:3)(cid:85)(cid:72)(cid:79)(cid:72)(cid:89)(cid:68)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:88)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
(cid:353)(cid:3)
(cid:353)(cid:3) (cid:68)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:69)(cid:92)(cid:3) (cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3)
network intelligence, which enables our services to be
truly targeted.
11
IN DIALOGUE WITH GCEO
The mobile advertising and marketing industry is in a
nascent stage and holds significant potential for mobile
operators in both the developed and emerging markets.
The location data produced in the normal course of our
network operations can help us, with permission from the
customer, to uniquely
identify customer preferences
and habits. We could utilise this knowledge to raise the
effectiveness of advertisers’ promotions and the value of
their marketing expenditure, while consumers benefit from
a better mobile experience. We are particularly excited about
the potential of mobile marketing in emerging markets,
where mobile phones offer advertisers the most compelling
avenue to reach hundreds of millions of current and
future customers.
As part of our strategy in this space, in March 2012, we
announced our plan to acquire US-based Amobee, a
premium provider of mobile advertising solutions to global
operators, publishers and advertisers. We plan to combine
Amobee’s advertising expertise and platforms with our
customer reach and knowledge to offer advertisers a unique
proposition and effective returns on their marketing spend.
the regional mobile associates, focusing on areas such as
procurement, networks and IT.
Our regional mobile associates generate a significant
portion of our Group earnings. We are a long-term strategic
investor and they remain a key part of our future. But we
need to engage them differently. Developments in the
emerging markets
indicate tremendous opportunities
for growth. The new organisation structure reflects
our commitment to drive stronger synergies and seize
opportunities more effectively across the entire footprint
of the SingTel Group.
For our enterprise customers, Group ICT will maximise
economies of scale and deliver relevant end-to-end
ICT solutions across different verticals globally. It will
focus on innovatively bundling IT solutions with voice
and data connectivity to drive down costs and simplify
administration, while raising the productivity of our
enterprise customers.
We will be making similar moves in other exciting digital
spaces as we continue to enhance and leverage the assets
of our core carrier business.
Q: HOW DO YOU INTEND TO ACCELERATE GROWTH
FOR THE GROUP?
A: As we seek new growth avenues, our core telco business
remains the critical lynchpin to our success. We will
continually review the core foundations of our carrier
business to anticipate industry changes rather than simply
react to them.
In Group Consumer, our priority is to continue delivering
strong profitability and lowering costs, while driving
service as well as business model innovations to better
meet customer needs. To capture scale benefits from the
Group’s operations in diverse geographies, we will also drive
tighter integration across Singapore, Australia and with
Q: HOW
IS SINGTEL RESPONDING TO THE
INCREASING GLOBAL DEMAND FOR MOBILE
DATA?
A: In recent years, with the advent and adoption of
smartphones and other connected devices such as tablets,
as well as richer applications, mobile data usage has
surged rapidly. Yet revenue for mobile data services
significantly lags the growth in data usage as well as
related costs.
To grow our carriage business, we must continually
meet customers’ network performance expectations.
We remain committed to making significant investments
in our networks from acquiring additional spectrum to
introducing more efficient data-handling technologies,
such as LTE.
To fund future network investments, it is critical for us to
ensure that our revenue from data services keeps pace
with the cost of provision. We, along with other carriers
12
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
are global in scope and scale, we believe that some of our
services can only be effective if they are competitive on a
global scale.
Thus it is important to possess strong local and global
perspectives to be able to identify and capture possibilities
both at home and in new geographies.
Our corporate discipline is strong and our innovation
culture is evolving. We actively encourage innovation
within the organisation. For us, innovation is not just about
technology. It also involves breaking new ground in our
business models and processes.
To complement our existing talents, we are also hiring
people from other industries to introduce fresh insights and
better execute our vision.
At the heart of this transformation is our commitment
to put customers first. We want to lead and shape the
communications landscape by making a difference in our
customers’ lives and enhancing the way they live, work
and play.
As an organisation, we have never backed away from new
challenges. We have a history of making bold first moves,
particularly during times of industry change. We have the
confidence and inspiration to prevail in the face of the
many challenges and exciting opportunities we see on
the horizon.
>
Embracing a culture that allows
innovation to flourish is important.
This will require a shift in our
collective mindset – away
from failure aversion to one of
constant experimentation.
around the world, are actively seeking new pricing models
to achieve this objective without causing unnecessary
pain to customers.
In Singapore, we are taking steps to shape customers’
behaviour. By delivering the right outcomes to customers
with tiered and quality-of-service oriented price plans,
we can maximise our chances of achieving returns and
sustain ongoing investments in our network. Through
initiatives by Group Digital L!fe, we will also create
interesting bundles of traditional and new services to
better satisfy our customers.
Q: WHAT ARE THE CHANGES SINGTEL IS MAKING
TO SUCCEED IN THE NEW DIGITAL AGE?
A: Embracing a culture that allows innovation to flourish
is important. This will require a shift in our collective
mindset – away from failure aversion to one of constant
experimentation. We need to learn from past failures and
be prepared to reiterate a bold idea if we believe it will
eventually bear fruit. Even when we do not succeed, we
expect a “fail fast and fail cheap” mentality to produce
valuable learnings that can form the basis of long-term
advantage against competition.
Nurturing a more global mindset among our staff and
bringing out their entrepreneurial spirit will also be
important for the Group. As some forms of our competition
Chua Sock Koong
Group Chief Executive Officer
13
BOARD OF DIRECTORS
SIMON ISRAEL
BOBBY CHIN YOKE CHOONG
CHUA SOCK KOONG
Non-executive and independent Director
Chairman, Risk Committee
Date of Appointment: 1 May 2012
Mr Chin, 60, is the Chairman of Singapore
Totalisator Board. He is a member of
the Council of Presidential Advisers and
serves on the boards of the Competition
Commission of Singapore and Singapore
Labour Foundation. He is also a Director
of several
including
listed companies
Oversea-Chinese Banking Corporation
Limited, Yeo Hiap Seng Limited, Ho Bee
Investment Ltd, SembCorp Industries Ltd
and AV Jennings Limited.
Mr Chin was the Managing Partner of
KPMG Singapore from 1992 until his
retirement in September 2005. He is a
former Director of Neptune Orient Lines
Limited. He also served as a Board
member of the Urban Redevelopment
Authority from 1997 to 2006 and was its
Chairman from 2001 to 2006.
Mr Chin holds a Bachelor of Accountancy
from the University of Singapore. He is a
Fellow of the Institute of Certified Public
Accountants of Singapore and an associate
member of the
Institute of Chartered
Accountants in England and Wales.
Executive and non-independent Director
Member, Optus Advisory Committee
Date of Appointment: Director on
12 Oct 2006 and Group Chief Executive
Officer (CEO) on 1 Apr 2007
Last Re-elected: 24 Jul 2009
Ms Chua, 54, was appointed Group CEO on
1 April 2007. She is responsible for SingTel’s
three key businesses – Group Consumer,
Group Digital L!fe and Group ICT.
Ms Chua joined SingTel in June 1989 as
Treasurer and was made CFO in April 1999.
She held the positions of Group CFO and
CEO, International from February 2006 to
12 October 2006, when she was appointed
Deputy Group CEO.
Ms Chua sits on the Boards of Bharti
Airtel Limited, Bharti Telecom Limited
and key subsidiaries of the SingTel Group.
She is also a member of the Singapore
Management University Board of Trustees
the Public Service Commission.
and
She is a former Board member of JTC
Corporation and the Casino Regulatory
Authority of Singapore, and also a former
member of the Corporate Governance
Council established by
the Monetary
Authority of Singapore.
Ms Chua holds a Bachelor of Accountancy
(First Class Honours) from the University
of Singapore. She is a Certified Public
Accountant
in Singapore and a CFA
charterholder.
Non-executive and non-independent Director
Chairman, SingTel Board
Chairman, Finance and Investment Committee
Member, Corporate Governance and
Nominations Committee
Member, Executive Resource and
Compensation Committee
Member, Optus Advisory Committee
Date of Appointment: Director on 4 Jul 2003
and Chairman on 29 Jul 2011
Last Re-elected: 30 Jul 2010
Mr Israel, 59, is Chairman of Asia Pacific
Breweries Limited and Asia Pacific
Breweries Foundation. He is a Director of
CapitaLand Limited and a member of the
Governing Board of Lee Kuan Yew School
of Public Policy.
Mr Israel was an Executive Director and
President of Temasek Holdings (Private)
Limited before retiring on 1 July 2011.
Prior to that, he was with the Danone Group
as Chairman Asia Pacific and a member
of
the Group’s Executive Committee.
Mr Israel also held various positions in
Sara Lee Corporation in the Asia Pacific
region, including Country Manager/Zone
Manager for Indonesia, the Philippines,
the South Pacific and Thailand, before
becoming President (Household & Personal
Care), Asia Pacific.
Mr Israel is the former Chairman of the
Singapore Tourism Board and a former
Director of Fraser and Neave Limited and
Neptune Orient Lines Limited.
Mr Israel was conferred the Knight in
the Legion of Honour by the French
government in 2007, and awarded the
Public Service Medal at the Singapore
National Day Awards 2011. He holds a
Diploma in Business Studies from The
University of the South Pacific.
14
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
FANG AI LIAN
DOMINIC CHIU FAI HO
Non-executive and independent Director
Chairman, Audit Committee
Member, Executive Resource and
Compensation Committee
Date of Appointment: 7 Aug 2008
Last Re-elected: 24 Jul 2009
Non-executive and independent Director
Member, Audit Committee
Member, Corporate Governance and
Nominations Committee
Date of Appointment: 28 Nov 2007
Last Re-elected: 29 Jul 2011
Mrs Fang, 62, has been the Chairman of
Great Eastern Holdings Ltd since April
2008, as well as Chairman of its insurance
subsidiaries. Prior to that, she was with
Ernst & Young for over 30 years, where she
was appointed Managing Partner in 1996
and Chairman in 2005.
Mr Ho, 61, is a non-executive Director
of Underwriters Laboratories Inc., Hang
Lung Properties Limited, the Hong Kong
Mercantile Exchange Limited and DBS
Bank (Hong Kong) Limited. He is also non-
executive Chairman and Director of DBS
Bank (China) Limited.
Mrs Fang is a Director of Banyan Tree
Holdings Limited, MediaCorp Pte Ltd,
Metro Holdings Limited and Oversea-
Chinese Banking Corporation Limited and
one of its subsidiaries. She is also the
Chairman of the Charity Council and the
Tax Academy of Singapore. She is a former
Board member of the Public Utilities Board
and International Enterprise Singapore.
Mrs Fang qualified as a Chartered
Accountant in London in 1973 and is a
Fellow of
Institute of Chartered
Accountants in England and Wales.
the
Mr Ho joined KPMG US in Houston in
1975 and became a partner in 1985. He
was transferred to Beijing, China to set up
KPMG’s practice in 1984 and resided in
China until 1989 when he was assigned to
Hong Kong. Mr Ho became the China firm’s
Senior Partner based in Beijing in 2000,
and was elected Chairman of KPMG in
China and Hong Kong SAR in April 2003.
He retired in April 2007.
Mr Ho holds a Bachelor of Business
Administration and a Master of Science in
Accountancy from the University of Houston,
US. He is a member of the American
Institute of Accountants and the Hong Kong
Institute of Certified Public Accountants.
15
BOARD OF DIRECTORS
LOW CHECK KIAN
PETER EDWARD MASON AM (1)
KAIKHUSHRU SHIAVAX NARGOLWALA
Non-executive and independent Director
Member, Corporate Governance and
Nominations Committee
Non-executive and independent Director
Chairman, Optus Advisory Committee
Member, Executive Resource and
Member, Finance and Investment Committee
Date of Appointment: 9 May 2011
Last Re-elected: 29 Jul 2011
Compensation Committee
Date of Appointment: 21 Sep 2010
Last Re-elected: 29 Jul 2011
an
Mr Low, 53, was one of the founding
partners of NewSmith Capital Partners
LLP,
partnership
independent
providing corporate finance advice and
investment management services, with
its headquarters based in London. Prior
to founding NewSmith, Mr Low was a
Senior Vice-President and Member of the
Executive Management Committee of
Merrill Lynch & Co., as well as its Chairman
for the Asia Pacific Region.
Mr Low sits on the Boards of Neptune
Orient Lines Limited and Fibrechem
Technologies Limited, as well as AWAK
Technologies Pte. Ltd. Mr Low served as
an independent director on the Singapore
Exchange Board from July 2000 and was
appointed Lead Independent Director in
May 2006 until his retirement in October
2011. He also previously sat on the Boards
of the Infocomm Development Authority
of Singapore and Singapore Workforce
Development Agency and chaired their
investment arms.
Mr Low holds Bachelor and Master
degrees in Economics from the London
School of Economics.
Mr Mason, 65, is the Chairman of AMP
Limited, a Director of David Jones Limited
and a Senior Advisor to UBS Australia. He
is a Trustee of the Sydney Opera House
Trust and the Chairman of the Centre for
International Finance and Regulation.
Mr Mason has 40 years experience in
investment banking. He was Chairman
of JP Morgan Chase Bank in Australia
from 2000 to 2005 and Chairman of its
associate, Ord Minnett Group.
Prior to this, he was Chairman and Chief
Executive of Schroders Australia and
Group Managing Director of Schroders’
investment banking businesses
in the
Asia Pacific region. He has previously been
Chairman and/or Director of a number of
Australian-listed companies.
Mr Mason holds a Bachelor of Commerce
(First Class Honours), an MBA and an
Honorary Doctorate from The University of
New South Wales.
16
Note:
(1) Member of the Order of Australia
Non-executive and Lead Independent Director
Chairman, Corporate Governance and
Nominations Committee
Chairman, Executive Resource and
Compensation Committee
Member, Audit Committee
Date of Appointment: Director on 29 Sep 2006
and Lead Independent Director on 13 May 2009
Last Re-elected: 24 Jul 2009
Mr Nargolwala, 62, is a non-executive
Director of Prudential plc., a member of
the Board of
the Casino Regulatory
Authority of Singapore and a member of the
Governing Board of the Duke-NUS Graduate
Medical School in Singapore. He is also a
Director and Chairman of Clifford Capital
Pte. Ltd. and a Director of PSA International
Pte Ltd.
Mr Nargolwala was the non-executive
Chairman of Credit Suisse Asia Pacific
from October 2010 to December 2011 and
the CEO of Credit Suisse Asia Pacific and a
member of the Executive Board of Credit
Suisse AG from January 2008 to September
2010. He was a Group Executive Director
of Standard Chartered PLC before joining
Credit Suisse Asia Pacific. Prior to that, he
was the Group Executive Vice President and
Head of Asia Wholesale Banking Group for
Bank of America, headquartered in Hong
Kong. Mr Nargolwala was a non-executive
Director of Tate & Lyle PLC from December
2004 to December 2007. He was also a
non-executive Director of the Asia Pacific
Region Board of Visa International until
October 2007.
Mr Nargolwala holds a Bachelor degree in
Economics (First Class Honours) from the
University of Delhi, India. He is a Fellow of
the Institute of Chartered Accountants in
England and Wales.
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
PETER ONG BOON KWEE
ONG PENG TSIN
Non-executive and non-independent Director
Member, Audit Committee
Member, Risk Committee
Date of Appointment: 1 Sep 2010
Last Re-elected: 29 Jul 2011
Non-executive and independent Director
Member, Finance and Investment Committee
Member, Risk Committee
Date of Appointment: 1 Jun 2009
Last Re-elected: 24 Jul 2009
Mr Ong, 50, is the Head of Singapore’s
Civil Service, Permanent Secretary of
the Ministry of Finance of Singapore and
Permanent Secretary (Special Duties) in
the Prime Minister’s Office. He previously
held the positions of Permanent Secretary
(National Security and Intelligence Co-
ordination), Permanent Secretary (Ministry
of Trade and Industry), Permanent Secretary
(Ministry of Transport) and 2nd Permanent
Secretary (Ministry of Defence). Prior to
that, he was an Executive Vice President of
Temasek Holdings (Private) Limited.
Mr Ong currently sits on the Boards of
the Monetary Authority of Singapore,
the National Research Foundation and
the ASEAN+3 Macroeconomic Research
Office. He is also the Chairman of the
Inland Revenue Authority of Singapore
and Calvary Community Care. He is the
former Chairman of the Accounting and
Corporate Regulatory Authority, MND
Holdings Pte Ltd and Maritime and Port
Authority of Singapore, and a former
Director of DBS Group Holdings Limited
and DBS Bank Limited.
Mr Ong was conferred the Meritorious
Service Medal (Pingat Jasa Gemilang) at the
Singapore National Day Awards 2010. He
holds a Bachelor of Economics (Honours)
from The University of Adelaide, Australia
and an MBA from Stanford University, US.
Mr Ong, 49, is the Chairman of Infocomm
Investments Pte Ltd and a venture partner
of GSR Ventures. He is also a member of
the Board of
the National Research
Foundation and a member of the Board
of Trustees of the Singapore University of
Technology and Design.
Mr Ong was the founder and Chairman
of Encentuate, Inc. (Encentuate), which
was acquired by IBM, Inc. (IBM) in 2008.
Prior to Encentuate, Mr Ong was the
founder and Chairman of Interwoven, Inc.
(Interwoven) (now Autonomy Corporation
plc, part of Hewlett-Packard). Before
Interwoven, Mr Ong was co-founder and
chief architect of Match.com (now part
of IAC/InterActiveCorp), and held various
engineering and management roles at
Illustra Information Technologies, Inc. (now
Informix Corporation, part of IBM), Sybase
Inc. (now SAP America, Inc.) and Gensym
Corporation. He is a former Director of
the Infocomm Development Authority of
Singapore and JTC Corporation.
Mr Ong holds a Bachelor of Science in
Electrical Engineering from the University
of Texas at Austin, US and a Master of
Science in Computer Science from the
University of Illinois at Urbana-Champaign,
US.
Note:
Mr Chumpol NaLamlieng, Mr Graham
John Bradley and Mr Nicky Tan Ng Kuang
retired from the SingTel Board following the
conclusion of the Annual General Meeting
held on 29 July 2011.
17
MANAGEMENT COMMITTEE
CHUA SOCK KOONG
BRADLEY GAMBILL
ALLEN LEW
Group Chief Executive Officer
Group Chief Strategy Officer
Ms Chua, 54, was appointed Group CEO on
1 April 2007. She is responsible for SingTel’s
three key businesses – Group Consumer,
Group Digital L!fe and Group ICT.
Ms Chua joined SingTel in June 1989 as
Treasurer and was made CFO in April 1999.
She held the positions of Group CFO and
CEO, International from February 2006 to
12 October 2006, when she was appointed
Deputy Group CEO.
Ms Chua sits on the Boards of Bharti
Airtel Limited, Bharti Telecom Limited
and key subsidiaries of the SingTel Group.
She is also a member of the Singapore
Management University Board of Trustees
and
the Public Service Commission.
She is a former Board member of JTC
Corporation and the Casino Regulatory
Authority of Singapore, and also a former
member of the Corporate Governance
the Monetary
Council established by
Authority of Singapore.
Ms Chua holds a Bachelor of Accountancy
(First Class Honours) from the University
of Singapore. She is a Certified Public
Accountant
in Singapore and a CFA
charterholder.
Mr Gambill, 48, was appointed Group
Chief Strategy Officer in February 2011.
He drives the Group’s transformation
strategies and is also responsible for M&A,
competitive and business
intelligence,
business partnerships and business model
innovation.
to his appointment
Prior
in SingTel,
Mr Gambill was based in Seoul as the
Executive Vice President and Chief Strategy
Officer of LG Electronics.
Mr Gambill has more than 20 years
investments
in strategy,
of experience
and management consulting. He was
also previously a Partner at McKinsey
& Company and Managing Director at
Innosight Ventures Pte. Ltd.
Mr Gambill graduated magna cum laude
from Duke University with a Bachelor
of Science
in Computer Science and
Public Policy, and holds an MBA from the
Wharton School of the University of
Pennsylvania, US.
Chief Executive Officer, Group Digital L!fe
Chief Executive Officer, Group ICT (covering)
Country Chief Officer Singapore
Mr Lew, 56, is CEO, Group Digital L!fe and
responsible for leading the Group’s journey
to become a leading player in the digital
ecosystem, beyond connecting voices to
bringing people together with innovative
and cutting-edge digital services. As
Country Chief Officer Singapore, he is the
principal liaison with local and regulatory
bodies. Mr Lew is also currently covering
the position of CEO, Group ICT. He assumed
these positions on 1 April 2012.
Previously, Mr Lew held the position of
CEO, Singapore from February 2006 to
March 2012. He began his career with the
SingTel Group in November 1980 and has
in various senior management
served
positions,
including Chief Operating
Officer of Advanced Info Service (AIS) –
the Group’s associate in Thailand, Chief
Operating Officer of Singapore Telecom
International Pte Ltd and Managing Director
of Optus Consumer.
Mr Lew is the Chairman of the AIS Executive
Committee, a Board member of the Sentosa
Development Corporation and a member
of the Singapore Institute of Technology’s
Board of Trustees.
from
Mr Lew holds a Bachelor of Electrical
the University of
Engineering
Western Australia and a Master of Science
(Management) from the Massachusetts
Institute of Technology, US.
18
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
JEANN LOW
PAUL O’SULLIVAN
AILEEN TAN
Group Chief Financial Officer
Chief Executive Officer, Group Consumer
Country Chief Officer Australia
Group Director Human Resources
Ms Low, 51, was appointed Group CFO
in September 2008. She oversees the
Group’s financial affairs including corporate
risk management
finance,
and capital management and
investor
relations. She was previously CFO of Optus
from 2006.
treasury,
Ms Low joined SingTel in 1998 as the
Group Financial Controller. In 2004, she
was promoted to Executive Vice President
of Strategic Investments managing the
Group’s international investments.
international accounting
Prior to SingTel, Ms Low worked at
an
firm and
thereafter in a public listed electronics
company in Singapore.
Ms Low is a Director of OpenNet Pte. Ltd.
Since April 2010, she has been a Council
Member of the Singapore
Institute of
Certified Public Accountants. Ms Low has
been a member of the Lee Kong Chian
School of Medicine Pro-Tem Governing
Board since November 2010.
Ms Low holds an Honours Degree in
Accountancy from the National University
of Singapore and is a Certified Public
Accountant in Singapore.
for
setting
responsible
Mr O’Sullivan, 51, is CEO, Group Consumer
and
new
benchmarks
in customer service as
the leading provider of next-generation
communication,
and
technology services to consumers across
Asia Pacific. As Country Chief Officer
Australia, he is the principal liaison with
local and regulatory bodies. He assumed
these positions on 1 April 2012.
infotainment
Previously, Mr O’Sullivan was CEO of Optus
from September 2004 to March 2012. He
also held management positions within
Optus including Chief Operating Officer and
Managing Director of Optus Mobile, as well
as various international management roles
at the Colonial Group and the Royal Dutch
Shell Group in Canada, the Middle East,
Australia and the United Kingdom.
Mr O’Sullivan also serves on the Board of
Commissioners of Telkomsel, Indonesia.
He is a founding member and Chairman
of the Australian Business and Community
Network, which partners businesses with
schools to improve collaboration between
corporate Australia and education leaders.
Mr O’Sullivan has a Bachelor of Arts (Mod)
Economics from Trinity College, University
of Dublin.
Ms Tan, 45, joined SingTel in June 2008
as Group Director Human Resources.
She oversees the development of human
resources across
the SingTel Group,
including wholly-owned subsidiaries NCS
and Optus. She is also in charge of the
Group’s corporate social responsibility
function.
Prior to SingTel, she was Group General
Manager Human Resources at WBL
Corporation and Vice President, Centers
of Excellence with Abacus International.
Ms Tan has over 20 years of HR experience
in various multinational corporations and
local companies.
from
Ms Tan graduated with a Bachelor of
Arts majoring in Statistics and Japanese
Studies
the National University
of Singapore and holds a Master of
Science in Organisational Behaviour from
the California School of Professional
Psychology, Alliant University.
Ms Tan is a member of the Home Nursing
Foundation Board and
the Singapore
Workforce Development Agency’s Human
Resource Workforce Skills Qualifications
(WSQ) Manpower, Skills and Training
Council.
19
SENIOR MANAGEMENT
BILL CHANG
Managing Director, Business Group
Group ICT
CHIA WEE BOON
Chief Executive Officer, NCS
Group ICT
MARK CHONG
Chief Operating Officer
AIS
TREVOR HEALY
Chief Executive Officer, Amobee
Group Digital L!fe
HUI WENG CHEONG
Chief Executive Officer, International
Group Consumer
MURRAY KING
Chief Financial Officer
Group Consumer
JOHN PAITARIDIS
Managing Director, Optus Business
Group ICT
KEVIN RUSSELL
Chief Executive Officer, Consumer Australia
Group Consumer
MICHAEL SMITH
Managing Director, Marketing
Consumer Australia
TAY SOO MENG
Managing Director, Networks
Consumer Singapore
YUEN KUAN MOON
Chief Executive Officer, Consumer Singapore
Group Consumer
20
ORGANISATION
STRUCTURE
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
GROUP CHIEF
EXECUTIVE OFFICER
CHUA SOCK KOONG
CHIEF
EXECUTIVE OFFICER
GROUP CONSUMER
PAUL O’SULLIVAN
> Consumer Australia
> Consumer Singapore
> International
CHIEF
EXECUTIVE OFFICER
GROUP DIGITAL L!FE
ALLEN LEW
> Communities and
Ecosystems
> Concierge & Hyperlocal
> eCommerce
> NextGen TV
> SingTel Innov8
> Amobee
CHIEF
EXECUTIVE OFFICER
GROUP ICT
ALLEN LEW
(covering)
> Business Group
> Enterprise Data &
Managed Services
> NCS
> Optus Business
AUDIT
COMMITTEE
GROUP CHIEF
INTERNAL AUDITOR
CHOR KHEE YANG
GROUP CHIEF
FINANCIAL OFFICER
JEANN LOW
GROUP DIRECTOR
HUMAN RESOURCES
AILEEN TAN
GROUP CHIEF
STRATEGY OFFICER
BRADLEY GAMBILL
GROUP CHIEF
INFORMATION OFFICER
(to be appointed)
COUNTRY CHIEF OFFICER
AUSTRALIA
PAUL O’SULLIVAN
COUNTRY CHIEF OFFICER
SINGAPORE
ALLEN LEW
GROUP GENERAL
COUNSEL /
COMPANY SECRETARY
CHAN SU SHAN
21
KEY AWARDS AND
ACCOLADES
CORPORATE GOVERNANCE
& TRANSPARENCY
BUSINESS EXCELLENCE
GOVERNANCE AND TRANSPARENCY INDEX – SINGTEL
> Ranked 1st
ASIA COMMUNICATION AWARDS 2011 – SINGTEL
> Best Cloud Service
SIAS INVESTORS’ CHOICE AWARDS 2011 – SINGTEL
Inaugural Internal Audit Excellence Award
>
> Special Recognition for Internal Audit Award – Chor Khee Yang
CCAS INTERNATIONAL CONTACT CENTRE AWARDS 2011 – SINGTEL
> Best In House Contact Centre (20–100 seats) – Gold
IR MAGAZINE SOUTH EAST ASIA AWARDS 2011 – SINGTEL
> Best Overall Investor Relations (Large Cap)
> Best Corporate Governance and Disclosure
> Best Investment Meetings
> Best Reporting
> Best Investor Relations by Sector (Technologies & Telecoms)
CORPORATE GOVERNANCE ASIA: ASIAN EXCELLENCE RECOGNITION
AWARDS 2011 – SINGTEL
> Asia’s Best CFO (Investor Relations) – Jeann Low
> Best Investor Relations by a Singapore Company
ETHISPHERE INSTITUTE: 2012 WORLD’S MOST ETHICAL
COMPANIES – SINGTEL
THAILAND CORPORATE EXCELLENCE AWARDS 2011 – AIS
> Corporate Improvement Excellence Award
COMPUTERWORLD SINGAPORE CUSTOMER CARE AWARDS 2011 – SINGTEL
> Telecommunication Services
COMPUTERWORLD SINGAPORE READERS’ CHOICE AWARDS 2011
– SINGTEL
> Best Data Centre and Hosting Services
> Best Managed Connectivity Services
FROST & SULLIVAN APAC ICT AWARD 2011 – SINGTEL
> Managed Service Provider of the Year
IT SQUARE EDITORS’ CHOICES, HONG KONG 2011 – SINGTEL
> Best Managed Services Provider
MEF CARRIER ETHERNET SERVICE PROVIDER
OF THE YEAR 2011 – SINGTEL
> Regional Service Provider of the Year – APAC
INSTITUTE OF CORPORATE DIRECTORS (ICD) – GLOBE
> Platinum Award for Corporate Governance Practices
NETWORKWORLD ASIA READERS’ CHOICE AWARDS 2011 – SINGTEL
> Best Managed Services
WORLD COMMUNICATION AWARDS 2011 – SINGTEL
> Users’ Choice Award
SINGAPORE INFOCOMM TECHNOLOGY AWARD 2011 – NCS
> eGovernment Category – Overall Winner
COMMUNICATIONS ALLIANCE AWARDS – OPTUS
> Commitment to Customer Service
CUSTOMER SERVICE INSTITUTE OF AUSTRALIA – OPTUS
> National Service Awards
MONEY & BANKING MAGAZINE – AIS
> Best Public Company of the Year 2011
22
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
CORPORATE CITIZENSHIP
BRAND EQUITY’S MOST TRUSTED BRANDS SURVEY 2011
– AIRTEL
> Service Brand – Ranked 1st
COMMUNITY CHEST SHARE AWARDS – SINGTEL
> Corporate Platinum Awards
> Special Events Platinum Awards – SingTel Touching Lives Fund
CNBC AWAAZ STORYBOARD CONSUMER AWARDS 2011 – AIRTEL
> Most Recommended Telecom Service Provider of the Year
> Consumer’s Trusted Choice of the Year
ET TELECOM AWARDS 2011 – AIRTEL
> Global Gamechanger
>
> Customer Experience Enhancement
Innovative VAS Provider
FROST & SULLIVAN 2011 INDIA IT & TELECOM EXCELLENCE AWARDS
– AIRTEL
> Mobile VAS Provider of the Year
> Enterprise Telecom Service Provider of the Year
> Wholesale Data Service Provider of the Year
ROLTA AWARDS 2011 – AIRTEL
> Telecom Player of the Year
7TH AFRICA TELECOM CONFERENCE – AIRTEL
> Best Data Operator for Eastern and Southern Africa
FROST & SULLIVAN – GLOBE
> Broadband Service Provider of the Year
10TH PHILIPPINE QUILL AWARDS – GLOBE
Award of Excellence:
> Conditional Cash Transfer (CCT) via GCASH REMIT
> Globe Prepaid SUPERUNLITXTALL25
FROST & SULLIVAN INDONESIA EXCELLENCE AWARDS 2011 – TELKOMSEL
> Most Innovative Application of the Year – t-cash
SELULAR AWARD – TELKOMSEL
> Operator of the Year
INDONESIA CELLULAR AWARD 2011 – TELKOMSEL
> Best Value Added Service
INDONESIA BRAND CHAMPION AWARD 2011 – TELKOMSEL
> Brand Equity Champion of Cellular Operator – simPATI
> Brand Equity Champion of Mobile Internet Provider –
TELKOMSELFlash
CORPORATE GOVERNANCE ASIA: ASIAN EXCELLENCE RECOGNITION
AWARDS 2011 – SINGTEL
> Best CSR
> Best Environmental Responsibility
WWF’S EARTH HOUR 2011 PARTICIPATION AWARDS – SINGTEL
> Best Staff Engagement Initiative
ASIA RESPONSIBLE ENTREPRENEURSHIP AWARDS 2011 – AIS
> Best Entrepreneur in Southeast Asia (Social Empowerment)
GREEN IT STUDY & AWARDS 2011 – AIRTEL
> Top 10 “Green IT Enterprises” in India
ICT PURA & USO AWARD 2011 – TELKOMSEL
INDONESIA CSR AWARD 2011 – TELKOMSEL
PEOPLE
MAY DAY AWARDS – SINGTEL
> Plaque of Commendation – Gold
AUSTRALIAN BUSINESS AWARDS – OPTUS
> Recommended Employer
SAFETY REHABILITATION AND COMPENSATION AWARDS 2011 – OPTUS
> Best Workplace Health and Wellbeing Program
GAWAD MAESTRO OUTSTANDING WORKPLACE AND LEARNING
PERFORMANCE PROGRAM OF THE YEAR – GLOBE
> Employer of Choice
23
OPERATING AND
FINANCIAL REVIEW
>
The SingTel Group is Asia’s leading communications group. We provide a
wide spectrum of multimedia and ICT solutions, including voice, data and
video services over fixed and wireless platforms.
The Group is structured along three key businesses: Group Consumer,
Group Digital L!fe and Group ICT.
Our main operations are in Singapore and Australia. In Singapore, SingTel
has more than 130 years of operating experience and played an integral
part in the country’s development as a major communications hub.
We continue to lead and shape the digital consumer market and the
enterprise ICT market. Optus is an Australian leader in integrated
telecommunications, driving competition and delivering innovative
products and services to customers.
We are a major player in Asia and Africa through our strategic investments
in six regional mobile operators. The Group’s investments are in AIS
(Thailand), Globe (the Philippines), PBTL (Bangladesh), Telkomsel (Indonesia)
and Warid (Pakistan). We also have investments in Airtel (India), which has
significant presence in Africa and South Asia.
We are a long-term strategic investor and work closely with our associates
to grow the business, by leveraging our scale in networks, customer reach
and extensive operational experience. Together, the Group serves 445 million
mobile customers as at 31 March 2012.
In this section, we provide a strategic review of the SingTel Group’s operations
and discuss the financial performance of the Group for the financial year
ended 31 March 2012.
CONTENTS
Group Consumer
Group Digital L!fe
Group ICT
Group Five-Year Financial Summary
Management Discussion and Analysis
Key Operating Companies
25
29
33
37
38
47
24
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Airtel launches mobile service in Rwanda
^
Optus celebrates its 20th anniversary
^
SingTel brings a wide range of
exciting handsets to customers
^
2,000 employees stand together to form the
new AIS logo
GROUP
CONSUMER
>
Optus
revitalises
its brand to
build stronger
bonds with
customers
^
Rewarding Lady Gaga look-alikes with tickets to
the artiste’s showcase – exclusive to SingTel
25
OPERATING AND FINANCIAL REVIEW
GROUP CONSUMER
Group Consumer consolidates the Group’s consumer-related
functions, including those of the emerging markets, allowing
us to fully leverage our scale of more than 400 million mobile
customers.
has become synonymous with choice over the last two
decades. Today, Optus is one of Australia’s most recognised
and respected brands.
The new unit focuses on driving more value from our core
carriage business. Firstly, Group Consumer
is realising
scale synergies through the SingTel Group’s cost and capital
expenditure programmes. Secondly, we are sharpening our
focus and driving critical scale in areas of new technology,
product development and customer offerings which can then
be offered to our associates. Finally, we are accelerating
the evolution of our sales, marketing and customer support
organisations to optimise selling and the provision of new digital
life services to our customers.
To be an effective organisation that anticipates, responds to and
influences customer behaviour, we continuously invest in our
brands, networks and processes, setting new benchmarks in
customer experience.
Forging closer connections with customers through our brands
SingTel, Optus, Airtel, AIS, Citycell, Globe, Telkomsel and
Warid are established brands in their respective markets. To
strengthen our connection with customers and develop a more
intimate understanding of their needs, the Group’s brands are
rejuvenated from time to time to ensure their brands’ attributes
appeal to new and existing customers.
During the year, the AIS brand was refreshed with a new
logo, fashioned after a green smile. The complementary
tagline “Your World.Your Way.” reflects AIS’ promise to uphold
service standards, as well as to deliver relevant products and
services to customers.
In Australia, the Optus brand was revitalised with a new
marketing campaign to build stronger bonds with customers
by showing them we care, from connecting them with their
loved ones to getting the hottest phone before anyone else. A
new digital twist was also incorporated into the campaign to
represent Optus innovation in the digital space.
Delighting customers with superior service at
all touch points
We are inspired to provide the best customer experience with
our interactions through various channels and touch points.
During the year, we continued to refine our processes,
improve products and train staff to better engage customers.
In Australia, we made it easier for customers to interact with
us by introducing more online self-service tools and providing
incentives for them to utilise such tools. More than two million
customers have registered to manage their accounts through
the Optus MyAccount portal. Online channels were further
enhanced with the Optus Community forum, a live chat feature
for customers, a dedicated area for frequently asked questions
and educational tutorials to help customers find out more about
our products and services. In addition, we introduced usage
alerts and a new MyOptus app that allows mobile customers to
view, pay and recharge their accounts on the go.
In Singapore, our customers who make purchases via
singtelshop.com enjoy the option of free home delivery as well
as exclusive special offers and discounts. We upgraded our
flagship retail store for a truly interactive retail experience. With
touch screens embedded in its exterior glass walls, the store is
effectively open 24/7, thus maximising consumer reach.
Valuing and rewarding our customers are also priorities. SingTel
customers are now able to transfer and combine points with
other customers to redeem rewards under our revamped Red
Rewards loyalty programme, a market first. Optus customers
also enjoy more value with the introduction of the Optus Rewards
programme in partnership with Qantas Frequent Flyer.
AIS went one step further by offering Facebook as a new
customer service channel, becoming the first operator in
Thailand to do so. Telkomsel opened “GraPARI 24 Jam”, a
24-hour service centre located in downtown Jakarta that caters
to the needs of busy Telkomsel customers.
In January 2012, Optus celebrated 20 years of providing value,
choice, service and innovation to Australian consumers. Optus’
name, derived from the Latin verb “optare” meaning “choice”,
We have proactively addressed the issue of overseas data
roaming charges, a concern for customers. As part of the Bridge
26
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Alliance, SingTel, Optus and our associates, together with other
Bridge Alliance member operators, offer overseas data roaming
packages, including unlimited and capped data packages, at
affordable rates using partners’ networks. These plans are
designed to help customers manage their data roaming charges
and avoid bill shock.
Capturing growth from mobile data and a larger share
of the customer’s wallet
The fastest growing area in the global telecommunications
market
is mobile data, spurred by the proliferation of
sophisticated mobile devices and the availability of richer
applications and content.
We are transforming ourselves to capture value from this
growth. We have a comprehensive strategy that encompasses
apps, content, handsets, price plans and customer experience to
win a bigger share of customers’ spend, as they communicate,
consume information and perform transactions.
Through our continuous network investments, customers enjoy
a quality connection and seamless experience both indoors
and on the go. In FY2012, we upgraded our network with Long
Term Evolution (LTE) technology or 4G in Singapore. We were
the first and remain the only consumer LTE service provider
in Singapore. We are working towards nationwide coverage by
early 2013. With our LTE service, we are setting the industry
trend by moving away from “all-you-can-eat” plans. Together
with Priority Pass, which offers tiered price plans for different
access speeds, we aim to promote a sustainable level of network
usage and improve customer experience.
Optus has started rolling out a 4G network and turned on
services for customers in Newcastle, New South Wales in
April 2012. From mid-2012, Optus’ 4G services will also
be delivered in the capital cities of Sydney, Melbourne and
Perth. In February 2012, Optus announced plans to acquire
Vividwireless, which will provide Optus with additional
spectrum in the 2.3Ghz frequency.
In another ground-breaking initiative, Optus introduced a new
offer providing 50GB of free home broadband on a range of
competitively priced mobile and telephony plans. By deploying
fixed-line capabilities to complement mobile offerings, Optus
seeks to differentiate its services against our competitors.
SIGNIFICANT HIGHLIGHTS
2011
APRIL
> Telkomsel crossed the 100 million customer mark
JUNE
> SingTel was the first to publish true mobile speeds with
the introduction of Priority Pass
JULY
> SingTel rewarded customers with an exclusive showcase
by Lady Gaga
> Airtel announced a new organisation structure for the
India and South Asia operations
> Optus launched Australia’s first femtocell service
> Warid Glow celebrated its youth-centric brand turning
two
SEPTEMBER
> Optus and Qantas Frequent Flyer launched new alliance
to reward Optus’ consumer as well as small-medium
business customers with Qantas Frequent Flyer points
> AIS introduced a new logo and tagline, “Your World.
Your Way.”
OCTOBER
> SingTel and partners announced plans to develop next
generation near field communications solutions
27
Our regional associates are similarly undergoing network
transformation in anticipation of the emerging opportunities
in mobile data services. Globe commenced its Network and
IT Transformation programme to support traffic growth and
improve customer experience. AIS believes that a quality and
extensive 3G network, which can support rich data services, is
essential for Thailand’s future. AIS plans to participate in the
anticipated 3G auction by the Thai regulator in 2012.
Airtel expanded its 3G services and covered more than 300 cities
as at end March 2012. 3G traffic has been expanding rapidly
and is expected to grow even faster when handset prices reach
mass market levels. Airtel has also launched 3G services in
seven of 17 countries in Africa.
Building next generation fibre networks
The digital evolution will gain pace with the rollout of fibre
In Singapore, the
networks
government-sponsored fibre network, known as the Next
Generation Nationwide Broadband Network (Next Gen NBN), is
already available in more than 90 per cent of homes.
in Australia and Singapore.
With the Next Gen NBN, we are leveraging the speeds to
strengthen our consumer business, by offering multimedia
bundles that span customers’ needs across entertainment,
information and games. More customers are signing up for fibre
services and as at end March 2012, we had 76,000 customers,
making us the leader in the home fibre market.
In Australia, the arrival of the National Broadband Network (NBN)
will present opportunities in health, education and entertainment
applications. The NBN will also double Optus’ addressable
market from our current four million homes. We have begun to
offer NBN services to consumers and small-medium business
customers in areas where the NBN is available. Optus has
also signed an interim satellite deal with NBN Co, as well as
a significant deal to migrate customers from our Hybrid Fibre
Co-axial (HFC) network to the NBN. Optus expects the initial
migration of its HFC customers to the NBN will commence
in 2014, once the deal is approved by the regulator, the
Australian Competition and Consumer Commission.
OPERATING AND FINANCIAL REVIEW
GROUP CONSUMER
SIGNIFICANT HIGHLIGHTS
2011
NOVEMBER
> Optus launched commercial services on the NBN
> Optus connected Australia’s first LTE data call in the
700MHz “Digital Dividend” spectrum band
> SingTel unveiled the next social media star on YouTube
> Globe announced network and IT transformation plans
> Citycell sponsored the 7th Citycell-Channel i Music
Awards
> Airtel passed the 50 million mobile customer mark in
Africa
DECEMBER
> LTE network lit up in Singapore
2012
JANUARY
> Optus celebrated 20 years of operations and marked
the Australia
the beginning of competition
telecommunications market
in
> Globe introduced GCASH mobile app for iPhone
FEBRUARY
> Optus announced plans to acquire Vividwireless to build
a new 4G network
28
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
>
mio TV launches
Jia Le, a Hokkien
language channel
GROUP
DIGITAL L!FE
>
Optus ONE80 Project, a national competition
that gives aspiring filmmakers a chance at
TV production in partnership with MTV
<
skoob has over 60,000 listings and accepts
payment in Singapore currency
^
Demo Day marks the end of the first bootcamp
sponsored by SingTel Innov8
^
Senator The Hon. Stephen Conroy presents the winners
of the “Unleash Your Apps” competition, organised by
Optus and National ICT Australia
29
OPERATING AND FINANCIAL REVIEW
GROUP DIGITAL L!FE
Group Digital L!fe focuses on creating new growth engines by
delighting customers with innovative and cutting-edge digital
services beyond traditional telephony, mobile, broadband and
video offerings.
As customers spend more time on their mobile devices and
the internet, this behaviour is creating immense opportunities
for us to develop compelling products over the mobile and
digital platforms.
Currently, our mobile apps and fibre services allow customers to
purchase music, books, games and online storage. We also deliver
information for shopping, dining, entertainment and related special
promotions to customers.
Our growing suite of multimedia apps has been well received by
customers. More importantly, we are able to boost usage of our
content and apps by pre-installing them onto customers’ devices,
which are subsidised for postpaid mobile customers who sign
up for a minimum contractual period. This gives us an invaluable
advantage over other content providers.
In Singapore, our voice-activated deF!ND digital concierge app
makes it easier for our customers to find important information and
perform tasks, like booking movie tickets and making restaurant
reservations on the move. With over 60,000 book titles, skoob, was
the first ebook store to accept payments in Singapore Dollars, and
customers enjoy the convenience of having purchases billed to
their monthly SingTel bill.
To truly grow our share of the customer’s wallet and bring in new
revenue to the Group, we will increasingly be competing in new
markets and adjacent industries, such as media, entertainment,
retail and banking. As a challenger in these industries, we will be
disruptive in our approach, supported by our strong and steady
core communications business.
inSing.com, our hyperlocal portal that offers the latest news, food
reviews, movies and shopping deals, has become one of the top
sites in Singapore. We also added new features to our AMPedTM
2.0 to allow for unlimited streaming of music on mobile devices
and PCs on demand. We included Asian songs in our offering and
AMPedTM has a library of more than three million songs.
Winning with apps – focusing on hyperlocal apps that tap local
and unique knowledge
We continued to lead the market with converged, innovative and
differentiated digital services that enhance the way our customers
live, work and play.
In Australia, Optus Go Places makes dining out an easier and
more convenient experience by providing restaurant listings,
reviews, bookings, travel instructions and vouchers all in one
easy-to-use app.
In Australia, Optus offered a consumer cloud service, Optus Smart
Safe™, which enables customers to back up and store content from
their mobile handsets or PCs for ready access anytime, anywhere.
Similarly in Singapore, our SingTel Store & Share solution offers
consumers online storage for their documents, photos, music,
videos and other multimedia content. It automatically synchronises
users’ digital content across their mobile devices and PCs, and
enables fast and reliable sharing of files and folders via SMS, social
networks, instant messaging and email.
Our apps and multimedia services possess strong local context
and are relevant to customers looking for local information,
entertainment and deals. Aptly called “hyperlocal” apps, they are
an example of how we are differentiating ourselves from global
content providers, by offering services that specifically cater to the
needs and tastes of Singaporeans and Australians.
Some apps are exclusive to our customers to differentiate our
services against competitors’ and reduce churn. We have also
begun to monetise some of these apps by charging for content via
revenue share arrangements with the content owners we have
partnered for the apps.
In FY2012, Optus announced partnerships with a few content
providers, including Football Federation Australia, Channel 7 for
their broadcast of the Australian Open tennis tournament and the
Australian Recording Industry Awards which saw Optus develop
unique content for mobile customers.
Moving into adjacent markets, competing from a position
of strength
The mobile advertising and marketing industry is an important
adjacent space that allows us to play to our strengths. By
leveraging our unique assets and Amobee, a recently acquired
30
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
mobile advertising company, we will be able to realise the full
potential of mobile marketing as a platform to change the way
brands communicate with their customers.
Our customer data gives us the ability to help brands better target
their customers, so they can be sent relevant, useful messages
based on their location and preferences. This increases the
effectiveness of the brands’ advertising messages and also
enhances customer satisfaction. Our extensive reach to over 400
million mobile customers also gives advertisers more scope to
deepen their one-on-one engagement with different audiences
across different countries.
In the emerging markets where our regional mobile associates
operate, mobile phones are possibly the most effective way for
advertisers to reach the mass consumer market, as many people
in these markets do not have PCs or TVs. For us to be successful in
these markets, we will need to develop advertising solutions that
suit phones with limited functionalities.
TV and video are another important part of our strategy to
increase our customer wallet share. Our Singapore pay TV service,
mio TV, increased its customers to 368,000 with the introduction
of Jia Le channel, a Hokkien channel, as well as Malay channels.
With a renewed focus on specific customer segments, we now
have a market share of 40 per cent. We continued to grow our
market share in TV by bringing additional content to our mio TV
platform, such as top Taiwanese dialect dramas series and top
movie titles available on the same day as their DVD release.
Optus MeTV with fetch is an internet TV service which is available
on demand via customers’ existing broadband connection. Optus
MeTV with fetch brings together the best of digital free-to-air and
subscription TV, plus access to the latest movies, entertainment,
documentaries, music and more all at a very affordable price.
Taking digital knowledge to the region – making a difference to
our associates
The digital products and services we are developing in Singapore
and Australia have real relevance for our regional mobile
associates, particularly in view of the rapid growth in mobile data.
We are able to share our expertise and knowledge to give them a
head start over their competitors.
SIGNIFICANT HIGHLIGHTS
2011
MAY
> Optus Smart SafeTM, a back-up and storage cloud service,
was offered
JUNE
> Optus announced digital partnership with Football
Federation Australia
JULY
> Optus TV Now™, a mobile free-to-air recording and
playback service, was launched
> MyAppsMall, the first regional service delivery platform,
was launched in Singapore
AUGUST
> mio TV introduced Jia Le, Singapore’s first Hokkien
channel
SEPTEMBER
> National ICT Australia and Optus launched student
competition to find “killer” Android mobile app
OCTOBER
> Optus MeTV with fetch, an internet TV service available on
demand, was introduced
> First SingTel Innov8 Startup Weekend event was held in
Singapore
> Optus Go Places, a mobile app designed to make dining
out easy and convenient, was introduced
31
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
GROUP DIGITAL L!FE
SIGNIFICANT HIGHLIGHTS
2011
NOVEMBER
> SingTel unveiled Singapore’s first ebookstore, skoob
> deF!ND, a SingTel digital concierge service, was introduced
> SingTel introduced Store & Share solution to enable
customers to store documents, photos, music, videos and
other multimedia content
> SingTel unveiled a brand-new, action-packed channel,
KIX HD
2012
JANUARY
The Group introduced the first regional service delivery platform
across various mobile networks in the region. This gives us,
developers and other partners the ability to distribute content and
services across various markets easily. The platform also enables
our partners to reach out to unbanked users in the prepaid markets
through our operator billing relationships.
MyAppsMall, a multi-market applications store that allows users
to access and personalise digital content via their smartphones or
feature phones, was the first service launched over the platform.
It is currently offered in four markets, namely the Philippines,
Singapore, Indonesia and Thailand, with plans to bring the other
Group operators on board.
Driving innovation internally and externally
Driving innovation is key for the development of new digital
products and services. Even as we innovate internally, SingTel
Innov8 (Innov8) and SingTel Idea Factory are charged with scouting
and bringing cutting-edge external innovations to the Group.
> The first SingTel Innov8 regional bootcamp for start-ups
kicked off in Singapore
> Optus served up new digital apps and Wi-Fi at Australian
We are nurturing the regional innovation ecosystem to make Asia
an innovation hub. This ensures we stay abreast of the latest
developments in technology and allows us to gain early access to
these technologies.
Open
FEBRUARY
> France24 joined the mio TV family
MARCH
> SingTel announced plan to acquire US-based Amobee
to expand its presence into the fast-growing mobile
advertising and marketing industry
> SingTel announced that all mio TV customers will enjoy
free viewing of the London 2012 Olympic Games
In Australia, Optus partnered National ICT Australia to organise a
competition for students to create a unique and innovative Android
mobile application that makes lives easier.
Innov8, our independent corporate venture capital company,
was a key partner in bringing Southeast Asia’s first 100-day
bootcamp for start-ups to Singapore. The bootcamp participants
received intensive mentorship from industry experts and were
given the opportunity to obtain funding from investors at the end
of the programme.
Innov8 also worked with AIS, Airtel, Globe, Telkomsel, Optus
and SingTel to tap into regional talent with six regional Startup
Weekends. The events connected the SingTel Group with next
generation entrepreneurs and demonstrated our commitment to
supporting the various local start-up ecosystems. Winning teams
were then invited to participate in the bootcamp.
32
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Optus Business and Alphawest are Platinum
sponsors at the Cisco Live event 2012
Customers learn how M2M (Machine-to-Machine)
solution can improve business productivity
and efficiency
GROUP
ICT
<
Demonstrating
intelligent ICT services,
available on demand
and on the move,
at the “Unleash the
Power of Fixed Mobile
Cloud Convergence”
conference
^
NCS showcases capabilities including business
analytics, next generation security, social media and
mobility solutions at the 2011 eGov Global Exchange
^
Showcasing innovative product solutions and
customer case studies at the Optus Vision event
33
OPERATING AND FINANCIAL REVIEW
GROUP ICT
We are moving into an era where enterprise customers find
themselves in a rapidly changing business environment. As
decisions are increasingly made on a regional or even global
basis, companies are looking for a trusted partner to provide
one-stop, end-to-end ICT solutions.
inventory, business processes and operations on the go via
smartphones, tablets and PCs. SingTel is the leading telco
provider of cloud services in the region, with over 180,000
enterprise users and more than 800 enterprises on our
cloud solutions.
To capture these opportunities, we have
integrated our
enterprise-related units into Group ICT. As a unit, Group ICT
supports businesses with a global perspective and delivers
locally relevant solutions. With a vast network of offices in 40
cities across 22 countries and territories, we are well-positioned
to understand both the regional and local challenges our
customers face as well as to develop and implement relevant
solutions in a fast-changing world.
Group ICT has the assets, scale, resources and expertise to
cater to customers’ specific ICT needs, whether they are small,
medium or large corporations. Along with our global network
and delivery model, we offer a comprehensive range of managed
ICT services, from unified communications to cloud and mobility
solutions, as well as IT consulting and applications.
Increasing our cloud firepower
Harnessing our innovative cloud solutions, we are committed
to reducing complexity, increasing productivity, as well as
providing greater control and scalability on demand.
During the year, we increased our cloud firepower through
strong partnerships with software market leaders. In Singapore,
we partnered Intuit to provide QuickBooks Online, a world-class
financial management solution that helps businesses manage
critical tasks, such as creating invoices and tracking cash flow.
We also worked with SAP to offer the SingTel-SAP Business
One solution, which enables small-medium enterprises (SMEs)
to streamline and manage their sales, customer relationships,
We broke new ground with the introduction of SingTel PowerON
Compute, enabled by VMware® vCloud™ Datacenter Service.
This state-of-the-art cloud solution provides enterprises with
the business agility and cost effectiveness of public clouds
without compromising on portability, compatibility, security
and control demanded by enterprise IT organisations. In
Australia, Optus also gained accreditation to deliver VMware
vCloud® Datacenter Services. This common platform will
enable Group ICT to provide regional cloud services across
Asia Pacific in the future.
Optus and Alphawest announced “Your IT as a Service”, a
private cloud solution hosting data on-premise, which features
a centralised catalogue of virtualised IT products and services,
including servers, storage, networking, and security applications,
from a single web portal. It enables customers to ‘automate’ their
IT architecture as a service, significantly reducing deployment
time from weeks to potentially a matter of minutes.
We also partnered Symantec Corp. to offer SingTel PowerON
Security, a comprehensive Security as a Service solution that
provides on-demand protection from viruses and other online
threats, whether customers are in the office or on the move.
Similarly, Optus Business boosted Internet security for enterprise
customers with Optus Evolve Internet Security as a Service and
Optus Evolve Distributed Denial of Service. These offerings help
ensure security threats, viruses and malware are proactively
detected and blocked at the network level so customers do not
have to deploy their own premise-based solutions.
FEATURED CUSTOMER – SATS
In FY2012, we reaffirmed our position as a leading force in
the enterprise ICT segment by providing SATS with a fully
managed IT infrastructure within a timeframe of just five
months. Using our comprehensive suite of managed ICT
offerings, SATS migrated all its IT services, and outsourced the
operation and support of its entire computing, storage, security
and networking infrastructure to SingTel.
with SATS to ensure that key operational applications that
dealt with resource planning and tracking, cargo handling,
flight activities tracking, and meal preparation, production and
distribution did not suffer any disruption, during and after the
migration. We also provided SATS with an enhanced service
desk experience through the SingTel Managed IT Helpdesk,
which supported over 10,000 users.
SATS is the leading gateway services and food solutions provider
in both aviation and non-aviation sectors in Singapore and
around the region. It provides ground and cargo handling, and
inflight catering services to airlines and the freight community
at Singapore Changi Airport, and catering services and supplies
to national agencies, premium and major events, institutions,
etc. With such time-sensitive activities, SingTel worked closely
Fully operational on SingTel’s platform, SATS enjoys greater
ease in scalability and flexibility to cater to its changing
requirements, and no longer needs to worry about day-to-day
management, maintenance and support of its IT infrastructure.
Looking ahead, the company is exploring opportunities to extend
SingTel Managed ICT services to its network of subsidiaries
and JVs in the region.
34
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Championing emerging technologies for mobility
With the proliferation of smart devices and unprecedented
mobile network speeds, the workforce is becoming increasingly
mobile, leading to the consumerisation of IT, where workers use
their personal devices for work. This presents new challenges
to enterprises as they look for ways to keep their employees
connected, secure and productive.
To address these challenges, we introduced the SingTel Mobility
Device Manager (MDM) to manage various mobile devices
and ensure data security via a simple web-based portal. MDM
is compatible with all mobile operating system platforms
and independent of location and mobile network, enabling IT
departments to control mobile devices globally. Similarly, Optus
integrated MDM as part of its enterprise mobility portfolio offering
to provide inventory management, remote lock and wipe and
user self-service. This helps customers easily manage and track
their mobile workforce.
Another emerging space is Machine-to-Machine (M2M). M2M
enables devices to communicate with one another via built-
in mobile SIM cards without human intervention. This opens
up new possibilities for businesses to improve efficiency and
services, and to simplify administration. SingTel’s M2M platform
empowers customers with end-to-end information control of
their connected devices and helps them reach new markets
quickly and easily.
We are also making headway with Unified Communications
(UC), which integrates multiple communication platforms
from fixed to mobile, enabling our customers to communicate
more effectively with a consistent user experience. The
introduction of mobile UC and Fixed Mobile Cloud Convergence
helps users eliminate reachability issues, reduce costs and
communicate easily, whether they are at their desks or on
the move.
Leveraging the combined strengths of the SingTel Group, Bridge
Alliance and other strategic partnerships, we offer an integrated
and managed suite of mobility products and services across
the Asia Pacific region. Our one-stop mobility solutions include
harmonised regional offerings, such as roaming services and the
delivery and coordination of localised products and services.
Boosting our infrastructure, the backbone of our ICT solutions
We continually improve our networks to serve our enterprise
customers better. In Singapore, we are the only home-grown
company to own commercial satellites, and we successfully
launched the ST-2 satellite in May 2011. We consistently
increase capacity to meet growing customer demand for fixed
and mobile satellite services with wide-ranging footprints of
C-band and Ku-band coverage for the Middle East, Central Asia,
the Indian subcontinent and Southeast Asia.
SIGNIFICANT HIGHLIGHTS
2011
APRIL
> Introduced SingTel QuickBooks Online, a cloud-based
financial software for SMEs to manage critical business
tasks, such as creating invoices and tracking cash flow
MAY
> Launched ST-2 satellite, increasing our capacity to
meet growing customer demand for fixed and mobile
satellite services in the broadcast, maritime and oil and
gas industries
> NCS Catalyst, an emerging technology incubator for
cloud, mobility, social media and business analytics was
launched
JUNE
> NCS showcased over 13 e-Government capabilities at
eGov Global Exchange
> Optus introduced Optus Evolve Internet Security as a
Service and Optus Evolve Distributed Denial of Service
> Optus boosted the enterprise mobility portfolio with
Optus Mobile Device Management
AUGUST
> SingTel-SAP Business One CRM software, a cloud-based
solution for SMEs to streamline and manage their sales,
customer relationships, inventory, business processes
and operations on-the-move, was launched
> SingTel Fixed Mobile Cloud Convergence Conference was
held for business customers
> Optus Business SmartPay attained PCI DSS compliance
in Australia and New Zealand
35
OPERATING AND FINANCIAL REVIEW
GROUP ICT
SIGNIFICANT HIGHLIGHTS
2011
OCTOBER
> NCS entered into a tripartite partnership with MHIES-A
and the National University of Singapore to develop an
Urban Mobility study initiative
> Optus gained accreditation to deliver VMware vCloud®
Datacenter Services
> SingTel launched a crew experience package that gives
maritime companies greater levels of control and
efficiency, optimises operational costs and enhances
welfare for their crew
NOVEMBER
> NCS-Sybase mobility suite of solutions was launched
across Southeast Asia
> NCS-Microsoft Windows Azure partnership for Asia
Pacific was introduced
> SingTel partnered Symantec Corp. to offer SingTel
PowerON Security solutions
2012
FEBRUARY
> SingTel Mobility Device Manager, a global cloud-based
service that enables companies to secure, control and
manage corporate data and mobile devices of their
employees, was introduced
MARCH
> Optus Business and Alphawest introduced “Your IT as
a Service”, an on-premise cloud solution that simplifies
the deployment and management of IT products and
services for enterprise customers
36
In Australia, Optus is the only full service telco that can harness
the geographical reach of satellite communications for customers.
Optus has five satellites in orbit and will be launching a new
satellite, Optus 10, in 2013. Our fixed networks, HFC, DSL and fibre,
enable us to provide services to four million Australian premises,
including 18,000 corporate premises.
During the year, we extended coverage for our Internet Protocol
Virtual Private Network (IP VPN) services with new Points of
Presence (POPs) in several cities, such as Zurich, Manama and
Kolkata, bringing our total of POPs to 130, spanning 80 cities
globally, of which 100 POPs are in 56 cities in Asia. In addition,
several new communications cables were introduced to provide
customers with more choices for routes and to reduce latency. We
rolled out direct routes from India to the Middle East and from Hong
Kong to Europe. We also procured various cables to introduce new
routes into the network for our dedicated point-to-point services.
Our IP VPN networks were enhanced with new solutions during
the year. To cater to the low latency requirements of our financial
customers, ConnectPlus Ultra Low Latency was introduced to
direct connections to financial exchanges and to deliver the lowest
latency for time-sensitive activities such as algorithmic trading.
We also introduced Electronic Bandwidth on Demand to give our
customers full control of their bandwidth usage and to enable
them to take advantage of on-demand cloud services for better
network and cost efficiencies. Through a convenient self-service
online portal, customers can temporarily increase the bandwidth
for their IP VPN networks in under 24 hours.
KEY CONTRACT WINS
Customer
Contract
Changi Airport
Group
A multi-year contract to provide consolidated
maintenance of airport IT systems.
Education Bureau
in Hong Kong
Infocomm
Development
Authority of
Singapore
Qantas
Sydney Water
To provide system maintenance and
support services to the Web-based School
Administration and Management System
(WebSAM) for the Education Bureau in
Hong Kong. The WebSAM system is currently
used by over 1,100 schools in Hong Kong.
To design, build, maintain and operate
a highly resilient and high availability
data centre.
A managed services contract to deliver
high speed wireless internet connectivity in
Qantas lounges in Australia.
A four-year managed services contract worth
nearly A$30 million to deliver whole-of-
business telecommunications services.
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
GROUP FIVE-YEAR FINANCIAL SUMMARY
Income Statement (S$ million)
Group operating revenue
SingTel
Optus
Optus (A$ million)
Group EBITDA (1)
SingTel
Optus
Optus (A$ million)
Share of associates’ pre-tax profits
Group EBITDA and share of associates’ pre-tax profits
Net profit after tax
Underlying net profit (2)
Cash Flow (S$ million)
Group free cash flow (3)
Singapore
Associates’ dividends (net of withholding tax)
SingTel
Optus
Optus (A$ million)
Capital expenditure
Balance Sheet (S$ million)
Total assets
Shareholders’ funds
Net debt
Key Ratios
Proportionate EBITDA from outside Singapore (%)
Return on invested capital (%)
Return on equity (%)
Return on total assets (%)
Net debt to EBITDA and share of associates’
pre-tax profits (number of times)
EBITDA and share of associates’ pre-tax profits
to net interest expense (number of times)
Per Share Information (S cents)
Earnings per share - basic
Earnings per share - underlying net profit (2)
Net assets per share
Dividend per share - ordinary
Dividend per share - special
‘SingTel’ refers to the SingTel Group excluding Optus.
Financial Year Ended 31 March
2012
2011
2010
2009
2008
18,825
6,551
12,275
9,368
5,219
2,128
3,091
2,357
2,005
7,223
3,989
3,676
3,462
1,170
841
2,011
1,451
1,111
2,249
18,071
6,401
11,670
9,284
5,119
2,183
2,937
2,334
2,141
7,260
3,825
3,800
4,038
1,436
1,084
2,520
1,519
1,206
2,005
16,871
5,995
10,876
8,949
4,847
2,224
2,623
2,153
2,410
7,257
3,907
3,910
3,406
1,290
858
2,148
1,258
1,015
1,923
14,934
5,547
9,387
8,321
4,431
2,110
2,321
2,067
2,051
6,482
3,448
3,455
3,245
1,231
963
2,194
1,050
967
1,918
14,844
4,904
9,940
7,760
4,530
1,967
2,564
2,002
2,559
7,089
3,960
3,681
3,575
1,422
1,001
2,423
1,152
903
1,879
40,418
23,428
7,860
39,282
24,328
6,023
37,952
23,493
6,311
33,255
20,476
6,544
34,714
21,000
7,303
78
16.9
16.7
10.0
1.1
20.7
25.04
23.07
147.08
15.8
-
76
17.6
16.0
9.9
0.8
21.8
24.02
23.86
152.75
15.8
10.0
74
18.9
17.8
11.0
0.9
23.5
24.55
24.56
147.55
14.2
-
72
17.2
16.6
10.2
1.0
19.9
21.67
21.71
128.67
12.5
-
75
18.9
18.9
11.8
1.0
20.7
24.90
23.15
132.03
12.5
-
Notes:
(1) Effective this financial year, EBITDA refers to earnings before interest, tax, depreciation and amortisation, namely the aggregate of operating
revenue and other income less operating expenses of the Singapore and Australia operations, and excludes the share of pre-tax results
of associates.
(2) Underlying net profit is defined as net profit before exceptional items and exchange differences on capital reductions of certain overseas
subsidiaries, net of hedging, as well as significant exceptional items of associates.
(3) Free cash flow refers to cash flow from operating activities, including dividends from associates, less cash capital expenditure.
37
OPERATING AND FINANCIAL REVIEW
MANAGEMENT DISCUSSION AND ANALYSIS
GROUP REVIEW
GROUP
Operating revenue
EBITDA (1)
EBITDA margin
Share of associates’ pre-tax profits
EBITDA and share of associates’ pre-tax profits
Exceptional items (pre-tax)
Taxation
Net profit
Basic earnings per share (S cents)
Underlying net profit (2)
Underlying earnings per share (S cents)
Financial Year Ended 31 March
2012
(S$ million)
2011
(S$ million)
Change (%)
18,825
5,219
27.7%
2,005
7,223
86
(978)
3,989
25.0
3,676
23.1
18,071
5,119
28.3%
2,141
7,260
25
(1,170)
3,825
24.0
3,800
23.9
4.2
1.9
-6.4
-0.5
241.1
-16.4
4.3
4.2
-3.3
-3.3
In this section, ‘Optus’ refers to SingTel Optus Pty Limited and its subsidiaries, ‘SingTel’ refers to the SingTel Group excluding Optus. ‘Associate’ refers
to either an associate or a joint venture as defined under Singapore Financial Reporting Standards.
Notes:
(1) Effective this financial year, EBITDA refers to earnings before interest, tax, depreciation and amortisation, namely the aggregate of operating
revenue and other income less operating expenses of the Singapore and Australia operations, and excludes the share of pre-tax results of associates.
(2) Underlying net profit refers to net profit before exceptional and other one-off items.
For the financial year ended 31 March 2012, the Group delivered
in line with its guidance with operating revenue growth of 4.2 per
cent to S$18.83 billion. The growth was underpinned by robust
mobile growth in Singapore and the 4 per cent strengthening of
the Australian Dollar from last year.
In Singapore, Mobile Communications recorded strong revenue
growth of 7.3 per cent driven mainly by increased customer
connections. As at 31 March 2012, SingTel’s mobile market share
was 45.9 per cent, up 1.1 percentage points from a year ago.
Data and Internet revenue was stable, reflecting planned price
adjustments for Local Leased Circuits following the nationwide
fibre rollout as well as continued price erosion in International
Leased Circuits. Fibre rollout revenue fell 33 per cent as OpenNet
Pte. Ltd. (OpenNet) reached peak rollout. Excluding fibre rollout,
the Singapore Business’ operating revenue rose 3.9 per cent from
last year.
In Australia, Optus recorded resilient performance in an intensely
competitive market with operating revenue growth of 0.9 per cent.
Mobile service revenue grew 1.0 per cent, partly reflecting the
mandated decline in the mobile termination rates from 9 cents to
6 cents per minute from January 2012. Revenue from Business and
Wholesale Fixed increased 3.1 per cent driven by double-digit growth
in both satellite and ICT and managed services, partially offset by
lower voice revenues. Consumer and Small-Medium Business Fixed
revenue, however, declined 5.4 per cent on lower broadband average
revenue per user (ARPU) and the continued exit of resale business.
Optus’ translated revenue in Singapore Dollar terms grew 5.2 per
cent from the previous year with a stronger Australian Dollar.
38
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
EBITDA for the Group was up 1.9 per cent year-on-year. In Australia,
EBITDA increased 1.0 per cent mainly on lower customer acquisition
costs associated with the introduction of device repayment plans
on high value handsets in October 2011. In Singapore Dollar terms,
Optus’ EBITDA rose 5.2 per cent. The Singapore Business’ EBITDA
was stable, reflecting investments in mio TV content and higher
mobile customer connections.
With a significant footprint across Asia and Africa, the combined
mobile customer base of the Group and its regional mobile
associates reached 445 million as at 31 March 2012, an increase of
11 per cent or 43 million from a year earlier.
Telkomsel and AIS delivered higher profits driven mainly by strong
data momentum. In the Philippines, Globe registered growth
in mobile and broadband though overall net profit declined on
higher marketing, subsidy and network costs. In South Asia, Airtel
recorded higher revenue and EBITDA on robust customer additions
with rollout of 3G services. Airtel Africa performed strongly, with
double-digit revenue and EBITDA growth underpinned by network
expansion and a growing customer base. Overall profit contributions
from Airtel, however, were impacted by higher interest, depreciation
and amortisation costs associated with the 3G rollout in India as
well as fair value losses.
With weaker regional currencies and higher fair value losses, the
Group’s share of pre-tax profits from associates declined 6.4 per
cent to S$2.01 billion. Excluding the currency translation impact and
the associates’ fair value adjustments, the pre-tax contributions of
the associates would have increased 2.3 per cent.
The Group’s EBITDA and share of associates’ pre-tax profits were
flat at S$7.22 billion.
The Group recorded an exceptional net gain of S$86 million for the
financial year. This comprised mainly AIS’ pre-tax contribution of
S$80 million for the March 2011 quarter following the alignment
of AIS’ reporting period to the Group, a foreign exchange gain of
S$28 million which arose on repayment of inter-company loans,
and a one-off charge of S$24 million for Optus’ ex-gratia costs on
its workforce restructuring.
The Group’s tax expense declined 16 per cent to S$978 million
primarily due to the recognition of an exceptional net tax credit
of S$270 million on the increase in value of assets transferred to
an associate, partly offset by Airtel’s higher taxes as a result of
reduction in tax holiday benefits in India.
Net profit grew 4.3 per cent to S$3.99 billion. Excluding exceptional
and one-off items, the Group’s underlying net profit declined 3.3
per cent to S$3.68 billion.
The Group has successfully diversified its earnings base through its
expansion and investments in overseas markets. On a proportionate
basis if the associates are consolidated line-by-line, operations
outside Singapore accounted for 77 per cent and 78 per cent of
the Group’s proportionate revenue and proportionate EBITDA
respectively.
39
OPERATING AND FINANCIAL REVIEW
MANAGEMENT DISCUSSION AND ANALYSIS
SINGAPORE BUSINESS
Operating revenue
Mobile communications
Data and Internet
International telephone
National telephone
Sale of equipment
mio TV
Others (1)
Singapore Telco
Revenue from NCS
Fibre rollout
Information technology and engineering (IT&E)
Total
(excluding Fibre rollout)
EBITDA (excluding Group’s corporate costs)
Singapore Business
Singapore Telco
IT&E
EBITDA margin
Numbers in above table may not exactly add due to rounding.
Financial Year Ended 31 March
2012
(S$ million)
2011
(S$ million)
Change (%)
1,919
1,607
501
352
352
106
220
5,058
1,315
178
1,493
6,551
6,372
2,242
1,974
268
34.2%
1,788
1,612
511
375
311
79
191
4,867
1,266
268
1,534
6,401
6,133
2,253
1,986
267
35.2%
7.3
-0.3
-1.9
-6.1
13.3
34.1
15.5
3.9
3.8
-33.3
-2.6
2.3
3.9
-0.5
-0.6
0.3
Operating revenue in Singapore grew 2.3 per cent to S$6.55 billion
led by strong growth in mobile. EBITDA was stable at S$2.24 billion,
reflecting investments in mio TV content and higher mobile customer
connections, as well as structural separation cost payments to
NetLink Trust2.
Mobile Communications, the largest revenue stream, grew 7.3 per
cent to S$1.92 billion driven mainly by strong customer connections.
Total mobile customer base grew 8.3 per cent or 273,000 to 3.58
million. SingTel registered market share gains in both prepaid
and postpaid, extending its lead with a mobile market share of
45.9 per cent as at 31 March 2012.
A record total number of 171,000 postpaid customers were added
in the year, spurred by higher smartphone connections and strong
data SIMs take-up from successful integrated mobile broadband
bundles. This brought total postpaid customer base to 1.95 million
as at 31 March 2012, up 9.6 per cent from a year ago. Postpaid
ARPU declined S$3 but was stable excluding ‘data only’ SIMs,
reflecting bundled discounts from growth in triple and quadruple
play customers.
SingTel’s strong suite of smartphones and tablets combined with
exclusive customised applications continued to drive growth in
mobile broadband. Total number of customers on monthly mobile
Notes:
(1) Include revenues from maritime & land mobile and lease of satellite
transponders.
(2) NetLink Trust is a business trust established pursuant to regulatory
requirements on structural separation under Singapore’s Next
Generation Nationwide Broadband Network. It is currently 100%
owned by SingTel but equity accounted as an associate in the Group
as SingTel does not control it.
40
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
broadband data subscription grew 44 per cent or 386,000 from a
year ago to 1.26 million as at 31 March 2012. Mobile data services
accounted for 42 per cent of blended ARPU, up from 39 per cent
a year ago.
In the prepaid segment, total customer base grew 6.7 per cent or
102,000 to 1.63 million as at 31 March 2012, and ARPU improved
2.8 per cent from last year. The growth was led by strong take-up
for 3G, data and value added services.
SingTel continued to grow its digital presence. With exciting new
offerings and exclusive sports, revenue from mio TV surpassed the
S$100 million mark to reach S$106 million, an increase of 34 per
cent from last year. Total mio TV customer base rose 26 per cent
or 76,000 to reach 368,000 as at end March 2012. As at 31 March
2012, SingTel maintained its lead in the domestic fibre market with
a fibre broadband3 customer base of 76,000, up significantly from
14,000 a year ago.
EBITDA
Data and Internet revenue was stable at S$1.61 billion. Growth
in Managed Services was offset by continued price erosion in
International Leased Circuits and planned price adjustments
in Local Leased Circuits with the nationwide fibre rollout. Fixed
Broadband revenue rose 5.5 per cent on increased adoption of
both fibre-based services and higher-tier plans.
IT&E revenue declined 2.6 per cent to S$1.49 billion on lower fibre
rollout revenue as OpenNet achieved home coverage of over 90 per
cent as of end March 2012 with completion to 95 per cent expected
by June 2012. NCS strengthened its leadership in the domestic IT
market with revenue up 3.8 per cent to S$1.32 billion.
REVENUE BY PRODUCTS AND SERVICES
S$6.55b
2012
S$2.24b
2012
Mobile Communications 29%
Data and Internet
IT and Engineering
25%
23%
International Telephone
National Telephone
Sale of Equipment
mio TV
Others
8%
5%
5%
2%
3%
Telco
IT and Engineering
88%
12%
International Telephone revenue declined 1.9 per cent to S$501
million on lower average collection rates partially offset by
increased international call traffic.
Note:
(3) Residential and corporate subscriptions to broadband Internet services
using optical fibre networks.
Revenue from Fixed-line phone services decreased 6.1 per cent
to S$352 million, impacted by fixed-to-mobile substitution and
competition. Sale of equipment revenue grew 13 per cent to
S$352 million with strong demand for smartphones and tablets.
41
OPERATING AND FINANCIAL REVIEW
MANAGEMENT DISCUSSION AND ANALYSIS
AUSTRALIA BUSINESS
Operating revenue by division
Mobile
Fixed
Business and Wholesale
Consumer and Small-Medium Business (SMB)
Inter-divisional
Total
EBITDA
EBITDA margin
REVENUE BY BUSINESS DIVISION
Financial Year Ended 31 March
2012
(A$ million)
2011
(A$ million)
Change (%)
6,072
5,977
2,029
1,275
(7)
9,368
2,357
25.2%
1,967
1,348
(8)
9,284
2,334
25.1%
1.6
3.1
-5.4
-13.4
0.9
1.0
Optus, SingTel’s largest subsidiary and Australia’s number two
telecommunications operator, delivered 0.9 per cent increase in
operating revenue amid intense market competition. EBITDA was up
1.0 per cent mainly from lower customer acquisition costs,
reflecting the lower level of subsidies due to the introduction of
device repayment plans in October 2011.
A$9.37b
2012
Mobile
Optus Business and
Wholesale Fixed
Consumer and
SMB Fixed
65%
22%
13%
Optus Mobile contributed 65 per cent to Optus’ operating revenue
and 67 per cent to Optus’ EBITDA. Mobile service revenue was up 1.0
per cent and would have increased 2.7 per cent excluding the impact
of the mandated reduction in mobile termination rates and the
service credits associated with the new device repayment plans.
EBITDA BY BUSINESS DIVISION
A$2.36b
2012
Mobile
Optus Business and
Wholesale Fixed
Consumer and
SMB Fixed
67%
23%
10%
42
Optus continued its postpaid customer growth momentum with net
additions of 424,000 in the year, underpinned by robust demand
for smartphones and wireless broadband. Reflecting its success in
penetrating the wireless broadband market, the number of wireless
broadband customers reached 1.58 million, up from 1.28 million a
year ago. Prepaid customer base was stable at 4.29 million as at
31 March 2012.
Blended ARPU was A$45, down A$2 year-on-year due to increased
mix of wireless broadband customers and higher value inclusions
on selected plans. With increased data usage and higher penetration
of wireless data products, SMS and other data revenue grew to
46 per cent (FY2011: 40 per cent) of ARPU while non-SMS data
revenue increased to 22 per cent (FY2011: 18 per cent) of ARPU.
EBITDA grew 1.0 per cent to A$1.58 billion from lower customer
acquisition costs.
Business and Wholesale Fixed accounted for 22 per cent of Optus’
operating revenue and 23 per cent of Optus’ EBITDA. Revenue
grew 3.1 per cent year-on-year to A$2.03 billion. Total Business
fixed revenue increased 2.2 per cent driven by ICT and managed
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
services growth from key contract wins, while Wholesale fixed
revenue expanded 4.9 per cent on strong satellite growth.
usage. As Optus continued to exit fixed resale services, Consumer
fixed off-net revenue decreased 37 per cent, resulting in an overall
decline in Consumer fixed revenue of 5.4 per cent to A$1.28 billion.
EBITDA was stable at A$546 million but would have increased 4.6
per cent excluding the write-back of a provision last year.
Consumer and Small-Medium Business Fixed contributed 13 per
cent to Optus’ operating revenue and 10 per cent of Optus’ EBITDA.
Consumer fixed on-net revenue declined 4.1 per cent as the growth
in the on-net broadband customer base was offset by lower ARPU
from increased broadband data allowances and lower telephony
In a highly competitive fixed broadband market, Optus registered a
net gain of 18,000 on-net broadband customers in the year, bringing
the total customer base to 978,000 as at 31 March 2012.
With lower traffic costs from lower mobile termination rates and
yield management initiatives, EBITDA improved 1.3 per cent from
last year.
ASSOCIATES
Share of ordinary pre-tax profits
Regional mobile associates
Telkomsel
Airtel
- India, Bangladesh and Sri Lanka (South Asia)
- Africa
AIS (1)
Globe
Warid
Pacific Bangladesh Telecom
Other associates
Group share of associates’ ordinary pre-tax profits
Group share of associates’ exceptional items
Group share of associates’ pre-tax profits
Share of post-tax profits
Regional mobile associates
Telkomsel
Airtel
- India, Bangladesh and Sri Lanka (South Asia)
- Africa
AIS (1)
Globe
Warid
Pacific Bangladesh Telecom
Other associates
Group share of associates’ post-tax profits
Numbers in above table may not exactly add due to rounding.
Financial Year Ended 31 March
2012
(S$ million)
2011
(S$ million)
Change (%)
898
628
(76)
551
350
187
(56)
(28)
1,902
110
2,013
(8)
2,005
665
474
(117)
356
249
131
(56)
(29)
1,316
91
1,407
855
860
(84)
776
276
192
(54)
(16)
2,028
122
2,150
(9)
2,141
638
726
(122)
604
191
138
(62)
(16)
1,492
108
1,601
5.1
-27.0
-9.2
-29.0
26.9
-2.6
2.8
72.4
-6.2
-9.8
-6.4
-13.2
-6.4
4.2
-34.7
-3.9
-41.0
30.7
-5.0
-8.6
76.1
-11.8
-16.0
-12.1
Note:
(1) Exclude the Group’s share of AIS’ results for the March 2011 quarter following the alignment of AIS’ reporting period to the Group, recognised as
exceptional items of the Group.
43
OPERATING AND FINANCIAL REVIEW
MANAGEMENT DISCUSSION AND ANALYSIS
SHARE OF ASSOCIATES’ POST-TAX PROFITS
year ago. Telkomsel registered 11 per cent growth in its customer
base to 110 million as at 31 March 2012. The Group’s combined
mobile customer base reached 445 million in 26 countries, a growth
of 11 per cent or 43 million from a year ago.
S$1.41b
2012
Telkomsel
Airtel
AIS
Globe
Warid,
Pacific Bangladesh
Telecom and Others
47%
25%
18%
9%
1%
Telkomsel accounted for 47 per cent of the Group’s share of total
post-tax profits from associates, up from 40 per cent last year.
Operating revenue grew 8 per cent and EBITDA increased 7 per
cent driven by strong data and customer growth amid stable
market conditions in Indonesia. With a 4 per cent depreciation
of the Indonesian Rupiah against Singapore Dollar, Telkomsel’s
post-tax contribution rose 4.2 per cent to S$665 million. Telkomsel
maintained its leading position in Indonesia with approximately
43.3 per cent of market share as at 31 March 2012.
CASH DIVIDENDS RECEIVED FROM ASSOCIATES (1)
S$920m
2012
Telkomsel
AIS
Globe
47%
23%
13%
Airtel, Southern Cross, 17%
SingPost and Others
Note:
(1) Cash dividends received from overseas associates are before
withholding and other related tax payments.
For the year ended 31 March 2012, the Group’s share of the
associates’ pre-tax and post-tax profits declined 6.4 per cent and
12 per cent respectively, negatively impacted by weaker regional
currencies and higher fair value losses. If the regional currencies
had remained stable from a year ago, the pre-tax and post-tax
contributions of the associates would have declined by 1.1 per cent
and 7.4 per cent respectively.
Airtel contributed 25 per cent to the Group’s share of associates’
post-tax profits, 13 percentage points lower than a year ago.
In South Asia, Airtel recorded revenue growth of 12 per cent and
EBITDA increase of 7 per cent, on robust customer additions with
rollout of 3G services. Airtel Africa posted strong double-digit
revenue and EBITDA growth underpinned by network expansion
and a growing customer base. However, overall earnings were
impacted by 3G network depreciation, spectrum amortisation and
interest costs in India, as well as higher fair value losses. Including
higher taxes from a reduction in tax holiday benefits and the steep
11 per cent depreciation of the Indian Rupee against Singapore
Dollar, overall post-tax contribution from Airtel declined 41 per cent
to S$356 million. Airtel continued to lead the India mobile market
with a market share of 19.7 per cent as at 31 March 2012.
AIS, the leading mobile phone operator in Thailand, delivered strong
operating results. Post-tax contribution surged 31 per cent to
S$249 million, underpinned by strong execution, robust data
growth, lower depreciation and amortisation expenses as well as
lower taxes from the reduction in Thai corporate tax rate from
January 2012. AIS maintained its lead in the Thailand mobile
market with approximately 44.7 per cent of market share.
Globe, the second largest mobile phone operator in the Philippines,
registered service revenue growth of 9 per cent driven by customer
gains in mobile and broadband. With higher marketing, subsidy and
network costs, Globe’s post-tax contribution declined 5 per cent to
S$131 million.
The regional mobile associates continued their strong customer
growth momentum. Airtel’s total mobile customer base across 20
countries covering India, Bangladesh, Sri Lanka and across Africa,
reached 241 million as at 31 March 2012, up 14 per cent from a
In Pakistan, Warid recorded improved EBITDA with higher revenue
and lower marketing costs. Including depreciation and interest costs,
the Group’s share of Warid’s net loss amounted to S$56 million,
down from S$62 million last year.
44
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
CASH FLOW
GROUP
Net cash inflow from operating activities
Net cash outflow for investing activities
Net cash outflow for financing activities
Net (decrease)/increase in cash balance
Exchange effects on cash balance
Cash balance at beginning of year
Cash balance at end of year
Free cash flow
Singapore
Australia
Australia (in A$)
Associates (net dividends after withholding tax)
Group
Cash capital expenditure as a percentage of operating revenue
‘nm’ denotes not meaningful.
Financial Year Ended 31 March
2012
(S$ million)
2011
(S$ million)
Change (%)
5,710
(2,809)
(4,264)
(1,363)
(29)
2,738
1,346
1,170
1,451
1,111
841
3,462
12%
6,043
(2,759)
(2,141)
1,143
(18)
1,614
2,738
1,436
1,519
1,206
1,084
4,038
11%
-5.5
1.8
99.2
nm
56.5
69.7
-50.8
-18.5
-4.5
-7.8
-22.4
-14.3
Operating Activities
The Group’s net cash inflow from operating activities for the
year was S$5.71 billion, down 5.5 per cent or S$333 million due
mainly to lower dividends received from the associates as well
as payments of tax in Australia from this financial year. Last year,
the Group received special dividends from AIS which was not
repeated this year.
Investing Activities
The investing cash outflow was S$2.81 billion. During the year,
payment of S$332 million was made for the acquisition of an
additional 2.05 per cent equity interest in AIS. Capital expenditure
totalled S$2.25 billion and represented 12 per cent of the Group’s
operating revenue, 1 percentage point higher than a year ago.
Major capital expenditure for the year included the expansion and
enhancement of mobile networks in Singapore and Australia to
support customer and data growth, investments in satellites and
core infrastructure, as well as NCS’ investments in equipment for
major customer contracts.
Financing Activities
Net cash outflow of S$4.26 billion for financing activities arose
mainly from the payment of S$3.03 billion of final and special
dividends in respect of the previous financial year ended 31 March
2011, and S$1.08 billion for interim dividends in respect of the
current financial year. Other major financing cash outflows included
S$922 million for settlement of swaps on repayment of bonds as
well as S$415 million for interest payments. These outflows were
partially offset by S$1.19 billion of cash inflow from net borrowings
during the year.
Free Cash Flow
The Group’s free cash flow fell 14 per cent to S$3.46 billion. Free
cash flow from Singapore declined 19 per cent from a year ago due
to lower operating cash flow partly from negative working capital
movements on the fibre rollout and higher capital expenditure. Free
cash flow from Australia fell 7.8 per cent to A$1.11 billion but would
have increased 1.9 per cent if excluding tax payments this year due
to favourable working capital movements partially offset by higher
capital expenditure.
45
OPERATING AND FINANCIAL REVIEW
MANAGEMENT DISCUSSION AND ANALYSIS
CAPITAL MANAGEMENT
GROUP
Gross debt (S$ m)
Net debt (1) (S$ m)
Net debt gearing ratio (2) (%)
Net debt to EBITDA and share of associates’ pre-tax profits
(number of times)
Interest cover (3) (number of times)
Average maturity of borrowings (years)
Financial Year Ended 31 March
2012
9,207
7,860
25.1
1.1
20.7
7.3
2011
8,761
6,023
19.8
0.8
21.8
6.5
2010
7,924
6,311
21.2
0.9
23.5
4.7
GROUP DEBT
MAR 12
MAR 11
MAR 10
7,860
8,761
7,924
6,023
6,311
(S$ m)
9,207
During the year, the Group issued new bonds and extended
its debt maturity. Net debt increased, reflecting lower cash
balances after the payment of special dividends in the prior year.
The Group has one of the strongest credit ratings among
telecommunications companies in Asia. SingTel is currently
rated Aa2 by Moody’s and A+ by Standard & Poor’s.
SingTel’s dividend payout ratio ranges from 55 per cent to 70 per
cent of underlying net profit. The Group will continue to review
at least on a three-year basis its cash needs for operations and
growth, with a view to returning surplus cash to shareholders.
This is consistent with the Group’s commitment to an optimal
capital structure and investment grade credit ratings, while
maintaining financial flexibility.
Gross Debt
Net Debt (1)
AVERAGE MATURITY OF BORROWINGS
(Years)
MAR 12
MAR 11
MAR 10
Average Maturity
7.3
6.5
4.7
Notes:
(1) Net debt is defined as gross debt less cash and bank balances
adjusted for related hedging balances.
(2) Net debt gearing ratio is defined as the ratio of net debt to net
capitalisation. Net capitalisation is the aggregate of net debt,
shareholders’ funds and minority interests.
(3) Interest cover refers to the ratio of EBITDA and share of associates’
pre-tax profits to net interest expense, where net interest expense is
interest expense less interest income.
46
KEY OPERATING
COMPANIES
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
SINGAPORE
AUSTRALIA
INTERNATIONAL (1)
NCS PTE. LTD.
100%
SINGTEL OPTUS
PTY LIMITED
100%
ADVANCED INFO SERVICE
PUBLIC COMPANY LIMITED
23%
SINGNET PTE LTD
100%
ALPHAWEST SERVICES
PTY LTD
100%
BHARTI AIRTEL LIMITED
32%
SINGTEL IDEA
FACTORY PTE. LTD.
100%
OPTUS BROADBAND
PTY LIMITED
100%
GLOBE TELECOM, INC.
47%
SINGTEL INNOV8
PTE. LTD.
100%
OPTUS MOBILE
PTY LIMITED
100%
PACIFIC BANGLADESH
TELECOM LIMITED
SINGTEL MOBILE
SINGAPORE
PTE. LTD.
100%
OPTUS NETWORKS
PTY LIMITED
100%
PT. TELEKOMUNIKASI
SELULAR
TELECOM EQUIPMENT
PTE LTD
100%
OPTUS VISION
PTY LIMITED
100%
WARID TELECOM
(PRIVATE) LIMITED
45%
35%
30%
SINGTEL DIGITAL
MEDIA PTE. LTD.
96%
UECOMM OPERATIONS
PTY LIMITED
100%
SOUTHERN CROSS CABLES
HOLDINGS LIMITED
40%
SINGAPORE POST
LIMITED
26%
VIRGIN MOBILE
(AUSTRALIA)
PTY LIMITED
100%
This chart is accurate as of 31 March 2012.
The list of significant subsidiaries, associates
and joint ventures is disclosed on pages
185 to 194 in Note 47 to the Financial
Statements.
Note:
(1) Effective ownership
47
CORPORATE SOCIAL
RESPONSIBILITY
>
As a leading communications company in the region, the Group’s
operations affect virtually every part of society. We therefore consider
it our responsibility and privilege to make a difference to the well-being
of the communities we operate in. As a Group, we leverage our
network and resources to serve the community in economic, social
and environmental ways.
Making a Difference
Celebrating its 10th year of fundraising, the SingTel Touching Lives
Fund (STLF) kicked off its annual activities with a flag day on 24 June
2011. Led by the Group’s senior management, the event saw whole-
hearted response from about 800 employees, family members
and friends.
Other signature events held under the STLF banner included
Fold-A-Heart, where SingTel donates S$1 for every origami and
electronic heart received, as well as the Charity Golf event which
raised a record S$820,000 last year. In all, the Group raised
S$2.6 million over the year for the STLF.
The funds go a long way in helping six beneficiaries that run
programmes for disadvantaged children and young persons in
Singapore, namely APSN Chaoyang School, APSN Tanglin School,
AWWA Early Years Centre – Early Intervention Programme for Infants
and Young Children, MINDS Lee Kong Chian Gardens School,
Singapore Cancer Society’s “Help the Children and Youths” and
Students Care Service. Over the past decade, the STLF has raised
over S$22 million for our beneficiaries.
In Australia, Optus actively supports various charity partners
throughout the year by holding fundraising events and campaigns
among its staff, such as Lock Up Your Boss to support Kids Helpline,
Movember in support of Beyondblue and Tour de Cure in support of
Optus’ charity partner, The Cancer Council, and other cancer-related
charities. Through various charity fundraisers, Optus people have
donated over A$100,000 in support of Optus’ 13 charity partners.
Youths, however, remain a key focus as beneficiaries. The mobile
student2student programme launched by Optus and The Smith
Family aims to help young people who are at risk of leaving school
in the metro and regional areas by improving their reading skills
through mobile phones. Matched with an older student “buddy”, 260
disadvantaged children read to their buddy three times a week using
mobile phones supplied by Optus. As an added incentive, students
keep the mobile phones and are rewarded with credits upon
completion of the programme. Evaluation studies showed 81 per cent
of the students in the programme improved their reading levels.
Optus also supports young people via community grants for local
programmes that address social isolation and disengaged youths
by providing access to communications and improving education
outcomes. In FY2012, Optus awarded 32 charity organisations with
A$150,000 worth of grants, bringing the total grants to over
A$550,000 since 2008.
Promoting the Spirit of Volunteerism
We believe in the spirit of volunteerism and encourage staff to
spend time helping others in need. We give our staff in Singapore
and Australia one day of paid volunteer leave, which they may use
for the benefit of any charity or community organisation.
In Singapore, we continued to promote “VolunTeaming” –
a programme that enables our staff to team up with colleagues for
a volunteer activity. Some 1,700 employees gave about 8,000
hours of their time to engage in 24 meaningful community and
environmental projects during the year.
48
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
One of the VolunTeaming projects undertaken during the year
was by the Global Accounts employees, who came together to
organise a lunch-cum-entertainment session for about 100
residents of the AWWA Community Home for Senior Citizens.
The seniors were treated to songs, games, gifts and a delicious
meal, served personally by our staff.
In another VolunTeaming effort, Satellite staff rallied together
to clean cars and sell packets of dried fruit and nuts for charity.
Their efforts paid off and they raised about S$8,500 for the STLF.
In Australia, Optus introduced a five-week skilled volunteer
programme where leaders within the company contribute their
skills, knowledge and experience to indigenous organisations in
regional Australia.
One of the key volunteerism initiatives in Optus is the collaboration
with the Australian Business Community Network where Optus
staff mentor “high-needs youths”, namely students who are
geographically, socially, financially or physically disadvantaged.
Many of these students are from non-English speaking or refugee
backgrounds, and lack the opportunities available to most urban
students. FY2012 saw our largest participation number to date –
408 employees mentored 1,477 students and school leaders in
29 schools across Australia.
Going Green
As a Group, we believe being a responsible corporate citizen includes
caring for the environment and promoting a sustainable way of life.
Project LESS is SingTel’s environmental campaign aimed at raising
awareness among employees and customers of the need to reduce
our carbon footprint. Apart from the annual Plant-A-Tree Day for
our staff, a SingTel-Nokia Mobile Phone Recycling Programme
was created for consumers in late March 2011, a first by a telco
in Singapore.
In a similar initiative, Optus promotes the recycling of discarded
mobile phones via Mobilemuster, an industry-wide Australian
programme. Optus customers can recycle their phones at Optus
stores or send them back to us using the reply-paid satchels included
in the packaging of prepaid phones. Recycled mobile phones receive
a new lease of life as batteries, stainless steel products, plastic
fence posts, pallets and even jewellery.
In a united effort to support Earth Hour, all SingTel shop outlets
and SingTel Exclusive Retailers across the island turned off non-
essential lighting and dimmed interior lights on 31 March 2012.
Optus too, showed their support by encouraging staff and customers
to “switch off” and think of ways to help the environment.
CSR MILESTONES
2011
APRIL
> 12 volunteers built houses and farms in a village in
Cebu as part of SingTel’s inaugural Overseas Volunteering
Programme
> 200 SingTel employees planted 105 trees at the 3rd
Plant-A-Tree Day
> 21 Optus staff rode some 1,400 km and together with Optus,
raised A$250,000 as part of the 2011 Tour de Cure
JUNE
> Marked the 10th anniversary of SingTel Touching Lives Fund
with a flag day that raised S$80,000
> “Erase Cyberbullying” was launched with packs sent to
10,000 Australian schools
> Optus’ “Connecting Communities Grants” provided grants
of up to A$5,000 to each local community organisation
JULY
> As title sponsor for Race Against Cancer, SingTel and staff
donated S$200,000 to help children affected by cancer
AUGUST
> SingTel’s business partners and associates raised
S$820,000 through cash donations and sponsorships of
golf flights at the Charity Golf event
SEPTEMBER
> More than 87,000 origami and electronic hearts were
received during the Fold-A-Heart activity
NOVEMBER
> Optus staff donated over A$48,000 for Movember,
a fundraising event for depression initiatives
2012
MARCH
> SingTel and Optus supported Earth Hour 2012, switching
off façade lights at key office premises. For the first time,
SingTel Exclusive Retailers joined our SingTel shop outlets
to dim the interior lights
> Over A$430,000 was donated to Optus’ 13 charity partners
through its payroll-giving programme
49
CORPORATE SOCIAL RESPONSIBILITY
<
Optus team takes part in the
2011 Tour de Cure to raise funds
for the fight against cancer
^
Over 800 SingTel employees, their family members and friends raised
S$80,000 through a flag day
^
SingTel staff volunteers refurbishing an elementary
school in Ayutthaya, Thailand, that was damaged
by flooding
<
SingTel donates
S$1 to the SingTel
Touching Lives
Fund for each
origami heart
folded by these
school children
during the Fold-A-
Heart campaign
<
Vanessa Amorosi,
an Australian
singer, using the
“Make Cyberspace
a Better Place”
education pack
produced by Optus
and Kids Helpline
for schools
^
SingTel Group partners Ericsson to provide
emergency communications services to
support disaster relief efforts in South and
Southeast Asia – a world’s first operator
partnership for Ericsson Response
50
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
A LEGACY OF GIVING
In 2002, the SingTel Touching Lives Fund (STLF) was set up as
a coordinated corporate philanthropy programme to support
children and youths with special needs in Singapore.
Ten years on, the STLF has raised over S$22 million for
22 charities, thanks to the strong support from our business
partners, associates, employees, customers and members of
the public.
The STLF has contributed significantly towards critical and
specialised programmes, such as special education for the
intellectually or physically challenged, and programmes that
help young people with learning difficulties or who come
from disadvantaged home environments.
Some of the activities organised over the years have become
iconic events for the STLF banner. These include the annual
charity golf tournament and the Fold-A-Heart activity, which
is popular with students and members of the public, where
SingTel donates S$1 for every folded paper heart received.
In 2010, an e-version of the paper heart was introduced,
enabling the campaign to reach a wider audience.
SingTel fully underwrites all fundraising costs so that every
dollar donated to the STLF will go towards our beneficiary
organisations. On top of this, SingTel matches the donations
made by our staff and also makes a corporate donation to
the STLF.
Our regional mobile associates also played their part in going
green. All eight SingTel Group operators collaborated with GSMA
in a Mobile Energy Efficiency benchmarking initiative. A benchmark
will be developed for the operators to drive energy cost savings and
reduce greenhouse gas emissions in their network operations.
Joining Hands with Regional Associates
As a responsible corporate citizen, SingTel and our regional
mobile associates respond readily to support disaster relief efforts
where possible. During the year, we donated 2 million Baht to the
communities affected by the severe flooding in Thailand, as well as
500,000 Pesos to Globe’s disaster relief efforts for Typhoon Sendong
victims in the Philippines. AIS and Globe, besides outright cash
donations, also responded to the calamity by offering free call and
SMS services to victims, and set up internet stations in evacuation
centres to help them contact their loved ones.
We stepped up our community efforts with two SingTel Overseas
Volunteering Programme expeditions to Cebu, Philippines and
Ayutthaya, Thailand during the year, in conjunction with Globe
and AIS respectively, to help rebuild communities affected by
natural disasters.
SingTel and the regional mobile associates also partnered Ericsson
Response to provide emergency communications services to
support disaster relief efforts in South and Southeast Asia. This
marked the world’s first operator partnership for Ericsson Response.
Ensuring Customer Safety
The Group is committed to the safety and protection of our
customers. This includes data protection, as laid out in our
Sustainability Report. For example, our radiation emissions from
base stations are well within the acceptable limits of the guidelines
set by the local authority.
To protect children, we offer mobile applications which allow
parents to filter, block or allow access to specific sites as well as
to set age appropriate default settings. Optus takes this one step
further by partnering Kids Helpline and developing ready-made
lesson plans on cyberbullying with the aim of educating young
people about this major issue. These award-winning educational
packs were distributed to 10,000 schools across Australia, serving
as useful materials for teachers to educate their students about
cyberbullying, sexting and the safe use of technology.
51
OUR PEOPLE
Celebrating the lunar
new year at SingTel
^
Launch of SingTel ESPRESSO, an enterprise social network for
staff to engage each other and share information and ideas
^
Teamwork at work and play builds strong relationships
among Optus people
^
^
Optus people celebrating Christmas on campus
Employees are encouraged to take charge
of their health and well-being
^
^
HR practitioners across the Group come together to share
best practices
52
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Leading and Shaping Through People
Our people form the engine that drives our transformation into the
region’s leading multimedia and ICT solutions company.
AGE DISTRIBUTION
Singapore
We believe that workforce diversity is essential to building and
sustaining our competitive advantage through the fostering of
innovative solutions, and greater flexibility and responsiveness to
business needs.
Diversity at the Group refers to the ways in which we differ, including
gender, age, ethnicity, language, cultural background, physical
ability and lifestyle choice. We accept and respect these differences,
and leverage the richness of our varied backgrounds, ideas and
perspectives to support the Group in realising our potential in a
global market.
As a leading employer, we are committed to developing and
maintaining an inclusive and collaborative workplace and culture.
Through our values, policies and behaviours, we aim to promote
an environment where individual differences are recognised and
valued. All employees have the opportunity to realise their potential
and contribute to our overall success.
This commitment includes establishing measurable diversity
objectives, beginning with gender diversity in our main employee
populations in Australia and Singapore. We will continuously
improve the proportion of women across all levels of our workforce,
ensuring that female voices are well-represented across the Group
throughout our pipeline of talent.
Engaging Our People
Our core values of Customer Focus, Challenger Spirit, Teamwork,
Integrity and Personal Excellence provide a common foundation
for how we work with each other, our customers and other
stakeholders.
Our “Connect & Grow” employee value proposition underscores our
commitment to building strong relationships among our people
and developing talent across the company. We tailor this value
proposition to keep up with changing times and varying needs
across different employee segments. Our enterprise social network,
SingTel ESPRESSO was launched on 11 November 2011 in
Singapore as a platform to engage with each other and share
ideas, and will be rolled out to the rest of the Group. We also
introduced further automation to improve employee experience
and increase productivity, such as enabling employee transactions
through mobile device applications.
Australia
Age Demographics
Boomers (Pre-1964)
29%
Gen X (1965-1977)
Gen Y (1978 onward)
35%
36%
Age Demographics
Boomers (Pre-1964)
20%
Gen X (1965-1977)
Gen Y (1978 onward)
43%
37%
OUR WORKFORCE OF APPROXIMATELY
23,000
employees around the globe represents 92
nationalities, from Australia to Zimbabwe.
53
OUR PEOPLE
We continued with our relentless focus on employee engagement,
a key component of the People Plan which is integral to our strategic
business planning process. Our global engagement framework
facilitates the analysis of direct employee feedback to help garner
insights into the drivers of employee engagement, motivation and
retention across the Group.
Attracting and Developing Talent
Our ability to attract capable and talented candidates – from
emerging young talent to strategic senior-level hires – is imperative
to strengthening existing expertise and building new capabilities.
We have been expanding recruitment channels into various
educational, networking and social media platforms to better engage
with and attract such talent.
Scholarship programmes help us identify young talent while strategic
internships and cadetship programmes offer direct exposure to the
dynamic environment, people and work of the Group.
Since its inception in 2009, the SingTel Group Undergraduate
Scholarship programme has awarded 16 scholarships and 15 book
prizes to students in Indonesia, the Philippines, Singapore and
Thailand. The book prizes are awarded to outstanding students
who reach the final selection interview.
In addition to full scholarships at top local universities, the scholars
also enjoy mentoring and internship opportunities at the SingTel
Group of companies locally and overseas.
We attract new graduate talent through our special graduate
recruitment initiatives and graduate programmes which provide
accelerated
learning and development opportunities across
the Group.
We also equip our people to be the best they can be, through holistic
training tailored to the needs of different employee segments, at
different stages of their careers. We deploy a multi-faceted approach
to learning and development through experience, relationship and
education-based interventions.
A highly interactive and comprehensive programme is in place to
welcome new hires and help them integrate into the organisation.
Employees are encouraged to take charge of their careers, with
guidance from their managers. Tools such as individual development
plans, competency frameworks and career roadmaps as well as
online resources enable employees to understand their career
options and ways to achieve their career objectives.
We continually enhance our management and technical capabilities
via specialised technical training and leadership programmes.
Our annual Learning Fiestas and Career Expos offer an engaging
forum for employees to take part in bite-sized, targeted learning on
a variety of strategic, technical, personal development and lifestyle
topics. eLearning and mLearning modules have been deployed to
align with how people learn in this digital age while regular forums
featuring globally renowned thought leaders feed innovative
strategic thinking.
The Group’s scope and diversity across different businesses and
geographies enable us to offer exciting and challenging career
growth and development opportunities while enhancing the
combined capabilities of the Group. Job rotations, regional talent
exchange programmes and secondments, including cross-affiliate
assignments, provide rich experiences and abundant opportunities
to develop cross-market and cross-functional excellence.
Grooming Leaders
A strong and competent leadership bench is essential for sustainable
business success. We invest heavily in leadership development to
ensure our current and future leaders can lead effectively and shape
a culture of empowerment, collaboration and excellence to deliver
on our objectives.
During the year, we continued to enhance our Group-wide leadership
development programmes. The curriculum for our Game for Global
Growth programme was refined to enhance collaboration and
knowledge sharing among leaders from the Group and regional
mobile associates who prepare to take on more significant roles. Our
Regional Leadership in Action programme, which grooms high-
potential emerging leaders to manage business operations in a multi-
national and multi-organisational context, was revamped to increase
exposure to a larger group of emerging leaders.
Driving and Rewarding Performance
We are proud of our high performance culture, and ensure each
employee understands the company’s strategic direction and the
part they play in contributing to our vision and mission. Corporate
strategies are translated into actionable objectives and cascaded
throughout the organisation.
Our philosophy is to align employee rewards with performance,
whether that be team or individual performance, as well as the
embodiment of our core values. People managers are measured on
and rewarded for not only the achievement of business results but
also how well they engage, lead and develop their teams. Incentives
54
are designed to motivate continued excellence while ensuring
ongoing relevance to evolving business and market contexts.
GENDER DISTRIBUTION
Safe and Healthy Work Environment
SingTel is committed to providing a healthy, positive and conducive
work environment for all employees, and ensuring the safety of
employees, business partners and the public.
Supporting health and well-being – physical, mental and social – is
a key component of our people management strategy. We actively
promote employee wellness and encourage employees to take
control of their health. Health clubs and gymnasiums are available
onsite across various locations, while healthier food options are
made available at all staff cafeterias. Talks, health screenings and
external professional counselling services on work-life issues through
our employee assistance programmes are some examples of
health management tools made widely available to our people.
leave
Family-friendly policies,
arrangements, are also offered, as are onsite childcare facilities at
some locations.
flexible work and
including
Workplace Safety and Health (WSH) information is easily accessible
online and at all our premises. WSH briefings are conducted during
new employee orientation, and we ensure that fire wardens and
health managers are appointed and equipped throughout our
locations. We have also established a set of guidelines for vendor
selection, which is especially critical for vendors performing
physical work in our workplace or worksites.
Employee Relations
We foster a strong proactive and collaborative partnership with
employees directly as well as through the Union of Telecoms
Employees of Singapore, with whom a new collective agreement
was successfully concluded in January 2012. Our Employment
Partnership Agreement in Australia, a collective agreement made
directly between Optus and employees since 1994, was renewed in
late 2009 for a further three years.
Our proactive approach to employee relations was demonstrated
by our
in
September 2011, ahead of Singapore legislation which took effect
on 1 January 2012.
implementation of re-employment at age 62
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Singapore
Operational Support
Professional & Technical
Middle Management
Top Management
Total
Australia
Operational Support
Professional & Technical
Middle Management
Top Management
Total
42.3
33.4
37.6
26.7
37.6
38.5
28.2
18.5
14.3
32.2
(%)
57.7
66.6
62.4
73.3
62.4
61.5
71.8
81.5
85.7
67.8
Female
Male
>
The Group’s scope and diversity
across different businesses and
geographies enable us to offer exciting
and challenging career growth and
development opportunities while
enhancing the combined capabilities
of the Group.
55
CORPORATE GOVERNANCE
INTRODUCTION
Good corporate governance ensures key stakeholders’ interests
are protected and enhances corporate performance and
accountability. SingTel aspires to the highest standards of
corporate governance and, to this end, has put in place a set of
well-defined policies and processes.
multiple directorships, enhanced remuneration disclosures, and
poll voting at shareholder meetings.
In line with corporate governance best practices, certain
enhancements to the SingTel Group’s corporate governance
regime have been made, including the following:
is guided
As SingTel shares are listed on both the Singapore Exchange
Securities Trading Limited (SGX) and Australian Securities
Exchange (ASX), SingTel seeks to comply with two sets of
listing rules and
its corporate governance
practices by the Singapore Code of Corporate Governance
2005 (2005 Code) as well as the ASX Corporate Governance
Principles and Recommendations with 2010 Amendments
(ASX Code). Where one Exchange has more stringent
requirements, SingTel will strive
the more
stringent requirements.
to observe
in
(cid:353)(cid:3) (cid:58)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3) (cid:72)(cid:80)(cid:83)(cid:75)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3) (cid:82)(cid:81)(cid:3) (cid:85)(cid:76)(cid:86)(cid:78)(cid:3) (cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3)
heightened risks and greater complexity in the business and
economic environment, a separate Risk Committee (RC) was
set up to assist the Board in overseeing the governance of
in the Group’s business. With this, the Finance,
risk
Investment and Risk Committee has been renamed the
Finance and Investment Committee in May 2012, and all items
relating to risk oversight are now covered by the RC. For more
details, see the ‘Risk Committee’ section on page 62.
On 2 May 2012, the revised Code of Corporate Governance
2012 was issued, and while it does not take effect yet, SingTel
already complies with many of the key revised guidelines,
including those relating to proportion of independent directors
on the board, the appointment of a lead independent director,
(cid:353)(cid:3) (cid:44)(cid:81)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:36)(cid:54)(cid:59)(cid:3) (cid:38)(cid:82)(cid:71)(cid:72)(cid:15)(cid:3)
SingTel has enhanced its disclosures on diversity within the
Group. For details, please refer to the ‘Board Composition,
Diversity and Balance’ section on pages 57 to 58 and the ‘Our
People’ section on pages 52 to 55.
Directors’ Attendance at Board Meetings during the Financial Year Ended 31 March 2012 (1)
Name of Director
Simon Israel
Bobby Chin Yoke Choong (2)
Chua Sock Koong
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian (3)
Peter Edward Mason AM (4)
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
Ong Peng Tsin
Chumpol NaLamlieng (5)
Graham John Bradley AM (4)(5)
Nicky Tan Ng Kuang (5)
Scheduled Board Meetings
Ad Hoc Board Meetings
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
6
-
6
6
6
6
6
6
6
6
2
2
2
6
-
6
6
6
6
5
6
6
6
2
2
2
1
-
1
1
1
1
1
1
1
1
0
0
0
1
-
1
1
1
1
1
1
1
1
0
0
0
Notes:
(1) Refers to meetings held/attended while each Director was in office.
(2) Mr Bobby Chin Yoke Choong was appointed to the Board on 1 May 2012.
(3) Mr Low Check Kian was appointed to the Board on 9 May 2011.
(4) Member of the Order of Australia.
(5) Mr Chumpol NaLamlieng, Mr Graham John Bradley and Mr Nicky Tan Ng Kuang retired following the conclusion of the AGM held on 29 July 2011.
56
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
This report sets out SingTel’s main corporate governance
practices with reference to the 2005 Code and the ASX Code.
Unless otherwise stated, these practices were in place for the
entire financial year. SingTel complies with the 2005 Code save
that, in respect of Board appraisal, the Board is of the view that
financial indicators are not appropriate criteria for assessing the
Board’s performance as the Board’s role is seen to be more in
formulating, rather than executing, strategy and policy. SingTel
also complies with the ASX Code.
The Board of Directors is responsible for SingTel’s corporate
governance standards and policies, and stresses their importance
across the Group. SingTel has received accolades from the
investment community for excellence in corporate governance.
More details are included in the ‘Key Awards and Accolades’
section on pages 22 to 23.
BOARD MATTERS
Board’s Conduct of its Affairs
The Board oversees the business affairs of the SingTel Group.
It assumes responsibility for the Group’s overall strategic
plans and performance objectives, financial plans and annual
budget, key operational initiatives, major funding and investment
proposals, financial performance reviews, compliance and
accountability systems, and corporate governance practices.
The Board also appoints the Group CEO, approves the policies
and guidelines for Board and Senior Management remuneration,
and approves the appointment of Directors. In line with best
practices in corporate governance, the Board also oversees long
term succession planning for Senior Management.
SingTel has established financial authorisation and approval
limits for operating and capital expenditure, the procurement
of goods and services, and the acquisition and disposal of
investments. Apart from matters that specifically require
the Board’s approval, such as the issue of shares, dividend
distributions and other returns to shareholders, the Board
approves transactions exceeding certain threshold limits, while
delegating authority for transactions below those limits to
Board Committees and the Management Committee so as to
optimise operational efficiency.
The Board meets regularly, and sets aside time at each
scheduled Board meeting to meet without the presence of
Management. Board meetings generally last a full day and
include presentations by senior executives and external
consultants/experts on strategic issues relating to specific
business areas, as well as presentations by each of the Group’s
associates during the course of the year, to allow the Board to
develop a good understanding of the Group’s businesses and to
promote active engagement with the Group’s partners and key
executives. Typically, at least one Board meeting a year is held
overseas, in a country where the Group either has significant
investment or has an interest in investing or where Board
members can be exposed to new technology relevant to the
Group’s growth strategy. On such occasions, the Board may meet
with local business leaders and government officials, so as to help
the Board gain greater insight into such countries. The Board also
meets SingTel’s partners in those countries to develop stronger
relationships with such partners. In addition to approximately
seven scheduled meetings each year, the Board meets as and
when warranted by particular circumstances. Seven Board
meetings were held in the financial year ended 31 March 2012.
Meetings via telephone or video conference are permitted by
SingTel’s Articles of Association.
A record of the Directors’ attendance at Board meetings during
the financial year ended 31 March 2012 is set out on page 56.
Directors are required to act in good faith and in the interests of
SingTel. All new Directors appointed to the Board are briefed on
the Group’s business activities, strategic direction and policies,
key business risks, and the regulatory environment in which
the Group operates, as well as their statutory and other duties
and responsibilities as Directors. In line with best practices in
corporate governance, the 2005 Code and the ASX Code, new
Directors also receive a letter from the Company stating clearly
the Board’s role and the role of non-executive Directors, the time
commitment that the Director would be expected to allocate
and other relevant matters.
Board Composition, Diversity and Balance
The size and composition of the Board are reviewed from time to
time by the Corporate Governance and Nominations Committee
(CGNC), which seeks to ensure that the size of the Board is
conducive to effective discussion and decision making, and that
the Board has an appropriate number of independent Directors.
The CGNC also seeks to maintain a diversity of expertise, skills
and attributes among the Directors, including relevant core
competencies in areas such as accounting and finance, business
and management,
industry knowledge, strategic planning,
customer-based experience and knowledge, and regional
business expertise, as well as taking into account broader
diversity considerations, such as gender, age, nationality/
ethnicity, etc., in making appointments. When a Board position
becomes vacant or additional Directors are required, the CGNC
will continue to select and recommend candidates on the
basis of their skills, experience, knowledge and diversity. Any
potential conflicts of interest are taken into consideration.
Reflecting the focus of the Group’s business in the region, four
of SingTel’s 10 Directors are from countries outside Singapore,
57
CORPORATE GOVERNANCE
namely, the Chairman, Mr Simon Israel, and non-executive
Directors, Messrs Dominic Chiu Fai Ho, Peter Edward Mason
AM and Kaikhushru Shiavax Nargolwala. There are two
female Directors, namely Ms Chua Sock Koong and Mrs Fang
Ai Lian.
In order to help attract high calibre international directors to the
SingTel Board, especially in the case of candidates who come
from jurisdictions where it is common practice for companies to
grant Deeds of Indemnity to their directors, SingTel has adopted a
policy on the grant of Deeds of Indemnity to Directors, to provide
assurance to Directors that they are adequately covered against
personal liability incurred in the course of performing their
professional duties.
The CGNC assesses the independence of each Director, taking
into account the guidance in the 2005 code and the ASX code
for assessing independence. On this basis, Ms Chua Sock Koong,
SingTel’s Group CEO, Mr Simon Israel, Chairman of the SingTel
Board and Mr Peter Ong Boon Kwee, Permanent Secretary of
the Ministry of Finance, Singapore are the only non-independent
Directors.
A Director who has no relationship with the Group or its officers
that could interfere, or be reasonably perceived to interfere,
with the exercise of his independent business judgement in the
best interests of SingTel, is considered to be independent. All
members of the Board, except those identified above as being
non-independent, are considered to be independent Directors.
In assessing the independence of the Directors, the CGNC has
examined the different relationships identified by the 2005 Code
and the ASX Code that might impair the Directors’ independence
and objectivity, and is satisfied that the Directors are able to act
with independent judgement.
The profile of each Director and other relevant information are
set out under ‘Board of Directors’ from pages 14 to 17.
The Chairman and the Group CEO
The Chairman of the Board is a non-executive appointment and
is separate from the office of the Group CEO. The Chairman leads
the Board and is responsible for ensuring the effectiveness of
the Board and its governance processes, while the Group CEO is
responsible for implementing the Group’s strategies and policies,
and for conducting the Group’s business. The Chairman and the
Group CEO are not related.
boardroom. This includes setting the agenda of the Board, and
promoting active engagement and an open dialogue amongst
the Directors, as well as between the Board and the Group
CEO. The Chairman also provides support and advice to, and
acts as a sounding board for, the Group CEO, while respecting
executive responsibility. In addition, the Chairman ensures that
the performance of the Board is evaluated regularly, and takes
the lead in addressing the development needs of the Board. The
Chairman plays a key role in the performance appraisal exercise
for the Group CEO, as well as in overseeing talent management,
and works with the Group CEO to ensure that robust succession
plans are in place for the senior leadership team. In addition, the
Chairman works with the Board, the relevant Board Committees
and Management to establish the boundaries of risk undertaken
by the Group.
The Chairman plays a significant leadership role by providing
clear oversight, advice and guidance to the Group CEO and
Management in the drive to transform SingTel’s businesses. This
involves developing a keen understanding of the Group’s diverse
and complex businesses, the industry, partners, regulators
and competitors. The Chairman also maintains effective
communications with major shareholders and supports the
Group CEO in engaging with a wide range of other stakeholders
such as partners, governments and regulators. In this connection,
he takes the time to travel overseas to visit the Group’s key
associates in the region and in the process, fosters strong
relationships with the Group’s partners as well as gathers
valuable feedback for Management to consider and follow up on.
The scope and extent of the Chairman’s and the Board’s
responsibilities and obligations have been expanding due to the
increased focus on risk management and corporate governance,
and enhanced regulatory requirements in the aftermath of the
global financial crises. Given the increased demands on the
Board and the Chairman, the Chairman has been and is expected
to spend more time on, and be more hands-on in, the affairs of
the Group. In this regard, the Board has agreed with the Chairman
that he will commit a significant proportion of his time to his role
and will manage his other time commitments accordingly.
Lead Independent Director
The Lead Independent Director is appointed by the Board to serve
in a lead capacity to coordinate the activities of the non-executive
Directors in circumstances where it would be inappropriate
for the Chairman to serve in such capacity, and to assist the
Chairman and the Board to assure effective corporate governance
in managing the affairs of the Board and the Company.
Role of the Chairman
The Chairman is responsible for leadership of the Board and is
pivotal in creating the conditions for overall Board, Committee
and individual Director effectiveness, both inside and outside the
The Lead Independent Director serves as chairman of the
Corporate Governance and Nominations Committee. The role
of the Lead Independent Director includes meeting with the
58
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
non-executive Directors without the Chairman present at least
annually to appraise the Chairman’s performance and on such
other occasions as are deemed appropriate. He will also be
available to shareholders if they have concerns relating to matters
which contact through the normal channels of the Chairman,
Group CEO or Group CFO has failed to resolve, or where such
contact is inappropriate.
Board Membership
The Corporate Governance and Nominations Committee (CGNC)
establishes and reviews the profile required of Board members
and makes recommendations to the Board on the appointment,
re-nomination and retirement of Directors.
When an existing Director chooses to retire or is required to retire
from office by rotation, or the need for a new Director arises,
the CGNC reviews the range of expertise, skills and attributes
of the Board and the composition of the Board. The CGNC then
identifies SingTel’s needs and prepares a shortlist of candidates
with the appropriate profile for nomination or re-nomination.
Where necessary, the CGNC may seek advice from external
search consultants.
The CGNC takes factors such as attendance, preparedness,
participation and candour into consideration when evaluating
the past performance and contributions of a Director for
recommendation to the Board. However, the re-nomination
or replacement of a Director does not necessarily reflect the
Director’s performance or contributions to the Board. The CGNC
may have to consider the need to position and shape the Board in
line with the evolving needs of SingTel and the business. In order
to ensure Board renewal, the Board has in place guidelines on the
tenure of the Chairman and Directors.
Directors must ensure that they are able to give sufficient time
and attention to the affairs of SingTel and, as part of its review
process, the CGNC decides whether or not a Director is able
to do so and whether he has been adequately carrying out his
duties as a Director of SingTel. The Board has also adopted an
internal guideline that seeks to address the competing time
commitments that may be faced when a Director holds multiple
board appointments. The guideline provides that, as a general
rule, each Director should hold no more than six principal board
appointments. The guideline includes the following: (1) in support
of their candidature for directorship or re-election, Directors are
to provide the CGNC with details of other commitments and an
indication of the time involved; and (2) non-executive Directors
should consult the Chairman or chairman of the CGNC before
accepting any new appointments as Directors.
A Director must retire from office at the third Annual General
Meeting (AGM) after the Director was elected or last re-elected. A
retiring Director is eligible for re-election by SingTel shareholders
at the AGM. In addition, a Director appointed by the Board to fill a
casual vacancy or appointed as an additional Director may only
hold office until the next AGM, at which time he will be eligible
for re-election by shareholders. If at any AGM, fewer than three
Directors would retire pursuant to the requirements set out
above, the additional Directors to retire at that AGM shall be
those who have been longest in office since their last re-election
or appointment. The Group CEO, as a Director, is subject to the
same retirement by rotation, resignation and removal provisions
as the other Directors and such provisions will not be subject to
any contractual terms that may have been entered into with the
Company. Shareholders are provided with relevant information
on the candidates for election or re-election.
Board Performance
The Board and the Corporate Governance and Nominations
Committee (CGNC) strive to ensure that Directors on the Board
possess the experience, knowledge and skills critical to the
Group’s business so as to enable the Board to make sound and
well-considered decisions.
Directors also participate in an annual offsite workshop with
Senior Management to strategise and plan the Group’s longer
term strategy. Training and development programmes for
Directors include talks and presentations by renowned experts
and professionals in various fields, such as telecommunications,
technology, regulatory matters and the economic/business
environment in relevant markets. The Directors may also
attend other appropriate courses, conferences and seminars.
In addition, Board meetings may be held in overseas locations
where Board members can be exposed to new technology
relevant to the Group’s growth strategy, such as the Board’s
visit to Silicon Valley. The Board may also hold Board meetings
in conjunction with key industry events where relevant experts
would be invited to speak to the Board on issues relevant to the
Group’s businesses.
the
financial
independent
Each year, the CGNC undertakes a process to assess the
effectiveness of the Board as a whole and the contributions
by each Director. The Board, led by the Lead Independent
Director, also assesses the effectiveness of the Chairman.
During
external
year, an
consultant was appointed to facilitate the evaluation of the
Board and Board Committees, as well as the Directors’ peer
appraisal exercise. Directors were requested to complete
appraisal forms to assess the overall effectiveness of the Board
and the Board Committees, as well as each individual Director’s
contributions to the Board and Board Committees. The results
of the appraisal exercise were considered by the CGNC, which
then made recommendations to the Board, aimed at helping the
Board discharge its duties more effectively. The appraisal process
59
Each Board Committee may make decisions on matters within its
terms of reference and applicable limits of authority. The terms
of reference of each Committee are reviewed from time to time,
as are the Committee structure and membership.
The selection of Board Committee members requires careful
management to ensure that each Committee comprises Directors
with appropriate qualifications and skills, and that there is an
equitable distribution of responsibilities among Board members.
The need to maximise the effectiveness of the Board, and to
encourage active participation and contribution from Board
members, is also taken into consideration.
A record of each Director’s Board Committee memberships and
attendance at Board Committee meetings during the financial
year ended 31 March 2012 is set out on page 61.
Finance and Investment Committee
The Finance and Investment Committee (FIC) comprises at least
three Directors, the majority of whom shall be independent
Directors. Membership of the Audit Committee and the FIC are
mutually exclusive.
The main responsibilities of the FIC include the provision of
advisory support on the development of the SingTel Group’s
overall strategy, review of strategic
issues, approval of
investments and divestments, review of the Group’s Investment
and Treasury Policies, evaluation and approval of any financial
offers and banking facilities and management of the Group’s
liabilities in accordance with the policies and directives of
the Board. In addition, the FIC reviews and approves guarantees,
letters of comfort and letters of awareness, and approves
consultancy
fees, capital expenditure, and write-off of
irrecoverable debts in accordance with the SingTel Board’s
policies and directives.
The FIC also oversees any on-market share repurchases pursuant
to SingTel’s share purchase mandate.
CORPORATE GOVERNANCE
focused on the evaluation of factors such as Board composition,
information management, Board processes, corporate integrity
and social responsibility, managing the Company’s performance,
strategic
review, Board Committee effectiveness, CEO
performance and succession planning, Director development and
management, managing risk adversity and overall perception of
the Board.
In addition to the appraisal exercise, the contributions and
performance of each Director were assessed by the CGNC as part
of its periodic reviews of the composition of the Board and the
various Board Committees. In the process, the CGNC was able to
identify areas for improving the effectiveness of the Board and
its Committees.
Access to Information
Prior to each Board meeting, SingTel’s Management provides
the Board with information relevant to matters on the agenda
for the Board meeting. The Board also receives regular reports
pertaining to the operational and financial performance of the
Group, as well as weekly updates which include information
on the Group’s competitors, and industry and technological
developments. In addition, Directors receive analysts’ reports
on SingTel and other telecommunications and digital companies
on a quarterly basis. Such reports enable the Directors to keep
abreast of key issues and developments in the industry, as well as
challenges and opportunities for the Group. In line with SingTel’s
commitment to conservation of the environment, as well as
technology advancement, SingTel has done away with hard copy
Board papers and Directors are instead provided with tablet
devices to enable them to access and read Board and Board
Committee papers prior to and at meetings.
The Board has separate and independent access to the Senior
Management and the Company Secretary at all times. The
Company Secretary attends all Board meetings and is responsible
for, among other things, ensuring that Board procedures
are observed and that applicable rules and regulations are
complied with. Procedures are in place for Directors and Board
Committees, where necessary, to seek independent professional
advice, paid for by SingTel.
Board and Management Committees
The following Board Committees assist the Board in executing
its duties:
(cid:353)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:353)(cid:3)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:353)(cid:3)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:353)(cid:3)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:53)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:353)(cid:3)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:49)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:353)(cid:3)(cid:3)(cid:50)(cid:83)(cid:87)(cid:88)(cid:86)(cid:3)(cid:36)(cid:71)(cid:89)(cid:76)(cid:86)(cid:82)(cid:85)(cid:92)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:17)
60
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Directors’ Board Committee Memberships and Attendance at Board Committee Meetings during the Financial Year Ended
31 March 2012 (1) (2)
Finance and
Investment
Committee
Audit Committee
Executive
Resource and
Compensation
Committee
Corporate
Governance and
Nominations
Committee
Optus Advisory
Committee
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
Number of
Meetings
Held
Number of
Meetings
Attended
6
6
5
1
6
2
6
6
5
1
6
2
4
4
4
4
4
4
4
4
4
3
9
10
10
9
9
1
4
4
9
10
10
9
9
1
2
4
2
3
3
2
3
3
1
2
2
3
2
3
3
1
4
4
4
3
2
2
4
4
4
3
2
2
Name of Director
Simon Israel (3)
Bobby Chin Yoke Choong (4)
Chua Sock Koong (5)
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian (6)
Peter Edward Mason AM (7)
Kaikhushru Shiavax Nargolwala (8)
Peter Ong Boon Kwee (9)
Ong Peng Tsin (10)
Chumpol NaLamlieng (11)
Graham John Bradley AM (11)
Nicky Tan Ng Kuang (11)
Notes:
(1) Refers to meetings held/attended while each Director was in office.
(2) The Risk Committee was established, and the Finance, Investment and Risk Committee was renamed the Finance and Investment Committee, in
May 2012.
(3) Mr Simon Israel was appointed to the Executive Resource and Compensation Committee on 11 May 2011 and the Corporate Governance and
Nominations Committee on 8 July 2011.
(4) Mr Bobby Chin Yoke Choong was appointed to the Board on 1 May 2012 and the Risk Committee on 9 May 2012.
(5) Ms Chua Sock Koong is not a member of the Committees other than the Optus Advisory Committee although she was in attendance at meetings of
those Committees as appropriate.
(6) Mr Low Check Kian was appointed to the Board on 9 May 2011, and the Corporate Governance and Nominations Committee and the Finance,
Investment and Risk Committee on 11 May 2011.
(7) Mr Peter Edward Mason was appointed to the Executive Resource and Compensation Committee and ceased to be a member of the Finance,
Investment and Risk Committee on 11 May 2011.
(8) Mr Kaikhushru Shiavax Nargolwala was appointed to the Executive Resource and Compensation Committee on 11 May 2011.
(9) Mr Peter Ong Boon Kwee was appointed to the Risk Committee and ceased to be a member of the Corporate Governance and Nominations Committee
on 9 May 2012.
(10) Mr Ong Peng Tsin was appointed to the Optus Advisory Committee on 11 May 2011 and ceased to be its member on 9 May 2012. He also ceased to
be a member of the Executive Resource and Compensation Committee on 11 May 2011 and was appointed to the Risk Committee on 9 May 2012.
(11) Mr Chumpol NaLamlieng, Mr Graham John Bradley and Mr Nicky Tan Ng Kuang retired following the conclusion of the AGM held on 29 July 2011.
61
CORPORATE GOVERNANCE
Audit Committee
The Audit Committee (AC) comprises at least three Directors,
all of whom shall be non-executive Directors and the majority
of whom,
independent
including the chairman, shall be
Directors. At least two members of the AC must have accounting
or related financial management expertise or experience. As
required by the terms of reference of the AC, the chairman of the
AC is a Director other than the Chairman of the Board. The AC
members are all non-executive Directors, and the majority of the
members, including the chairman, are independent.
The AC has explicit authority to investigate any matter within its
terms of reference, and has the full cooperation of and access
to Management. It has direct access to the internal and external
auditors, and full discretion to invite any Director or executive
officer to attend its meetings.
The main responsibilities of the AC are to assist the Board in
discharging its statutory and other responsibilities relating to
internal controls, financial and accounting matters, compliance,
and business and financial risk management.
fraud risk exposure in the Group. The AC also reviewed the
adequacy of the whistle-blower arrangements instituted by the
Group through which staff and external parties may, in confidence,
raise concerns about possible improprieties in matters of financial
reporting or other matters. All whistle-blower complaints were
reviewed by the AC at its quarterly meetings to ensure independent
and thorough investigation and adequate follow-up.
The Audit Committee met four times during the financial year. At
these meetings, the Group CEO, Group CFO, Vice President Group
Finance, Group Chief Internal Auditor and the respective CEOs
and CFOs of the businesses were also in attendance. During the
financial year, the AC reviewed the quarterly financial statements
prior to approving or recommending to the Board of their
release, as applicable. It reviewed the results of audits performed
by SingTel Internal Audit based on the approved audit plan,
significant litigation and fraud investigations, SingTel’s register of
interested person transactions and non-audit services rendered
by the external auditors. The AC also met with the internal and
external auditors, without the presence of Management, during
the financial year.
The AC reports to the Board on the results of the audits
undertaken by the internal and external auditors, the adequacy
of disclosure of information, and the appropriateness and quality
of the system of risk management and internal controls. It reviews
the quarterly and annual financial statements with Management
and the external auditors, reviews and approves the annual audit
plans for the internal and external auditors, and reviews the
internal and external auditors’ evaluation of the Group’s system
of internal controls.
Risk Committee
The role of the Risk Committee (RC) is to assist the Board in
fulfilling its responsibilities in relation to governance of material
risks in the Group’s business. These responsibilities include
ensuring that Management maintains a sound system of risk
management and internal controls to safeguard shareholders’
interests and the Group’s assets, and determining the nature and
extent of the material risks which the Board is willing to take in
achieving the Group’s strategic objectives.
The AC is responsible for evaluating the cost-effectiveness of
audits, the independence and objectivity of the external auditors,
and the nature and extent of the non-audit services provided by
the external auditors to ensure that the independence of the
external auditors
It also makes
is not compromised.
recommendations to the Board on the appointment or re-
appointment of the external auditors. In addition, the AC reviews
and approves the SingTel Internal Audit Charter to ensure the
independence and effectiveness of the internal audit function.
At the same time, it ensures that the internal audit function
is adequately resourced and has appropriate standing within
SingTel. The AC also reviews the performance of Internal Audit,
including the performance and compensation of the Group Chief
Internal Auditor.
The RC comprises at least three members, the majority of whom
shall be independent. Members of the RC shall be appointed by
the Board, on the recommendation of the Corporate Governance
and Nominations Committee. There shall be at least one common
member between the RC and the Audit Committee.
The RC shall review the Group’s strategy, policies, framework,
processes and procedures for the identification, measurement,
reporting and mitigation of material risks in the Group’s business
and report any significant matters, findings and recommendations
in this regard to the Board.
The RC shall meet at least three times a year, with additional
meetings to be convened as deemed necessary by the chairman
of the RC.
During the financial year, the AC reviewed the Management’s
and SingTel Internal Audit’s assessment of fraud risk and held
discussions with the external auditors to obtain reasonable
assurance that adequate measures were put in place to mitigate
Executive Resource and Compensation Committee
The Executive Resource and Compensation Committee (ERCC)
comprises at least three Directors, all of whom shall be non-
62
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
executive and the majority of whom shall be independent. The
ERCC is chaired by an independent non-executive Director. The
ERCC has access to expert advice inside and/or outside SingTel.
Information Officer, Group Chief Strategy Officer and Group
Director Human Resources.
The main responsibilities of the ERCC are to approve the Group’s
policies on executive remuneration, and to administer and review
any long-term incentive schemes of SingTel.
The ERCC approves or recommends to the Board the appointment,
promotion and remuneration of key management positions.
Policies and guidelines for Directors’ compensation are also
recommended by the ERCC for the Board’s endorsement.
The ERCC also ensures that appropriate recruitment, development
and succession planning programmes are in place for key
executive roles.
The Group CEO, who is not a member of the ERCC, may attend
meetings of the ERCC but does not attend discussions relating to
her own performance and remuneration.
SingTel’s remuneration policy and remuneration for Directors and
Senior Management are discussed in this report from pages 67
to 71.
Corporate Governance and Nominations Committee
The Corporate Governance and Nominations Committee (CGNC)
comprises at least three Directors, the majority of whom, including
the chairman, shall be independent. In line with the 2005 Code,
the chairman of the Committee is not a substantial shareholder
of SingTel, nor is he directly associated with any substantial
shareholder of SingTel.
The main functions of the CGNC are outlined in the commentaries
on ‘Board Composition, Diversity and Balance’, ‘Board Membership’
and ‘Board Performance’ from pages 57 to 60. The CGNC is also
responsible for the development and review of SingTel’s corporate
governance principles and practices, taking into account relevant
local and international developments in the area of corporate
governance.
Optus Advisory Committee
The Optus Advisory Committee comprises at least three Directors,
the majority of whom shall be non-executive Directors. The
Committee reviews strategic business issues relating to the
Australian business.
Management Committee
In addition to the six Board Committees, SingTel has a Management
Committee that comprises the Group CEO, CEO Group Consumer,
CEO Group Digital L!fe, CEO Group ICT, Group CFO, Group Chief
The Management Committee meets every week to review and
direct Management on operational policies and activities.
ACCOUNTABILITY AND AUDIT
Accountability
SingTel recognises the importance of providing the Board with
accurate and relevant information on a timely basis. Hence, Board
members receive monthly financial and business reports from
SingTel’s Management. Such reports compare SingTel’s actual
performance against the budget, and highlight key business
drivers/indicators and major issues that are relevant to SingTel’s
performance, position and prospects.
For the financial year ended 31 March 2012, SingTel’s Group CEO
and Group CFO have provided written confirmation to the Board
on the integrity of SingTel’s financial statements and on SingTel’s
risk management, compliance and internal control systems.
This certification covers SingTel and the subsidiaries which are
under SingTel’s management control. In line with the SGX Listing
Rules, the Board provides a negative assurance statement to
shareholders in respect of the interim financial statements, which
is supported by a negative assurance statement from the Group
CEO and Group CFO.
Internal Audit
SingTel Internal Audit comprises a team of 53 staff members,
including the Group Chief Internal Auditor who reports to the Audit
Committee (AC) functionally and to the Group CEO administratively.
SingTel Internal Audit is a member of the Singapore chapter of
the Institute of Internal Auditors (IIA) and adopts the International
Standards for the Professional Practice of Internal Auditing (the IIA
Standards) laid down in the International Professional Practices
Framework issued by the IIA. SingTel Internal Audit successfully
completed another external Quality Assurance Review in 2010 and
continues to meet or exceed the IIA Standards in all key aspects.
SingTel Internal Audit adopts a risk-based approach in formulating
the annual audit plan which aligns its activities to the key risks
across the Group’s business. This plan is reviewed and approved
by the AC. The reviews performed by SingTel Internal Audit are
aimed at assisting the Board in promoting sound risk management
and good corporate governance, through assessing the design
and operating effectiveness of controls that govern key business
processes and risks identified in the overall risk framework of the
Group. SingTel Internal Audit’s reviews also focus on compliance
with SingTel’s policies, procedures and regulatory responsibilities,
63
CORPORATE GOVERNANCE
performed in the context of financial and operational, revenue
assurance and information systems reviews. SingTel Internal
Audit engages closely with Management in its internal consulting
and control advisory role to promote effective risk management,
internal control and governance practices in the development of
new products/services, and implementation of new/enhanced
systems and processes. SingTel Internal Audit also collaborates
with the internal audit functions of SingTel’s regional mobile
associates to promote joint reviews and the sharing of knowledge
and/or internal audit best practices.
and management of significant risks and reports to the Board on
material matters, findings and recommendations pertaining to risk
management. The Audit Committee (AC) provides oversight of the
financial reporting risk and the adequacy and effectiveness of the
Group’s internal control and compliance systems. In May 2012, a
separate Board-level Risk Committee (RC) was established by the
Board to assist in its responsibilities relating to the governance of
risk and to provide an increased focus on and a more integrated
Group-wide perspective in the oversight of material risks in the
Group’s business.
To ensure that the internal audits are performed effectively,
SingTel Internal Audit recruits and employs suitably qualified
professional staff with the requisite skillsets and experience.
SingTel
Internal Audit provides training and development
opportunities for its staff to ensure their technical knowledge and
skillsets remain current and relevant.
External Auditors
The Board is responsible for the initial appointment of external
auditors. Shareholders then approve the appointment at SingTel’s
AGM. The external auditors hold office until their removal or
resignation. The AC assesses the external auditors based on
factors such as the performance and quality of their audit and the
independence of the auditors, and recommends their appointment
to the Board. Pursuant to the requirements of the Singapore
Exchange Securities Trading Limited (SGX), an audit partner may
only be in charge of a maximum of five consecutive annual audits
and may then return after two years. Deloitte & Touche LLP has
met this requirement and the current Deloitte & Touche LLP audit
partner for SingTel took over from the previous audit partner with
effect from 1 April 2011. SingTel has complied with Rules 712 and
715 of the Listing Manual issued by SGX in relation to its auditors.
In order to maintain the independence of the external auditors,
SingTel has developed policies regarding the types of non-audit
services that the external auditors can provide to the SingTel
Group and the related approval processes. The AC has also
reviewed the non-audit services provided by the external auditors
during the financial year and the fees paid for such services. The
AC is satisfied that the independence of the external auditors has
not been impaired by the provision of those services. The external
auditors have also provided a confirmation of their independence
to the AC.
Risk Management and Internal Controls
The Board has overall responsibility for the governance of risk and
exercises oversight of the material risks in the Group’s business.
During the financial year ended 31 March 2012, the Finance,
Investment and Risk Committee (now known as the Finance and
Investment Committee) assisted the Board in the oversight of the
Group’s risk profile and policies, adequacy and effectiveness of
the Group’s risk management system including the identification
64
The Board has approved a Group Risk Framework for the
identification of key risks within the business. This Framework
defines 28 categories of risks ranging from environmental to
operational and management decision-making risks. The Group’s
risk management and internal control framework is aligned
with the ISO 31000:2009 Risk Management framework and
the Committee of Sponsoring Organisations of the Treadway
Commission (COSO) Internal Controls Integrated Framework.
Major incidents and violations, if any, are also reported to the
Board to facilitate the Board’s oversight of the effectiveness of
crisis management and the adequacy of mitigating measures
taken by Management to address the underlying risks.
The identification and management of risks are delegated
to Management who assumes ownership and day-to-day
management of these risks. Management is responsible for the
effective implementation of risk management strategy, policies
and processes to facilitate the achievement of business plans
and goals within the risk tolerance established by the Board. Key
business risks are proactively identified, addressed and reviewed
on an ongoing basis.
The Risk Management Committee, comprising relevant members
from the Senior Management team, is responsible for setting
the direction of corporate risk management and monitoring the
implementation of risk management policies and procedures
including the adequacy of the Group’s insurance programme.
The Risk Management Committee reports to the RC on a regular
basis.
During the financial year, SingTel with the assistance of an external
risk consulting firm, conducted a review of its risk management
framework and processes to ensure adequacy and alignment with
global best practice standards. The significant risks in the Group’s
business including mitigating measures were also reported to
and reviewed by the Board on a regular basis. Risk registers are
maintained by the business and operational units which identify
the key risks facing the Group’s business and the internal controls
in place to manage those risks.
Internal and external auditors conduct audits that involve testing
the effectiveness of the material internal control systems in the
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Group addressing financial, operational and compliance risks.
Any material non-compliance or lapses in internal controls
together with remedial measures recommended by internal and
external auditors are reported to the AC. The AC also reviews the
adequacy and timeliness of the actions taken by Management
in response to the recommendations made by the internal and
external auditors. Control self-assessments in key areas of the
Group’s operations are conducted by Management on a periodic
basis to evaluate the adequacy and effectiveness of the risk
management and internal control systems, including quarterly
and annual certifications by Management to the AC and the
Board respectively on the integrity of financial reporting and the
adequacy and effectiveness of the risk management, internal
control and compliance systems.
year. The results announcements contain detailed financial
disclosures and in-depth analyses of key value-drivers and metrics
for the Group’s businesses. SingTel also provides guidance on
the outlook for its businesses at the start of each financial year,
and affirms or updates the guidance every quarter to accurately
reflect prevailing market conditions.
The SingTel IR website is the key resource of information
for the investment community. In addition to the quarterly
financial results materials, it contains a wealth of investor-
related information on SingTel, including investor presentations,
webcasts of earnings presentations, transcripts of conference
calls, annual reports, upcoming events, shares and dividend
information and factsheets.
Based on the framework established and the reviews conducted
by Management and the internal and external auditors, the Board
opines, with the concurrence of the AC, that there were adequate
controls in place within the Group addressing material financial,
operational and compliance risks to meet the needs of SingTel in
its current business environment as at 31 March 2012.
The system of internal control and risk management established
by Management provides reasonable, but not absolute, assurance
that SingTel will not be adversely affected by any event that can be
reasonably foreseen as it strives to achieve its business objectives.
However, the Board also notes that no system of internal controls
and risk management can provide absolute assurance in this
regard, or absolute assurance against poor judgement in decision
making, human error, losses, fraud or other irregularities.
Further details of the Group’s Risk Management Philosophy and
Approach can be found on pages 74 to 79.
Communication with Shareholders
SingTel
to maintaining high standards of
is committed
corporate disclosure and transparency. SingTel takes an open
and non-discriminatory approach when communicating with
shareholders, the investment community and the media. SingTel
provides consistent, relevant and timely information regarding
the Group’s performance, progress and prospects, to assist
shareholders and investors in their investment decisions.
SingTel makes timely disclosures on any new material
information to the Singapore Exchange Securities Trading
Limited (SGX) and Australian Securities Exchange (ASX). These
filings are also posted on SingTel’s Investor Relations (IR)
website immediately, so investors are made aware of business
and strategic developments on a timely and consistent basis.
SingTel reports financial results on a quarterly basis: within 45
days after the end of each financial quarter for its first three
quarters, and within 60 days after the end of the financial
SingTel proactively engages shareholders and investors through
one-on-one meetings, conference calls, investor conferences and
roadshows in Singapore, Australia, Hong Kong, US and Europe. In
FY2012, SingTel met with more than 300 investors in over 200
meetings, both locally and internationally, to share the Group’s
business strategy, operational and financial performance and
business prospects. While these meetings are largely undertaken
by SingTel’s Senior Management, the Chairman and certain Board
members also meet with investors every year.
SingTel strongly encourages and supports shareholder
participation at AGMs. SingTel delivers the Notice of the Meeting
and related information a month ahead, providing ample time for
shareholders to review the Notice and reply with their attendance.
SingTel holds the AGM at a central location in Singapore
with convenient access to public transportation. A registered
shareholder who is unable to attend the AGM may choose to
appoint a proxy to attend the AGM and vote on his behalf.
At each AGM, the Group CEO delivers a presentation to update
shareholders on SingTel’s progress over the past year. The
Directors and Senior Management are in attendance to address
queries and concerns about SingTel. SingTel’s external auditors
also attend the AGM to help address shareholders’ queries
relating to the conduct of the audit and the preparation and
content of the auditors’ reports. All resolutions at SingTel’s AGM
and Extraordinary General Meeting are voted on by poll so as to
better reflect shareholders’ shareholding interests. The poll voting
results (which are presented to the audience during the voting
process) are filed with the stock exchanges together with the
proxy voting results. Voting in absentia by mail, facsimile or email
is currently not permitted to ensure proper authentication of the
identity of shareholders and their voting intent.
Leading business journals and financial institutions recognise
SingTel for its strong emphasis and proactive approach to
shareholder communication and engagement.
65
CORPORATE GOVERNANCE
Securities Transactions
SingTel’s Securities Transactions Policy states that Directors and
officers of the Group should not deal in SingTel shares during
the period commencing two weeks before the announcement of
SingTel’s financial statements for each of the first three quarters
of the financial year, and during the period commencing one
month before the announcement of the financial statements
for the full financial year and ending on the date of the
announcement of the relevant results. The policy also discourages
trading on short-term considerations and reminds Directors and
officers of their obligations under insider trading laws. Directors
and officers of the Group wishing to deal in SingTel shares during a
closed period must secure prior written approval of the Chairman
(in the case of Directors of SingTel), the Lead Independent Director
(in the case of the Chairman) or the Group CEO (in the case of
directors of SingTel subsidiaries, top management members and
persons who are in attendance at Board and top management
meetings). Requests for written approval must contain a full
explanation of the exceptional circumstances and proposed
dealing. If approval is granted, trading must be undertaken
in accordance with the limits set out in the written approval.
Directors are to consult with the Company Secretary/Group
CEO before trading in SingTel shares to ensure compliance with
securities laws. The Board is kept informed when a Director
trades in SingTel securities. A summary of SingTel’s Securities
Transactions Policy is available in the Corporate Governance
section of the SingTel corporate website.
In relation to shares of other companies, Directors are to refrain
from trading in shares of SingTel’s listed associates when in
possession of material price sensitive information relating to such
associates. Directors are also to refrain from having any direct or
indirect financial interest in SingTel’s competitors that might or
might appear to create a conflict of interest or affect the decisions
Directors make on behalf of SingTel.
Continuous Disclosure
There are formal policies and procedures to ensure that SingTel
complies with its disclosure obligations under the listing rules of
the SGX and ASX. A Market Disclosure Committee is responsible for
SingTel’s Market Disclosure Policy. The policy contains guidelines
and procedures for internal reporting and decision making with
regard to the disclosure of material information.
Material Contracts
Except for what is mentioned below, there are no material
contracts entered into by SingTel or any of its subsidiaries
that involve the interests of the Group CEO, any Director, or the
controlling shareholder, Temasek Holdings (Private) Limited
(Temasek). In December 2011, SingTel Strategic Investments
Pte Ltd acquired 61 million ordinary shares constituting
approximately 2 per cent of the issued share capital of
Advanced Info Services Public Company Limited from Shin
66
Corporation Public Company Limited, a company in which
Temasek has an interest, for a consideration of approximately
Baht7.9 billion (approximately S$331 million).
Codes of Conduct and Practice
SingTel has a code of internal corporate governance practices,
policy statements and standards as described in this report,
and makes this code available to Board members as well as
employees of the Group. The processes and standards in the code
are intended to enhance investor confidence and rapport, and to
ensure that decision-making is properly carried out in the best
interests of the Group. The code is reviewed from time to time
and updated to reflect changes to the existing systems or the
environment in which the Group operates.
SingTel also has a code of conduct that applies to all employees.
The code sets out principles to guide employees in carrying
out their duties and responsibilities to the highest standards of
personal and corporate integrity when dealing with SingTel, its
competitors, customers, suppliers and the community. The code
of conduct covers areas such as workplace health and safety,
conduct in the workplace, business conduct, protection of
intellectual
SingTel’s assets, proprietary
property, confidentiality, conflict of interest, and non-solicitation
of customers and employees. The code is posted on SingTel’s
internal website and a summarised version is accessible from
the SingTel corporate website. Policies and standards are clearly
stipulated to guide employees in carrying out their daily tasks.
information and
SingTel has established an escalation process so that the Board of
Directors, Senior Management, and internal and external auditors
are kept informed of corporate crises in a timely manner, according
to their severity. Such crises may include violations of the code of
conduct and/or applicable laws and regulations, as well as loss
events which have or are expected to have a significant impact,
financial or otherwise, on the Group’s business and operations.
Whistle-Blower Policy
The Group is committed to a high standard of ethical conduct and
adopts a zero tolerance approach to fraud. SingTel undertakes
to investigate complaints of suspected fraud in an objective
manner and has put in place a whistle-blower policy and
procedures which provide employees with well-defined and
accessible channels within the Group, including a direct channel
to SingTel Internal Audit and a whistle-blower hotline service
independently managed by an external service provider, for
reporting suspected fraud, corruption, dishonest practices or
other similar matters. The policy aims to encourage the reporting
of such matters in good faith, with the confidence that employees
making such reports will be treated fairly and, to the extent possible,
protected from reprisal. On an ongoing basis, the whistle-blower
policy is covered during staff training and periodic communication
to all staff as part of the Group’s efforts to promote awareness of
fraud control.
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
REMUNERATION
The broad principles that guide the Executive Resource and
Compensation Committee (ERCC) in its administration of fees,
benefits, remuneration and incentives for the Board of Directors
and Senior Management are set out below.
Directors’ Fees and Incentives
SingTel’s Group CEO is an Executive Director and is therefore
remunerated as part of Senior Management. She does not receive
Directors’ fees.
In the financial year ended 31 March 2012, in view of the
expansion of the terms of reference for the Finance and
Investment Committee (FIC) to include advisory support on
strategic issues for the SingTel Group as a whole, the basic fees
for the chairman and members of the FIC were increased to
S$50,000 and S$35,000 respectively. The fees for non-executive
Directors comprised a basic retainer fee, additional fees for
appointment to Board Committees, attendance fees for ad
hoc Board meetings and a travel allowance for Directors
who were required to travel out of their country or city of
residence to attend Board meetings and Board Committee
meetings which did not coincide with Board meetings.
There are no retirement benefit schemes or share-based
compensation schemes in place for non-executive Directors.
The framework for determining non-executive Directors’ fees
was as follows:
Basic Retainer Fee
Board Chairman
Director
S$220,000 per annum
S$110,000 per annum
Fee for appointment to Audit Committee
and Finance and Investment Committee
Committee chairman
Committee member
S$50,000 per annum
S$35,000 per annum
S$35,000 per annum
S$25,000 per annum
Fee for appointment to
any other Board Committee
Committee chairman
Committee member
Attendance Fee per Ad Hoc
Board meeting(cid:21)
Travel allowance for Board
Meetings and Board Committee
Meetings which do not coincide with
Board meetings (per day of travel
required to attend meeting)
The proposed framework for Directors’ fees for the financial year
ending 31 March 2013 is the same as that for the financial year
ended 31 March 2012.
Remuneration of Non-Executive Directors
The aggregate compensation paid to or accrued to SingTel
non-executive Directors for services in all capacities for the
financial year ended 31 March 2012 is set out in the table below.
The aggregate compensation paid to or accrued to the SingTel
Executive Director for the financial year ended 31 March 2012 is
set out on page 68:
Name of Director
Simon Israel (2)(3)
Bobby Chin Yoke Choong(4)
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian (5)
Peter Edward Mason AM
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee (6)
Ong Peng Tsin (7)
Chumpol NaLamlieng (8)
Graham John Bradley AM (8)
Nicky Tan Ng Kuang (8)
Director’s
Fees(1)
(S$)
354,866
-
205,000
211,000
171,854
193,103
228,992
190,000
247,000
97,829
64,473
78,672
Notes:
(1) Directors’ fees are paid on a half-yearly basis in arrears.
(2) Fees are payable to Mr Simon Israel’s employer before 1 July 2011.
(3) In addition to his fees, Mr Simon Israel also received car-related
benefits with a taxable value of S$10,888.
(4) Appointed to the Board on 1 May 2012.
(5) Appointed to the Board on 9 May 2011.
(6) Fees for Singapore public sector Director are processed in accordance
with the framework of the Singapore Directorship and Consultancy
Appointments Council.
S$2,000
(7) Fees include travel allowance for attending Board Committee meetings
which do not coincide with Board meetings.
(8) Retired following the conclusion of the AGM held on 29 July 2011.
No employee of the Group who is an immediate family member of a
Director was paid remuneration that exceeded S$150,000 during the
financial year ended 31 March 2012.
S$3,000
67
CORPORATE GOVERNANCE
No Director decides his own fees. Directors’ fees are recommended
by the ERCC and are submitted for endorsement by the Board.
Directors’ fees are subject to the approval of shareholders at the
AGM. SingTel seeks shareholders’ approval for Directors’ fees
for the current financial year so that Directors’ fees can be paid on
a half-yearly basis in arrears for that year.
In order to align Directors’ interests with that of shareholders,
Directors are encouraged to acquire SingTel shares each year
from the open market to the extent of one-third of their fees
until they hold the equivalent of one year’s fees in shares, and to
continue to hold the equivalent of one year’s fees in shares while
they remain on the Board. Directors who were previously eligible
for applicable share option schemes are encouraged to hold,
beyond the vesting period, any shares acquired by the exercise of
share options under those schemes.
Remuneration of Executive Director
The aggregate compensation paid to or accrued to Group CEO (Chua Sock Koong) for the financial year ended 31 March 2012 is set
out in the table below:
Name
Fixed
Remuneration (1)
($)
Variable
Bonus (2)
($)
Provident
Fund (3)
($)
Benefits (4)
($)
Total Cash
& Benefits (5)
Restricted
Share
Award (RSA) (6)
Performance
Share
Award (PSA) (6)
($)
(no. of shares)
(no. of shares)
Chua Sock Koong S$1,615,000
S$3,200,000
S$9,474
S$74,251 S$4,898,725
119,024
1,272,984
Performance shares granted, vested and lapsed for Ms Chua as at 31 March 2012 are as follows:
General Award (GA)
Senior Management Award (SMA)
Performance
Share
Awards
2009 Awards
2010 Awards
2011 Awards
Vesting Date
1-Jun-12
1-Jun-13
1-Jun-14
Granted
(‘000)
922
934
1,013
Vested
(‘000)
576
-
-
Lapsed
(‘000)
346
-
-
Granted
(‘000)
629
630
655
Vested
(‘000)
409
-
-
Lapsed
(‘000)
220
-
-
Notes:
(1) Fixed Remuneration refers to base salary and Annual Wage Supplement earned for the year ended 31 March 2012.
(2) Variable Bonus refers to cash bonuses awarded for performance for the year ended 31 March 2012.
(3) Provident Fund in Singapore represents payments in respect of company statutory contributions to the Singapore Central Provident Fund.
(4) Benefits are stated on the basis of direct costs to the company and include car benefits, flexible benefits and other non-cash benefits such as medical
cover and club membership.
(5) Total Cash & Benefits is the sum of Fixed Remuneration, Variable Bonus, Provident Fund and Benefits for the year ended 31 March 2012.
(6) Long Term Incentives are awarded in the form of performance shares. Grants of the Restricted Share Award (RSA) and Performance Share Award
(PSA) under the SingTel Performance Share Plan were made in June 2012 for performance for the year ended 31 March 2012. The per unit fair
values of the RSA and PSA are S$2.776 and S$2.336 respectively. The performance conditions for the awards are detailed on pages 69 to 70.
68
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Remuneration for Executive Director and Senior Management
In determining the remuneration policy, the ERCC has established
the following objectives:
(cid:353)(cid:3) (cid:55)(cid:82)(cid:3) (cid:70)(cid:79)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3) (cid:79)(cid:76)(cid:81)(cid:78)(cid:3) (cid:68)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:83)(cid:85)(cid:82)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3)
performance, on an annual and long-term basis;
(cid:353)(cid:3) (cid:55)(cid:82)(cid:3)(cid:68)(cid:79)(cid:76)(cid:74)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:90)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)
creation;
(cid:353)(cid:3) (cid:55)(cid:82)(cid:3) (cid:85)(cid:72)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:82)(cid:81)(cid:3) (cid:68)(cid:3) (cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3) (cid:86)(cid:70)(cid:82)(cid:85)(cid:72)(cid:70)(cid:68)(cid:85)(cid:71)(cid:3)
approach, which includes financial and non-financial metrics;
(cid:353)(cid:3) (cid:55)(cid:82)(cid:3) (cid:68)(cid:87)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:15)(cid:3) (cid:80)(cid:82)(cid:87)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3) (cid:75)(cid:76)(cid:74)(cid:75)(cid:16)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3) (cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3)
which is necessary for SingTel to lead and shape industry by
reinventing its core business, creating and driving new growth
platforms and turbo-charging capabilities in enterprise ICT;
and
(cid:353)(cid:3) (cid:55)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:72)(cid:89)(cid:68)(cid:81)(cid:87)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:17)
The ERCC recognises that the Group operates in a multinational
and multifaceted environment and reviews remuneration through
a process that considers Group, business unit and individual
performance, relevant comparative remuneration in the market
and, where required, feedback from independent external advisors
on human resource management and reward and benefit policies.
The performance evaluations for Senior Management have been
conducted for the financial year in accordance with the above
considerations.
In line with market practice, SingTel may, under special
circumstances, compensate Senior Management for their past
contributions when their services are no longer needed; for
example, due to redundancies arising from reorganisation or
restructuring of the Group.
Remuneration Components
The remuneration structure for Senior Management comprises
five components – fixed remuneration, variable bonus, provident/
superannuation fund, benefits and long-term incentives. The
structure is designed such that the percentage of the variable
component of Senior Management’s remuneration increases
as they move up the organisation. The variable component also
depends on the actual achievement of corporate targets and
individual performance objectives. The cost and value of the
remuneration components are considered as a whole and are
designed to strike a balance between linking rewards to short-
term and long-term objectives, and maintaining competitiveness
with market practice.
(cid:353)(cid:3) (cid:41)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:53)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
The fixed remuneration comprises base salary and reflects
the market worth of the job but may vary with responsibilities,
performance, qualifications and the experience that the
individual brings to the role.
In Australia, consistent with local market practice, executives
may opt for a portion of their salaries to be received in tax-
effective benefits-in-kind, such as superannuation contributions
and motor vehicles, while maintaining the same overall cost to
the company.
(cid:353)(cid:3) (cid:57)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:37)(cid:82)(cid:81)(cid:88)(cid:86)
Variable bonus is an annual remuneration component which
varies according to actual achievement against Group, business
unit and individual performance objectives.
Performance objectives aligned to the overall strategic,
financial and operational goals of the Group are set at the
beginning of each financial year. While these objectives are
different for each executive, they are assessed on the same
principles across two broad categories of targets: Business
and People. Business targets comprise financials, strategy,
customer and business processes. People targets comprise
leadership competencies, core values, people development
and staff engagement. In addition, the executives are assessed
on teamwork and collaboration across the Group.
In determining the final variable bonus payouts, the ERCC
considers overall Group performance, business unit
performance and individual performance as well as relevant
market remuneration benchmarks. The ERCC proposes the
payouts for the Group CEO, CEO Group Consumer, CEO Group
Digital L!fe, CEO Group ICT and Group CFO for the Board’s
approval and approves the variable bonus payouts for the
other Senior Management.
(cid:353)(cid:3) (cid:51)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:18)(cid:54)(cid:88)(cid:83)(cid:72)(cid:85)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:41)(cid:88)(cid:81)(cid:71)(cid:3)
This component
is made up of SingTel’s contributions
towards the Singapore Central Provident Fund or the Optus
Superannuation Fund or any other chosen fund, as applicable.
(cid:353)(cid:3) (cid:37)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)
SingTel provides benefits consistent with local market practice,
such as an in-company medical scheme, club membership,
employee discounts and other benefits that may incur
Australian Fringe Benefits Tax, where applicable. Participation
in such benefits is dependent on the country in which the
executive is located. For expatriates located away from
home, additional benefits such as accommodation, children’s
education and tax equalisation may be provided.
(cid:353)(cid:3) (cid:47)(cid:82)(cid:81)(cid:74)(cid:16)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:44)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)
Long-term incentives are delivered through equity plans
meant to drive an ownership culture and retain key talents,
with a focus on delivering long-term growth and shareholder
value. These are provisionally granted to Senior Management
for performance for the year ended 31 March 2012.
From 1 April 2012, long-term incentives will cease to be granted
under the General Award (GA) and Senior Management Award
(SMA) of the SingTel Performance Share Plan (Share Plan).
The termination of the GA and SMA will not affect the rights
of holders of any outstanding existing performance shares,
and existing grants will continue to vest under the respective
criteria established for each award.
69
CORPORATE GOVERNANCE
Two new awards have been introduced under the Share Plan
in 2012 – the Performance Share Award (PSA) and the
Restricted Share Award (RSA) – with grants made at
the discretion of the ERCC. The PSA is granted to top
management while a broader group of executives is eligible
for the RSA. The number of performance shares awarded is
determined using the valuation (of the shares) based on a
Monte-Carlo simulation.
The share awards are conditional upon the achievement of
predetermined performance targets over the performance
period. These performance conditions and targets are
established by the ERCC and approved by the Board
at the beginning of the performance period. The final
number of performance shares vested to the recipient
will depend on the level of achievement of these targets
over the performance period, subject to the approval
of the ERCC. The details of the vesting criteria for the two
awards are as follows:
Restricted Share Award (RSA)
The Restricted Share Award (RSA) has a two-year performance
period from 1 April 2012 to 31 March 2014. Shares are allocated
equally to the following performance conditions:
(cid:3)
(cid:353)(cid:3) (cid:24)(cid:19)(cid:3) (cid:83)(cid:72)(cid:85)(cid:3) (cid:70)(cid:72)(cid:81)(cid:87)(cid:3) (cid:54)(cid:76)(cid:81)(cid:74)(cid:55)(cid:72)(cid:79)(cid:3) (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:342)(cid:86)(cid:3) (cid:49)(cid:72)(cid:87)(cid:3) (cid:51)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:3) (cid:36)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3) (cid:55)(cid:68)(cid:91)(cid:3) (cid:11)(cid:49)(cid:51)(cid:36)(cid:55)(cid:12)(cid:3) (cid:351)(cid:3)
SingTel Group NPAT achieved against predetermined targets;
and
Figure A: Restricted Share Award (RSA) Vesting Schedule
(cid:3)
(cid:353)(cid:3) (cid:24)(cid:19)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:54)(cid:76)(cid:81)(cid:74)(cid:55)(cid:72)(cid:79)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:342)(cid:86)(cid:3)(cid:41)(cid:85)(cid:72)(cid:72)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:3)(cid:11)(cid:41)(cid:38)(cid:41)(cid:12)(cid:3)(cid:351)(cid:3)(cid:54)(cid:76)(cid:81)(cid:74)(cid:55)(cid:72)(cid:79)(cid:3)
Group FCF achieved against predetermined targets.
Details of the RSA vesting schedule are shown in Figure A.
Performance Share Award (PSA)
The Performance Share Award (PSA) has a three-year
performance period from 1 April 2012 to 31 March 2015.
Shares are allocated equally according to the following
performance conditions:
(cid:3)
(cid:3)
(cid:353)(cid:3) (cid:24)(cid:19)(cid:3) (cid:83)(cid:72)(cid:85)(cid:3) (cid:70)(cid:72)(cid:81)(cid:87)(cid:3) (cid:54)(cid:76)(cid:81)(cid:74)(cid:55)(cid:72)(cid:79)(cid:3) (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:342)(cid:86)(cid:3) (cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3) (cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)
(Relative TSR) – TSR relative to the MSCI Asia Pacific
Telecommunications Index; and
(cid:353)(cid:3) (cid:24)(cid:19)(cid:3) (cid:83)(cid:72)(cid:85)(cid:3) (cid:70)(cid:72)(cid:81)(cid:87)(cid:3) (cid:54)(cid:76)(cid:81)(cid:74)(cid:55)(cid:72)(cid:79)(cid:3) (cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:342)(cid:86)(cid:3) (cid:36)(cid:69)(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:72)(cid:3) (cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)
Return (Absolute TSR) – Absolute TSR achieved against
predetermined targets.
Details of the PSA vesting schedule are shown in Figure B.
Details of the performance shares granted under the
Share Plan during the financial year are set out in the ‘Directors’
Report’.
SingTel employees are prohibited
into
transactions in associated products which limit the economic
risk of participating in unvested entitlements under SingTel’s
equity-based remuneration schemes.
from entering
Group NPAT (50%)
Group FCF (50%)
Performance
Vesting Level ^
Performance
Vesting Level ^
Stretch
Target
Threshold
Below Threshold
130%
100%
50%
0%
Stretch
Target
Threshold
Below Threshold
130%
100%
50%
0%
^ For achievement between these performance levels, the percentage of shares under this tranche that will vest would vary accordingly.
Figure B: Performance Share Award (PSA) Vesting Schedule
Relative TSR (50%)
Absolute TSR (50%)
Performance *
Vesting Level ^
Performance
Vesting Level ^
-
≥ +7.00%
+2.00%
< +2.00%
-
100%
50%
0%
Stretch
Target
Threshold
Below Threshold
200%
100%
30%
0%
* Percentage outperformance against the MSCI Asia-Pacific Telecom Index.
^ For achievement between these performance levels, the percentage of shares under this tranche that will vest would vary accordingly.
70
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Remuneration of Senior Management
The aggregate compensation paid to or accrued to the five top-earning key executives for the financial year ended 31 March 2012
is set out in the table below:
Name
Fixed
Remuneration (1)
($)
Variable
Bonus (2)
($)
(cid:51)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:18)
Superannuation
Fund (3)
($)
Benefits (4)
($)
Total Cash
& Benefits (5)
Restricted
Share
Award (RSA) (6)
Performance
Share
Award (PSA) (6)
($)
(no. of shares)
(no. of shares)
The following are in alphabetical order:
Bill Chang
Managing Director
Business Group
Group ICT
Hui Weng Cheong (7)
CEO International
Group Consumer
Allen Lew
CEO Group
Digital L!fe/
Country Chief
Officer Singapore
Jeann Low (8)
Group CFO
Paul O’Sullivan (9)
CEO Group
Consumer/
Country Chief
Officer Australia
S$580,600
S$835,000
S$12,707
S$56,656
S$1,484,963
53,315
253,425
S$636,000
S$850,000
S$7,048
S$147,957
S$1,641,005
61,240
291,096
S$1,074,000
S$2,250,000
S$7,048
S$62,792
S$3,393,840
73,848
789,812
S$850,000
S$1,200,000
S$9,474
S$30,041
S$2,089,515
36,024
385,274
A$1,080,000
A$1,192,661
A$209,039
A$59,586
A$2,541,286
112,677
1,205,358
Performance shares granted, vested and lapsed for the above five executives as at 31 March 2012 are as follows:
General Award (GA)
Senior Management Award (SMA)
Performance
Share
Awards
2009 Awards
2010 Awards
2011 Awards
Vesting Date
1-Jun-12
1-Jun-13
1-Oct-13
1-Jun-14
Granted
(‘000)
2,073
2,113
201
2,459
Vested
(‘000)
1,296
Lapsed
(‘000)
777
-
-
-
-
-
-
Granted
(‘000)
1,414
1,425
-
1,590
Vested
(‘000)
919
-
-
-
Lapsed
(‘000)
495
-
-
-
Notes:
(1) Fixed Remuneration refers to base salary and Annual Wage Supplement (if applicable) earned for the year ended 31 March 2012.
(2) Variable Bonus refers to cash bonuses awarded for performance for the year ended 31 March 2012.
(3) Provident Fund in Singapore represents payments in respect of company statutory contributions to the Singapore Central Provident Fund.
Superannuation Fund in Australia represents payments in respect of the superannuation guarantee levy to the superannuation scheme.
Any contributions made by an individual may be salary sacrificed, and are part of fixed remuneration.
(4) Benefits are stated on the basis of direct costs to the company and include overseas assignment benefits, tax equalisation, car benefits, flexible
benefits and other non-cash benefits such as medical cover, club membership and Australian Fringe Benefits Tax, where applicable.
(5) Total Cash & Benefits is the sum of Fixed Remuneration, Variable Bonus, Provident/Superannuation Fund and Benefits for the year ended
31 March 2012.
(6) Long-Term Incentives are awarded in the form of performance shares. Grants of the Restricted Share Award (RSA) and Performance Share Award
(PSA) under the SingTel Performance Share Plan were made in June 2012 for performance for the year ended 31 March 2012. The per unit fair
values of the RSA and PSA are S$2.776 (A$2.130) and S$2.336 (A$1.792) respectively. The performance conditions for the awards are detailed on
pages 69 to 70.
(7) Benefits for Mr Hui Weng Cheong include tax equalisation in relation to his past secondment to Advanced Info Service, Thailand.
(8) Benefits for Ms Jeann Low include tax equalisation in relation to her past secondment to Optus, Australia.
(9) Mr Paul O’Sullivan is based in Australia and remunerated in Australian dollars.
71
INVESTOR RELATIONS
PROACTIVE COMMUNICATION WITH THE INVESTMENT
COMMUNITY
for their respective businesses, while investors were given the
opportunity to try out some of SingTel’s latest innovative services
and applications.
SingTel continually strives towards higher standards of disclosure
and corporate transparency by:
a. Disseminating accurate and relevant
information to the
marketplace expeditiously, to help investors make informed
investment decisions;
b. Providing regular access to SingTel’s Management through
face-to-face meetings, conferences, roadshows, conference
calls and webcasts; and
c. Meeting investors’ growing demands for transparency and
governance, and balancing that with commercial sensitivities
of SingTel’s businesses.
The Investor Relations (IR) team drives and facilitates financial
communication efforts with existing and potential institutional
investors, financial analysts as well as retail shareholders. During the
year, SingTel participated in investor conferences and roadshows
in Singapore, Hong Kong, US and Europe. SingTel’s Management,
together with the IR team, met more than 300 investors in over
200 meetings, both locally and internationally, to share the Group’s
business strategy, and operational and financial performance. In
addition, the IR team arranges site visits to SingTel’s operational
facilities, such as multimedia showrooms and network centres, to
help investors better understand SingTel’s expansion plans in the
digital, multimedia and ICT space.
For the quarterly financial announcements, SingTel presents detailed
financial statements, slides and other key financial information.
We also host analyst conference calls to address questions and
clarify issues. The recorded webcasts and transcripts of these
events are made available on the IR website. The IR website is a key
resource for corporate information and financial data. In addition
to the quarterly financial materials, the IR website includes annual
reports, upcoming investor events, shares and dividend information,
factsheets and investor presentation slides.
SingTel derives more than three quarters of our proportionate
EBITDA from outside Singapore, hence IR efforts are also targeted at
communicating SingTel’s overseas strategy and updating investors
on key developments of our overseas businesses. In July and
December 2011, the IR team organised the Optus Investor Day
in Sydney and the Regional Mobile Investor Day in Singapore
respectively. Each event was attended by more than 60 Singapore
and overseas investors and analysts. Airtel, Telkomsel, AIS,
Globe, Optus and SingTel’s Management conducted presentations
In March 2012, SingTel announced a new organisation structure and
a significant acquisition, Amobee, a US-based mobile advertising
solutions provider. The Senior Management hosted media and
investors’ briefings to help them understand our expansion strategy
into the new adjacent industries.
SingTel commissions an investor perception study annually to
gather feedback from investors. An independent consultant
conducts in-depth interviews with institutional investors and
financial analysts, and reports on the findings. These findings help
SingTel’s Board and Management understand investors’ concerns
and assist the IR team in developing messages and content to
address these concerns. These actions help augment the efficacy
of SingTel’s IR efforts.
The SingTel Management maintains strong rapport with the
investment community through our proactive and regular investor
engagement initiatives. During the year, SingTel won several
awards in recognition of our corporate governance, transparency
and IR efforts.
SHAREHOLDER INFORMATION
As at 20 April 2012, Temasek Holdings (Private) Limited remained
the largest SingTel shareholder with 54 per cent of shares.
Other Singapore shareholders held 19 per cent of shares. US/
Canada and Europe shareholders held 14 per cent and 9 per cent
of shares respectively.
SHARE OWNERSHIP BY GEOGRAPHICAL DISTRIBUTION
Temasek Holdings
54%
Singapore ex Temasek
19%
US/Canada
Europe
Asia ex Singapore
Australia
14%
9%
3%
1%
Approximate figures based on share register analysis as at 20 April 2012.
72
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
SHARE PRICE PERFORMANCE
Between April 2011 and March 2012, SingTel (SGX) and SingTel (ASX) were up 4 per cent and 3 per cent respectively.
SingTel Share Price Performance – 1 April 2011 to 31 March 2012
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
4%
4%
3%
-4%
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
SingTel – SGX, 4%
SingTel – ASX, 3%
1. The Australian Dollar depreciated approximately 1 per cent against
the Singapore Dollar from 1 April 2011 to 31 March 2012.
MSCI Asia Pacific Telecommunications Index, 4%
Straits Times Index, -4%
Source: Bloomberg
SHAREHOLDER PAYOUT
SingTel has a track record of generous shareholder payout.
The Board has recommended a final ordinary dividend of 9.0 cents
a share. Together with the interim ordinary dividend of 6.8 cents a
share, total ordinary dividends for FY2012 amounted to 15.8 cents
a share, consistent with the previous year. This represents a payout
ratio of 68 per cent of underlying net profit for FY2012.
SHAREHOLDER PAYOUT
(S$ b)
IR CALENDAR EVENTS
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2.0
2.0
1.8
1.7
1.3
0.8
1.1
1.0
2.5
2.5
2.3
Date
Activities
1.6
Mar 2011
Credit Suisse Asian Investment Conference,
Hong Kong
May 2011
Non-deal Equity Roadshows, US and Europe
1.5
2.3
3.0
Jul 2011
Optus Investor Day, Sydney
Jul 2011
19th Annual General Meeting and Extraordinary
General Meeting, Singapore
Sep 2011
CLSA Investors Forum, Hong Kong
Nov 2011
Non-deal Equity Roadshows, US and Europe
Dec 2011
SingTel Regional Mobile Investor Day, Singapore
Ordinary Dividend
Special Dividend
Capital Reduction
73
RISK MANAGEMENT PHILOSOPHY
AND APPROACH
>
Risk management is a fundamental part of the Group’s business strategy
and effective corporate governance. The Group adopts a risk philosophy
aimed at maximising business opportunities and minimising adverse
outcomes, thereby enhancing shareholder value by effectively balancing
risk and reward.
RISK MANAGEMENT
The identification and management of risk reduce the uncertainty
associated with the execution of our business strategies and
allow the Group to maximise opportunities that may arise. Risk
takes on many forms and can have material adverse impacts on
the Group’s ability to achieve our stated objectives, by potentially
impacting our reputation, operation, human resources and financial
performance.
The Board is overall responsible for determining the Group’s risk
profile, overseeing the Group’s risk management framework,
reviewing the Group’s key risks and mitigation strategies, and
ensuring the effectiveness of risk management policies and
procedures. The Finance, Investment and Risk Committee (FIRC) (1)
and the Audit Committee (AC) review the management of these
risks and effectiveness of mitigation strategies and controls.
The Management has the primary responsibility of identifying,
managing and reporting the key risks faced by the Group to
the Board. The Management is also responsible for ensuring
that the risk management framework is effectively implemented
within all areas of the respective business units. In addition,
specialised areas such as Regulatory, Legal, Environment,
in the
Insurance, Treasury and Credit support the Group
management of these risks.
The Group’s philosophy and approach towards effective risk
management are underpinned by three key principles:
(cid:353)(cid:3) Culture
We seek to build a strong risk management and control culture
by setting the appropriate tone at the top, promoting awareness,
ownership and proactive management of key risks, and promoting
accountability. In short, we seek to promote a risk-conscious
workforce across the Group.
(cid:353)(cid:3) Structure
We seek to put in place an appropriate organisational structure
that promotes good corporate governance, provides for proper
segregation of duties, defines clearly risk-taking responsibility
and authority, and promotes ownership and accountability for
risk taking.
(cid:353) Process
We seek to implement robust processes and systems for
effective identification, quantification, monitoring, mitigation and
management of risk. We seek to improve our risk management
as well as internal control policies and procedures on an
ongoing basis to ensure that they remain sound and relevant by
benchmarking against global best practices.
Note:
(1) The Risk Committee was established, and the Finance, Investment
and Risk Committee (FIRC) was renamed the Finance and Investment
Committee (FIC), in May 2012.
74
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Based on the above principles, the Group undertakes a continuous
process of risk
identification, monitoring, management and
reporting of risks throughout the organisation, to provide assurance
to the Board and relevant stakeholders. The effectiveness of risk
management policies and processes is reviewed on a regular
basis and, where necessary, improved. Independent reviews are
conducted by third party consultants on a regular basis to ensure
the appropriateness of the Group’s risk management framework.
They also report key risks to the Board as well as provide periodic
support and input when undertaking specific risk assessments.
Furthermore, the risk management processes facilitate alignment
of the Group’s strategy and annual operating plan with the
management of key risks.
Risk assessment and mitigation strategy is an integral part of
the Group’s annual business planning and budgeting process.
The key risk management activities include scenario planning,
business continuity/disaster recovery management and crisis
planning and management. Close monitoring and control
processes, including the establishment of appropriate key risk
indicators and key performance indicators, are put in place to
ensure that risk profiles are managed within policy limits. The
Group has in place a formal programme of risk and control self-
assessment whereby line personnel are involved in the ongoing
assessment and improvement of risk management and controls.
Additionally, independent specialist consultants are engaged from
time to time to review the Group’s risk management framework
and processes.
reporting processes, and
SingTel Internal Audit carries out reviews and internal control
advisory activities aligned to the key risks in the Group’s
business. This provides
independent assurance to the AC
on the adequacy and effectiveness of the risk management,
financial
internal control and
compliance systems. In order to provide assurance to the
Board, the CEOs of the business groups submit a report
on the key risks and mitigation strategies for their respective
businesses to the FIRC on a semi-annual basis. Annually,
the Group CEO and Group CFO provide a written certification to
the Board confirming the integrity of financial reporting, and the
efficiency and effectiveness of the risk management, internal
control and compliance systems.
In the course of their statutory audit, SingTel’s external auditors
carry out a review of the Group’s material internal controls to the
extent of the scope as laid out in their audit plans. Any material
non-compliance and internal control weaknesses, together with
the external auditors’ recommendations to address them, are
reported to the AC. SingTel’s Management, with the assistance
of SingTel Internal Audit, follows up on the external auditors’
recommendations as part of their role in reviewing the Group’s
system of internal controls.
The systems that are in place are intended to provide reasonable
but not absolute assurance against material misstatements or loss,
as well as to ensure the safeguarding of assets, the maintenance
of proper accounting records, the reliability of financial information,
compliance with applicable legislation, regulations and best
practices, and the identification and management of business risk.
RISK FACTORS
The Group’s financial performance and operations within and
outside Singapore are influenced by a vast range of risk factors.
Many of these risk factors affect not just our businesses but
also other businesses in and outside of the telecommunications
industry. These risks vary widely and many are beyond the Group’s
control. There may also be risks that are either presently unknown
or not currently assessed as significant, which may later prove to
be material. However, we aim to mitigate the exposures through
appropriate risk management strategies and internal controls.
The section below sets out the principal risk types.
ECONOMIC RISKS
Changes in domestic, regional and global economic conditions
may have a material adverse effect on the demand for
telecommunications, IT and related services, and hence, on the
Group’s financial performance and operations.
The global credit and equity markets have experienced substantial
dislocations, liquidity disruptions and market corrections. These
and other related events have had a significant impact on economic
growth as a whole, and consequently, consumer and business
demand for telecommunications, IT and related services.
Our planning and management review processes involve the
periodic monitoring of budgets and expenditures to minimise the
risk of over-investment. The Group has continuing cost management
programmes to drive improvements in our cost structure.
POLITICAL RISKS
Some of the countries in which the Group operates have
experienced or continue to experience political instability. The
continuation or re-emergence of such political instability in the
future could have a material adverse effect on economic or social
conditions in those countries, as well as the ownership, control and
condition of the Group’s assets in those areas.
75
RISK MANAGEMENT PHILOSOPHY
AND APPROACH
The Group is geographically diversified with earnings from
Singapore, Australia and the emerging markets. We work closely
with the management and our partners in the countries where
the Group operates to leverage the local expertise, knowledge
and ability. In this way, we ensure compliance with the laws and
are able to implement risk mitigation measures.
REGULATORY RISKS AND LITIGATION RISKS
Regulatory Risks
The Group’s global operations are subject
to extensive
government regulations, which may impact or limit our flexibility
to respond to market conditions, competition, new technologies
or changes in cost structures. Governments may alter their
policies relating to the telecommunications,
IT and related
industries as well as the regulatory environment (including
taxation) in which we operate. Such changes could have a
material adverse effect on the Group’s financial performance
and operations.
In Singapore, the Infocomm Development Authority of Singapore
(IDA) has, in its implementation of the Next Generation Nationwide
Broadband Network (Next Gen NBN), designed a structure aimed
at levelling the playing field, allowing the benefits of the Next Gen
NBN to be available to all industry players. This has significantly
altered the existing cost model of the industry and increased the
level of competition in the market with new entrants. Another
regulatory change is the revision of the Media Market Conduct
Code by the Media Development Authority of Singapore (MDA) to
include a Public Interest Obligation. This enables mandatory cross
carriage of exclusive content in the pay TV market and promotes fair
market conduct and effective competition by laying the ground
rules for fair competition in the media market. Furthermore,
revisions to the Telecommunications Act were passed
in
November 2011 with key changes including increasing the
maximum penalty that can be imposed, amendments to facilitate
transfer of certain rights from one Public Telecommunications
Licensee (PTL) to another; amendments to the consolidation
provisions; empowering the Minister to directly take over telecom
network and businesses to ensure that key telecom network
or services continue to function and to impose structural or
operational separation on vertically integrated operators where
necessary.
In Australia, the government is currently undertaking a significant
reform of the fixed-line telecommunications sector, including
the rollout of a national broadband network to be operated on
a wholesale-only open access basis. It is possible the Australian
76
legislation and
government’s regulatory reforms,
the deployed national broadband network and commercial
transactions relating to the national broadband network, could
ultimately lead to a sub-optimal or negative outcome for Optus.
including
Our overseas investments are subject to the risk of imposition
of laws and regulations restricting the level, percentage and
manner of foreign ownership and investment, as well as the risk
of nationalisation, any of which could materially and adversely
affect our overseas investments.
licences
Our businesses depend on statutory
issued by
governmental authorities. Failure to meet regulatory requirements
could result in fines or other sanctions including, ultimately, the
revocation of licences. The Group has access to appropriate
regulatory expertise and staffing resources in Singapore and
Australia. We
in discussions and
consultations with the respective regulatory authorities and
the industry to propose changes and provide feedback on
regulatory reforms and developments in the telecommunications
and media industry.
regularly participate
Access to Spectrum
The Group may need to access additional spectrum to support
both organic growth and the development of new services.
Access to spectrum is of critical importance to us in order to
support our business of providing mobile voice and broadband
services. The use of spectrum in most countries the Group
operates
is regulated by governmental authorities and
requires licences. Failure to acquire access to spectrum or new
or additional spectrum on reasonable terms or at all could have
a material adverse effect on the Group’s business, financial
performance and growth plans.
in
Litigation Risks
We are exposed to the risk of regulatory or litigation action by
regulators or private parties. Such regulatory matters or litigation
actions may have a material effect on our financial condition and
results of operations. Examples of such actions which the Group
is exposed to are disclosed in notes to the financial statements
under ‘Contingent Liabilities’.
The Group has put in place standard master supply agreements
with vendors and implemented contract policies to manage
contractual arrangements with customers. The policies provide
the necessary empowerment
for management
executives, the CEOs, the Management Committee and the Board
Committees to approve any deviations from the standard policies.
framework
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
COMPETITIVE RISKS
The Group faces competitive risks in all the markets we operate.
Singapore Business
The telecommunications market in Singapore is highly competitive.
As new players enter the market and regulation requires SingTel
Singapore to allow our competitors to have access to our
networks, our market share in some segments and prices for
certain products and services have declined. These trends may
continue and intensify for SingTel Singapore.
Australia Business
In the Australia mobile market in addition to the incumbent
operator, a number of participants are subsidiaries of international
groups and operators and have made large investments which
are now sunk costs. The Group is therefore exposed to the risk
of irrational pricing being introduced by such competitors. The
fixed-line services market continues to be dominated by the
incumbent provider which can leverage its scale and market
position to restrict the development of competition. With the
deployment of the Australian National Broadband Network,
competition is expected to increase as new entrants enter the
market.
International Businesses
The operations of our international businesses are also subject
to highly competitive market conditions. Business customers
enjoy a wide range of choices for many of the services the
international voice and data
Group provides, particularly
communications. The quality and prices of these services can
influence a potential business customer’s decision. Prices for
some of these services have declined significantly in recent
years as a result of capacity additions and price competition. Such
price declines are expected to continue.
The growth of our associates depends in part on increases in
the mobile penetration rate in the markets where they operate.
Some of these overseas markets, including Indonesia and India,
have experienced and will continue to experience an increase in
the number of competitors, leading to intense price competition
and potential loss of market share for our associates. As these
markets mature, the pace of subscriber growth may slow and
new customers may not be as profitable as existing customers.
Our business models and profits are also challenged by
disintermediation in the telecommunications industry by handset
providers and non-traditional
telecommunications service
providers who provide multimedia content, applications and
services directly on demand.
The Group continues to invest in innovation, technologies, new
products and services, transformational initiatives in processes,
new business models and customer experience to meet evolving
customer needs and strengthen customer loyalty.
REGIONAL EXPANSION RISKS
Given the size of the Singapore and Australia markets, the future
growth of the Group depends, to a large extent, on our ability to
grow our overseas operations. This comes with considerable risks.
Partnership Relations
The success of our strategic investments depends, to a large extent,
on our relationships with, and the strength of our investment
partners. There is no assurance that the Group will be able to
maintain these relationships or that our investment partners will
remain committed to their partnerships with the Group.
Acquisition Risks
In acquisitions, the Group faces challenges arising from integrating
newly acquired businesses with our own operations, managing
these businesses in markets where we have limited experience,
and financing these acquisitions. The Group risks not being
able to generate synergies from these acquisitions and the
acquisitions become a drain on the Group’s management and
capital resources.
look for
We continually
investment opportunities that can
contribute to our regional expansion strategy and for the
development of new revenue streams. Our efforts are challenged
by the limited availability of opportunities, competition for the
available opportunities from other potential investors, foreign
ownership restrictions, government and regulatory policies,
political considerations and the specific preferences of sellers.
In addition, the business strategy of some of our regional mobile
associates involves the expansion of operations outside their home
countries. These associates may enter into joint ventures and
other arrangements with other parties. Such joint ventures and
other arrangements involve risks, including but not limited to the
possibility that the joint venture or investment partner may have
economic or business interests or goals that are not consistent
with those of the associates. There is no assurance that the
regional mobile associates can fully generate synergies and
successfully achieve their aims of regional competitiveness and
building a competitive regional footprint.
The SingTel Group adopts a disciplined approach in our investment
evaluation and decision process. Members of our management
team are also represented as Board directors of our associates.
77
RISK MANAGEMENT PHILOSOPHY
AND APPROACH
In addition to sharing of network and commercial experience,
best practices in the areas of corporate governance and financial
reporting are shared across the Group.
and mindset changes. These businesses may also expose the
Group to new areas of risks associated with the media and
online industries, such as content rights, customer data privacy
and protection.
PROJECT RISKS
The SingTel Group incurs substantial capital expenditure in
constructing and maintaining our networks and systems
infrastructure. These projects are subject to risks associated with
the construction, supply, installation and operation of equipment
and systems.
Project Management
The projects we undertake as sub-contractors to roll out
infrastructure are subject to the risks of increased project costs,
disputes and unexpected implementation delays, any of which
can result in an inability to meet projected completion dates.
The Group is also a major IT services provider to government and
large enterprises in the region. We face potential project execution
risks when projects are not accurately scoped or the quality
of service performance is not up to customers’ specifications,
resulting in over-commitments to customers and inadequate
resource allocation and scheduling. These can lead to cost
overruns, project delays and losses.
The Group has a project risk management framework in place, with
processes for regular risk assessment, performance monitoring
and reporting of key projects.
Satellite Business
The launch and operation of any satellite is subject to the risk
of launch delays, cost overruns and the occurrence of other
unforeseeable events, such as satellite launch failures, satellite
failure to enter into designated orbital locations, in-orbit failure or
any other events beyond the control of the Group. We maintain and
regularly review our business continuity programme, including
restoration plans, for implementation in the event of a catastrophic
loss of all or part of a satellite.
NEW BUSINESS RISKS
From a traditional carriage business in Singapore and Australia,
the Group is now venturing to invest in new growth areas to
create new revenue streams, including mobile applications and
services, pay TV, managed services, cloud services, content and
ICT. There is no assurance that the Group will be successful in
these ventures which may require new expertise, substantial
process or systems changes, as well as organisational cultural
The Group’s organisational structure, talent management and
development programme seeks to respond to changing needs
and new business strategies. The Group continues to update our
policies, invest in processes and technologies to support the
requirements of new businesses.
BREACH OF PRIVACY RISKS
The Group seeks to protect the privacy of voice and information
on networks and systems infrastructure. Significant failure of
encryption and security measures may result in customer
confidence being undermined and materially
impact our
businesses. The Group may also be subject to the imposition of
additional regulatory measures relating to the security and privacy
of customer data.
The SingTel Group has in place security mechanisms such as
firewalls and encryption algorithms, designed to minimise the risk
of privacy breaches. We also implement and test antivirus or
intrusion prevention systems, based on established security standards.
INFRASTRUCTURE AND TECHNOLOGY RISKS
Rapid and significant technological changes are typical in the
telecommunications industry and these changes may materially
affect the SingTel Group’s capital expenditure and operating costs
as well as the demand for our products and services.
We have invested substantial capital and other resources in the
development and modernisation of our networks and systems.
Technological changes continue to reduce costs and expand
the capacities of new infrastructure able to deliver competing
products and services. Moreover, our associates operate
in emerging markets where the regulatory
predominantly
practices including spectrum availability may not synchronise
with the technology progression path and the market demand
for new technologies.
Such rapid advancements in technology may leave the Group
stranded with investments that are technologically obsolete
before the end of their expected useful life. These changes may
require us to replace and upgrade our network infrastructure
to remain competitive and as a result, incur additional capital
expenditure.
78
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
The SingTel Group faces a continuing risk of market entry
by new operators and service providers (including non-
telecommunications players) that, by using newer or lower cost
technologies, may succeed in rapidly attracting customers away
from established market participants.
We may have to incur substantial development expenditure
to gain access to related or enabling technologies, so that we
may pursue new growth opportunities in the ICT industry. The
challenge is to modify our network infrastructure in a timely and
cost-effective manner to facilitate such implementation, failing
which this could adversely affect our quality of service, financial
condition and results of operations.
The Group continues to invest in upgrading, modernising and
equipping our systems with new capabilities to ensure that
we continue to deliver innovative and relevant services to our
customers.
VENDOR RISKS
The Group relies on third party vendors in many aspects of our
business. We rely on third party vendors for various purposes,
including but not limited to the construction of the Group’s network,
the supply of handsets and equipment, systems and applications
development and services, content provision and customer
acquisition. Accordingly, our operations may be affected by third
party vendors failing to perform their obligations. In addition, the
industry is dominated by a few key vendors for such services
and equipment and any failure or refusal by a key vendor to
provide such services or equipment, or any consolidation of the
industry, may significantly affect our business and operations.
The Group monitors closely our relationships with strategic vendors
and develops new relationships to mitigate supply risks.
FINANCIAL RISKS
The main risks arising from the Group’s financial assets and
liabilities are foreign exchange, interest rate, market, liquidity,
access to financing sources and increased credit risks. Financial
markets continue to be volatile and this may heighten execution
risk for funding activities and credit risk premiums for market
participants.
The Group is exposed to foreign exchange fluctuations from our
operations and through subsidiaries and associated and joint
venture companies operating in foreign countries. These relate
to the translation of the foreign currency earnings and carrying
values of the overseas operation. Additionally, a significant
portion of associated and joint venture companies purchases
and liabilities are denominated in foreign currencies, versus the
local currency of the respective operations, thereby giving rise to
changes in cost structures and fair value gains or losses when
marked to market.
The Group has established policies, guidelines and control
procedures to manage and report exposure to such risks. The
Group’s financial risk management is discussed in detail on page
174 in Note 38 to the Financial Statements.
ELECTROMAGNETIC ENERGY RISKS
to electromagnetic energy associated with
Health concerns have been raised regarding the potential
exposure
the
operation of mobile communications devices. While there is no
substantiated evidence of public health risks from exposure
to the levels of electromagnetic energy typically emitted from
mobile communications devices, perceived health risks can
result in reduced demand for mobile communications services
or worse, litigation against the Group. In addition, government
environment controls may be introduced to address this perceived
risk, restricting our ability to deploy our mobile communications
networks.
The Group’s policy is to comply with regulatory and international
safety standards.
NETWORK FAILURE AND CATASTROPHIC RISKS
The provision of the Group’s services depends on the quality,
stability, resilience and robustness of our integrated networks.
We face the risk of the malfunction of, loss of, or damage to
infrastructure from natural or man-made causes.
network
Some of the countries in which the Group operates have
experienced a number of major natural catastrophes over the
years,
including typhoons, droughts and earthquakes. Such
losses or damage may significantly disrupt our operations which
may materially adversely affect our ability to deliver services
to customers.
The Group has insurance policies as well as a defined crisis
management and escalation process involving the CEOs and
to emergencies and/or
senior management
to respond
catastrophic events. However, our
inability to operate our
networks or customer support systems may have a material
impact on our business.
79
FINANCIAL STATEMENTS
CONTENTS
Directors’ Report
Statement of Directors
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement
of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
80
81
89
90
91
92
93
95
99
102
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
The Directors present their report to the members together with the audited financial statements of the Company (“SingTel”) and its
subsidiaries (the “Group”) for the financial year ended 31 March 2012.
1.
DIRECTORS
The Directors of the Company in office at the date of this report are -
Simon Israel (Chairman) (appointed Chairman on 29 July 2011)
Bobby Chin Yoke Choong (appointed on 1 May 2012)
Chua Sock Koong (Group Chief Executive Officer)
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian
Peter Edward Mason AM*
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
Ong Peng Tsin
Chumpol NaLamlieng, Graham John Bradley AM* and Nicky Tan Ng Kuang, who served during the financial year, retired following
the conclusion of the Annual General Meeting on 29 July 2011.
* Member of the Order of Australia
2.
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND
DEBENTURES
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to
enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate, except for share options granted under the Singapore Telecom Share Option Scheme 1999 (“1999
Scheme”), and performance shares granted under the SingTel Performance Share Plan (“Share Plan 2004”).
81
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
3.
DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES
The interests of the Directors holding office at the end of the financial year in the share capital of the Company and related
corporations according to the register of Directors’ shareholdings kept by the Company under Section 164 of the Singapore
Companies Act were as follows -
Holdings registered in the name
of Director or nominee
Holdings in which Director is
deemed to have an interest
At 1 April 2011
or date of
appointment,
if later
At 31 March 2012
At 1 April 2011
or date of
appointment,
if later
At 31 March 2012
497,820
4,390,513
91,930
15,000
1,490
100,000 (3)
400,000
870
150,000
497,820
3,690,513
91,930
-
1,490
100,000
250,000
870
150,000
-
700,000
1,360 (1)
18,508,829 (2)
-
-
-
-
-
1,537 (1)
-
-
9,000
2,000
5,600
-
9,000
2,000
5,600
-
-
-
-
17,000
1,360
13,154,576
-
-
-
-
-
1,537
-
-
-
-
-
10,000
Singapore Telecommunications Limited
(Ordinary shares)
Simon Israel
Chua Sock Koong
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian
Peter Edward Mason AM
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
Ong Peng Tsin
(Options to purchase ordinary shares)
Chua Sock Koong
Singapore Airlines Limited
(Ordinary shares)
Simon Israel
Chua Sock Koong
Low Check Kian
Ong Peng Tsin
Singapore Technologies Engineering Limited
(Ordinary shares)
Fang Ai Lian
50,000
50,000
-
-
82
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
3.
DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (Cont’d)
Holdings registered in the name
of Director or nominee
Holdings in which Director is
deemed to have an interest
At 1 April 2011
or date of
appointment,
if later
At 31 March 2012
At 1 April 2011
or date of
appointment,
if later
At 31 March 2012
-
-
73,000
48,000
SMRT Corporation Ltd
(Ordinary shares)
Ong Peng Tsin
Notes:
(1) Held by spouse.
(2) Chua Sock Koong’s deemed interest of 18,508,829 shares included -
(a) 13,696,424 ordinary shares in SingTel held by DBS Trustee Limited, the trustee of a trust established for the purposes of the Share
Plan 2004 for the benefit of eligible employees of the Group;
(b) 28,137 ordinary shares held by Ms Chua’s spouse; and
(c) an aggregate of up to 4,784,268 ordinary shares in SingTel awarded to Ms Chua pursuant to the Share Plan 2004, subject to certain
performance criteria being met and other terms and conditions.
(3) Held by Burgoyne Investments Pty Ltd as trustee for Burgoyne Superannuation Fund. Both Peter Edward Mason AM and spouse are directors
of Burgoyne Investments Pty Ltd and beneficiaries of Burgoyne Superannuation Fund.
Between the end of the financial year and 21 April 2012, Chua Sock Koong’s deemed interest increased to 20,325,829 shares due
to the acquisition by DBS Trustee Limited of an additional 1,817,000 ordinary shares in SingTel for the benefit of eligible employees
in the Group.
Except as disclosed above, there were no changes to any of the above-mentioned interests between the end of the financial year
and 21 April 2012.
4.
DIRECTORS’ CONTRACTUAL BENEFITS
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which
he has a substantial financial interest except as disclosed in the notes to the financial statements and in this report.
5.
SHARE OPTIONS AND PERFORMANCE SHARES
The Executive Resource and Compensation Committee (“ERCC”) is responsible for administering the share option and performance
share plans. At the date of this report, the members of the ERCC are Kaikhushru Shiavax Nargolwala (Chairman of the ERCC),
Simon Israel, Fang Ai Lian and Peter Edward Mason AM.
Ong Peng Tsin, who served during the financial year, stepped down as member of the ERCC on 11 May 2011. Chumpol NaLamlieng
and Graham John Bradley AM, who also served during the financial year, stepped down as members of the ERCC following the
conclusion of the Annual General Meeting on 29 July 2011.
83
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
5.1
Share Options
1999 Scheme
Options granted pursuant to the 1999 Scheme are in respect of ordinary shares in SingTel. Options exercised and cancelled during
the financial year, and options outstanding at the end of the financial year under the 1999 Scheme, were as follows -
Date of grant
Exercise period
Exercise price
Market Price Share Options
For staff and senior management
30.05.01
29.11.01
30.05.02
31.05.02 to 30.05.11
30.11.02 to 29.11.11
31.05.03 to 30.05.12
S$1.56
S$1.51
S$1.31
Balance
as at
1 April 2011
(’000)
Options
exercised
(’000)
Options
Balance
as at
cancelled 31 March 2012
(’000)
(’000)
561
2,466
4,892
7,919
(413)
(2,070)
(3,339)
(5,822)
(148)
(396)
(54)
(598)
-
-
1,499
1,499
For Group Chief Executive Officer (Chua Sock Koong)
S$1.31
30.05.02
31.05.03 to 30.05.12
700
(700)
-
-
Total
8,619
(6,522)
(598)
1,499
The options under the 1999 Scheme do not entitle the holders of the options, by virtue of such holdings, to any right to
participate in any share issue of any other company.
84
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
5.1
Share Options (Cont’d)
Details of the Directors’ share options are set out in the following table -
Granted since
commencement of
scheme to
31 March 2012
(’000)
Aggregate Options
Exercised since
commencement of
scheme to
31 March 2012
(’000)
Outstanding
as at
31 March 2012
(’000)
-
4,709
-
-
-
-
-
-
-
60
-
60
4,829
-
(4,709)
-
-
-
-
-
-
-
(60)
-
(60)
(4,829)
-
-
-
-
-
-
-
-
-
-
-
-
-
1999 Scheme
Simon Israel
Chua Sock Koong
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian
Peter Edward Mason AM
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
Ong Peng Tsin
Chumpol NaLamlieng (1)
Graham John Bradley AM (1)
Nicky Tan Ng Kuang (1)
Note:
(1) Chumpol NaLamlieng, Graham John Bradley AM and Nicky Tan Ng Kuang, retired as Directors of the Company following the conclusion of the
Annual General Meeting on 29 July 2011.
No options were granted to the Directors during the financial year ended 31 March 2012.
No option has been granted to controlling shareholders of the Company or their associates, and there are no participants who have
received five per cent or more of the total number of options available under the 1999 Scheme.
The 1999 Scheme was suspended with the implementation of the SingTel Executives’ Performance Share Plan (“Share Plan 2003”)
following a review of the remuneration policy across the Group in 2003. Hence, no option has been granted since then. The existing
options granted will continue to vest according to the terms and conditions of the 1999 Scheme and the respective grants.
From the commencement of the 1999 Scheme to 31 March 2012, options in respect of an aggregate of 273,767,350 ordinary shares
in the Company have been granted to Directors and employees of the Company and its subsidiaries.
5.2
Performance Shares
Following the review of the remuneration policy across the Group, SingTel implemented the Share Plan 2003 in June 2003 and
granted awards to selected employees of the Group under this plan. This plan only allows the purchase and delivery of existing
SingTel shares to participants upon the vesting of the awards.
The Share Plan 2004 was implemented with the approval of shareholders at the Extraordinary General Meeting held on 29 August
2003. This plan gives the flexibility to either allot and issue and deliver new SingTel shares or purchase and deliver existing SingTel
shares upon the vesting of awards.
85
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
5.2
Performance Shares (Cont’d)
Participants will receive fully paid SingTel shares free of charge, the equivalent in cash, or combinations thereof, provided that certain
prescribed performance targets are met within a prescribed performance period. The performance period for the awards granted
is three years. The number of SingTel shares to be allocated to each participant or category of participants will be determined at
the end of the performance period based on the level of attainment of the performance targets.
From the commencement of the performance share plans to 31 March 2012, awards comprising an aggregate of 38,548,775
shares and 216,395,115 shares have been granted under the Share Plan 2003 and Share Plan 2004 respectively.
Performance share awards granted, vested and cancelled during the financial year, and share awards outstanding at the end of the
financial year, were as follows -
Date of grant
Performance shares (General Awards)
For staff and senior management
04.06.08
01.09.08
02.12.08
02.03.09
03.06.09
02.09.09
03.03.10
03.06.10
01.09.10
02.12.10
02.03.11
02.06.11
01.09.11
10.01.12
15.03.12
For Group Chief Executive Officer
(Chua Sock Koong)
04.06.08
03.06.09
03.06.10
02.06.11
Balance
as at
1 April 2011
(’000)
Share
awards
granted
(’000)
Share
awards
vested
(’000)
Share
awards
cancelled
(’000)
Balance
as at
31 March 2012
(’000)
11,426
115
867
83
18,677
177
14
17,976
53
293
350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,649
92
65
72
(1,400)
(14)
(109)
(10)
-
-
-
-
-
-
-
(19)
-
-
-
(10,026)
(101)
(758)
(73)
(1,011)
-
(14)
(1,141)
-
(80)
-
(1,142)
-
-
-
50,031
20,878
(1,552)
(14,346)
671
922
934
-
2,527
-
-
-
1,013
1,013
(84)
-
-
-
(84)
(587)
-
-
-
(587)
-
-
-
-
17,666
177
-
16,835
53
213
350
19,488
92
65
72
55,011
-
922
934
1,013
2,869
Sub-total
52,558
21,891
(1,636)
(14,933)
57,880
86
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
5.2
Performance Shares (Cont’d)
Date of grant
Performance shares
(Senior Management Awards)
For senior management
04.06.08
03.06.09
03.06.10
02.06.11
For Group Chief Executive Officer
(Chua Sock Koong)
04.06.08
03.06.09
03.06.10
02.06.11
Sub-total
Total
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Balance
as at
1 April 2011
(’000)
Share
awards
granted
(’000)
Share
awards
vested
(’000)
Share
awards
cancelled
(’000)
Balance
as at
31 March 2012
(’000)
1,537
2,290
2,538
-
6,365
453
629
630
-
1,712
8,077
-
-
-
2,267
2,267
-
-
-
655
655
2,922
-
-
-
-
-
-
-
-
-
-
-
(1,537)
-
-
-
(1,537)
(453)
-
-
-
(453)
(1,990)
-
2,290
2,538
2,267
7,095
-
629
630
655
1,914
9,009
60,635
24,813
(1,636)
(16,923)
66,889
During the financial year, awards in respect of an aggregate of 1,636,049 shares granted under the Share Plan 2004 were vested.
The awards under Share Plan 2004 were satisfied in part by the delivery of existing shares purchased from the market and in part
by the payment of cash in lieu of delivery of shares, as permitted under the Share Plan 2004.
As at 31 March 2012, no participant has been granted options under the 1999 Scheme and/or received shares pursuant to the
vesting of awards granted under the Share Plan 2004 which, in aggregate, represents five per cent or more of the aggregate of -
(i)
the total number of new shares available under the Share Plan 2004 and the 1999 Scheme collectively; and
(ii)
the total number of existing shares purchased for delivery of awards released under the Share Plan 2004.
87
DIRECTORS’ REPORT
For the financial year ended 31 March 2012
6.
AUDIT COMMITTEE
At the date of this report, the Audit Committee comprises the following members, all of whom are non-executive and the
majority of whom, including the chairman, are independent -
Fang Ai Lian (Chairman of the Audit Committee)
Dominic Chiu Fai Ho
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
The Audit Committee carried out its functions in accordance with Section 201B of the Singapore Companies Act, Chapter 50.
In performing its functions, the Committee reviewed the overall scope of both internal and external audits and the assistance
given by the Company’s officers to the auditors. It met with the Company’s internal auditors to discuss the results of the
respective examinations and their evaluation of the Company’s system of internal accounting controls. The Committee also
held discussions with the internal and external auditors and is satisfied that the processes put in place by management
provide reasonable assurance on mitigation of fraud risk exposure to the Group.
The Committee also reviewed the financial statements of the Company and the Group, as well as the Independent Auditors’
Report thereon.
In addition, the Committee had, with the assistance of the internal auditors, reviewed the procedures set up by the
Company and the Group to identify and report, and where necessary, sought appropriate approval for interested person
transactions.
The Committee has full access to and has the co-operation of the management and has been given the resources required
for it to discharge its function properly. It also has full discretion to invite any Director or executive officer to attend its
meetings. The external and internal auditors have unrestricted access to the Audit Committee.
The Committee has nominated Deloitte & Touche LLP for re-appointment as auditors of the Company at the forthcoming
Annual General Meeting.
7.
AUDITORS
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
On behalf of the Directors
Simon Israel
Chairman
Singapore, 9 May 2012
88
Chua Sock Koong
Director
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
STATEMENT OF DIRECTORS
For the financial year ended 31 March 2012
In the opinion of the Directors,
(a)
the consolidated financial statements of the Group and the statement of financial position and statement of changes in
equity of the Company as set out on pages 91 to 194 are drawn up 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 2012 and of the results, changes in equity and cash flows of the Group and
changes in equity of the Company for the year then ended; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.
On behalf of the Directors
Simon Israel
Chairman
Singapore, 9 May 2012
Chua Sock Koong
Director
89
INDEPENDENT AUDITORS’ REPORT
To the Members of Singapore Telecommunications Limited
For the financial year ended 31 March 2012
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Singapore Telecommunications Limited (the “Company”) and its subsidiaries
(the “Group”) which comprise the statements of financial position of the Group and the Company as at 31 March 2012, the income statement,
statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of
changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes,
as set out on pages 91 to 194.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions
of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising and maintaining a system of
internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use
or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair
income statement and balance sheets and to maintain accountability of assets.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation of financial statements that gives a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity
of the Company are properly drawn up in accordance with the provisions 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 2012 and of the results, changes in equity
and cash flows of the Group and changes in equity of the Company for the year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in
Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Deloitte & Touche LLP
Public Accountants and
Certified Public Accountants
Singapore, 9 May 2012
90
CONSOLIDATED INCOME STATEMENT
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Operating revenue
Operating expenses
Other income
Depreciation and amortisation
Exceptional items
Profit on operating activities
Share of results of associates and joint ventures
Profit before interest, investment income (net) and tax
Interest and investment income (net)
Finance costs
Profit before tax
Tax expense
Profit after tax
Attributable to -
Shareholders of the Company
Non-controlling interests
Notes
2012
S$ Mil
2011
S$ Mil
4
5
6
7
8
9
18,825.3
18,070.6
(13,709.8)
(13,081.5)
103.2
130.2
5,218.7
5,119.3
(2,001.6)
6.6
(1,968.7)
55.7
3,223.7
3,206.3
1,431.4
1,564.1
4,655.1
4,770.4
10
11
54.0
(394.7)
43.5
(367.5)
4,314.4
4,446.4
12
(324.9)
(623.7)
3,989.5
3,822.7
3,988.7
0.8
3,825.3
(2.6)
3,989.5
3,822.7
Earnings per share attributable to shareholders of the Company
- basic (cents)
- diluted (cents)
13
13
25.04
24.97
24.02
23.98
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
91
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 31 March 2012
Profit after tax
Other comprehensive (loss)/ income:
2012
S$ Mil
2011
S$ Mil
3,989.5
3,822.7
Exchange differences arising from translation of foreign operations
and other currency translation differences
(897.1)
(556.5)
Cash flow hedges
- Fair value changes during the year
- Tax effects
- Fair value changes transferred to income statement
- Tax effects
Available-for-sale investments
- Fair value changes during the year
Share of other comprehensive loss of associates
and joint ventures
Other comprehensive loss, net of tax
Total comprehensive income
Attributable to -
Shareholders of the Company
Non-controlling interests
38.4
(8.0)
30.4
(0.8)
(5.1)
(5.9)
24.5
92.6
(264.3)
(12.4)
(276.7)
144.4
38.2
182.6
(94.1)
34.5
(19.8)
(7.4)
(799.8)
(623.5)
3,189.7
3,199.2
3,188.9
0.8
3,201.8
(2.6)
3,189.7
3,199.2
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
92
STATEMENTS OF FINANCIAL POSITION
As at 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Current assets
Cash and cash equivalents
Trade and other receivables
Asset held for sale
Derivative financial instruments
Inventories
Non-current assets
Property, plant and equipment
Intangible assets
Subsidiaries
Associates
Joint ventures
Available-for-sale investments (“AFS”)
Derivative financial instruments
Deferred tax assets
Loan to an associate
Other non-current receivables
Total assets
Current liabilities
Trade and other payables
Provision
Current tax liabilities
Borrowings (unsecured)
Borrowings (secured)
Derivative financial instruments
Deferred gain
Notes
Group
2012
S$ Mil
2011
S$ Mil
Company
2012
S$ Mil
2011
S$ Mil
15
16
17
26
18
19
20
21
22
23
25
26
12
27
28
29
30
31
32
26
27
1,346.4
3,927.0
334.1
2.9
208.1
5,818.5
11,580.0
10,174.1
-
212.4
9,968.1
148.7
98.2
963.0
1,325.0
129.6
34,599.1
2,738.0
3,449.3
-
68.6
299.3
6,555.2
11,112.5
10,218.3
-
172.4
10,024.5
309.1
-
764.0
-
126.3
32,727.1
254.4
2,561.2
-
5.1
31.1
2,851.8
1,925.5
1.7
6,768.2
592.1
24.1
41.7
157.5
-
1,325.0
241.4
223.3
5,516.7
-
68.6
71.7
5,880.3
1,890.8
2.0
7,734.1
24.7
34.1
38.6
22.9
-
-
270.8
11,077.2
10,018.0
40,417.6
39,282.3
13,929.0
15,898.3
5,049.7
3.5
298.9
105.8
25.3
23.0
29.2
5,535.4
4,450.1
0.3
391.7
2,672.6
26.3
999.8
-
8,540.8
2,174.8
-
197.8
-
0.2
9.8
-
2,382.6
1,575.5
-
248.3
2,667.4
-
988.2
-
5,479.4
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
93
STATEMENTS OF FINANCIAL POSITION
As at 31 March 2012
Group
Company
Notes
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
Non-current liabilities
Borrowings (unsecured)
Borrowings (secured)
Advance billings
Deferred income
Deferred gain
Derivative financial instruments
Deferred tax liabilities
Other non-current liabilities
Total liabilities
Net assets
Share capital and reserves
Share capital
Reserves
Equity attributable to shareholders
of the Company
Non-controlling interests
2011
S$ Mil
734.5
-
157.7
2.9
-
311.8
177.8
17.7
31
32
33
27
26
12
34
8,470.4
192.3
728.1
17.4
1,060.5
508.3
243.8
213.5
11,434.3
4,544.1
42.6
706.6
22.6
-
586.1
295.3
193.9
6,391.2
857.9
157.5
173.7
1.3
-
356.4
135.2
17.5
1,699.5
1,402.4
16,969.7
14,932.0
4,082.1
6,881.8
23,447.9
24,350.3
9,846.9
9,016.5
35
2,632.2
20,795.3
2,622.8
21,705.5
2,632.2
7,214.7
2,622.8
6,393.7
23,427.5
20.4
24,328.3
22.0
9,846.9
-
9,016.5
-
Total equity
23,447.9
24,350.3
9,846.9
9,016.5
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
94
STATEMENTS OF CHANGES IN EQUITY
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
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I
STATEMENTS OF CHANGES IN EQUITY
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Company - 2012
Share
Capital
S$ Mil
Treasury
Shares (1)
S$ Mil
Capital
Reserve -
Performance
Shares
S$ Mil
Hedging
Reserve
S$ Mil
Fair Value
Reserve
S$ Mil
Retained
Earnings
S$ Mil
Total
Equity
S$ Mil
Balance as at 1 April 2011
2,622.8
-
(64.6)
(197.3)
29.0
6,626.6
9,016.5
Changes in equity for the year
Issue of new shares
Performance shares
purchased by the Company
Performance shares vested
Equity-settled performance
shares
Transfer of equity to liability
Cash paid to employees under
performance share plans
Contribution to Trust (5)
Unclaimed dividends
Final dividend paid to
shareholders of the
Company
Special dividend paid to
shareholders of the
Company
Interim dividend paid to
shareholders of the
Company
Total comprehensive income
for the year
-
-
-
-
-
-
-
-
-
-
9.4
-
Balance as at 31 March 2012
2,632.2
9.4
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-
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(0.4)
10.8
(0.2)
(0.9)
(12.6)
-
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-
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7.3
9.4
(0.4)
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10.8
(0.2)
(0.9)
(12.6)
7.3
-
(1,435.7)
(1,435.7)
-
(1,594.0)
(1,594.0)
-
-
(1,084.3)
(1,084.3)
(4,106.7)
(4,100.6)
-
32.4
3.1
4,895.5
4,931.0
(67.9)
(164.9)
32.1
7,415.4
9,846.9
(0.4)
0.4
-
-
-
-
-
-
-
-
-
-
-
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
97
STATEMENTS OF CHANGES IN EQUITY
For the financial year ended 31 March 2012
Company - 2011
Share
Capital
S$ Mil
Treasury
Shares (1)
S$ Mil
Capital
Reserve -
Performance
Shares
S$ Mil
Hedging
Reserve
S$ Mil
Fair Value
Reserve
S$ Mil
Retained
Earnings
S$ Mil
Total
Equity
S$ Mil
Balance as at 1 April 2010
2,616.3
-
(58.8)
(167.2)
21.5
6,230.0
8,641.8
Changes in equity for the year
Issue of new shares
Performance shares
purchased by the Company
Performance shares vested
Equity-settled performance
shares
Transfer of liability to equity
Cash paid to employees under
performance share plans
Contribution to Trust (5)
Final dividend paid to
shareholders of the
Company
Interim dividend paid to
shareholders of the
Company
Total comprehensive (loss)/
income for the year
Balance as at 31 March 2011
2,622.8
6.5
-
-
-
-
-
-
-
-
-
6.5
-
(5.4)
5.4
-
-
-
-
-
-
-
-
-
-
-
(3.2)
11.0
2.3
(1.6)
(14.3)
-
-
(5.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6.5
(5.4)
2.2
11.0
2.3
(1.6)
(14.3)
-
(1,274.3)
(1,274.3)
-
-
(1,083.5)
(1,083.5)
(2,357.8)
(2,357.1)
-
(30.1)
7.5
2,754.4
2,731.8
(64.6)
(197.3)
29.0
6,626.6
9,016.5
Notes:
(1)
(2)
(3)
‘Treasury Shares’ are accounted for in accordance with FRS 32 (revised 2004).
‘Currency Translation Reserve’ relates mainly to the translation of the net assets of foreign subsidiaries, associates and joint ventures of
the Group denominated mainly in Australian Dollar, Indian Rupee, Indonesian Rupiah, Pakistani Rupee, Philippine Peso, Thai Baht and United
States Dollar.
Included currency translation losses of S$363 million in respect of the translation of Warid Telecom (Private) Limited’s carrying value
denominated in Pakistani Rupee as at 31 March 2012 (as at 31 March 2011: S$453 million).
(4) ‘Other Reserves’ relate mainly to goodwill on acquisitions completed prior to 1 April 2001.
(5) DBS Trustee Limited (the “Trust”) is the trustee of a trust established to administer the performance share plans effective from March 2012.
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
98
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Cash Flows From Operating Activities
Profit before tax
Adjustments for -
Depreciation and amortisation
Exceptional items (non-cash)
Interest and investment income (net)
Finance costs
Share of results of associates and joint ventures (post-tax)
Other non-cash items
2012
S$ Mil
2011
S$ Mil
4,314.4
4,446.4
2,001.6
(30.1)
(54.0)
394.7
(1,431.4)
36.8
917.6
1,968.7
(55.7)
(43.5)
367.5
(1,564.1)
18.8
691.7
Operating cash flow before working capital changes
5,232.0
5,138.1
Changes in operating assets and liabilities
Trade and other receivables
Trade and other payables
Inventories
Currency translation adjustments of subsidiaries
Cash generated from operations
Payment to employees in cash under performance share plans
Dividends received from associates and joint ventures
Income tax and withholding tax paid
Net cash inflow from operating activities
(478.9)
396.9
91.5
1.8
(134.2)
101.4
31.6
16.6
5,243.3
5,153.5
(1.4)
919.8
(451.3)
(4.0)
1,194.0
(300.5)
5,710.4
6,043.0
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
99
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 March 2012
Cash Flows From Investing Activities
Dividends received from AFS investments (net of withholding tax paid)
Interest received
Contribution from non-controlling interests
Investment in an associate
Investment in other associates and joint ventures
Repayment of loan by a joint venture
Proceeds from sale of a joint venture
Investment in AFS investments
Proceeds from sale of AFS investments
Payment for purchase of property, plant and equipment
Advance payment for purchase of submarine cable capacity
Drawdown of prepaid submarine cable capacity
Proceeds from sale of property, plant and equipment
Partial proceeds from sale of assets and business to an associate
Purchase of intangible assets
Withholding tax paid on intra-group interest income
Note
2012
S$ Mil
2011
S$ Mil
27
27
15.2
29.8
-
(567.4)
(350.6)
-
15.3
(86.2)
0.2
(2,248.7)
(9.7)
18.4
14.6
567.4
(118.5)
(88.8)
17.7
34.0
2.3
-
(669.6)
1.4
-
(20.0)
0.8
(2,004.6)
(27.9)
29.4
23.8
-
(26.9)
(119.5)
Net cash outflow from investing activities
(2,809.0)
(2,759.1)
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
100
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Cash Flows From Financing Activities
Proceeds from term loans
Repayment of term loans
Proceeds from bond issue
Repayment of bonds
Proceeds from finance lease liabilites
Finance lease payments
Net proceeds from borrowings
Settlement of swaps for bonds repaid
Net interest paid on borrowings and swaps
Dividend paid to non-controlling interests
Final dividend paid to shareholders of the Company
Special dividend paid to shareholders of the Company
Interim dividend paid to shareholders of the Company
Repayment of loans to non-controlling interests
Unclaimed dividends
Proceeds from issue of shares
Purchase of performance shares
Net cash outflow from financing activities
Net (decrease)/ increase in cash and cash equivalents
Exchange effects on cash and cash equivalents
Cash and cash equivalents at beginning of year
Note
2012
S$ Mil
2011
S$ Mil
3,867.5
(2,056.2)
2,008.6
(2,612.3)
12.0
(30.8)
1,188.8
(922.0)
(413.9)
(2.4)
(1,434.3)
(1,593.6)
(1,083.5)
-
7.3
9.4
(20.0)
638.3
(1,958.8)
2,755.9
(573.2)
-
(22.3)
839.9
(217.6)
(347.8)
(0.9)
(1,273.7)
-
(1,082.9)
(25.1)
-
6.5
(39.4)
(4,264.2)
(2,141.0)
(1,362.8)
(28.8)
2,738.0
1,142.9
(18.4)
1,613.5
Cash and cash equivalents at end of year
15
1,346.4
2,738.0
Note:
In September 2011, SingTel sold certain assets and related business to NetLink Trust, a 100%-owned associate of SingTel (see
details in Note 27). A partial settlement of S$567.4 million was made by NetLink Trust to SingTel and the remaining balance of
S$1.33 billion was settled by a unitholder loan.
The accompanying notes on pages 102 to 194 form an integral part of these financial statements.
Independent Auditors’ report – page 90
101
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1.
GENERAL
The Company, Singapore Telecommunications Limited (“SingTel”), is domiciled and incorporated in Singapore and is publicly
traded on the Singapore Exchange and Australian Stock Exchange. The address of its registered office is 31 Exeter Road,
Comcentre, Singapore 239732.
The principal activities of the Company consist of the operation and provision of telecommunications systems and services,
and investment holding. The principal activities of the subsidiaries are disclosed in Note 47.
Under a licence granted by the Info-communications Development Authority of Singapore (“IDA”), the Group had the
exclusive rights to provide fixed national and international telecommunications services through 31 March 2000 (with
limited exceptions) and public cellular mobile telephone services through 31 March 1997. From the expiry of the exclusive
rights, the Group’s licences for these telecommunications services continue on a non-exclusive basis to 31 March 2017.
In addition, the Group is licensed to offer Internet services and has also obtained frequency spectrum and licence rights
from IDA to install, operate and maintain 3G mobile communication systems and services respectively, as well as wireless
broadband systems and services. The Group also holds licences from the Media Development Authority of Singapore for the
purpose of providing subscription nationwide television services.
In Australia, Optus was granted telecommunication licences under the Telecommunications Act 1991. Pursuant to the
Telecommunications (Transitional Provisions and Consequential Amendments) Act 1997, the licences continued to have
effect after the deregulation of telecommunications in Australia in 1997. The licences do not have a finite term, but are of
continuing operation until cancelled under the Telecommunications Act 1997.
These financial statements were authorised and approved for issue in accordance with a Directors’ resolution dated
9 May 2012.
2.
SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of Accounting
The financial statements are prepared in accordance with Singapore Financial Reporting Standards (“FRS”) including
related interpretations, and the provisions of the Singapore Companies Act. They have been prepared under the historical
cost convention, except as disclosed in the accounting policies below.
The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the
process of applying the Group’s accounting policies. It also requires the use of accounting estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the financial year. Although these
estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ
from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements,
and areas involving a higher degree of judgement are disclosed in Note 3.
The accounting policies have been consistently applied by the Group, and are consistent with those used in the
previous financial year. The adoption of the new or revised FRS and Interpretations to FRS (“INT FRS”) which are
mandatory from 1 April 2011 has no significant impact on the financial statements of the Group or the Company in the
current financial year.
102
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.2
Group Accounting
The accounting policy for subsidiaries, associates and joint ventures in the Company’s financial statements is stated in
Note 2.4. The Group’s accounting policy on goodwill is stated in Note 2.15.1.
2.2.1 Subsidiaries
Subsidiaries are entities (including special purpose entities) controlled by the Group. Control exists when the Group has the
power, directly or indirectly, to govern the financial and operating policies of the entity, generally accompanying a shareholding
of more than one half of the voting rights. Subsidiaries are consolidated from the date that control commences until the date
that control ceases. All significant inter-company balances and transactions are eliminated on consolidation.
2.2.2 Associates
Associates are entities over which the Group has significant influence, and that is neither a subsidiary nor a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee.
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.
Equity accounting involves recording the investment in associates initially at cost, and recognising the Group’s share of
the post-acquisition results of associates in the consolidated income statement, and the Group’s share of post-acquisition
reserve movements in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of
the investments in the consolidated statement of financial position.
In the consolidated statement of financial position, investments in associates include goodwill on acquisition identified on
acquisitions completed on or after 1 April 2001, net of accumulated impairment losses. Goodwill is assessed for impairment
as part of the investment in associates.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including loans that are in
fact extensions of the Group’s investment, the Group does not recognise further losses, unless it has incurred or guaranteed
obligations in respect of the associate.
Unrealised gains resulting from transactions with associates are eliminated to the extent of the Group’s interest in the
associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
2.2.3 Joint ventures
Joint ventures are entities over which the Group has contractual arrangements to jointly share the control with one or more
parties, and none of the parties involved has unilateral control over the entities’ economic activities.
The Group’s interest in joint ventures is accounted for in the consolidated financial statements using the equity method
of accounting.
In the consolidated statement of financial position, investments in joint ventures include goodwill on acquisition identified on
acquisitions completed on or after 1 April 2001, net of accumulated impairment losses. Goodwill is assessed for impairment
as part of the investment in joint ventures.
The Group’s interest in its unincorporated joint venture operations is accounted for by recognising the Group’s assets and
liabilities from the joint venture, as well as expenses incurred by the Group and the Group’s share of income earned from
the joint venture, in the consolidated financial statements.
Unrealised gains resulting from transactions with joint ventures are eliminated to the extent of the Group’s interest in the
joint venture. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
103
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.2
Group Accounting (Cont’d)
2.2.4 Special purpose entity
The Trust has been consolidated in the consolidated financial statements under INT FRS 12, Consolidation – Special
Purpose Entities.
2.2.5 Business combinations
Business combinations are accounted for using the acquisition method on and after 1 April 2010. The consideration for each
acquisition is measured at the aggregate of the fair values of assets given, liabilities incurred and equity interests issued
by the Group and any contingent consideration arrangement at acquisition date. Acquisition-related costs, other than those
associated with the issue of debt or equity, are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are recognised in the income statement.
For business combinations that are achieved in stages, any existing equity interests in the acquiree entity are re-measured
to their fair values at acquisition date and any changes are taken to the income statement.
Non-controlling interests in subsidiaries represent the equity in subsidiaries which are not attributable, directly or indirectly,
to the shareholders of the Company, and are presented separately in the consolidated statement of comprehensive income,
statement of changes in equity and within equity in the consolidated statement of financial position. The Group elects for
each individual business combination whether non-controlling interests in the acquiree entity are recognised at fair value,
or at the non-controlling interests’ proportionate share of the fair value of the acquiree entity’s identifiable net assets, at the
acquisition date. Total comprehensive income is attributed to non-controlling interests based on their respective interests in
a subsidiary, even if this results in the non-controlling interests having a debit balance.
Changes in the Group’s interest in subsidiaries that do not result in loss of control are accounted for as equity transactions.
When the Group loses control of a subsidiary, any interest retained in the former subsidiary is recorded at fair value with
re-measurement gain or loss recognised in the income statement.
2.3
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity shares are
taken to equity as a deduction, net of tax, from the proceeds.
When the Company purchases its own equity share capital, the consideration paid, including any directly attributable costs,
is recognised as ‘Treasury Shares’ within equity. When the shares are subsequently disposed, the realised gains or losses
on disposal of the treasury shares are included in ‘Other Reserves’ of the Company.
The Trust acquires shares in the Company from the open market for delivery to employees upon vesting of performance
shares awarded under the Group’s performance share plans. Such shares are designated as ‘Treasury Shares’. In the
consolidated financial statements, the cost of unvested shares, including directly attributable costs, is recognised as
‘Treasury Shares’ within equity.
Upon vesting of the performance shares, the weighted average costs of the shares delivered to employees, whether held
by the Company or the Trust, are transferred to ‘Capital Reserve – Performance Shares’ within equity in the consolidated
financial statements.
104
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.4
Investments in Subsidiaries, Associates and Joint Ventures
In the Company’s statement of financial position, investments in subsidiaries, associates and joint ventures, including loans
that meet the definition of equity instruments, are stated at cost less accumulated impairment losses. Where an indication
of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable
value. On disposal of investments in subsidiaries, associates and joint ventures, the difference between the net disposal
proceeds and the carrying amount of the investment is recognised in the income statement of the Company.
2.5
Investments
Purchases and sales of investments are recognised on trade date, which is the date that the Group commits to purchase or
sell the investment.
2.5.1 AFS investments
AFS investments are initially recognised at fair value plus directly attributable transaction costs.
They are subsequently stated at fair value at the end of the reporting period, with all resulting gains and losses, including
currency translation differences, taken to ‘Fair Value Reserve’ within equity. AFS investments for which fair values cannot
be reliably determined are stated at cost less accumulated impairment losses.
When AFS investments are sold or impaired, the accumulated fair value adjustments in the ‘Fair Value Reserve’ are included
in the income statement.
A significant or prolonged decline in fair value below the cost is objective evidence of impairment. Impairment loss is
computed as the difference between the acquisition cost and current fair value, less any impairment loss previously
recognised in the income statement. Impairment losses recognised in the income statement on equity investments are not
reversed through the income statement until the equity investments are disposed.
2.6
Derivative Financial Instruments and Hedging Activities
Derivative financial instruments are initially recognised at fair value on the date the derivative contract is entered into and
are subsequently re-measured at their fair values at the end of each reporting period.
Derivative financial instrument is carried as an asset when the fair value is positive and as a liability when the fair value
is negative.
Any gains or losses arising from changes in fair value are recognised immediately in the income statement, unless they
qualify for hedge accounting.
2.6.1 Hedge accounting
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the
Group wishes to apply hedge accounting, as well as its risk management objectives and strategy for undertaking the hedge
transactions. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature
of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to
changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that
they actually have been highly effective throughout the financial reporting periods for which they are designated.
105
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.6
Derivative Financial Instruments and Hedging Activities (Cont’d)
2.6.1 Hedge accounting (Cont’d)
Fair value hedge
Designated derivative financial instruments that qualify for fair value hedge accounting are initially recognised at fair value
on the date that the contract is entered into. Changes in fair value of derivatives are recorded in the income statement
together with any changes in the fair value of the hedged items that are attributable to the hedged risks.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge accounting. The adjustment to the carrying amount of the
hedged item arising from the hedged risk is amortised to the income statement from that date.
Cash flow hedge
The effective portion of changes in the fair value of the designated derivative financial instruments that qualify as cash flow
hedges are recognised in ‘Other Comprehensive Income’. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement. Amounts accumulated in the ‘Hedging Reserve’ are transferred to the income
statement in the periods when the hedged items affect the income statement.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity
at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income
statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in
equity is recognised immediately in the income statement.
Net investment hedge
Changes in the fair value of designated derivatives that qualify as net investment hedges, and which are highly effective,
are recognised in ‘Other Comprehensive Income’ in the consolidated financial statements and the amount accumulated
in ‘Currency Translation Reserve’ are transferred to the consolidated income statement in the period when the foreign
operation is disposed.
In the Company’s financial statements, the gain or loss on the financial instrument used to hedge a net investment in a
foreign operation of the Group is recognised in the income statement.
The Group has entered into the following derivative financial instruments to hedge its risks, namely -
Cross currency swaps and interest rate swaps are fair value hedges for the interest rate risk and cash flow hedges for
the currency risk arising from the Group’s issued bonds. The swaps involve the exchange of principal and floating or fixed
interest receipts in the foreign currency in which the issued bonds are denominated, for principal and floating or fixed
interest payments in the Group’s functional currency.
Certain cross currency swaps related to net investment hedges for the foreign currency exchange risk on its Australia
operations.
Forward foreign exchange contracts are cash flow hedges for the Group’s exposure to foreign currency exchange risks
arising from forecasted or committed expenditure.
106
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.7
Fair Value Estimation of Financial Instruments
Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between
knowledgeable willing parties in arm’s length transaction, other than in a forced or liquidation sale.
The following methods and assumptions are used to estimate the fair value of each class of financial instrument -
Bank balances, receivables and payables, current borrowings
The carrying amounts approximate fair values due to the relatively short term maturity of these instruments.
Quoted and unquoted investments
The fair value of investments traded in active markets is based on the market quoted mid-price (average of offer and bid
price) or the mid-price quoted by the market maker at the close of business at the end of the reporting period.
The fair values of unquoted investments are determined by using valuation techniques. These include the use of recent
arm’s length transactions, reference to current market value of another instrument which is substantially the same or
discounted cash flow analysis.
Cross currency and interest rate swaps
The fair value of a cross currency or an interest rate swap is the estimated amount that the swap contract can be exchanged
for or settled with under normal market conditions. This fair value can be estimated using the discounted cash flow method
where the future cash flows of the swap contract are discounted at the prevailing market foreign exchange rates and
interest rates. Market interest rates are actively quoted interest rates or interest rates computed by applying techniques to
these actively quoted interest rates.
Forward foreign currency contracts
The fair value of forward foreign exchange contracts is determined using forward exchange market rates for contracts with
similar maturity profiles at the end of the reporting period.
Non-current borrowings
For disclosure purposes, the fair value of non-current borrowings which are traded in active markets is based on the market
quoted ask price. For other non-current borrowings, the fair values are based on valuation provided by service providers or
estimated by discounting the future contractual cash flows using a discount rate based on the borrowing rates which the
Group expects would be available at the end of the reporting period.
2.8
Financial Guarantee Contracts
Financial guarantees issued by the Company prior to 1 April 2010 are recorded initially at fair values plus transactions costs
and amortised in the income statement over the period of the guarantee. Financial guarantees issued by the Company on or
after 1 April 2010 are directly charged to the subsidiary as guarantee fees based on fair values.
107
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.9
Trade and Other Receivables
Trade and other receivables, including loans given by the Company to subsidiaries, associates and joint ventures, are
recognised initially at fair values and, other than those that meet the definition of equity instruments, are subsequently
measured at amortised cost using the effective interest method, less allowance for impairment.
An allowance for impairment of trade and other receivables is established when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms of the debts. Loss events include financial difficulty
or bankruptcy of the debtor, significant delay in payments and breaches of contracts. The impairment loss, measured
as the difference between the debt’s carrying amount and the present value of estimated future cash flows discounted
at the original effective interest rate, is recognised in the income statement. When the debt becomes uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised in the
income statement.
2.10 Trade and Other Payables
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method.
2.11 Borrowings
Borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs.
After initial recognition, unhedged borrowings are subsequently stated at amortised cost using the effective interest method.
Hedged borrowings are accounted for in accordance with the accounting policies set out in Note 2.6.1.
2.12 Cash and Cash Equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand, balances
with banks and fixed deposits with original maturity of mainly three months or less, net of bank overdrafts which are
repayable on demand and which form an integral part of the Group’s cash management.
Bank overdrafts are included under borrowings in the statement of financial position.
2.13 Foreign Currencies
2.13.1 Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The statement of financial position and
statement of changes in equity of the Company and consolidated financial statements of the Group are presented in
Singapore Dollar, which is the functional and presentation currency of the Company and the presentation currency of the
Group.
2.13.2 Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional
currency at the exchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the end of the reporting period are translated at exchange rates ruling at that date. Foreign exchange
differences arising from translation are recognised in the income statement.
108
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.13 Foreign Currencies (Cont’d)
2.13.3 Translation of foreign operations’ financial statements
In the preparation of the consolidated financial statements, the assets and liabilities of foreign operations are translated to
Singapore Dollar at exchange rates ruling at the end of the reporting period except for share capital and reserves which are
translated at historical rates of exchange (see Note 2.13.4 for translation of goodwill and fair value adjustments).
Income and expenses in the income statement are translated using either the average exchange rates for the month or
year, which approximate the exchange rates at the dates of the transactions. All resulting translation differences are taken
directly to ‘Other Comprehensive Income’.
On loss of control of a subsidiary, loss of significant influence of an associate or loss of joint control of a joint venture,
the accumulated translation differences relating to that foreign operation are reclassified from equity to the consolidated
income statement as part of gain or loss on disposal.
On partial disposal where there is no loss of control of a subsidiary, the accumulated translation differences relating to the
disposal are reclassified to non-controlling interests. For partial disposals of associates or joint ventures, the accumulated
translation differences relating to the disposal are taken to the consolidated income statement.
2.13.4 Translation of goodwill and fair value adjustments
Goodwill and fair value adjustments arising on the acquisition of foreign entities completed on or after 1 April 2005 are
treated as assets and liabilities of the foreign entities and are recorded in the functional currencies of the foreign entities and
translated at the exchange rates prevailing at the end of the reporting period. However, for acquisitions of foreign entities
completed prior to 1 April 2005, goodwill and fair value adjustments continue to be recorded at the exchange rates at the
respective dates of the acquisitions.
2.13.5 Net investment in a foreign entity
The exchange differences on loans from the Company to its subsidiaries, associates or joint ventures which form part of the
Company’s net investment in the subsidiaries, associates or joint ventures are included in ‘Currency Translation Reserve’.
On disposal of the foreign entity, the accumulated exchange differences deferred in the ‘Currency Translation Reserve’ are
reclassified to the consolidated income statement in a similar manner as described in Note 2.13.3.
2.14 Provisions
A provision is recognised when there is a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the
amount can be made of the amount of the obligation. No provision is recognised for future operating losses.
The provision for liquidated damages in respect of information technology contracts is made based on management’s best
estimate of the anticipated liability.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate.
109
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.15
Intangible Assets
2.15.1 Goodwill
Goodwill on acquisition of subsidiaries on and after 1 April 2010 represents the excess of the consideration transferred, the
recognised amount of any non-controlling interest in the acquiree entity and the fair value of any previous equity interest in
the acquiree entity over the fair value of the net identifiable assets acquired, including contingent liabilities, at the acquisition
date. Such goodwill is recognised separately as intangible asset and stated at cost less accumulated impairment losses.
Acquisitions completed prior to 1 April 2001
Goodwill on acquisitions of subsidiaries, associates and joint ventures completed prior to 1 April 2001 had been adjusted in
full against ‘Other Reserves’ within equity. Such goodwill has not been retrospectively capitalised and amortised.
The Group also had acquisitions where the costs of acquisition were less than the fair value of identifiable net assets
acquired. Such differences (negative goodwill) were adjusted against ‘Other Reserves’ in the year of acquisition.
Goodwill which has been previously taken to ‘Other Reserves’, is not taken to income statement when the entity is disposed
of or when the goodwill is impaired.
Acquisitions completed on or after 1 April 2001
Prior to 1 April 2004, goodwill on acquisitions of subsidiaries, associates and joint ventures completed on or after
1 April 2001 was capitalised and amortised on a straight-line basis in the consolidated income statement over its estimated
useful life of up to 20 financial years. In addition, goodwill was assessed for indications of impairment at the end of each
reporting period.
Since 1 April 2004, goodwill is no longer amortised but is tested annually for impairment or whenever there is an indication
of impairment (see Note 2.16). The accumulated amortisation for goodwill as at 1 April 2004 had been eliminated with a
corresponding decrease in the capitalised goodwill.
Bargain purchase gain is recognised directly in the consolidated income statement.
Gains or losses on disposal of subsidiaries, associates and joint ventures include the carrying amount of capitalised goodwill
relating to the entity sold.
2.15.2 Other intangible assets
Expenditure on telecommunication and spectrum licences is capitalised and amortised using the straight-line method
over their estimated useful lives of 12 to 25 years. Customer relationships or customer contracts acquired in business
combinations are carried at fair values at the date of acquisition, and amortised on a straight-line basis over the period of
the expected benefits, which is estimated at 5 to 10 years.
Other intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
110
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.16
Impairment of Non-financial Assets
Goodwill on acquisition of subsidiaries, which has an indefinite useful life, is subject to annual impairment test or more
frequently tested for impairment if events or changes in circumstances indicate that it might be impaired. Goodwill is not
amortised (see Note 2.15.1).
Other intangible assets of the Group, which have definite useful lives and are subject to amortisation, as well as property,
plant and equipment and investments in subsidiaries, associates and joint ventures, are reviewed at the end of each reporting
period to determine whether there is any indicator for impairment, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If any such indication exists, the assets’ recoverable amounts
are estimated.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of the asset’s fair value less costs to sell and value-in-use.
An impairment loss for an asset, other than goodwill on acquisition of subsidiaries, is reversed if, and only if, there has been
a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
Impairment loss on goodwill on acquisition of subsidiaries is not reversed in the subsequent period.
2.17
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. Net
realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and
selling expenses.
Work-in-progress is stated at costs less progress payments received and receivable on uncompleted information technology
and engineering services, and fibre rollout. Costs include third party hardware and software costs, direct labour and other
direct expenses attributable to the project activity and associated profits recognised on projects-in-progress. When it
is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense
immediately.
Work-in-progress is presented in the consolidated statement of financial position as “Work-in-progress” (as a current asset)
or “Excess of progress billings over work-in-progress” (as a current liability) as applicable.
111
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.18 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, where
applicable. The cost of self-constructed assets includes the cost of material, direct labour, capitalised borrowing costs and
an appropriate proportion of production overheads.
Depreciation is calculated on a straight-line basis to write off the cost of the property, plant and equipment over their
expected useful lives. Property, plant and equipment under finance leases are depreciated over the shorter of the lease term
or useful life. The estimated useful lives are as follows -
Buildings
Transmission plant and equipment
Switching equipment
Other plant and equipment
No. of years
5 - 40
5 - 25
3 - 10
3 - 20
Other plant and equipment consist mainly of motor vehicles, office equipment, and furniture and fittings.
No depreciation is provided on freehold land, long-term leasehold land with a remaining lease period of more than 100 years
and capital work-in-progress. Leasehold land with a remaining lease period of 100 years or less is depreciated in equal
installments over its remaining lease period.
In respect of capital work-in-progress, assets are depreciated from the month the asset is completed and held ready for use.
Costs to acquire computer software which are an integral part of the related hardware are capitalised and recognised as
assets and included in property, plant and equipment when it is probable that the costs will generate economic benefits
beyond one year and the costs are associated with identifiable software products which can be reliably measured by
the Group.
The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the items.
Dismantlement, removal or restoration costs are included as part of the cost if the obligation for dismantlement, removal or
restoration is incurred as a consequence of acquiring or using the asset. Costs may also include transfers from equity of any
gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent
expenditure is included in the carrying amount of an asset when it is probable that future economic benefits, in excess of the
originally assessed standard of performance of the existing asset, will flow to the Group.
The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at the end
of each reporting period.
On disposal of property, plant and equipment, the difference between the disposal proceeds and its carrying value is taken
to the income statement.
112
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.19 Leases
2.19.1 Finance leases
Finance leases are those leasing agreements which effectively transfer to the Group substantially all the risks and benefits
incidental to ownership of the leased items. Assets financed under such leases are treated as if they had been purchased
outright at the lower of fair value and present value of the minimum lease payments and the corresponding leasing
commitments are shown as obligations to the lessors.
Lease payments are treated as consisting of capital repayments and interest elements. Interest is charged to the
income statement over the period of the lease to produce a constant rate of charge on the balance of capital repayments
outstanding.
2.19.2 Operating leases
Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Operating lease payments are recognised as expenses in the income statement on a straight-line basis
over the period of the lease.
2.19.3 Sales of network capacity
Sales of network capacity are accounted as finance leases where -
(i)
(ii)
(iii)
(iv)
(v)
the purchaser’s right of use is exclusive and irrevocable;
the asset is specific and separable;
the terms of the contract are for the major part of the asset’s economic useful life;
the attributable costs or carrying value can be measured reliably; and
no significant risks are retained by the Group.
Sales of network capacity that do not meet the above criteria are accounted for as operating leases.
2.19.4 Gains or losses from sale and leaseback
Gains on sale and leaseback transactions resulting in finance leases are deferred and amortised over the lease term on a
straight-line basis, while losses are recognised immediately in the income statement.
Gains and losses on sale and leaseback transactions established at fair value which resulted in operating leases are
recognised immediately in the income statement.
2.19.5 Capacity Swaps
The Group may exchange network capacity with other capacity or service providers. The exchange is regarded as a
transaction which generates revenue unless the transaction lacks commercial substance or the fair value of neither the
capacity received nor the capacity given up is reliably measurable.
113
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.20 Revenue Recognition
Revenue for the Group is recognised based on the fair value for the sale of goods and services rendered, net of goods and
services tax, rebates and discounts, and after eliminating sales within the Group. Revenue includes the gross income received
and receivable from revenue sharing arrangements entered into with overseas telecommunication companies in respect of
traffic exchanged. For device repayment plans, the consideration is allocated to its separate revenue-generating activities
based on the best estimate of the price of each activity in the arrangement. Handsets are accounted for in accordance with
the sale of equipment accounting policy of the Group. As the service credits under the device repayment plans are provided
over time for services, they are recorded as a reduction of subscription revenue.
For prepaid cards which have been sold, provisions for unearned revenue are made for services which have not been
rendered as at the end of the reporting period. Expenses directly attributable to the unearned revenue are deferred until
the revenue is recognised.
Revenue from the provision of information technology and engineering services, and fibre rollout are recognised based on
the percentage of completion of the projects using cost-to-cost basis. Revenue from information technology and engineering
services where the services involve substantially the procurement of computer equipment and third party software for
installation is recognised upon full completion of the project.
Revenue from the sale of equipment is recognised upon the transfer of significant risks and rewards of ownership of the
goods to the customer which generally coincides with delivery and acceptance of the goods sold.
Dividend income is recorded gross in the income statement when the right to receive payment is established.
Interest income is recognised on a time proportion basis using the effective interest method.
Rental income from operating leases is recognised on a straight-line basis over the term of the lease.
2.21 Employees’ Benefits
2.21.1 Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate
entities such as the Central Provident Fund. The Group has no legal or constructive obligation to pay further contributions
if any of the funds does not hold sufficient assets to pay all employee benefits relating to employee services in the current
and preceding financial years.
The Group’s contributions to the defined contribution plans are recognised in the income statement as expenses in the
financial year to which they relate.
2.21.2 Employees’ leave entitlements
Employees’ entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision
is made for the estimated liability of annual leave and long service leave as a result of services rendered by employees up
to the end of the reporting period.
114
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.21 Employees’ Benefits (Cont’d)
2.21.3 Share-based compensation
Performance shares
The performance share plans of the Group are accounted for either as equity-settled share-based payments or cash-settled
share-based payments. Equity-settled share-based payments are measured at fair value at the date of grant, whereas cash-
settled share-based payments are measured at current fair value at the end of each reporting period. The performance
share expense is amortised and recognised in the income statement on a straight-line basis over the vesting period.
At the end of each reporting period, the Group revises its estimates of the number of performance shares that the
participants are expected to receive based on non-market vesting conditions. The difference is charged or credited to the
income statement, with a corresponding adjustment to equity or liability for equity-settled and cash-settled share-based
payments respectively.
The dilutive effect of Share Plan 2004 is reflected as additional share dilution in the computation of diluted earnings
per share.
Share options
As the share options were granted before 22 November 2002, FRS 102, Share-based Payment, is not applicable.
No compensation expense is recognised for the outstanding share options under the share option schemes.
The proceeds received, net of any directly attributable transaction costs, from the exercise of share options are credited to
‘Share Capital’.
The dilutive effect of outstanding share options is reflected as additional share dilution in the computation of diluted earnings
per share.
2.22 Borrowing Costs
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary
costs incurred in arranging borrowings, and finance lease charges. Borrowing costs are generally expensed as incurred,
except to the extent that they are capitalised if they are directly attributable to the acquisition, construction, or production
of a qualifying asset.
2.23 Customer Acquisition Costs
Customer acquisition costs, including related sales and promotion expenses and activation commissions, are expensed
as incurred.
2.24 Pre-incorporation Expenses
Pre-incorporation expenses are expensed as incurred.
115
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
2.25 Government Grants
Grants in recognition of specific expenses are recognised in the income statement over the periods necessary to match
them with the relevant expenses they are intended to compensate. Grants related to depreciable assets are deferred and
recognised in the income statement over the period in which such assets are depreciated and used in the projects subsidised
by the grants.
2.26 Exceptional Items
Exceptional items refer to items of income or expense within the income statement from ordinary activities that are of
such size, nature or incidence that their separate disclosure is considered necessary to explain the performance for the
financial year.
2.27 Deferred Taxation
Deferred taxation is provided in full, using the liability method, on all temporary differences at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the
deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred
income tax is also not recognised for goodwill which is not deductible for tax purposes. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
(and laws) enacted or substantively enacted in countries where the Company and subsidiaries operate by, at the end of the
reporting period.
Deferred tax liabilities are provided on all taxable temporary differences arising on investments in subsidiaries, associates
and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and carry forward of unutilised tax losses, to the
extent that it is probable that future taxable profit will be available against which the deductible temporary differences and
carry forward of unused losses can be utilised.
At the end of each reporting period, the Group re-assesses unrecognised deferred tax assets and the carrying amount of
deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it is probable that
future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount
of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable profit will be available to allow
the benefit of all or part of the deferred tax asset to be utilised.
Current and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in
the same or different period, directly to equity.
2.28 Dividends
Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the
financial year in which the dividends are approved by the shareholders.
116
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
2.29 Segment Reporting
Operating segment is identified as the component of the Group that is regularly reviewed by the chief operating decision
maker in order to allocate resources to the segment and to assess its performance.
2.30 Non-current Assets (or Disposal Groups) Held for Sale and Discontinued Operations
Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount
and fair value less costs to sell if their carrying amounts are recovered principally through sale transactions rather than
through continuing use.
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
FRS 1, Presentation Of Financial Statements, requires disclosure of the judgements management has made in the process of
applying the accounting policies that have the most impact on the amounts recognised in the financial statements. It also
requires disclosure about the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year. The estimates and assumptions are based on historical experience and other
factors that are considered relevant. Actual results may differ from these estimates.
The following presents a summary of the critical accounting estimates and judgements -
3.1
Impairment Reviews
The accounting policies for impairment of non-financial assets are stated in Note 2.16.
During an impairment review, the Group assesses whether the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount. Recoverable amount is defined as the higher of an asset’s or cash generating unit’s fair value less
costs to sell and its value-in-use. In making this judgement, the Group evaluates the value-in-use which is supported by the
net present value of future cash flows derived from such assets using cash flow projections which have been discounted at
an appropriate rate.
Forecasts of future cash flows are based on the Group’s estimates using historical, sector and industry trends, general
market and economic conditions, changes in technology and other available information.
The assumptions used by management to determine the value-in-use calculations of goodwill on acquisition of subsidiaries,
and carrying values of associates and joint ventures are stated in Note 24.
3.2
Impairment of Trade Receivables
The Group assesses at the end of each reporting period whether there is objective evidence that trade receivables have
been impaired. Impairment loss is calculated based on a review of the current status of existing receivables and historical
collections experience. Such provisions are adjusted periodically to reflect the actual and anticipated experience.
117
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
3.3
Estimated Useful Lives of Property, Plant and Equipment
The Group reviews annually the estimated useful lives of property, plant and equipment based on factors such as business
plans and strategies, expected level of usage and future technological developments. It is possible that future results of
operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned
above. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation
and decrease the carrying value of property, plant and equipment.
3.4
Investment in NetLink Trust
Based on facts and circumstances as disclosed in Note 27, although the Company holds 100% of the units in NetLink Trust,
the Company does not control but has significant influence in the trust in accordance with FRS 28, Investments in Associates.
Therefore, NetLink Trust has been accounted for as an associate of the Group.
3.5
Taxation
3.5.1 Deferred tax asset
The Group reviews the carrying amount of deferred tax asset at the end of each reporting period. Deferred tax asset is
recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised. This involves judgement regarding the future financial performance of the particular legal entity or tax
group in which the deferred tax asset has been recognised. Management has assessed the transfer of certain assets and
business to an associate at fair value and in accordance with FRS 12, Income Taxes, recognised a deferred tax asset of
S$294 million.
3.5.2
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Judgement is involved in determining the group-wide
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 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.
3.6
Share-based Payments
Equity-settled share-based payments are measured at fair value at the date of grant, whereas cash-settled share-based
payments are measured at current fair value at the end of each reporting period. In addition, the Group revises the estimated
number of performance shares that participants are expected to receive based on non-market vesting conditions at the end
of each reporting period.
The assumptions of the valuation model used to determine fair values are set out in Note 5.3.
3.7
Contingent Liabilities
The Group consults with its legal counsel on matters related to litigation, and other experts both within and outside the
Group with respect to matters in the ordinary course of business.
As at 31 March 2012, the Group was involved in various legal proceedings where it has been vigorously defending its claims
as disclosed in Note 42.
118
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
4.
OPERATING REVENUE
Mobile communications
Data and Internet
Information technology and engineering
- infrastructure services and business solutions
- fibre rollout
National telephone
Sale of equipment
International telephone
Pay television
Others
Operating revenue
Operating revenue
Other income (see Note 6)
Interest and dividend income (see Note 10)
Total revenue
Group
2012
S$ Mil
8,173.6
3,577.2
1,888.7
178.4
2,067.1
1,850.7
1,705.6
818.1
205.2
427.8
2011
S$ Mil
7,719.8
3,486.7
1,759.1
267.5
2,026.6
1,886.4
1,557.4
852.8
184.3
356.6
18,825.3
18,070.6
18,825.3
103.2
63.7
18,070.6
130.2
53.4
18,992.2
18,254.2
119
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.
OPERATING EXPENSES
Selling and administrative costs (1)
Traffic expenses
Staff costs
Cost of equipment sold
Repairs and maintenance
Other cost of sales
Group
2012
S$ Mil
4,824.9
3,092.4
2,312.6
2,200.8
328.8
950.3
2011
S$ Mil
4,701.4
2,881.1
2,196.6
2,005.8
322.2
974.4
13,709.8
13,081.5
Note:
(1)
Included mobile and broadband subscriber acquisition and retention costs, supplies and services, as well as rentals of properties
and mobile base stations.
5.1
Staff Costs
Staff costs included the following -
Contributions to defined contribution plans
Performance share expense
- equity-settled arrangements
- cash-settled arrangements
Termination benefits
Group
2012
S$ Mil
2011
S$ Mil
233.2
211.8
25.8
9.9
5.3
22.1
3.4
8.3
120
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.2
Key Management Personnel Compensation
Key management personnel compensation (1)
Directors' fees and remuneration (2)
Other key management personnel remuneration (3)
Group
2012
S$ Mil
6.9
13.1
20.0
2011
S$ Mil
6.5
12.6
19.1
Notes:
(1) Comprise base salary, annual wage supplement, bonus, contributions to defined contribution plans and other cash benefits, but
exclude performance share expense disclosed below.
(2) The Executive Director was awarded up to 1,668,121 (2011: 1,564,409) ordinary shares of SingTel pursuant to Share Plan 2004 during
the year, subject to certain performance criteria including other terms and conditions being met. The performance share expense for
the Executive Director computed in accordance with FRS 102, Share-based Payment, was S$3.4 million (2011: S$2.2 million).
(3) The other key management personnel were awarded up to 3,963,948 (2011: 4,573,308) ordinary shares of SingTel pursuant to Share
Plan 2004 during the year, subject to certain performance criteria including other terms and conditions being met. The performance
share expense for other key management computed in accordance with FRS 102, Share-based Payment, was S$7.7 million
(2011: S$5.8 million).
The other key management personnel of the Group comprise members of SingTel’s Management Committee.
5.3
Share-based Payments
5.3.1 Share options
In 2003, the Singapore Telecom Share Option Scheme 1999 was suspended with the implementation of Share Plan 2003.
The existing share options granted continue to vest according to the terms and conditions of the scheme and the respective
grants.
The share options have a validity period of ten years from the date of grant, and are granted either without performance
hurdles (“Market Price Share Options”) or with performance hurdles (“Performance Share Options”).
Market Price Share Options are granted based on the performance of the Group and individuals. These share options vest
over three years from the date of the grant and are exercisable after the first anniversary of the date of the grant and will
expire on the tenth anniversary of the date of grant.
Performance Share Options are conditional grants where vesting is conditional on performance targets set based on
medium-term corporate objectives. At the end of the three-year performance period, the final number of Performance
Share Options awarded will depend on the level of achievement of those targets.
121
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.3.1 Share options (Cont’d)
Number of
share options
Weighted average
exercise price
per share
Group and Company
Outstanding as at 1 April
Cancelled
Exercised
Outstanding and exercisable as at 31 March
2012
‘000
8,619
(598)
(6,522)
1,499
2011
‘000
12,495
(329)
(3,547)
8,619
The outstanding share options have the following exercise prices -
S$1.50 to S$1.99
S$1.30 to S$1.49
2012
S$
1.48
1.55
1.45
1.31
2012
‘000
-
1,499
1,499
2011
S$
1.59
1.92
1.83
1.48
2011
‘000
3,027
5,592
8,619
Weighted average remaining validity life
2.0 months
1.0 year
No compensation expense is recognised when the share options are issued (see Note 2.21.3).
5.3.2 Performance share plans
Two categories of awards – General Awards given to selected staff and Senior Management Awards for senior management
staff – were made on an annual basis. The grants are conditional on the achievement of targets set for a three-year
performance period. The performance shares will only be released to the recipients at the end of the qualifying performance
period. The final number of performance shares will depend on the level of achievement of the targets over the three-year
period.
The General Awards are generally settled by delivery of SingTel shares, while the Senior Management Awards are generally
settled by SingTel shares or cash, at the option of the recipient.
Additionally, early vesting of the performance shares can also occur under special circumstances approved by the Executive
Resource and Compensation Committee such as retirement, redundancy, illness and death while in employment.
The performance share plans provide for the award of performance shares to selected employees of SingTel and its
subsidiaries. Though the performance shares are awarded by SingTel, the respective subsidiaries that wish to provide
incentives to their own employees to retain and encourage their continued service, bear all costs and expenses in any way
arising out of, or connected with, the grant and vesting of the awards to their employees.
The fair value of the performance shares are estimated using a Monte-Carlo simulation methodology at the measurement
dates, which are grant dates for equity-settled awards, and at the end of the reporting period for cash-settled awards.
122
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
5.3.2 Performance share plans (Cont’d)
General Awards
The movements of the number of performance shares for the General Awards during the financial year were as follows -
Group and Company
2012
Date of grant
Share Plan 2004
FY2009 (1)
4 Jun 2008
Sep 2008 to Mar 2009
FY2010
3 Jun 2009
Sep 2009 to Mar 2010
FY2011
3 Jun 2010
Sep 2010 to Mar 2011
FY2012
2 Jun 2011
Sep 2011 to Mar 2012
Outstanding
as at
1 April 2011
‘000
12,097
1,065
19,599
191
18,910
696
Granted
‘000
Vested
‘000
Cancelled
‘000
Outstanding
and unvested
as at
31 March 2012
‘000
-
-
-
-
-
-
(1,484)
(133)
(10,613)
(932)
-
-
-
-
-
-
(19)
-
(1,011)
(14)
(1,141)
(80)
(1,142)
-
18,588
177
17,769
616
20,501
229
-
-
21,662
229
52,558
21,891
(1,636)
(14,933)
57,880
Note:
(1)
“FY2009” denotes financial year ended 31 March 2009.
123
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.3.2 Performance share plans (Cont’d)
Outstanding
as at
1 April 2010
‘000
13,895
197
12,727
1,111
21,156
191
Granted
‘000
Vested
‘000
Cancelled
‘000
Outstanding
and unvested
as at
31 March 2011
‘000
-
-
-
-
-
-
(13,133)
(171)
-
-
-
-
-
-
(762)
(26)
(630)
(46)
(1,557)
-
(1,022)
-
(4,043)
-
-
12,097
1,065
19,599
191
18,910
696
52,558
-
-
19,932
696
49,277
20,628
(13,304)
Group and Company
2011
Date of grant
Share Plan 2004
FY2008
29 May 2007
Sep 2007 to Feb 2008
FY2009
4 Jun 2008
Sep 2008 to Mar 2009
FY2010
3 Jun 2009
Sep 2009 to Mar 2010
FY2011
3 Jun 2010
Sep 2010 to Mar 2011
124
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
5.3.2 Performance share plans (Cont’d)
The fair values of the significant General Awards at grant date and the assumptions of the fair value model for the equity-
settled grants were as follows -
2012 and 2011
General Awards
Fair value at grant date
Assumptions under Monte-Carlo Model
Expected volatility
SingTel
MSCI Asia Pacific Telco Index
MSCI Asia Pacific Telco Component Stocks
Historical volatility period
From
To
Risk free interest rates
Date of grant
Share Plan 2004
FY2010
FY2011
FY2012
3 June 09
3 June 10
2 June 11
S$1.56
S$1.53
S$1.81
34.6%
23.1%
33.4%
22.7%
30.3%
19.3%
July 2001
June 2009
July 2001
June 2010
July 2001
June 2011
Yield of Singapore Government Securities on
3 June 2009
3 June 2010
2 June 2011
125
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.3.2 Performance share plans (Cont’d)
Senior Management Awards - cash-settled arrangements
The movements of the number of performance shares under the Senior Management Awards, the fair value of the grants at
the end of the reporting period and the assumptions of the fair value model for the relevant grants were as follows -
Date of grant
Share Plan 2004
FY2009
FY2010
FY2011
FY2012
2012
4 June 08
3 June 09
3 June 10
2 June 11
Group
And
Company
Senior Management Award
Number of performance shares (‘000)
Outstanding as at 1 April 2011
Granted
Cancelled
Outstanding and unvested as at
31 March 2012
1,990
-
(1,990)
2,919
-
-
3,168
-
-
-
2,922
-
8,077
2,922
(1,990)
-
2,919
3,168
2,922
9,009
Fair value at 31 March 2012
S$3.12
S$2.45
S$2.75
Assumptions under Monte-Carlo Model
Expected volatility
SingTel
MSCI Asia Pacific Telco Index
MSCI Asia Pacific Telco Component Stocks
Risk free interest rates
22.1%
12.9%
22.1%
12.9%
800 days historical volatility
preceding March 2012
Yield of Singapore Government Securities on
31 March 2012
31 March 2012
126
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
5.3.2 Performance share plans (Cont’d)
Date of grant
Share Plan 2004
FY2008
FY2009
FY2010
FY2011
2011
29 May 07
4 June 08
3 June 09
3 June 10
Senior Management Award
Number of performance shares (‘000)
Outstanding as at 1 April 2010
Granted
Vested
Cancelled
Outstanding and unvested as at
31 March 2011
Fair value at 31 March 2011
Assumptions under Monte-Carlo Model
Expected volatility
SingTel
MSCI Asia Pacific Telco Index
MSCI Asia Pacific Telco Component Stocks
Risk free interest rates
1,974
-
(1,974)
-
-
2,027
-
-
(37)
1,990
S$2.96
2,919
-
-
-
2,919
S$2.49
-
3,168
-
-
3,168
S$2.05
30.5%
19.9%
30.5%
19.9%
800 days historical volatility
preceding March 2011
Yield of Singapore Government Securities on
31 March 2011
31 March 2011
Group
And
Company
6,920
3,168
(1,974)
(37)
8,077
127
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.3.3 Performance-based Deferred Bonus Scheme (“PBDBS”)
With effect from 2004, discretionary PBDBS units are granted to selected overseas local hires. While these units have
the same vesting criteria as the Share Plan 2004, the payout is in the form of cash instead of shares. The recipients are
encouraged to purchase and hold SingTel shares with the cash payout, in line with the objective of the performance
share plans.
2012
4 June 08
3 June 09
3 June 10
2 June 11
Group
Date of grant
FY2009
FY2010
FY2011
FY2012
PBDBS (cash-settled)
Number of performance shares (‘000)
Outstanding as at 1 April 2011
Granted
Vested
Cancelled
Outstanding and unvested as at
31 March 2012
546
-
(69)
(477)
589
-
-
(63)
538
-
-
(44)
-
534
-
(32)
1,673
534
(69)
(616)
-
526
494
502
1,522
Fair value at 31 March 2012
S$1.95
S$1.23
S$1.80
Assumptions under Monte-Carlo Model
Expected volatility
SingTel
MSCI Asia Pacific Telco Index
MSCI Asia Pacific Telco Component Stocks
Risk free interest rates
22.1%
12.9%
22.1%
12.9%
800 days historical volatility
preceding March 2012
Yield of Singapore Government Securities on
31 March 2012
31 March 2012
128
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
5.3.3 Performance-based Deferred Bonus Scheme (“PBDBS”) (Cont’d)
2011
29 May 07
4 June 08
3 June 09
3 June 10
Group
Date of grant
FY2008
FY2009
FY2010
FY2011
PBDBS (cash-settled)
Number of performance shares (‘000)
Outstanding as at 1 April 2010
Granted
Vested
Cancelled
Outstanding and unvested as at
31 March 2011
584
-
(534)
(50)
572
-
-
(26)
589
-
-
-
-
538
-
-
1,745
538
(534)
(76)
-
546
589
538
1,673
Fair value at 31 March 2011
S$2.96
S$1.63
S$1.27
Assumptions under Monte-Carlo Model
Expected volatility
SingTel
MSCI Asia Pacific Telco Index
MSCI Asia Pacific Telco Component Stocks
Risk free interest rates
30.5%
19.9%
30.5%
19.9%
800 days historical volatility
preceding March 2011
Yield of Singapore Government Securities on
31 March 2011
31 March 2011
129
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
5.4
Special Purpose Entity
The Trust’s purpose is to purchase the Company’s shares from the open market for delivery to the recipients upon vesting
of the awards.
As at the end of the reporting period, the Trust held the following assets -
Cash at bank
Cost of SingTel shares, net of vesting
Group
Company
2012
S$ Mil
0.8
42.3
43.1
2011
S$ Mil
0.6
27.1
27.7
2012
S$ Mil
0.6
32.5
33.1
The details of SingTel shares held by the Trust were as follows -
Group
Balance as at 1 April
Purchase of SingTel shares
Vesting of shares
Balance as at 31 March
Number of shares
Amount
2012
‘000
8,887
5,798
(989)
13,696
2011
‘000
10,125
6,985
(8,223)
8,887
2012
S$ Mil
27.1
18.2
(3.0)
42.3
2011
S$ Mil
0.5
20.4
20.9
2011
S$ Mil
30.5
21.5
(24.9)
27.1
Upon consolidation of the Trust in the consolidated financial statements, the weighted average cost of vested SingTel shares
is taken to ‘Capital Reserve - Performance Shares’ whereas the weighted average cost of unvested shares is taken to
‘Treasury Shares’ within equity. See Note 2.3.
130
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
5.5
Other Operating Expense Items
Operating expenses included the following -
Auditors' remuneration
- Deloitte & Touche LLP, Singapore
- Deloitte Touche Tohmatsu, Australia
- Other Deloitte & Touche offices
Non-audit fees paid to
- Deloitte & Touche LLP, Singapore (1)
- Deloitte Touche Tohmatsu, Australia (1)
- Other Deloitte & Touche offices
Impairment of trade receivables
Allowance for inventory obsolescence
Inventory written off
Provision/ (Write-back of provision) for liquidated damages and warranties
Research and development expenses written off
Operating lease payments for properties and mobile base stations
Group
2012
S$ Mil
2011
S$ Mil
1.2
1.2
0.3
0.4
0.9
0.5
158.3
27.7
2.8
3.3
2.8
315.1
1.1
1.0
0.3
0.3
0.7
-
136.8
19.3
4.6
(17.4)
2.2
283.6
Note:
(1) The non-audit fees for the current financial year ended 31 March 2012 included S$0.2 million (2011: S$0.2 million) and S$0.4 million
(2011: S$0.4 million) paid to Deloitte & Touche LLP, Singapore, and Deloitte Touche Tohmatsu, Australia, respectively in respect of
certification and review for regulatory purposes.
The Audit Committee had undertaken a review of the non-audit services provided by the auditors, Deloitte & Touche LLP, and
in the opinion of the Audit Committee, these services would not affect the independence of the auditors.
6.
OTHER INCOME
Bad trade receivables recovered
Rental income
Net foreign exchange (losses)/ gains - trade related
Net (losses)/ gains on disposal of property, plant and equipment
Co-location access fees from network facilities
Others
Group
2012
S$ Mil
3.0
4.7
(8.9)
(1.1)
53.4
52.1
2011
S$ Mil
2.7
5.2
1.8
6.7
57.3
56.5
103.2
130.2
131
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
7.
DEPRECIATION AND AMORTISATION
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of sale and leaseback income
Amortisation of deferred gain on sale of a joint venture
8.
EXCEPTIONAL ITEMS
Exceptional gains
Net foreign exchange gains on intra-group loans
Fair value gain on purchase consideration payable for
a joint venture
Gain on disposal of a joint venture
Gain on dilution of interest in associates and joint ventures
Exceptional losses
Ex-gratia payments on staff restructuring
Impairment of AFS investments
Others
Group
2012
S$ Mil
1,875.4
131.4
(2.1)
(3.1)
2,001.6
2011
S$ Mil
1,863.6
111.9
(3.7)
(3.1)
1,968.7
Group
2012
S$ Mil
28.2
-
4.7
2.7
35.6
(23.5)
(5.5)
-
(29.0)
2011
S$ Mil
18.5
38.0
-
3.5
60.0
-
-
(4.3)
(4.3)
6.6
55.7
132
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
9.
SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Share of ordinary profits/ (losses) of
- joint ventures
- associates
Group
2012
S$ Mil
2011
S$ Mil
2,017.1
(4.6)
2,012.5
2,143.7
6.1
2,149.8
Share of exceptional gains/ (losses) (1) of associates and joint ventures
19.3
(40.6)
Share of tax of
- joint ventures
- associates
Note:
(1) Share of exceptional gains/ (losses) comprised -
Additional quarter of a joint venture’s post-tax profit
Write-back of provisions made in prior years
Reduction of deferred tax asset
Recognition of additional depreciation and other adjustments
Brand launch costs
Transaction costs on acquisitions
Others
(590.6)
(9.8)
(600.4)
(533.6)
(11.5)
(545.1)
1,431.4
1,564.1
54.6
7.2
(25.1)
(5.3)
-
-
(12.1)
19.3
-
-
-
(7.0)
(31.5)
(9.6)
7.5
(40.6)
133
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
10.
INTEREST AND INVESTMENT INCOME (NET)
Interest income from
- bank deposits
- others
Gross dividends from AFS investments
Other revenue
Net foreign exchange losses - non-trade related
Fair value gains/ (losses) on hedging instruments
Fair value (losses)/ gains on fair value hedges
- hedged items
- hedging instruments
11.
FINANCE COSTS
Interest expense
- bonds
- bank loans
- others
Less: Amounts capitalised
Effects of hedging using interest-rate swaps
Unwinding of discount (including adjustments)
Group
2012
S$ Mil
28.4
16.8
45.2
18.5
63.7
(10.3)
0.6
(132.4)
132.4
-
2011
S$ Mil
30.8
3.0
33.8
19.6
53.4
(5.5)
(4.4)
522.1
(522.1)
-
54.0
43.5
Group
2012
S$ Mil
367.8
36.0
23.8
427.6
(4.3)
423.3
(34.9)
6.3
394.7
2011
S$ Mil
352.5
28.1
17.7
398.3
-
398.3
(39.1)
8.3
367.5
The interest rate applicable to the capitalised borrowings was 7.6 per cent as at 31 March 2012.
134
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
12.
TAXATION
12.1
Tax Expense
Current tax
- Singapore
- Overseas
Deferred tax (credit)/ expense
Tax expense attributable to current year's profit
Recognition of deferred tax credit on other temporary differences (1)
Recognition of deferred tax credit (2)
Adjustments in respect of prior year (3) -
Current income tax
- over provision
Deferred income tax
- over provision
Notes:
(1) This relates to deferred tax credit recognised on interest expense arising from inter-company loans.
(2) This relates to deferred tax credit recognised on the value of assets transferred to an associate.
(3) This included certain tax credits upon finalisation of earlier years’ tax assessments.
Group
2012
S$ Mil
313.1
501.2
814.3
(25.9)
788.4
(121.0)
(294.0)
2011
S$ Mil
259.8
513.4
773.2
8.5
781.7
(123.8)
-
(46.0)
(17.8)
(2.5)
324.9
(16.4)
623.7
135
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
12.1 Tax Expense (Cont’d)
The tax expense on profits was different from the amount that would arise using the Singapore standard rate of income tax
due to the following -
Profit before tax
Less: Share of results of associates and joint ventures
Tax calculated at tax rate of 17 per cent (2011: 17 per cent)
Effects of -
Different tax rates of other countries
Income not subject to tax
Expenses not deductible for tax purposes
Deferred tax asset not recognised
Deferred tax asset previously not recognised now recognised
Others
Tax expense attributable to current year's profit
Group
2012
S$ Mil
4,314.4
(1,431.4)
2,883.0
2011
S$ Mil
4,446.4
(1,564.1)
2,882.3
490.1
490.0
277.2
(20.9)
41.4
2.1
(0.2)
(1.3)
788.4
281.5
(24.0)
28.0
1.9
(0.3)
4.6
781.7
136
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
12.2 Deferred Taxes
The movements of the deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction)
during the financial year were as follows -
Group - 2012
Deferred tax assets
Balance as at 1 April 2011
Credited/ (Charged) to income statement
Charged to other comprehensive income
Transfer to current tax
Translation differences
Balance as at 31 March 2012
Provisions
S$ Mil
134.2
125.9
-
(178.3)
0.1
81.9
Group - 2012
Deferred tax liabilities
Balance as at 1 April 2011
Credited/ (Charged) to income statement
Transfer from current tax
Translation differences
Balance as at 31 March 2012
TWDV (1) in
excess of
NBV (2) of
depreciable
assets
S$ Mil
Tax losses
and
unutilised
capital
allowances
S$ Mil
420.3
(62.6)
-
-
2.0
359.7
2.3
-
-
(2.2)
-
0.1
Accelerated
tax
depreciation
S$ Mil
Offshore
interest and
dividend
not remitted
S$ Mil
(289.6)
50.8
(1.2)
0.2
(239.8)
(5.2)
(0.1)
-
-
(5.3)
Others
S$ Mil
218.3
327.4
(13.1)
(0.5)
0.1
532.2
Others
S$ Mil
(11.6)
2.0
-
-
(9.6)
Total
S$ Mil
775.1
390.7
(13.1)
(181.0)
2.2
973.9
Total
S$ Mil
(306.4)
52.7
(1.2)
0.2
(254.7)
137
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
12.2 Deferred Taxes (Cont’d)
Group - 2011
Deferred tax assets
Balance as at 1 April 2010
Credited/ (Charged) to income statement
Charged to other comprehensive income
Transfer to current tax
Translation differences
Balance as at 31 March 2011
Provisions
S$ Mil
251.3
115.5
-
(233.2)
0.6
134.2
Group - 2011
Deferred tax liabilities
Balance as at 1 April 2010
Credited/ (Charged) to income statement
Transfer from current tax
Translation differences
Balance as at 31 March 2011
TWDV (1) in
excess of
NBV (2) of
depreciable
assets
S$ Mil
Tax losses
and
unutilised
capital
allowances
S$ Mil
407.7
6.2
-
-
6.4
420.3
57.2
0.1
-
(54.1)
(0.9)
2.3
Accelerated
tax
depreciation
S$ Mil
Offshore
interest and
dividend
not remitted
S$ Mil
(293.7)
10.5
(6.3)
(0.1)
(289.6)
(5.1)
(0.1)
-
-
(5.2)
Others
S$ Mil
191.0
(1.8)
25.8
-
3.3
218.3
Others
S$ Mil
(12.9)
1.3
-
-
(11.6)
Total
S$ Mil
907.2
120.0
25.8
(287.3)
9.4
775.1
Total
S$ Mil
(311.7)
11.7
(6.3)
(0.1)
(306.4)
138
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
Deferred
sale and
leaseback
income
S$ Mil
0.5
(0.3)
0.2
Provisions
S$ Mil
0.6
-
0.6
12.2 Deferred Taxes (Cont’d)
Company - 2012
Deferred tax assets
Balance as at 1 April 2011
Charged to income statement
Balance as at 31 March 2012
Company - 2012
Deferred tax liabilities
Balance as at 1 April 2011
Credited to income statement
Transfer from current tax
Balance as at 31 March 2012
Company - 2011
Deferred tax assets
Balance as at 1 April 2010
Credited/ (Charged) to income statement
Balance as at 31 March 2011
Deferred
sale and
leaseback
income
S$ Mil
0.7
(0.2)
0.5
Provisions
S$ Mil
0.5
0.1
0.6
Company - 2011
Deferred tax liabilities
Balance as at 1 April 2010
Credited to income statement
Transfer from current tax
Balance as at 31 March 2011
Notes:
(1) TWDV – Tax written down value
(2) NBV – Net book value
Others
S$ Mil
2.0
(0.4)
1.6
Accelerated
tax
depreciation
S$ Mil
(180.9)
44.5
(1.2)
(137.6)
Others
S$ Mil
1.5
0.5
2.0
Accelerated
tax
depreciation
S$ Mil
(185.5)
10.8
(6.2)
(180.9)
Total
S$ Mil
3.1
(0.7)
2.4
Total
S$ Mil
(180.9)
44.5
(1.2)
(137.6)
Total
S$ Mil
2.7
0.4
3.1
Total
S$ Mil
(185.5)
10.8
(6.2)
(180.9)
139
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
12.2 Deferred Taxes (Cont’d)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against
current tax liabilities, and when deferred income taxes relate to the same fiscal authority.
The amounts, determined after appropriate offsetting, are shown in the statements of financial position as follows -
Deferred tax assets
Deferred tax liabilities
Group
Company
2012
S$ Mil
963.0
(243.8)
719.2
2011
S$ Mil
764.0
(295.3)
468.7
2012
S$ Mil
-
(135.2)
(135.2)
2011
S$ Mil
-
(177.8)
(177.8)
Deferred tax assets are recognised to the extent that realisation of the related tax benefits through future taxable profits is
probable.
As at 31 March 2012, the subsidiaries of the Group had estimated unutilised income tax losses of approximately S$88
million (2011: S$92 million), unutilised investment allowances of S$57M, unutilised capital tax losses of S$138 million (2011:
S$137 million) and unabsorbed capital allowances of approximately S$0.7 million (2011: S$2.9 million).
These unutilised income tax losses and investment allowances, and unabsorbed capital allowances are available for set-off
against future taxable profits, subject to the agreement of the relevant tax authorities and compliance with certain provisions
of the income tax regulations of the respective countries in which the subsidiaries operate. The unutilised capital tax losses
are available for set-off against future capital gains of a similar nature subject to compliance with certain statutory tests in
Australia.
As at the end of the reporting period, the potential tax benefits arising from the following items were not recognised in the
financial statements due to uncertainty on their recoverability -
Unutilised income tax losses and investment allowances,
and unabsorbed capital allowances
Unutilised capital tax losses
Group
2012
S$ Mil
145.5
137.6
2011
S$ Mil
90.6
137.0
140
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
13.
EARNINGS PER SHARE
Weighted average number of ordinary shares in issue for
calculation of basic earnings per share (1)
Adjustment for dilutive effect of share options
Adjustment for dilutive effect of Share Plan 2004
Weighted average number of ordinary shares for calculation of
Group
2012
‘000
2011
‘000
15,928,847
2,324
40,769
15,925,839
5,013
18,456
diluted earnings per share
15,971,940
15,949,308
Note:
(1) Adjusted to exclude the number of performance shares held by the Trust.
‘Basic earnings per share’ is calculated by dividing the Group’s profit attributable to shareholders of the Company by the
weighted average number of ordinary shares in issue during the financial year.
For ‘Diluted earnings per share’, the weighted average number of ordinary shares in issue included the number of additional
shares outstanding if the potential dilutive ordinary shares arising from the share options and performance shares granted
by the Group were issued. Adjustment is made to earnings for the dilutive effect arising from the associates and joint
ventures’ dilutive shares.
141
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
14.
RELATED PARTY TRANSACTIONS
In addition to the related party information disclosed elsewhere in the financial statements, the Group had the following
significant transactions and balances with related parties –
Revenue
Subsidiaries of ultimate holding company
Telecommunications
Rental and maintenance
Information technology and engineering
Associates and joint ventures
Telecommunications
Expenses
Subsidiaries of ultimate holding company
Telecommunications
Utilities
Associates and joint ventures
Telecommunications
Transmission capacity
Postal
Due from subsidiaries of ultimate holding company
Due to subsidiaries of ultimate holding company
All the above transactions were on normal commercial terms and conditions and market rates.
Please refer to Note 5.2 for information on key management personnel compensation.
Group
2012
S$ Mil
2011
S$ Mil
133.1
29.9
2.4
139.7
29.8
12.6
36.2
37.1
85.2
101.7
56.6
31.6
10.0
24.5
17.3
78.4
89.3
72.9
45.4
10.3
26.0
3.2
142
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
15.
CASH AND CASH EQUIVALENTS
Fixed deposits
Cash and bank balances
Group
Company
2012
S$ Mil
640.3
706.1
1,346.4
2011
S$ Mil
2,049.5
688.5
2,738.0
2012
S$ Mil
165.0
89.4
254.4
The carrying amounts of the cash and cash equivalents approximate their fair values.
Cash and cash equivalents denominated in the non-functional currencies of the Group were as follows –
USD
AUD
JPY
The maturities of the fixed deposits were as follows -
Less than three months
Over three months
Group
Company
2012
S$ Mil
227.7
6.0
9.4
2011
S$ Mil
167.8
45.9
28.8
2012
S$ Mil
172.2
5.3
9.2
Group
Company
2012
S$ Mil
637.9
2.4
640.3
2011
S$ Mil
2,043.4
6.1
2,049.5
2012
S$ Mil
165.0
-
165.0
2011
S$ Mil
161.8
61.5
223.3
2011
S$ Mil
122.1
45.6
7.6
2011
S$ Mil
161.8
-
161.8
As at 31 March 2012, the weighted average effective interest rates of the fixed deposits of the Group and Company were
1.1 per cent (2011: 0.4 per cent) and 1.5 per cent (2011: 1.4 per cent) respectively.
The exposure of cash and cash equivalents to interest rate risks is disclosed in Note 38.3.
143
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
16.
TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance for impairment of
trade receivables
Group
Company
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
3,154.3
2,757.1
529.2
498.5
(288.8)
2,865.5
(280.5)
2,476.6
(83.2)
446.0
(75.9)
422.6
Other receivables
262.2
252.9
23.4
18.1
Loans to subsidiaries
Less: Allowance for impairment of
loans due
Amount due from subsidiaries
- trade
- non-trade
Less: Allowance for impairment of
amount due
Amount due from associates
and joint ventures
- trade
- non-trade
Amount due from an associate
for fibre rollout
Interest receivable
Prepayments
Staff loans
Others
-
-
-
-
-
-
-
9.0
115.3
124.3
206.5
82.5
373.5
0.1
12.4
-
-
-
-
-
-
-
12.3
104.6
116.9
186.2
117.6
285.4
0.9
12.8
121.7
458.1
(12.9)
108.8
823.3
889.5
(45.7)
1,667.1
1.1
-
1.1
206.5
40.3
63.7
-
4.3
(12.9)
445.2
684.5
3,694.9
(45.7)
4,333.7
2.2
2.4
4.6
186.2
73.0
27.6
0.1
5.6
3,927.0
3,449.3
2,561.2
5,516.7
As at 31 March 2012, the effective interest rate of amount due from a subsidiary was 0.01 per cent (2011: 0.01 per cent) per
annum based on quoted bank rates. The loans to subsidiaries and amounts due from other subsidiaries, associates and joint
ventures were unsecured, interest-free and repayable on demand.
Trade receivables are non-interest bearing and are generally on 14-day to 30-day terms, while balances due from carriers
are on 60-day terms, and certain balances in respect of information technology and engineering services are on 90-day
terms.
144
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
16.
TRADE AND OTHER RECEIVABLES (Cont’d)
The maximum exposure to credit risk for trade receivables by type of customer is as follows -
Individuals
Corporations and others
Group
Company
2012
S$ Mil
697.8
2,167.7
2,865.5
2011
S$ Mil
580.8
1,895.8
2,476.6
2012
S$ Mil
147.6
298.4
446.0
The age analysis of trade receivables before allowance for impairment is as follows -
Not past due or less than 60 days overdue
Past due
- 61 to 120 days
- more than 120 days
Group
Company
2012
S$ Mil
2011
S$ Mil
2,657.9
2,338.1
256.7
239.7
182.8
236.2
3,154.3
2,757.1
2012
S$ Mil
369.4
89.3
70.5
529.2
2011
S$ Mil
140.7
281.9
422.6
2011
S$ Mil
374.6
24.7
99.2
498.5
Based on historical collections experience, the Group believes that no allowance for impairment is necessary in respect of
certain trade receivables which are not past due as well as certain trade receivables which are past due but not impaired.
145
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
16.
TRADE AND OTHER RECEIVABLES (Cont’d)
The movement in the allowance for impairment of trade receivables is as follows -
Balance as at 1 April
Allowance for impairment
Utilisation of allowance for impairment
Write-back
Translation differences
Balance as at 31 March
Group
Company
2012
S$ Mil
280.5
197.4
(149.8)
(39.1)
(0.2)
288.8
2011
S$ Mil
294.8
161.7
(156.9)
(24.9)
5.8
280.5
2012
S$ Mil
75.9
33.6
(26.3)
-
-
83.2
The movement in the allowance for impairment of loans to subsidiaries is as follows -
Balance as at 1 April
Write-back
Balance as at 31 March
Company
2012
S$ Mil
12.9
-
12.9
2011
S$ Mil
88.5
31.0
(28.7)
(14.9)
-
75.9
2011
S$ Mil
24.1
(11.2)
12.9
146
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
17.
ASSET HELD FOR SALE
This comprised the Group’s 3.98% equity interest in Taiwan’s Far EasTone Telecommunications Co., Ltd, which was sold for
a cash consideration of approximately S$339 million by way of an on-market sale on 27 April 2012.
18.
INVENTORIES
Equipment held for resale
Maintenance and capital works' inventories
Work-in-progress for fibre rollout
Group
Company
2012
S$ Mil
178.3
27.0
2.8
208.1
2011
S$ Mil
228.7
35.9
34.7
299.3
2012
S$ Mil
1.7
26.6
2.8
31.1
2011
S$ Mil
1.3
35.7
34.7
71.7
147
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
19.
PROPERTY, PLANT AND EQUIPMENT
Freehold
land
S$ Mil
Leasehold
land
S$ Mil
Buildings
S$ Mil
Transmission
plant and
equipment
S$ Mil
Switching
equipment
S$ Mil
Other
plant and
equipment
S$ Mil
Capital
work-in-
progress
S$ Mil
Total
S$ Mil
Group - 2012
Cost
Balance as at 1 April 2011
27.4
248.5
774.7
17,871.0
3,113.0
6,316.6
793.0
29,144.2
Additions (net of rebates)
Disposals/ Write-offs
Reclassifications/
Adjustments
-
-
-
Translation differences
0.1
-
-
-
-
0.1
(19.1)
238.4
(253.8)
44.4
(105.4)
180.5
1,933.5
2,396.9
(93.0)
-
(471.3)
34.6
1.3
1,198.7
55.7
117.6
4.5
418.8
(1,780.2)
20.3
1.7
(10.5)
83.6
Balance as at
31 March 2012
Accumulated depreciation
Balance as at 1 April 2011
Depreciation charge
for the year
Disposals/ Write-offs
Translation differences
Balance as at
31 March 2012
Accumulated impairment
Balance as at 1 April 2011
Disposals
Balance as at
31 March 2012
Net Book Value as at
27.5
248.5
791.6
19,110.0
3,174.1
6,843.2
948.0
31,142.9
-
-
-
-
-
-
-
-
52.2
294.1
10,875.4
2,165.9
4,617.9
-
18,005.5
4.0
-
-
19.7
(11.8)
0.1
1,270.4
(194.6)
32.4
187.8
(104.2)
2.0
393.5
(83.5)
15.5
-
-
-
1,875.4
(394.1)
50.0
56.2
302.1
11,983.6
2,251.5
4,943.4
-
19,536.8
2.0
-
7.3
-
8.5
(0.1)
5.2
-
3.2
-
2.0
7.3
8.4
5.2
3.2
-
-
-
26.2
(0.1)
26.1
31 March 2012
27.5
190.3
482.2
7,118.0
917.4
1,896.6
948.0
11,580.0
148
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
19.
PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Freehold
land
S$ Mil
Leasehold
land
S$ Mil
Buildings
S$ Mil
Transmission
plant and
equipment
S$ Mil
Switching
equipment
S$ Mil
Other
plant and
equipment
S$ Mil
Capital
work-in-
progress
S$ Mil
Total
S$ Mil
Group - 2011
Cost
Balance as at 1 April 2010
27.0
258.0
680.9
16,955.4
2,946.1
5,708.3
518.1
27,093.8
Additions (net of rebates)
Disposals/ Write-offs
Reclassifications/
Adjustments
-
-
-
Translation differences
0.4
-
(8.0)
-
(1.5)
0.2
-
87.8
5.8
323.2
(273.4)
131.9
(57.0)
192.4
1,475.5
2,123.2
(63.4)
-
(401.8)
657.6
208.2
71.7
20.3
407.2
(1,209.4)
72.1
8.8
14.9
314.1
Balance as at
31 March 2011
Accumulated depreciation
Balance as at 1 April 2010
Depreciation charge
for the year
Disposals/ Write-offs
Translation differences
Balance as at
31 March 2011
Accumulated impairment
Balance as at 1 April 2010
Disposals
Balance as at
31 March 2011
Net Book Value as at
27.4
248.5
774.7
17,871.0
3,113.0
6,316.6
793.0
29,144.2
-
-
-
-
-
-
-
-
50.0
275.4
9,823.4
2,041.9
4,126.6
-
16,317.3
4.1
(1.1)
(0.8)
17.9
1,181.6
-
0.8
(268.1)
138.5
165.7
(54.2)
12.5
494.3
(59.7)
56.7
-
-
-
1,863.6
(383.1)
207.7
52.2
294.1
10,875.4
2,165.9
4,617.9
-
18,005.5
2.0
-
2.0
7.3
-
7.3
8.5
-
8.5
5.2
-
5.2
3.3
(0.1)
3.2
-
-
-
26.3
(0.1)
26.2
31 March 2011
27.4
194.3
473.3
6,987.1
941.9
1,695.5
793.0
11,112.5
149
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
19.
PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Freehold
land
S$ Mil
Leasehold
land
S$ Mil
Buildings
S$ Mil
Transmission
plant and
equipment
S$ Mil
Switching
equipment
S$ Mil
Other
plant and
equipment
S$ Mil
Capital
work-in-
progress
S$ Mil
Total
S$ Mil
Company - 2012
Cost
Balance as at 1 April 2011
0.4
212.5
424.7
2,923.4
1,093.7
1,025.4
298.4
5,978.5
Additions (net of rebates)
Disposals/ Write-offs
-
-
-
-
1.3
(1.4)
209.5
(183.2)
46.9
(92.8)
109.9
(43.9)
30.6
-
398.2
(321.3)
Balance as at
31 March 2012
Accumulated depreciation
Balance as at 1 April 2011
Depreciation charge
for the year
Disposals/ Write-offs
Balance as at
31 March 2012
Accumulated impairment
Balance as at 1 April 2011
Disposals/ Write-offs
Balance as at
31 March 2012
Net Book Value as at
31 March 2012
0.4
212.5
424.6
2,949.7
1,047.8
1,091.4
329.0
6,055.4
-
-
-
-
-
-
-
42.0
210.4
2,018.2
984.7
814.6
2.2
-
11.6
-
167.4
(127.2)
48.5
(92.8)
73.1
(40.5)
-
-
-
4,069.9
302.8
(260.5)
44.2
222.0
2,058.4
940.4
847.2
-
4,112.2
2.0
-
7.2
-
7.0
(0.1)
1.2
-
0.4
-
2.0
7.2
6.9
1.2
0.4
-
-
-
17.8
(0.1)
17.7
0.4
166.3
195.4
884.4
106.2
243.8
329.0
1,925.5
150
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
19.
PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Freehold
land
S$ Mil
Leasehold
land
S$ Mil
Buildings
S$ Mil
Transmission
plant and
equipment
S$ Mil
Switching
equipment
S$ Mil
Other
plant and
equipment
S$ Mil
Capital
work-in-
progress
S$ Mil
Total
S$ Mil
Company - 2011
Cost
Balance as at 1 April 2010
0.4
220.5
424.5
3,027.5
1,071.7
Additions (net of rebates)
Disposals/ Write-offs
-
-
-
(8.0)
0.2
-
119.9
(224.0)
55.0
(33.0)
995.5
73.2
(43.3)
207.2
5,947.3
91.2
-
339.5
(308.3)
Balance as at
31 March 2011
Accumulated depreciation
Balance as at 1 April 2010
Depreciation charge
for the year
Disposals/ Write-offs
Balance as at
31 March 2011
Accumulated impairment
Balance as at 1 April 2010
and 31 March 2011
Net Book Value as at
31 March 2011
0.4
212.5
424.7
2,923.4
1,093.7
1,025.4
298.4
5,978.5
-
-
-
-
-
40.8
198.8
2,041.8
973.9
782.4
2.3
(1.1)
11.6
-
182.6
(206.2)
43.2
(32.4)
74.8
(42.6)
-
-
-
4,037.7
314.5
(282.3)
42.0
210.4
2,018.2
984.7
814.6
-
4,069.9
2.0
7.2
7.0
1.2
0.4
-
17.8
0.4
168.5
207.1
898.2
107.8
210.4
298.4
1,890.8
Property, plant and equipment included the following -
Group
Company
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
Net book value of property, plant and
equipment
- Finance lease obligations
- Held for generating operating lease income
Interest charges capitalised during the year
60.1
5.5
4.3
41.4
6.6
-
Staff costs capitalised during the year
199.1
192.1
28.8
-
-
14.1
-
-
-
14.7
151
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
Group
Company
2012
S$ Mil
9,658.1
504.7
11.3
2011
S$ Mil
9,657.2
541.5
19.6
10,174.1
10,218.3
2012
S$ Mil
-
1.7
-
1.7
2011
S$ Mil
-
2.0
-
2.0
Group
2012
S$ Mil
9,657.2
0.9
9,658.1
2011
S$ Mil
9,654.6
2.6
9,657.2
Group
Company
2012
S$ Mil
541.5
84.4
(123.1)
-
1.9
504.7
1,156.8
(649.8)
(2.3)
504.7
2011
S$ Mil
517.8
84.2
(103.8)
37.6
5.7
541.5
1,068.4
(524.6)
(2.3)
541.5
2012
S$ Mil
2011
S$ Mil
2.0
-
(0.3)
-
-
1.7
8.4
(6.7)
-
1.7
2.3
-
(0.3)
-
-
2.0
8.4
(6.4)
-
2.0
20.
INTANGIBLE ASSETS
Goodwill on acquisition of subsidiaries
Telecommunications and spectrum licences
Customer relationships and others
20.1 Goodwill on Acquisition of Subsidiaries
Balance as at 1 April
Translation differences
Balance as at 31 March
20.2 Telecommunications and Spectrum Licences
Balance as at 1 April
Additions
Amortisation for the year
Reclassifications
Translation differences
Balance as at 31 March
Cost
Accumulated amortisation
Accumulated impairment
Net book value as at 31 March
152
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
20.3 Customer Relationships and Others
Balance as at 1 April
Amortisation for the year
Translation differences
Balance as at 31 March
Cost
Accumulated amortisation
Net book value as at 31 March
21.
SUBSIDIARIES
Unquoted equity shares, at cost
Shareholders' advances
Deemed investment in a subsidiary
Less: Allowance for impairment losses
Group
2012
S$ Mil
19.6
(8.3)
-
11.3
53.0
(41.7)
11.3
2011
S$ Mil
27.8
(8.1)
(0.1)
19.6
53.0
(33.4)
19.6
Company
2012
S$ Mil
6,419.9
678.3
32.5
7,130.7
(362.5)
6,768.2
2011
S$ Mil
6,319.4
1,884.7
32.5
8,236.6
(502.5)
7,734.1
The advances given to subsidiaries were unsecured with settlement neither planned nor likely to occur in the foreseeable
future. The effective interest rate at the end of the reporting period was 0.7 per cent (2011: 1.0 per cent) per annum.
The deemed investment in a subsidiary, SingTel Group Treasury Pte. Ltd. (“SGT”), arose from financial guarantees provided
by the Company for loans drawn down by SGT prior to 1 April 2010.
The details of subsidiaries are set out in Note 47.
153
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
22.
ASSOCIATES
Group
Company
2012
S$ Mil
74.3
1,477.2
1.7
1,553.2
2011
S$ Mil
74.3
1,466.8
1.7
1,542.8
(28.3)
(28.3)
(330.9)
(513.0)
(872.2)
(468.6)
212.4
(270.3)
(480.1)
(778.7)
(591.7)
172.4
2012
S$ Mil
24.7
567.4
-
592.1
-
-
-
-
-
2011
S$ Mil
24.7
-
-
24.7
-
-
-
-
-
592.1
24.7
Quoted equity shares, at cost
Unquoted equity shares, at cost
Shareholder's loan (unsecured)
Goodwill on consolidation adjusted
against shareholders' equity
Share of post acquisition reserves
(net of dividends, and accumulated
amortisation of goodwill and intangible)
Translation differences
Less: Allowance for impairment losses
As at 31 March 2012,
(i) The market values of the quoted equity shares in associates held by the Group and Company were S$516.2 million
(2011: S$583.8 million) and S$503.9 million (2011: S$573.0 million) respectively.
(ii) The Group’s shares representing 26% (2011: 26%) equity interest in an associate were under negative liens.
(iii) The Group’s proportionate interest in the capital commitments of the associates was S$54.6 million (2011:
S$77.8 million).
The details of associates are set out in Note 47.4.
The summarised financial information of associates were as follows –
Operating revenue
Net profit after tax
Total assets
Total liabilities
154
Group
2012
S$ Mil
2011
S$ Mil
1,413.8
1,363.8
26.4
10.6
5,088.8
4,614.7
(3,735.2)
(3,196.8)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
23.
JOINT VENTURES
Group
Company
Quoted equity shares, at cost
Unquoted equity shares, at cost
Goodwill on consolidation adjusted
against shareholders' equity
Share of post acquisition reserves
(net of dividends, and accumulated
amortisation of goodwill)
Translation differences
2012
S$ Mil
2,798.4
3,739.3
6,537.7
2011
S$ Mil
2,466.8
3,748.1
6,214.9
(1,225.9)
(1,225.9)
6,882.2
(2,195.9)
3,460.4
6,459.0
(1,393.5)
3,839.6
Less: Allowance for impairment losses
(30.0)
(30.0)
2012
S$ Mil
-
24.1
24.1
-
-
-
-
-
2011
S$ Mil
-
34.1
34.1
-
-
-
-
-
9,968.1
10,024.5
24.1
34.1
As at 31 March 2012,
(i) The market value of the quoted equity shares in joint ventures held by the Group was S$12.13 billion (2011:
S$10.05 billion).
(ii) The Group’s proportionate interest in the capital commitments of joint ventures was S$1.73 billion (2011:
S$1.61 billion).
(iii) The Group’s shares representing 24.8% (2011: 24.8%) equity interest in a joint venture are placed in an escrow account
under a deed of undertaking whereby under certain events of default, the joint venture partner could be entitled to
these shares.
The details of joint ventures are set out in Note 47.5.
Optus holds a 31.25% (2011: 31.25%) interest in an unincorporated joint venture to maintain an optical fibre submarine cable
between Western Australia and Indonesia.
In addition, Optus has an interest in an unincorporated joint venture to share certain 3G network sites and radio infrastructure
across Australia whereby it holds an interest of 50% (2011: 50%) in the assets, with access to the shared network and shares
50% (2011: 50%) of the cost of building and operating the network.
The Group’s property, plant and equipment included the Group’s interest in the property, plant and equipment employed in
the unincorporated joint ventures of S$450.9 million (2011: S$320.8 million).
155
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
23.
JOINT VENTURES (Cont’d)
The Group’s share of certain items in the income statements and statements of financial position of the joint ventures were
as follows –
Operating revenue
Operating expenses
Net profit before tax
Net profit after tax
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group
2012
S$ Mil
2011
S$ Mil
10,891.7
10,112.9
(6,396.4)
(5,794.4)
2,088.9
1,445.8
15,929.8
3,048.8
(5,630.0)
(6,181.3)
2,110.1
1,576.5
17,405.0
2,349.9
(5,164.6)
(7,145.7)
7,167.3
7,444.6
24.
IMPAIRMENT REVIEWS
24.1 Goodwill arising on acquisition of subsidiaries
The carrying values of the Group’s goodwill on acquisition of subsidiaries as at 31 March 2012 were assessed for impairment
during the financial year.
Goodwill is allocated for impairment testing purposes to the individual entity which is also the cash generating unit
(“CGU”).
The fixed, mobile, cable and broadband networks of Optus Group are integrated operationally and accordingly, Optus as a
group is a CGU for the purpose of impairment tests for goodwill.
Group
Carrying value of goodwill in -
- Optus Group
- SCS Computer
Systems Pte. Ltd.
2012
S$ Mil
2011
S$ Mil
Terminal growth
rate (1)
Pre-tax
discount rate
2012
2011
2012
2011
9,575.9
9,575.0
4.0%
4.0%
12.9%
12.2%
82.2
82.2
2.0%
2.0%
8.5%
9.9%
Note:
(1) Weighted average growth rate used to extrapolate cash flows beyond the terminal year.
156
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
24.1 Goodwill arising on acquisition of subsidiaries (Cont’d)
The recoverable values of cash generating units including goodwill are determined based on value-in-use calculations.
The value-in-use calculations apply a discounted cash flow model using cash flow projections based on financial budgets
and forecasts approved by management covering periods of five years. Cash flows beyond the terminal year are extrapolated
using the estimated growth rates stated in the table above. Key assumptions used in the calculation of value-in-use are
growth rates, operating margins, capital expenditure and discount rates.
The terminal growth rates used do not exceed the long term average growth rates of the respective industry and country in
which the entity operates and are consistent with forecasts included in industry reports.
The discount rates applied to the cash flow projections are based on Weighted Average Cost of Capital (WACC) where the cost
of a company’s debt and equity capital are weighted to reflect its capital structure.
As at 31 March 2012, no impairment charge was required for goodwill on acquisition of subsidiaries, with any
reasonably possible change to the key assumptions applied not likely to cause the recoverable values to be below their
carrying values.
24.2 Carrying values (including goodwill) of associates and joint ventures
The Group’s carrying value in Warid Telecom (Private) Limited (“Warid”) as at 31 March 2012 was assessed for impairment.
The carrying value of Pacific Bangladesh Telecom Limited (“PBTL”) was nil as at 31 March 2012.
Group
Carrying value (including goodwill) in -
Warid and PBTL
Less: Allowance for
2012
S$ Mil
2011
S$ Mil
526.2
650.1
impairment losses
(466.9)
(590.0)
Terminal growth
rate (1)
Pre-tax
discount rate
2012
2011
2012
2011
59.3
60.1
7%
5.5%
to 7%
12.2%
17.8% to 18.7%
Note:
(1) Weighted average growth rate used to extrapolate cash flows beyond the terminal year.
The impairment review of the Group’s investments in the associates and joint ventures is based on the same methodology
described in Note 24.1. The cash flow projections were based on financial budgets and forecasts approved by management
covering nine years (2011: seven to nine years).
157
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
25.
AVAILABLE-FOR-SALE (“AFS”) INVESTMENTS
Balance as at 1 April
Additions
Disposals
Provision for impairment
Utilisation of provision for impairment
Net fair value gains included in
other comprehensive income
Reclassified to 'Asset held for sale'
Translation
Balance as at 31 March
AFS investments included the following –
Quoted equity securities
- Taiwan
- Thailand
- Singapore and United States
Unquoted
Equity securities
Others
Group
Company
2012
S$ Mil
309.1
86.2
(1.0)
(5.5)
0.9
92.6
(334.1)
0.5
148.7
2011
S$ Mil
255.8
20.0
(1.1)
(0.1)
-
34.5
-
-
309.1
2012
S$ Mil
38.6
-
-
-
-
3.1
-
-
41.7
Group
Company
2012
S$ Mil
-
21.8
9.5
31.3
82.7
34.7
117.4
2011
S$ Mil
244.3
18.4
9.6
272.3
33.6
3.2
36.8
2012
S$ Mil
-
21.8
9.4
31.2
10.5
-
10.5
2011
S$ Mil
31.1
-
-
-
-
7.5
-
-
38.6
2011
S$ Mil
-
18.4
9.5
27.9
10.7
-
10.7
148.7
309.1
41.7
38.6
158
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
26.
DERIVATIVE FINANCIAL INSTRUMENTS
Balance as at 1 April
Fair value gains/ (losses)
- included in income statement
- included in 'Hedging Reserve'
- included in 'Currency Translation Reserve'
Settlement of swaps for bonds repaid
Translation differences
Group
Company
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
(1,517.3)
(1,052.9)
(1,208.5)
(718.8)
131.9
39.7
(5.1)
922.0
(1.4)
(534.5)
(112.6)
(50.2)
217.6
15.3
62.0
20.9
-
922.0
-
(470.2)
(19.5)
-
-
-
Balance as at 31 March
(430.2)
(1,517.3)
(203.6)
(1,208.5)
Disclosed as -
Current asset
Non-current asset
Current liability
Non-current liability
2.9
98.2
(23.0)
(508.3)
(430.2)
68.6
-
(999.8)
(586.1)
(1,517.3)
5.1
157.5
(9.8)
(356.4)
(203.6)
68.6
22.9
(988.2)
(311.8)
(1,208.5)
159
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
26.1 Fair Values
The fair values of the currency and interest rate swap contracts excluded the accrued interest of S$18.6 million (2011:
S$44.4 million). The accrued interest is separately disclosed in Note 16 and Note 29.
The fair value adjustments of the derivative financial instruments were as follows -
2012
Fair value and cash flow hedges
Cross currency swaps
Interest rate swaps
Forward foreign exchange
Derivatives that do not qualify
for hedge accounting
Cross currency swaps
Interest rate swaps
Forward foreign exchange
Disclosed as -
Current
Non-current
Group
Fair Value adjustments
Assets
S$ Mil
Liabilities
S$ Mil
Company
Fair Value adjustments
Assets
S$ Mil
Liabilities
S$ Mil
50.6
46.9
2.9
-
0.7
-
355.5
136.9
20.1
-
18.8
-
-
-
2.5
81.6
78.1
0.4
179.1
8.1
0.6
81.6
90.5
6.3
101.1
531.3
162.6
366.2
2.9
98.2
101.1
23.0
508.3
531.3
5.1
157.5
162.6
9.8
356.4
366.2
160
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
26.1 Fair Values (Cont’d)
2011
Fair value and cash flow hedges
Cross currency swaps
Interest rate swaps
Forward foreign exchange
Derivatives that do not qualify
for hedge accounting
Cross currency swaps
Interest rate swaps
Forward foreign exchange
Disclosed as -
Current
Non-current
Group
Fair Value adjustments
Assets
S$ Mil
Liabilities
S$ Mil
Company
Fair Value adjustments
Assets
S$ Mil
Liabilities
S$ Mil
-
68.6
-
-
-
-
1,529.5
(8.3)
42.3
-
22.4
-
68.6
1,585.9
68.6
-
68.6
999.8
586.1
1,585.9
-
69.5
-
9.0
13.0
-
91.5
68.6
22.9
91.5
970.9
8.6
30.8
257.9
31.8
-
1,300.0
988.2
311.8
1,300.0
The cash flow hedges are designated for foreign currency commitments and repayments of principal and interest of the
foreign currency denominated bonds.
The forecasted transactions for the foreign currency commitments are expected to occur in the financial year ending 31 March
2013, while the forecasted transactions for the repayment of principal and interest of the foreign currency denominated
bonds will occur according to the timing disclosed in Note 31.1.
161
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
26.1 Fair Values (Cont’d)
As at 31 March 2012, the details of the outstanding derivative financial instruments were as follows -
Group
Company
2012
2011
2012
2011
Interest rate swaps
Notional principal (S$ million equivalent)
Fixed interest rates
Floating interest rates
4,908.1
0.5% to 6.2%
1.7% to 4.3%
6,126.4
1.8% to 6.2%
1.4% to 4.9%
5,633.6
0.5% to 4.5%
0.1% to 1.7%
5,802.0
1.8% to 4.5%
0.1% to 2.6%
Cross currency swaps
Notional principal (S$ million equivalent)
Fixed interest rates
Floating interest rates
5,323.7
1.8% to 7.5%
0.5% to 6.2%
6,346.8
3.5% to 7.5%
0.7% to 6.7%
5,628.9
0.9% to 5.2%
0.5% to 2.4%
4,918.0
3.9% to 5.2%
0.7% to 2.5%
Forward foreign exchange
Notional principal (S$ million equivalent)
887.3
710.7
462.3
392.6
The interest rate swaps entered into by the Group are re-priced at intervals ranging from monthly to six-monthly periods.
The interest rate swaps entered by the Company are re-priced every six months.
26.2 Fair Value Measurements
The Group classifies fair value measurements using a fair value hierarchy which reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the following levels -
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(b)
inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices) (Level 2); and
(c)
inputs for the asset or liability which are not based on observable market data (unobservable inputs) (Level 3).
162
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
26.2 Fair Value Measurements (Cont’d)
The following table presents the assets and liabilities measured at fair value as at 31 March 2012 -
Group
2012
Financial assets
AFS investments (1) (Note 25)
- Quoted equity securities
- Unquoted investments
Derivative financial instruments (Note 26.1)
Financial liabilities
Derivative financial instruments (Note 26.1)
Group
2011
Financial assets
AFS investments (1) (Note 25)
- Quoted equity securities
- Unquoted investments
Derivative financial instruments (Note 26.1)
Financial liabilities
Derivative financial instruments (Note 26.1)
Level 1
S$ Mil
Level 2
S$ Mil
Level 3
S$ Mil
Total
S$ Mil
31.3
-
31.3
-
31.3
-
-
-
-
-
101.1
101.1
531.3
531.3
-
16.6
16.6
-
16.6
-
-
31.3
16.6
47.9
101.1
149.0
531.3
531.3
Level 1
S$ Mil
Level 2
S$ Mil
Level 3
S$ Mil
Total
S$ Mil
272.3
-
272.3
-
272.3
-
-
-
68.6
68.6
-
-
1,585.9
1,585.9
-
17.1
17.1
-
17.1
-
-
272.3
17.1
289.4
68.6
358.0
1,585.9
1,585.9
163
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
26.2 Fair Value Measurements (Cont’d)
Company
2012
Financial assets
AFS investments (Note 25)
- Quoted equity securities
- Unquoted equity securities
Derivative financial instruments (Note 26.1)
Financial liabilities
Derivative financial instruments (Note 26.1)
Company
2011
Financial assets
AFS investments (Note 25)
- Quoted equity securities
- Unquoted equity securities
Derivative financial instruments (Note 26.1)
Financial liabilities
Derivative financial instruments (Note 26.1)
Level 1
S$ Mil
Level 2
S$ Mil
Level 3
S$ Mil
Total
S$ Mil
31.2
-
31.2
-
31.2
-
-
-
-
-
162.6
162.6
366.2
366.2
-
10.5
10.5
-
10.5
-
-
31.2
10.5
41.7
162.6
204.3
366.2
366.2
Level 1
S$ Mil
Level 2
S$ Mil
Level 3
S$ Mil
Total
S$ Mil
27.9
-
27.9
-
27.9
-
-
-
-
-
91.5
91.5
1,300.0
1,300.0
-
10.7
10.7
-
10.7
-
-
27.9
10.7
38.6
91.5
130.1
1,300.0
1,300.0
Note:
(1) Excluded AFS investments stated at cost of S$100.8 million (2011: S$19.7 million).
See Note 2.7 for the policies on fair value estimation of the financial assets and liabilities.
The fair values of the unquoted AFS investments included within Level 3 were estimated using the net asset values as
reported in the statements of financial position in the management reports of the AFS investments.
164
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
26.2 Fair Value Measurements (Cont’d)
The following table presents the reconciliation for the unquoted AFS investments measured at fair value based on
unobservable inputs (Level 3) -
AFS investments - unquoted
Balance as at 1 April
Total (losses)/ gains included in other
comprehensive income
Additions
Utilisation of provision for impairment
Disposals
Balance as at 31 March
27.
SALE OF ASSETS AND BUSINESS TO NETLINK TRUST
Loan to an associate
Deferred gain
Classified as -
Current
Non-current
Group
Company
2012
S$ Mil
17.1
(0.5)
0.1
0.9
(1.0)
16.6
2011
S$ Mil
17.7
0.2
0.3
-
(1.1)
17.1
2012
S$ Mil
10.7
(0.2)
-
-
-
10.5
Group
Company
2012
S$ Mil
1,325.0
29.2
1,060.5
1,089.7
2011
S$ Mil
-
-
-
-
2012
S$ Mil
1,325.0
-
-
-
2011
S$ Mil
10.1
0.6
-
-
-
10.7
2011
S$ Mil
-
-
-
-
In July 2011, SingTel established a business trust, NetLink Trust, as part of the IDA’s effective open access requirements
under Singapore’s Next Generation Nationwide Broadband Network. In September 2011, SingTel sold certain infrastructure
assets, namely ducts and manholes used by OpenNet Pte. Ltd., a 29.9%-owned associate of SingTel, and 7 exchange buildings
(“Assets”), and SingTel’s business of providing duct and manhole services in relation to the Assets (“Business”) to NetLink
Trust, for an aggregate consideration of approximately S$1.89 billion. SingTel also completed its subscription for a further
567,380,000 units at S$1 each in NetLink Trust.
The aggregate consideration paid by NetLink Trust for the purchase of the Assets and Business was financed by the issue
of units to SingTel of S$567.4 million and a loan from SingTel of S$1.33 billion.
Although currently 100% owned by SingTel, NetLink Trust is managed and operated by CityNet Infrastructure Management
Pte. Ltd. in its capacity as trustee-manager, and hence it is equity accounted as an associate of SingTel.
At the consolidated level, the gain on disposal of Assets and Business recorded by SingTel was deferred in the Group’s
statement of financial position and is being amortised over the useful lives of the Assets. The unamortised deferred gain in
the Group’s statement of financial position will be released to the Group’s income statement when NetLink Trust is partially
or fully sold, based on the proportionate equity interest disposed. In addition, SingTel’s lease expenses paid to NetLink Trust
and interest income earned from NetLink Trust are not eliminated on a line-by-line basis in the Group.
165
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
28.
OTHER NON-CURRENT RECEIVABLES
Prepayments
Other receivables
29.
TRADE AND OTHER PAYABLES
Trade payables
Advance billings
Accruals
Interest payables
Due to subsidiaries
- trade
- non-trade
Due to associates and joint ventures
- trade
- non-trade
Deferred gain on sale of a joint venture
(see Note 33)
Customers' deposits
Other deferred income
Other payables
Group
Company
2012
S$ Mil
65.3
64.3
129.6
2011
S$ Mil
78.4
47.9
126.3
2012
S$ Mil
241.4
-
241.4
Group
Company
2012
S$ Mil
3,205.6
677.8
669.8
116.8
-
-
-
64.8
161.3
226.1
3.1
25.4
38.3
86.8
2011
S$ Mil
2,747.7
630.5
697.9
195.6
-
-
-
62.6
0.6
63.2
3.1
24.1
19.7
68.3
2012
S$ Mil
741.3
86.2
110.6
36.4
205.4
687.7
893.1
59.0
160.0
219.0
-
14.3
17.9
56.0
2011
S$ Mil
270.7
0.1
270.8
2011
S$ Mil
589.1
75.0
98.6
125.7
191.4
362.0
553.4
55.2
-
55.2
-
13.8
8.5
56.2
5,049.7
4,450.1
2,174.8
1,575.5
The trade payables are non-interest bearing and are generally settled on 30 to 60 days terms.
The interest payables on borrowings are generally settled on a half-year or annual basis except for interest payables on
certain bonds and syndicated loan facilities which are settled on quarterly and monthly basis respectively.
The amounts due to subsidiaries are repayable on demand and interest-free.
166
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
30.
PROVISION
The provision mainly relates to provision for liquidated damages and warranties. The movements were as follows -
Balance as at 1 April
Provision/ (Writeback of provision)
Amount written off against provision
Balance as at 31 March
31.
BORROWINGS (UNSECURED)
Current
Bonds
Bank loans
Non-current
Bonds
Bank loans
Group
2012
S$ Mil
0.3
3.3
(0.1)
3.5
2011
S$ Mil
17.9
(17.4)
(0.2)
0.3
Group
Company
2012
S$ Mil
-
105.8
105.8
6,300.8
2,169.6
8,470.4
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
2,667.4
5.2
2,672.6
4,094.1
450.0
4,544.1
-
-
-
857.9
-
857.9
2,667.4
-
2,667.4
734.5
-
734.5
Total unsecured borrowings
8,576.2
7,216.7
857.9
3,401.9
167
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
31.1 Bonds
Principal
amount
US$1,350 million (2)
US$700 million (2)
US$200 million
US$100 million
US$500 million (1) (2)
US$600 million (2)
US$500 million (2)
€500 million (2)
€700 million (1) (2)
A$75 million (1)
S$250 million
S$600 million (2)
¥10,000 million
HK$830 million
HK$620 million
HK$1,000 million (1)
Group
Company
Maturity
2011
2017
2018
2018
2019
2021
2031
2011
2020
2018
2016
2020
2018
2017
2018
2020
2012
S$ Mil
-
873.0
251.5
125.8
657.3
838.0
857.9
-
1,185.0
97.9
250.0
600.0
153.0
140.6
109.1
161.7
2011
S$ Mil
1,755.1
-
-
-
628.2
748.4
734.5
912.3
1,221.4
-
-
600.0
-
-
-
161.6
2012
S$ Mil
-
-
-
-
-
-
857.9
-
-
-
-
-
-
-
-
-
2011
S$ Mil
1,755.1
-
-
-
-
-
734.5
912.3
-
-
-
-
-
-
-
-
6,300.8
6,761.5
857.9
3,401.9
Notes:
(1) The bonds, issued by Optus Group, are subject to a negative pledge that limits the amount of secured indebtedness of certain
subsidiaries of Optus.
(2) The bonds are listed on Singapore Exchange.
31.2 Bank Loans
Current
Non-current
168
Group
2012
S$ Mil
105.8
2,169.6
2,275.4
2011
S$ Mil
5.2
450.0
455.2
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
31.3 Maturity
The maturity periods of the non-current unsecured borrowings at the end of the reporting period were as follows -
Between one and two years
Between two and five years
Over five years
31.4
Interest Rates
Group
Company
2012
S$ Mil
350.0
2,210.2
5,910.2
8,470.4
2011
S$ Mil
100.0
350.0
4,094.1
4,544.1
2012
S$ Mil
-
-
857.9
857.9
The weighted average effective interest rates at the end of the reporting period were as follows -
2011
S$ Mil
-
-
734.5
734.5
2011
%
6.5
-
-
Group
Company
2012
%
3.9
1.7
2.1
2011
%
5.2
-
1.0
2012
%
7.4
-
-
Group
Company
2012
S$ Mil
2011
S$ Mil
6,300.8
2,275.4
6,761.5
455.2
6,356.9
2,275.4
6,860.4
455.2
2012
S$ Mil
857.9
-
901.8
-
2011
S$ Mil
3,401.9
-
3,487.3
-
Bonds (fixed rate)
Bonds (floating rate)
Bank loans (floating rate)
31.5 Fair Values
Carrying value
Bonds
Bank loans
Fair value
Bonds
Bank loans
See Note 2.7 on the basis of estimating the fair values and Note 26 for information on the derivative financial instruments
used for hedging the risks associated with the borrowings.
169
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
31.6 The tables below set out the maturity profile of borrowings and related swaps based on expected contractual undiscounted
cash flows.
Group
As at 31 March 2012
Net-settled interest rate swaps
Cross currency interest rate swaps (gross-settled)
- Inflow
- Outflow
Borrowings
As at 31 March 2011
Net-settled interest rate swaps
Cross currency interest rate swaps (gross-settled)
- Inflow
- Outflow
Borrowings
Company
As at 31 March 2012
Net-settled interest rate swaps
Cross currency interest rate swaps (gross-settled)
- Inflow
- Outflow
Borrowings
As at 31 March 2011
Net-settled interest rate swaps
Cross currency interest rate swaps (gross-settled)
- Inflow
- Outflow
Borrowings
Less than
1 year
S$ Mil
Between
1 and 2 years
S$ Mil
Between
2 and 5 years
S$ Mil
Over
5 years
S$ Mil
48.5
45.9
75.1
48.0
(182.2)
191.2
57.5
373.4
(182.2)
188.7
52.4
614.8
(546.2)
597.2
126.1
2,884.1
(1,109.3)
927.3
(134.0)
7,302.2
430.9
667.2
3,010.2
7,168.2
(76.3)
9.9
(25.3)
(82.7)
(200.8)
288.3
11.2
3,896.8
3,908.0
(147.9)
186.6
48.6
283.5
332.1
(443.5)
601.6
132.8
892.8
(1,232.3)
1,185.4
(129.6)
5,821.6
1,025.6
5,692.0
Less than
1 year
S$ Mil
Between
1 and 2 years
S$ Mil
Between
2 and 5 years
S$ Mil
Over
5 years
S$ Mil
9.3
(46.4)
24.4
(12.7)
46.4
33.7
7.4
10.8
26.5
(46.4)
24.1
(14.9)
46.4
31.5
(139.1)
72.6
(55.7)
139.1
83.4
(695.7)
363.4
(305.8)
1,577.0
1,271.2
(84.9)
8.8
13.8
27.6
(99.4)
133.3
(51.0)
3,753.3
3,702.3
(46.5)
24.8
(12.9)
46.5
33.6
(139.4)
74.4
(51.2)
139.4
88.2
(743.4)
396.6
(319.2)
1,624.6
1,305.4
The maximum amount that the Company can be called on under the financial guarantee contract if the full guaranteed amount
is claimed by the counterparty to the guarantee is as disclosed in Note 42(a)(ii).
170
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
32.
BORROWINGS (SECURED)
32.1 Finance Lease Liabilities
The minimum lease payments under the finance lease liabilities were payable as follows -
Group
Company
2012
S$ Mil
39.9
85.3
659.5
784.7
(567.1)
217.6
25.3
192.3
217.6
2011
S$ Mil
29.6
47.7
-
77.3
(8.4)
68.9
26.3
42.6
68.9
2012
S$ Mil
11.6
46.5
659.5
717.6
(559.9)
157.7
0.2
157.5
157.7
2011
S$ Mil
-
-
-
-
-
-
-
-
-
Not later than one year
Later than one but not later than five years
Later than five years
Less: Future finance charges
Classified as -
Current
Non-current
32.2
Interest Rates
The weighted average effective interest rates per annum at the end of the reporting period were as follows -
Finance lease liabilities
32.3 Fair Values
Carrying value
Finance lease liabilities
Fair value
Finance lease liabilities
Group
Company
2012
%
7.3
2011
%
7.3
2012
%
7.3
2011
%
-
Group
Company
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
217.6
68.9
157.7
217.6
68.9
157.7
-
-
The fair value of the finance lease obligations was estimated by discounting the expected future cash flows using current
interest rates for liabilities with similar risk profiles.
171
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
33.
DEFERRED INCOME
Gain on sale and leaseback arrangements
Balance as at 1 April
Amount recognised as income
during the year
Balance as at 31 March
Deferred gain on sale of
a joint venture
Balance as at 1 April
Amount recognised as income
during the year
Balance as at 31 March
Classified as -
Current (see Note 29)
Non-current
Group
Company
2012
S$ Mil
5.9
(2.1)
3.8
19.8
(3.1)
16.7
2011
S$ Mil
9.6
(3.7)
5.9
22.9
(3.1)
19.8
20.5
25.7
3.1
17.4
20.5
3.1
22.6
25.7
2012
S$ Mil
2.9
(1.6)
1.3
-
-
-
1.3
-
1.3
1.3
2011
S$ Mil
4.4
(1.5)
2.9
-
-
-
2.9
-
2.9
2.9
Gain on sale and finance leaseback of certain telecommunications equipment is recognised as income over the lease period
of 11 to 16 years.
Deferred gain on sale of a joint venture is recognised as income on a straight-line basis over the remaining useful life of the
joint venture’s cable system of approximately 10 years.
34.
OTHER NON-CURRENT LIABILITIES
Performance share liability
Other payables
Group
Company
2012
S$ Mil
11.9
201.6
213.5
2011
S$ Mil
12.1
181.8
193.9
2012
S$ Mil
10.8
6.7
17.5
2011
S$ Mil
10.6
7.1
17.7
172
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
35.
SHARE CAPITAL
Group and Company
Balance as at 1 April
Issue of shares under share options
2012
2011
Number of
shares
Mil
15,935.7
6.5
Share
capital
S$ Mil
2,622.8
9.4
Number of
shares
Mil
15,932.2
3.5
Balance as at 31 March
15,942.2
2,632.2
15,935.7
Share
capital
S$ Mil
2,616.3
6.5
2,622.8
All issued shares are fully paid, and carry one vote per share and a right to dividends as and when declared by the
Company.
During the year, the Company issued 6,521,600 (2011: 3,546,818) shares upon the exercise of 6,521,600 (2011: 3,546,818)
share options under the 1999 Scheme at exercise prices between S$1.31 and S$1.56 (2011: S$1.41 and S$2.12) per share.
The newly issued shares rank pari passu in all respects with the previously issued shares.
Capital Management
The Group is committed to an optimal capital structure while maintaining financial flexibility and investment grade credit
ratings. In order to achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return
capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or reduce its borrowings.
The Group monitors capital based on gross and net gearing ratios, and the dividend payout ratio ranges from 55% to 70% of
underlying net profit. Underlying net profit is defined as net profit before exceptional and other one-off items.
From time to time, the Group purchases its own shares from the market. The shares purchased are primarily for delivery to
employees upon vesting of performance shares awarded under the Group’s performance share plans. The Group can also
cancel the shares which are re-purchased from the market.
There were no changes in the Group’s approach to capital management during the financial year.
The Company and its subsidiaries are not subject to any externally imposed capital requirement.
173
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
36.
DIVIDENDS
Final ordinary dividend of 9.0 cents
(2011: 8.0 cents) per share, paid
Special dividend of 10.0 cents
(2011: nil) per share, paid
Interim dividend of 6.8 cents
(2011: 6.8 cents) per share, paid
Group
Company
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
2011
S$ Mil
1,434.3
1,273.7
1,435.7
1,274.3
1,593.6
-
1,594.0
-
1,083.5
4,111.4
1,082.9
2,356.6
1,084.3
4,114.0
1,083.5
2,357.8
During the financial year, a final one-tier tax exempt ordinary dividend of 9.0 cents per share and a special one-tier exempt
dividend of 10.0 cents per share were paid in respect of the previous financial year ended 31 March 2011, and an interim
one-tier tax exempt ordinary dividend of 6.8 cents per share was paid in respect of the current financial year ended
31 March 2012.
The amount paid by the Group differed from that paid by the Company due to dividends on performance shares held by the
Trust that were eliminated on consolidation of the Trust.
The Directors have proposed a final one-tier tax exempt ordinary dividend of 9.0 cents per share, totalling approximately
S$1.43 billion in respect of the current financial year ended 31 March 2012 for approval at the forthcoming Annual
General Meeting.
These financial statements do not reflect the final dividend payable of approximately S$1.43 billion, which will be accounted
for in the shareholders’ equity as an appropriation of ‘Retained Earnings’ in the next financial year ending 31 March 2013.
37.
FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
The fair values of AFS investments and borrowings are set out in Note 26, Note 31.5 and Note 32.3 respectively.
The carrying values of the other financial assets and liabilities approximate their fair values.
38.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
38.1 Financial Risk Factors
The Group’s activities are exposed to a variety of financial risks: foreign exchange risk, interest rate risk, credit risk, liquidity
risk and market risk. The Group’s overall risk management seeks to minimise the potential adverse effects of these risks on
the financial performance of the Group.
The Group uses financial instruments such as currency forwards, cross currency and interest rate swaps, and foreign currency
borrowings to hedge certain financial risk exposures. No financial derivatives are held or sold for speculative purposes.
The Directors assume responsibility for the overall financial risk management of the Group. For the financial year ended
31 March 2012, the Finance, Investment and Risk Committee (“FIRC”) assisted the Directors in reviewing and establishing
policies relating to financial risk management in accordance with the policies and directives of the Directors.
174
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
38.2 Foreign Exchange Risk
The foreign exchange risk of the Group arises from subsidiaries, associates and joint ventures operating in foreign countries
such as Australia, Bangladesh, India, Indonesia, Philippines, Pakistan and Thailand. Translation risks of overseas net
investments are not hedged unless approved by the FIRC.
The Group has borrowings denominated in foreign currencies that have primarily been hedged into the functional currency
of the respective borrowing entities using cross currency swaps in order to reduce the foreign currency exposure on these
borrowings. As the hedges are perfect, any change in the fair value of the cross currency swaps has minimal impact on
profit and equity.
The Group Treasury Policy, as approved by the FIRC, is to substantially hedge all known transactional currency exposures.
The Group generates revenue, receives foreign dividends and incurs costs in currencies which are other than the functional
currencies of the operating units, thus giving rise to foreign exchange risk. The currency exposures are primarily for the
Australian Dollar, Euro, Hong Kong Dollar, Indian Rupee, Indonesian Rupiah, Philippine Peso, Pound Sterling, Thai Baht,
United States Dollar and Japanese Yen.
Foreign currency purchases and forward currency contracts are used to reduce the Group’s transactional exposure to
foreign currency exchange rate fluctuations. The foreign exchange difference on trade balances is disclosed under Note 6
and the foreign exchange difference on non-trade balances is disclosed under Note 10.
38.3
Interest Rate Risk
The Group has cash balances placed with reputable banks and financial institutions which generate interest income for the
Group. The Group manages its interest rate risks on its interest income by placing the cash balances on varying maturities
and interest rate terms.
The Group’s borrowings include bank borrowings and bonds. The borrowings expose the Group to interest rate risk. The
Group seeks to minimise its exposure to these risks by entering into interest rate swaps over the duration of its borrowings.
Interest rate swaps entail the Group agreeing to exchange, at specified intervals, the difference between fixed and variable
rate interest amounts calculated by reference to an agreed-upon notional principal amount. As at 31 March 2012, after
taking into account the effect of interest rate swaps, approximately 75% (2011: 73%) of the Group’s borrowings were at fixed
rates of interest.
As at 31 March 2012, assuming that the market interest rate is 50 basis points higher or lower than the market interest
rate and with no change to the other variables, the annualised interest expense on borrowings would be higher or lower by
S$7.8 million (2011: S$11.8 million).
175
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
38.4 Credit Risk
Financial assets that potentially subject the Group to concentrations of credit risk consist primarily of trade receivables,
cash and cash equivalents, marketable securities and financial instruments used in hedging activities.
The Group has no significant concentration of credit risk from trade receivables due to its diverse customer base. Credit
risk is managed through the application of credit assessment and approvals, credit limits and monitoring procedures. Where
appropriate, the Group obtains deposits or bank guarantees from customers or enters into credit insurance arrangements.
The Group places its cash and cash equivalents and marketable securities with a number of major and high credit
rating commercial banks and other financial institutions. Derivative counter-parties are limited to high credit rating
commercial banks and other financial institutions. The Group has policies that limit the financial exposure to any one
financial institution.
38.5 Liquidity Risk
To manage liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the
management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. Due to the dynamic
nature of the underlying business, the Group aims at maintaining flexibility in funding by keeping both committed and
uncommitted credit lines available.
38.6 Market Risk
The Group has investments in quoted equity shares. The market value of these investments will fluctuate with market
conditions.
176
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
39.
SEGMENT INFORMATION
Segment information is presented based on the information reviewed by the chief operating decision maker for performance
measurement and resource allocation.
The Group’s reportable segments are as follows -
Singapore – represent the services and products provided by SingTel and its subsidiaries (excluding Optus).
Australia – represent the services and products provided by Optus, a wholly-owned subsidiary of the Group domiciled
in Australia.
Associates & Joint Ventures (“Assoc & JV”) – represent the Group’s investments in associates and joint ventures which
mainly comprise Advanced Info Service Public Company Limited (“AIS”) in Thailand, Bharti Airtel Limited (“Airtel”) in India,
Globe Telecom, Inc. (“Globe”) in the Philippines, and PT Telekomunikasi Selular (“Telkomsel”) in Indonesia.
The main services and products provided in both Singapore and Australia are mobile communications, data and Internet,
national telephone, information technology and engineering, sale of equipment, international telephone and pay television.
The accounting policies used to derive the reportable operating segment results are consistent with those described in the
“Significant Accounting Policies” note to the financial statements.
Segment results represent operating revenue less expenses. Corporate costs represent the costs of the Group function not
allocated to the reportable operating segments.
Segment assets represent assets directly managed by each segment, and primarily include receivables, property, plant and
equipment, and inventories. Assets managed at corporate level include cash and bank balances, fixed deposits and AFS
investments.
Segment capital expenditure comprise additions to property, plant and equipment, and intangible assets.
The Group’s revenue from its major products and services are disclosed in Note 4.
The Group has a large and diversified customer base which consists of individuals and corporations. There was no
single customer that contributed 10% or more of the Group’s revenue for the financial years ended 31 March 2012 and
31 March 2011.
177
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
39.
SEGMENT INFORMATION (Cont’d)
Group - 2012
Singapore
S$ Mil
Australia
S$ Mil
Assoc & JV
S$ Mil
Elim
S$ Mil
Segment
Total
S$ Mil
Corp
S$ Mil
Group
Total
S$ Mil
Operating revenue
6,550.8
12,274.5
Segment results
Other income
Profit/ (Loss) before
exceptional items
1,619.4
45.3
1,599.2
67.1
1,664.7
1,666.3
Exceptional items
4.7
(23.5)
Profit/ (Loss) on operating activities 1,669.4
1,642.8
-
-
-
-
-
-
Share of results of associates
and joint ventures
- Airtel
- Telkomsel
- Globe
- AIS
- Others
Profit before interest,
-
-
-
-
-
-
-
-
-
-
-
-
351.0
665.1
130.8
278.5
6.0
1,431.4
-
18,825.3
-
18,825.3
-
-
-
-
-
-
-
-
-
-
-
3,218.6
112.4
(104.7)
(9.2)
3,113.9
103.2
3,331.0
(113.9)
3,217.1
(18.8)
25.4
6.6
3,312.2
(88.5)
3,223.7
351.0
665.1
130.8
278.5
6.0
1,431.4
-
-
-
-
-
-
351.0
665.1
130.8
278.5
6.0
1,431.4
investment income (net) and tax
1,669.4
1,642.8
1,431.4
-
4,743.6
(88.5)
4,655.1
Interest and investment
income (net)
Finance costs
-
-
22.1
(198.6)
-
-
Profit/ (Loss) before tax
1,669.4
1,466.3
1,431.4
-
-
-
-
-
-
-
-
-
22.1
(198.6)
31.9
(196.1)
54.0
(394.7)
4,567.1
(252.7)
4,314.4
4,727.6
3,392.2
1,028.1
630.4
402.2
10,180.5
-
-
-
-
-
-
4,727.6
3,392.2
1,028.1
630.4
402.2
10,180.5
-
-
-
-
-
-
-
-
-
-
-
-
4,727.6
3,392.2
1,028.1
630.4
402.2
10,180.5
Segment assets
Investment in associates
and joint ventures
- Airtel
- Telkomsel
- Globe
- AIS
- Others
Goodwill on acquisition
of subsidiaries
Other assets
82.2
6,615.3
9,575.9
17,079.5
-
-
-
(4,975.1)
9,658.1
18,719.7
-
1,859.3
9,658.1
20,579.0
6,697.5
26,655.4
10,180.5
(4,975.1)
38,558.3
1,859.3
40,417.6
Capital expenditure
882.2
1,599.1
Depreciation and amortisation
(577.3)
(1,424.3)
Impairment of AFS investment
-
-
-
-
-
-
-
-
2,481.3
(2,001.6)
-
-
2,481.3
(2,001.6)
-
(5.5)
(5.5)
178
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
39.
SEGMENT INFORMATION (Cont’d)
Group - 2011
Singapore
S$ Mil
Australia
S$ Mil
Assoc & JV
S$ Mil
Elim
S$ Mil
Operating revenue
6,400.6
11,670.0
Segment results
Other income
Profit/ (Loss) before
exceptional items
Exceptional items
1,654.0
48.5
1,441.4
77.2
1,702.5
1,518.6
-
-
Profit/ (Loss) on operating activities
1,702.5
1,518.6
-
-
-
-
-
-
Share of results of associates
and joint ventures
- Airtel
- Telkomsel
- Globe
- AIS
- Others
Profit before interest,
-
-
-
-
-
-
-
-
-
-
-
-
567.3
638.2
137.7
190.5
30.4
1,564.1
-
-
-
-
-
-
-
-
-
-
-
-
Segment
Total
S$ Mil
Corp
S$ Mil
Group
Total
S$ Mil
18,070.6
-
18,070.6
3,095.4
125.7
(75.0)
4.5
3,020.4
130.2
3,221.1
(70.5)
3,150.6
-
55.7
55.7
3,221.1
(14.8)
3,206.3
567.3
638.2
137.7
190.5
30.4
1,564.1
-
-
-
-
-
-
567.3
638.2
137.7
190.5
30.4
1,564.1
investment income (net) and tax
1,702.5
1,518.6
1,564.1
-
4,785.2
(14.8)
4,770.4
Interest and investment
income (net)
Finance costs
-
-
26.7
(157.8)
-
-
Profit/ (Loss) before tax
1,702.5
1,387.5
1,564.1
-
-
-
-
-
-
-
-
-
26.7
(157.8)
16.8
(209.7)
43.5
(367.5)
4,654.1
(207.7)
4,446.4
5,230.8
3,274.7
1,008.9
261.6
420.9
10,196.9
-
-
-
-
-
-
5,230.8
3,274.7
1,008.9
261.6
420.9
10,196.9
-
-
-
-
-
-
-
-
-
-
-
-
5,230.8
3,274.7
1,008.9
261.6
420.9
10,196.9
Segment assets
Investment in associates
and joint ventures
- Airtel
- Telkomsel
- Globe
- AIS
- Others
Goodwill on acquisition
of subsidiaries
Other assets
82.2
5,008.3
9,575.0
15,478.3
-
-
-
(3,793.6)
9,657.2
16,693.0
-
2,735.2
9,657.2
19,428.2
5,090.5
25,053.3
10,196.9
(3,793.6)
36,547.1
2,735.2
39,282.3
Capital expenditure
842.8
1,364.5
Depreciation and amortisation
(550.5)
(1,418.2)
-
-
-
-
2,207.3
(1,968.7)
-
-
2,207.3
(1,968.7)
179
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
40.
OPERATING LEASE COMMITMENTS
The future aggregate minimum lease payments under non-cancellable operating leases contracted for at the end of the
reporting period but not recognised as liabilities, were as follows -
Not later than one year
Later than one but not later than five years
Later than five years
Group
Company
2012
S$ Mil
496.4
1,239.7
1,620.3
3,356.4
2011
S$ Mil
436.1
1,209.7
1,775.8
3,421.6
2012
S$ Mil
102.2
291.6
715.9
2011
S$ Mil
95.5
313.7
794.6
1,109.7
1,203.8
Sale and operating leaseback contracts were entered into for certain property, plant and equipment for a period of 20 years
commencing on 2 March 2005 and 1 November 2010. The above commitments included the minimum amounts payable
of S$39.5 million (2011: S$39.4 million) per annum under those contracts. The operating lease payments under these
contracts are subject to review every year with a general increase not exceeding the higher of 2% or Consumer Price Index
percentage of the preceding year.
41.
COMMITMENTS
41.1 The commitments for capital and operating expenditures, and investments which had not been recognised in the financial
statements, excluding the commitments shown under Note 41.2, were as follows -
Authorised and contracted for
1,725.7
1,025.1
2012
S$ Mil
2011
S$ Mil
2012
S$ Mil
181.7
2011
S$ Mil
67.0
Group
Company
The above included equity funding commitments of S$769 million (2011: S$64 million) and commitments to purchase
capacity in the cable network of a joint venture of S$54 million (2011: S$12 million).
41.2 As at 31 March 2012, the Group’s commitments for the purchase of broadcasting program rights were S$219 million (2011:
S$397 million). The commitments included only the minimum guaranteed amounts payable under the respective contracts
and do not include amounts that may be payable based on revenue share arrangement which cannot be reliably determined
as at the end of the reporting period.
180
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
42.
CONTINGENT LIABILITIES
(a)
Guarantees
As at 31 March 2012,
(i) The Group and Company provided bankers’ and other guarantees, and insurance bonds of S$572.8 million and
S$413.2 million (2011: S$583.6 million and S$389.6 million) respectively.
(ii) The Company provided guarantees for loans of S$1.55 billion (2011: S$450 million) drawn down under various loan
facilities entered into by SGT with maturities between September 2012 and June 2014. The Company also provided
guarantees for SGT’s notes issue of an aggregate equivalent amount of S$3.28 billion (2011: S$1.36 billion) due between
July 2016 and September 2021.
(iii) The Company provided a guarantee for US$90 million (S$113 million) (2011: US$90 million) on a proportionate share
basis in respect of a loan obtained by an associate.
(b)
Appeal against the decision by Komisi Pengawas Persaingan Usaha Republik Indonesia (“KPPU”) (Republic of Indonesia
Commission for Supervision of Business Competition) (the “Commission”)
SingTel announced on 29 June 2007 that SingTel and its wholly-owned subsidiary, Singapore Telecom Mobile Pte Ltd
(“SingTel Mobile”), had been called by the Commission to attend before it for an examination concerning the allegation
of a violation by Temasek Business Group of Article 27(a)1 of Law No.5 of 1999 (the “Law”) relating to business
competition matters.
On 20 November 2007, SingTel announced that the Commission had issued its decision (the “Decision”). The Decision states
that SingTel and SingTel Mobile together with other parties to the proceedings (the “Parties”) are in violation of Article 27(a)
of the Law and that Telkomsel is in violation of Article 17(1)2 of the Law.
The Decision orders, amongst other things, that (i) the Parties divest either Telkomsel or PT Indosat Tbk (“Indosat”) within
two years, (ii) Telkomsel reduces tariffs by at least 15 per cent and (iii) each of the Parties and Telkomsel pay 25 billion rupiah
(approximately S$4 million) in fines.
SingTel and SingTel Mobile filed an appeal to the District Court of Central Jakarta on 19 December 2007. The District
Court announced its ruling on 9 May 2008 dismissing SingTel’s and SingTel Mobile’s appeal, but (i) setting aside the order
that Telkomsel reduce tariffs by at least 15 per cent; and (ii) reducing the fine for each of the Parties and Telkomsel to
15 billion rupiah (approximately S$2 million). SingTel and SingTel Mobile appealed to the Supreme Court of the Republic of
Indonesia on 22 May 2008.
By a written decision dated 9 September 2008, of which official notification was given to SingTel and SingTel Mobile on 25
November 2008, the Supreme Court dismissed the appeal.
On 20 May 2009, SingTel and SingTel Mobile filed an application to the Indonesian Supreme Court for civil review of the
Supreme Court decision.
1
2
Article 27(a) relates to the ownership of majority shares in several similar companies conducting business activities in the same field in the
same market.
Article 17(1) relates to the control of the production and or marketing of goods and or services which may result in monopolistic practices
and or unfair business competition.
181
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
42.
CONTINGENT LIABILITIES (Cont’d)
(b)
Appeal against the decision by Komisi Pengawas Persaingan Usaha Republik Indonesia (“KPPU”) (Republic of Indonesia
Commission for Supervision of Business Competition) (the “Commission”) (Cont’d)
On 9 June 2009, KPPU applied to the Central Jakarta District Court to enforce the Supreme Court Decision. This application
is understood to be pending.
On 12 January 2011, SingTel and SingTel Mobile received official notification that the civil review applications have been
rejected. SingTel and SingTel Mobile maintain that they have complied with all the laws of Indonesia. However, in February
2011, SingTel and SingTel Mobile paid the fines with due respect to the Indonesian Courts, without prejudice to their rights
under International Law.
(c)
Other commercial disputes
Optus (and certain subsidiaries) is in dispute with third parties regarding certain transactions entered into in the ordinary
course of business. Some of these disputes involve legal proceedings relating to the contractual obligations of the parties
and/or representations made, including the amounts payable by Optus’ companies under the contracts and claims against
Optus’ companies for compensation for alleged breach of contract and/or representations. Optus is vigorously defending
all these claims.
43.
SIGNIFICANT CONTINGENT LIABILITIES OF JOINT VENTURES
(a)
Airtel, a 32.3% joint venture of the Group, has disputes with various government authorities in the respective jurisdictions
where its operations are based, as well as with third parties regarding certain transactions entered into in the ordinary
course of business.
As at 31 March 2012, the taxes, custom duties and demands under adjudication, appeal or disputes amounted to approximately
INR 55.5 billion (SingTel’s equity share: S$442 million). In respect of some of the tax issues, pending final decisions, Airtel
had deposited amounts with statutory authorities.
Airtel Nigeria B.V. (“ANBV”), a 100% owned indirect subsidiary of Airtel, has 65.7% shareholding in Airtel Networks Limited
(“ANL”), whose principal activity is the provision of mobile telecommunication services in Nigeria.
Econet Wireless Limited (“EWL”) had in 2003 claimed a 5% stake in ANL and in 2006 also made a claim alleging breach of
its pre-emption rights under a shareholders agreement between EWL and former shareholders of ANL. ANL and ANBV have
filed appeals in the Nigerian Courts and are actively pursuing these appeals.
Under the terms of the acquisition by Airtel of ANBV from Zain International B.V. in 2010, Airtel has the benefit of seller’s
indemnities in respect of such matters.
(b)
The Group holds an equity interest of 23.3% in AIS.
Revenue share disputes arising from abolishment of excise tax
In January 2008, TOT Public Company Limited (“TOT”) and CAT Telecom Public Company Limited (“CAT”) demanded additional
payments of revenue share from AIS and its subsidiary, Digital Phone Company Limited (“DPC”) respectively.
182
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
43.
SIGNIFICANT CONTINGENT LIABILITIES OF JOINT VENTURES (Cont’d)
CAT had submitted its case against DPC to arbitration and the Arbitral Tribunal has dismissed CAT’s case against DPC on
1 March 2011. On 3 June 2011, CAT began proceedings to appeal against the Arbitral Tribunal’s decision in the Central
Administrative Court.
On 20 May 2011, the Arbitral Tribunal dismissed TOT’s claim against AIS for additional revenue share. On 22 September
2011, TOT submitted its case to the Central Administrative Court to appeal against the Arbitral Tribunal’s award.
TOT’s demand for additional revenue shares
On 2 February 2011, AIS received demand letters from TOT for additional payments of revenue share, penalties and
surcharges to be paid by 15 February 2011. The first demand amounted to THB 36,996 million (SingTel’s equity share: S$352
million) plus interest at 7.5% per annum and value added tax for reduction of revenue sharing rate on prepaid services and
deduction of roaming cost from the revenue share payment to TOT. The second demand amounted to THB 36,817 million
(SingTel’s equity share: S$350 million) plus interest at 7.5% per annum and value added tax due to the deduction of excise
tax from the revenue share payment to TOT.
AIS’ management believes that the demands shall have no material impact to its financial statements because it is not
obligated to make any additional payments as demanded by TOT. On 4 February 2011, AIS sent a letter to TOT opposing
such demands. On 11 February 2011, AIS submitted TOT’s claim for additional revenue share in relation to the first demand
to arbitration.
On 26 August 2011, TOT informed AIS of the cancellation of its first demand due to its misunderstanding of the facts.
On 3 October 2011, AIS requested the withdrawal of this dispute which was approved by the Arbitration Institute on
6 October 2011.
The second demand, which is a duplicate of the TOT’s demand for additional revenue share arising from the abolishment of
excise tax, has been dismissed by the Arbitration Tribunal on 20 May 2011. On 22 September 2011, TOT submitted its case
to the Central Administrative Court to appeal against the Arbitral Tribunal’s award.
On 26 January 2011, TOT sent a letter demanding AIS to pay additional revenue share based on gross interconnection
income received from 2007 to 2010 of THB 17,803 million (SingTel’s equity share: S$169 million) plus interest at the rate of
1.25% per month. AIS sent a letter opposing the said claim to TOT on 21 February 2011. On 9 March 2011, AIS submitted the
dispute to arbitration.
TOT’s demand for access charge
On 9 May 2011, TOT submitted a case to the Central Administrative Court against CAT as first defendant and DPC as second
defendant demanding access charge amounting to THB 2,954 million (SingTel’s equity share: S$28 million) plus interest.
This case is pending.
AIS’ management believes that the case has no material impact to its financial statements because DPC has correctly and
fully complied with the law and the relevant agreements in all respects.
(c)
Globe, a 47.3% joint venture of the Group, is contingently liable for various claims arising in the ordinary conduct of business
and certain tax assessments which are either pending decision by the Courts or are being contested, the outcome of which
are not presently determinable. In the opinion of Globe’s management and legal counsel, the eventual liability under these
claims, if any, will not have a material or adverse effect on the Globe Group’s financial position and results of operations.
183
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
43.
SIGNIFICANT CONTINGENT LIABILITIES OF JOINT VENTURES (Cont’d)
(d)
As at 31 March 2012, Telkomsel, a 35% joint venture of the Group, has filed appeals and cross-appeals amounting to
approximately IDR 1,523 billion (SingTel’s equity share: S$73 million) for various tax claims arising in certain tax assessments
which are pending final decisions, the outcome of which are not presently determinable.
44.
ASSOCIATE - PROPOSED RESTRUCTURING OF LOAN FACILITIES
Warid, an associate in which the Group has a 30% equity interest, is currently in discussions with its lenders in relation to
a proposed restructuring of its loan facilities. As at 31 March 2012, the outstanding principal amounted to approximately
US$758 million, net of hedging, and was secured by a floating charge on Warid’s assets. In addition, US$90 million of these
loan facilities was guaranteed by SingTel (see Note 42 (a)(iii)) and US$512 million was secured by guarantees of the other
shareholder group of Warid.
45.
SUBSEQUENT EVENTS
From 1 April 2012, the Group is organised by three business units, Group Consumer, Group ICT and Group Digital L!fe, to
better serve the evolving needs of its customers and to exploit growth opportunities globally.
In April 2012, the Group completed the acquisition of 100% of the share capital of Amobee, Inc., for an aggregate cash
consideration of US$321 million. Amobee, Inc., a corporation organised under the laws of Delaware, USA, is a premium
provider of mobile advertising offering solutions to operators, publishers and advertisers globally.
46.
EFFECTS OF FRS AND INT FRS ISSUED BUT NOT YET ADOPTED
Certain new or revised FRS and INT FRS are mandatory for adoption by the Group for financial year beginning on or after
1 April 2012.
(a) FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS
12, Consolidation - Special Purpose Entities. FRS 110 defines the principle of control and establishes control as the basis
from determining which entities are consolidated in the consolidated financial statements. FRS 27 remains as a standard
applicable only to separate financial statements. These will take effect from financial year beginning on 1 April 2013
with full retrospective application.
(b) FRS 111 Joint Arrangements and FRS 28 Investments in Associates and Joint Ventures
FRS 111 supersedes FRS 31, Interests in Joint Ventures, and INT FRS 13, Jointly Controlled Entities – Non-Monetary
Contributions by Venturers. FRS 111 classifies a joint arrangement as either a joint operation or a joint venture based
on the parties’ rights and obligations under the arrangement. The joint venturer should use the equity method under
the revised FRS 28 to account for a joint venture. These will take effect from financial year beginning on 1 April 2013 with
full retrospective application.
(c) FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated with
its interest in subsidiaries, associates, joint arrangements and unconsolidated structured entities, and will take effect
from financial year beginning on 1 April 2013.
(d) FRS 113 Fair Value Measurements
FRS 113 is a single new standard that applies to both financial and non-financial items. It provides a common fair
value definition and hierarchy applicable to the fair value measurement of assets, liabilities, and an entity’s own equity
instruments within its scope. FRS 113 will be effective prospectively from financial year beginning on 1 April 2013.
The Group is currently assessing the impact of the above new or revised FRS on the financial statements of the Group and
the Company in the period of initial application.
The other new or revised FRS and INT FRS are not expected to have a significant impact on the financial statements of the
Group and the Company in the period of initial application.
184
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
47.
COMPANIES IN THE GROUP
The Company’s immediate and ultimate holding company is Temasek Holdings (Private) Limited, a company incorporated
in Singapore. The following were the significant subsidiaries, associates and joint ventures as at 31 March 2012 and
31 March 2011.
47.1 Significant subsidiaries incorporated in Singapore
Name of subsidiary
Principal activities
1.
2.
3.
4.
5.
6.
7.
8.
9.
Computer Systems Holdings Pte Ltd
Investment holding
NCS Communications Engineering
Pte. Ltd.
NCS Pte. Ltd.
NCSI Solutions Pte. Ltd.
SCS Computer Systems Pte. Ltd.
Provision of facilities management and
consultancy services, and distributor
of specialised telecommunications
and data communication products
Provision of information technology
and consultancy services
Provision of information technology
services
Provision of information technology
and consultancy services
NCSI Holdings Pte. Ltd.
Investment holding
Singapore Telecom Mobile Pte Ltd
Investment holding
SingNet Pte Ltd
Provision of internet access services
Singapore Telecom International
Pte Ltd
10.
SingTel Group Treasury Pte. Ltd.
11.
SingTel Idea Factory Pte. Ltd.
Holding of strategic investments
and provision of technical and
management consultancy services
Provision of finance and treasury
services to SingTel and its subsidiaries
Engaged in research and development,
products and services development
and business partnership
12.
SingTel Innov8 Pte. Ltd.
Venture capital investment holding
13.
SingTel Mobile Singapore Pte. Ltd.
Operation and provision of cellular
mobile telecommunications systems
and services, resale of fixed line and
broadband services
Percentage of effective
equity interest held by the Group
2012
%
100
100
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
14.
SingTel Ventures (Singapore) Private
Limited
Investment holding
100
100
185
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.1 Significant subsidiaries incorporated in Singapore (Cont’d)
Name of subsidiary
Principal activities
15.
SingTelSat Pte Ltd
16.
SingTel Singapore Pte. Ltd.
17.
ST-2 Satellite Ventures Private Limited
18.
Subsea Network Services Pte Ltd
Provision of satellite capacity for
telecommunications and video
broadcasting services
Investment holding and provision
of business and management
consultancy services
Provision of satellite capacity for
telecommunications and video
broadcasting services
Ownership and chartering of barges
and provision of storage facilities
for submarine cables and related
equipment
19.
Sembawang Cable Depot Pte Ltd
Provision of storage facilities for
submarine cables and related equipment
20.
SingTel Digital Media Pte Ltd
21.
Telecom Equipment Pte Ltd
Development and management of
on-line internet portal
Engaged in the sale and maintenance
of telecommunications equipment
Percentage of effective
equity interest held by the Group
2012
%
100
2011
%
100
100
100
61.9
61.9
100
100
60
95.6
100
60
95.6
100
47.2 Significant subsidiaries incorporated in Australia
Name of subsidiary
Principal activities
Percentage of effective
equity interest held by the Group
Alphawest Services Pty Ltd (1)
Provision of information technology
services
Cable & Wireless Optus Satellites
C1 Satellite contracting party
Pty Limited (1)
Inform Systems Australia Pty Ltd (1)
NCSI (Australia) Pty Limited
Provision of information technology
services
Provision of information technology
services
Optus Administration Pty Limited (1)
Provision of management services to
the Optus Group
1.
2.
3.
4.
5.
186
2012
%
100
100
100
100
100
2011
%
100
100
100
100
100
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.2 Significant subsidiaries incorporated in Australia (Cont’d)
Name of subsidiary
Principal activities
Optus Backbone Investments
Pty Limited
Investment in telecommunications
network infrastructure in Australia
6.
7.
8.
9.
Optus Billing Services Pty Limited (*)
Optus Broadband Pty Limited (1)
Optus Data Centres Pty Limited (1)
10.
Optus Finance Pty Limited (1)
11.
Optus Insurance Services Pty Limited
12.
Optus Internet Pty Limited (1)
Provision of billing services to the
Optus Group
Provision of high speed residential
internet service
Provision of data communication
services
Provision of financial services to the
Optus Group
Provision of handset insurance and
related services
Provision of internet services to retail
customers
13.
Optus Mobile Pty Limited (1)
Provision of mobile phone services
14.
Optus Narrowband Pty Limited (*)
Provision of narrowband portal
content services
15.
Optus Networks Investments
Pty Ltd(*) (1)
Bidding company for the National
Broadband Network in Australia
16.
Optus Networks Pty Limited (1)
17.
Optus Rental & Leasing Pty Limited (*)
18.
Optus Stockco Pty Limited (*)
Provision of telecommunications
services
Provision of equipment rental services
to customers
Purchases of Optus Group network
inventory
19.
Optus Superannuation Pty Limited (*)
A trustee for Optus Group’s
superannuation scheme
20.
Optus Systems Pty Limited (1)
21.
Optus Vision Interactive Pty Limited (*)
Provision of information technology
services to the Optus Group
Provision of interactive television
service
Percentage of effective
equity interest held by the Group
2012
%
100
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
187
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.2 Significant subsidiaries incorporated in Australia (Cont’d)
Name of subsidiary
Principal activities
22.
Optus Vision Media Pty Limited (*) (2)
23.
Optus Vision Pty Limited (1)
24.
Perpetual Systems Pty Ltd (1)
Provision of broadcasting related
services
Provision of telecommunications
services
Provision of IT disaster recovery
services
25.
Prepaid Services Pty Limited (1)
Distribution of prepaid mobile products
26.
Reef Networks Pty Ltd (1)
Operation and maintenance of fibre
optic network between Brisbane
and Cairns
27.
Singapore Telecom Australia
Investments Pty Limited
Investment holding
28.
Simplus Mobile Pty Limited (1)
Provision of mobile phone services
29.
SingTel Optus Pty Limited
Investment holding
30.
Source Integrated Networks
Pty Limited (1)
Provision of data communications and
network services
31.
Uecomm Operations Pty Limited (1)
Provision of data communication
services
32.
Virgin Mobile (Australia) Pty Limited (1)
Provision of mobile phone services
33.
XYZed LMDS Pty Limited (*)
Holder of telecommunications licence
34.
XYZed Pty Limited (1)
Provision of telecommunications
services
Percentage of effective
equity interest held by the Group
2012
%
20
2011
%
20
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
All companies are audited by Deloitte Touche Tohmatsu, Australia, except for those companies denoted (*) where no statutory
audit is required.
Notes:
(1) These entities are relieved from the Australian Corporations Act 2001 requirements for preparation, audit and lodgement of financial
reports pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998.
(2) Optus Vision Media Pty Limited is deemed to be a subsidiary by virtue of control.
188
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
47.3 Significant subsidiaries incorporated outside Singapore and Australia
Name of subsidiary
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
1.
GB21 (Hong Kong) Limited
Provision of
telecommunications services
and products
Hong Kong
2.
Guangzhou Zhong Sheng
Information Technology
Co., Ltd. (**) (1)
Provision of information
technology training
People’s
Republic of
China
2012
%
100
2011
%
100
100
100
3.
Information Network Services
Sdn Bhd
Provision of data
communication and value
added network services
Malaysia
100
100
Lanka Communication
Services (Pvt) Limited
Provision of data
communication services
Sri Lanka
NCS Information Technology
(Suzhou) Co., Ltd. (1)
Software development and
provision of information
technology services
6.
NCSI (Chengdu) Co., Ltd (1)
Provision of information
technology research and
development, and other
information technology
related services
People’s
Republic of
China
People’s
Republic of
China
NCSI (HK) Limited
Provision of information
technology services
Hong Kong
NCSI (India) Private Limited
Provision of information
technology services
India
NCSI (Korea) Co., Limited
South Korea
4.
5.
7.
8.
9.
82.9
100
82.9
100
100
100
100
100
100
100
100
100
10.
NCSI Lanka (Private) Limited
11.
NCSI (Malaysia) Sdn Bhd
12.
NCSI (ME) W.L .L.
Provision of information
technology consultancy and
system integration services
Provision of information
technology and
communication engineering
services
Provision of information
technology services
Provision of information
technology and
communication engineering
services
Sri Lanka
100
100
Malaysia
Bahrain
100
100
100
100
189
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.3 Significant subsidiaries incorporated outside Singapore and Australia (Cont’d)
Name of subsidiary
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
13.
NCSI (Philippines) Inc.
14.
NCSI (Shanghai), Co. Ltd (1)
Provision of information
technology and
communication engineering
services
Philippines
Provision of system
integration, software research
and development and other
information technology-
related services
People’s
Republic of
China
2012
%
100
2011
%
100
100
100
15.
Shanghai Zhong Sheng
Information Technology
Co., Ltd. (**) (1)
Provision of information
technology training and
software resale
People’s
Republic of
China
100
100
16.
SingTel Global Private Limited
17.
SingTel Global India
Private Limited
18.
Singapore Telecom
Hong Kong Limited
Provision of infotainment
products and services, and
investment holding
Provision of
telecommunications services
and all related activities
Provision of
telecommunications services
and all related activities
Mauritius
100
100
India
74
74
Hong Kong
100
100
19.
Singapore Telecom India
Private Limited
Engaged in general liaison
and support services
India
Japan
100
100
100
100
South Korea
100
100
USA
100
100
Provision of
telecommunications services
and all related activities
Provision of
telecommunications services
and all related activities
Provision of
telecommunications,
engineering and marketing
services
Investment holding
20.
Singapore Telecom Japan
Co Ltd (*)
21.
Singapore Telecom Korea
Limited
22.
Singapore Telecom
USA, Inc. (*)
23.
SingTel Australia
Investment Ltd (*)
24.
SingTel (Europe) Limited
190
British Virgin
Islands
100
100
100
100
Provision of
telecommunications services
and all related activities
United
Kingdom
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
47.3 Significant subsidiaries incorporated outside Singapore and Australia (Cont’d)
Name of subsidiary
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
25.
SingTel (Philippines), Inc.
Engaged in general liaison
and support services
Philippines
2012
%
100
2011
%
100
26.
SingTel Taiwan Limited
Provision of
telecommunications services
and all related activities
27.
SingTel Ventures (Cayman)
Investment holding
Pte Ltd (*)
28.
Sudong Sdn. Bhd.
Management, provision and
operations of a call centre for
telecommunications services
Taiwan
100
100
Cayman
Islands
Malaysia
100
100
100
100
All companies are audited by a member firm of Deloitte Touche Tohmatsu LLP except for the following -
(*) No statutory audit is required.
(**) Audited by another firm.
Note:
(1) Subsidiary’s financial year-end is 31 December.
47.4 Associates of the Group
Name of associate
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
1.
2.
3.
4.
5.
ADSB Telecommunications
Dormant
Netherlands
B.V.
APT Satellite Holdings
Investment holding
Bermuda
Limited (1)
APT Satellite International
Investment holding
Company Limited (1)
Infoserve Technology Corp.
Dormant
British Virgin
Islands
Cayman
Islands
2012
%
25.6
20.3
28.6
25.0
NetLink Trust (2) (6)
Singapore
100.0
To own, install, operate
and maintain the passive
infrastructure for Singapore’s
Next Generation Nationwide
Broadband Network
2011
%
25.6
20.3
28.6
25.0
-
191
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.4 Associates of the Group (Cont’d)
Name of associate
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
6.
OpenNet Pte. Ltd. (3)
7.
8.
Singapore Post Limited (4)
Telescience Singapore Pte Ltd
9.
Viewers Choice Pte Ltd
To design, build and operate
the passive infrastructure for
Singapore’s Next Generation
Nationwide Broadband
Network
Operation and provision of
postal services
Sale, distribution
and installation of
telecommunications
equipment
Provision of services relating to
motor vehicle rental and retail of
general merchandise
2012
%
29.9
25.6
50.0
2011
%
29.9
25.6
50.0
Singapore
Singapore
Singapore
Singapore
49.2
49.2
10.
Warid Telecom (Private)
Limited (5)
Provision of mobile
telecommunications services
Pakistan
30.0
30.0
Notes:
(1) The company has been equity accounted for in the consolidated financial statements based on results ended, or as at,
31 December 2011, the financial year-end of the company.
(2) Audited by Deloitte & Touche LLP, Singapore.
(3) Audited by Ernst & Young LLP, Singapore.
(4) Audited by PricewaterhouseCoopers LLP, Singapore.
(5) Audited by Ernst and Young Ford Rhodes Sidat Hyder (a member firm of Ernst and Young Global Limited).
(6) NetLink Trust is a business trust established as part of IDA’s effective open access requirements under Singapore’s Next Generation
Nationwide Broadband Network, and is currently 100% owned by SingTel. It is regarded as an associate as SingTel does not have
effective control in the trust.
47.5
Joint ventures of the Group
Name of joint venture
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
1.
Abacus Travel Systems Pte Ltd Marketing and distributing
Singapore
2012
%
30.0
2011
%
30.0
certain travel-related services
through on-line airline
computerised reservations
systems
Provision of networking
services to business
customers operating within
and outside Malaysia
2.
Acasia Communications
Sdn Bhd (1)
192
Malaysia
14.3
14.3
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
47.5
Joint ventures of the Group (Cont’d)
Name of joint venture
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
3.
ACPL Marine Pte Ltd
To own, operate and manage
maintenance-cum-laying
cableships
Singapore
2012
%
41.7
2011
%
41.7
4.
Advanced Info Service Public
Company Limited (2)
5.
ASEAN Cableship Pte Ltd
Provision of mobile,
broadband, international
telecommunications
services, call centre and data
transmission
Operation of cableships
for laying, repair and
maintenance of submarine
telecommunication cables
Thailand
23.3
21.3
Singapore
16.7
16.7
6.
7.
8.
ASEAN Telecom Holdings
Investment holding
Malaysia
Sdn Bhd (1)
Asiacom Philippines, Inc. (1)
Investment holding
Philippines
Bharti Airtel Limited (3)
India
Provision of mobile, long
distance, broadband and
telephony telecommunications
services, enterprise solutions,
pay television and passive
infrastructure
9.
Bharti Telecom Limited (3)
Investment holding
India
10.
Bridge Mobile Pte Ltd
Provision of regional mobile
services
Singapore
11.
Globe Telecom, Inc. (4)
Provision of mobile,
broadband, international and
fixed line telecommunications
services
Philippines
12.
Grid Communications Pte Ltd (1)
Provision of public trunk radio
services
Singapore
13.
Indian Ocean Cableship
Pte Ltd
Leasing, operating and
managing of maintenance-
cum-laying cableship
Singapore
14.
International Cableship
Pte Ltd
Ownership and chartering of
cableships
Singapore
15.
Main Event Television Pty
Limited
Provision of cable television
programmes
Australia
14.3
40.0
32.3
36.2
33.6
47.3
50.0
50.0
45.0
33.3
14.3
40.0
32.3
36.2
33.6
47.3
50.0
50.0
45.0
33.3
193
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2012
47.5
Joint ventures of the Group (Cont’d)
Name of joint venture
Principal activities
Country of
incorporation
Percentage of effective
equity interest held by the Group
16.
OPEL Networks Pty Limited
Dormant
17.
Pacific Bangladesh Telecom
Limited (5)
18.
Pacific Carriage Holdings
Limited
19.
PT Telekomunikasi Selular (6)
20.
Radiance Communications
Pte Ltd (1)
21.
Southern Cross Cables
Holdings Limited (7)
22.
SSBI Pte. Ltd.
23.
TeleTech Park Pte Ltd (8)
24.
VA Dynamics Sdn Bhd (1)
Provision of mobile
telecommunications,
broadband and data
transmission services
Operation and provision of
telecommunications facilities
and services utilising a
network of submarine cable
systems
Provision of mobile
telecommunications and related
services
Sale, distribution, installation
and maintenance of
telecommunications equipment
Operation and provision of
telecommunications facilities
and services utilising a
network of submarine cable
systems
Provision of business
and management consultancy
services
Engaged in the business of
development, construction,
operation and management of
TeleTech Park
Distribution of networking
cables and related products
2012
%
50.0
45.0
2011
%
50.0
45.0
Australia
Bangladesh
Bermuda
40.0
40.0
Indonesia
35.0
35.0
Singapore
50.0
50.0
Bermuda
40.0
40.0
Singapore
50.0
-
Singapore
-
40.0
Malaysia
49.0
49.0
Notes:
(1) The company has been equity accounted for in the consolidated financial statements based on the results ended, or as at,
31 December 2011, the financial year-end of the company.
(2) The company’s reporting period has been aligned to the Group during the financial year. Audited by KPMG Phoomchai Audit Ltd,
Bangkok.
(3) Audited by S.R.Batliboi & Associates, New Delhi (a member firm of Ernst & Young).
(4) Audited by SGV & Co. (a member firm of Ernst & Young).
(5) Audited by S. F. Ahmed & Co (SFACO) (an international associate firm of Ernst & Young).
(6) Audited by Tanudiredja Wibisana & Rekan (a member firm of PricewaterhouseCoopers).
(7) Audited by KPMG, Bermuda.
(8) The company has been disposed during the financial year.
194
INTERESTED PERSON TRANSACTIONS
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
The aggregate value of all interested person transactions during the financial year ended 31 March 2012 (excluding transactions less than
S$100,000) were as follows -
Name of interested person
Advanced Info Service Public Company Ltd
Aetos Security Management Pte Ltd
Capitaland Limited
CapitaMalls Asia Limited
Certis Cisco Security Pte Ltd
Global Crossing Singapore Pte Ltd
Grid Communications Pte Ltd
iDirect Asia Pte Ltd
iShopAero Pte Ltd
MediaCorp TV Singapore Pte Ltd
MediaCorp Pte Ltd
NexWave Technologies Pte Ltd
Nucleus Connect Pte Ltd
PSA Corporation Limited
Radiance Communications Pte Ltd
SembCorp Industries Limited
Shin Corporation Public Company Limited
Singapore Technologies Kinetics Limited
SMRT Engineering Pte Ltd
SMRT Trains Ltd
SP PowerAssets Limited
SP Services Ltd
SP Telecommunications Pte Ltd
SPI Electricity Pty Ltd
StarHub Ltd
StarHub Cable Vision Ltd
StarHub Mobile Pte Ltd
ST Electronics (Info-Comm Systems) Pte Ltd
ST Electronics (Satcom & Sensor Systems) Pte Ltd
Temasek Capital Management Pte Ltd
Trusted Source Pte Ltd
S$ mil
1.3
2.9
0.2
0.5
0.3
0.1
0.5
0.4
1.8
0.3
0.7
0.1
0.9
0.8
1.4
0.3
331.6
1.3
1.2
1.3
0.3
0.1
0.6
1.1
62.7
29.8
5.0
0.1
1.7
0.1
0.3
449.7
195
SHAREHOLDER INFORMATION
As at 31 May 2012
ORDINARY SHARES
Number of ordinary shareholders
Number of holders of CHESS Units of Foreign Securities relating to ordinary shares in the Company
(CUFS)
312,256
20,376
Voting rights:
On a show of hands - every member present in person and each proxy shall have one vote
On a poll - every member present in person or by proxy shall have one vote for every share he holds or represents
(The Company cannot exercise any voting rights in respect of shares held by it as treasury shares)
SingTel shares are listed on Singapore Exchange Securities Trading Limited and ASX Limited (ASX) (in the form of CUFS).
SUBSTANTIAL SHAREHOLDERS
Temasek Holdings (Private) Limited
Note:
(1) Deemed through interests of associated companies and/or subsidiaries.
MAJOR SHAREHOLDERS LIST - TOP 20
No.
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBSN Services Pte Ltd
DBS Nominees Pte Ltd
Central Provident Fund Board
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
BNP Paribas Securities Services
Chess Depositary Nominees Pty Limited (3)
Raffles Nominees (Pte) Ltd
DB Nominees (S) Pte Ltd
OCBC Nominees Singapore Private Limited
Merrill Lynch (Singapore) Pte Ltd
Bank of Singapore Nominees Pte Ltd
Morgan Stanley Asia (Singapore)
BNP Paribas Nominees Singapore Pte Ltd
Chen Chun Nan
OCBC Securities Private Ltd
Chua Sock Koong
UOB Kay Hian Pte Ltd
Direct
Interest
Deemed
Interest
8,671,325,982
14,050,926 (1)
No. of
shares held
% of issued
share capital (1)
8,671,325,982
1,521,366,136
1,448,038,547
1,298,872,827 (2)
929,499,476
658,219,119
311,387,356
166,837,282
163,034,804
134,025,400
30,598,512
17,891,983
16,617,172
10,119,054
5,677,530
4,268,904
3,900,000
3,721,226
3,700,403
3,560,013
15,402,661,726
54.39
9.54
9.08
8.15
5.83
4.13
1.95
1.05
1.02
0.84
0.19
0.11
0.11
0.07
0.04
0.03
0.02
0.02
0.02
0.02
96.61
Notes:
(1) The percentage of issued ordinary shares is calculated based on the number of issued ordinary shares of the Company as at 31 May 2012,
excluding 1,079,620 ordinary shares held as treasury shares as at that date.
(2) Excludes 1,079,620 ordinary shares held by DBS Nominees Pte Ltd as treasury shares for the account of the Company.
(3) The shares held by CHESS Depositary Nominees Pty Limited are held on behalf of the persons entered in the register of CUFS holders.
196
SHAREHOLDER INFORMATION
As at 31 May 2012
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
MAJOR CUFS HOLDERS LIST (1) - TOP 20
No.
Name
No. of
CUFS held
% of issued
share capital (2)
1. National Nominees Limited
2. HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
3.
Cogent Nominees Pty Limited
4.
Citicorp Nominees Pty Limited
5.
Optus Share Plan Pty Limited
6.
The Australian National University
7.
8.
Paul O'Sullivan
9. HSBC Custody Nominees (Australia) Limited
10. HSBC Custody Nominees (Australia) Limited - A/C 3
11.
12.
13.
14.
15.
16.
17.
18.
19.
20. HSBC Custody Nominees (Australia) Limited-GSCO ECA
Cogent Nominees Pty Ltd
CS Fourth Nominees Pty Ltd
Cogent Nominees Pty Limited
J P Morgan Nominees Australia Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
John Simon
AMP Life Limited
RBC Dexia Investor Services Australia Nominees Pty Ltd
J P Morgan Nominees Australia Limited
26,405,811
22,910,671
20,817,955
6,503,404
4,166,698
2,755,359
2,600,000
2,258,663
2,252,048
2,018,551
1,439,188
1,303,216
1,294,787
698,800
636,826
522,991
515,888
489,692
476,710
439,577
100,506,835
0.17
0.14
0.13
0.04
0.03
0.02
0.02
0.01
0.01
0.01
0.01
0.01
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.63
Notes:
(1) CUFS are CHESS Units of Foreign Securities relating to ordinary shares in the Company. The shares are held by CHESS Depositary Nominees Pty
Limited on behalf of the persons entered in the CUFS register.
(2) The percentage of issued ordinary shares is calculated based on the number of issued ordinary shares of the Company as at 31 May 2012,
excluding 1,079,620 ordinary shares held as treasury shares as at that date.
ANALYSIS OF SHAREHOLDERS AND CUFS HOLDERS
Range of holdings
1 - 999
1,000 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 and above
No. of
holders
266,324
48,280
9,502
7,964
507
55
332,632
Number of holders holding less than a marketable parcel
% of
holders
80.07
14.51
2.86
2.39
0.15
0.02
100.00
No. of
shares/CUFS
% of issued
share capital
61,751,901
111,284,157
72,351,267
199,188,487
119,625,174
15,379,375,963
15,943,576,949
0.39
0.70
0.45
1.25
0.75
96.46
100.00
238,620
Notes:
(1) This table is compiled on the basis that each holding of CUFS is a separate holding and, accordingly, the holding of shares by CHESS Depositary Nominees
Pty Limited is ignored.
(2) Based on information available to the Company as at 31 May 2012, approximately 45% of the issued ordinary shares of the Company is held by the public
and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with. The percentage of issued
ordinary shares held by the public is calculated based on the number of issued ordinary shares of the Company as at 31 May 2012, excluding 1,079,620
ordinary shares held as treasury shares as at that date.
(3) A marketable parcel is defined in the ASX Listing Rules as a parcel of securities of not less than $500 in Australian dollars, based on the closing price of the
securities on the ASX.
(4) As at 31 May 2012, the number of ordinary shares held in treasury is 1,079,620, and the percentage of such holding against the total number of issued
ordinary shares (excluding ordinary shares held as treasury shares) is 0.01%.
SHARE PURCHASE MANDATE
At the Extraordinary General Meeting of the Company held on 29 July 2011 (2011 EGM), the shareholders approved the renewal of a mandate
to enable the Company to purchase or otherwise acquire not more than 10 per cent of the issued ordinary share capital of the Company as
at the date of the 2011 EGM. As at 31 May 2012, there is no current on-market buy-back of shares pursuant to the mandate.
197
CORPORATE INFORMATION*
BOARD OF DIRECTORS
COMPANY SECRETARY
Simon Israel (Chairman)
Bobby Chin Yoke Choong
Chua Sock Koong (Group CEO)
Fang Ai Lian
Dominic Chiu Fai Ho
Low Check Kian
Peter Edward Mason AM (1)
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
Ong Peng Tsin
AUDIT COMMITTEE
Fang Ai Lian (Chairman)
Dominic Chiu Fai Ho
Kaikhushru Shiavax Nargolwala
Peter Ong Boon Kwee
EXECUTIVE RESOURCE AND
COMPENSATION COMMITTEE
Kaikhushru Shiavax Nargolwala
(Chairman)
Fang Ai Lian
Simon Israel
Peter Edward Mason AM (1)
CORPORATE GOVERNANCE AND
NOMINATIONS COMMITTEE
Kaikhushru Shiavax Nargolwala
(Chairman)
Dominic Chiu Fai Ho
Simon Israel
Low Check Kian
FINANCE AND INVESTMENT
COMMITTEE
Simon Israel (Chairman)
Low Check Kian
Ong Peng Tsin
RISK COMMITTEE
Bobby Chin Yoke Choong (Chairman)
Peter Ong Boon Kwee
Ong Peng Tsin
OPTUS ADVISORY COMMITTEE
Peter Edward Mason AM (1) (Chairman)
Chua Sock Koong
Simon Israel
198
Chan Su Shan
ASSISTANT COMPANY SECRETARY
Lim Li Ching
REGISTERED OFFICES
In Singapore:
31 Exeter Road
Comcentre
Singapore 239732
Republic of Singapore
Tel: +65 6838 3388
Fax: +65 6732 8428
Website: www.singtel.com
In Australia:
Level 4, Building C
1 Lyonpark Road, Macquarie Park
NSW 2113 Australia
Tel: +61 2 8082 7800
Fax: +61 2 8082 7100
Website: www.optus.com.au
SHARE REGISTRARS
In Singapore:
M & C Services Private Limited
138 Robinson Road
#17-00 The Corporate Office
Singapore 068906
Republic of Singapore
Tel: +65 6228 0544
Fax: +65 6225 1452
Email:
annualreports@mncsingapore.com
Website: www.mncsingapore.com
In Australia:
Computershare Investor Services
Pty Limited
Level 4, 60 Carrington Street
Sydney, NSW 2000
Australia
Tel: 1800 501 501 (Enquiries within
Australia)
Tel: +61 3 9415 4029 (Outside Australia)
Fax: +61 3 9473 2500
On-line Contact:
www.investorcentre.com/contact
Website: www.computershare.com.au
SINGTEL AMERICAN
DEPOSITARY RECEIPTS
Citibank Shareholder Services
PO Box 43077
Providence, Rhode Island 02940-3077
USA
Tel: 1 877 248 4237
(Toll Free within USA)
Tel: +1 781 575 4555 (Outside USA)
Email:
citibank@shareholders-online.com
Website: www.citi.com/dr
AUDITORS
Deloitte & Touche LLP
(appointed on 28 July 2006)
6 Shenton Way #32-00
DBS Building Tower Two
Singapore 068809
Republic of Singapore
Tel: +65 6224 8288
Fax: +65 6538 6166
Audit Partner: Philip Yuen Ewe Jin
INVESTOR RELATIONS
31 Exeter Road
#19-00 Comcentre
Singapore 239732
Republic of Singapore
Tel: +65 6838 2123
Email: investor@singtel.com
Notes:
* As at 9 May 2012
(1) Member of the Order of Australia
SINGTEL CONTACT POINTS
SINGAPORE TELECOMMUNICATIONS LIMITED AND SUBSIDIARY COMPANIES / ANNUAL REPORT 2012
SINGAPORE
SingTel Headquarters
31 Exeter Road, Comcentre
Singapore 239732
Republic of Singapore
Tel: +65 6838 3388
Fax: +65 6732 8428
Website: www.singtel.com
NCS Pte. Ltd
5 Ang Mo Kio Street 62
NCS Hub, Singapore 569141
Republic of Singapore
Tel: +65 6556 8000
Fax: +65 6556 7000
Email: reachus@ncs.com.sg
AUSTRALIA
SingTel Optus Pty Limited
Sydney (Head Office)
Optus Centre Sydney
1 Lyonpark Road
Macquarie Park, NSW 2113, Australia
Tel: +61 2 8082 7800
Fax: +61 2 8082 7100
Website: www.optus.com.au
Adelaide
Level 4, 431-439 King William Street
Adelaide, SA 5000, Australia
Tel: +61 8 8468 5100
Fax: +61 8 8468 5166
Brisbane
Level 21, 12 Creek Street
Brisbane, QLD 4000, Australia
Tel: +61 7 3317 3700
Fax: +61 7 3317 3320
Canberra
Level 3, 10 Moore Street
Canberra, ACT 2601, Australia
Tel: +61 2 6222 3800
Fax: +61 2 6222 3838
Darwin
Optus Centre Darwin
49 Woods Street
Darwin, NT 0800, Australia
Tel: +61 8 8901 4500
Fax: +61 8 8901 4505
Melbourne
367 Collins Street
Melbourne, VIC 3000, Australia
Tel: +61 3 9233 4000
Fax: +61 3 9233 4900
Perth
Level 3, 1260 Hay Street
West Perth, WA 6005, Australia
Tel: +61 8 9288 3000
Fax: +61 8 9288 3030
BANGLADESH
Dhaka
Singapore Telecommunications Limited
(Bangladesh Liaison Office)
Bay’s 50, 15th Floor, South Block
50 Mohakhali
Dhaka – 1212, Bangladesh
Tel: +880 2 883 5120
Fax: +880 2 988 0037
Email: g-singtel-bd@singtel.com
CHINA
Beijing
Unit 1503, Beijing Silver Tower
2 Dongsanhuanbei Road
Chaoyang District, Beijing 100027
People’s Republic of China
Tel: +86 10 6410 6193 / 4 / 5
Fax: +86 10 6410 6196
Email: singtel-beij@singtel.com
Guangzhou
Unit 117, 15F, West Tower, Fortune Plaza,
114-118 Tiyudong Rd,
Tianhe District, Guangzhou 510620
People’s Republic of China
Tel: +86 20 3886 0668 1171
Email: singtel-gz@singtel.com
Shanghai
Unit 707, 7F, KIC Plaza
No 333 Song Hu Road,
Shanghai 200433
People’s Republic of China
Tel : +86 21 3362 0388
Fax :+86 21 3362 0389
Email: singtel-sha@singtel.com
EUROPE
Frankfurt
Platz der Einheit 1
60327 Frankfurt am Main, Germany
Tel: +49 69 975 03 445
Fax: +49 69 975 03 200
Email: singtel-germany@singtel.com
London
Birchin Court
20 Birchin Lane
London EC3V 9DU, United Kingdom
Tel: +44 20 7122 8000
Fax: +44 20 7122 8088
Email: singtel-uk@singtel.com
HONGKONG
Tsimshatsui
Suites 2002-6, Tower 6,
The Gateway, 9 Canton Road,
Tsimshatsui, Kowloon, Hong Kong
Tel: +852 2877 1500
Fax: +852 2802 1500
Email: singtel-hk@singtel.com
INDIA
Bangalore
Suite No. 305
DBS Business Centre
26 Cunningham Road
Bangalore 560052, India
Tel: +91 80 2226 7272
Fax: +91 80 2225 0509
Email: singtel-ind@singtel.com
Chennai
20/30, Paras Plaza
3rd Floor, Cathedral Garden Road,
Nungambakkam, Chennai – 600 034
Tel: +91 44 4264 9410
Fax: +91 44 4264 9414
Email: singtel-ind@singtel.com
Hyderabad
Reliance Business Centre, 303
Swapna Lok Complex, 92
Sarojini Devi Road
Secunderabad - 500003, India
Tel: +91 40 2781 2699
Fax: +91 40 2781 2724
Email: singtel-ind@singtel.com
199
SINGTEL CONTACT POINTS
MALAYSIA
US
Chicago
8770 West Bryn Mawr Avenue
Suite 1314
Chicago, IL 60631, US
Tel: +1 773 867 8122
Fax: +1 773 867 8121
Email: singtel-usa@singtel.com
Los Angeles
624 South Grand Avenue
Suite 823
Los Angeles, CA 90017, US
Tel: +1 213 489 9388
Fax: +1 213 489 9390
Email: singtel-usa@singtel.com
New York
140 Broadway
Suite 2110
New York, NY 10015, US
Tel: +1 212 269 7920
Email: singtel-usa@singtel.com
San Francisco
100 Marine Parkway
Suite 450
Redwood City, CA 94065, US
Tel: +1 650 508 6800
Fax: +1 650 508 1578
Email: singtel-usa@singtel.com
VIETNAM
Hanoi
Suite 704, CMC Tower
7th Floor
Duy Tan Street
Dich Vong Hau Ward
Cau Giay District
Hanoi, Vietnam
Tel: +84 4 3943 2161 / 2
Fax: +84 4 3943 2163
Email: singtel-vn@singtel.com
Kuala Lumpur
602B, Level 6, Tower B, Uptown 5
5, Jalan SS21/39, Damansara Uptown
47400 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Tel: +603 7728 2813
Fax: +603 7727 6186
Email: sgomals@singtel.com
MIDDLE EAST
Dubai
Dubai Internet City 12 #02-211
P O Box 502430, Dubai
United Arab Emirates
Tel: +971 4363 6705
Fax: +971 4361 1063
Email: g-singtel-me@singtel.com
PHILIPPINES
Manila
Unit 1504 Liberty Center
104 H V de la Costa Street
Salcedo Village, Makati City 1227
Philippines
Tel: +63 2 887 2791
Fax: + 63 2 887 2763
Email: singtel-phil@singtel.com
TAIWAN
Taipei
2F, No 290, Section 4
Chung Hsiao East Road, Taipei
Taiwan, Republic of China
Tel: +886 2 2741 1688
Fax: +886 2 2778 6083
Email: singtel-twn@singtel.com
THAILAND
Bangkok
9th Floor, Unit 6
500 Amarin Tower
Ploenchit Road, Lumpini
Pathumwan, Bangkok 10330, Thailand
Tel: +66 2 256 9875 / 6
Fax: +66 2 256 9808
Email: singtel-thai@singtel.com
Mumbai
Sahar Plaza
111 Bonanza Wing B
Mathuradas Vasanji Road
Andheri East, Mumbai 400069, India
Tel: +91 22 2824 4999 / +91 22 4075 7777
Fax: +91 22 2824 4996
Email: singtel-ind@singtel.com
New Delhi
5th Floor, A Wing, Statesman House
148 Barakhamba Road
New Delhi 110001, India
Tel: +91 11 4152 1199 / +91 11 4362 1199
Fax: +91 11 4152 1683
Email: singtel-ind@singtel.com
INDONESIA
Jakarta
CIMB Niaga Plaza
15th Floor, Suite 1505
Jalan Jenderal, Sudirman Kavling 25
Jakarta 12920, Indonesia
Tel: +62 21 526 7937 / 8
Fax: +62 21 526 7939
Email: singtel-ina@singtel.com
JAPAN
Osaka
A&S Building
4F, 2-6-11 Sonezaki Shinchi
Kita-ku, Osaka, 530-0002, Japan
Tel: +81 6 6458 1405 / 1407
Fax: +81 6 6458 1401
Email: singtel-jpn@singtel.com
Tokyo
Arco Tower
9F, 1-8-1 Shimomeguro
Meguro-ku, Tokyo 153-0064, Japan
Tel: +81 3 5437 7033
Fax: +81 3 5437 7066
Email: singtel-jpn@singtel.com
KOREA
Seoul
11th Floor, Hansol Building
736-1 Yoksam-Dong, Kangnam-Gu
135-983, Seoul, Korea
Tel: +82 2 3287 7576
Fax: +82 2 3287 7589
Email: singtel-kor@singtel.com
200
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