Professional Documents
Culture Documents
SHL AR2015 Financial Statements
SHL AR2015 Financial Statements
Overview
Financials
Statement by Directors 130
Independent Auditors’ Report 140
Statements of Financial Position 141
Income Statements 142
Statements of Comprehensive Income 143
Statements of Changes in Equity 144
Consolidated Cash Flow Statement 146
Notes to the Financial Statements 148
Strategy
Performance
Governance & Sustainability
Financials
130
STATEMENT
BY DIRECTORS
YEAR ENDED 31 DECEMBER 2015
We are pleased to submit this statement to the members of the Company together with the audited financial statements for the
financial year ended 31 December 2015.
In our opinion:
(a) the financial statements set out on pages 141 to 190 are drawn up so as to give a true and fair view of the financial position of
the Group and of the Company as at 31 December 2015 and the financial performance and changes in equity of the Group
and of the Company and the cash flows of the Group for the year ended on that date in accordance with the provisions of the
Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; 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.
Directors
The directors in office at the date of this statement are as follows:
Directors’ Interests
According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50,
particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant
children) in shares, debentures, warrants, share options and share awards in the Company and in related corporations (other than
wholly-owned subsidiaries) are as follows:
1 January 2015/
date of appointment 31 December 2015
The Company
Ordinary Shares
1 January 2015/
date of appointment 31 December 2015
Overview
The Company
Ordinary Shares
Strategy
Lim Ming Seong 210,336 222,036
Liu Chee Ming 170,684+ 180,184+
Robert J. Sachs 105,534 114,034
Nasser Marafih 50,230 59,930
Related Corporations
Performance
Peter Seah Lim Huat 545,325 545,325
Nihal Vijaya Devadas Kaviratne CBE 17,000 17,000
Lim Ming Seong 94,436 98,336
+
Held (partly or wholly) by a nominee.
Financials
132
STATEMENT
BY DIRECTORS
YEAR ENDED 31 DECEMBER 2015
The Company
Conditional awards of shares under StarHub Performance Share Plan
(1)
A conditional award was granted in May 2012. The performance period was from 2012 to 2014. The final award was granted in March 2015 based on the
actual level of achievement of the pre-determined targets. The shares under the final award were delivered in April 2015.
(2)
A conditional award was granted in May 2013. The performance period is from 2013 to 2015. No shares will be delivered if the threshold performance
targets are not achieved while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets
are met or exceeded.
(3)
A conditional award was granted in March 2014. The performance period is from 2014 to 2016. No shares will be delivered if the threshold performance
targets are not achieved while up to 1.825 times the number of shares that are the subject of the award will be delivered if the stretched performance
targets are met or exceeded.
(4)
A conditional award was granted in March 2015. The performance period is from 2015 to 2017. No shares will be delivered if the threshold performance
targets are not achieved while up to 1.825 times the number of shares that are the subject of the award will be delivered if the stretched performance
targets are met or exceeded.
(5)
A conditional award was granted in May 2012. The performance period was from 2012 to 2013. The final award was granted in March 2014 based on the
actual level of achievement of the pre-determined performance targets. The shares under the final award were delivered in phases according to the
stipulated vesting periods from 2014 to 2015.
(6)
A conditional award was granted in May 2013. The performance period was from 2013 to 2014. The final award was granted in March 2015 based on the
actual level of achievement of the pre-determined performance targets. The shares under the final award were partially delivered in 2015, and the
balance will be delivered in 2016.
(7)
A conditional award was granted in March 2014. The performance period is from 2014 to 2015. No shares will be delivered if the threshold performance
targets are not achieved while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance
targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.
(8)
A conditional award was granted in March 2015. The performance period is from 2015 to 2016. No shares will be delivered if the threshold performance
targets are not achieved while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance
targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.
Except as disclosed in this statement, no director who held office at the end of the financial year had interests in shares, debentures,
warrants, share options or share awards of the Company, or of its related corporations, either at the beginning of the financial year, or
date of appointment if later, or at the end of the financial year.
There were no changes in the above-mentioned directors’ interests in the Company between the end of the financial year and
21 January 2016.
Except as disclosed under the “Other interests” section of this statement, neither at the end of nor at any time during the financial year,
was the Company a party to any arrangement whose objects are, or one of whose objects 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.
133
The Company has in place the StarHub Performance Share Plan 2014 and the StarHub Restricted Stock Plan 2014 (collectively,
“StarHub Share Plans 2014”, and each, “StarHub PSP 2014” and “StarHub RSP 2014” respectively).
Overview
The StarHub Share Plans 2014 were approved and adopted at the Extraordinary General Meeting (“EGM”) of the Company held on
14 April 2014, in replacement of the then existing StarHub Performance Share Plan and the StarHub Restricted Stock Plan which were
adopted by the Company on 16 August 2004 (collectively, “StarHub Share Plans 2004”, and each, “StarHub PSP 2004” and “StarHub
RSP 2004” respectively).
The StarHub Share Plans 2004 together with the StarHub Share Option Plan 2004 were terminated at the EGM of the Company held on
14 April 2014. The Company had also in 2000 adopted the StarHub Pte Ltd Share Option Plan (“StarHub Share Option Plan 2000”) and
terminated the same in 2004.
The StarHub Share Plans 2014, the StarHub Share Plans 2004, the StarHub Share Option Plan 2004 and the StarHub Share Option
Plan 2000 (collectively, “Plans”) are administered by the Company’s Executive Resource and Compensation Committee (“ERCC”)
comprising four directors, namely Peter Seah Lim Huat (Chairman), Teo Ek Tor, Sio Tat Hiang and Lim Ming Seong.
Strategy
The Company designates Singapore Technologies Telemedia Pte Ltd as its parent company (“Parent Company”) for purposes of the Plans.
(a) Options granted under the StarHub Share Option Plan 2000 and the StarHub Share Option Plan 2004 (collectively, the “StarHub
Share Option Plans”)
(i) The termination of the StarHub Share Option Plans was without prejudice to the rights of holders of options accepted
and outstanding under the StarHub Share Option Plans as at the date of termination. The outstanding options under
the StarHub Share Option Plans were exercised according to the terms of the StarHub Share Option Plans and the
respective grants.
Performance
(ii) Since 31 December 2010, there has been no option outstanding held by the directors of the Company.
(iii) Details of options granted to directors of the Company under the StarHub Share Option Plans are as follows:
Aggregate options granted and Aggregate options exercised
accepted since commencement of since commencement of
StarHub Share Option Plans to StarHub Share Option Plans to
Name of director 31 December 2015 31 December 2015
(iv) As at the end of the financial year, no options have been granted to controlling shareholders of the Company or its
associates or to directors or employees of the Parent Company and its subsidiaries (“Parent Group”).
(v) No options had been offered at a discount during the financial year.
Financials
(vi) The options granted by the Company do not entitle the option holders, by virtue of such holding, to any rights to
participate in any share issue of any other company.
(vii) During the financial year, a total of 176,486 ordinary shares fully paid in the Company were issued pursuant to the
StarHub Share Option Plans at exercise price of $1.52 per share.
(viii) As at the end of the financial year, there were no outstanding or unexercised options under the StarHub Share Option Plans.
134
STATEMENT
BY DIRECTORS
YEAR ENDED 31 DECEMBER 2015
(b) StarHub Share Plans 2014 and StarHub Share Plans 2004 (collectively, the “StarHub Share Plans”)
(i) The StarHub Share Plans were implemented with the objectives of motivating key executives to strive for superior
performance and sustaining long-term growth for the Group.
(ii) The termination of the StarHub Share Plans 2004 was without prejudice to the rights of holders of awards accepted
and outstanding under the StarHub Share Plans 2004 as at the date of termination. The outstanding awards under the
StarHub Share Plans 2004 were vested according to the terms of the StarHub Share Plans 2004 and the respective
grants.
(iii) The following persons were/shall be eligible to participate in the StarHub Share Plans, respectively at the absolute
discretion of the ERCC:
(1) employees (including executive directors) and non-executive directors of the Group;
(2) employees (including executive directors) and non-executive directors of the Parent Group who meet the
relevant age and rank criteria and whose services have been seconded to a company within the Group and who
shall be regarded as an employee of the Group for the purposes of the StarHub Share Plans; and
(3) employees and non-executive directors of the Company’s associated companies, who in the opinion of the
ERCC, have contributed or will contribute to the success of the Group.
(iv) Under the StarHub PSP 2004 and the StarHub PSP 2014, awards of shares are granted on an annual basis, conditional
on targets set for a performance period, currently prescribed to be a three-year period. Awards represent the right of
a participant to receive fully paid shares, their equivalent cash value or combinations thereof, free of charge, upon the
participant achieving prescribed performance targets set based on medium-term corporate objectives.
Awards are released once the ERCC is satisfied that the prescribed performance targets have been achieved. The actual
number of shares given will depend on the level of achievement of the prescribed performance targets over
the performance period.
Since the commencement of the StarHub PSP 2004 to the financial year ended 31 December 2015, conditional awards
aggregating 9,584,950 shares have been granted under the aforesaid plan. For share awards granted prior to and during
the financial year ended 31 December 2013, no shares will be delivered if the threshold performance targets are not
achieved, while up to twice the number of shares that are the subject of the award will be delivered if the stretched
performance targets are met or exceeded. For share awards granted during and after the financial year ended
31 December 2014, no shares will be delivered if the threshold performance targets are not achieved, while up to 1.825
times the number of shares that are the subject of the award will be delivered if the stretched performance targets
are met or exceeded. The performance targets benchmark (a) the performance of the Company’s Total Shareholders’
Return (“TSR”) measured against the MSCI Asia-Pacific Telecommunications Index (including Japan) over the
performance period, and (b) the Wealth Added which measures investment performance in terms of the Company’s
TSR against shareholders’ expected returns using cost of equity as a benchmark.
Since the commencement of the StarHub PSP 2014 to the financial year ended 31 December 2015, conditional awards
aggregating 534,700 shares have been granted under the aforesaid plan. For share awards granted during the financial
year ended 31 December 2015, no shares will be delivered if the threshold performance targets are not achieved, while
up to 1.825 times the number of shares that are the subject of the award will be delivered if the stretched performance
targets are met or exceeded. The performance targets benchmark (a) the performance of the Company’s Total
Shareholders’ Return (“TSR”) measured against the MSCI Asia-Pacific Telecommunications Index (including Japan) over
the performance period, and (b) the Wealth Added which measures investment performance in terms of the Company’s
TSR against shareholders’ expected returns using cost of equity as a benchmark.
135
Details of share awards granted under the StarHub PSP 2004 and StarHub PSP 2014 (collectively, the “StarHub PSP
Share Plans”) are as follows:
Overview
Aggregate share
awards granted since Aggregate
Share awards commencement of the share awards
granted during the StarHub PSP Share Plans Share awards vested outstanding as at
Participants financial year to 31 December 2015 during the financial year 31 December 2015
Strategy
StarHub PSP 2014
Executive director:
Tan Tong Hai 261,200 261,200 – 261,200
(v) Under the StarHub RSP 2004 and the StarHub RSP 2014, awards granted vest only after the satisfactory completion of
time-based service conditions (time-based restricted awards) or where the award is performance-related, after a further
Performance
period of service beyond the performance period (performance-based restricted awards).
No minimum vesting periods are prescribed under the StarHub RSP 2004 and the StarHub RSP 2014 and the length of
the vesting period in respect of each award will be determined on a case-by-case basis. Performance-based restricted
awards differ from awards granted under the StarHub PSP 2004 and the StarHub PSP 2014 in that an extended vesting
period is imposed beyond the performance period.
The performance-based restricted awards represent the right of a participant to receive fully paid shares, their
For performance-based restricted awards granted prior to and during the financial year ended 31 December 2007,
(a) the first performance target benchmarks the performance of the Company’s TSR measured against the Straits
Times Index (“STI”) over the performance period; and (b) the second performance target used is measured against
Free Cashflow (“FCF”).
For performance-based restricted awards granted during and from financial year ended 31 December 2008 to financial
year ended 31 December 2013, the performance targets used are measured against the Return on Invested Capital
(“ROIC”) and the FCF respectively.
For performance-based restricted awards granted during and from financial year ended 31 December 2014 onwards,
Financials
the performance targets used are measured against the Return on Invested Capital (“ROIC”) and the Earnings Before
Interest, Taxation, Depreciation and Amortisation (“EBITDA”).
136
STATEMENT
BY DIRECTORS
YEAR ENDED 31 DECEMBER 2015
Since the commencement of the StarHub RSP 2004 to the financial year ended 31 December 2015:
(1) performance-based restricted awards aggregating 17,413,000 shares have been granted under the aforesaid
Plan. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.3 times
or as the case may be 1.5 times, the number of shares that are the subject of the award, will be delivered if
stretched performance targets are met or exceeded;
(2) a time-based restricted award of 100,000 shares has been granted on 15 January 2009. The shares under this
award were vested in three equal tranches over a 3-year period from 1 January 2009 to 31 December 2011
according to a specified vesting schedule;
(3) a time-based restricted award of 213,000 shares has been granted on 17 May 2010. The shares under this award
were vested in May 2011 upon the participants’ continued tenure as non-executive directors of the Company for
a full one-year period from the date of grant;
(4) a restricted award of 155,900 shares has been granted on 7 June 2012. The shares under this award formed 30%
of the non-executive directors’ remuneration for the financial year ended 31 December 2011 and were vested
immediately without any further vesting period;
(5) a restricted award of 99,400 shares has been granted on 10 May 2013. The shares under this award formed 30%
of the non-executive directors’ remuneration for the financial year ended 31 December 2012 and were vested
immediately without any further vesting period; and
(6) a time-based restricted award of 30,000 shares has been granted on 10 March 2014. The shares under this
award will vest in two equal tranches over a 2-year period from 1 January 2015 to 31 December 2016 according
to a specified vesting schedule.
Since the commencement of the StarHub RSP 2014 to the financial year ended 31 December 2015:
(1) performance-based restricted awards aggregating 2,270,800 shares have been granted under the aforesaid
Plan. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times,
the number of shares that are the subject of the award, will be delivered if stretched performance targets are
met or exceeded;
(2) restricted awards aggregating 224,000 shares have been granted to non-executive directors of the Company as
part of their directors’ remuneration, and were vested immediately upon grant; and
(3) a time-based restricted award of 32,500 shares has been granted on 8 July 2015. The shares under this award
will vest in two equal tranches over a 2-year period from 8 July 2015 to 7 July 2017 according to a specified
vesting schedule.
137
Details of share awards granted under the StarHub RSP 2004 and the StarHub RSP 2014 (collectively, the “StarHub RSP Plans”) are as follows:
Overview
Aggregate share
awards granted since Aggregate
commencement of the share awards
Share awards granted StarHub RSP Share Plans Share awards vested outstanding as at
Participants during the financial year to 31 December 2015 during the financial year 31 December 2015
Strategy
Nihal Vijaya Devadas Kaviratne CBE − 103,700 − −
Teo Ek Tor − 91,100 − −
Sio Tat Hiang − 4,400 − −
Lim Ming Seong − 106,900 − −
Liu Chee Ming − 76,100 − −
Robert J. Sachs − 73,700 − −
Nasser Marafih − 50,400 − −
Executive director:
Performance
Tan Tong Hai − 739,400 131,550 282,600
Executive director:
Tan Tong Hai 156,200 156,200 − 156,200
Financials
STATEMENT
BY DIRECTORS
YEAR ENDED 31 DECEMBER 2015
During the financial year, a total of 3,297,033 ordinary shares fully paid in the Company were issued pursuant to the StarHub Share Plans.
As at 31 December 2015, no participant has been granted options under the StarHub Share Option Plans and/or received shares pursuant to
the release of awards granted under the StarHub Share Plans, which, in aggregate, represents 5% or more of the aggregate of:
(a) the total number of new shares available under the StarHub Share Option Plans and the StarHub Share Plans collectively; and
(b) the total number of existing shares delivered pursuant to options exercised under the StarHub Share Option Plans and awards
released under the StarHub Share Plans collectively.
Audit Committee
The members of the Audit Committee as at the date of this statement are as follows:
The Audit Committee has held four meetings since the last directors’ report. In performing its functions in accordance with Section
201B of the Singapore Companies Act, Chapter 50, the Audit Committee met with the Company’s external and internal auditors to
discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.
(1) assistance provided by the Company’s officers to the internal and external auditors;
(2) financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and
(3) interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading
Limited) of the Company and its subsidiaries and the Company’s compliance with the review procedures of such transactions.
The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full
authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends
the appointment of the external auditors and reviews the level of audit and non-audit fees.
The Audit Committee has undertaken a review of all non-audit services provided by the external auditors, and is satisfied with the
independence and objectivity of the external auditors and has recommended to the Board of Directors that KPMG LLP be nominated
for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.
139
Overview
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
Strategy
Steven Terrell Clontz Tan Tong Hai
Director Director
Singapore
16 February 2016
Performance
Governance & Sustainability
Financials
140
INDEPENDENT
AUDITORS’ REPORT
MEMBERS OF THE COMPANY
STARHUB LTD
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 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 give 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, the income statement and
statement of comprehensive income 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 financial position of the
Group and of the Company as at 31 December 2015 and the financial performance, changes in equity and cash flows of the Group and
the financial performance and changes in equity of the Company for the year ended on that date.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
16 February 2016
141
STATEMENTS OF
Group Company
2015 2014 2015 2014
Note $m $m $m $m
Non-current assets
Overview
Property, plant and equipment 3 890.0 911.1 411.4 400.5
Intangible assets 4 388.1 404.5 70.6 79.3
Subsidiaries 5 – – 1,758.1 1,692.1
Associate 6 27.5 – 27.8 –
Balances with related parties 11 – – 344.2 106.0
1,305.6 1,315.6 2,612.1 2,277.9
Current assets
Inventories 8 54.3 42.4 50.1 36.8
Strategy
Trade receivables 9 153.3 161.7 137.5 147.7
Other receivables, deposits and prepayments 10 196.8 185.9 34.1 34.0
Balances with related parties 11 26.0 17.4 110.8 272.6
Cash and cash equivalents 12 173.4 264.2 154.2 176.0
603.8 671.6 486.7 667.1
Current liabilities
Trade and other payables 13 (687.3) (795.8) (297.7) (342.9)
Balances with related parties 11 (122.5) (99.2) (404.4) (385.6)
Performance
Borrowings 14 (137.5) (200.0) (137.5) (200.0)
Provision for taxation (80.6) (97.9) (49.1) (35.5)
(1,027.9) (1,192.9) (888.7) (964.0)
Non-current liabilities
Shareholders’ equity
Share capital 16 293.5 282.6 293.5 282.6
Reserves 18 (105.9) (133.6) 1,281.5 1,111.7
Total equity 187.6 149.0 1,575.0 1,394.3
Financials
INCOME
STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Group Company
2015 2014 2015 2014
Note $m $m $m $m
Attributable to:
Equity holders of the Company 372.3 370.5 514.9 507.1
Profit for the year 372.3 370.5 514.9 507.1
STATEMENTS OF
Group Company
2015 2014 2015 2014
Note $m $m $m $m
Overview
Other comprehensive income
Items that are or may be reclassified subsequently to profit
or loss:
Foreign currency translation differences 0.5 0.5 – –
Effective portion of changes in fair value of cash flow hedge 24 1.9 2.8 1.9 2.8
Total comprehensive income for the year, net of taxation 374.7 373.8 516.8 509.9
Strategy
equity holders of the Company 374.7 373.8 516.8 509.9
Performance
Governance & Sustainability
Financials
STATEMENTS OF
CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2015
Share-based
Share Treasury Goodwill payments Hedging Translation Retained Total Total
capital shares written off reserve reserve reserve profits reserves equity
Group $m $m $m $m $m $m $m $m $m
At 1.1.2014 271.4 (0.2) (276.3) 15.0 (4.2) 0.3 104.6 (160.8) 110.6
Overview
At 1.1.2014 271.4 (0.2) 276.5 15.0 (4.2) 661.3 948.4 1,219.8
Strategy
recognised directly in equity
Contributions by and distributions to equity
holders of the Company
Issue of shares pursuant to share plans 11.2 – – (10.6) – – (10.6) 0.6
Share-based payments expenses – – – 9.2 – – 9.2 9.2
Transfer from treasury shares to share-based
payments reserve – 0.2 – (0.2) – – – –
Dividends paid (Note 17) – – – – – (345.2) (345.2) (345.2)
Total transactions with equity holders
Performance
of the Company 11.2 0.2 – (1.6) – (345.2) (346.6) (335.4)
At 31.12.2014 282.6 – 276.5 13.4 (1.4) 823.2 1,111.7 1,394.3
CONSOLIDATED
CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2015
2015 2014
$m $m
Operating activities
Investing activities
Proceeds from disposal of property, plant and equipment and intangible assets 1.6 0.8
Purchase of property, plant and equipment and intangible assets (328.8) (321.6)
Interest received 2.0 2.0
Repayment of loan from an associate 36.9 –
Investment in an associate (12.0) –
Net cash used in investing activities (300.3) (318.8)
Financing activities
Overview
Deconsolidation of subsidiary
On 22 July 2015, STT APDC Pte. Ltd. (“STT APDC”), made an investment of $36.9 million for a 70% equity interest in SHINE Systems
Assets Pte. Ltd. (“SSAPL”). The Group’s 100% equity interest in SSAPL was therefore diluted to 30%. Based on the fair value of the
net assets disposed, the Group recognised a gain of $15.0 million under non-operating income (Note 23). The net assets and other
components of equity related to SSAPL was consequently deconsolidated from the Group’s financial statements from 22 July 2015.
The Group commenced equity accounting of SSAPL’s financial results based on its equity interest of 30% thereafter.
The net assets of SSAPL (excluding the repaid shareholder’s loan) deconsolidated and the cash flows arising from loss of control in
SSAPL are provided below:
Strategy
Effect of deconsolidation on the financial position of the Group
Note $m
Performance
Gain on deconsolidation of a subsidiary 23 15.0
Equity interests retained as investment in an associate (15.8)
Consideration received –
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
The financial statements were authorised for issue in accordance with a resolution of the Board of Directors of StarHub Ltd on
16 February 2016.
The principal activities of the Company are those relating to the operation and provision of telecommunications services and
other businesses relating to the info-communications industry. The principal activities of the subsidiaries are set out in Note 5
to the financial statements.
The consolidated financial statements relate to the Company and its subsidiaries (the “Group”), and the Group’s interest in
equity-accounted investee.
The financial statements are prepared on a historical cost basis except for certain financial assets and liabilities which are
measured at fair value as disclosed in the accounting policies below.
The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial
information presented in Singapore dollars has been rounded to the nearest million, unless otherwise stated.
The accounting policies set out below have been applied consistently by the Group to all periods presented in these financial
statements, except as disclosed below.
The Group is currently assessing the potential impact of adopting the following new standards and interpretations that are
relevant to its operations, on the financial statements of the Group and the Company. The Group does not plan to early adopt
these standards.
149
Overview
loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It is mandatory for
adoption by the Group for the annual period beginning 1 January 2018.
Strategy
1 January 2018.
Amendments to FRS 16 and FRS 38: Clarification of Acceptable Methods of Depreciation and Amortisation.
The amendments to FRS 16 and FRS 38: Clarification of Acceptable Methods of Depreciation and Amortisation clarifies that the
use of revenue-based methods to calculate depreciation of an asset or amortisation of intangible asset are not appropriate. It is
mandatory for adoption by the Group for the annual period beginning 1 January 2016.
2.2 Consolidation
Subsidiaries
Performance
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes
into consideration potential voting rights that are currently exercisable.
Investments in subsidiaries are stated in the Company’s statement of financial position at cost less impairment losses.
Subsidiaries are consolidated with the Company in the Group’s financial statements.
Acquisitions of subsidiaries from related corporations controlled by the ultimate holding company, Temasek Holdings (Private)
Under the historical cost method, the acquired assets and liabilities were recorded at their existing carrying amounts. The
consolidated financial statements included the results of operations, and the assets and liabilities, of the pooled enterprises as
part of the Group for the whole of the current and preceding periods.
To the extent that the par value of the shares issued in consideration for these transactions exceeded the par value of the shares
held by the related corporations, the difference was recognised as a merger reserve in the Group’s financial statements.
When control over a subsidiary is lost as a result of a transaction, event or other circumstances, the Group derecognises all
assets and liabilities of the subsidiary, any non-controlling interest and the other components of equity related to the subsidiary.
The surplus or deficit arising on the loss of control is recognised in profit or loss. Any remaining interest in the previous
subsidiary is recognised at its fair value at the date that control is lost, with the gain or loss arising recognised in the profit
Financials
and loss account. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset
depending on the level of influence retained.
150
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
All significant intra-group transactions, balances and unrealised gains/losses are eliminated on consolidation. Unrealised gains
are eliminated in full. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no
evidence of impairment. Otherwise they are recognised immediately in the income statement.
Associates
Associate is that entity which the Group has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds 20% or more of the voting power of another entity.
Investment in associate is accounted for using the equity method. It is recognised initially at cost, which includes transaction
costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and
other comprehensive income of equity-accounted investee, after adjustments to align the accounting policies with those of the
Group, from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment,
together with any long-term interests that form part thereof is reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation to fund the investee’s operations or has made payments
on behalf of the investee.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The costs of self-constructed assets
include the cost of materials and direct labour, an appropriate proportion of overheads, the costs of dismantling and removing
the assets and restoring the site on which they are located and capitalised borrowing costs.
Subsequent expenditure relating to existing property, plant and equipment is added to the carrying amount of the 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. All other subsequent expenditure is recognised as an expense in the year in which it is incurred.
Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference
between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the income
statement on the date of retirement or disposal.
151
Overview
Leasehold improvements – Shorter of lease term or 5 years
Network equipment – 2 years to 15 years
Office equipment, computers and furniture and fittings – 2 years to 5 years
Motor vehicles – 5 years
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.
Strategy
2.4 Intangible assets
Goodwill
Acquisitions prior to 1 January 2010
Goodwill arising on acquisition prior to 1 January 2010 represents the excess of the cost of acquisition over the fair value of the
Group’s share of the identifiable assets, liabilities and contingent liabilities of the acquiree.
Performance
• the fair value of the consideration transferred; plus
• t he recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in
stages, the fair value of the existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment on an annual basis as
Goodwill arising on acquisitions of subsidiaries that occurred prior to 1 January 2001 was written off against reserves in the year
of acquisition and has not been retrospectively capitalised and amortised.
Goodwill that has previously been taken to reserves is not taken to the income statement when the business is disposed of or
the goodwill is impaired. Similarly negative goodwill that has previously been taken to reserves is not taken to income statement
when the business is disposed.
In respect of associate, the carrying amount of goodwill is included in the carrying amount of the investment, and an
impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying
amount of the associate.
Financials
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Subsequent expenditure on capitalised intangible assets is added to the carrying value only when it increases the future
economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in income statement
as incurred.
Computer software integral to a related item of equipment is accounted for as property, plant and equipment.
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
2.5 Impairment
The carrying amounts of the Group’s assets, other than inventories and deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount
is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit (“CGU”) exceeds its
recoverable amount. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, in
which case it is charged to other comprehensive income.
For goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use, the recoverable amount
is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related CGU
exceeds its estimated recoverable amounts.
Impairment losses recognised in respect of CGU are allocated first to reduce the carrying amount of any goodwill allocated to
the CGU (group of units) and then, to reduce the carrying amount of other assets in the CGU (group of units) on a pro rata basis.
For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is
determined for the CGU to which the asset belongs. For the purpose of goodwill impairment testing, CGUs to which goodwill
has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level within the
Group at which goodwill is monitored for internal reporting purposes.
An impairment loss in respect of an associate is measured by comparing the recoverable amount of the investment with its
carrying amount. An impairment loss is recognised in profit or loss. An impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount.
Reversals of impairment
An impairment loss recognised in prior periods for an asset other than goodwill is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. All reversals of impairment are recognised in the income statement.
153
Overview
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make
the sale. Allowance for obsolescence is made for all deteriorated, damaged, obsolete and slow-moving inventories.
Strategy
2.8 Cash and cash equivalents
For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents comprise cash balances
and deposits with financial institutions and bank overdrafts which are repayable on demand and which form an integral part of
the Group’s cash management.
Performance
2.10 Borrowings
Borrowings are initially recognised at fair value of the proceeds received less directly attributable transaction costs. After initial
recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Any difference
between the proceeds (net of transactions costs) and the settlement or redemption of borrowings is recognised in income
statement over the period of the borrowings.
recognised in the income statement on a straight line basis over the vesting period. At each reporting date, the Company
revises its estimates of the number of shares that the participating employees and directors 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.
154
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
The Group adopts an incentive compensation plan, which is tied to the creation of Economic Value Added (“EVA”) for its
management personnel executives. An EVA bank is used to hold incentive compensation credited in any year. Typically
one-third of the accumulated EVA-based bonus, comprising the EVA declared in the financial year and the balance of such
bonus brought forward from preceding years is paid out in cash each year, with the balance being carried forward to the
following year. The balances of the EVA bank in future will be adjusted by the yearly EVA performance of the Group and the
payouts made from the EVA bank.
2.13 Provisions
Provisions are recognised in the statement of financial position when the Group has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of obligation. If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Where share capital recognised as equity is repurchased and held as treasury shares, the amount of the consideration paid,
including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such shares are
subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is
recognised in the income statement.
155
Overview
• Revenue from telecommunications, broadband and cable television services and advertising space is recognised at the
time such services are rendered. Revenue billed in advance of the rendering of services is deferred and presented in the
statement of financial position as unearned revenue.
• Revenue from sale of pre-paid phone cards for which services have not been rendered is deferred and presented in the
statement of financial position as unearned revenue. Upon the expiry of pre-paid phone cards, any unutilised value of
the cards is taken to the income statement.
• Revenue from sale of equipment is recognised upon delivery and acceptance of the equipment sold.
Strategy
• Revenue from bundled products and services is recognised based on values allocated to the individual elements of the
bundled products and services in accordance to the earning process of each element.
Finance costs comprise interest expense and similar charges. They are recognised in the income statement using the effective
interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or
production of an asset which necessarily takes a substantial period of time to prepare for its intended use or sale.
Performance
2.17 Government grants
Government grants received, which are designated for the purchase of property, plant and equipment, are accreted to the
income statement on a straight-line basis over the estimated useful lives of the related assets, so as to match the related
depreciation expense.
Government grants received, which are designated for operating expenditure, are recognised on a systematic basis in the
income statement over the periods necessary to match the related cost which they are intended to compensate.
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences at the balance sheet date arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements.
Deferred tax is provided based on the expected realisation or settlement of the temporary differences, using tax rates enacted
or substantively enacted at the reporting date.
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
• temporary differences relating to investments in subsidiaries and associate to the extent that the Group is able to control
the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable
future;
A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
2.21 Dividends
Interim dividends to the Company’s shareholders are recognised in the financial year in which they are declared payable.
Final dividend to the Company’s shareholders is recognised in the financial year in which the dividend is approved by
the shareholders.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into
Singapore dollars at the exchange rate at the date on which fair value was determined.
157
Overview
Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial
instruments are remeasured at fair value prevailing at reporting date. The gain or loss on remeasurement to fair value is
recognised immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of
any resultant gain or loss depends on the nature of the item being hedged as described in Note 2.24.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the
reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The fair
value of forward exchange contracts is their quoted market price at the reporting date, being the present value of the quoted
forward price.
Strategy
2.24 Hedging
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability,
or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised
directly in other comprehensive income and presented in the hedging reserve in equity.
When the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or the
forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge
accounting is applied, the associated cumulative gain or loss is removed from other comprehensive income and included in
Performance
the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a forecast transaction subsequently
results in the recognition of a financial asset or financial liability, the associated gains and losses that were recognised in
other comprehensive income are reclassified into the income statement in the same period or periods during which the asset
acquired or liability assumed affects the income statement (i.e. when interest income or expense is recognised).
For other cash flow hedges, the associated cumulative gain or loss that was recognised in other comprehensive income is
removed and recognised in the income statement in the same period or periods during which the hedged forecast transaction
affects the income statement. The ineffective part of any gain or loss is recognised immediately in the income statement.
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
The Group operates primarily in Singapore and delivers its Mobile, Pay TV, Broadband, Fixed network services and equipment
sales on an operationally integrated network, customer service, sales, marketing and administration support. Based on the
financial information regularly reviewed by the CODM, the Group has one operating and reporting segment.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.
In the application of the Group’s accounting policies, which are described in Note 2, management is of the opinion that there
is no instance of application of judgement which is expected to have a significant effect on the amounts recognised in the
financial statements, apart from those involving estimations described below.
The key assumptions concerning the future, and other key sources at reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities in the next financial year are described in the
following notes:
Office
equipment,
Overview
Leasehold computers
Leasehold Leasehold improve- Freehold Network and furniture Motor Construction
land buildings ments property equipment and fittings vehicles in progress Total
Group $m $m $m $m $m $m $m $m $m
Cost
At 1.1.2014 34.3 9.1 49.9 1.7 2,974.2 163.3 6.7 87.0 3,326.2
Additions – – – – 3.7 0.9 0.1 266.3 271.0
Transfers – – 1.9 – 252.8 8.7 – (263.4) –
Disposals – – (2.6) – (21.5) (12.6) (0.2) – (36.9)
At 31.12.2014 34.3 9.1 49.2 1.7 3,209.2 160.3 6.6 89.9 3,560.3
Strategy
At 1.1.2015 34.3 9.1 49.2 1.7 3,209.2 160.3 6.6 89.9 3,560.3
Additions – – – – 4.2 – 0.4 247.9 252.5
Transfers – 0.1 1.8 – 236.5 19.3 – (257.7) –
Disposals – – (2.8) – (103.2) (8.5) (0.5) – (115.0)
Disposal of subsidiary (34.3) – – – – – – (19.6) (53.9)
At 31.12.2015 – 9.2 48.2 1.7 3,346.7 171.1 6.5 60.5 3,643.9
Performance
At 1.1.2014 0.4 1.5 44.7 – 2,282.3 135.0 4.9 – 2,468.8
Charge for the year 0.6 0.2 3.5 – 198.7 12.7 0.9 – 216.6
Disposals – – (2.5) – (21.2) (12.3) (0.2) – (36.2)
At 31.12.2014 1.0 1.7 45.7 – 2,459.8 135.4 5.6 – 2,649.2
Carrying amount
At 31.12.2014 33.3 7.4 3.5 1.7 749.4 24.9 1.0 89.9 911.1
Group
2015 2014
Financials
$m $m
Staff costs capitalised in construction in progress during the year 3.3 3.2
160
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Office
equipment,
computers and
Leasehold Leasehold Network furniture and Motor Construction
buildings improvements equipment fittings vehicles in progress Total
Company $m $m $m $m $m $m $m
Cost
At 1.1.2014 9.1 41.5 1,154.9 120.9 2.1 46.9 1,375.4
Additions – – – 1.4 – 97.5 98.9
Transfers – 1.9 89.8 3.8 – (95.5) –
Disposals – (2.5) (8.0) (12.2) – – (22.7)
At 31.12.2014 9.1 40.9 1,236.7 113.9 2.1 48.9 1,451.6
Accumulated depreciation
At 1.1.2014 1.4 38.6 846.0 103.9 1.4 – 991.3
Charge for the year 0.3 2.6 71.1 7.7 0.3 – 82.0
Disposals – (2.4) (7.8) (12.0) – – (22.2)
At 31.12.2014 1.7 38.8 909.3 99.6 1.7 – 1,051.1
Carrying amount
At 31.12.2014 7.4 2.1 327.4 14.3 0.4 48.9 400.5
Telecommunications
and spectrum Software in
Overview
licences Software development Goodwill Total
Group $m $m $m $m $m
Cost
At 1.1.2014 116.8 448.1 17.0 220.3 802.2
Additions 40.0 0.2 38.6 – 78.8
Transfers – 43.0 (43.0) – –
Disposals – (1.4) – – (1.4)
At 31.12.2014 156.8 489.9 12.6 220.3 879.6
Strategy
Additions – 0.2 36.3 – 36.5
Transfers – 32.2 (32.2) – –
Disposals (1.0) (4.2) – – (5.2)
At 31.12.2015 155.8 518.1 16.7 220.3 910.9
Accumulated amortisation
At 1.1.2014 65.6 356.0 – – 421.6
Charge for the year 6.4 48.5 – – 54.9
Disposals – (1.4) – – (1.4)
At 31.12.2014 72.0 403.1 – – 475.1
Performance
At 1.1. 2015 72.0 403.1 – – 475.1
Charge for the year 7.8 44.8 – – 52.6
Disposals (1.0) (3.9) – – (4.9)
At 31.12.2015 78.8 444.0 – – 522.8
Carrying amount
At 31.12.2014 84.8 86.8 12.6 220.3 404.5
The recoverable amount of the CGU is determined based on value-in-use calculations. The key assumptions for the value-in-
use calculations are the discount rates, growth rates and expected changes to profit margins. The value-in-use calculations
apply a discounted cash flow model using cash flow projections from the most recent financial budget and forecasts approved
by management. The forecast cash flows were extrapolated using an estimated growth rate of 3.8% (2014: 2.8%). The pre-tax
discount rate applied is assumed at 6.3% (2014: 6.3%) for the value-in-use calculation.
Financials
No impairment charge was required for the carrying amount of goodwill assessed as at 31 December 2015 and 31 December 2014
as the recoverable value was in excess of the carrying value. Any reasonably possible change to the key assumptions applied
was not likely to cause the recoverable value to be below the carrying value.
162
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Cost
At 1.1.2014 1.0 386.2 14.6 401.8
Additions – – 29.2 29.2
Disposals – (1.5) – (1.5)
Transfers – 33.3 (33.3) –
At 31.12.2014 1.0 418.0 10.5 429.5
Accumulated amortisation
At 1.1.2014 0.8 308.9 – 309.7
Charge for the year 0.1 41.9 – 42.0
Disposals – (1.5) – (1.5)
At 31.12.2014 0.9 349.3 – 350.2
Carrying amount
At 31.12.2014 0.1 68.7 10.5 79.3
Staff costs capitalised in software in development during the year 1.8 2.4
163
2015 2014
Company $m $m
Overview
Investments in subsidiaries, at cost 1,209.1 1,209.1
Loans to subsidiaries 556.0 490.0
Discount implicit in the interest-free loan to a subsidiary 21.9 21.9
1,787.0 1,721.0
Allowance for impairment losses (28.9) (28.9)
1,758.1 1,692.1
At 31 December 2015, the loans to the subsidiaries are unsecured, not repayable within the next 12 months and bore interest
ranging from 2.72% to 3.48% (2014: 3.48%) per annum.
Strategy
Country of
incorporation/ Effective equity
Name of company Principal activities business interest held by the Group
2015 2014
% %
StarHub Cable Vision Ltd. (1) Provision of subscription television and Singapore 100 100
television broadcasting services
StarHub Mobile Pte Ltd (1) Provision of mobile telecommunications Singapore 100 100
Performance
services
StarHub Internet Pte Ltd (1) Provision and operation of internet Singapore 100 100
services
StarHub Online Pte Ltd (1) Provision of broadband access services Singapore 100 100
StarHub (Mauritius) Ltd (3) Investment holding company and for Mauritius 100 100
acquisition of info-communication and
infotainment services
StarHub (Hong Kong) Limited (4) Provision of telecommunication services Hong Kong 100 100
(1)
Audited by KPMG LLP Singapore
(2)
On 22 July 2015, StarHub Ltd diluted its controlling interest in the company and the company was subsequently equity accounted for in the
consolidated financial statements based on its results ended 31 December 2015, the financial year-end of the company (Note 6).
(3)
Audited by KPMG Mauritius, a member firm of KPMG International
(4)
Audited by another firm
(5)
Not required to be audited by laws of the country of incorporation
(6)
The company is currently in liquidation pursuant to a winding-up order by the High Court of Singapore issued on 14 January 2011.
164
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
6 Associate
Group Company
2015 2014 2015 2014
$m $m $m $m
Country of
incorporation/ Effective equity
Name of company Principal activities business interest held by the Group
2015 2014
% %
SHINE Systems Assets Pte. Ltd. (1) Investment in, ownership or lease of Singapore 30(2) –
infrastructure assets and provision of data
centre services
(1)
Audited by KPMG LLP Singapore
(2)
On 22 July 2015, StarHub Ltd diluted its controlling interest in the company and the company was subsequently equity accounted for in the
consolidated financial statements based on its results ended 31 December 2015, the financial year-end of the company (Note 5).
The following summarises the financial information of the associate, based on its financial statements prepared in accordance
with FRS, amended for fair value adjustments on acquisition.
2015 2014
$m $m
2015 2014
$m $m
Overview
Summarised Statement of Comprehensive Income
Total revenue – –
Loss for the year (1.7) –
Other comprehensive loss – –
Total comprehensive loss for the year (1.7) –
Strategy
Carrying amount of interest in associate at end of the year 27.5 –
Recognised
Recognised in other
At in income comprehensive At
Group
Performance
1.1.2015 statement income 31.12.2015
2015 $m $m $m $m
Property, plant and equipment and intangible assets (139.2) (4.7) – (143.9)
Other payables and accruals 8.5 (3.8) (0.6) 4.1
Unutilised capital allowances 2.3 6.2 – 8.5
Unutilised tax losses – 4.1 – 4.1
Total (128.4) 1.8 (0.6) (127.2)
166
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Deferred tax assets are recognised to the extent that realisation of the related tax benefits through future taxable profits is
probable.
Deferred tax assets have not been recognised in respect of the following items:
2015 2014
$m $m
The Group has not recognised deferred tax assets in respect of the above tax losses and capital allowances as the Group does
not expect to recover these potential deferred tax assets in the foreseeable future. The Group reassesses the recovery of these
potential deferred tax assets annually.
Recognised
Recognised in other
At in income comprehensive At
Company 1.1.2015 statement income 31.12.2015
2015 $m $m $m $m
Recognised
Recognised in other
At in income comprehensive At
Company 1.1.2014 statement income 31.12.2014
2014 $m $m $m $m
8 Inventories
Group Company
2015 2014 2015 2014
$m $m $m $m
Inventories, at lower of cost and net realisable value 54.3 42.4 50.1 36.8
(Written back)/ allowance made during the year (0.5) 0.1 (0.7) 0.1
167
Group Company
2015 2014 2015 2014
Overview
$m $m $m $m
The trade receivables of the Company include amounts billed under a combined billing arrangement to customers for services
provided by certain subsidiaries.
The Group’s and the Company’s primary credit risk exposure arises through its trade receivables, which include corporate and
retail customers. There is no concentration of credit risk with respect to trade receivables as the Group and the Company have
Strategy
a large number of customers. The recorded allowances for doubtful receivables have been made based on the Group’s and the
Company’s historical collections experience. Due to these factors, management believes that no additional credit risk beyond
the amounts provided for collection losses is inherent in the Group’s and the Company’s trade receivables.
The age analysis of trade receivables past due but not impaired at the reporting date is as follows:
Group Company
2015 2014 2015 2014
$m $m $m $m
Performance
Past due 0 – 15 days 40.9 36.4 37.7 34.1
Past due above 15 days 50.5 66.0 41.9 58.0
91.4 102.4 79.6 92.1
The movements in allowance for doubtful receivables in respect of trade receivables during the year are as follows:
Group Company
2015 2014 2015 2014
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Current
Loan to subsidiary – – – 22.0
Non-current
Loans to subsidiaries – – – 106.0
The non-current trade amount due from a subsidiary is unsecured, interest free and is not repayable within the next 12 months.
169
Overview
Group Company
2015 2014 2015 2014
$m $m $m $m
Current
Amounts due to (trade):
– Subsidiaries – – 373.8 320.9
– Related corporations 122.5 99.2 30.6 64.7
122.5 99.2 404.4 385.6
The amounts due to subsidiaries include unsecured interest bearing amounts of $167.9 million (2014: $111.7 million) at interest
Strategy
rates ranging from 0.93% to 1.25% (2014: 0.91% to 1.20%) per annum and are repayable on demand. The remaining amounts due
to subsidiaries have trade terms.
11.3 The Company’s balances with subsidiaries included amounts netted under agreed master netting arrangements; the amounts
before netting are as follows:
Gross amounts
Gross amounts offset Net amounts
Company $m $m $m
Performance
2015
Current
Amounts due from subsidiaries 565.5 (468.3) 97.2
Amounts due to subsidiaries 842.1 (468.3) 373.8
Non-current
Amounts due from subsidiaries 344.2 – 344.2
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Current
Trade payables 55.6 60.3 56.9 53.5
Accruals 414.1 462.4 171.3 205.9
Unearned revenue 131.1 137.2 19.1 22.8
Property, plant and equipment vendors 62.4 106.1 33.8 45.1
Deferred income 15 7.8 14.0 0.5 –
Deposits from customers 16.3 15.2 16.1 15.0
Mark-to-market financial instruments
– Interest rate swaps – 0.6 – 0.6
687.3 795.8 297.7 342.9
Non-current
Unearned revenue 22.7 22.2 22.7 22.2
Mark-to-market financial instruments
– Interest rate swaps – 1.1 – 1.1
22.7 23.3 22.7 23.3
14 Borrowings
Group and Company
2015 2014
Note $m $m
Current
Bank loan 14.1 137.5 200.0
Non-current
Bank loans 14.1 330.0 267.5
Medium term note 14.2 220.0 220.0
550.0 487.5
171
Overview
2015 2014
$m $m
Repayable:
– Within 1 year 137.5 200.0
– After 1 year but within 5 years 330.0 267.5
467.5 467.5
Strategy
At 31 December 2015, the unsecured bank loans bore interest at rates ranging from 1.47% to 2.98% (2014: 0.79% to 2.56%) per annum.
Performance
The Company has established a multicurrency medium term note programme with a maximum aggregate principal amount
of $1,000,000,000 in September 2011. In September 2012, the Company issued a $220,000,000 10 years medium term note
which bore an interest rate of 3.08% per annum and is payable in September 2022. There is no material difference between the
carrying amount and fair value of the medium term note.
15 Deferred Income
Group Company
Deferred grants
At beginning of year 21.3 41.7 – –
Grants receivable 2.3 – 2.3 –
Amount accreted to the income statement (14.7) (20.4) (0.7) –
At end of year 8.9 21.3 1.6 –
The deferred income are government grants received. The assets related grants are recognised over the estimated useful lives
of the related assets. The income related grants are recognised on a systematic basis over the periods to match the related cost.
172
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
16 Share Capital
2015 2014
Number of Number of
shares shares
Company ’000 $m ’000 $m
The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All ordinary shares (excluding treasury shares) rank equally with
regard to the Company’s residual assets.
17 Dividends
Company
2015 2014
$m $m
Final dividend of $0.05 (2014: $0.05) per share (1-tier tax exempt) paid in respect of the
previous financial year 86.5 86.3
Interim dividends of $0.15 (2014: $0.15) per share (1-tier tax exempt) paid in respect of the
current financial year 259.4 258.9
345.9 345.2
173
Group Company
2015 2014 2015 2014
Overview
$m $m $m $m
Strategy
The merger/capital reserve comprises reserve arising from the acquisition of a subsidiary, StarHub Cable Vision Ltd. (“SCV”),
on 2 July 2002 and the excess of the fair value of the Company’s shares issued as consideration for the acquisition of SCV over
its par value.
The goodwill written off represents the excess of consideration paid on the acquisition of subsidiaries prior to 1 January 2001
over the Group’s share of the fair value of net assets acquired.
The share-based payments reserve comprises the cumulative value of services received from employees and directors
recorded in respect of the grant of share options and share awards.
Performance
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions.
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
19 Total Revenue
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
20 Operating Expenses
Group Company
2015 2014 2015 2014
$m $m $m $m
Included in the Group’s cost of services is government grant amounting to $3.4 million (2014: $1.8 million).
Group Company
2015 2014 2015 2014
$m $m $m $m
Group Company
2015 2014 2015 2014
$m $m $m $m
Overview
Group Company
2015 2014 2015 2014
$m $m $m $m
Included in the above is the total compensation to directors of the Company which amounted to $5.0 million (2014: $4.7 million).
Strategy
Key management personnel also participate in the StarHub Share Option Plans, the StarHub Performance Share Plans and the
StarHub Restricted Stock Plans as detailed in Note 20.2.2. The short term benefits include the Company balanced scorecard
incentive programme to reward employees for achieving or exceeding performance target.
Conditional awards of shares 534,700 (2014: 645,100 shares) under the StarHub Performance Share Plans and conditional
awards of shares 435,800 (2014: 640,400 shares) under the StarHub Restricted Stock Plans were granted to the key
management personnel of the Company during the year.
Awards of 95,800 shares (2014: 111,100 shares) under the StarHub Restricted Stock Plans were vested and delivered to certain
non-executive directors of the Company as part of their non-executive directors’ remuneration, without any performance or
vesting conditions attached, during the year.
Performance
Based on the actual level of achievement of the pre-determined performance targets over the 2012 to 2014 performance
period, final awards comprising 629,300 shares were delivered to the key management personnel of the Company during the
year under the 2012 conditional awards granted to key management personnel of the Company in May 2012 pursuant to the
StarHub Performance Share Plans.
Based on the actual level of achievement of the pre-determined performance targets over the 2013 to 2014 performance
period, final awards comprising 372,780 shares were delivered to the key management personnel of the Company during the
All share options and conditional share awards (except for the time-based restricted share awards) granted to the key
management personnel of the Company were on the same terms and conditions as those offered to other employees of the
Company.
As at 31 December 2015, 1,503,800 (2014: 1,540,100) of the conditional awards of shares under the StarHub Performance Share
Plans, and 1,199,380 (2014: 1,214,750) of the conditional awards of shares under the StarHub Restricted Stock Plans granted to
the key management personnel were outstanding.
Financials
176
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Weighted average
Number of share options exercise price per share
2015 2014 2015 2014
Company ’000 ’000 $ $
Options were exercised throughout the year. The weighted average share price during the year was $3.95 per share (2014: $4.15
per share).
2015 2014
Company $ $
Exercise price:
$1.52 – 234
Outstanding at end of year – 234
During the financial year ended 31 December 2015, the conditional grants of 534,700 (2014: 645,100) shares under the
StarHub Performance Share Plans were made to the key employees of the Group. These represent the number of shares
to be delivered when performance targets at “on-target” level are achieved, or as the case may be, when the time-based
service conditions are completed.
177
Overview
The movements of the number of shares under the StarHub Performance Share Plans, the fair values of the grant at
measurement date and the assumptions of the fair value model for the grants of the Company are as follows:
Strategy
16 March 2015 – 535 – – 535
Total 1,949 535 (872) (78) 1,534
Performance
10 March 2014 – 645 – – 645
Total 2,162 645 (858) – 1,949
The fair value of the shares is estimated using a Monte-Carlo simulation methodology at the measurement dates, which are
grant dates of the share awards. The assumptions under the model used for the grant in 2015 and 2014 are as follows:
Year of grant
2015 2014
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
During the financial year ended 31 December 2015, the conditional grants of 2,432,200 (2014: 2,517,900) shares under the
StarHub Restricted Stock Plans were made to non-executive directors and key employees of the Group. These represent the
number of shares to be delivered when performance targets at “on-target” level are achieved, or as the case may be, when the
time-based service conditions are completed.
During the financial year ended 31 December 2015, 128,900 (2014: 127,300) shares under the StarHub Restricted Stock
Plans were vested and delivered to certain non-executive directors of the Company as part of their non-executive directors’
remuneration, without any performance or vesting conditions attached.
The movements of the number of shares under the StarHub Restricted Stock Plans, the fair values of the grant at measurement
date and the assumptions of the fair value model for the grants of the Company are as follows:
Overview
The fair value of the share awards is estimated using a Monte-Carlo simulation methodology at the measurement dates, which
are grant dates of the share awards.
The assumptions under the model used for the grant in 2015 and 2014 are as follows:
Year of grant
2015 2014
Strategy
Risk-free interest rates 0.70% – 1.36% 0.26% – 0.46%
Performance
– Audit 0.4 0.4 0.1 0.1
– Non-audit 0.3 0.2 0.1 0.1
Foreign currency exchange (gain)/ loss (1.4) 3.1 (2.4) 1.8
Changes in fair value of financial instruments (1.0) 0.9 (1.0) 0.9
21 Other Income
Group Company
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Interest income:
– Bank deposits 2.0 2.0 1.9 1.9
– Subsidiaries – – 14.9 12.6
Finance income 2.0 2.0 16.8 14.5
Interest expense:
– Bank loans 11.0 15.8 11.0 15.8
– Medium term note 6.8 6.8 6.8 6.8
– Subsidiaries – – 1.7 1.6
Finance costs 17.8 22.6 19.5 24.2
23 Non-operating Income
Group Company
2015 2014 2015 2014
$m $m $m $m
24 Taxation
Group Company
2015 2014 2015 2014
$m $m $m $m
Current tax
Current income tax 62.9 91.4 34.9 36.8
Utilisation of previously unrecognised deferred tax assets (9.6) (8.6) (14.0) (11.2)
Under/(over) provision in prior year 22.1 4.6 21.6 (0.3)
75.4 87.4 42.5 25.3
Deferred tax
Origination and reversal of temporary differences 12.8 (0.3) 4.9 0.9
Over provision of tax liabilities in prior year (20.3) (1.5) (19.9) (1.4)
(7.5) (1.8) (15.0) (0.5)
Overview
2015 2014 2015 2014
$m $m $m $m
Income tax using Singapore tax rate of 17% 74.8 77.5 92.2 90.4
Income not subject to tax (2.7) (0.1) (54.7) (55.5)
Non-deductible expenses 3.7 4.3 2.3 2.7
Deferred tax assets not recognised – 9.6 – –
Utilisation of previously unrecognised deferred tax assets (9.6) (8.6) (14.0) (11.2)
Strategy
Under/(over) provision in prior year, net 1.8 3.1 1.7 (1.6)
Others (0.1) (0.2) – –
Total income tax in income statement 67.9 85.6 27.5 24.8
The Company’s utilisation of previously unrecognised deferred tax assets relates to unutilised tax losses and unutilised capital
allowances transferred from its subsidiaries under the group tax relief system in the Republic of Singapore.
Income tax recognised in other comprehensive income for the years ended 31 December are as follows:
Group and Company
2015 2014
Performance
$m $m
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
For the purpose of calculating the diluted earnings per share, the weighted average number of ordinary shares in issue is
adjusted to take into account the dilutive effect arising from the StarHub share plans.
Group
2015 2014
$m $m
Number of shares
2015 2014
’000 ’000
Group
2015 2014
$m $m
Overview
In the normal course of business, the Group purchases and sells info-communications services to related companies. The related
party transactions are carried out on terms negotiated between the parties which are intended to reflect competitive terms.
Other than disclosed above and elsewhere in the financial statements, significant transactions of the Group and the Company
with related parties during the financial year were as follows:
Group Company
2015 2014 2015 2014
$m $m $m $m
Strategy
Subsidiaries
Sales – – 534.7 523.4
Purchase of services – – 57.6 48.1
Related corporations
Sales 70.0 77.6 34.7 33.1
Purchase of property, plant and equipment 19.5 18.1 11.8 13.8
Rental expenses 81.7 85.1 33.6 37.1
Performance
Purchase of services 183.7 151.8 30.2 36.8
Purchase of inventories 166.1 167.2 165.9 166.8
28 Segment Reporting
Segment information is presented based on the information reviewed by the chief operating decision maker (“CODM”) for
performance assessment and resource allocation.
The Group operates primarily in Singapore in one segment. The Group delivers its Mobile, Pay TV, Broadband, Fixed networks
services and equipment sales on a fully integrated network, customer service, sales, marketing and administration support.
The Group has a large and diversified customer base which consists of individuals and corporations. There was no single
customer that contributed to 10% or more of the Group’s revenue.
Financials
184
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Group
2015 2014
$m $m
Other information
Capital expenditure 289.0 349.8
Free cash flow * 215.7 333.3
* Free cash flow refers to net cash from operating activities less purchase of property, plant and equipment and intangible assets in the
consolidated cash flow statement.
185
Overview
its general risk management philosophy, and has established processes to monitor and control the hedging of transactions in a
timely and accurate manner.
Derivative financial instruments are used to reduce exposure to fluctuations in foreign exchange rates and interest rates. While
these are subject to the risk of market rates changing subsequent to acquisition, such changes are generally offset by opposite
effects on the items being hedged.
The Group’s accounting policy in relation to derivative financial instruments is set out in Note 2.23.
Credit risk
Strategy
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Periodic frequent
credit review and counterparty credit limits are practised.
The Group has no significant concentration of credit risk from trade receivables due to its large diversified customer base.
Credit evaluations are performed on corporate customers requiring credit. Identification documents are obtained from retail
customers. Deposits are obtained for certain categories of higher-risk customers.
The Group places its cash and cash equivalents and enters into treasury transactions only with creditworthy banks and financial
institutions.
Performance
The maximum credit risk exposure is represented by the carrying value of each financial asset in the statement of financial position.
Liquidity risk
The Group monitors its liquidity risk and actively manages its operating cash flows, debt maturity profile and availability of
funding. The Group maintains sufficient level of cash and cash equivalents, and has available funding through diverse sources
of committed and uncommitted credit facilities from banks and the capital market through its medium term note programme.
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
Overview
Contractual cash flows
After After
1 year but within 5 years but within
Company Carrying amount Total Within 1 year 5 years 10 years
2015 $m $m $m $m $m
Strategy
Contractual cash flows
After After
1 year but within 5 years but within
Company Carrying amount Total Within 1 year 5 years 10 years
2014 $m $m $m $m $m
Performance
Derivative financial liabilities
Interest rate swaps used for hedging 3.3 3.3 3.1 0.2 –
1,394.3 1,465.2 918.3 306.6 240.3
^ The carrying amount of trade and other payables disclosed in the table exclude deferred income, unearned revenue, interest accruals for
derivative financial liabilities. The interest accruals are included in the derivative financial liabilities.
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
After 1 year
Within but within
Group and Company 1 year 5 years Total
2015 $m $m $m
After 1 year
Within but within
Group and Company 1 year 5 years Total
2014 $m $m $m
The Group adopts a policy of ensuring that at least 50 percent of its exposure to changes in interest rates on bank loans is on
a fixed rate basis. Interest rate swaps, denominated in Singapore dollars, have been entered into to achieve this purpose.
At 31 December 2015, the Group had outstanding interest rate swap agreements with notional principal amounts totalling
$145.0 million (2014: $335.0 million) in cash flow hedges against borrowings. These interest rate swaps will mature over the
remaining term ranging from 0.6 year to 1.4 years (2014: 0.1 year to 2.4 years) to match the underlying hedged cash flows arising
on the borrowings consisting of semi-annual interest payments. The fixed interest payable are at interest rates ranging from
0.86% to 1.45% per annum (2014: 0.86% to 2.25% per annum).
Sensitivity analysis
The Group’s and the Company’s borrowings are denominated in Singapore dollars. An increase/decrease in the interest rates by
100 basis points, with all other variables remaining constant, does not have a material impact in the Group’s and the Company’s
profit before taxation (2014: $0.1 million).
The Group’s and the Company’s exposures to United States Dollar are as follows:
Group Company
2015 2014 2015 2014
$m $m $m $m
For operations with significant expenditure denominated in foreign currencies, forward exchange contracts are entered into to
hedge the foreign currency risk on forecasted payment obligations. At 31 December 2015, the Group and the Company have
outstanding forward exchange contracts with notional principal amounts of approximately $105.1 million (2014: Nil).
In respect of other monetary liabilities held in foreign currencies, the Group ensures that the net exposure is kept to an
acceptable level by buying foreign currencies at spot rates where necessary to address any shortfalls.
189
Overview
The Group and Company had assessed that a reasonable change in the exchange rate would not result in a material impact on
the Group’s and Company’s results.
Derivatives
Marked to market valuations of the forward exchange contracts are provided by the banks. For interest rate swaps, valuations
are also provided by the banks. Those quotes are tested using pricing models or discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and
Strategy
the discount rate is a market related rate for a similar instrument at the reporting date. Where other pricing models are used,
inputs are based on market related data at the reporting date.
Borrowings
The fair values of borrowings which reprice within one year of reporting date were assumed to equate the carrying value. All
other borrowings are calculated using discounted cash flow models based on the present value of future principal and interest
cash flows, discounted at the market rate at the reporting date.
Performance
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with maturity of less than one year (including trade and other receivables,
cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values.
2015 2014
The following table represents the assets and liabilities measured at fair value, using Level 2 valuation method, at reporting date:
Financials
NOTES TO THE
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
30 Capital Management
The Group regularly reviews its financial position, capital structure and use of capital, with the objective of achieving long-term
capital efficiency, optimum shareholders’ total returns, including the level of dividends, and proper strategic positioning.
From time to time, the Group may purchase its own shares on the market; the timing of these purchases depends on market
prices. Such share purchases are intended to be used for issuing shares under the StarHub Share Option Plan, StarHub
Performance Share Plan and StarHub Restricted Stock Plan programmes. Other than for such specific purposes, the Group
does not have a defined share buy-back plan.
The Group manages the use of capital centrally and all borrowings to fund the operations of the subsidiaries are managed by
the Company. The capital employed by the Company consists of equity attributable to shareholders, bank borrowings from
financial institutions and medium term note issued.
There were no changes in the Group’s approach to capital management during the year.
31 Commitments
(a) Capital and other financial commitments
Group Company
2015 2014 2015 2014
$m $m $m $m
Included in the capital expenditures contracted by the Company is an amount of approximately $2.7 million (2014: $4.7 million)
which has been entered into on behalf of its subsidiaries.
As at 31 December 2015, the Group has outstanding capital and other financial commitments with related companies amounting
to $10.2 million (2014: $15.2 million).
Payable:
– Within 1 year 98.8 99.4 54.0 57.2
– Within 2 to 5 years 106.1 134.1 83.1 84.0
– After 5 years 210.5 60.3 210.3 60.0
415.4 293.8 347.4 201.2
Included in the operating lease commitment of the Company is $7.0 million (2014: $7.1 million) which is contracted on behalf
of a subsidiary. The operating leases include lease of premises and network infrastructure. The leases have varying terms and
renewal rights.
As at 31 December 2015, the Group has outstanding operating lease commitments with related companies amounting to
$277.6 million (2014: $139.8 million).
32 Subsequent Event
The directors have proposed a final dividend of $0.05 (2014: $0.05) per share, tax exempt (one tier), totalling $86.5 million
(2014: $86.3 million) in respect of the financial year ended 31 December 2015. This proposed final tax exempt dividend has not
been recognised as at year end and will be submitted for shareholders’ approval at the forthcoming Annual General Meeting of
the Company in 2016.