Page 144 - Annual Report 2014

2.12 Customer loyalty programmes Overview

For customer loyalty programmes, the fair value of the consideration received or receivable from a sales transaction which Strategy
attracts customer loyalty credits or points is allocated between the customer loyalty points and the other component of the
sale. The amount allocated to the customer loyalty points is estimated by reference to the fair value of the customer loyalty
points for which they could be redeemed. The fair value of the customer loyalty points is estimated by taking into account the
expected redemption rate and the timing of such expected redemptions. Such amount is deferred and recorded as unearned
revenue until the customer loyalty points are redeemed. At this juncture, the cost of fulfilling the customer loyalty credits is
also recognised.

2.13 Provisions Performance

Provisions are recognised in the balance sheet 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.

2.14 Share capital Governance

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity shares are
recognised as a deduction from equity, net of any tax effects.

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.

2.15 Revenue recognition Financials

Revenue comprises fees earned from telecommunications services, broadband access, Pay TV, related advertising space and
sale of equipment. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured. Revenue is recognised in the income statement as follows:

� 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.

� R evenue 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.

2.16 Finance income and costs

Finance income comprises interest income on bank deposits. Interest income is recognised on a time-apportioned basis taking
into account the principal outstanding at the applicable rate.

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.

StarHub Ltd | Annual Report 2014 141