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Notes to the Financial Statements
31 December 2015
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p) Provisions for liabilities and charges
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is probable
that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made. Provisions
are measured at the present value of management’s best estimate of the expenditures expected to be required to settle the obligation by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
(i)
Site rectification and decommissioning works
Provision for site rectification works is based on management’s best estimate and the past trend of costs for rectification works to be
carried out to fulfil new regulatory guidelines and requirements imposed after network cell sites were built.
Provision for decommissioning works is the estimated costs of dismantling and removing the structures on identified sites and
restoring these sites. This obligation is incurred either when the items are installed or as a consequence of having used the items
during a particular period.
(ii)
Contract obligations and legal claims
Provisions for contract obligations and legal claims are made in respect of network and content costs. The Group and the Company
recognise a provision for contract obligations when the expected benefits to be derived from a contract are less than the unavoidable
costs of meeting the obligations under the contract. Contract obligations are measured at the lower of cost to fulfil the contract or the
cost to exit it.
(iii) Staff incentive scheme
Provision for staff incentive scheme is based on management’s best estimate of the total amount payable as at reporting date based
on the service and/or performance conditions of individual employees and/or financial performance of the Group.
(iv) Restructuring costs
Provision for restructuring costs is made in respect of employee termination payments under the Career Transition Scheme (“CTS”)
based on management’s best estimate of the amount payable as at reporting date offered to selected employees. See accounting
policy Note 3(t)(ii) on employee termination benefits.
(q) Income taxes
The tax expenses for the period comprise current and deferred tax. The income tax expense or credit for the period is the tax payable on
the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in the statement of profit or loss except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
Current tax expenses are determined according to the tax laws of each jurisdiction in which the Group operates and include all taxes based
upon the taxable profits, and real property gains taxes payable on disposal of properties.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and
liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it 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.
