Annual Report 2011

The licences and spectrum rights have remaining useful lives ranging from 3.5 years to 10 years (2010: 4.5 years to 11 years).

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In 2009, the Group’s subsidiary, M1 Net Ltd. (M1 Net), acquired a 100% equity interest in M1 Connect Pte. Ltd. (M1 Connect). The Group agreed to pay to some of the selling shareholders potential consideration of S$2.5 million if certain financial targets can be met by M1 Connect for financial periods up to and ending on 30 June 2011. In the current financial year, the Group paid an additional S$0.5 million to certain previous shareholders of M1 Connect after the performance targets were met. This gave rise to an adjustment to goodwill arising from this acquisition.

Impairment testing of goodwill

Management has allocated the goodwill to M1 Net and M1 Connect as a single cash-generating unit (CGU) for impairment testing. The recoverable amount of the CGU has been determined based on value in use calculations using cash flow projections covering a five-year period. The discount rate applied to the cash flow projections and terminal growth rate used to extrapolate cash flow projections beyond the five-year period are 10% and nil respectively.

The calculation of value in use for the CGU is most sensitive to the following assumptions:

Terminal growth rate – The terminal growth rate used does not exceed the long term average growth rate of the industry and country in which the CGU operates.

Pre-tax discount rate – Discount rate reflects the current market assessment of the risks specific to the CGU.

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Staff loans are repayable in equal monthly instalments over periods of up to seven years and interest bearing at rates of up to 2% (2010: 2%) per annum.

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Details of the subsidiaries of the Company as at 31 December 2011 and 2010 are as follows:

All subsidiaries are audited by Ernst & Young LLP except for Kliq Pte. Ltd. for which there is no statutory audit requirement.

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The Group had a 50% joint venture with PLDT (SG) Retail Service Pte Ltd. The principal activity of this joint venture is provision of prepaid mobile services.

The aggregate amounts of each of current assets, non-current assets, current liabilities, income and expenses related to the Group’s interests in the jointly-controlled operation are as follows:

In August 2011, the Company entered into an agreement with PLDT (SG) Retail Service Pte Ltd to dispose its 50% shareholdings.

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Trade debtors comprise billed trade debtors, accrued service revenue and accrued handset revenue.

Billed trade debtors are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

The Group has accrued handset revenue amounting to S$105,817,000 (2010: S$95,416,000) included in accrued revenue.

Debtors that are past due but not impaired:

The Group and Company have unsecured trade debtors that are past due at the statement of financial position date but not impaired and the analysis of their ageing at the statement of financial position date is as follows:

Debtors that are impaired:

The Group’s and Company’s trade debtors that are impaired at the end of the reporting period and the movement of the allowance accounts used to record impairment are as follows:

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The non-trade amount due from a subsidiary is unsecured, non-interest bearing and not expected to be repaid by the subsidiary in the next twelve months.

The amounts due from/(to) subsidiaries are unsecured, non-interest bearing and are repayable on demand.

The amounts due from/(to) related parties are unsecured, non-interest bearing and are generally on 30 to 90 days terms.

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Cash and cash equivalents comprise cash on hand and at banks, which earn interest at floating rates offered by short-term money market ranging from 0.02% to 0.50% (2010: 0.05% to 0.42%) per annum.

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