ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) B2 Revenue (continued) Key estimate and judgement: Revenue recognition Judgement is applied in determining: • whether performance obligations are distinct. Requires an assessment of whether the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and if the promise is separately identifiable from other promises in the contract. • the transaction price for contracts with variable consideration (e.g. bonus, liquidated damages, penalties, etc). Requires an evaluation of potential risk and factors which may affect completion or delivery of the contract, in accordance with contract obligations. • estimated cost to complete. For revenue recognised over time, the percentage of completion is assessed by reference to the contract costs incurred till date in proportion to the total estimated costs for each contract. In making the estimates, management relies on the expertise of its project team and past experience of completed projects. The estimated total costs is reviewed regularly and adjusted where necessary, with the corresponding effect of the change being recognised prospectively from the date of change. B3 Profit from operations Profit from operations are arrived after charging the following items (excluding those disclosed in the other notes to the financial statements): Group 2020 2019 $’000 $’000 After charging Auditors’ remuneration – auditors of the Company 2,322 3,862 – other auditors # 1,833 1,741 Non-audit fees – auditors of the Company 143 597 – other auditors # 17 1,112 Fees paid to a firm of which a director is a member 1,890 420 Allowance for inventory obsolescence 40,001 76,780 Impairment loss on trade receivables and contract assets 26,686 53,473 Provision for onerous contracts 91,177 16,305 Property, plant and equipment written off 874 1,408 Research, design and development expenses 103,558 100,605 Short-term lease expense 14,618 29,284 Low-value assets lease expense 2,118 2,638 # Refers to overseas practice of PricewaterhouseCoopers LLP (2019: other member firms of KPMG International) / ST ENG I NEER I NG 168