ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C11 Provisions (continued) Recognition and measurement (continued) (ii) Onerous contracts Provision for onerous contracts on uncompleted contracts is recognised immediately in profit or loss when it is determinable. (iii) Closure costs Provision for closure costs is made in respect of the expected costs that the Group will undertake between the cessation of certain operations of the Group to the completion of their liquidation. (iv) Restoration costs Provision for restoration costs is made for dismantlement, removal or restoration costs expected to be incurred on expiry of lease agreements. Estimate and judgement: Provision for warranty The provision for warranty is based on estimates from known and expected warranty work to be performed after completion. The warranty expense incurred could be higher or lower than the provision made. Estimate and judgement: Provision for onerous contracts The Group conducts a critical review of all its long-term contracts regularly. Allowance is made where necessary to account for onerous contracts and judgement is used to estimate the total cost to complete. / ST ENG I NEER I NG 200