NTUC Income AR 2018

Notes to the Financial Statements For the Financial Year Ended 31 December 2018 2. Summary of significant accounting policies (continued) (s) Share capital and treasury shares Paid-up shares consist of Common and Permanent Shares and are classified as equity. Although Common Shares do not qualify as equity based on the presentation requirements of FRS 32 Financial Instruments: Presentation , the Co-operative has classified the shares as equity as there is a minimum paid-up capital requirement under the Insurance (Valuation and Capital) Regulations 2004. All shareholders are entitled to redeem their shares at the par value of $10 each or the net asset value (NAV) based on the last audited financial statements, whichever is lower. NAV is computed in accordance with the Co- operative Societies Act. Dividends on Common Shares and Permanent Shares are recognised in the statement of changes in equity in the year in which they are declared and approved for payment. The consideration payable for the purchase by the Group of its own shares is treated as treasury shares at the reporting date, and shown as a deduction from Shareholders’ Fund in the statement of changes in equity. (t) Dividends to the Co-operative’s shareholders Dividends to the Co-operative’s shareholders are recognised when the dividends are approved for payment. (u) Other provisions Provisions other than insurance contract provisions are recognised when the Group has a present legal or constructive obligation, as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably measured. (v) Operating leases Lessor – Operating leases Leases of investment properties which the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease income. Lessee – Operating leases Leases where substantially all risk and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives given from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease. (w) Deferral of FRS 109 Financial Instruments The Group has decided to apply the temporary exemption from FRS 109 permitted under the Amendments to FRS 104 Insurance Contracts , and defer its implementation of FRS 109 until FRS 117 Insurance Contracts that replaces FRS 104 is effective. The Group assessed that it has qualified for the temporary exemption as the carrying amount of its liabilities arising from contracts within the scope of FRS 104 is significant compared to the total carrying amount of all its liabilities; and that the total carrying amount of its liabilities connected with insurance is above 90% of its total liabilities as at 31 December 2015. There were no changes in the Group’s activities after this date, hence no reassessment was required at subsequent reporting year-ends. 63 2018 ANNUAL REPORT