NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
70
CITIC ENVIROTECH LTD.
Annual Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.20 Retirement benefit costs
Pursuant to the relevant regulations of the People’s Republic of China (“PRC”) government, the PRC
subsidiaries of the Group (“PRC Subsidiaries”) have participated in central pension schemes (“the
Schemes”) operated by local municipal government whereby the PRC subsidiaries are required to
contribute a certain percentage of the basic salaries of their employees to the Schemes to fund their
retirement benefits. The local municipal governments undertake to assume the retirement benefit
obligations of all existing and future retired employees of the PRC subsidiaries. The only obligation
of the PRC subsidiaries with respect to the Scheme is to pay the ongoing required contributions
under the Schemes mentioned above. Contributions under the Schemes are charged to profit or loss
as incurred.
Payments to defined contribution retirement benefit plans are charged as an expense as they fall
due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central
Provident Fund and the Malaysia Employee Provident Fund, are dealt with as payments to defined
contribution plans where the Group’s obligations under the plans are equivalent to those arising in a
defined contribution retirement benefit plan.
2.21 Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to
the end of the reporting period.
2.22 Share-based payments
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value of the equity instruments (excluding
the effect of non-market-based vesting conditions) at the date of grant. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in Note 29 to
the financial statements. The fair value determined at the grant date of the equity-settled share-
based payments is expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of the number of equity instruments that will eventually vest and adjusted for the effect
of non market-based vesting conditions. At the end of each reporting period, the Group revises
the estimate of the number of equity instruments expected to vest. The impact of the revision of
the original estimates, if any, is recognised over the remaining vesting period with a corresponding
adjustment to the share option reserve.
2.23 Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit
as reported in the statement of profit or loss and other comprehensive income because it excludes
items of income or expense that are taxable or deductible in other years and it further excludes
items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using
tax rates (and tax laws) that have been enacted or substantively enacted in countries where the
Company and its subsidiaries operate by the end of the reporting period.
