NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
88
CITIC ENVIROTECH LTD.
Annual Report
2015
7 TRADE RECEIVABLES (cont’d)
(ii)
These amounts are stated before any deduction for impairment losses. These receivables are
not secured by any collateral or credit enhancements.
This allowance for doubtful debts has been determined by reference to past default experience for
estimated irrecoverable amounts from the provision of environmental consultancy and engineering
services to third parties.
In determining the recoverability of a trade receivable the Group considers any change in the
credit quality of the trade receivable from the date credit was initially granted up to the end of the
reporting period. Management believes that there is no further allowance required for credit risk in
excess of the allowance for doubtful debts as there has been no significant change in credit quality
and the amounts are still considered recoverable. The Group does not hold any collateral over these
balances.
Management is of the opinion that the fair value of the non-current trade receivables approximates
the carrying amount.
8 SERVICE CONCESSION RECEIVABLES
The Group through its subsidiaries engages in the businesses of waste water treatment and
water supply in the PRC (the “operator”) and has entered into a number of service concession
arrangements with certain governmental authorities or their agencies in the PRC on a Build-
Operate-Transfer (“BOT”) and Transfer-Operate-Transfer (“TOT”) basis in respect of its businesses.
These service concession arrangements generally involve the Group as an operator to (i) construct
waste water treatment and water supply and plants for those arrangements on a BOT basis; (ii) pay
a specific amount for those arrangements on a TOT basis; or (iii) operate and maintain the waste
water treatment, water supply plants at a specified level of serviceability on behalf of the relevant
governmental authorities for periods ranging from 20 to 30 years (the “service concession periods”),
and the Group will be paid for its services over the relevant periods of the service concession
arrangements at prices stipulated through pricing mechanism. The plants will be transferred to the
respective grantors at the end of the service concession periods for BOT and TOT.
The Group is generally entitled to operate all the property, plant and equipment of the waste water
treatment and water supply plants, however, the relevant governmental authorities as grantors
control and regulate the scope of services the Group provides to the waste water treatment and
water supply plants. Each of these service concession arrangements is governed by a contract and,
where applicable, supplementary agreements entered into between the Group and the relevant
governmental authorities or their agencies in the PRC that set out, inter alia, performance standards,
mechanisms for adjusting prices for the services rendered by the Group, specific obligations
levied on the Group to restore the waste water treatment and water supply to a specified level of
serviceability at the end of the service concession periods, and arrangements for arbitrating disputes.
Group
December
31,
March
31,
2015
2015
$’000
$’000
Service concession receivables
509,161 389,590
Less: Non-current portion
(504,819)
(384,814)
Current portion
4,342
4,776
