Page 110 - S P Setia Annual Report 2013
P. 110

108 | Financial Statements S P SETIA BERHAD GROUP Annual Report 2013



1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(k) Service concession arrangements
The Group recognises revenue from the construction and upgrading of infrastructure projects under concession arrangements in
accordance with its accounting policy for construction contracts set out in 1(o) below. Where the Group performs more than one
service under the arrangement, consideration received or receivable is allocated to the components by reference to the relative fair
values of the services delivered, when the amounts are separately identifable.

The Group recognises the consideration received or receivable as a fnancial asset to the extent that it has an unconditional right
to receive cash or another fnancial asset for the construction services. Financial assets are accounted for in accordance with the
accounting policy set out in 1(q) below.

The Group recognises the consideration receivable as a concession asset to the extent that it receives a right to charge users of the
public service. Concession assets are accounted for in accordance with the accounting policy set out in 1(l) below.

Subsequent costs and expenditures related to infrastructure and equipment arising from the Group’s commitments to the concession
contracts or that increase future revenue are recognised as additions to the concession asset and are stated at cost. Capital expenditures
necessary to support the Group’s operation as a whole are recognised as property, plant and equipment, and accounted for in
accordance with the policy stated under property, plant and equipment in 1(i) above. When the Group has contractual obligations that
it must fulfl as a condition of its license to:

- maintain the infrastructure to a specifed standard or,
- restore the infrastructure when the infrastructure has deteriorated below a specifed condition

it recognises and measures these contractual obligations in accordance with the accounting policy for provisions in 1(x) below. Repairs
and maintenance and other expenses that are routine in nature are expensed and recognised in proft or loss as incurred.
(l) concession assets

Concession assets are recognised to the extent that the Group has acquired development rights or a right (a licence) to charge users
of public services.
Development rights are derecognised as and when the rights are exercised. Licences are amortised on a systematic basis over its useful
Concession assets are stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and
measurement of impairment losses is in accordance with 1(r) (iii) below.
Amortisation of the concession assets begins when it is available for use, which means when it is in the location and condition necessary
for it to be capable of operating in the manner intended by management.

Gains or losses arising from derecognition of a concession asset are measured as the difference between the net disposal proceed and
the carrying amount of the asset and is recognised in proft or loss when the asset is derecognised.

(m) leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments for the right to use an
asset for an agreed period of time.

(i) Finance lease
A fnance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may
not eventually be transferred.
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