NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
101
Annual Report 2014
2.
Significant accounting policies
(continued)
2.23 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the key
management whose members are responsible for allocating resources and assessing performance of the
operating segments.
2.24 Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents
include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change
in value and bank overdrafts and exclude pledged deposits with financial institutions. Bank overdrafts are
presented as current borrowings on the balance sheet.
For cash subjected to restriction, assessment is made on the economic substance of the restriction and
whether they meet the definition of cash and cash equivalents.
2.25 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new
ordinary shares are deducted against the share capital account.
2.26 Dividends to Company’s shareholders
Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.
2.27 Government grants
Grants from the government are recognised as a receivable at their fair value when there is reasonable
assurance that the grant will be received and the Group will comply with all the attached conditions.
Government grants receivable are recognised as income over the periods necessary to match them with
the related costs which they are intended to compensate, on a systematic basis. Government grants
relating to expenses are shown separately as other income.
Government grants relating to assets are deducted against the carrying amount of the assets.
3.
Critical accounting estimates, assumptions and judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
(a)
Construction contracts
The Group uses the percentage-of-completion method to account for its contract revenue. The
stage of completion is measured by reference to the contract costs incurred to date compared to
the estimated total costs for the contract.
Significant assumptions are used to estimate the total contract costs and the recoverable variation
works that affect the stage of completion and the contract revenue respectively. In making these
estimates, management has relied on past experience and industry practices.
If the stage of completion increases/decreases by 10% (2013: 10%) from management’s estimates,
the Group’s revenue will increase/decrease by $808,005,000 (2013: $572,539,000) and the Group’s
cost of sales will increase/decrease by $740,208,000 (2013: $525,949,000).
If the total contract costs to be incurred increase/decrease by 10% (2013: 10%) from management’s
estimates, the Group’s cost of sales will increase/decrease by $470,038,000 (2013: $335,607,000).
