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The Group determines the provision for ECL on trade receivables (Note 20) and contract assets (Note 22(a)). This estimate is based on the credit history of the customers, the current market condition and forward-looking information. Management reassesses the adequacy of provision on a regular basis by reviewing the individual account based on past credit history and any prior knowledge of debtor insolvency or other credit risk which might not be easily accessible public information and market volatility might bear a significant impact which might not be easily ascertained. As at 30 June 2020, the provision for impairment on trade receivables and contract assets are RMB1,231,399,000 (31 December 2019: RMB1,346,804,000) and RMB186,671,000 (31 December 2019: RMB193,086,000) respectively.

(d) Deferred taxes

The estimates of deferred income tax assets (Note 35) require estimates over future taxable profit and corresponding applicable income tax rates of respective years. The change in future income tax rates and timing would affect income tax expense or benefit, as well as deferred income tax balance. The realisation of deferred income tax assets also depends on the realisation of sufficient profitability (taxable profit) of the Group. Deviation of future profitability from the estimate could result in material adjustments to the carrying amount of deferred income tax assets. Deferred tax assets relating to certain temporary differences and tax losses are recognised as management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilised. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred tax assets and taxation in the years in which such estimates are changed. As at 30 June 2020, deferred tax assets recognised in the consolidated statement of financial position is RMB715,238,000 (31 December 2019: RMB738,052,000).

The Group are from time to time involved in legal proceedings arising in the ordinary course of our business. If the management believes that the legal proceedings may result claims for compensation to third parties against the Group, the best estimate of provision for litigation claims will be recognised. If the management believes that the legal proceedings may be more likely not to result claims for compensation to third parties against the Group, no provision will be recognised under any potential litigation claims. Except to the extent that the situations and uncertainties involved, that will be disclosed as contingent liabilities. To access the outcome of legal proceedings and any potential amount of litigation claims, significant judgment is required. As at 30 June 2020, provision for litigation claims (Note 32) is RMB189,302,000 (31 December 2019: RMB196,945,000).

6. Revenue

The Group’s revenue is set out below:

Six months ended 30 June

2020 2019

RMB’000 RMB’ 000

Engineering, consulting and licensing 1,210,131 951,852

EPC Contracting 15,528,332 13,852,329

Construction 6,901,301 7,734,067

Equipment manufacturing 157,392 143,770

23,797,156 22,682,018

Remaining performance obligations

As at 30 June 2020, amount of remaining performance obligations is RMB107,834,427,000 (2019: RMB105,473,232,000), which is expected to be completed in the coming 60 months (2019: 60 months).

(iv) Equipment manufacturing – providing design, development, manufacture and sales of equipment and spare parts for facilities including oil refining and chemical facilities.

Inter-segment sales were conducted at prices no less than cost and with terms mutually agreed among those business segments. Operating expenses of a functional unit are allocated to the relevant segment which is the predominant user of the services provided by the unit. Operating expenses of other shared services which cannot be allocated to a specific segment and corporate expenses are included as unallocated costs.

Segment assets consist primarily of property, plant and equipment, rights of use assets, construction in progress, intangible assets, investment in a joint arrangement and investment in associates, other non-current assets, inventories, notes and trade receivables, prepayments and other receivables, restricted cash and cash and cash equivalents. Unallocated assets comprise items such as some of the time deposits, loans due from the ultimate holding company, deferred income tax assets and other unallocated assets.

Segment liabilities comprise operating liabilities.

Capital expenditure comprises additions to property, plant and equipment (Note 16), right-of-use assets (Note 17), intangible assets (Note 18) and other non-current assets.

Segment revenue 1,230,173 15,528,332 9,612,750 264,320 – (2,838,419) 23,797,156 Segment results 72,846 797,595 253,027 4,677 22,308 – 1,150,453 Finance income 446,324 Finance expenses (43,958) Share of profit of a joint arrangement 7 – – – – – 7 Share of profit of associates 8,605 – 1,392 – – – 9,997 Profit before taxation 1,562,823 Income tax expense (302,470) Profit for the period 1,260,353

Other segment items

Depreciation 42,164 75,872 149,127 9,294 – – 276,457 Amortisation 8,027 19,837 1,545 – – – 29,409 Capital expenditures

– Property, plant and equipment 31,917 4,262 114,156 – – – 150,335 – Right-of-use assets 3,436 26,921 5,553 – – – 35,910 – Intangible assets – 3,147 778 – – – 3,925 Provision/(Reversal of provision)

for ECL on trade and other receivables and

contract assets, net 3,598 (135,563) 14,773 57 – – (117,135)

The segment assets and liabilities as at 30 June 2020 are as follows:

Engineering, Consulting and

licensing ContractingEPC Construction manufacturingEquipment Elimination Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Assets

Segment assets 4,123,553 26,067,728 15,013,544 1,022,532 (4,094,647) 42,132,710 Investment in a joint arrangement 2,523 – – – – 2,523 Investment in associates 154,496 – 23,814 – – 178,310 Other unallocated assets 25,184,286

Total assets 67,497,829

Liabilities

Segment liabilities 2,938,673 27,089,087 13,303,408 707,338 (4,094,647) 39,943,859

Segment results 84,166 700,768 292,848 (2,675) 26,036 – 1,101,143

Finance income 450,638

Finance expenses (54,561)

Share of loss of a

joint arrangement (111) – – – – – (111)

Share of profit of associates 5,248 9,992 1,115 – – – 16,355

Profit before taxation 1,513,464

Income tax expense (314,710)

Profit for the period 1,198,754

Other segment items

Depreciation 28,807 70,055 184,534 12,596 – – 295,992

Amortisation 695 34,817 1,276 – – – 36,788

Capital expenditures

– Property, plant and equipment 13,094 16,603 56,563 1,041 – – 87,301

– Right-of-use assets 598 12,668 36,216 6,782 – – 56,264

– Intangible assets – 926 434 – – – 1,360

Provision/(Reversal of provision) for ECL on trade and other receivables and

contract assets, net (15,384) (73,972) (8,682) 308 – – (97,730)

The segment assets and liabilities as at 31 December 2019 are as follows: Engineering,

Consulting and

licensing ContractingEPC Construction manufacturingEquipment Elimination Total

RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000

Assets

Segment assets 4,334,365 26,984,887 15,466,872 877,664 (5,291,173) 42,372,615

Investment in a joint arrangement 2,516 – – – – 2,516

Investment in associates 139,531 – 22,421 – – 161,952

Other unallocated assets 25,336,665

Total assets 67,873,748

Liabilities

Segment liabilities 1,910,225 28,558,826 14,861,104 564,225 (5,291,173) 40,603,207

RMB’000 RMB’ 000 The PRC 21,040,916 16,754,294 Malaysia 2,296 222,749 Kuwait 919,438 2,938,500 Saudi Arabia 1,539,108 1,383,330 Other countries 295,398 1,383,145 23,797,156 22,682,018

Information about major customers

The customers accounted for more than 10% of the total revenue of the Group and revenue from them for the six months ended 30 June 2020 and 2019, the details are as follows:

Six months ended 30 June

2020 2019

RMB’000 RMB’ 000

Fellow subsidiary and its subsidiaries

– Customer group A 3,530,215 3,257,948

– Customer group B 2,786,181 2,967,725

The revenue from the customers are derived from the segment of engineering, consulting and licensing, EPC contracting, construction and equipment manufacturing.