Annual Report 2012 - ecoWise Holdings Limited

ecoWise Holdings Limitedannual report 201211331 OCTOBER 2012NOTES TO THE FINANCIAL STATEMENTS21. TRADE AND OTHER RECEIVABLES (CONTINUED)Other receivables from the subsidiaries are unsecured, bear interest at 2.75% (2011: 5%) per annum andhave no fixed terms of repayment.Other receivables from an associate are unsecured, non-interest bearing and not expected to be repaidwithin the next 12 months.Other receivables from related parties are unsecured, non-interest bearing and have no fixed terms ofrepayment.There is no allowance for doubtful receivables on receivables due from related parties.At the end of the reporting year, factored trade receivables of $373,000 (2011: $255,000) were transferredto bank. The factoring facility is secured by a corporate guarantee provided by the Company. Since thesereceivables did not meet the FRS 39 derecognition requirements, they were recognised as receivables eventhough they were legally sold without recourse.22. FINANCE LEASE RECEIVABLESDuring the current reporting year, the Group completed the construction of a biomass co-generation plantunder a Design, Build and Operate Agreement (“DBO Agreement”) entered with a customer in previousreporting years. Under the DBO Agreement, the Group will operate and maintain the biomass co-generationplant to supply electricity and heat to the customer for a term of 15 years.The Group assessed that the terms and conditions of the DBO Agreement contains a lease arrangementunder INT-FRS 104 – Determining whether an Arrangement contains a Lease. The lease is classified as afinance lease as the present value of the minimum lease receivables amount to at least substantially all ofthe fair value of the biomass co-generation plant at the inception of the lease. Consequently, the Groupreclassified its investment in the biomass co-generation plant from plant and equipment to finance leasereceivables. The Group continues to be the legal owner of the plant.