SIC Interpretation 29 Service Concession Arrangements: Disclosures (SIC‑29) is set out in paragraphs 6⁠–⁠7. SIC‑29 is accompanied by a Basis for Conclusions. The scope and authority of Interpretations are set out in the Preface to IFRS Accounting Standards.

FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION

SIC Interpretation 29Service Concession Arrangements: Disclosures

Issue

1

An entity (the operator) may enter into an arrangement with another entity (the grantor) to provide services that give the public access to major economic and social facilities. The grantor may be a public or private sector entity, including a governmental body. Examples of service concession arrangements involve water treatment and supply facilities, motorways, car parks, tunnels, bridges, airports and telecommunication networks. Examples of arrangements that are not service concession arrangements include an entity outsourcing the operation of its internal services (eg employee cafeteria, building maintenance, and accounting or information technology functions).

2

A service concession arrangement generally involves the grantor conveying for the period of the concession to the operator:

(a)

the right to provide services that give the public access to major economic and social facilities, and

(b)

in some cases, the right to use specified tangible assets, intangible assets, or financial assets,

in exchange for the operator:

(c)

committing to provide the services according to certain terms and conditions during the concession period, and

(d)

when applicable, committing to return at the end of the concession period the rights received at the beginning of the concession period and/or acquired during the concession period.

3

The common characteristic of all service concession arrangements is that the operator both receives a right and incurs an obligation to provide public services.

4

The issue is what information should be disclosed in the notes in the financial statements of an operator and a grantor.

5

Certain aspects and disclosures relating to some service concession arrangements are already addressed by existing International Financial Reporting Standards (eg IAS 16 applies to acquisitions of items of property, plant and equipment, IFRS 16 applies to leases of assets, and IAS 38 applies to acquisitions of intangible assets). However, a service concession arrangement may involve executory contracts that are not addressed in International Financial Reporting Standards, unless the contracts are onerous, in which case IAS 37 applies. Therefore, this Interpretation addresses additional disclosures of service concession arrangements.

Consensus

Disclosure of service concession arrangements [text block] Disclosure Text block 800500, 832900
[Refer:Basis for Conclusions paragraphs 8⁠–⁠10]

6

All aspects of a service concession arrangement shall be considered in determining the appropriate disclosures in the notes. An operator and a grantor shall disclose the following in each period:

(a)

a description of the arrangement;

Description of service concession arrangement Disclosure Text 832900

(b)

significant terms of the arrangement that may affect the amount, timing and certainty of future cash flows (eg the period of the concession, re‑pricing dates and the basis upon which re‑pricing or re‑negotiation is determined);

Explanation of significant terms of service concession arrangement that may affect amount, timing and certainty of future cash flows Disclosure Text 832900

(c)

the nature and extent (eg quantity, time period or amount as appropriate) of:

(i)

rights to use specified assets;

Explanation of nature and extent of rights to use specified assets Disclosure Text 832900

(ii)

obligations to provide or rights to expect provision of services;

Explanation of nature and extent of obligations to provide or rights to expect provision of services Disclosure Text 832900

(iii)

obligations to acquire or build items of property, plant and equipment;

Explanation of nature and extent of obligations to acquire or build items of property, plant and equipment Disclosure Text 832900

(iv)

obligations to deliver or rights to receive specified assets at the end of the concession period;

Explanation of nature and extent of obligations to deliver or rights to receive specified assets at end of concession period Disclosure Text 832900

(v)

renewal and termination options; and

Explanation of nature and extent of renewal and termination options Disclosure Text 832900

(vi)

other rights and obligations (eg major overhauls);

Explanation of nature and extent of other rights and obligations Disclosure Text 832900

(d)

changes in the arrangement occurring during the period; and

Description of changes in service concession arrangement Disclosure Text 832900

(e)

how the service arrangement has been classified.

Explanation of how service concession arrangement has been classified Disclosure Text 832900
Disclosure of detailed information about service concession arrangements [table] Disclosure Table 832900
Disclosure of detailed information about service concession arrangements [text block] Disclosure Text block 832900
Service concession arrangements [axis] Disclosure Axis 832900, 990000
Service concession arrangements [domain] Disclosure Domain 832900, 990000

6A

An operator shall disclose the amount of revenue and profits or losses recognised in the period on exchanging construction services for a financial asset or an intangible asset.

Profit (loss) recognised on exchanging construction services for financial asset Disclosure MonetaryDuration, Credit 832900
Profit (loss) recognised on exchanging construction services for intangible asset Disclosure MonetaryDuration, Credit 832900
Revenue recognised on exchanging construction services for financial asset, operating Disclosure MonetaryDuration, Credit 832900
Revenue recognised on exchanging construction services for intangible asset, operating Disclosure MonetaryDuration, Credit 832900

7

The disclosures required in accordance with paragraph 6 of this Interpretation shall be provided individually for each service concession arrangement or in aggregate for each class of service concession arrangements. A class is a grouping of service concession arrangements involving services of a similar nature (eg toll collections, telecommunications and water treatment services).

Date of consensus

May 2001

Effective date

This Interpretation becomes effective on 31 December 2001.

An entity shall apply the amendment in paragraphs 6(e) and 6A for annual periods beginning on or after 1 January 2008. If an entity applies IFRIC 12 for an earlier period, the amendment shall be applied for that earlier period.

IFRS 16, issued in January 2016, amended paragraph 5. An entity shall apply that amendment when it applies IFRS 16.