Annual Report 2019

Explanatory Notes 30 SEPTEMBER 2019 2. ACCOUNTING POLICIES (CONT’D) 2.6 Significant accounting policies (Cont’d) (d) Recognition of income Policy effective prior to 1 October 2018 Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable stated net of discounts, returns, value added taxes, rebates and other similar allowances. The specific recognition criteria described below must also be met before revenue is recognised. Interest and similar income For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Fees that the Group considers to be an integral part of these financial instruments are recognised in the EIR. Earnings from finance leases are recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Commissions or discounts received from merchants on financing of credit agreements are initially recognised and presented in other liabilities in the statement of fnancial position. The release to profit or loss is recognised in fee and commission income in the statement of profit or loss. Rental income Rental income is recognised in accordance with the substance of the relevant agreement. Rental income from operating leases net of value added taxes is recognised on a straight line basis over the lease term. Dividend income Dividend income is recognised when the Group’s right to receive the payment is established. Rendering of services Revenue from rendering of services is recognised in the accounting period in which services are rendered. Management fees are recognised as the services are provided. Policy effective as from 1 October 2018 Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer. Fee and commission income The Group earns fee and commission income from the financial services it provides to its customers. Fee and commission income is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange for providing the services. The performance obligations, as well as the timing of their satisfaction, are identified, and determined, at the inception of the contract. The Group’s revenue contracts do not typically include multiple performance obligations. CIM FINANCIAL SERVICES LTD / ANNUAL REPORT 2019 79