107 I N T E G R A T E D R E P O R T 2 0 2 1 2. ACCOUNTING POLICIES (CONT’D) 2.8 Significant accounting policies (Cont’d) (e) Recognition of income (Cont’d) (ii) Income related to card activities The Group provides its customers with credit card processing services (i.e., authorisation and settlement of transactions) where it is entitled to a fee for each transaction. These services represent a single performance obligation comprised of a series of distinct daily services that are substantially the same and have the same pattern of transfer over the contract period. The fees vary based on the number of transactions processed and are structured as either a fixed rate per transaction processed or at a fixed percentage of the underlying cardholder transaction. The variable income are allocated to each distinct day, based on the number and value of transactions processed that day, and the allocated revenue is recognised as the entity performs. Revenue from these fees are recognised at a point in time. (iii) Income related to factoring activities The Group provides factoring services to its customers and receives fees at a percentage for each transaction agreed with the counterparties. The performance obligation is satisfied at the acceptance of the invoice for which it provides the factoring service and the revenue is recognised at this point. (iv) 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. Income 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. Income or discounts received from merchants on financing of credit agreements are initially recognised and presented in other liabilities in the statement of financial position. The release to profit or loss is recognised in lending and agency related income line in the statement of profit or loss. (v) 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. (vi) Penalty and late payment fees Penalty and late payment fees on card activities are recognised over the period to which they accrue. Also included in penalty and late payment fees, contingent rent arising on leases, hire purchase and other credit agreement which are recognised as income in the period they are incurred. (vii) Dividend Income Dividend Income is recognised when the Group’s right to receive the payment is established. (viii) Management and administration fees Revenue from management and administration services are recognised over time as the services are received and consumed simultaneously. Explanatory Notes 30 SEPTEMBER 2021 E x p l a n a t o r y N o t e s
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