AS AT 30 JUNE 2011
52
Notes to the Financial Statements (continued)
1. Summary of signifcant accounting policies
(continued)
Non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation
diferences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. For example,
translation diferences on non-monetary assets and liabilities
such as equities held at fair value through proft or loss are
recognised in proft or loss as part of the fair value gain or
loss and translation diferences on non-monetary assets
such as equities classifed as available-for-sale fnancial
assets are recognised in other comprehensive income.
iii. Group companies
The results and fnancial position of all the Group entities
(none of which has the currency of a hyperinfationary
economy) that have a functional currency diferent from
the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of the
balance sheet
• income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative efect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates
of the transactions), and
• all resulting exchange diferences are recognised in
other comprehensive income
On consolidation, exchange diferences arising from the
translation of any net investment in foreign entities, and
of borrowings and other fnancial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange diference
is recognised in the income statement, as part of the gain
or loss on sale where applicable.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and
liabilities of the foreign entities and translated at the
closing rate.
e. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances and amounts collected on
behalf of third parties.
Revenue is recognised for the major business activities
as follows:
i. Lease fnance interest revenue
Lease fnance interest revenue is recognised by applying
discount rates implicit in the leases to lease balances
receivable at the beginning of each payment period.
Secondary lease income, including rental income on
extended rental assets is recognised when it is due on an
accruals basis. Proceeds from the sale of rental assets are
recognised upon disposal of the relevant assets.
ii. Interest income on customer loans
Interest income on loans is recognised in the income
statement using the efective interest method.
The efective interest method is a method of calculating
the amortised cost of a fnancial asset and of allocation
of the interest income over the relevant period. The efective
interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected life
of the fnancial instrument or, when appropriate, a shorter
period to the net carrying amount of the fnancial asset or
fnancial liability. When calculating the efective interest rate,
the Group estimates cash fows considering all contractual
terms of the fnancial instrument but does not consider
future credit losses.
iii. Equipment protection plan revenue
The Group operates an equipment protection and debt
waiver plan entitled Protect Plan. Protect Plan revenue is
recognised in the month it is due on an accruals basis. A
provision for outstanding expected claims is recognised in
the balance sheet for the cost of Protect Plan claims which
have been incurred at year end, but have not yet been
notifed to the Group, or which have been notifed to the
Group but not yet paid.
iv. Mobile broadband revenue
Revenue relating to the sale of modems is recognised when
the Group entity has delivered the goods to the dealer.
Delivery does not occur until the products have been
shipped to the specifed location, the risks of obsolescence
and loss have transferred to the dealer and the dealer has
accepted the products. Revenue relating to the broadband
contracts is recognised on an accruals basis over the life of
the contract.
v. Cheque guarantee revenue
Revenue is recognised when the service associated with
the guarantee has been provided on an accruals basis.
All monthly fees are recognised in revenue in the month
to which they relate.
vi. Interest income – bank accounts/loss reserves
Interest income on bank and loss reserve balances is
recognised on an accruals basis.