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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
115
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Revenue recognition continued
The main categories of revenue and the bases of recognition are as follows:
(a)
Prepaid and postpaid SIM cards
Revenue is recognised when the significant risks and rewards of ownership are transferred to the
customer, and when the entity no longer retains continuing managerial involvement to the degree
usually associated with ownership.
Activation bonuses received from the networks are recognised when the SIM card is activated on the
relevant cellular network. Ongoing revenue and other incentives are recognised once certain criteria
have been met. The point of activation is determined by the relevant cellular networks. For this
category of revenue the Group acts as a principal.
(b)
Sales of prepaid airtime
Sales of prepaid airtime are recognised when the Group sells the airtime to the customer. Sales are
recorded based on the price specified in the sales contracts, net of discounts at the time of sale. The
Group accounts for the sale of prepaid airtime based on the substance of the arrangement. Where
the Group acts in its capacity as principal for the sale of airtime (for instance where the Group bears
inventory risk), revenue is recognised as the fair value of the consideration receivable net of discounts
and taxes. Revenue is recognised at the point at which risks and rewards are transferred to the
customer and the Group retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the prepaid airtime.
Where the Group is acting in its capacity as an agent in the sale of prepaid airtime (for instance where
the Group does not bear any inventory risk), the amount of revenue recorded is the fair value of
commission received or receivable.
(c)
Sales of postpaid airtime
Sales of postpaid airtime are recognised on airtime contracted to be delivered to customers for a
period of time and billed on a monthly basis in arrears. Revenue is recognised when the significant
risks and rewards of ownership are transferred to the customer, and when the entity no longer retains
continuing managerial involvement to the degree usually associated with ownership.
Where the Group acts in its capacity as principal for the sale of postpaid airtime, revenue is recognised
as the fair value of the consideration receivable net of discounts. Where the Group is acting in its
capacity as an agent in the sale of postpaid airtime, revenue is recorded upfront as the fair value of
commission received or receivable.
(d)
Sales of handsets, tablets and other devices
Revenue is recognised at the point at which risks and rewards are transferred to the customer and
the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the handsets. For this category of revenue the Group acts as a
principal.
(e)
Sales of services
Sales of services are recognised in the accounting period in which the services are rendered, by
reference to completion of the specific transaction assessed on the basis of the actual service provided
as a proportion of the total services to be provided. These services include location-based services,
SMS transaction services, media, call centre and data transaction revenue, and technology revenue.
For this category of revenue the Group acts as a principal.