Page 48

AFDAWN AR FINAL 2019

AFRICAN DAWN ANNUAL REPORT 2019 46 Accounting Policies continued 1.12 Contingent assets A Contingent asset is an asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within control of the entity. 1.13 Revenue Revenue from contracts with customers The company has adopted IFRS 15 Revenue from Contracts with Customers from 1 March 2018 which resulted in changes in accounting policies but no adjustments to the amounts recognised in the financial statements, (refer to note 1.2). In accordance with the transition provisions in IFRS 15, the company has adopted the new rules retrospectively. Revenue comprises services rendered as follows: • Commissions received; • Administration fees • Income from the rendering of services; • Interest income on trade receivables and originating fees Revenue measured at the fair value of the consideration received or receivable is reduced by any rebates and trade discounts allowed and excludes value-added tax. Management have elected to apply the practical expedient available and carry revenue and the related receivable at the undiscounted value for all contracts with customers where management expects at contract inception, the period between revenue recognition and when repayment for those goods or services will be one year or less. The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales transaction. The consideration received from these multiple-component transactions is allocated to each separately identifiable component in proportion to their relative standalone selling price. Commission income Commission income is derived from the sale of insurance premiums to micro-financing debtors as well as collection commission where the group earns commission from collecting debts. For insurance commission the group acts as an agent by offering insurance products under-written by an external party. The group therefore receives a commission based on the number of premiums written by the external company and recognises only the commission earned, once under-written, per the agreement between the parties. Collection commission relates to collecting services provided by the group to external parties. The group earns commission based on a fixed portion that the group collects. These commissions are earned as amounts are collected. Administration fees Monthly administration fees are charged on micro-finance debtors classified as trade receivables. Fees are recognised when the services are provided and determined as a fixed cost for each debtor for the period that their loan remains outside of default or in the legal book. No administration fees are charged on loans in default or in the legal book. Interest income Interest income is recognised in profit or loss using the effective-interest method taking into account the expected timing and amount of cash flows. Interest income is recognised for micro-financing debtors; which are measured at amortised cost and classified as trade receivables. The effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating the interest income over the relevant period. The original effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset. When calculating the original effective interest rate, the group estimates cash flows considering contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate.


AFDAWN AR FINAL 2019
To see the actual publication please follow the link above