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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
135
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
The main categories of revenue and the bases of recognition are as follows:
(a) Sale of starter packs
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 phone network. Ongoing revenue and other incentives are recognised once certain criteria have been
met. The point of activation is determined by the relevant cellular phone 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 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.
(d) Electricity commission
Commissions on the sale of prepaid electricity are recognised when the Group sells electricity to the customer
on behalf of the utility suppliers. Commissions are recorded based on agreed rates per the contracts. For this
category of revenue the Group acts as an agent.
Employee benefits
(a) Equity compensation benefit
The Group operates an equity-settled forfeitable share incentive plan, under which the entity receives services
from employees as consideration for equity instruments of the Group. The fair value of the services received
in exchange for the grant of forfeitable shares is recognised as an expense. The total amount to be expensed
is determined by the fair value of the forfeitable shares granted. The total amount expensed is recognised
over the vesting period, which is the period over which all of the vesting conditions are to be satisfied. At
each reporting date, the entity recognises the impact of any shares that have been forfeited prior to the end
of the vesting period, if any, in the statement of comprehensive income with a corresponding adjustment
to equity.