GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 97 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 5. REVENUE (cont’d) (a) Rental of EDC equipment Rental income is accounted for on a straight line basis over the lease term of an ongoing lease. The aggregate cost of incentives provided to the lessee is recognised as reduction of rental income over the lease term on a straight line basis. (b) Sales of value-added solutions Revenue from sale of services rendered except for maintenance income is recognised at a point in time when the services has been rendered to the customer and coincides with the delivery of services and acceptance by customers. There is no right of return and warranty provided to the customers on the services rendered. There is no significant financing component in the revenue arising from services rendered as the services are made on the normal credit terms not exceeding twelve months. Maintenance income is accounted for on a straight line basis over the services term of an ongoing services. The aggregate cost of incentives provided to the customer is recognised as reduction of maintenance income over the services term on a straight line basis. (c) Sales of goods Revenue from sale of goods is recognised at a point in time when the goods have been transferred to the customer and coincides with the delivery of products and acceptance by customers. There is no right of return and warranty provided to the customers on the sale of goods. There is no significant financing component in the revenue arising from sale of goods as the sales are made on the normal credit terms not exceeding twelve months. (d) Sales of prepaid air-time top-ups The Group, being a distributor in the sales of prepaid airtime top-ups, is in substance acting as an agent for the operators. The revenue associated with the sales of prepaid airtime top-ups to end-users is recognised on a net basis, which represents the margin earned. The revenue is recognised at a point in time when the sales of prepaid airtime top-ups have been transferred to the customer and coincides with the delivery of prepaid airtime top-ups and acceptance by customers. The details of the prepaid airtime top-ups are as follows: Group 2019 2018 RM RM Sales of prepaid airtime top-ups: Gross billing 1,774,886,326 1,895,734,872 Cost of purchase from telecommunication service providers (1,681,622,224) (1,797,363,684) 93,264,102 98,371,188 (e) Management fees Management fees are recognised at a point in time when management service rendered and acceptance by subsidiaries.