Page 97 - Neal and Massy Holdings Annual Report 2012

95 forward focused
2 Summary Of Significant Accounting Policies (continued)
2.22 Revenue recognition (continued)
c) Sale of services (continued)
Revenue from fixed-price contracts for delivering design services is also recognised under the percentage-of-completion
method. Revenue is generally recognised based on the services performed to date as a percentage of the total services to
be performed.
Revenue from fixed-price contracts is generally recognised in the period the services are provided, using a straight-line
basis over the term of the contract.
If circumstances arise that may change the original estimates of revenues, costs or extent of progress toward completion,
estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected
in income in the period in which the circumstances that give rise to the revision become known by management.
d) Rental income
Rental income from investment property leased out under an operating lease is recognised in the income statement on a
straight-line basis over the lease term.
Contingent rents, such as turnover rents, rent reviews and indexation, are recorded as income in the periods in which
they are earned. Rent reviews are recognised when such reviews have been agreed with tenants.
e) Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group
reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original
effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on
impaired loans and receivables is recognised using the original effective interest rate.
f) Dividend income
Dividend income is recognised when the shareholder’s right to receive payment is established.
2.23 Leases
a) Group is the lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to
the consolidated income statement on a straight-line basis over the period of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where, the Group has
substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s
commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance