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Notes to the Consolidated Financial Statements

31st March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.23 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Group’s activities. Revenue is shown net of value
added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group
recognises revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific criteria have been met for each of
the Group’s activities as described below:

(i) Sales of goods are recognised when a group entity has delivered products to the customer,
the customer has accepted the products and collectability of the related receivables is
reasonably assured.

(ii) Rental income is recognised on a straight-line basis over the periods of the respective leases.

(iii) Interest income is recognised on a time-proportion basis using the effective interest method.
When a 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.

2.24 Leases

Operating lease (as 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.

Finance lease (as the lessee)

The Group has land leases 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.

Operating lease (as the lessor)

Where the Group leases out assets under operating leases, the assets are included in the
consolidated balance sheet according to their nature, as set out in Note 2.7. Revenue arising from
operating leases is recognised in accordance with the Group’s revenue recognition policies, as set
out in Note 2.23(ii).

52 ALCO HOLDINGS LIMITED ANNUAL REPORT 2015