NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2022 (cont’d) FINANCIAL STATEMENTS 3. Significant accounting policies (CONT’D) (s) Revenue recognition (cont’d) (i) Revenue from contracts with customers (cont’d) (b) Sales of goods Revenue from sale of goods is recognised when control of the products has transferred, being at the point that the goods had been delivered to the customer. Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, and bears the risks of obsolence and loss in relation to the goods. A receivable is recognised by the Group when the goods are delivered as this represents the point in time at which the right to consideration is unconditional, because only the passage of time is required before payment is due. (ii) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis. (iii) Interest income Interest income is recognised on accruals basis using the effective interest method. (iv) Dividend income Dividend income from investment is recognized when the right to received dividend payment is established. (v) Income from Ijarah financing This represents a lease contract that transfers the ownership of an asset to another party for a specified period in exchange for a rental. Effective transfer of the legal title is a consequent to the conclusion of the lease arrangement that can be in the form of a sale or gift of the asset to the lessee. Al-Ijarah Thumma al-Bai’ (“AITAB”) is a form of Ijarah lease contracts where the sale of asset to the lessee is executed at the completion of the lease period. Income from an Ijarah contract is recognised on effective profit rate basis over the period of the contract based on the principal amounts outstanding. (t) Employee benefits (i) Short-term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the reporting period in which the associated services are rendered by employees of the Group and of the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur. The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. 179
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