Ann: Half Year Report and Accounts - 31 December 2017, page-111

The previous accounting standard says that, "Revenue is recognised when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably." For this to apply, the future economic benefits need only be probable, not certain, so the signing of a digital contract to purchase is not required. For the future economic benefits to be probable, they need to be more likely to flow than not to flow. If my understanding is correct, based on past experience BRTV expected that customers who signed up to get a video made were more likely to proceed with a purchase than not to proceed with a purchase - i.e. it was probable that they would proceed with a purchase & economic benefits would flow. It is not an unreasonable assumption, as some cooperation with the client would be required to make a video, & no client would waste their time doing that if they weren't expecting there would be a good chance of them purchasing the final product, & hoping for that outcome. That is sufficient for the old accounting standard to apply.

It may be that some of those purchases were delayed due to the company getting distracted with other matters, as well as due to taking on too many customers in too short a time & overwhelming their video production capacity, which would have resulted in a report under the new accounting standards to appear considerably less optimistic than that under the old. In effect, the old standards don't factor in the time value of money as well as the new standards do, as they say nothing about when it is probable that the future financial benefits flow. As such, the new accounting standards are better for this situation. However, whether the sales conversions end up being done fast enough to save the company & produce significant value, or whether the cash burn rate remains too high & the rate of sale conversions is unable to sufficiently make up for that, remains to be seen.