TGA thorn group limited

Revenue Recognition

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    I am trying to understand the commentary made by management that because of the 4 year contracts to consumers under the Radio Rentals division, reported income is down.

    Note 2 to the accounts shows segment revenue
    Note 3 to the accounts shows revenue recognition.

    Does anyone understand the interaction between these two notes.

    Note 3 shows operating leases at $42.9 million revenue which I assume is from Radio rentals. Yet the Radio rentals revenue per note 2 is $251 million.

    Then as to the revenue recognition points in note 3,
    How do they actually work?
    Operating leases revenue recognised on a straight line basis. But it is only $42.9 million. How do they get this number?
    Finance lease revenue is large at $116million, but its revenue recognition point is at the time the contract is entered into.
    This is significant because then from a P&L perspective its all lumped into the period when the contract is entered into, its not recognised over the course of the lease.

    Interest revenue at $127 million is large, but in my opinion safely accounted for on an accrual basis.

    The reason I am trying to focus on this is to understand their business model.
    Especially the radio rentals division.

    Help on this would be appreciated.
 
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