LOM 2023 Annual Report - Report - Page 41
LOM
2021 ANNUAL REPORT
Revenue from Contracts with Customers
The amount of revenue that the Company recognize is
measured based on the consideration specified in contracts
with customers. The Company recognize revenue when a
performance obligation is satisfied over time as the services
are performed or at a point in time depending on the nature
of the services provided as further discussed below. Revenue
recognition guidance related to contracts with customers
excludes interest received on the company’s cash and broker
balances, income from equity investments, foreign exchange
income, net trading gains, corporate finance income and
administration and custody fees, to which we apply other
applicable U.S. GAAP guidance.
For contracts with multiple performance obligations, or
contracts that have been combined, the Company allocate the
contracts’ transaction price to each performance obligation
using best estimate of the standalone selling price. Contractual
fees are negotiated on a customer-by-customer basis and are
representative of standalone selling price utilized for allocating
revenue when there are multiple performance obligations.
Substantially all services are provided as a distinct series of
daily performance obligations that the customer simultaneously
benefits from as they are performed. Payments may be made
to third party service providers and the expense is recognized
gross when we control those services as we are deemed the
principal.
Contract durations may vary from short to long term or may
be open ended. Termination notice periods are in line with
general market practice and typically do not include termination
penalties. Therefore, for substantially all revenues, the duration
of the contract and the enforceable rights and obligations do
not extend beyond the services that are performed daily or at
the transaction level. In instances where we have substantive
termination penalties, the duration of the contract may extend
through the date of substantive termination penalties.
Brokerage Fee, Net interest Income, Administration and
Custody Revenue
Revenue from contracts with customers related to servicing fees
is recognized over time as customers benefit from the custody,
administration, accounting and other related asset services
as they are performed. At contract inception, no revenue is
estimated as the fees are dependent on assets under custody
and administration and/or actual transactions which are
susceptible to market factors outside of the Company’s control.
Therefore, revenue is recognized using a time-based output
method as the customers benefit from the services over time
and as the assets under custody or transactions are known or
determinable during each reporting period based on contractual
fee schedules. Payments made to third party service providers,
such as sub-custodians, are generally recognized gross as the
entity is deemed to be a principal in such arrangements.
Trading services revenue includes revenue generated from
providing access and use of electronic trading platforms and
other trading and brokerage services. Electronic FX services
are dependent on the volume of actual transactions initiated
through the Company’s electronic exchange platforms. Revenue
is recognized over time using a time-based measure as access
to, and use of, the electronic exchange platforms is made
available to the customer and the activity is determinable.
Revenue related to other trading and brokerage services is
recognized when the customer obtains the benefit of such
services which may be over time or at a point in time upon
trade execution.
Management Fee
Revenue from contracts with customers related to management
fee, is recognized over time as customers benefit from the
services as they are performed. Substantially all investment
management fees are determined by the value of assets under
management. At contract inception, no revenue is estimated
as the fees are dependent on assets under management which
are susceptible to market factors outside of the Company’s
control.
Therefore, substantially all Investment Management services
revenue is recognized using a time-based output method as
the customers benefit from the services over time and as the
assets under management are known or determinable during
each reporting period based on contractual fee schedules.
Revenue by category
In Note 14, revenue is disaggregated by the two lines of
business and by revenue stream for which the nature, amount,
timing, and uncertainty of revenue and cash flows are affected
by economic factors.
Contract balances and contract costs
As of December 31, 2021, net receivables of $1,028,630
(2020 - $798,956), included fees receivable, representing
amounts billed or currently billable to or due from customers
related to revenue from contracts with customers. As
performance obligations are satisfied, we have an unconditional
right to payment following which billing is generally performed
monthly. No adjustments are made to the promised amount
of consideration for the effects of a significant financing
component as the period between when we transfer a promised
service to a customer and when the customer pays for that
service is expected to be one year or less.
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