NWG // FINANCIAL INFORMATION // THE GROUP
Note 4 - Revenue
Accounting policies
Most of New Wave Group ' s revenue comes from sales of goods , which are defined as separate performance obligations . Sales are mainly to retailers in promo and retail . New Wave Group ´ s contracts with customers are primarily contracts with no agreed volumes or there is no existing contract and general terms apply . Therefore , a binding contract occurs , in main part of the sales , when a customer order is received and confirmed . Fulfillment of the performance obligations under the contracts are deemed to be achieved when control of the goods is transferred to the customer . New Wave Group assesses that moment with the help of shipping documents and shipping terms , which vary within the Group .
The transaction price primarily consists of a fixed price per sold quantity . Variable parts , such as discounts , bonuses and returns , only occur to a small extent and then reduces the transaction price . At the balance sheet date , a repayment liability for accrued bonuses , kick-backs and rebates are recorded as accrued expenses and prepaid income in the consolidated balance sheet .
Within the Group there are also a few smaller contracts with repurchase commitments where New Wave Group delivers goods to the customer with full return right at the same price as the original sale . The Group recognizes a right-of-return asset as inventory and a repayment liability for expected returns as other liabilities in the Group ´ s consolidated balance sheet . The income and costs related to the expected returns are not recognized in the Group ´ s consolidated income statement until the return period expires .
Contractual assets arise when invoicing or a customer ’ s payment is conditional to additional performance obligations such as conditional partial deliveries of goods . If the Group has received payments from customers without any performance obligation being fulfilled , a contractual liability is recognized as accrued expenses and prepaid income in the Group ´ s consolidated balance sheet . The Group has a number of sponsorship agreements , which imply an exchange of goods and services between the contractual parties . In the sponsorship agreements where the customer has a distinct obligation , mainly related to marking activities , and the customer receives free goods as compensation , New Wave Group recognizes a revenue that is valued to the fair value of the transferred goods . The revenue is recognized in connection with delivery of the goods . New Wave Group does not have any significant guarantee commitments . The Group has insignificant revenues from royalty , commission and membership fees for customer clubs , which are recognized as net sales in the Group ’ s consolidated income statement .
During 2020 the Group has received grants from governments around the world related to actions that have been introduced due to the outbreak of COVID-19 . Government grants are recognized in the Group ´ s consolidated balance sheet and the Group ´ s consolidated income statement when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received . Grants related to expenses are classified as other operating income in the Group ´ s consolidated income statement and is recognized on a systematic basis over the same period in which the Group recognizes the related costs for which the grants are intended to compensate .
Disaggregation of revenue
Disaggregation of revenue from agreements with customers has been made based on the Group ' s two sales channels promo and retail , the Group ' s three segments Corporate , Sports & Leisure and Gifts and Home Furnishings as well as geographic areas .
Customers within promo place higher demands on fast deliveries and the order frequency is higher than in retail . In both sales channels , goods are sold to customers , and the timing of revenue recognition is determined in the same way . The uncertainty in revenue and cash flows is somewhat lower within the sales channel promo because the Group ' s customers have in turn usually already sold the products at the time of the order .
074 // ANNUAL REPORT