Note 4- Revenue
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.
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.
098 // ANNUAL REPORT