NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 127

NWG // FINANCIAL INFORMATION
retailers, risks related to revenue reduction and the
transfer of risk to the customer, which is why we have
considered the revenue recognition as a key audit
matter in our audit.
The audit procedures related to revenue
recognition, among other things include:
# # Walkthrough of processes and procedures
related to revenue recognition, verification of
compliance in regards to IFRS standards
# # Detailed analysis of recorded revenue for
different agreements based on historical
results, budgets, and the follow ups where made
to deviations from the expected outcome
# # Random inspection of contracts and the
transfer of risk associated to the period close in
order to verify correct revenue accruals
# # Review of the supporting material that
judgments, calculations and accruals related
to estimates of discounts and bonuses are based
on
# # We have also reviewed the Company's
effectiveness regarding the revenue
disclosures
Valuation of goodwill and trademarks
The reported value for intangible assets amounted
to SEK 1,501.0 million per 31 of December 2019
according to the consolidated statement regarding
financial position. That amount represents 18 percent
of total assets. The Company performs checks of the
reported value against the recoverable amount at an
annual basis or at signs of impairment. The recove-
rable amount is determined for each cash generating
unit by performing a present value calculation of future
cash flows. The calculations are based on the decided
business plan for the next five years and an estimate of
cash flows at the end of the forecast period. The calcu-
lations are also based on a number of assumptions,
such as growth, operating margin and discount rate.
Changes in assumptions have a material effect on
the calculation of the recoverable amount. Due to this
fact we have considered the valuation of goodwill and
trademarks as a key audit matter in our audit.
A description of the impairment loss test is presented
in note 8 “Intangible fixed assets”.
As a part of our audit we have evaluated and tested
the Company’s process for preparing impairment loss
tests. The evaluation and testing has been based on a
review of the accuracy of earlier forecasts and assump-
tions. We performed reasonability assessments of
forecasted cash flows and growth assumptions by
comparing them to other companies within the same
industry. Furthermore we have tested the market-
ability of the Company’s assumptions regarding the
discount rate and long term growth rate with support
from our valuation experts. We have also reviewed
the Company’s model and method for conducting
impairment loss tests, this includes an evaluation
of the Company’s sensitivity analysis. We have also
reviewed the effectiveness of the disclosures related to
valuation of goodwill and trademarks in the annual
report.
Valuation of inventory
The reported value of inventory amounted to SEK
3,557.9 million per 31 of December 2019 according
to the consolidated statement regarding financial
position. That amount represents 42 percent of total
assets. The inventory is valued based on the first
in-first out principle at the lowest cost and net reali-
zable value at the balance sheet date. The calculation
of the net realizable value is based on the Company’s
assumptions regarding slow moving and obsolete
goods. Due to this fact we have considered the valu-
ation of inventory as a key audit matter in our audit.
The Company’s disclosures regarding stock-
in-trade is presented in note 16 in the annual report.
We have reviewed the Company’s processes and
procedures for assessing and following up on slow
moving and obsolete goods. We have performed an
analytical review based on historical comparisons
and data analysis in order to identify slow moving and
obsolete goods and assess the need to make provision.
Furthermore we have also reviewed the effectiveness
of the disclosures related to valuation of inventory in
the annual report.
ANNUAL REPORT // 127