Senwes Annual Financial Statements 2022 | Page 82

SENWES ANNUAL FINANCIAL STATEMENTS 2022
2.12 Revenue recognition Revenue includes income earned from the sale of goods , income from commodity trading , income from services rendered , commission income , interest and dividend income . Interest received as a result of credit extension is also stated as revenue but only to the extent that collection is reasonably assured . Revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services , net of any discounts , rebates and related taxes . The group assesses its revenue agreements in order to determine if it is acting as a principal or agent . Intragroup sales are eliminated on consolidation .
Revenue from contracts with customers
Services rendered Storage and handling of grain As a customer cannot benefit separately from either handling or storage on its own or together with other readily available resources , handling and storage constitutes a single performance obligation .
This performance obligation is satisfied by Senwes over a period of time as the customer receives and consumes the benefit of being able to store the product at the silo .
As the customer pays for specific activities to be performed , an output based method to measure the completion of the service is appropriate . This entails that revenue is recognised on the basis of the value of services transferred to date relative to the total service promised .
Revenue from handling is currently recognised on a fixed ratio-basis , which is derived from the costs and efforts of loading the product compared to withdrawing it from the silo .
Revenue from storage is recognised as the grain is stored over time .
Processing of grain Senwes processes grain on behalf of a counter party . This process includes various actions , i . e .:
• Quality control of grain ;
• Fumigation of seed ;
• Processing to predetermined condition ( including cleaning );
• Packing of processed seed ;
• Protection of seed ; and
• Storage of seed .
The primary performance obligation ( cleaning ) is performed at a point in time once the cleaning process has been completed , based on the following indicators :
• The client only benefits from the processing upon completion .
• Senwes only has a right to be paid once processing has been completed .
• Senwes only transfers physical possession of the product which value has been enhanced back to the client once processing is completed .
Thus , the full revenue from the transaction price is recognised upon completion of the processing activity by Senwes .
Commission received Commission is received on the procurement and sale of grain .
Revenue is recognised at the point in time when grain is delivered .
Servicing of equipment The customer is charged for time spent , parts and consumables . If it is not possible to complete the service due to work beyond the initial scope , the client is liable for the charges for additional time spent and materials used to the point when the service ceases .
If the service does not take a significant period of time to perform , the revenue will be recognised when the service is completed . If the service does however , take a significant amount of time , revenue will be recognised as the customer ’ s asset is enhanced and Senwes obtains a right to receive payment .
Credit initiation fees The client pays Senwes the initial fee to perform certain necessary work and to prepare loan documentation .
The performance obligation is fulfilled at a specific point in time , as opposed to over a period of time . This point in time is when all the procedures to put the loan agreement in place , have been completed .
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