Cloudberry Clean Energy Annual report 2020

73 Cloudberry Annual report 2020 Financial statements Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. On consolidation, the assets and liabilities of foreign entities with functional currencies other than NOK are translated into NOK at the rate of exchange prevailing at the reporting date and their income statements are translated at annual average exchange rates. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. Revenue recognition Cloudberry accounts for revenue in accordance with IFRS 15 Revenue from Contracts with Customers and applies the five-step method to all revenue stream. The Group’s sales revenues are divided into two categories 1. Sale of hydro and wind generated electricity delivered to the grid, el-certificates and guaran- tees of origin. 2. Sale of management services within project development or production management serviceses. The revenues from Production bear the characteris- tic of delivering power at a certain price. The per- formance obligation is to deliver a series of distinct goods (power) and the transaction price is the con- sideration Cloudberry expects to receive, at either spot price, regulated price or contract price. The performance obligation is satisfied over time which entails that revenue should be recognised for each unit delivered at the transaction price. Cloudberry applies a practical expedient under IFRS 15 whereby the revenue from power for most of the contracts is recognised at the amount of which the entity has a right to invoice. The right to invoice power arises when power is produced and delivered, and the right to invoice the consideration will normally correspond directly with the value to the customer. Revenue frommanagement services is recognized when the service is preformed, and Cloudberry has an unconditional right to the consideration settlement. When the performance obligation is fulfilled and Cloudberry has an unconditional right to the consid- eration, this is presented separately in the balance sheet as a receivable. When determining the transaction price for each element in the contract, Cloudberry adjusts for the time value of money if the timing of payment agreed to by the parties provides the customer with a significant benefit of financing. The Group applies a practical approach, and the consideration is not adjusted for a financing component if the period between the transfer for the goods or service and the payment is less than a year. Other income Income in the Develop segment is mainly related to the sale of ready-to-build develop projects and is accounted net of inventory costs and presented as other income in accordance with IFRS 10. The pro- jects are often organised in single-purpose-vehicles (SPV) and the net gain and net loss is recognised when control of the project SPV is transferred to the acquirer. Net gain or loss from sale of fixed assets is classified and presented as other income. Government grants Government grants are conditional to own gen- eration of power from certain technologies. This includes el certificates and guarantees of origin (GoO). The right to receive the grants are obtained at the time of generation. When the el certificates and GoO are granted they are measured at fair value and recognised as a government grant within “Other income” and inventory. Upon subsequent sales, the sales price is recognised within “sales revenues”. Inventory of el-certificates and GoO are measured at the lower of cost and net realisable value with adjustments to el-certs cost. Share-based compensation Cloudberry has an equity incentive plan for top management and key employees. The programme includes the issue of warrants for shares in the company. The warrants-scheme is accounted for and reported in accordance with IFRS 2. The renumeration is share-based. The fair value of the warrants is measured at grant date using an appro- priate valuation model. In Cloudberry the Black and Scholes model is applied based on the market price to determine the fair value at the grant date. The grant date is determined by the Board of Directors. The fair value of the warrants is recognised as a