123 Cloudberry Annual report 2022 Financial statements Statement of profit or loss and comprehensive income Note 11 Sales revenues and other operating income Accounting principle Revenue recognition The Group accounts for revenue in accordance with IFRS 15 Revenue from Contracts with Customers and applies the five-step method to all revenue streams. The Group’s sales revenues are divided into the following categories: 1. Sale of hydro and wind generated electricity delivered to the grid, el-certificates and guarantees of origin. 2. Sale of management services for hydro and wind power assets. 3. Sale of management services for development of hydro and wind assets 4. Digital services 5. Consultancy services within accounting and IT management. 6. Agency fee power sales Revenue from power production or related products bear the characteristic of delivering power, el-certificates and guarantees of origin, at a certain price. The performance obligation is to deliver a series of distinct goods (power or related products) and the transaction price is the consideration the Group 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 recognized for each unit delivered at the transaction price. The Group applies a practical expedient under IFRS 15 whereby the revenue from power for most of the contracts is recognized 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. The right to invoice for el-certificates and guarantees of origin arise when the certificates are delivered. Revenue from management and consultancy services is recognized when the service is performed, and the Group has an unconditional right to the consideration settlement. When the performance obligation is fulfilled and the Group has an unconditional right to the consideration, this is presented separately in the balance sheet as a receivable. Agency fee from power sales are services related to power trade on behalf of power producers. Agency fee revenues are presented net and represent only the agency fee. This is because the Group acts on behalf of the power producer and does not trade at its own risk. A smaller part of the trade portfolio includes risk related to unbalance, but this risk is actively reduced as much as possible. When determining the transaction price for each element in the contract, the Group 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 Sale of ready to build development projects is assessed as not part of the ordinary course of daily business, as each transaction is unique. The sales of ready-to-build development projects is accounted net of inventory costs and presented as other income in accordance with IFRS 10. The projects are often organized in single-purpose-vehicles (SPV) and the net gain and net loss is recognized when control of the project SPV is transferred to the acquirer. Net
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