Notes to the Financial Statements continued for the year ended 31 May 2022
1 Accounting policies continued Assurance continued
Timing of satisfaction of performance obligations and significant payment terms
Revenue recognition policies, including determination of transaction price and rationale Transaction price is determined by fixed contract rates based upon day rates and number of post-go-live consultancy days. One performance obligation, being a combined monitoring cyber and licence service, is identified in relation to the MSP model monitoring service. Revenue is recognised over the contract length as the software and monitoring process is an overall service, whereby the Group retains control of the licence and provides a complete monitoring service to the customer. If the customer cancels the contract, the Group will retain control of the licence. The customer benefits from a 24/7 monitoring service whereby benefit is obtained daily and therefore revenue is recognised on straight-line basis as the performance obligation is satisfied over time. The transaction price is determined by fixed contract rates for the combined services. Revenue in relation to the reseller model monitoring service is recognised over the contract length on a straight-line basis as the performance obligation is satisfied over time. The customer benefits from a 24/7 monitoring service whereby benefit is obtained daily on straight-line basis. Revenue is recognised when control of the product is transferred to the customer. This occurs upon delivery under the contractual terms. On certain sales of third party products, the control of the product is considered to pass from the vendor to the end customer and in these cases the Group acts as an agent, and hence only records a commission on sale as opposed to gross revenue and costs of sale. Revenue is recognised on an input basis to measure the satisfaction of the performance obligation over time. This is done according to total costs incurred in comparison to the total expected costs to be incurred to satisfy the performance obligation. This input measure is driven by the nature of the activities carried out in satisfying the performance obligation. The transaction price is fixed within the terms of the contractual arrangement.
Revenue stream
Nature
Global Managed Services (GMS) continued
Product sales
The customer only benefits from the products on delivery. Invoices are raised monthly or based on an agreed invoicing profile with the customer. Invoices are usually payable within 30 days.
This revenue represents the sale of own manufactured and/or resale of third party products with no connection to other Group services.
Long-term fixed price contracts
Delivery of the product is considered to represent one performance obligation. The development and/or
This revenue represents the long-term development and/ or manufacture of specialised software and hardware solutions.
manufacturing work carried out by the Group is not considered to create an asset with an alternative use to the entity. The Group is entitled to payment as performance of the contract is completed. On this basis, revenue is recognised over time. Invoices are raised based on achievements of pre-defined milestones in the contract. Invoices are usually payable within 30 days.
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NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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