Sales revenues of goods and services are recognised by the Group at a point in time (or over time) when a performance obligations are satisfied by transferring a promised good or service (i.e. an asset) to a customer in the amount reflecting the consideration, to which – as the Group expects – it will be entitled in exchange for these goods or services. This principle the Group also applies to consideration, which includes a variable amount. An asset is transferred when the customer obtains control of that asset. The following circumstances indicate the transfer of control in accordance with IFRS 15: the current right of the seller to consideration for an asset, the legal ownership of the asset by the customer, physical possession of the asset, transfer of risks and rewards and acceptance of the asset by the customer. Revenues include received and due payments for delivered finished goods, merchandise, raw materials and services, decreased by the amount of any trade discounts and value added tax (VAT), excise tax and fuel charges. The amount of revenues is determined at the fair value of the payment received or due. Revenues from the sale of finished goods and services are adjusted for profits or losses from settlement of cash flows hedging instruments related to the above mentioned revenues.
Revenues and costs from services, which beginning and end fall within different reporting periods, are recognised by reference to the stage of completion of the service, when the outcome of a contract can be valued reliably, in other cases, revenues are recognised only to the extent of costs incurred to the date, but not higher than the costs that the Group expects to recover. There is no significant financing component in contracts with customer concluded by the Group.
Based on analyses of contractual clauses in sales contracts, the Group identified the agency model mainly in the area of LPG sales and non-fuel merchandise sales by ORLEN Deutschland to customers network.
The loyalty program VITAY liability, arises at the time of sales of goods and services at own and franchise petrol stations for each single sale transaction and in case of purchase by the Group’s customers in partner’s e-Shops and consists of calculating points entitling to discounts on future purchases. A ratio of 68.5% is adopted to recognise liability taking into account the probability of its on realisation, based on empirical data of points used compared to those issued to the customer in the last 36 months.
The Group provides marketing services to suppliers when purchasing merchandise. The Group assessed, that marketing services provided to suppliers are inseparably linked to the purchase of these merchandise, hence revenues from service reduce costs related to their purchase and release for sale.
| % share | |||||
|---|---|---|---|---|---|
| NOTE | 2019 | 2018 | 2019 | 2018 | |
| Revenues from sales of finished goods and services, net | 93,009 | 91,014 | 83.6% | 83.0% | |
| revenues from contracts with customers | 92,690 | 90,792 | 83.3% | 82.8% | |
| excluded from scope of IFRS 15 | 319 | 222 | 0.3% | 0.2% | |
| Revenues from sales of merchandise and raw materials, net | 18,194 | 18,692 | 16.4% | 17.0% | |
| revenues from contracts with customers | 18,161 | 18,692 | 16.4% | 17.0% | |
| excluded from scope of IFRS 15 | 33 | – | – | – | |
| Sales revenues, incl.: | 111,203 | 109,706 | 100.0% | 100.0% | |
| revenues from contracts with customers | 11.4 – 11.7 | 110,851 | 109,484 | 99.7% | 99.8% |
Revenues excluded from the scope of IFRS 15 refer to operating lease contracts and compensation for energy prices
As part of the concluded contracts, the Group commits to transfer to customers mainly refining, petrochemical products and goods, energy, crude oil and gas. Under these agreements the Group acts as a principal. Transaction prices in existing contracts with customers are not constrained.
There are no significant contracts in force in the Group, which allow for obligations for returns, refunds and other similar obligations. The Group does not identify revenues for which the payment of consideration is contingent.
The warranties provided under the contracts are warranties that provide a customer with assurance that the related product complies with agreed-upon specification. They are not a distinct service.
In the Downstream segment, there are mainly sales with deferred payment. In the Retail segment, there are both cash sales as well as sales with deferred payment terms performed by using a fuel cards entitling customers to continuous purchase at the network of petrol stations. Settlements with customers take place mostly in two-week periods (so-called Fleet Cards).
Usually payment is due after transferring good or service. In contracts with customers in Downstream and Retail segments, in most cases payment terms not exceeding 30 days are used, while in the Upstream segment payment terms not exceeding 60 days are used.
The variability of consideration in contracts with customers is connected mainly with volume rebates.
ORLEN Group operates in the conditions of changing macroeconomic environment. The economic situation, the labour market and macroeconomic trends have a significant impact on the level of consumption of fuels and petrochemical products, and consequently on sales volume and sales prices. The Downstream segment margins are mainly affected by the quotation of refinery and petrochemical products and crude oil prices. Crude oil prices are shaped by factors such as changes in demand, the volume of extraction and global inventory of crude oil level and fuels quotation.
The main economic indicator – GDP (Gross Domestic Product), which is determined by consumption, capital expenditures and exports, allows to assess at what stage is the economy. The changes in the GDP index are usually correlated with changes in the unemployment rate and fuel consumption. The general condition of the economy, measured, among others, by the level of GDP, affects present and future consumer behaviour.
The Group divides revenues from contracts with customers by:
In the Group’s opinion the above breakdown allows at best to acquaint the reader with nature, amount, due dates and uncertainty related to revenues and cash flows resulting from contracts with customers.