General
The Group recognizes revenue in accordance with IAS 18, Revenue Recognition, including provisions related to recognition of revenue from multiple-component transactions. Accordingly, the Group recognizes revenue from the sale of goods when:
|
· |
the significant risks and rewards of ownership of the goods have been transferred to the customer;
|
|
· |
it is probable that the economic benefits associated with the transaction will flow to the Group;
|
|
· |
the costs incurred or to be incurred in respect of the transaction can be measured reliably;
|
|
· |
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; and
|
|
· |
the amount of revenue can be measured reliably.
|
The revenue from sales in the ordinary course of business is measured according to the fair value of the consideration received or receivable, which is based on the selling price of each component, net of discounts.
In general, the Group’s sales agreements include several components:
|
· |
surgical robotic-guidance systems (“Systems”);
|
|
· |
related re-usable accessories; and
|
|
· |
warranty and maintenance services related to the Systems sold, which includes spare parts, software updates, preventive maintenance and on-call support as detailed in the agreement.
|
These components are split into separate accounting units if and only if each component has separate value for the customer and there is reliable evidence of the fair value of the components not yet supplied. Components not split into a separate accounting unit due to non-compliance with the above conditions, are grouped together as a single accounting unit. The revenue from each such accounting unit is recognized upon fulfillment of the conditions for recognition of revenue from the components included therein, according to their type. The allocation of consideration from a revenue arrangement to its separate units of account is based on the relative fair values of each unit. If the fair value of the delivered item is not reliably measurable, then revenue is allocated based on the difference between the total arrangement consideration and the fair value of the undelivered item. Usually, fair value of the warranty and maintenance services component is determined based on the renewal quote offered in the sales agreement.
The timing of revenue recognition from the various components is as follows:
Sales of Systems - The revenue from sales of Systems is recognized at the time of transfer of the significant risks and rewards of ownership as follows:
|
· |
Sales to end customers - Upon the completion of installation of the System, training of at least one surgeon, which typically occurs prior to or concurrent with the System installation, and customer acceptance, if required.
|
|
· |
Sales to distributors - Upon delivery to the distributor, according to contractual delivery terms, provided that the significant risks and rewards of ownership of the System are transferred to the distributor upon delivery, the distributor has no right of return, receipt of the consideration is probable and not dependent on the distributor’s ability to collect from the end customer, the commitment to carry out installation and training for the end customer lies with the distributor and that the distributor has been authorized to perform the installation and training for the end customers, or if the distributor has the ability to perform the installation and training for the end customer independently. If the above conditions are not met, the Group recognizes revenue at the time of fulfillment of the conditions for recognition of revenue from the end customer.
|
For System sales, where a commitment for future trade-in exists, the Company examines whether the transaction meets all revenue recognition criteria. If one or more of the revenue recognition criteria are not met, revenue is deferred and the System is presented in inventory until the earliest of trade-in commitment is fulfilled, or trade-in option expire.
In rare circumstances, the Company may bill a customer for a product and retain physical possession of the product until it is transferred to the customer at a point in time in the future. If such delivery is delayed at the customer’s request and the customer assumes title and accepts billing, revenue is recognized when the buyer takes title, provided that:
|
(i) |
it is probable that the delivery will be made;
|
|
(ii) |
the item is on hand, identified and ready for delivery to the customer at the time the sale is recognized;
|
|
(iii) |
the customer specifically acknowledges the deferred delivery instructions, and
|
|
(iv) |
the usual payment terms apply.
|
Disposable components sales - Revenue from the disposable components sales is recognized at the time of the transfer of the significant risks and rewards of ownership as follows:
|
· |
In sales to end customers - Upon delivery.
|
|
· |
In sales to distributors - Upon delivery to the distributor, provided that the significant risks and rewards of ownership of the components are transferred to the distributor upon delivery, the distributor has no right of return and that the receipt of the consideration is probable and not dependent on the distributor’s ability to collect from the end customer.
|
Warranty and maintenance services (“Services”) - Revenue from Services is recognized proportionately over the period of rendering of the service and subject to the other conditions for revenue recognition specified above.
