Revenue is recognised when the Group has entered into a contract with a customer under which the work to be performed is identifiable, the payment terms are clear and the contract has commercial substance. It must also be probable that the Group will collect the consideration to which it is entitled. Revenue from portfolios of contracts with similar characteristics is recognised on a portfolio basis when the outcome does not differ materially from determining revenue at the individual contract level.
Revenue is allocated to the individual performance obligation(s) on the basis of relative stand-alone selling prices. Revenue is recognised when the customer obtains control of the performance satisfied.
Variable consideration is only recognised if it is highly probable that no significant reversal of revenue will occur:
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Revenue from additional work is included in the total transaction price where the amount has been accepted by the client in any manner.
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Revenue from claims and incentives is included in the total transaction price to the extent that these arise from enforceable rights, it is highly probable that they will result in revenue and they can be measured reliably.
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Unless it is highly unlikely that a penalty will be applied, the amount of any penalties will be deducted from the transaction price.
Bonuses are included in the transaction price to the extent that it is highly probable that the specified performance standards will be met and the amount of the bonus can be determined reliably, without a significant reversal of revenue being expected. If a bonus can only be obtained after a certain period after completion of , it is not recognised until it is highly probable that the bonus will in fact be received and that no significant reversal of revenue will occur.
If the outcome of a performance obligation cannot be measured reliably, contract revenue is recognised only to the extent that it is probable that the costs incurred will be recovered.
If a contract contains a significant financing component, the Group adjusts the transaction price accordingly, except if the time between the fulfilment of the performance obligation and the payment of the consideration is less than one year.
Expected contract losses are recognised immediately in the statement of profit or loss. In determining the amount of such loss provisions, the Group proceeds on the basis of the economic benefits expected to be received compared with the attributable costs of the contract.
(5a) Revenue from the sale of goods - mainly land
Revenue from the sale of goods (mainly land) is recognised at the agreed consideration or allocated consideration (for example, where the transfer of the land forms part of a combined purchase-and-construction contract for residential projects). Revenue from the land is recognised at the time of legal transfer at the civil-law notary.
(5b) Work in progress – projects
Revenue relating to work in progress is recognised in the statement of profit or loss when control has transferred to the customer. Since the Group executes projects on land owned by the client, the client obtains control by accession according to progress made in completion of the project. For all project activities - with the exception of a few specific activities in the Living segment, as explained below - the progress of the attributable result is determined on the basis of the proportion of costs recorded in relation to the total expected costs (cost-to-come) to the extent that the costs incurred are representative of the progress made in the transfer of goods/services to the client. This takes in to account any unsold units. Inefficiencies are disregarded in determining the stage of completion.
In addition, in the case of property development activities, the stage of completion is determined in proportion to the total invoiced instalments (per individual project). The same applies to construction work insofar as there are split purchase/construction contracts in which case the group invoices strictly on the basis of progress according to established milestones. If invoicing does not provide a sound basis for measuring progress (for example, where full invoicing takes place upon completion), progress is measured in accordance with the first paragraph and revenue recognition is based on that measurement.
(5c) Services
Revenue from the provision of services, mainly service and maintenance activities, is recognised in the statement of profit or loss in proportion to the work performed, as the customer simultaneously receives and consumes the benefits of the services. The stage of completion is determined from assessments of the work already carried out.