Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes. The policies adopted for the recognition of turnover are as follows:
Sale of goods
Turnover from the sale of materials is recognised when significant risks and rewards of ownership of the goods have transferred to the buyer, the amount of turnover can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. This is usually on dispatch of the goods.
Construction contracts
When the outcome of a costruction contract can be estimated reliably, contract costs and turnover are recognised by reference to the stage of completion at the balance sheet date. Stage of completion is measured by the latest valuation undertaken by a quantity surveyor.
Where the outcome cannot be measured reliably, contract costs are recognised as an expense in the period in which they are incurred and contract turnover is recognised to the extent of costs incurred that is probable will be recoverable.
When it is probable that contract costs will exceed the total contract turnover, the expected loss is recognised as an expense immediately, with a corresponding provision.