The order backlog shows the amount of the long-term construction contracts awarded to the Group, net of revenue recognised at the reporting date. The Group records the current and outstanding contract outcome in its order backlog. Projects are included when the Group receives official notification that it has been awarded the project by the customer, which may take place before the definitive binding signing of the related contract.
The Group includes projects in its order backlog when it deems that the contract counterparties will comply with their obligations. Moreover, its contracts usually provide for the activation of specific procedures (usually arbitrations) to be followed in the case of either party’s contractual default.
The order backlog includes the amount of the projects, including when they are suspended or deferred, pursuant to the contractual conditions, even if their resumption date is unknown.
The Group decreases the amount of the order backlog:
- when a contract is cancelled or decreased as agreed with the customer;
- in line with the recognition of contract revenue in profit or loss.
The Group updates the order backlog to reflect amendments to contracts and agreements signed with customers. In the case of contracts that do not have a fixed consideration, the related order backlog reflects any contractual variations agreed with the customer or when the customer requests an extension of the execution times or amendments to the project that had not been provided for in the contract, as long as these variations are agreed with the customer and the related revenue is reasonably certain.
The order backlog is not a measurement parameter provided for by the IFRS and is not calculated using financial information prepared in accordance with such standards. Therefore, the calculation method used by the Group may differ from that used by other sector operators. Accordingly, it cannot be considered as an alternative indicator to the revenue calculated under the IFRS or other IFRS measurements.
Moreover, although the Group’s accounting systems update the related data on a consolidated basis once a month, the order backlog does not necessarily reflect the Group’s future results, as its data may be subject to significant variations.
Order backlog
The order backlog for the foreign construction segment is as follows:
| Area/Country (Share in millions of Euros) | Residual backlog at 30 June 2016 | Percentage of total | ||
|---|---|---|---|---|
| Italy | 8,907 | 28.5% | ||
| Asia | 6,499 | 20.8% | ||
| Africa | 7,634 | 24.4% | ||
| Americas | 5,524 | 17.7% | ||
| Europe | 1,843 | 5.9% | ||
| Oceania | 839 | 2.7% | ||
| Total | 31,246 | 100% | ||
The following chart provides a breakdown of the order backlog by type of business:
Breakdown of the order backlog
