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The Application of IFRS:
Segment reporting
Executive Summary
July 2010
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Foreword
The International Accounting Standards Board published IFRS 8 Operating Segments in November 2006. The
standard became effective for nancial statements beginning on or after 1 January 2009. Previously entities
applied IAS 14 Segment Reporting for the disclosure of segment information.
IFRS 8 sets out the requirements for disclosure of information about an entitys operating segments using the
management approach, both in regard to the identication of reportable segments and the measures disclosed
for those segments (for example the segment result). This major change from the approach in IAS 14 is an
opportunity for entities to communicate with their stakeholders based on the information they use internally;
enabling greater alignment of narrative explanations and the nancial statements themselves.
However, the rst application of any new standard is always a challenge and best practice inevitably develops
only over time. IFRS 8 is likely to be no exception.
Following the end of the rst reporting season in which IFRS 8 became mandatory, we wanted to look at
practice to see how entities had grasped the opportunity to present their segment information through their
own eyes, how much change this had generated and to see how much consistency within and between specic
sectors had emerged in the rst year of application.
This publication presents an overview of the results of a survey of the segment disclosures of 81 companies
operating in ten sectors in their most recent nancial statements, principally December 2009 year ends. Later
in 2010 we will issue a further publication on segment reporting, containing the expanded survey results and
practical examples taken from the nancial statements surveyed.
Based on our survey, IFRS 8 has clearly facilitated a change in approach to segment reporting. The challenge
for entities is to build upon this rst experience of applying IFRS 8 and further enhance communication of
segmental performance in the coming year in half-yearly and annual nancial statements. We hope that this
publication helps you to achieve this.
Steve McGregor (Leader)
David Littleford (Deputy leader)
Sanel Tomlinson
KPMGs global IFRS Presentation leadership team
KPMG International Standards Group
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
About this publication
This publication has been produced by the KPMG International Standards Group (part of KPMG IFRG Limited).
We would like to acknowledge the principle authors of this publication. They are Daniel Armesto, Regina
Croucher, David Littleford and David Ward of the KPMG International Standards Group.
This executive summary has been drawn from The Application of IFRS: Segment Reporting, to be published in
August 2010, and focuses on the results of a survey of the IFRS nancial statements of 81 companies selected
randomly from the IFRS preparers within the Fortune Global 500.
The text of this publication is referenced to IFRS 8 and to selected other IFRSs in issue at 30 June 2010.
References in the left-hand margin identify the relevant paragraphs.
IFRS 8 was amended during the Improvements to IFRSs (2009) and now requires that segment information with
respect to total assets is disclosed only if such information is reported regularly to the chief operating decision
maker. This amendment is effective for annual periods beginning on or after 1 January 2010. Early application is
permitted but none of the companies in our survey had early adopted this amendment.
When preparing nancial statements in accordance with IFRSs, an entity has regard to its local legal and
regulatory requirements. This publication does not consider the requirements of a particular jurisdiction.
IFRSs and their interpretation change over time. Accordingly, neither this publication nor any of our other
publications should be used as a substitute for referring to the IFRSs.
For access to an extensive range of accounting, auditing and nancial reporting guidance and literature, visit
KPMGs Accounting Research Online. This web-based subscription service can be a valuable tool for anyone who
wants to stay informed in todays dynamic environment. For a free 15-day trial, go to www.aro.kpmg.com and
register today.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Contents
1. Introduction 4
Background 4
Our survey 4
Five step approach to IFRS 8 5
What did our survey nd? 5
2. Survey results 7
2.1 Step 1: Identication of the chief operating decision maker (CODM) 7
2.2 Step 2: Identication of operating segments 8
2.3 Step 3: Aggregation of operating segments 8
2.3.1 Aggregated segments 8
2.4 Step 4: Determining reportable segments 9
2.4.1 Number of reportable segments 10
2.4.2 Comparison of the number of IFRS 8 and IAS 14 reportable segments 11
2.4.3 Basis on which reportable segments are being identied 11
2.5 Step 5: Segment disclosure information 12
2.5.1 Basis disclosed as being used for segment reporting 13
2.5.2 Measure of prot or loss used by the CODM 14
2.5.3 Disclosure of corporate assets and activities 14
2.5.4 Disclosure of information on joint ventures and associates 15
2.5.5 Presentation of segment information in currencies other than the presentation currency 15
2.6 Other matters 15
Appendix A: Overview of the requirements of IFRS 8 16
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
The Application of IFRS: Segment reporting Executive Summary
July 2010
4
1. Introduction
Background
IFRS 8 Operating Segments sets out requirements for segment disclosures by entities whose debt
or equity instruments are traded in a public market. An overview of the requirements of IFRS 8 is
included in Appendix A.
Many entities that are listed in a public market are large, with diversied, often multinational
operations.
Communicating the performance of such entities to stakeholders is a challenge, requiring
disaggregation to explain the trends and results of components of the entity that have been
affected by different factors or that have different prospects. Entities are used to discussing
performance on a disaggregated basis in the narrative sections of their annual reports. These
sections are often relatively free-form, allowing exibility to management to choose the most
appropriate way to describe the business they run.
Previously, this was in stark contrast to the rigid disaggregation required by IAS 14 Segment
Reporting, under which disaggregation was by either business or product. However, IAS 14 has
now been replaced by IFRS 8, which became effective for nancial statements for accounting
periods beginning on or after 1 January 2009.
IFRS 8 sets out the requirements for disclosure of information about an entitys operating segments
using the management approach, both in regard to the identication of reportable segments and
the measures disclosed for those segments (for example, the disclosed segment result is the
measure used by management to make decisions). This major change from the approach in IAS 14
is an opportunity for entities to communicate with their stakeholders based on the information they
use internally; enabling greater alignment of narrative explanations and the nancial statements
themselves.
Our survey
This publication presents a summary of the results of a survey of the segment disclosures of
81 companies selected randomly from the IFRS preparers within the Fortune Global 500, classied
into the following industry sectors:

Automotive 8 companies

Banking 13 companies

Communications and Media (C&M) 5 companies

Diversied Industries 6 companies

Energy and Natural Resources (E&NR) 14 companies

Food, Drink and Consumer Goods (F&D) 6 companies

Insurance 5 companies

Pharmaceuticals (Pharma) 6 companies

Transport 6 companies

Other 12 companies
The survey results for a sector are reported separately only when that sector had ve or more
companies allocated to it. Sectors with less than ve companies allocated to it are included in the
other category.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
5 The Application of IFRS: Segment reporting Executive Summary
July 2010
The survey is based on the most recent nancial statements, principally December 2009 year ends,
and looks at practice to see how these companies had grasped the opportunity to present their
segment information through their own eyes, how much change this had generated and to see how
much consistency had emerged in this rst year of application within and between specic sectors.
IFRS 8 became mandatory for nancial statements for accounting periods beginning on or after
1 January 2009 and our survey included 52 companies that had applied IFRS 8 for the rst time in
the nancial statements covered by our survey. Our survey also included 29 companies that had
chosen to adopt IFRS 8 in an earlier period.
Five step approach to IFRS 8
Our survey results are presented based on the ve step approach to segment reporting under
IFRS 8:

Identification of the chief operating decision maker (CODM)
Identification of operating segments
Aggregation of operating segments
Determining reportable segments
Segment disclosure information
Step 1
Step 2
Step 3
Step 4
Step 5
Our survey looked at certain key areas in each of these ve steps. It used the segment information
disclosed in the nancial statements to consider how the companies in our survey are applying
IFRS 8 in practice.
What did our survey nd?
The results of our survey are set out in section 2 of this publication. In summary:

We found that the average number of reportable segments had increased from 4.6 under IAS 14
to 5.2 under IFRS 8. An increase was widely expected and may, in part, reect the relatively
high hurdle that must be met before aggregation is permitted of operating segments that are
reported separately internally.

Freed from the constraints of IAS 14, nearly a quarter of companies presented segment
disclosures on a mixed basis (e.g. reecting some segments identied based on products
and services, and others based on geographical areas); an approach that would not have been
permitted previously. Disaggregation by products and services was the most common approach
(66% of companies), while geographical disaggregation was predominant in specic sectors.

We found that more than half of all companies in our survey disclosed a measure of segment
prot that excludes certain items (for example, interest, depreciation, amortisation or one-off
items). While a variety of measures were disclosed across our survey, we found that there was
some consistency within some sectors.

Perhaps surprisingly, we found that these measures were generally based on IFRS. This may
indicate that IFRSs have now become embedded in internal management reporting. However,
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
The Application of IFRS: Segment reporting Executive Summary
July 2010
6
it is surprising that IFRS information is being used regularly by the CODM given some of the
concerns occasionally raised about the complexity of IFRSs.

Our survey did suggest a number of areas for which further improvement of the explanations
and disclosures appears possible, for example, for segment measures, the factors (e.g. for
aggregation) used to identify the reportable segments and the reconciliations of segment
measures to IFRS measures. However, the rst application of any new standard is always a
challenge and best practice inevitably develops only over time. IFRS 8 is likely to be no exception
and we expect to see further enhancement in the coming year.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
7 The Application of IFRS: Segment reporting Executive Summary
July 2010
2. Survey results
2.1 Step 1: Identication of the chief operating decision maker
(CODM)
The term chief operating decision maker (CODM) refers to a function, rather than to a specic title.
The function of the CODM is to allocate resources to the operating segments of an entity and to
assess their performance. The CODM usually is the highest level of management (e.g. CEO or
COO), but the function of the CODM may be performed by a group rather than by one person (e.g.
a Board of Directors, an executive committee or a management committee).
Identifying the CODM is the rst step in identifying reportable segments. While IFRS 8 requires
IFRS 8.22 disclosure of the factors used to identify the reportable segments, there is no explicit requirement
within IFRS 8 to explain who (or what) is the CODM, or how the CODM was determined.
In many companies, the identication of the CODM may be relatively straightforward. Given
the difference in governance models that may exist and the increasingly global audience for
nancial statements, who the CODM is may be of relevance to users of nancial statements and
more than a third of the companies in our survey voluntarily disclosed this information. Perhaps
unsurprisingly, in most of these cases the CODM was identied as being either the whole of the
Board of Directors or the Executive Directors/Executive Board. In only ve companies was the
Chief Executive Ofcer identied as the CODM. In a very small number of cases the CODM was
identied as being a sub-group of the Board.

Who was identified to be the CODM?
6%
31%
61%
2%
CEO
Executive Directors or the Board
CODM not disclosed
Other
While there was some variance, the results were broadly consistent across the various sectors
surveyed.
It may be that many companies concluded that the identication of the CODM is sufciently
straightforward not to warrant additional disclosure.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
The Application of IFRS: Segment reporting Executive Summary
July 2010
8

Did companies disclose how the CODM was determined?
9%
91%
Yes
No
As can be seen from the chart above, only seven out of 81 companies (9%) choose to include
specic disclosures about how the CODM was determined. Most of those that did so also
disclosed the identity of their CODM.
2.2 Step 2: Identication of operating segments
Operating segments are identied based on the way in which nancial information is organised and
reported to the CODM. An operating segment is dened by IFRS 8 as a component of an entity:

that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses relating to transactions with other components of the same
entity;

whose operating results are reviewed regularly by the entitys CODM in order to allocate
resources and assess its performance; and

for which discrete nancial information is available.
2.3 Step 3: Aggregation of operating segments
IFRS 8.12 Under IFRS 8 two or more operating segments may be aggregated into a single operating segment
when the operating segments have characteristics so similar that they can be expected to have
essentially the same prospects. Aggregation is permitted only if:

it is consistent with the core principle of IFRS 8;

the segments have similar economic characteristics; and

the segments are similar in each of the following respects:
the nature of products and services;
the nature of the production processes;
the type or class of customer for their products and services;
the methods used to distribute their products or provide their services; and
if applicable, the nature of the regulatory environment, e.g. banking, insurance or public utilities.
IFRS 8.14 Non-reportable operating segments (see 2.4) may be aggregated if they have similar economic
characteristics and share a majority of the last ve aggregation criteria listed above.
2.3.1 Aggregated segments
IFRS 8.22(a) Our survey considered whether there were any disclosures indicating that segments may have
been aggregated. In particular, paragraph 22(a) of IFRS 8 requires disclosure of the factors used to
identify reportable segments and gives aggregation as an example. In addition, for those companies
that disclosed that aggregation had occurred we further considered any disclosure of the reasons
for aggregation.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
9 The Application of IFRS: Segment reporting Executive Summary
July 2010

Were segments aggregated for disclosure?
12%
20%
68%
Yes
No
Not clear
The apparently low occurrence of disclosing aggregation may reect the relatively high hurdle that
IFRS 8.12 must be met for aggregation to occur. However, it should be noted that in 55 companies (68%) it
was not clear whether or not aggregation has occurred.

Did companies disclose the reasons for aggregation?
80%
20% Yes
No
Of the ten companies that disclosed that aggregation had occurred, eight (80%) explained the
reasons for the aggregation. In most cases the reasons given in respect of the aggregation refer to
the operating segments having not met the quantitative thresholds in paragraph 13 of IFRS 8. This
indicates that in these cases aggregation was based on the lower hurdle for aggregation required
for non-reportable operating segments.
2.4 Step 4: Determining reportable segments
Under IFRS 8 an operating segment is required to be reported separately if any of the following
quantitative thresholds is met:

The segments reported revenue (external sales and inter-segment transfers) is 10 percent or
more of the combined revenue (internal and external) of all operating segments.

The absolute amount of the segments reported prot or loss is 10 percent or more of the greater,
in absolute amount, of (1) the combined reported prot of all operating segments that did not
report a loss; and (2) the combined reported loss of all operating segments that reported a loss.

The segments assets are 10 percent or more of the combined assets of all operating segments.
An entity may identify additional segments voluntarily. Any remaining segments (that are not
reportable) are included in an all other segments category within the reconciliations from the total
reportable segments amounts to IFRS amounts reported in the nancial statements.
As mentioned in 2.4.1, a number of companies in our survey had included operating segments
within an all other segments category, although the name used to describe these amounts varied.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
The Application of IFRS: Segment reporting Executive Summary
July 2010
10
We surveyed three aspects of disclosure in respect of reportable segments. First, we looked
at the number of reportable segments that the companies disclosed under IFRS 8. Second, for
those companies that applied IFRS 8 for the rst time in the nancial statements we surveyed,
we compared the number of IFRS 8 reportable segments to the number of reportable segments
identied under IAS 14 in the previous year. Third, we looked at the basis for identication of
reportable segments under IFRS 8.
2.4.1 Number of reportable segments
The average number of segments reported for the 81 companies surveyed was 5.2. However,
as can be seen from the graph there is some variation in the number of segments reported
by companies. The sectors with the highest and lowest averages were affected by individual
companies in the sector.
Notably in the Insurance sector one company disclosed 13 segments. This was the most reportable
segments disclosed by any company in our survey. Excluding this company from the survey, the
average number of reportable segments in the Insurance sector drops from 6.8 to 5.3 and the
average number of segments reported for all companies surveyed drops from 5.2 to 5.1.

Average number of reportable segments
0
1
2
3
4
5
6
7
8
Automotive Banking C & M Diversified
Industries
E&NR F&D Insurance Pharma Transport Other
IFRS 8.23, 28 While IFRS 8 requires disclosures about each reportable segment together with reconciliations of
certain total reportable segment measures to the IFRS amounts, there is no explicit requirement
either to name the reportable segments or to disclose sub-totals for all reportable segments. In
performing our survey we noted that, in some cases, it was not entirely clear whether certain
disclosures formed part of the reconciliations or were themselves a reportable segment. This
was particularly the case when amounts were described as other, as it is unclear whether these
amounts represented other operating segments that had been designated as a reportable
IFRS 8.13, 16 segment, or an amount in respect of all other (non-reportable) segments that forms part of the
reconciliations, or merely other reconciling items. In our survey, columns titled Other, Corporate
Centre, Corporate and Other, or similar were excluded from our calculation of the number of
reportable segments.
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
11 The Application of IFRS: Segment reporting Executive Summary
July 2010
2.4.2 Comparison of the number of IFRS 8 and IAS 14 reportable segments
For those companies in our survey (52 out of 81) that applied IFRS 8 for the rst time in the
nancial statements we surveyed, we compared the number of IFRS 8 reportable segments to the
number of reportable segments identied in the primary segment disclosures under IAS 14 in their
previous years nancial statements. The 29 companies in our survey that had applied IFRS 8 also in
the previous year were excluded.
For these 52 companies, the average number of IFRS 8 reportable segments disclosed in 2009
was 5.2 segments. In the previous year when reporting under IAS 14 the average number was
4.6 segments.
This increase in the number of reportable segments can be seen as the expected result of the
management approach under IFRS 8, together with the stringent criteria necessary to aggregate
operating segments under IFRS 8 (see 2.3).
2.4.3 Basis on which reportable segments are being identied

How does management identify reportable segments?
11%
66%
23%
Geographical area
Products and services
Combination of geographical areas and products and services
Having previously been restricted by IAS 14 to the identication of reportable segments based
either on products and services or geographical areas, almost a quarter of all companies surveyed
were now able to present segment disclosures under IFRS 8 using a combination of products and
services and geographical areas; reporting in a manner consistent with the way that management
view the business.
The survey indicates that only a small percentage of the sample of 81 companies selected (11%)
use geographical area solely as the basis for their segment reporting to the CODM, perhaps
reecting the globalisation in many sectors. The vast majority use products and services solely
(66%) or a combination of both products and services and geographical areas (23%).
2010 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
The Application of IFRS: Segment reporting Executive Summary
July 2010
12

How does management identify reportable segments?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Combination of geographical areas and products and services
Products and services
Geographical area
Automotive Banking C & M Diversified
Industries
E&NR F&D Insurance Pharma Transport Other
However, a more in depth analysis of our survey result reveals some diversity between sectors
when identifying segments based on geographical areas: two sectors show signicant use of
geographical internal reporting. For the Food, Drink and Consumer Goods sector, ve of the six
companies sampled used geographical area solely as their basis for their segment reporting to
the CODM; the remaining company used it in combination with products and services. For the
Communications and Media sector, two of the ve companies sampled used geographical area
as the sole basis for their segment reporting to the CODM, whilst two of the remaining three
companies used it in combination with products and services.
Our survey found that both the Automotive and Transport sectors used products and services
exclusively as the basis for their segment reporting to the CODM. Another three sectors also have
this basis for internal reporting for the majority of the sample.
In most cases when reportable segments were identied based on both geographical area and
products and services, the majority of the reportable segments were identied based on products
and services. Generally, segments based on geographical areas were disclosed either as a sub-
division of the same product or service into different geographical areas or when regions/countries
are treated as one segment due to the nature of the product or services in those regions/countries
having different characteristics/risk factors attached to them.
2.5 Step 5: Segment disclosure information
IFRS 8.23 The previous sections have already covered a number of disclosure aspects of IFRS 8 in our survey
ndings. This section considers some of the specic disclosures required for reportable segments.
IFRS 8 contains a lengthy list of disclosure requirements for each period for which a statement
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13 The Application of IFRS: Segment reporting Executive Summary
July 2010
of comprehensive income is presented, some of which are dependent on the nature of the
information received by the CODM. These include:

measures of revenues from external customers and intra-segment transactions;

measures of prot or loss, assets and liabilities;

interests in the prot or loss of joint ventures and associates;

disclosures of capital expenditure, interest, depreciation and amortisation;

material items; and

reconciliations.
Our survey looked at ve aspects of these specic disclosures. First we surveyed what basis is
disclosed as being used in determining segment measures. Second we surveyed the disclosure
of which measure of prot or loss is used by the CODM. Third we surveyed the reconciliation
disclosure of corporate assets and activities. Fourth we surveyed for the disclosures made
in respect of information of joint ventures and associates. Finally we surveyed whether any
companies presented their segment reporting in a currency other than the presentation currency
used for presenting the rest of their nancial statements.
2.5.1 Basis disclosed as being used for segment reporting

Which basis is being disclosed as used for the reportable segments information?
95%
1%
4%
IFRS
Adjusted IFRS
Not clear
For 77 companies in our survey, the basis for segment measures is the same as is being applied
in the preparation of the nancial statements themselves, i.e. IFRSs. However, in respect of
three companies, whilst IFRS was the main basis for the measures disclosed, two, which were
in the Banking sector, disclosed that they applied non-IAS 39
1
measurements for certain nancial
instruments in their segment measure disclosures, and the third gave its segment measure
disclosures based on a constant currency basis rather than an IFRS currency basis for both the
current and comparative year.
IFRS 8.26 This may indicate that IFRSs have now become embedded in internal management reporting.
However, it is surprising that IFRS information is being used regularly by the CODM given some
of the concerns occasionally raised about the complexity of IFRSs. Alternatively, the disclosed
measures might have been inuenced by the requirement of IFRS 8 that allows the disclosed
measure to be the one closest to IFRSs when two (or more) measures are used by the CODM.
1 IAS 39 Financial Instruments: Recognition and Measurement
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The Application of IFRS: Segment reporting Executive Summary
July 2010
14
2.5.2 Measure of prot or loss used by the CODM

What was the measure of profit or loss used by the CODM?
21%
9%
9%
15%
23%
23%
Operating profit
EBIT
EBITDA or adjusted EBITDA
Adjusted operating profit
Other
Not clear
Based on our survey, companies disclosed a variety of segment measures of prot or loss;
reecting differing degrees of inclusivity of certain items of income or expense. In cases when
the composition of the segment measure was clear, more than half used measures that exclude
interest and tax. About a quarter also excluded depreciation and amortisation. Nearly a fth
excluded other items from the measure used by the CODM, adjusting for specic items such
as bad debt provisions on loans (Banking sector), special items, exceptional items, non-recurring
items, restructurings and impairments.
Nearly a quarter used an other measure (i.e. a measure other than operating prot, earnings
before interest and tax (EBIT), earnings before interest, tax, depreciation and amortisation (EBITDA)
or an adjusted version of these) such as prot before tax, adjusted prot before tax, replacement
cost EBIT, prots calculated on a constant currency basis, and gross prot.
The 23 percent of cases for which the segment measure was not clear reects that some
companies are not explicit in their disclosures about how they measure their segment prot. Such
companies often disclose multiple prot measures and in some cases the whole of the statement
of comprehensive income is analysed into the different segments.
There was greater consistency of segment measures of prot or loss at sector level:

80 percent of the Communications and Media companies used EBITDA or adjusted EBITDA;

50 percent of the Diversied Industries companies used operating prot;

75 percent of the Automotive companies used operating prot or adjusted operating prot;

80 percent of the Insurance companies used operating prot or adjusted operating prot; and

77 percent of the Banking companies presented an analysis of their whole statement of
comprehensive income by reportable segment, thereby disclosing multiple measures of
segment prot.
2.5.3 Disclosure of corporate assets and activities
Only two companies clearly disclosed that the corporate assets and activities had been allocated to
the reportable segments. Practice by the others was very mixed. Some reported separate columns
under titles such as Corporate Centre. Others included them within Other or Corporate and
Other. The rest included them within separate columns labelled for example as Other/elimination,
Corporate Centre and Consolidation and Head Ofce/eliminations or included them within the
reconciliations specied within paragraph 28 of IFRS 8.
Generally the reconciliations specied by paragraph 28 of IFRS 8 and illustrated within
the Implementation Guidance to IFRS 8 were only seen rarely. Most companies surveyed
presented columnar tables for the segment disclosures and included as the penultimate column
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15 The Application of IFRS: Segment reporting Executive Summary
July 2010
(i.e. immediately before the total column that agrees to the amounts in the primary IFRS
statements) an eliminations/consolidation column.
2.5.4 Disclosure of information on joint ventures and associates

How was information on joint venture and associates disclosed?
2%
36%
22%
4%
36%
As a separate reportable segment
Integrated in other reportable segments
Excluded from reportable segment disclosures
Other
Not clear
Only two companies surveyed treated the share of results from joint ventures and/or associates
as separate reportable segments. Twenty nine companies surveyed (36%) included their share
of results from joint ventures and associates as part of the reportable segment measures, while
18 companies surveyed (22%) excluded it from their reportable segment measures. However,
for 29 companies (36%) it was not clear whether any amount was included within the reportable
segment measures. This high percentage is partly due to the 23% of companies surveyed being
unclear in their disclosure of what their segment result is, as previously discussed in 2.5.2 above.
2.5.5 Presentation of segment information in currencies other than the presentation
currency
All 81 companies surveyed presented their segment reporting in the same currency as the
presentation currency of the nancial statements. This suggests that the CODM is receiving
information on all operating segments, translated to the groups presentation currency, regardless
of their actual functional currencies.
2.6 Other matters
IAS 36.80 When IFRS 8 was introduced, a consequential change was made to IAS 36 Impairment of Assets.
Following this amendment, the level at which goodwill arising from business combinations is
allocated and then subject to impairment testing can be no larger than an operating segment
determined in accordance with IFRS 8.
In carrying out the survey we also examined whether companies disclosure made any mention
that the adoption of IFRS 8 had impacted their impairment analysis. We found only two instances of
companies making any reference to the fact that adoption of IFRS 8 had changed the level at which
impairment testing had occurred. This may be because others had previously allocated goodwill in
a similar way or may reect the low level of aggregation that we found in our survey. None of the
companies that disclosed the change identied any goodwill impairment in the year.
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The Application of IFRS: Segment reporting Executive Summary
July 2010
16
Appendix A: Overview of the requirements
of IFRS 8

IFRS 8 sets out requirements for segment disclosures by entities whose debt or equity
instruments are traded in a public market or that le, or are in the process of ling,
their nancial statements with a securities commission or other regulatory organisation
for the purpose of issuing any class of instruments in a public market.

IFRS 8 introduces the management approach, which requires segment disclosures
based on the components of the entity that management monitors in making decisions
about operating matters.

Such components (operating segments) are identied on the basis of internal reports
that the entitys chief operating decision maker (CODM) reviews regularly in allocating
resources to segments and in assessing their performance.

The aggregation of operating segments is permitted only when the segments have
similar economics and meet a number of other specied criteria.

Reportable segments are identied based on quantitative thresholds of revenue, prot
or loss, or assets.

The amounts disclosed for each reportable segment are the measures reported to
the CODM, which are not necessarily based on the same accounting policies as the
amounts recognised in the nancial statements.

Because IFRS 8 requires disclosure of segment prot or loss, segment assets and
segment liabilities as reported to the CODM rather than as they would be reported
under IFRSs, it also requires disclosure of how these amounts are measured for each
reportable segment.

IFRS 8 requires reconciliations between total amounts for all reportable segments and
nancial statements amounts with a description of all material reconciling items.

IFRS 8 requires general and entity-wide disclosures, including information about
products and services, geographical areas (including country of domicile and individual
foreign countries, if material), major customers and factors used to identify an
entitys reportable segments. Such disclosures are required even if an entity only has
one segment.

Comparative information normally is restated for changes in operating segments.














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Cover design: Mytton Williams
Publication name: The Application of IFRS: Segment
reporting Executive summary
Publication no: 314448
Publication date: July 2010