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The Group presents information on operating segments in accordance with IFRS 8 „Operating Segments”. The Group is organized and managed in segments by type of products offered and type of production activity.
After analyses of the aggregation criteria and quantitative thresholds, the following operating segments were established in the Group’s consolidated financial statements:
The Management Board of the Parent Company has identified operating segments based on the financial reporting of the companies comprising the Group. Information originating from the reports is used for strategic decision-making in the Group.
The JSW Management Board is the corporate body that makes the key decisions in the Group. The measure of the financial results generated by the Group’s distinct operating segments analyzed by the Management Board of the Parent Company is the segment’s operating profit/loss determined according to IAS/IFRS. Revenues from transactions with external entities are measured in a manner consistent with the method applied for consolidated financial result.
Revenues from transactions between segments are eliminated in the consolidation process. Sales between segments are conducted on an arm’s length basis. According to the principles applied by the Management Board of the Parent Company to evaluate operating results of the respective segments, revenues and margins are recognized in segmental results at the moment a sale is made outside of the segment. Financial income and costs are not included in the financial result of the various segments.
*No operations classified in “Other segments” meet the aggregation criteria and quantitative thresholds defined by IFRS 8 Operating Segments, to be accounted for as a separate operating segment **The „Consolidation adjustments” column eliminates the effects of intra-segment transactions within the Group
Coal
Coke
Other segments *
Consolidation adjustments **
Total
FOR THE PERIOD ENDED 31 DECEMBER 2018
Total segment sales revenues
8,296.6
4,451.5
1,003.3
(3,941.9)
9,809.5
– Revenues on inter-segment sales
3,212.0
–
729.9
(3,941.9)
–
– Sales revenues from external customers
5,084.6
4,451.5
273.4
–
9,809.5
Gross profit on sales of the segment
2,146.1
677.3
143.4
(95.7)
2,871.1
Segment’s operating profit/(loss)
1,753.1
416.4
84.9
(0.3)
2,254.1
Depreciation and amortization
(612.1)
(100.2)
(64.4)
10.7
(766.0)
OTHER SIGNIFICANT NON-CASH ITEMS:
– Recognition of impairment losses on property, plant and equipment and intangible assets
(1,214.0)
–
–
–
(1,214.0)
– Reversal of impairment losses for property, plant and equipment and intangible assets
719.3
–
–
–
719.3
– Reversal of the impairment loss on property, plant and equipment of the Krupiński Mine transferred from the Suszec Section to other units
15.5
–
–
–
15.5
– Reversal of the provision for potential litigation related to the free coal allowance for old-age and disability pensioners
653.5
–
–
–
653.5
TOTAL SEGMENT ASSETS, INCLUDING:
7,947.2
2,288.7
1,516.3
(843.3)
10,908.9
Increases in non-current assets (other than financial instruments and deferred tax assets)
1,471.9
50.1
241.3
(48.8)
1,714.5
* No operations classified in “Other segments” meet the aggregation criteria and quantitative thresholds defined by IFRS 8 Operating Segments, to be accounted for as a separate operating segment ** The „Consolidation adjustments” column eliminates the effects of intra-segment transactions within the Group
Coal
Coke
Other segments *
Consolidation adjustments **
Total
FOR THE PERIOD ENDED 31 DECEMBER 2017
Total segment sales revenues
7,929.2
3,688.1
839.2
(3,579.3)
8,877.2
– Revenues on inter-segment sales
3,003.3
–
576.0
(3,579.3)
–
– Sales revenues from external customers
4,925.9
3,688.1
263.2
–
8,877.2
Segment’s gross profit/(loss) on sales
2,987.3
120.4
111.3
19.9
3,238.9
Segment’s operating profit/(loss)
3,001.9
(47.9)
57.1
105.4
3,116.5
Depreciation and amortization
(680.9)
(96.8)
(56.2)
9.2
(824.7)
OTHER SIGNIFICANT NON-CASH ITEMS:
– Recognition of impairment losses on property, plant and equipment and intangible assets
(759.1)
–
(0.5)
–
(759.6)
– Reversal of the provision for employee benefits for KWK Krupiński employees transferred to SRK
50.1
–
–
–
50.1
– Reversal of provisions in connection with the transfer of KWK Krupiński to SRK
116.2
–
–
–
116.2
– Reversal of the impairment loss on property, plant and equipment of the Krupiński Mine transferred from the Suszec Section to other units
51.2
–
–
–
51.2
– Reversal of the provision for potential litigation related to the free coal allowance for old-age and disability pensioners
1,249,2
–
–
–
1,249.2
TOTAL SEGMENT ASSETS, INCLUDING:
8,598.7
2,008.7
1,115.0
(822.9)
10,899.5
Increases in non-current assets (other than financial instruments and deferred tax assets)
852.3
81.2
123.5
(9.1)
1 047.9
Presented below is reconciliation of the results (operating profit) generated by the segments with profit before tax.
2018
2017
OPERATING PROFIT
2,254.1
3,116.5
Financial income
40.1
132.9
Financial costs
(101.8)
(125.9)
Share in profits/(losses) of associates
0.1
0.1
PROFIT BEFORE TAX
2,192.5
3,123.6
The amounts of total assets are measured in a manner consistent with the method applied in the consolidated statement of financial position. These assets are allocated by segment’s business and by physical location of the asset component.
Group assets are located in Poland.
The reconciliation of segment assets with the Group’s total assets is presented below:
31.12.2018
31.12.2017
SEGMENT ASSETS
10,908.9
10,899.5
Investments in associates
1.1
1.1
Deferred tax assets
669.5
814.3
Other long-term assets
2 175.2
328.9
Income tax backpayment
0.7
32.5
Derivatives
7.2
13.8
Other current financial assets
–
0.1
TOTAL ASSETS ACCORDING TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
13,762.6
12,090.2
The geographic breakdown of revenues on sales is depicted by the buyer’s country of origin:
Note
2018
2017
Sales in Poland, of which:
Coal
3,712.3
3,672.8
Coke
648.3
608.2
Other segments
271.8
262.3
TOTAL SALES IN POLAND
4,632.4
4,543.3
Sales abroad, including:
EU member states, of which:
4 809.5
4 184.4
Coal
1 372.3
1 253.1
Coke
3 436.0
2 930.5
Other segments
1.2
0.8
Non-EU Europe, of which:
367.6
104.1
Coke
367.2
104.1
Other segments
0.4
–
Other states, of which:
–
45.4
Coke
–
45.3
Other segments
–
0.1
Total sales abroad, including:
5,177.1
4,333.9
Coal
1,372.3
1,253.1
Coke
3,803.2
3,079.9
Other segments
1.6
0.9
TOTAL SALES REVENUES
4.1
9,809.5
8,877.2
Revenues on sales – geographic breakdown by the country of origin of the counterparty making the purchase:
2018
2017
Poland
4,634.0
4,544.1
Germany
1,996.1
1,664.4
Austria
1,098.3
1,166.6
Czech Republic
940.1
930.1
Slovakia
283.4
303.1
Switzerland
216.2
–
Spain
152.0
70.1
Belgium
145.8
37.4
Norway
126.8
104.1
Luxembourg
120.8
–
Sweden
49.1
–
Brazil
–
45.3
Other countries
46.9
12.0
TOTAL SALES REVENUES
9,809.5
8,877.2
For the period from 1 January to 31 December 2018, revenues on sales to two clients, to each one of them individually, were roughly 10% of the Group’s revenues on sales. Revenues on sales to one of them were PLN 2,589.8 million and to the other PLN 979.9 million. Revenues on sales to those clients were included in the Coal segment and in the Coke segment.
For the period from 1 January to 31 December 2017, revenues on sales to two clients, to each one of them individually, exceeded 10% of the Group’s revenues on sales. Revenues on sales to one of them were PLN 2,536.4 million and to the other PLN 1001.4 million. Revenues on sales to those clients were recognized in the Coal segment, in the Coke segment and in the segment entitled Other segments.