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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:
Segment 1 – Coal
includes extraction and sales of black coal;
Segment 2 – Coke
includes production and sales of coke and hydrocarbons;
Other segments
include activities performed by the Group’s entities other than those covered by Segments 1 or 2, such as, without limitation, repair services, research and development activity, IT services, transportation services, etc.
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.
| 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 |
| Coal | Coke | Other segments * |
Consolidation adjustments ** | Total | |
| 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 |
* 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
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 |