EC staff consolidated version as of 21 June 2012, EN EU IFRS 8

FOR INFORMATION PURPOSES ONLY

International Financial Reporting Standard 8
Operating Segments
Core principle
1 An entity shall disclose information to enable users of its financial statements to evaluate the nature
and financial effects of the business activities in which it engages and the economic environments in
which it operates.
Scope
2 This IFRS shall apply to:
(a) the separate or individual financial statements of an entity:
(i) whose debt or equity instruments are traded in a public market (a domestic or foreign
stock exchange or an over-the-counter market, including local and regional markets), or
(ii) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing any class of
instruments in a public market; and
(b) the consolidated financial statements of a group with a parent:
(i) whose debt or equity instruments are traded in a public market (a domestic or foreign
stock exchange or an over-the-counter market, including local and regional markets), or
(ii) that files, or is in the process of filing, the consolidated financial statements with a
securities commission or other regulatory organisation for the purpose of issuing any
class of instruments in a public market.
3 If an entity that is not required to apply this IFRS chooses to disclose information about segments that does
not comply with this IFRS, it shall not describe the information as segment information.
4 If a financial report contains both the consolidated financial statements of a parent that is within the scope of
this IFRS as well as the parents separate financial statements, segment information is required only in the
consolidated financial statements.
Operating segments
5 An operating segment is a component of an entity:
(a) 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),
(b) whose operating results are regularly reviewed by the entitys chief operating decision maker to
make decisions about resources to be allocated to the segment and assess its performance, and
(c) for which discrete financial information is available.
An operating segment may engage in business activities for which it has yet to earn revenues, for example,
start-up operations may be operating segments before earning revenues.
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6 Not every part of an entity is necessarily an operating segment or part of an operating segment. For example,
a corporate headquarters or some functional departments may not earn revenues or may earn revenues that
are only incidental to the activities of the entity and would not be operating segments. For the purposes of
this IFRS, an entitys post-employment benefit plans are not operating segments.
7 The term chief operating decision maker identifies a function, not necessarily a manager with a specific
title. That function is to allocate resources to and assess the performance of the operating segments of an
entity. Often the chief operating decision maker of an entity is its chief executive officer or chief operating
officer but, for example, it may be a group of executive directors or others.
8 For many entities, the three characteristics of operating segments described in paragraph 5 clearly identify
its operating segments. However, an entity may produce reports in which its business activities are presented
in a variety of ways. If the chief operating decision maker uses more than one set of segment information,
other factors may identify a single set of components as constituting an entitys operating segments,
including the nature of the business activities of each component, the existence of managers responsible for
them, and information presented to the board of directors.
9 Generally, an operating segment has a segment manager who is directly accountable to and maintains
regular contact with the chief operating decision maker to discuss operating activities, financial results,
forecasts, or plans for the segment. The term segment manager identifies a function, not necessarily a
manager with a specific title. The chief operating decision maker also may be the segment manager for some
operating segments. A single manager may be the segment manager for more than one operating segment. If
the characteristics in paragraph 5 apply to more than one set of components of an organisation but there is
only one set for which segment managers are held responsible, that set of components constitutes the
operating segments.
10 The characteristics in paragraph 5 may apply to two or more overlapping sets of components for which
managers are held responsible. That structure is sometimes referred to as a matrix form of organisation. For
example, in some entities, some managers are responsible for different product and service lines worldwide,
whereas other managers are responsible for specific geographical areas. The chief operating decision maker
regularly reviews the operating results of both sets of components, and financial information is available for
both. In that situation, the entity shall determine which set of components constitutes the operating segments
by reference to the core principle.
Reportable segments
11 An entity shall report separately information about each operating segment that:
(a) has been identified in accordance with paragraphs 510 or results from aggregating two or more
of those segments in accordance with paragraph 12, and
(b) exceeds the quantitative thresholds in paragraph 13.
Paragraphs 1419 specify other situations in which separate information about an operating segment shall be
reported.
Aggregation criteria
12 Operating segments often exhibit similar long-term financial performance if they have similar economic
characteristics. For example, similar long-term average gross margins for two operating segments would be
expected if their economic characteristics were similar. Two or more operating segments may be aggregated
into a single operating segment if aggregation is consistent with the core principle of this IFRS, the segments
have similar economic characteristics, and the segments are similar in each of the following respects:
(a) the nature of the products and services;
(b) the nature of the production processes;
(c) the type or class of customer for their products and services;
(d) the methods used to distribute their products or provide their services; and
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(e) if applicable, the nature of the regulatory environment, for example, banking, insurance or public
utilities.
Quantitative thresholds
13 An entity shall report separately information about an operating segment that meets any of the following
quantitative thresholds:
(a) Its reported revenue, including both sales to external customers and intersegment sales or
transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating
segments.
(b) The absolute amount of its reported profit or loss is 10 per cent or more of the greater, in absolute
amount, of (i) the combined reported profit of all operating segments that did not report a loss and
(ii) the combined reported loss of all operating segments that reported a loss.
(c) Its assets are 10 per cent or more of the combined assets of all operating segments.
Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and
separately disclosed, if management believes that information about the segment would be useful to users of
the financial statements.
14 An entity may combine information about operating segments that do not meet the quantitative thresholds
with information about other operating segments that do not meet the quantitative thresholds to produce a
reportable segment only if the operating segments have similar economic characteristics and share a
majority of the aggregation criteria listed in paragraph 12.
15 If the total external revenue reported by operating segments constitutes less than 75 per cent of the entitys
revenue, additional operating segments shall be identified as reportable segments (even if they do not meet
the criteria in paragraph 13) until at least 75 per cent of the entitys revenue is included in reportable
segments.
16 Information about other business activities and operating segments that are not reportable shall be combined
and disclosed in an all other segments category separately from other reconciling items in the
reconciliations required by paragraph 28. The sources of the revenue included in the all other segments
category shall be described.
17 If management judges that an operating segment identified as a reportable segment in the immediately
preceding period is of continuing significance, information about that segment shall continue to be reported
separately in the current period even if it no longer meets the criteria for reportability in paragraph 13.
18 If an operating segment is identified as a reportable segment in the current period in accordance with the
quantitative thresholds, segment data for a prior period presented for comparative purposes shall be restated
to reflect the newly reportable segment as a separate segment, even if that segment did not satisfy the criteria
for reportability in paragraph 13 in the prior period, unless the necessary information is not available and the
cost to develop it would be excessive.
19 There may be a practical limit to the number of reportable segments that an entity separately discloses
beyond which segment information may become too detailed. Although no precise limit has been
determined, as the number of segments that are reportable in accordance with paragraphs 1318 increases
above ten, the entity should consider whether a practical limit has been reached.
Disclosure
20 An entity shall disclose information to enable users of its financial statements to evaluate the nature
and financial effects of the business activities in which it engages and the economic environments in
which it operates.
21 To give effect to the principle in paragraph 20, an entity shall disclose the following for each period for
which an statement of comprehensive income is presented:
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(a) general information as described in paragraph 22;
(b) information about reported segment profit or loss, including specified revenues and expenses
included in reported segment profit or loss, segment assets, segment liabilities and the basis of
measurement, as described in paragraphs 2327; and
(c) reconciliations of the totals of segment revenues, reported segment profit or loss, segment assets,
segment liabilities and other material segment items to corresponding entity amounts as described
in paragraph 28.
Reconciliations of the amounts in the statement of financial position for reportable segments to the amounts
in the entitys statement of financial position are required for each date at which a statement of financial
position is presented. Information for prior periods shall be restated as described in paragraphs 29 and 30.
General information
22 An entity shall disclose the following general information:
(a) factors used to identify the entitys reportable segments, including the basis of organisation (for
example, whether management has chosen to organise the entity around differences in products
and services, geographical areas, regulatory environments, or a combination of factors and
whether operating segments have been aggregated), and
(b) types of products and services from which each reportable segment derives its revenues.
Information about profit or loss, assets and liabilities
23 An entity shall report a measure of profit or loss for each reportable segment. An entity shall report a
measure of total assets and liabilities for each reportable segment if such amounts are regularly provided to
the chief operating decision maker. An entity shall also disclose the following about each reportable segment
if the specified amounts are included in the measure of segment profit or loss reviewed by the chief
operating decision maker, or are otherwise regularly provided to the chief operating decision maker even if
not included in that measure of segment profit or loss:
(a) revenues from external customers;
(b) revenues from transactions with other operating segments of the same entity;
(c) interest revenue;
(d) interest expense;
(e) depreciation and amortisation;
(f) material items of income and expense disclosed in accordance with paragraph 97 of IAS 1
Presentation of Financial Statements (as revised in 2007);
(g) the entitys interest in the profit or loss of associates and joint ventures accounted for by the equity
method;
(h) income tax expense or income; and
(i) material non-cash items other than depreciation and amortisation.
An entity shall report interest revenue separately from interest expense for each reportable segment unless a
majority of the segments revenues are from interest and the chief operating decision maker relies primarily
on net interest revenue to assess the performance of the segment and make decisions about resources to be
allocated to the segment. In that situation, an entity may report that segments interest revenue net of its
interest expense and disclose that it has done so.
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24 An entity shall disclose the following about each reportable segment if the specified amounts are included in
the measure of segment assets reviewed by the chief operating decision maker or are otherwise regularly
provided to the chief operating decision maker, even if not included in the measure of segment assets:
(a) the amount of investment in associates and joint ventures accounted for by the equity method, and
(b) the amounts of additions to non-current assets* other than financial instruments, deferred tax assets, net
defined benefit assets (see IAS 19 Employee Benefits) and rights arising under insurance contracts.
[footnote omitted]
Measurement
25 The amount of each segment item reported shall be the measure reported to the chief operating decision
maker for the purposes of making decisions about allocating resources to the segment and assessing its
performance. Adjustments and eliminations made in preparing an entitys financial statements and
allocations of revenues, expenses, and gains or losses shall be included in determining reported segment
profit or loss only if they are included in the measure of the segments profit or loss that is used by the chief
operating decision maker. Similarly, only those assets and liabilities that are included in the measures of the
segments assets and segments liabilities that are used by the chief operating decision maker shall be
reported for that segment. If amounts are allocated to reported segment profit or loss, assets or liabilities,
those amounts shall be allocated on a reasonable basis.
26 If the chief operating decision maker uses only one measure of an operating segments profit or loss, the
segments assets or the segments liabilities in assessing segment performance and deciding how to allocate
resources, segment profit or loss, assets and liabilities shall be reported at those measures. If the chief
operating decision maker uses more than one measure of an operating segments profit or loss, the segments
assets or the segments liabilities, the reported measures shall be those that management believes are
determined in accordance with the measurement principles most consistent with those used in measuring the
corresponding amounts in the entitys financial statements.
27 An entity shall provide an explanation of the measurements of segment profit or loss, segment assets and
segment liabilities for each reportable segment. At a minimum, an entity shall disclose the following:
(a) the basis of accounting for any transactions between reportable segments.
(b) the nature of any differences between the measurements of the reportable segments profits or
losses and the entitys profit or loss before income tax expense or income and discontinued
operations (if not apparent from the reconciliations described in paragraph 28). Those differences
could include accounting policies and policies for allocation of centrally incurred costs that are
necessary for an understanding of the reported segment information.
(c) the nature of any differences between the measurements of the reportable segments assets and the
entitys assets (if not apparent from the reconciliations described in paragraph 28). Those
differences could include accounting policies and policies for allocation of jointly used assets that
are necessary for an understanding of the reported segment information.
(d) the nature of any differences between the measurements of the reportable segments liabilities and
the entitys liabilities (if not apparent from the reconciliations described in paragraph 28). Those
differences could include accounting policies and policies for allocation of jointly utilised
liabilities that are necessary for an understanding of the reported segment information.
(e) the nature of any changes from prior periods in the measurement methods used to determine
reported segment profit or loss and the effect, if any, of those changes on the measure of segment
profit or loss.
(f) the nature and effect of any asymmetrical allocations to reportable segments. For example, an
entity might allocate depreciation expense to a segment without allocating the related depreciable
assets to that segment.
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Reconciliations
28 An entity shall provide reconciliations of all of the following:
(a) the total of the reportable segments revenues to the entitys revenue.
(b) the total of the reportable segments measures of profit or loss to the entitys profit or loss before
tax expense (tax income) and discontinued operations. However, if an entity allocates to
reportable segments items such as tax expense (tax income), the entity may reconcile the total of
the segments measures of profit or loss to the entitys profit or loss after those items.
(c) the total of the reportable segments assets to the entitys assets.
(d) the total of the reportable segments liabilities to the entitys liabilities if segment liabilities are
reported in accordance with paragraph 23.
(e) the total of the reportable segments amounts for every other material item of information
disclosed to the corresponding amount for the entity.
All material reconciling items shall be separately identified and described. For example, the amount of each
material adjustment needed to reconcile reportable segment profit or loss to the entitys profit or loss arising
from different accounting policies shall be separately identified and described.
Restatement of previously reported information
29 If an entity changes the structure of its internal organisation in a manner that causes the composition of its
reportable segments to change, the corresponding information for earlier periods, including interim periods,
shall be restated unless the information is not available and the cost to develop it would be excessive. The
determination of whether the information is not available and the cost to develop it would be excessive shall
be made for each individual item of disclosure. Following a change in the composition of its reportable
segments, an entity shall disclose whether it has restated the corresponding items of segment information for
earlier periods.
30 If an entity has changed the structure of its internal organisation in a manner that causes the composition of
its reportable segments to change and if segment information for earlier periods, including interim periods, is
not restated to reflect the change, the entity shall disclose in the year in which the change occurs segment
information for the current period on both the old basis and the new basis of segmentation, unless the
necessary information is not available and the cost to develop it would be excessive.
Entity-wide disclosures
31 Paragraphs 3234 apply to all entities subject to this IFRS including those entities that have a single
reportable segment. Some entities business activities are not organised on the basis of differences in related
products and services or differences in geographical areas of operations. Such an entitys reportable
segments may report revenues from a broad range of essentially different products and services, or more
than one of its reportable segments may provide essentially the same products and services. Similarly, an
entitys reportable segments may hold assets in different geographical areas and report revenues from
customers in different geographical areas, or more than one of its reportable segments may operate in the
same geographical area. Information required by paragraphs 3234 shall be provided only if it is not
provided as part of the reportable segment information required by this IFRS.
Information about products and services
32 An entity shall report the revenues from external customers for each product and service, or each group of
similar products and services, unless the necessary information is not available and the cost to develop it
would be excessive, in which case that fact shall be disclosed. The amounts of revenues reported shall be
based on the financial information used to produce the entitys financial statements.
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Information about geographical areas
33 An entity shall report the following geographical information, unless the necessary information is not
available and the cost to develop it would be excessive:
(a) revenues from external customers (i) attributed to the entitys country of domicile and (ii)
attributed to all foreign countries in total from which the entity derives revenues. If revenues from
external customers attributed to an individual foreign country are material, those revenues shall be
disclosed separately. An entity shall disclose the basis for attributing revenues from external
customers to individual countries.
(b) non-current assets
1
other than financial instruments, deferred tax assets, post-employment benefit
assets, and rights arising under insurance contracts (i) located in the entitys country of domicile
and (ii) located in all foreign countries in total in which the entity holds assets. If assets in an
individual foreign country are material, those assets shall be disclosed separately.
The amounts reported shall be based on the financial information that is used to produce the entitys
financial statements. If the necessary information is not available and the cost to develop it would be
excessive, that fact shall be disclosed. An entity may provide, in addition to the information required by this
paragraph, subtotals of geographical information about groups of countries.
Information about major customers
34 An entity shall provide information about the extent of its reliance on its major customers. If revenues from
transactions with a single external customer amount to 10 per cent or more of an entitys revenues, the entity
shall disclose that fact, the total amount of revenues from each such customer, and the identity of the
segment or segments reporting the revenues. The entity need not disclose the identity of a major customer or
the amount of revenues that each segment reports from that customer. For the purposes of this IFRS, a group
of entities known to a reporting entity to be under common control shall be considered a single customer.
However, judgement is required to assess whether a government (including government agencies and similar
bodies whether local, national or international) and entities known to the reporting entity to be under the
control of that government are considered a single customer. In assessing this, the reporting entity shall
consider the extent of economic integration between those entities.
Transition and effective date
35 An entity shall apply this IFRS in its annual financial statements for periods beginning on or after 1 January
2009. Earlier application is permitted. If an entity applies this IFRS in its financial statements for a period
before 1 January 2009, it shall disclose that fact.
35A Paragraph 23 was amended by Improvements to IFRSs issued in April 2009. An entity shall apply that
amendment for annual periods beginning on or after 1 January 2010. Earlier application is permitted. If an
entity applies the amendment for an earlier period it shall disclose that fact.
36 Segment information for prior years that is reported as comparative information for the initial year of
application (including application of the amendment to paragraph 23 made in April 2009) shall be restated to
conform to the requirements of this IFRS, unless the necessary information is not available and the cost to
develop it would be excessive.
36A IAS 1 (as revised in 2007) amended the terminology used throughout IFRSs. In addition it amended
paragraph 23(f). An entity shall apply those amendments for annual periods beginning on or after 1 January
2009. If an entity applies IAS 1 (revised 2007) for an earlier period, the amendments shall be applied for that
earlier period.
36B IAS 24 Related Party Disclosures (as revised in 2009) amended paragraph 34 for annual periods beginning
on or after 1 January 2011. If an entity applies IAS 24 (revised 2009) for an earlier period, it shall apply the
amendment to paragraph 34 for that earlier period.

1
For assets classified according to a liquidity presentation, non-current assets are assets that include amounts expected to be recovered
more than twelve months after the statement of financial position date.
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Withdrawal of IAS 14
37 This IFRS supersedes IAS 14 Segment Reporting.
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Appendix A
Defined term
This appendix is an integral part of the IFRS.
operating
segment
An operating segment is a component of an entity:
(a) 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),
(b) whose operating results are regularly reviewed by the entitys chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance,
and
(c) for which discrete financial information is available.