Segment Decision Tree
The various steps in deciding in which product sub-segment, if any, a certain activity belongs is summarized in the following graphic:
Note that for the product sub-segments Aggregates and Ready-Mix Concrete certain non-core revenues (e.g. inert fill, merchandising of goods, franchising, etc.) have to be reported separately as 'Net Sales - Other' and are therefore excluded from the application of the segment decision tree.
Any changes of the existing business segment model of a Group Reporting Unit needs to be validated by the Head of Accounting, Reporting and Internal Control.
The following examples should help to clarify the meaning of the graphic above. For specific product sub-segment boundaries refer to 'Product Segments and Product Sub-Segments'.
Examples
• A Group Reporting Unit supplies engineering services within the Group and to third parties. The cash cost of the work performed for third parties exceeds 20% and USD 1 million rule of the total cash cost of the engineering company.This company would operate in the product segment other products and services and therefore as well report its total net sales and costs within this product sub-segment, regardless of the product sub-segments in which the work was performed for the Group companies. This means that this activity is not regarded as a support process anymore but as a separate business described in 'Allocation methods'.
• A shared service center provides consulting support to Group companies. The cash cost of work performed for third parties is greater than USD 1 Million, but represents less than 20% of the total cash costs of running the shared service center.
The shared service center therefore does not operate directly within a product segment, but performs a support process. The costs of operating this support process must be allocated on an equitable basis across the various product sub-segments described in 'Allocation methods'.
Revenues generated on sales to third parties are disclosed as a cost recovery in a similar way to the sale of by-products
net sales exceeds 20%
• A ready-mix concrete company provides transportation services with own trucks to third parties. The cash cost associated with the net sales exceeds 20% and USD 1 Million of the total cash cost of the company's distribution main cost center delivering.
This activity of supplying transport to third parties and Group companies is to be fully reported in the product sub-segment Other solutions and products.
• A ready-mix concrete company provides transportation services with own trucks to third parties. The cash cost associated with the net sales does NOT exceed 20% and USD 1 Million of the total cash cost of the company's distribution main cost center delivering.
This activity of supplying transport to third parties and Group companies is to be fully reported as 'Net Sales - Other' in the product sub-segment Ready-Mix Concrete.
This activity of supplying transport to third parties and Group companies is to be fully reported in the product sub-segment Other solutions and products.
• A ready-mix concrete company provides transportation services with own trucks to third parties. The cash cost associated with the net sales does NOT exceed 20% and USD 1 Million of the total cash cost of the company's distribution main cost center delivering.
This activity of supplying transport to third parties and Group companies is to be fully reported as 'Net Sales - Other' in the product sub-segment Ready-Mix Concrete.
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