6. Segment information
The Group has two reportable segments, as described below, which are the Group’s strategic business units.
The strategic business units offer different products, and are managed separately because they require different technology and marketing strategies. The following summary describes the operations in each of the Group’s reportable segments:
- Phosphate-based products segment includes mainly production and distribution of ammophos, diammoniumphosphate and other phosphate based and complex (NPK) fertilizers on the factories located in Cherepovets and Balakovo and production and distribution of apatite concentrate extracted from the apatite-nepheline ore, which is mined and processed in Kirovsk;
- Nitrogen fertilizers segment includes mainly production and distribution of ammonia, ammonium nitrate and urea on the factory located in Cherepovets.
Certain assets, revenue and expenses, not allocated to any particular segment, and are therefore included into the “other operations” column. None of these operations meet any of the quantitative thresholds for determining reportable segments.
Information regarding the results of each reportable segment is included below. Performance is measured based on gross profit, as included in the internal management reports that are reviewed by the Group’s CEO.
Business segment information of the Group at 31 December 2011 and for the year then ended is as follows:
| RUB million | Phosphate-based products | Nitrogen fertilizers | Other operations | Inter-segment elimination | Total |
|---|---|---|---|---|---|
| Segment revenue and profitability |
|||||
| Segment external revenues, thereof: |
88,982 | 10,727 | 809 | — | 100,518 |
| Export | 60,837 | 9,426 | — | — | 70,263 |
| Domestic | 28,145 | 1,301 | 809 | — | 30,255 |
| Inter-segment revenues | — | 3,629 | — | (3,629) | — |
| Cost of goods sold | (50,631) | (7,495) | (2,042) | 3,629 | (56,539) |
| Gross segment profit/(loss) | 38,351 | 6,861 | (1,233) | — | 43,979 |
| Certain items of profit and loss | |||||
| Amortisation and depreciation | (4,887) | (413) | (109) | — | (5,409) |
| Total non-current segment assets | 40,310 | 10,296 | 1,948 | — | 52,554 |
| Additions to non-current assets | 8,314 | 6,561 | 368 | — | 15,243 |
Business segment information of the Group at 31 December 2010 and for the year then ended is as follows:
| RUB million | Phosphate-based products | Nitrogen fertilizers | Other operations | Inter-segment elimination | Total |
|---|---|---|---|---|---|
| Segment revenue and profitability | |||||
| Segment external revenues, thereof: |
68,832 | 7,012 | 1,106 | — | 76,950 |
| Export | 43,875 | 6,131 | 78 | — | 50,084 |
| Domestic | 24,957 | 881 | 1,028 | — | 26,866 |
| Inter-segment revenues | — | 2,154 | — | (2,154) | — |
| Cost of goods sold | (42,812) | (6,253) | (1,814) | 2,154 | (48,725) |
| Gross segment profit/(loss) | 26,020 | 2,913 | (708) | — | 28,225 |
| Certain items of profit and loss | |||||
| Amortisation and depreciation | (4,262) | (347) | (115) | — | (4,724) |
| Total non-current segment assets | 37,241 | 4,767 | 2,309 | — | 44,317 |
| Additions to non-current assets | 8,393 | 1,101 | 1,120 | — | 10,614 |
The analysis of export revenue by regions is as follows:
| RUB Million | 2011 | 2010 |
|---|---|---|
| Europe | 16,197 | 14,381 |
| India | 12,029 | 9,127 |
| North and South America | 28,287 | 14,334 |
| Other regions | 13,750 | 12,242 |
| 70,263 | 50,084 |
In 2011 revenue from sales of phosphate-based products to one single customer amounted to approximately 28% (RUB 27,725 million) of the Group’s total revenue (2010: 20% (RUB 15,169 million).
| RUB Million | 2011 | 2010 |
|---|---|---|
| Total segment revenues | 100,518 | 76,950 |
| Difference in timing of revenue recognition between management accounts and IFRS | — | 1 |
| Consolidated revenue | 100,518 | 76,951 |
| RUB Million | 2011 | 2010 |
|---|---|---|
| Total segmental profit | 43,979 | 28,225 |
| Difference in depreciation and amortisation | (77) | (50) |
| Difference in timing of expenses recognition | (168) | (295) |
| Difference in timing of revenue recognition | — | 1 |
| Re-allocation (from)/to administrative expenses | (89) | 1,044 |
| Re-allocation from selling expenses | (184) | — |
| Re-allocation from other income | 297 | — |
| Recognition of finance lease | 350 | 219 |
| Other adjustments | 214 | 137 |
| Consolidated gross profit | 44,322 | 29,281 |
| RUB Million | 2011 | 2010 |
|---|---|---|
| Total segment assets | 52,554 | 44,317 |
| Difference in the carrying value of the tangible fixed assets and intangible assets between management accounts and IFRS | 5,202 | 2,939 |
| Consolidated non-current segment assets | 57,756 | 47,256 |
Notes to the Consolidated Financial Statements