IMMOEAST Annual Report 2006/07

7. Segment Reporting
IFRS 8 Operating Segments (convergence standard for segment reporting)
The IASB issued International Financial Reporting Standard 8 Operating Segments as part of a joint project with
the US Financial Accounting Standards Board (FASB) to reduce the differences between IFRS and US GAAP. IFRS 8
replaces IAS 14 and achieves convergence with the requirements of SFAS 131. IFRS 8 requires companies to provide
financial and descriptive information on their reportable segments, whereby this standard calls for the identification
of operating segments based on the internal management focus of the company (management approach). In keeping
with this approach, the presentation of the segments must reflect the same basis used for internal reporting. IFRS 8
applies to annual periods beginning on or after 1 January 2009. The early application of IFRS 8 to these consolidated
financial statements leads, above all, to additional disclosures in the notes and provide a more detailed insight into
segment financial position and performance.
IFRS 8 is applicable to financial years beginning after 31 December 2008. Earlier application of this standard is permitted
and recommended, and the consolidated financial statements for 2006/07 make use of this option.
The requirements for segment reporting were previously part of external reporting, a subject area where the international
standards – IFRS and US-GAAP – differed. The requirements of SFAS 131 are based above all on internal
reporting, while IAS 14 – the previous standard for segment reporting – calls for the derivation of disaggregated
information according to independent principles that are anchored in external reporting. In particular, IFRS 8 calls for
the application of the management approach for reporting on the economic development of the individual segments.
The management approach assumes that the units defined for internal reporting and decision-making as well as the
operating management of a company are also relevant for external segment reporting since the best information for
segmentation is available to management. IAS 14 calls for the use of the risk and reward approach for segmentation.
This approach requires the definition of segments on the basis of homogeneous risks and opportunities, which
means the segments should represent separate components of the company that are differentiated in a way that the
scope of their activities differs substantially with respect to risks and rewards.
IAS 14 requires the disclosure of information according to a more detailed primary and a less detailed secondary
format.
In accordance with IFRS 8.5 ff., a component of an entity is an operating segment
• if it engages in activities from which it may earn revenues and incur expenses, including revenues and expenses
relating to transactions with other components of the same entity
• if its operating results are regularly reviewed by the entity’s decision-makers and used to assess performance and
allocate resources, and
• discrete financial information is available on the component.
IFRS 8.13 includes quantitative thresholds for the identification of reportable operating segments. The reporting
obligation is triggered by three alternative criteria:
• Revenue, including both sales to external customers and intersegment sales, equals at least 10% of the combined
external and intersegment revenue of all operating segments, or
• The reported segment profit or loss equals at least 10% of the greater of the combined reported profit of all operating
segments that did not report a loss, and the combined reported loss of all operating segments that reported a
loss, or
• Segment assets equal at least 10% of the combined assets of all operating segments.
Notes
Report by the Executive Board 221
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
IFRS 8.35
IFRS 8.5
IFRS 8.13