# Segment Reporting Memo: [Entity name], [Reporting period]

> Technical accounting memo that identifies the chief operating decision
> maker (CODM), the operating segments, any aggregation, the reportable
> segments and the segment disclosures, including significant segment
> expenses. Structure aligned with IFRS 8 Operating Segments (as amended,
> including consequential amendments from IFRS 18 issued April 2024) and
> FASB ASC Topic 280 Segment Reporting as amended by ASU 2023-07, cited
> by paragraph or section number only. Obtain the standards for the
> normative text. Replace every `[bracketed]` value and every row marked
> *Example*. This is a documentation format, not accounting, audit or
> financial advice: check the current official text and a qualified
> professional.

<!--
Guidance: How to use this template
- Purpose: record the judgements behind the segment note so that
  auditors, regulators and the audit committee can see why the segments
  are what they are, and so the conclusion is re-tested every period.
- Prepare it at first application, on any reorganisation, change of
  CODM or change in the internal reporting package, and refresh it
  annually.
- Evidence is internal: board and executive committee packs, budgets,
  organisation charts, incentive plans. Attach the actual CODM package.
- The worked example uses the fictional Orvane Instruments Group plc
  (IFRS reporter, EUR millions, calendar year 2027). Every number is
  recomputed and marked *Example*.
- Related templates: Technical Accounting Memo (`finance/technical-accounting-memo`),
  Impairment Test Memo (`finance/impairment-test-memo`) since goodwill
  is allocated to units no larger than an operating segment, Financial
  Statement Disclosure Checklist (`finance/financial-statement-disclosure-checklist`),
  IFRS 18 Transition Plan (`finance/ifrs-18-transition-plan`), Monthly
  Management Report (`finance/monthly-management-report`).
-->

## Document control

<!-- Guidance: Name the period, the framework and the version of the CODM package reviewed. -->

| Field | Value |
|---|---|
| Document ID | [SEG-YYYY-NN] *Example:* SEG-2027-01 |
| Reporting entity | [Group name] *Example:* Orvane Instruments Group plc |
| Framework | [IFRS 8 / ASC 280 / both] *Example:* IFRS 8; ASC 280 comparison in section 8 |
| Period | [Year ended YYYY-MM-DD] *Example:* year ended 2027-12-31 |
| CODM package reviewed | [Name, version, dates] *Example:* Monthly Executive Committee pack, January to December 2027 |
| Version | [0.1] |
| Status | [Draft / In review / Final] |
| Owner | [@group-reporting-lead] |
| Approvers/reviewers | [@group-controller], [@cfo], [@audit-committee-chair] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Preparer | [@name] | [Prepared] | YYYY-MM-DD |
| Group controller | [@name] | [Reviewed] | YYYY-MM-DD |
| CFO | [@name] | [Approved] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | Draft |
| 1.0 | YYYY-MM-DD | [@name] | *Example:* Approved for 2027 financial statements |

## 1. Summary and conclusion

<!-- Guidance: Lead with the answer: who the CODM is, how many operating and reportable segments, and what changed from last period. -->

*Example:* The CODM of Orvane Instruments Group plc is the Executive
Committee, chaired by the Chief Executive Officer. The group has five
operating segments. None are aggregated. Four are reportable: Industrial
sensors, Medical devices and Software and services meet the revenue
test, and Aftermarket parts meets the profit test. Training is shown in
"All other segments". Reportable segments carry 98.0% of external
revenue, above the 75% threshold. There is no change from 2026.

## 2. Identifying the CODM

<!-- Guidance: The CODM is a function, not a title: whoever allocates resources and assesses performance. Pitfall: naming the board when the board only approves what an executive committee has decided. -->

| Question | Evidence | Answer |
|---|---|---|
| Who allocates capital and headcount between units? | [Budget approval minutes] | *Example:* Executive Committee, quarterly |
| Who assesses performance and sets targets for unit heads? | [Incentive plan, review minutes] | *Example:* Executive Committee |
| What information does that body receive regularly? | [Pack contents] | *Example:* revenue, adjusted operating profit and four cost lines by business unit |
| Does the board do more than approve? | [Board minutes] | *Example:* No, it approves the group budget only |

Reference: IFRS 8 para. 7; ASC 280-10-50. Under ASC 280 as amended by
ASU 2023-07, disclose the title and position of the CODM and how the
CODM uses the segment profit measure.

## 3. Identifying operating segments

<!-- Guidance: Test each candidate unit against the three criteria: earns revenue and incurs expenses, results reviewed by the CODM, discrete financial information available. -->

| Candidate unit | Business activities with revenue and expenses | Results regularly reviewed by CODM | Discrete financial information | Segment manager | Operating segment? |
|---|---|---|---|---|---|
| *Example:* Industrial sensors | Yes | Yes | Yes | Divisional president | Yes |
| *Example:* Medical devices | Yes | Yes | Yes | Divisional president | Yes |
| *Example:* Software and services | Yes | Yes | Yes | General manager | Yes |
| *Example:* Aftermarket parts | Yes | Yes | Yes | General manager | Yes |
| *Example:* Training | Yes | Yes | Yes | Director | Yes |
| *Example:* Group head office | Incidental income only | Cost review | Yes | CFO | No, corporate |

Reference: IFRS 8 paras. 5 to 10. Where several overlapping sets of
information exist (by product and by region), explain which one is the
basis and why.

## 4. Aggregation

<!-- Guidance: Aggregation is allowed only when segments have similar economic characteristics (for example similar long-term margins) and are similar in all the listed qualitative respects. Pitfall: aggregating to reduce disclosure while margins differ materially. -->

| Criterion (IFRS 8 para. 12) | Segment A | Segment B | Similar? |
|---|---|---|---|
| Economic characteristics (long-term margin, growth) | [Data] | [Data] | [Yes/No] |
| Nature of products and services | | | |
| Production processes | | | |
| Type or class of customer | | | |
| Distribution methods | | | |
| Regulatory environment, where relevant | | | |
| Conclusion | | | [Aggregate / Do not aggregate] |

*Example:* Aftermarket parts and Industrial sensors were considered for
aggregation; they were not aggregated because the aftermarket margin
(9 / 60 = 15.0%) differs from industrial sensors (38 / 440 = 8.6%) and
customers and distribution differ. Under IFRS 8 para. 22(aa), disclose
the judgements made in applying the aggregation criteria.

## 5. Quantitative thresholds

<!-- Guidance: Apply each 10% test to all operating segments, then the 75% external revenue test. Keep the workings in this table. -->

Tests (IFRS 8 para. 13; ASC 280-10-50): a segment is reportable if its
total revenue (external plus inter-segment) is 10% or more of combined
revenue of all segments, or the absolute amount of its profit or loss is
10% or more of the greater of combined profit of profitable segments and
combined loss of loss-making segments, or its assets are 10% or more of
combined segment assets.

*Example*, year 2027, EUR millions:

| Segment | External revenue | Inter-segment revenue | Total revenue | % | Segment profit or loss | % of 80 | Assets | % | Reportable |
|---|---|---|---|---|---|---|---|---|---|
| Industrial sensors | 410 | 30 | 440 | 48.5% | 38 | 47.5% | 520 | 49.4% | Yes |
| Medical devices | 265 | 5 | 270 | 29.8% | 31 | 38.8% | 390 | 37.0% | Yes |
| Software and services | 120 | 0 | 120 | 13.2% | (14) | 17.5% | 95 | 9.0% | Yes (revenue, profit) |
| Aftermarket parts | 48 | 12 | 60 | 6.6% | 9 | 11.3% | 40 | 3.8% | Yes (profit) |
| Training | 17 | 0 | 17 | 1.9% | 2 | 2.5% | 8 | 0.8% | No |
| Total | 860 | 47 | 907 | 100% | 66 | | 1,053 | 100% | |

Profitable segments total 80 and loss-making segments total 14, so the
profit test base is 80. External revenue of reportable segments is 410 +
265 + 120 + 48 = 843, or 98.0% of 860, above the 75% test (IFRS 8 para.
15). Training (EUR 17 million external revenue) is presented in "All
other segments" (para. 16).

## 6. Segment measures and significant expenses

<!-- Guidance: Use the measures the CODM actually uses, then list the expense lines regularly provided. Pitfall: disclosing IFRS operating profit when the CODM pack uses an adjusted measure. -->

Segment profit measure: [measure name and definition] *Example:*
adjusted operating profit, which excludes amortisation of acquired
intangibles, restructuring and share-based payment expense, all held
centrally.

Under ASU 2023-07, disclose significant segment expenses regularly
provided to the CODM and included in segment profit, and the amount and
composition of "other segment items". Under IFRS 8 para. 23, disclose
the specified amounts when they are included in the measure of segment
profit reviewed by the CODM or otherwise regularly provided, even if not
reviewed separately; this follows the IFRS Interpretations Committee
agenda decision on disclosure of revenues and expenses for reportable
segments (finalised June 2024; the IASB did not object in July 2024).

*Example*, EUR millions:

| Line | Industrial sensors | Medical devices |
|---|---|---|
| Total revenue | 440 | 270 |
| Cost of materials | (172) | (98) |
| Staff costs | (118) | (84) |
| Depreciation and amortisation | (34) | (22) |
| Other segment items (freight, energy, facilities) | (78) | (35) |
| Segment profit | 38 | 31 |

Repeat for every reportable segment.

## 7. Reconciliations and entity-wide disclosures

<!-- Guidance: Reconcile every segment total to the primary statements and list reconciling items by nature. -->

*Example*, EUR millions:

| Reconciliation | Amount |
|---|---|
| Total segment revenue | 907 |
| Elimination of inter-segment revenue | (47) |
| Group revenue | 860 |
| Total segment profit (reportable 64, all other 2) | 66 |
| Central costs not allocated | (18) |
| Group operating profit | 48 |
| Total segment assets | 1,053 |
| Unallocated assets (cash, tax, head office) | [amount] |

Entity-wide disclosures (IFRS 8 paras. 32 to 34): revenue by product or
service group, revenue and non-current assets by country of domicile and
material foreign countries, and reliance on major customers (any single
customer at 10% or more of revenue, with the segments that report it).

## 8. US GAAP comparison (ASC 280 and ASU 2023-07)

<!-- Guidance: Complete only if you also report under US GAAP or are an SEC registrant. Effective dates are for public entities. -->

| Topic | IFRS 8 | ASC 280 after ASU 2023-07 |
|---|---|---|
| Significant segment expenses | Specified amounts per para. 23 | Significant expenses regularly provided to the CODM, plus other segment items |
| CODM disclosure | Judgements on aggregation | Title and position of the CODM, and how the CODM uses the measure |
| Interim periods | Limited per IAS 34 | Annual segment disclosures also in interim periods |
| Single segment entities | Entity-wide disclosures | Full segment disclosures also required |
| Additional profit measures | One measure | More than one measure allowed if used by the CODM, with one consistent with GAAP measurement |
| Effective date | In force | Fiscal years beginning after 2023-12-15, interim periods within fiscal years beginning after 2024-12-15, applied retrospectively |

## 9. Change and monitoring

<!-- Guidance: Name the triggers that reopen this memo. -->

Triggers: reorganisation, new CODM or committee membership, a new
internal reporting package, acquisitions or disposals, a segment
crossing a 10% threshold, or a regulator comment. When segments change,
restate comparative information unless the information is not available
and the cost to develop it would be excessive (IFRS 8 paras. 29 and 30).

## 10. Glossary and references

<!-- Guidance: Short definitions in your own words. -->

| Term | Meaning in this memo |
|---|---|
| CODM | The function that allocates resources to and assesses the performance of the operating segments |
| Operating segment | A component with its own revenue and expenses whose results the CODM reviews and for which discrete information exists |
| Reportable segment | An operating segment, or an aggregation of segments, that meets a quantitative threshold or is chosen for disclosure |
| Significant segment expense | An expense category regularly provided to the CODM and included in the segment measure (ASC 280) |

| Reference | Version or date | URL |
|---|---|---|
| IFRS 8 Operating Segments | As amended, including IFRS 18 consequential amendments | https://www.ifrs.org/issued-standards/list-of-standards/ifrs-8-operating-segments/ |
| IFRS Interpretations Committee, Disclosure of Revenues and Expenses for Reportable Segments | Agenda decision finalised June 2024, IASB did not object July 2024 | https://www.ifrs.org/projects/work-plan/disclosure-of-revenues-and-expenses-for-reportable-segments-ifrs-8/ |
| FASB ASU 2023-07, Improvements to Reportable Segment Disclosures | Issued November 2023 | https://www.fasb.org/standards |

## Standard and licence note

Structure aligned with IFRS 8 Operating Segments and FASB ASC Topic 280
as amended by ASU 2023-07. Standards are cited by name and paragraph or
section number only; no text from the IFRS Foundation or FASB is
reproduced. Official text: IFRS Foundation (IFRS Accounting Standards,
licensed access at https://www.ifrs.org/) and FASB (Accounting Standards
Codification, access at https://asc.fasb.org/). Check later amendments,
agenda decisions and effective dates. Orvane Instruments Group and all
figures are fictional. The text is original and is not accounting
advice. Template licence: MIT.