Note 6 - Operating segments
The Group’s segment performance is assessed periodically by the Group’s management and reported to the Board of Directors, which acts as the Group’s Chief Operating Decision Maker (CODM). These segments are represented by geographical regions. Each region has similar characteristics relevant to the Group business and usually includes several markets in which it sells its products. The sales of the Group’s products in the markets are managed either by wholly owned subsidiaries or by external third-party distributors. The reported performance of these markets is provided periodically and is consolidated in the Group’s headquarters for the purpose of presentation to the CODM.
Segment information
Segment information is based on the geographical location of customers as reported to the CODM. CODM business decisions are primarily based on the market data of the various markets in which the Group operates. The data received by the CODM consists of revenues from external customers and segment results by market, which include items directly attributable to each market as well as those that can be allocated on a reasonable basis. The operating segments’ accounting policies are identical to the accounting policies applied in these financial statements. Inter-company transactions are not reported in the management reports and thus not presented in the segment information. Assets and liabilities data is not reported in the operating segment information since it is not reviewed by the CODM.
The Company aggregates the different markets in which the Group operates into four main reportable geographical segments as set forth below:
-The Americas
-Western Europe
-Asia-Pacific
-Central and Eastern Europe, Middle East and Africa
The Group’s management aggregates the different markets based on consumer characteristics and geographical proximity.
Segment results are calculated in accordance with the management reports reported to the CODM and as follows:
|
1. |
For markets in which marketing is performed by third-party distributors, segment results represent revenues from external customers, less direct cost of revenues and less participation in advertising expenses for that market. |
|
2. |
For markets in which marketing is performed by the Group’s wholly owned subsidiaries, segment results represent revenues from external customers, less direct cost of revenues and less other operating expenses (general and administrative and sales and marketing expenses). |
Reconciliation to consolidated financial statements
The reconciliation amounts include all other operating and financial expenses that were not related directly to the Group’s sales and distribution activities and were not included in the expenses allocated to specific segments in the reports to the CODM.
AInformation about reportable segments
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Year ended December 31, 2017 |
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Central and |
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Eastern |
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Europe, |
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Western |
Middle East |
Reportable |
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The Americas |
Europe (1) |
Asia-Pacific |
and Africa |
Segments |
Reconciliation (2) |
Consolidated |
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|
|
|
(in thousands) |
||||||||||||
|
Revenues |
|
127,370 |
|
325,315 |
|
61,902 |
|
28,784 |
|
543,371 |
|
— |
|
543,371 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Depreciation and amortization |
|
949 |
|
1,126 |
|
544 |
|
119 |
|
2,738 |
|
19,550 |
|
22,288 |
|
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|
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|
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Segments Results |
|
18,864 |
|
93,275 |
|
16,032 |
|
5,711 |
|
133,882 |
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(52,507) |
|
81,375 |
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Financial income, net |
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(1,354) |
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Reportable income before income tax |
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82,729 |
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(1) |
Revenues from one customer of the Group’s Western Europe segment represents approximately $39.1 million of the Group’s total revenues. |
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(2) |
Reconciling items are recurring items that are not related directly to the Group’s sales and distribution activities and were not allocated to the different segments by the Company’s Chief Operating Decision Maker. Such items include primarily unallocated operating overhead costs and share based payments. |
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Year ended December 31, 2016 |
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Central and |
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Eastern |
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Europe, |
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Western |
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Middle East |
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Reportable |
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The Americas |
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Europe (1) |
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Asia-Pacific |
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and Africa |
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Segments |
|
Reconciliation (2) |
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Consolidated |
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|
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(in thousands) |
||||||||||||
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Revenues |
|
114,747 |
|
286,512 |
|
49,614 |
|
25,192 |
|
476,065 |
|
— |
|
476,065 |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Depreciation and amortization |
|
1,993 |
|
2,110 |
|
649 |
|
239 |
|
4,991 |
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14,460 |
|
19,451 |
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|
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|
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Segments Results |
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17,433 |
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71,983 |
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10,308 |
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3,678 |
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103,402 |
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(48,930) |
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54,472 |
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|
|
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|
|
|
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|
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Financial expense, net |
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|
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|
|
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|
|
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|
|
|
|
2,120 |
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|
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|
|
|
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|
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|
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|
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Reportable income before income tax |
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|
|
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|
|
|
|
|
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52,352 |
|
(1) |
Revenues from one customer of the Group’s Western Europe segment represents approximately $40.0 million of the Group’s total revenues. |
|
(2) |
Reconciling items include impairment of other intangible assets in the amount of $1.8 million recorded under other expense in the statement of operations in 2016. Other reconciling items are recurring items that are not related directly to the Group’s sales and distribution activities and were not allocated to the different segments by the Company’s Chief Operating Decision Maker. Such items include primarily unallocated operating overhead costs and share based payments. |
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|
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Year ended December 31, 2015 |
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Central and |
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Eastern |
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Europe, |
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Western |
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Middle East |
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Reportable |
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The Americas |
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Europe (1) |
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Asia-Pacific |
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and Africa |
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Segments |
|
Reconciliation (2) |
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Consolidated |
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(in thousands) |
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Revenues |
|
102,104 |
|
251,496 |
|
40,711 |
|
21,644 |
|
415,955 |
|
(2,820) |
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413,135 |
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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Depreciation and amortization |
|
2,233 |
|
2,219 |
|
528 |
|
241 |
|
5,221 |
|
11,722 |
|
16,943 |
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|
|
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|
|
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|
|
|
|
|
|
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Segments Results |
|
6,485 |
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48,444 |
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5,232 |
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3,272 |
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63,433 |
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(53,192) |
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10,241 |
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|
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|
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|
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|
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|
|
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Financial income, net |
|
|
|
|
|
|
|
|
|
|
|
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(4,842) |
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|
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|
|
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|
|
|
|
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|
Reportable income before income tax |
|
|
|
|
|
|
|
|
|
|
|
|
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15,083 |
|
(1) |
Revenue from one customer of the Group’s Western Europe segment represents approximately $37.3 million of the Group’s total revenues. |
|
(2) |
Reconciling items include restructuring costs of $9.5 million comprised of charges to revenue of $2.8 million, impairment of inventory of $3.2 million, impairment of property, plant and equipment of $1.0 million, employee benefits of $1.9 million and operating expenses of $0.6 million. Other reconciling items are recurring items that are not related directly to the Group’s sales and distribution activities and were not allocated to the different segments by the Company’s Chief Operating Decision Maker. Such items include primarily unallocated operating overhead costs and share based payments. |
|
B. |
Entity level disclosures |
Information on geographical segments
Information regarding the assets of each geographical segment is detailed below. The information includes non-current assets data, of which the depreciated cost of property, plant and equipment is allocated to each of the geographical segments, and the intangible assets’ amortized cost, deferred tax asset and other receivables are not allocated to the geographical segments.
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Central and |
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Eastern |
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Europe, |
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|
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|
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|
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|
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Western |
|
|
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Middle East |
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Reportable |
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|
|
|
|
|
|
The Americas |
|
Europe |
|
Asia-Pacific |
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and Africa (1) |
|
Segments |
|
Reconciliation (2) |
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Consolidated |
|
|
|
(in thousands) |
||||||||||||
|
December 31, 2017 |
|
10,424 |
|
18,883 |
|
6,561 |
|
135,675 |
|
171,543 |
|
38,365 |
|
209,908 |
|
December 31, 2016 |
|
8,879 |
|
16,418 |
|
4,947 |
|
134,384 |
|
164,628 |
|
37,582 |
|
202,210 |
|
December 31, 2015 |
|
10,364 |
|
13,757 |
|
6,713 |
|
124,460 |
|
155,294 |
|
42,095 |
|
197,389 |
|
(1) |
Includes the depreciated cost of property, plant and equipment of the manufacturing facilities as of December 31, 2017 in the amount of $134.8 million (2016 and 2015: $133.6 million and $122.8 million, respectively). |
|
(2) |
Refer to Note 8 for additional information with respect to an impairment of other intangible assets in the amount of $1.8 million recorded under other expense in the statement of operations in 2016. |
Reconciliation of geographical segments to total non-current assets:
|
|
|
Year ended December 31, |
||||
|
|
|
2015 |
|
2016 |
|
2017 |
|
|
|
(in thousands) |
||||
|
Geographical segments non-current assets |
|
155,294 |
|
164,628 |
|
171,543 |
|
Intangible assets |
|
42,095 |
|
37,582 |
|
38,365 |
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Other non-current assets |
|
1,537 |
|
6,842 |
|
10,695 |
|
Consolidated non-current assets |
|
198,926 |
|
209,052 |
|
220,603 |
Major customers
During 2017, 2016 and 2015 a distributor, located in Western Europe represented 7.2%, 8.4%, 9.0%, respectively, of the total revenue of the Group.
Information about products
|
|
|
Year ended December 31, |
||||
|
|
|
2015 |
|
2016 |
|
2017 |
|
|
|
Revenues |
||||
|
|
|
(In thousands) |
||||
|
Sparkling water makers and exchangeable CO2 cylinders |
|
131,749 |
|
170,790 |
|
212,293 |
|
Consumables |
|
272,276 |
|
297,011 |
|
323,449 |
|
Other |
|
9,110 |
|
8,264 |
|
7,629 |
|
|
|
|
|
|
|
|
|
Total |
|
413,135 |
|
476,065 |
|
543,371 |