Operating segment identification and disclosure

Multi-brand and multi-format hospitality groups (hotels, QSR, casual dining, delivery-only kitchens) risk under- or over-aggregating segments if they follow external marketing presentation instead of the management approach, which can obscure how the CODM actually allocates capital and hide underperforming formats from investors and lenders.

Does the chief operating decision maker regularly receive separate financial information (revenue, results, or assets) by brand, format (e.g., hotels vs. restaurants vs. delivery-only kitchens), or geography to make resource allocation and performance decisions? Do any of these operating segments meet the quantitative thresholds (10% of revenue, profit/loss, or assets) requiring separate disclosure, or are they aggregated because they share similar economic characteristics? Is the segment information reported to management reconciled to the consolidated financial statement totals?

1. Identify the chief operating decision maker (CODM) -- the function (not necessarily an individual title) that allocates resources and assesses performance of the business's components; in founder-led groups this is often the CEO or an executive committee.
2. Identify operating segments as the components of the entity for which discrete financial information is available and is regularly reviewed by the CODM to make resource allocation and performance decisions (e.g., separate monthly P&Ls by brand, format, or region).
3. Do not equate segments with external brand names or legal entities by default -- test against what the CODM actually reviews internally, which may combine or split differently than external branding.
4. Apply the aggregation criteria only where two or more operating segments have similar economic characteristics (similar margins, customer base, regulatory environment) AND are similar in nature of products/services, production process, customer type, distribution method, and regulatory environment -- aggregate only if all relevant criteria are met, not for convenience alone.
5. Apply the quantitative thresholds to each operating segment (before or after permitted aggregation): 10% of combined revenue, 10% of the greater of combined profit of profitable segments or combined loss of loss-making segments, or 10% of combined assets -- any segment meeting one threshold is reportable.
6. Check that reportable segments cover at least 75% of total external revenue; if not, identify additional reportable segments (even below threshold) until this is satisfied.
7. Prepare the reconciliation of segment revenues, profit/loss, and assets to consolidated totals, and the required entity-wide disclosures (products/services, geographic areas, major customers) regardless of segment structure.

Segment amounts are measured on the same basis reported to the CODM internally, which may differ from IFRS measurement used in the primary financial statements (e.g., internal management accounts may use different cost allocations or exclude certain corporate overheads) -- this basis, and any reconciling items to consolidated IFRS figures, must be disclosed rather than restated to a 'pure IFRS' segment number. There is no separate recognition/measurement model under IFRS 8 itself; it governs identification and disclosure, not remeasurement of underlying transactions. Re-test segment identification and the 10%/75% thresholds each reporting period, since a new brand, closed format, or shifting revenue mix can change which segments are reportable year to year.

Disclose: factors used to identify reportable segments (including the basis of organization, e.g., by brand/format/geography); types of products and services from which each reportable segment derives revenue; segment revenue (external and inter-segment), profit or loss, and total assets (and liabilities if regularly provided to the CODM); reconciliations of total segment revenue, profit/loss, and assets to consolidated amounts; entity-wide disclosures on revenue from external customers by product/service group; entity-wide geographic disclosures (revenue and non-current assets, home country vs foreign); information about major customers representing 10% or more of total revenue.

1. Defining segments to mirror external brand marketing materials rather than the components actually reviewed separately by the CODM for resource allocation.
2. Aggregating dissimilar businesses (e.g., asset-heavy hotels with capital-light QSR franchising) purely for reporting convenience without meeting all the aggregation criteria.
3. Omitting a format or brand that independently crosses the 10% threshold by folding it into an 'other' category.
4. Failing to reach the 75% external revenue coverage test and not adding further reportable segments to close the gap.
5. Skipping entity-wide geographic and major-customer disclosures on the mistaken belief that segment disclosures alone satisfy IFRS 8.