26.

Segment information

The Group’s operations are presented in three business segments as follows:

•

Steel segment, comprising production and sales of semi-finished steel products, carbon and specialty long products, carbon and stainless flat products, value-added downstream metal products, including forgings, stampings, hardware, rails, balks and ferrosilicon;

•

Mining segment, comprising production and sales of coal (coking and steam) and middlings, coke and chemical products, and iron ore concentrate, which supplies raw materials to the Steel and Power segments and also sells substantial amounts of raw materials to third parties;

•

Power segment, comprising generation and sales of electricity and heat power, which supplies electricity and heat power to the Steel and Mining segments and also sells a portion of electricity and heat power to third parties.

The above three segments meet criteria for reportable segments. No operating segments have been aggregated to form the above reportable operating segments. Subsidiaries are consolidated by the segment to which they belong based on their products and by which they are managed. The Group’s management evaluates performance of the segments based on segment revenues, gross margin, operating income (loss), assets and liabilities. Transfer prices between operating segments are on an arm’s-length basis in a manner similar to transactions with third parties. Income tax, deferred tax related to the consolidated group of taxpayers and certain other assets and liabilities are not allocated to those segments as they are managed on the group basis.


As of December 31, 2018 and for the year then ended	Mining			Steel			Power			Adjustments and eliminations			Consolidated
Revenues from contracts with external customers		96,882			187,918			27,774			—			312,574
Inter-segment revenues		37,549			5,865			15,471			(58,885	)		—
Gross profit		77,199			44,433			12,571			615			134,818
Gross margin, %		57.4			22.9			29.1			—			43.1
Depreciation and amortisation		(7,621	)		(5,738	)		(500	)		—			(13,859	)
Loss on write-off of non-current assets		(572	)		(258	)		(29	)		—			(859	)
Impairment of goodwill and non-current assets		(3,684	)		(819	)		(2,719	)		—			(7,222	)
Operating profit (loss)		32,574			19,831			(3,240	)		615			49,780
Share of profit (loss) of associates, net		10			—			—			—			10
Finance income		23,387			9,478			1,191			—			34,056
Intersegment finance income		1,071			395			41			(1,507	)		—
Finance cost		(28,932	)		(12,810	)		(310	)		—			(42,052	)
Intersegment finance cost		(220	)		(1,015	)		(272	)		1,507			—
Income tax (expense) benefit		(5,940	)		531			83			2,645			(2,681	)
Profit (loss) for the year		11,489			1,331			(2,544	)		3,260			13,536
Segment assets		208,123			97,373			7,519			4,610			317,625
Segment liabilities		296,125			247,241			9,469			(2,015	)		550,820
Investments in associates		293			—			—			—			293
Capital expenditures		(4,243	)		(1,942	)		(356	)		—			(6,541	)


As of December 31, 2017 and for the year then ended	Mining			Steel			Power			Adjustments and eliminations			Consolidated
Revenues from contracts with external customers		100,129			172,760			26,224			—			299,113
Inter-segment revenues		42,286			7,622			16,338			(66,246	)		—
Gross profit		93,464			34,013			12,724			(1,444	)		138,757
Gross margin, %		65.6			18.9			29.9			—			46.4
Depreciation and amortisation		(7,979	)		(5,800	)		(448	)		—			(14,227	)
Loss on write-off of non-current assets		(135	)		(145	)		(41	)		—			(321	)
Impairment of goodwill and non-current assets		(3,800	)		(2,281	)		—			—			(6,081	)
Operating profit		48,190			9,154			1,267			(1,444	)		57,167
Share of profit (loss) of associates, net		18			—			—			—			18
Finance income		475			150			8			—			633
Intersegment finance income		1,335			567			49			(1,951	)		—
Finance cost		(34,324	)		(12,793	)		(493	)		—			(47,610	)
Intersegment finance cost		(222	)		(1,342	)		(387	)		1,951			—
Income tax expense		(3,410	)		(203	)		(229	)		692			(3,150	)
Profit (loss) for the year		17,210			(4,116	)		228			(752	)		12,570
Segment assets		209,630			100,543			10,417			(1,463	)		319,127
Segment liabilities		371,196			184,952			9,808			(2,696	)		563,260
Investments in associates		283			—			—			—			283
Capital expenditures		(5,852	)		(1,329	)		(321	)		—			(7,502	)


As of December 31, 2016 and for the year then ended	Mining			Steel			Power			Adjustments and eliminations			Consolidated
Revenues from contracts with external customers		89,647			161,639			24,723			—			276,009
Inter-segment revenues		31,907			7,254			15,903			(55,064	)		—
Gross profit		76,515			42,148			11,578			(554	)		129,687
Gross margin, %		62.9			25.0			28.5			—			47.0
Depreciation and amortisation		(7,912	)		(5,435	)		(367	)		—			(13,714	)
Loss on write-off of non-current assets		(863	)		(1,089	)		(1	)		—			(1,953	)
Impairment of goodwill and non-current assets		(1,336	)		(3,866	)		—			—			(5,202	)
Operating profit		31,012			11,531			701			(554	)		42,690
Share of profit (loss) of associates, net		(17	)		—			—			—			(17	)
Finance income		1,082			93			1			—			1,176
Intersegment finance income		1,401			2,141			53			(3,595	)		—
Finance cost		(37,615	)		(16,015	)		(610	)		—			(54,240	)
Intersegment finance cost		(1,731	)		(1,396	)		(468	)		3,595			—
Loss after tax for the year from discontinued operations, net		—			(406	)		(20	)		—			(426	)
Income tax benefit (expense)		115			1,485			(73	)		(6,420	)		(4,893	)
Profit (loss) for the year		7,443			8,675			(312	)		(6,974	)		8,832
Segment assets		209,553			104,675			10,887			350			325,465
Segment liabilities		375,944			191,242			11,057			(190	)		578,053
Investments in associates		265			—			—			—			265
Capital expenditures		(3,958	)		(1,206	)		(360	)		—			(5,524	)

The following table presents the Group’s revenues from contracts with customers segregated between domestic and export sales. Domestic represents sales by a subsidiary in the country in which it is located. This category is further divided between subsidiaries located in Russia and other countries. Export represents cross-border sales by a subsidiary regardless of its location.

2018

2017

2016

Domestic

Russia

178,880

176,906

164,361

Other

29,666

23,445

22,252

Total

208,546

200,351

186,613

Export

104,028

98,762

89,396

Total revenue

312,574

299,113

276,009

Allocation of total revenue from contracts with customers by country is based on the location of the customer. The Group’s total revenues from external customers by geographic area were as follows:


	2018		2017		2016
Russia		178,997		177,005		164,412
Asia		61,840		63,182		54,114
Europe		44,263		36,605		34,126
CIS		23,877		19,346		18,630
Middle East		3,130		2,212		1,536
USA		258		286		707
Other regions		209		477		2,484

Total		312,574		299,113		276,009

The majority of the Group’s non-current assets are located in Russia. The carrying amounts of mineral licenses and property, plant and equipment pertaining to the Group’s major operations were as follows:


	December 31, 2018		December 31, 2017
Russia		219,504		228,825
Germany		1,532		1,407
Austria		637		589
Czech Republic		224		216
Romania		20		41
Other		30		37

Total		221,947		231,115

Because of the significant number of customers, there are no individual external customers that generate sales greater than 10% of the Group’s consolidated total revenue from contracts with customers.

The following table presents the breakdown of the Group’s revenues from contracts with external customers by major products:


	2018		2017		2016
Mining segment
Coal and middlings		80,022		84,341		75,258
Coke and chemical products		14,205		13,747		11,330
Iron ore concentrate		839		220		126
Other		1,816		1,821		2,933

Total		96,882		100,129		89,647

Steel segment
Long steel products		105,722		96,768		89,575
Hardware		30,040		27,578		24,580
Flat steel products		22,786		22,505		18,230
Forgings and stampings		15,848		12,247		11,652
Ferrosilicon		3,927		2,807		3,368
Steel pipes		3,230		2,733		3,286
Semi-finished steel products		54		492		3,434
Other		6,311		7,630		7,514

Total		187,918		172,760		161,639

Power segment
Electricity		26,009		24,297		22,527
Other		1,765		1,927		2,196

Total		27,774		26,224		24,723

Total revenue		312,574		299,113		276,009