4. Segment information

In 2017, the IFRS 8 Operating Segments threshold of 10% of the combined revenues, external and inter-segment, of all segments was met by the external and internal revenues reported by our fee-for-service business located in Croatia. Consequently, there were two reportable segments in 2015 and 2016 and 2017, R&D and fee-for-service business.

Segment information for year 2017

(Euro, in thousands)


		R&D		Fee-for-services		Inter-segment elimination		Group
External revenue	€	118,262	€	8,825			€	127,087
Internal revenue				5,104	€	(5,104)
Other income		28,815		15				28,830
Revenues & other income		147,077		13,945		(5,104)		155,918

Segment result		(73,610)		86				(73,524)
Unallocated expenses (1)								(16,278)
Operating loss								(89,802)
Financial (expenses)/income (2)								(25,705)
Result before tax								(115,507)
Income taxes (2)								(198)
Net loss							€	(115,704)

(1)

The unallocated expenses of €16,278 thousand were composed of (a) €16,536 thousand of warrant costs; and (b) €258 thousand of reduced cost from the IAS19R Employee Benefits reclassification of actuarial losses on long term defined post-employment benefit obligations, from profit or loss accounts to other comprehensive income. The above listed items are not presented to management in our management reporting as segment results, and are, therefore, presented on the line “unallocated expenses” in our segment reporting.

(2)

Financial results and taxes information are not being provided to management in our management reporting as segment results and therefore, their aggregate amount is disclosed at the level of the group in our segment reporting.

Segment information for year 2016

(Euro, in thousands)


		R&D		Fee-for-services		Inter-segment elimination		Group
External revenue	€	121,616	€	7,903			€	129,519
Internal revenue				4,379	€	(4,379)
Other income		21,922		171				22,093
Revenues & other income		143,538		12,453		(4,379)		151,612

Segment result		1,138		(1,787)				(649)
Unallocated expenses (1)								(10,841)
Operating loss								(11,491)
Financial (expenses)/income (2)								65,737
Result before tax								54,246
Income taxes (2)								(235)
Net income							€	54,012

(1)

The unallocated expenses of €10,841 thousand were composed of (a) €11,034 thousand of warrant costs; and (b) €193 thousand of reduced cost from the IAS19R Employee Benefits reclassification of actuarial losses on long term defined post-employment benefit obligations, from profit or loss accounts to other comprehensive income. The above listed items are not presented to management in our management reporting as segment results, and are, therefore, presented on the line “unallocated expenses” in our segment reporting.

(2)

Segment information for the year 2015

(Euro, in thousands)


		R&D		Fee-for-services		Inter-segment elimination		Group
External revenue	€	34,129	€	5,434			€	39,563
Internal revenue				5,459	€	(5,459)
Other income		20,778		238				21,017
Revenues & other income		54,907		11,131		(5,459)		60,579

Segment result		(82,024)		(2,690)				(84,713)
Unallocated expenses (1)								(4,731)
Operating loss								(89,444)
Financial (expenses)/income (2)								(30,184)
Result before tax								(119,628)
Income taxes (2)								1,218
Net loss							€	(118,410)

(1)

The unallocated expenses of €4,731 thousand were composed of (a) €5,036 thousand of warrant costs; (b) €507 thousand of decrease in depreciation cost triggered by an IFRS adjustment on the depreciation charges reported by Fidelta (Croatia) reflecting the expected useful lifetime following the purchase accounting of the acquisition of the Zagreb Research operations of GSK in 2010; and (c) €202 thousand of cost from the IAS19R Employee Benefits reclassification of actuarial gains on long term defined post-employment benefit obligations, from profit or loss accounts to other comprehensive income. The above listed items are not presented to management in our management reporting as segment results, and are, therefore, presented on the line “unallocated expenses” in our segment reporting.

(2)

Segment assets and liabilities are not information being provided to the chief operating decision maker on a recurring basis. This information is therefore not disclosed in our segment information.

GEOGRAPHICAL INFORMATION

In 2015, 2016 and 2017, our operations were mainly located in Belgium, Croatia, France and the Netherlands.

In 2017 our top 10 customers represented 97% of the revenues. In 2016 our top 10 customers represented 98% of the revenues. In 2015 our top 10 customers represented 97% of the revenues. Our client base in 2017, 2016 and 2015 included seven of the largest pharmaceutical companies in the world.

Following table summarizes the revenues by destination of customer:


	Year ended December 31,
	2017		2016		2015
	(Euro, in thousands)
North America	€	82,050	€	88,628	€	17,077
Europe		45,037		40,884		22,446
Asia Pacific		—		6		40
Total	€	127,087	€	129,519	€	39,563

Following table summarizes the revenues by major customers:


		Year ended December 31,
		2017			2016			2015
Spilt up of revenues by major customers		(Euro, in thousands)	%		(Euro, in thousands)	%		(Euro, in thousands)	%
Gilead:
North America	€	80,687	63%	€	87,813	68%		—	0%
AbbVie:
Europe		34,049	27%		32,596	25%	€	13,640	34%
North America		—	0%		—	0%		16,229	41%
Janssen Pharmaceutica:
Europe		—	0%		156	0%		112	0%
North America		—	0%		87	0%		454	1%
Les Laboratoires Servier:
Europe		67	0%		265	0%		3,835	10%
Total revenues from major customers	€	114,804	90%	€	120,917	93%	€	34,271	87%

Following table summarizes the revenues of the operations by destination:


	Year ended December 31,
	2017		2016		2015
		(Euro, in thousands)
Galapagos NV (Belgium)	€	118,244	€	121,703	€	34,082
Galapagos SASU (France)		18		84		25
Fidelta d.o.o. (Croatia)		8,825		7,732		5,440
Xenometrix, Inc. (United States)		—		—		16
Total revenues	€	127,087	€	129,519	€	39,563

In 2017, we held €89 million of non-current assets (€76 million in 2016; €68 million in 2015) distributed as follows:

Belgium: €47 million (€37 million in 2016; €30 million in 2015)

France: €34 million (€31 million in 2016; €29 million in 2015)

Croatia: €4 million (€4 million in 2016; €5 million in 2015)

The Netherlands: €4 million (€4 million in 2016; €4 million in 2015)

The increase in non-current assets 2017 vs 2016 was mainly explained by the increase in non-current R&D incentives receivables (see note 15).