Page 66 - Bauxite Resources Annual Report 2013

Notes to the Financial Statements cont.
18. OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s
operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore
determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar
economic characteristics and are also similar with respect to the following:
— the products sold and/or services provided by the segment;
— the manufacturing process;
— the type or class of customer for the products or services;
— the distribution method; and
— any external regulatory requirements.
Types of products and services by segment
i. Mining – Direct Shipping Ore
In the 2010 year, the Company exported trial shipments to Chinese customers being three shipments of bauxite totalling
approximately 128,000 tonnes. No further operations have been undertaken since then. The company still holds assets that
were acquired to undertake the shipments of ore.
ii. Exploration
The Group has continued to advance its business case of defining an economic bauxite resource necessary to support a
direct shipping ore (DSO) operation. The Group is also exploring for refinery grade bauxite on its tenements in the south-
west of Western Australia.
iii. Bankable feasibility and other studies
During the 2011 financial year, the Company entered into an agreement with Yankuang for an alumina refinery joint
venture. As part of the joint venture, studies are underway for a Bankable Feasibility for an alumina refinery.
iv. Administration & Other
The administration area supports the above mining, exploration and bankable feasibility segments.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to
operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the
annual financial statements of the Group.
b. Inter-segment transactions
An internally determined transfer price is set for all inter-segment sales. This price is reset quarterly and is based on what
would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on
consolidation of the Group’s financial statements.
Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of
transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to
fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial
statements.
c. Segment assets
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic
value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and
physical location.
64 Bauxite Resources Annual Report 2013