notes to the financial statements - Investor Relations

CWT Limited
110
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2011
32 PROVISIONS (CONT’D)
The provisions made by the Group and the Company are in respect of:
(i) warranty claims for completed projects. The provision is made based on estimates from historical warranty data and
a weighting of all possible outcomes against their associated probabilities;
(ii) claims by customers for damage of goods and liquidated damages for services rendered in the course of business
including third party claims for accident; and
(iii) obligations to carry out site restoration work on the leasehold buildings used for warehouse operations, estimated by
third party consultants.
33 SEGMENT REPORTING
Operating segments
The Group has three reportable segments, as described below, which are the Group’s strategic divisions. The strategic
divisions offer different products and services, and are managed separately because they require different technology and
marketing strategies. For each of the strategic divisions, the Group CEO (the chief operating decision maker) reviews internal
management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s
reportable segments:
(a) Logistics services. Include warehousing, transportation, freight forwarding and cargo consolidation, collateral
management services, surface preparation of metal materials for corrosion control and container depot operations.
The Group, being a one-stop logistics provider, views all logistics services as a total logistics solutions provided to
customers. These logistics services are aggregated into a single operating segment since the aggregated operating
results of this segment are regularly reviewed by the Group CEO to make decisions about resources to be allocated
to it and to assess its performance.
(b) Engineering services. Include design, building and construction management, maintenance and repair of vehicles,
equipment and buildings.
(c) Commodity marketing and supply chain management. Include physical trading and supply chain management of
base metal non-ferrous concentrates with predominant focus on copper, lead, zinc and other minor metals and
energy products like coal and fuel.
Other services of the Group include asset management services, brokerage services and other investment holding activities.
None of these segments meets any of the quantitative thresholds for determining reportable segments in 2011 or 2010.
Performance is measured based on segment profit before income tax and is reviewed regularly by the GCEO. Segment
profit is used to measure performance as management believes that such information is the most relevant in evaluating the
results of certain segments relative to other entities that operate within these business environments. Inter-segment pricing
is determined on an arm’s length basis.