Segment Reporting At Bayer, the Board of Management – as the chief operating decision-maker – allocates resources to the operating segments and assesses their performance. The reportable segments and regions are identified, and the disclosures selected, in line with the internal financial reporting system (management approach) and based on the Group accounting policies outlined in Note “Basic principles, methods and critical accounting estimates”. The Bayer Group lost control of the Covestro Group at the end of the third quarter of 2017 and deconsolidated Covestro. As of December 31, 2017, there are four reportable segments: Pharmaceuticals, Consumer Health, Crop Science and Animal Health. Therefore, total figures for the four Life Science segments are no longer presented separately. The segments’ activities are as follows: Activities of the Segments Segment Activities Pharmaceuticals Development, production and marketing of prescription products, especially for cardiology and women’s healthcare; specialty therapeutics in the areas of oncology, hematology and ophthalmology; diagnostic imaging equipment and the necessary contrast agents Consumer Health Development, production and marketing of mainly nonprescription (OTC = over-the-counter) products in the dermatology, dietary supplement, analgesic, gastrointestinal, cold, allergy, sinus and flu, foot care and sun protection categories Crop Science Development, production and marketing of a broad portfolio of products in seeds and plant traits, crop protection and nonagricultural pest control Animal Health Development, production and marketing of prescription and nonprescription veterinary products In the Crop Science segment, the Crop Protection / Seeds and Environmental Science operating segments were combined, mainly in light of the comparable nature of their products for the agricultural industry, such as in the area of crop protection and the related comparable production processes and comparable distribution methods, including via wholesalers in particular. Business activities that cannot be allocated to any other segment are reported under “All Other Segments.” These primarily include the services provided by the service areas: Business Services and Currenta. The items in “Corporate Functions and Consolidation” mainly comprise the Bayer holding companies and and Leaps by Bayer (formerly the Bayer Lifescience Center), which focuses on the development of crucial, cross-species innovations. They also include the increase or decrease in expenses for Group-wide long-term stock-based compensation arising from fluctuations in the performance of Bayer stock, and the consolidation of intersegment sales (2017: €2.4 billion; 2016: €1.4 billion). The segment data are calculated as follows: Table B 1/1 “Key Data by Segment” and the present chapter contain supplementary performance indicators that are not subject to requirements of the financial reporting standards governing the preparation of the Combined Management Report and the consolidated financial statements. The most important of these indicators are EBIT, EBITDA, EBIT before special items, EBITDA before special items, and the return on capital employed (ROCE). These supplementary indicators are defined, and their calculation explained, in Chapter “Alternative Performance Measures Used by the Bayer Group” of the Combined Management Report in the Bayer Annual Report 2017. The intersegment sales reflect intra-Group transactions effected at transfer prices fixed on an arm’s-length basis. The net cash provided by operating activities is the cash flow from operating activities as defined in IAS 7 (Statement of Cash Flows). The segment assets comprise all assets serving the respective segment, stated as of December 31, including material participating interests of direct relevance to business operations. The equity items reflect the earnings and carrying amounts of investments accounted for using the equity method. Reconciliations The reconciliations schließen Reconciliation The reconciliation records, on the one hand, those business activities not assigned to any other segment (“All Other Segments”), including particularly the services provided by Business Services and Currenta. It also includes “Corporate Functions and Consolidation,” which largely comprises Bayer holding companies and Leaps by Bayer (formerly the Bayer Lifescience Center). of EBITDA before special items, EBIT before special items and EBIT to Group income before income taxes and of the segments’ assets to Group assets are given in the following tables: (XLS:) Download Reconciliation of Segments’ EBITDA Before Special Items to Group Income Before Income Taxes 2016 2017 € million € million 2016 figures restated 1 For definition, see Management Report & Annexes, Chapter “Alternative Performance Measures Used by the Bayer Group.” EBITDA before special items of segments 9,656 9,724 EBITDA before special items of Corporate Functions and Consolidation (338) (436) EBITDA before special items1 9,318 9,288 Depreciation, amortization and impairment losses / loss reversals before special items of segments (2,486) (2,145) Depreciation, amortization and impairment losses / loss reversals before special items of Corporate Functions and Consolidation (6) (13) Depreciation, amortization and impairment losses / loss reversals before special items (2,492) (2,158) EBIT before special items of segments 7,170 7,579 EBIT before special items of Corporate Functions and Consolidation (344) (449) EBIT before special items1 6,826 7,130 Special items of segments (1,068) (1,190) Special items of Corporate Functions and Consolidation (20) (37) Special items1 (1,088) (1,227) EBIT of segments 6,102 6,389 EBIT of Corporate Functions and Consolidation (364) (486) EBIT1 5,738 5,903 Financial result (965) (1,326) Income before income taxes 4,773 4,577 (XLS:) Download Reconciliation of Segments’ Assets to Group Assets 2016 2017 € million € million Prior-year figures include Covestro Assets of the operating segments 66,252 52,896 Corporate Functions and Consolidation assets 507 4,207 Nonallocated assets 15,479 17,984 Group assets 82,238 75,087 The reconciliation of the segments’ sales to Group sales is apparent from the table of key data by segment in Note “Key data by segment”. Information on geographical areas The following table provides a regional breakdown of external sales by market and of intangible assets, property, plant and equipment: (XLS:) Download Information on Geographical Areas Net sales (external) – by market IIntangible assets and property, plant and equipment 2016 2017 2016 2017 € million € million € million € million 2016 figures restated Europe / Middle East / Africa 13,062 13,388 23,438 21,356 of which Germany 3,329 3,392 12,468 10,856 of which Switzerland 510 485 5,047 5,190 North America 10,066 10,143 14,693 10,354 of which United States 8,706 8,561 14,297 10,056 Asia / Pacific 7,413 7,637 4,116 1,771 of which China 2,441 2,594 2,938 853 Latin America 4,402 3,847 746 577 of which Brazil 2,173 1,647 340 209 Total 34,943 35,015 42,993 34,058 Information on major customers Revenues from transactions with a single customer in no case exceeded 10% of Bayer Group sales in 2017 or 2016.