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Notes to the consolidated financial statements
Year ended 31 July 2007
2. Segmental analysis
The Group has a single business segment, the distribution and supply of construction materials and services.
The Group’s geographical segments are Europe, consisting of UK and Ireland, France, Nordic and Central and Eastern Europe, and North America. The Group has determined that its geographical segments are its primary segments for IFRS reporting purposes. The revenue, trading profit and operating profit of the Group’s geographical segments are detailed in the following three tables.
| Revenue | 2007 £m |
2006 £m |
|---|---|---|
| UK and Ireland |
3,171 | 2,690 |
| France | 1,872 | 1,725 |
| Nordic | 1,617 | – |
| Central and Eastern Europe | 899 | 735 |
| Europe | 7,559 | 5,150 |
| North America | 8,662 | 9,008 |
| Group | 16,221 | 14,158 |
| Trading profit (note 9) | 2007 £m |
2006 £m |
|---|---|---|
| UK and Ireland |
211 | 201 |
| France | 101 | 91 |
| Nordic | 99 | – |
| Central and Eastern Europe | 35 | 31 |
| European central costs | (13) | (7) |
| Europe | 433 | 316 |
| North America | 487 | 603 |
| Group central costs | (43) | (37) |
| Group | 877 | 882 |
| Operating profit | 2007 £m |
2006 £m |
|---|---|---|
| UK and Ireland |
193 | 188 |
| France | 100 | 90 |
| Nordic | 58 | – |
| Central and Eastern Europe | 33 | 30 |
| European central costs | (13) | (7) |
| Europe |
371 | 301 |
| North America | 425 | 570 |
| Group central costs | (43) | (37) |
| Group | 753 | 834 |
Other segmental information:
| For the year ended 31 July 2007 | UK and Ireland £m |
France £m |
Nordic £m |
Central and Eastern Europe £m |
North America £m |
Group centre £m |
Total £m |
|---|---|---|---|---|---|---|---|
| Depreciation of property, plant and equipment | 47 | 23 | 15 | 8 | 88 | 1 | 182 |
| Amortisation of non-acquired intangibles | 1 | – | 1 | 1 | 2 | 4 | 9 |
| Amortisation of acquired intangibles | 18 | 1 | 41 | 2 | 57 | – | 119 |
| Impairment of acquired intangibles | – | – | – | – | 5 | – | 5 |
| 66 | 24 | 57 | 11 | 152 | 5 | 315 | |
| Additions to property, plant and equipment | 108 | 37 | 10 | 15 | 189 | 1 | 360 |
| Additions to non-acquired intangible assets | 2 | – | 4 | 5 | 2 | 41 | 54 |
| 110 | 37 | 14 | 20 | 191 | 42 | 414 | |
| Additions to goodwill | 8 | 11 | 650 | 9 | 85 | – | 763 |
| Additions to acquired intangible assets | 20 | 3 | 409 | 13 | 104 | – | 549 |
| Segment assets | 1,973 | 1,141 | 1,957 | 494 | 4,011 | 107 | 9,683 |
| Reconciliation to total assets as reported in the Group Balance Sheet: | |||||||
| Deferred tax assets | 9 | ||||||
| Financial assets – current and non-current | 16 | ||||||
| Current tax receivable | 8 | ||||||
| Derivative financial assets | 10 | ||||||
| Cash and cash equivalents | 244 | ||||||
| Total assets as reported in the Group Balance Sheet | 9,970 | ||||||
| Segment liabilities | 674 | 558 | 480 | 172 | 1,334 | 168 | 3,386 |
| Reconciliation to total liabilities as reported in the Group Balance Sheet: | |||||||
| Current tax payable | 133 | ||||||
| Bank loans and overdrafts | 2,627 | ||||||
| Obligations under finance leases | 80 | ||||||
| Derivative financial liabilities | 18 | ||||||
| Deferred tax liabilities | 275 | ||||||
| Total liabilities as reported in the Group Balance Sheet | 6,519 | ||||||
| For the year ended 31 July 2006 | UK and Ireland £m |
France £m |
Nordic £m |
Central and Eastern Europe £m |
North America £m |
Group centre £m |
Total £m |
|---|---|---|---|---|---|---|---|
| Depreciation of property, plant and equipment | 33 | 22 | – | 7 | 72 | – | 134 |
| Amortisation of non-acquired intangibles | – | – | – | – | 1 | 5 | 6 |
| Amortisation of acquired intangibles | 13 | 1 | – | 1 | 33 | – | 48 |
| Impairment of acquired intangibles | – | – | – | – | – | – | – |
| 46 | 23 | – | 8 | 106 | 5 | 188 | |
| Additions to property, plant and equipment | 93 | 33 | – | 18 | 217 | 4 | 365 |
| Additions to non-acquired intangible assets | – | – | – | 1 | 3 | 21 | 25 |
| 93 | 33 | – | 19 | 220 | 25 | 390 | |
| Additions to goodwill | 192 | 19 | – | 11 | 165 | – | 387 |
| Additions to acquired intangible assets | 83 | 3 | – | 3 | 162 | – | 251 |
| Segment assets | 1,812 | 1,063 | – | 414 | 4,247 | 74 | 7,610 |
| Reconciliation to total assets as reported in the Group Balance Sheet: | |||||||
| Deferred tax assets | 16 | ||||||
| Financial assets – current and non-current | 25 | ||||||
| Current tax receivable | 1 | ||||||
| Derivative financial assets | 10 | ||||||
| Cash and cash equivalents | 416 | ||||||
| Total assets as reported in the Group Balance Sheet | 8,078 | ||||||
| Segment liabilities | 668 | 532 | – | 136 | 1,489 | 102 | 2,927 |
| Reconciliation to total liabilities as reported in the Group Balance Sheet | |||||||
| Current tax payable | 91 | ||||||
| Bank loans and overdrafts | 2,276 | ||||||
| Obligations under finance leases | 75 | ||||||
| Derivative financial liabilities | 29 | ||||||
| Deferred tax liabilities | 88 | ||||||
| Total liabilities as reported in the Group Balance Sheet | 5,486 | ||||||
The Group will prepare segmental disclosures in accordance with US GAAP and disclose them in its Form 20-F for the year ended 31 July 2007. The disclosure requirements under US GAAP differ from those under IFRS, such that revenue, trading profit and operating profit for North America will be further analysed by operating segment in the Form 20-F. In order to ensure consistency of information disclosed to all investors, the following table is included in these financial statements.
| Revenue | 2007 £m |
2006 £m |
|---|---|---|
| US plumbing and heating | 5,685 | 5,396 |
| US building materials | 2,358 | 2,966 |
| Canada | 619 | 646 |
| North America | 8,662 | 9,008 |
| Trading profit (note 9) | £m | £m |
| US plumbing and heating | 411 | 378 |
| US building materials | 44 | 192 |
| Canada | 42 | 44 |
| North American central costs | (10) | (11) |
| North America | 487 | 603 |
| Operating profit | £m | £m |
| US plumbing and heating | 386 | 369 |
| US building materials | 8 | 168 |
| Canada | 41 | 44 |
| North American central costs | (10) | (11) |
| North America | 425 | 570 |
The change in revenue and trading profit between the years ended 31 July 2006 and 2007 can be analysed into the effects of changes of exchange rates, the effects of acquisitions made during the financial year, and the effect of taking in a full year’s revenue and trading profit of businesses acquired part way through the previous year, with the remainder being organic change.
| Analysis of change in revenue | 2006 £m |
Exchange £m |
New acquisitions 2007 £m |
Increment on 2006 acquisitions £m |
Organic change £m |
Organic change % |
2007 £m |
|---|---|---|---|---|---|---|---|
| UK and Ireland | 2,690 | (5) | 22 | 199 | 265 | 9.9 | 3,171 |
| France | 1,725 | (28) | 28 | 47 | 100 | 5.9 | 1,872 |
| Nordic | – | – | 1,617 | – | – | – | 1,617 |
| Central and Eastern Europe | 735 | (17) | 68 | 29 | 84 | 11.7 | 899 |
| Europe | 5,150 | (50) | 1,735 | 275 | 449 | 8.8 | 7,559 |
| US plumbing and heating | 5,396 | (443) | 302 | 156 | 274 | 5.5 | 5,685 |
| US building materials | 2,966 | (244) | 27 | 269 | (660) | (24.2) | 2,358 |
| Canada | 646 | (39) | 3 | 2 | 7 | 1.2 | 619 |
| North America | 9,008 | (726) | 332 | 427 | (379) | (4.6) | 8,662 |
| Group | 14,158 | (776) | 2,067 | 702 | 70 | 0.5 | 16,221 |
| Analysis of change in trading profit (note 9) | 2006 £m |
Exchange £m |
New acquisitions 2007 £m |
Increment on 2006 acquisitions £m |
Organic change £m |
Organic change % |
2007 £m |
|---|---|---|---|---|---|---|---|
| UK and Ireland | 201 | – | 2 | 15 | (7) | (3.7) | 211 |
| France | 91 | (1) | 1 | – | 10 | 11.9 | 101 |
| Nordic | – | – | 99 | – | – | – | 99 |
| Central and Eastern Europe | 31 | (1) | 4 | 4 | (3) | (10.6) | 35 |
| European central costs | (7) | – | – | – | (6) | 85.3 | (13) |
| Europe | 316 | (2) | 106 | 19 | (6) | (1.9) | 433 |
| US plumbing and heating | 378 | (31) | 25 | 11 | 28 | 8.0 | 411 |
| US building materials | 192 | (16) | – | 13 | (145) | (82.6) | 44 |
| Canada | 44 | (3) | 1 | – | – | – | 42 |
| North American central costs | (11) | 1 | – | – | – | – | (10) |
| North America | 603 | (49) | 26 | 24 | (117) | (21.2) | 487 |
| Group central costs | (37) | – | – | – | (6) | (16.5) | (43) |
| Group | 882 | (51) | 132 | 43 | (129) | (15.6) | 877 |