Annual Report and
Accounts 2006

Year ended 31 July 2006


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 and Central Europe and North America. The Group has determined that its geographical segments are its primary segments for IFRS reporting purposes. The revenue, operating profit and trading profit of the Group's geographical segments are detailed in the following three tables.

Revenue 2006
£m 		2005
£m
UK and Ireland 2,690 2,351
France 1,725 1,644
Central Europe 735 642
Europe 5,150 4,637
North America 9,008 6,619
Group 14,158 11,256

 

Operating profit 2006
£m 		2005
£m
UK and Ireland 188 181
France 90 97
Central Europe 30 30
European central costs (7) (4)
Europe 301 304
North America 570 423
Group central costs (37) (25)
Group 834 702

 

Trading profit (note 9) 2006
£m 		2005
£m
UK and Ireland 201 183
France 91 98
Central Europe 31 30
European central costs (7) (4)
Europe 316 307
North America 5603 426
Group central costs (37) (25)
Group 882 708

Other segmental information:

For the year ended 31 July 2006 UK and Ireland
£m 		France
£m 		Central
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
  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 assets 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

 

For the year ended 31 July 2005 UK and Ireland
£m 		France
£m 		Central
Europe
£m 		North
America
£m 		Group
Centre
£m 		Total
£m
Depreciation of property, plant and equipment 35 23 6 49 1 114
Amortisation of non-acquired intangibles 1 1 - 1 - 3
Amortisation of acquired intangibles 2 1 - 3 - 6
  38 25 6 53 1 123
             
Additions to property, plant and equipment 54 37 12 134 1 238
Additions to non-acquired intangible assets - - - 2 19 21
  54 37 12 136 20 259
             
Additions to goodwill 34 7 2 78 - 121
             
Additions to acquired intangible assets 19 3 3 83 - 108
             
Segment assets 1,226 986 342 3470 18 6,042
 
Reconciliation to total assets as reported in the Group Balance Sheet:
Deferred tax assets           55
Financial assets - current and non-current         11
Current tax receivable           7
Derivative financial assets           3
Cash and cash equivalents           381
Total assets as reported in the Group Balance Sheet   6,499
             
Segment liabilities 631 491 124 1,241 19 2,506
 
Reconciliation to total liabilities as reported in the Group Balance Sheet:
Current tax payable           70
Bank loans and overdrafts           1,484
Obligations under finance leases           62
Derivative financial liabilities           14
Deferred tax liabilities           62
Total liabilities as reported in the Group Balance Sheet     4,198

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 2006. 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 2006
£m 		2005
£m
US Plumbing and Heating 5,396 3,858
US Building Materials 2,966 2,249
Canada 646 512
North America 9,008 6,619

 

Operating profit £m £m
US Plumbing and Heating 369 258
US Building Materials 168 130
Canada 44 36
North America central costs (11) (1)
North America 570 423

 

     
Trading profit (note 9) £m £m
US Plumbing and Heating 378 260
US Building Materials 192 131
Canada 44 36
North America central costs (11) (1)
North America 603 426

The change in revenue and trading profit between the years ended 31 July 2005 and 2006 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 movement in revenue 2005
£m 		Exchange
£m 		New
acquisitions
2006
£m 		Increment
on 2005
acquisitions
£m 		Organic
change
£m 		Organic
change
% 		2006
£m
UK and Ireland 2,351 - 277 14 48 2.1 2,690
France 1,644 1 27 17 36 2.1 1,725
Central Europe 642 (1) 28 19 47 7.4 735
Europe 4,637 - 332 50 131 2.8 5,150
               
US Plumbing and Heating 3,858 135 264 168 971 24.3 5,396
US Building Materials 2,249 79 262 280 96 4.1 2,966
Canada 512 60 4 9 61 10.7 646
North America 6,619 274 530 457 1,128 16.4 9,008
Group 11,256 274 862 507 1,259 10.9 14,158

 

Analysis of change in trading profit (note 9) 2005
£m 		Exchange
£m 		New
acquisitions
2006
£m 		Increment
on 2005
acquisitions
£m 		Organic
change
£m 		Organic
change
% 		2006
£m
UK and Ireland 183 - 19 1 (2) (1.1) 201
France 98 - 2 - (9) (9.2) 91
Central Europe 30 - 1 1 (1) (2.1) 31
European central costs (4) - - - (3)   (7)
Europe 307 - 22 2 (15) (4.9) 316
               
US Plumbing and Heating 260 9 18 10 81 30.0 378
US Building Materials 131 5 20 27 9 6.0 192
Canada 36 4 - 1 3 10.0 44
North American central costs (1) - - - (10)   (11)
North America 426 18 38 38 83 18.6 603
Group central costs (25) - - - (12)   (37)
Group 708 18 60 40 56 7.8 882