Notes to the accounts

1 Segmental information

IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Board to allocate resources and assess their performance. After review of the segments identified by the previous standard, IAS 14 Segment Reporting, the Board believe that the current segments still apply under IFRS 8. The business is organised around differences in products and services. Where areas of the business have common characteristics, segments have been aggregated appropriately.

The Group's reportable segments and their activities are listed below:

The Domestic Division supplies a comprehensive range of bathroom, heating and plumbing products to a variety of customers, both public and private sector, from large national contractors to the sole trading plumber and heating engineer through its extensive branch network.

The Industrial Division is the market leader in the UK supply and distribution of pipeline, process, heating and mechanical services equipment. Its customers range from large national contractors to local independents.

The Specialist Division supplies a range of power tools, hand tools, maintenance and health and safety products to three principal market sectors, the manufacturing industry, wholesale and trade customers. The Division uses its key capabilities, industry leading catalogues, web and vendor managed inventory solutions, in order to maximise service to its customers.

  2009
         2008
Industrial
Division		 Domestic
Division		 Specialist
Division		 Total    Industrial
Division		 Domestic
Division		 Specialist
Division		 Total
£m £m £m £m   £m £m £m £m
Gross revenue 352.1 873.3 122.2 1,347.6   338.1 843.0 113.9 1,295.0
Inter-segment sales (0.5) (2.2) (4.3) (7.0)   (0.9) (2.9) (2.2) (6.0)
Revenues from external customers 351.6 871.1 117.9 1,340.6   337.2 840.1 111.7 1,289.0
 
Segment result before redundancy costs 29.7 36.4 3.2 69.3   25.1 42.1 2.5 69.7
Redundancy costs (0.3) (0.6) (0.1) (1.0)   – – (1.2) (1.2)
Segment result 29.4 35.8 3.1 68.3   25.1 42.1 1.3 68.5
Unallocated charges (including redundancy costs) (3.9) (5.1)
Operating profit 64.4 63.4
Net finance costs (6.6) (5.1)
Profit before taxation 57.8 58.3
Income tax expense (16.8) (17.5)
 
Profit after taxation for the year 41.0 40.8
           
Segment assets 119.9 282.2 44.0 446.1   120.0 287.3 45.9 453.2
           
Acquired intangibles 0.9 4.2 22.3 27.4   1.2 4.6 20.3 26.1
Goodwill 10.9 51.6 17.4 79.9   10.9 51.6 19.5 82.0
131.7 338.0 83.7 553.4   132.1 343.5 85.7 561.3
Unallocated assets
Deferred tax asset 9.8 5.3
Cash and cash equivalents 10.8 4.1
Derivative financial instruments 4.3 3.3
Intangibles – software 18.2 10.3
Properties 6.8 6.8
Group property, plant and equipment 0.4 1.7
Total assets 603.7 592.8
Segment liabilities (64.5) (140.4) (19.7) (224.6)   (66.6) (150.2) (24.7) (241.5)
           
Unallocated liabilities
Retirement benefit liabilities (30.9) (13.1)
Onerous lease and property dilapidation provisions (3.1) (4.2)
Borrowings (96.8) (108.4)
Tax liabilities (16.7) (14.1)
Total liabilities (372.1) (381.3)
       
Other segment items
Capital expenditure - Property, plant and equipment    
Segment 1.0 6.1 0.8 7.9   1.8 6.4 0.6 8.8
Group 0.1 0.4
Capital expenditure - Intangibles
Group 7.4 6.4
15.4 15.6
Depreciation
Segment 1.1 3.5 0.7 5.3   1.1 3.0 0.5 4.6
Group 0.5 0.5
5.8 5.1
Amortisation of intangible assets
Segment 0.3 0.4 1.5 2.2   0.3 0.4 0.4 1.1
Group 0.3 0.5
2.5 1.6

All inter-segment sales/transfers are transacted on an arm's length basis. The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit represents the profit earned by each segment without allocation of corporate and head office costs, investment revenue and finance costs and income tax expense as reported to the Board.

The Board monitor the tangible and intangible assets and working capital of each segment. Segment assets include property, plant and equipment, goodwill, inventories and trade receivables and exclude deferred taxation. Segment liabilities comprise operating liabilities and exclude taxation, borrowings and retirement benefit liabilities.

Geographical information

The Group operates in one principal geographical area, the UK and the Republic of Ireland. The Industrial and Specialist Divisions sell products to overseas countries but these operations of the Group are not monitored by the Board for allocating resources or performance purposes as a separate function. Information on the split of external revenue to overseas countries is shown below, no information on the allocation of assets is available.

2009
£m		 2008
£m
UK and the Republic of Ireland 1,338.0 1,286.2
Other 2.6 2.8
1,340.6 1,289.0

Sales to any individual country outside of UK and the Republic of Ireland are not material and therefore are not disclosed separately.

Information about major customers

The Group does not rely on any individual customer. Included in revenues arising from the Domestic Division are revenues of approximately £50.5m (2008: £35.5m) which arose from sales to the Group's largest customer.

Information on products and services

Each division supplies a distinct set of products and services. The Group's revenues from its major products and services and allocation of its assets are shown by individual segments above.