The Group's operating segments are identified by grouping together businesses that manufacture similar products, as this is the basis on which information is provided to the Board for the purposes of allocating resources within the Group and assessing the performance of the Group's businesses.
The Group's business segments are described in note 1.
During 2009, the Group substantially completed its long-term programme of disposing of or exiting its non-core businesses and changes were made to the Group's internal reporting structure to assist the Board in focusing on the performance of the Group's ongoing businesses. Distinction is now drawn between those of the Group's continuing operations that are ongoing and those that have been exited but do not meet the conditions to be classified as discontinued operations. The following changes were made:
Also during 2009, the Group's Water Pumps business was transferred from Other Industrial & Automotive to Power Transmission.
Comparative information for 2008 and 2007 has been re-presented to reflect these changes.
The Board uses adjusted operating profit to measure the profitability of each segment. Adjusted operating profit is, therefore, the measure of segment profit or loss presented in the Group's segment disclosures.
Adjusted operating profit represents operating profit before specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year on year or with other businesses.
During the periods under review, the items excluded from operating profit in arriving at adjusted operating profit were as follows:
Sales |
Adjusted operating profit/(loss) |
|||||
|---|---|---|---|---|---|---|
| Year ended 2 January 2010 $ million |
Year ended 3 January 2009 $ million |
Year ended 29 December 2007 $ million |
Year ended 2 January 2010 $ million |
Restated* Year ended 3 January 2009 $ million |
Restated* Year ended 29 December 2007 $ million |
|
| Ongoing segments | ||||||
| Industrial & Automotive: | ||||||
| – Power Transmission | 1,763.4 | 2,125.2 | 2,078.6 | 212.4 | 228.1 | 267.9 |
| – Fluid Power | 588.7 | 832.3 | 769.1 | (11.8) | 46.2 | 71.0 |
| – Sensors & Valves | 313.6 | 421.0 | 413.5 | 0.1 | 29.6 | 31.8 |
| – Other Industrial & Automotive | 463.4 | 602.1 | 717.5 | 25.4 | 45.5 | 74.1 |
| 3,129.1 | 3,980.6 | 3,978.7 | 226.1 | 349.4 | 444.8 | |
| Building Products: | ||||||
| – Air Distribution | 874.2 | 1,112.3 | 1,083.6 | 77.8 | 104.2 | 102.5 |
| – Bathware | 140.3 | 208.2 | 275.5 | (8.7) | (11.8) | 5.8 |
| 1,014.5 | 1,320.5 | 1,359.1 | 69.1 | 92.4 | 108.3 | |
| Corporate | – | – | – | (32.3) | (37.0) | (53.7) |
| Total ongoing | 4,143.6 | 5,301.1 | 5,337.8 | 262.9 | 404.8 | 499.4 |
| Exited segments | ||||||
| Industrial & Automotive: | ||||||
| – Caps & Thermostats | – | 80.2 | 170.3 | – | 10.3 | 23.2 |
| – Materials Handling | – | – | 163.7 | – | – | 9.4 |
| – | 80.2 | 334.0 | – | 10.3 | 32.6 | |
| Building Products: | ||||||
| – Doors & Windows | 36.5 | 134.6 | 200.5 | (13.1) | (12.2) | (3.7) |
| – Fittings | – | – | 13.8 | – | – | 1.9 |
| 36.5 | 134.6 | 214.3 | (13.1) | (12.2) | (1.8) | |
| Total exited | 36.5 | 214.8 | 548.3 | (13.1) | (1.9) | 30.8 |
| Total continuing operations | 4,180.1 | 5,515.9 | 5,886.1 | 249.8 | 402.9 | 530.2 |
| By origin | ||||||
| US | 2,172.9 | 2,947.6 | 3,457.0 | 105.3 | 181.4 | 300.8 |
| UK | 297.0 | 399.6 | 408.1 | 4.7 | (5.0) | 7.1 |
| Rest of Europe | 603.5 | 787.2 | 733.9 | 29.4 | 55.9 | 66.1 |
| Rest of the world | 1,106.7 | 1,381.5 | 1,287.1 | 110.4 | 170.6 | 156.2 |
| 4,180.1 | 5,515.9 | 5,886.1 | 249.8 | 402.9 | 530.2 | |
| By destination | ||||||
| US | 2,358.9 | 3,178.7 | 3,712.5 | |||
| UK | 87.3 | 129.0 | 149.4 | |||
| Rest of Europe | 665.8 | 864.9 | 809.7 | |||
| Rest of the world | 1,068.1 | 1,343.3 | 1,214.5 | |||
| 4,180.1 | 5,515.9 | 5,886.1 | ||||
* See note 2
Inter-segment sales were not significant.
Reconciliation of adjusted operating profit to profit/(loss) before tax:
| Year ended 2 January 2010 $ million |
Restated* Year ended 3 January 2009 $ million |
Restated* Year ended 29 December 2007 $ million |
|
|---|---|---|---|
| Adjusted operating profit | 249.8 | 402.9 | 530.2 |
| Amortisation of intangible assets arising on acquisitions | (11.2) | (10.6) | (7.2) |
| Impairments (see note 5) | (73.0) | (342.4) | (0.8) |
| Restructuring costs (see note 6) | (144.1) | (26.0) | (27.6) |
| Net gain on disposals and on the exit of businesses (see note 6) | 0.2 | 43.0 | 91.4 |
| Gain on amendment of post-employment benefits (see note 7) | 63.0 | – | – |
| Operating profit | 84.7 | 66.9 | 586.0 |
| Net finance costs | (46.3) | (75.0) | (60.9) |
| Profit/(loss) before tax | 38.4 | (8.1) | 525.1 |
*See note 2
Segmental analysis of the sales and adjusted operating profit of discontinued operations is presented in note 13.
The Board does not review, and is not regularly provided with, an analysis of the Group's total assets by operating segment. In order to comply with the requirements of IFRS 8, an analysis is provided below of the Group's operating assets, goodwill and other intangible assets by operating segment:
| As at 2 January 2010 $ million |
As at 3 January 2009 $ million |
As at 29 December 2007 $ million |
|
|---|---|---|---|
| Ongoing segments | |||
| Industrial & Automotive: | |||
| – Power Transmission | 1,192.2 | 1,216.4 | 1,730.7 |
| – Fluid Power | 589.9 | 594.5 | 601.6 |
| – Sensors & Valves | 202.8 | 236.3 | 312.2 |
| – Other Industrial & Automotive | 310.9 | 344.3 | 398.7 |
| 2,295.8 | 2,391.5 | 3,043.2 | |
| Building Products: | |||
| – Air Distribution | 645.5 | 753.2 | 771.9 |
| – Bathware | 69.2 | 86.6 | 105.2 |
| 714.7 | 839.8 | 877.1 | |
| Corporate | 23.8 | 33.7 | 27.8 |
| Total ongoing | 3,034.3 | 3,265.0 | 3,948.1 |
| Exited segments | |||
| Industrial & Automotive: | |||
| – Caps & Thermostats | – | – | 94.2 |
| Building Products: | |||
| – Doors & Windows | 3.4 | 24.2 | 45.8 |
| Total exited | 3.4 | 24.2 | 140.0 |
| 3,037.7 | 3,289.2 | 4,088.1 | |
Reconciliation of assets analysed by operating segment to total assets:
| As at 2 January 2010 $ million |
As at 3 January 2009 $ million |
As at 29 December 2007 $ million |
|
|---|---|---|---|
| Segment assets | 3,037.7 | 3,289.2 | 4,088.1 |
| Cash and cash equivalents | 445.0 | 291.9 | 295.9 |
| Collateralised cash | 2.1 | 3.8 | 5.8 |
| Derivatives hedging translational exposures | 56.9 | 73.4 | 6.2 |
| Deferred tax assets | 82.9 | 64.8 | 47.4 |
| Income tax recoverable | 49.0 | 47.6 | 29.5 |
| Total assets | 3,673.6 | 3,770.7 | 4,472.9 |
The geographic analysis of long-lived assets (goodwill and other intangible assets, and property, plant and equipment) and investments in associates was as follows:
| As at 2 January 2010 $ million |
As at 3 January 2009 $ million |
As at 29 December 2007 $ million |
|
|---|---|---|---|
| By location | |||
| US | 862.9 | 957.3 | 1,047.0 |
| UK | 65.6 | 70.1 | 131.0 |
| Rest of Europe | 175.2 | 192.6 | 233.3 |
| Rest of the world | 553.7 | 492.3 | 773.9 |
| 1,657.4 | 1,712.3 | 2,185.2 | |
Capital expenditure, depreciation and amortisation in respect of long-lived assets was as follows:
| Year ended 2 January 2010 | Year ended 3 January 2009 | Year ended 29 December 2007 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Capital expenditure $ million |
Depreciation $ million |
Amortisation $ million |
Capital expenditure $ million |
Depreciation $ million |
Amortisation $ million |
Capital expenditure $ million |
Depreciation $ million |
Amortisation $ million |
|
| Continuing operations | |||||||||
| Ongoing segments | |||||||||
| Industrial & Automotive: | |||||||||
| – Power Transmission | 50.3 | 74.3 | 7.5 | 91.6 | 96.1 | 7.8 | 93.1 | 103.1 | 6.7 |
| – Fluid Power | 36.4 | 25.5 | 8.2 | 35.8 | 27.3 | 8.8 | 38.2 | 26.4 | 6.9 |
| – Sensors & Valves | 5.7 | 23.8 | 1.2 | 19.5 | 26.1 | 1.2 | 36.6 | 26.4 | 0.5 |
| – Other Industrial & Automotive | 13.3 | 15.2 | 1.2 | 12.2 | 15.8 | 1.1 | 26.1 | 17.5 | 1.0 |
| 105.7 | 138.8 | 18.1 | 159.1 | 165.3 | 18.9 | 194.0 | 173.4 | 15.1 | |
| Building Products: | |||||||||
| – Air Distribution | 13.6 | 24.7 | 7.2 | 28.4 | 26.3 | 6.6 | 23.5 | 26.0 | 4.7 |
| – Bathware | 3.5 | 8.3 | 0.1 | 2.2 | 9.6 | 0.2 | 6.7 | 9.3 | 0.1 |
| 17.1 | 33.0 | 7.3 | 30.6 | 35.9 | 6.8 | 30.2 | 35.3 | 4.8 | |
| Corporate | 0.1 | 0.2 | 0.2 | 0.2 | 0.1 | 0.3 | 0.3 | 0.4 | 0.4 |
| Total ongoing | 122.9 | 172.0 | 25.6 | 189.9 | 201.3 | 26.0 | 224.5 | 209.1 | 20.3 |
| Exited segments | |||||||||
| Industrial & Automotive: | |||||||||
| – Caps & Thermostats | – | – | – | 2.8 | – | – | 5.3 | 3.4 | 0.3 |
| – Materials Handling | – | – | – | – | – | – | 0.2 | – | – |
| – | – | – | 2.8 | – | – | 5.5 | 3.4 | 0.3 | |
| Building Products: | |||||||||
| – Doors & Windows | 0.1 | 0.2 | – | 1.1 | 1.8 | – | 1.9 | 3.4 | – |
| – Fittings | – | – | – | – | – | – | 0.2 | – | – |
| 0.1 | 0.2 | – | 1.1 | 1.8 | – | 2.1 | 3.4 | – | |
| Total exited | 0.1 | 0.2 | – | 3.9 | 1.8 | – | 7.6 | 6.8 | 0.3 |
| Total continuing operations | 123.0 | 172.2 | 25.6 | 193.8 | 203.1 | 26.0 | 232.1 | 215.9 | 20.6 |
| Discontinued operations | |||||||||
| Industrial & Automotive: | |||||||||
| – Wiper Systems | – | – | – | – | – | – | 4.4 | – | – |
| Total Group | 123.0 | 172.2 | 25.6 | 193.8 | 203.1 | 26.0 | 236.5 | 215.9 | 20.6 |
The Board regularly reviews the Group's capital expenditure, which represents cash outflows on additions to property, plant and equipment and non-integral computer software included within other intangible assets.