Financial Statements

Notes to the Consolidated Financial Statementsfor the year to 31 December 2008

4. Business and geographical segments

Business segments

For management purposes, the Group is currently organised into four operating divisions – Housing United Kingdom, Housing North America, Housing Spain and Gibraltar, and Corporate. These divisions are the basis on which the Group reports its primary segment information. Taylor Woodrow Construction, previously reported as the business segment 'Construction', was disposed of on 9 September 2008, and is disclosed as a discontinued operation. The results and net assets of a minor residual construction operation, primarily based in Ghana and previously included within the Construction segment, are presented within Corporate in 2008. 2007 has been restated for consistency, resulting in an increase in Corporate external sales of £37.8m, and an increase in operating loss before joint ventures, brand amortisation and exceptional items of £10.0m, an increase in profit from joint ventures of £0.1m, an increase in segment assets of £24.9m, an increase in joint ventures of £0.1m and an increase in segment liabilities of £6.8m.

Segment information about these businesses is presented below:

2008 Housing United Kingdom
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Revenue from continuing operations:      
External sales 2,390.1 981.6 59.8 36.2 3,467.7
       
Result from continuing operations:      
Operating profit/(loss) before joint ventures, brand amortisation and exceptional items 53.2 52.1 (2.4) (14.2) 88.7
Share of results of joint ventures (0.2) 7.8 7.6
Profit/(loss) on ordinary activities before finance costs, exceptional items and amortisation of brands, after share of results of joint ventures 53.0 59.9 (2.4) (14.2) 96.3
Brand amortisation (2.4) (2.4)
Exceptional items (1,750.4) (76.6) (37.4) (20.1) (1,884.5)
Loss on ordinary activities before finance costs, after share of results of joint ventures (1,699.8) (16.7) (39.8) (34.3) (1,790.6)
Finance costs, net (including exceptional finance costs)         (179.1)
Loss on ordinary activities before taxation       (1,969.7)
Taxation 76.6
Result from discontinued operations:      
Profit for the year from discontinued operations         53.1
Loss for the year – total Group     (1,840.0)
   
2008 Housing United Kingdom*
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Assets and liabilities:    
Segment operating assets 3,919.9 1,014.8 175.4 25.2 5,135.3
Joint ventures 45.4 22.1 0.2 67.7
Segment operating liabilities (1,379.6) (359.1) (47.6) (113.4) (1,899.7)
Net operating assets/(liabilities) 2,585.7 677.8 128.0 (88.2) 3,303.3
Current taxation (net)   (106.1)
Deferred taxation (net)     5.3
Net debt (1,529.3)
Net assets   1,673.2

* The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the Taylor Woodrow Group Pension and Life Assurance Fund, a multi-employer pension scheme, on an actuarial basis by entity. However, for the purposes of the 2008 segmental analysis above, the Group has allocated the deficit to Housing United Kingdom as the participating entities materially sit within this business segment. The assets and liabilities of the George Wimpey Staff Pension Scheme have been allocated in their entirety to Housing United Kingdom.

2008 Housing United Kingdom
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Other information:  
Property, plant and equipment additions 2.3 1.3 0.1 5.5 9.2
Amortisation of intangibles 6.7 6.7
Depreciation – plant and equipment 3.5 1.5 0.2 2.3 7.5
Other non-cash expenses:    
Provisions recognised 56.8 13.5 0.5 4.4 75.2
Inventory write downs 930.1 104.3 37.4 1,071.8
Reversal of inventory write downs (25.8) (33.2) (59.0)
Impairment of goodwill 694.3 5.5 699.8
Impairment of other intangible assets 116.3 116.3
           
2007 (restated) Housing United Kingdom
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Revenue from continuing operations:      
External sales 3,053.8 986.8 64.4 37.8 4,142.8
Result from continuing operations:      
Operating profit/(loss) before joint ventures, brand amortisation and exceptional items 409.1 53.3 2.2 (25.4) 439.2
Share of results of joint ventures 9.1 14.2 0.1 23.4
Profit/(loss) on ordinary activities before finance costs, exceptional items and amortisation of brands, after share of results of joint ventures 418.2 67.5 2.2 (25.3) 462.6
Brand amortisation (3.7) (3.7)
Exceptional items (47.9) (321.3) (6.3) (4.2) (379.7)
Profit/(loss) on ordinary activities before finance costs, after share of results of joint ventures 366.6 (253.8) (4.1) (29.5) 79.2
Finance costs, net   (112.8)
Loss on ordinary activities before taxation       (33.6)
Taxation (173.4)
Result from discontinued operations:      
Profit for the year from discontinued operations         10.3
Loss for the year – total Group     (196.7)
           
2007 (restated) Housing United Kingdom*
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Assets and liabilities – continuing operations:        
Segment operating assets 5,350.1 976.7 182.1 64.4 6,573.3
Joint ventures 39.6 20.0 0.2 0.1 59.9
Segment operating liabilities (1,616.5) (316.4) (66.7) (77.4) (2,077.0)
Continuing Group net operating assets/(liabilities) 3,773.2 680.3 115.6 (12.9) 4,556.2
Discontinued operations:    
– operating assets   68.0
– operating liabilities   (153.7)
4,470.5
Goodwill 699.8
Current taxation (net)   (137.6)
Deferred taxation (net)     87.9
Net debt (1,415.4)
Net assets   3,705.2

* The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the Taylor Woodrow Group Pension and Life Assurance Fund, a multi-employer pension scheme, on an actuarial basis by entity. For the purposes of the segmental analysis presented in the published 2007 financial statements, the Group allocated the deficit to business segments on the basis of headcount. The 2007 segmental information presented above has been restated to present within Housing United Kingdom, the deficit for this scheme previously included in the Construction business segment following the disposal of the construction business on 9 September 2008, resulting in an increase in segment liabilities for Housing United Kingdom of £67.8m. The allocation is performed solely for the purposes of providing a meaningful segmental analysis and is not an appropriate apportionment in accordance with IAS 19 Retirement benefits. The assets and liabilities of the George Wimpey Staff Pension Scheme have been allocated in their entirety to Housing United Kingdom.

2007 (restated) Housing United Kingdom
£m
Housing North America
£m
Housing Spain and Gibraltar
£m
Corporate
£m
Consolidated
£m
Other information – continuing Group:      
Property, plant and equipment additions 6.2 5.8 0.3 12.3
Amortisation of intangibles 5.7 5.7
Depreciation – plant and equipment 3.3 3.6 0.1 7.0
Other non-cash expenses:    
Provisions recognised 48.7 28.7 0.6 78.0
Inventory write downs 283.4 6.3 289.7
Impairment of brands 10.0 20.0 30.0

In addition to the above, there was £1.3m of property, plant and equipment additions and £1.3m of depreciation on plant and equipment in relation to discontinued operations in 2007.

Geographical segments

The Group's operations are located primarily in the United Kingdom and North America. The Group's housing divisions are already segmented geographically above. The construction division, which was disposed of on 9 September 2008, was primarily located in the United Kingdom.

The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services:

Sales revenue by
geographical market
2008
£m
2007 (restated)
£m
United Kingdom 2,390.1 3,053.8
North America 981.6 986.8
Rest of the world 96.0 102.2
Total continuing operations 3,467.7 4,142.8
Discontinued operation – United Kingdom 453.4 571.5
Total Group 3,921.1 4,714.3

The following is an analysis of the carrying amount of segment assets, and additions to property and plant, analysed by the geographical area in which the assets are located:

Carrying amount of
segment assets
Additions to property
and plant
2008
£m
2007
£m
2008
£m
2007
£m
United Kingdom 4,592.5 6,205.9 2.3 6.9
North America 1,251.8 1,231.8 1.3 5.8
Rest of the world 208.1 231.5 5.6 0.9
Total 6,052.4 7,669.2 9.2 13.6