Notes to the Consolidated Financial Statements
Notes 1-5
- 1. Basis of preparation
- 2. Significant accounting policies
- 3. Segment analysis
- 4. Operating profit/(loss)
- 5. Investment income and financing costs
3. Segment analysis
The Group has a single group of related services and products, being the supply of communications services and products. Segment information is provided on the basis of geographic areas, being the basis on which the Group manages its world wide interests. Revenue is attributed to a country or region based on the location of the Group company reporting the revenue. Inter-segment sales are charged at arms length prices. The Group uses adjusted operating profit for internal performance analysis and, therefore, the Group’s measure of segment profit is adjusted operating profit, being operating profit excluding non-operating income of associates, impairment losses and other income and expense.
During the year ended 31 March 2008, the Group early adopted IFRS 8 “Operating Segments”. The Group also changed its organisation structure such that the Group’s associated undertaking in France, SFR, is now managed within the Europe region and reported within Other Europe. As a result, prior period disclosures have been amended to conform to the current year presentation.
| Segment revenue £m |
Common functions £m |
Intra-region revenue £m |
Regional revenue £m |
Inter-region revenue £m |
Group revenue £m |
Adjusted operating profit £m |
|
|---|---|---|---|---|---|---|---|
| 31 March 2008 | |||||||
| Germany | 5,397 | (128) | 5,269 | (10) | 5,259 | 1,265 | |
| Italy | 4,435 | (33) | 4,402 | (6) | 4,396 | 1,573 | |
| Spain | 5,063 | (96) | 4,967 | (4) | 4,963 | 1,282 | |
| UK | 5,424 | (46) | 5,378 | (10) | 5,368 | 431 | |
| Arcor | 1,632 | (86) | 1,546 | (1) | 1,545 | 225 | |
| Other Europe(1) | 4,583 | (64) | 4,519 | (3) | 4,516 | 1,430 | |
| Europe | 26,534 | (453) | 26,081 | (34) | 26,047 | 6,206 | |
| Eastern Europe | 3,154 | – | 3,154 | (35) | 3,119 | 332 | |
| Middle East, Africa & Asia(2) | 4,547 | (1) | 4,546 | (24) | 4,522 | 769 | |
| Pacific | 1,645 | – | 1,645 | (14) | 1,631 | 181 | |
| Associates – US | – | – | – | – | – | 2,447 | |
| EMAPA | 9,346 | (1) | 9,345 | (73) | 9,272 | 3,729 | |
| Common functions(3) | – | 170 | – | 170 | (11) | 159 | 140 |
| Group | 35,880 | 170 | (454) | 35,596 | (118) | 35,478 | 10,075 |
| 31 March 2007 | |||||||
| Germany | 5,443 | (123) | 5,320 | (9) | 5,311 | 1,354 | |
| Italy | 4,245 | (44) | 4,201 | (5) | 4,196 | 1,575 | |
| Spain | 4,500 | (106) | 4,394 | (3) | 4,391 | 1,100 | |
| UK | 5,124 | (54) | 5,070 | (9) | 5,061 | 511 | |
| Arcor | 1,441 | (27) | 1,414 | – | 1,414 | 171 | |
| Other Europe(1) | 4,275 | (82) | 4,193 | (4) | 4,189 | 1,448 | |
| Europe | 25,028 | (436) | 24,592 | (30) | 24,562 | 6,159 | |
| Eastern Europe | 2,477 | – | 2,477 | (31) | 2,446 | 184 | |
| Middle East, Africa & Asia(2) | 2,565 | – | 2,565 | (9) | 2,556 | 694 | |
| Pacific | 1,399 | – | 1,399 | (11) | 1,388 | 159 | |
| Associates – US | – | – | – | – | – | 2,077 | |
| Associates – Other | – | – | – | – | – | 130 | |
| EMAPA | 6,441 | – | 6,441 | (51) | 6,390 | 3,244 | |
| Common functions(3) | – | 168 | – | 168 | (16) | 152 | 128 |
| Group | 31,469 | 168 | (436) | 31,201 | (97) | 31,104 | 9,531 |
| 31 March 2006 | |||||||
| Germany | 5,754 | (143) | 5,611 | (9) | 5,602 | 1,496 | |
| Italy | 4,363 | (39) | 4,324 | (4) | 4,320 | 1,672 | |
| Spain | 3,995 | (100) | 3,895 | (2) | 3,893 | 968 | |
| UK | 5,048 | (50) | 4,998 | (10) | 4,988 | 698 | |
| Arcor | 1,320 | (34) | 1,286 | – | 1,286 | 139 | |
| Other Europe(1) | 4,697 | (78) | 4,619 | (3) | 4,616 | 1,452 | |
| Europe | 25,177 | (444) | 24,733 | (28) | 24,705 | 6,425 | |
| Eastern Europe | 1,435 | – | 1,435 | (14) | 1,421 | 176 | |
| Middle East, Africa & Asia(2) | 1,784 | – | 1,784 | (15) | 1,769 | 523 | |
| Pacific | 1,335 | – | 1,335 | (14) | 1,321 | 140 | |
| Associates – US | – | – | – | – | – | 1,732 | |
| Associates – Other | – | – | – | – | – | 192 | |
| EMAPA | 4,554 | – | 4,554 | (43) | 4,511 | 2,763 | |
| Common functions(3) | – | 145 | – | 145 | (11) | 134 | 211 |
| Group | 29,731 | 145 | (444) | 29,432 | (82) | 29,350 | 9,399 |
| Notes: | |
|---|---|
| (1) | Adjusted operating profit includes £425 million (2007: £517 million; 2006: £479 million), representing the Group’s share of results in associated undertakings. |
| (2) | Adjusted operating profit includes £2 million (2007: £nil; 2006: £nil), representing the Group’s share of results in associated undertakings. |
| (3) | Adjusted operating profit includes £2 million (2007: £1 million; 2006: £8 million), representing the Group’s share of results in associated undertakings. |
A reconciliation of adjusted operating profit to operating profit/(loss) is shown below. For a reconciliation of operating profit/(loss) to profit/(loss) before taxation, see the Consolidated Income Statement.
| 2008 £m |
2007 £m |
2006 £m |
|
|---|---|---|---|
| Adjusted operating profit | 10,075 | 9,531 | 9,399 |
| Impairment losses | – | (11,600) | (23,515) |
| Other items | (28) | 505 | 32 |
| Operating profit/(loss) | 10,047 | (1,564) | (14,084) |
| Non-current assets(1) £m |
Capitalised fixed asset additions(2) £m |
Other expenditure on intangible assets £m |
Depreciation and amortisation £m |
Impairment of goodwill £m |
|
|---|---|---|---|---|---|
| 31 March 2008 | |||||
| Germany | 18,267 | 392 | 14 | 1,067 | – |
| Italy | 16,215 | 411 | 1 | 582 | – |
| Spain | 14,589 | 533 | – | 500 | – |
| UK | 7,930 | 465 | – | 973 | – |
| Arcor | 862 | 221 | – | 100 | – |
| Other Europe | 8,303 | 469 | 11 | 616 | – |
| Europe | 66,166 | 2,491 | 26 | 3,838 | – |
| Eastern Europe | 6,879 | 633 | – | 665 | – |
| Middle East, Africa & Asia | 11,958 | 1,554 | 7 | 954 | – |
| Pacific | 1,346 | 212 | – | 245 | – |
| EMAPA | 20,183 | 2,399 | 7 | 1,864 | – |
| Common functions | 717 | 185 | 8 | 207 | – |
| Group | 87,066 | 5,075 | 41 | 5,909 | – |
| 31 March 2007 | |||||
| Germany | 16,233 | 425 | – | 1,063 | 6,700 |
| Italy | 13,722 | 421 | 26 | 556 | 4,900 |
| Spain | 12,289 | 547 | – | 449 | – |
| UK | 8,483 | 661 | – | 930 | – |
| Arcor | 627 | 189 | – | 144 | – |
| Other Europe | 7,187 | 489 | 6 | 586 | – |
| Europe | 58,541 | 2,732 | 32 | 3,728 | 11,600 |
| Eastern Europe | 6,235 | 435 | – | 349 | – |
| Middle East, Africa & Asia | 3,079 | 574 | 276 | 272 | – |
| Pacific | 1,249 | 251 | – | 194 | – |
| EMAPA | 10,563 | 1,260 | 276 | 815 | – |
| Common functions | 612 | 216 | – | 568 | – |
| Group | 69,716 | 4,208 | 308 | 5,111 | 11,600 |
| 31 March 2006 | |||||
| Germany | 592 | – | 1,167 | 19,400 | |
| Italy | 541 | 1 | 588 | 3,600 | |
| Spain | 502 | – | 395 | – | |
| UK | 665 | 11 | 924 | – | |
| Arcor | 129 | – | 140 | – | |
| Other Europe | 511 | 4 | 645 | 515 | |
| Europe | 2,940 | 16 | 3,859 | 23,515 | |
| Eastern Europe | 280 | – | 231 | – | |
| Middle East, Africa & Asia | 426 | – | 216 | – | |
| Pacific | 247 | – | 209 | – | |
| EMAPA | 953 | – | 656 | – | |
| Common functions | 112 | – | 189 | – | |
| Group | 4,005 | 16 | 4,704 | 23,515 | |
| Notes: | |
|---|---|
| (1) | Includes goodwill, other intangible assets and property, plant and equipment. |
| (2) | Includes additions to property, plant and equipment and computer software, reported within intangible assets. |