Annual Report 2012 - Development Securities PLC

Financial Statements
2 Segmental analysis
The segmental information presented consistently follows the information provided to the Chief Operating Decision-Maker (CODM) and reflects the three
sectors in which the Group operates. The CODM, which is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Board. The three operating divisions are:
Investment – management of the Group’s investment property portfolio, generating rental income and valuation surpluses from property management;
Development and trading – managing the Group’s development and trading projects. Revenue is received from project management fees, development
profits and the disposal of inventory; and
Operating – serviced office operations. Revenue is principally received from short-term licence fee income.
Unallocated assets and liabilities comprise amounts that cannot be specifically allocated to operating segments; an analysis is provided below.
These divisions are the basis on which the Group reports its primary segmental information. All operations occur and all assets are located in the United
Kingdom, except assets of £89,000, which are located in The Netherlands. In December 2010, assets of £642,000 were located in France and The
Netherlands. All revenue arises from continuing operations.
Investment
£’000
Development
and trading
£’000
14-month period ended 29th February 2012
Operating
£’000
Segment revenue 17,085 58,393 4,550 80,028
Direct costs (3,710) (49,941) (6,002) (59,653)
Segment result 13,375 8,452 (1,452) 20,375
Operating costs (4,350) (10,441) — (14,791)
Gain on disposal on investment properties 211 — — 211
Loss on revaluation of property portfolio (4,686) — (86) (4,772)
Operating profit/(loss) 4,550 (1,989) (1,538) 1,023
Other income 342 408 — 750
Exceptional impairment and provision for business segment — — (2,845) (2,845)
Share of post-tax profits of joint ventures and associates 1,454 123 — 1,577
Unallocated loss on sale of other fixed assets (28)
Profit before interest and income tax 477
Finance income 1,382 1,189 — 2,571
Finance costs (8,639) (4,576) — (13,215)
Loss before income tax (10,167)
Income tax (1,879)
Loss after income tax (12,046)
Assets and liabilities
Segment assets 278,108 237,380 4,881 520,369
Unallocated assets 31,926
Total assets 552,295
Segment liabilities (150,579) (75,673) (3,774) (230,026)
Unallocated liabilities (9,027)
Total liabilities (239,053)
A summary of unallocated assets and liabilities is shown on page 79.
In view of continuing losses arising within the Group’s serviced office business, the Directors have conducted an impairment review (as described in the
Financial Review on page 41). The business operates seven centres, each of which is designated as a cash-generating unit. The review determined that the
fixed assets of five of the seven centres are fully impaired, requiring a provision of £1,575,000. In addition, four of those centres are not expected to cover their
committed rental costs in full, and a further provision of £1,270,000 has been made in this regard, aggregating to an exceptional provision of £2,845,000.
The net book amount of the remaining fixed assets associated with the business segment is £2,149,000. No reasonable change in underlying assumptions
would give rise to a material impairment.
Total
£’000
Development Securities PLC / Annual Report 2012 77