Annual Report 2006
GfK Group: www.gfk.com
Segment reporting
The primary classification of the GfK Group into segments is based on the organization of the divisions corresponding to the products and services offered. The secondary classification is by region.
The GfK Group provides services in the segments Custom Research, Retail and Technology, Consumer Tracking, Media, HealthCare as well as in Other.
In the Custom Research division, GfK and around 50 subsidiaries in more than 30 countries provide clients across the world with information services for their operating and strategic decisions relating to all areas of the marketing mix.
In the Retail and Technology division, GfK provides its clients in the retail and industrial sectors with regular information services gained from ongoing surveys and analyses of sales of electronic and technical consumer goods in retail in over 60 countries in the world.
In the Consumer Tracking division, GfK provides its clients with regular information services on consumer goods and services based on continuous surveys and analyses of consumer buying decisions and habits in 26 European countries.
In the Media division, GfK provides clients in over 20 European countries and in the USA with information services based on continuous studies as well as custom research surveys on the intensity and nature of media usage and media offerings as well as media acceptance.
In the HealthCare division, GfK provides its clients with information and advisory services for the special pharmaceuticals and healthcare markets in all countries in which the GfK network is present.
These divisions are complemented by Other which comprises, in particular, the head office services of GfK for its subsidiaries and participations as well as its partners.
In the GfK Group, the internal control and reporting are largely based on the same accounting and valuation methods as the consolidated financial statements.
The Group measures the success of its segments by reference to the adjusted operating income. The adjusted operating income of a segment is determined on the basis of the operating income net of the following income and expenses: integration costs linked to company acquisitions, amortization on disclosed hidden reserves from purchase price allocation, personnel expenses from share-based payments and long-term incentives, other operating income and the remaining other operating expenses. However, according to IAS 14, operating income must be presented by segment.
In the following table, the column marked “Reconciliation” shows the items which cannot be allocated to the individual segments. These mainly include central functions such as administrative and financial departments at the Group Head Office. Assets, liabilities, income and expenses due to the nature of which no definite allocation to segments is possible are also shown in the Reconciliation column.
Intersegment sales are covered exclusively by the division of Other. Their elimination is also reported in the Reconciliation column. In principle, internal Group transactions are recorded at the same conditions as for third parties.
Information on segments for financial years 2005 and 2006 is shown in the two tables below.
Segment assets include all capitalized assets which can be assigned to segments. These mainly involve tangible and intangible assets and trade receivables.
Segment liabilities mainly comprise trade payables, liabilities on orders in progress, provisions and other liabilities.
Segment assets and liabilities which cannot be assigned and the effects of consolidation are shown in the table below.
The reconciliation of operating income to consolidated total income is as follows:
The secondary segmentation is based on the regions, on which the GfK Group’s activities are focused. These include Germany, Northern Europe, Western and Southern Europe, Central and Eastern Europe, America and Asia and the Pacific.
The regions of Northern Europe, Western and Southern Europe, Central and Eastern Europe comprise all European Union countries and other European countries where GfK is represented.
In addition, South Africa, the United Arab Emirates and Israel are allocated to Western and Southern Europe. The segment America includes the United States of America, Canada, Brazil, Chile, Venezuela, Argentina and Mexico. The segment of Asia and the Pacific encompasses Hong Kong, Japan, Thailand, Singapore, Malaysia, Indonesia, South Korea, China, India and Australia.
Segment information by region for financial years 2005 and 2006 is shown in the table below.
During the reporting year, as in the prior year, none of the segments recorded sales with any single client exceeding 10% of consolidated sales.
GfK Annual Report 2006