Annual Report 2013

Other disclosures

(34) Group segment report

The format for reporting the activities of the Henkel Group by segment is by business unit; selected regional information is also provided. This classification corresponds to the way in which the Group manages its operating business, and the Group's reporting structure.

Business units

The activities of the Henkel Group are divided into the following reported operating segments: Laundry & Home Care, Beauty Care, and Adhesive Technologies (Adhesives for Consumers, Craftsmen and Building, and Industrial Adhesives).

Laundry & Home Care

The Laundry & Home Care business unit is globally active in the laundry and home care Branded Consumer Goods business. The Laundry business includes not only heavy-duty and specialty detergents but also fabric softeners, laundry performance enhancers and laundry care products. Our Home Care product portfolio encompasses hand and automatic dishwashing products, cleaners for bathroom and WC applications, and household, glass and specialty cleaners. We also offer air fresheners and insecticides for household applications in selected regions.

Beauty Care

The Beauty Care business unit is active in the Branded Consumer Goods business with Hair Care, Hair Colorants, Body Care, Skin Care and Oral Care, as well as the professional Hair Salon business.

Adhesive Technologies (Adhesives for Consumers, Craftsmen and Building, and Industrial Adhesives)

The Adhesive Technologies business unit comprises five marketand customer-focused strategic businesses.

In the Adhesives for Consumers, Craftsmen and Building business, we market a wide range of brandname products for private and professional users. Based on our four international brand platforms, namely Loctite, Pritt, Pattex and Ceresit, we offer target group-aligned system solutions for applications in the household, schools and offices, for do-it-yourselfers and craftsmen, and also for the building industry.

Our Transport and Metal business serves major international customers in the automotive and metal-processing industries, offering tailored system solutions and specialized technical services that cover the entire value chain from steel strip coating to final vehicle assembly.

In the General Industry business, our customers comprise manufacturers from a multitude of industries, ranging from household appliance producers to the wind power industry. Our portfolio here encompasses Loctite products for industrial maintenance, repair and overhaul, as well as a wide range of sealants and system solutions for surface treatment applications, and specialty adhesives.

The Packaging, Consumer Goods and Construction Adhesives business serves major international customers as well as medium- and small-sized manufacturers of the consumer goods and furniture industries. Our economies of scale allow us to offer attractive solutions for standard and volume applications.

Our Electronics business offers customers from the worldwide electronics industry a technology-spanning portfolio of innovative high-technology adhesives and soldering materials for the manufacture of microchips and electronic assemblies.

Principles of Group segment reporting

In determining the segment results and the assets and liabilities, essentially the same principles of recognition and measurement are applied as in the consolidated financial statements. Net operating assets in foreign currencies have been valued at average exchange rates.

The Group measures the performance of its segments on the basis of a segment income variable referred to by Internal Control and Reporting as "adjusted EBITadjusted EBIT
Earnings Before Interest and Taxes (EBIT) adjusted for exceptional items in the form of one-time charges, onetime gains and restructuring charges.
." For this purpose, operating profit (EBIT) is adjusted for one-time charges and gains and also restructuring charges.

Of the restructuring charges, 28 million euros is attributable to the business unit Laundry & Home Care, 51 million euros is attributable to Beauty Care and 58 million euros is attributable to Adhesive Technologies.

For reconciliation with the figures for the Henkel Group, Group overheads are reported under Corporate together with income and expenses that cannot be allocated to the individual business units.

Proceeds transferred between the segments only exist to a negligible extent and are therefore not separately disclosed.

Operating assets, provisions and liabilities are assigned to the segments in accordance with their usage or origin. Where usage or origin is attributable to several segments, allocation is effected on the basis of appropriate ratios and keys.

For regional and geographic analysis purposes, we allocate sales to countries on the basis of the country-of-origin principle, and non-current assets in accordance with the domicile of the international company to which they pertain.

Reconciliation between net operating assets / capital employed and financial statement figures
Net operating assets Financial
statement figures
Net operating assets Financial
statement figures
in million euros Annual average1 2012 December 31, 2012 December 31,
2012
Annual average1 2013 December 31, 2013 December 31,
2013
Goodwill at book value 6,774 6,661 6,661 6,565 6,353 6,353
Other intangible assets and property, plant and equipment (total) 4,377 4,298 4,298 4,281 4,131 4,131
Deferred taxes 592 606
Inventories 1,619 1,478 1,478 1,618 1,494 1,494
Trade accounts receivable from third parties 2,238 2,021 2,021 2,633 2,370 2,370
Intra-group accounts receivable 712 709 765 706
Other assets and tax refund claims2 370 304 3,199 439 372 3,303
Cash and cash equivalents 1,238     1,051
Assets held for sale 38     36
Operating assets (gross) / Total assets 16,090 15,471 19,525 16,301 15,426 19,344
– Operating liabilities 4,826 5,007 5,669 5,470
of which:
Trade accounts payable to third parties
2,661 2,647 2,647 2,920 2,872 2,872
Intra-group accounts payable 712 709 768 706
Other provisions and other liabilities2
(financial and non-financial)
1,453 1,651 1,893 1,981 1,892 2,122
Net operating assets 11,265 10,464 10,632 9,959
– Goodwill at book value 6,774 6,565
+ Goodwill at cost3 7,260 7,072
Capital employed 11,751 11,139

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