VII. Segment Information

The segment information is, for the first time, being provided in conformity with IFRS 8 Operating Segments. As described in “New accounting pronouncements”, Bechtle applied this standard for the first time ever during the reporting period.

Bechtle AG currently has operations in two segments: “IT system house & managed services” (formerly “IT system house”) and “IT e-commerce”. The two segments differ in terms of their areas of activity and their sales processes for IT products. Their strategic alignment and expansion strategies are also different.

Bechtle's IT system house & managed services segment caters to small and medium-sized businesses, financial service providers and the public sector by handling all their IT infrastructure and application support needs. Its services range from IT strategy consulting and supplying hardware and software to project planning and execution, system integration, maintenance and training to countless IT services, including full-service IT hosting. The Bechtle IT system house segment has over 50 offices distributed throughout Germany, Switzerland and Austria so it can remain close to its customers at all times.

“Managed services” was added to this segment's name during the reporting period. This was done to clearly and visibly express the growing importance of managed services – i.e. the services involved in outsourcing and outtasking customer IT processes – which are closely tied to the conventional IT system house business. This was a change in name only; the service differentiation and allocation remains the same.

The IT e-commerce segment comprises the group's Internet, catalogue, and telesales-based trading activities. Bechtle pursues a multi-brand strategy in this segment. Its Bechtle direct brand is represented in ten European countries; its ARP Datacon brand operates in five countries; and its Comsoft software licensing companies are represented in four countries outside Germany. As a specialised IT reseller with more than 37,000 IT products, Bechtle offers the full range of standard products from about 300 manufacturers. To a limited extent, ARP Datacon also offers products under its own label.

Most of the Bechtle Group's offices are in Germany. It maintains foreign offices in Austria, Belgium, France, Ireland, Italy, the Netherlands, Spain, Switzerland, Taiwan and the United Kingdom.

Most of its administration – especially the strategic management of the individual companies – is centralised in Gaildorf and Neckarsulm with Bechtle AG as the group parent with the Executive Board.

The same accounting policies apply to the segment information as to the consolidated financial statements. An aggregation of operating segments has not been presented.

The segment information presented here conforms to the measures that are used in the internal reporting and management system and applied by the group's management to assess performance and allocate resources. It contains all the revenues, expenses, assets and liabilities of the Bechtle Group's central units/functions, as provided or used in the two segments “IT system house & managed services” and “IT e-commerce”. The segments' earnings-related key performance indicator (KPI) is operating profit, i.e. earnings before financial income, financial expense and taxes. The KPI does not include financial earnings because Bechtle AG provides most of the financing for the segments, and so Bechtle AG incurs/earns most of the external interest cost/income. For this reason, financial income and expenses are only recognised at the group level and used to determine financial earnings. This is then used to determine earnings before taxes in the Bechtle Group and, after accounting for taxes at the group level, earnings after taxes in the Bechtle Group.

An asymmetric allocation (IFRS 8.27 f) exists in the sense that the segments' reported assets and liabilities comprise interest-bearing assets and liabilities as well as tax assets and liabilities. If the allocation was symmetrical, segment assets and liabilities would be lower and the segments' earningsrelated KPI would be broader and also include financial income, finance expenses and taxes.

An insignificant volume of transactions is conducted between the two segments. The transactions are settled at market rates. The transactions along with their revenues, receivables and payables are expressly disclosed below in the interest of completeness and transparency. External revenue consists of revenue generated by the two segments with non-group entities and thus, in its sum, constitutes the consolidated revenue of the Bechtle Group. The same principle applies to the receivables, payables, assets and liabilities of the two segments and, thus, of the Bechtle Group.

The investments, depreciation and amortisation are recognised for intangible assets (including goodwill) and property, plant and equipment.

In the segment report according to regions (domestic or abroad), revenue is assigned to the country where the subsidiary is domiciled. From the subsidiary's point of view, it only generates revenue in its own country. Only external revenue is reported. Assets, liabilities and investments are also assigned to the domestic market (Germany) or abroad depending on the subsidiary's domicile.

in th. euros   2008   2007
    IT system
house &
  Total Group   IT system
house &
  Total Group
According to Segments                        
Total segment revenues   928,216   504,010       887,762   497,945    
minus revenues with
another segment
  - 686   - 78       - 1,990   - 264    
External revenues   927,530   503,932   1,431,462   885,772   497,681   1,383,453
Amortisation/depreciation   9,402   4,508   13,910   9,743   3,758   13,501
Operating earnings   38,444   21,785   60,229   33,065   25,188   58,253
Financial result           1,304           753
Earnings before taxes           61,533           59,006
Income taxes           16,105           18,047
Earnings after taxes           45,428           40,959
Investments   12,054   2,018   14,072   8,434   2,851   11,285
Investments by
changes to
consolidated companies
  7,509   0   7,509   4,816   2,881   7,697

Total segment assets
minus receivables from
another segment
  - 125   - 32       - 81   - 561    
Assets   326,846   169,222   496,068   296,195   155,228   451,423
Total segment liabilities   122,559   62,217       104,550   71,050    
minus liabilities to
another segment
  - 32   - 125       - 561   - 81    
Liabilities   122,527   62,092   184,619   103,989   70,969   174,958

The IT e-commerce segment's reported operating profit for the reporting period contains the following significant non-cash items: an impairment of 600 thousand euros for the Artikona brand and a capital gain of 466 thousand euros from the deconsolidation of TomTech. The other non-cash items in the two segments are restricted to the customary transactions occurring in the ordinary course of business (e.g. changes in trade receivables and trade liabilities).

in th. euros   2008   2007
    Domestic market   Abroad   Total Group   Domestic market   Abroad   Total Group
According to Regions                        
External sales   938,868   492,594   1,431,462   902,367   481,086   1,383,453
Investments   10,988   3,084   14,072   6,794   4,491   11,285
Investments by changes to consolidated companies   4,148   3,361   7,509   1,519   6,178   7,697

Liabilities   103,296   81,323   184,619   98,821   76,137   174,958

Switzerland accounted for 250,870 thousand euros of the external revenue (prior year: 253,114 thousand euros). The rest is distributed among the remaining countries of Austria, Belgium, France, Ireland, Italy, the Netherlands, Spain, Taiwan and the United Kingdom, each of which contributed less than five per cent of the Bechtle Group's external revenue.

There was no customer who accounted for more than ten per cent of the Bechtle Group's revenue in the reporting period or in the prior year (IFRS 8.34).

Employee numbers, broken down by segment and region, are disclosed in Item X. “Employees” of the notes to the consolidated financial statements.