Exercise 18.6 ★ ★ ★ ANALYSING THE SEGMENT INFORMATION Company A is a listed diversifi ed manufacturing company. It is listed on the London Stock Exchange and produces most of its products in China and India. Its markets are in the European Union and the Asia– Pacifi c region. It produces three types of products and services: home furniture; offi ce furniture and soft furnishings. The CODM has determined that Company A’s operating segments should be based on geographical markets and has identifi ed the reportable segments as listed below. The following information is reported to the CODM for each of the markets: 1. earnings before interest, depreciation and amortisation and taxation (EBITDA) 2. revenues from external customers. The following table sets out the fi nancial information provided to the CODM for the year ended 31 December 2014. Each operating segment has been identifi ed as a reportable segment. All amounts are in pounds. France £ Germany £ United Kingdom £ India £ China £ Australia and New Zealand £ Revenue from external customers 22 300 000 35 654 000 21 587 600 5 325 000 7 324 800 8 763 400 Inter-segment revenue — — — 10 000 000 7 324 800 — EBITDA 6 400 000 7 325 000 5 325 000 5 324 000 7 625 000 2 325 000 Other information disclosed in the company’s 31 December 2014 fi nancial statements:

(a) Total consolidated revenue: £125 000 000.

(b) Inter-segment revenues represent wholesale sales from China and India to the other operating segments.

(c) Net profi t before taxation: £25 625 000.

(d) Total consolidated assets: £1 041 670 000.

(e) Revenue from external customers for each type of product is: (i) Home furniture: £78 525 000. (ii) Offi ce furniture: £17 700 000. (iii) Soft furnishings: £28 775 000. Required Analyse Company A’s business with reference to its reported segment information. Show all workings to support your analysis.