A diversified company can report the same total sales while the businesses underneath move in opposite directions. After reading the group number, look for segment information in the notes.
What the segment note helps you ask
IFRS 8 addresses operating segments and information about products and services, geographical areas and major customers. A geographical split may answer a different question from a business-unit split. Start with the issuer’s definitions rather than assuming similarly named units at two companies are equivalent.
A fictional bridge to group sales of 120
These invented amounts use one arbitrary currency unit.
| Sales category | Prior year | Current year |
|---|---|---|
| Segment A | 80 | 90 |
| Segment B | 40 | 60 |
| Internal sales and other eliminations | −20 | −30 |
| Consolidated revenue | 100 | 120 |
A grows 12.5%, B grows 50%, and group revenue grows 20%. The simple average of the segment growth rates, 31.25%, is not group growth. Starting sizes and eliminations matter. Similarly, segment sales containing internal transactions can produce percentages that do not sum to 100% when divided by consolidated revenue.
Bridge segment profit to the group measure
If fictional segment profits are 18 and 6, with a central cost adjustment of −4, the reconciled amount is 20. Calling the unadjusted total of 24 consolidated operating income would omit that adjustment. Read both the definition of segment profit and the reconciliation in the actual filing.
Keep a note on what changed
- Check whether segment names and boundaries changed.
- Separate external revenue from intersegment sales.
- Record only explanations actually supported by the filing, such as volume, price, currency or acquisitions.
- Keep geographic and business-unit analyses in separate tables.
FirmLens headline revenue is the company’s consolidated annual figure. Segment figures are not currently shown in its summary cards. Use the source notes instead. Samsung Electronics or Microsoft can be starting points for this reading exercise; the company links below are for practice.