21.1 The Need for Segmental Analysis

International Accounting Standard 14 (Reporting financial information by segment) states:

"Rates of profitability, opportunities for growth, future prospects and risks to investments may vary greatly among industry and geographical segments. Thus, users of financial statements need segment information to assess the prospects and risks of a diversified enterprise which may not be determinable from the aggregated data. The objective of presenting information by segments is to provide users of financial statements with information on this relative size, profit contribution, and growth trend of the different industries and different geographical areas in which a diversified enterprise operates, to enable them to make more informed judgements about the enterprise as a whole." [IAS 14, para 5.]

21.2 Companies Act 1985 Requirements

The Companies Act 1985 requires notes to accounts to give the following analyses:

1. analysis of turnover between substantially different classes of business;

2. analysis of profit or loss before tax between substantially different classes of business;

3. analysis of turnover between substantially different geographical markets (determined by location of customers).

21.3 SSAP 25 Segmental Reporting

SSAP 25, requires disclosure of segmental information, both by class of business segment and by geographical segment.

The disclosures specified by SSAP 25 extend well beyond those required by either the Companies Act 1985 (for all companies) or by the UK Listening Authority (for listed companies).

However, these additional disclosures are mandatory only for the following entities:

• a plc;

• an entity which has a plc as a subsidiary;

• a banking or...