Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HK Listco Ltd
Financial statements for the year ended 31 December 2023
HKFRS 8.IN11
HKFRS
8.7
HKFRS 8.1
HKFRS 15.115
HKFRS 8.12
HKFRS 8.25 & 26
HKFRS 8.22(a)
HKFRS 8.22(aa)
HKFRS 8.27
HKFRS 8.28
122 HKFRS 8 requires a "management approach" to reporting the financial performance of operating segments, i.e. the financial
statements should report segment information which is consistent with the segment information as is reviewed by an entity's "chief
operating decision maker" (CODM).
Identifying an entity's CODM is therefore key to the identification of operating segments under HKFRS 8. Paragraph 7 of HKFRS 8
defines the CODM as a function rather than an individual with a specific title. That function is to allocate resources to and assess the
performance of operating segments of an entity. The CODM usually is the highest level of management responsible for the entity's
overall resource allocation and performance assessment. In this regard, the standard states that often the CODM of an entity is its
chief executive officer or the chief operating officer, but it may be a group consisting of, for example, the entity's executive directors
or others. In any event, a key point to note is that each reporting entity can only have one "CODM". For example, when the reporting
entity is a group (as is almost always the case for entities within the scope of HKFRS 8), the CODM is the highest level of executive
management within the group.
123 Operating segments are identified on the basis of internal reports that an entity's CODM reviews regularly in allocating resources to
segments and in assessing their performance, and may include start-up operations, vertically integrated operations and joint
ventures and associates. In HK Listco's case, the main division of the group, electronics, is split further into 3 geographical segments,
as in HK Listco's assumed circumstances, this is consistent with the way that information is provided internally to the most senior
executive management of the group.
If an entity discloses information under HKFRS 8, HKFRS 15 requires the entity to disclose sufficient information to enable users of
financial statements to understand the relationship between the disclosure of disaggregated revenue disclosed in accordance with
HKFRS 15 (i.e. as illustrated in note 3(a)) and the revenue information disclosed for each reportable segment. HK Listco does this by
identifying which products and services are included in which segment in this narrative description and by giving numerical break-
down of segment revenue from external customers into point in time and over time in the segment analysis table (i.e. as illustrated
in note 3(b)(i)). Other approaches may also be sufficient to satisfy this disclosure requirement.
124 Material operating segments that are identified in the internal reports that an entity's CODM reviews may only be aggregated for the
purposes of reporting segment information in the financial statements if aggregation is consistent with the core principle in HKFRS 8
(as set out in paragraph 1 of HKFRS 8), the segments have similar economic characteristics and those segments are similar in each of
the characteristics set out in paragraph 12 of HKFRS 8. If these criteria are met, then aggregation is allowed but not required i.e.
management may choose not to aggregate and could therefore instead present information to users as it is presented internally to the
CODM. As also mentioned in footnote 125 below, "whether segments have been aggregated" is identified as one of the items of
"general information" about factors used to identify reportable segments that should be disclosed in accordance with paragraph 22 of
HKFRS 8. When segments have been aggregated, judgement made by management in applying the aggregation criteria is also
required to be disclosed.
125
Consistent with the management approach, HKFRS 8 requires the amounts of each segment item reported to be the measure reported
internally to the CODM. This means that segment information disclosed in the financial statements should be prepared using non-
HKFRS policies if this is how the information reported to the CODM is prepared. However, where the CODM internally uses more than
one segment measure, HKFRS 8 requires the entity to report those measures determined in accordance with measurement principles
which management believes are most consistent with those used in measuring the corresponding amount in the entity's financial
statements.
To help users understand the segment information presented and its limitations in the context of an entity's financial statements,
HKFRS 8 requires entities to disclose the following:
general information about the factors used to identify the entity's reportable segments and the extent to which operating
segments have been aggregated for disclosure purposes;
judgements made by management in applying the aggregation criteria in paragraph 12 of HKFRS 8;
information about the measurement basis adopted, such as the nature of any differences between the measurements used in
reporting segment information and those used in the entity's financial statements, the nature of any changes from prior periods
in the measurement methods used, and the nature and effect of any asymmetrical allocations to reportable segments (for
example, an entity might allocate depreciation expense to a segment without allocating the related depreciable assets to that
segment); and
reconciliations of total reportable segment revenue, total profit or loss and other material amounts disclosed for reportable
segments to corresponding consolidated totals in the entity's financial statements with all material reconciling items separately
identified and described. Reconciliations of total reportable segment assets to consolidated assets and segment liabilities to
consolidated liabilities are also required if segment assets and segment liabilities have been reported under paragraph 23 of
HKFRS 8.
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