BUSINESS DESCRIPTION CONTINUED This section analyses the information which companies provide to help readers understand the contextual surroundings of the main markets and industries of operation as well as an explanation of their business activities and performance. Setting the scene Companies are certainly getting to grips with providing detailed information regarding their products and services, with the 95% of the FTSE 100 providing some description of what they do, usually in the introductory section of the report. Companies must not rely on all readers having an existing, sound knowledge of the business and its products or services. Providing a succinct overview will give the readers a basic understanding of what the company does before they read about its strategy and performance. The information on the company’s products and services is only part of the contextual information which ought to be provided in the report. Another major element of this area of reporting is the main industries and markets of operation, for the group and divisions which has been recognised and reported on by 92% of the FTSE 100. A clear outline of this information allows the reader to gain an understanding of the locations and environment in which the company operates and can therefore understand the context for the following information presented in the report. reviews, financial highlights, performance and the segmental analysis of the financial statements. Another beneficial element of divisional reporting is to allow the reader to understand the alignment between group and divisional objectives and judge the success of the group’s strategies at an operational level. In recent years, companies approach to reporting in detail within their operating reviews has improved. We have seen a significant number of companies’ providing specific financial and operational highlights for each division, allowing the company to report in a more specific and structured manner regarding each division and its activities. Although this area of reporting has improved, the area in which companies could now focus is linking divisional KPIs with group measures. More consistency in operating reviews Most companies, in these introductory pages, provide information regarding the group as well as each operating division, conveying to the reader the main activities for each division. It is crucial that the way in which the divisions are reported is consistent throughout the report; in the business description, the operating Figure 4.1 Figure 4.2 Figure 4.3 How are companies discussing their main products and services? How are companies discussing their main industries and markets? How do companies discuss each business division/segment? • • • • No description General description Detailed description Very detailed description 5% 26% 42% 27% • • • • No description General description Detailed description Very detailed description 8% 25% 39% 28% • • • • No description General description Detailed description Very detailed description 6% 27% 41% 26% 18 © Black Sun Plc 2011 www.blacksunplc.com
