Free Management Dissertations - As A Result, The Comparative Information And The Five-year Financial Summary
As a result, the comparative information and the five-year financial summary of the Group accounts have been prepared on the same historical cost basis.
In November 2001, the Group reorganised into three business sectors: Transco, Telecoms and Lattice Enterprises. Each business sector is headed by a Group Managing Director and is discussed in detail in the Business Review. (Lattice Group Plc Annual Report 2001-2002, http://production.investis.com/ngt/reports/)
Where as Lattice Group Plc included the OFR as a section under the director’s report, Tesco Plc allocated a separate section (5 pages) on the OFR, including various graphical and tabular illustrations and review of various market segments.
Source: Tesco Annual Report and Financial Statements 2000, www.tesco.com)
Therefore, as illustrated by the two examples it is up to the board to decide on the appropriate format and contents; the Combined Code requirement is for inclusion of a balanced and understandable assessment. The aim of the operating review is to explain the main influences on the overall results, and how these inter-relate. Factors would include:
A discussion of the operating results for the period, including segmental performance.
Dynamics of the business: major influences on present and future results.
Investment for the future: capital expenditure and revenue investment expenditure
Total recognised gains and losses for the year
Dividends and earning per share
Accounting policies selected.
The aim of the financial review is to explain the capital structure of the business its treasury policy and the dynamics of its financial position. Factors would include:
A discussion of the present capital structure, e.g. the maturity profile of debt and the types of capital instruments used.
Treasury policies and objectives, e.g. the management of interest rate risk
Significant aspects of the tax change
Cash inflows for the period
Current liquidity
The directors’ assessment of whether the company is going concern could usefully be disclosed here.
Strengths of the business not recognised in the balance sheet e.g. brands and other unrecognised intangibles (ACCA Paper 3.6)
The OFR is a key recommendation arising from the independent Company law review in May 2004. The proposal for statutory OFR was considered alongside changes in the director’s report due to some similarities between OFR and enhanced reporting requirements under the directive.The key aspect of the proposal on the OFR require the directors of quoted companies to give a balanced and comprehensive analysis of their business as part of their annual report and accounts to shareholders. This will include company’s objectives, strategies and key drivers of the business, and focusing on more qualitative and forward-looking information than has traditionally been included in annual reports (OFR and Directors Report Regulations 2004, http://www.dti.gov.uk/cld/21_12_gov_response.
Dissertations - Free Management Dissertations
