In a study of the narrative reporting habits of the entire FTSE 350, PwC found that companies have upped their efforts to meet compulsory requirements of the legislation, but were still below-par in disclosing optional information essential to investors.

David Phillips, senior corporate reporting partner at PwC, said: ‘If companies do not provide strategically relevant information as a matter of course, they are more likely to find themselves in the unenviable position of having their reporting challenged by the market and other observers. At the end of the day, box-ticking compliance alone will not be enough for investors.’

PwC’s study praised corporates’ improving standard of narrative reporting, as 75% are now complying with the requirement to communicate key performance indicators. Data showed 75% of the FTSE 350 are also clearly setting out their principal risks and uncertainties.

But only 35% of companies support strategic statements with qualitative or quantitative targets.

Only two thirds of companies align some, or all, of their KPIs with their strategic priorities and these are invariably related to financial measures, PwC found.

On the whole, PwC backed the Business Review, which has been phased in since the more demanding Operating and Financial Review was dropped at the end of 2005.
But it said there have been mixed reactions to the financial reporting developments brought about by IFRS and the narrative and non-financial factors, such as business strategy and market environment, covered by the Business Review.

PwC highlighted the complexity and length of reporting which has led to greater reliance on non-financial and contextual information.

Phillips added: ‘The Business Review poses some complex questions. It enables critical information to be presented in a logical and integrated way essential for an understanding of the long-term direction of the company and its short-term performance, but companies need to go beyond legal requirements.’

COMPANY REPORTS

Diageo CFO earns £1.5m

Nick Rose has scooped £1.5m for his financial stewardship of Diageo. In its annual report the drinks giant disclosed that Rose's base salary and bonus contributed to a pay packet of £1.5m. Rose has been in the financial driving seat of the booming corporate, which owns well-known brands such as Guinness, Bailey's and Smirnoff since 1 July 1999. This year Diageo made net sales of almost £7.5bn. On paper, his windfall was beefed up further by long-term incentive plan gains of almost £1.3m. The FTSE 100 giant's accounts showed that £795,000 of share options granted to Rose in 2004 vested this year, in addition to him exercising options on £481,000 of shares.

Netstore's Memory gain

David Memory has been hired as Netstore's new CFO. The AIM-quoted corporate said that Memory will assume financial control as of today. Memory, a chartered accountant, was previously Group FD of Tie Rack for 12 years, steering the company through a public to private transaction and the subsequent sale earlier this year. The incoming FD, who was at PricewaterhouseCoopers for 15 years, replaces Ian Daly who resigned last month. Netstore CEO Graham Kingsmill said: 'I am delighted that David is joining our team, his strong financial management background and experience working with the City will be a great asset to Netstore.'

Seven years of restatements

NASDAQ-quoted software provider UTStarcom Inc has been forced to restate seven years of revenue after an audit found errors in its revenue recognition. An investigation by the company's audit committee, independent legal counsel and forensic accountants found issues with the accounting treatment of sales contracts in western China. The audit determined that revenue previously recorded in the region was recognised earlier than it should have been.

Callan named as Lehman Brothers CFO

Lehman Brothers has brought in one of its most prominent investment bankers asCFO. The US banking heavyweight announced that Erin Callan would become its new financial chief in December. Callan will replace Chris O'Meara, who will become global head of risk management. As CFO, Callan will oversee Lehman's finance operations including, treasury, tax, financial control and reporting.