BusinessCompany NewsCorporates face EU reporting millstone

Corporates face EU reporting millstone

Companies will have to produce interim management statements between their interim and final results under new rules, as well as comply with a burdensome standard on estimates in their interim results

The reporting demands are a result of the EU Transparency Obligations
Directive, applying to corporates with reporting periods beginning on or after
20 January.

Corporates with reporting periods after this date will have to issue interim
management statements twice a year, in-between annual and half-yearly reporting.

Also, IFRS half-yearly group reports must comply with IAS34 on interim
financial reporting.

Previously, the optional standard was bypassed by the great majority of
corporates because compliance meant that they could expose themselves to extra
disclosures on estimates which changed significantly between interim and annual
reports.

Many companies have dropped parts of their interim statements to avoid the
extra disclosure.

Paragraph 26 of the standard states: ‘If an estimate of an amount reported in
an interim period changed significantly during the final interim period of the
financial year, but a separate financial report is not published for that final
interim period, the nature and amount of that change in estimate shall be
disclosed in a note to the annual financial statements for that financial year.’

Deloitte reported that only 9% of half-yearly reports in the companies
surveyed claim to have adopted this standard. Deadlines for submission of
reports has also been brought forward. Under the rules, interim reports must now
be issued within two months of the period end and annual reports within four
months.

A total of 46% of listed companies will need to bring forward their
half-yearly reporting to comply with the cut-off point, the Big Four firm said.

Deloitte’s Isobel Sharp said: ‘These new rules are a bid for greater
transparency and disclosure for listed companies, but there is growing concern
that this increasingly regimented reporting will be a burden on business and may
simply lead to more bland statements rather than focused commentary issued as
appropriate by companies.’

‘In recent years, the focus has been on providing more information, which
meant the average number of pages in annual reports increased to 85 in 2006, up
from 71 in the previous year. But the rules demand not only more information,
but more reports,’ she said.

Deloitte predicted that 86% of UK-listed companies may need to produce the
additional reports to meet the new reporting rules.

COMPANY REPORTS

Lonmin appoints Ferguson as new CFO

Alan Ferguson has been announced as the new financial chief of FTSE-100
heavyweight Lonmin. Ferguson will assume control from 6 June when present
incumbent John Robinson steps down.

The incoming finance boss has been group FD of The BOC Group since 2005, but
will be leaving the gas and associated equipment supplier following the
acquisition of BOC by the Linde Group, which took place in late 2006.

Before joining BOC, Alan worked for Inchcape plc for 22 years in a variety of
roles, including group FD. Sir John Craven, chairman of Lonmin said: ‘Alan had a
long and distinguished career with Inchcape and more recently as the finance
director of BOC. He will be a great addition to the Lonmin executive team and I
look forward to working with him in the future.’

Balls lightens financial markets’ tax system

The government is looking to ease the administrative burden for share
transaction tax breaks, in a bid to open up the markets. Ed Balls, Economic
secretary to the Treasury, announced plans to cut the reporting of share
transactions to the market or intermediaries to benefit from stamp duty tax
relief.

The move is expected to remove obstacles to competition and expand choice in
trading financial instruments in the UK. Balls made the declaration at a meeting
with EC internal market commissioner Charlie McCreevy and European competition
commissioner Neelie Kroes.

Ferox wrangle settled

E&Y has brokered an out of court settlement with Ferox Capital Management
bringing its potentially damaging early filings law suit to a peaceful
conclusion. The firm agreed to make a charitable donation for an undisclosed
amount, avoiding a costly High Court battle.

In what was believed to be an unprecedented case, Ferox had intended to drag
E&Y through the courts alleging that the firm had filed its 2004 annual
report too early, exposing the company to unwanted media attention.

The firm said: ‘Ernst & Young and Ferox Capital Management have settled
their dispute regarding the filing of FCM’s accounts for the year to 31 December
2004, with Ernst & Young, at the request of FCM, agreeing to make a
charitable donation. Both Ernst & Young and FCM are pleased to bring this
matter to a close and will not be commenting further.’

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