Unlisteds fret over share accounting

Initially the requirements introduced in 2005 applied only to listed
companies, but this is the first time the hundreds of thousands of non-listed UK
companies whose accounting periods begin on or shortly after 1 January 2006 will
have to meet the requirements set out by the Accounting Standards Board.

‘Some companies will be doing this already, but for all the others this will
hit them full in the face,’ said John Graham of Grant Thornton’s financial
markets group. ‘It applies across the board from smaller concerns to the likes
of John Lewis.’

At the start of the year the ASB took a policy U-turn and decided not to
inflict FRS 20 on companies applying the FRSSE but the bigger unlisted players
will have to adhere to its demands. ‘It’s something that companies do because
the rules say you have to and for some it’s a bit of a grudge process,’ said

‘But at the same time, if they are granting options to staff they need to
have a realistic value for those options. The difficulty for these businesses is
that this is the first time their FDs or managing directors will have to use
these option pricing models to work out the values.

‘Finding the necessary inputs for these models generates unique problems for
unlisted companies as they are unlikely to have a history of the company’s share
price and so estimating the expected volatility will potentially be difficult.’

There are a several models including lattice and Black-Scholes which can be used
for calculation. But Graham warned that the lack of a single approved standard
could cause further blowback.

‘Companies could decide that they want to get it done quick and dirty, but
they could come to audit and find the methods they have used aren’t sufficiently
sophisticated and they simply can’t justify the figures that they’ve got,’ he
said. ‘For every company there are subjective assumptions that they must give
serious consideration to. I’d be stunned if there aren’t companies who don’t get
caught out by this.

Company reports

Livedoor CFO sent down for 20 months

The former financial chief of defunct internet firm Livedoor has been hit
with a 20-month prison sentence for manipulating the company’s accounts. Ryoji
Miyauchi had expected that his co-operation in giving evidence against former
chief exec Takafumi Horie would result in a much lighter or suspended sentence.
‘Give me a chance to go free and I will make it up to the people I harmed,’ he
vowed before the verdict was delivered.

Judge Toshiyuki Kosaka said that although Miyauchi’s confession had ‘come
from the heart’, the attempt to take the blame for the scandal ­ and to cover
for Horie ­ deserved a stiff sentence. Judge Kosaka added that Miyauchi played
an integral part in ‘planning and executing criminal schemes’. Three other
senior Livedoor executives each received suspended sentences of about 18 months

Threshers agree £8m outsourcing deal

Threshers has agreed a five-year deal with outsourcing and technology company,
Xansa.The deal will include support for over 300 staff at Thresher’s head office
in Welwyn Garden City and will save the drinks retailer over £1m a year.

Threshers CFO Harvey Ainley said: ‘We chose Xansa because of the quality of
its offshore capabilities and its ability to offer a complete support model. We
felt Xansa really understood our business and the sector in general.’ Xansa will
provide support for Threshers’ core IT operations. In addition, Xansa will host
Threshers’ JDA merchandising applications, which support its strategic planning

London IPOs market eclipses New York

The London Stock Exchange trounced its US counterparts in the amount raised
by initial public offerings. In the first quarter of 2007, the LSE and AIM
exchanges raised $11.2bn (£5.7bn) through IPOs, compared to $8.3bn on the Nasdaq
and New York Stock Exchange, according to business information providers Thomson

Although AIM is the world’s busiest market in terms of the number of new
issues, a succession of major floats on the LSE’s main market saw it raise
$7.8bn, outstripping both Nasdaq’s $5.2bn and the NYSE’s $3.1bn. AIM raised
$3.4bn. London benefited from the return to the market of the $1.97bn Irish
packaging group Smurfit Kappa, retailer Sports Direct and 3i’s infrastructure

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