Fund managers buck trend by liking IFRS

In a survey of 75 fund managers responsible for managing funds worth more
that £2 trillion – approximately half of the market – Big Four firm
Pricewaterhouse-Coopers found that almost two thirds believed IFRS had improved
company reporting. A similar percentage of the fund managers (59%) supported the
introduction of fair value accounting.

The support for IFRS in the fund management community is in stark contrast to
the feelings of leading FTSE 350 FDs and executives.

Kevin O’ Byrne, the group finance director of DSGi, which owns PC World, told
Accountancy Age that IFRS increased costs, but added ‘no value whatsoever’ to
business.

‘Anything that adds cost and complexity to the business is clearly not
welcome,’ O’Byrne said. ‘I would rather we were spending time focused on things
like the performance of our Greek subsidiary rather than the accounting of our
Greek subsidiary.’

Stuart Bridges, FD of FTSE 250 insurer Hiscox, himself a former fund manager,
said it was ‘difficult’ to keep an eye on a company because of the demands of
IFRS on management’s time.

Meanwhile, Lord Browne, the chief executive of BP, said the standards made
accounts difficult to understand and failed to hold management accountable.

‘Some would argue that IFRS neither produces a record of the accountability
of management, nor a measure of the changes in the economic value of assets and
liabilities. I would agree with them,’ Browne said.

But despite the criticisms of IFRS raised by management teams, fund managers
believe that company boards have managed the transition to the standards
competently.

The PwC research found that four fifths of the fund managers believed that
the management teams had coped with the accounting overhaul very or fairly well.

The fund managers also felt they were developing a better understanding of
IFRS numbers.

Over half of the respondents said their knowledge of the standards had
improved, and more than a third said that the conversion to IFRS had influenced
a decision to invest or divest from a company.

Ian Dilks, head of IFRS conversions at PwC, said the research suggested that
fund managers were becoming more confident when analysing IFRS accounts and had
taken a positive attitude to the new accounting standards.

‘The indications are that the first sets of full year-end IFRS accounts have
generally been seen as a useful aid in helping fund managers make decisions
about the companies in which they invest,’ Dilks said.

These positive sentiments aside, Dilks said the real reason for fund manager
support for IFRS could be the benefits of international comparability, rather
than the actual thinking behind the standards.

Overall, Dilks said, the jury was still out on whether UK GAAP was more
useful than IFRS.

COMPANY REPORTS

FTSE 100

Malcolm Wyman, the finance director of brewer SABMiller, saw his pay for 2006
breach the £1m mark as his total package increased from £857,296 in 2005 to
£1.18m. Wyman’s salary increased from £450,000 to £525,000 and he picked up a
£560,000 bonus. The rest of his package was made up by expense allowances of
£1,100 and £94,639 in benefits. During the 2006 financial year revenues climbed
from $12.9bn (£7.08bn) in 2005 to $15.3bn. EBITDA was up 23% to £2.9bn. But
pre-tax profits were 4% lower at £2.4bn as a result of exceptional UStax
charges. Over the last three year’s SABMiller’s share pricehas tripled.

FTSE 250

WS Atkin’s effective tax rate for the year ended 31 March 2006 was down to
29.6% from31.4% the previous year. The infrastructure company said its rate was
lower because of a greater contribution from itsin overseas operations in lower
tax regimes.

FTSE small cap

Martin Lamaison, the departing group finance director of Oxford Instruments,
has soldoff a chunk of share options. Lamaison sold 66,000 shares at no cost and
released a further 56,000 shares at 202.50p to pocket £113,000. Lamaison will
retire in early August and be succeeded by Kevin Boyd, currently the finance
director of Radstone Technology.

Music company Sanctuary was forced to warn the market that it is expecting to
report an underlying loss of between £17m and £22m. The losses are a result of
delays in disposingof non-core assets and slow trading in the company’s recorded
product division. Chief executive Frank Presland said that management was ‘in
the process of agreeing budgets for fiscal 2007’. Presland replaced Andy Taylor,
who was forced to resign after an FRRP probe into Sanctuary’s accounting
practices.