Annual report disclosures fall short of the mark

The way the UK’s leading companies communicate with shareholders in their
annual reports has been criticised as ineffective and bland, according to new

Merchant, a communications consultancy, analysed the annual reports of the
UK’s top 500 companies, including Vodafone, HSBC and BP, and found that the
presentation of IFRS information, share price data and company strategy was

The report said only 5% of companies had ‘made an effort’ to headline IFRS in
their annual reports, while a mere 25% produced operating and financial reviews
discussing business performance.

Merchant said the research indicated that companies ‘continue to miss the
opportunity to communicate effectively with the investment community’ in their
annual reports.

Brian Shearer, national technical partner at Grant Thornton, said some of the
weaknesses raised by the research were not necessarily important for
shareholders who used annual reports. He said: ‘IFRS does not change the
underlying substance of a business, which is what should be highlighted.’

He added that more IFRS detail was likely to be included in future annual
reports now that companies had actually started using the new standards.

Tim Copnell, KPMG’s director of corporate governance, said the small number
of OFR statements would no longer be an issue as all future annual reports would
require this mandatory disclosure.

‘Reporting periods from April this year will have a mandatory OFR, and I
think it is dangerous to compare voluntary OFRs with the statutory OFRs we are
going to see,’ Copnell said.



Diversified mining group BHP Billiton has said its $2.2bn
(£1.23bn) tax charge on earnings before exceptionals represented an effective
tax rate of 24.9%. The company said this rate was below the statutory rate of
30% in theUK and Australia, due to a 3.9% reduction from the recognition of US
tax losses of $350m.

Consumer packaging group Rexam, which saw underlying pre-tax
profit for the six months to 30 June 2005 increase by 6% from £135m in 2004 to
£143m, said statutory profits had been boosted by £2m because of the positive
impact of market value changes on derivatives under IAS39.

An unusually low tax rate in 2004 was cited by hotelier Hilton
as the reason for a drop in pre-tax profits and earnings per
share for the six months to June 2005. Hilton’s adjusted earnings per share fell
5.9% from 9.6p and pre-tax profit before non-trading items fell from £201.9m to
£192.1m. The company said that the low effective tax rateof 15.5% in 2004 was
due to the recognition of deferred tax assets in respect of tax losses in that


Burren Energy has secured a new four-year ‘revolving
reserve-based secured loan facility’ worth $80m (£44.3m). The facility, arranged
by Natexis Banques Populaires, has the capacity to be increased to $150m. Burren
said the loan facility would provide it with financial flexibility for ‘future
potential investment opportunities’.

Reporting an increase in operating profits for the first six months of 2005
from £24.7m in 2004 to £37m, fund manager Henderson said
profits were boosted by reducing corporate costs from £8.1m to £7.2m.
Substantial reorganisation of the corporate office took place in the second
quarter of 2005 following the sale of Henderson’s life services. The group said
a number of corporate staff were transferred to the outgoing business or left.

Slough Estates, which saw pre-tax profits for the first half
of 2005 drop to £119m from £173.6m in 2004, said its tax charge for the six
months to the end of June 2005 was £13.5m, up from a charge of £11m over the
same period in 2004.

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