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News - 2016

19 December 2016 - Lab encouraged by early improvements to dividend reporting

The Lab publishes its implementation study on Disclosure of Dividend: Policy and Practice. The study follows on from The Financial Reporting Lab’s report Disclosure of dividends – policy and practice (PDF) published in November 2015. This implementation study examines how companies from across the FTSE 350 have implemented investors’ preferences highlighted in the Lab’s original report; the study found that 28 companies have enhanced their disclosures.
 
The Lab is encouraged by the improvements made by the 28 companies identified in this study. However, there remain a large number of companies who might benefit from implementing the Lab’s findings, improving their communication with investors.
 
The full implementation study report provides further details on the improvements made and examples of good practice. The full report is available here (PDF).

27 October 2016 - FRC publishes Lab project report: Business model reporting

The Financial Reporting Council’s (FRC) Financial Reporting Lab has today published a report on ‘Business model reporting’, which provides valuable insight for companies on the importance of business model information to investors, and the type of information they are seeking.

This report forms part of the FRC’s Clear & Concise reporting initiative that promotes transparent and accessible reporting. The report reflects the views of 19 companies, 36 investors from 27 investment and analyst organisations, and 2 retail shareholders who contributed to this Lab project. The Lab found:

  • Business model information is fundamental to investors’ analysis and understanding of a company and a lack of good disclosure on business model raises concerns over the quality of management;
  • As business model information provides context to the other information in the annual report most investors want it positioned towards the front of the Strategic Report;
  • Where a company operates a number of business models, disclosures of each significant business model is desired;
  • Investors are looking for better natural linkage of business model information to other sections of the Strategic Report, and consistency with disclosure in the annual report; and
  • Investors are looking for more detail than is currently provided by most companies. In particular investors find disclosures are often lacking information that answers questions such as:
    • What are the key revenue and profit drivers and how do profits convert to cash?
    • Are there any key asset and liability items that support the business model?
    • What is the company’s competitive advantage?

The Lab report also includes examples of current good practice as well as highlighting how disclosure could be modified to provide more value to investors.

A copy of the report can be downloaded here.

08 June 2016 - Lab call for participants - Digital Future: Data

The Lab announces a call for participants for its next project, Digital Future: Data, which will look at how the use of technology to communicate corporate reporting to the investment community might evolve.

In Digital Future: Data, we will investigate:

  • How technology trends might drive future change in corporate reporting and provide opportunities for improvements in the access to, and analysis of, corporate reporting data; and

  • How transformation of reporting formats, potentially driven by regulatory change (such as the expected implementation of a European Single Electronic Format for corporate reporting by 2020), might be optimised for investors and companies.

For more details of the project and how to register interest, please read the full call here (PDF).

 

02 June 2016 - The Components of Digital Reporting

Read the Lab's article on the Components of Digital Reporting (PDF) originally posted on our LinkedIn page.

10 February 2016 - Disclosure of dividends - policy and practice 

The FRC's Financial Reporting Lab (the Lab) has today made available slides and a  60 second animation summarising the key findings of the Disclosure of dividends -  policy and practice project report.

04 February 2016 - FRC comments on new IFRS requirement on debt disclosure

The Financial Reporting Council (FRC) issued a press release welcoming improved debt disclosure standards.  Commenting on the publication of ‘Amendments to IAS 7’, by the International Accounting Standards Board (IASB), Director of the FRC's Financial Reporting Lab, Sue Harding, commented:

"The Financial Reporting Lab's work on net debt reconciliations demonstrated that investors need more information on significant cash and non-cash changes in debt. The new requirements will provide welcome transparency on this. We encourage the IASB to continue its consideration of enhanced disclosure of the accessibility of cash and cash equivalent balances.” 

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