News November 2012 FRC publishes Lab reports on 'Debt terms and maturity tables’ and ‘Operating and investing cash flow

FRC publishes Lab reports on 'Debt terms and maturity tables’ and ‘Operating and investing cash flows’

06 November 2012

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The Financial Reporting Council (FRC) has today released two Financial Reporting Lab (Lab) project reports on ‘Debt terms and maturity tables’ (PDF) and ‘Operating and investing cash flows’ (PDF).  These reports relate to the Lab project report ‘Net debt reconciliations’ published in September, and complete the Lab’s initial project on debt and cash flow disclosure.
The Lab worked closely with five leading companies and a range of investors in preparing the observations contained in the reports. Comments on existing company disclosure were gathered by the Lab in a series of face-to-face discussions with over thirty individuals from sixteen investment organisations.
The five companies who participated in this project were: BT Group, National Grid, Royal Dutch Shell, Vodafone and Xchanging.
The Lab’s reports show how some companies are disclosing information on debt and its effect on liquidity risk and interest cost, and on cash flows generated and invested. 
Director of the Financial Reporting Lab, Sue Harding, said:

‘Through its work with companies and investors, the Lab has demonstrated on this project the need for information on debt to answer basic questions such as how much debt is owed and when it is due.  This is important information when debt plays a key role in company financing structures.  
‘These reports follow on from the Lab’s work on net debt reconciliations to explore aspects of reporting on the constituent parts – debt and cash.  The descriptions of reporting practices that help investors to understand debt obligations and their risks, and the drivers of cash flow movements, should help companies to ensure their reporting answers more basic questions such as those on instrument terms and accounting, leaving the time spent with investors to be focused on important issues for the business.'

The Lab has recently announced a new project on remuneration reporting and expects to be able to provide further details on the scope and content of its other projects in the forthcoming weeks.
The Lab encourages readers of these reports to comment on their content and presentation. Any feedback will be taken into account in how the Lab approaches and reports on future projects. Please send any feedback to
Notes to editors:

  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
  2. The Financial Reporting Lab provides a unique environment where investors and companies can come together to develop pragmatic solutions to today’s reporting needs:
  3. As a learning space, companies can use the Lab to test new and advanced reporting formats with investors, and investors can indicate areas where management can add greater value through the information they provide;
  4. As a hub to support innovation in reporting, the Lab’s focus on gathering and sharing evidence from the market provides the broader corporate community with feedback from investors on the value that new reporting formats bring. More information about the Lab’s work can be found here.
  5. The reports “Debt terms and maturity tables” and “Operating and investing cash flows” can be found here.