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Channel Island NEDBriefingCorporate governance, reporting andtechnical accounting update
18 & 19 January 2016
www.pwc.co.uk
January 2016
PwC
Agenda
Session Facilitator
Welcome and introductions• Setting the scene
Regulatory update• What’s happening at the FRC?• New ‘front half’ requirements• FRC areas of focus• Mandatory firm rotation & non audit
services
Investor hot topics
Accounting developments• New standards• Alternative performance measures• New UK GAAP
Closing comments
Appendix - Extracts
Slide 2
PwC
Facilitators
Slide 3
Tina Farington
Tina is currently on her secondsecondment to the UK as a Directorin PwC’s Accounting ConsultingServices (ACS) team.Responsibilities include advisingengagement teams on financialinstrument issues under IFRS andUK GAAP, reviewing financialstatements and delivering thoughtleadership / training on hot topicsand new accounting standards.Prior to joining the UK team, shewas part of the Global ACS teamfocusing on consistent applicationof IFRS across our PwC territoriesand following activities at the IASB.
Iain Selfridge
Iain currently leads one of the threeteams in PwC's AccountingConsulting Services Department.Iain provides technical advice andsupport on International FinancialReporting Standards (IFRS) andUK GAAP. Iain’s areas of specialismare IFRS/UK GAAP accounting forbusiness combinations,consolidations and disposals,impairments of non-financial assetsas well as first time adoption ofIFRS, share based payments andthe introduction of new UK GAAP,FRS 102. He is responsible for theproduction of PwC’s Manuals ofAccounting for IFRS and UK GAAPas well as our related websitewww.inform.pwc.com.
PwC
Setting the scene
Slide 4
PwC
Implications of the economy on financial reporting
5
Reporting ofrisks &
exposures
Impairmenttesting andsensitivities
FX, hedgingBusiness
combinations
PwC
The most popular risks and KPIsA consistent picture?
6
Top 3 Risks reported by the FTSE 350
Regulation
People
Safety
Earnings per share
Revenue
Return on CapitalEmployed
Top 3 KPIs in the FTSE 350
PwC
Relevant risk reporting – Is your risk reporting specific anddynamic enough to bring to life your risk management?4
Telling an authentic story – Is your narrative consistentand coherent throughout?
Weighty tomes – has the continued increase in length ofannual reports been at the expense of quality?1
Measures that matter – Do your KPIs genuinely explain theprogress being made?
2
3
What does your reporting say about you?
7
Facing the future – Are you providing the reader with aforward-looking orientation that is clear and consistent?5
PwC
PwC Slide 8PwC
Regulatory update
PwC
What’s happening at the FRC?
Slide 9
PwC
Progress so far
Slide 10
Audit committee reporting
Fair, balanced andunderstandable
New UK GAAP
The extendedaudit report
Strategic report
Audit firm tendering
Remuneration reporting
The StewardshipCode
New risk managementdisclosures
The viability statement
Recent FRCActivity
PwC
A turning point for the FRC?
11
Recent history of multiple regulatoryinterventions
McKinsey – a strategic review of the Conduct function
• Embedding, consistency and improvement
• Deregulation where possible
• New structure
PwC
New ‘front half’ requirements
Slide 12
PwCPwC
The components of the ‘front half’2015 - A year of relatively little change
FRC auditreports – ISA(UK&I) 700
BISremuneration
reportingregulations
BIS narrativereporting
regulations
2014 UKCorporate
Governance Code
Front half of the annual report
13
PwC
Reminder of requirements2014 UK Corporate Governance Code and Guidance
Slide 14
New
Viability statement
Going concern confirmation
Robust assessment of principalrisks
Monitoring and review of riskmanagement and internal
control
Amended
Goingconcern
Risk
PwC
Viability statementA multi-part disclosure
“Taking account of the company’s current position and principal risks, the directorsshould explain in the annual report how they have assessed the prospects of thecompany, over what period they have done so and why they consider thatperiod to be appropriate.
How – what wasthe process?
Over what period –how many years?
Why periodappropriate – whatmakes e.g. 3 or 5 years
the right choice?
Slide 15
PwC
Viability statementA multi-part disclosure
The directors should state whether they have a reasonable expectation that thecompany will be able to continue in operation and meet its liabilities as they fall dueover the period of their assessment, drawing attention to any qualifications orassumptions as necessary.” [2014 Code provision C.2.2]
Formal statement – to‘reasonable expectation’
degree of confidence
Assumptions – whatneeds to be borne inmind by the reader?
Slide 16
PwC
Viability statementsWhat we’re seeing – Process
Slide 17
Range of possible approaches
Disclosure – Range is narrower?
High-level and narrativeDetailed and quantitative
• Viability not in doubt in relevantperiod
• Focus on existing processes andcharacteristics of the business,including risk appetite
• Viability defined and stress-testedfor severe but plausiblecircumstances using quantifiedprincipal risks
• Combinations of risks considered –scenarios
PwC
What does this mean in practice for riskmanagement
Slide 18
Risk appetiteand culture
FRC Guidancepara 43
Issues
Communi-cation
Changes
Integration
Operationof systems
Risk appetite and culture
• The company’s willingness to take on risk,the desired culture within the company andwhether this culture has been embedded
Issues
• Issues dealt with in reportsreviewed by the board during theyear, in particular the incidenceof significant control failings orweaknesses…
Communication
• The extent, frequency and quality of thecommunication of the results ofmanagement’s monitoring to the board…
Operation of systems
• The operation of the risk management and internalcontrol systems, covering the design,implementation, monitoring and review andidentification of risks and determination of thosewhich are principal to the company
Integration
• The integration of riskmanagement and internalcontrols with considerationsof strategy and business model,and with business planningprocesses
Changes
• The changes in the nature, likelihoodand impact of principal risks…
1
2
4
5
6
3
The annual review should consider…
PwC
22 based the period ontheirstrategic/business
plans; 9 providedadditional explanationfor the period
22 companies
reviewed17 provided a
robust riskassessmentstatement
16 placed the viabilitystatement in their strategicreport
6 made it clear
which risks wereconsidered relevantto viability
8 stated that there
were no significantfailings or weaknesses
13 chose a 3 year viability period
VS
7 chose a 5 year viability period
2 did more thansimply mentionrisk appetite
11 (of the 17) made the
robust assessmentstatement in theirstrategic report
VS
8 made it clear what
they regarded as themain assumptionsunderlying thestatement
Impact of 2014 UK Corporate Governance CodeWhat we’re seeing - disclosure
18 referred to stress
testing procedures, butinsights were almostalways limited
19
PwC
FRC Areas of focus
Slide 20
PwC
CRRT – Annual update
Slide 21
1Quality of reporting good, room for improvement forsmaller companies
2Clear and concise continues to be a focus
3Materiality is a focus – CRRT is challenging companies judgements of someitems as immaterial
4Collaboration with AQRT
PwC
2015 annual report – Published 22 October 2015
Slide 22
Panel activity 2015 2014 2013 2012
Accounts reviewed 252 271 264 326
Companies written to 76 100 91 130
Press notices 3 2 1 –
Committee references 6 10 10 6
PwC
Development of prior years areas of focus
Slide 23
Involvement ofprofessionalexpertise
Tax impacts
Clarity of specificnature ofjudgmentsapplied
Include IAS 1sensitivityanalysis
Disclosed benefitsvs intangiblesrecognised
Accounting policyneeded
Auditors’ andAudit Committeereports used
Clear disclosureof significantestimates
Expect to seemore intangibles
Items whichenhance ratherthan distract
Exceptional items Significantjudgements
Estimates andsensitivities
Businesscombinations andseparateintangibles
PwCPwC
CRRT and exceptional items
• Even-handed approach to exceptional items.
• Gains and losses should not be netted, unless permitted.
• Reconsider recurring items.
• Consistent presentation in different periods.
• Explain the tax effect.
• Presentation in cash flow statement.
• Disclosure of ‘underlying profit’.
• Management commentary on results should be clear.
Also, ESMA guidance on alternative performance measures
24
PwC
Areas of focus for 2015/16
Slide 25
Applicationof materiality
judgements
Complexsupplier
arrangementsPensions
Revenue Cash flowsTax
PwC
FRC Priority sectors
Slide 26
• Insurance
• Food, drink and consumer goodsmanufacturers and retailers
• Companies servicing theextractive industries
• Business services
• Support services
• IT (including software companies)
2014/15
2015/16
PwCPwC
ESMA priorities for 2015 financial statements
• Impact of financial markets conditions:
- Interest rate environment
- High volatility and low prices for commodities
- Foreign exchange rate and country risk
• Cash flow statement and related disclosures
• Fair value measurement and related disclosures
27
PwC
Mandatory firm rotation & non-auditservices
Slide 28
PwC
What are we seeing in the FTSE 350 market so far?
29
The majority of large listed companies are still to tender, waitingfor a partner rotation or the regulatory deadline
33%
6%
61%
FTSE 100
Switched Retained Yet to tender
15% 7%
78%
FTSE 250
Switched Retained Yet to tender
PwC
A recap of the CMA and EU regimes
30
CMA
Applies to FTSE 350companies
10 year mandatorytendering
Audit tenure measuredthroughout lifetime, evenwhen you weren’t a FTSE 350company
Disclosure requirements
Applies years beg on/after 1Jan 2015 with transitionalarrangements
EU Regulation
Applies to EU PIEs
10 year mandatoryrotation, with a 10 yearextension option after a tender
Audit tenure measured onlysince you became a PIE
Member state options toextend period
Applies from 17 June 2016with transitional arrangements
Notice the nuances around audit tenure calculation
PwC
Transition arrangements under EU Reg and CMA
• Measure audit tenure as at 16 June 2014
- EU – Since PIE status began
- CMA – Since auditor was appointed, disregarding any change of status
31
Rotate/Tender next auditappointment after 17 June 2020
If 20 yearsor more
Rotate/Tender next audit appointmentafter 17 June 2023
If 11 - 19years
After 17 June 2016, generallytender when tenure reaches10 years (check tenure at 16June 2014 – this drives date)
If <11years
Date of yourAGM becomesimportant!
Notice theimpact of the10 year extension
PwC
Audit Committee disclosure requirements (from1 January 2015) under the CMA Order
(b) the reasons as to why completinga tender in the financial year isin the best interests of thecompany's members
32
Must be disclosed every year in the Audit Committee Report until the company completes acompetitive tender process
If the proposed financial year is no longer appropriate for a tender, the reasons for this mustbe disclosed in the next Audit Committee Report after making this decision
Where a FTSE 350 company has not completed a tender process in relation to fiveconsecutive financial year ends, the Audit Committee must set out in the Audit CommitteeReport relating to the fifth year:
If an Audit Committee Report is not prepared, the information above must be disclosedelsewhere in the Annual Report
(a) the financial year inwhich the companywill next complete atender process
PwC
Specific proposals for audit committees
• Summary of AC effectiveness reviewand how performance evaluation wasconducted
• In addition to existing disclosure ontenure of current auditor and when atender was last conducted, disclose:
name of current audit partner andhow long she/he has held the role;
indication of when next tenderprocess will be undertaken; and
explanation of changes to intendedtender timing.
33
• At least one AC member to havecompetence in accounting and/orauditing and audit committee as awhole to have sectoral competence
• Discuss with auditors findings of anyreview by the FRC’s Audit QualityReview team and if findingssignificant, disclose findings andactions which the AC and theirauditors plan to take. NB: disclosureof the audit quality category is notrequired
• Disclose nature and extent of anyinteraction with FRC’s CorporateReporting Review Team
Audit Committee activities: Further new disclosures proposed:
PwC
A summary of the EU rules on non-audit services
Public interest entities
• EU entities listed on EUregulated exchange
• Credit institutions
• Insurance undertakings
Member states haveoption to add PIEs
Cap on non-audit fees
• 70% of previous threeyears’ average auditfees
• Needs a three yeartrack record
• Applies only to auditorof PIE
Member states haveoption to make capstricter
Non-audit servicesprohibitions
• Prohibited list ofservices
• Limited cooling-inprovisions
Member states can maketax/valuations ban alittle easier
Member states can addanything to theprohibited list
Audit Committees must have oversight over the auditor’s assessment ofpermitted non-audit services
34
PwC
EU blacklist approach: prohibited non-auditservices
35
• Tax services
• Services that involve playing any part in management ordecision making
• Bookkeeping and preparing accounting records/payroll services
• Designing and implementing internal control or riskmanagement procedures for preparation/control of financialinformation or designing and implementing financialtechnology systems
• Valuation services
• Services linked to financing, capital structure and allocationand investment strategy
• Promoting, dealing in or underwriting shares
• Certain HR services
The FRC is taking theMember state option:allowed if no direct effect orclearly inconsequentialeffect
Not allowed the year beforeappointment as auditor
Except assurance servicesincluding due diligence
The FRC is taking the Memberstate option: allowed if nodirect effect or clearlyinconsequential effect
Prohibitions more stringent and ambiguous than ANYexisting rules
/legal services/internal audit
PwC
FRC proposal for UK implementation
Public interest entities
• EU entities listed on EUregulated exchange
• Credit institutions
• Insurance undertakings
Member states haveoption to add PIEs
Cap on non-audit fees
• 70% of previous threeyears’ average auditfees
• Needs a three yeartrack record
• Applies only to auditorof PIE
Member states haveoption to make capstricter
Non-audit servicesprohibitions for PIEs
• Prohibited list ofservices
• Limited cooling-inprovisions
Member states can maketax/valuations ban alittle easier
Member states can addanything to theprohibited list
The EU’s stringentrestrictions on NAS willapply only to PIEs (andtheir group companies).Other listed entities willface a less restrictiveregime.
The FRC is adopting the“black list” of prohibitedservices directly from theEU Regulation and willextend to ALL of the PIEauditor’s network firms.
Member State optionsover tax and valuationservices are being taken.These can be provided aslong as certain conditionsare met.
The FRC is proposing toextend the 70% cap toinclude ALL of the PIEauditor’s network firms
36
PwC
UK cap calculations under FRC proposals
Audit fees
• Based on average of previous3 years’ audit fees
• Audit fees of PIE, parents andsubsidiaries
TAKE 70%...
Non audit fees
FRC’s proposal is to extend the cap toinclude ALL of the auditor’s networkfirms providing audit services toentities in the audit ownership chain,not simply the member state auditorof the EU PIE.
The cap only applies when 3 years of audit fees areavailable
37
PwC
An example to think about – internal to externalaudit transition – the auditor overlap period
38
A restricted period where both firms cannot do the internal audit work
• PwC currently hold internal audit contract – PwC win tender to take over auditcontract for 31/12/20 – this was their “only choice”
• April 2020 AGM EY resigns, client would like EY to take over the internal auditcontract (a prohibited service)
• Cooling in period – PwC cannot carry out internal audit work from 1/1/2020. EYcannot carry out internal audit work until EY’s resignation is confirmed at the AGM.
EY incumbent;KPMG taxcompliance; PwCinternal audit
2015
FRC recommendtender
2016
Deloitte finishwork on majorsystems change
2019
EU/CMAmandates tender/rotation
PwC appointed atApril 2020 AGM
2020
KPMG will rotateoff competitor
2023
PwC Slide 39PwC
Investor hot topics
PwC
Investor views on the usefulness of quarterlyreporting
“Quarterly reporting is aboutequalising the advantage
insiders have over outsiders.”
Analyst (in the FT)
“Providing the market withquarterly updates adds littlevalue for companies that are
operating in long-term businesscycles.”
PwC Investor interview
“Eliminating quarterlyreporting would deprive
investors and analysts of muchneeded information in a fast
moving economy.”
Robert Pozen MIT (in the WallSt journal)
“Mandatory requirements topublish information can
frequently provide anunnecessary focus on matters
of little relevance to a long-term business.”
FD of National Grid PLC (in theFT)
“We hugely welcome removingmandatory IMS reporting.”
The Quoted Companies Alliance
“Quarterly earnings resultsgive investors an idea as to
whether the companies remainon their long-term growth path
or not.”
David Merkel AlephInvestments (via Talk Markets)
40
PwC
What are we seeing in practice today?
Guidance Pre-closestatement
IMS Other Comments
New WorldResources
Annual X X New World Resources decided to stop providingregular guidance in 2013, however the company isobliged to issue quarterly updates under its bondindentures.
United Utilities Twice peryear
Twice peryear
X X United Utilities dropped quarterly reporting after theFCA rule change, but is still issuing pre-closestatements.
National Grid Annual X X National grid have used a ‘newsletter’ styleapproach, which they say is “an alternative way ofcommunicating that can be customized to suit theemerging news at the time.”
Unilever Annual X X Unilever stopped giving quarterly guidance sixyears ago but keeps a quarterly update, as well asoffering some new information about its salesbreakdown that it hadn’t put out before.
Companies have taken a variety of approaches to quarterly reporting, while many companies have continued to issue an IMS,others have taken a variety of approaches.
This table summarises some of the approaches we are seeing:
41
PwC
Investor views on tax reporting
Why do investors want toknow more about tax?
Will the BEPS initiative resultin changes to theinternational tax system?
Common frustrations withtax reporting today
• Lack of clarity on tax ratereconciliations, including:
• Large ‘other’ balances• Not having a clear explanation /
reconciliation of the weighedaverage tax rate
• Inability to see the likely longterm sustainable cash rate
• Confusing deferred tax disclosures:
• What do the balances relate to?• What is the likely impact they
will have on the future tax rate?
• Key expense
• Need to understand likely long termsustainable tax rate to forecast cashflows
• Reputation risk – this is becomingmuch more of a focus, so companiesneed to tell their tax story effectively
• Interested in the total tax picture, butprimarily focused on corporation tax
• BEPS initiative could result incountry-by-country tax reportingrequirements, but it is not clearexactly what or when at this stage
• Investors are in favour of enhancedtransparency, particularly as it couldimprove their ability to understandthe likely long term tax implicationsof business decisions etc
• It is important to talk about thepotential impact of BEPS, even if youdon’t know the answer, opendiscussion on the range ofpossibilities builds trust
42
PwC
Investor views on new accounting standards
What will bethe impactfor you?
How can youcommunicatewell?
What hasworked wellfor others?
Finalthoughts
43
PwC
Overview:
• Everyone is still trying to figure this out
• What will change and how will it affect you?
• Be clear about what the changes really mean for you and reconcileclearly.
• Don’t be boilerplate. This is an opportunity to tell your story.
What will bethe impact foryou?
“It is very frustrating thatcompanies are not talkingabout the impact of IFRS 15;we really need to understandthe company’s expectationson the impact.”
“Giving numbers assoon as possibleahead of time willhelp minimisemarket reactions andreduce surprises.”
Impact of upcoming new accounting standards
44
PwC Slide 45PwC
Accounting developments
PwC
Latest on new standards?
Slide 46
PwC
Not much!
What’s new for IFRS* in 2015?
47
*We will come on to new UK GAAP
PwC
Amendments effective this year
48
Standard Nature of amendment
IAS 19, ‘Employee benefits’ Employee contributions
Annual improvements Various
Company law List of related undertakings
PwC
A little more change next year
49
Standard Nature of amendment
IFRS 14, ‘Regulatory deferral accounts’ Rate-regulated activities
Amendments to IFRSs 10, 11 and IAS 28 Acquisition of interests
IASs 16 and 38 Methods of depreciation
IAS 1 ‘Disclosure initiative’
IFRS 10 and IAS 28 Investment entities
Annual improvements Various
EU endorsement is still pending for most standard changes
PwC
What’s next?The ‘big three’
Slide 50
• Published July 2014
• Effective 2018
• EU endorsement expected BUT conditionalon amendment and deferral for insurers untiltheir new standard applies
IFRS 9 Financial instruments
IFRS 15 revenue
• Published May 2014
• Effective 2018
• EFRAG predict EU endorsement soon
• IASB and FASB proposing amendmentsalready
IFRS16 Leases
• Published January 2016
• Effective 2019
• (Almost) all leases on-balance sheet
• IASB to treat all leases like finance leases;FASB to classify leases for P&L purposes
PwC
Adjusted performance measures –Latest developments
Slide 51
PwC
High level observations
Slide 52
2 did not presenta reconciliation
7 presented it in other areas (such as‘other information’ sections after thenotes and ‘unaudited supplementalinformation’ sections)
54 presented in the notes
95 companies usean APM
2
93 showed areconciliation
35 out of the 93 presentedthe reconciliation on the faceof the financials
A review of the total numbershowed that movements inaggregate for all 100 companieswith an APM went from a GAAPfigure of roughly £119bn to£187bn
Often companiespresented thereconciliation in morethan one place in theannual reports
Somehad separatenon-GAAPsections at the endof the report
43 presentedthe reconciliationin the front half
43
PwC
What were the most common adjustments?
Slide 53
0
10
20
30
40
50
60
70
Acquiredintangible
amort'
Assetimpairment
FVmovements
SBP Pension Restructuring One-off sale Acquisitionrelated
Interest,depn, amort'
& tax
Bank specificadjs
Other-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Value and number of adjustments across the FTSE 100
Value of adjustments across all entities £000 Number of entities adjusting for this type of adjustment
PwC
What is the most common form of APM?
Slide 54
• Adjusted operating profit (39%)
• Adjusted PBT (35%)
• Adjusted EBIT/EBITDA (11%)
• There were some bespoke ‘other’measures (7%). This included ‘Net rentalincome’ which was common for propertycompanies
• Others included ‘Replacement cost profitbefore interest and taxation’ and‘Earnings on a current cost of suppliesbasis’
• Variety of different names were used
39%
3%35%
3%
11%
2%7%
Adjusted operatingprofit
Adjusted PAT
Adjusted PBT
Adjusted revenue
EBIT/EBITDA/Adjusted EBIT/EBITDA
None used
Other
PwC
Core versus non-core – What next?
Slide 55
Scope – listed companies on regulatedmarkets and all financial informationexcluding back half of accounts (whichwill be covered by forthcoming IASBproject on reporting)
Effective date – All announcements post3 July 2016
FRC and FCA will be responsible forenforcement in the UK
ESMA ‘guidelines’ on AlternativePerformance Measures (‘APM’s’)
The Guidelines define APM’s and outline principlesfor their disclosure.
Issuers are required to:
• Define APM’s in a clear and readable way and givemeaningful labels (impairments and restructuringcharges are ‘rarely … unusual or non-recurring’).
• Reconcile APM’s to most directlyreconcilable GAAP line item explaining materialreconciling items.
• The use of APM’s should be explained so usersunderstand relevance and reliability.
• APM’s – Do not display with more prominence,emphasis or authority than GAAP measures.
• APM’s should be presented with comparativeswhich also need to be reconciled.
• APM’s should be defined consistently over timeand any changes justified.
PwC
New UK GAAP – It’s here
Slide 56
PwC
New UK GAAPTemperature test
57
Q: Have you started to look at New UK GAAP?
1. We’ve been working on it since last year
2. We’ve started thinking about it
3. Not yet – we don’t need to think about it till wereport next year
PwC
• Qualifying entities
• Notify shareholders
FRS 101 – IFRS with disclosure exemptions
• FRS 100 – Application of financial reporting requirements
• FRS 103 – Insurance contracts
• FRS 104 – Interim financial reporting
• FRS 105 – Micro-entities
What else is there?
58
New UK GAAP frameworkRecap
FRS 102 – The ‘New UK GAAP’
• All entities except groups listed on an EU regulated market
• Notify shareholders of reduced disclosures
PwC
FRS 102Measurement changes vs. old UK GAAP
59
Ta
ng
ible
assets
Sh
are
ba
sedp
aym
ents
Leases
Post employment benefits
Intangibleassets
Other employeebenefits
Capitalisation of borrowing costs
Businesscombinations
Deferred tax
Investment propertiesFinancial instruments
Deriva
tives
Hed
gin
gC
ash
an
dca
sheq
uiva
lents
Comparative information
PwC
‘New’ UK GAAP
60
Choices to be made for other group companies.Potential impact on:
3
• Cash tax
• Distributable reserves
• Levels of disclosure
• Systems and data-gathering challenges.
Effective 2015 – that’s now!1
Consolidated accounts of EU listed groups still IFRS.2
PwC
The practical side – New UK GAAP transitionchecklist
61
Restate comparatives Explain impact Balance sheet and P&L
reconciliations, includingopening period
Other reconciliations asconsidered useful
Update policies Update notes
PwC
Appendix
Slide 62
PwC
Viability statementsWhat we’ve seen - Derwent London plc
63PwC
Indicators (other than availability offorecasts) for why the five year period was
appropriate
PwC
Viability statementsWhat we’ve seen – Grainger
PwC
Establishing the context for the viabilitystatement upfront – makes it easy to see that
this is not seen as difficult
Quantification of the sensitivity analysesprovides stakeholders with added detailabout what is considered as ‘severe but
plausible’. The board has alreadyconfirmed that these scenarios do not break
the business model.
64
PwC
Viability statementsWhat we’ve seen – Lonmin plc
65PwC
The 2014 Code requires the directors to take account of the principalrisks when making the assessment of viability. This example identifiesthose principal risks which could threaten the existence of the group, asopposed to those which would only most likely threaten performance.
The identification of the former provides substantial context to theassessment of viability.
PwC
Viability statementsWhat we’ve seen – Shaftesbury
PwC
The key assumptions embedded in theforecasts are specified first. The stress-testing of the resilience of the business
to those principal risks that couldthreaten solvency or liquidity over andabove the plan has then been explained
in the final column.
The context within whichthe directors make the
viability statement is set atthe start of the risk section
of the report.
66
PwC
New standards– investor view
What hasworked wellfor others?
Barclays income statement reconciliation between IFRS andUK GAAP
Source: Barclays 2005 annual report
Show the numbers
Slide 67
Describe what’s changed – andhow it affects you
Veolia’s explanation of IFRS 11 changes
Source: Analystpresentation, April 2013
New standards– investor view
What hasworked wellfor others?
Slide 68
Describe what’s changed – andhow it affects you
Veolia’s explanation of IFRS 11 changes
Source: Analystpresentation, April 2013
New standards– investor view
What hasworked wellfor others?
Slide 69
Describe what’s changed – andhow it affects you
Veolia’s explanation of IFRS 11 changes
Source: Analystpresentation, April 2013
New standards– investor view
What hasworked wellfor others?
Slide 70
