Bodycote

UK Corporate Governance Code

Corporate governance has faced immense scrutiny recently following the high-profile collapses of BHS in 2016 and Carillion in January 2018, with MPs, the media and the public blaming the actions of the directors and auditors and all asking the same question… where was the board?

MPs, shareholders and the public have also been asking how effective the Financial Reporting Council’s (FRC) Corporate Governance Code has been in deterring poor corporate governance at the UK’s largest companies, following a raft of corporate failures. In July 2018 the FRC released a new UK Corporate Governance Code, (the Code) for listed companies in the UK. It also issued an update on its Guidance on Board Effectiveness. The Code is applicable to all companies with a premium listing, whether incorporated in the UK or elsewhere.

The new Code applies to accounting periods beginning on or after 1 January 2019, so with that in mind, this Common Practices report looks at how companies have been reporting on the current Code. We look at some good examples of reporting and look at the “explanations” made regarding compliance with the Code. We also discuss what’s new in the 2018 Code to enable readers to prepare for the upcoming changes.

The annual reports of 25 UK listed companies with year-ends between 31 December 2017 and 30 September 2018 were selected at random for review, across a range of industries. The full list of sample companies detailing company name, period end, auditor and industry classification can be found at the end of this report.

Segment Reporting

The requirement to disclose information on operating segments has been around for a number of years, firstly under IAS 14 Segment Reporting, and currently under IFRS 8 Operating Segments which has been applicable for entities with publicly traded debt or equity instruments (or those which are about to publicly trade) since 2009.
 
This report looks at the operating segment disclosures in the consolidated financial statements of 20 UK listed companies selected at random.
 

Bodycote plc Monitor

Bodycote plc Annual Report 2017
CR Monitor Issue: 
2018/0821
Company covered: 
Bodycote plc
Period End: 
31 December, 2017
Report issued on 31 August 2018 covered the following practice issues:
Change
Expanded disclosure of principal risks in strategic report.
Change
Disclosure of key audit matters included in auditors' report including discussion of manual adjustments to revenue.
Change
Separate sections included in auditors' report outlining director and auditor responsibilities.
Change
Separate note to the accounts added detailing use of non-IFRS performance measures.

Disclosure of the impacts of IFRS 16 "Leases"

IFRS 16 “Leases” will fundamentally change accounting by lessees as it requires assets previously off balance sheet under operating lease arrangements to be brought on balance sheet as is currently the case for finance leased assets. As a result on application companies will recognise both additional assets and additional liabilities. Consequently there will also be knock on effects in the income statement as operating lease charges are replaced by a depreciation charge and a finance expense. This report analyses the financial statements of a range of companies to firstly establish whether there has been any early adoption and secondly to establish what companies are disclosing in respect of IFRS 16 and its future impacts.

FRS 101 "Reduced disclosure framework"- A review of application in parent company accounts of IFRS groups

The preparation of parent company financial statements is something that all consolidated IFRS groups have to consider. In light of the great level of recent change in this area in the UK this represents a one-off report giving guidance on the preparation of parent company financial statements under FRS 101 "Reduced Disclosure Framework". It focuses on UK groups that prepare IFRS consolidated accounts.

The report sets out the key findings from our review of the first-time application of FRS 101 “Reduced Disclosure Framework” by a group of 29 parent companies that prepare consolidated financial statements under IFRS.  We consider a number of points including: how companies informed shareholders of the intention to implement FRS 101; the format of the primary financial statements; disclosure of the list of exemptions taken; the concept of equivalent disclosure in the consolidated financial statements; the length of company financial statements under FRS 101; and changes in accounting policy on adoption. 

Bodycote plc Monitor

Bodycote plc Annual Report 2014
CR Monitor Issue: 
2015/0819
Company covered: 
Bodycote plc
Period End: 
31 December, 2014
Report issued on 31 August 2015 covered the following practice issues:
Change
Industrial strategy invoked to explain business combination.
Change
Normalised financial metric used for greenhouse gas disclosure.
Change
Directors' remuneration performance awards and payouts disclosed retrospectively.

Bodycote plc

Bodycote plc Annual Report 2011
CR Monitor Issue: 
2012/0606
Company covered: 
Bodycote plc
Period End: 
31 December 2011
Report issued on 18 June 2012 did not identify any changes with significant impacts on the financial statements but covered the following practice issues:
Divergence
Reason for not providing a geographical analysis of non-current assets lacks clarity.
Change
Reference to authorised share capital deleted.
Change
Information about two share-based payment schemes now disclosed in financial statements.
Change
Fair value movements in hedges of net investments now disclosed separately.
Change
Basis of consolidation section of accounting policies note expanded.
Change
Disclosure of a risk premium applied to the discount rate in respected of an impaired CGU.