Viability statements

Risk and viability in the strategic report

In light of recent high-profile collapses such as Carillion, the reporting by companies of risks and long-term viability is once again in the spotlight. Investors and other stakeholders expect detailed, specific information in the annual report which clearly sets out the key risks facing the company and the potential impact of these risks on the company’s longer-term viability. This report analyses the consolidated financial statements of 20 UK listed companies to assess the quality of risk and viability reporting in the annual report.

Carpetright plc Monitor

Carpetright plc Annual Report 2016
CR Monitor Issue: 
2017/0106
Company covered: 
Carpetright plc
Period End: 
30 April, 2016
Report issued on 16 January 2017 covered the following practice issues:
Restatement
Statement of cash flow restated without full explanation.
New
Restricted cash recognised on disposal of properties.
Change
Reduction in tax rates results in reducing deferred tax liability.
Pronouncements
Viability statement looking forward for five years presented.

Daejan Holdings PLC Monitor

Daejan Holdings PLC Annual Report 2016
CR Monitor Issue: 
2017/0103
Company covered: 
Daejan Holdings PLC
Period End: 
31 March, 2016
Report issued on 9 January 2017 covered the following practice issues:
Change
Change in accounting policy to carry fixed rate loans and borrowings at amortised cost following initial recognition.
Change
Disclosure of a reconciliation showing the difference between the total of future minimum lease payments and present values.
Pronouncements
Viability statement looking forward for five years presented.

Ashtead Group plc Monitor

Ashtead Group Plc Annual Report 2016
CR Monitor Issue: 
2017/0101
Company covered: 
Ashtead Group Plc
Period End: 
30 April, 2016
Report issued on 3 January 2017 covered the following practice issues:
Change
Recognition of impairment loss in respect of customer lists.
Change
Impairment and amortisation of intangible assets identified as exceptional items.
Change
Disclosure of proposed revisions to directors’ remuneration policy.
Change
Developments in directors' remuneration charted against company performance.
Change
"Laws and regulations" identified as a new principal risk factor
Change
Viability statement added outlining operational viability for a period of three years.

Hammerson plc Monitor

Hammerson plc Annual Report 2015
CR Monitor Issue: 
2016/1209
Company covered: 
Hammerson plc
Period End: 
31 December, 2015
Report issued on 19 December 2016 covered the following practice issues:
Restatement
Restricted monetary assets are shown separately from trade receivables.
New
Introduced chart showing potential impact and probability assessment of principal risks.
New
Acquisition accounting of joint venture identified as risk of material misstatement.
New
Maturity analysis for derivative and non-derivative financial liability disclosed separately.
New
Sensitivity of unobservable inputs used in fair value measurement is provided.
Change
Statement of other comprehensive income clearly split between items that can and cannot be reclassified to profit or loss.

Babcock International Group PLC Monitor

Babcock International Group PLC Annual Report 2016
CR Monitor Issue: 
2016/1113
Company covered: 
Babcock International Group PLC
Period End: 
31 March, 2016
Report issued on 29 November 2016 covered the following practice issues:
Change
Restatement of financial statements due to finalisation of provisional business combination accounting.
Pronouncements
Presentation of a full list of subsidiaries rather than just principal subsidiaries following a change in the Companies Act.
Change
Viability statement looking forward for three years included within strategic report.

Mothercare plc Monitor

Mothercare plc Annual Report 2016
CR Monitor Issue: 
2016/1011
Company covered: 
Mothercare plc
Period End: 
26 March, 2016
Report issued on 21 October 2016 covered the following practice issues:
Change
Viability statement looking forward for three years presented.
Restatement
Material restructuring costs presented in aggregate with impairment reversal as an exceptional item.
Pronouncements
Presentation of full list of subsidiaries.

Big Yellow Group PLC Monitor

Big Yellow Group PLC  Annual Report 2016
CR Monitor Issue: 
2016/1007
Company covered: 
Big Yellow Group PLC
Period End: 
31 March, 2016
Report issued on 17 October 2016 covered the following practice issues:
Change
Discussion of a new area of risk in the table of Principal risks.
Change
Restatement of summarised financial information for investment in associate following change in accounting treatment of a lease.
Restatement
Expanded breakdown of cash flows from borrowings within financing activity section of the cash flow statement.
New
Acquisition of new stores identified as post balance sheet event.
Change
Viability statement looking forward for four years presented.
Pronouncements
Presentation of a full list of subsidiaries rather than just principal subsidiaries.

Mitie Group plc Monitor

Mitie Group plc Annual Report 2016
CR Monitor Issue: 
2016/1004
Company covered: 
Mitie Group plc
Period End: 
31 March, 2016
Report issued on 10 October 2016 covered the following practice issues:
Change
New table published disclosing the impact of principal risks on its strategic aims.
New
Recognition of impairment loss due to discontinuance of contracts.
Pronouncements
Viability statement published looking ahead for three years.
Inconsistent
No reference to restatement of prior year segmental information following change in segmental reporting structure.

Witan Investment Trust plc Monitor

Witan Investment Trust plc Annual Report 2015
CR Monitor Issue: 
2016/0908
Company covered: 
Witan Investment Trust plc
Period End: 
31 December, 2015
Report issued on 20 September 2016 covered the following practice issues:
Pronouncements
Extended disclosure on directors’ remuneration including clawback and malus provisions.
Change
Maturity analysis of future minimum operating lease payments is presented following renegotiation of lease term.
Pronouncements
Introduction of viability statement looking forward for five years.