Directors' Report - New Style Business Review

Directors' Report - New Style Business Review

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I've tried to find guidance on what the directors of a medium-sized company now need to refer to in their Directors' Report under the heading 'Business review'- but I can't seem to find any examples, or a simple guide to how the review should look.

My main concerns are:

Do the directors have to state performance indicators such as their GP%, debtor days etc (i.e. actual numbers) or can they just say that they refer to these indicators when measuring performance?

Do the direcors have to state what they consider to be the principal risks and uncertainties facing their business?

And isn't this all going to be giving quite a bit of info to the opposition?

Can anyone point me in the right direction?

Jane Powell

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By jsriram36
31st Jul 2006 14:19

Directors' Report
Suggest to give key financial ratios indicating the performance such as Return on capital employed, Current ratio, Debt-Equity ratio and the like under the "Financial Highlights". I feel even if we don't give, the opposition is always ready with the info.The focus may be more on business expansion and the steps to be taken to overcome the risks and uncertainties facing the future.May add the contributions made by the Research and Development for the innovations and the likely impact in future development.

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By pgittins
31st Jul 2006 15:42

These might help ....
The ASB's Operating Statement on the OFR can be found at http://www.frc.org.uk/images/uploaded/documents/Reporting%20Statements%20OFR%20web.pdf

.... and although it doesn't set out an "example" OFR, it does include the ASB's guidance, which might be regarded as best practice. There's quite a bit of detail on each of the areas which need to be covered.

For examples, many of the plc accounts published in the last year or so include an OFR within the Directors' Report; have a look at one or two for companies in a similar line of business, and amend (and prune!) accordingly.

Medium-sized companies (turnover not more than £22.8m, balance sheet total not more than £11.4m, employees not more than 250) have to prepare the business review, but aren't required to include information about key non-financial performance indicators; although they are strongly encouraged to report on these issues voluntarily.

Hope this helps .....

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