The FRC published two Financial Reporting Lab (Lab) project reports on 'Debt terms and maturity tables' and 'Operating and investing cash flows'. These reports relate to the Lab project report, 'Net debt reconciliations', 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."
Press release
Financial Reporting Lab project report: Debt terms and maturity tables - November 2012
Financial Reporting Lab project report: Operating and investing cash flows - November 2012
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