7.18 The Financial review quotes 2023 underlying growth for [business unit] as [n]%; the business unit review gives [n]%
UK Company A · a UK-listed medical technology group · Drafting slip
In brief
The Chief Financial Officer's commentary says [business unit] revenue grew by [n]% reported and [n]% underlying in 2023. The [business unit] review in the same report gives 2023 underlying growth of [n]%, in its text and in its performance table, with a [n] basis-point currency headwind. The [n]% is the Group's 2023 underlying growth, not the business unit's.
The evidence, as filed
Further pages withheld to protect the company’s identity (two): Annual Report 2024, page 23; Annual Report 2024, page 48. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
Names, figures, dates, logos and any wording that could be searched back to the company are boxed out in grey; the point is highlighted in yellow.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Financial review: 'grew by [n]% on a reported basis ([n]% on an underlying basis)'; [business unit] review: 'Underlying growth was [n]%' and table 2023 underlying growth [n]% | What the rule requires One figure, [n]%, for [business unit]'s 2023 underlying growth in both places |
Why it matters
A reader comparing the Financial review with the business unit review gets two different underlying growth rates for the same business unit and year.
Exposure
Narrative slip in an alternative performance measure; no statutory figure is wrong.
Our workings
the 2023 paragraph of the Chief Financial Officer's financial commentary gives [business unit] growth of [n]% reported and [n]% underlying. The [business unit] performance section gives [n]% reported, a [n] basis-point currency headwind and [n]% underlying, and its table shows [n]% for 2023.
the Group's own 2023 underlying growth, on the Financial review's preceding page, is [n]%.
No statutory figure is affected.
Management’s best defence, and our reply
Management could say the business unit tables are the authoritative source and the narrative sentence is a comparative-year remark that a reader would check against the table. They could add that the error does not touch revenue or any audited number. That limits the effect, but the sentence still states a wrong figure for an alternative performance measure in the strategic report, and the report's own tables show the right one.
The fix
- Read '([n]% on an underlying basis)' in the Financial review, and tie each business unit growth rate in the Financial review to the business unit performance tables before approval.
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The Financial review gives [n]% as [business unit]'s 2023 underlying growth | Document | Annual Report 2024, page 23 |
| 2 | The [business unit] review gives [n]% for the same year, with a [n]bps currency headwind | Document | Annual Report 2024, page 48 |
| 3 | The business unit performance table shows 2023 underlying growth of [n]% | Document | Annual Report 2024, page 48 |
| 4 | [n]% is the Group's 2023 underlying growth | Document | Annual Report 2024, page 22 |
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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