1.34 The 2024 foreign exchange sensitivity gives a [amount] gain for a 10% appreciation but only a [amount] loss for a 10% depreciation
UK Company B · a UK-listed technology and logistics group · Regulator-style question
In brief
The currency risk table shows the effect on profit of a 10% rise and a 10% fall in the foreign currencies the Group holds. For 2025 the two effects mirror each other at [amount], and the 2023 figures in the 2024 report mirror each other at [amount]. For 2024 the table shows a [amount] gain for a rise but a [amount] loss for a fall, both in the 2025 report and in the 2024 report as published.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 242; Annual Report 2024, page 216. 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.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows 2024 comparative: 10% appreciation increases income by [amount]; 10% depreciation decreases income by [amount]. 2025: [amounts]. 2023 (in the 2024 report): [amounts]. | What the rule requires Effects that are consistent with the exposure measured, or an explanation of why a fall in the currencies has a tenth of the effect of a rise (for example, an option or a floor in the exposure). |
The rule
IFRS 7 Financial Instruments: Disclosures, paragraph 40(a)
Version relied on: UK-adopted international accounting standards (UK Endorsement Board), as in force for financial years beginning in or after January 2025
For each type of market risk, the accounts must give a sensitivity analysis showing how profit or loss and equity would have been affected by reasonably possible changes at the year end.
Why it applies here: the instruments named are monetary items whose sterling value moves in proportion to the exchange rate, so a 10% fall should have an effect of about the same size as a 10% rise (or about [amount] if the move is applied to the sterling rate rather than the currency, since [n] x [n] / [n] = [n]).
Why it matters
If one of the 2024 figures is a slip, the published currency sensitivity understated (or overstated) the Group's exposure to a fall in the currencies by about [amount] in the year it was reported, and the slip has been carried into the comparative.
Exposure
A comparative sensitivity figure; no penalty attaches. A correction in the next Annual Report is the remedy.
Our workings
the sensitivity table on p.242 shows for [date] an increase in income of [amount] for a 10% appreciation of the foreign currencies against sterling and a decrease of [amount] for a 10% depreciation. The same figures were printed as the current-year figures in the 2024 report (p.216), where the 2023 comparatives were [amounts]. The 2025 figures are [amounts]. The note says the exposure arises on trade receivables, trade payables, lease liabilities and cash held in foreign currencies.
the 2024 gain exceeds the 2024 loss by [n] - [n] = [amount].
Neither basis produces [amount]. The pattern in 2023 and 2025 suggests that one of the two 2024 figures was transcribed with a misplaced decimal point, but the report does not allow that to be confirmed, so the point is put as a question.
| Step | Computation | Result (GBP m) |
|---|---|---|
| 2024 gap between rise and fall | [n] - [n] = [n] | [n] |
| Fall effect if the move is applied to the sterling rate | [n] x [n] / [n] = [n] | [n] |
| Gap as a share of the 2024 loss before tax | [n] / [n] = [n]% | [n]% |
Management’s best defence, and our reply
Management could say that the 2024 exposure included items whose value does not move in a straight line with the exchange rate, so a rise and a fall need not have mirror effects, and that a sensitivity is an illustration rather than a measured amount. They could add that the difference is small against the 2024 loss. The answer: the note lists only monetary items (receivables, payables, leases and cash), which move in proportion to the rate, and the 2023 and 2025 figures are exactly symmetrical, so the 2024 asymmetry needs an explanation that the report does not give.
The fix
- Confirm the 2024 effect of a 10% depreciation; if it is [amount], correct the comparative and footnote the correction.
Question for the company
Is the effect on 2024 income of a 10% depreciation of the foreign currencies [amounts], and if [amount], what in the 2024 exposure made a fall in the currencies so much smaller in effect than a rise?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | A 10% rise in the currencies: [amount] in 2025 and [amount] in 2024 | Document | Annual Report 2025, page 242 |
| 2 | A 10% fall in the currencies: [amount] in 2025 but only [amount] in 2024 | Document | Annual Report 2025, page 242 |
| 3 | The 2024 report as published: [amount] for 2024 and [amount] for 2023 on a rise | Document | Annual Report 2024, page 216 |
| 4 | The 2024 report as published: [amount] for 2024 but [amount] for 2023 on a fall | Document | Annual Report 2024, page 216 |
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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