3.07 'Fees invoiced' includes [amount] of automation fees that its own definition leaves out, and it has no reconciliation to revenue
UK Company B · a UK-listed technology and logistics group · Presentation point
In brief
The Financial Review reports [segment] 'fees invoiced', an alternative performance measure (APM), up [n]% to [amount]. The APM section defines it as design and capacity fees for [facility] ([facility]) and [product] commitments, but the [amount] includes [amount] of [business unit] ([business unit]) fees; on the printed definition the figure is [amount], up 21%. The APM section says each APM is reconciled to the nearest IFRS measure, but this one has a definition only, and the three components printed add to [amounts] less than the total.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2024, page 31; Annual Report 2025, page 270; Annual Report 2024, page 32; Annual Report 2024, page 239; Annual Report 2024, page 240. 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 p.31-32: fees invoiced [amount] (FY23: [amount]), up [n]%, made up of design and access fees [amount], recurring capacity fees [amount] and [business unit] fees [amount] (sum [amount]). p.240: defined as design and capacity fees for existing and future [facility] and [product] commitments, with no reconciliation. | What the rule requires A definition that matches the figure (either include [business unit] fees in the definition or leave them out of the figure), and a reconciliation of fees invoiced to [segment] revenue that names every reconciling item, including the residual between the components and the total. |
The rule
ESMA Guidelines on Alternative Performance Measures, paragraph 20
Version relied on: ESMA Guidelines on Alternative Performance Measures, ESMA/2015/1415, published October 2015, applying from July 2016; the FCA expects UK issuers to continue to apply them after EU exit
Issuers or persons responsible for the prospectus should define the APMs used and their components as well as the basis of calculation adopted, including details of any material hypotheses or assumptions used.
ESMA Guidelines on Alternative Performance Measures, paragraph 26
Version relied on: ESMA Guidelines on Alternative Performance Measures, ESMA/2015/1415, published October 2015, applying from July 2016; the FCA expects UK issuers to continue to apply them after EU exit
A reconciliation of the APM to the most directly reconcilable line item, subtotal or total presented in the financial statements of the corresponding period ... should be disclosed, separately identifying and explaining the material reconciling items.
Why it applies here: the figure and the growth rate are calculated on a wider basis than the definition the APM section gives, and readers have no bridge from the measure to revenue.
Why it matters
The [n]% growth in fees invoiced is set against [n]% revenue growth to show forward momentum, but part of the gap comes from [business unit] fees that the measure's own definition excludes, and readers cannot bridge the measure to audited revenue.
Exposure
No fine. An APM whose definition and figure differ, with no reconciliation, can draw a Financial Reporting Council Corporate Reporting Review enquiry and an undertaking to improve the next report.
Our workings
the Financial Review gives fees invoiced of [amount] (FY23: [amount]) and lists three components: design and access fees for [facility] and [product] commitments of [amount] (FY23: [amount]), recurring capacity fees of [amount] (FY23: [amount]) and fees invoiced by the [business unit] business of [amount] (FY23: [amount]). The APM section lists '[segment] fees invoiced' as an APM and states that definitions and reconciliations to the nearest IFRS measures are presented; the definition on p.240 limits the measure to design and capacity fees for [facility] and [product] commitments, and no reconciliation follows. [segment] revenue, the nearest IFRS segment measure, is [amount].
the components add to [amount] against [amount] ([amount] not itemised: the review says the fees 'primarily comprise' the three components), while the 2023 components add exactly to [amount]; on the printed definition the measure is [amount] (FY23: [amount]), growth of 21% against [n]% as printed.
| [segment] fees invoiced (£m) | FY24 | FY23 |
|---|---|---|
| Components printed (design and access + capacity + [business unit]) | [n] + [n] + [n] = [n] ([amount]) | [n] + [n] + [n] = [n] |
| Printed total less components | [n] - [n] = [n] | [n] - [n] = [n] |
| On the printed definition (design and capacity fees only) | [n] + [n] = [n] | [n] + [n] = [n] ([amount]) |
| Measure | Computation | Result |
|---|---|---|
| Growth as printed | [n] / [n] - 1 | [n]% |
| Growth on the printed definition | [n] / [n] - 1 | 21% |
| [business unit] fees as % of loss before tax from continuing operations | [n] / [n] | [n]% |
Management’s best defence, and our reply
Management would say the Financial Review lists all three components, [business unit] included, beside the total, so no reader is misled about what [amount] contains, and [business unit] sits inside the [segment] segment whose fees the measure is meant to capture. They would add that the Financial Review itself bridges much of the measure to revenue in narrative (capacity fees invoiced against capacity fee revenue, the release of design fees from contract liabilities, [business unit] revenue), that the fees are said to 'primarily comprise' the three components so a small residual is expected, and that the measure was dropped in the 2025 report and that the component comparisons in the review serve as a reconciliation. However, the APM section, where readers are sent for definitions, limits the measure to [facility] and [product] commitments and promises a reconciliation that is not given; the printed components leave [amount] unexplained in 2024 although they add exactly in 2023; and the growth rate is quoted on the wider basis.
The fix
- If the measure is used again, define it as 'design, capacity and [business unit] fees invoiced' (or exclude [business unit] fees from the figure) and add a table reconciling it to [segment] revenue, naming the residual.
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The headline figure and growth rate for fees invoiced | Document | Annual Report 2024, page 31 |
| 2 | [segment] revenue, the nearest IFRS segment measure | Document | Annual Report 2024, page 31 |
| 3 | First component: design and access fees for [facility] and [product] commitments | Document | Annual Report 2024, page 32 |
| 4 | Second and third components: capacity fees and [business unit] fees, both inside the total | Document | Annual Report 2024, page 32 |
| 5 | The APM section promises a reconciliation for each listed APM, fees invoiced included | Document | Annual Report 2024, page 239 |
| 6 | The definition covers [facility] and [product] design and capacity fees only; no reconciliation follows it | Document | Annual Report 2024, page 240 |
Absence check
- Document
- Annual Report 2024
- Where it would appear
- [segment] fees invoiced
- What is missing
- a reconciliation of [segment] fees invoiced to [segment] revenue or another IFRS measure
- Pages looked at
- p.239-241 (APM section), p.31-32 ([segment] review), p.179 (segment note)
- Result
- 'fees invoiced' appears only on p.31-32 (the figure and its three components) and p.239-240 (the APM list and the definition); '[n]' appears only on p.31; 'reconciliation of' appears on p.166, [n], each time for another measure (adjusted EBITDA, adjusted EPS, gross debt, net debt, Total Group, underlying cash flow), never for fees invoiced.
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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