3.09 [place] is a 'shared' site earning service revenue in the [segment] review but a 'sole customer site' held as a finance lease in the [former subsidiary] review
UK Company B · a UK-listed technology and logistics group · Regulator-style question
In brief
The [segment] review calls [place] a 'shared' site and includes [amount] of [place] capital and rent recharges in revenue as a service. The [former subsidiary] review says the [place] site is 'now' [wording masked]', after [customer] stopped deliveries from [place] during the year. The two reviews also give different 2025 capital recharges between the two businesses: [amount] received by [segment] and [amount] paid by [former subsidiary] (both [amount] for 2024). The Group's net investment in leases lists [place], [place] and [place], not [place], as sites used solely by [former subsidiary].
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 33; Annual Report 2025, page 37; Annual Report 2025, page 29; Annual Report 2025, page 45. 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.33: [place] a 'partner-shared' site, [amount] of [place] recharges in revenue, capital recharges [amount] (2024: [amount]); p.37: [place] 'now' a sole customer site held as a finance lease, capital recharges paid to [segment] [amount] (2024: [amount]); p.45: sites solely used by [former subsidiary] named as [place], [place] and [place]. | What the rule requires One description of [place]'s status across the Financial Review, with the date it became a sole-customer site, [wording masked] [place] recharges are presented (service revenue or lease), and an explanation of any difference in the capital recharges reported by the two businesses. |
The rule
IFRS 16 Leases, paragraph 9
Version relied on: UK-adopted international accounting standards (UK Endorsement Board), as in force for financial years beginning in or after January 2025
At inception an entity must assess whether a contract is or contains a lease, that is, whether it conveys the right to control the use of an identified asset for a period in exchange for consideration.
IFRS 16 Leases, paragraph 61
Version relied on: UK-adopted international accounting standards (UK Endorsement Board), as in force for financial years beginning in or after January 2025
A lessor must classify each lease as either an operating lease or a finance lease.
Why it applies here: a contract that conveys control of an identified asset is a lease for both parties under International Financial Reporting Standard (IFRS) [n], and each lessor must classify its leases.
Why it matters
A reader cannot tell whether the [place] recharges belong in Group revenue and adjusted EBITDA or in lease income outside it, or why the two businesses report different recharges between them.
Exposure
No regulatory consequence expected if the treatment is explained; if [place] is a lease for the Group, part of the [amount] would move from revenue to lease income.
Our workings
on p.33 the [segment] review says capital recharges for partner-shared sites, 'primarily [place] and [place]', are revenue because the Group provides a service, and that revenue includes [amount] for 'the shared [place] site'. On p.37 the [former subsidiary] review attributes most of its higher depreciation to 'the [place] [facility] [wording masked]'. On p.29 [customer] ceased deliveries from [place] during the period. On p.45 the Group's net investment in leases covers sites 'solely used by [former subsidiary], including the [place], [place] and [place] sites'.
capital recharges received by [segment] exceed those paid by [former subsidiary] by [n] in 2025; they agree in 2024.
The reviews describe [place] in two incompatible ways for the same year, and the gap in the recharges between the Group and its associate is not explained. The Group may have good reasons (it operates the site, and the associate follows its other shareholder's policies and calendar), but the report gives neither the date of the change nor the basis, so the point is a question.
| Item | [segment] review p.33 (£m) | [former subsidiary] review p.37 (£m) | Difference (£m) |
|---|---|---|---|
| Capital recharges 2025 | [n] | [n] | [n] - [n] = [n] |
| Capital recharges 2024 | [n] | [n] | [n] - [n] = [n] |
Management’s best defence, and our reply
The Group could say that [segment], not [former subsidiary], runs the [place] [facility], so [former subsidiary] does not direct how the site is used and the Group's contract remains a service; the lessee and lessor judgements are made by different entities on their own facts, and [former subsidiary] now follows its other shareholder's accounting calendar and policies. The [amounts] could also differ because [former subsidiary]'s year ends on [date] and because [place] was still shared for part of the year. That reading is tenable, but the Financial Review gives neither the date on which [place] stopped being shared nor the basis for treating the same arrangement as a service on one side and a finance lease on the other, and it calls [place] 'shared' and 'sole customer' in the same report. The answer rests on contract terms only the company holds, so the point is put as a question.
The fix
- Describe [place]'s status once (shared to a stated date, sole-customer after it), state how the Group presents the [place] recharges from that date and why, and reconcile the capital recharges reported by the two businesses.
Question for the company
From what date has the [place] [facility] been used only by [former subsidiary], and on what basis does the Group still present the [amount] of [place] capital and rent recharges as service revenue from a 'shared' site when [former subsidiary] accounts for the site as a finance lease? What explains the difference between the [amount] of capital recharges reported by [segment] and the [amount] reported as paid by [former subsidiary]?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The [segment] review treats [place] as a shared site whose capital recharges are service revenue | Document | Annual Report 2025, page 33 |
| 2 | [amount] of [place] recharges is in Group revenue, described as for 'the shared [place] site' | Document | Annual Report 2025, page 33 |
| 3 | Capital recharges received by [segment], which the same page says are charges to [former subsidiary] | Document | Annual Report 2025, page 33 |
| 4 | The [former subsidiary] review says [place] is now a sole customer site held as a finance lease | Document | Annual Report 2025, page 37 |
| 5 | Capital recharges paid by [former subsidiary] to [segment] | Document | Annual Report 2025, page 37 |
| 6 | [customer] left [place] during the year, leaving [former subsidiary] as the only partner there | Document | Annual Report 2025, page 29 |
| 7 | The Group's net investment in leases names the sole-use sites without [place] | Document | Annual Report 2025, page 45 |
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.
Want this on your own annual report, before it is published?
Start with three free findings on your latest published annual report, or talk to us about a fixed-fee pre-publication review.
Your annual report will be in draft before the year-end audit.
Have it read before it is published.
Under NDA, with our reviewer on your insider list under UK MAR.