4.06 The 2025 section 172 statement is the 2024 text carried forward with only page references updated, still says no change was made 'in 2024', and names no decision taken in 2025
UK Company C · an AIM-quoted scientific instruments group · Regulator-style question
In brief
A large company's strategic report must describe how the directors had regard to the matters in section 172(1)(a) to (f) in the year. The 2025 statement is the 2024 text carried forward, with only page references and cross-reference lines updated, including the sentence that no change was made in 2024 to the Group's strategy, and it refers to no 2025 decision, although 2025 saw the chief executive succession, the purchase of the [place] minority, a 10% dividend increase while adjusted earnings per share fell 3%, and cost reductions. The need to act fairly between members is listed but not discussed.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 24; Annual Report 2024, page 23; Annual Report 2025, page 13; Annual Report 2025, page 16; Annual Report 2025, page 12; Annual Report 2025, page 15; Annual Report 2025, page 56. 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 The stakeholder statement repeats the 2024 paragraphs, changing only page references and cross-reference lines, including 'No change was made in 2024 [wording masked]'; no 2025 decision named | What the rule requires A statement written for 2025 describing how the directors had regard to the section 172(1) matters, illustrated by the principal decisions of 2025 and the stakeholders affected |
The rule
Companies Act 2006 s.414CZA(1)
Version relied on: Companies Act 2006, revised text on legislation.gov.uk as in force for the financial year reviewed
A strategic report for a financial year of a company must include a statement (a “section 172(1) statement”) which describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) when performing their duty under section 172.
Why it applies here: the statement was not updated for the year, so it cannot show how the directors weighed stakeholder interests in 2025.
Why it matters
Members cannot see from the statement how the Board balanced shareholders, employees and other stakeholders in the year's main decisions, which is the purpose the Act gives the strategic report (section 414C(1)).
Exposure
A question for the Board; the statement exists, and its quality is a matter the Financial Reporting Council (FRC) raises through its Corporate Reporting Review.
Our workings
the 2025 statement (p.24) lists the six section 172(1) matters and gives paragraphs on culture, shareholders, customers and suppliers, employees, and community and environment. Compared with the 2024 statement (p.23), the paragraphs are the same; the only changes are the page numbers cross-referred to, 'forty percent' for '40%', and added 'For more information' lines. The culture paragraph says no change was made in 2024 [wording masked] and that [wording masked]. The statement names no decision taken in 2025, and the directors' report (p.56) refers back to it for stakeholder engagement. Elsewhere the 2025 report describes the chief executive succession announced in [date], the purchase of the [n]% minority in [subsidiary] do [place], a total dividend up 10% while [wording masked] 3% from [amount] to [amount], and action taken to reduce costs.
Whether the directors' regard to those matters was in fact considered is for the Board to explain; the point is the description.
Management’s best defence, and our reply
The Board could say that section 414CZA requires a description of how the directors have had regard to the section 172 matters, not a decision-by-decision analysis, and that its long-term, unchanged strategy is itself the answer. It could add that the statement cross-refers to the sustainability report, the corporate governance statement and the directors' report, which describe engagement in more detail. However, the culture paragraph still speaks of 2024, the paragraphs are the prior year's with only references updated, and no 2025 decision is mentioned anywhere in the statement or the pages it cross-refers to. Because the Act leaves the form of the description to the directors, the point is put as a question.
The fix
- Rewrite the statement each year around the year's principal decisions (in 2025: chief executive succession, the [subsidiary] do [place] purchase, the dividend, cost actions), saying which stakeholders were considered and how, and remove the 2024 reference.
Question for the company
How did the directors have regard to the section 172(1) matters in the principal decisions of 2025, such as the chief executive succession, the [subsidiary] do [place] purchase and the dividend increase, and why was the 2024 statement carried forward unchanged?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The 2025 statement still describes 2024 | Document | Annual Report 2025, page 24 |
| 2 | Listed but not discussed in the body of the statement (fair treatment between members) | Document | Annual Report 2025, page 24 |
| 3 | The same sentence in the 2024 report | Document | Annual Report 2024, page 23 |
| 4 | A principal 2025 decision not mentioned in the statement | Document | Annual Report 2025, page 13 |
| 5 | A 2025 acquisition decision not mentioned in the statement | Document | Annual Report 2025, page 16 |
| 6 | Dividend decision taken while adjusted earnings fell | Document | Annual Report 2025, page 12 |
| 7 | Adjusted earnings fell in the year of the dividend increase | Document | Annual Report 2025, page 15 |
| 8 | A 2025 cost decision not mentioned in the statement | Document | Annual Report 2025, page 16 |
| 9 | The directors' report relies on the same statement | Document | Annual Report 2025, page 56 |
Absence check
- Document
- Annual Report 2025
- Where it would appear
- SECTION [n] STATEMENT
- What is missing
- any description of a decision taken in 2025 and of how stakeholder interests were weighed in it
- Pages looked at
- p.24 (statement image); p.12-17, 44-49 (Chair, Chief Executive and governance pages)
- Result
- 'key decision' hits only p.24, the generic sentence that [wording masked], which names no decision; 'section 172' hits cover and opening pages (contents line), p.24 (the statement heading and opening) and p.56 (the directors' report referring back to the statement on page 24); 'principal decision' and 'had regard' do not hit. 'Board decision making' on p.47 describes the schedule of matters and board papers, not any 2025 decision.
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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