1. 1 Financial Information Reporting Systems B&F Investment Services Section Breakfast June 7 th 2005 SLA Conference Toronto Sylvia James-Consultant

2. 2 Financial Information Reporting Systems SYLVIA JAMES CONSULTANT Address: “Daymer” Birchen Lane Haywards Heath,West Sussex,UK Tel/FAX:01444 452871 e mail:da-james@11daymer.freeserve.co.uk

3. 3 Financial Information Reporting Systems What do the Standards and Systems mean for the B&F Information Professional ? Understanding company financial data more easily Why the annual report is so important Application to all kinds of companies; not just listed Understanding the company data provided in commercial information services

4. 4 Financial Information Reporting Systems Company Annual Report Information about performance during the previous year Management view of strategy for the future One of the most important communications of listed/public companies Present an overview of the company Management’s discussion of company’s recent performance company’s plans for the future

5. 5 Financial Information Reporting Systems Annual report Companies create and distribute their annual reports in order to Report the company’s financial performance for the more recently completed year and compare it with performance in prior years Fulfil obligations for public financial reporting State Stock Exchange

6. 6 Financial Information Reporting Systems Annual Report Components Chairman’s Statement “Letter” Financial Summary Key ratios, measures Management Statement Analysis, Directors report

7. 7 Financial Information Reporting Systems Annual Report Components Management Statement All or any combination of Operations Breakdowns sales/revenues/exports By operational unit Financial Resources and Liquidity Selected Financial Data Critical Accounting Policies Corporate Governance Risk Factors

8. 8 Financial Information Reporting Systems Annual Report Components Financial Statements Consolidated or not Profit & Loss, Earnings, Revenue Balance Sheet Statement of Financial Position Off balance financing issues Notes to Accounts Auditors Report Optional Statement of Changes in Share Owner’s Equity Statement of Cash Flows

9. 9 Financial Information Reporting Systems

10. 10 Financial Information Reporting Systems On continental Europe, wherever large companies operate 2 dominant systems of accounting thought principles-based approach rule-based approach Guide economic decisions

11. 11 Financial Information Reporting Systems

12. 12 Financial Information Reporting Systems IFRS in EU From 2005, a European Union (EU) regulation will require listed companies to prepare their consolidated accounts in compliance with International Financial Reporting Standards (IFRS) Regulation 1606/2002/EC 7,000 listed companies in the EU

13. 13 Financial Information Reporting Systems IFRS in EU Harmonisation throughout Europe has not been successful Barrier to efficient capital markets in Europe

14. 14 Financial Information Reporting Systems IFRS in EU The European Commission wants all companies to use IFRS harmonise and increase the quality of information provided by companies greater transparency of the financial affairs of enterprises member states have been allowed to extend the scope of the Regulation to cover those enterprises which are not listed on stock markets

15. 15 Financial Information Reporting Systems IFRS in EU Main responsibility for delivering IFRS to be left to national standard setters Individual member states will move at different speeds to take their national standards for unlisted companies towards IFRS

16. 16 Financial Information Reporting Systems There are a number of examples of accounts prepared using IAS/IFRS Roche http://www.roche.com/home/investor/inv- finance/inv-reports.htm Novartis http://www.novartis.com/downloads/annual_r eports/annualreport_2002.pdf Nestle http://www.ir.nestle.com/pdf/English/2002_Fin ancialStatement.pdf http://www.roche.com/home/investor/inv- finance/inv-reports.htm http://www.novartis.com/downloads/annual_r eports/annualreport_2002.pdf http://www.ir.nestle.com/pdf/English/2002_Fin ancialStatement.pdf

17. 17 Financial Information Reporting Systems Examples of accounts prepared using IAS/IFRS Commerzbank http://www.commerzbank.com/aktionaere/kon zern/archiv/2002/gb2002/index.html RWE http://www.rwe.com/en/investor_relation/annu alreports/annualreports.jsp http://www.commerzbank.com/aktionaere/kon zern/archiv/2002/gb2002/index.html http://www.rwe.com/en/investor_relation/annu alreports/annualreports.jsp