Regime change has been a feature of narrative reporting in recent years. 2007 is no exception to this. Just as the 2006 introduction of the statutory Enhanced Business Review (EBR) comes fully into force,
this year has seen two further law changes. These arise from:

• The introduction of the EU Transparency Obligations Directive into the UK regulatory environment, effective for periods beginning on or after 20 January 2007; and
• The coming into force of section 417 of the Companies Act 2006 enhancing the EBR requirements for accounting periods beginning on or after 1 October 2007. This survey therefore captures that happy year when section 234ZZB of the 1985 Companies Act was in force. All companies in this Deloitte survey were required to produce an EBR. As with similar surveys performed in 2006, 2005, 2003, 2000 and 1996, the companies surveyed were taken from all listed companies and the results analysed across three categories, being those within the top 350 companies by market capitalisation, those in the smallest 350 by market capitalisation and the middle group between the two former ones.

The 2006 survey was called “Write to reason”. The thinking was that companies, then just removed from the threat of a statutory Operating and Financial Review (OFR), would write their own account of how their business has performed during the period and its position at the period end and for the future. Having reviewed how companies are reporting in 2007, the most striking feature is that companies are writing to order. There is a certain consistent feel to the narrative sections in annual reports. Individuality is losing out against uniformity. This may be because companies, under constant time pressures and faced with complex rule books, are looking at model narrative reports such as that produced with the Deloitte 2006 survey. Alternatively, it may be the need to comply with the rules, knowing that the Financial Reporting Review Panel now has within its sights directors’ reports.

For further information, download our publication Surveying OFRs, EBRs and narrative reporting in annual reports. (PDF, 3052 KB)