Britvic Plc 2011 Annual Return - Essay Example

…………………………………………………………………………..xxxxx ……………………………………………………………………….xxxx …………………………………………………………………………..xxxx ………………………………………………………………………xxxx @2012 Britvic plc’s 2011 annual report Chairman’s statement The chairman of Britvic Plc gave his statement in the company’s annual financial statement regarding its performance. He made a comparison of the year’s performance with the previous years in the company. In his statement, he said that 2011 was a challenging year to the soft drink manufacturing company in terms of their profits. According to his statement, the chairman quotes profit that the company has been making since its floatation as a public company six years ago. The statement explains the company’s progress in terms of its profits and that it has grown by about 80% for the past six years. According to his statement and the financial report, the company has made a record of both revenue and volume growth in 2011 in the international market (Gibson 201). This growth is evident in the French and an international territory which contributes to the company’s overall growth of about 4.3%. This growth brings the company to the current 138.1 million Euros. The statement indicates that there was a growth of revenue for Britvic in the year 2011 to 14.6%. That means that the current revenue position in the company according to its financial statement is 1.3 billion Euros. The chairman’s stamen indicates the underlying revenue excluding that of the French territory in the previous financial year. It was a notable achievement for the company given the situation of the cost of raw materials. Their cost was high in this particular year, but Britvic recorded high revenue. The chairman also congratulates the company on its progress quoting that there was a weaker consumer environment in comparison to the previous years. The GB revenue of the company in 201 was 2.7 %, which indicates a growth of 11.3 % from the previous two years. There is an association between growth and the strong carbonates performance of the company (Gibson 2010). The chairman’s report attributes the continued success of the company to its strategy of supply chains, distribution channels and innovation. His statement also indicates of the company’s strategy of business efficiency as being one of the contributors to its success. Britvic also operates in Ireland, though operations in this region have been difficult. In 2011, the company was able to launch new brands in the market like juicy drench and Mountain Dew. The two brands have been a success in the market because consumers are purchasing them. Difficult macro trading conditions in the market led to a decline in revenue by 9.6 % (Gibson, 2010). The chairman explains how the Britvic international is performing, by specifically looking at the market in USA. The rising cost of raw materials led to a profit after tax of 0.9 %, which indicates a low per share. The statement foresees 2012 to be a difficult year for the company in all its operating territories. However, the chairman says that they have plans of dealing with difficult times. They have plans of improving execution and taking control of costs so that they ensure continued success of the company. They also plan on controlling their pricing growth and are so optimistic of the uncertainty in the market. Stewardship and Decision-usefulness in the context of IASB/FASB This paper aims at analyzing stewardship and decision-usefulness according to phase A of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB). They are bodies that set standards to guide the accounting framework in the industry for companies and organizations. They give definitions of these two terms in response to some letters written about the context of the terms (Staubus 2010). The letters give their views of these terms in regard to financial statements and financial reporting. These two bodies give reasons to support the stewardship objective in preparing financial statements and in financial reporting. However, there are views that support this objective while others oppose the objective in financial reporting. Most organizations are in favour of the objective because it encourages and promotes accountability in financial statements. Others view it as a way of assessing managers in organizations. IASB and FASB link this objective of financial statement with the accountability objective of the boards. Accountability also defines the stewardship objective, which aims at ensuring there is proper management of accounts in companies and that financial statements are prepared according to the framework and requirements. The frameworks have similar opinions to this objective of stewardship or accountability. The two bodies argue that financial statements are indicators of stewardship management of the resources in the business (Staubus 2010). They show how well or poorly resources have been managed in the company through the accountability objective. Assessing the stewardship enables companies and mangers to make appropriate economic decisions in their organizations regarding the allocation of resources. For instance, it is through stewardship that a company is able to make a decision on whether to sell or hold an investment in the organization. The objective of stewardship and decision-usefulness relate with each other because one of the objective depends on the other. However, this is not to mean that they are the same, rather, the two objectives are different. There is a link between the agency theory and the stewardship objective of IASB and FASB (IASB 2010). Shareholders assign stewardship of their organization to the management. The management has the obligation of showing the accountability or stewardship through the financial statements they prepare at the end of financial years. Decision-usefulness objective of IASB and FASB relates to the decisions that managers make basing on the financial statements. This is because it is easy for managers to assess the decision-making ability by focusing on the performance indicated by the financial statements like income statement. This objective of the two boards is complete because the importance of financial statements is to enable decision making in the company. These decisions range from decisions regarding resource allocation to the company and other useful decisions like those regarding investments (Staubus 2010). Creditors and investors of Britvic Plc make decisions basing them on the financial statements of the organization. For instance, shareholders make decisions on whether to retain mangers by analyzing the financial position of the organization. Creditors of Britvic Plc will make decisions whether to lend the organization by analyzing their financial statements to see if they are fit for lending or not. Therefore, this objective of the IASB and FASB is relevant to organizations. References 1. Britvic 2011 annual report, http://www.britvic.co.uk/reports/Britvic-Annual-Review-2011/index.html. Accessed on November 3, 2012. 2. Gibson, C. H, 2010. Financial reporting and analysis: using financial accounting information: Cengage Learning: Pg. 456-567. 3. International Accounting Standards Board, IFRS Foundation, 2010. The conceptual framework of financial reporting 2010: international accounting standards Board: Pg. 34-63. 4. Staubus, G. J, 2000. The decision usefulness theory of accounting: A limited history: Routledge: 5. Veron, N, 2007. The global accounting experiment: Bruegel. Read More