News Article - 22 January 2007
Category:

Under the new international financial reporting standards (IFRS), goodwill arising from the acquisition of companies in the FTSE 100 accounts for more than half of total deal values, a study has shown.

Some 53 per cent of the deal value was made up of intangible goodwill assets, amounting to almost £21 billion, research by brand consultancy firm Intangible Business found.

The firm has stated that the figure is too high and cannot be explained as goodwill is often amassed rather than being broken down, leading to a loss of transparency.

This appears to be in conflict with IFRS 3, Business Combinations, which was implemented in December 2005 to improve transparency.

Intangible Business joint managing director Thayne Forbes said: "The FTSE 100 spent £40bn of shareholders' money on acquisitions last year and failed to explain what over half of this expenditure was for."

"IFRS 3 was designed to demonstrate to investors how their money was being spent on acquisitions."

He added that the research highlighted that companies were failing to comply with the standard.

Under IFRS 3, amortisation of goodwill is not allowed and intangible assets which are finite must be amortised.

Article keywords:

---

More industry news

• Think tank warns UK may have already slipped back into recession
• Growing demand for HR staff in technology and international sectors
• Boosting business growth a ‘priority’ to avoid Eurozone slowdown
• HMRC launches alternative disputes pilot scheme this week
• December employment statistics disregard gloomy recruitment predictions
• Eurozone manufacturing PMI shows modest improvement
• UK scores highly for economic governance by ratings agency
• Government launches two-year project focusing on manufacturing sector
• Burden of regulation on UK businesses ‘too high’

Back to news home page »