Staff share options wipe $13b from UK profits

Some £4.6 billion ($13 billion) was wiped off the profits of Britain's biggest listed companies last year as a result of new accounting rules which require staff share awards to be treated as expenses.

Research by accountancy group PricewaterhouseCoopers also found the technology sector was hardest hit, with profits cut by an average of 12 per cent under the International Financial Reporting Standard 2 (IFRS2). At the other end of the scale, telecoms companies saw profits reduced by only 1 per cent.

Under the new rule, all options granted must be recorded as outgoings in company accounts. The study found extreme examples, with charges for share awards amounting to 34 and 24 per cent of profits in two cases. In the case of another company, 44 per cent of losses were put down to the new charges.

- INDEPENDENT