The relatively unknown accounting uplift
The Scottish like the word uplift and have given it many different meanings, none of which accountants use. The first Scottish use of uplift can be to make someone proud. Accountants are not interested in pride so have not used this meaning. The second Scottish use of uplift is in the collecting of rent or wages. Now this is much closer to the accounting world but again accountants have chosen never to use it in this sense. The last relates to uplift in taking up passengers in a bus or ferry.
Mostly accountants use uplift with another accounting term ‘fair value’, as in fair value uplift. An International accounting standard has been written about fair value: IFRS 13 Measurement of Fair Value where the “IFRS defines fair value as the price that would be received to sell an asset …”
Here you can see that value should be price and fair is irrelevant. But they had to call it something. A fair price on sale might be a better description. Anyway keep in mind that fair value is a selling price. It makes for easier understanding.
But accountants generally use update in the sense of ‘elevate’ or even better ‘increase’. So an inventory fair value uplift means the increase in the selling price of inventory. The expression ‘the Group has elected not to uplift the book value’ means the Group has elected not to increase the book value. Or ‘an uplift of $5,635m on the carrying value’ means an increase of $5,635m on the carrying value. Now you know what a yield uplift means. How much easier it would have been to use the word ‘increase’ in these sentences.
And then from time to time accountants sprinkle gems into their annual reports. Here are but a few relating to uplift.
My favourite is ‘fair value uplift unwind’, so much so I put it into the title of the book. If accountants wanted to look stupid this is the statement to use. I have decided not to name the company that put this into their annual report to avoid embarrassing them. I will look out though, to see if they persist in using this in the years to come. I suppose it means they decrease the selling price which they had previously increased.
And sometimes accountants decide to change the meaning of uplift. How about this sentence:
“We have commenced biodiversity uplift projects at our three largest R&D facilities.” [1]
I have no idea what this could mean. Believe me even put in context does not make it clearer.
And then there is this, which I suppose uses uplift in the sense of morally elevating their employees with salary increases:
“When we talk about uplifting our associates, it certainly includes compensation.” [2]
Or perhaps they are using the Scottish meaning of making their employees proud to work for their company even though they are based in Cincinnati, Ohio.
[1] GSK Inc, Form 20-F, for the fiscal year ended 31st December 2022, page 46
[2] The Kroger Co., for the fiscal year ended 29th January 2022, Notice of 2022 Annual Meeting of Shareholders 2022 Proxy Statement and 2021 Annual Report on Form 10-K, Dear Fellow Shareholder letter, under the heading Investing in Our Associates, 2nd paragraph.