While companies listed on the Alternative Investment Market (AIM) are subject to less stringent interim reporting compared to those on the main market, they still have to comply with certain requirements to maintain transparency and protect investors. One such requirement involves the preparation and publication of interim (six-monthly) financial statements.
Is interim reporting mandatory?
Yes, AIM listed companies are required to prepare and publish an interim financial statement for the first six months of their financial year. This requirement is set out in Rule 18 of the AIM Rules for Companies, which states that a company must prepare and publish half-yearly reports no later than three months after the end of the relevant period.
This is to ensure that shareholders and potential investors are kept informed about the company’s performance between its full-year results.
What reporting framework is required?
There is no reporting framework which is mandated. The minimum contents of the interim statement are set out in AIM Rule 18; being:
- A Balance Sheet
- An Income Statement
- A Cash Flow Statement
- Comparative figures for the corresponding 6 months in the previous year (or, for the Balance Sheet only, the most recent ‘year end’ Balance Sheet)
The interim statement must be prepared in a form consistent with the annual report, which means that thought will need to be given to any key transactions undertaken in that period to ensure that the presentation is not significantly different in the full year results.
Many businesses who report under IFRS for their full year results voluntarily prepare interim statements in accordance with IAS 34, which is the interim reporting standard within the IFRS suite of standards. If the interim statement says that it complies with IAS 34, it must include the additional disclosures which this entails beyond the requirements of AIM Rule 18 set out above.
Do I need to have my interim statement audited or reviewed by an auditor?
There is no requirement to have any form of audit or review of the interim statement. However, given that the interim statement should be consistent with the full year results, it is strongly recommended to obtain some form of assurance that key transactions are correctly presented in the interim statement. This assurance can range from an informal review up to a full audit.
Key areas to consider in interim reporting
An AIM-listed company’s interim financial statement is less comprehensive than its annual report but to provide maximum value to investors it should still include certain key components to ensure it provides a meaningful snapshot of the company’s performance. These might include:
- Financial highlights
- Income Statement: A summary of the company’s revenues, costs, and profits over the six-month period.
- Balance Sheet: A snapshot of the company’s financial position at the end of the interim period, including assets, liabilities, and equity.
- Cash Flow Statement: An overview of cash inflows and outflows, helping investors understand how the company is managing its cash and liquidity.
- Management commentary
- Performance Review: A narrative analysis from the management team, discussing the financial results, key developments during the period, and the company’s strategic direction.
- Outlook: Management may provide forward-looking statements about the company’s prospects, market conditions, and any significant risks or opportunities they foresee.
- Principal risks and uncertainties
- The interim report might highlight the principal risks and uncertainties facing the company for the remaining six months of the financial year. This helps investors understand potential challenges and the company’s ability to navigate them, and pre-empt challenges that might be later reflected in the full year results.
- Related party transactions
- Disclosure of any significant transactions between the company and related parties, such as directors or major shareholders, that occurred during the period.
- Accounting policies
- Any changes in accounting policies that have been applied in the preparation of the interim financial statements compared to those used in the most recent annual report should be disclosed. This will enable investors to understand the basis on which the full year results are going to be prepared.
- Earnings Per Share (EPS)
- The interim report typically includes the basic and diluted EPS figures, which provide a quick measure of the company’s profitability on a per-share basis.
Additional Considerations
While the AIM Rules outline the minimum requirements, companies often include additional information in their interim reports to provide a fuller picture of their financial health and strategic initiatives. This might include sector-specific metrics, non-financial performance indicators, or more detailed market analysis.
How can Gravita help?
Gravita’s listed audit team have a broad range of experience in preparing and reviewing interim statements for our AIM listed clients. Our AIM sector expertise means we can offer the following support for interim financial reporting:
- Production of interim statements compliant with AIM Rule 18 and IAS 34
- Preparation of consolidated results for inclusion in interim reporting
- Informal reviews of interims reports
- Agreed upon procedures on key balances within interim reports
- Audits of interim reports
- Assistance with the calculation of share option charges, Earnings Per Share disclosures and other accounting support.
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Please contact Joseph Brewer, a partner in our Listed Audit team, for support with your interim statement.
