| 4 | The objectives of interim reports are consistent with those of annual reports. Interim reports play an important role in the financial reporting calendar and, like annual financial statements, are often fundamental to the making of investment decisions, enabling these to be made on the basis of more timely financial information than would otherwise be available. Hence, largely similar information is required at the interim date as at the year-end, although the balance of benefit and cost on the reliability and timeliness of information may differ. |
| 5 | Whilst sufficient information should be given in an interim report to permit an informed assessment of the company's performance and financial position, as a progress report within the annual reporting cycle, it need not be as extensive as that required by annual financial statements. Avoiding unnecessary detail will normally increase the cost-effectiveness of an interim report, bearing in mind that such statements are used to update information contained in previously published financial statements. A recommendation for summarised information is therefore consistent with the role of interim reports in a continuing reporting process. |
| 6 | A summarised profit and loss account, statement of total recognised gains and losses, balance sheet and cash flow statement provides information about the financial position, performance and financial adaptability of a company that is useful to a wide range of users for making economic decisions. |
| 7 | The requirement for the summarised profit and loss account reflects the London Stock Exchange Listing Rules. Additionally, in response to the frequently expressed needs of users, the Statement calls for segmental information and, in recognition of recent developments in year-end reporting, it also recommends the analysis of turnover and operating profit into continuing and discontinued operations, identifying the effect of acquisitions where possible. |
| 8 | The recommended format of the summarised balance sheet analyses current assets into their main constituent parts because the different characteristics (including liquidity) of these items vary significantly. Other items in the balance sheet may be expanded further if they add to the understanding of the events and trends in the interim period. For example, a company with significant additions to intangible fixed assets in an interim period may usefully disclose that information. |
| 9 | Cash flow information is of great potential value to the user of an interim report. It gives an indication of the relationship between profitability and cash-generating ability, and thus of the quality of the profit earned. It is helpful to be able to understand cash flows within the context of the other primary statements and therefore the reconciliation of operating profit to operating cash flow in an interim report is recommended. |
| 10 | Information on the net debt (essentially borrowings less cash and liquid resources) of a company is often important to an understanding of how the company finances its activities. The Statement therefore proposes that a reconciliation of cash movements to movements in net debt should be given. This highlights any significant movements in net debt during the period, providing information on the company's liquidity, solvency and financial adaptability that may otherwise not be highlighted in the interim report. |
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