Preparing annual financial reports is a requirement for companies in Hong Kong. However, don’t forget that a report should be written out in some cases too.
‘Interim’ is translated as ‘in the time between two further particular periods or events.
An interim report is a financial report that is done in the periods between the annual financials statements that fall in the fiscal year. They can be structured as a semi-annual or quarterly reports or even an on-demand format.
Unlike an annual report which is reposted after a year to describe a company’s financial position and stability, we are looking at interim reports which offer a more tangible financial picture.
The primary advantage of an interim report in a company is that it makes it more open, therefore more transparent to others. It helps the brand to communicate with the public, owners, and team members more effectively.
Content Outline
Is an Interim Report Required For All Companies?
No, not every corporation is required to form a preliminary report. Nevertheless, by no means all companies make reports if they are not legally bound, but for internal bookkeeping or, for example, to interest a potential investor.
Under Hong Kong’s limited disclosure regime, a listed company must file an interim report in the case that it trades on the Main Board or the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong.
What Components are Typically Found in an Interim Report?
The three essential components that must be included in every interim report are:
- Cash flow statement, describing how cash flows through the company and what is the amount of it.
- A statement of income that itemizes the company’s gross income and cost of sales within the specified time interval.
- Balance sheets – financial statements representing the balances of a company as at the specific date of the balance sheet.
Explanatory notes are also frequently appended to the report to give a context of the listed information. It may contain details on stocks, dividends, regulatory complaints, etc.
The emphasis of some information may be changed according to the reader of your report. In this respect, for an interested investor, the emphasis is laid on the cash flow statements, balance sheets, and shareholders’ equity.
The mandatory reports must be submitted in accordance with the HKAS 34 Interim Financial Reporting Standards.
Related article: Understanding financial statements: Definition, Scope, and Types
What are The Due Dates?
In Hong Kong, the frequency of interim reporting depends on whether the company is a public or private entity. Interim reports are issued by main board-listed companies twice a year, within two to three months of the first six months of the financial year. GEM-listed companies must submit their statements within 45 days after the interim period. This practice maintains regular and on time review of the company’s operational and financial performance through quarterly reports that are issued four times a year.
Interim Reports for Small Businesses
As previously stated, preparing regular financial reports, even if not obligatory, is advantageous. If seeking a new investor or lender for your small business, they will likely request an interim report for the following reasons:
- In case of a significant impairment loss being reported
- If there’s been market expansion into new territories
- Any industry trends indicating upward or downward movement.
Even if one has no plans to approach investors or lenders, preparing the interim report is worth it. It provides priceless facts about the state of the business, therefore allowing business owners to identify and solve financial challenges that might have been overlooked earlier. This is even more critical for small businesses with few resources, as it empowers them to react quickly through any bottleneck and to lay out good strategies for their sustainable growth.
How FastLane Group Can Help?
The Hong Kong business environment is one which is competitive and fast-paced. Having your company’s essential filings done correctly and on time gives the market confidence that your operations are reliable.
Accountability is essential in client, shareholder, and prospective investors’ relationships and interim reports play a crucial role in achieving this transparency.
Our team of credentialed tax and accounting professionals is committed to providing you with assistance in the preparation of interim reports and other required financial documents.
You can always trust Fastlane Group to take care of your accounting, reporting, payroll, and other duties, which will free you up to focus on expanding your business. Contact us now.