Research & Strategy

By Daniel Redman - Content and Strategy Director - 13 Dec 2017


Following the recent FRC report on “Improving the Quality of Reporting by Smaller Listed and AIM Quoted Companies”, it has been concluded that the overall quality of reporting by such corporates is not as elaborate as their larger peers.

The FRC thematic view for 2018/19, to assess any improvement in the quality of compliance, will focus on five specific aspects of corporate reporting, spanning from accounting policies to pensions. Read more here.

One of the key focus areas this year for smaller listed and AIM-quoted companies centres around the content of the strategic report, namely reporting on the business model, alternative performance measures (APMs) and principal risks and uncertainties (PRU).

Here, we look at what the FRC expects in these areas of reporting and provide examples of how this can be achieved.

The business model

This should explain how money is being made and be consistent with other information in the annual report and accounts.

EMIS Group plc provides a straightforward example of a business model, demonstrating the company’s value chain and how money is made through services and in turn how this is transformed into wider value for stakeholders. A case study is provided to demonstrate the business model in action (shown on pages 8–9).

Alternative performance measures

When reporting APMs, a company should clearly define each measurement, reconcile each to the relevant IFRS numbers and accurately label and explain each with a supporting calculation.

Abcam plc clearly discloses the APMs used, the related IFRS measures, sources, definitions and relevance to the group (shown on pages 25–27).

Principal risks and uncertainties

When disclosing PRUs, a company should ensure these are tailored to the company and explain how they are regularly reviewed and updated as the company’s circumstances change.

KCOM Group plc ‌clearly displays the risk management framework with a diagram and specifically addresses the company’s developing risk appetite. The group also provides information on how each risk can be material to the strategy (shown on pages 24–29).

If you would like to learn how you can improve your corporate reporting, please contact