IFRS reprieve for small companies

Link:Ready AIM fire

The exchange began issuing guidance to more than 900 AIM-listed companies last week, ending uncertainty over whether they would be among the 7,000 UK corporates forced to adopt the new rules from January.

The announcement, which means the companies will only have to prepare accounts using IFRS for financial years starting on or after 1 January 2007, took some by surprise as many companies and advisers had only expected a 12-month extension.

Nevertheless, the move to finally resolve the issue was widely welcomed.

There has been mounting evidence that uncertainty about IFRS compliance was delaying AIM-listed companies from preparing for eventual adoption of the new rules.

Several companies, including bar nightclub operator Urbium, have told investors in recent weeks that they should expect a delay to IFRS adoption.

In its interim results last week, Blooms of Bressingham admitted that ‘work on appraising the impact of IFRS…has not progressed rapidly’.

The plant retailer said: ‘Whereas it had previously been expected that Blooms as an AIM company would need to comply with IFRS with effect from its 2005-06 accounting period, it now seems probable that AIM companies will be given longer before being required to adopt IFRS.’

AIM has been consulting on the changes since June as part of a drive to become an exchange-regulated market in October 2004.

As well as delaying IFRS adoption, the change means AIM-listed companies will avoid having to adhere to major EU directives, such as the EU prospectus directive and the EU transparency obligations directive, which are due to come into force in 2005.

The row over IAS39 and the uncertainty this has fuelled is understood to have helped persuade exchange officials to settle on an IFRS compliance date of 2007 rather than a year earlier.

AIM said companies should do so earlier, a move described by Grant Thornton partner Philip Secrett as ‘best practice’.