FBK Senior Partner Anastasiya Terekhina spoke at the VII Annual Forum ‘The Future of the Bond Market’, where she focused on how to build a reporting roadmap: what to prepare, for which periods, and when to engage the auditor to avoid missing placement deadlines.
Key takeaways from the speech:
1. Start with the perimeter, not the placement date
The starting point is a clear group structure. IFRS consolidation is founded on the principle of control, not merely the presence of a common owner. Before preparing historical statements, the issuer, the parent company, and the control perimeter should first be defined. If rights are not fully formalised or key assets fall outside the perimeter, this will come to light during the reconciliation of intra-group balances and become the primary bottleneck for the project.
2. Bonds: the base package for the memorandum
The memo requires: the issuer’s annual RAS financial statements for three completed years with an audit opinion; the group’s consolidated IFRS Accounting Standards financial statements for three years with an audit opinion (if required); and issuance documents. The historical audit must be completed prior to filing. Current interim financial statements are included in accordance with the requirements applicable as at the memo’s date. The RAS, IFRS statements, and the memo must be reconciled before filing.
3. Updating figures before placement
Before opening the order book, check whether a new reporting period has begun. If documentation was initiated before year-end and the placement was postponed to the spring, it is necessary to review the requirements for the new annual financial statements and make sure that the memo remains current. Financial metrics across the memo, presentation, and underwriter’s materials must be consistent.
4. IPO and combined financial statements
A common occurrence: the holding company for the IPO was established not so long ago, but the underlying business has operated for many years. Combined financial statements are prepared in this case: these consolidate entities that, during the periods under review, were not all bound by parent-subsidiary relationships. Their purpose is to present a justifiable financial history of the selected business perimeter. Combined financial statements do not replace the issuer’s mandatory statutory financial statements.
5. The most costly mistake an issuer can make
Preparing and auditing three years of financials only to change significantly the transaction perimeter later. To avoid this, the deal structure and reporting perimeter must be locked in with the finance team, lawyers, and auditors from the very outset.
6. Audit timing: working backwards
The schedule is built backwards from the memo filing date and the roadmap. The annual audit must be completed before the memo is filed. An annual audit and a review of semi-annual financial statements are distinct engagements with different scopes of procedures. The auditor must be engaged at the beginning of the preparation process, not on the eve of the stock exchange bell.
7. Life after the bell: a regular disclosure calendar
Once listed, a company is subject to a strict schedule of regular disclosure. The issuer must publish in a timely manner:
- annual and interim financial statements (IFRS Accounting Standards and RAS) accompanied by auditor’s reports or review conclusions;
- issuer reports for the full year and half-year;
- the company’s annual reports and disclosures of material facts.
‘The most costly mistake an issuer can make is not an error in the figures, but an error in the perimeter. It is when three years of prepared and audited financial statements have to be reassembled from scratch because the deal structure changed. That is precisely why the auditors, lawyers, and the finance team must be seated at the same table at the very start of the project, rather than on the eve of the presentation tour,’ noted Anastasiya Terekhina.
