The basic requirement for a UK company seeking an ESCC listing in London is for an audited, three year IFRS financial track record (or such shorter period as the company has been in operation) on a consistent set of accounting policies. For many businesses, the presentation of the financial track record is straightforward. However, this can be more complicated if:
- the company has made major acquisitions within the three-year period, it may become necessary to present separate financial statements for the acquired business as well as a “pro forma” presentation of the income statement in order to allow investors to understand what the results of operations may have looked like had the acquisition occurred at the beginning of the financial year;
- the business being listed was acquired out of a larger entity during the three-year period (potentially leading to mismatches in presentation for the pre- and post-acquisition periods, or even the need to prepare “carve- out accounts” for the pre-acquisition period); or
- the listing is to be launched on the basis of interim financial statements which may require the production of comparable financial information for the previous interim period.
The reporting accountants will also be responsible for other customary accounting due diligence, including:
- reviewing and reporting on the financial reporting procedures (the “financial position and prospects procedures report” or “FPP procedures report”) of the company;
- working with the company to prepare a report on the working capital of the company for 12- 24 months following the IPO;
- working with the company to prepare the capitalisation and indebtedness statement; and
- preparing the “long form” report (a general commercial and financial due diligence report on the business of the company).