Reporting Accountant services

Providing assurance on key financial work streams associated with capital market transactions

What is a Reporting Accountant?

A Reporting Accountant prepares reports for inclusion in, or in connection with, an investment circular, including:

public opinions required by the rules governing capital markets transactions
due diligence for the directors, sponsor or nominated adviser to meet regulatory requirements.

When is a Reporting Accountant needed?

Private companies undertaking an IPO on the London Stock Exchange (Main Market and AIM).
Premium listed companies undertaking an acquisition or disposal of a significant business.
Listed companies undertaking a further issue, reverse acquisition or move up from AIM to the Main Market.
Companies seeking to issue debt securities (e.g. investment grade bonds, high yield bonds, EMTNs, Rule 144a bonds)

On this page, we’ve outlined the key reports and opinions we produce as a Reporting Accountant for transactions on the London Stock Exchange.

Your exact needs will depend on the nature of the transaction. For companies listed overseas, we’ll consider the local exchange requirements and work with our offices around the world.

Services

Historical Financial Information (HFI)
Working capital
Financial Position and Prospects Procedures (FPPP)
Long form report
Profit forecast or estimate
Other comfort

Historical Financial Information (HFI)

The rules surrounding HFI are very complex. As your Reporting Accountant, we’ll help you navigate the requirements in an efficient way.

If your company is issuing shares for the first time, you’ll need to include 3 years of the group’s IFRS historical financial information (HFI) in a prospectus or investment circular. (Or information from the target, in the case of a class 1 acquisition.) This must include at least 75% of the business over the track record period and can’t be more than 6 months old for premium listed companies.

For an IPO, you’ll also need to identify the extra ‘plc’ disclosures required. And in a class 1 acquisition, you’ll need to factor in any accounting policy differences between the target and the acquirer.

You’ll also need a public opinion from a Reporting Accountant under the Standards of Investment Reporting (“SIR”) 2000. To collate enough evidence to issue a SIR 2000 report, the standard requires the Reporting Accountant to form an independent view of any pre-existing audit work.

Working capital

The Listing Rules and Prospectus Rules regulation require a Company to have sufficient working capital for at least the 12 months following the date of the investment prospectus or circular. You’ll need to make a statement about this in the document.

You’ll also need to prepare a sufficiently detailed working capital model, including forecasts and a ‘reasonable worst case scenario’ to illustrate the impact of certain risks.

As the Reporting Accountant, we’ll give you a private assurance opinion for the company and the sponsor. And we’ll help the sponsor make their declaration to the FCA that the directors have a reasonable basis for the working capital statement.

Financial Position and Prospects Procedures (FPPP)

As part of an IPO or class 1 transaction, the directors are required to make an FPPP assertion to the sponsor. This declares that certain procedures are in place, including:

reporting the company’s interim and year end results to the market on a timely and reliable basis
providing periodic trading updates
forecasting accurately to manage the market’s expectations, and
establishing systems, controls and governance for the above.

We work as the Reporting Accountant for FPPP in accordance with the TECH 14/14CFF guidance issued by the ICAEW. We’ll give you comfort in the form of a private commentary report and letter.

Long form report

As part of an IPO or Class 1 transaction process, the sponsor or nomad may request a long form report including a financial due diligence process by the Reporting Accountant. This supports the financial disclosures in the prospectus or class 1 circular, including the operating and financial review (OFR).

As a Reporting Accountant, we can provide a private due diligence report covering the company’s financial track record period.

The scope of the report is agreed between the sponsor or nomad and the company, and can include:

the history and description of the business
management of the business
products and marketing
production, purchasing and research and development
trading results and financial position covering the 3 year track record
tax; and
other areas such as litigation, contingent liabilities and intellectual property rights.

Profit forecast or estimate

When undertaking an IPO or Class 1 acquisition/disposal, you have a choice to make a profit forecast or estimate. Or, if there’s an existing profit forecast or estimate outstanding when the prospectus is published, you’ll need to reproduce, replace or withdraw it.

The company is responsible for compiling the profit forecast or estimate and making sure it’s consistent with its accounting policies. The company is also responsible for determining whether any existing profit forecasts or estimates in the public domain at the time of the prospectus are still valid.

In our role as Reporting Accountant, we’ll provide a private commentary report on whether the forecast or estimate has been properly compiled.