Listing on one of London’s stock exchanges provides a growing company with access to capital, increased liquidity, credibility and prestige, currency for acquisitions and enhanced corporate governance and transparency.
Once a company has made the decision to IPO, the path to becoming a public company can be a minefield, with accounting and financial reporting issues often being one of the most challenging and time-consuming areas.
One Advisory specialises in guiding your company down this path to an IPO. With our expertise and guidance, we streamline the financial deliverables, ensuring clarity and efficiency every step of the way whilst working alongside your other IPO advisors.
IFRS Conversions
One of the key financial requirements for inclusion in a company’s prospectus (Main Market) or admission document (AIM) is to produce historical financial information (HFI) on the company for prospective investors, typically covering a three-year period, presented in accordance with IFRS. Often private companies will have prepared their accounts under their local GAAP (e.g. UK, US) and will therefore be required to convert the financial information to IFRS.
Subject to a ‘true and fair’ opinion from your reporting accountant in which top-up audit procedures will be conducted on the HFI, being unaware of the requirements of your HFI and not producing financial statements under IFRS can lead to significant delays and expense on the road to IPO. The rules surrounding HFI are complex.
At One Advisory, we undertake a thorough review of the existing financial statements prepared under local GAAP and produce an IFRS conversion impact assessment that details the material areas of difference and high-risk areas between your local GAAP and IFRS.
We then undertake a full IFRS conversion, making those adjustments that typically arise between local GAAP and IFRS which include, but are not limited to, lease accounting, revenue recognition, capitalisation of development costs and amortisation of goodwill. Additionally, we identify those additional Plc disclosures required.
Engaging with One Advisory to prepare your HFI can lead to a significant saving in time and cost, allowing resources to be spent elsewhere on the company in the run-up to IPO.
”One Advisory came highly recommended for delivering complex financial workstreams for IPOs, and I’m pleased to say that they absolutely delivered. They hit the tight timescales that we were working towards, with professionalism as well as personality. I would have no hesitation in recommending their services to other companies looking to IPO.
Dan Walden, CFOProcook Group Plc
Financial Position and Prospects Procedures (FPPP)
Completion of a financial position and prospects procedures (FPPP) memorandum is a crucial part of the London IPO process for companies wishing to list on the Main Market or AIM.
The directors are required to make an FPPP assertion 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
- Issuing periodic trading updates
- Accurate forecasts to manage market expectations
- Ensuring that robust systems, controls and governance are in place to support these activities
The FPPP must be signed off by the Company’s reporting accountant and Nomad/Sponsor. At One Advisory, we know what level of controls, procedures and policies are required to achieve sign off in the most efficient and cost effective manner possible.
Prior to the directors signing the board memorandum setting out details of the procedures in place for establishing and reporting the company’s financial position and prospects, considerable preparatory work is usually required.
We specialise in drafting the FPPP from scratch, working with the company to understand the current controls and processes in place and guiding management based on regulatory guidance on the further procedures that the company must adopt prior to listing.
It is commonplace for companies to overestimate the quality of their governance, risk and control environment. Our team of experienced FPPP advisors have a track record of supporting companies to complete the necessary FPPP memorandum and ensure it is fit for purpose.
”It was our nomad that recommended that we speak to One Advisory at the outset of our IPO journey and I’m thankful, that we did. Their IPO Finance Support team were extremely professional and efficient throughout the transaction, particularly given the timescales we set for listing, as well as our recent acquisition activities that added complexity during our due diligence phase. The team at One Advisory were also very responsive and great people to deal with so we would have no hesitation whatsoever in recommending their HFI and FPPP Services as well as their IPO Project Management capabilities to other companies looking to IPO in London.
Chris Day, Former CFOLords Trading Group Plc
Working Capital
The AIM Rules and current Prospectus rules require a company to confirm that it has sufficient working capital for at least 12 months. Working capital is considered to be a company’s ability to access cash and other available liquid resources to meet its liabilities as they fall due over that period.
In order to satisfy this requirement, a detailed fully integrated working capital model, including forecasts and an illustration that there is sufficient margin or headroom to cover a ‘reasonable worst-case scenario’ must be prepared on the basis that the transaction has occurred.
We are able to interrogate existing working capital models, ensuring that the directors have considered all relevant factors such as size, complexity, predictability and the particular circumstances of the company or group, such as the industry in which it operates and the general economic environment. We then provide detailed recommendations to ensure the model will meet the robust challenges of the reporting accountant.
”The One Advisory Financial Reporting Team demonstrated exceptional professionalism and support throughout our relisting process. Despite a tight timeline, which included significant amendments along the way, they efficiently developed a comprehensive working capital model, prepared our FPPP for the expanded Group, conducted the HFI for a target company, and assembled our Proforma of Net Assets for the Admission Document. Their expertise and dedication were evident, making them a pleasure to work with, and they interacted exceptionally well with the Reporting Accountants. If you're considering listing or relisting on the stock exchange, I highly recommend their financial reporting services—they’ve been an invaluable partner for us.
Elizabeth Lake, CFOEARNZ Plc
Pro Forma Financial Information
Pro forma financial information provides a hypothetical illustration of how a transaction or series of transactions might affect an issuer’s assets, liabilities, and earnings. It does not claim to represent the issuer’s actual financial position or performance post-transaction, rather it presents the post-transaction position as if the transaction had occurred at an earlier period-end date.
A prospectus for an offer or a request for admission to trading of shares must, in the case of a ‘significant gross change,’ describe how the transaction might have impacted the issuer’s assets, liabilities, and earnings if it had occurred at the start of the reporting period or on the reported date.
Companies listed on AIM have the option to include pro forma financial information in their admission document, but it is not mandatory.
Pro forma financial information can also be helpful for transactions other than significant gross changes. For example, in an initial public offering or a subsequent rights issue, open offer, or placing, pro forma financial information might illustrate how the reduction in gearing results from using the issue’s proceeds to repay debt.
At One Advisory we routinely prepare the Pro Forma Income and Pro Forma of Net Assets for inclusion in the prospectus or admission document.
Make an enquiry
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