Accounting requirements for listing
Early preparation is key
The IPO timeline will hinge around the timely preparation of accounts. Disruption to business-as-usual and costs incurred from preparing for listing can be minimised through appropriate preparation and early involvement of capital markets experts.
Companies that start to behave like a public company before they list, will find their new environment post-IPO very much easier to navigate.
The IPO is an opportunity for a business to formalise its business practices and prepare itself to face the challenges of operating in the public spotlight.
The necessary documentation for an IPO is set out as follows:
- The Long Form Report
This is not a legal or regulatory requirement nor will it be made publicly available but it is established practice. The Long Form Report is prepared by an external firm (often the same firm that conducts the financial audit) and is a due diligence report on components such as organisational structure, accounting policies and tax compliance.
- Financial Reporting Procedures Report (FRP Report)
The company must be able to demonstrate to the regulator that it has established procedures for the timely disclosure of financial and price sensitive information.
- Audited IFRS financial statements
A company must present financial information covering at least three years. 75% of the company’s business must be supported by a revenue-earning track record for the 3 year period.
- Working Capital Report
The prospectus will include a working capital statement (projected cash flow, P&L and balance sheet for the 18 months post-IPO) that considers both internal and external financial resources available to the company in order to meet its liabilities as they fall due. The Working Capital Report, however, will be private and underpins the numbers in the working capital statement.
For more information on accounting requirements both pre and post IPO, download the full 'Guide to Listing' guidelines above.