Pro forma financial information – new ICAEW guidance

The Institute of Chartered Accountants in England and Wales has published a new Technical Release providing guidance for those preparing pro forma information (Tech 06/15CFF). This updates Technical Release 01/15CFF to take into account UKLA Technical Notes 633.1 (Pro forma financial information) and 305.2 (Hostile Takeovers), both published in March 2015 (UK Corporate Update 1 April 2015).


Pro forma financial information is a hypothetical illustration of the impact of a transaction(s) on an issuer’s assets and liabilities and earnings.

A prospectus relating to an offer of shares to the public or a request for the admission of shares to trading on a regulated market must, in the case of a "significant gross change", include a description of how the transaction might have affected the assets and liabilities and earnings of the issuer, had the transaction been undertaken at the commencement of the period being reported on or at the date reported (see Annex I, Item 20.2 of the Prospectus Directive Regulation (Commission Regulation (EC) No 809/2004)).

The Regulation states that this requirement will normally be satisfied by the inclusion of pro forma financial information which must be presented as set out in Annex II of the Regulation. Pro forma financial information may also be included in certain circulars (eg a Class 1 or Related Party Circular) and Listing Rule 13.3.3R requires any such information to comply with the requirements of Annex II of the Regulation.


The ICAEW guidance provides commentary and practical help for preparing pro forma financial information. The guidance also includes market practice points around how information is prepared, what is included and how it is presented. Specifically the guidance covers:

  • when pro forma financial information is required – including the definition of “significant gross change”. Here it highlights that UKLA Technical Note 633.1 provides further guidance on what constitutes significant gross change;
  • the presentation of pro forma financial information (including narrative information) – including the position taken by the UKLA in relation to hostile takeovers, where it would not normally expect to see pro forma financial information included in a circular where an offeror does not have access to the relevant offeree information; and
  • adjustments – including when they are necessary and how they should been shown and explained.