ICAEW.com works better with JavaScript enabled.

Prospective financial information

On 8 October 2003, the Institute issued Guidance for directors who publish prospective financial information (PFI) for investors which has been welcomed by the UK Listing Authority. This followed publication of a consultation draft in July 2002.

Prospective financial information

Download a PDF copy of the Information for Better Markets report: Prospective financial information.

Download now


The Guidance is for directors who are either required to or who choose to publish prospective financial information (PFI) for investors. It is based on principles of global relevance of what makes that information useful, as well as an appreciation of the expectations of regulators. The Guidance will be of particular interest to directors of UK listed, AIM and OFEX companies, their professional advisers and investors and all those with an interest in the financial transparency of the capital markets.

There are at present no financial reporting standards or statements of best or recommended practice in the UK to help directors prepare PFI and to give investors confidence in its quality. Consequently, there are no objective and generally accepted criteria by which to judge the information value of PFI disclosures.

This Guidance aims to address that gap and consolidate best practice. The approach adopted for the UK environment could be adapted for use internationally to promote convergence and so comments are also being sought from an international audience.


The Guidance applies to published PFI, comprising primary financial statements and elements, extracts and summaries of such statements and related disclosures drawn up to a date, or for a period, in the future. PFI includes the forward-looking equivalent of any information that might subsequently be prepared as historical financial information:

  • announcements of changes in expectations
  • working capital statements
  • estimates of funding requirements
  • profit forecasts
  • merger benefits statements
  • illustrative financial projections issued by OFEX companies
  • other voluntary disclosures, e.g. in the OFR

Key ideas

The Guidance emphasises that markets and investors need PFI that is understandable, relevant, reliable and comparable. The promptness and clarity of profit warnings, for instance, are areas of recent interest that fall within the scope of the Guidance.

The Guidance is based on a framework of principles derived from the International Accounting Standards Board's Framework for the preparation and presentation of financial statements. Aligned with current regulatory and legal requirements, it encourages directors to have regard to the concepts of business analysis, subsequent validation and reasonable disclosure, when preparing PFI for publication.

The Consultation Draft is in three parts. It builds up to Part C which guides directors through the rules that require and regulate common types of PFI published in the UK.

Part C is supported by Parts A and B. These are essential building blocks. Part A comprises principles for making PFI useful in helping investors make decisions. Part B summarises the legal and regulatory framework that UK directors need to bear in mind when they provide PFI to investors. The principles and the regulatory framework reinforce each other and both are used to support the specific guidance in Part C.

Although the Guidance is designed to set a 'gold standard' for reporting PFI disclosure, it also provides a framework for other kinds of forward-looking information about strategy, future plans and risk.


If the approach taken in the Guidance is adopted as best practice, it will:

  • help underpin investor confidence in the reliability and quality of PFI disclosure as a sound basis for their investment decisions;
  • provide a set of benchmarks that directors, investors, analysts and commentators can use to assess the quality of PFI and promote improvement;
  • help directors to address legal risks in the current liability environment as well as risks of reputational damage; and
  • reinforce directors' efforts to prevent or correct unrealistic market expectations and thereby reduce the pressures such expectations create for aggressive earnings management.

Welcome for the Guidance

Ken Rushton, Director of Listing, UK Listing Authority:

"We welcome this guidance as an important contribution to the efficient functioning of UK markets. Its principle-based approach is applicable to a wide range of regulated and voluntary PFI. It provides an authoritative supplement to existing law and regulations and as it becomes accepted practice it will help to ensure the provision of high-quality information to the markets."

Richard Murley, Director General of the Takeover Panel:

"We are pleased to welcome the Guidance. PFI is a difficult area for companies and their advisers from a Takeover Code perspective and the guidance should be helpful when dealing with the Panel on matters such as profit forecasts or merger benefit statements."

John Coombe, Chief Financial Officer of GlaxoSmithKline plc:

"The issue of this guidance comes at a very timely moment for finance directors and others interested in communicating their expectations for the financial future of their companies. It pulls together existing best practice including legal and other regulations which have to be followed in order to produce, safely and effectively, a soundly based view of the future. All financial reporting teams (and others) will benefit from reading it."

Eric Anstee, Chief Executive of the Institute:

"Our guidance encourages companies to start providing the markets with the forward-looking information they need. Hitherto the absence of principles underpinning good practice in this area has contributed to businesses being cautious about publishing very much of the wealth of prospective financial information that they use internally.

"Those preparing PFI now have a basis for determining whether their information is of sufficiently high quality to be useful to the markets. This should facilitate wider publication of forward-looking information and give investors more confidence in the integrity of financial reporting."

Download the Guidance

For printed copies of the Guidance, please email bettermarkets@icaew.com

Links to topics of related interest: