Pro Forma

Pro forma figures show what the financials would look like if a transaction or adjustment had already been completed. They include a planned event as if it had already happened. This makes it possible to estimate, for example, how an acquisition would affect the figures. The approach is used above all in three cases. In combinations it shows the joint earnings and asset position. In carve-outs it presents the separated unit's figures on a stand-alone basis. It is also used where the financing structure changes materially.

The presentation follows a clear logic: actual figures are the starting point, supplemented by the effects of the event, such as the acquired company's result for the full year, financing costs, amortisation from the purchase price allocation, and costs falling away or arising. The distinction between evidenced adjustments and expectations is decisive: expected synergies strictly do not belong in a pro forma presentation because they have not yet been realised, though in practice they are often shown separately. For listed companies there are requirements on derivation, explanation and reconciliation to actual figures. In transactions the boundary with adjusted EBITDA is fluid, which is why buyers regularly require a complete reconciliation to reported earnings.

Typical applications include presenting a full financial year for a business acquired mid-year, removing a divested segment, or reflecting cost measures already decided. Under IFRS 3.B64, business combinations require disclosure of revenue and profit as if the combination had occurred at the beginning of the reporting period, which is a regulated form of this presentation. Outside such requirements there is no uniform definition, so the informational value depends entirely on how transparently each individual adjustment is explained.