23 March 2020

This article was written by Christopher Walker. 

This delay relates only to preliminary results due for publication within two weeks of the FCA’s request and is not a moratorium on all corporate reporting, including final audit reports.

The announcement does not cover AIM companies, who should instead consult their Nominated Advisers.

The FCA’s rationale

The FCA’s logic surrounding the announcement follows that investment decisions are made on the basis of the provision of reliable information and that the current climate is shifting rapidly due to coronavirus – with strong potential for reported information to become outdated quickly as well. The FCA believes that delaying publication will give companies additional time to prepare and update their disclosures in light of current events. The proposed delay may also prevent both listed companies and auditors alike from facing further pressure at a time of stretched capacity and resources.

Crucially, the Market Abuse Regulation remains in full force – the FCA has reminded listed companies that they are still required to ‘announce inside information to the market as soon as possible unless a valid reason to delay disclosure under the regulation exists’.

A voluntary measure at the board’s discretion

The delay to preliminary financial statements is voluntary and the guidance recommends that ‘each board must take its own decision based on its own circumstances’; some companies may find ongoing UK policy announcements to be ‘less material’ than others. Separately, where the delay would ‘add burden’ to a company, its board may choose not to participate in the delay. The FCA remarks that issuing preliminary financial statements is ‘not required by either the Listing Rules or the Transparency Directive” - the requirement is that companies must publish full audited financial statements within four months of the financial year end. 

Final reports

The announcement relates to preliminary annual accounts, not final audited reports. There is a principle underlying the FCA’s request that may applied to final reports: that is ‘subject to MAR being observed, it should be acceptable for companies to use the full time available to them in the rules and regulation to publish their reports. However, if the work is complete on the final audited report, and appropriate consideration has been given to recent economic developments, it would make sense to finalise the report’. The FCA has left this as a matter for each board’s individual discretion. 

The FCA is coordinating with the PRA and Financial Reporting Council on ‘measures aimed at ensuring companies take the necessary time in these uncertain times to prepare appropriate disclosures and address current practical challenges’.

The full FCA statement is available here and has since been supplemented by a technical Q&A for firms here.

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