08 June 2020

It goes without saying that COVID-19 is posing unprecedented challenges across the world. Companies and investors are having to try and understand and assess the impact of these challenges on their underlying businesses on a daily basis. Listed companies are also facing the additional hurdle of preparing annual or interim financial statements. In this legal update we look at the latest guidance from the regulators in the UK and how this might help listed companies to navigate through their financial reporting season.

On 27 May 2020 the FCA published the Primary Market Bulletin Issue No. 28 Coronavirus (COVID-19) Update. This update addresses the temporary relief available to listed companies in respect of the publication of their half yearly financial reports and contains a statement on market practice relating to “going concern” assessments. The measures introduced are intended to complement the previous measures introduced in March 2020 extending the time for publishing audited financial statements and to align with ESMA’s recent guidance.

Timing for filing financial reports

On 26 March 2020, the FCA announced a temporary relief granting listed companies that need additional time to complete their audited financial statements a further two months in which to publish them. In effect extending the filing deadline under the Transparency Directive from four months to six after the financial year end to which they relate.

In addition, the FCA recently confirmed that listed companies will also have an additional month in which to publish their half yearly financial reports meaning that financial statements must be published within four months of the end of the period to which they relate rather than the current three month deadline under the Transparency Directive. The temporary relief means that issuers who breach DTR 4.2.2R but do file within the extended deadline will not have to request a suspension of their securities, nor will the FCA take unilateral actions to suspend the listing for that breach. However, the FCA reserves the right to unilaterally suspend the listing for any other reasons.

The rules regarding whether or not a company has its interim reports audited remain unchanged and therefore issuers should continue to comply with DTR 4.2.9R in this respect.

The FCA has also urged market participants to understand the need for these temporary reliefs to be put in place and the importance of listed companies utilising them if required to ensure that they (and their auditors) have sufficient time to overcome both the practical challenges of preparing the financial statements and to fully assess and consider any additional disclosures that may be required.

Given the competing demands on companies’ resources at the moment and the inherent uncertainty as to the precise impact of COVID-19, we suspect that these extensions and the FCA’s request to the market may be welcome relief as they allow additional time for businesses to try to understand how they are likely to be affected and to make complex judgments. They also help to set market expectations and try to create an environment that facilitates clear and transparent reporting which should be welcomed during these challenging times.

Going concern

Understandably, businesses are concerned with, and face additional challenges in the current climate, preparing going concern assessments. The extensions offered to the filing deadlines may provide some relief by giving extra time to work through the analysis without fear of repercussions of missing a filing deadline.

In preparing the financial statements, judgment must be exercised to determine whether any material uncertainties affecting the entity’s ability to continue as a going concern will need to be disclosed. Whilst the extensions to the filing deadlines allow additional time for these challenging decisions to be made, they do not address how the market will perceive any such disclosures. Historically, any such disclosures would have been met with negativity and concern.

We would anticipate more companies needing to include additional disclosures in their financial statements to explain the impact of COVID-19 on their businesses, and this expectation aligns with that of the FCA, FRC and PRA in a joint statement of 26 March 2020.

Helpfully, the FCA has urged issuers and auditors alike to be clear and transparent about the impact in their financial statements and the FRC has published guidance on how to interpret additional disclosures and the impact that these may have on auditors’ reports. With the regulators seeking to set the tone for how the market should consider its reaction to companies who need to make additional disclosures or who seek to avail themselves of the temporary reliefs made available, it is hoped that a degree of pragmatism is exercised and market practice adapts to take account of the context in which these financial statements are being prepared.

Given the unprecedented nature of the challenges being faced as a result of COVID-19 and the regulators call to arms, it may be that we start to see that those looking at companies’ financial statements might be less concerned with a qualification of material uncertainty and more concerned with understanding the underlying disclosures. These disclosures will provide greater insight into the fundamental business and reasons for the material uncertainty.

These considerations are also true for those companies whose financial year has ended but the accounts have not yet been approved, as they may need to reassess if it is still appropriate to use a going concern basis for the preparation of those accounts.


Despite the continued uncertainty we are facing as a result of COVID-19, one thing which is clear is that open and transparent communication is key. Companies are having to develop and maintain good communication channels with stakeholders and be prepared to adapt and use innovative forms of engagement in an attempt to guide them through these unprecedented times. Whilst it is acknowledged that these changes to reporting procedures and processes will be temporary in nature, perhaps the additional scrutiny financial statements will face will result in directors and investors alike having a much deeper understanding of their underlying businesses. This heightened awareness combined with the call for pragmatism by the FCA hopefully will create an environment which means issuers can successfully navigate their affected financial reporting periods and begin to look forward and plan on how to recover from these challenging times.

How can we help?

This article was written by Amy Carr. If you have any questions regarding a company’s reporting obligations, please speak to your usual contact at Burges Salmon or Nick Graves.

Key contact

Nick Graves

Nick Graves Partner

  • Head of Corporate
  • Corporate Advice
  • Mergers and Acquisitions

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