Coronavirus Prompts FCA to Request Delay in Preliminary Financials

This analysis was originally posted by Audit Analytics.

The Financial Conduct Authority (FCA) is taking measures to ensure that companies take the time they need to address the challenging and complex events coronavirus (COVID-19) has caused in recent weeks when preparing their annual financial statements.  As a result, on March 21, 2020, they requested that companies delay publishing their previously scheduled preliminary results for two weeks.

According to the FCA, this decision had been made in conference with both the Financial Reporting Council, the public company accounting regulator, and the Prudential Regulation Authority, who oversees financial institutions and insurance companies.

The main intention of the voluntary moratorium is to allow companies to fully address and disclose the challenges they are facing as a result of COVID-19. The impacts of this pandemic have been developing rapidly, and delaying results may allow companies better footing to fully disclose the expected impact, in addition to allowing companies and audit professionals more time.

The FCA notes that the timetables established prior to the crisis are no longer applicable and may put undue pressure on companies and the audit profession during this trying time.

The FCA further noted in their announcement that the Market Abuse Regulation remains “in full force and listed companies are still required to announce inside information to the market as soon as possible.”

A number of companies have already announced compliance with the request.

• Kingfisher PLC [XLON:KGF], recently removed from the FTSE 100 and placed on the FTSE 250, was scheduled to publish on March 24.
• Barr (A G) [XLON:BAG], a member of FTSE 250, announced that it would delay its March 24 publication to a future date.
• Anglo Pacific Group PLC [XLON:APF] has interpreted the request to justify its decision to delay the 2019 Annual Report and Accounts originally scheduled to be published March 25. “Although Anglo Pacific was publishing its final results and not preliminary results, we understand that the intention was for this announcement to cover any financial results announcement. “

Just prior to the FCA request, on March 12, Burford Capital Ltd [AIM:BUR] announced a delay in the publication of its results, citing coronavirus impact as the reason.

The voluntary moratorium applies to London Stock Exchange Main Market companies but not AIM listed companies. However, several AIM companies have delayed results, citing the FCA request as the reason. These companies include IGas Energy plc [AIM:IGAS], Fevertree Drinks plc [AIM:FEVR], and Personal Group Holdings plc [AIM:PGH].

However, it is important to note that preliminary financial statements are commonly issued by companies, but they are not required.1

Further information about the FCA request can be found here.

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1. FCA Listing Rules