March 21, 2020 / 11:23 PM / 6 days ago

Virus hit UK companies told to delay financial statements

LONDON (Reuters) - Companies should not publish preliminary financial statements for at least two weeks to better assess how the coronavirus epidemic is affecting their business, Britain’s Financial Conduct Authority said on Saturday.

FILE PHOTO: A usually crowded Canary Wharf is seen at lunchtime, as the number of coronavirus disease (COVID-19) cases grow around the world, in London, Britain March 19, 2020. REUTERS/Dylan Martinez

“The FCA will be writing tonight to companies it is aware were intending to publish preliminary financial statements in the next few days to delay their planned publications,” the watchdog said in a statement.

The watchdog said it wants them to announce delays to statements as soon as Monday and will come forward with further measures.

“The FCA strongly requests all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks.”

The practice of issuing preliminary financial statements earlier than required is adding unnecessarily to the pressure on auditors and listed companies, it said.

The FCA, the Financial Reporting Council, which regulates auditors, and the Prudential Regulation Authority, the Bank of England arm that regulates banks, will soon announce details of a package to ensure that listed companies take time to prepare appropriate disclosures, the watchdog said.

Stocks markets have already tumbled as investors dump shares in companies they expect to be badly hit by the virus after the government told shops, restaurants and other public places to shut, and advised people to avoid all non-essential travel.

Britain said on Friday it will pay a massive share of private sector wage bills to discourage bosses from firing staff as it resorts to war-time levels of borrowing to prop up the economy during its coronavirus shutdown. The FCA’s interim chief executive Christopher Woolard told companies in a letter on Saturday that they should look to announce delays in statements as soon as Monday.

“I would be grateful if you could give this request urgent consideration, discuss with your board if appropriate, and indicate today or tomorrow whether you will delay publication,” Woolard said in his letter.

“Please could you also indicate if you intend to announce delay on Monday morning,” Woolard wrote.

Markets rely on trustworthy information for trading shares in companies, but the basis on which companies are reporting and planning is changing rapidly as the epidemic evolves and more time was needed to make appropriate disclosures, the FCA said,

“Observing timetables set before this crisis arose may not give companies the necessary time to do this,” the FCA said.

Many companies opt to issue preliminary statements to update markets in advance of disclosures that have been checked by outside auditors. The main requirement is to publish full audited financial statements within four months of the end of their financial year.

Reporting by Huw Jones; Editing by Chris Reese and Daniel Wallis

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