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Relieving pressure on UK companies and maintaining market integrity

Robin Stevens, Senior Advisor, Capital Markets
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The government's unprecedented range of supportive measures for UK businesses in the wake of the Covid-19 pandemic do not mitigate the impending public reporting requirements that many will find impossible to comply with over the next three months and beyond.

In addition to the direct financial costs arising from the pandemic, the wholesale disruption to working practices mean that normal financial reporting requirements may be impossible to meet. Companies and their auditors ‎are going to be restricted in the timely preparation of financial information and in the physical need to visit premises, meet management and verify assets. Furthermore, many companies are going to struggle during this crisis to prove to their auditors that their accounts should be prepared on a going concern basis. For many public companies the combination of late filing, a suspended share price and a qualified audit report will be catastrophic.

‎March to June on each year is the prime reporting period for the majority of UK public companies with December year ends. Private companies with the same year end can file their accounts with Companies House through to 30 October.

Between 31 March to 30 June 2020, the following key UK listed public company deadlines exist:

  • 31 March 2020 – publication deadline of annual audited accounts for AIM companies with 30 September 2019 year end, publication deadline for interim results for AIM companies with 30 June 2020 year ends
  • 23 April 2020 – 80 business day deadline for submission of FCA regulated accounts with 31 December year ends
  • 30 April 2020 – publication deadline for LSE Main Market companies with 31 December 2019 year ends
  •  31 May 2020 – publication deadline for NEX (now Aquis) companies with 31 December 2019 year ends
  • 30 June 2020 – publication deadline for AIM companies with 31 December 2019 year ends – publication deadline for interims for AIM companies with 30 September 2020 year end. Companies House filing deadline for UK plcs with 31 December 2019 year ends.

Many public companies and their auditors  are currently proceeding on the basis that at some point these deadlines will be relaxed because it is clear that working routines are being so disrupted that accounts cannot be finalised and audited in the time available. Unless we see a marked improvement in business confidence and performance in the next two to three months, directors may also find it impossible to convince the audit firm required to sign the audit report on their accounts that the underlying businesses are going concerns, i.e. they can meet their debts as they fall due over the following 12 months from date of signature. This combination of delay and uncertainty is a potential doomsday scenario for UK plc.  

Over the last few days AIM Regulation have opened the door to nominated advisors seeking delays to share suspension on a case by case basis ‎if reporting deadlines are likely to be missed, and the Financial Reporting Council have supported a two week moratorium in announcing public company results.

‎However, these moves are only the start of the process and we must see confirmation of a temporary relaxation or extension of the strict financial reporting filing requirements of the London Stock Exchange Main Market and AIM, and the junior UK markets, to protect the integrity and operations of the markets and to help maintain investor confidence. This might mean reliance on unaudited financial information for much, or all off, the current year. Who said 20-20 ‎vision was perfect?

If the filing deadlines are not flexed to allow financial information to be completed and, where required, audited there could be hundreds of public companies on UK markets in default leading to a suspension in trading in their shares. This will further damage market confidence, remove liquidity and put the many companies concerned at even greater financial risk.

For more information on how Crowe can help, please contact Robin Stevens, Paul Blythe or your usual Crowe contact.

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Paul Blythe
Partner, Corporate Finance