ESMA recommendations for 2020 half-yearly financial reports

The European Securities and Markets Authority (ESMA) has published a public statement addressing implications of the COVID-19 outbreak on the publication of half-yearly financial reports.

The statement contains recommendations for the attention of listed issuers in preparation for interim financial statements for the 2020 half-yearly reporting periods, keeping in mind the effects of the COVID-19 pandemic on the financial position, performance, and cash-flows of issuers. 

ESMA’s statement focuses on the need for:

  • compliance with the timing established by current legislation in relation to the publication of the 2020 half-yearly report;
  • adequate disclosure regarding the updating of the information included in the latest annual report, with particular reference to significant uncertainties, business continuity, and risks related to COVID-19;
  • an assessment as to whether the pandemic represents a source of impairment, and consequently to perform an impairment test in order to estimate the recoverable value of non-financial assets. In this regard, ESMA reports that, due to the current uncertainty arising from the pandemic, companies must pay particular attention in preparing business plans to support the impairment test. In estimating future cash flows, different scenarios should be taken into account, while the discount rate should exclude the risks and uncertainties already taken into consideration in the expected cash flows. ESMA’s statement also indicates the importance of updating information relating to the significant assessments and assumptions underlying the impairment test and the sensitivity analysis in the half-yearly financial statements;
  • consideration of the relevance of other international accounting standards in the specific half-yearly financial reporting (for example, recoverability of deferred tax assets and recognition of tax reliefs in accordance with IAS 12, measurement of fair value in accordance with IFRS 13, etc.).

In addition, ESMA points out that the effects of the pandemic should not be presented in separate income statement items. Rather, it encourages issuers to provide appropriate information in the notes to the financial statements.

For more information, visit EMSA's website on