What should reporters do in the age of COVID-19?

Reporters have an extra challenge to meet this year – how to reflect the impact that COVID-19 and the associated lockdowns have had on their business.

Written by
Nicholas White

Reporters have an extra challenge to meet this year – how to reflect the impact that COVID-19 and the associated lockdowns have had on their business.

 

Of course, we appreciate that this is a tricky subject – no-one has a crystal ball, after all. And there are no precedents – no ‘best practice’. As with many reporting-related conundrums, there isn’t a ‘one size fits all’ solution – different sectors will be experiencing very different conditions. Some firms, positioned well to benefit from the ‘work from home’ boom, are actually seeing increased sales.

In late 2020, March year-end reporters have had to deal with COVID-19 to a great or lesser degree. The most effective cover all bases – how customers, employees and others were looked after, how access to cash was secured and so on. Some, like Marks & Spencer, even offer a four-page look at how the Board and emergency committees worked together to address the crisis in its first three months.

Helpfully, the FRC, PRA and FCA stepped in earlier this year to offer valuable guidance to reporters. They emphasise that investors need to understand a company’s resilience in the face of current uncertainty, particularly around liquidity, viability and solvency. They conclude their advice on the strategic report and viability statement with a call to action: ‘At this time, the need for fuller disclosure is paramount.’

In line with the official guidance, we believe reporters should consider the following in preparing their strategic reports:

  • as always, ensure the narrative has a forward looking perspective, particularly important in the current crisis
  • give the pandemic and its impact prominence in the report; e.g. highlighting the key issues in the CEO’s review
  • provide assumptions and judgements made in assessing resilience
  • report on access to cash in the medium term
  • describe the impact on the market environment and any influence on strategy
  • disclose actions taken to mitigate the effects
  • report on new risks to the company’s resources, assets and relationships, including the protection and retention of staff
  • describe the potential impacts of post-balance sheet events
  • describe any qualifications and assumptions in the viability statement

It’s still a good idea to discuss how the business was kept running smoothly and stakeholders were informed and looked after during the early stages of the pandemic, but nearly a year on reporters can also discuss the economic aftermath of the pandemic, rather than the crisis itself. Now is the time to start talking about the reality of conducting business in damaged national and global economies, where the future looks increasingly uncertain.