The European Securities and Markets Authority (ESMA) has issued a public statement calling for transparency on COVID-19 effects in half-yearly financial reports.

ESMA has issued a public statement calling for transparency on COVID-19 effects in half-yearly financial reports. The statement highlights:

  • The importance of providing relevant and reliable information, which may require issuers to make use of the time allowed by national law to publish half-yearly financial reports while not unduly delaying the timing of publication;
  • the importance of updating the information included in the latest annual accounts to adequately inform stakeholders of the impacts of COVID-19, in particular in relation to significant uncertainties and risks, going concern, impairment of non-financial assets and presentation in the statement of profit or loss; and
  • the need for entity-specific information on the past and expected future impact of COVID-19 on the strategic orientation and targets, operations, performance of issuers as well as any mitigating actions put in place to address the effects of the pandemic.

ESMA notes that the statement is also applicable to financial statements in other interim periods when IAS 34 Interim Financial Reporting is applied.

Below is a summary of the public statement. For full details, please refer to IASPlus ESMA statement on the implications of the COVID-19 outbreak on the half-yearly financial reports.

Timing of publication of half-yearly financial reports 2020

ESMA highlights that the key driver in making this assessment shall remain the objective of providing timely, relevant and reliable information, while not unduly delaying the publication of periodic information.

Half-yearly financial statements

On application of IAS 34, ESMA

  • Reminds that purpose of interim reports is to provide an update on the latest complete set of annual financial statements, including new activities, events and circumstances not captured in the most recent annual financial statements. ESMA expects this update to be particularly extensive for the upcoming half-yearly financial statements because the events related to the COVID-19 outbreak have become evident in the first half of 2020.
  • Expects that, for a large proportion of issuers, COVID-19 constitutes a significant event under IAS 34:15-15C and, therefore, urges issuers to adjust and potentially expand the level of detail of the information provided in the half-yearly financial statements.
  • Notes the availability of various relief and support measures for which the issuer’s entitlement to the programme may require compliance with particular conditions. ESMA recommends that issuers provide transparency regarding the application of these measures in terms of eligibility, conditions and consequences as well as in terms of the underlying judgements they made.
  • Urges issuers to update the assessment made at year-end about the assumptions regarding the future and other major sources of estimation uncertainty as provided in accordance with IAS 1:125. Also, IAS 34:16A(d) require disclosures of the nature and amount of changes in estimates of amounts reported in prior interim reporting periods of the current financial year or changes in estimates of amounts reported in prior financial years.
  • Notes that if the uncertainties arising from the COVID-19 pandemic cast significant doubt on going concern, the entity shall disclose those uncertainties (IAS 1:25). ESMA expects issuers most significantly impacted by COVID-19 to provide disclosures about the going concern assessment and the related underlying judgements where these are significant.
  • Reminds issuers of the importance of providing disclosures regarding those risks and to consider the requirements in IFRS 7 regarding, in particular, the exposures of issuers to credit, liquidity and other risks and the related sensitivities. ESMA highlights that some of these disclosures are also relevant in relation to the calculation of expected credit losses in accordance with IFRS 9 including disclosures to explain the assumptions and judgements applied.

On impairment of non-financial assets, ESMA

  • Reminds issuers that, in accordance with IAS 36:9 and :12, they should assess whether there are any indications that an asset may be impaired on the basis of a set of internal and external sources of information. In ESMA’s view, the effects of the COVID-19 outbreak would most likely constitute a strong basis to conclude that one or more of the impairment indicators in IAS 36 have been triggered.
  • Notes that determining the recoverable amount in the current uncertain environment requires a careful assessment of the cash-flow projections over a relevant horizon.
  • Reminds issuers of the importance of updating the disclosures relating to the significant judgements and assumptions underlying these assessments and the sensitivity analyses as per IAS 1:122 and :125 and IAS 36:134(d) and :134(f). ESMA expects this update to be significant to an understanding of the changes in an entity’s financial position or performance since the last annual reporting period.

On presentation of COVID-19 related items in the statement of profit or loss, ESMA

  • Calls for caution regarding any separate presentation of the impacts of the COVID-19 pandemic in issuers’ profit or loss statement.
  • Instead, encourages issuers to provide information, also on a quantitative basis, on the significant impacts of the COVID-19 outbreak as part of the explanations of the amounts presented and recognised in the statement of profit or loss in a single note as part of the notes to the financial statements.

On other disclosure requirements applicable to half-yearly financial statements, ESMA

  • Highlights that issuers should consider whether other requirements in IFRS are also relevant in the context of their half yearly financial reporting, including, but not limited to
  • The recognition of deferred tax assets and tax reliefs (IAS 12).
  • Fair value measurement (IFRS 13).
  • Provisions and onerous contracts (IAS 37).
  • Recommends that issuers closely monitor the developments in relation to the expected IASB amendments of IFRS 16 on accounting for COVID-19-related lease concessions, and the related EU endorsement process.

On interim management reports, ESMA recommends that issuers provide detailed and entity specific information in their interim management reports regarding:

  • The impact that the COVID-19 pandemic had on their strategic orientation and targets, operations, financial performance, financial position and cash-flows.
  • Measures taken to address and mitigate the impacts of the COVID-19 pandemic on their operations and performance and their progress/state of completion.
  • Where available, the expected future impact on issuers’ financial performance, financial position and cash-flows, related risks and contingency measures planned to mitigate the expected future impact and risk and uncertainties identified.

To complement the information provided above and to facilitate users’ understanding, issuers should also include narrative information regarding the estimates and judgements made as well as assumptions used.

Finally, ESMA notes publication of a new Q&A on the ESMA Guidelines on Alternative Performance measures in the context of COVID-19. ESMA highlights that any new COVID-19 related subtotals qualifying as APMs and presented simultaneously inside and outside the financial statements, are subject to the principles and disclosure requirements provided for in the APM guidelines.


Henrik Z. Hansen


+45 36 10 37 83

Jan Peter Larsen


+45 36 10 36 81

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