LexGo

CSSF Carried Out a COVID-19 Thematic Review of Issuers’ Reporting
27/11/2020

The COVID-19 pandemic has hit Luxembourg as other European countries since the beginning of the year 2020 and has adversely affected a number of issuers under CSSF's supervision. In this context, the CSSF has decided to carry out a thematic review of the information provided by issuers concerning the impact of COVID-19 on their operations and financial performance as of 30 June 2020.

Read the detailed findings published by the CSSF on 13 November.

We noted that information provided in the interim financial reports regarding the effects of the COVID-19 pandemic was generally sufficiently entity-specific and detailed. The information was mainly available in the management reports and often repeated or summarized in the relevant notes to the financial statements.

However we consider that there are several areas for improvement that issuers should consider when preparing their future financial information regarding the impacts of this pandemic.

The main issue encountered concerns the impairment of non-financial assets. Indeed we were confronted with insufficient disclosure in the interim financial reports and more importantly, we observed that the assessments made by management with regard to the recoverable value of non-financial assets did not always appear consistent with the impacts of the COVID-19 pandemic (on the first half-year 2020 and planned) described elsewhere in the financial reports.

Another area for improvement concerns the measurement and disclosure of expected credit losses (ECLs), especially on trade and lease receivables for corporates. A number of the issuers examined hold significant receivables for which the credit risk is likely to change as their clients could be weakened by the effects of COVID-19. As such, we expect issuers to provide precise information on their credit risk management in response to COVID-19 and on any significant adjustments made to the impairment models as well as on the impairment losses recognised.

The findings detailed below relate to interim and annual financial reports published for periods ending March 2020 or after. The purpose of this document is to assist issuers in preparing their next interim or annual financial report.

1. Scope and methodology of the review

We selected for our thematic review the interim financial reports as at 30 June 2020 or the annual financial reports for period ending March 2020 for 16 issuers. These reports were prepared in accordance with IFRS.

Issuers included in the sample are those for which we determined that the COVID-19 outbreak had a significant effect on the first half-year 2020, based on several criteria (sectors at risk; drop in market capitalisation; decrease in revenues, net income or other financial performance measures explained by COVID-19; guidance / outlook for full-year 2020 withdrawn or negatively updated).

Industries represented in the sample are as follows:

The topics reviewed were notably those identified in the ESMA public statement on implications of the COVID-19 outbreak on the half-yearly financial reports (ESMA Public Statement1), in particular:

  • Disclosures reflecting significant uncertainties, going concern and risks linked to COVID-19;
  • Change in credit risk and impact on expected credit losses;
  • Impairment of non-financial assets;
  • Disclosure requirements related to the application of relief and support measures granted by public authorities;
  • Presentation of COVID-19 related items in the primary statements;
  • Management reports and alternative performance measures (APMs).

Related : Wildgen SA ( Mr. Michel Bulach )

[+ http://www.wildgen.lu]

Mr. Michel Bulach Mr. Michel Bulach
Partner
[email protected]

All articles Banking law

Lastest articles Banking law

Application of MiFID to Luxembourg IFMs
11/06/2021

The CSSF clarifies under what circumstances and the extent to which MiFID rules apply to IFMs, their third-party delegates...

Application of MiFID to Luxembourg IFMs Read more

Modernisation of the Law of 22 March 2004 on securitisation
03/06/2021

A draft Bill of law No. 7825 (the “Bill”) amending the Law of 22 March 2004 on securitisation (the “Secu...

Modernisation of the Law of 22 March 2004 on securitisation Read more

Implementation of new EU framework relating to covered bonds
02/06/2021

A draft bill (7822/00) relating to the issuance of covered bonds was recently deposited to implement EU Directive 2019/216...

Read more

Bill amending the Luxembourg Securitisation Act published
28/05/2021

Bill No 7825 (the Bill), which aims, amongst other things, to amend the Act of 2 March 2004 on securitisation, as ame...

Read more

Lastest articles by Mr. Michel Bulach

Bill on Inactive Accounts, Inactive Safes and Unclaimed Insurance Contracts
20/09/2019

On 6 August 2018, Bill No. 7348 on inactive accounts, inactive safes and unclaimed insurance contracts (the ‘Bill&rs...

Read more

Transposition of the second payment service directive (PSD2) in Luxembourg through draft bill n°...
02/11/2017

On 10 October 2017, draft bill n°7195 transposing PSD2 into national law was submitted to the Luxembourg Parliament. ...

Read more

Luxembourg Green Exchange: The Wolrd's Leading Exchange for Green Securities
20/10/2016

On September 29, 2016, Luxembourg Stock Exchange (LuxSE) introduced the world’s first exchange that will trade nothi...

Read more

The mortgage Credit Directive : Bill 7025 submitted to the Luxembourg Parliament
23/09/2016

Following the entry into force of the Mortgage Credit Directive (“MCD”)1 on 21 March 20142, bill 7025 tra...

Read more

LexGO Network