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No Playbook: Financial Reporting Amidst COVID-19

April 15, 2020
By Patrick Kane

There is no playbook.

That’s been a nearly universal theme over the past several weeks as companies around the world evaluate and reevaluate every aspect of their businesses in response to COVID-19.

Across every industry sector, global enterprises have pulled their 2020 projections and are scrambling to get their arms around how to communicate their companies’ financial stories as they’re being rewritten in real-time. In the midst of all this, a number of the companies we counsel are reworking their annual reports and rethinking their shareholder meetings to reflect their ongoing business transformation as a result of COVID-19.

As we work with them, we certainly don’t pretend to know what’s going to happen in the coming weeks and months. What we do know from long experience, however, is how to communicate authentically and transparently during tough times to a variety of stakeholders.

Here are a few things we’re suggesting that company leaders keep top of mind in their financial reporting during this most uncertain time:

It’s more important than ever to hear from corporate leadership in times of adversity.

As uncomfortable as it might be, your shareholders and investors need to hear from you.

You may be considering not publishing an annual report this year. But the changes your business is going through need to be addressed now more than ever. A strong letter from leadership can reassure audiences of your commitment and ability to leading through these difficult times.

Address shareholders directly, with an honest assessment of how the business performed leading up to this crisis and what to expect in the coming months.

You may not have all the answers. But there’s great benefit in having honest and transparent conversations with your audiences. Addressing business impacts openly can instill confidence in where the company is headed.

Set reasonable and realistic expectations.

We can’t yet predict the extent and duration of the COVID-19 pandemic, or its consequences. But it’s reasonable for shareholders and investors to expect companies to be able to articulate their expectations of the possible impacts on their businesses in different scenarios.

They also want a company to show resilience in the face of uncertainty and to lay out the key assumptions and judgments leadership is making as they adapt to a changing environment and prepare adjusted outlooks. Your annual report can be a powerful platform for articulating the company’s plan of action for dealing with the unpredictable months ahead.

Obviously, you don’t want to promise what you can’t deliver. Rather, take an honest look at your business outlook and communicate what you can, as clearly as you can.

Address COVID-19 openly and honestly.

COVID-19 has already made major changes across the entire business landscape. And it will be part of virtually every company’s story for some time to come. We suggest addressing this crisis from four angles in your annual report:

  • Leadership’s overall response to the pandemic
  • An assessment and overview of its impact on the markets you serve
  • How you’re addressing the needs of investors and other external stakeholders
  • How you’re looking out for your employees

That last point demands particular attention. There is more at stake here than just telling your financial story. Research FleishmanHillard has just released shows that how your company treats its employees will shape the public’s perception of you – for better or worse – for years to come.

Consider the opportunity video presents.

Video from senior leaders allows shareholders, investors, employees and media to hear personal messages from senior executives. In fact, as social distancing continues, it’s becoming the medium for a growing number of virtual shareholder meetings. Your key audiences crave directness and authenticity from leaders during this confusing time, and video is one way to speak more directly to them.

This could accompany the CEO letter to shareholders and include a transparent update on the business outlook and the steps your company is taking to address it.

Bottom line: no one can yet predict the full impact of this pandemic on their operations yet. Businesses are largely on common ground, navigating uncharted territory day by day. As you create your company’s operational playbook, just keep in mind that a sound, straightforward communications playbook is critical, too.