On 2 March 2010, the UKLA published a special edition of its magazine List!, which contained a major article on the interaction between working capital statements and risk factors.

The article covered the following issues:

  • The document belongs to the issuer and the issuer and its advisers must be satisfied that it discloses the issuer’s position accurately.
  • Some risk factors are fundamentally inconsistent with a clean working capital statement.
  • Not all risk factors dealing with matters of funding or finance are necessarily inconsistent with a clean working capital statement.
  • The document as a whole should be consistent - the risk factors, business strategy and working capital sections should all tell the same story.
  • Some high impact low probability risks may be consistent with a clean working capital statement.
  • Risks should only be expressed to operate ‘in the longer term’ if this is genuinely the case.
  • Risk factors sections should be particular to the issuer and should detail a specific risk.
  • Risk factors cannot be made to be consistent with a clean working-capital statement simply by using disclaimers or preambles.

View List! Issue 24, 2 March 2010