On 20 December 2019, ESMA published a report on the use of alternative performance measures, such as EBIT and EBITDA, as an EU issuer's measure of financial performance.
ESMA's report finds that alternative performance measures are widely used, and the majority of issuers have not complied with ESMA's guidelines in their use of management reports and prospectuses issued on or after July 2016. ESMA's 2016 guidelines require that an APM's reliability is explained, and reconcilable line items are identified between the financial statements and earnings results and prospectuses produced by the issuer.
ESMA finds that there is significant room for improvement in complying with its guidelines, and has also noted that the ratios and subtotals inside a financial statement may fall under the umbrella of an APM and their presentation should therefore comply with its 2016 guidelines.
View ESMA's announcement here.
View ESMA's full report here.
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