European Union:
Financial Reporting: ESMA Report On EU Issuers' Use Of Alternative Performance Measures
22 January 2020
Shearman & Sterling LLP
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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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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