Disclosure of Alternative Performance Measures found Lacking
The European Securities and Markets Authority (ESMA) has called on issuers to improve their disclosure of Alternative Performance Measures (APMs) in a recent report.
The report assessed to what extent issuers comply with the guidelines for reporting alternative performance measures, finding significant room for improvement.
Commonly used APM’s include earnings before interest and tax (EBIT), operating results, earnings before interest, taxes, depreciation and amortisation (EBITDA), and net-debt. These all fall under the 2016 APM Guidelines, which were designed to improve the comparability, reliability and comprehensibility of financial information.
ESMA expects issuers to consider the findings of this report when preparing their future communications to the market containing APMs, notably ad-hoc disclosures, financial reports and prospectuses. They have called for issuers to enhance their reconciliations, definitions and explanations in regards to all APMs used.
Read more and access the report here.