ESMA Consults on Guidelines for Issuers Performance Measures

The European Securities and Markets Authority (ESMA) has launched a consultation on alternative performance measures (APMs) guidelines.

The guidelines aim to encourage European issuers to publish transparent, unbiased and comparable information on their financial performance, so that users can gain a better understanding.

Examples of APMs include earnings before interest and tax (EBIT) and earnings before intest, taxes, depreciation and amortisation (EBITDA), free cash flow, underlying profit or net debt.

The proposed guidelines set out the principles that issuers must follow when presenting APMs and are based on the requirements applicable to financial statements, as required by the International Accounting Standards (IAS) regulation, mainly referring to their labeling, calculation, presentation and comparability.

“The proposed guidelines aim to improve the transparency and comparability of financial information published by issuers,” said ESMA chair, Steven Maijoor. “APMs presented in an appropriate way may reduce information asymmetry among the users of financial statements.

“These guidelines will ensure that APMs are used and presented in a coherent fashion across the European Union (EU), which will in turn contribute to restoring confidence in the accuracy and usefulness of financial information and improve investor protection.”

The closing date for responses to the consultation is 14 May 2014 and ESMA expects to publish the final guidelines in Q414.

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