Corporate Disclosure

The European Securities and Markets Authority (ESMA) has published six new questions in its Questions and Answers (Q&A) document, on the implementation of its Guidelines on the Alternative Performance Measures (APMs) for listed issuers.

The new questions provide information on:

  1. the definition of APMs;
  2. the scope of the APM guidelines;
  3. application of the scope exemption
  4. definition of the APM ‘organic growth’;
  5. how to carry out reconciliation; and
  6. how to apply the fair review principle.

An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The guidelines apply to alternative performance measures disclosed by issuers or persons responsible for drawing up a prospectus (read ESMA’s one page summary).

The purpose of this Q&A is to promote common supervisory approaches and practices in the implementation of these guidelines.

The European Securities and Markets Authority (ESMA) today published the priorities to be considered by listed companies, and their auditors, when preparing and auditing their 2017 financial statements. These priorities are set out in the annual Public Statement on European Common Enforcement Priorities (Statement), through which ESMA promotes the consistent application of the International Financial Reporting Standards (IFRS).  

Reflecting both the relevance of the change introduced by the new accounting standards and issues identified in the course of the enforcement activities, the 2017 enforcement priorities encompass:

  • Disclosure of the expected impact of the implementation of major new standards in the period of their initial application:  ESMA stresses the need for high-quality implementation of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers and for enhancing the communication of their expected impact. The importance of improving disclosures in this area is also supported by a fact-finding exercise conducted by ESMA and that accompanies the Statement.
  • Specific issues relating to IFRS 3 Business Combinations and IAS 7 Statement of Cash Flows: ESMA reminds issuers of the continued relevance of issues already highlighted in its 2014 Report on IFRS 3. Regarding IAS 7, ESMA reminds issuers of the importance of specific disclosure aspects.

In addition, this year’s priorities emphasise the importance of measurement and disclosure of non-performing loans by credit institutions, the ongoing relevance of the fair presentation of financial performance and the disclosure on the impact of Brexit.  ESMA also highlights that the 2017 year-end will be the first time that the requirements of the amended Accounting Directive to disclose non-financial and diversity information will become applicable for certain large groups and undertakings.

Steven Maijoor, Chair, said:

“This year’s enforcement priorities focus on new standards which are about to come into force and will introduce significant change to financial statements. ESMA expects that issuers affected by these changes will provide entity-specific quantitative and qualitative disclosures about the application of the new standards and in particular financial institutions for IFRS 9 and corporates for IFRS 15. 

Investors increasingly value information on social and environmental impacts of issuers’ activities.  Consequently, ESMA highlights that both financial and non-financial reporting requirements are essential to support sustainable and long-term investment decision-making in Europe”.

ESMA has appointed new chairs for its Corporate Finance, Corporate Reporting, Financial Innovation, Market Integrity, Post-Trading and Secondary Markets Standing Committees as well as its Commodity Derivatives Task Force.

The new chairs begin their two year terms on 1 October.