Alternative performance measures: how have practices of large European corporates evolved?

Building on our previous studies on this topic, Mazars has analysed the use of Alternative Performance Measures (“APM”) by a sample of issuers in their financial reporting for 2017 and 2018. We also look at the future changes proposed by the International Accounting Standards Board (“IASB”) as part of the Primary Financial Statement Project, and what this will mean for corporates.

Since 2015, European issuers have had access to detailed guidelines on the use of APMs. As APMs became increasingly popular, the European Securities and Markets Authority (“ESMA”) published further recommendations aiming to improve the comparability, reliability and comprehensibility of APMs.

Our study of practices on the use of APMs analyses whether disclosures comply with the ESMA guidelines. It sheds light on the sensitivity of financial reporting on APMs to the latest accounting standard changes with the outcomes of the application of IFRS 9 and IFRS 15 in 2018, as well as the expected impacts of IFRS 16 in 2019. Finally, it takes account of the recent exposure draft published by the IASB on the presentation of financial statements, giving some initial insights into the implications of the PFS project for corporates.

Although the issuers consistently use APMs, there are still some divergences in the level of transparency and clarity of the information provided. It would appear there is still significant room for improvement for some companies regarding financial reporting on APMs. These practices will continue to evolve significantly over the coming years in light of the IASB’s ongoing works.

Our study is based on a sample of 39 European companies from the industrial and services sectors, listed on the EURO STOXX 50 index and closing their accounts as of 31 December, except for one company whose closing date is 30 September.

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