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ESMA Guidelines on Alternative Performance Measures (‘APMs’) come into force

The European Securities and Markets Authority (‘ESMA’) published its Guidelines on Alternative Performance Measures (‘ESMA APM Guidelines’) for issuers on 30 June 2015.  IAASA reminds issuers that these become effective in relation to any APMs disclosed on or after 3 July 2016. The ESMA APM Guidelines apply to issuers with securities traded on regulated markets and persons responsible for drawing up a prospectus. IAASA also reminds issuers that APMs included in preliminary announcements are governed by the ESMA APM Guidelines.

An APM is a financial measure of historical or future financial performance, a financial position, or cash flows. However, APMs disclosed in financial statements are out of scope of the ESMA APM Guidelines (as such measures are already governed by financial reporting standards). Examples of the more common APMs used by Irish issuers in financial reports include earnings measures (such as EBITDA, EBIT and underlying profits), free cash flow, net debt and adjusted earnings per share measures.

Compliance with the ESMA Guidelines will be supervised by competent authorities and other bodies in the EU with responsibilities under the Transparency Directive (in Ireland’s case, IAASA), Prospectus Directive or Market Abuse Regulation (in Ireland’s case, the Central Bank of Ireland).

As the statutory accounting enforcer in Ireland, IAASA has engaged extensively with a number of issuers in Ireland on this topic in the past and has received undertakings for improvements from those issuers. The coming into force of the ESMA APM Guidelines will give added impetus to IAASA’s activity in this area.

IAASA has also published the results of its survey on the use of Alternative Performance Measures by Irish equity issuers in two papers, namely:


The ESMA APM Guidelines can be found here