CSSF Release Findings on ESMA Guidelines on Alternative Performance Measures

The Surveillance Commission for the Financial Sector (CSSF), Luxemourg's financial regulator, has carried out an examination of the financial communication published for the 2016 annual period focused on the respect of the ESMA Guidelines on Alternative Performance Measures.

The examination comes following the announcement on 16 January 2017 related to the enforcement priorities of the CSSF for the 2016 financial information published by issuers subject to the law of 11 January 2008 on transparency requirements for issuers, otherwise known as the “Transparency Law”.

The findings show that whilst some progress has been observed since the CSSF’s first examination on the same topic, a series of misstatements and omissions have still been identified. The most significant include the fact that the guidelines requirements related to Alternative Performance Measures (APMs) are not yet fully respected by a lot of issuers in their press releases accompanying the publication of annual financial statements.

Moreover, some issuers, while respecting the guidelines requirements for common APMs, tend to disregard the same requirements for other, more specific, financial measures and fail to identify them as APMs. Regarding this issue, the CSSF reminded issuers of the definition of an APM as 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.

As during the first examination, the CSSF also identified recurring breaches regarding the definitions of APMs used, the reconciliations of APMs to the most directly reconcilable line item, subtotal or total presented in the financial statements, and explanations on the use of APMs.

In view of such findings, the CSSF recalled that issuers should assess for each measure used, when preparing future financial information, whether this measure is an APM or not and, in case it is, if the guidelines are applicable to this APM. Where the guidelines are applicable, issuers should comply with all requirements for each and every APM used. Accordingly, the CSSF plans to continue closely monitoring how issuers comply with the guidelines in their future financial communication, in particular the 2017 half-yearly financial report and press release.