Final guidelines intended to encourage European issuers to publish more transparent, unbiased, comparable information on their financial performance were published on Tuesday by the European Securities and Markets Authority (ESMA).
The guidelines set out the principles that issuers should follow when using alternative performance measures — such as free cash flow, EBITDA, and underlying profit — in regulated filings, and provide guidance on the calculation and presentation of these sorts of metrics.
The guidelines will improve the comparability, reliability and comprehensibility of these sorts of measures for investors, the ESMA said.
“I strongly believe that compliance with these guidelines will provide end-users with a more comprehensive and transparent representation of the financial measures disclosed by European issuers to the market,” said Steven Maijoor, chair of the ESMA, in a statement.
“The application of these guidelines to regulated documents like prospectuses, financial reports, and market disclosures will foster investor protection, avoid regulatory arbitrage and contribute to a single rulebook by promoting a uniform and consistent application of the requirements across the EU,” he added.
The guidelines apply to both issuers with securities trading on regulated markets, and those who are responsible for drawing up prospectuses. They will take effect July 3, 2016.
The ESMA noted that its guidelines are also aligned with the approach of securities regulators in Canada, the U.S., and Australia in this area.