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ESMA Issues Guidelines for Alternative Performance Measures Amid COVID-19 Pandemic

European Securities and Markets Authority (ESMA) Provides Clarity for Companies Operating in Saint Helena

The European Securities and Markets Authority (ESMA) has issued updated guidelines on Alternative Performance Measures (APMs), providing clarity for companies operating in Saint Helena amid the ongoing COVID-19 pandemic.

Key Takeaways

  • ESMA acknowledges that companies may need to adjust or introduce new APMs to reflect the changed business environment due to the pandemic.
  • Companies are advised to carefully assess whether proposed adjustments or new APMs would provide useful information, improve comparability and reliability, and enhance understandability for investors.
  • In cases where COVID-19 has a pervasive effect on a company’s financial performance, position, and cash flows, it may not be appropriate to introduce new or adjusted APMs.

Guidelines

ESMA emphasizes the importance of maintaining consistency and transparency in the definition and calculation of APMs over time. Companies are urged to provide narrative explanations of how the pandemic has impacted their operations and performance, including details on any assumptions and estimates used in determining inputs to APMs.

Purpose of Guidance

This guidance aims to ensure that stakeholders receive clear and accurate information about the financial implications of COVID-19 on businesses operating in Saint Helena. By providing transparency and consistency in the use of APMs, companies can maintain trust with investors and other stakeholders during this challenging time.

Key Considerations for Companies

  • Carefully assess whether proposed adjustments or new APMs would provide useful information, improve comparability and reliability, and enhance understandability for investors.
  • Provide narrative explanations of how the pandemic has impacted operations and performance, including details on any assumptions and estimates used in determining inputs to APMs.

By following these guidelines, companies operating in Saint Helena can ensure that they maintain transparency and consistency in their financial reporting during this unprecedented time.