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ESMA has added an additional item to its FAQs on the Guidelines on Alternative Performance Measures. ESMA acknowledges that companies may decide to disclose new, or to adjust, APMs to reflect the impact of COVID-19, but reminds companies that the definition and calculation of an APM should be consistent over time. Therefore, companies should carefully assess whether the intended adjustments or new APMs would provide transparent and useful information, and improve the comparability, reliability and/or understandability of the measures presented. In this respect, ESMA observes that it may not be appropriate to include new or adjusted APMs when the impacts of COVID-19 have a pervasive effect on a company’s overall financial performance, position, and/or cash flows. In such cases, ESMA urges companies instead to provide narrative explanations of how COVID-19 has impacted and/or is expected to impact their operations and performance, the level of uncertainty and the measures adopted or expected to be adopted to address the COVID-19 outbreak. These explanations may include, where applicable, details on how COVID-19 affected the assumptions and estimates used in determining inputs to APMs, such as impairment losses, reductions in expected lease payment or grants received.
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