Review of non-IFRS performance measures for ASX200

ASX200 non-IFRS performance measures

This report examines the annual reports of ASX200 companies for June to September 2015, with insight into common types of non-IFRS performance measures.

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KPMG Australia

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Since 2009 KPMG have undertaken a number of reviews of listed company annual reports to assess the prevalence of non-IFRS performance measures. Over this period the two most significant reconciling items between non-IFRS and statutory equivalent measures have related to impairments and fair value adjustments on financial instruments.

For over 60 percent of companies reviewed, the non-IFRS performance measures exceeded the relevant statutory measure, though this trend has been decreasing from 76 percent in 2009 to 64 percent in 2014.

Observations

What we have seen in the 2015 reporting period:

  • 86 percent of companies reviewed reported at least one non-IFRS performance measure in their annual report.
  • 69 percent of these companies reported a 2015 non-IFRS measures that implied ‘better’ performance than the relevant statutory measure.
  • The most common non-IFRS performance measures used were adjusted net profit after tax (NPAT) and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA).
  • Impairments, transaction and restructure costs, gains/losses on derivatives and hedging, along with gains/losses on the purchase or sale of investments were the most common adjustments to statutory results.
  • 57 percent of companies included non-IFRS remuneration tables in their remuneration reports.
  • 68 percent of companies used and disclosed non-IFRS performance measures as their primary financial target for assessing eligibility for short-term incentive remuneration of key management personnel.

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