Most ASX200 companies using non-IFRS information in their annual reports

ASX200 companies using non-IFRS info in annual reports

Non-IFRS financial information – results or performance measures not determined by accounting standards – continues to play a key role in how top companies communicate and analyse their financial performance. KPMG’s study of a sample of ASX200 companies shows 26 out of 30 reported at least one such result in their 2015 annual reports, most of which implied a better performance than the relevant statutory measure.

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Kim Heng, KPMG Audit Partner said: “Four years ago, ASIC issued Regulatory Guide 230 Disclosing Non-IFRS Information to establish some boundaries and around the use of these measures. While this has certainly improved consistency in the market, nonetheless our survey has revealed that ASX200 companies are not fully complying with those guidelines”.


Highlights from the report include:

  • 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.

Kim Heng said: “The study identified several areas of improvement needed in terms of complying with RG230. For a start, IFRS information should be presented with equal or greater prominence than the non-statutory measures – yet we found only 35% of companies were consistently doing this. Secondly, reconciliations between IFRS and non-IFRS information should be provided, clearly identifying and explaining each item – yet this is not happening in the majority of cases. Only 42% of companies appeared to provide some sort of rationale as to why the use of non-IFRS financial information is useful for a clearer understanding of the company’s performance. We would like to see this number higher in future.”

She added: “Remuneration reports are always an area of great interest, so it is encouraging that our study showed that companies using non-IFRS targets in their short-term incentive plans do so in a way which is consistent with those used elsewhere in the annual report – which implies alignment of interests of the key management personnel. But given the element of discretion that can be exercised by senior executives in arriving at non-IFRS measures, directors and boards need to continue to take great care that investors fully understand the rationale behind the figures.”

Further information

Ian Welch
Senior Communications Manager, KPMG
T: 02 9335 7765 / 0400 818 891
E: iwelch@kpmg.com.au

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