On June 21, the CSSF issued Circular 16/636, the purpose of which is to adopt into Luxembourg regulations the ESMA Guidelines on Alternative Performance Measures published on October 5, 2015. The circular enters into force on July 3.

The ESMA guidelines are addressed to non-state issuers that are individuals or legal entities governed by private or public law whose securities are admitted to trading on a regulated market and are required to publish regulatory information as defined by the Transparency Directive (2004/109/EC), as well as the persons responsible for the prospectus under Article 6 (1) of the Prospectus Directive (2003/71/EC).

The guidelines apply to regulatory authorities under the two directives as well as the Market Abuse Regulation number 596/2014.

For the purposes of the guidelines, an alternative performance measure is understood a financial measure of historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.

The guidelines clarify that APMs are usually derived from (or based on) the financial statements prepared in accordance with the applicable reporting framework, mostly by adding or subtracting amounts from the figures presented in financial statements, giving examples of measures that fall under the definition of APM and other financial and non-financial pieces of information that cannot be treated as such.

The guidelines are structured as a series of principles accompanied by explanation, details and examples. The principles provide information on the way APMs should be disclosed and presented, the reconciliation method, explanation of the use of APMs to be provided by the issuer, the way APMs should be displayed and presented in the documents, comparison information that should accompany APMs, consistency measures, and incorporation by reference.

The purpose of the guidelines is to ensure consistent, efficient and effective supervisory practices and a uniform and consistent application of the relevant legislation with the ultimate aim of improving the comparability, reliability and/or comprehensibility of APMs included in securities prospectuses or regulatory information.