FRC Lab report on reporting performance metrics

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22 Jun, 2018

A new report from the Financial Reporting Lab of the Financial Reporting Council (FRC) includes a framework and set of questions for companies and their boards to consider when deciding on how they report their performance.

The report points out that investors are calling on companies to reassess how they report their performance metrics. The metrics chosen by companies to report their performance should be clearly aligned to the company’s strategic goals, be transparent on how they are calculated and provide sufficient information that allows comparisons to be made to previous years’ performance.

The questions companies and their boards should consider when deciding on how they report their performance focus on:

  • alignment to strategy,
  • transparency,
  • context,
  • reliability, and
  • consistency.

The report, which is the outcome of the first phase of the Lab's project on performance metrics, builds on the guidance on alternative performance measures issued by the European Securities and Markets Authority (ESMA) in October 2015 but provides an investor perspective on the reporting of all types of metrics (including wider metrics that are not covered by ESMA’s guidelines).

The next phase of the project will seek to identify examples of how these principles can be put into practice.

Please click to access the press release and full report on the FRC website.

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