Financial Reporting 2.0

S. 71 1. Introduction

This article looks at the use of non-GAAP performance measures by the companies in the DAX 30 index in their accounts and results presentations. Statistical data is from a survey of companies for year-ends in 2012. Many companies, not just in Germany but also across Europe, use these measures as KPIs. They do so because they feel they provide more useful measures of performance than the GAAP figures and, for the most part, investors and analysts agree that these are more useful measures. The use of non-GAAP measures, where these are the measures used by management for assessing the business, is supported, even encouraged, by IFRS 8. There are, of course, some general reservations: that any adjustments made to GAAP measures should be explained properly and a worry that the proliferation of different measures used damages comparability between companies.

Use of non-GAAP profit measures is common in Germany, over three quarters of the DAX have an adjusted measure at some level of the income statement. This has been the case for a number of years; in 2009 the proportion of the DAX with a non-GAAP profit measure was two thirds. In the UK such measures have a longer histor...