Let’s return to the IFRS 18 concept of management-defined performance measures.

You’ll recall that the new standard defines such a measure as ‘a subtotal of income and expenses that an entity uses in public communications outside financial statements; to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole, excluding various defined items. The IFRS Interpretations Committee recently considered a fact pattern in which a private entity prepares and shares presentations (including pitch materials) with a small number of identifiable shareholders or potential investors. The presentations are shared under agreements that require confidentiality and prevent redistribution of the presentations to other parties; they’re not published online, included in press releases, distributed to analysts, or otherwise made accessible to a broader or undefined external audience. They contain performance measures that could meet the definition of a management-defined performance measure.

The originating submission, as contained in the underlying staff paper, set out a possible argument for viewing the measures included in such presentations as management-defined performance measures, such that the entity should disclose information about them in its financial statements, including a reconciliation to the closest relevant IFRS subtotal:

• Under this view, the term public communications in IFRS 18 is interpreted broadly. Supporters note that IFRS 18.B119 includes “investor presentations” explicitly within its examples of public communications, without distinguishing between materials that are widely distributed and those shared only with specific investors. They therefore consider that the Standard intends investor-facing materials, by their nature, to fall within the scope of public communications, regardless of whether they are subject to confidentiality restrictions.
• Applying this view, subtotals included in investor presentations or fundraising materials— even when distributed under confidentiality agreements—would give rise to management defined performance measures and, therefore, trigger the disclosure and reconciliation requirements in IFRS 18.

The submission suggested that this issue “could have a widespread and material effect on private entities, including start ups and investor-backed groups that routinely provide confidential investor updates while preparing IFRS financial statements.” It adds: “Because IFRS 18 does not address whether confidentiality restrictions exclude a communication from being ‘public,’ divergent interpretations are emerging during implementation. A broad interpretation could oblige private entities to include reconciliations of internally used measures in audited financial statements, increasing operational burden and risking disclosure of commercially sensitive information. Given the prevalence of private-market capital structures, consistent guidance is needed before IFRS 18 becomes effective.”

When it developed IFRS 18, the IASB specifically decided not to define “public communications” in the context of the standard, in part because of concerns that any definition might carry unintended consequences. However, staff material from the time notes that “the common interpretation of ‘public’ is wide in scope. For example, the Merriam-Webster definition for public as an adjective is: (a) exposed to general view, open, (b) well-known, prominent, (c) perceptible, material.” Against that backdrop, some extracts from the Committee’s discussion:

• To help entities assess whether a communication is a public communication, paragraph B119 of IFRS 18 lists particular communications that ‘public communications’ include and exclude. The Committee observed that the reference to ‘investor presentations’ in paragraph B119 of IFRS 18 should not be read to mean that all presentations provided to investors are public communications.
• The Committee noted that an entity applies judgement in assessing whether a particular communication is a public communication. In paragraph BC335 of the Basis for Conclusions accompanying IFRS 18, the IASB observed that ‘an entity actively decides how it communicates publicly and the performance measures it includes in those communications. An entity usually has systems and processes in place to monitor and control its communications to comply with laws and regulations restricting the type and timing of information permitted to be provided to the market…’.

On that basis, the Committee concluded that the presentations described in the fact pattern are not public communications for the purposes of identifying a management-defined performance measure applying IFRS 18, that the principles and requirements in the standard provide an adequate basis for the entity to assess the issue, and that a standard-setting project in this respect isn’t needed. This appears reasonable in that the object of this aspect of IFRS 18, broadly speaking, is to bring greater rigour and transparency to the use of such measures. In the kind of situation set out above, where dissemination is tightly controlled, with no great likelihood of other market participants coming across or being influenced by the content of the materials, additional disclosure appears unnecessary: among other things, recipients of confidential private company presentations are better able to communicate directly with the entity on questions of interpretation or lack of clarity.

The deadline for commenting on the tentative agenda decision is September 9, 2026. As matters arising from the implementation of IFRS 18 go, one imagines it might spark a bit less debate than the issue we looked at here…

The opinions expressed are solely those of the author.