On October 22, 2019 ESMA, the European Securities and Markets Authority has published a Public Statement, "European Municipalities Priorities of Application for Financial Reports 2019" (ESMA32-63-791), in relation to the established 2019 financial statements to be published by listed companies (https://www.esma.europa.eu/sites/default/files/library/esma32-63-791_esma_european_common_enforcement_priorities_2019.pdf )

Purpose of this document is to encourage the coherence and the reliability of financial and non-financial information produced by issuers and, consequently, to give a contribution to the correct functioning of European capital markets.

In particular, also taking into account what has been emerging from the supervisory activity carried out by the various European Supervisory Authorities, ESMA indicated the following aspects that, in the current context, will need specific attention by listed companies and by the Supervisory Authorities:

- specific issues related to the application of IFRS 16 "Leasing";

- follow up of some questions relating to the application of IFRS 9 "Financial Instruments" for financial institutions and IFRS 15 "Revenues from contracts with customers" for corporate issuers;

- issues concerning the application of IAS 12 "Income Taxes" (including the application of IFRIC 23 "Uncertainty about treatments for income tax purposes").

In addition to the issues mentioned above, in the document in question, ESMA draws attention (i) to the need to provide, where relevant, information on the impacts deriving from Brexit as well as (ii) on the activities that the issuers will be required to undertake in consideration of the obligation to prepare annual financial reports for financial years starting on 1 January 2020 or at a later date in the single electronic communication format (ESEF, European Single Electronic Format).

In continuity with what happened last year, a special section of the document is dedicated to calling the attention of companies to non-financial information (requested in Italy by Legislative Decree 254/2016) as well as specific aspects relating to the "ESMA Guidelines on Alternative Performance Indicators "(ESMA / 2015/1415). In particular, ESMA highlights some general principles aimed at improving the quality of communication of social and environmental information by companies. In this perspective, the attention of issuers is drawn to certain fundamental principles set out in the "[Non-binding] guidelines on the communication of non-financial information" of the European Commission (i.e., relevance, completeness, balance and accessibility of information).

ESMA also draws the attention of the companies to the information relating to the following specific aspects:

• - environmental issues and climate change;
• - Key Performance Indicators - KPIs;
• - used reporting standard;
• - supply chains.

With reference, instead, to Alternative Performance Indicators (APMs), considering that with the entry into force of IFRS 16 many issuers have modified and/or introduced various indicators, ESMA draws attention to the paragraphs of the Guidelines on APMs which require to provide any information allowing users to correctly understand the changes made. It is also reiterated that the APMs must not be shown with greater prominence than the measures directly derived from the values included in the financial statements.