WHAT IS A MANAGEMENT-DEFINED PERFORMANCE MEASURE?SUBTOTALS OF INCOME AND EXPENSESPerformance measuresFinancial performance measuresNon-financialperformancemeasuresSubtotals of income and expensesOther measures thatare not subtotals ofincome and expensesMPMsHKFRS AccountingStandards specifiedFor example:
Adjusted profitor lossAdjustedoperating profitAdjustedEBITDAFor example:
Operating profitor lossSubtotals ofincome andexpenses listed inparagraph 118 ofHKFRS 18For example:
Subtotals of onlyincome or onlyexpensesMeasures ofassets or liabilitiesFinancial ratios1Measures of cashflowsFor example:
Number ofcustomersCustomersatisfactionscoreStore surfaceIn prior HKFRS 18 Navigator issues, we introduced the key changes to the statement of profit or lossunder HKFRS 18 Presentation and Disclosure in Financial Statements. Building on this foundation,we now turn to another significant aspect of the Standard — management‑defined performancemeasures (MPMs). In this issue, we explore the identification of MPMs, the related disclosurerequirements and key practical implications.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4Entities may present various non‑GAAP measures. Not all such measures qualify as MPMs.Under HKFRS 18, an MPM is defined as a measure that meets all three of the followingcriteria, regardless of whether it is presented in the statement of profit or loss:
1.a subtotal of income and expenses other than those specified by HKFRS AccountingStandards;
2.used in public communications outside financial statements; and
3.used to communicate to users of financial statements management’s view of an aspect ofthe financial performance of the entity as a whole.To qualify as an MPM, a measure must first be a subtotal of income and expenses.The table below illustrates examples of different types of measures that an entity mayhave and which of these measures meet the definition of an MPM.The numerator or denominator in a financial ratio might be an MPM if they meet the definition of an MPM.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4To qualify as an MPM, a subtotal of income and expenses must be used by the entity inpublic communications outside the financial statements. HKFRS 18 provides examplesof communications that are considered public communications, as well as those that arenot, as illustrated below.PUBLIC COMMUNICATIONSExamples of public communicationsExcluded from public communicationsManagement commentaryPress releasesInvestor presentationsOral communicationsWritten transcripts of oralcommunicationsSocial media postsMoreover, the MPM must relate to the same reporting period as the financialstatements. For example, a subtotal of income and expenses relating to interim financialstatements, but not to the annual financial statements, can only be an MPM in theinterim financial statements, and vice versa.An entity is not required to include a measure identified in the prior period as an MPM ifevidence indicates that it will no longer be included in the public communications for thecurrent reporting period.HKFRS 18 presumes that a subtotal of income and expenses used in publiccommunications outside the financial statements communicates management’s view ofan aspect of the financial performance of the entity as a whole.An entity is permitted to rebut this presumption only when it has reasonable andsupportable information available that demonstrates both of the following:
COMMUNICATE MANAGEMENT’S VIEWThe subtotal does notcommunicatemanagement’s viewandThe subtotal is used for a reason other thancommunicating management’s viewExamples include cases inwhich the subtotal is:
Communicated withoutprominenceNot used internally toassess or monitorfinancial performanceExamples include cases in which the subtotalis:
Required by law or regulationUsed to communicate performance relatedto financial statements under a non-HKFRSAccounting Standards frameworkUsed to satisfy a request from an externalpartyUsed to communicate information otherthan financial performanceLATEST IASB DEVELOPMENTSAssessment of a Specified Main Business Activity for the Purposes of the SeparateFinancial Statements of a ParentClassification of a Foreign Exchange Difference from an Intragroup Monetary Liability(or Asset)
Classification of Gains and Losses on a Derivative Managing a Foreign CurrencyExposureScope of the Requirement to Disclose Expenses by NatureIn April 2026, the IFRS Interpretations Committee published the following four Agenda Decisionsrelated to IFRS 18. These Agenda Decisions provide useful insights into the application of therequirements in HKFRS 18:
Illustrative examplesHKFRS 18 IE8 provides illustrative examples of disclosures for MPMs.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4DISCLOSURES FOR MPMSOnce a performance measure meets the definition of an MPM, entities should label and describeeach MPM in a clear and understandable manner and are required to disclose the followinginformation in a single note.Changes to MPMsIf an entity changes the calculation of an MPM, introduces a new MPM or ceases using a previouslydisclosed MPM, it is required to disclose:
an explanation of the change, addition or cessation and its effects;
the reasons for the change, addition or cessation; andrestated comparatives to reflect the change, addition or cessation unless impracticable to do so.A statementFor each MPMDescriptionsA reconciliationThe MPMs:
provide management’sview of an aspect of thefinancial performance ofthe entity as a whole; andare not necessarilycomparable with measuressharing similar labels ordescriptions provided byother entities.The aspect offinancialperformance iscommunicated bythe MPM;
Why the MPMprovides usefulinformation; andHow the MPM iscalculated.Between the MPM and the mostdirectly comparable total or subtotalrequired by HKFRS AccountingStandards, showing;
The income tax effect and theeffect on non-controlling interestsfor each item disclosed in thereconciliation; andA description of how the entitydetermines the income tax effect.KEY CONSIDERATIONS FOR PREPARERSLOOKING AHEAD: WHAT’S NEXT IN OUR SERIESH2
6.A deep-dive into income,expenses & informationgrouping
7.Beyond the headlines:
Changes to other HKFRSAccounting Standards
8.Navigating IFRS agendadecisions on HKFRS 18
9.From theory to practiceQ2
3.Defining what you do:
Determination of mainbusiness activities
4.Management-definedPerformanceMeasures
5.Insights for financialinstitutionsQ1
1.Getting ready
2.Navigating the newstructureEarly internal alignment and external communicationsEntities should involve the appropriate level of management and investor relationsteams early in the process to identify which performance measures meet the definitionof an MPM, how those performance measures will be communicated going forward,and how those communications may affect financial statement disclosures.Comparative information requirementsOn initial application of HKFRS 18, comparative information for MPMs is required .Preparers should therefore assess at an early stage what data will be needed for thecomparative period to support adoption of the new Standard.Audit considerationsDisclosures for MPMs will be subject to audit. Early engagement with auditors wouldbe necessary to agree on the identification of MPMs, related disclosure changes andthe documentation expected to support significant judgements.MAY 2026 ISSUE 4In the next issue, we will focus on how HKFRS 18 will change the income statement of financialinstitutions.This publication has been prepared by staff of HKICPA for information or illustration purposes. Members of the HKICPAand other users should also read the full HKFRS Accounting Standards, as found in the HKICPA Members’ Handbook forfurther reference, and seek professional advice where necessary.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURES
HKFRS 18 Navigator Issue 4: Management-defined performance measures
下载原件WHAT IS A MANAGEMENT-DEFINED PERFORMANCE MEASURE?SUBTOTALS OF INCOME AND EXPENSESPerformance measuresFinancial performance measuresNon-financialperformancemeasuresSubtotals of income and expensesOther measures thatare not subtotals ofincome and expensesMPMsHKFRS AccountingStandards specifiedFor example:
Adjusted profitor lossAdjustedoperating profitAdjustedEBITDAFor example:
Operating profitor lossSubtotals ofincome andexpenses listed inparagraph 118 ofHKFRS 18For example:
Subtotals of onlyincome or onlyexpensesMeasures ofassets or liabilitiesFinancial ratios1Measures of cashflowsFor example:
Number ofcustomersCustomersatisfactionscoreStore surfaceIn prior HKFRS 18 Navigator issues, we introduced the key changes to the statement of profit or lossunder HKFRS 18 Presentation and Disclosure in Financial Statements. Building on this foundation,we now turn to another significant aspect of the Standard — management‑defined performancemeasures (MPMs). In this issue, we explore the identification of MPMs, the related disclosurerequirements and key practical implications.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4Entities may present various non‑GAAP measures. Not all such measures qualify as MPMs.Under HKFRS 18, an MPM is defined as a measure that meets all three of the followingcriteria, regardless of whether it is presented in the statement of profit or loss:
1.a subtotal of income and expenses other than those specified by HKFRS AccountingStandards;
2.used in public communications outside financial statements; and
3.used to communicate to users of financial statements management’s view of an aspect ofthe financial performance of the entity as a whole.To qualify as an MPM, a measure must first be a subtotal of income and expenses.The table below illustrates examples of different types of measures that an entity mayhave and which of these measures meet the definition of an MPM.The numerator or denominator in a financial ratio might be an MPM if they meet the definition of an MPM.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4To qualify as an MPM, a subtotal of income and expenses must be used by the entity inpublic communications outside the financial statements. HKFRS 18 provides examplesof communications that are considered public communications, as well as those that arenot, as illustrated below.PUBLIC COMMUNICATIONSExamples of public communicationsExcluded from public communicationsManagement commentaryPress releasesInvestor presentationsOral communicationsWritten transcripts of oralcommunicationsSocial media postsMoreover, the MPM must relate to the same reporting period as the financialstatements. For example, a subtotal of income and expenses relating to interim financialstatements, but not to the annual financial statements, can only be an MPM in theinterim financial statements, and vice versa.An entity is not required to include a measure identified in the prior period as an MPM ifevidence indicates that it will no longer be included in the public communications for thecurrent reporting period.HKFRS 18 presumes that a subtotal of income and expenses used in publiccommunications outside the financial statements communicates management’s view ofan aspect of the financial performance of the entity as a whole.An entity is permitted to rebut this presumption only when it has reasonable andsupportable information available that demonstrates both of the following:
COMMUNICATE MANAGEMENT’S VIEWThe subtotal does notcommunicatemanagement’s viewandThe subtotal is used for a reason other thancommunicating management’s viewExamples include cases inwhich the subtotal is:
Communicated withoutprominenceNot used internally toassess or monitorfinancial performanceExamples include cases in which the subtotalis:
Required by law or regulationUsed to communicate performance relatedto financial statements under a non-HKFRSAccounting Standards frameworkUsed to satisfy a request from an externalpartyUsed to communicate information otherthan financial performanceLATEST IASB DEVELOPMENTSAssessment of a Specified Main Business Activity for the Purposes of the SeparateFinancial Statements of a ParentClassification of a Foreign Exchange Difference from an Intragroup Monetary Liability(or Asset)
Classification of Gains and Losses on a Derivative Managing a Foreign CurrencyExposureScope of the Requirement to Disclose Expenses by NatureIn April 2026, the IFRS Interpretations Committee published the following four Agenda Decisionsrelated to IFRS 18. These Agenda Decisions provide useful insights into the application of therequirements in HKFRS 18:
Illustrative examplesHKFRS 18 IE8 provides illustrative examples of disclosures for MPMs.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURESMAY 2026 ISSUE 4DISCLOSURES FOR MPMSOnce a performance measure meets the definition of an MPM, entities should label and describeeach MPM in a clear and understandable manner and are required to disclose the followinginformation in a single note.Changes to MPMsIf an entity changes the calculation of an MPM, introduces a new MPM or ceases using a previouslydisclosed MPM, it is required to disclose:
an explanation of the change, addition or cessation and its effects;
the reasons for the change, addition or cessation; andrestated comparatives to reflect the change, addition or cessation unless impracticable to do so.A statementFor each MPMDescriptionsA reconciliationThe MPMs:
provide management’sview of an aspect of thefinancial performance ofthe entity as a whole; andare not necessarilycomparable with measuressharing similar labels ordescriptions provided byother entities.The aspect offinancialperformance iscommunicated bythe MPM;
Why the MPMprovides usefulinformation; andHow the MPM iscalculated.Between the MPM and the mostdirectly comparable total or subtotalrequired by HKFRS AccountingStandards, showing;
The income tax effect and theeffect on non-controlling interestsfor each item disclosed in thereconciliation; andA description of how the entitydetermines the income tax effect.KEY CONSIDERATIONS FOR PREPARERSLOOKING AHEAD: WHAT’S NEXT IN OUR SERIESH2
6.A deep-dive into income,expenses & informationgrouping
7.Beyond the headlines:
Changes to other HKFRSAccounting Standards
8.Navigating IFRS agendadecisions on HKFRS 18
9.From theory to practiceQ2
3.Defining what you do:
Determination of mainbusiness activities
4.Management-definedPerformanceMeasures
5.Insights for financialinstitutionsQ1
1.Getting ready
2.Navigating the newstructureEarly internal alignment and external communicationsEntities should involve the appropriate level of management and investor relationsteams early in the process to identify which performance measures meet the definitionof an MPM, how those performance measures will be communicated going forward,and how those communications may affect financial statement disclosures.Comparative information requirementsOn initial application of HKFRS 18, comparative information for MPMs is required .Preparers should therefore assess at an early stage what data will be needed for thecomparative period to support adoption of the new Standard.Audit considerationsDisclosures for MPMs will be subject to audit. Early engagement with auditors wouldbe necessary to agree on the identification of MPMs, related disclosure changes andthe documentation expected to support significant judgements.MAY 2026 ISSUE 4In the next issue, we will focus on how HKFRS 18 will change the income statement of financialinstitutions.This publication has been prepared by staff of HKICPA for information or illustration purposes. Members of the HKICPAand other users should also read the full HKFRS Accounting Standards, as found in the HKICPA Members’ Handbook forfurther reference, and seek professional advice where necessary.HKFRS 18 NAVIGATORMANAGEMENT-DEFINEDPERFORMANCE MEASURES