The new Standard, IFRS 18 Presentation and Disclosure in Financial Statements, will give investors more transparent and comparable information about companies’ financial performance, enabling better investment decisions.

IFRS 18 introduces three sets of new requirements to improve companies’ reporting of financial performance and give investors a better basis for analyzing and comparing companies:

1. Improved comparability in the statement of profit or loss (income statement)

• The income statement currently lacks a fixed structure, causing inconsistencies in companies reported operating profits, thus reducing comparability. IFRS 18 introduces a new structure with defined categories - operating, investing, and financing - and mandates specific subtotals, including operating profit. This will enhance the consistency and comparability of companies' performance analysis.

2. Enhanced transparency of management-defined performance measures

• Companies often use alternative performance measures but typically lack sufficient information for investors to understand their calculation and relation to income statement measures. IFRS 18 will require companies to disclose and explain these company-specific measures, improving their transparency discipline and making them auditable.

3. More useful grouping of information in the financial statements

• IFRS 18 provides more explicit guidance on the organization and presentation of financial data, addressing issues caused by over-summarized or over-detailed information. It mandates more transparency about operating expenses, aiming to deliver more detailed, helpful information and facilitate investor understanding.

The standard is effective for annual reporting periods beginning on or after January 1, 2027, but companies can apply it earlier. Changes in companies’ reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems.

Access the press release on the IFRS’s website.