IFRS16 retailer accounting changes set to confuse comparisons

marks and spencer

Changing accounting rules and regulations can hamper the understanding of company performance, making it more difficult to assess figures, especially if investors are not fully aware of what has happened.

This is happening with the latest accounting changes relating to leases. The IFRS16 accounting standard has come into force and it will generally make debt appear higher and affect different levels of profit. This is particularly true of the retail sector.

Peel Hunt has published a note called IFRS16: Assessing the retail impact, which sets out the impact of the accounting changes on earnings and balance sheets of the retailers it covers. The broker argues that comparing different retailers’ performance from headline profit and loss will become more difficult.
IFRS16 is t...

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Andrew Hore is the publisher of AIM Journal, which is an online monthly publication covering the Alternative Investment Market.