New report identifies UK companies whose balance sheets will be most impacted by the new IFRS 16 lease accounting standards
LONDON– 19 February 2019 – LeaseAccelerator, the pioneer of the Enterprise Lease Accounting solutions market, announced today the release of its new study on Which UK Companies are Most Impacted by IFRS 16. The report includes a ranking of the FTSE 350 companies with the largest leasing obligations. Collectively, the top 350 listed companies in the UK add up to £180 billion in operating lease liabilities with the highest concentrations in the energy, airline, retail, telecoms and financial sectors.
On 1 January 2019, a new set of lease accounting standards began to take effect, requiring companies to transfer an estimated $3 trillion of operating leases onto corporate balance sheets as right-of-use assets and corresponding lease liabilities. Historically, only a limited set of information about operating leases has been reported in the footnotes of annual financial reports. However, under the new IFRS 16 standards, companies are required to add new line items to the balance sheet for these operating leases. As a result, key financial metrics, such as return on assets, EBITDA and the quick ratio will be impacted by these accounting changes.
“With the first interim statements to be reported under IFRS 16 now imminent, CFOs need to start developing strategies for communicating these balance sheet changes to their investor communities,” said Michael Keeler, CEO of LeaseAccelerator. “The publication of this report will help provide companies and CFOs with a perspective on the relative size and significance of their operating lease obligations compared to their industry peers.”
Developed over a period of ten years by the International Accounting Standards Board (IASB), the new lease accounting standards change the way listed companies will report leases in their quarterly and annual financial statements. Many real estate and equipment leases, previously only disclosed in the footnotes of investor filings will now be capitalised on corporate balance sheets. The IASB estimates that almost $3 trillion of assets and liabilities will transfer onto corporate balance sheets in the coming years. The implementation deadlines for the new standards have now started, commencing on 1 January this year.
The report is accessible at:
Data was sourced from information provided in the company’s most recent annual financial reports.
LeaseAccelerator offersthe market-leading software-as-a-service (SaaS) for Enterprise Lease Accounting, proven to be the simplest, fastest, easiest path to compliance with the new IFRS 16 standards. Using LeaseAccelerator’s unique Global Lease Accounting Engine, customers can apply the new standards to all types of leases – real estate, equipment and embedded – at the asset level as specified by the IASB. The company’s ecosystem of certified, global partners offers a variety of guaranteed turn-key solutions. On average, the firm’s Sourcing and Management applications drive savings of 17 percent with smarter procurement and end-of-term management – compliance plus ROI. Visit http://www.leaseaccelerator.com/.
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