Response 10 - Anonymous

Deadline for completion of this Invitation to Comment:

Close of business, 7 October 2025

Please submit to: [email protected]

Introduction

The objective of this Invitation to Comment is to obtain input from stakeholders on the endorsement and adoption of IFRS 18 Presentation and Disclosure in Financial Statements, published by the International Accounting Standards Board (IASB) in April 2024. IFRS 18 replaced IAS 1 Presentation of Financial Statements. IFRS 18 sets out general presentation and disclosure requirements that apply across the primary financial statements and the notes. It has an effective date of 1 January 2027 with earlier application permitted (subject to the UKEB adoption in the UK). The information collected from this Invitation to Comment is intended to help with the endorsement assessment.

UK endorsement and adoption process

The requirements for UK adoption are set out in Statutory Instrument 2019/685¹.

The powers to formally adopt international accounting standards for use in the UK were delegated to the UK Endorsement Board in May 2021².

Who should respond to this Invitation to Comment?

Stakeholders with an interest in the quality of accounts prepared in accordance with IFRS Accounting Standards.

How to respond to this Invitation to Comment

Please download this document, answer any questions on which you would like to provide views, and return it to [email protected] by close of business on 7 October 2025.

Brief responses to individual questions are welcome, as well as comprehensive responses to all questions.

Privacy and other policies

The data collected through submitting this document will be stored and processed by the UKEB. By submitting this document, you consent to the UKEB processing your data for the purposes of influencing the development of and adopting IFRS Accounting Standards for use in the UK. For further information, please see our Privacy Statements and Notices and other Policies (e.g. Consultation Responses Policy and Data Protection Policy)³.

The UKEB’s policy is to publish on its website all responses to formal consultations issued by the UKEB unless the respondent explicitly requests otherwise. A standard confidentiality statement in an e-mail message will not be regarded as a request for non-disclosure. If you do not wish your signature to be published, please provide the UKEB with an unsigned version of your submission. The UKEB prefers to publish responses that do not include a personal signature. Other than the name of the organisation/individual responding, information contained in the “Your Details” document will not be published. The UKEB does not edit personal information (such as telephone numbers, postal or e-mail addresses) from any other response document submitted; therefore, only information that you wish to be published should be submitted in such responses.

Assessment against endorsement criteria

Our draft assessment [tentatively] concludes that:

• IFRS 18 meets the criteria of relevance, reliability, understandability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management, as required by SI 2019/685 (see Regulation 7(1)(c));
• application of IFRS 18 is not contrary to the principle that an entity's accounts must give a true and fair view as required by SI 2019/685 (see Regulation 7(1)(a)); and
• that IFRS 18 is likely to be conducive to the long term public good in the UK as required by SI 2019/685 (see Regulation 7(1)(b)), having considered:
  • whether they will generally improve the quality of financial reporting;
  • the costs and benefits that are likely to result from their use; and
  • whether they are likely to have an adverse effect on the economy of the UK, including on economic growth.

Our draft assessment also concludes that IFRS 18 is not likely to lead to a significant change in accounting practice and therefore does not meet the criteria for a post-implementation review under Regulation 11 in SI 2019/685.

Our assessment is set out in Sections 3–6 of the [Draft] ECA.

Questions

Technical accounting criteria assessment

1Do you agree with the draft assessment of IFRS 18 against the technical accounting criteria? (please select one option)

2Please include any comments you may have in response to question 1:

Yes, we agree that IFRS 18 meets the criteria of relevance, reliability, understandability, and comparability.

• Relevance & comparability: Mandatory subtotals will improve comparability and help distinguish operational performance from financing effects which is an important distinction in a capital-intensive sector.
• Reliability & understandability: The aggregation/disaggregation principles reduce reliance on “other” categories and encourage meaningful disclosure of key drivers.

We note, however, that the application of these principles may involve significant judgement. In particular, derivative and other fair-value movements could be presented differently across entities, and classification inconsistencies may arise within group structures where the activities of individual entities differ from those of the consolidated group. Ensuring consistency in these areas will be important for maintaining comparability across the sector.

Overall, we support the draft conclusion that IFRS 18 meets the statutory endorsement criteria under SI 2019/685, while flagging the above as important areas for practical implementation.

UK long term public good assessment

3Do you agree with the initial overall assessment of the costs likely to arise from the implementation of IFRS 18? (please select one option).

4Please include any comments you may have in response to question 3 including, if applicable, any costs that may have been omitted from the analysis:

Yes, we broadly agree that the costs of implementing IFRS 18 will not be disproportionate, though for our sector there are some specific areas where additional effort will be required.

The main cost areas relate to updating systems, mapping chart-of-accounts structures to the new subtotals, and introducing more granular reporting to meet the new disaggregation requirements. Aligning classifications across project and financing entities within a group may also require additional analysis. These costs are manageable overall, though a reduced disclosure approach for smaller entities would ease the transition.

5Do you agree with the initial overall assessment of the benefits likely to arise from the implementation of IFRS 18? (please select one option).

6Please include any comments you may have in response to question 5 including, if applicable, any benefits that may have been omitted from the analysis:

Yes, we agree that the benefits of IFRS 18 are likely to outweigh the costs, the main benefits are:

• Provide a clearer distinction between operational and financing activities, improving users' understanding of performance
• Enhance transparency through more meaningful disaggregation of income and expense items
• Strengthen comparability across capital-intensive industries, including the energy-storage sector.

That said, we note a potential challenge that this could introduce volatility into the reported operating results, which may obscure the underlying performance unless carefully explained. However, we see this as a net benefit for users of accounts as it provides an understanding of performance and risk.

7Do you agree with the draft assessment that IFRS 18 is likely to be conducive to the long term public good in the UK? (please select one option)

8Please include any comments you may have in response to question 7 including, if applicable, any economic effects that have been omitted from the analysis:

We agree that IFRS 18 is likely to be conducive to the long-term public good in the UK. Improved transparency and comparability in financial reporting will support investor confidence and efficient capital allocation across the energy-infrastructure sector.

9In our assessment of implementation costs we have concluded that implementing IFRS 18 will not be disproportionately costly for listed small- and medium-cap entities. Do you agree with this assessment? (please select one option).

10Please include any comments you may have in response to question 9:

Yes, although as smaller and medium-sized private business we expect the effort to be relatively more strenuous than for larger listed peers. Bigger groups have established IFRS reporting infrastructure and larger finance teams, whereas our resources are leaner and must cover operations across multiple European markets. This means that mapping new subtotals, disaggregating revenues, and preparing comparatives will require proportionally more effort from us.

While we agree the costs are not disproportionate overall, we believe proportional or reduced reporting requirements for SMEs would help ease the transition without undermining transparency.

True and fair view assessment

11Do you agree with the draft assessment that IFRS 18 is not contrary to the true and fair view requirement? (please select one option)

12Please include any comments you may have in response to question 7:

We agree IFRS 18 is not contrary to true and fair view and believe it enhances faithful representation. The main consideration is ensuring that preparers apply consistent judgement in disaggregating volatile or one-off items, so that the improved transparency does not inadvertently reduce clarity for users.

Is IFRS 18 likely to lead to a significant change in accounting practice?

13The UKEB's tentative view is that IFRS 18 is not likely to lead to a significant change in accounting practice because:

1. Approximately 80% of the requirements in IAS 1 have been carried forward into IFRS 18 (or into IAS 8 Changes in Accounting Policies, Estimates and Errors or IFRS 7 Financial Instruments: Disclosures) with limited or no changes. Likewise, a few of the new requirements in IFRS 18 are based on previous requirements in IAS 1.
2. It does not include requirements on how entities recognise and measure items in the financial statements.
3. Current financial reporting practices in the UK may already align with certain aspects of the new requirements in IFRS 18. Therefore, implementing IFRS 18 is unlikely to result in a fundamental change to existing accounting practices.

14The UKEB observes, however, that there are arguments supporting that IFRS 18 is likely to lead to a significant change in accounting practice, notably that:

1. IFRS 18 introduces new requirements that extend beyond the scope of IAS 1 that are expected to affect most if not all entities, such as:
   1. A new structure and newly defined subtotals, including operating profit in the statement of profit or loss, that may affect how entities present and communicate financial performance.
   2. Mandatory disclosure of management defined performance measures (MPMs) in a single note. In practice there may not be much change considering that most entities already provide detailed reconciliations of their alternative performance measures (APMs). However, entities will need to reassess and potentially expand the information they disclose publicly.
   3. New guidance on aggregation and disaggregation, which may require entities to revisit how they group, disaggregate information across the financial statements.
2. IFRS 18 is more than a standard on presentation and disclosure. It represents a long-awaited response to user demands for more relevant, transparent and comparable information. Users have widely acknowledged that IFRS 18 will significantly impact and reshape the presentation and disaggregation of information (primarily on the statement of profit or loss).

15Taking into consideration the arguments presented above, do you agree with the tentative assessment in the [Draft] ECA that IFRS 18 is not likely to lead to a significant change in accounting practice? (please select one option):

16Please provide your rationale for the answer to Question 15—namely, the reasons for concluding whether or not IFRS 18 is likely to lead to a significant change in accounting practice:

Yes, we agree that IFRS 18 does not change the underlying recognition and measurement principles, so in that sense it does not create a significant change in accounting practice.

The new presentation and disclosure requirements will change how our results are communicated and interpreted. In particular:

• Operational revenues and costs will be more disaggregated, giving clearer visibility of different income streams and cost drivers.
• Financing costs will be separated more sharply, highlighting the impact of debt structures on our results.

While this does not represent a fundamental accounting change, in practice we still expect variable implementation which will need explanation to investors and lenders.

17Do you have any other comments you would like to add?

We see IFRS 18 as an important step forward in improving consistency and transparency. To support effective implementation in our sector, we suggest the UKEB consider encouraging the IASB or other bodies to provide implementation guidance and illustrative examples tailored to renewable energy and storage businesses. In particular, it would be valuable to see:

• Presentation and disaggregation of income and expense categories in capital-intensive sectors
• The consistent classification of items within group structures where entities have differing principal activities.

We believe this type of guidance would promote consistent application across the sector, ensuring that IFRS 18 delivers the comparability and understandability that it aims to achieve.

Thank you for completing this Invitation to Comment

Please submit this document by close of business on 7 October 2025 to: [email protected]

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