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IFRS 16 Study Half Year Reports 2019 Impact of IFRS 16 – updated analysis of Half Year Reports 2019 WP StB CPA Christoph Gruss
Transcript of IFRS 16 Study Half Year Reports 2019 - PwC€¦ · 4 IFRS 16 Study Half Year Reports 2019 October...
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IFRS 16 Study Half Year Reports 2019
Impact of IFRS 16 – updated analysis of Half Year Reports 2019
WP StB CPA Christoph Gruss
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PwC
Disclosure study on the leases standard
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October 2019IFRS 16 Study Half Year Reports 2019
We analyzed 78 companies,
which already adopted the
standard and disclosed the
impact of IFRS 16 in their
reports. This excludes Early
Adopters and the companies
which have not adopted the
new lease standard yet.
• DAX (25)
• MDAX (33)
• SDAX (12)
• TecDAX (8)
Listing Stock
Exchange
Not yet adopted
Adopted and disclosed an impact
between 01.01. – 31.03.2019
Early Adopters
10%
78%
12%
100
companies
22%
23%
48%
7%
Total Assets
78 companies
38%
12%
14%
26%
10%
Total Revenue
78 companies
< 0.25 bn €
0.25 – 1 bn €
1 – 5 bn €
5 – 10 bn €
> 10 bn €
0.1 – 1 bn €
1 – 10 bn €
10 – 50 bn €
> 50 bn €
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PwC
Change in total assets caused by the recognition of RoU assets and lease liabilities compared to the prediction made in the Annual Reports 2018
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October 2019IFRS 16 Study Half Year Reports 2019
We compared forecasted results in Annual Reports 2018, with the impact in Half Year Reports 2019, majority of the companies
disclosed a change in total assets caused by the recognition of RoU assets and lease liabilities between 1 and 5%.
The higher the change in total assets, the higher the deviation
from the prediction.
Average forecasted change = 5.1%
Average realized change = 4.6%
The forecast in the Annual Reports 2018 was mostly precise
comparing to the actual impact disclosed in the Half Year Reports
2019. Majority of companies had a deviation from prediction
between +/-5%.
0%
5%
10%
15%
20%
25%
0 10 20 30 40 50 60 700%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
Annual Reports 2018 Half Year Reports 2019
Ø 4.6%
Forecasted results in Annual Reports
2018 vs Half Year Reports 2019
No. of companies
Devia
tion f
rom
the
pre
dic
tion % Change
in RoU
< 1%
1 – 5%
5 – 10%
10 – 20%
> 20%
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PwC
Change in total assets caused by RoU assets and lease liabilities per industry
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October 2019IFRS 16 Study Half Year Reports 2019
• In the Automotive Industry, Energy Sector and the Industrial Production the change is in all companies between 1 and 5%.
• For the Trade & Consumer Goods and the Chemistry & Healthcare/Pharmaceuticals industry, the change is much more widespread.
% Change
< 1%
1 – 5%
5 – 10%
10 – 20%
> 20%
01
0 01
0
15
5
11
32
15
4 4
0
3
01
01
3
01
0
3
0
21
0 0 0
2
0 0 0
Automotive
Industry
Chemistry and
Healthcare /
Pharmaceuticals
Energy Trade and
Consumer Goods
Industrial
Production
Technology,
Media and
Telecommunications
Other
Ø 1.8% Ø 4.2% Ø 2.9% Ø 16.9% Ø 2.7% Ø 6.9% Ø 3.2%
Compared to the total average change of 4.6%, Trade & Consumer Goods and the Automotive Industry had the greatest deviation.
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PwC
Disclosure about the impact on KPIs
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October 2019IFRS 16 Study Half Year Reports 2019
In the Half Year Reports 2019, companies disclosed a significant higher impact on the following KPIs,
than they have forecasted in the Annual Reports 2018.
Even though Net Debt is considered to be one of the KPIs mostly affected by IFRS 16, majority of companies have not disclosed the impact on Net Debt.
The reason could be that Net Debt is not a key figure for those companies, or the impact is not significant.
11%
38%
23%
36%
46% 45%
Net Debt EBITDA Debt to Equity Ratio
Annual Reports 2018 Half Year Reports 2019
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PwC
Change in EBITDA based on industry
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October 2019IFRS 16 Study Half Year Reports 2019
Out of 78 companies only 27 disclose a quantitative impact on EBITDA with a total average change of 12.4% (total median 6.8%),
most impacted industries were Trade and Consumer Goods and Industrial Production.
None of the companies in the Automotive
industry mentioned significant effect on
EBITDA due to adoption of IFRS 16.
While almost all the companies in the Chemistry industry have disclosed EBITDA as a key
performance indicator, twelve out of sixteen companies disclosed that IFRS 16 had
an impact on their EBITDA. However nine out of twelve companies have disclosed
the quantitative impact. For the rest we assume they did not have a material impact.
< 1%
1 – 5%
5 – 10%
10 – 20%
> 20%
1
0 0
1
0
1
2
1
0 0
3
22
0 0
2
0
1
3
0 0
1
2
0
1
0
3
1
0 0
Chemistry andHealthcare /
Pharmaceuticals
Energy Trade andConsumer Goods
Industrial Production Technology, Mediaand
Telecommunications
Other
Ø 9.3% Ø 1.3% Ø 40.4% Ø 16.3% Ø 6.2% Ø 4.1%
Change in
EBITDA%
due to IFRS 16
Automotive Industry
Chemistry and Healthcare/ Pharmaceuticals
Energy
Financial Services
Trade and Consumer Goods
Industrial Production
Technology, Media and Telecommunications
Other
16
78
companies3
9
816
7
145
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PwC
Change in free cash flow based on industry
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October 2019IFRS 16 Study Half Year Reports 2019
27 companies disclosed their quantitative impact on free cash flow. Compared to the average change of 12.1% (total median 5.1%),
two companies in the Trade and Consumer Goods industry had the highest impact.
Automotive Industry
Chemistry and Healthcare/ Pharmaceuticals
Energy
Financial Services
Trade and Consumer Goods
Industrial Production
Technology, Media and Telecommunications
Other
16
3
9
816
7
145
< 1%
1 – 5%
5 – 10%
10 – 20%
> 20%
Change in
free CF%
due to IFRS 16
Among sixteen analyzed companies in the Industrial Production industry, only six disclosed quantitative impact in free cash flow,
however nine out of sixteen mentioned change in free cash flow in their Half Year Reports 2019. For the rest we assume, that the effect on Group free
cash flow is not material.
Ø 4.3% Ø 7.4% Ø 47.3% Ø 9.1% Ø 9.6% Ø 6.3%
0 0 0 0
1 1
2
3
1
2 2
11 1
0
1 1 1
0
2
0
3
0
1
0 0
2
0
1
0
Automotive Industry Chemistry andHealthcare /
Pharmaceuticals
Trade and ConsumerGoods
Industrial Production Technology, Mediaand
Telecommunications
Other
78
companies
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PwC
67 66
31
1 14
13 3
Low-value assets Short-term leases Separation of lease vs. non-leasecomponents
Application of exemptions
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October 2019IFRS 16 Study Half Year Reports 2019
Majority of the companies applied the practical expedients. The simplifications on short-term leases and low-value assets are
the most commonly used.
Application of exemptions
Application of exemption rule in majority of asset classes
No application of exemptions
“NORMA Group has made use of these application
simplifications as lessee, with the exception of leased assets
which are allocated to the asset class “Rights of use – land
and buildings.” In addition, lessees are given the option of not
having to separate leasing and non-leasing components,
which NORMA Group has exercised except for the asset
classes “Rights of Use – Land and Buildings” and
“Rights of Use – Vehicles (Passenger Cars).” (Source: Norma Group SE, Interim Report 2019, p.39)
When applying the exemptions, most of the companies apply
them in all asset classes, however 4 out of 78 companies
apply the exemption for separation of lease and
non-lease components in the majority of asset classes,
but not in Real Estate and Fleet.
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PwC
Disclosure on the affected asset classes
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October 2019IFRS 16 Study Half Year Reports 2019
19
17
18
24
28
37Real Estate
Machinery
IT & Office Equipment
Fleet
Other
50 out of the 78 analyzed
companies disclosed the
impact at least in one of
the specific asset classes.
Almost half of the analyzed companies disclose an effect on their real estate.
Technical Equipment
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PwC
Decision on the interest rate and distribution of the incremental borrowing rate
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October 2019IFRS 16 Study Half Year Reports 2019
The Lessee´s incremental borrowing rate is much more commonly used. Almost 80% of the companies use the
incremental borrowing rate.
In average the weighted incremental borrowing
rate of these companies amounts to 2.5% with a
median at 2.4%, however the distribution is quite
widespread.
78
companies
61
15
2
Out of the 61 companies, that chose the
incremental borrowing rate, 56 provide
quantitative information about the weighted
average borrowing rate used for calculation.
Incremental Borrowing Rate
Interest rate implicit in the lease
No disclosure
0
2
4
6
8
10
12
14
16
0.5% 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5% 5%
Am
ount of
com
panie
s
Distribution of the weighted average incremental borrowing rate
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PwC
October 2019IFRS 16 Study Half Year Reports 2019
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Dr. Christoph Wallek
Manager
Tel. +49 69 9585-3818
WP StB CPA Christoph Gruss
Partner
Tel. +49 69 9585-3415
[email protected] Thank you.
Contact persons
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pwc.de
© 2019 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft.
All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, which is a member firm of
PricewaterhouseCoopers International Limited (PwCIL). Each member firm of PwCIL is a separate and independent legal entity.
