The International Accounting Standards Board (IASB) has issued IFRS 18 – Presentation and Disclosure in Financial Statements, which introduces a comprehensive restructuring of the statement of profit or loss and significantly expands disclosure requirements. Singapore is expected to adopt IFRS 18 into SFRS(I) for annual periods beginning on or after 1 January 2027, with full retrospective application.
Mandatory New Presentation Structure
Standardised Profit or Loss Categories
IFRS 18 introduces three mandatory, principle-based categories into the statement of profit or loss:
Operating
Investing
Financing
All income and expense items must be classified within these categories based on detailed application guidance. This represents a fundamental shift from existing practice, which allows more judgement in defining intermediate performance measures. The new structure aims to enhance cross-entity comparability and reduce diversity in practice.
Prescribed Subtotals
The standard introduces consistent subtotals across entities, such as:
Operating profit
Profit before financing and income taxes
Entities may no longer present bespoke subtotals unless they qualify as a Management-Defined Performance Measure (MPM) under the new disclosure framework.
Management-Defined Performance Measures (MPMs)
IFRS 18 establishes a specific framework for Management-Defined Performance Measures, defined as subtotals of income and expenses that:
Are used in public communications outside the financial statements; and
Reflect management’s view of an aspect of the entity’s overall financial performance.
Examples include Adjusted EBITDA, “core profit,” or other non-IFRS performance metrics commonly used in investor reporting.
For each MPM, entities must:
Provide a clear definition and description
Present a quantitative reconciliation to the nearest IFRS-defined subtotal
Disclose explanations of adjustments, including their nature and rationale
Present comparative information consistently across periods
This introduces discipline, transparency and comparability around non-GAAP performance metrics historically communicated without standardised requirements.
Enhanced Disaggregation Requirements
IFRS 18 tightens the requirements for disaggregation of income and expenses, requiring entities to:
Provide more granular breakdowns where necessary for users to understand performance
Avoid broad, aggregated line items such as “other expenses” unless immaterial
Apply a consistent basis for classification across the financial statements and notes
The standard specifies factors to assess whether items require further disaggregation, including nature, function, measurement basis, and variability.
Disclosures of “Unusual” Income and Expenses
IFRS 18 introduces explicit requirements to disclose unusual income and expense items, defined as items that:
Are not expected to recur in the near term; and
Have a significant effect on financial performance.
Entities must:
Identify such items based on the standard’s criteria
Disclose the amount, nature, and reason the item is considered unusual
Present comparative disclosures
This enhances users’ understanding of non-recurring items affecting performance trends.
Retrospective Application and Comparative Information
The standard requires full retrospective application, including:
Restating all comparative periods using the new P&L structure
Reclassifying historical income and expense items into operating, investing, and financing categories
Applying MPM definitions and reconciliations consistently to prior periods
Providing comparative disclosure of unusual items and disaggregation detail
As a result, entities presenting FY2027 financial statements will also present restated FY2026 comparatives under the IFRS 18 framework.
Implications for Reporting, Systems and Communications
The structural changes introduced by IFRS 18 will have significant implications for:
Financial statement presentation and mapping
Internal reporting frameworks
KPI and performance metric definitions
Investor and lender communication
Disclosure controls and accounting policy frameworks
Given the mandatory retrospective application and shift to standardised categories and subtotals, the adoption of IFRS 18 represents one of the most material presentation changes since the adoption of IFRS itself.
If you require technical guidance on IFRS 18 interpretation, presentation impacts, or disclosure implications, our team can support you with detailed analysis and implementation expertise.