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Client success story - Waveconn

The Challenge

waveconn logoWaveconn is an agile and flexible digital infrastructure business, who specialises in developing and investing in telecommunications infrastructure throughout Australia.

Their core business involves building and owning cell phone towers and then leasing space on those towers to mobile networks, who then place their equipment on them. In turn, Waveconn have ground leases in place for the locations they have built their towers on. This creates some complexity when complying with the IFRS 16 lease accounting standard for both their ground leases and tower leases.

Waveconn was created from a merger of two smaller companies, both exempt from IFRS 16, so they did not have any previous internal experience when it came to complying with the standard.

They initially took advice from their Big 4 consultants, who advised them that for IFRS 16 accounting purposes their ground leases needed to mirror the income period of the master services agreement on their tower leases. However, these master lease agreements were for 20 years, while the ground leases were only for five years.

Therefore, their IFRS 16 compliance solution needed to have the ability to create lease records that could be extended beyond their contracted term to align with the contract that governed the whole arrangement.

The Change

Originally, they investigated the option of pushing the relevant IFRS 16 accounting information from their asset and property management software to their ERP and getting their ERP to calculate their IFRS 16 calculations. However, this solution did not produce the accurate financial results needed for their complex lease accounting scenarios.

After researching various IFRS 16 lease accounting solutions available they found that LOIS lease accounting software (delivered by Quadrent) was the only solution that could accurately calculate what they needed.

They were also impressed at how the LOIS team of experienced lease accounting experts were able to demonstrate how to set up the system to accommodate their complex lease accounting needs, and were open to being more flexible than larger vendors who couldn’t tailor their set up.

The Implementation

As this was Waveconn’s first time reporting IFRS 16 they were creating their month-end process from scratch. This meant collating and uploading all their lease data, which had not been recorded in one central location. Additionally, they had to review all the files one by one, to uncover nuances in some lease agreements that were buried in text fields and unable to be automatically mapped to their fields in LOIS.

This led to a lot of sense checking and iterations needing to take place, going back into LOIS to find and amend the relevant leases and redo the process several times.

This iterative implementation approach was agreed upfront with the LOIS team and involved numerous calls to collaboratively work out solutions that could automate the process in the future.

The LOIS team also created bulk upload templates to assist in the lease data uploads and uploaded the more complex leases themselves. Not having to do everything manually, and having solutions to speed up and automate the initial set up phase was a great way for Waveconn to learn how to use LOIS effectively.

The Results

For Waveconn, it was not only important to get the numbers right for their starting position in their first set of financial statements, but also to be able to articulate them back to their auditors was very important.

Moving forward they will need to be reviewing 20% of their 1200 lease portfolio every year, which requires a more active lease management cycle. This has led to continued discussions about what other projects Quadrent and Waveconn can work on together in the future to see how they can asset manage their 1200 leases more efficiently.

The ability to work super close with the team at LOIS and have direct access to their lease accounting knowledge was most beneficial. They took the time to understand how we wanted our system set up and aligned to our internal process. Therefore, they were able to prioritise the most pressing tasks that needed to be completed for the implementation and were proactive in giving us advice on areas we needed to be aware of so we could use LOIS more effectively moving forward.
Rahat Khan, Head of Finance

At Quadrent, we provide our clients with lease accounting software solutions designed to manage and report on leased assets. We work to deliver long-term cost-savings across your organisation and assist with all facets of equipment finance needs, from providing operating leases to asset management, IFRS 16 compliance and reporting. Our world-leading LOIS lease accounting solution is designed to assist in creating a robust process that effortlessly guides you in accounting for all leases to maintain compliance with IFRS 16 and uncover hidden ROI savings within leasing. 

Discover how leasing can be a cost-effective and efficient way to access and manage the assets your business relies on.

Download our LOIS Lease Accounting Solution Whitepaper