Understand how your numbers compare to the market, not the bank.
IFRS 16 has seen over $3 trillion USD come on balance sheet, as noted by the IASB in 2019. To put that in perspective, this equates to twice the total government debt of New Zealand and Australia combined.
Today, most large organisations carry more in lease liabilities than they do bank debt. Additionally, banks, ratings agencies and analysts are all faced with how to assess these lease liabilities and serviceability in post IFRS 16 accounts. The impact of this on all key financial metrics is significant, which has consequences for every stakeholder.
Deloitte in a recent CPA webinar commented that a 1% increase in the rate used calculate a lease liability (IBR) could decrease the lease liability by up to 5%, but the interest would increase by 39%.
For many large businesses with hundreds of millions in lease liabilities, the ability to set, measure, benchmark and accurately predict IBRs can create a huge competitive advantage - getting it wrong could be equally expensive.
The complexity of IFRS 16 has created issues in understanding the true commercial impact of the IBR. Hence, companies that can access clear concise information will have a leader’s march on the competition. However,
Quadrent’s lease analytics portal is a master key, providing access to data that is not publicly available, is independent of controlled sources, is correlated to market rates and is validated against 40,000 actual data points used in leasing books across Australia and New Zealand. Nowhere else is this service available and with your data overlaid you can easily benchmark your balance sheet compared the market.
Is a 39% change in your EBITDA material to your external stakeholders? Get in touch to explore what options we can provide.
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