AASB 18 readiness

New structure for the statement of profit and loss including categories and subtotals. 
All income and expenses must be classified into one of five categories including operating, investing, financing, income taxes or discontinued operations.  Two new subtotals are mandated in the statement of profit and loss: “operating profit or loss” and “profit or loss before financing and income tax”. For the purpose of classifying income and expenses, entities will need to assess their main business activity, which will require judgement.  The new categories are intended to provide users clearer insight into core operating results versus other activities.

Mandatory disclosure of MPMs: 

If you use management-defined performance measures (MPMs, often non-GAAP metrics) in public communications, AASB 18 requires disclosing them in your financial statements. You will need to explain each MPM, why it’s used, how it’s calculated and how it provides useful information.  MPMs need to be reconciled to the most comparable subtotal. This is intended to improve transparency and consistency for investors.

Greater disaggregation and clarity:
The new standard has stricter rules on how items are aggregated or labelled. Vague “other” line items are discouraged and companies must provide more detail on their composition. The aim is to enhance comparability and help stakeholders better understand your financial performance.