The World Is About to Read Profit Statements Differently

IFRS 18 / IND AS 118

- By Keyur Dave

For years, investors have analysed profits without fully realising that the same word often meant different things across companies.

“Operating profit” in one company could look very different in another — not because their businesses were fundamentally different, but because accounting standards allowed flexibility in presentation.

That era is about to change

With the issuance of IFRS 18 - Presentation and Disclosure in Financial Statements, the IASB has taken a decisive step towards bringing structure and discipline to how companies present their performance. In India, ICAI has already released the draft Ind AS 118, and once notified by the Ministry of Corporate Affairs, it is expected to apply from 1 April 2027.

This is not a routine accounting update

It represents a fundamental shift in how corporate performance will be read, interpreted and compared — not just by auditors and accountants, but by investors, analysts and boards globally.

Why the Change Was Needed

Despite global adoption of IFRS, profitability still remained difficult to compare across companies and geographies.

A key reason was simple:

While companies were using terms like “Operating Profit”, “Core Earnings” or “Adjusted EBITDA” extensively in annual reports and investor presentations, IFRS never clearly defined how these should be derived or presented. The result?

Too much flexibility.

Too much subjectivity.

And too many “versions” of performance.

IFRS 18 addresses this by standardising the structure of the Statement of Profit and Loss and introducing strict disclosure discipline around company-defined performance measures.

The intent is clear:

To ensure that when two companies report an “operating profit”, investors are no longer comparing apples with oranges.

What Will Actually Change for Companies