The Companies using operational leasing will disclose higher EBITDA in accordance with the new IFRS 16 to be applied starting from 2019.

The new IFRS 16 was implemented also in Accounting rules provided by Order of Ministry of Finance 1802/2014 with all updated amendments, applicable to companies in Romania.

The old “rent expense” for assets leased was included so far in operating costs. For future this will be calculated and disclosed differently as depreciation of the right of use of assets under operational lease, not being presented within EBITDA.

The total cost of operational leasing for entire duration of the leasing contract is the same as it was under the old accounting standard. Nevertheless, the allocation in time of yearly costs will be influenced by discount rate and incremental borrowing rate, being faster during first years of the lease contract.

When budgeting Forecast P&L 2019, it is critical the understanding of all these aspects and the relevant impact of Accounting and Financial Reporting Standards in interpretation and analysis of Company’s business results. The Companies may revisit the method of assessment operational performance and implicitly the management’s bonus calculation, if EBITDA still remains relevant, it should be adjusted or other key performance indicators are recommended to be taken into consideration as well.