BT sees positive impact on earnings from IFRS 16

BT said on Wednesday that the adoption of the IFRS 16 accounting rules is expected to have a positive on its 2020 earnings.

The company said IFRS 16 is expected to add £700m to earnings before interest, tax, depreciation and amortisation for the year to the end of March 2020, because the operating lease expense is replaced by interest expense and depreciation.

Under the new rules, 2020 adjusted EBITDA will rise to between £7.9bn and £8bn from between £7.2bn and £7.3bn.

For 2019, adjusted EBITDA will rise to £8.1bn from £7.4bn, while closing net debt will be between £16.6bn and £17.6bn, compared to £11bn previously as the standard requires lessees to recognise a lease liability for all leases meeting the lease definition of the standard, unless certain exemptions are made.

BT said there will be no impact on revenue or cash flow.