Implementation of IFRS16 standards
In February 2017, the International Accounting Standards Board published a new International Financial Reporting Standard, “IFRS 16: Leasing”. The standard specifies the methods of presenting financial data, cash flows, fixed assets and their valuation. It also specifies which information has to be included in the financial statement. Polsat Group like other companies owning and leasing real estate properties was obliged to adjust their IT system to the new regulations.
New IFRS16 regulations
The problem with introduction of IFRS16 affected businesses and organisations that lease real estate, both owned and rented. This means that companies that lease spaces had to use a different method of carrying operating lease agreements. This is where SAP comes to aid with the RE-FX solution. Although the SAP Real Estate solution at that time had already been well established on the market for over 10 years, this major change did not go unnoticed by SAP and Hicron, and, in September 2016, a new note was issued to cover “IFRS 16 Leasing” using RE-FX.
The greatest challenge for Hicron was to introduce the changes taking into account complex architecture of the client’s systems. In case of Cyfrowy Polsat it consisted of two SAP ERP systems in different versions and a numerous non-SAP solutions. Moreover, a few dozens of subsidiaries in different sectors and high dynamics of the Group’s development, made the implementation challenge even bigger.
Cyfrowy Polsat Capital Group was looking for a provider with experience in undertaking complex projects in Real Estate area and who would have a vision of how the IFRS16 solution should be integrated with external solutions in such complex environment.
- The SAP system was adjusted to the latest IFRS16 regulations
- It has enabled the settlement of lease agreements according to the latest standards, including all the numerous subsidiaries, various types of agreements and leased objects
- Unification of the company’s profit and loss account
- Increase in EBITDA
- Increase in the value of permanent assets
The international financial reporting standards (IFRS) define precisely what scope of data is required for the financial reports. They are mainly used by publicly listed companies, large concerns and capital groups, such as Cyfrowy Polsat. Handling tens of agreements in all its subsidiaries requires an advanced solution which – by automatising the processes imposed by the regulations – lowers the risk, shortens the time required to handle the processes, and increases the efficiency of the business.
MANAGING PARTNER AT HICRON