The IASB's IFRS 18 — Presentation and Disclosure in Financial Statements replaces IAS 1 for annual periods beginning on or after 1 January 2027, applied retrospectively — so 2026 comparatives will be re-presented in the new format. The UK Endorsement Board adopted the standard in December 2025, and in February 2026 ESMA published a public statement urging issuers to prepare investors for the change during 2026 reporting. Companies you analyse are transitioning right now. What actually changes A mandatory income-statement structure. Income and expenses are classified into five categories: operating, investing, financing, income taxes and discontinued operations. Two new required subtotals. Operating profit and profit before financing and income taxes. Until now, “operating profit” had no IFRS definition — every company drew the line differently. Management-defined performance measures (MPMs). Company-specific measures like “adjusted EBITDA” must now be disclosed in a single note, with a reconciliation to the nearest IFRS subtotal and an explanation of why the measure is useful. Aggregation and disaggregation principles. New rules on when items must be split out rather than buried in “other expenses”. Why this matters for your studies Courses and exams built on IAS 1 remain correct for statements published through 2026 — nothing you have learned is wasted. But from 2027 annual reports, the income statement you read will look different: operating profit becomes a defined, comparable anchor across companies, which changes how ratio analysis (margins, interest cover, EBIT-based multiples) is taught and applied. If you are writing a thesis or case analysis that spans 2026–2027 data, note that restated comparatives mean the “2026” column in a 2027 report may not match the originally published 2026 statement. Sources ifrs.org — IFRS 18 Presentation and Disclosure in Financial Statements (standard page) ESMA public statement, February 2026 — “Reshaping performance: implementation of IFRS 18” UK Endorsement Board — adoption decision, 10 December 2025