New rules on how retailers account for the costs of renting their premises are likely to have a significant impact on profits and valuations, and could even force some to renegotiate debt agreements, analysts and advisers have warned.
“Historically, the expense of leases was simply recorded as an operating cost in the profit-and-loss account. Now you’ve got to bring them on to the balance sheet as assets and corresponding liabilities,” said Nick Chandler, a partner at KPMG specialising in accounting advisory services.
“It’s a fundamentally different piece of accounting.”
