In spring 2026 an early-adopting group sent me their first IFRS 18 annual report to translate into English. The German was clean. The trap was invisible: their approved English glossary, built over three IAS 1 reporting seasons, was now quietly wrong in a dozen places. IFRS 18 doesn’t just change the accounting. It invalidates terminology you already signed off on.
IFRS 18 Presentation and Disclosure in Financial Statements supersedes IAS 1 and is mandatory for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. So the group above was an early adopter reporting on a FY2025 period start; most of my clients hit this for real in the FY2027 reports that reach investors in spring 2028. Either way, the translation problem is identical, and it starts long before anyone opens a file.
The income statement stops being a blank canvas
Under IAS 1, there was no specified structure for the income statement—companies chose their own subtotals. That freedom is exactly why translation memories are unreliable here. The IASB studied 100 companies and found that over 60 reported an operating profit figure using at least nine different ways to calculate it. Same English words, nine different underlying numbers. Any legacy match your CAT tool proposes for such a line is a guess dressed up as consistency.
IFRS 18 ends the guessing. Every item of income and expense must now be classified into one of five categories: operating, investing, financing, income taxes, and discontinued operations. And three subtotals become mandatory for every entity: operating profit or loss, profit or loss before financing and income taxes, and profit or loss. For the translator this is the difference between rendering prose and rendering a fixed schema. The category headings and the three subtotals are not stylistic choices I get to smooth over—they are defined labels that must land in a defined place.
That has a practical consequence people underestimate. In an IAS 1 report, a German line and its English rendering were a private handshake between preparer and translator. In an IFRS 18 report, the structure itself is now part of the standard, so the English has to match a reference point outside your company’s house style. When the German gliederung and the IFRS 18 category logic disagree—and in transition year they will—someone has to decide, on the record, which wins.
Operating profit is now defined—so Betriebsergebnis, operatives Ergebnis, and EBIT stop being synonyms
Here is the single change that will generate the most terminology tickets. Under IAS 1, operating profit was not defined or required as a subtotal. Under IFRS 18 it is formally defined, and its English label on the face of the statement is operating profit or loss. BDO Austria puts the German side of this bluntly: IFRS 18 no longer provides for a defined EBIT as a subtotal; das operative Ergebnis takes its place and is scoped differently.
For years I could treat Betriebsergebnis, operatives Ergebnis, and EBIT as loosely interchangeable in running text, because in an IAS 1 world they often pointed at the same company-defined number. IFRS 18 breaks that equivalence. Betriebsergebnis or operatives Ergebnis as the primary-statement subtotal now maps to the defined term operating profit or loss. EBIT—especially bereinigtes EBIT—does not, because IFRS 18 doesn’t define EBIT at all. Translate them as the same thing and you’ve quietly asserted an equivalence the standard specifically abolished.
So when a German source carries Betriebsergebnis in the P&L and bereinigtes EBIT two paragraphs later in the management report, those are now two different animals requiring two different English treatments. Deciding which is which is not a translation call. It’s an accounting call the IR and reporting team has to make first, and hand to me.
MPMs: a brand-new disclosure class with no IAS 1 ancestor
Because neither EBIT nor EBITDA is a defined subtotal, any company that keeps using them in investor communication must now present them as Management-defined Performance Measures in a dedicated note—not as face-of-statement lines. EY Germany states it plainly: since neither EBIT nor EBITDA is a defined IFRS 18 subtotal, they no longer appear directly in the P&L but in the notes as MPMs. Forvis Mazars lists the usual suspects: adjusted profit or loss, adjusted operating profit, financing result, EBIT, adjusted EBITDA.
Each MPM needs its own note explaining the measure and the aspect of performance management believes it communicates, the calculation method, a reconciliation to the nearest IFRS-defined subtotal showing every adjusting line, and the tax and non-controlling-interest effects. And this note is audited: as CPDbox notes, if your financial statements are subject to external audit, the management-performance-measures disclosure must be audited too.
That last point is why MPM terminology cannot be settled during translation. The auditor reads the English MPM note alongside the German. If your English label for a measure—and the names of its reconciling lines—drifts between the note, the management report, and the press release, that inconsistency surfaces in the audit, not quietly in my draft. There is no legacy TM segment that will save you here, because the whole disclosure class is new. The English label set for every MPM and every reconciling line has to be locked in writing before I start, not finalized in the review round.
The right time to name your MPMs in English is the day you decide which non-GAAP measures survive IFRS 18—not the day you send the report out for translation.
Unusual or infrequent items and the ban on cleaning up operating profit
The operating category under IFRS 18 is a residual. You classify investing and financing first; whatever is left is operating. And crucially, the operating category does not exclude volatile, unusual, or non-recurring items. There is no mechanism to strip one-offs out of operating profit on the face of the statement—the only permitted adjustment channel is an MPM disclosure. BDO Austria makes the same point from the German side: adjusting these items out is only possible with full disclosure.
This is where German source texts stay systematically fuzzy, and where I have to resist my own instincts. German reports love bereinigtes Betriebsergebnis and EBIT vor Sondereffekten in the narrative. Under IAS 1 I could render those as neat parallel English lines. Under IFRS 18 they are not synonyms for the mandatory operating subtotal—they are adjusted measures that, if used publicly, drag along MPM obligations. My job is to keep the defined subtotal and the adjusted measure visibly distinct in English, even when the German blurs them, and to flag the blur back to the IR team rather than paper over it with a tidy translation.
The investing category and income from associates
IFRS 18 reclassifies something that used to sit comfortably inside a broad EBIT block. Income and expenses from equity-accounted associates and joint ventures are always classified in the investing category—and, unusually, without exception. As IFRS Consulting notes, an entity is not required or permitted to determine that investing in equity-method associates is a main business activity. BDO UK confirms the effect: those results are excluded from operating profit.
For a holding company or an industrial group with integral associates, this creates a real distortion: the operating costs of running those investments sit in operating, while the returns sit in investing. IFRS Consulting warns that in extreme cases such companies may report operating losses even when they are profitable over time. A German report’s Ergebnis aus at-equity bewerteten Unternehmen or Erträge aus assoziierten Unternehmen line, which in prior years lived inside the EBIT band, has physically migrated to a new category. The English translation has to reflect the new placement—not the position the translation memory learned from last year’s file. Rendering the words correctly while leaving the line in its old structural home is a subtler failure than a mistranslation, and harder to catch on proofread.
Transition year: two naming regimes in one audited document
The first IFRS 18 report is the highest-risk document I translate, because it legally contains both label sets. On first application you restate the prior-year comparatives under IFRS 18 and present a reconciliation between the restated amounts and the amounts previously presented under IAS 1. So the reconciliation note carries IAS 1 labels in one column and IFRS 18 labels in the other—both in the same document, both audited.
Hand that to a translation memory configured to pre-translate and it will happily populate the IFRS 18 column with IAS 1 wording, because the numbers and the surrounding German look familiar. The only safe workflow is to segment-lock the reconciliation table, translate it fresh, and then propagate the approved IFRS 18 label set forward into the primary statements—never let the old labels flow backward into the new ones. In transition year, TM leverage is not a time-saver. It’s the attack vector.
What your translation memory is now getting wrong
Every TM I hold for a long-standing IFRS client is built on IAS 1-era reports. That’s an asset for continuity and a liability the moment the standard changes. There is a structural reason the drift runs deep: the IFRS Foundation publishes its Accounting Taxonomy—the authoritative English element labels—in English plus Japanese, Korean, Spanish, and Ukrainian. German is not among them. German preparers and their translators have no IASB-sanctioned German mapping for IFRS 18 elements; the German comes from the EU endorsement text and from company decisions. So legacy German label variants in your TM are often company- or era-specific, and they do not correspond cleanly to the new IFRS 18 elements.
Concretely, three things go wrong. A high-scoring fuzzy match offers last year’s rendering of Betriebsergebnis that predates the defined subtotal. An EBIT segment resurfaces as a face-of-statement line when it now belongs in an MPM note. And the associates line is pre-translated into its old EBIT-block phrasing instead of its new investing-category home. None of these show up as errors—they show up as confident matches. My cleanup workflow is deliberate: quarantine every P&L, subtotal, and MPM-adjacent segment from the legacy TM, retranslate against the agreed IFRS 18 glossary, and only then let approved segments re-enter the memory. Trusting the TM’s confidence score is exactly how last year’s vocabulary contaminates this year’s compliance.
This isn’t IFRS 18-specific wisdom—it’s standard financial-translation practice that IFRS 18 makes urgent. A reference list of approved technical terms is one of the most useful things a client can give me, and inconsistent terminology between the current report and prior-year documents is precisely what undermines investor trust. IFRS 18 just guarantees that, this year, the prior-year documents are wrong.
The IFRS 18 briefing your IAS 1 checklist never had
When I take on an IFRS 18 mandate, three inputs have to exist before the job is placed. None of them appeared in a standard IAS 1-era briefing.
- The approved English label set for the three mandatory subtotals and the five categories, confirmed by your reporting team—so operating profit or loss and its neighbors are fixed, not negotiated segment by segment.
- A written MPM register: every management-defined performance measure you will disclose, its final English name, and the agreed English wording for each reconciling line. This is the item most likely to be missing, and the one the auditor scrutinizes most closely.
- A classification note for the migrated lines—associates and joint ventures, and any items you have moved between operating, investing, and financing—so I place them in the correct category rather than inheriting last year’s structure from the memory.
None of this is translation work, and that’s the point. These are decisions the standard forces onto the preparer, and they have to be settled upstream of me. When they arrive with the file, the translation is fast and the audit is quiet. When they don’t, we discover the disagreements in the review round, under deadline, with the auditor already reading. You can see how I structure specialist financial work on my services page, and the fastest way to start a transition-year mandate is to send the brief and the MPM register together.
IFRS 18 is a terminology project too
The accounting profession has spent two years framing IFRS 18 as a presentation change. From where I sit, it is equally a terminology event: a coordinated reset of the English words that describe your performance, imposed across the notes, the primary statements, the management report, and the press release at once. The subtotals are defined, EBIT and EBITDA have moved to the notes as MPMs, the associates line has changed category, and your translation memory is quietly out of date on all three.
The right moment to steer that vocabulary is before the first translation request—when your team decides which measures survive and what they will be called in English. Steer it there and IFRS 18 is a manageable file. Leave it to the proofread and it becomes a scramble to reconcile three documents that should have agreed from the start. I’d rather translate the decision than referee it.