RE:Brandnew Interview
Huet restated that the SP may have been damaged by the confusion arising from the mandatory adoption of US GAAP accounting standards, in contrast to the 2015 IFRS accounting standards.
The question has occurred to me, that had the company reported its 2016 results, as required by US GAAP, together with these results restated as they would have been under the IFRS regime, then explanation would not be required.
In this way, shareholders would have been made aware of the impact of the transition year to GAAP. Moreover, in 2017 the results would have been GAAP, with comparative 2016 in GAAP which will be comparable.
When clear explanations are not given in order to highlight the change of accounting policy implications, then the market makers are likely to be given cause for concern.
The question therefore is, what is the problem in the company being transparent regarding the implications of the change of accounting policy.
In the alternative, there will be a suspician that the accounting policy change is being used as a cloak to shield the implcations of the bottom line hit arising from future sales and derivative losses.
These losses are just as likely to have hit the bottom line in the former IRFS accounting policy and it may therefore be that institutional investors are savvy enough to recognise this and note the potential lack of transparency. In the event, the lack of transparency may have been more damaging to the SP than the future sale losses, which were already discounted by the market.