New international accounting rules have plunged a small New Zealand marine company called Sealegs Corp. into the red, just when it was about to break even.
About a month ago, Sealegs said it expected break-even operating results for the full year when it posted the results in April. But CEO David McKee Wright warned this week that the company, which makes amphibious craft, will be “adversely affected by the accounting treatment of staff share options under the newly adopted International Financial Reporting Standards (IFRS).”
He added that the firm was “working to quantify exactly what effect the new standards will have on the final result, but it is likely to be materially affected.”
In a new New Zealand newspaper report distributed by Yahoo Finance, he said the predominant issue caused by IFRS revolves around the valuation of the management and staff option plan. Profits would be impacted for the next five years, something he described as “extremely disappointing.”
Said Writgh, “Sealegs has worked very hard to get into a position where it can report a profit, and it’s a pity the accounting treatment of staff share options under the new IFRS standards will have such a large effect on this and future year’s results.”