A quick review of reporting season
If we look at the overall market, the ASX200 Index is up close to 3% in the first two weeks of February, so across the overall market, the news so far appears to be pretty good. In this video Portfolio Manager Tim Kelley discusses a few stocks held in The Montgomery Fund.
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
steven
:
Hello Tim,
I would appreciate it if you would explain generally how Executive share options are reconciled, if there is a quick answer that doesn’t take up your time. For instance reviewing Dominoes’ Annual Report for 2016; Share Capital increased by $41.4m due to stock options.
Assets = Liabilities + Equity, what Asset is increased or Liability decreased on the balance sheet to account for the increase in Equity from the stock option, unless I’m mistaken I don’t see it in reserves nor anywhere else on the balance sheet.
Tim Kelley
:
Hi Steven. I haven’t studied DMP’s accounts (we couldn’t make sense of the valuation), but I would expect that on issue of the options, their fair value at the time would be expensed, resulting in lower NPAT and therefore lower retained earnings (so no overall change to Equity). Subsequent exercise of the options should result in receipt of cash and an increase to current assets.
Readers with more insight into the 2016 accounts may be able to add some additional colour.