Ignore this ‘recycled’ profit – Ping An

There is a particular gain or loss in the income statement of many companies that, in our view, is irrelevant to investors. Fortunately, it is gradually disappearing from most IFRS financial statements due to the introduction of IFRS 9. However, if you invest in insurance companies you might not be so lucky.

Chinese insurer Ping An’s pre-2018 results were significantly impacted. But no longer – the company is one of the few IFRS reporters in the global insurance sector where investors now benefit from the elimination of this ‘irrelevant’ component of profit & loss.

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Investors need fair value, not fake value

Equity investments currently reported at fair value could be measured at cost or some other ‘fake value’ in EU companies’ financial statements, depending on the outcome of a European Commission consultation.

There seems to be a never-ending debate in Europe about fair value measurement, particularly regarding equity investments. In our view any move to change the current financial reporting requirements would be detrimental for users of financial statements.

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