SIX Exchange Regulation announced that it has reprimanded Bellevue Group AG for several errors in its 2016 annual financial statements. Bellevue Group AG is sanctioned for the incorrect recognition of the foreign currency translation, the inadequate liquidity risk disclosures as well as the insufficient fair value disclosures with regard to a liability from a contingent consideration.
Bellevue Group AG breached the requirements of IFRS in its 2016 annual financial statements as follows:
Bellevue Group AG erroneously recognized a gain from foreign currency translation amounting to CHF 672,000 directly in equity through “other comprehensive income”. Instead, this foreign exchange gain resulting out of a contingent consideration in connection with a business combination should have been recognized in the income statement. As a result of this error, the net loss for the year 2016 was overstated by CHF 672,000 and the basic/diluted loss per share was overstated by CHF 0.05 (both approximately 51%). The total comprehensive income and equity are not affected.
| Financial statement position |
Amounts as stated in the 2016 IFRS annual financial statements |
Amounts after the correction of errors |
Effect |
| Net loss | CHF -1.324 million | CHF -652,000 | CHF +672,000 (+50.8%) |
| Loss per share | CHF -0.10 | CHF -0.05 | CHF +0.05 (+50.8%) |
Furthermore, the maturity analysis for financial liabilities was disclosed inadequately. In this regard, the liability from the contingent consideration in the amount of CHF 21.3 million was erroneously disclosed as being due in full within 3 months. In fact, a portion of this liability is contractually due only within 1 to 5 years.
In its 2016 annual financial statements, Bellevue Group AG allocated the fair value of the liability arising from the contingent consideration to level 3. However, the corresponding fair value was not included in the disclosure of the fair value hierarchy. In addition, the significant unobservable inputs used in the fair value measurement were not disclosed in enough detail and no reconciliation describing the changes in fair value between the balance sheet dates was disclosed. Moreover, the sensitivity analysis with regard to a reasonable possible change in the unobservable inputs and their effects on the fair value was incorrectly disclosed.
After considering the severity of the errors, the degree of negligence as well as the fact that the company has not been sanctioned during the last three years, SIX Exchange Regulation issued a sanction notice reprimanding Bellevue Group AG. The company has accepted the sanction notice. The errors were already corrected in the 2017 interim financial statements and will be corrected in the 2017 annual financial statements, respectively.