SIX Exchange Regulation announced that has reached an agreement with SHL Telemedicine Ltd. in connection with a breach of the accounting standards (IFRS) in the 2015 annual financial statements. The identified deficiencies relate to the revenue recognition and disclosure for performance-based contracts as well as the recognition of expenses.
As part of the agreement, the company has committed itself to correct the errors, to adjust the disclosures in the 2016 annual financial statements and to make a payment of CHF 15,000 to the IFRS-Foundation.
In the 2015 IFRS annual financial statements, SHL Telemedicine Ltd. reversed revenue recognized in relation to a specific performance-based contract for the years 2013, 2014 and 2015. However, already in 2014 data indicating that revenue recognized relating to this contract in the years 2013 and 2014 was too high became available. This was not adequately taken into consideration at this time. Therefore, a portion of the revenue adjustment recorded in the 2015 IFRS annual financial statements amounting to USD 2’506 thousand should have been recognized already in the 2014 IFRS annual financial statements. In this context, SHL Telemedicine Ltd. did also not disclose the accrued income related to performance- based contracts separately from accounts receivable in its 2015 IFRS annual financial statements.
Furthermore, expenses for the renewal of a customer contract in the amount of USD 789 thousand should have been accrued and recorded in the 2015 IFRS annual financial statements rather than in 2016. As a result of these errors, the net loss for the year ending 31 December 2015 was overstated by USD 1’717 thousand and the loss per share was overstated by USD 0.17 (both approximately 11.5%).
|
Financial statement position |
Amounts as stated in the 2015 IFRS annual financial statements |
Amounts after the correction of errors |
Effect |
|
Net loss |
KUSD -16‘635 |
KUSD -14‘918 |
KUSD +1‘717 (+11.5%) |
|
Loss per share |
USD -1.59 |
USD -1.42 |
USD +0.17 (+11.5%) |
As part of the agreement, SHL Telemedicine Ltd. has committed itself to correct and disclose the errors as well as to adjust the disclosures in the 2016 IFRS annual financial statements. It was agreed that the public is informed by SIX Exchange Regulation with this public notification at the date of the publication of the 2016 annual financial statements of SHL Telemedicine Ltd. In addition, the company will make a payment of CHF 15,000 to the IFRS-Foundation as part of the agreement.
The investigation opened by SIX Exchange Regulation against SHL Telemedicine Ltd. in connection with the 2015 IFRS annual financial statements and 2016 IFRS interim financial statements has been terminated with the conclusion of the agreement. Since the errors are not considered a serious violation of the listing rules and as this course of action results in a more timely public information than would have been the case with a duly completed sanction proceeding.
Obligations concerning financial reporting
Periodic financial reporting is part of the information required under the Financial Market Infrastructure Act and the Listing Rules to ensure a functional market. As part of this process, issuers must comply with the applicable financial reporting standards.