SIX Exchange Regulation has reached an agreement with Petroplus Holdings Ltd in connection with the violation of IFRS accounting standards in the 2009 annual financial statements. The error identified by SIX Exchange Regulation relates to the incorrect presentation of restructuring expenses as discontinued operations. Under the terms of the agreement, the company has made a payment in the amount of CHF 50,000 to the IFRS Foundation.
In its annual financial statements for 2009 Petroplus Holdings Ltd incorrectly presented expenses from the restructuring of a refinery as discontinued operations separately from the result from continuing operations. Due to the fact that the operations at the refinery were not discontinued and significant activities remain, the restructuring expenses should have correctly been presented as part of the result from continuing operations. The effect from the non-compliance with IFRS was an overstatement of the company's result from continuing operations by USD 137 million for the year 2009. The company presented an operating profit from continuing operations of USD 65 million rather than an operating lossfrom continuing operations of USD 72 million.
The investigation into Petroplus Holdings Ltd is concluded with an agreement as this course of action results in a more timely public disclosure than would have been the case with a duly completed sanction procedure. In addition, an agreement has to be published in accordance with the Rules of Procedure.
Periodic financial reporting is part of the information required under the Stock Exchange Act and the Listing Rules to ensure a functioning market. As part of this process, issuers must comply with the applicable accounting standards. It is the responsibility of SIX Exchange Regulation to ensure that issuers adhere tothe transparency provisions imposed on them by the Regulatory Board.
Information on financial reporting can be found at: http://www.six-exchange-regulation.com/obligations/financial_reporting_en.html
Agreements to date in connection with financial reporting can be found at: http://www.six-exchange- regulation.com/enforcement/media_releases/agreements/financial_reporting_en. html
Appendix to the accounting standards
Below is a summary of the accounting standards that were of relevance in assessing the case in question.
IFRS 5p32 states that a discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and
- represents a separate major line of business or geographical area of operations,
- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or
- is a subsidiary acquired exclusively with a view to resale.
Only if the requirements in IFRS 5p32 are met, is an entity allowed and required to present the after-tax result of the discontinued operation in accordance with IFRS 5p33(a) separately from the result from continuing operations in its statement of comprehensive income.
