The SIX Swiss Exchange has issued a reprimand against Adval Tech Holding AG for breaching the provisions of the IFRS accounting standards in its 2008 semi-annual financial statements. The reprimand relates to the incorrect presentation of the cash flow statement and the ensuing shortcomings in the reporting of cash flows from operating, financing and investing activities.
Listed in the main segment of the SIX Swiss Exchange, Adval Tech Holding AG reported the item "Other non-cash income/expenses" for the first half of 2008 under "Cash used for investing activities" in its 2008 semi-annual financial statements. However, the pertinent provisions of IAS 7 "Statement of Cash Flows" require that only cash inflows and outflows which have actually occurred be presented.
In connection with the investigations conducted by the SIX Swiss Exchange, it was established that, essentially, a purchase price installment not due for payment until 2010 was erroneously included by Adval Tech Holding AG in the cash flow statement. As a consequence, "cash inflow by operating activities" reported for the first half of 2008 was approximately CHF 2 million (52%) too high, "cash outflow for investing activities" was approx. CHF 18.5 million (22%) too high, and "cash inflow by financing activities" was approx. CHF 16.5 million (17%) too high.
Upon being made aware of the mistake, Adval Tech Holding AG responded immediately and on September 23, 2008 published a rectified version of its 2008 semi-annual financial statements together with an explanatory media release. Furthermore, the company will restate the error in its 2009 semi-annual financial statements and make a corresponding disclosure.
Considering all aspects of the matter, the SIX Swiss Exchange has in the present case issued a sanction notice against Adval Tech Holding AG in the form of a reprimand.
Periodic financial reporting in compliance with applicable accounting regulations is part of the information that contributes to a functioning market, as required by the Swiss Stock Exchange Act and the Listing Rules. One of the tasks of the SIX Swiss Exchange is to ensure that transparency rules are enforced.
