Periodic financial reporting in compliance with recognised accounting principles are an integral part of the information that contributes to transparent trading in accordance with the Securities Exchange Act and SWX Listing Rules. One of the tasks of SWX is to ensure issuers' compliance with the enacted rules governing transparency.
In January 2003, SWX initiated an investigation with regard to the 2002 interim financial report of Distefora Holding AG (Distefora). Independently of this investigation and at the request of the company itself, SWX has suspended trading in the shares of Distefora since 20 March 2003. This trading suspension was mainly due to the determination by Distefora's auditors that the company's books were not being kept in a proper manner and that a motion to reject the 2002 annual financial statements would have to be proposed at the general meeting of its shareholders. The proceeding at hand pertains to the company's 2002 interim financial report and not to the irregularities identified by its auditors that were the reason for the aforementioned trading suspension.
Distefora uses International Financial Reporting Standards (IFRS, formerly IAS) as the accounting standard for its consolidated annual financial statements. Pursuant to Admission Board Communiqué No. 8/2001 of 14 May 2001, issuers who have not specifically selected another accounting standard for their interim financial reports (e.g. IFRS) must at least apply the principles of Swiss GAAP FER 12 in their interim financial reports. In the case at hand, the minimum requirements of Swiss GAAP FER 12 were applicable to Distefora's 2002 interim financial report.
According to Swiss GAAP FER 12 mrn. 6, the notes to the interim financial statements must enable the reader to form a well-founded opinion on how the company's activities and business results are developing. In particular, the notes must include an indication of the factors that have had a material influence on the assets and liabilities, financial position and earnings status of the company during the period under review.
Distefora's 2002 interim financial report contains no notes to the financial statements. Such, however, would have been of particular significance to investors in the present case, given that, among other things, the company was planning to divest all media-related activities. That information was made public on 31 July 2002 by means of a media release, and thus was known at the time the company's 2002 interim financial report was being prepared. Moreover, owing to this change in Distefora's business activities, the future business outlook the company was by no means clear.
In the meantime, the individuals responsible for the company's 2002 interim financial report have left the company. The sole board member of Distefora since 20 December 2002 - i.e. subsequent to the publication of its 2002 interim financial report - is Johann Christoph Rudin.
The Committee of the Admission Board has ruled that the given deficiencies represent a violation of elementary stipulations of the Listing Rules and the applicable minimum rules governing disclosure as prescribed by Swiss GAAP FER 12. For that reason, a reprimand with related publication has been issued against Distefora Holding AG.
SWX hopes that the new management of Distefora will be able to quickly and successfully alleviate the problems identified by the auditors.
In connection with the requirements for interim financial reporting, the Admission Board resolved on 25 November 2002 that, as of issuers' 2003 interim financial report, the same accounting standards shall now be applied as those used for the given issuer's annual financial statements, i.e. also with regard to presentation and disclosure. This means that issuers who apply IFRS in the consolidated financial statements of their annual report must in future use IAS 34 (Interim Reporting) for interim financial reporting purposes (see Admission Board Communiqué No. 12/2002 of 25 November 2002 in this regard).
