Periodic financial reporting in compliance with applicable accounting standards represents an integral part of the information that contributes to transparent trading as stipulated by the Securities Act and the Listing Rules. One of the regulatory tasks of the SWX is to ensure enforcement of the transparency rules imposed on issuers.
The 2002 annual financial statements of formulafirst Ltd. were not drawn up in full compliance with International Financial Reporting Standards (IFRS). The disclosure made by the company in connection with an acquisition completed in the year under review was incomplete. Furthermore, information pertai-ning to related-party transactions, risk disclosure and financial instruments, as well as the cash flow sta-tement, was insufficient. This inadequate application of the accounting standards (IFRS) used by the company constitutes a clear breach of the requirements stipulated in the Listing Rules (LR).
The 2002 annual report of formulafirst Ltd. contains no separate corporate governance section. Pur-suant to the rules laid down in the Directive on Corporate Governance (DCG), each annual report has to contain a separate section devoted to disclosure of the relevant information. Moreover, various details required by DCG were not disclosed in the company's annual report (information re the board of direc-tors, capital structure, auditors, etc.).
Pursuant to ref. no. 3 DCG, issuers that are not domiciled in Switzerland are also included in the scope of applicability of the Directive if their equity securities are listed on the SWX but not on a securities ex-change in their home country.
Upon initiation of this SWX sanctioning procedure, formulafirst Ltd. voluntarily published on its Internet homepage the required corporate governance report.Although, when taken on their own, the individual violations of LR provisions were not deemed to be severe in this particular instance, the Committee of the Admission Board deemed the collective deficien-cies of the 2002 annual report of formulafirst Ltd. to constitute a severe violation.
For these reasons, the Committee of the Admission Board of the SWX Swiss Exchange has issued a reprimand with related publication against formulafirst Ltd.