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Periodic financial reporting in compliance with applicable accounting regulations 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 SWX is to ensure enforcement of the transparency rules imposed on issuers.
After Jomed N.V. publicly announced in January 2003 that internal investigations had uncovered im-proper bookings on a massive scale, SXW immediately commenced its own comprehensive investiga-tion with regard to the company's 2001 annual financial statements.
The SWX investigation into this matter was based primarily on a forensic examination conducted by the Swedish subsidiary of a major international auditing firm. According to the forensic audit report that has now become available, the 2001 annual financial statements of Jomed reflected a wilful over-statement of its consolidated revenues as the result of incorrect accounting for "sale and leaseback" transactions associated with the sale of the company's IVUS systems. The improper booking of those transactions resulted in an overstatement of at least €16.4 million in consolidated revenues and ap-proximately €12.5 million in net profit reported by the company. Moreover, invoices "for anticipated sales" were generated and recorded as revenues without the related goods ever having been sold or delivered. This fictitious accounting resulted in the company's 2001 consolidated revenues being inflated by an additional €2.2 million and net profit by an additional €2.2 million. Public knowledge of these improper bookings caused an immediate and severe drop in the price of Jomed's shares.
The irregularities involved in the booking of leasing-transaction revenues, as well as the generation of fictitious invoices, are clear and intentional violations of applicable accounting principles and are deemed to be grave breaches of the Listing Rules.
Upon becoming aware of the erroneous bookings, the board of directors of the company initiated a number of immediate measures to rectify the situation as well as replacing the members of manage-ment who were responsible for the irregularities. The magnitude of those irregularities, combined with the wilful intent that led to the erroneous bookings, would have called for a harsher sanction in the case at hand. However, in ruling on the extent of the penalty, consideration was given to the fact that the company informed the public and SWX on its own volition and without delay once it uncovered the irregularities. The responsible individuals at the company were immediately replaced after the irregu-larities had become known. The company's board also ordered that a forensic examination be con-ducted by an auditing firm to investigate the causes of the irregularities.
Given the aforementioned considerations, the Committee of the Admission Board of the SWX Swiss Exchange has issued a reprimand with related publication against Jomed N.V.
At the company's own request, Jomed N.V. was delisted from the SWX Swiss Exchange effective 1 October 2003. Due to the fact that bankruptcy proceedings were initiated on 2 May 2003, Jomed N.V. will publish no annual report for its 2002 financial year.
