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SWX Swiss Exchange Reprimands LEM Holding SA

Date 06/12/2002

SWX Swiss Exchange has issued a reprimand with publication against LEM Holding SA, Grand-Lancy, for breach of the Listing Rules. The SWX reprimand relates in particular to the failure to disclose segment results within the consolidated financial statements for the 2000/2001 financial year. The group's auditors also qualified their audit report as a result of incomplete segment reporting.

LEM Holding SA (LEM) applied the International Financial Reporting Standards (IFRS - formerly IAS) to its consolidated financial statements for the 2000/2001 financial year. The IFRS are one of the sets of accounting standards recognised by the Admission Board of SWX. The regulations laid down in the SWX Swiss Exchange Listing Rules (LR) demand that issuers comply without qualification with financial reporting requirements that are recognised by the SWX Admission Board.

The sanction proceedings initiated by the SWX related to a breach of the IFRS in respect to the failure to disclose important elements of the segment reporting, as well as to the absence of further information on the disclosure of provisions, tax and financial risk in the notes to the consolidated financial statements. The presentation of business results was not the subject of the proceedings, however.

In the view of the Committee of the Admission Board, the failure to disclose segment results in LEM's 2000/2001 consolidated financial statements constitutes a clear breach of the IFRS (or IAS 14), because fundamental information required to assess the profitability of individual divisions of the business was withheld from investors. In addition, investors were denied significant information enabling them to assess individual balance sheet items, as figures relating to provisions, taxes and financial risks were not presented in an IFRS-compliant form in the notes to the consolidated annual financial statements. On 2 October 2002, LEM lodged an appeal with the Disciplinary Commission of the SWX Swiss Exchange against the decision of the Committee of the Admission Board of 26 August 2002. LEM withdrew its appeal on 22 November 2002 and the decision of the Admission Board has now entered into force.

In August 2002, after sanction proceedings against LEM had commenced, the company published and submitted to the SWX its 2001/2002 annual report, which no longer contained any qualification on the part of the auditors. The points that SWX took action against in its sanction proceedings had been corrected in the new 2001/2002 Annual Report.

According to the recently published Admission Board Communiqué No. 13/2002 of 25 November 2002, the SWX reserves the right, in the future, to demand that issuers submit a restatement of their annual financial statements in cases in which the auditors have qualified their report on the consolidated annual accounts owing to a breach of the accounting regulations that have been applied. The purpose of such a restatement is to provide investors with consolidated annual financial statements that are in compliance with the applicable financial reporting requirements. This new Communiqué enters into effect on 1 January 2003.