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Tornos Holding Ltd. has made an error regarding the valuation of inventories in its 2012 IFRS interim financial statements. The company will correct the error in the 2013 IFRS interim financial statements and, as part of the agreement reached with SIX Exchange Regulation, will make a payment of CHF 10,000 to the IFRS Foundation.
In assessing the valuation of its inventories in the 2012 IFRS interim financial statements, Tornos Holding Ltd. has assumed an inflated future consumption. The assumed future consumption of inventories was materially too high compared to internal forecasts and led to an overstatement of the valuation of CHF 3.8 million (4.3%) in the 2012 interim financial statements. As a result, EBIT was overstated by CHF 3.8 million (60%) and the net loss for the period was understated by CHF 3.2 million (48%).
|
|
Values as per published 2012 interim financial statements |
Values after correction of the error |
Error in CHF |
|
Inventories |
CHF 91.2 million |
CHF 87.4 million |
CHF 3.8 million (4.3%) |
|
Operating income/(loss) (EBIT) |
CHF – 2.5 million |
CHF – 6.3 million |
CHF 3.8 million (– 60%) |
|
Net loss for the period |
CHF – 3.4 million |
CHF – 6.6 million |
CHF 3.2 million (– 48%) |
In connection with the agreement, Tornos Holding Ltd. will make a payment of CHF 10,000 to the IFRS Foundation. The company will further disclose and correct the error in the 2013 IFRS interim financial statements.
The investigation against Tornos Holding Ltd. is concluded with an agreement being reached as this course of action resulted in a more timely public information than would have been the case with duly completed sanction proceedings. An agreement has to be published in accordance with the Rules of Procedure.
Agreements to date in connection with financial reporting can be found at: http://www.six-exchange- regulation.com/enforcement/media_releases/agreements/financial_reporting_en.html
Appendix regarding the accounting standards
Periodic financial reporting is part of the information required under the Stock Exchange Act and the Listing Rules to ensure a functional market.
Information on financial reporting can be found at:
http://www.six-exchange-regulation.com/obligations/financial_reporting_en.html
The following accounting standards were relevant in assessing the case in question:
According to IAS 2p9 inventories shall be measured at the lower of cost and net realisable value. The estimates of the net realisable value are based on the most reliable evidence available at the time the estimates are made per IAS 2p30.
