Wednesday 21 August 2019

CEO of troubled Datalex quits

Aidan Brogan. Photo: Michael Chester
Aidan Brogan. Photo: Michael Chester
Ellie Donnelly

Ellie Donnelly

Aidan Brogan, the CEO of troubled software group Datalex, has resigned with immediate effect.

Mr Brogan’s resignation comes just a week after the group’s chairman Paschal Taggart announced he was stepping down.

Sean Corkery, deputy chairman, will take up responsibility as acting CEO of the company while the board undertakes a search for a permanent CEO.

 In a brief statement the company said it would update the market in due course.

Yesterday Datalex suspended trading in its shares because it was not able to publish financial accounts by April 30, as required under Central Bank of Ireland rules.

Trading will remain suspended until the accounts have been published, which it is understood may not happen until the end of June.

These latest developments come after the company itself earlier launched a review of its 2018 financial performance after uncovering what the board described as "significant accounting irregularities".

A report by PwC for the company found it had failed to apply the international IRFS 15 accounting standard "appropriately" to its results for the first half of 2018. That relates to rules on how future revenue streams from contracts with customers are booked.

The misstated results for the first half of 2018 were down to early recognition of revenues associated with a significant customer - understood to be German airline Lufthansa.

The report found that Datalex had incorrectly recognised about $3.5m (€3.1m) of revenue for the contract in the first six months of 2018, which has subsequently been corrected by the group.

It also noted that about $2.9m (€2.5m) of other services and platform revenue was incorrectly recognised in the period, of which $700,000 is not recoverable. The balance will be recognised in respect of the second half of 2018, or in the 2019 financial year.

The review also found that there were "material weaknesses" in Datalex's internal control environment.

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