Datalex falls 20pc on suspension of shares
Loan which has to be approved
Shares in Dublin-based travel-software company Datalex plummeted 20pc yesterday to €0.67 after the group said it will temporarily suspend its share trading from May 1. Trading is not expected to resume until the end of June, the Irish Independent understands.
The announcement came ahead of an extraordinary general meeting of shareholders this Friday to approve a loan from Dermot Desmond, Datalex's biggest shareholder.
Please log in or register with Independent.ie for free access to this article.
Datalex took the dramatic step of suspending trading because it will not be 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.
"The company is in the process of finalising the audit and the results will be announced, and the accounts published, as soon as possible," Datalex said. "A further update will be given as soon as the board is in position to do so."
The Central Bank declined to comment.
Euronext, which operates the Irish Stock Exchange, declined to comment, but it is understood the market operator has not opened any investigation into the issues.
The latest twist in the Datalex saga comes 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.
Earlier this year Mr Desmond's IIU shored up the software company's balance sheet via a €3.8m share placing, lifting IIU's holding to 29.9pc, and a €6.1m secured loan facility to the group, which has to be approved by shareholders at Friday's EGM.