Troubled Datalex to temporarily suspend share trading
Dublin-based travel software company Datalex will temporarily suspend the trading of its shares from the 1st of May.
The trading of shares is being suspended after the group said it would not be able to publish its accounts by 30 April 2019, as required by the Transparency Regulations.
Datalex is currently undertaking a detailed review of its financial year 2018 following what it previously said were “significant accounting irregularities” at firm.
Datalex faces the prospect of intense scrutiny from outside agencies, including the Office of the Director of Corporate Enforcement, after it confirmed that "significant accounting irregularities" at the travel software firm were the "underlying cause" for a shock misstatement of revenue and earnings for the first half of 2018.
The trading of shares in the company will remain suspended until the accounts have been published, however the group did not specify when the results were likely to be released.
"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 in a statement.
"A further update will be given as soon as the board is in position to do so."
A report by PwC into the events at Datalex found that the group had failed to apply the international IRFS 15 accounting standard "appropriately" to its results for the first half of 2018. That standard deals with how revenue from contracts with customers is accounted for. The review also found that there were "material weaknesses" in Datalex's internal control environment.
The misstated revenue and earnings for the first half of 2018 related to the accelerated revenue recognition associated with a significant customer deployment of one of Datalex's systems, understood to be with German airline Lufthansa.
The report found that Datalex had incorrectly recognised about $3.5m (€3.1m) of service revenue associated with the Lufthansa deployment 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.