Belfast Telegraph

Software firm Datalex to suspend share trading

Chairman: Paschal Taggart
Chairman: Paschal Taggart

By Ellie Donnelly

Dublin-based travel software company Datalex will temporarily suspend the trading of its shares from May 1.

The shares are being suspended from next Wednesday after the group said it would not be able to publish its accounts by April 30, as required by the Transparency Regulations.

Datalex is currently undertaking a detailed review of its financial year following what it previously said were "significant accounting irregularities" at the firm.

Datalex faces the prospect of intense scrutiny from outside agencies, including the Republic's corporate watchdog 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.

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 business advisory firm 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 (£2.7m) 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 (£2.4m) of other services and platform revenue was incorrectly recognised in the period, of which $700,000 (£541,000) is not recoverable.

The balance will be recognised in respect of the second half of 2018, or in the 2019 financial year.

At the end of last month, Datalex chairman and shareholder Paschal Taggart said that events "have been distressing for the shareholders, directors and for all the company's stakeholders".

The firm's single biggest shareholder is billionaire financier Dermot Desmond.

It has premises in China, the Netherlands, Manchester, the US and Latin America.

Shares in the business plunged in January when the issues first came to light.

Belfast Telegraph