Pharma Equity Group's Response to Danish Business Authority Order
Pharma Equity Group A/S has recently published significant corrections pertaining to its financial statements, specifically the Annual Report for 2024 and the Interim Report for H1 2025. This announcement occurred after the Danish Business Authority mandated specific accounting adjustments following an order concerning how the company measures its receivables.
Understanding the ECL Model Implementation
In compliance with the order issued to Pharma Equity Group, the company is now required to implement an 'Expected Credit Loss' (ECL) model as per IFRS 9 for evaluating its receivable from Portinho S.A. This shift marks a pivotal change in the accounting practices of the company as it aims to enhance financial transparency and accuracy.
Awaited Supplementary Information Release
Pharma Equity's auditor, BDO Statsautoriseret Revisionsaktieselskab, is diligently reviewing the necessary corrective information. Stakeholders can look forward to receiving the final, audited supplement report within approximately two weeks, which will also include the independent auditor's findings.
Impact on Financial Statements
The impending corrections will reveal adjustments in key financial figures as the application of the ECL model results in a reduction of the receivable’s carrying amount. For instance, as of December 31, 2024, the receivable will be adjusted from TDKK 58,000 to TDKK 41,812, reflecting a commendable commitment on the part of the company to uphold accurate reporting standards.
Background on the Accounting Adjustments
Previously, Pharma Equity accounted for its receivable using a simplified net present value approach. The newly adopted ECL model utilizes probability-weighted scenarios to factor in potential collection losses more effectively. This decision reflects both regulatory compliance and the company's proactive stance towards better financial management.
Consequences for the Annual Report
This modification will significantly affect profit/loss reporting. For the financial year 2024, the profit/loss statement will reflect these corrections and is considered an accounting error correction, resulting in a revised annual loss extending up to TDKK 40,610. This candid approach showcases Pharma Equity Group's dedication not only to compliance but also to maintaining integrity in its financial disclosures.
Adjustments for H1 2025 Interim Report
For the first half of 2025, the company has evaluated the fair value of the receivable as of June 30, 2025, and estimates this value to be TDKK 33,697. This represents a negative correction from the previously reported TDKK 58,000, with an overall impact totaling TDKK 24,303, broken down into TDKK 16,188 and TDKK 8,115 adjustments in prior and current periods, respectively.
Management's Assurance
Pharma Equity's management has reassured stakeholders that this adjustment is purely an accounting formality and will not affect the company's liquidity or cash flow. The legal claim against the debtor, Portinho S.A., is still fully active, emphasizing the company’s ongoing efforts to maximize recovery from its investment.
About Pharma Equity Group A/S
Pharma Equity Group, a publicly traded company on Nasdaq Copenhagen, is strongly committed to advancing the healthcare initiatives of Reponex Pharmaceuticals A/S, its subsidiary. The organization aims to bring invaluable medical advancements while maintaining strategic focus on their current projects. This dedication positions them well not only for potential future investments but also ensures a robust impact on global healthcare outcomes.
For individuals seeking further information about these changes or general inquiries, contact:
Christian Tange, CEO, Pharma Equity Group A/S, phone: +45 2948 8417
Christian Vinding Thomsen, Chairman of the Board, Pharma Equity Group A/S, phone: +45 2622 7222
Frequently Asked Questions
What prompted the recent corrections in financial reports?
The corrections were initiated due to an order from the Danish Business Authority requiring the implementation of the Expected Credit Loss (ECL) model for receivables.
Will these corrections affect the company's cash flow?
No, management has assured that these changes are purely accounting corrections and do not impact the company's liquidity or cash flow.
What is the Expected Credit Loss (ECL) model?
The ECL model is an accounting standard (IFRS 9) that requires companies to account for expected credit losses over the life of financial assets.
When will the revised financial reports be available?
The audited supplementary information is expected to be published within approximately two weeks, as confirmed by the company's auditor.
Who should I contact for more information?
You can reach out to Christian Tange, CEO, or Christian Vinding Thomsen, Chairman of the Board, for inquiries related to the announcements.
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