The Financial Supervisory Authority (FSA) has announced the conclusion of its board of directors, that Eimskip violated Art. 122.1 of the Securities Act no. 108/2007 in relation to the publication of 2016 first quarter results, and has imposed a fine of ISK 50 million on the company. The FSA considers it a violation that Eimskip did not disclose earlier Eimskip’s improved results for the first quarter of 2016 or notified the FSA on delayed disclosure.
Eimskip disagrees with FSA’s interpretation of the law and its conclusion, inter alia, based on the following:
- Publication of an interim financial report is a periodic information requirement, not an incident based requirement.
- The financial calendar for 2016 was already published in December 2015, announcing publication date on 26 May 2016, which was confirmed on 18 May 2016.
- In February 2016 the company announced that it anticipated improved financial results compared to the year before.
- Certain pre-scheduled processes apply to the preparation and publishing of financial results for listed companies, which require involvement from the company’s management, Audit Committee and Board of Directors. It is the Board of Directors that eventually approves the interim financial report and it cannot be published until such approval has been granted.
- One cannot look only at the EBITDA margin when evaluating the financial performance of the company, rather a comprehensive overview of the results is needed.
- The company finds the amount of the fine to be extraordinary, as ISK 50 million is larger than the increase in net earnings between first quarter 2015 and 2016, which amounted to ISK 45.4 million.
- The company considers it incorrect to relate alterations in its share price, following the publication of the interim financial report, solely to the EBITDA growth as other factors can affect the share price, such as updated EBITDA forecast, publication of proposed cooperation with Royal Arctic Line, proposed acquisitions for the year, the number of shares available to trade, general expectations of the market, etc.
If FSA’s interpretation of the law will prevail, it will effectively become impossible for listed companies to prepare financial reports in a reasonable manner, unless by adopting a new process where the FSA is notified about delay of public disclosure of information every single time, as soon as the company begins preparing the reports. On the other hand it is hard to find the purpose of such a procedure, let alone for investors that are expecting such periodic information disclosure from listed companies.
Eimskip is of the opinion that all preparation and publishing of the 2016 first quarter results was done in accordance with applicable law and good corporate governance. Therefore the company has decided to refer this case to the Icelandic courts.
About Eimskip
Eimskip is a leading transportation company in the North Atlantic with connections to international markets and is specialized in worldwide freight forwarding services, with the vision of providing excellence in transportation solutions and services. Eimskip was founded in 1914 and is a publicly traded company with its shares listed at Nasdaq Iceland. The company runs a network of 61 offices in 20 countries, operates 21 vessels and has around 1,700 employees.
