Following an inquiry by ASIC, Epsilon Healthcare Limited (Epsilon) and HSC Technology Group Limited (HSC) have amended (respectively) their financial statements and operating financial reviews (OFR) for the six months ended 30 June 2022. did.
Epsilon reduced the value of its medical cannabis business goodwill and plant equipment by $6,082,936 in its financial report for the six months ended June 30, 2022.
After reviewing Epsilon’s financial statements for the year ended December 31, 2021, ASIC raised concerns about the carrying amount of goodwill and the free cash flow projections used in the impairment model.
Separately, HSC has updated OFR’s key business risks in its June 30, 2022 semi-annual report.
ASIC has reviewed HSC’s financial report for the year ended December 31, 2021 and has raised concerns about the quality of its business risk disclosures in the OFR.
Board members should be reminded that the OFR plays an important role in complementing the financial report by telling the story of the company’s performance drivers, strategy and financial outlook. It involves material, non-general risks to achieving the stated financial prospects.
As outlined in ASIC Media Release 22-153MR, ASIC is calling for better disclosure of business risks and asset values following its review of financial reports. Disclosure of asset values and business risks is a focus area of financial reporting.
As part of its financial reporting oversight program, ASIC regularly reviews the financial reporting of selected risk-based publicly traded companies and other significant public interest groups. The program aims to improve the quality of financial reporting, ensure financial reporting is prepared in accordance with the law, and support investor confidence and the integrity of the Australian market.
ASIC Regulatory Guide 247 Effective Disclosure in Operational Financial Reviews provides guidance to directors of publicly traded companies to provide useful and meaningful information to investors in their OFRs.