Aqua Bio Technology ASA: 2018 accounts to be restated

Reference is made to Aqua Bio Technology ASA’s (ABT) stock exchange release dated 21 January, 2020, regarding notice of decision by the Financial Supervisory Authority of Norway (Finanstilsynet). 

In its notice, Finanstilsynet advised ABT that it did not find the stated value of the inventory of skin care product ingredients sufficiently substantiated, and therefore considered instructing the Company to write down the inventory to NOK 0. In its notice Finanstilsynet also concluded that since Restorsea does not have a legal obligation to exercise its options to extend its exclusivity from 2022 to 2027 and from 2027 to 2032, against payment of MUSD 2.5 for each extension, such future payments cannot be taken into consideration when estimating net realization value of ABT's inventory for Restorsea.  Furthermore, Finanstilsynet advised ABT that an estimate of the recoverable amount of ABT’s patents should have been made at the end of 2018 based on these assumptions, and that it considered instructing the Company to do so.

ABT still believes that Restorsea will succeed with its commercialization strategy and therefore will exercise its options to extend its exclusivity with further exclusivity payments to ABT, which implies that ABT's inventory has a substantial value. After having reviewed Finanstilsynet’s conclusions, ABT’s board of directors has resolved to restate the Company’s 2018 accounts. The inventory of skin care product ingredients as well as the carrying amount of patents are being written down to NOK 0 as of 31 December, 2018. The combined impairment amounts to NOK 20,105,942.

Consequently, the restated 2018 financial result for ABT is NOK -38,466,070, whereas the previously reported financial result was NOK -18,360,128. Furthermore, the Company’s equity as of 31 December, 2018, is being restated to NOK -197,159. The previously reported equity at the end of 2018 was NOK 19,908,783. All corrections have been made in accordance with International Accounting Standards (IAS) 8 and will be reflected in the 2019 financial statements.

ABT’s board of directors has reviewed Finanstilsynet’s notice. It is the board’s opinion that the value of the inventory and the patents are closely interlinked. Following Finanstilsynet’s advice, the board has therefore resolved to value both the inventory and the patents at NOK 0 as of 31 December 2018.

For further information, please contact Mr Edvard Cock, Chairman of the Board, telephone  004.