The Norwegian Financial Supervisory Authority published the findings of a financial reporting review of Navamedic ASA’s 2023 annual report and its interim report for fourth quarter 2024 covering the company’s loans to Observe Medical ASA. The supervisor concluded that the main loan was credit-impaired already in 2023 and that Navamedic should have recognised a material expected credit loss under IFRS 9, alongside correcting related interest income and addressing significant disclosure deficiencies. Navamedic has confirmed it will correct the errors in its 2024 annual financial statements in line with IAS 8, which the authority has taken note of and treated the matter as closed. The review covered loans that made up NOK 49.1 million of long-term financial assets at 31 December 2023, including a 2019 convertible loan with a carrying amount of NOK 43.8 million (including accrued interest). Finanstilsynet found that 2023 debt renegotiations were not accounted for in accordance with IFRS 9 and that note disclosures were incorrect or incomplete under IAS 1, IFRS 7 and IFRS 13, including misstatements about whether loan terms changed and insufficient qualitative and quantitative information on credit risk, expected credit loss and fair value. For the fourth quarter 2024 interim reporting, it also challenged Navamedic’s provision of NOK 7.7 million (a 20% loss rate) and its staging of the exposure, concluding the loan should still be treated as credit-impaired at 31 December 2024 and that expected credit loss measurement and interest recognition should follow the IFRS 9 requirements for credit-impaired assets. Finanstilsynet asked Navamedic to provide written confirmation of where and how the matters have been corrected in the 2024 annual report within two weeks after that report is published, and to reflect the corrections in future comparative figures and note disclosures.

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