DGAP-News: Wirecard AG / Key word(s): Statement
In the following, we would like to give full transparency of a summary of the detailed findings from an independent investigation of Wirecard's transactions and corporate actions regarding allegations preliminarily reviewed by Rajah & Tann Singapore LLP (R&T) in May of 2018 as we have received them today.
The findings are limited to certain transactions concerning specific Wirecard entities in Asia and are based on the documents provided to R&T, including an accounting review of specific transactions highlighted by R&T conducted by a forensics team at a reputable global independent consulting firm.
The independent review made no findings of round tripping or corruption. No finding has a material implication on the financial results and financial positions. The only restatement resulting from this investigation affects EUR 2.5 million revenue in 2017, which is compensated by other positive restatements identified for the same reporting period in the course of audit procedures outside of the scope of the Rajah & Tann investigation.
1. A non-implemented transaction structure with a certain customer group has led to the following wrongful accounting recordings: Revenue of EUR 2.5 million emanating from a purported contract was wrongfully recorded (and related invoices wrongfully issued) by a Wirecard subsidiary in 2017 (which will be restated in the 2018 annual accounts). A subsidiary also wrongfully recorded an asset of approx. EUR 3 million for a short period in 2018; however this was corrected within a week and as such will not be reflected or have an influence on the 2018 annual accounts.
Comment: The related contracts pertain to a project where Wirecard is assisting a bank in digital transformation of their products and services using software of Wirecard. Delivery of the project eventually occurred in 2018. Revenue recognition along the delivery time period is being revised accordingly, yet total revenues recognizable remain the same.
In addition, draft contracts were prepared and signed on behalf of certain subsidiaries, and not fully executed. These events occurred in respect of agreements which may appear to not have underlying genuine transactions. Save for one transaction of approximately EUR 63K, none of the draft transactions were entered into respective ledgers nor did funds flow into or out of the bank accounts of Wirecard group companies.
Comment: In preparation of certain possible business transactions, which ultimately did not occur, draft and sample agreements were being prepared to be shared with the business partners. A transaction of approximately EUR 63k pertains to the reimbursement of business development expenses of a partner.
2. An amount of EUR 2.3M was entered into the aged receivables report of a Wirecard subsidiary in January 2018. This was wrongfully done because no agreement or business transaction has been entered into with the counterparty. The entry was removed a month later without being ever logged into the general ledger.
3. In addition, Rajah & Tann Singapore LLP could not correlate certain payments made between business partners and Wirecard entities with agreements between them.
Comment: Neither the P&L nor the balance sheet have been or are impacted by this finding. Wirecard has taken appropriate measures to improve the structure of ledgers to be able to track incoming funds against individual ledger entries on a more granular level.
4. It is not clear why revenue from third parties, with whom a Wirecard entity has existing relationships, was booked into a different Wirecard entity's accounts. Not all of the revenue recorded has been received. There is evidence of contracts being created for IFRS audit purposes.
Comment: Neither the P&L nor the balance sheet have been or are impacted by this topic. Certain commercial agreements were re-drafted by the finance department in Singapore in order to include specific clauses required for IFRS 15 compliance.
5. An internal agreement and a separate internal transaction between Wirecard entities were entered into by or on the instructions of a person without apparent authority to do so.
Comment: The employee was envisaged to be appointed and registered as a director of the respective entities. The underlying agreements and transactions were of genuine nature. Wirecard will improve its internal signatory policies and contract governance accordingly.
6. Criminal liability may be attributable to a few local employees in Singapore according to local law in relation to some of the above mentioned circumstances. Investigations by the Singapore authorities are currently ongoing.
7. The review has not revealed findings of criminal liability under Singapore law in respect of the headquarters of Wirecard in Munich/Aschheim.
Wirecard is committed to constantly investing in in the best-in-class global compliance and corporate governance systems and is working closely with its internal compliance team and reputable independent advisors to continually improve and develop its compliance and governance processes.
In order to be able to take into account the results of Rajah & Tann's investigation as part of the ongoing preparation and review of the annual financial statements and the annual financial report for the 2018 financial year, the Management Board today decided to reschedule the publication of the annual financial report and the annual press conference (previously 4 April 2019) to 25th April 2019.
Management confirms 2019 guidance of reaching an EBITDA of between EUR 740M and EUR 800M.
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|End of News||DGAP News Service|