External Investigation of Rajah & Tann reveals no material impact on financial reports of Wirecard
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.
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.
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.
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.
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.
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.