Wirecard AG’s auditor Ernst & Young GmbH, informed Wirecard AG that no sufficient audit evidence could be obtained so far of cash balances on trust accounts to be consolidated in the consolidated financial statements in the amount of EUR 1.9 billion, „approximately a quarter of the consolidated balance sheet total”, according to the press release.
„There are indications that spurious balance confirmations had been provided from the side of the trustee respectively of the trustee’s account holding banks to the auditor in order to deceive the auditor and create a wrong perception of the existence of such cash balances or the holding of the accounts for to the benefit of Wirecard group companies.”, the company said.
The Wirecard management board is working intensively together with the auditor towards a clarification of the situation.
Wirecard AG has been informed by the auditor EY that an audit certificate for the annual financial statements for the past fiscal year 2019 requires additional audits. This is due to recent communications from the two banks that have been managing the escrow accounts since 2019, according to which „the account numbers in question could not be assigned,” the company said in a press release. The responsible trustee is in continuous contact with the banks and Wirecard AG.
The respective subsidiaries of Wirecard AG have paid substantial security deposits totaling 1.9 billion euros into these escrow accounts in order to guarantee risk management for participating merchants. The banks managing the escrow accounts are two Asian banks. Both institutions have investment grade ratings. The trustee, who has been in office since 2019, holds numerous mandates in Asia.
Markus Braun, CEO Wirecard AG: „We are in contact with the trustee present on site. Previously issued confirmations by the banks were no longer recognised by the auditor. All parties involved are endeavouring to clarify the matter as quickly as possible. It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred. Wirecard AG will file a complaint against unknown persons.”
According to provisional figures, the transaction volume in the 2019 reporting year rose by almost 38.5 percent to EUR 173.0 bn (2009: EUR 124.9 bn). Group revenue rose by 37.5 percent to EUR 2.8 bn (2008: EUR 2.0 bn). Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 37.8 percent to EUR 772.3 million (previous year: EUR 560.5 million).
Free cash flow from operating activities (adjusted) rose by 37.0 percent to EUR 580.8 million (previous year: EUR 423.9 million). Earnings after taxes increased to EUR 482.4 million (previous year: EUR 347.4 million), which corresponds to earnings per share (undiluted) of EUR 3.90 (previous year: EUR 2.81).
Banking 4.0 – „how was the experience for you”
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