fThere is new bad news for the troubled real estate company Adler Group. Because the financial services regulator Bafin identified further serious errors as part of its balance sheet control. According to Bafin, the consolidated balance sheet total of the Adler subsidiary Adler Real Estate is 3.9 billion euros too high in the balance sheet for 2019, which means that the annual result is also 543 million euros too high. In addition, the subsidiary ADO Properties should not have been fully integrated into the consolidated financial statements.
The Bafin has now found three more errors in the Adler balance sheets, after having criticized the overvaluation of a real estate project in Düsseldorf-Gerresheim in August. According to Bafin, the value of the project was 170 million to 233 million euros too high. At the time, Adler had raised an objection to the Bafin’s partial findings and announced on Thursday that it would also object to the Bafin’s current error notice.
Adler contradicts Bafin findings
With a judicial review of the Bafin notices, the Adler Group wants to make a further contribution to clarifying allegations that related parties have influenced transactions and business transactions. This last year from the professional short seller Fraser Perring The allegations made raised deep doubts about the Adler balance sheets from shareholders and creditors. The share price of around 20 euros at the time then collapsed and is currently bobbing in the single-digit euro range.
More transparency and clarification are apparently actually necessary with a view to the possible influence of those pulling the strings on the company. The Bafin also complains that Adler Real Estate did not keep records of whether and why counterparties to corporate and real estate transactions were classified as related parties. “The accounting records were incomplete in this regard,” the agency notes.
The Bafin emphasizes that the previous and current notifications are partial error determinations. This means that it has not yet completed the balance sheet control process at the Adler Group and the final results are not yet available. The audit of the accounting and the consolidated financial statements as well as the combined management report for Adler Real Estate for the 2019, 2020 and 2021 financial years is ongoing. However, the supervisory authority CSSF is responsible for controlling the balance sheet of the Luxembourg-based parent company Adler Group.
The Bafin had taken over the balance sheet control procedure from the DPR, the originally responsible test center for accounting, because the official responsibilities were reorganized after the Wirecard balance sheet scandal. The original reason for the balance sheet control procedure was the complex mergers and acquisitions that created the Adler Group in 2020. The companies Adler Real Estate, Consus Real Estate and Ado Properties were the subject of these M&A transactions.
The balance sheets of the Adler subsidiary Adler Real Estate, which is subject to the Bafin control procedure, had been checked and certified by the auditing company Ebner Stolz since the 2010 financial year. In view of the doubts about the Adler balance sheets, the auditing authority APAS is investigating whether Ebner Stolz could have violated professional obligations during the audit.