|Bid||0.4973 x 37100|
|Ask||0.5000 x 20900|
|Day's Range||0.4950 - 0.5128|
|52 Week Range||0.4688 - 145.6000|
|Beta (5Y Monthly)||-0.28|
|PE Ratio (TTM)||0.13|
|Earnings Date||Nov 05, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Jun 19, 2019|
|1y Target Est||205.49|
(Bloomberg) -- Wirecard AG continuously obstructed a special audit by accounting firm KPMG LLP, a probe that ended up uncovering fictitious bookings on a massive scale and hastened the collapse of the once high-flying German mobile payment company.Speaking at a parliamentary inquiry in Berlin on Thursday, KPMG partner Alexander Geschonnek laid out how his company was confronted with “considerable obstacles” in its task to unpack Wirecard’s accounts dating back several years.Interviews with key counterparts were routinely delayed or moved, and accounting probes couldn’t be fulfilled because the company didn’t provide the required data, Geschonnek said. As a result, KPMG struggled to fulfill its mandate, he said.“It proved impossible to sufficiently comprehend the transaction volumes from 2016 to 2018,” Geschonnek, who works at the KPMG Forensic division, told the inquiry in Berlin.KPMG billed Wirecard 5.8 million euros ($6.9 million) for the audit, but ended up receiving just 5.3 million euros, Geschonnek said. At one point, KPMG even considered aborting the task outright, which involved as many as 40 accountants during a six-month process, he said. ‘Surprised’The auditor’s account is a key part of an investigation trying to understand why Wirecard collapsed, and if the company’s alleged malfeasance could have been detected sooner. KPMG was brought on by Wirecard to do a special audit late last year, reviewing the accounts that had already been signed off by longterm auditor Ernst & Young.One episode that has drawn particular attention was a trip by auditors and company management earlier this year to Manila in the Philippines, where Wirecard said its partner companies held large sums of cash from transactions in escrow accounts. But in Geschonnek’s telling, employees at the local bank were unable to produce the requested documents, raising suspicions.By the time KPMG handed over its report, the auditor had concluded there was no evidence that funds in the escrow accounts in Asia actually existed, he said. Geschonnek said he was “surprised” how even after repeated requests, Wirecard failed to provide proof that the money allegedly sitting in the escrow accounts was there.Wirecard filed for insolvency in late June, after admitting that 1.9 billion euros in funds never existed. Former Chief Executive Officer Markus Braun was detained shortly thereafter and is in jail, while his No. 2, Chief Operating Officer Jan Marsalek, is on the run and now features on Interpol’s Most-Wanted list.Braun appeared in front of the parliamentary inquiry last week but largely refrained from answering questions beyond brief introductory comments. In that statement, he said regulators or auditors were likely “massively misled.”(adds detail on KPMG audit in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- When Wirecard AG’s former boss Markus Braun was taken from his Bavarian prison last week to give testimony to a German parliamentary enquiry, he declined to answer almost all questions about the payment-processing group’s sudden collapse.Dressed in his trademark black turtleneck sweater, he did read a prepared statement which generously exonerated politicians, financial authorities and auditors for not spotting the epic fraud. “I can’t understand why external regulators should be held responsible for failures here,” he said.Braun has good reason to play nice with German authorities: After 1.9 billion euros ($2.3 billion) of Wirecard cash balances disappeared (they may never have existed), prosecutors are investigating whether he knew that profits were fabricated and that prettified accounts were used to obtain billions of euros in funding. He denies wrongdoing.Investors who lost their shirts when Wirecard collapsed will be less forgiving of Germany. Confidence in the country’s capital markets has been shattered by the affair, which exposed alarming gaps in its regulatory and accounting oversight. Germany’s opposition politicians can be commended for insisting on a rigorous parliamentary inquiry, but there’s little sign that top officials are ready to accept blame.Regrettably, the detective work was left to courageous financial journalists at the Financial Times, whom Germany tried to hinder by investigating claims that they’d conspired with short sellers. German financial regulator BaFin also banned investors from shorting Wirecard stock, even though hedge fund instincts were proved correct. Wirecard’s chief operating officer, Jan Marsalek, believed by Germany authorities to be an informant for Austria’s spy agency, has eluded Berlin’s efforts to find him.Germany’s latest effort to make amends — an overhaul of the rules governing admission to the country’s blue-chip Dax share index — is a step in the right direction.Companies that fail to promptly issue audited financial statements will be swiftly booted from the index, which is being expanded from 30 to 40 constituents. They’ll be required to have an independent audit committee. Wirecard’s supervisory board didn’t establish an audit committee until 2019. Meanwhile, Berlin is preparing an overhaul of BaFin’s powers. Bizarrely, Wirecard didn’t fall under the finance regulator’s oversight (except for its banking arm) because it was considered a technology company. Dozens of BaFin employees traded Wirecard stock while the company was facing questions about its accounting. There’s no suggestion they acted on insider information, but this was a cavalier attitude toward conflicts of interest. BaFin staff will be banned from trading securities in the companies it oversees. It’s incredible that it was ever allowed. Germany’s accounting watchdog, FREP, which lacked the resources to conduct a forensic investigation of Wirecard, will have its contract cancelled, with BaFin gaining greater powers on forensic audits.BaFin’s president, Felix Hufeld, has largely ducked responsibility for Wirecard and pointed the finger instead at auditor, EY, whose staff appear at Germany’s parliamentary inquiry this week. (Like Braun, they’re expected to remain largely silent.) In a long report on Wirecard this month, the European Securities and Markets Authority said BaFin lacks independence from its government.All of this tells me that Germany hasn’t fully come to terms with what happened, and international investors will continue to regard its financial regulators as docile and toothless.The country has form. A decade ago, Volkswagen AG briefly became the world’s most valuable company when Porsche revealed it had cornered the market in its parent company’s shares using financial derivatives that it wasn’t obliged to reveal under German rules. This brought about a massive squeeze on short sellers and inflicted billions of dollars of losses on hedge funds, after a Bernstein analyst exposed what Porsche was probably up to. Investors remain bitter to this day.On Wirecard, financial journalists did Germany’s supervisory work for it. Dan McCrum and his FT colleague Stefania Palma have been nominated for the Federal Cross of Merit, Germany’s highest civilian honor, but there’s been no apology from BaFin. My guess is it may never arrive.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Germany’s DAX index plans its most sweeping overhaul since its inception, adding 10 new companies and new quality controls after the implosion of Wirecard AG rocked investor confidence in the gauge.The changes will trigger billions of euros of passive flows for the new members. Those are likely to come from the largest stocks in Germany’s MDAX gauge, which include Airbus SE, Siemens Healthineers AG, Sartorius AG and Zalando SE. Index operator Qontigo will boost the number of DAX members to 40 from 30 in the third quarter of next year, while reducing MDAX membership to 50 from 60 companies, it said in a statement.Qontigo, a unit of Deutsche Boerse AG, will also impose new criteria on both existing and prospective DAX members, including a requirement to publish quarterly statements and audited annual results, with a fast exit for those failing to release them on time.The changes come after the implosion of Wirecard, the fintech that was a DAX member for two years despite repeated allegations of irregularities. When it collapsed in June, pressure to overhaul the index mounted as existing rules didn’t allow for the benchmark’s first-ever insolvent member to be ejected right away. After that, the index makers undertook a four-week long consultation with more than 600 market participants before adjusting the rules.“In general, the larger volume, the slightly higher diversification and the slightly increased share of dynamically growing companies is positive for the DAX and should slightly improve the leading German index,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg Bank.For prospective new members, the potential benefits are big. According to Goldman Sachs strategists, 30 billion euros ($36 billion) to 40 billion euros in assets under management are benchmarked directly to the DAX.Entry will be based on market cap, a general liquidity threshold and the new qualitative criteria, with the index owner dropping its previous methodology of rankings which included the volume of shares traded. New members will also need to have been profitable for the past two years.Possible new members include Airbus, Symrise AG, Zalando, Sartorius, Qiagen NV, Siemens Energy AG, LEG Immobilien AG, Brenntag AG, Siemens Healthineers and Hannover Rueck SE, according to Landesbank Baden-Wuerttemberg index analyst Uwe Streich. HelloFresh SE, Scout24 AG, Knorr-Bremse AG, Puma SE and TeamViewer AG are next in line, he added.Delivery Hero SE joined the DAX in August to replace Wirecard, and some investors expressed unease about the fact that the Berlin food-delivery firm had never reported an annual profit. Had the new rules already been in place, it would not have been eligible to join.The change to 40 members brings Germany in line with France’s benchmark CAC index, and may help to minimize the impact of heavyweights on the gauge.“Europe’s benchmark indexes are generally too narrow compared to U.S. equity indices,” said Frederik Hildner, Salm-Salm & Partner portfolio manager. “I very much like the fact that these are a better proxy for the economy, whereas narrow large-cap indices are oftentimes heavily impacted by sharp moves of large constituents.”The earnings reporting requirements will become effective during the first-quarter index review, along with a mandate for companies to include an audit committee on their supervisory board. Existing members that don’t yet have an audit committee will get until August 2022 to adapt to the new rule.The only proposal that was not adopted would have banned companies involved in “controversial weapons.” According to Qontigo, this would have affected one current member of the MDAX.While investors generally welcomed the changes and the new quality controls, some expressed concern about the impact on the midcap gauge.“Due to the fact that small companies will join the DAX the weights of the bigger ones won’t change much and cluster risks remain. It is even more tragic for the MDAX index as the gauge will lose a lot of liquidity,” said Tarek Saffaf, Greiff Capital Management AG portfolio manager. “The quality measures are a good step.”Read more: How German Fintech Darling Wirecard Fell From Grace: QuickTake(Updates to add Goldman data on AUM benchmarked to DAX.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.