Adler posts €1.18b loss as KPMG issues results 'disclaimer'

The entire board of German residential landlord Adler has tendered its resignation after a KPMG-commissioned report failed to lay to rest the firm's financial woes.

Shares in the S-Dax-listed Adler reached record lows on Monday after the company's annual results revealed a €1.18 bn loss, which KPMG refused to endorse, citing 'the denial of access to certain related party information'.

As the company reeled from KPMG's disclaimer, the whole board collectively offered to resign, although the chairman only accepted four resignations, 'to ensure the continuity of business'.

The company's board of directors now consists of Thierry Beaudemoulin, Stefan Kirsten, Thilo Schmid and Thomas Zinnöcker.

KPMG 'disclaimer'
KPMG hinted that it had been unable to view thousands of documents, commenting that 'exceptional circumstances' had prevented the firm 'from obtaining sufficient appropriate evidence about the identification and disclosure of related parties and significant related party transactions and account balances'.

The Luxembourg-based office added: 'This also precludes us from evaluating whether the accounting treatments for at least some of these transactions are appropriate and consistent with their substance, as well as evaluating whether management’s assessment about the valuation of certain account balances is adequate'.

However, Adler noted that the audited financial statements were published within all relevant deadlines on 30 April, and that the group had therefore complied with the statutory publication deadline as a S-Dax listed company vis-à-vis the capital market.

'This means that the bond covenants of the existing bond portfolio stay intact,' said Adler in a statement.

Outgoing deputy and former chairman Dr. Peter Maser commented: 'The board has worked intensively in 2021 with external advice, while under severe pressure from the outside.

'We exercised our duty in the best interest of the company; now we want to give Adler Group a fresh start with our collective resignation.'

Short sellers
Adler has been battling attacks from short sellers in the past 12 months, after Fraser Perring's Viceroy Research published a damning report that pushed down shares and raised concerns over Adler's financial state.

The allegations centred on major stakeholder Cevdet Caner, an Austrian entreprenuer who is accused of extracting monies from the company via consulting contracts and influencing personnel decisions. German authorities are now investigating further.

Although a German court subsequently ordered Fraster Perring to eliminate 'untruthful' information from its 64-page analysis, the crisis prompted Alder to commission a KPMG report to counteract the allegations, which delayed full-year results.

Earlier this year, German residential landlord Vonovia became the largest single shareholder in peer Adler, after the latter group's largest shareholder allegedly breached the terms of a loan.

The default triggered a margin call at Aggregage Holdings, allowing Vonovia to step in and snap up a 20.5% stake in Adler.

Despite Vonovia's increased holdings, the firm's CEO Rolf Buch recently hinted that the company was cooling on a full Adler takeoever bid. 'This is currently not the right time for larger acquisitions or mergers', Buch said at the the firm's virtual general meeting on 29 April.


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