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Adler Group stock drops sharply after denial of certification

Paper lost about 50 percent at times. The CEO sees a fresh start for real estate investors.

Real estate investor Adler Group was cut off from capital markets and banks after refusing to issue a certificate for its annual financial statements for 2021. On the stock exchange, investors reacted in a panic — Adler’s stock, included in the SDAX index of small businesses, lost nearly 50 percent. From its value on Monday, it fell to a record low of 3.88 euros. “We have a difficult moment for the company,” said Adler Chairman Stefan Kirsten.

In the meantime, Adler made a fresh start. However, the auditors’ decision KPMG It has consequences for refinancing. “We also need to realize that as long as we have a disclaimer, the banking and capital markets are closed to us,” Kirsten said. However, as the balance sheet shows, Adler has more than half a billion euros in liquid assets. “We have no concerns at this point,” Kirsten said. The Adler Group is out of the past and aims for certification for its 2022 annual financial statements: “We restarted the company on May 1st.”

Adler published annual financial statements for 2021 at the last minute on Saturday, showing a loss of more than 1 billion euros. KPMG Luxembourg informed the Adler Group that it had issued a “disclaimer for opinion (disclaimer note) for the consolidated financial statements and the individual financial statements for 2021”. The auditors explained that important information relating to some transactions was not made available to them.

“There was an exam,” Kirsten said. “We have an audited certificate.” “KPMG cannot form an opinion,” he added. From the company’s perspective, the terms of the bonds have been met with the presentation of the annual financial statements. “We have 4.4 billion euros of bonds there,” Kirsten said.

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The Adler Group has repeatedly delayed publishing its balance sheet due to a private investigation by KPMG auditors. The reason for the audit was allegations by Viceroy about short seller Fraser Perring regarding Adler’s accounting methods. A network of transactions has benefited at the expense of shareholders and bondholders, and there are shortcomings in the valuation of real estate, some of which are artificially inflated. KPMG Forensic auditors did not find any systematic fraud, but they did discover shortcomings. “It’s not a first-class vindication, of course shortcomings have been revealed,” Kirsten said when presenting the results of the special test.

German Financial Supervisory Authority BaFin Examines company books. “We will evaluate the findings of KPMG’s investigation into the Adler Group and include them in our audit,” a BaFin spokeswoman said.