Investor Relations
Further clarification on the publication of an examination order by BaFin of July 12, 2022

07/13/2022

Publication of inside information pursuant to Article 17 MAR

Munich, July 13, 2022 – Yesterday, BaFin published an announcement on an accounting review regarding the presentation of the spin-off of Nagarro SE in the consolidated financial statements of Allgeier SE (WKN A2GS63, ISIN DE000A2GS633) as of December 31, 2020. We published an explanatory note on this yesterday. Due to inquiries, we supplement the explanation on the background of the examination order according to our knowledge as follows:

The audit issues raised relate exclusively to the presentation of the spin-off transaction in the consolidated financial statements of Allgeier SE as of December 31, 2020 and have no impact on the companies involved Allgeier SE and Nagarro SE beyond that.

The examination order relates to the following two main aspects:

  • Firstly, BaFin considers the standards of IFRIC 17 to be applicable to the spin-off and would like to examine whether we should have separately disclosed an accounting profit in the order of EUR 200 million in the discontinued operations in the consolidated income statement as of December 31, 2020. This book gain is caused by the disclosure of hidden reserves in the course of the structuring of Nagarro SE in the run-up to the spin-off. However, this gain is no longer economically available to Allgeier SE as of December 31, 2020, as it was spun off to the shareholders of Allgeier SE in the form of the shares of Nagarro SE with the execution of the spin-off of Nagarro SE on December 15, 2020. We have therefore presented the two partial aspects of the spin-off – i.e. the disclosure of hidden reserves in the Nagarro Group and the transfer to shareholders – in a netted form in equity as part of the balance sheet. Should the reconciliation with BaFin lead to the need to adjust this disclosure, we will do so.
  • Secondly, BaFin addresses the point in time when Nagarro SE was to be regarded as discontinued operations and consequently the depreciation and amortization of the assets of Nagarro SE had no longer to be recognized in the Allgeier consolidated financial statements. In our opinion, this was the case until the spin-off became effective on December 15, 2020. BaFin would like to examine earlier dates. The date of the Annual General Meeting on September 24, 2020 or the expiry of the contestation period for the Annual General Meeting resolution could be considered. If this were to be followed, the write-downs on the assets of Nagarro SE shown in the discontinued operations would already end on these dates. The difference would be in the order of EUR 1-2 million net, by which the expense shown in the discontinued operations as of December 31, 2020 would then be lower.

We are dutifully reviewing these points and will finalize their content with BaFin. In any case, according to our current knowledge, they relate exclusively to the accounting presentation of the spin-off transaction in the consolidated financial statements as of December 31, 2020.

The effectiveness of the spin-off itself is not affected by the BaFin’s audit notes. The spin-off has been effectively executed without any doubt and nothing will change in this respect.

The continuing operations of the Allgeier Group, i.e. the entire current Allgeier business, are also not affected by the audit points. Similarly, the annual and consolidated financial statements of Allgeier SE as of December 31, 2021 and subsequent financial statements are not affected in any material way. The disclosure issues also have no tax relevance and no impact on the Group’s liquidity.

The business of Nagarro SE and the annual and consolidated financial statements of Nagarro SE are also not affected by the audit issues.

It is solely a matter of the correct presentation of the spin-off transaction in the consolidated financial statements of Allgeier SE as a one-off disclosure issue in relation to various IFRS standards.