BaFin concludes the examination of ADLER Real Estate’s financial statements 2019 to 2021

• Examination of consolidated financial statements as of 31 December 2019, 2020 and 2021 with error determination
• No restatement or error correction of the consolidated financial statements was ordered, and no fines were imposed by BaFin; the only sanctioning measure is the publication of the error determination by BaFin today
• Adler continues to maintain the full accuracy and correctness of the audited consolidated financial statements for the financial years 2019, 2020 and 2021
• Good and constructive dialogue with BaFin during complete examination process despite differences of opinion on complex matters
• After squeeze-out of the minority shareholders became effective in October 2023, ADLER Real Estate is not listed anymore

Luxembourg/Berlin, 27 December 2023 – Adler Group S.A. (“Adler Group”) announces that the German Federal Financial Supervisory Authority (“BaFin”) has concluded its examination of the consolidated financial statements and combined management reports of Adler Group’s formerly listed subsidiary, ADLER Real Estate Aktiengesellschaft (together with Adler Group, “Adler”), for the financial years 2019, 2020 and 2021. The decision was published by BaFin today.

In connection with the conclusion of the examination, BaFin decided that the audited consolidated financial statements and the related combined management report for the financial years 2020 and 2021 contain accounting errors. BaFin’s error determination includes newly identified items which were not included in the error determination in the financial statements 2019. The first error is regarding the sale of shares held in ACCENTRO Real Estate AG. BaFin determined that the outstanding purchase price receivable in the amount of EUR 59m (incl. interests) was “significant overvalued”, as the known significant credit and realisation risks for expected credit losses were not correctly taken into account. The second one is in connection with a real estate sale to AB Immobilien B.V. According to BaFin, the purchase price receivable was incorrectly determined at nominal value instead of the approx. EUR 18.9m lower fair value. BaFin also criticised the lack of information on the collateralisation of an inter-company loan.

Regarding BaFin’s error determination in connection with the real estate project “Glasmacherviertel”, Adler emphasises that this is not a newly identified item but a consequential error that has already been decided and published by BaFin in connection with the error determination in the financial statements 2019. Adler has repeatedly pointed out publicly that it considers the valuation to be proper and correct, contrary to the opinion of BaFin.

Against this background and in line with the filed appeal against the error determination of the financial statements for the 2019 financial year, Adler is considering whether to appeal against the decision.

Adler highlights that BaFin's error determination as well as the examination proceedings that have now been concluded do not affect the validity of ADLER Real Estate AG's consolidated financial statements as of 31 December 2019, 2020 and 2021. Moreover, neither a restatement of the consolidated financial statements nor an error correction was ordered, and no fines were imposed.

Adler emphasises the continued good and constructive dialogue with BaFin during the complete examination process despite different views on complex matters. Following the effectiveness of the squeeze-out of minority shareholders in October 2023, the Adler Group subsidiary ADLER Real Estate is no longer listed on the stock exchange and has no securities listed on officially regulated stock exchanges.

“Even though we do not agree with the error determinations by BaFin, we are pleased to have concluded the proceedings with BaFin in an always constructive and professional dialogue”, said Thomas Echelmeyer, CFO of Adler Group.

Adler is convinced that BaFin conducted a very thorough examination, which is clear from the fact that the examination was conducted over two years. Apart from the errors made public – which Adler does not share – it did not identify any other errors. The allegations made by a short-seller in October 2021 have therefore not been substantiated beyond the errors identified.

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