Wild values at Wild Bunch AG

The share price had already crashed in 2021, but now there is also official news. The German financial supervisory authority BaFin has identified errors in the abbreviated financial statement of Wild Bunch AG, based in Berlin, as of June 30, 2020. BaFin’s announcement is made under § 109 paragraph 2 sentence 1 of the Securities Trading Act.

In the consolidated financial statements, the item “goodwill” (€124.5 million) is overstated by €54 million. This violates IAS 8.42 in conjunction with IAS 36.104(a).

The International Accounting Standards (IAS) are part of the International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). Companies whose securities are listed on an organized market are required to prepare their consolidated financial statements according to IFRS.

According to IAS 8.42, a company must retrospectively correct material errors from previous periods, and according to IAS 36.104(a), it should initially recognize an impairment expense for a cash-generating unit (CGU) against the goodwill if its recoverable amount is lower than its carrying amount.

CGU stands for cash-generating unit, which is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets.

The recoverable amount of a cash-generating unit is the higher of the two amounts between fair value less costs to sell and value in use. Fair value less costs to sell: The amount that could be obtained from selling a cash-generating unit in a transaction between knowledgeable, willing parties, after deducting the costs of sale. Value in use: The value in use is the present value of future cash flows that are expected to be derived from a cash-generating unit, discounted to the valuation date.