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MOSCOW (MRC) -- K+S (Kassel, Germany)
says the German Audit Office for Accounting (DPR) is examining the company’s
consolidated statements after Germany’s financial watchdog, the Federal
Financial Supervisory Authority (BaFin), found potash-related impairment charges
of about EUR2.0 billion (USD2.4 billion), said Chemweek.
The
DPR is studying financial statements for the periods ending 31 December 2019 and
30 June 2020. At the request of BaFin, the DPR “has announced that it will
examine the accuracy of the impairment losses recognized. For this purpose, DPR
requests the company’s cooperation and the submission of documents,” K+S says.
The company states that it “comprehensively complies with this request and has
already provided the documents requested by DPR.” It will cooperate fully in the
examination and provide further information upon request “with maximum
transparency,” K+S adds.
According to K+S, BaFin contacted DPR stating an
examination was required as assets in the company’s Europe+ operating unit
reported in the consolidated financial statement ending 31 December 2019 and in
abbreviated financial statements ending 30 June 2020, in particular non-current
assets, “may be overstated."
“BaFin has concrete indications that this
impairment requirement may not have been determined correctly and should have
been recognized in full or in part at an earlier date. Other asset items may
also be affected by the need for an impairment loss,” K+S says. The DPR has
indicated that it reserves the right to extend the examination to further items
if further indications of incorrect accounting become known, it says.
In
November last year K+S announced it had adjusted its long-term assumptions for
its potash business, essentially related to the long-term development of potash
prices. An adjustment of the weighted average cost of capital also became
mandatory. “Overall, this resulted in a non-cash, one-off impairment loss of
around ˆ2 billion on assets in the Europe+ operating unit,” it says. The
impairment loss was recognized in the company’s third-quarter 2020 financial
statements “and had a correspondingly negative impact on adjusted consolidated
earnings after tax and ROCE, but did not result in a cash outflow,” it
says.
The executive board at K+S “is convinced that the impairment loss
has been recognized appropriately and in compliance with all relevant accounting
standards,” it states, adding that the board “assumes that it will be able to
invalidate BaFin’s indications.” The company’s supervisory board “also does not
anticipate any indications to the contrary at present. It has immediately
established committees and processes to monitor the occasion-related
examination,” it says.
As per MRC, K+S (Kassel, Germany) and Remex, a
subsidiary of Remondis Group (Lunen, Germany), are bundling their
waste-management activities in a new joint venture (JV) called REKS, K+S
says. The partners plan jointly to tap into the rapidly growing market for
reutilization and disposal, as well as sustainable waste-management
solutions.
We remind that
Russia's output of chemical products rose in November 2020 by 9.5% year on year.
At the same time, production of basic chemicals increased in the first eleven
months of 2020 by 6.6% year on year, according to Rosstat's data. According to
the Federal State Statistics Service of the Russian Federation, polymers in
primary form accounted for the greatest increase in the January-November 2020
output. November production of polymers in primary form rose to 896,000 tonnes
from 852,000 tonnes in October. Overall output of polymers in primary form
totalled 9,240,000 tonnes over the stated period, up by 17.1% year on
year.
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