The Company made the following accounting restatements and reclassifications presented in the disclosure relating to the semi-annual report for H1 2021 published on 2 September 2021 on the basis of the comments made by the Company's auditor on the Semi-annual Report.
In line with the disclosure requirement set out in Sections 55 and 56 of Act CXX of 2001 on the Capital Market and in PM Decree No. 24/2008. (VIII.15.), AutoWallis Nyrt. (registered office: 1055 Budapest, Honvéd utca 20.; hereinafter: Company) hereby informs the market participants about the matters below.
The Company made the following accounting restatements and reclassifications (hereinafter: Restatements) presented in the disclosure relating to the semi-annual report for H1 2021 published on 2 September 2021 (hereinafter: Semi-annual Report) on the basis of the comments made by the Company's auditor on the Semi-annual Report. In order to ensure compliance with IFRS requirements and to present more relevant information, the following changes were made retrospectively:
1. Restatement relating to the share-based compensation scheme
2. Restatement relating to the transaction involving Iniciál Autóház Kft. and ICL Kft.
3. Restatement and reclassification relating to reverse factoring
4. Changes in the classification and presentation of liabilities and certain cash flow items
In order to ensure comparability, the Company applied these restatements and presentation changes also for the comparative periods of the Semi-annual Report, i.e. for 30 June 2020 and, in certain cases, 31 December 2020, and published them in the Semi-annual Report.
To ensure comparability with previous periods which are not covered by the Semi-annual Report but are affected by the Restatements in question, the Company calculated these Restatements also for the years 2018 and 2019 (where applicable) and hereby publishes them in this Extraordinary Announcement.
The Company would like to note that these restatements concerning previous periods were reviewed, but not audited, by the Company's auditor for the relevant periods.
I. Restatement relating to the share-based compensation scheme
The AutoWallis Employee Share Ownership Programme (hereinafter: ESOP) was launched in 2019, as part of which WALLIS ASSET MANAGEMENT Zrt., the Company's majority owner, transferred shares of AutoWallis Nyrt. to the AutoWallis MRP Organisation (hereinafter: MRP1) in 2019. The Company decided to modify the accounting treatment of the portion of these shares which is specified below, having regard to the fact that their effect was not recorded in the Company's financial statements for 2019 and 2020 as no expenditures have been or will be incurred and no other assets have been or will be transferred by members of AutoWallis Group, given that the shares were transferred from the outside as part of the MRP1 programme. As a result, this expense recognised for accounting purposes does not affect EBITDA, whereas profit before taxes is affected only from a technical perspective, and this expense has not, had and will never have any impact on the Company's equity and financial position.
The accounting treatment was modified retrospectively up until the date of the transfer, and so the Company already ensured comparability with the new programme launched in 2021 using its own funds as part of the ESOP (MRP2) in the Semi-annual Report.
This restatement has the following impact on the comparative data of the relevant previous periods which were not included in the Semi-annual Report (data in thHUF):
As the program was launched in 2019, it had no impact on the year 2018.
II. Restatement relating to the transaction involving INICIÁL AUTÓHÁZ Kft. and ICL Kft.
As the transaction in question was concluded in 2020, no additional restatement is required for the years 2018 and 2019.
III. Restatement and reclassification relating to reverse factoring
AutoWallis Group has financing arrangements under which the consideration for the inventories acquired is paid to the supplier not by the AutoWallis Group, but by a financing company, typically immediately upon purchase. Legally, under these arrangements, AutoWallis Group no longer incurs any debt to the supplier and the financing company becomes liable for such debt. AutoWallis Group settles its debt to the financing company later on (typically when the inventories are sold) in the amount of the original purchase price plus any financing fees charged.
The presentation of these reverse factoring agreements was adjusted by the Company as follows: as AutoWallis Group enters into such transactions in large volumes, the effects of these transactions are highlighted in the balance sheet and are presented on the balance sheet line Liabilities arising from reverse factoring, broken down into interest-bearing and non-interest-bearing liabilities. These balances had previously been recorded on the balance sheet lines Trade payables and Short-term loans and credits.
This modification has the following impact on the comparative data of the relevant previous periods which were not included in the Semi-annual Report (data in thHUF):
The presentation of expenses relating to items affected by the reclassification was adjusted by the Company and these were collectively presented as interest expenses within financial expenses. This change resulted in an increase in EBITDA.
This presentation change has the following impact on the comparative data of the relevant previous periods which were not included in the Semi-annual Report (data in thHUF):
IV. Changes in the classification and presentation of liabilities
Having regard to the significant change in the size and financing structure of the AutoWallis Group, starting from 2021 the Company modified the presentation of its liabilities as it believed that this would result in a considerable improvement in the quality and clarity of its
The new form of presentation clearly differentiates between interest-bearing and non-interest-bearing liabilities, which allows additional expected liabilities relating to financing to be identified. Furthermore, prepayments and accruals are presented on separate lines within assets and liabilities, respectively. In addition to this separation, the Company decided to include additional aggregate lines in the balance sheet presenting the balances of interest-bearing and non-interest-bearing liabilities, due to the fact that, in the Company's experience, this is material information in terms of clarity.
In addition to the impact presented in the previous sections of this Extraordinary Announcement, these changes have the following impact on the comparative data of the relevant previous periods which were not included in the Semi-annual Report (data in thHUF):
Reclassifications due to changes in the presentation of assets:
Modifications due to changes in the presentation of liabilities and restatements:
Effects of the restatements on the presentation of the cash flow statement
The Company adjusted the presentation of items affected by past and current restatements in the consolidated statement of cash flows as well, in accordance with its accounting policy.
In the case of reverse factoring, the cash flow effect of only those payment solutions and arrangements are presented in operating cash flow where the conditions associated with the liability arising from reverse factoring are essentially identical to those that would be imposed by a supplier (term, security, fees, etc.). If this requirement is not met, the purchase of inventories is shown by the Company in the cash flow statement as an item that does not generate any cash flows, and the cash outflow resulting from the liability arising from reverse factoring is then presented in financing cash flow.
This presentation change due to reverse factoring and other restatements has the following impact on the comparative data of the relevant previous periods which were not included in the Semi-annual Report (data in thHUF):
The summary table containing restatements listed in this disclosure and presented in previous periods, along with the originally reported financial data, is included in the annex to this disclosure.
Budapest, 23 September 2021
Annex: summary tables of reported and restated financial data for previous periods
The Company would like to note that
• the audited end-of-year data for 2018 presented in the tables included in the annex contain the comparative data for 2018 as presented in the audited financial statements for 2019, instead of the data in the audited financial statements for 2018
• the structure of the tables included in the annex may be different from the structure of the statements and/or disclosures for the relevant periods due to changes in presentation and naming conventions that may have occurred in the meantime
• the data included in the annex are for information purposes only and do not represent a re-publishing for any period and do not serve any additional purpose other than providing information
• the summary tables included in the annex were not audited.
(1) Separation and reclassification of prepayments
(3) Reclassifications due to reverse factoring
(2) Release of the reserve for the MRP1 programme under IFRS 2
(4) Reclassification of the share option agreement for Iniciál Autóház and ICL Kft.