Wirecard (WDI GY) : Assesment of Wirecard's True Cash Flow After Q3 Results

Network International (NETW LN): It Is Not Wirecard Just Yet. Cashflow Comparison.

European Event-Driven Analyst

Patryk Basiewicz

PGB Research

Forensic Accounting

At the heart of the controversy surrounding <a href="https://www.smartkarma.com/entities/wirecard-ag" target="_blank" data-smartkarma-citation="entities:21743:1" rel="noopener">Wirecard AG (WDI GR)</a>  is the allegation that Wirecard boosts its revenue and profits by recycling cash that is booked receivables into the P&amp;L. The complexity of Payment Companies (PayCos) and Wirecard’s strange reporting method has provided ammunition for the side that doubt veracity of Wirecard’s accounts.
All the problems PayCos face in measuring operating and financial position is present in Wirecard. First, the ‘cash’ item related to Ingenico’s “Funds related to intermediation activities” is missing. Second, there are items in the cash flow statement that constitute credible use of capital. Third, the missing items and the Payment NWC are material and very relevant in valuation and financial analysis.
In this insight, I go through Wirecard’s financial statements and reorganise them such that the cash flows associated with payments are divided into those that matter and those that do not.
I show that Wirecard's reported operating performance and financial position is very different from economic reality. 
This insight provides a framework that explains how I will judge Wirecard's financial statements going forward.

At the heart of the controversy surrounding Wirecard AG (WDI GR)  is the allegation that Wirecard boosts its revenue and profits by recycling cash that is booked receivables into the P&amp;L. The complexity of Payment Companies (PayCos) and Wirecard’s strange reporting method has provided ammunition for the side that doubt veracity of Wirecard’s accounts.
All the problems PayCos face in measuring operating and financial position is present in Wirecard. First, the ‘cash’ item related to Ingenico’s “Funds related to intermediation activities” is missing. Second, there are items in the cash flow statement that constitute credible use of capital. Third, the missing items and the Payment NWC are material and very relevant in valuation and financial analysis.
In this insight, I go through Wirecard’s financial statements and reorganise them such that the cash flows associated with payments are divided into those that matter and those that do not.
I show that Wirecard's reported operating performance and financial position is very different from economic reality. 
This insight provides a framework that explains how I will judge Wirecard's financial statements going forward.

Wirecard (WDI GY): Understanding Wirecard's Cash Flow Dynamics