EQS-Adhoc

edding Aktiengesellschaft: Unexpectedly high negative effect of EUR 5.0 million from deconsolidation of edding Argentina S.A.

EQS-Ad-hoc: edding Aktiengesellschaft / Key word(s): Change in Forecast edding Aktiengesellschaft: Unexpectedly high negative effect of EUR 5.0 million from deconsolidation of edding Argentina S.A. 04-Jul-2023 / 16:35 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. Unexpectedly high negative effect of EUR 5.0 million from deconsolidation of edding Argentina S.A. As a result, for the first time in edding's history, ‚technical‘ loss expected

New forecast corridors for sales revenue and earnings

On 14 April 2023, as a result of the sale of edding Argentina S.A., the economic transfer to the new owner took place. After recording all direct effects from this sale, which had a comparatively moderate negative impact of EUR 1.2 million on the consolidated financial statements and resulted, among other things, from severance payments, a negative deconsolidation effect of an additional EUR 5.0 million has now been identified.

This effect results from all technically necessary postings for the elimination of edding Argentina S.A. from the consolidated financial statements, which include effects from 22 years of the Argentine company belonging to the edding Group. In addition to the removal of all assets and liabilities of the company, this also covers the recycling of all effects from the initial and subsequent application of hyperinflationary accounting, which has been required for Argentina since 2018, and which were previously recognized in equity with no effect on profit or loss.

The largest effect that led to this high loss, however, is the cumulative effect from the devaluation of Argentinean assets due to the decline in the value of the Argentine Peso, which was previously recognised in the currency translation adjustment in equity. This has largely accumulated over the last 10 years and amounts to EUR -6.1 million. Such devaluation effects were correctly booked directly to equity each year without affecting profit or loss. Since the loss due to the deconsolidation will become final, it must now be charged to the income statement and will affect the result in the 2023 financial year; however, in economic terms it relates to previous years. In the view of the Management Board, the allocation of this effect to the 2023 financial year - although technically necessary according to IFRS - is economically not justified and irrelevant for the assessment of our current performance.