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GRENKE AG: GRENKE provides an update on the status of Company-commissioned audits - Seite 2

Member of the Board of Directors Sebastian Hirsch added: "We prefer not to comment prematurely until the availability of the final audit results. We will therefore wait to report on the results conclusively only once they have been validated and substantiated. At the same time, however, we would like to provide some information on the current status. Furthermore, we are examining a variety of options to develop our franchise model further and plan to make rapid progress in this area as well."

Franchise acquisitions audited so far can be deemed as positive

WKGT has received information on all of the franchise acquisitions and is initially auditing four selected transactions that took place in the period 2008 to 2018 (no further acquisitions were made after 2018) in detail. These four acquisitions represent the largest acquisitions and together account for approximately 60 percent of the purchase prices paid for all franchises acquired to date. Proof of outgoing payments for the purchase prices of the franchise acquisitions under investigation have been provided and will be conclusively audited.

WKGT has informed the Company's Supervisory Board of its preliminary interim findings. According to these findings, the franchise companies acquired since 2008 together contribute to the Consolidated Group's profit through either the earnings generated directly by the individual local subsidiaries or through those from other companies within the Consolidated Group. Overall, these are within the range of expected results that justify an investment in participations. As a result, these acquisitions can be described as positive for the GRENKE Consolidated Group.

The starting point of determining purchase prices was the so-called multiplier method, which is a generally common method for company valuation. This method was categorically outlined at the beginning of the franchise partnership within the scope of the purchase option. The potential future profit of a franchise company was determined on the basis of the company's new business development and multiplied by a multiplier. This multiplier was derived in a market-oriented manner and, in the case of the most recent acquisitions, from the mean value of the price-earnings ratio (PE) of the GRENKE share and the EURO STOXX 50. A discount of 25 percent to this valuation was stipulated as a general rule. Consequently, this method includes specifics that take into account the business model and the focus on young, fast-growing companies. This approach for determining the purchase prices of franchise companies was therefore described by WKGT as a fundamentally sound method.