DGAP-Ad-hoc: GRENKE AG / Key word(s): Miscellaneous 
GRENKE AG: GRENKE reports on the expert opinion issued by Warth & Klein 
Grant Thornton and provides an update on the current status of knowledge of 
GRENKE AG from the special audit by KPMG 
 
16-Dec-2020 / 15:22 CET/CEST 
Disclosure of an inside information acc. to Article 17 MAR of the Regulation 
(EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. 
The issuer is solely responsible for the content of this announcement. 
 
*GRENKE reports on the expert opinion issued by Warth & Klein Grant Thornton 
and provides an update on the current status of knowledge of GRENKE AG from 
the special audit by KPMG* 
 
Baden-Baden, December 16, 2020: GRENKE AG reports on the expert opinion of 
the auditing firm Warth & Klein Grant Thornton (WKGT) and takes this 
opportunity to provide information on its current status of knowledge 
regarding the special, still ongoing audit by KPMG AG 
Wirtschaftsprüfungsgesellschaft (KPMG). The subject of the examination by 
WKGT commissioned by the Supervisory Board of GRENKE AG was the review of 
the advantageousness and market conformity of the acquisitions of the 
franchise companies. 
 
*Review of the advantageousness of acquisitions of franchise companies* 
Based on the chosen audits method and specific assumptions, WKGT has 
concluded that the 17 franchise acquisitions completed to date can be 
described as positive overall for GRENKE AG. As stated by WKGT, combined, 
the returns on the investments in the franchise acquisitions reviewed by the 
auditing firm are within the range of earnings expectations that make an 
investment in the companies justified. According to WKGT's enquiries, a 
pre-tax return of at least 10.7% was achieved or exceeded for the portfolio 
of acquired former franchisees in each year from 2016 to 2019. This return 
is based on GRENKE AG's entire investment. In simple terms, this includes 
the purchase prices, the capital contributions, and the ex-post directly 
generated earnings contributions of the companies according to IFRS, as well 
as the earnings generated in the Consolidated Group from the business of 
these companies. 
 
*Review of acquisitions in terms of market conformity* 
In addition, WKGT has reviewed the market conformity of the franchise 
acquisitions. As a result, the auditing firm concluded that GRENKE AG's 
expansion model, in which franchise companies are taken over after 
approximately five years, as a very specific and difficult model to compare 
with other available market transactions. The involvement of the external 
financial investors was judged as generally plausible for the expansion, the 
exclusive cooperation with CTP Handels- und Beteiligungs GmbH, however, was 
only partially plausible for WKGT. In relation to this, the Board of 
Directors of GRENKE AG had already announced its intention to integrate the 
existing franchise companies into the Consolidated Group and to expand in 
the future using its own start-up companies. 
 
According to WKGT's assessment, the valuation methodology for the purchase 
options agreed has a number of elements that are customary in the market but 
deviates, in part, particularly from standard M&A practice in the actual 
implementation of individual transactions. According to WKGT, it is quite 
common to take into account the special features of young growth companies 
when determining values and setting purchase prices in the form of 
growth-related earnings adjustments and multiplier discounts. In the case of 
several of the takeovers in previous years, the negotiation process, in the 
view of WKGT, was only comprehensible in light of the specific background of 
the permanent cooperation with the business partners of the franchise model. 
In some cases, deviations from the originally agreed general valuation 
methodology were detected that led to an increase in the purchase price but, 
according to WKGT, these deviations in relation to the total purchase price 
were within the usual range when valuing companies in early phases of 
development. WKGT identified purchase-price-increasing deviations from the 
originally agreed fundamental measurement methodology in the total amount of 
EUR 15.1 million (approximately 13% of the purchase prices). Of this amount, 
EUR 9.2 million alone was related to the transaction in Portugal in 2012. 
From GRENKE's standpoint, this deviation should be assessed above all based 
on the strategic considerations at that time, including the intention to 
expand into Brazil. Other transactions accounted for between EUR 30 thousand 
and EUR 1.8 million. 
According to WKGT's assessment, the deviations found are not insignificant, 
but are within the scope of the usual uncertainties involved in the 
valuation of companies in an early development phase. 
 
*Audits of personnel and company law relationships in connection with the 
ownership structures of the acquired companies* 
After completing the audit of the advantageousness and market conformity, 
WKGT is now continuing its investigation of the personnel and company law 
relationships with regard to the ownership structures of the acquired 
companies. 
The Board of Directors has also commissioned WKGT to value the franchises to 
be acquired. 
 
*GRENKE provides information about the current state of knowledge of the 
special audit by KPMG* 
 
GRENKE AG also reported today on the current state of knowledge of the 
special audit being performed by KPMG AG Wirtschaftsprüfungsgesellschaft 
(KPMG) in connection with the allegations of Viceroy Research LLC. 
 
This is the current status of knowledge of the Board of Directors of the 
special audit commissioned by the Supervisory Board in connection with the 
regular audit of the annual financial statements performed by KPMG to update 
the risk assessment. This status of knowledge does not in any way represent 
the anticipated result of the audit of the consolidated financial statements 
and is still subject to further findings obtained until the complete 
conclusion of the audit. 
 
In addition to obtaining an updated understanding of the Company, the 
environment and the internal control system, KPMG also carried out 
functional tests of the internal controls and statement-related audit 
procedures, including individual case reviews at various points in time. 
KPMG has already obtained the audit evidence presented below in the context 
of the risk assessment - subject to the audit conclusion - by the time this 
report was prepared: 
 
*Evidence of the existence of the leases based on confirmation requests, 
lease payments received, and a review of the supporting documentation* 
In the course of its reviews to date, KPMG has not been able to identify any 
evidence suggesting that the leasing business does not exist. To have a 
random sample, KPMG obtained evidence of the existence of these leases. KPMG 
has not reported any evidence to suggest that resellers or specialist 
reseller partners with whom GRENKE is working together with in leasing do 
not exist. Background research on the 30 largest resellers did not reveal 
any indications that they do not exist, are involved in criminal 
transactions, or that their business activities are questionable in any 
other respect. 
 
*Dependence on resellers* 
In order to identify any concentration of risks or potential dependencies, 
KMPG analysed the structure of the GRENKE Consolidated Group's resellers on 
the basis of sales data. As of August 31, 2020, the Consolidated Group's ten 
largest resellers accounted for almost 4.2% of the Consolidated Group's 
lease portfolio. 
 
*Involvement of resellers in risk management and business relationship with 
Viewble Media UK* 
The allegation that GRENKE enabled or deliberately concealed fraud by 
financing the leased assets is currently not confirmed by KPMG. The Company 
takes note of indications of process weaknesses identified by KPMG, such as 
in the ongoing monitoring of suppliers, and will review integrating them 
into its internal processes. 
 
*Precautions to prevent money laundering and terrorist financing * 
Based on all investigations to date, KPMG has not provided any evidence or 
confirmation of the allegation that GRENKE AG was systematically involved in 
money laundering or facilitated such laundering. KPMG was unable to identify 
a violation of a BaFin order in the review of the individual case mentioned 
in the allegations. The allegations regarding business connections with 
unlicensed trading platforms could not be substantiated by KPMG. With regard 
to the adequacy of organisational money laundering prevention in the GRENKE 
Consolidated Group, KPMG formulated significant objections. The potential 
for improvement of the internal process for money laundering prevention 
identified in the course of the audit is already being reviewed. 
 
*Assessment of the allegation that GRENKE BANK AG provides guarantees to 
Consolidated Group companies that endanger their existence* 
The allegation that GRENKE BANK AG provides guarantees for the Consolidated 
Group's financial liabilities and, in particular, for issued bonds, was also 
not confirmed based on the information available to date. 
 
*Inclusion of franchise companies in the consolidated financial statements; 
nature and scope of related-party disclosures in the IFRS consolidated 
financial statements of GRENKE AG* 
The nature and scope of the persons and companies to be included in GRENKE 
AG's consolidated financial statements - the topic of "Scope of 
Consolidation" or "Related Parties" - are the subject of the ongoing audit 
conducted by KPMG. Notwithstanding the ongoing audit, GRENKE is evaluating 
KPMG's advice to classify the disclosures on business relationships with 
franchise companies and their shareholders as disclosures in accordance with 
IAS 24 and to provide these in the notes to the consolidated financial 
statements in accordance with IFRS in the future and to remedy weaknesses in 
the internal control system. 
 
*Continuation of audit procedures by KMPG*

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December 16, 2020 09:22 ET (14:22 GMT)