discontinue this lending business. Mazars classifies the deficiencies as serious. This also applies to the bank's money laundering prevention, which Mazars assesses as not fully compliant with legal rules. However, Mazars has no evidence that GRENKE Bank has systematically and actively promoted money laundering. GRENKE takes the aforementioned critical points very seriously. Among other things, the company plans to quickly and comprehensively revise the instruments and processes for lending and money laundering prevention and to strengthen GRENKE Bank's Board of Directors. Calculation of risk provisions Another finding by Mazars concerns the methodology for calculating risk provisions in accordance with the IFRS 9 accounting standard. Model and documentation weaknesses are identified. With regard to the model, Mazars finds, among other things, that GRENKE has not yet taken into account macroeconomic factors. GRENKE AG continues to use its model-based approaches derived from statistical methods, but has expanded them in line with the standard, without causing significant changes in the estimates of the amount of risk provisions. Findings on internal control system, internal audit and compliance The Mazars report also contains findings on missing or ineffective process-dependent controls in the internal control system as well as severe findings on the internal audit and compliance organization. The latter two largely coincide with the criticisms made by BaFin, about which GRENKE had provided detailed information in the letter from the Chairman of the Supervisory Board dated February 8, 2021, and which had led to the resignation of Board of Directors member Mark Kindermann. The Board of Directors has begun to significantly develop the internal control system on the basis of these findings. Earnings forecast for fiscal year 2020 GRENKE expects an after-tax result in the upper double-digit million range for fiscal year 2020. The balance sheet equity ratio as of December 31, 2020 was around 16 percent. The company has net liquidity of EUR 1,290 million as of February 22, 2021. Sebastian Hirsch, CFO of GRENKE AG, said, "We have been turned upside down. We have changed many things and we will implement further improvements. What remains is substance, profitability and a strong equity base." Outlook The time-consuming audits in particular were the primary cause for significant delays and the reason it has not yet been possible to set a corporate calendar for 2021. The audit opinion with regard to the consolidated financial statements is expected in the second quarter of 2021. KPMG will report the final results of the audit as of December 31, 2020 in the audit report and in the auditor's opinion. The Board of Directors remains in very close and constructive contact with the auditing company KPMG for the normal audit of the annual financial statements and with the other auditing companies in the context of the ongoing special audits. Isabel Rösler, who has been a member of the Board of Directors since January 2021, is responsible for coordination with BaFin and monitors the implementation of the measures decided on the basis of the audit results. On the Supervisory Board, Jens Rönnberg has assumed this role as interim Deputy Chairman of the Supervisory Board, who joined GRENKE in November 2019. Disclaimer: This document is a non-binding convenience translation of the German original. In the event of any conflict or inconsistency between the English translation and the German original, the German original shall prevail. For further information, please contact: GRENKE AG Team Investor Relations Neuer Markt 2 76532 Baden-Baden Phone: +49 7221 5007-204 Email: investor@grenke.de Website: www.grenke.com Press contact Stefan Wichmann Executive Communications Consulting Alfred-Bierwirth-Weg 2 D-53572 Unkel (near Bonn) Phone: +49 22 24 98 77 98 Email: presse@grenke.de Mobile: +49 (0) 171 20 20 300 About GRENKE The GRENKE Group (GRENKE) is a global financing partner for small and medium-sized companies. As a one-stop shop for customers, GRENKE's products range from flexible small-ticket leasing and demand-driven bank products to convenient factoring. Fast and easy processing and personal contact with customers and partners are at the centre of GRENKE's activities. Founded in 1978 in Baden-Baden, the Company operates in 33 countries and employs more than 1,700 staff worldwide. GRENKE shares are listed in the MDAX on the Frankfurt Stock Exchange (ISIN DE000A161N30). Further information about GRENKE and its products is available at: www.grenke.com =---------------------------------------------------------------------------------------------------------------------- 2021-02-26 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de =---------------------------------------------------------------------------------------------------------------------- Language: English Company: GRENKE AG Neuer Markt 2 76532 Baden-Baden Germany Phone: +49 (0)7221 50 07-204 Fax: +49 (0)7221 50 07-4218 E-mail: investor@grenke.de Internet: www.grenke.de ISIN: DE000A161N30 WKN: A161N3 Indices: SDAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange EQS News ID: 1171360 End of News DGAP News Service =------------
1171360 2021-02-26
(END) Dow Jones Newswires
February 25, 2021 21:40 ET (02:40 GMT)