- Franchise companies to be integrated into the Consolidated Group in the upcoming 12 to 18 months
- Board of Directors to be expanded to include a Chief Risk Officer (CRO) responsible for the areas of risk control, legal and compliance
- Reallocation of Board of Directors' responsibilities: Sebastian Hirsch to become Chief Financial Officer (CFO); CEO Antje Leminsky to be additionally responsible for Internal Audit
Baden-Baden, October 29, 2020: GRENKE AG, global financing partner for small and medium-sized enterprises, is setting its future course with a roadmap for the integration of the franchise companies and the reinforcement of the Board of Directors, as well as a reallocation of responsibilities.
To further the development of the compliance area, as well as the entire internal control system, GRENKE is installing a Chief Risk Officer (CRO) at the level of the Board of Directors and transferring responsibility for Internal Audit to the Chair of the Board of Directors Antje Leminsky. In addition, Sebastian Hirsch, member of the Board of Directors, has been appointed Chief Financial Officer (CFO), effective immediately.
Antje Leminsky, Chair of the Board of Directors of GRENKE AG, comments: "As a medium-sized group, we stand for entrepreneurial spirit, reliability and long-term growth. Through continuous development, we want to align this successful model even more closely to what the capital market expects from us: transparency, professional governance and compliance".
Integration of franchise companies
Since 2003, the expansion of the GRENKE Consolidated Group into new markets has been carried out, among others, through franchise companies in which the managing partners of these companies hold a substantial minority interest. The majority of capital is held by various financial investors, including CTP Handels- und Beteiligungs GmbH (CTP). In the past, GRENKE has typically been able to acquire the franchise companies after a period of four to six years.
Member of the Board of Directors Sebastian Hirsch explains: "For almost two decades we have been very successful in our expansion via franchise companies. We want to continue this success, but now we intend to do so with GRENKE start-ups and not external financial investors. Given the Consolidated Group's size, strength and expertise, we believe that the opportunities in taking this step outweigh the risks. What remains important for the future is supporting the entrepreneurial spirit of the start-up teams and providing them with an incentive by giving them a commensurate share in the success. In order to present our new approach in a transparent manner, we intend to disclose the results of these start-ups and the associated costs separately in our balance sheet in addition to the customary presentation".
GRENKE plans to integrate the existing 16 franchise companies, that have not yet been acquired by the Consolidated Group. The GRENKE Board of Directors will initiate talks immediately with these companies' prior owners. In September, company founder and the indirect owner of CTP, Wolfgang Grenke, had offered to sell his interests to GRENKE AG. The same is true for Garuna AG, which also holds interests.
Any transactions in this context are to be based on independent value assessments. The Consolidated Group plans to complete the acquisition of interests from all financial investors in stages over the next 12 to 18 months.
Irrespective of the future obligation under IFRS to consolidate the franchise companies in the consolidated financial statements, GRENKE AG intends to carry out a pro forma consolidation as early as the 2020 annual financial statements and show the anticipated effects on the balance sheet.
Reinforcement of Board of Directors and reallocation of responsibilities underscore strong governance
At the initiative of the Supervisory Board chairman, Prof. Dr. Ernst-Moritz Lipp, the Supervisory Board has decided to expand the Board of Directors to include a Chief Risk Officer (CRO), who will be responsible for the areas of risk control, legal affairs and compliance. In taking this step, the Company is striving to meet the more stringent regulatory requirements for internal control systems even better in the future. The search for a suitable candidate has begun. In addition, the Consolidated Group plans to review its key compliance guidelines and all secondary employment and roles of employees within and outside of the Consolidated Group.
Simultaneously, another important department is becoming a matter for top management. With immediate effect, the Chair of the Board of Directors Antje Leminsky will assume responsibility for Internal Audit. She will also oversee the Consolidated Group Strategy, IT, Risk Control and Credit Center areas.
Member of the Board of Directors Sebastian Hirsch, who is already responsible for the areas of Controlling, M&A, Treasury, Legal, Tax and Investor Relations, has been appointed Chief Financial Officer (CFO) with immediate effect.
Further adjustments in departmental responsibilities will be implemented following the expansion of the Board of Directors.
Prof. Dr. Ernst-Moritz Lipp comments: "The GRENKE Group has been a success story for the past 40 years – 20 of those years as a listed family business. The size of the Company today brings up new challenges, which we are actively addressing. With the steps announced today, we are strengthening our Board of Directors as well as our corporate governance".
Intact business model with long-term growth opportunities
Antje Leminsky summarises saying: "We are firmly confident that our business model is intact. As a global financing partner for small and medium-sized enterprises, we have gained true competitive advantages and a strong market position thanks to our large network of resellers. We will continue to modernise GRENKE with all our strength and are uniquely placed to continue our profitable growth in the long term. We are focused on the future".
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