Dear GRENKE investors,
We have heard your call for more transparency regarding the resignation of our Board of Directors member, Mark Kindermann, loud and clear and would like to respond to it in detail.
In the course of the ongoing audits by KPMG and Mazars, there had already been some qualitative indications and findings regarding the Internal Audit and Compliance organisation. The imminent reason for Mark Kindermann's resignation was BaFin's criticism of Internal Audit and Compliance processes in the course of the ongoing audits by Mazars.
It is important for me to emphasize: None of these criticisms by BaFin suggest any direct impact on the company's balance sheet or profit and loss statement. Nor do BaFin's statements in any way call into question the information published on December 16, 2020 about the expert opinion by Warth & Klein Grant Thornton and the separate audit by KPMG.
In the case of Internal Audit, BaFin’s criticisms related to the quality of working papers, the ability of the Board of Directors to discard identified deficiencies, to the fact that Internal Audit did not initiate its own investigation into the Viceroy allegations, the quantitative staffing of Internal Audit, and to Internal Audit's restricted access to certain company confidential information until the beginning of last year (2020).
Criticism of the Compliance function related to procedural weaknesses in the documentation of related parties, insufficient traceability of updates to the Compliance manual, questions about the metrics for assessing compliance risks, insufficient documentation of the Compliance function's written annual reports, and, again, inadequate staffing of the Compliance function.
On the basis of these findings, BaFin sent a letter of consultation to the company and gave notice that it would decide whether to dismiss Mark Kindermann as a member of the Board of Directors after a deadline to submit comments had expired.
The Supervisory Board discussed the points of criticism and possible consequences with Mark Kindermann. As a result, Mark Kindermann informed the Supervisory Board on February 8, 2021 that he would resign from his position on the Board of Directors and all other group mandates. We have complied with this request. At the same time, we have agreed that he will be at the disposal of the company for a transitional period – outside the Board of Directors – to ensure a smooth handover.
The uncertainty that has prevailed since September is weighing heavily on our stock and bonds. The audits are also requiring considerable management and personnel capacities from the company. It is a top priority for the company that we continue and conclude the ongoing audits swiftly. Naturally, we are consistently addressing the findings of the audits and further refining the processes.
We have already done this in recent months: Last October, for example, we transferred the Internal Audit function from Mark Kindermann to CEO Antje Leminsky, and at the beginning of 2021 we transferred the Compliance function to Isabel Rösler, our new Chief Risk Officer (CRO). In addition, suitably qualified personnel are being sought for both Internal Audit and Compliance, because we want to expand the workforce in the short term.
Since December, we have been working with an independent consulting firm to review the processes for Internal Audit and Compliance and further develop both areas.
Further, the Supervisory Board has decided to reallocate Mark Kindermann's remaining responsibilities as follows: Antje Leminsky, Chairwoman of the Board of Directors, will assume responsibility for Human Resources. Isabel Rösler will also take over key administrative functions in the back office with immediate effect. Sebastian Hirsch, who was appointed Chief Financial Officer (CFO) in October 2020, will additionally be given responsibility for Group Accounting. This step would have been taken anyway after the publication of the annual financial statements and has now been brought forward.
We hope that this letter has answered your open questions on this subject.
We also understand that you have further questions and in particular would like to know when the audits will be completed. As the timetable is largely determined by the auditors, we are currently unable to make any binding statements on this matter.
Rest assured: We will do everything in our power to complete the audits as quickly as possible and emerge from this crisis situation as a stronger company.
Prof. Dr. Ernst-Moritz Lipp
Chairman of the Supervisory Board
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