INDEPENDENT AUDITOR’S REPORT

1. RECOVERABILITY OF GOODWILL

a. The consolidated financial statements of PUMA SE show goodwill in the amount of € 241.9 million corresponding to approximately 8.5% of the consolidated balance sheet total or 14.6% of the group equity.

Each financial year or in case of respective signs of impairment, goodwill is subject to impairment tests. The impairment tests are performed by PUMA SE by applying the discounted cash flow method. The valuation is based on the present values of the future cash flows. The company’s valuation model is based on future cash flows, which are in turn based on the effective three-year plan and valid at the date of the impairment test. This detailed planning phase is extended with the assumption of long-term growth rates. The discounting is performed using the weighted average cost of capital (WACC). Here, the realizable amount is determined on the basis of the value in use and a possible need for impairment is determined by comparing the value in use with the carrying amount.

The outcome of this valuation highly depends on the managing directors’ assessment of future cash flows, the WACC rate applied and the long-term growth rate and therefore involves uncertainties and discretion. Thus, the assessment of the recoverability of the goodwill was classified as a key audit matter within the scope of our audit.

Information on the goodwill, provided by the managing directors, is disclosed in Chapter 2 Significant Consolidation, Accounting and Valuation Principles and in Chapter 10 Intangible Assets of the notes to the consolidated financial statements.

2. RECOVERABILITY OF THE COBRA BRAND

a. The consolidated financial statements of PUMA SE disclose for the COBRA brand a brand value of € 118.6 million corresponding to approximately 4.2% of the consolidated balance sheet total or 7.2% of the group equity.

The COBRA brand is subject to an impairment test conducted annually or in case of a triggering event. The impairment test is conducted by PUMA  SE based on the relief from royalty method. According to this approach, the value of the brand results from future royalty that a company would have to pay for the use of the brand if they had to license it. The approach uses forecasted revenue generated with the COBRA brand based on the effective three-year plan, valid at the time the impairment test is conducted. Subsequently, the projection period is extended assuming long-term growth rates. The discounting is performed by means of the weighted average cost of capital (WACC). The recoverable amount and the need for impairment is determined by comparing the value in use with the carrying amount.

The outcome of this valuation highly depends on the managing directors’ assumption of future revenue to be generated with the COBRA brand, the royalty rate and the long-term growth rate as well as the WACC rate applied and therefore involves uncertainties and discretion. Thus, the assessment of the recoverability of the COBRA brand was classified as key audit matter within the scope of our audit.

Information on the COBRA brand, provided by the managing directors, is disclosed in Chapter 2 Significant Consolidation, Accounting and Valuation Principles and in Chapter 10 Intangible Assets of the notes to the consolidated financial statements.

3. DEFERRED TAXES ON TAX LOSS CARRY FORWARDS

a. Within the consolidated financial statements of PUMA SE, the deferred tax assets include a total amount of € 92.2 million for tax losses carried forward. The Group assesses the future utilization of the tax losses carried forward based on the tax plans for the respective companies. The tax plan is derived from the corporate plan prepared by the managing directors. From our point of view, the deferred tax assets were of special importance, since the corporate plan as basis for the recoverability of the deferred tax assets strongly depends on the assessment and assumptions of the managing directors and is thus subject to uncertainties and discretion.

Information on the deferred tax assets on tax loss carry forwards, provided by the managing directors, is disclosed in Chapter 2 Significant Consolidation, Accounting and Valuation Principles and in Chapter 8 Deferred Taxes of the notes to the consolidated financial statements.

OTHER INFORMATION

The managing directors are responsible for the other information. The other information comprises:

• the Group’s statement on corporate governance pursuant to Section 315d German Commercial Code (HGB) specified in Chapter Corporate Governance Report including the Statement on Corporate Governance of the combined management report,
• the corporate governance report pursuant to No. 3.10 of the German Corporate Governance Code specified in Chapter Corporate Governance Report including the Statement on Corporate Governance of the combined management report,
• the managing directors’ confirmation relating to the consolidated financial statements and to the combined management report pursuant to Section 297 (2) Sentence 4 and Section 315 (1) Sentence 5 German Commercial Code (HGB), respectively, as included in the notes to the consolidated financial statements,
• the combined non-financial report which will be published after the issuance of this auditor´s report and
• the remaining parts of the Annual Report which will be published after the issuance of this auditor´s report, with the exception of the audited consolidated financial statements and combined management report and our auditor’s report.

RESPONSIBILITIES OF THE MANAGING DIRECTORS AND THE ADMINISTRATIVE BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED MANAGEMENT REPORT

The managing directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) German Commercial Code (HGB) and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position and financial performance of the Group. In addition, the managing directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the managing directors are responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations or there is no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error and whether the combined management report as a whole provides an appropriate view of the Group’s position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our audit opinions on the consolidated financial statements and on the combined management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 German Commercial Code (HGB) and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this combined management report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management report, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
• Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and measures relevant to the audit of the combined management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
• Evaluate the appropriateness of accounting policies used by the managing directors and the reasonableness of estimates made by the managing directors and related disclosures.
• Conclude on the appropriateness of the managing directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the consolidated financial statements and in the combined management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.