Graf

Cost of Equity Recommendation

as of 31 March 2022

Equity Risk Premium

We recommend the use of an equity risk premium in Europe (“ERP”) of

7.0%

as of 31 March 2022

Please note that the ERP shall be accompanied by appropriate risk-free rate, beta and size and country risk premium. Further guidance is provided below.

Size Premium

Based on our research and the financial data available in Europe, we observe a clear pattern that size premium in Europe exists, thus we recommend to use the size premium. The size premium presented below is consistent with the equity risk premium recommendation.

Quartile 1

Quartile 2

Quartile 3

Quartile 4

0%

Market capitalization > 7 961 EUR mil

0%

Market capitalization <= 7 961 EUR mil and > 2 485 EUR mil

1%

Market capitalization <= 2 485 EUR mil and > 828 EUR mil

2%

Market capitalization <= 828 EUR mil

Country Risk Premium

Based on our research and the financial data available in Europe, we observe a clear differences in European regions, thus we recommend to use the country risk premium. The country risk premium presented below is consistent with the equity risk premium recommendation.

Region 1
 

Region 2

 

Region 3
 

0%

1%

Austria, Belgium, Czech Republic, Estonia, Finland, France, Ireland, Island, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, United Kingdom

1.0%

Bulgaria, Croatia, Cyprus, Greece, Hungary, Italy, Portugal, Romania, Spain

Denmark, Germany, Luxembourg, Netherlands, Norway, Sweden, Switzerland