Grenke AG — Annual Report 2010

Feb 11, 2011

GRENKELEASING AG GROUP FINANCIAL REPORT 2010

KEY FIGURES GRENKE GROUP

	Jan. 1 to	Change	Jan. 1 to
	Dec. 31, 2010	(%)	Dec. 31, 2009	Units
New business
GRENKE Group ind. franchise partners*	692,979	39.4	497,120	EURk
– of which Germany	288,437	18.0	244,537	EURk
– of which International	358,294	62.8	220,083	EURk
– of which Franchise international	46,248	42.3	32,499	EURk
Leasing business	649,892	43.3	453,492	EURk
– of which Germany	246,497	22.7	200,910	EURk
– of which International	358,294	62.8	220,083	EURk
– of which Franchise international	45,101	38.8	32,499	EURk
Factoring	43,087	–1.2	43,627	EURk
– of which Germany	41,940	–3.9	43,627	EURk
– of which Franchise international (CH)	1,147	n. a.	0	EURk
Contribution margin 2 (CM2) of New business
GRENKE Group ind. franchise partners*	102,796	19.8	85,774	EURk
– of which Germany	33,799	–6.8	36,252	EURk
– of which International	60,362	41.4	42,688	EURk
– of which Franchise international	8,635	26.4	6,834	EURk
Leasing business	101,594	19.2	85,262	EURk
– of which Germany	32,597	–8.8	35,741	EURk
– of which International	60,362	41.4	42,687	EURk
– of which Franchise international	8,635	26.4	6,834	EURk
Further Information Leasing business
Number of new contracts	77,727	24.7	62,321	units
Share of IT products in the lease portfolio	88	2.3	86	percent
Share of corporate customers in the lease portfolio	100	0.0	100	percent
Mean acquisition value	7,6	4.1	7.3	EURk
Mean term of contract	46	0.0	46	months
Volume of leased assets	1,921	12.3	1,711	EURm
Number of current contracts	251,265	10.8	226,806	units
GRENKE BANK
Deposits per December 31, 2010	122,239	14.9	106,379	EURk
Business start-up financing volume per December 31, 2010	279	n. a.	0	EURk

* incl. Factoring

KEY FIGURES GRENKE CONSOLIDATED GROUP

	Jan. 1 to	Change	Jan. 1 to
	Dec. 31, 2010	(%)	Dec. 31, 2009	Units
Key figures income statement
Net interest income	80,029	11.5	71,781	EURk
Settlement of daims and risk provisioning	–33,724	8.1	–31,189	EURk
Profit from insurance business	22,236	9.5	20,301	EURk
Profit from new business	26,263	14.0	23,047	EURk
Profit from disposals (income exceeding the calculated residual value)	2,026	–749.4	–312	EURk
Other operating income	3,381	–0.5	3,397	EURk
Costs of new contracts	18,864	32.0	14,288	EURk
Costs of current contracts	6,043	6.8	5,659	EURk
Project costs and basic distribution costs	17,831	24.4	14,334	EURk
Management costs	16,875	26.4	13,355	EURk
Other costs	3,575	127.3	1,573	EURk
Profit from operating business	37,023	8.9	33,997	EURk
Other interest result	–773	280.8	–203	EURk
Income/expenses from market valuation of financial instruments	275	–273.0	–159	EURk
EBT(Earnings before taxes)	36,525	8.6	33,635	EURk
Net profit for the period	27,836	13.1	24,612	EURk
Earnings per share (according to IFRS)	2.03	12.8	1.80	EUR
Further information
Dividend	0.70	16.7	0.60	EUR
Embedded value of the leasing contract portfolio (incl. equity before taxes)	406	11.2	365	EURm
Embedded value of the leasing contract portfolio (incl. equity after taxes)	372	10.7	336	EURm
Cost/income ratio	63.5	3.9	61.1	percent
Return on equity (ROE) after taxes	9.7	3.2	9.4	percent
Average number of employees	538	6.1	507	persons

LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS	2
REPORT OF THE SUPERVISORY BOARD	4
THE BOARD OF DIRECTORS OF GRENKELEASING AG	8
THE SUPERVISORY BOARD OF GRENKELEASING AG	9
CORPORATE GOVERNANCE REPORT	10
OUR SHARES AND INVESTOR RELATIONS	17
GROUP MANAGEMENT REPORT FOR FISCAL YEAR 2010	22
CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2010	66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2010	73
AUDIT OPINION	145
DECLARATION IN ACCORDANCE WITH SEC. 297 (2) SENTENCE 4 AND SEC. 315 (1) SENTENCE 6 HGB	146
CALENDAR 2011 AND CONTACT	147

LETTER R TO SHAR 0REHOLDER RS FROM T THE BOAR RD OF DIRE ECTORS

Dear Share holders, Ladies a and Gentlemen,

At this poin our long-te franchise p the fiscal ye nt last year, we p erm growth trend partners of 39.4 p ear 2010. We hav romised that the d overall. Today, percent to EUR 6 ve therefore achie e performance in , we are able to 693.0 million and eved the upper e 2009 would rem report growth in d a net profit for end of our guidan ain only a minor n new business i the period in the nce. r and short-lived in the GRENKE G e Group of EUR 2 deviation from roup including 27.8 million for

The trend i trended do honed scor n loan losses ma wnwards over th ring process to ev ade a material co e rest of the year valuate credit risk ontribution to th r. At the end of th ks arising from le he good result. H he worst recessio ease agreements aving peaked in on in post-war his has once again f n the first quarte story, we can say fully proved itself r of 2010, they y that our finely f.

Above and 2010 with t Portugal. I new busine largest inte beyond the gro three new locati n Italy - our mos ess of EUR 71.6 ernational marke wth we have ach ons, three new f st rapidly expand million, the volu t at present. hieved, we have franchise partne ding single mark ume there is now e once again exp ers and the suppo ket at present – w almost half th panded our activi ort of a cell divis we are now repr he size of the Fre vities significantl sion at our franc resented in five l ench market, wh ly in fiscal year chise partner in locations. With hich is still our

In total 201 of the reces were in a p tial investm spects of va competitio 10 was a successf ssionary year 200 osition to exploi ment in our Europ arious countries i n. ful year by and la 09 and the rapid it these opportun pean presence in in Europe; we ca arge. The extraor economic recove nities resolutely n recent years is n also concentra dinarily rapid gro ery in Europe. Ho and convert them now paying off. ate, in particular, owth is, of course owever, we ranke m into success fo We can not only , on those region e, partly a result ed among those c or the GRENKE G y benefit from the ns where we are e of the low base companies that roup. Substane different proexposed to less

We have re and medium ly. In view trend has c sistently hi continuing epeatedly reporte m-sized enterpris of an imminent i continued in the igh contribution caution in mana ed that, as a resu ses are being mo intensification in past year. This w margins, albeit aging risk. ult of the recent ore cautious in th n the regulations will result in oppo t slightly lower t financial market heir positioning o s governing the s ortunities for gro than those requ t crisis, providers or have even with sector and increa owth for the GRE ired during the rs of financial ser hdrawn from the ased capital requ ENKE Group comb crisis, and, at t rvices for small market entireuirements, this bined with perthe same time, Of course, we In 2010, we a contribution m attractive mar shall not neglect chieved growth i margin 2 of 13. rgins in Germany t our German dom in new business 2 percent comp y too. mestic market de for the first time ared with 15.6 p espite the fact th e in several years percent in the G at we are expose of 18.0 percent GRENKE Group, w ed to more compe to EUR 288.4 mi we continue to a etition here. illion. With a achieve very

The new busi markets. In co refinancing in ABS bond afte ness in the fisca ombination with nstruments. At th er the financial m al year 2010 wo h our now proven he beginning of t market crisis and w ould not have be n refinancing fro the year, we wer we also issued a b een possible wit om GRENKE Bank re one of the first bond in the amo thout our very g k's bank deposits t companies in th unt of EUR 75 mi ood standing in s, we have a bro he leasing sector llion in March. n the capital oad range of r to place an

Two further b instruments w more than off average volum bonds worth EUR were successfully fset, we are also me of bonds will m R 100 million ea y extended, new well positioned w mature. ach followed in J ly concluded or with regard to th June and in Oct utilised. As a res he fiscal year 201 tober. Various A sult, repayments 11, which has jus BCP programme s due in 2010 we st started, in whi es and other ere not only ich a below-

We also aim t target of at le increase signi business conc tracts. These p since we shall be flatter than to achieve growt east ten percent ificantly to EUR 3 cluded in previou positive effects w l press ahead with n that in income, th in new busine and to achieve m 33 to 36 million. us years will be fe will, as in 2010, b h our continuous , meaning that w ess in the GREN more than 20 pe . This is due to th elt increasingly i be partly offset by s international ex e expect profits t KE Group includ ercent in this fisc he fact that the i in the Group's in y further increase xpansion in 2011 to grow strongly ding franchise pa cal year. The net impact of incom ncome statement es in operating a 1 too. The increas overall. artners above ou profit for the pe e from the hight over the term o nd administratio se in expenses wi ur long-term eriod should -margin new of these conon expenses, will, however,

We held onto high enthusia tomers, our le should like to mitment. our well-trained asm and have bo essees. This is wh o express our dee employees in th oosted the prese hy we were able ep gratitude to o he recessionary y nce of the GREN to benefit from our employees fo year of 2009. They NKE Group with o the upturn so ea or their performa y have continued our specialist res arly in the fiscal ance and their co d marketing with eller partners an year 2010. At th ontinued high lev h unchanged nd their cushis point, we evels of com-

We should lik which was ap GRENKE Group and would like ke to thank our s parent not least p rapidly in the n e you to join us in shareholders for t in the good per ext few years, in n doing so. r their loyalty in rformance of ou order to realise a the recent finan r share price in additional earnin ncial market cris the past fiscal y ngs potential to i sis and for their ear. We wish to increase our ente confidence, develop the erprise value

Wolfgang Gren Chairman of th nke he Board of Direc ctors

REPOR RT OF THE SORY BOA ARD

The Superv in the fisca manageme and the Su significance manner, bo and minute developme events, the approval fo visory Board perfo al year 2010. It w ent of business. T pervisory Board; e to the compan oth orally and in es of meetings. T nt of the Group, e status of corpo or resolution in a ormed the activit worked with the The strategic ori ; the Board of Di ny. The Superviso writing, on all k The Board of Dire its economic sit rate planning an timely manner. ties required of it Board of Directo entation of the irectors directly ory Board also re key issues, amon ectors provided th tuation, the curr nd the personne t by law and the ors on an ongoin Group was close involved the Sup eceived informat ng others on the he Supervisory B rent course of bu l situation. The B articles of incorp ng basis, advised ly coordinated b pervisory Board i tion regularly, co basis of submiss oard with detaile usiness including Board of Directo poration of GREN d it regularly and between the Boa in all decisions o omprehensively a sions by the Boa ed information o g banking busine ors submitted ma NKELEASING AG d monitored its ard of Directors of fundamental and in a timely ard of Directors on the strategic ess and current atters requiring

Thereweren immediate Boardmoni andcomplia system.Tot ongoingde issueatthe accountofit noconflictsofint disclosuretothe itoredtheGroupance–includingc thisend,itregula evelopment,thec emeetingsoftheS tsdiversifiedsou terestontheparto eSupervisoryBoa -wideriskmanage compliancewitht arlyreceivedrepo currentrisksituati SupervisoryBoar rcesofcapitaland ofmembersofthe ardandreporting ementsystem,the theKWG[Kreditw ortsfromtheBoar tionandsalesman rd.In2010again dtargetedliquidit eBoardofDirecto gtotheAnnualGe einternalcontrol wesengesetz,Germ rdofDirectorson nagement.TheGr n,therefinancing tymanagement. orsorSupervisory eneralMeetingin lsystemsintheare manBankingAct] theriskmanagem roup'scurrentref oftheGRENKEGr yBoardthatwoul nthefiscal year. T reasofinternalau ]–andtheoperat mentsystemofth financingsituatio roupwasensured dhaverequired TheSupervisory dit,accounting tingriskcontrol heGroupandits onwasaregular datalltimeson

If so require the reports included th financial st ing the effi German Co ments for S with regard Directors it ration Act o dated June the Federal ed by law and the s and resolution he adoption of t tatements as of D ciency of the wor rporate Governa Supervisory Boar d to its establish t issued the decla on the recomme e 6, 2008 and, si l0SUPERVIS e articles of incor proposals of the the annual finan December 31, 200 rk of the Supervis nce Code in its v d members of co hed practices, sin aration of compli endations of the nce it became ap rporation, the Su e Board of Direc ncial statements 09 and the moni sory Board. In th versions applicab ompanies that are nce all requirem ance of GRENKEL Government Co pplicable, the su upervisory Board ctors. The key iss of GRENKELEAS toring of the inte he reporting yea ble at the time. In e subject to the K ents were met. O LEASING AG in lin mmission on the upplementary ve closely examine sues at the meet SING AG and the ernational entitie r, the Supervisor n this connection KWG. It found tha On April 26, 201 ne with Section 1 e German Corpor rsion dated June ed, discussed and tings of the Sup e approval of th es, the risk strat ry Board dealt in n, it discussed th at there was no n 10, together wit 161 of the Germa rate Governance e 18, 2009) as p d then voted on pervisory Board e consolidated egy and checkdepth with the he new requireneed for action h the Board of an Stock Corpoe Code (version promulgated by Ministry of Justice in the official section of the electronic Federal Gazette on August 8, 2008. The Board of Directors also reports on corporate governance at GRENKELEASING AG on behalf of the Supervisory Board in this financial report on the fiscal year 2010. All the members of the Supervisory Board have personally undertaken to comply with the principles of corporate governance applicable in the reporting year.

The Supervisory Board met as follows in the fiscal year 2010: The meetings took place on February 1 and 4, April 26, July 26 and November 15, 2010. The meeting on February 1 focused on the adoption of the annual financial statements and the meeting on February 4 focused on the approval of the consolidated financial statements as of December 31, 2009. No member of the Supervisory Board missed any meeting without excuse.

The Chairman of the Supervisory Board was also informed in detail by the Board of Directors of transactions of particular significance between the meetings of the Supervisory Board. As Chairman of the Supervisory Board, I informed myself of current business development including banking business and key transactions. Other issues discussed in personal talks with the Board of Directors included the preparation of refinancing decisions, compliance issues, internal controlling, risk management, personnel issues and the preparation of elections to the Supervisory Board.

In accordance with the articles of incorporation, the Supervisory Board of GRENKELEASING AG has six members. The terms in office of the Supervisory Board members Dr. Brigitte Sträter, Mr Dieter Münch, Dr. Oliver Nass and Mr Erwin Staudt ended at the close of the Annual General Meeting on May 11, 2010. Dr. Sträter and Dr. Nass did not stand for re-election. The Supervisory Board wishes to thank those members who have left for their faithful and fruitful work over many years.

The following persons were elected to the Supervisory Board on May 11, 2010 by the Annual General Meeting. They were elected for the period until the end of the Annual General Meeting that resolves the official approval of the actions of the Supervisory Board for fiscal year 2014:

• Mr Dieter Münch, Weinheim, retired bank officer, member of foundation board
• Mr Florian Schulte, Baden-Baden, CEO of Deltavista AG
• Mr Erwin Staudt, Leonberg, President of the soccer club VfB Stuttgart 1893 e. V.
• Prof. Dr. Thilo Wörn, Essen, Professor

Accordingly, the members of the Supervisory Board in fiscal year 2010 were:

• Prof. Dr. Ernst-Moritz Lipp, Chairman
• Mr Gerhard E. Witt, Deputy Chairman
• Mr Dieter Münch
• Dr. Oliver Nass (until May 11, 2010)
• Mr Florian Schulte (from May 11, 2010)
• Mr Erwin Staudt
• Dr. Brigitte Sträter (until May 11, 2010)
• Prof. Dr. Thilo Wörn (from May 11, 2010)

In accordance with its Rules of Procedure, the Supervisory Board formed two committees to assist in the efficient performance of its duties, the Audit Committee and the Personnel Committee (Executive Committee) – the latter also performs the functions of a nomination committee. The committees prepare the issues and resolutions relevant to them, which are then discussed by the Supervisory Board as a whole. The chairs of the committees reported to the Supervisory Board in detail on the work of their committees in its meetings.

The Audit Committee consists of the following three members with special knowledge in the area of accounting:

• Mr Gerhard E. Witt (Chairman)
• Prof. Dr. Ernst-Moritz Lipp
• Mr Dieter Münch

The Audit Committee primarily deals with issues of internal and external accounting, the systems of corporate planning and risk management at the company. It reviews and monitors the requisite independence of the auditor in accordance with Article 7.2.1 of the German Corporate Governance Code, commissions the auditor, determines the audit focus and is responsible for the fee agreement with the auditor. In the reporting year the Audit Committee did not learn of any circumstances calling the independence of the auditor into question and therefore took no further measures to ensure this.

On February 1, 2010 the Audit Committee prepared the decision of the Supervisory Board to adopt the annual financial statements and approve the consolidated financial statements and, in the presence of the auditor, discussed the 2009 annual financial statements in depth. The Audit Committee also discussed the quarterly financial statements with the Board of Directors in depth before each publication thereof.

The Personnel Committee consists of the following three members:

• Prof. Dr. Ernst-Moritz Lipp (Chairman)
• Mr Gerhard E. Witt
• Mr Erwin Staudt

In particular, the Personnel Committee is responsible for the Supervisory Board's personnel decisions and for concluding, amending and terminating employment agreements with the members of the Board of Directors. It also dealt with the phantom stocks programme. The Personnel Committee met twice in fiscal year 2010. The purpose of these meetings was to determine the remuneration parameters for members of the Board of Directors with regard to the fiscal year 2010 and to prepare the proposed resolution for the Supervisory Board on the imminent changes to the Board of Directors.

The Board of Directors agreements of Mr Thomas Konprecht and Mr Michael Kostrewa expired as of April 30, 2010. Both left the Board of Directors of GRENKELEASING AG. The Supervisory Board wishes to thank Mr Konprecht and Mr Kostrewa for their great commitment over many years to the GRENKE Group. The German Federal Office for Supervision of Financial Services approved Mr Gilles Christ's appointment to the Board of Directors for three years starting on May 1, 2010 in accordance with a resolution of the Supervisory Board. The Board of Directors agreement with Dr. Uwe Hack was extended for five years, as scheduled, with effect from October 1, 2010.

In its meetings on February 1 and 4, 2010, the Supervisory Board examined the annual financial statements of GRENKELEASING AG as of December 31, 2009, the management report for the fiscal year 2009, the consolidated financial statements as of December 31, 2009 and the Group management report for the fiscal year 2009 in depth, discussed, adopted and approved them. The auditor responsible, Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main, took part in the discussions and reported on the key results of the audit. The auditor issued unqualified audit opinions for each of the annual financial statements.

The annual financial statements of GRENKELEASING AG as of December 31, 2010 prepared by the Board of Directors, the management report of the company for the fiscal year 2010, the consolidated financial statements as of December 31, 2010 and the Group management report for the fiscal year 2010 were submitted to the Supervisory Board for review in a timely manner and d Board for the discussed at its m appropriation of meetings on Feb f the profits of GR bruary 4, 2011. T RENKELEASING A The Board of Dir AG. rectors made its proposal to the Supervisory

The annual fin furt am Main. the provisions The HGB annu 317 HGB and Wirtschaftsprü Group manag provisions of the EU. The c German gene Wirtschaftsprü ING AG and th nancial statemen The accounting s of the German ual financial stat German genera üfer [Institute of ement report for Section 315a (1 consolidated fina erally accepted üfer (IDW). Unqu he consolidated fi nts were audited of the separate f Commercial Code tements as of De lly accepted stan f Public Auditors r the fiscal year f ) HGB on the ba ancial statement standards for ualified audit opi financial stateme d by Ernst & Youn financial stateme e (HGB) and in c ecember 31, 200 ndards for the au s in Germany] (I from January 1 t asis of the Intern ts were audited the audit of inions were issue ents of the GRENK ng GmbH, Wirtsc ents of GRENKEL consideration of 09 were audited i udit of financial IDW PS 200). The to December 31, national Financia in accordance w financial state ed for both the a KELEASING AG Gr chaftsprüfungsge LEASING AG was the financial rep in accordance wi statements prom e consolidated fi 2010 were prep al Reporting Stan with the provisio ements promulg annual financial roup. esellschaft, Eschb prepared in acco porting framewor ith the provision mulgated by the inancial stateme pared in accordan ndards (IFRSs) as ons of Section 31 gated by the I statements of G born/Frankordance with rk for banks. ns of Section e Institut der ents and the nce with the s adopted in 17 HGB and Institut der RENKELEAS-

These docume Board by the mitted to it by auditor respon the Superviso thereby adop GRENKELEASI tors on the ap also dealt wit Please see the report. The Su adopts them. ents and the pro Board of Directo y the Board of Di nsible took part i ory Board raised n ted the annual ING AG consolida ppropriation of t th the mandator e corresponding upervisory Board posal of the Boa ors in a timely ma irectors and the in the discussion no objections to financial statem ated financial sta the profits of GRE ry disclosures in information in th d has reviewed th rd of Directors fo anner. The Super auditor in depth s and reported o the results of the ments of GRENKE tements. The Su ENKELEASING AG accordance with he management hese disclosures or the appropriat rvisory Board exa h and discussed t on the key results e audit of the an ELEASING AG on pervisory Board G. In the meeting h Section 289 (4 report of GRENK and this inform tion of profits we amined the annu them in its meeti s of the audit. Fol nnual financial st February 4, 201 endorsed the pro g on February 4, 4) and 315 (4) H KELEASING AG an ation, which it b ere issued to the ual financial state ng on February 4 llowing its own ex atements by the 10 as well as ap oposal of the Boa 2011 the Superv HGB and the rela d in the Group m believes to be co e Supervisory ements sub-4, 2011. The examination, e auditor and pproving the ard of Direcvisory Board lated report. management omplete, and

Having gained 2010 with gro Overall, it out end of year ra growth strate ployees and t personal com 2010 to a succ d more than 50 owth of a further tperformed the D ally in the SDAX. egy by doubling i he members of t mitment made i cessful close. per cent in the p r 29 percent. It f DAX index with a The capital mark its share price in the Board of Dire it possible for th previous year, th followed the perf a sharp rise in De ket has therefore n the last two fisc ectors for their hi he GRENKE Group he GRENKE shares formance of the ecember 2010, b e acknowledged cal years. The Su igh level of comm p to continue de s performed extr DAX and SDAX in but was not quite the GRENKE Grou upervisory Board mitment and the eveloping succes remely well in th ndex closely unti e able to match t up's successful in wishes to thank e work they have ssfully and to bri he fiscal year til late 2010. the dazzling nternational k all the eme done. Their ing the year

Baden-Baden On behalf of th , February 4, 201 he Supervisory B 11 Board

Prof. Dr. Ernst Chairman t-Moritz Lipp

THE BOARD OF DIRECTORS OF GRENKELEASING AG

THE SUPERVISORY BOARD OF GRENKELEASING AG

Name/Residence	Activity	Other Supervisory Board / Advisory Board Functions
Prof. Dr. Ernst-Moritz Lipp Baden-Baden, DE Born 1951 First elected: 2003 Elected until the Annual General Meeting 2012	Chairman of the Supervisory Board, Professor of international finance, General manager of ODEWALD & COMPAGNIE Gesellschaft für Betei- ligungen mbH	OYSTAR Holding GmbH, Karlsruhe, DE; Winter Holding Verwaltungs GmbH, Nußloch, DE; Sodexo Beteiligungs B.V. & Co. KG, Heidelberg, DE; GRENKE BANK AG, Baden-Baden, DE
▶ Gerhard E. Witt Baden-Baden, DE Born 1945 First elected: 1997 Elected until the Annual General Meeting 2012	Vice Chairman of the Supervisory Board, Public auditor and tax advisor	Grenke Investitionen Verwal- tungs KGaA, Baden-Baden, DE
Dieter Münch Weinheim, DE Born 1943 First elected: 2000 Elected until the Annual General Meeting 2015	Member of the Supervisory Board, Retired bank officer, Chairman of a foundation	Grenke Investitionen Verwal- tungs KGaA, Baden-Baden, DE; Weisenburger Bau + Grund AG, Halle/Saale, DE
▶ Florian Schulte Baden-Baden, DE Born 1971 First elected: 2010 Elected until the Annual General Meeting 2015	Member of the Supervisory Board, CEO of Deltavista AG
▶ Erwin Staudt Leonberg, DE Born 1948 First elected: 2005 Elected until the Annual General Meeting 2015	Member of the Supervisory Board, Economics graduate, President of the football club VfB Stuttgart 1893 e.V.	PROFI Engineering Systems AG, Darmstadt, DE; USU AG, Möglingen, DE; Hahn Verwal- tungs-GmbH, Fellbach, DE
Prof. Dr. Thilo Wörn Essen, DE Born 1968 First elected: 2010 Elected until the Annual General Meeting 2015	Member of the Supervisory Board, Professor at the University of Public Administration in North Rhine- Westphalia	Partner of Dr. Wörn GmbH, Essen, DE; DIHAG Deutsche Giesserei- und Industrie-Holding Aktiengesell- schaft, Essen, DE; GENO BANK ESSEN eG, Essen, DE

CORPORATE GOVERNANCE REPORT

Responsibility and good corporate governance represent the cornerstones of management activity at GRENKELEASING. The Board of Directors, Supervisory Board and executive employees of GRENKELEASING AG identify with the principles of valuebased and transparent company management. They are aware of the special significance of these principles for the assessment and valuation of the company by shareholders and capital providers on the capital market and for increasing confidence among present and future customers, employees, business partners and the public at large.

GRENKELEASING AG complies with the recommendations of the German Corporate Governance Code dated June 6, 2008 and, since it became applicable, the supplementary version dated June 18, 2009 with few exceptions. The Board of Directors and the Supervisory Board have discussed their compliance with the Code in their meetings and passed the declaration of compliance with the Code reproduced at the end of this report. The declaration can also be found on the website of GRENKELEASING AG.

GROUP MANAGEMENT AND MONITORING

GRENKELEASING AG has a Board of Directors consisting of four members and a Supervisory Board composed of six members.

The Supervisory Board

In the fiscal year 2010, the Board of Directors reported to the Supervisory Board regularly, in detail and comprehensively on the economic situation of the company, the status of corporate planning and current events. Refinancing and liquidity status also remained a key focus in this connection. The Supervisory Board coordinated strategic development with the Board of Directors and discussed issues of risk provisioning, risk management, the internal control system and the internal audit system.

The responsibilities of the Supervisory Board include appointing and monitoring the members of the Board of Directors and adopting the annual financial statements of GRENKELEASING AG and approving the consolidated financial statements, taking into consideration the reports by the auditors and the findings of the Audit Committee (see the "Report of the Supervisory Board"). A further key activity is examining and approving acquisitions of companies. The Rules of Procedure of the Supervisory Board provide for the formation of committees. The Supervisory Board of GRENKELEASING AG has formed two committees to assist in the efficient performance of its duties and has transferred certain authorities to them in line with its Rules of Procedure. The committees prepare the issues and resolutions relevant to them, which are then discussed by the Supervisory Board as a whole. The chairs of the committees report to the Supervisory Board in detail on the work of their committees in its meetings.

The Audit Committee

The Audit Committee consists of three members with special knowledge in the area of accounting and compliance. It primarily deals with issues of external and internal accounting and the systems of corporate planning and risk management at the company. It reviews and monitors the independence of the auditor in accordance with Article 7.2.1 of German Corporate Governance Code, determines the audit focus and is responsible for the fee agreement with the auditor. The Audit Committee also prepares the decision of the Supervisory Board on the adoption of the annual financial statements and the approval of the consolidated financial statements.

As part of the Supervisory Board's activities under the German Corporate Governance Code, the Audit Committee also deals with compliance issues. The Board of Directors regularly reports to the Audit Committee on the compliance situation – including compliance with the KWG [Kreditwesengesetz] – in the company.

Personnel Committee (Executive Committee)

The Personnel Committee consists of three members. In particular, it prepares the personnel decisions of the Supervisory Board and is responsible for concluding, amending and terminating employment agreements with the members of the Board of Directors.

The Board of Directors

The Board of Directors manages the Group under its own responsibility and is responsible for the strategic development of the company and compliance with principles of corporate policy. In addition, it prepares the quarterly financial statements, the annual financial statements of GRENKELEASING AG and the consolidated financial statements. The Board of Directors reports to the Supervisory Board regularly and comprehensively by way of reports and proposals on the company as a whole, issues of strategy and its implementation, planning, business performance, the financial and earnings situation and business risks.

The Rules of Procedure of the Board of Directors contain a list of transactions requiring approval. Key decisions by the Board of Directors – such as acquisitions and financial measures – require the approval of the Supervisory Board. The Board of Directors and the Supervisory Board are liable to pay damages to the company in the event of culpable neglect.

Remuneration Structure and Remuneration of the Board of Directors and the Supervisory Board

The principles of the remuneration system for the Board of Directors provide for a fixed, performance-unrelated basic annual salary and a variable performance-related remuneration component.

Remuneration of the Board of Directors

EUR	Christ (from May 1, 2010)	Grenke	Dr. Hack	Kindermann	Konprecht (until April 30, 2010)	Kostrewa (until April 30, 2010)	Total 2010	Total 2009
Gross salary	115,819.08	328,946.88	268,519.44	128,820.66	57,386.83	42,626.84	942,119.73	1,024,468.19
Performance bonus	55,080.00	144,551.00	123,492.13	53,848.33	14,709.25	11,031.93	402,712.64	483,073.88
Bonus	0.00	0.00	0.00	0.00	0.00	0.00	0.00	248,831.10
Phantom stocks	84,350.00	0.00	289,200.00	0.00	0.00	0.00	373,550.00	300,195.00
Pensions	0.00	0.00	21,000.00	0.00	0.00	0.00	21,000.00	21,000.00
Total costs	255,249.08	473,497.88	702,211.57	182,668.99	72,096.08	53,658.77	1,739,382.37	2,077,568.17

Prepared according to the principle of cash settlement or due date

Total remuneration for the Board of Directors amounted to EUR 1,739k in the 2010 fiscal year (previous year: EUR 2,078k). Remuneration for members of the Board of Directors includes fixed and variable components. The criteria for the variable remuneration component are defined in advance each year based on the increase in EBIT (earnings before interest and taxes) and the development of the key performance indicators of a balanced scorecard (BSC). The attainment of the EBIT growth target is measured at the end of each year (with failure to reach targets meaning that no payment is made) and the BSC criteria are measured at the end of each quarter.

ThemaincriteriacontainedintheBSCcorrespondtothekeyperformanceindicatorsforthelong-termdevelopmentoftheGroup, suchasnumberofleaseagreementsandnewbusiness.AnannualpensionpremiumofEUR21kispaidtoacompanyprovident fundforDr.Hack.SomemembersoftheBoardofDirectorsreceivephantomstocksaswell.

The structure of the remuneration system including the phantom stocks structure presented below do not lead to the creation of an incentive to incur inappropriate risk. The remuneration system promotes the company's long term success and creates incentives only to incur those risks that are easily controllable statistically and involve appropriate remuneration for the risk. The company's regulatory equity is neither jeopardised by its remuneration practice nor does this restrict the longterm retention of equity.

On March 12, 2007, the Chairman of the Supervisory Board of GRENKELEASING AG concluded a phantom stock agreement and a reinvestment offer with Dr. Hack for the fiscal years 2007 to 2009. It was treated as a cash settlement plan. Under this agreement, Dr. Hack received entitlement to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG based on a defined underlying share price. Dr. Hack's claim to payment in the amount of EUR 300,195.00 from the phantom stock agreement from the fiscal year 2009 was settled in January 2010 in accordance with the cash settlement agreement. Dr. Hack bought a total of 2,000 shares in GRENKELEASING AG via the stock exchange (Xetra) in February 2010.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded additional phantom stock agreements with Board of Directors members Dr. Hack and Mr Christ. Under this agreement, Dr. Hack receives for both the current fiscal year and for each of the next two fiscal years entitlements to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG in relation to a defined basic share price. The share price is the arithmetic mean of the Xetra closing prices on all trading days from December 1 to December 23 of the respective prior year.

The basic share price for 2010 was EUR 28.68. The maximum payment arising from this agreement is limited to EUR 600,000 for the period of three years. Under the programme, Dr. Hack is required to invest the respective net amount paid plus a personal contribution of 25 percent of that amount in GRENKELEASING AG shares. Mr Gilles Christ's pro rata temporis entitlement to payment is based on the increase in value of 15,000 shares of GRENKELEASING AG. The maximum payment is limited to EUR 300,000. The value of the phantom stocks agreement granted totalled EUR 373,550 as at December 31, 2010. The payment amount was due at the end of 2010.

In the past, the company had taken out directors' and officers' liability insurance for its executive bodies and top managers under which the insured party must pay a fixed deductible of EUR 3,000 per claim. This directors' and officers' liability insurance for the Board of Directors no longer conformed to the newly introduced Section 93 (2) 3 of the German Stock Corporation Act and was therefore amended in line with the new requirements of the German Stock Corporation Act within the statutory transition period.

No further benefits have been agreed with any members of the Board of Directors in connection with the termination of their appointment. Moreover, no member of the Board of Directors received benefits or promises from third parties relating to his position as a member of the Board of Directors in the past fiscal year.

		Basic Remune	Audit	Personnel	Variable	Travel	Total	Total
Name	Function	ration 2010	Committee	Committee	Remuneration	expenses	2010*	2009*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	5,250.00	936.08	18,936.08	16,148.51
Witt	Deputy Chairman	7,500.00	900.00	600.00	3,750.00	611.40	13,361.40	11,374.00
Münch	The Supervisory Board	7,500.00	600.00	0.00	3,300.00	633.90	12,033.90	10,782.64
Dr. Nass	The Supervisory
(until May 11, 2010)	Board	2,729.17	0.00	0.00	3,000.00	660.40	6,389.57	10,112.92
Schulte	The Supervisory
(from May 11, 2010)	Board	4,791.67	0.00	0.00	0.00	0.00	4,791.67	--
Staudt	The Supervisory Board	7,500.00	0.00	600.00	3,300.00	124.00	11,524.00	9,900.00
Dr. Sträter	The Supervisory
(until May 11, 2010)	Board	2,729.17	0.00	0.00	3,000.00	457.20	6,186.37	9,929.70
Prof. Dr. Wörn	The Supervisory
(from May 11, 2010)	Board	4,791.67	0.00	0.00	0.00	1,331.56	6,123.23	--
Total		48,791.68	2,100.00	2,100.00	21,600.00	4,754.54	79,346.22	68,247.77

Remuneration of the Supervisory Board

* fixed remuneration, variable remuneration and travel expenses

In the fiscal year 2010, the members of the Supervisory Board received a total of EUR 79.3k (previous year: EUR 68.2k) including travel expenses in remuneration for their work. The remuneration for each individual member can be found in the table above. Dr. Sträter received remuneration of EUR 3.5k for public relations consulting above and beyond this remuneration.

The remuneration of the members of the Supervisory Board is regulated in the articles of incorporation of GRENKELEASING AG and determined by the Annual General Meeting. The Annual General Meeting on May 11, 2010 resolved to make adjustments regarding this. Until then, the members of the Supervisory Board had received fixed annual remuneration of EUR 6,000, the Chairman EUR 9,000.

There was also variable remuneration if a dividend of more than EUR 0.20 was distributed to shareholders. If this occurred, the fixed remuneration was increased by one quarter of the percentage rate by which the dividend per share exceeded EUR 0.20. The variable remuneration component was limited to a maximum of 50 percent of the fixed remuneration of a member of the Supervisory Board. Remuneration increased by EUR 600 for each Supervisory Board member who is also a member of a committee, or by EUR 900 for the Chairman of a committee per year.

Under the new version of the articles of incorporation following the resolution by the Annual General Meeting on May 11, 2010, the members of the Supervisory Board receive fixed remuneration of EUR 7,500 for each full year on the Board, the Chairman receives EUR 11,250, plus EUR 600 for each committee membership and EUR 900 for each committee chaired. If members are only on the Board for part of a fiscal year, the fixed remuneration as well as the remuneration for committee memberships and chairmanships is calculated pro rata temporis.

The members of the Supervisory Board also receive a variable component if a dividend in excess of EUR 0.20 per share is paid to shareholders. In this case, the fixed remuneration is increased by one half of the percentage by which the dividend per share exceeds the amount of EUR 0.20, but in doing so the variable remuneration component does not exceed 100 percent of the fixed remuneration.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance for members of the Supervisory Board. This envisages a fixed deductible of 10 percent per claim, however, subject to a maximum of one and a half times the annual fixed remuneration for all claims per year. The company also reimburses the members of the Supervisory Board for their cash expenses and VAT insofar as they are entitled to invoice the tax separately and actually do so.

Accounting, Audits of Financial Statements and Financial Reporting

Group accounting for the fiscal year from January 1 to December 31, 2010 was conducted in accordance with the provisions of International Financial Reporting Standards (IFRSs) as adopted in the EU. In preparing the consolidated financial statements and the Group management report, the company also complied with and applied the provisions Section 315a (1) HGB. The consolidated financial statements were audited in accordance with the provisions of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW PS 200). The Audit Committee ensures the independence of the auditor and proposes an auditor for election to the Annual General Meeting. The auditor is elected by the Annual General Meeting in accordance with the statutory provisions.

Transparency and Reporting to Shareholders

GRENKELEASING uses the Internet to report to shareholders, all capital market participants and the media comprehensively, equally and promptly. All ad hoc disclosures and press releases, annual and quarterly reports and notifications in accordance with Section 15 of the German Securities Trading Act are published in German and English. The declarations of compliance with the German Corporate Governance Code are available on the website.

Shareholders can also find out about the Group, its management and organisational structure on the Internet. Notifications by the company are published in the electronic Federal Gazette (Bundesanzeiger). Shareholders can watch the report by the Board of Directors and the general debate during the Annual General Meeting on the Internet. Proxies appointed by the company can be entrusted to exercise voting rights, even in absentia. The dates of regular financial reporting are shown in the financial calendar. The GRENKE shares have been reported on in detail in the section "Our Shares and Investor Relations".

Controlling and Risk Management

The risk management system at the GRENKE Group has the function of systematically identifying, assessing, documenting and disclosing risks of the parent company and subsidiaries. It is designed to enable employees and management to address risks responsibly and make the most of the opportunities that present themselves. The GRENKELEASING AG risk management system is continually expanded and operated using a risk management tool on the intranet of GRENKE Group.

Since the 2009 Annual Tax Act came into effect, leasing companies must also comply with the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)] published by Deutsche Bundesbank and the German Federal Office for Supervision of Financial Services (BaFin). Leasing companies were granted 2009 as a transition period for implementation with full implementation having to take place in 2010. The GRENKE Group had largely implemented MaRisk from 2009. The appropriate risk management and controlling processes demanded by MaRisk for the key types of risks – counterparty, market value, liquidity and operational risks – have been implemented in the GRENKE Group.

The functionality of the risk management system and the results of its measures are reviewed by the internal audit department. The internal audit department reports directly to the Board of Directors. Details on the risk management system can be found in the Group Management Report.

Declaration of Compliance

The Board of Directors and Supervisory Board of GRENKELEASING AG issued the following declaration of compliance on April 26, 2010:

"The Board of Directors and Supervisory Board of GRENKELEASING AG declare in accordance with Section 161 of the German Stock Corporation Act that since issuing its last declaration of compliance on April 27, 2009, the recommendations of the German Corporate Governance Code initially in the version dated June 6, 2008 and, since it became applicable, the supplementary version dated June 18, 2009 have been complied with and will also be complied with in future with the following exceptions:

The company has taken out a directors' and officers' liability insurance for members of the Board of Directors and members of the Supervisory Board, which already provides for a deductible payable by Board members per claim. However, the present regulation does not comply with the regulation recently introduced for members of the Board of Directors in Section 93 (2) 3 of the German Stock Corporation Act and also adopted for the Supervisory Board in Article 3.8 of the German Code of Corporate Governance.

This is why the Board of Directors' existing directors' and officer's liability insurance will be adjusted to the new regulation mentioned above within the statutory transition period. The Board of Directors and Supervisory Board will also propose to this year's Annual General Meeting, that the remuneration of members of the Supervisory Board regulated in Article 10 of the articles of incorporation be amended taking account of the recommendation of the German Code of Corporate Governance in Article 3.8 and the requisite amendment to the articles of incorporation regarding this be resolved.

In deviation from the recommendation in accordance with Article 4.2.3 of the German Code of Corporate Governance, the Board of Directors agreements of incumbent members of the Board of Directors do not provide for a maximum severance payment. The reason for this is that the Board of Directors agreements were concluded before the recommendation in question was included in the German Code of Corporate Governance and consequently enjoy the right of continuance.

Both in the composition of the Board of Directors and in proposals for the election of members of the Supervisory Board, attention is to be paid, among other things, to a specifiable age limit and to diversity in accordance with the recommendations under Article 5.1.2 and 5.4.1 of the German Code of Corporate Governance. The company does not comply with either suggestion, since, in the opinion of the company, neither of these two criteria is suitable for deciding the appointment of members of the Board of Directors or the election of members of the Supervisory Board. Rather, while taking account of the other aspects to which attention must be paid, the knowledge, skills and experience required in the respective area of business or responsibility should be key, in the opinion of the company, to selecting suitable candidates.

Baden-Baden, Germany, April 26, 2010

GRENKELEASING AG

The Board of Directors The Supervisory Board"

OUR SHARES AND INVESTOR RELATIONS

The price of the GRENKELEASING share rose by 28.0 percent in fiscal year 2010. Having started the year with a price on Xetra of EUR 29.68, the shares initially trended sideward in a range of some ten percent in the first half of the year. At the beginning of July, an upward trend started which continued until the year-end. The shares ended the year at EUR 37.99. The high for the year of EUR 38.50 was initially achieved on November 9 and 10 and then another time on December 27. The EUR 40 mark was exceeded for the first time just after the turn of the year 2010/11. As a result, the price of the GRENKE share has more than doubled in the last two fiscal years.

The relevant benchmark indices, the DAX and SDAX, recorded a comparable performance to the GRENKE share during long periods in 2010. In December, the SDAX price index rose somewhat more strongly than the share, while the DAX lagged behind the share by and large. By contrast, the performance of the DAXsector Financial Services index was far weaker. It closed 2010 only just up on its level at the beginning of the year.

DIVIDEND POLICY

The dividend policy of GRENKELEASING AG continues to be based on the criteria of continuity, yield and safeguarding the equity base for future growth. Thus, GRENKE shares offer investors ongoing income combined with attractive growth prospects and high intrinsic value.

The GRENKE Group traditionally reports a substantial equity base. Our strategic target is 16 percent. This provides the basis for our high rating and grants us access to attractive refinancing opportunities. During the very difficult years for the international financial sector caused by the recent crisis, the equity ratio was systematically expanded well above this level owing to risk considerations. At the end of the reporting year it stood at 17.2 percent.

We therefore possess a good base, which will facilitate further strong growth in the future. This is why we will propose raising the dividend in line with the increase in the net profit for the period. This is even more the case, since we are convinced that we shall be able at least to maintain the increased dividend in the future as well: we are expecting further strong growth combined with rising income over the next few years, as the substantial contribution margin 2 achieved on our most recent new business will gradually be included in the income statement and the loss rate will tend downwards.

The Board of Directors and the Supervisory Board will thus propose to the Annual General Meeting of GRENKELEASING AG on May 10, 2011 a dividend of EUR 0.70 per share for the fiscal year 2010. A dividend of EUR 0.60 per share was distributed in the previous year.

INVESTMENT CASE

In positioning our shares on the capital market, we highlight our growth strategy, market leadership in our core business, our proven risk management over many years including the requirements of MaRisk and their high intrinsic value measured in terms of return on equity and embedded value. We focus our business on high-margin business areas by gearing management clearly towards contribution margin 2. Our aim is still to generate growth through new business and consequently to achieve earnings momentum. The key requirement for this, namely efficient control of costs and risks, is ensured by our sophisticated risk management strategy. Furthermore, we can react flexibly to changes in market conditions, while at the same time achieving appropriate risk premiums. This proved highly beneficial during the financial market crisis.

Refinancing costs were again fully passed on to the market in 2010 and net interest income even increased significantly. This effectively cushioned the inevitable rise in the loss rate following the recession. A highly important quality of our cost and risk management is its function as a barrier to market entry to potential competitors. Together with our finely honed sales system, we therefore remain well equipped for future growth.

INVESTOR RELATIONS

With our investor relations activities, we maintain an open and ongoing exchange of information with investors, analysts and media representatives. The Board of Directors again explained the business model of the GRENKE Group to capital market participants and reported on the company's performance with a number of roadshows and at investor conferences in Europe's leading financial centres in the fiscal year 2010. In addition, we frequently speak to market participants and media representatives in one-on-one talks and in conference calls. Thanks to this active communication policy we have steadily extended our investor base over the last few years.

The Annual General Meeting is also an important forum for us to maintain contact with our shareholders. The Board of Directors' speech to the AGM and the general debate are broadcast as a live stream available to the public on our website. Up-to-date investor relations news, press releases and annual and quarterly reports can also always be found on the GRENKELEASING homepage.

We also aspire to be among the leading companies in terms of the quality and timeliness of the information we provide. We publish the latest figures on new business and contribution margins for the past quarter on the second working day of the subsequent quarter. The audited consolidated financial statements for the fiscal year are published at the start of February of the following year. Our website www.grenke.de also offers a user-friendly interactive financial report. And, in keeping with the spirit of high transparency, our reporting goes well beyond the required minimum.

Coverage

GRENKELEASING is covered and rated by renowned banks and analysts. The following institutes regularly publish reports on our shares. The most recent ratings as of January 7, 2011 are as follows:

Commerzbank	Buy	HSBC Trinkaus & Burkhardt	Overweight
equinet	Hold	Macquary	Outperform
Deutsche Bank	Hold	Merrill Lynch	Buy
Silvia Quandt Research	Neutral	WestLB	Neutral

The agency Standard & Poor's issued a rating for GRENKELEASING AG in an analysis dated December 6, 2010. With a stable outlook and noting our strong capitalisation, our sound profitability and our strong risk management in particular, its assessment was as follows:

Counterparty Credit Rating	BBB+/Stable/A-2
Senior Unsecured	BBB
Short-Term Debt	A-3

Our Shares at a Glance

Code	GLJ
Code Bloomberg	GLJ_GR
Code Reuters	GKLG.DE
ISIN	DE0005865901
Market segment	Prime Standard
Index	SDAX
Designated Sponsors	WestLB
No. of outstanding shares	13,684,099
Class	No-par value shares
Nominal value per share (rounded)	EUR 1.28

Shareholder structure according to Sec. 1.7 of the current Deutsche Börse stock indices guidelines

Free float (widely spread shareholding)	61.80%
Mr and Mrs Grenke	38.20%

	2010	2009	2008	2007	2006
Xetra closing price
(last trading day)	EUR 37.99	EUR 29.50	EUR 17.82	EUR 22.90	EUR 36.06
Highest intraday price	EUR 38.50	EUR 30.22	EUR 28.20	EUR 42.00	EUR 64.45
Lowest intraday price	EUR 28.70	EUR 17.82	EUR 17.40	EUR 19.60	EUR 32.30
Market capitalisation	EUR 520 million	EUR 404 million	EUR 243 million	EUR 313 million	EUR 492 million
Earnings per share	EUR 2.03	EUR 1.80	EUR 2.42	EUR 2.35	EUR 2.23
Price Earnings Ratio
(Basis: closing price)	18.7	16.4	7.4	9.8	16.2

GROUP MANAGEMENT REPORT FOR THE FISCAL YEAR 2010	22
Corporate Legislative Framework	22
Business Profile	22
Business Model	22
Presence across Europe	23
The Group's Growth Strategy	24
Development and Structure of Services	24
Corporate Management	25
Fiscal Year 2010	26
Economic Conditions and Industry Performance	26
Significant Developments in the Fiscal Year	28
Report on the Results of Operations	30
Report on the Financial Position and Net Assets	33
Overall Statement on the Financial Situation of the Group	35
Additional Information
Sales and Customer Structure	35
Structure of the Supplier Base	35
Research and Development	36
Non-financial Performance Indicators	36
Personnel	38
Changes in the Executive Bodies	39
Remuneration Report	39
Shares Held and Share Transactions by the Executive Bodies	42
Disclosures Pursuant to Section 315 (4) HGB	43
Corporate Governance	44
Declaration on Company Management Pursuant to Section 289a HGB	45
Risk Management Report	48
Significant Events after the End of the Fiscal Year 2010	60
Report on Forecasts and the Outlook for the Group	64
CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2010	66
Consolidated Income Statement for Fiscal Year 2010	66
Consolidated Statement of Comprehensive Income for Fiscal Year 2010	67
Consolidated Balance Sheet as per December 31, 2010	68
Consolidated Cash Flow Statement for Fiscal Year 2010	70
Statement of Changes in Consolidated Equity for Fiscal Year 2010	72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2010	73
AUDIT OPINION	145
DECLARATION IN ACCORDANCE WITH SECTION 297 (2) SENTENCE 4 AND SECTION 315 (1) SENTENCE 6 HGB	146

GROUP MANAGEMENT REPORT FOR FISCAL YEAR 2010

CORPORATE LEGISLATIVE FRAMEWORK

The GRENKELEASING AG Group (hereinafter referred to as the "GRENKE Group" or "Group") submits the following management report on the fiscal year 2010 ended December 31, here. The Group was formed as a sole proprietorship in 1978. GRENKELEASING AG was founded in 1997 and has been listed on the Frankfurt Stock Exchange since April 2000. GRENKELEASING AG (hereinafter referred to as the "AG") and Grenke Investitionen Verwaltungs KGaA (hereinafter referred to as the "KGaA") are two separate entities in a unitary enterprise, the AG being the operating company and the KGaA the holding company. Both entities were originally founded to bundle the activities of the various companies controlled by Wolfgang Grenke.

The GRENKE Group operates internationally and is continuously expanding its international presence. Two methods of expansion are used for this purpose: firstly, the Group is represented in many European countries with its own subsidiaries, some of which have already established their own branch offices to cover their respective local markets. Secondly, a franchise model has been established in order to tap new regional markets and to expand with new financing products.

The Group does not hold interests in the legally independent franchise companies. However, in each case GRENKELEASING AG is entitled to acquire the company for a purchase price following a pre-agreed period of several years. The purchase price is calculated from the application of a calculation formula agreed at the time the contract is concluded, which is linked to market parameters and the company's individual performance. As a rule, acquisition takes place after four to six years. Under its franchise agreements, the AG provides partners with its expertise, operational infrastructure, a number of services and the right to use its name. The Group usually refinances finance agreements, which the franchisee concludes with its customers, via its subsidiary in Ireland by purchasing the franchisees' receivables or through sale and leaseback agreements, which means that the GRENKE Group generates a portion of its new business by refinancing franchisees' new business. Some of the franchisees also conclude lease agreements within the framework of a commission model meaning that the GRENKE Group features directly as a lessor.

This management report presents the development of the GRENKE Group except where the GRENKE Group including franchise partners or the franchise model are explicitly mentioned.

BUSINESS PROFILE

Business Model

GRENKELEASING was born out of the business idea of standardising lease financing using IT-based processes, making it economically viable to offer them even for small-ticket IT products. By doing this, we carved out a new market which did not exist before GRENKELEASING was formed and which, even today, is not covered by the large majority of other lease providers, particularly the IT product manufacturers themselves and even banks. We finance IT products with a net value upwards of EUR 500. In fiscal 2010, the mean value of the leases concluded in the GRENKE Group, including franchise partners, was EUR 7,693 after EUR 7,277 in the previous year and has consequently trended upwards somewhat once more following a slight fall in 2009.

To make it economical to finance such low volumes, these agreements must be processed at very low costs per contract. Accordingly, GRENKELEASING's business model is geared towards maximising its efficiency. Standardisation, speed and comprehensive, IT-based automation are significant USPs and define key entry barriers in our market.

In particular, our lease financing is sold through independent specialist reseller partners who offer their customers – small and medium-sized enterprises – various financing options at the point of sale. A key factor in choosing GRENKELEASING as a financing partner is a fair price, which we achieve through our cost-efficient, IT-based business processes and our broadbased refinancing. We also help our specialist reseller partners to conclude their transactions quickly by making prompt contract and payment commitments, which we can usually deliver within ten minutes. 72 percent – and as many as 79 percent in Germany – of all the GRENKE Group's financing requests, including those received by franchise partners, are made using our online tool. All of the Group's lease contracts are managed and automatically processed centrally at our head office in Baden-Baden, Germany.

We measure and calculate risks and rates of default on finance using our internally developed IT-based scoring sytem, which is optimised on an ongoing basis. The broad diversification of our receivables portfolio is not just due to the low volume of the individual agreements; focus on IT products for commercial use in offices leads to a broad distribution across different lines of business.

Risk limitation through diversification is also our philosophy for other aspects of our business model: we also take care that no cluster risks arise among our lessees and sales partners, our positioning for IT products is vendor-neutral and, not least, we are gradually expanding our already broad range of refinancing instruments further.

We implement our business model via our own subsidiaries and branches in a number of European countries and via our franchise model in the market. The task of sales is to provide comprehensive support to our specialist reseller partners in all matters relating to leasing, thereby ensuring their business success. Thus, we have a unique offering in the small-ticket area that clearly sets us apart from our competitors.

Our franchise model allows us to recruit specialist personnel who show the entrepreneurial spirit required to establish a new local company. The franchisees use the brand names "GRENKE" or "GRENKELEASING", thereby establishing themselves on the market. At the same time, our examination of the finance agreements as part of their refinancing ensures that we are thoroughly familiar with the receivables portfolio of the franchisee at all times. Incentives for the best possible receivables quality are established using defined parameters for subsequently determining a purchase price for the franchise company by the Group.

We have developed and established this business model in the market for small-ticket IT leasing. We have gradually also taken on the financing of other assets and are developing additional financial products on both the assets side and the liabilities side of our balance sheet. IT-based standardisation of business processes, indirect or purely online sales and broad diversification to limit risks will remain the cornerstones that define our business model.

Presence across Europe

In the reporting year, the GRENKE Group has once again expanded its presence across Europe with three new locations and currently operates in fourteen European countries via subsidiaries, which have often established their own branches as well. Having focused business on our domestic market in Germany and in our first international market, namely France, Italy has now evolved into a significant market with five locations. We handle the Swiss market, which is significant for us albeit smaller in economic terms, and the market in the United Kingdom from three locations. We are also represented, through one or two locations, in Belgium, Denmark, Ireland, the Netherlands, Austria, Poland, Sweden, Spain (Barcelona) and the Czech Republic.

GRENKELEASING is further represented by its franchise system in Finland, Norway, Portugal, Romania, Slovakia, Spain (Madrid) and Hungary as well as Luxembourg and Slovenia since 2010. Franchise partners also offer car leasing in Germany and small-ticket factoring in Switzerland.

The Group's Growth Strategy

GRENKELEASING is a growth company. Growth during the global financial market crisis and the recession it triggered and the speedy return to very rapid growth rates as early as 2010 have again highlighted this impressively. In the past few years, we have developed to become a European provider in small-ticket IT leasing. In 2010, more than half the Group's new business was generated in our international markets. As a result, we have established a market presence in many countries, which will make further substantial and profitable growth possible in future by continuing to solidify our network of locations.

Above and beyond regional growth, we are also continuously expanding the range of products, which we finance outside the IT sector and our portfolio of financing solutions. The main criteria by which we manage our expansion are: concentration on products that are suitable for indirect and online sales channels and automated contract settlement, meaning that even small contract volumes can be offered at attractive terms for clients while still generating attractive margins for GRENKE; high diversification of our portfolio across customers and lines of business as well as small average finance volumes to limit risk; focus on commercial clients. We also make no concessions in terms of our strategic targets for equity ratio and profitability.

In addition to the purchasing of small amount receivables (factoring) and car leasing that we have built up in the last few years, since 2010, our new products include two new offerings from GRENKE BANK AG: in March 2010, we established a cooperation agreement between NRW.BANK in Dusseldorf, GRENKELEASING AG and GRENKE BANK AG.

Thanks to this cooperation agreement, small and medium-sized enterprises and freelance professionals in North Rhine-Westphalia will be able to obtain development funds if they finance new purchases of operating equipment through leases. The model has proved very successful in just a very short time: 1,805 agreements were generated up to the end of 2010.

GRENKE BANK AG was also accredited by KfW-Mittelstandsbank in March for its business start-up programme "KfW-StartGeld". On the basis of our many years of extensive experience in the field of IT-based contract settlement, an innovative Internet platform was developed to offer entrepreneurs quick and simple access to "KfW-StartGeld". Thus, KfW-Mittelstandsbank is supporting new business start-ups, self-employed professionals and small companies that have existed for no more than three years with up to EUR 50,000 per inquiry. Volume transacted up to the year-end came to EUR 0.3 million.

Development and Structure of Services

The GRENKE Consolidated Group is in the process of comprehensively rounding off its offering specifically for small and medium-sized enterprises with all types of financial products that are suitable for online sales and IT-based, automated contract settlement systems.

Our financing portfolio will continue to be concentrated in small-ticket IT leasing. We shall continue to finance an extensive portfolio of products, particularly in the area of information technology. It focuses on IT equipment, printers, photocopiers, telecommunications products and software. We have developed a multi-faceted range of financing contracts for this purpose. The structure of the product portfolio has not changed significantly in the reporting year. It is determined by the type and extent of products used in office environments by small and medium-sized companies in Europe. Today, information technology is used in all offices in every industry. Accordingly, our focus prevents the formation of risk clustering in individual lines of business or regions.

Since autumn 2009, we have also been conducting small-ticket factoring in Germany; since March 2010, in cooperation with NRW.BANK, we have also been providing development funds to small and medium-sized enterprises and freelance professionals in North Rhine-Westphalia if they finance new purchases of operating equipment through leases and are accredited by KfW-Mittelstandsbank for its business start-up programme "KfW-StartGeld". Under our franchise model we have also been active in car leasing since 2005 and in small-ticket factoring in Switzerland since June 2010.

GRENKE BANK AG now offers various products. In addition to payment accounts in euro and foreign currency and simple investment products such as term deposits and savings certificates for our commercial clients, we are also enjoying great success in offering demand and term deposits for retail clients.

Corporate Management

Key Target Values Remain the Equity Ratio and Return on Equity

Our corporate management focuses on achieving a sustainably high rate of return on equity while at the same time maintaining a solid equity base. The target values for both the equity ratio and the post-tax return on equity have remained unchanged, at 16 percent, for many years. We believe that both of these figures are important for ensuring a good rating for our company. They also represent the cornerstones of an attractive valuation for our stock.

The equity ratio was 17.2 percent in fiscal year 2010, still above our medium-term target of 16 percent despite our rapid growth. This slight overcapitalisation was deliberately brought about during the financial market crisis owing to risk considerations. While the biggest risks from the crisis now seem to have passed, we still see elevated overall risk potential on capital markets in light of the numerous problems that have not yet been overcome, such as the debt overload problem in various countries. We are therefore continuing to base our balance sheet management on a scenario with above-average capital market risks.

Furthermore, we attach particular importance to the stability of profitability. During the financial market crisis and the subsequent recession in the real economy, we successfully cushioned the resultant strain on our earnings situation in two ways. Firstly, through the sophisticated management of the risk profile in our new business with our scoring models in the past. This balanced partly the rise in loan losses in the financing portfolio. Secondly, by increasing the contribution margins

in new business, which had a positive impact on the earnings situation in the reporting year and will have an even more positive impact in fiscal year 2011.

With this management we succeeded in increasing our post-tax return on equity again in 2010 – only one year after the worst recession in the post-war period. The return on equity came to 9.7 percent in the reporting year after 9.4 percent in the previous year. We are even more satisfied with this development given that income is still being substantially impacted by losses – as is typical at the end of a recession – and at the same time we have invested considerable sums in expanding our geographical presence. In our business this leads to increases in personnel and operating expenses ahead of future income.

Broad Range of Instruments for Optimising the Refinancing of the Group

We have established access to a broad range of refinancing options. Thus, we can ensure the sufficient refinancing of the Group at all times and can also take advantage of different developments on the respective sub-markets for specific instruments to strengthen our competitive capability.

The Group has traditionally felt it a duty to maintain full transparency, particularly when it comes to presenting its activities on the refinancing markets. Primarily in the interest of a comprehensible, competitive rating, we have always structured all instruments in such a way that they must be accounted for in full from the very start. Off-balance sheet structures have deliberately been avoided. We will continue this policy to ensure complete transparency of the Group's obligations at all times in the future.

We issue asset-backed commercial paper (ABCP) programmes, managed by DZ Bank AG, Hypovereinsbank/UniCredit Bank AG, SEB AG and WestLB, through special purpose entities. We have also issued promissory note loans, debentures and bonds under a debt issuance programme (DIP). The DIP is supported by Deutsche Bank, HSBC and WestLB. A new financing instrument was used for the first time in 2006 when we placed an ABS bond. The bond was repaid early in December 2009. A new ABS bond with a volume of EUR 160 million was placed successfully in February 2010. Our standing as an issuer is supported by Standard & Poor's ratings, unchanged since May 2003, of BBB+ (long-term) and A-2 (short-term).

We also conduct a substantial portion of refinancing through bank deposits via GRENKE BANK AG's online platform www.grenkebank.de. Together with the Group's high equity base, we therefore have the instruments to be able to take advantage of opportunities for growth well above our expectations at short notice, as we have demonstrated in the reporting year.

Day-to-day business is geared towards ensuring that the Group is solvent at all times. To do this, GRENKELEASING AG maintains enough funds to refinance its own lease receivables as well as those of its subsidiaries at all times. GRENKE FINANCE Plc. manages the Group's cash for the Group companies in a cash pool. We also take efforts to secure local or local-currency finance for some elements of our international expansion. Framework agreements are currently in place in the UK, Poland and Switzerland in particular.

FISCAL YEAR 2010

Economic Conditions and Industry Performance

Economy as a Whole

In 2010, the global economy recovered significantly following the worst crisis in post-war history. However, the generally positive picture differs markedly in both regional and sector-specific terms. The economy has, for example, gained virtually no momentum in the UK, the USA and Japan among others. Substantial government debt and deficits in public sector budgets are also having an adverse impact on the economy. Particularly the countries mentioned but also many other European countries are therefore forced to make savings in their public budgets. There is a specific risk that this may reverse the monetary moves taken to stimulate the economy.

By contrast, the German economy has not only emerged rapidly from the economic doldrums, the upturn has also become widespread in the second half of 2010 and has consequently become far more entrenched. Following the positive impact of the inventory cycle in manufacturing industry at the end of the recession, since mid-2010, investment and private consumption, the key drivers of the domestic economy, have firmed considerably without any material slowdown in the export boom.

This situation has been helped in particular by the fact that, thanks to government support for short-time working, there was only a slight fall in employment during the recession. 2011 is therefore starting on sound foundations: both private consumer spending and corporate investments are making a considerable contribution to growth, export momentum is being maintained at more or less the same rate and the monetary framework conditions remain favourable.

Industry Performance

The latest ifo investment study of German leasing companies, which the German ifo Institute conducts regularly with the Federal Association of German Leasing Companies, shows a tentative recovery in the leasing sector following the difficult recession of 2009. Following a restrained start to the year, the investment climate in Germany visibly improved in 2010 and, after some delay, even reached the leasing sector in the course of the year. On average, moderate growth of 2.5 percent to EUR 41.1 billion in new movables business is expected. This below-average trend in leasing is associated, according to ifo and the BDL, with far stronger cash flow in many companies and a sharp fall in leasing by private individuals.

There is still very little meaningful industry data on the development of the segment of the leasing market relevant to us. We assume that – as a result of the general economic recovery in Europe and in Germany in particular – overall the volume of leasing financing in our sub-market again increased significantly in 2010. According to our empirical assessment of the market, however, we achieved strong growth and consequently acquired substantial market share.

One of the reasons for the lack of statistics on the leasing market is the extreme fragmentation of the market – in Germany alone, the number of providers is likely to come to around 2,000 – another is the fact that individual sub-markets showed distinctly different individual industry trends. Internationally, there is usually even less documentation available on the market as a whole. This applies in particular to those countries where lease financing is only just becoming widespread, i.e. where there is particularly strong growth potential for us combined with limited competition.

In addition, small-ticket IT leasing is not a market segment of its own and is targeted by only a handful of companies. Thus the competitiveness of the market varies more if marginal participants that focus more on other areas of leasing or finance join or – as was increasingly seen in recent years during the crisis – leave the market rather than if the volume of smallticket IT leasing itself fluctuates.

Altogether, all analyses indicate that the penetration of IT equipment in office markets will continue to grow over the medium term – albeit with fluctuations – and that leasing as a method of financing will enjoy disproportionately strong growth. This applies in particular to small and medium-sized enterprises, our target market, whereas lease financing is already much more common among large companies.

An increase in the proportion of leasing in financing is even more likely since refinancing of companies by banks has become far more difficult or more expensive during the financial market crisis and the recent economic recession and this trend is more likely to be exacerbated in future as a result of the planned tightening of the regulatory requirements facing the banking sector.

In particular, the customer deposits at GRENKE BANK AG perform a refinancing function for the Group. New deposit business is therefore mainly managed – in accordance with the statutory and legal framework conditions – in line with refinancing requirements. As a result, its volume fluctuates virtually independently from the general trend in deposits by retail and commercial clients in the banking sector. Any fluctuation in the average interest rates for these refinancing funds is therefore far more important for us. In view of the continuing very low level of interest rates in Europe, no significant increase in costs was recorded here in the reporting year.

The factoring sector was hard hit by the economic crisis in 2009. However, according to the German Factoring Association for Small and Medium-sized Enterprises, the factoring sector for SMEs turned the corner in 2010. Interest in bankindependent financing has increased most notably among small and medium-sized enterprises. This trend is likely to continue in future as well.

Significant Developments in the Fiscal Year

Strong Growth with Excellent Margins and Ongoing Systematic Limitation of Risks

The fiscal year 2010 was the first year since the financial market crisis, which was once more entirely dominated by growth for the GRENKE Group including its franchise partners. We had steered back towards growth in the second half of 2009 and gradually increased the rate of expansion in new business. Therefore at the beginning of 2010, when economic demand in Europe and, in particular, in Germany picked up more rapidly and more strongly than expected by most economic analysts, our organisation was already well placed to benefit fully from this without any delay.

As a result, we were able to achieve high growth rates throughout the entire fiscal year, which also continued in the fourth quarter – despite the higher basis of the previous year from this point. We have therefore raised our forecast for the expected growth in new business by the GRENKE Group including its franchise partners twice in the course of 2010. The final growth of 39.4 percent represents a very gratifying result.

We are also very satisfied with the regional structure of our growth: we have not only succeeded in continuing to tap international markets very rapidly and increased new business in the GRENKE Group by 62.8 percent year on year to EUR 358.3 million in the reporting year, but also achieved growth of 18.0 percent in Germany, which remains our largest single market, to EUR 288.4 million for the first time for several years. As a result, we now achieve more than half our new business outside Germany.

Of the international markets, our largest country, namely France, has again reported very gratifying growth of +54.4 percent to EUR 148.4 million, while Italy remains the most rapidly growing country, posting growth of +157.9 percent to EUR 71.6 million. The UK also posted triple digit growth, namely +139.6 percent. By contrast, at +8.1 percent (including franchise partners), growth in business in Spain was at the lower end of our country portfolio's range because of the country's difficult economic conditions and in Poland we are working systematically at repositioning our sales team, with the result that a fall in new business of 15.0 percent had to be recorded there.

Leasing requests in the GRENKE Group rose to a total of 176,299 in the fiscal year 2010 after 139,458 in the previous year. Internationally in particular, we received significantly more requests than in the previous year (114,480 after 81,507). The GRENKE Group including franchise partners recorded 194,913 requests after 152,382 in the previous year, 133,086 of which from international (previous year: 93,996).

We have therefore continued to exploit the improvement in the competitive situation caused by some banks and marginal participants in small-ticket IT leasing taking on a much more restrictive positioning or withdrawing from the market altogether. We also raised our conversion rate (conversion of requests into contracts) within the Group during the year, with the result that it reached 44 percent in 2010 as a whole after 41 percent in the previous year and in the GRENKE Group including franchise partners 43 percent after 41 percent. It therefore still remained below our target. However, this was partly the result of strong growth in our international markets where the conversion rate was below the average for the Group because of our cautious risk policy.

In total, we concluded 77,727 new lease agreements in the GRENKE Group in the fiscal year 2010 after 57,695 in the previous year, 49,062 of which international (previous year: 31,647). In the GRENKE Group including franchise partners 84,482 new contracts were concluded after 62,321 in the previous year, 55,333 of which abroad after 35,917 in the previous year.

Because of the favourable competitive situation, we achieved this rapid growth, while continuing to limit risk strictly, at contribution margin 2, which we have reduced somewhat once more compared with the extraordinarily high level in the recession year of 2009; however, with a contribution margin 2 in leasing business of 15.6 percent in the fiscal year 2010 after 18.8 percent in the previous year, the profitability of new business within the Group remains above the pre-crisis level of 2008.

We saw the sharpest reduction in margins in Germany, where competition is strongest, not least because we are the subject of particular attention as the market leader. Nevertheless, we continued to realise a contribution margin 2 on new business of 13.2 percent in 2010 after 17.8 percent in the previous year. We continue to achieve a very attractive margin despite strong growth in our largest European markets, namely France with a contribution margin 2 of 17.6 percent in 2010 after 20.8 percent in the previous year, in the UK with a contribution margin 2 of 19.7 percent after 20.1 percent and in Italy with a contribution margin 2 of 13.7 percent after 15.9 percent.

As well as the substantial levels of new business, we have switched back to growth with regard to the geographical expansion of our locations and in addition to new locations for the Group in Italy and in the UK, we have also supported our Portuguese franchisees with the opening of a new location as well as concluding franchise agreements with new partners in Luxembourg and in Slovenia for leasing business and in Switzerland for factoring. Preparations were also made to continue this expansion in the fiscal year 2011.

We are continuing to exercise a great deal of restraint in managing our factoring business with the result that we recorded a year-on-year reduction in new business in the Group of 3.9 percent to EUR 41.9 million in the reporting year and of 1.2 percent to EUR 43.1 million in the GRENKE Group including franchise partners. The margin in the Group amounted to 2.3 percent after 1.95 percent in the previous year in relation to the average period for a factoring transaction of around 31 days in 2010 and of around 32 days in the previous year.

Further Success on the Refinancing Markets

The situation on the international capital markets eased considerably in the reporting year. The worst fears felt by financial markets and consequently by the real economy during the global crisis failed to materialise. However, this is only a relative success – markets remained fraught with considerable risk in 2010 and extraordinary measures on the part of governments and central banks were needed to support them. Given this, we are even more satisfied with our continuing success on the capital markets.

Our broad range of refinancing instruments and good standing, which we have worked to achieve over many years, on the capital markets again fully proved themselves. At the beginning of the year, we were one of the first companies in the leasing sector to place an ABS bond after the financial market crisis and we also issued a bond in the amount of EUR 75 million in March. As a result, we were more than able to redeem an expiring bond in the amount of EUR 100 million. At the end of June, this was followed by another bond with a volume of EUR 100 million, which was 20 percent oversubscribed – at a time when the capital market remained closed to many companies – and finally, in October 2010, by a third bond with a volume of EUR 100 million.

The ABCP programme with LBBW was terminated in December 2010. In November 2010, we signed an additional ABCP programme to refinance French receivables with Hypovereinsbank/UniCredit Bank AG. A number of additional instruments were concluded and utilised successfully including agreements on the purchase of receivables for UK lease receivables.

Overall, the maturities structure of our refinancing instruments continued to be optimised in line with the duration of our receivables portfolio. Since no major bonds are maturing in 2011, we are well placed for additional growth.

In 2010, we have also continued to make great use of GRENKE BANK AG's bank deposits, which have now proved their worth as a source of refinancing over two years. In addition to the funds mentioned above, we have increased holdings of bank deposits to EUR 122.2 million as of December 31, 2010 after EUR 106.4 million at the end of the previous year. Bank deposits represent a key component of our range of refinancing instruments, with which we have positioned ourselves on the liabilities side of our balance sheet with private clients in addition to commercial clients.

This form of financing is also independent of both banks and the capital market, which in turn makes us less dependent on the cycles of these markets. Our operations on this market are therefore based firstly on managing this investor base. Secondly, we aim to manage the inflow of bank deposits through an appropriate interest rate policy in line with the inflow and outflow of funds from our other instruments and with the aim of refinancing our financing requirements on a matching basis.

GRENKELEASING Ratings Confirmed

Since May 2003, GRENKELEASING has received a Counterparty Credit Rating of BBB+ with a stable outlook (long-term) and A-2 (short-term) by the ratings agency Standard & Poor's. This rating was confirmed once again on December 6, 2010. Our excellent market position, the broad diversification of our receivables portfolio, strong risk management for ensuring our profitability and solid capitalisation continue to be emphasised as key factors in this respect. The renewed rating confirmation affirms our unchanged, strong standing on the capital markets.

Report on the Results of Operations

The success of our management focus – particularly in the past two years – on high contribution margins from mid-2008 and gradual return to growth in the second half of 2009 can be seen in the 8.7 percent increase as against the previous year in interest and similar income from financing business to EUR 124.5 million. Substantial growth in 2010 will have a positive impact on income in subsequent fiscal years, since because of the nature of our business we only receive the income from the contract over its term.

In contrast to this, expenses from interest on refinancing and deposit business have only risen by 4.1 percent. This was due to below-average refinancing requirements on account of using large cash holdings at the beginning of the year and our refinancing from bank deposits. The expansion in interest income led to a gratifying increase in net interest income of 11.5 percent.

However, the increase in the settlement of claims and risk provision caused by the recession but still ongoing in fiscal year 2010 was still above the long-term average. However, the increase of 8.1 percent to EUR 33.7 million was still far less than the growth in net interest income.

The profit from insurance business also posted a gratifying increase of 9.5 percent to EUR 22.2 million in 2010, as did the profit from new business, which firmed by 14.0 percent. Having posted a small loss in the previous year, the profit from disposals was positive again, at EUR 2.0 million, in 2010. This means that we are virtually back to the level of the pre-crisis year of 2008. In total, operating income increased by EUR 15.8 percent to EUR 96.8 million in the reporting year after EUR 83.6 million in the prior-year period. At this level, we even exceeded the 2008 result. The contribution of GRENKE BANK AG, which was acquired in 2009, to total operating income was more tangible than in the previous year. However, its contribution to earnings remains low. GRENKEFACTORING GmbH still remained just below break-even point.

In addition to the limited impact of the first-time consolidation of GRENKE BANK AG and GRENKEFACTORING GmbH for a full twelve-month period, the GRENKE Group's operating expenses reflect the acceleration in the push for growth in 2010 in particular. Accordingly, selling and administration expenses especially have increased significantly, at 20.7 percent. We deliberately factored in this increase to support the sharp expansion in new business and to prepare for further growth in future. The fact that the mean value per lease increased by 5.7 percent from EUR 7,277 in the previous year to EUR 7,693 in the reporting year and consequently a smaller number of leases needed to be concluded and processed to reach a specific contract volume, tended to limit the increase in both selling and administration expenses.

The increase in other operating expenses to EUR 3.6 million after EUR 0.7 million in the previous year also depressed income. The largest individual item here was exchange differences of EUR 1.6 million, among which such between the euro and the Swiss franc in connection with a loan in Swiss francs, which was repaid at the end of the reporting year. In principle, economic currency risks within the Group are hedged. The outstanding currency position resulting from the loan was therefore matched by a corresponding position resulting from current business.

The increase in personnel expenses, which remained well below-average at 11.5 percent, is mainly due to salary increases. On the other hand, the increase in the number of employees was limited to 6.1 percent, since we held onto our core staff during the recession.

Following the reduction in the previous year caused by the recession, earnings before taxes increased by 8.6 percent in total to EUR 36.5 million in fiscal year 2010 after EUR 33.6 million in the previous year. The net profit for the period climbed by 13.1 percent to EUR 27.8 million after EUR 24.6 million in the previous year. Earnings per share came in at EUR 2.03 after EUR 1.80 in fiscal year 2009.

Report on the Development of the Segments

The GRENKE Consolidated Group divides its activities into the following segments: leasing business, banking business and factoring business. The leasing business segment accounts for all activities performed by GRENKELEASING AG and its subsidiaries until the acquisition of GRENKE BANK AG and GRENKEFACTORING GmbH. In managing the leasing business, the Consolidated Group essentially focuses on the individual countries and regions.

Thus, the leasing business segment represents a combination of several operating segments defined by countries or groups of countries and the reportable leasing business segment. The banking business segment consists of the activities of GRENKE BANK AG, which focuses mainly on German customers. The Factoring segment includes the activities of GRENKEFACTORING GmbH, which performs traditional factoring services in Germany and is a financial services provider.

In addition to new business volume and contribution margin 2 for the Leasing segment, the main performance figures for segment development are operating segment income, segment results before other net financial income and personnel expenses.

The information in the above section on the development of individual items within the Group naturally relates to the segments in the same way – and this is especially true in leasing business, which accounts for the largest share of our business. In our international markets, there were very significant increases in operating segment income in some cases as a consequence of continuous growth in new business since the second half of 2008 combined with a substantial contribution margin 2. On the other hand, segment income remained unchanged in the Germany region, since new business did not pick up here until fiscal year 2010. We shall receive income from this expansion in volume during the next few years over the term of the contract.

We have increased personnel expenses in virtually all segments to prepare for further expansion. Switzerland, where expenditure fell as a result of the reduction in staff numbers over the course of the reporting year, constitutes an exception. As has been mentioned on numerous occasions, the employment market in the Swiss financial services sector is heavily exposed to the volatilities of the banking sector. As it becomes more attractive following the easing of the financial market crisis, we shall have more difficulty once more in finding suitable employees at appropriate salaries for our business.

The segment result in the France, Italy and Other regions increased very significantly in some cases because of the substantial growth in operating segment income. By contrast, in Germany, significantly higher costs were incurred in preparation for future expansion into new countries in particular. Additional significant consulting and audit fees were incurred in connection with the development of our commission model in which franchisees no longer conclude lease contracts in their own names rather the GRENKE Group features directly as a lessor. Last but not least, the above mentioned exchange differences amounting to EUR 1.6 million were incurred in the Germany region. As a result, the segment result fell sharply here overall.

New business in the GRENKE Group's leasing division increased extraordinarily rapidly in fiscal year 2010. Following the economic upturn, we reduced our contribution margin 2 requirements from the recession level of the previous year and set them lower. However, with a contribution margin 2 of 15.6 percent in the reporting period after 18.8 percent in the previous year, we still exceeded the level of the pre-crisis year of 2008.

While our international business is still the obvious growth driver and contributed the larger share of the Group's expansion, at 58.4 percent, we also recorded perceptible growth, at 18.0 percent to EUR 288.4 million, in Germany for the first time in a long period. At 13.2 percent after 17.8 percent in the previous year, the contribution margin 2 remains at an attractive level. This trend is even more gratifying since the potential for growth is more limited in our domestic market, where we have had for many years a higher market penetration than in our international markets.

In the Switzerland region, where we are the clear market leader in small-ticket IT leasing as in Germany, new business increased by 22.7 percent to EUR 17.6 million with a contribution margin 2 of 21.1 percent after 21.9 percent in the previous year. In our largest international market, namely France, we expanded our business by a further 54.4 percent to EUR 148.4 million. The contribution margin 2 came to 17.6 percent after 20.8 percent in the previous year.

Developments in the Italy region, which has enjoyed very strong growth in recent years, were extremely encouraging in the reporting year as well. New business increased by 157.9 percent to EUR 71.6 million while the contribution margin 2 amounted to 13.7 percent after 15.9 percent in the previous year. We were also able to more than double new business in the UK with growth of +139.6 percent to EUR 36.2 million at a contribution margin 2 of 19.7 percent after 20.1 percent in the previous year.

In the reporting year, Spain was at the lower end of the growth scale. Given the economic risks in this country, we only expanded new business, including that of the local franchisee, by 8.1 percent to EUR 17.0 million at a contribution margin 2 of 15.2 percent after 16.9 percent here. In Poland, new business decreased by 15.0 percent to EUR 9.6 million as a result of an operational reorganisation while the contribution margin 2 amounted to 10.8 percent after 12.3 percent in the previous year.

The banking business segment more than doubled its operating segment income in the first twelve month period following the acquisition of GRENKE BANK AG. The segment result improved sharply and was just positive but remained insignificant because of the expenses associated, in particular, with the relocation of the company from Hamburg to Baden-Baden and the development of new products.

Factoring business is currently still immaterial from a Group perspective. At present, we are essentially steering business in line with risk and expense limitation aspects. Accordingly, new business by the GRENKE Group including franchisees saw a drop in the factoring volume of 1.2 percent to EUR 43.1 million. The margin on the factoring volume was 2.3 percent after 1.95 percent in the previous year. This margin relates to the average period for a factoring transaction of around 31 days (previous year: 32 days). The segment result was slightly negative in the reporting year.

Report on the Financial Position and Net Assets

Total assets grew by EUR 169.3 million or 11.3 percent to EUR 1,671.0 million in the fiscal year 2010. In line with the nature of our business, by far the largest proportion of our total assets relates to lease receivables. At EUR 1,328.2 million, they contributed 79.5 percent to total assets in 2010. Having fallen slightly in net terms during the financial crisis of 2009 as part of our initially restrictive management of new business, these receivables expanded significantly once more in the reporting year. We had already steered back towards growth in the second half of 2009 and continued this policy consistently and very successfully throughout the reporting year.

Accordingly, lease receivables grew by EUR 193.3 million or 17.0 percent. The ratio of short-term to long-term lease receivables has also returned to normal with the sharp increase in new business. As a result of its restrictive management in 2009, the short-term portion increased meanwhile to 68 percent of the long-term portion but moved back towards the long-term average of 62 percent in 2010.

The liquidity reserves recorded in other current financial assets and loans issued as collateral to SPEs for ABS/ABCP refinancing could also be perceptibly reduced in connection with the switch within refinancing instruments – a marked reduction in the use of ABS/ABCP refinancing in return for a sharp expansion in bonds, debentures and private placements – which took place in fiscal year 2010. The increase in other current assets of EUR 22.1 million to EUR 54.9 million is caused virtually exclusively by reporting-date related factors. Against this background and because of the planned reduction in the liquidity position, non-current assets have risen far more sharply, at 13.9 percent, than current assets (+8.1 percent).

In line with the rapid expansion in new leasing business, liabilities from its refinancing have increased by EUR 126.4 million in total or 12.9 percent to EUR 1,107.5 million. As mentioned above, refinancing was largely made up of bonds, debentures and private placements, while the ABS/ABCP alternative was scaled back. An ABCP programme in the amount of EUR 150 million with LBBW was dissolved in this connection and another programme with WestLB was reduced from EUR 250 million to EUR 40 million. The difference was repaid by refinancing via a new ABS bond (see Notes). At the balance sheet date 2010, a new ABCP programme with the Italian bank Hypovereinsbank/UniCredit Bank AG (Arabella) for EUR 100 million to finance French lease receivables had not yet been utilised.

In fiscal year 2010, three new bonds with a total nominal volume of EUR 275.0 million and six promissory note loans with a total nominal volume of EUR 60.5 million were issued. They were offset by the redemption of a bond for EUR 100.0 million and three promissory note loans totalling EUR 52.0 million.

On the acquisition of GRENKE BANK AG, bank deposits also became available to the Group as a source of refinancing in 2009 and the Group reported deposits for the first time of EUR 106.4 million this year. In the reporting year, bank deposits were expanded by 14.9 percent to EUR 122.2 million. On the other hand, a foreign currency (CHF) loan reported under bank liabilities was repaid in full at the end of December 2010. Overall, the long-term portion of the refinancing for leasing business has also risen significantly on a matching basis with lease receivables, while short-term refinancing liabilities have even fallen.

The Group employs a range of instruments for its refinancing and staggers their maturity dates across several periods. This enables GRENKELEASING to react flexibly to changes on the refinancing markets. The table below shows the expected cash outflows resulting from contractual obligations as of December 31, 2010.

		Payments falling due
		Within	In 3 months		In more than
EURk	Total	3 months	to 1 year	In 1 – 5 years	5 years
Financial liabilities	1,343,896	260,096	253,091	820,751	9,958
Leases and tenancies	18,157	1,336	4,010	11,599	1,212
Purchase commitments*	125,682	125,682
Commitments from pending transactions**	7,033	7,033
Contractual agreements in total	1,494,768	394,147	257,101	832,350	11,170

* Legally binding commitments to accept goods and services and trade payables

** The present values of all future cash flows are shown here. The Group considers this to be the appropriate representation of the cash flows that would become payable if it were necessary to close these items. Derivative holdings are shown in the due on demand category as this representation shows the earliest possible outflow of liquidity. The actual duration of a contract may extend to a much longer period.

See Notes

Besides the usual purchase commitments from ordinary activities, interest and capital repayments for financial liabilities fall due in particular within the current fiscal year 2011. The volume of financial liabilities falling due in 2011 is comparatively low. Of the EUR 513 million in financial liabilities that fall due in 2011, EUR 158 million is accounted for by ABS and ABCP programmes, which fundamentally consist of individual tranches of short duration.

These are generally fixed for defined periods of 12 months and can be utilised on a revolving basis during this period. Amounts released through the repayment of lease receivables can therefore be utilised repeatedly. The largest other single items among the financial liabilities falling due in 2011 are two bonds totalling EUR 22.0 million, which are due for redemption in April and July and four promissory notes totalling EUR 85.0 million, which mature between March and July. The repayment will be effected using the operating cash flow from the available refinancing facilities and through the possible utilisation of additional refinancing.

Thanks to earnings, equity increased by EUR 24.9 million or 9.5 percent to EUR 287.8 million in 2010. Despite strong growth in new business, at 17.2 percent, the equity ratio remained perceptibly above our long-term target of at least 16 percent in the reporting year.

The GRENKELEASING AG Group manages the utilisation of refinancing funds closely in line with the development of new business and the cash flow from the receivables portfolio. The inflow of funds from refinancing could be limited not just in view of the substantial holdings of cash and cash equivalents at the beginning of the reporting year but also thanks to the trend in income. Cash inflows from refinancing rose far less sharply than lease receivables, for example. Accordingly, cash flow from operating activities declined from EUR 19.7 million to EUR 1.6 million in the reporting year. After payment of taxes and after net interest received, net cash flow from operating activities was EUR –13.6 million after EUR 16.0 million.

Cash flow from investing activities came to EUR –4.0 million after EUR 31.1 million in the previous year because of payments for the acquisition of operating and office equipment in particular. The figure for the previous year still contains a cash inflow from the acquisition of GRENKE BANK AG as a material item.

Cash flow from financing activities in the amount of EUR –12.3 million after EUR –11.6 million in the previous year results from dividend distributions and a reduction in bank liabilities of EUR 4.1 million in the reporting period. In the fiscal year 2010, aggregate cash flow decreased to EUR –29.9 million after EUR 35.6 million.

Overall Statement on the Financial Situation of the Group

The GRENKE Group was back on its strategic growth path early in fiscal year 2010 and the extraordinary overall economic situation allowed it to exceed the historical expansion rates in new business significantly. At the same time, the Group also pushed forward with the strategic expansion of its international presence. With regard to refinancing, it not only repaid loans due and maturing bonds and refinanced the high level of new business in the reporting year, but also created sufficient scope for further growth.

This allowed the Group to strengthen its market position in Europe independently. The weakness of its competitors in certain countries and regions also contributed to this. We are also seeing competitors assume a more defensive positioning in our business or even withdraw from it completely due to losses suffered during the financial markets crisis and the economic recession, or pending higher capital requirements as a result of more intensive regulation of the financial markets, or a combination of both factors.

Therefore, as of the time of this financial report going to press, the Group is excellently positioned to continue its international growth strategy and to deal successfully with the continued risks from problems that have not yet been overcome, such as the high level of national debt in various countries.

ADDITIONAL INFORMATION

Sales and Customer Structure

The GRENKE Group's roots are in small-ticket IT leasing. Its activities are being gradually extended to the financing of other small-ticket receivables. The Group is also very successfully involved in the deposits business. Owing to the small size of the individual agreements, direct sales are not an option for us – it is not economically feasible.

This is why the Group practises what are known as "partner programmes" in its leasing business: we enter into most of our financing agreements with end customers after they are referred by manufacturers and particularly by our specialist reseller partners.

Here, our intensive support for our specialist reseller partners sets us apart from our competitors. Through our own staff in local sales offices or our franchisees we offer intensive personal training and support not only in lease financing, but also in sales issues and sales support, in organisational matters and other topics for increasing process efficiency. The aim is to contribute to the business success of specialist reseller partners. This strengthens ties between specialist reseller partners and the GRENKE brand. Our service programme also includes the expansion of our quality management system with the aim of improved customer orientation.

We use key account management for manufacturers of IT products. We also rely on the highest process quality and efficiency to strengthen customer loyalty with these sales partners. We additionally manage selected corporate clients under a direct sales model. Each quarter we analyse our receivables portfolios for possible framework financing with suitable customers. We actively limit potential risk clustering in line with our risk philosophy of a broad customer structure: even among these lessees, no single customer is permitted to owe total liabilities in excess of two percent of the Group's equity.

In addition to these sales channels, our online activities represent a significant and growing additional sales channel. This applies to our traditional business in small-ticket IT leasing as well as our new financial products. We conduct deposits business solely as an online bank and have developed an innovative Internet platform for handling business start-up financing.

Structure of the Supplier Base

Our lease financing is vendor-independent. Thus, the structure of our supplier portfolio and individual manufacturers essentially reflects German and European SME demand for IT products. Without our exercising any active influence, it varies according to the IT products on offer, manufacturers' product policies and customers' usage patterns. As a result, the supplier structure of the GRENKE Group also remains broadly based in line with our risk philosophy.

Moreover, competition between manufacturers means that the products forming the basis of our leases represent the state of the art. We thereby largely avoid the risk of technology becoming obsolete by making our leases full payout agreements that, to a large extent, rule out any risk of resale. Our resale business is operated independently of our leasing business.

Research and Development

The GRENKE Group is a financial services company. It therefore does not perform research or development. However, the company's core competence is providing efficient leasing logistics through the use of centralised, highly standardised IT processes. To do this, we use standard market products optimised using applications individually programmed for our needs. This demands a limited amount of IT development work for online platforms that takes into account the particular requirements of our individual markets.

Non-financial Performance Indicators

Beyond the financial and organisational management of the Group, our success is largely the result of non-financial performance. We have defined the following performance indicators in this connection:

Modern Human Resource Management

GRENKE is a services group. Our employees therefore make a major contribution to the Group's image vis-à-vis its competitors. We focus on modern human resources management to remain successful in the long-term.

We have set out the manner and way in which we work together and deal with each other in a manual. This describes the obligations of both employees and the company to each other. We focus on esteem, fairness and respect in dealing with each other. We support personal responsibility and equality of opportunity.

We encourage employees' individual strengths and take account of their wishes in structuring their workplace and their hours as far as possible. In our arrangements we try to achieve a "work-life balance". By providing training and development, we ensure our employees are equipped to live up to the demands placed on them and open up prospects for their professional and personal development.

Integrity in Relationships with Business Partners

Integrity is key to the GRENKE Group's longstanding success. Our corporate values centre on reliability and trustworthiness. The mandatory GRENKE Corporate Code constitutes the ethical framework for our actions and decisions. With it we aim to ensure that our company's values are complied with across national boundaries despite the diversity that now characterises our international organisation.

Feedback from our employees, suppliers, lessees and other business partners – their suggestions, wishes and complaints – is therefore recorded systematically and evaluated. The so-called "Internal Recipient Satisfaction" is gauged with managers and other departments every quarter. It is included in the balance scorecard analysis and consequently in the performance bonus of the managers and departments being assessed. Written suggestions and criticism received from the customers we finance and our specialist reseller partners are evaluated on an ongoing basis as part of the so-called "External Recipient Satisfaction" process. Telephone conversations are documented in detail over a defined period and analysed repeatedly every quarter.

We aim to ensure that we include feedback from our business partners in a structured process and take it into consideration in developing our product range and our services.

Knowledge of the Markets and Individuality of the Product Range

The GRENKE Group is active throughout Europe and consequently operates in a large number of countries, some of which have very different structures, histories and requirements. The Group also plans to expand beyond the borders of Europe in future. We service our markets with individual financing packages, contractual structures and contribution margin requirements. Beyond simple, standardised financing, we offer a broad range of contractual options, which take account of our customers' differing requirements. This contributes significantly to our success.

When opening up a new market, we start by examining the circumstances and statutory framework conditions in detail from Germany and then either establish a local subsidiary or conclude a contract with an entrepreneurially-minded franchisee, who knows the local market well. Our range of contracts is then continually optimised in close collaboration between the local sales team and the Group's head office in Germany. The contribution margin requirements of the local units are finetuned in an ongoing standardised process, which is increasingly dealt with online.

Quality of the Receivables

Since 1994, we have assessed the creditworthiness of our customers using an IT-based scoring system developed in-house. We classify risks and the requisite contribution margins associated therewith on the basis of a combination of information from publicly accessible databases and our own continually optimised criteria to ensure that we can generate our target returns long term. This forms the basis of our contract and payment commitments, which we can usually deliver within ten minutes of a financing request.

The aim of our scoring process is not to minimise risks but to assess risks correctly so that the calculated losses of the contribution margin calculation come as close as possible to the actual loss rate. As a result, we ensure that, firstly, we achieve our target returns and, secondly, offer the most competitive terms possible.

Reputation on Equity and Capital Markets

Our reputation on capital markets is crucial in deciding on our access to financing and consequently on the Group's competitiveness and potential for growth. Our strategy centres on maintaining and developing our existing well-diversified funding.

To this end, we focus on complete transparency in presenting the Group's commitments and on managing operations in such a way that the resultant substantial equity base and high rate of return on equity will help maintain our good longterm and short-term ratings. Thus, we can ensure the sufficient refinancing of the Group at all times in our day-to-day business and can also take advantage of different developments on the respective sub-markets for specific instruments.

Via GRENKE BANK AG, we have also obtained access to refinancing from the bank deposits of private and commercial customers and have consequently made us less dependent on the cycles of capital markets. We also cultivate this market with an attractive and sustainable offering.

Last but not least we attach great importance to our reputation on the equities market even if our current capital resources and profitability mean that external financing through equity is neither needed nor planned. Our image on the equities market is characterised by prompt, transparent and regular reporting, personal discussions with capital market participants at Management Board level and a consistent and shareholder-friendly dividend policy.

Personnel

The GRENKE Group only grew organically in the reporting year. Since we had retained our highly qualified and experienced employees within the company even during the financial market crisis and had avoided redundancies, we were able to achieve the substantial growth in the reporting year with only a limited increase in the number of staff. Accordingly, the number of employees (not including the Board of Directors) rose from 507 in the previous year to an average of 538.

The fluctuation rate in the 2010 fiscal year was 12.0 percent after 9.3 percent in the previous year. The increase is the result, in particular, of the reorganisation of our sales team in Poland, which we are currently implementing systematically and the relocation of GRENKE BANK AG from Hamburg to Baden-Baden. It was far lower in other areas of the company and remained very low at management level and among executives in particular.

Encouragement of our employees' training and development and consequently the opening up of personal and professional opportunities is a self-evident obligation beyond short-term, corporate self-interest. We therefore offer numerous extensive opportunities. 27 young people trained with us in the fiscal year 2010. We also regularly support new training courses, as we are currently doing in dialog marketing, where we have two trainees, and in IT with one trainee in application development.

In addition, seven students are currently undertaking international business management degree programmes that combine work and study in three countries, at the Baden-Württemberg Cooperative State University in Lörrach, the University of Applied Sciences Northwestern Switzerland in Basel and the University of Haute Alsace in Colmar. Both GRENKELEASING AG and our subsidiaries in Switzerland and France offer young people opportunities such as these.

We have been working with Lörrach since 2004. Since 2007, we have also been working together with the universities of cooperative education in Karlsruhe, where two students are currently enrolled in business computing and one student is enrolled in applied computer science. We have also been working with the University of Cooperative Education in Mannheim since 2007, where we currently have one student studying accounting and controlling.

Changes in the Executive Bodies

The Board of Directors agreements of Mr Thomas Konprecht and Mr Michael Kostrewa expired as of April 30, 2010. Both left the Board of Directors of GRENKELEASING AG. The German Federal Office for Supervision of Financial Services approved Mr Gilles Christ's appointment to the Board of Directors for three years starting on May 1, 2010 in accordance with a resolution of the Supervisory Board. The Board of Directors agreement with Dr. Uwe Hack was extended for five years, as scheduled, with effect from October 1, 2010.

The terms in office of the Supervisory Board members Dr. Brigitte Sträter, Mr Dieter Münch, Dr. Oliver Nass and Mr Erwin Staudt ended at the close of the Annual General Meeting on May 11, 2010. The persons listed below were elected to the Supervisory Board by the Annual General Meeting on May 11, 2010. They were elected for the period until the end of the Annual General Meeting that resolves the official approval of the actions of the Supervisory Board for fiscal year 2014:

• Mr Dieter Münch, Weinheim, retired bank officer, member of foundation board
• Mr Florian Schulte, Baden-Baden, CEO of Deltavista AG
• Mr Erwin Staudt, Leonberg, President of the soccer club VfB Stuttgart 1893 e. V.
• Prof. Dr. Thilo Wörn, Essen, Professor

Remuneration Report

The principles of the remuneration system for the Board of Directors provide for a fixed, performance-unrelated basic annual salary and a variable performance-related remuneration component.

Remuneration of the Board of Directors

EUR	Christ (from May 1, 2010)	Grenke	Dr. Hack	Kindermann	Konprecht (until April 30, 2010)	Kostrewa (until April 30, 2010)	Total 2010	Total 2009
Gross salary	115,819.08	328,946.88	268,519.44	128,820.66	57,386.83	42,626.84	942,119.73	1,024,468.19
Performance bonus	55,080.00	144,551.00	123,492.13	53,848.33	14,709.25	11,031.93	402,712.64	483,073.88
Bonus	0.00	0.00	0.00	0.00	0.00	0.00	0.00	248,831.10
Phantom stocks	84,350.00	0.00	289,200.00	0.00	0.00	0.00	373,550.00	300,195.00
Pensions	0.00	0.00	21,000.00	0.00	0.00	0.00	21,000.00	21,000.00
Total costs	255,249.08	473,497.88	702,211.57	182,668.99	72,096.08	53,658.77	1,739,382.37	2,077,568.17

Prepared according to the principle of cash settlement or due date

Total remuneration for the Board of Directors amounted to EUR 1,739k in the 2010 fiscal year (previous year: EUR 2,078k). Remuneration for members of the Board of Directors includes fixed and variable components. The criteria for the variable remuneration component are defined in advance each year based on the increase in EBIT (earnings before interest and taxes) and the development of the key performance indicators of a balanced scorecard (BSC).

The attainment of the EBIT growth target is measured at the end of each year and the BSC criteria are measured at the end of each quarter. The main criteria contained in the BSC correspond to the key performance indicators for the longterm development of the Group, such as number of lease agreements and new business. An annual pension premium of EUR 21k is paid to a company provident fund for Dr. Hack. Some members of the Board of Directors still receive phantom stocks as well. The structure of the remuneration system including the phantom stocks structure presented below do not lead to the creation of an incentive to incur inappropriate risk. The remuneration system promotes the company's long term success and creates incentives only to incur those risks that are easily controllable statistically and involve appropriate remuneration for the risk. The company's regulatory equity is neither jeopardised by its remuneration practice nor does this restrict the long-term retention of equity.

On March 12, 2007, the Chairman of the Supervisory Board of GRENKELEASING AG concluded a phantom stock agreement and a reinvestment offer with Dr. Hack for the fiscal years 2007 to 2009. It was treated as a cash settlement plan. Under this agreement, Dr. Hack received entitlement to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG based on a defined underlying share price. Dr. Hack's claim to payment in the amount of EUR 300,195.00 from the phantom stock agreement from the fiscal year 2009 was settled in January 2010 in accordance with the cash settlement agreement. Dr. Hack bought a total of 2,000 shares in GRENKELEASING AG via the stock exchange (Xetra) in February 2010.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded additional phantom stock agreements with Board of Directors members Dr. Hack and Mr Christ. Under this agreement, Dr. Hack receives for both the current fiscal year and for each of the next two fiscal years entitlements to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG in relation to a defined basic share price. The share price is the arithmetic mean of the Xetra closing prices on all trading days from December 1 to December 23 of the respective prior year.

The basic share price for 2010 was EUR 28.68. The maximum payment arising from this agreement is limited to EUR 600,000 for the period of three years. Under the programme, Dr. Hack is required to invest the respective net amount paid plus a personal contribution of 25 percent of that amount in GRENKELEASING AG shares. Mr Gilles Christ's pro rata temporis entitlement to payment is based on the increase in value of 15,000 shares of GRENKELEASING AG. The maximum payment is limited to EUR 300,000. The value of the phantom stocks agreement granted totalled EUR 373,550 as at December 31, 2010. The payment amount was due at the end of 2010.

In the past, the company had taken out directors' and officers' liability insurance for its executive bodies and top managers under which the insured party must pay a fixed deductible of EUR 3,000 per claim. This directors' and officers' liability insurance for the Board of Directors no longer conformed to the newly introduced Section 93 (2) 3 of the German Stock Corporation Act and was therefore amended in line with the new requirements of the German Stock Corporation Act within the statutory transition period.

No further benefits have been agreed with any members of the Board of Directors in connection with the termination of their appointment. Moreover, no member of the Board of Directors received benefits or promises from third parties relating to his position as a member of the Board of Directors in the past fiscal year.

		Basic Remune	Audit	Personnel	Variable	Travel	Total	Total
Name	Function	ration 2010	Committee	Committee	Remuneration	expenses	2010*	2009*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	5,250.00	936.08	18,936.08	16,148.51
Witt	Deputy Chairman	7,500.00	900.00	600.00	3,750.00	611.40	13,361.40	11,374.00
	The Supervisory
Münch	Board	7,500.00	600.00	0.00	3,300.00	633.90	12,033.90	10,782.64
Dr. Nass	The Supervisory
(until May 11, 2010)	Board	2,729.17	0.00	0.00	3,000.00	660.40	6,389.57	10,112.92
Schulte	The Supervisory
(from May 11, 2010)	Board	4,791.67	0.00	0.00	0.00	0.00	4,791.67	--
	The Supervisory
Staudt	Board	7,500.00	0.00	600.00	3,300.00	124.00	11,524.00	9,900.00
Dr. Sträter	The Supervisory
(until May 11, 2010)	Board	2,729.17	0.00	0.00	3,000.00	457.20	6,186.37	9,929.70
Prof. Dr. Wörn	The Supervisory
(from May 11, 2010)	Board	4,791.67	0.00	0.00	0.00	1,331.56	6,123.23	--
Total		48,791.68	2,100.00	2,100.00	21,600.00	4,754.54	79,346.22	68,247.77

Remuneration of the Supervisory Board

* fixed remuneration, variable remuneration and travel expenses

In the fiscal year 2010, the members of the Supervisory Board received a total of EUR 79.3k (previous year: EUR 68.2k) including travel expenses in remuneration for their work. The remuneration for each individual member can be found in the table above. Dr. Sträter received remuneration of EUR 3.5k for public relations consulting above and beyond this remuneration.

The remuneration of the members of the Supervisory Board is regulated in the articles of incorporation of GRENKELEASING AG and determined by the Annual General Meeting. The Annual General Meeting on May 11, 2010 resolved to make adjustments regarding this. Until then, the members of the Supervisory Board had received fixed annual remuneration of EUR 6,000, the Chairman EUR 9,000.

There was also variable remuneration if a dividend of more than EUR 0.20 was distributed to shareholders. If this occurred, the fixed remuneration was increased by one quarter of the percentage rate by which the dividend per share exceeded EUR 0.20. The variable remuneration component was limited to a maximum of 50 percent of the fixed remuneration of a member of the Supervisory Board. Remuneration increased by EUR 600 for each Supervisory Board member who is also a member of a committee, or by EUR 900 for the Chairman of a committee per year.

Under the new version of the articles of incorporation following the resolution by the Annual General Meeting on May 11, 2010, the members of the Supervisory Board receive fixed remuneration of EUR 7,500 for each full year on the Board, the Chairman receives EUR 11,250, plus EUR 600 for each committee membership and EUR 900 for each committee chaired. If members are only on the Board for part of a fiscal year, the fixed remuneration as well as the remuneration for committee memberships and chairmanships is calculated pro rata temporis.

The members of the Supervisory Board also receive a variable component if a dividend in excess of EUR 0.20 per share is paid to shareholders. In this case, the fixed remuneration is increased by one half of the percentage by which the dividend per share exceeds the amount of EUR 0.20, but in doing so the variable remuneration component does not exceed 100 percent of the fixed remuneration.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance for members of the Supervisory Board. This envisages a fixed deductible of 10 percent per claim, however, subject to a maximum of one and a half times the annual fixed remuneration for all claims per year. The company also reimburses the members of the Supervisory Board for their cash expenses and VAT insofar as they are entitled to invoice the tax separately and actually do so.

Shares Held and Share Transactions by the Executive Bodies

The Directors' Holdings on the balance sheet date December 31, 2010 are summarised in the following table. The members of the Board of Directors do not currently hold stock options in GRENKELEASING AG. Members of the Supervisory Board were not granted stock options and there is no plan to do so. Dr. Hack bought a total of 2,000 shares in GRENKELEASING AG and Prof. Dr. Lipp bought 2,800 shares in GRENKELEASING AG via the stock exchange (Xetra) in February 2010 and July 2010 respectively.

	Shares as of Dec. 31, 2010		Shares as of Dec. 31, 2010
The Board of Directors		The Supervisory Board
Wolfgang Grenke	4,916,619	Prof. Dr. Ernst-Moritz Lipp	23,800
Dr. Uwe Hack	7,000	Dieter Münch	75
Mark Kindermann	52,053	Erwin Staudt	1,000
Total	4,975,672	Total	24,875

Disclosures Pursuant to Sec. 315 (4) HGB

The shares of GRENKELEASING AG are admitted to trading on the Frankfurt Stock Exchange in the Prime Standard, the segment of the regulated market with additional post-admission obligations. The company's issued capital amounts to EUR 17,491,421.86 and is divided into 13,684,099 no-par-value bearer shares with a notional nominal value of EUR 1.28 each. All shares carry the same rights – there are no restrictions on voting rights, preferred shares or special control rights. The Board of Directors is not aware of any other restrictions agreed between shareholders relating to voting rights or the transfer of shares.

The Chairman of the Board of Directors of GRENKELEASING AG, Wolfgang Grenke, held 4,916,619 shares in the company as of December 31, 2010, which represents 35.93 percent of the capital stock. 38.20 percent of the capital stock, which represents 5,227,951 shares, is held by Mr and Mrs Grenke.

The articles of incorporation do not provide for any regulations which deviate from the statutory regulations on the appointment of members of the Board of Directors by the Supervisory Board. These stipulate that members of the Board of Directors are appointed for a maximum of five years. Re-appointment is permitted. The Board of Directors has at least two members. The Supervisory Board determines the number of members of the Board of Directors. It decides on their appointment, the revocation of their appointment and on the conclusion, amendment and termination of contracts of employment to be made with them. The Supervisory Board can nominate a Chairman of the Board of Directors and a Deputy Chairman of the Board of Directors as well as deputy members of the Board of Directors.

In accordance with legal requirements, amendments to the articles of incorporation must be adopted by the Annual General Meeting. Unless otherwise required by legal regulations, resolutions are approved by the Annual General Meeting by a simple majority of votes cast and, if legislation requires a majority of capital in addition to a majority of votes, by a simple majority of the capital stock represented. The Supervisory Board is authorised to decide on amendments to the articles of incorporation that only relate to their wording. In addition, the Supervisory Board is authorised to adapt the wording of Art. 4 of the articles of incorporation governing the amount and division of the capital stock, according to the utilisation of the approved capital or after the end of the authorisation period.

In accordance with the resolution adopted on May 12, 2009 by the Annual General Meeting, the Board of Directors is authorised, with the approval of the Supervisory Board, to increase the Company's capital stock once or several times by May 11, 2014 by up to a nominal amount of EUR 8,500,000 by issuing new no-par-value bearer shares against cash or noncash contributions. The shareholders are to be granted a subscription right. However, in the case of cash capital increases the Board of Directors is authorised, with the approval of the Supervisory Board, to partially or completely disapply shareholder subscription rights for up to ten percent of the capital stock of the company if the issue price of the new shares is not significantly lower than the market price. In addition, the shareholders' right to subscribe in the event of non-cash capital increases due to the purchase of entities, parts of entities or equity investments can be partially or completely disapplied.

In accordance with the resolution adopted on May 9, 2006 by the Annual General Meeting the Company's capital stock was also contingently increased by up to EUR 3,834,690 by issuing 3,000,000 new no-par value bearer shares ("Contingent Capital III"). The contingent capital serves to cover options or convertible bonds with a total nominal value of up to EUR 150,000,000 and a maximum term of ten years which the Board of Directors can issue, with the approval of the Supervisory Board, on one or more occasions until May 8, 2011. Existing shareholders' subscription rights may be disapplied. No options or convertible bonds have been issued since authorisation was granted.

There are no compensation agreements with members of the Board of Directors or employees for the event of a takeover bid. No further disclosures are made pursuant to GAS 15a.27 ("change of control" clause) as they could be of a considerable disadvantage to the parent company.

By way of resolution of the Annual General Meeting on May 11, 2010, the company was authorised in accordance with Section 71 (1) no. 8 of the German Stock Corporation Act to acquire treasury shares of up to a total of ten percent of the capital stock existing at the time of the resolution. The authorisation can be exercised in whole or in part, on one or more occasions, by the company itself or by third parties assigned by the company.

The shares can be redeemed without a resolution of approval by the Annual General Meeting. They may be sold for non-cash contributions. They may also be sold for cash to third parties by other means than via the stock exchange or through an offer to all shareholders, if the sale price is not significantly lower than the market price at the time of the transaction. Utilisation of the various authorisations to issue new shares while disapplying subscription rights may not in total exceed ten percent of the company's existing capital stock at the time of the resolution by the Annual General Meeting. The authorisation applies until May 10, 2015. No shares have been acquired to date.

Corporate Governance

Companies listed in Germany that have their registered office in Germany have a duty under the German Transparency and Disclosure Act ["Transparenz- und Publizitätsgesetz": TransPuG] to disclose the compliance of their corporate governance with the recommendations of the German Corporate Governance Code and to explain any deviations.

Good corporate governance, which manifests itself in value-based, transparent company management and control, is an integral part of how GRENKELEASING AG – i.e. the Board of Directors, Supervisory Board and executive employees – does business. GRENKELEASING AG and the GRENKE Group agree very strongly with the principles of the German Corporate Governance Code and see their implementation as a key factor helping to build trust among all current and future stakeholders, with customers, shareholders, lenders, employees, business partners and the general public.

In the past few years, corporate governance has also become a considerably more important factor in the assessment and valuation of listed companies. It thus contributes significantly to the increase in the value of the company and to securing and extending access to equity markets.

GRENKELEASING AG therefore traditionally complied in full with the recommendations of the Corporate Governance Code. The exceptions, which are listed in the declaration of compliance reproduced below, were only recently drafted and are the result of rights of transition and continuance. The company does not follow the Code's proposals with regard to age limits and diversity either. The Board of Directors and Supervisory Board of the company signed the Declaration of Compliance with the Code on April 26, 2010 – initially in its version dated June 6, 2008 and, since it became applicable, the supplementary version dated June 18, 2009.

The company's current declaration of compliance is reproduced below as part of the Declaration on Company Management pursuant to Section 289a HGB and published on the company's website at www.grenke.de in German and in English. The German Corporate Governance Code can also be viewed there.

Declaration on Company Management pursuant to Section 289a HGB

As a listed stock corporation, we have to submit a Declaration on Company Management pursuant to Section 289a HGB, which contains the Declaration of Compliance pursuant to Section 161 AktG, the disclosures on corporate management practices and the description of the Board of Directors and Supervisory Board's method of operation.

Declaration of Compliance by the Board of Directors and Supervisory Board with the German Corporate Governance Code pursuant to Section 161 AktG

"The Board of Directors and Supervisory Board of GRENKELEASING AG declare in accordance with Section 161 of the German Stock Corporation Act that since issuing its last declaration of compliance on April 27, 2009, the recommendations of the German Corporate Governance Code initially in the version dated June 6, 2008 and, since it became applicable, the supplementary version dated June 18, 2009 have been complied with and will also be complied with in future with the following exceptions:

The company has taken out a directors' and officers' liability insurance for members of the Board of Directors and members of the Supervisory Board, which already provides for a deductible payable by Board members per claim. However, the present regulation does not comply with the regulation recently introduced for members of the Board of Directors in Section 93 (2) 3 of the German Stock Corporation Act and also adopted for the Supervisory Board in Article 3.8 of the German Code of Corporate Governance.

This is why the Board of Directors' existing directors' and officer's liability insurance will be adjusted to the new regulation mentioned above within the statutory transition period. The Board of Directors and Supervisory Board will also propose to this year's Annual General Meeting, that the remuneration of members of the Supervisory Board regulated in Article 10 of the articles of incorporation be amended taking account of the recommendation of the German Code of Corporate Governance in Article 3.8 and the requisite amendment to the articles of incorporation regarding this be resolved.

In deviation from the recommendation in accordance with Article 4.2.3 of the German Code of Corporate Governance, the Board of Directors agreements of incumbent members of the Board of Directors do not provide for a maximum severance payment. The reason for this is that the Board of Directors agreements were concluded before the recommendation in question was included in the German Code of Corporate Governance and consequently enjoy the right of continuance.

Both in the composition of the Board of Directors and in proposals for the election of members of the Supervisory Board, attention is to be paid, among other things, to a specifiable age limit and to diversity in accordance with the recommendations under Article 5.1.2 and 5.4.1 of the German Code of Corporate Governance. The company does not comply with either suggestion, since, in the opinion of the company, neither of these two criteria is suitable for deciding the appointment of members of the Board of Directors or the election of members of the Supervisory Board. Rather, while taking account of the other aspects to which attention must be paid, the knowledge, skills and experience required in the respective area of business or responsibility should be key, in the opinion of the company, to selecting suitable candidates.

Baden-Baden, Germany, April 26, 2010

GRENKELEASING AG

The Board of Directors The Supervisory Board"

Company Management Practices

The company management and monitoring structures of GRENKELEASING AG are as follows:

Shareholders and Annual General Meeting

The Annual General Meeting decides on all tasks allocated to it by law (including election of the shareholders' representatives to the Supervisory Board, official approval of the actions of the Board of Directors and Supervisory Board, amendments to the articles of incorporation, appropriation of profits, capital measures).

The Supervisory Board

The Supervisory Board advises and monitors the Board of Directors. It consists of six highly qualified members, who represent the shareholders of GRENKELEASING AG. The members are elected by the Annual General Meeting.

The Board of Directors

The Board of Directors is the company's management body. It manages the company's business within the framework of corporate legislation and the articles of incorporation adopted by the shareholders. It is therefore committed to the company's interests and bound by the principles of business policy.

Holdings of the Board of Directors and the Supervisory Board

Members of the Board of Directors and the Supervisory Board hold shares in GRENKELEASING AG. The following reportable securities transactions pursuant to Section 15a WpHG took place in the course of fiscal year 2010: Dr. Hack bought a total of 2,000 shares in GRENKELEASING AG and Prof. Dr. Lipp bought 2,800 shares in GRENKELEASING AG via the stock exchange (Xetra) in February 2010 and July 2010 respectively.

Transparency

The business situation and results of GRENKELEASING AG are reported in the Annual Report, the Quarterly Financial Reports and the Semi-Annual Report. Information is also published in ad hoc disclosures and press releases. All notifications and reports are available on the Internet under Investor Relations.

GRENKELEASING AG has created the insider register prescribed in Section 15b WpHG. The persons in question were advised of the statutory duties and sanctions.

Accounting and Audits of Financial Statements

The annual financial statements of GRENKELEASING AG are prepared by the Board of Directors in accordance with the principles of the German Commercial Code (HGB). Having been examined by the Supervisory Board, the approved annual financial statements are published within four months of the end of the fiscal year. The Annual General Meeting selected Ernst & Young AG Wirtschaftsprüfungsgesellschaft/Steuerberatungsgesellschaft (company's name changed to: Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft) Eschborn/Frankfurt a. M. as the auditors for fiscal year 2010. The latter also carries out the review of the Semi-Annual Report for the fiscal year 2010, if this takes place.

Method of Operation of the Board of Directors and the Supervisory Board

The Board of Directors and the Supervisory Board work together closely for the benefit of the company.

The Board of Directors reports to the Supervisory Board regularly, promptly and comprehensively on all issues of corporate strategy, planning, business performance, the financial and earnings situation and on particular business risks and opportunities. Major decisions require the approval of the Supervisory Board. In accordance with the articles of incorporation of GRENKELEASING AG, the Board of Directors is appointed and dismissed by the Supervisory Board.

The key function of the Supervisory Board consists in advising and monitoring the Board of Directors. The Supervisory Board of GRENKELEASING AG meets every quarter; extraordinary meetings and conference calls are also held if necessary. The Supervisory Board has established an Audit Committee and a Personnel Committee.

The Audit Committee

The key function of the Audit Committee consists in supporting the Supervisory Board in fulfilling its monitoring duties with regard to the accuracy of the separate and consolidated financial statements of GRENKELEASING AG, compliance with the legal and statutory provisions within the Group, the qualification and performance of external auditors and the internal control functions. The members of the Audit Committee are Mr Witt (Chairman), Prof. Dr. Lipp and Mr Münch. The members all have particular knowledge in the areas of accounting and compliance.

Personnel Committee

The Personnel Committee is responsible for the preparation and annual review of the remuneration system for the Board of Directors before it is finally approved. The committee also monitors the search for suitable candidates for appointment as a member of the Board of Directors and submits proposals to the Supervisory Board regarding this. The committee prepares contracts with the members of the Board of Directors for approval by the Supervisory Board, particularly with regard to their remuneration. The members of the Personnel Committee are Prof. Dr. Lipp (Chairman), Mr Staudt and Mr Witt.

RISK MANAGEMENT REPORT

General

The risk management system at the GRENKE Group has the function of systematically identifying, documenting and assessing risks to the parent company and subsidiaries as well as disclosing them. It is designed to enable employees and management to address risks responsibly and make the most of the opportunities that present themselves. The Group's risk management is a coordinated process at all relevant levels of its organisation and is closely coordinated with the activities of the Group's divisions. The functionality of the risk management system and the status and results of its measures are reviewed by the internal audit department. The internal audit department reports directly to the Board of Directors. The Board of Directors bears full responsibility for the monitoring of and compliance with risk management in the Group.

The risk management system introduced in 2003 has organically developed further since then. It is run via a risk management tool on the GRENKE Group intranet. Risk surveys in which the employees of the Group are requested to assess actual and potential risks are regularly carried out using this tool. If risks are to be rated as relevant, countermeasures are determined to control these risks.

In addition to regular risk surveys and ad hoc risk reporting, comprehensive instruments are used for handling risks in financial and risk controlling in particular. These include monthly calculations of finance market risk positions and the regular presentation and discussion of the interest risk and liquidity position. The risk work group meets regularly and at least three times a year. In addition to the CEO and CFO, the risk work group includes the managers responsible for accounting, administration, quality management and controlling plus a branch office manager.

A risk inventory, i.e. a stock-taking of all relevant and significant risks, is performed at least once per year as part of risk controlling. In particular, this involves an analysis of the latest risk surveys and recent ad hoc risk reports. Changes or new risks are communicated immediately.

Minimum Requirements for Risk Management

Since the 2009 Annual Tax Act came into effect, leasing companies have also had to comply with the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)] published by Deutsche Bundesbank and the German Federal Office for Supervision of Financial Services (BaFin). These minimum requirements include qualitative expectations of risk management to be implemented by financial service providers in line with the scale, type, extent, complexity and risk content of their business. Full implementation was required for the first time for 2010, transition regulations still applied in the previous year. The GRENKE Group had largely implemented the appropriate risk management and controlling processes demanded by MaRisk for the key types of risks – counterparty, market value, liquidity and operational risks as early as 2009; the process was completed in 2010.

GRENKELEASING AG, based in Baden-Baden, is the parent company of GRENKE BANK AG, also based in Baden-Baden, which is subject to the regulatory requirements of the German Banking Act [Kreditwesengesetz (KWG)] and the German Solvency Regulation [Solvabilitätsverordnung (SolvV)]. In addition to the parent company, GRENKELEASING AG and GRENKE BANK AG, the financial service providers GRENKEFACTORING GmbH and Grenke Investitionen Verwaltungs KGaA are also subject to the KWG and to BaFin regulation. In 2010, GRENKELEASING AG announced that it would be utilising the waiver permitted under Section 2a (1) KWG for the two last-mentioned entities for the first time. This permits subordinate entities to apply to the BaFin to refrain from applying certain supervisory provisions, if the requisite organisational requirements are complied with in full by the parent company.

Our petition to BaFin to identify the regulatory consolidated group with the consolidated accounting group was approved in 2009. Thus, all the Group companies of the GRENKE Group, i.e. the parent company GRENKELEASING AG and all its German and international subsidiaries are included in the regulatory consolidation group.

The GRENKE Group's Risk Policy

Our risk policy aims to be able to measure risks which arise from operating activities precisely, to take them and actively manage them. We pay attention not just to individual risks but also to potential risk clustering in particular and wider interdependences. Our risk management benefits from a long track record.

We are able to measure the risks of default in our business very accurately. Our risk strategy aims to diversify our receivables widely, something which is already an integral part of our business model. Our focus on small-ticket business (leasing, banking, factoring) means there is no risk concentration, for example, in our lease portfolio or in new business. This applies to both customers and industries. Nor are we dependent on manufacturers and we have diversified our refinancing among various banks and our own sources of capital. Our international growth strategy also leads to an even wider diversification of our receivables portfolio.

Asset and earnings risks resulting from open residual values are largely avoided in our leasing model. Contractual risks are limited by only holding full payout leases in our portfolio and because we usually do not enter into maintenance or warranty risks. While we calculate the residual amounts for the recognition of lease receivables in line with IAS 17 as part of IFRS accounting, our consistently positive profit from disposal in normal economic situations shows that we do not overstate the residual values of portfolios in these calculations.

A key element of our risk management system is extensive quality management, which also affords the additional benefit of ensuring a high level of service quality and satisfaction among our customers and business partners. Its systematic and ongoing improvement is a part of our corporate philosophy. Above all, this includes our scoring process to evaluate credit risks arising from lease agreements, the evaluation of our reseller relationships based on counterparty risks, the documentation of our business processes and the development of IT programmes to meet our specific needs in administering contractual arrangements with our lessees and franchise partners. In addition, the correctness of financing (avoidance of double financing, actual acquisition of lease assets) is reviewed and documented by external advisors every six months.

The aim of risk management is not to completely avoid all risks but rather to allow them to be handled systematically. The following principles are key in this:

• avoidance of transactions that are incompatible with the risk strategy of the Group
• income prospects and risks must be in reasonable proportion to each other
• risk clusters should be largely avoided
• derivatives are used for hedging purposes only, i.e. to limit a risk position. The earnings prospects should play no role in this.
• the management of bad debt that arise with the aim of limiting losses
• forms and agreements with third parties must be subject to legal review

Risk-bearing Capacity

The risk-bearing capacity of the Group is determined on a quarterly basis. Sufficient risk-bearing capacity exists if the material risks on a continuous basis are not higher than the available risk cover. The risk cover essentially consists of the Group's IFRS equity. It is broken down into several levels to which individual risk items are assigned in line with the valueat-risk model.

In normal loss situations, the total risk potential and the individual risks should not exceed level 1 risk cover, which consist of pre-tax earnings and the provision for possible loan losses. In normal loss cases, the confidence level is 84 percent; at level 5 it is 99.9 percent.

Emergency Concept

The emergency concept is documented in the form of an emergency plan that details all the measures to be taken in the event of an emergency and all the necessary information. It is designed to reduce the extent of possible losses and includes plans for both the continuation and restart of business. The emergency concept can be accessed by the employees concerned not just in digital form but also in paper form at several locations.

A crisis staff, consisting of a manager and his team, serves as a central instrument in reacting to a potential crisis. The responsibilities of the crisis staff can be broken down into the areas of situation assessment, coordination of measures, communication with parties involved, activation of measures to restart processes and restoring operating continuity.

In order to ensure the suitability, efficiency and topicality of emergency planning and emergency and crisis management, the precautionary measures, organisational structures and the different plans will be regularly reviewed in tests, exercises and simulations. The tests take place at least once per year and cover all salient points.

Counterparty Risks and Credit Risks

Receivables Volume

The receivables volume in the GRENKE Group breaks down as follows in line with IFRS:

EURk	Dec. 31, 2010	Dec. 31, 2009
Current receivables
Cash on hand and balances with banks	78,297	109,865
Lease receivables	508,325	459,315
Financial instruments with positive market value (short term portion)	1,255	1,238
Other current financial assets	77,434	68,821
Trade receivables	3,845	3,046
Total current assets	669,156	642,285

EURk	Dec. 31, 2010	Dec. 31, 2009
Non-current receivables
Lease receivables	819,899	675,564
Other non-current financial assets	43,831	82,615
Financial instruments with positive market value (long term portion)	1,115	785
Total non-current assets	864,845	758,964
Total receivables assets	1,534,001	1,401,249

Cash on hand and balances with banks include central bank balances of EUR 15,157k as of December 31, 2010. The remaining cash on hand and balances with banks include (cash of up to EUR 7k) balances at German and international banks. The financial instruments with positive fair values represent the Group's derivatives carried at fair value as of the reporting date.

Leasing Business

Counterparty risks are defined in the Group as possible losses on receivables from business partners. Since 1994, we have assessed the creditworthiness of our lessees using a scoring system. The quality of this system has been consistently and sufficiently proven by the levels of loss experienced since its implementation, particularly during the recent global financial market crisis.

This applies to our established domestic business as well as to new international markets that we have been gradually entering. A review is performed annually based on the actual loss figures using automated database reports which contain both publicly available data and internally generated historical data. The scoring system is enhanced on an ongoing basis by specialist staff. A further key element of risk mitigation is the fact that no single lessee constitutes more than a one percent share of new business in one fiscal year.

Even in years that experienced very low actual loss rates, we continued to factor the average loss rate of the previous recession into our contribution margin 2 management. Moreover, the Group is structured in such a way that it will continue to cover the operating costs of the company even if the loss rate increases significantly beyond this point. Loss rates are measured at all times throughout the Group.

This is done by comparing the historical acquisition costs of the volume of leased assets and the contracts that have become bad debt over a defined period. Over time, this analysis serves as an early indicator of expected defaults and thereby the quality of the portfolio. The company aims for a situation where the calculated losses of the contribution margin calculation come as close as possible to the actual loss rate. The main risks in the leasing business are managed by the scoring system. This is combined with a hierarchical authority structure based on volumes and extending from sales employees to the Board of Directors.

The Group uses a portfolio approach for contracting lease agreements. The differentiation is as follows:

• lessees: highly diversified portfolio of lessees that are almost entirely business or corporate clients
• resellers/manufacturers: no individual dependencies
• leased assets: no significant outstanding residual amounts (full cost recovery); maintenance or warranty risks are typically borne by suppliers/manufacturers
• lease contracts: high number of current agreements with a portfolio duration below 2 years and a focus on small tickets below EUR 25k (95 percent of all leases)
• sales channels: represented in virtually all sales channels
• geographic: represented in all major European economies with locations in 20 countries

Lending Business at GRENKE BANK AG

In the past, the main financial risk at GRENKE BANK AG was the risk posed by its lending activities prior to being taken over. This old business has now been significantly reduced – as of December 31, 2010, the credit volume of GRENKE BANK AG (credit as defined by Section 19 (1) KWG[Kreditwesengesetz]) was EUR 6 million (previous year: EUR 10 million).

The remaining risks to the GRENKE Group resulting from this are decreasing continuously. The bank's new business model is guided by Group strategy: its asset business is currently still focused on the purchase of lease receivables from the Group. GRENKE BANK AG also gives people wishing to start their own business easy and rapid access to "KfWStartGeld". With this programme, KfW-Mittelstandsbank is supporting new business start-ups, self-employed professionals and small companies that have existed for no more than three years with up to EUR 50,000 per inquiry.

Factoring Business of GRENKEFACTORING GmbH

Owing to risk considerations, we essentially offer small-ticket factoring as "notification factoring". As opposed to nonnotification factoring, this also means additional security as debtors will only be discharged in respect to their payment obligations if they pay directly to us. In the event of non-notification factoring, payments discharging obligations can usually only be paid to a bank account pledged to us. However, in both cases, GRENEKEFACTORING assumes the default risk of the purchased receivables.

Financing of Franchise Companies

The franchise companies of the GRENKE Group operate on their respective leasing markets as lessors. They generally operate in the small-ticket IT segment, though we also offer car leasing under our franchise model. The leases contracted by the franchise companies are predominantly refinanced by the GRENKE Group. Some of the franchisees also conclude lease agreements within the framework of a commission model meaning that the GRENKE Group features directly as a lessor. The basis for this is formed by the refinancing framework agreement concluded between the franchisee and the GRENKE Group. If refinancing is offered, it is provided in the form of either loans or as forfaiting. The instalments in future lease instalments are usually discounted at the refinancing interest rate.

Derivatives

The GRENKE Group uses derivative financial instruments exclusively and only when ordinary business activities entail risks that can be minimised or eliminated by using suitable derivatives. Interest rate swaps, caps and forward exchange contracts are used in the GRENKE Group. Each derivative contract is subject to an economic hedged item with a correspondingly opposite risk position. The partners are always only banks of prime credit standing. We regularly ensure a prime credit standing when selecting partners. Therefore, and on account of the diversification among our contract partners, counterparty risk plays a subordinate role.

Financial Market Risk

Fluctuations in market prices on the financial markets can have a significant effect on cash flow and net profit. In particular, changes in interest rate markets and in certain currencies can affect the GRENKE Group. We actively manage these risks as part of our constant risk management and monitoring of interest rate and currency positions. We use derivative financial instruments only to manage the risk positions of underlying contracts.

In addition to assessing risk-prone, market-sensitive positions such as a floating rate note or a receivable in a currency other than the euro, we also consider sensitivities and elasticities to be important in handling financial market risk. We aim to limit the sensitivity of net profit to the volatility of market prices. This means aiming for the lowest possible dependency of net profit on the development of the interest rate and currency markets while maintaining a good balance between the cost and benefit of hedge relationships. The following parameters are used for risk analysis:

• a concurrent, parallel increase or decrease in the value of the euro compared with all foreign currencies by ten percent
• a parallel shift in term structures of interest rates by 100 basis points (1 percentage point)

The potential economic effects identified in the analyses are estimates. They are based on an artificial market condition and in particular on the assumption that all other conditions will remain the same. This means that the shift in the term structure of interest rates is viewed independently of any related effects on other interest rate-induced market developments. The actual effects on the Group's income statement can significantly differ from this as a result of how the market really develops.

The main market price risks and the outstanding interest rate and currency risk items are discussed at least once per month at Board of Directors level or in Controlling on the basis of ongoing reports. Any action required is carried out immediately.

The GRENKE Group is not exposed to risks from changes in share prices as the Group does not hold any listed shares. Changes in the prices of commodities also have no effect on the risk position as the Group holds nothing in these categories.

Interest Rate Risk

Identification

The interest rate risk for the operations of the GRENKE Group stems mainly from the sensitivity of its financial liabilities to changes in market interest rates (interest rate risk). We endeavour to limit the impact of such risks on interest expenses and net interest income by using appropriate derivatives. Financial liabilities primarily consist of floating-rate debentures, ABCP programmes and the ABS bond. Further information on these risks is presented in the "Financial Risk Strategy" section in the notes to the consolidated financial statements.

Sensitivity to financial performance is key to the identification of an open risk position, which leads to corresponding protection using derivative instruments. This means that overall we endeavour to achieve net interest income which demonstrates minimal sensitivity to interest rates.

According to estimates from the sensitivity analysis, a parallel shift in the interest rate curve by plus 100 basis points for the past fiscal year would lead to a EUR 631k (previous year: EUR 418k) reduction in earnings before tax. This is equivalent to approximately 0.8 percent (previous year: 0.6 percent) of net interest income.

Instruments

Issuing bonds and contracting interest rate swaps are elements of a financing strategy that separates refinancing from interest rate hedging in order to obtain maximum flexibility for refinancing activities. The resulting risks (variable cash flows) are then hedged by appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and designated as hedges in accordance with IAS 39. As all interest rate derivatives used in hedge accounting have been proven to be virtually 100 percent effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised virtually fully in equity.

Under the ABCP programme with DZ-Bank (CORAL) and Hypovereinsbank/UniCredit Bank AG (Arabella), GRENKELEASING AG is responsible for interest rate hedging and thus interest rate risk management. The ABCP transaction also serves here as an underlying transaction with a floating rate and cash flows are being hedged by deploying interest rate swaps. Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes. However, the contracting parties are the SPEs. Therefore we do not account for the derivatives and also do not apply hedge accounting.

The parameters of the underlying contract, i.e. those of the financing (liability), are considered first and foremost when contracting interest rate swaps. For this reason, the interest rate terms of the swaps on the variable side are largely identical to those of the hedged item. Furthermore, the volume contracted in the swaps will never be greater than the volume of the hedged financing. Existing and planned refinancing transactions are actively incorporated into risk management and the related hedges are subject to ongoing analysis through quarterly effectiveness tests using a method permitted under IFRSs. These tests have proved highly effective in the past.

The fair value of the interest rate swaps recognised in hedge accounting under IAS 39, which have a negative fair value of EUR 1,172k on the balance sheet date (previous year: negative fair value of EUR 3,715k), would have had a negative fair value of EUR 951k on the balance sheet date (previous year: negative fair value of EUR 2,988k) if the above interest rate scenario were assumed (parallel shift in interest rate curve of 100 basis points). Due to hedge accounting under IAS 39, the corresponding change would largely be shown in equity or in hedge reserves.

A corresponding downwards shift in the interest rate curve – while in the sensitivity analysis a negative interest level is not permitted, i. e. a minimum market rate of 0.0 percent – would lead to a rise of EUR 889k (previous year: rise of EUR 1,903k) in earnings before tax. In terms of the fair value measurement of the interest rate swaps in hedge accounting, this interest rate scenario would result in a fair value which was lower by EUR 223k (previous year: EUR 788k), which would mostly be taken straight to equity.

The interest rate risk is usually calculated once per month as an open position. This is done by comparing the floating and fixed-rate assets with the floating and fixed-rate liabilities. The elasticity of the floating rate positions is 1, as almost all reference interest rates reflect 1- to 3- or 6-month Euribor and are sufficiently mapped. In addition to the balance sheet items and their planned pattern of amortisation, the latest yield curves, exchange rates and all derivative items are also included in the calculations. The results are regularly analysed at Board of Directors level.

Currency Risk

The GRENKE Group is exposed to currency risks because of its European activities and the growing significance of its international markets. Derivatives are used to mitigate or eliminate these risks. The derivatives used in this context are disclosed under financial assets or financial liabilities at their fair value as of the balance sheet date. Reassessment due to the translation from a foreign currency of the net profit of Group companies in non-euro countries has not been necessary due to the relative insignificance of the companies concerned.

Currency risks currently exist in financing for Group companies or franchisees outside the euro area. These risks are generally hedged as soon as the amount of the financing volume outstanding reaches around EUR 1,000k. This amount was exceeded in Poland, Denmark, the UK, Norway, Sweden as well as in the Czech Republic and Hungary. Thus the exchange rate for financing in Polish zloty, pound sterling, Hungarian forint, Swiss francs (solely for the refinancing of Hungarian leases, which are contracted in Swiss francs), Danish and Norwegian krone, Swedish krona and Czech koruna for holding lease receivables of the respective subsidiaries is known and contracted for the main part.

However, in the course of the companies' growth there are risks in respect to open tranches which are under the hedging threshold. The outstanding volume of financing for the franchise partner in Romania is still insignificant, with the result that no currency hedging has been undertaken.

Neither Switzerland nor, to a certain extent, the UK now is mentioned in this context, as we have an agreement with a Swiss bank to provide lease refinancing in local currency. Also, in the context of economic hedging, there are cash flows between the currencies.

Overall, risks arise from currency fluctuations relating to financial assets and receivables in foreign currency, from pending transactions in foreign currency and from the translation of Group companies' financial statements. The use of derivatives (only forward exchange contracts are used for currency risk) offsets the market sensitivity of hedged items (i.e. cash flows from financial assets and receivables). Ideally, the instruments achieve an almost full offset. For the foreseeable future, hedge accounting will not be used for currency positions.

Value-at-risk

To identify open positions that are subject to currency risk, foreign currency cash flows are compared against the forward exchange contracts concluded. The cash flows from the refinancing of franchise operations in foreign currency, the cash flows or refinancing of Group companies in foreign currency and the cash flows of forward exchange contracts are relevant for the calculation of open risk positions. The outstanding loan in Swiss francs, repaid in full at the end of the fiscal year, was not included in the calculation.

If open cash flows are identified that exceed EUR 500k in total when translated at current rate then these are hedged. The value-at-risk (VaR) method is used to calculate the risks of open currency positions. This calculates the value of the loss not exceeded on a specific risk position at a given probability and time horizon. This value must be covered by the risk cover assets. Standard deviation and the average of historical time series for the last two years are calculated for each currency, with the help of which the value-at-risk can be determined for the currencies.

It must also be taken into account that the contractually agreed term of a lease must be hedged. With a lease volume outside the euro area of EUR 148.2 million as of the reporting date, however, even minor deviations such as extraordinary repayments, cancellations as well as delays in instalment payments can accumulate negatively for the entire portfolio merely on account of unfavourable transaction delays caused by banks in periods of above-average currency fluctuation.

For our foreign currency sensitivity analysis we assume that the euro will gain or lose value against all currencies relevant to the GRENKE Group. As of December 31, 2010, an appreciation of the euro of ten percent would have caused consolidated earnings before taxes to rise by EUR 1,200k (previous year: EUR 59k). A respective depreciation of the euro would have led to a EUR 1,171k (previous year: EUR 41k) decrease in earnings before taxes according to estimates and assumptions made in the sensitivity analysis. In total, assets negatively impacted by foreign exchange rates totalled around EUR 175 million (previous year: EUR 65 million) on the balance sheet date. In terms of nominal volume and new lease business, the pound sterling, Polish zloty and Swiss franc are the most significant currencies.

An isolated analysis of the depreciation of the euro against pound sterling or the Polish zloty would have had a positive earnings effect of EUR 602k for the pound and EUR 254k for the zloty. An appreciation of ten percent would have entailed an earnings reduction of EUR 587k for pound sterling positions and EUR 249k for Polish zloty positions. Given the same appreciation of the euro, positions in Swiss francs – including the repaid building loan and the resulting effects given an equivalent share price performance – would have decreased pre-tax profits by EUR 137k, while depreciation would have led to a EUR 131k increase.

Refinancing Risks

We refinance ourselves independently of individual banks and also have direct access to the capital markets. As a result, we are in a position to ensure that our liabilities are well diversified and to work together with several banking partners.

Our range of refinancing instruments is very broad. It ranges from traditional bank financing to revolving loan facilities and asset-backed commercial paper (ABCP) programmes. This financing is fixed for defined periods with agreed terms and maturities so that there are no risks relating to their availability within the agreed framework.

In addition, we have direct access to the capital markets thanks to our ABS bond and the debt issuance programme and we exploit the options of using the GRENKE BANK AG's deposit business to finance our activities. Given these instruments, we can make use of the most attractive financing channels offered at any time on the capital markets.

The ABCP programmes are financing loans based on defined underlying assets, i.e. lease receivables. We can currently use them to refinance our business in Germany, France and Austria. Moreover, for the UK, Poland and Switzerland, we have conventional bank financing that also has such an asset-oriented structure. The other refinancing instruments described are not asset-oriented, making them appropriate for use in line with our business performance as we see fit.

Following the limited and very slow easing in the situation on international financial markets in the previous year, the supply of funding has improved perceptibly in the reporting year. However, the financial markets remained subject to distortions in 2010 as well. Firstly, the search for attractive returns markedly reduced interest rate spreads between benchmark government bonds in some cases, for example German government bonds and private sector bonds. Secondly, at the same time, the spreads between government bonds issued by countries with substantial structural deficits and benchmark government bonds rose to record levels. However, the refinancing of the GRENKE Group was still not materially affected by this; its financing requirements were met in full, speedily and at attractive conditions even in the reporting year.

Liquidity Risks

The management of liquidity risks ensures that the Group is always able to meet its payment obligations on time.

Short-term Liquidity

Liquidity risk management comprises the day-to-day management of incoming and outgoing payments. A "liquidity overview" is prepared for short-term reporting on a weekly basis, i.e. on the first working day of each calendar week, and discussed at Board of Directors level. It includes all relevant information on short-term cash developments in the coming weeks. The weekly liquidity overview provides the current liquidity status of the Group. It focuses on cash flows from leasing business.

Reporting distinguishes between four liquidity levels:

• cash liquidity: credit on all bank accounts plus overdrafts and all "immediate" (one-week) cash flows
• liquidity 1: cash liquidity plus cash flows due or received within one month. This also includes tied-up assets that can be monetarised within this period
• liquidity 2: liquidity 1 plus cash flows due or received within three months. This also includes tied-up assets that can be monetarised within this period
• liquidity 3: liquidity 2 plus cash flows due or received in more than three months. This also includes tied-up assets that can only be monetarised in a period of more than three months

Medium and Long-term Liquidity

In addition to short-term liquidity management and weekly reporting, dynamic liquidity planning is also prepared usually monthly or at least once per quarter. The aim of cash planning here is to map the liquidity status for the coming periods. There is a more detailed presentation at quarterly level and at least for the next two years. As the duration on the assets side of the portfolio is roughly the same as this period, this constitutes a suitable parameter for liquidity management at Group level.

Operational Risks

The GRENKE Group defines operational risks as the possible occurrence of losses in connection with contractual agreements, employees, technology and IT, failure or collapse of infrastructure, customer relations and cooperations, projects and external influences. This does not include general business and reputation risks. Operational risks are essentially controlled with the Group's risk profile management. This is supplemented by regular employee surveys using the risk management tool on the Group's intranet. Their assessments of operational risks are therefore included in risk profile management on an ongoing basis.

Certification

TÜV Management Service GmbH certified our company in line with DIN EN ISO 9001:1994 in 1998. Our quality management system was tested and certified in 2010 by Technical Control Association officers from TÜV Management Service GmbH in accordance with the new standard DIN EN ISO 9001:2008. In addition to the German branches, the subsidiaries in Austria, France, the Netherlands, Switzerland and Spain, GRENKEFACTORING GmbH, the Romanian franchisee, GRENKELEASING SRL, the Hungarian franchisee, Grenkeleasing kft, and Grenke Investitionen Verwaltungs KGaA, which is responsible for asset sales, have also been certified.

The Board of Directors regularly assesses the effectiveness of the management system. Any necessary corrective measures are taken promptly. The current audit report dated September 21, 2010 confirms that GRENKELEASING AG (including the above mentioned subsidiaries and franchise partners) have an effective management system, which operates very well. According to the report, the requirements of ISO 9001:2008 are met.

Any original lease contracts which have not been scanned in are kept in fireproof cabinets or safes. Thus, even in the event of damage to property, sufficient precautions have been taken. Contract data is stored and updated in our IT system, mainly using programs specially developed for this purpose. Original contract data is stored both in branch offices as well as in the central contract management division in Baden-Baden, Germany. Automatic backup programs and power interruption facilities safeguard data maintenance. IT systems play an important role in the processing and management of our leasing business. As such, the IT organisation and processes are subject to regular internal audits.

Sales Risk

Ongoing marketing measures serve to mitigate sales risk. These include:

• gathering information
• product development
• procedural improvements
• developing sales channels

During the history of our Company, which spans more than thirty years, we have gathered extensive experience in developing and managing our sales channels, which has enabled us to achieve more than lasting high growth: we now view this experience and the company reputation we have built up as an important market entry barrier for potential competitors as well.

The draft of the International Financial Reporting Standard (Accounting for Leases), which is the subject of intense discussion in the leasing sector and which stipulates, in principle, that each leased item must be accounted for by the lessee (either as an asset or as a right of use on the assets side and the matching payment obligation on the liabilities side), could affect the investment propensity of the companies in question in such a way that leasing was viewed as a less attractive alternative when making decisions. However, as far as we are aware at present, the IFRS regulation will only affect a small number of GRENKE clients. Typically only those lessees that have access to the stock market via shares or bonds are required to prepare their accounts in accordance with IFRS. Our clients – small and medium-sized enterprises – are independent of the stock market and usually prepare their accounts in accordance with local accounting standards. The risks of the IFRS draft being implemented are therefore likely to be limited both for clients and with regard to accounting requirements within the Group.

On the contrary, we believe that the proportion of IT expenditure devoted to leasing in our target market will even continue to increase in the medium to long-term. In anticipation of the more stringent capital requirements imposed by the future Basel III regime, banks are likely to be restrictive in granting financing even after the financial crisis.

Key Features of the Internal Control System and the Risk Management System of the GRENKE Group in Terms of the Accounting Process

As a listed corporation as defined by Section 264d HGB, we are required under Section 289 (5) HGB to describe the key features of the internal control and risk management system with regard to the accounting process.

The internal control and risk management system with regard to the accounting process and the consolidated accounting process has not been defined by law. We understand the internal control and risk management system as a comprehensive system and follow the definitions of the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW), Dusseldorf, of the internal control system for accounting (IDW PS 261 (19) f.) and the risk management system (IDW PS 340 (4)). These define an internal control system as the principles, procedures and measures introduced in a company by its management geared towards the organisational implementation of management decisions:

• to ensure the effectiveness and efficiency of business activities (including the protection of assets, which extends to preventing and covering asset losses),
• to ensure the correctness and reliability of internal and external accounting and
• to ensure compliance with the legal provisions relevant to the company.

The risk management system includes all organisational regulations and measures for risk detection and the handling of risks of business activity. The following structures and processes have been implemented in the Group with regard to the accounting and consolidated accounting processes:

The Board of Directors bears full responsibility for the internal control and risk management system with regard to the accounting and consolidated accounting processes. All the companies included in the consolidated financial statements are also included into a firmly defined management and reporting organisation.

The principles, structure and process organisation and the processes of the internal control and risk management system for accounting throughout the Group are documented in a manual that is adapted in line with external and internal developments at regular intervals.

Regarding the accounting and consolidated accounting processes, we consider such features of the internal control and risk management system to be significant that can have a material effect on the Group's accounting and the overall statement of the consolidated financial statements including the Group management report. In particular, these are the following elements:

• the identification of significant risk fields and control areas of relevance to the Group-wide accounting process
• controls to monitor the Group-wide accounting process and its results at the level of the Board of Directors and at the level of the companies included in the consolidated financial statements
• preventative control measures in the finance and accounting system of the Group and of the companies included in the consolidated financial statements and in the operative, performance-oriented company processes that generate significant information for the preparation of the consolidated financial statements including the Group management report, including a separation of functions and of pre-defined approval processes in relevant areas
• measures that safeguard proper IT-based processing of matters and data relevant to Group accounting
• the establishment of an internal audit system to monitor the internal control and risk management system for the consolidated accounting process

The GRENKE Group has also implemented a risk management system for the Group-wide accounting process that contains measures to identify and assess significant risks and corresponding risk-mitigating measures to ensure the correctness of the consolidated financial statements.

The risk management system established throughout the Group for the accounting process thereby guarantees the preparation of accurate and reliable information for the public.

Risk Summary

The Group already largely implemented the Minimum Requirements for Risk Management published by Deutsche Bundesbank and the German Federal Office for Supervision of Financial Services in 2009. This process was completed in 2010. Sufficient precautions have been taken to offset identified counterparty risk, credit risk and similar risks arising from our leasing business. The corresponding write-downs, valuation adjustments and provisions disclosed in the annual financial statements were recognised at an appropriate level using conservative benchmarks. With respect to the future development of GRENKELEASING AG and its subsidiaries, there are no particular business-related risks exceeding the normal measure.

SIGNIFICANT EVENTS AFTER THE END OF THE FISCAL YEAR 2010

There were no events of particular significance to be reported after the end of the fiscal year.

REPORT ON FORECASTS AND THE OUTLOOK FOR THE GROUP

Economic Environment

In their autumn 2010 reports, the economic research institutes highlight the regional differences in the growth in the global economy. They make clear the continuing global risks posed by the actual threat of an economic downturn in the USA and refer to the substantial potential for inflation caused by significant overheating in China and the impact on the global economy of a possible change in policy towards limiting growth. There are also particular economic risks posed by the problematic indebtedness of several countries, particularly in the euro area, which may also affect our business adversely.

By contrast, evaluations of the German economy are extremely positive. The institutes describe Germany as the engine driving the European economy. As a matter of fact, Germany achieved growth in real gross domestic product (GDP) of 3.6 percent in 2010. By contrast, growth of only 1.6 percent in total is expected for the EU-27 countries and 1.3 percent for the euro area. The Council of Experts has issued an even more subdued forecast for the euro area and expects an increase of just 0.9 percent here.

The upturn in the German economy gained significant breath and resilience in the course of the second half of 2010. Because there has been only a slight change in export momentum, the growth rate in production has scarcely slowed in the first few months of 2011; at the same time stimulus has been provided by a pick-up in domestic demand resulting from the buoyant employment market.

The unemployment rate is at its lowest level since the reunification boom at the beginning of the 1990s. Persistently favourable monetary framework conditions are continuing to have a positive impact. The federal government is therefore expecting the upturn in Germany to continue with an increase in real GDP of 2.3 percent for 2011. With a forecast of 1.4 percent, the German economic research institutes are expecting far less dynamism from the EU-27 in 2011 as well. The same is true of the euro area where they are only forecasting growth of 1.3 percent.

Opportunities and Risks

The following report summarises the opportunities and risks forecast for the Group and its segments of leasing, banking and factoring business. The fundamental statements concerning domestic leasing business also apply to the reportable leasing business segments in international markets.

Following the current economic upturn in Europe and the world, the previous risks facing our business have diminished. This is particularly true of the earnings risks resulting from bad debts and the risks to the Group's growth and consequently a possible under-utilisation of our capacity.

The opportunities for additional growth clearly predominate and losses should have peaked, as was clear from developments in fiscal 2010. We also continue to benefit from a reduction in competitive intensity, since other providers are being more cautious in their positioning or have withdrawn entirely from the business. We are therefore confident of being able to continue achieving attractive contribution margins for the respective risk classes – even if interest rates rise – in future.

Refinancing risks have also reduced significantly. Firstly, our success in raising funds even during the financial market crisis documents our very resilient standing in capital markets. With GRENKE BANK AG, we also have an additional refinancing instrument, which is largely independent of the volatilities in capital markets. And last but not least, only a relatively small amount of our debentures and bonds will be due for repayment in 2011 meaning that the refinancing requirement for fiscal year that has just started is lower than average.

With regard to refinancing lease receivables, the consolidated Group is subject to interest rate risks to only a limited extent as the refinancing – if subject to a floating rate at all – is hedged using derivatives. In new business, however, risks may arise as a result of changes in interest rates and spreads.

The time lag with which we pass on interest rate changes to customers in particular can have a temporary impact on the profitability of new business. We are maintaining our cautious – medium-term – planning which includes a recovery in interest rates. On the other hand, however, we continue to expect that we will be able to take future fluctuations in refinancing costs into account in our conditions and thereby limit the risks to earnings.

Owing to the very strong growth in our international markets, including non-euro countries, changes in exchange rates are also increasingly playing a role in our business. Firstly, these are resulting from the translation of the capital of subsidiaries in non-euro countries and are affecting consolidated equity. Secondly, they result from the fact that the Consolidated Group is refinanced mainly in euro, and therefore there is a disparity between the Consolidated Group's refinancing, on the one hand, and receivables from lease customers on the other (indirectly through internal refinancing).

Although we are also continuing our conservative risk policy in terms of currency risks and hedge all such risks as far as economically feasible, temporary effects in particular cannot be completely ruled out. This is due, for example, to the fact that hedged foreign currency cash flows can deviate from realised cash flows on account of delays in payment, early redemption and terminations and therefore must be adjusted or dissolved. If there are strong fluctuations in the respective currencies, this can also have a tangible effect on earnings.

Forecast Business Development

Fiscal Year 2011

We are very confident regarding the fiscal year 2011. Having been driven by the extraordinary concurrence of the relatively low base of the recessionary year 2009, the very rapid economic upturn in 2010 and little competitive intensity in our international markets in fiscal year 2010, we expect growth to normalise in 2011. Notwithstanding this, we again expect to achieve growth in new business in the GRENKE Group including franchise partners above our long-term target of at least ten percent and to achieve more than 20 percent in this fiscal year.

The net profit for the period should increase significantly, reaching EUR 33 to 36 million. This sharp rise in profits is due to the fact that the impact of income from the high-margin new business concluded in previous years is felt increasingly over the term of these contracts.

At the same time, the loss rate should tend to decrease further as the economy improves. Higher income will, as in 2010, be faced by further increases in operating and administration expenses, since we shall press ahead with our continuous international expansion in 2011 too. The increase in expenses will, however, be flatter than that in income, meaning that, as shown, we expect profits to grow strongly overall.

Subsequent Years

The key factors affecting business development in 2011 will also apply, in principle, to subsequent years. We will stick to our growth course. We will continue to strive for sustainable growth in new business in the GRENKE Group including franchise partners of more than ten percent per year. As a pan-European company, we will also clearly shape our future growth at a European level. And in the medium-term we shall also look beyond the borders of Europe.

The considerable geographic diversification achieved meanwhile makes us largely independent of the developments in individual countries. As the significance of our international business continues to grow, this will naturally also apply to the German leasing market. We will systematically take advantage of the strong growth prospects in countries that currently only have low levels of lease penetration and countries in which we have only achieved a small market share at present. We will continue to manage our new business with a high contribution margin 2 throughout the economic cycle, thereby ensuring the Group's performance and a sustainable return on equity of 16 percent.

Baden-Baden, Germany, February 1, 2011

The Board of Directors

CONSOLIDATED INCOME STATEMENT FOR FISCAL YEAR 2010

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2010	Dec. 31, 2009
Interest and other income from financing business	3.1	124,549	114,566
Expenses from interest on refinancing and on deposit business	3.1	44,520	42,785
Net interest income		80,029	71,781
Settlement of claims and risk provision	3.2	−33,724	−31,189
Net interest income after settlement of claims and risk provision		46,305	40,592
Profit from insurance business	3.3	22,236	20,301
Profit from new business	3.4	26,263	23,047
Profit from disposal	3.5	2,026	−312
Income from operating business		96,830	83,628
Personnel expenses	3.6	32,673	29,306
Depreciation	3.7	2,674	2,901
Selling and administration expenses (excl. personnel expenses)	3.8	24,275	20,118
Other operating expenses		3,566	703
Other operating income	3.9	3,381	3,397
Profit/loss from operating business		37,023	33,997
Expenses/income from the fair value measurement		275	−159
Other interest income		414	1,039
Other interest expenses		1,187	1,242
Earnings before taxes (EBT)		36,525	33,635
Income taxes	3.10	18,350	16,256
Deferred taxes	3.10	−9,661	−7,233
Net profit for the period		27,836	24,612
Earnings per share (basic) in EUR	3.11	2.03	1.80
Earnings per share (diluted) in EUR	3.11	2.03	1.80
Average shares outstanding (basic)	3.11	13,684,099	13,684,099
Average shares outstanding (diluted)	3.11	13,684,099	13,684,099

Jan. 1 to	Jan. 1 to
Dec. 31, 2010	Dec. 31, 2009
27,863	24,612
2,087	614
−151	−176
1,936	438
−88	−131
28	85
−60	−46
3,387	−324
5,263	68
33,099	24,680

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR FISCAL YEAR 2010

See Point 4.19 in the Notes

CONSOLIDATED BALANCE SHEET AS PER DECEMBER 31, 2010

EURk	Note	Dec. 31, 2010	Dec. 31, 2009
Assets
Current Assets
Cash	4.1	78,297	109,865
Financial instruments with positive market value (short term portion)	4.2	1,255	1,238
Lease receivables	4.3	508,325	459,315
Other current financial assets	4.4	77,434	68,821
Trade receivables	4.5	3,845	3,046
Lease assets for sale		8,159	12,727
Tax receivables	4.6	572	838
Other current assets	4.7	54,913	22,076
Total current assets		732,800	677,926
Non-current assets
Lease receivables	4.3	819,899	675,564
Financial instruments with positive market value (long term portion)	4.2	1,115	785
Other non-current financial assets	4.4	43,831	82,615
Property, plant and equipment	4.8	35,645	35,394
Goodwill	4.9	12,985	11,178
Other intangible assets	4.10	1,660	2,333
Deferred tax assets	4.11	22,575	15,557
Other non-current assets	4.7	483	307
Total non-current assets		938,193	823,733
Total assets		1,670,993	1,501,659

CONSOLIDATED BALANCE SHEET AS PER DECEMBER 31, 2010

EURk	Note	Dec. 31, 2010	Dec. 31, 2009
Liabilities and equity
Liabilities
Current liabilities
Refinancing liabilities	4.12	320,582	379,343
Liabilities from deposit business	4.12	87,624	75,817
Short-term debt	4.12	684	2,346
Financial instruments with negative market value (short term portion)	4.13	5,449	3,667
Trade payables		6,194	5,766
Tax liabilities	4.14	14,795	11,521
Deferred liabilities	4.16	4,713	3,884
Provisions	4.15	3,452	0
Other current liabilities		7,411	7,606
Deferred lease payments		67,300	67,711
Total current liabilities		518,204	557,661
Non-current liabilities
Refinancing liabilities	4.12	786,961	601,822
Liabilities from deposit business	4.12	34,615	30,561
Long term debt	4.12	3,094	6,516
Financial instruments with negative market value (long term portion)	4.13	1,583	1,165
Deferred tax liabilities	4.11	36,361	38,580
Pensions	4.17	1,566	1,358
Other non-current liabilities	4.18	836	1,112
Total non-current liabilities		865,016	681,114
Equity	4.19
Capital stock		17,491	17,491
Capital reserve		60,166	60,166
Retained earnings		89,054	83,900
Other components of equity		1,175	−4,088
Balance sheet profit		119,887	105,415
Total equity		287,773	262,884
Total liabilities and equity		1,670,993	1,501,659

CONSOLIDATED CASH FLOW STATEMENT FOR FISCAL YEAR 2010

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2010	Dec. 31, 2009
	Earnings before taxes	36,525	33,635
	Non-cash items contained in net profit for the period and
	reconciliation to cash flow from operating activities
+/−	Amortisation/depreciation	2,674	2,901
−/+	Profit/loss from the disposals of equipment and intangible assets	−15	−18
−/+	Investment income	773	203
−/+	Non-cash changes in equity	5,892	378
+/−	Increase/decrease deferred liabilities, provisions and pensions	4,489	473
−	Additions of lease receivables	−669,807	−445,503
+	Payments by lessees	506,004	469,397
+	Disposals/reclassifications of lease receivables at residual carrying values	105,456	109,482
−	Interest and other income from financing business	−124,549	−114,566
−	Increase in other receivables from lessees	−521	−7,937
+/−	Currency translation differences	−9,928	−2,533
=	Change in lease receivables	−193,345	8,340
+	Additions of liabilities from refinancing	1,290,465	1,094,519
−	Payment of annuities to refinancers	−257,596	−280,590
−	Disposal of liabilities from refinancing	−955,919	−926,516
+	Expenses from interest on refinancing and on deposit business	44,520	42,785
+/−	Currency translation differences	4,908	−98
=	Change in refinancing liabilities	126,378	−69,900
+/−	Increase/decrease in liabilities from deposit business	15,861	58,341
−/+	Increase/decrease in loans to franchisees	17,330	−18,945
	Changes in other assets/liabilities
−/+	Increase/decrease in other assets	−16,750	15,208
+/−	Increase/decrease in deferred lease payments	−411	−2,506
+/−	Increase/decrease in other liabilities	2,157	−8,442
=	Cash flow from operating activities	1,558	19,668

continued on next page

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2010	Dec. 31, 2009
−/+	Taxes paid/received	−14,387	−3,462
−	Interest paid	−1,187	−1,242
+	Interest received	414	1,039
=	Net cash flow from operating activities	−13,602	16,003
−	Purchase of equipment and intangible assets	−4,094	−1,070
−/+	Payments/proceeds from acquisition of subsidiaries	0	32,139
+	Proceeds from sale of equipment and intangible assets	51	63
=	Cash flow from investing activities	−4,043	31,132
+/−	Raising/repayment of bank liabilities	−4,066	−3,374
−	Dividend payment	−8,210	−8,210
=	Cash flow from financing activities	−12,276	−11,584
	Cash funds at the beginning of the period
	Cash on hand and balances with banks	109,865	77,012
−	Bank liabilities from overdrafts	−1,131	−3,593
=	Cash and cash equivalents at the beginning of the period	108,734	73,419
+/−	Change due to currency translation	−629	−236
=	Cash funds after currency translation	108,105	73,183
	Cash funds at the end of the period
	Cash on hand and balances with banks	78,297	109,865
−	Bank liabilities from overdrafts	−113	−1,131
=	Cash and cash equivalents at the end of the period	78,184	108,734
	Change in cash and cash equivalents during the period
	(=Total cashflows)	−29,921	35,551
	Net cash flow from operating activities	−13,602	16,003
+	Cash flow from investing activities	−4,043	31,132
+	Cash flow from financing activities	−12,276	−11,584
=	Total cash flow	−29,921	35,551

CONSOLIDATED CASH FLOW STATEMENT FOR FISCAL YEAR 2010: CONTINUED

STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY FOR FISCAL YEAR 2010

					Reserve for
	Capital	Capital	Retained	Hedging	actuarial profits	Currency	Total
EURk	stock	reserve	earnings	reserve	and losses	translation	equity
Equity as per
Jan. 1, 2009	17,491	60,166	172,913	−3,379	−66	−711	246,414
Total comprehensive			24,612	438	−46	−324	24,680
Dividend in 2009
for 2008			−8,210				−8,210
Equity as per
Dec. 31, 2009	17,491	60,166	189,315	−2,941	−112	−1,035	262,884
Equity as per
Jan. 1, 2010	17,491	60,166	189,315	−2,941	−112	−1,035	262,884
Total comprehensive			27,836	1,936	−60	3,387	33,099
Dividend in 2010
for 2009			−8,210				−8,210
Equity as per
Dec. 31, 2010	17,491	60,166	208,941	−1,005	−172	2,352	287,773

See Point 4.19 in the Notes

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2010

1 PURPOSE OF THE COMPANY

GRENKELEASING AG (hereinafter also referred to as "GRENKELEASING" or the "company") is a stock corporation with its registered office at Neuer Markt 2, Baden-Baden, Germany. The company is entered in the commercial register at the local court of Mannheim, section B, under HRB 201836. GRENKELEASING AG is the parent company of the GRENKELEASING Group (hereinafter also referred to as the Group).

The Group conducts financing business, as a partner for mainly small and medium-sized enterprises, ranging from leases to factoring, various payment transaction services and deposits business with private customers. The Group's business areas comprise the leasing of all types of movable assets, the management of lease contracts for third parties, the broking of property insurance for leased assets, the purchase and management of receivables from and for third parties (factoring), banking business and all other related transactions.

Leasing business focuses on small-ticket leasing of IT products, such as PCs, notebooks, servers, monitors and other peripheral devices, software, telecommunication and copier equipment and other IT products. Almost all leases concluded provide for full cost recovery (full payout leases). This means that the payments made by the lessee during the basic lease period, including the guaranteed residual values, exceed the acquisition and contract cost.

2 BASIC PRINCIPLES OF THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Basis of Preparation

GRENKELEASING AG, as a listed parent company which is traded on an organised market within the meaning of Section 2 (5) WpHG has, as in the previous year, prepared its consolidated financial statements in accordance with Section 315a of the German Commercial Code [Handelsgesetzbuch (HGB)] on the basis of the International Financial Reporting Standards (IFRSs). The consolidated financial statements comply with IFRSs as published by the International Accounting Standards Board (IASB) and as adopted in the EU as of December 31, 2010.

All International Financial Reporting Standards (IFRSs) (formerly International Accounting Standards (IAS)) applicable to fiscal year 2010 and the interpretations by the International Financial Reporting Interpretations Committee (IFRIC) (formerly the Standing Interpretations Committee (SIC)) were observed in these financial statements.

The consolidated financial statements for the fiscal year ended December 31, 2010 are prepared for GRENKELEASING AG and all the companies it controls. The annual financial statements of the companies included in GRENKELEASING AG's consolidated financial statements are all based on uniform accounting policies. The annual financial statements in accordance with local commercial law have been prepared as of the balance sheet date of the consolidated financial statements and are audited by independent auditors when this is required by local law. The reconciliation of the financial statements of all subsidiaries to IFRSs was audited in the audit of the consolidated financial statements. The consolidated financial statements have been prepared in euro (EUR). Unless stated otherwise, all figures are rounded and stated in thousands of euro (EURk).

The accounting policies used are the same as those used in the previous year. Exceptions are listed in notes 2.2 and 2.3 below.

The consolidated financial statements are based on historical cost accounting. Unless otherwise stated, assets and liabilities are recognised at nominal value less necessary valuation allowances. The only exception is the recognition of the derivative financial instruments used in the Group. These are recognised at fair value.

It is planned that the Supervisory Board will adopt these consolidated financial statements prepared by the Board of Directors and approve them for publication in its meeting on February 4, 2011.

2.2 Effects of New or Amended IFRSs

2.2.1 Accounting Standards Implemented in 2010

In recent years, the IASB has published various different amendments of IFRSs and new IFRSs as well as International Financial Reporting Interpretations Committee interpretations (IFRICs).

The IASB also publishes amendments to existing standards as part of an annual procedure. The primary aim of the collective standard is to eliminate inconsistencies and to clarify formulations.

The new and revised IFRSs listed below entered into force effective for the past fiscal year:

• IFRS 1 "First-time Adoption of International Financial Reporting Standards" (January 1, 2010)
• IFRS 2 "Share-based Payment" (January 1, 2010)
• IFRS 3 "Business Combinations" (July 1, 2009)
• IAS 27 "Consolidated and Separate Financial Statements" (July 1, 2009)
• Improvements to IFRS 2009 with the following amendments to individual standards:
• − IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" (January 1, 2010)
• − IFRS 8 "Operating Segments" (January 1, 2010)
• − IAS 7 "Statement of Cash Flows" (January 1, 2010)
• − IAS 17 "Leases" (January 1, 2010)
• − IAS 32 "Financial Instruments: Disclosure" (February 1, 2010)
• − IAS 36 "Impairment of Assets" (January 1, 2010)
• − IAS 38 "Intangible Assets" (July 1, 2009)
• − IAS 39 "Financial Instruments: Recognition and Measurement" (January 1, 2010)
• − IFRIC 9 "Reassessment of Embedded Derivatives" (July 1, 2009)
• − IFRIC 16 "Hedges of a Net Investment in a Foreign Operation" (July 1, 2009)
• IFRIC 17 "Distributions of Non-Cash Assets to Owners" (July 1, 2009)
• IFRIC 18 "Transfers of Assets from Customers" (July 1, 2009)
• IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" (July 1, 2010)

The following section briefly describes the provisions which are relevant to GRENKELEASING, as well as their effects on these financial statements.

• The amended versions of IFRS 3 "Business Combinations" and IAS 27 "Consolidated and Separate Financial Statements" has resulted in effects on the measurement of interests without controlling influence, the recognition of transaction costs, the initial recognition and subsequent measurement of a contingent consideration and subsequent acquisitions. These new rules will have an effect on the rate of goodwill amortisation, on earnings in the period under review, in which a merger takes place, and on future earnings. The revised IAS 27 stipulates that a change in the proportion of ownership interest in a subsidiary, which does not result in loss of control, will be recognised as an equity transaction with owners. No goodwill amortisation or gain or loss can result from such a transaction. Provisions on the attribution of losses to shareholders of the parent company and interests without controlling influence and the accounting rules for transactions which result in loss of control were also amended. Both new rules will have an effect on future acquisitions and losses of control of subsidiaries and transactions with interests without controlling influence. They had no effect on these financial statements.
• IFRS 8 "Operating Segments" requires reporting on financial and descriptive information relating to companies' reportable segments. The Improvements to IFRSs (2009) provided clarification as regards the disclosures on segment assets. However, this also did not result in any adjustments in these financial statements.
• The revision of IAS 36 "Impairment of Assets" by Improvements to IFRSs (2009) does not affect these consolidated financial statements. The adjustment again clarified at which level an impairment test should be conducted. The impairment tests performed by the company were already consistent with the clarifications made, which meant that the revision did not lead to any changes.
• One exception in the scope of IAS 39 was worded more clearly in Improvements to IFRSs (2009). Options to acquire shares in companies now fall within the scope of the standard. Please see the information on assumptions and measurement for details of the effects of this (see note 5.3.1).

The standards not explicitly listed here either are or were not relevant to these financial statements, and their first-time adoption has therefore not resulted in any changes.

2.2.2 Accounting Standards already Published but not yet Implemented

Apart from the IFRSs mentioned whose application is mandatory, the IASB has also published other IFRSs and IFRICs, which have already partly received EU endorsement but which will only become mandatory at a later date. Voluntary early application of these standards is explicitly permitted/recommended. GRENKELEASING AG is not exercising this option. These standards will be implemented in the consolidated financial statements when their adoption will become mandatory.

"Improvements to IFRSs (2010)" was published by the IASB in May 2010. It is the third standard published as part of the Annual Improvements Process (AIP) project. Improvements to IFRSs include eleven different changes to six existing IFRSs and one interpretation. By grouping these changes together in a single document, the IASB intends to reduce the expense for all involved.

Specifically, this affects the following standards and interpretations:

• IFRS 1 "First-time Adoption of International Financial Reporting Standards"
• IFRS 3 "Business Combinations"
• IFRS 7 "Financial Instruments: Disclosures"
• IAS 1 "Presentation of Financial Statements"
• IAS 27 "Consolidated and Separate Financial Statements"
• IAS 34 "Interim Reporting"
• IFRIC 13 "Customer Loyalty Programs"

In addition, the following standards and interpretations were amended or published for the first time:

• IFRS 1 "First-time Adoption of International Financial Reporting Standards"
• IFRS 9 "Financial Instruments" (January 1, 2013)
• IAS 24 "Related Party Disclosures"
• IAS 32 "Financial Instruments: Presentation" (February 1, 2010)
• IFRIC 14 "IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction"
• IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" (July 1, 2010)

The changes are applicable to fiscal years beginning on or after January 1, 2011.

Below, only standards and interpretations that could be relevant for GRENKELEASING AG are explicitly described.

• IAS 1 "Presentation of Financial Statements": The individual components of equity can be presented in an analysis of comprehensive income in the statement of changes in equity or in the notes.
• IFRS 7 "Financial Instruments: Disclosures": The disclosure requirements on financial assets that are past due but not impaired and those for impaired financial assets no longer apply. This is also the case for disclosures on financial assets whose carrying amounts do not reflect the maximum credit risk.
• IFRS 9 is the first phase of the IASB project to revise IAS 39 and covers the classification and measurement of financial instruments defined in IAS 39. This project is scheduled to be completed in 2011. Mandatory adoption is intended for financial years beginning on or after January 1, 2013.
• IAS 24 "Related Party Disclosures": The definition of a related party was made clearer. The revised standard has amended the disclosure requirements for government-related entities.
• The changes to IAS 34 "Interim Reporting" relate to further disclosures on reclassifications and changes in the classification of financial instruments and financial assets.

Other than additional or modified disclosures, no significant effects are currently expected for GRENKELEASING's consolidated financial statements as a result of the adoption of the above standards and interpretations.

2.3 Changes in Disclosures/First-Time Disclosure

For more transparent presentation of the results from operating lease contracts, an extra line was added to the profit from disposals. For further information, please see note 3.5 and the corresponding adjustments in the statement of changes in property, plant and equipment under note 4.8.

Owing to the first-time reporting of provisions for uncertain risks, this item was also reported in the balance sheet. Please see note 4.15 for further information.

2.4 Consolidation Policies

2.4.1 Consolidated Group

The consolidated financial statements contain all assets and liabilities as well as all expenses and income of GRENKELEASING AG (hereinafter referred to as the "Group") and of the subsidiaries it controls after eliminating all material intragroup transactions. Subsidiaries are included in the consolidated group for as long as they are under the control of the parent. Control is normally evidenced when the Group holds, either directly or indirectly, 50 percent (or more) of the voting rights or the issued capital of an entity and/or has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities.

In addition to GRENKELEASING AG, the following subsidiaries and special purpose entities are included in the consolidated financial statements:

Name	Registered office	Equity investment 2010	Equity investment 2009
Germany
GRENKE SERVICE AG	Baden-Baden	100%	100%
Grenke Investitionen Verwaltungs Kommanditgesellschaft
auf Aktien (84.4 percent directly, 15.6 percent indirectly via
GRENKE SERVICE AG)	Baden-Baden	100%	100%
GRENKE BANK AG	Baden-Baden	100%	100%
GRENKEFACTORING GmbH	Baden-Baden	100%	100%
International
GRENKELEASING s.r.o.	Prague/Czech Republic	100%	100%
GRENKE ALQUILER S.A.	Barcelona/Spain	100%	100%
Grenkefinance N.V.	Vianen/Netherlands	100%	100%
GRENKELEASING AG	Zurich/Switzerland	100%	100%
GRENKELEASING AG	Vienna/Austria	100%	100%
GRENKELEASING ApS	Herlev/Denmark	100%	100%
GRENKE LIMITED	Dublin/Ireland	100%	100%
GRENKE FINANCE Plc.	Dublin/Ireland	100%	100%
GRENKE LOCATION SAS	Schiltigheim/France	100%	100%
GRENKE Locazione S.r.l.	Milan/Italy	100%	100%
GRENKE LEASING S.r.l.	Milan/Italy	100%	100%
GRENKELEASING AB	Stockholm/Sweden	100%	100%
GRENKE LEASE Sprl1)	Brussels/Belgium	100%	100%
Grenke Leasing Ltd.	Guildford/UK	100%	100%
GRENKELEASING Sp. z o.o	Poznan/Poland	100%	100%
FCT "GK"-COMPARTMENT "G1" 2)	Pantin/France	100%	100%
GOALS FINANCING 2009 LIMITED3)	Dublin/Ireland	--	--

1) GRENKELEASING AG holds a direct interest of EUR 1,499k (of a total of EUR 1,500k) in GRENKE LEASE Sprl in Brussels/Belgium and an indirect interest of EUR 1k through its German subsidiary, GRENKE SERVICE AG.

2) Founded in 2009 as part of the ABCP programme Coral for French lease receivables. GRENKELEASING AG holds indirect interests in this company through its Irish subsidiary GRENKE FINANCE Plc. (EUR 150k) and its German subsidiary GRENKE SERVICE AG (EUR 150k).

3) Founded in 2009 in connection with the issue of the ABS bond. The issue of the ABS bond means that GRENKELEASING AG has gained control of the special-purpose entity GOALS FINANCING LIMITED 2009 in accordance with SIC-12. It is not an investee or investor.

The balance sheet date of all subsidiaries and SPEs is December 31, 2010.

Equity investment or control in line with SIC-12	Equity Dec. 31, 2010 (EUR) Net profit/loss 2010 (EUR)
Grenke Investitionen Verwaltungs
Kommanditgesellschaft auf Aktien, Baden-Baden 1)	780,828.96	0.00
GRENKE SERVICE AG, Baden-Baden	1,363,148.47	860.74
GRENKE BANK AG, Hamburg 2)	26,117,917.50	472,350.85
GRENKEFACTORING GmbH, Baden-Baden	185,647.38	–468,751.39
GRENKE LOCATION SAS, Schiltigheim/France	25,267,733.26	4,037,473.88
GRENKELEASING AG, Zurich/Switzerland	12,087,457.26	2,478,343.80
GRENKELEASING AG, Vienna/Austria	2,241,682.05	46,957.56
GRENKELEASING s.r.o., Prague/Czech Republic	255,139.42	–88,928.89
GRENKE ALQUILER S.A., Barcelona/Spain	2,117,815.46	–460,992.15
GRENKE Locazione S.r.l., Milan/Italy 2)	2,092,313.91	565,345.52
Grenkefinance N.V., Vianen/Netherlands	786,419.21	458,028.08
GRENKE LEASING S.r.l., Milan/Italy	1,924,298.48	–46,011.31
GRENKELEASING ApS, Herlev/Denmark	–1,421,889.66	–631,530.35
GRENKE LIMITED, Dublin/Ireland	2,410,266.16	449,695.99
GRENKE FINANCE Plc., Dublin/Ireland	43,565,528.15	19,350,679.32
GRENKELEASING AB, Stockholm/Sweden	967,297.04	–114,491.11
GRENKE LEASE Sprl, Brussels/Belgium	365,056.55	115,571.00
Grenke Leasing Ltd., Guildford/UK	749,406.58	2,890,956.22
GRENKELEASING Sp. z o.o, Poznan/Poland	2,707,364.38	420,386.83
FCT "GK" COMPARTMENT "G1" Pantin/France 3)	300.00	--
GOALS FINANCING 2009 LIMITED	3.00	0.00
1) After profit/loss transfer
2) The capital of these subsidiaries changed as follows in fiscal year 2010: GRENKE BANK AG, Hamburg Feb. 5, 2010	Capital addition EUR 14,000,000

3) Founded in 2009 as part of the ABCP programme Coral for French lease receivables.

GRENKE LEASING S.r.l., Milan April 13, 2010 Capital reserve EUR 350,000

2.4.2 Foreign Currency Translation

Foreign Currency Transactions

Foreign currency transactions are translated at the closing rate at the time of the transaction. Foreign currency monetary items (e.g. cash and cash equivalents, receivables and liabilities) are subsequently translated using the closing rate, with any translation differences reported in net profit or loss.

Non-monetary items carried at historical cost are not subsequently translated, the rate on initial recognition is used.

Foreign Entities

Each company within the Group determines its own functional currency. Items included in the financial statements of the relevant company are measured using this functional currency. Foreign currency translations are translated into the functional currency at the spot rate on the transaction date.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate. All currency translation differences are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of such foreign operation are accounted for as assets and liabilities of the foreign operation and translated at the closing rate.

The local currency is the functional currency of all foreign operations. The assets and liabilities of these subsidiaries are translated into euro at the closing rate at the balance sheet date. Income and expenses of these subsidiaries are translated attheaverageexchangeratesprevailingduringthefiscalyear(thearithmeticmeanofthedailyratesduringthefiscal year).

The exchange differences arising on translation are recognised as a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss.

	Closing rate on	Average rate	Closing rate on	Average rate
	Dec. 31, 2010	2010	Dec. 31, 2009	2009
CHF	1.2504	1.3803	1.4836	1.5099
CZK	25.0610	25.2840	26.4730	26.4548
DKK	7.4535	7.4473	7.4418	7.4463
GBP	0.8608	0.8578	0.8881	0.8911
HUF 1)	277.9500	275.4800	270.4200	280.5442

The development of the exchange rates of the currencies used in the Group in relation to the euro is illustrated below:

	Closing rate on	Average rate	Closing rate on	Average rate
	Dec. 31, 2010	2010	Dec. 31, 2009	2009
NOK 1)	7.8000	8.0043	8.3000	8.7288
PLN	3.9750	3.9947	4.1045	4.3298
RON 1)	4.2620	4.2122	4.2363	4.2396
SEK	8.9655	9.5373	10.2520	10.6200
USD 2)	1.3362	--	1.4406	--
CAD 2)	1.3322	--	1.5128	--
JPY 2)	108.6500	--	133.1600	--

1) Currency of the franchise companies, refinancing granted partly in foreign currency

2) Foreign currencies relevant only in credit and deposit portfolios of GRENKE BANK AG

2.5 General Accounting Policies

2.5.1 Leases

Determining Whether an Arrangement Contains a Lease

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A reassessment of whether an arrangement is a lease is only required after the inception of the arrangement when any one of the following conditions is met:

• a. there is a change in the contractual terms, unless the change only renews or extends the arrangement;
• b. a renewal option is exercised or an extension is agreed on by the parties to the arrangement, unless the term of the renewal or extension had initially been included in the lease term;
• c. there is a change in the determination of whether fulfilment is dependent on a specified asset; or
• d. there is a substantial change to the asset.

The Group is the Lessor

Finance Leases

Under a finance lease, all the significant risks and rewards of legal ownership are transferred by the lessor to the lessee. The lease payment receivable is thus treated by the lessor as repayment of principal and finance income to reimburse and reward the lessor for its investment and services.

Assets from a finance lease are recognised in the balance sheet as receivables at an amount equal to the net investment, i.e. the present value of the residual receivables of all lease contracts existing at the end of a fiscal year. The net investment value is calculated on the basis of the net purchase cost of the leased assets less a special lease payment made by the lessee. Initial direct costs incurred in connection with contract conclusion are offset against income over the entire term of the lease contract by proportionately reducing the unearned finance income by these initial costs. Finance income is recognised such that a constant periodic rate of return on the outstanding residual receivable is generated.

Operating Leases

Leases where the Group retains all the significant risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating and concluding an operating lease are added to the carrying amount of the leased asset and depreciated along with that to the residual value over the term of the leasing agreement. Contingent rents are recognised as income in the period in which they are generated. Operating lease assets are disclosed in the balance sheet based on the type of asset (see note 4.8).

After the original lease has expired, the contract may be extended or a follow-on contract concluded. This leads to the lease being remeasured. In cases where the criteria for an operating lease are met, the leased asset is disclosed as property, plant and equipment from the start of the extension period and is carried at fair value.

The Group is the Lessee

Finance leases, which transfer all the significant risks and rewards incidental to ownership of the leased asset to the Group, are capitalised at the date of inception of the lease at the fair value of the leased property, or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability over the period. Finance charges are expensed immediately.

If there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the capitalised leased asset is fully depreciated over the shorter of the lease terms or its useful life. The lease payments under an operating lease are recognised as an expense in the income statement on a straight-line basis over the lease term. Contingent rents are recognised as an expense in the period in which they are incurred.

2.5.2 Cash on Hand and Balances with Banks

The cash on hand and balances with banks item in the balance sheet comprises cash on hand, bank balances and balances at central banks. Current account liabilities are deducted from cash on hand and balances with banks for the cash flow statement.

2.5.3 Financial Assets and Liabilities

Financial assets as defined by IAS 39 are, depending on their characteristics, classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available-for-sale financial assets. Financial assets are measured at fair value on initial recognition.

The carrying amounts of financial instruments other than those designated as at fair value through profit or loss include transaction costs that are directly attributable to the acquisition of the assets.

Financial assets are allocated to the measurement categories following initial recognition. Reclassifications are made as of the end of a given fiscal year where permissible and appropriate. No reclassifications took place in the reporting periods. All regular way purchases and sales of financial assets use settlement date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

The derivatives used in the Group other than for hedging purposes in line with IAS 39 are classified as held for trading and must therefore be recognised at fair value through profit or loss.

Financial assets held for trading are initially recognised at cost plus any transaction costs incurred and are carried at fair value on subsequent measurement. The derivatives used in the Group are measured using either Bloomberg (interest rate swaps and caps) or the measurement bases provided by the banks (forward exchange contracts).

The assessment whether a contract contains an embedded derivative is made when the entity first becomes party to the contract. Embedded derivatives are separated from the host contract if the latter is not measured at fair value through profit or loss and an analysis reveals that the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans and receivables are measured at amortised cost using the effective interest method less any impairment.

Amortised cost includes all discounts and premiums paid upon acquisition and includes all fees which are an integral part of the effective interest rate and the transaction costs. Gains and losses are recognised in net profit when the loans and receivables are derecognised or impaired and through the amortisation process.

The Group held no available-for-sale financial assets and no held-to-maturity financial instruments on the balance sheet date. No financial assets or liabilities were designated as at profit or loss through fair value at initial recognition ("fair value option").

Financial liabilities are recognised initially at cost and subsequently at amortised cost. Liabilities from refinancing are recognised at nominal value less the transaction costs, except for refinancing using loans, bonds or debentures with matching maturities. The deducted transaction costs and any debt discounts are amortised over the lease term using the effective interest method.

Liabilities from deposit business are also recognised at nominal value plus deferred interest components. Interest expenses are shown as expenses from interest on deposits business in net interest income.

Liabilities from refinancing which result from the sale of the lease receivables to the respective refinancing party are recognised at the present value of the payments yet to be made to the refinancing party. The originally agreed rate is used as the discount rate for fixed-interest loans. Upon repayment, regular payments are split into an interest portion and a principal component. The interest portions are disclosed as expenses from interest on refinancing.

2.5.4 Impairment of Financial Assets

At each balance sheet date, the Group assesses whether a financial asset or group of financial assets is impaired. If there is an objective indication of impairment of loans and receivables carried at amortised cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding expected future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate

(i.e. the effective interest rate determined on initial recognition). The carrying amount of the asset is reduced using an allowance account. The impairment loss is recognised directly in profit or loss.

If the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. The amount of the reversal is limited to amortised cost at the date of the reversal. The reversal is recognised in profit or loss.

2.5.5 Hedge Accounting

When hedging transactions are entered into to hedge the exposure to variability in cash flows which are determined by variable market prices (e.g. interest), certain derivatives are allocated to certain host contracts that are attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction (cash flow hedge). The hedging instruments in a hedge are also recognised at fair value.

However, changes in value relating to the effective portion are recognised in the cash flow hedge reserve, a separate item under equity ("hedging reserve"). Any ineffectiveness is recognised in profit or loss. Effectiveness is measured as of the balance sheet date using the hypothetical derivative method.

2.5.6 Derecognition of Financial Assets and Liabilities

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when any one of the following three conditions is met:

• The contractual rights to receive cash flows from the financial asset expire.
• The Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them immediately to a third party under a "pass-through" arrangement pursuant to IAS 39.19.
• The Group has transferred the contractual rights to receive cash flows of a financial asset and has either (a) transferred substantially all the risks and rewards of ownership of the financial asset or has (b) neither transferred nor retained substantially all risks and rewards of ownership of the asset, but has transferred control of the asset.

When the Group transfers its contractual rights to receive the cash flows of an asset, but neither transfers nor retains substantially all the risks and rewards of ownership of the asset, and also retains control of the transferred asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement.

Financial liabilities are derecognised if the contractual obligation underlying the liability is discharged or finally expires. If an existing financial liability is exchanged with another financial liability to the same lender with substantially different terms, or if the terms of an existing liability are changed substantially, then such an exchange or change is treated as an extinguishment of the original liability and the recognition of a new liability. The difference between the two carrying amounts is recognised in profit or loss.

2.5.7 Receivables and Other Assets

Receivables and other assets are carried at their nominal value. Adequate flat-rate specific bad debt allowances are recognised to account for the credit risk from non-performing lease receivables.

The Group generally treats a lease as a "non-performing lease receivable" as soon as the second lease payment is missed. The lease is then usually terminated. The present value of the outstanding payments is claimed as damages. This amount is considered impaired.

2.5.8 Property, Plant and Equipment

Property, plant and equipment are recognised at cost plus directly attributable costs net of accumulated depreciation and accumulated impairment losses. Since the start of fiscal year 2008, financing costs have been capitalised if the necessary requirements are met. In prior periods, this was treated as an expense in the period incurred. Property, plant and equipment are subject to straight-line depreciation over their expected economic life. When property, plant and equipment are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is recognised in the consolidated income statement.

The depreciation rates are based on the following estimated economic lives:

	Office buildings	33 years
	Operating and office equipment
	IT hardware	3 years
	Vehicle fleet	4 – 5 years
	Leasehold improvements	10 years
	Other (office equipment)	3 – 20 years

The useful life and depreciation method for property, plant and equipment are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment.

2.5.9 Goodwill

Goodwill resulting from acquisitions is initially measured at cost which is the excess of the purchase price over the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired entity as of the date of acquisition plus the directly attributable acquisition costs. Goodwill was amortised straight-line over its economic life until December 31, 2004. Following the implementation of IFRS 3, all goodwill was frozen at the value recognised as of December 31, 2004 and scheduled amortisation ceased at this time. This fixed value is now considered to be the new historical cost.

Instead of straight-line amortisation/after initial recognition, all goodwill is tested for impairment at least once a year pursuant to IAS 36 to prove its adequate valuation (impairment-only approach). This regular impairment test is conducted in the third quarter of each year on the basis of the six-month figures. If there are indications that goodwill might be impaired, more frequent tests must be conducted in addition to the mandatory annual impairment test.

2.5.10 Intangible Assets

Licenses, Software

Licenses are carried at cost plus acquisition charges. The cost of software is capitalised and treated as an intangible asset if it is not an integral part of the related hardware. As licenses and software have limited useful lives, they are subject to straight-line amortisation over their economic life, generally three years.

Internally generated Intangible Assets

An intangible asset developed as part of a project is only recognised if the Group is able to prove the technical feasibility of completing the intangible asset for internal use or sale and the intention to complete the intangible asset and use or sell it.

In addition, the generation of future economic benefits by the asset, the availability of resources to complete the asset, and the ability to measure the expenditure attributable to the intangible asset during its development must exist.

Internally generated intangible assets are measured at cost. The cost comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended.

The capitalised amounts are amortised straight-line over the period during which the project is expected to generate revenue or during which the software can probably be amortised. Given the technical developments expected in future years, the economic life is assumed to be three years. Before an internally generated asset is used, it is tested for impairment once a year.

Dealer Network/Customer Base

With the acquisition in fiscal 2008 of GRENKELEASING Sp. z o.o, Poznan, Poland and of Grenke Leasing Ltd., Guildford, UK, GRENKELEASING AG acquired a dealer network of PLN 4,779k and GBP 453k respectively (equivalent to EUR 1,948k in total), which is amortised straight-line over its economic life of six years. The initial measurement of the dealer network used the cost approach system. Estimated acquisition costs for the dealer portfolio of each country were used. In addition, we evaluated the carrying amount using our contribution margin calculation.

The customer base worth initially EUR 656k resulting from the acquisition of GRENKE BANK AG in 2009 will be written down over an expected useful life of five years. Initial measurement was by way of forecasting and discounting future cash flows.

2.5.11 Impairment of Non-financial Assets

Assets within the meaning of IAS 36.1 are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised as soon as the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal.

Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The recoverable amount is estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.

The carrying amounts of goodwill are reviewed to assess the probability of continuing future benefits in accordance with the rules described in note 2.5.9. Impairment is recognised in net profit or loss if the value in use is lower than the carrying amount of the respective cash-generating unit. If the reason for an impairment recorded in a prior period ceases to apply, an impairment loss is reversed. Exceptions to this rule exist only for impairments of goodwill, reversal of which is expressly prohibited.

2.5.12 Provisions

Provisions are carried at their probable settlement amount if a present obligation (legal or constructive) exists for the Group due to an event occurring prior to the balance sheet date, it is probable that settlement of the obligation will lead to an outflow of resources embodying economic benefits, and if a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

2.5.13 Pensions and Other Post-Employment Benefits

Defined benefit plans relate to benefits after the end of employment and are based on direct benefit commitments for which the amount of the benefit is determined and dependent on factors such as age, remuneration and time employed. The provision recognised in the balance sheet for defined benefit plans is the present value of the defined benefit obligation on the balance sheet date less the fair value of any plan assets, adjusted for unrecognised past service cost. The unrecognised past service cost will be recognised on a straight-line basis over the average period until the entitlements become vested.

The present value of the defined benefit obligation is calculated annually by an independent actuarial expert using the projected unit credit method by discounting forecast future cash outflows with the interest rate of industrial bonds of excellent credit standing. The industrial bonds are denominated in the currency of the payment amounts and their terms match those of the pension obligations. In particular, the calculation also takes into account a current market rate of interest and forecasts of future salary and pension increases in addition to biometric assumptions.

In accordance with Swiss law, the Group has set up a defined benefit pension plan in Switzerland which requires contributions to be made to separately administered funds. The obligation under the defined benefit plans is calculated using the projected unit credit method. There are also defined benefit pension plans for employees of GRENKE BANK AG acquired in fiscal year 2009 that left the company as of or on the reporting date. These benefits are not financed by funds. The underlying pension plans are for both final salary and flat salary pension plans. Actuarial gains and losses are recognised in equity in accordance with IAS 19.93A.

The carrying amount of the asset or liability under a defined benefit plan is the aggregate of the present value of the defined benefit obligation and the fair value of plan assets out of which the obligations are to be settled directly.

Contributions to defined contribution plans are recognised as an expense when an employee has rendered service. They include contributions to statutory pension schemes and direct insurance premiums.

2.5.14 Taxes

Current Tax Assets and Liabilities

Current tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. They are calculated based on the tax rates and tax laws applicable as of the balance sheet date.

Deferred Tax Liabilities and Assets

Deferred tax liabilities are calculated using the liability method in accordance with IAS 12. The deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of an asset or a liability for financial reporting purposes and its tax base.

Deferred tax assets for previously non-utilised loss carryforwards are recognised if it is probable that taxable profit will be available to utilise these carryforwards. Deferred tax assets and liabilities are recognised on the basis of tax rates anticipated for the period in which the temporary differences will reverse. For this purpose, tax rates are used which are applicable as of the balance sheet date or will be applicable in the near future.

Deferred tax relating to items which are recognised directly in equity is recognised in that position and not in the income statement. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the entity expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are not discounted and are classified as non-current assets or liabilities in the consolidated balance sheet.

Value-added Tax

Revenue, expenses and assets are recognised net of VAT, with the following exceptions:

• Where the VAT incurred on a purchase of assets or services is not recoverable from the tax authorities, in which case the VAT is recognised as part of the cost of the asset or as part of the expense item.
• When receivables and liabilities are stated with VAT.

The net VAT recoverable from, or payable to, the tax authorities is stated under other receivables or liabilities in the consolidated balance sheet.

Trade Tax

Leasing and factoring companies are considered as financial service institutions as defined by Section 1 (1a) 2 numbers 9 and 10 of the German Banking Act [Kreditwesengesetz (KWG)]. The companies were thus on the one hand included in the so-called commercial trade tax banking privilege from 2008 under Section 19 of the Trade Tax Implementation Regulations [Gewerbesteuer-Durchführungsverordnung (GewStDV)], and on the other hand they have been subject to regulation by the German Federal Office for Supervision of Financial Services (BaFin) and by Deutsche Bundesbank since the 2009 Annual Tax Act came into effect on December 25, 2008.

The inclusion in Section 19 of the Trade Tax Implementation Regulations means that the competitive disadvantage for leasing and factoring companies in comparison with banks, which resulted from the 2008 Annual Tax Act, is withdrawn. The application of Section 19 of the Trade Tax Implementation Regulations is subject to the requirement that the leasing company demonstrably undertakes financial services exclusively in terms of Section 1 (1a) 2 Number 10 of the German Banking Act. These are the conclusion of finance leases and the administration of leasing companies. The Federal Ministry of Finance issued a statement on November 27, 2009 to clarify issues of interpretation. In line with the findings of the supreme financial authorities on the interpretation of the exclusivity rule, auxiliary and additional transactions accompanying financial services are not a violation of the exclusivity rule. Such transactions occur when they are essential to the performance of the respective financial services. According to the transition regulations contained in the written statement by the Federal Ministry of Finance, companies that offered transactions other than factoring and finance leases before December 24, 2008 will only be affected by the exclusivity rule for the first time for the 2011 assessment period.

By way of resolution of the German Bundestag on March 5, 2010 and its approval by the German Bundesrat on March 26, 2010 on the "Act on the Implementation of EU Tax Requirements and the Amendment of Tax Provisions", Section 19 of the Trade Tax Implementation Regulations was also amended – in some cases retroactively to the 2008 assessment period. In line with this, the addition of charges for liabilities and similar amounts, provided that these relate directly to financial services within the meaning of Section 1 (1a) sentence 2 of the German Banking Act, is waived for financial services providers within the meaning of Section 1 (1a) of the German Banking Act – including finance leases and factoring – retroactively to the 2008 assessment period. Such financial services also include factoring and finance leases. There will be a 50 percent limit from the 2011 assessment period. If the above financial services do not account for at least 50 percent of the revenues generated, the interest expenses must be added in full.

The 50 percent threshold does not apply to the 2008 – 2010 assessment periods. Therefore, "charges and similar amounts relating directly to financial services within the meaning of Section 1 (1a) sentence 2 of the German Banking Act are not to be added".

In the calculation of the trade tax provision for the German group companies GRENKELEASING AG, GRENKE Investitionen und Verwaltungs KGaA and GRENKEFACTORING GmbH, Section 19 of the Trade Tax Implementation Regulations was applied to the 2008 – 2010 assessment periods and charges and similar amounts relating directly to financial services within the meaning of Section 1 (1a) sentence 2 of the German Banking Act were not added.

2.5.15 Revenue Recognition

Income from Leasing

Please see the information in note 2.5.1.

Income from Insurance Business

Income from insurance business comprises premiums for insurance policies in lease business, which the lessees must conclude via GRENKELEASING if they do not insure the leased assets themselves. The insurance premiums are collected annually; these amounts are deferred and released to income pro rata temporis.

Sale of Lease Assets

Revenues from sales are recognised upon transfer of benefits and burdens.

Interest Income

Interest and similar income from financing business are recognised when interest or similar fees (e.g. factoring fees) arise using the effective interest method.

2.5.16 Judgement

Using the accounting policies, the senior management has made the following judgements, which substantially influence the recognition and amounts in the financial statements. This does not include such decisions which include estimates.

Leasing

Based on an analysis of its contractual conditions, the Group as lessor has come to the conclusion that during the basic lease term all relevant opportunities and risks related to the ownership of a lease asset are transferred to the lessee in almost all leases. This means that these leases are shown entirely as finance leases.

Asset-backed Commercial Paper Programmes ("ABCP Programmes")

The Group uses various ABCP programmes for refinancing. If these are special purpose entities established by various banks that purchase lease receivables from GRENKELEASING Group companies, bundle them and then issue short-term commercial papers for their own refinancing, they are not included in the consolidated group. As part of an analysis of the contractual terms of the individual programmes, the Group reviewed a potential consolidation requirement in line with SIC-12 "Consolidation – Special Purpose Entities". It is true that this financing structure provides the Group access to a broader form of refinancing and thus to corresponding benefits. However, the organising banks carry relevant and material risks due to the liquidity commitments they provide. After weighing the benefits created for GRENKELEASING against the risks borne in relation to the assessment in accordance with SIC-12, consolidation in the Group should be ruled out.

In addition, in the assessment of the evaluation of the consolidation requirement it was taken into account that the legal owner of the above individual special purpose entities is a trust. This uses the services of various legal offices which are responsible for the relevant management on behalf of the trust. There is no possibility of the Group exercising influence over the trust or the management of the special purpose entities.

Refinancing via the ABCP programmes is based on the contractual sale of future lease payments. In the assessment according to IAS 39.17 ff. as to whether a derecognition of the underlying financial assets should be undertaken, the Group must evaluate to what extent it transfers risks and rewards from the underlying financial assets to the purchasing vehicle. Due to the opportunity-reward ratio in connection with lease claims, there is no derecognition in the context of the sale. For this reason the use of refinancing via ABCP programmes in GRENKELEASING's financial statements is accounted for as a loan. There is no off-balance sheet recognition.

Shares in the funds of two subsidiaries are held in the FCT and included in consolidation accordingly. GOALS 2009 is the SPE for an ABS bond (note 4.12.1). As there are no liquidity guarantees here and the majority of risks and rewards are assigned to the Group, GOALS 2009 was included in consolidation in 2010.

2.5.17 Use of Assumptions and Estimates

In preparing the consolidated financial statements, assumptions and estimates have been made which have had an effect on the recognition and carrying amounts of assets, liabilities, income, expenses and contingent liabilities.

Assumptions and estimates generally relate to the uniform determination of useful lives of assets within the group, the measurement of provisions, the recoverability of receivables from terminated contracts, the recognition of realisable residual values for leased assets, the identification of parameters for assessing the ongoing value of intangible assets and other non-financial assets as well as the probability of future tax benefits. The actual figures may in some cases differ from the assumptions and estimates. Any changes will be recognised in profit or loss as and when better information is available.

The main estimating uncertainties and the associated disclosure requirements are in the following areas:

• Assumptions made in impairment tests for measuring goodwill.
• Measurement of non-performing lease receivables on the basis of the recoverability rate.
• Use of estimated residual values at the end of the lease term to determine the present value of lease receivables.
• Recognition of lease assets for sale at estimated residual values.
• Recognition and measurement of deferred tax on loss carryforwards.

The cash flows used to measure goodwill under the discounted cash flow method are based on current business plans and internal plans for the next five years. This involved making assumptions as to future revenues and costs. Assumptions as to future investments in the company's operations were made on the basis of past figures and past income patterns were projected into the future. If significant assumptions differ from actual figures, adjustments may have to be made in the future. Depending on country and currency, average costs of equity of between 6.4 percent (EUR) and 11.2 percent (PLN) (previous year: 8.6 percent) were used to discount cash flows.

Non-performing lease receivables are carried at nominal value less appropriate bad debt allowances. The amounts of bad debt allowances are determined using percentages and processing categories. Percentages are calculated using statistical methods. They are reviewed once a year for validity. Processing statuses are grouped together in processing categories set up with a view to risk.

The following table lists the processing categories:

Category	Description
0	Current contract not in arrears
1	Current contract in arrears
2	Terminated contract with serviced instalment agreement
3	Terminated contract (recently terminated or court order for payment applied for)
4	Legal action (pending or after objection to court payment order)
5	Order of attachment issued/Debt-collecting agency commissioned
6	Statement in lieu of oath (applied for or issued) and insolvency proceedings instituted but not completed
7	Derecognised
8	Being settled (not terminated)
9	Discharged (completely paid)

A decrease in value is assumed for categories 2 to 7 as the contracts have been terminated due to defaults in payment. The allowance rates range between 5 percent and 100 percent. Estimated residual values are used to determine the present value of lease receivables. Non-guaranteed residual values are used to calculate lease receivables in accordance with the definition in IAS 17. Estimated residual values comprise anticipated sales proceeds and any revenues generated in a renewal period. They are determined on the basis of past experience and statistical methods. Based on experience, residual values of additions until end-2006 range between 11 percent and 15 percent of historical cost, depending on the term of the lease. In fiscal year 2007, this allocation was broken down further into more detailed maturity groups on account of the increase in forecastability in the statistical population. For additions from 2007 to 2008, the residual values range between 7.7 and 28.4 percent of historical cost depending on the term of the lease. Residual values of between 6.5 percent and 28.4 percent were used for additions in 2009 and 2010. Proceeds are a best estimate based on statistical analyses. If the post-transaction recoverable amount is lower than expected (from sale and subsequent lease), the lease receivables are written down. However, an increase in recoverable amount is not recognised.

Lease assets for sale are measured on the basis of the average sales proceeds per age group realised in the past fiscal year in relation to the original acquisition cost. Lease assets for sale are measured at historical residual values, taking into account their actual saleability. As of the balance sheet date, the residual values used amounted to between 3.3 percent and 17.0 percent of the historical cost (previous year: between 6.6 percent and 22.8 percent). If a sale is considered unlikely due to the condition of the asset, the asset is written off and recognised directly as an expense.

Deferred tax assets are recognised for all unused tax loss carryforwards to the extent to which it is likely that taxable income will be available, meaning that the loss carryforwards can in fact be used. In calculating the level of the deferred tax assets considerable use of judgement is required on the part of the management with regard to the expected occurrence and level of the future taxable income, as well as future tax planning strategies.

The German Health Insurance Relief Act of July 16, 2009 was published in the Federal Law Gazette on July 22, 2009. The tax relief measures it contains to combat the financial and economic crisis include a temporary redevelopment privilege that eases the loss deduction restriction of Section 8c of the German Corporation Tax Act [Körperschaftsteuergesetz – (KStG)] for certain cases.

Under this privilege, an equity investment acquired after December 31, 2007 and before January 1, 2010 does not affect the restriction on loss utilisation of Section 8c (1) German Corporation Tax Act if acquired for the purpose of the redevelopment of the operations of the loss-making company. An eligible redevelopment is defined as a measure intended to prevent or eliminate insolvency or overextension while at the same time retaining the essential operating structures.

In a letter dated April 30, 2010, the German Federal Ministry of Finance announced that, with a resolution on February 24, 2010, the EU Commission had opened a formal investigation under Article 108 (2) of the Treaty on the Functioning of the European Union (TFEU) against the restructuring clause of the regulation on loss set-off restrictions for corporations (Section 8c (1a) KStG). The EU Commission has doubts regarding the compatibility of the regulation on the restructuring clause of Section 8c (1a) KStG with the common market. On January 26, 2011, the EU Commission resolved that the restructuring clause contained in Section 8c (1a) and applicable from January 1, 2008 constitutes a form of state aid incompatible with European law. The formal investigation under Article 108 (2) of the TFEU which was initiated on February 24, 2010 was thus officially concluded. Accordingly, the restructuring clause is not taken into account.

3 SELECTED NOTES ON THE INCOME STATEMENT

3.1 Net Interest Income

3.1.1 Interest and Similar Income from Financing Business

Interest and similar income from financing business break down as follows:

EURk	2010	2009
Net interest income from leasing business	119,701	109,883
Interest income from the bank's lending business	571	935
Interest and similar income from factoring business	953	291
Interest income from the refinancing of franchisees	3,324	3,457
Total	124,549	114,566

3.1.2 Expenses from Interest on Refinancing and Deposit Business

Interest expenses from refinancing and deposit business liabilities amounted to EUR 44,520k (previous year: EUR 42,785k). Deposit business interest for 2010 amounted EUR 2,894k (previous year: EUR 1,647k). This item also includes the interest income of EUR 1,888k (previous year: EUR 1,954k) generated by the loans issued under the ABCP programmes and the ABS bond (asset-backed securities) (see note 4.4).

3.2 Settlement of Claims

Flat-rate specific bad debt allowances are calculated based on historical rates for the collectability of a receivable in conjunction with its categorisation (percentage-of-receivables approach).

EURk	2010	2009
Derecognition of and net addition to flat-rate specific bad debt allowances	25,502	31,147
Income from settlement of claims	24,113	37,554
Expenses from the derecognition of performing lease receivables	32,149	37,517
Allowance for losses on the bank's loans and advances	–263	–18
Allowance for losses in factoring business	103	97
Prepaid expenses for del credere franchiser	346	0
Total	33,724	31,189

3.3 Profit from Insurance Business

Revenues and expenses from insurance business for leasing business are as follows:

EURk	2010	2009
Income from insurance business	24,132	22,177
Expenses from insurance business	1,896	1,876
Profit from insurance business	22,236	20,301

3.4 Profit from New Business

Revenues from new contracted lease business are comprised as follows:

EURk	2010	2009
Recognition of new lease receivables	669,807	445,503
Share of revenues from leasing downpayments	3,850	2,495
Revenues from processing fees	2,212	1,626
Revenues from special lease payments	1,589	1,615
Total	677,458	451,239

Expenses for new contracted lease business are comprised as follows:

EURk	2010	2009
Cost of newly acquired leased assets	638,735	420,284
Commissions paid to dealers	12,460	7,908
Total	651,195	428,192
Profit from new business	26,263	23,047

The cost of newly acquired leased assets represents all expenses related to the acquisition of the assets. Revenue from capitalising lease receivables includes the present value of fixed lease payments and the present value of expected or fixed income from the post transaction. As almost all contracted lease contracts provide for full cost recovery, the total of expected cash flows is equal to or greater than cost. Related costs are capitalised when the contract is concluded.

3.5 Profit from Disposals

EURk	2010	2009
Revenues from subsequent leases	22,273	20,919
Depreciation of leased assets in the subsequent lease period	–1,185	–718
Accounting losses from disposal after end of the basic lease term	–18,947	–18,187
Accounting losses from mutually agreed early termination of contracts	–115	–2,326
Total	2,026	–312

Revenues from subsequent leases relate to lease income recognised after the end of the basic term of the respective lease. These compensate for the depreciation and the accounting losses from the disposal of leased assets after the end of the basic lease term and from mutually agreed early dissolution of contracts.

3.6 Personnel expenses

The average number of staff during the fiscal year totalled 538 (previous year: 507). Part-time staff were converted into full-time equivalents.

EURk	2010	2009
Salaries	26,953	24,309
Social security and other benefit costs	5,346	4,697
Board of Directors' phantom stock programme (note 8.6)	374	300
Total	32,673	29,306

Almost all company pensions in the Group are defined contribution schemes. Under defined contribution plans, the entity pays contributions to public or private pension insurance schemes on the basis of statutory or contractual requirements or voluntarily. The entity does not have any other benefit obligations beyond payment of contributions. The current contribution payments are recognised as an expense for the respective year. In 2010, they came to EUR 1,262k (previous year: EUR 1,077k) and mainly comprised contributions to the statutory pension insurance scheme in Germany.

A total net pension expense of EUR 101k (previous year: EUR 127k) was recognised for existing pension plans in personnel expenses in the fiscal year 2010.

The personnel expenses also include EUR 370k (previous year: EUR 267k) for the employee participation programme of the French subsidiary.

3.7 Depreciation and Amortisation

EURk	2010	2009
Operating and office equipment	1,348	1,448
Office buildings	460	476
Other intangible assets	866	977
Total	2,674	2,901

As in the previous year, no impairment expenses were incurred in the fiscal year.

3.8 Selling and Administration Expenses (excluding Personnel Expenses)

Selling and administrative expenses break down into the following categories:

EURk	2010	2009
Operating expenses	9,203	8,121
Administrative expenses	3,753	3,468
Consulting and audit fees	4,884	3,693
Distribution costs (without commissions)	4,716	3,894
Other taxes	1,604	869
Remuneration of the Supervisory Board	115	73
Total selling and administrative expenses (excluding personnel expenses)	24,275	20,118

Consulting and audit fees

The consulting and audit fees of EUR 4,884k (previous year: EUR 3,693k) include fees (and expenses) for the auditor of GRENKELEASING AG totalling EUR 594k (previous year: EUR 539k). The auditor's fees in fiscal year 2010 break down as follows:

EURk	2010	2009
Audits of financial statements	461	344
Other assurance or valuation services	92	117
Other services	41	78
Total	594	539

EUR 163k of the total fees (previous year: EUR 81k) related to prior periods.

Expenses from Rent and Lease Contracts

Expenses of EUR 5,484k (previous year: EUR 4,541k) were incurred from rent and lease contracts in the fiscal year. They are primarily recognised under operating expenses and mainly relate to the rental of offices for branches and company car leases.

3.9 Other Operating Income

Other operating income breaks down as follows:

EURk	2010	2009
Franchise fees received	805	686
Rent and ancillary rental costs	501	61*
Reversal of other provisions	478	321*
Other items	434	311*
Administration fees received	367	506
Commission income from banking business	304	500
Prior-period income	168	1*
Revenues from the disposal of merchandise	154	0*
Court costs allocated to lessees	103	77
Insurance compensation	36	106*
Accounting gains from the disposal of fixed assets	29	44*
Derecognition of liabilities	2	35*
Collection fees from factoring business	0	23
Currency translation differences recognised in profit and loss	0	726
Total	3,381	3,397

* Reported collectively in the amount of EUR 879k under "Other items" in the previous year

3.10 Tax Expenses

EURk	2010	2009
Current taxes	18,350	16,256
Deferred taxes	–9,661	–7,233
Total	8,689	9,023

Current taxes include expenses of EUR 1,834k relating to underfunded income taxes of GRENKELEASING AG from the previous year. Opposite effects in the other leasing companies resulted in real net tax expenses of EUR 1,584k. In return, additional deferred tax assets of exactly the same amount were recognised, meaning that this did not have an impact on group earnings. In the same period of 2009, current taxes included income from previous years of EUR 183k.

Statement of Reconciliation from the Average Effective Tax Rate and the Expected Tax Rate

The reconciliation of the expected applicable tax rate of GRENKELEASING AG to the effective tax rate based on EBT (100 percent) is as follows:

Applicable tax rate		2010	2009
Trade tax		14.19%	14.19%
Corporate income tax		15.00%	15.00%
Solidarity surcharge (5.5 percent of corporate income tax)		0.83%	0.83%
Average expected tax rate GRENKELEASING AG		30.02%	30.02%
Others		1.15%	0.73%
Average effective tax rate for the Group		23.80%	26.83%
Average expected tax rate GRENKELEASING AG		30.02%	30.02%
Tax increases due to non-deductible expenses		0.02%	0.19%
Changes due to foreign taxes		–11.29%	–3.22%
	Balance of tax reductions and increases due to changes in tax rates 1)	0.11%	–0.19%
Utilisation of non-capitalised loss carryforwards		–0.55%	–0.16%
Back payments and tax rebates from previous years 2)		4.34%	–0.54%
Other		1.15%	0.73%
Average effective tax rate for the Group		23.80%	26.83%
1)	Essentially the following change arose in the tax rates used to calculate deferred taxes:
GRENKEFINANCE N.V., Holland	Tax rate 2010	25.00% (previous year: 25.50%)
GRENKE Leasing Ltd., UK	Tax rate at the time of reversal of deferred taxes	26.00% (tax rate 2010: 28.00%)

2) Backpayments of tax less tax rebates for prior years in 2010 amounted to EUR 1,584k (previous year: tax rebates from previous years EUR 183k).

3.11 Earnings per share

The calculation of both diluted and basic earnings is based on the net profit for the period. There was no dilutive effect in either fiscal year 2010 or the previous year. Earnings per share came in at EUR 2.03 for the year under review (previous year: EUR 1.80).

No.	2010	2009
Shares outstanding at beginning of period	13,684,099	13,684,099
Average number of shares outstanding at end of period (basic)	13,684,099	13,684,099
Average number of shares outstanding at end of period (diluted)	13,684,099	13,684,099
Shares outstanding at end of period	13,684,099	13,684,099

4 SELECTED NOTES ON THE BALANCE SHEET

4.1 Cash and Cash Equivalents

EURk	Dec. 31, 2010	Dec. 31, 2009
Cash in hand	7	38
Balances at central banks	15,157	26,826
Bank balances	63,133	83,001
Total	78,297	109,865

For the purposes of the cash flow statement, cash and cash equivalents break down as follows:

EURk	Dec. 31, 2010	Dec. 31, 2009
Cash and cash equivalents as per the balance sheet	78,297	109,865
Less current account liabilities	113	1,131
Cash and cash equivalents as per the cash flow statement	78,184	108,734

4.2 Financial Instruments with Positive Fair Value

In 2010, financial instruments with positive fair values of EUR 2,370k (previous year: EUR 2,023k) relate solely to nonhedge derivates. The main item here is the fair value of an interest rate swap concluded under the ABS bond (EUR 2,302k). Interest rate caps and foreign currency forwards are also reported here. Details of interest and currency derivatives can be found under note 5.2.

4.3 Lease Receivables

EURk	Dec. 31, 2010	Dec. 31, 2009
Outstanding minimum lease payments	1,285,922	1,070,360
+ Non-guaranteed residual values	168,414	152,905
Gross investment	1,454,336	1,223,265
– Unrealised (outstanding) finance income	212,962	174,715
Net investment	1,241,374	1,048,550
– Present value of non-guaranteed residual values	124,446	114,781
Present value of minimum lease payments	1,116,928	933,769

EURk	Less than 1 year	1 to 5 years	More than 5 years
Gross total investment	523,122	922,620	8,594
Gross total investment (previous year)	460,279	757,727	5,259
Present value of outstanding minimum lease payments	364,753	746,973	5,202
Present value of outstanding minimum lease payments (previous year)	332,157	598,586	3,026

The reconciliation of gross investment only contains contracts still in effect on the balance sheet date. The following adjustments have to be made to reconcile net investment to the carrying amount of lease receivables disclosed in the balance sheet:

EURk	Dec. 31, 2010	Dec. 31, 2009
Changes in performing lease receivables
Balance at beginning of period	1,048,550	1,064,827
+ Change during the period	192,824	–16,277
Lease receivables (current + non-current) from current contracts at end of period	1,241,374	1,048,550
Changes in non-performing lease receivables
Gross receivables at beginning of period	169,389	151,667
– Accumulated valuation allowances at beginning of period	–83,060	–73,276
= Non-performing lease receivables at beginning of period	86,329	78,391
+ Additions to gross receivables during the period	26,911	40,119
– Disposals of gross receivables during the period	25,954	22,397
+ Disposal of accumulated valuation allowances during the period	11,727	13,201
– Addition of accumulated valuation allowances during the period*	12,163	22,985
Non-performing lease receivables at end of period	86,850	86,329
Lease receivables (carrying amounts of current and non-current receivables) at beginning of
period	1,134,879	1,143,218
Lease receivables (carrying amounts of current and non-current receivables) at end of period	1,328,224	1,134,879

* Item contains exchange differences of EUR 50k (previous year: EUR 100k).

	Present value	Present value	Other receivables	Carrying
EURk	of minimum lease payments	of residual values	from lessees	amount
2009
Current lease receivables	332,157	40,829	86,329	459,315
Non-current lease receivables	601,612	73,952	0	675,564
Total (2009)	933,769	114,781	86,329	1,134,879
2010
Current lease receivables	364,753	56,722	86,850	508,325
Non-current lease receivables	752,175	67,724	0	819,899
Total (2010)	1,116,928	124,446	86,850	1,328,224

Receivables from non-performing contracts are included in current lease receivables.

The following table lists non-performing receivables with the number of days past due.

							Overdue on the balance sheet date in the following time bands
			Receivables
		thereof past	subject to bad
		due on the	debt allowances			Between
Lease receivables	Net carrying	balance	on the balance		Between 91	181 and 360	Between 1
EURm	amount	sheet date	sheet date	< 90 days	and 180 days	days	and 5 years	> 5 years
As of Dec. 31, 2009
Not impaired	10.7	10.7	0.0	8.9	0.7	0.5	0.6	0.0
Impaired	75.6	158.6	83.0	9.5	11.1	18.8	66.2	53.0
Total	86.3	169.3	83.0	18.4	11.8	19.3	66.8	53.0
As of Dec. 31, 2010
Not impaired	14.4	14.4	0.0	13.1	0.6	0.3	0.4	0.0
Impaired	72.4	155.8	83.4	9.1	8.7	12.7	72.3	53.0
Total	86.8	170.2	83.4	22.2	9.3	13.0	72.7	53.0

There were no indications that performing lease receivables were impaired as of the balance sheet date.

The maximum credit risk, without taking into account security, credit assessment systems and other tools, is the carrying amount of the receivables.

As of December 31, 2010, there were no indications that financial assets (in particular lease receivables) which are neither impaired nor past due will be defaulted upon. Thanks to effective risk management and a highly diversified contract and lessee portfolio, the lease receivables have a particularly diversified risk structure with regard to credit risk.

The following table shows changes in valuation allowances on current and non-current receivables.

EURm	Dec. 31, 2010	Dec. 31, 2009
Valuation allowances as of the beginning of the fiscal year	83.0	73.3
Allocation to specific bad debt allowance	18.0	23.0
Utilisation of specific bad debt allowance	14.2	9.0
Reversal of specific bad debt allowance	3.9	4.2
Currency translation differences	0.5	–0.1
Valuation allowances as of the end of the fiscal year	83.4	83.0

4.4 Other Financial Assets

EURk	Dec. 31, 2010	Dec. 31, 2009
Other current financial assets
Receivables from franchisees (refinancing)	20,141	25,061
ABCP loans	13,710	34,015
Current portion of subordinated loan for ABS bond	0	651
Reserve accounts for ABS bond	0	2,500
Instalments collected at end of month	517	615
Loans (bank)	2,137	3,379
Receivables from refinancers	3,045	867
Receivables from factoring business	3,972	1,733
Restricted cash	33,912	0
Total other current financial assets	77,434	68,821
Other non-current financial assets
ABCP loans	9,270	32,950
Receivables from franchisees (refinancing)	30,467	42,876
Loans (bank)	4,094	6,789
Total other non-current financial assets	43,831	82,615
Total financial assets	121,265	151,436

Restricted cash refers to the cash and cash equivalents in the bank accounts of GOALS 2009. This represented the liquidity reserve of the SPE. The Group cannot access these funds.

Receivables from franchisees (see also note 2.5.3) include receivables resulting from the refinancing for leases concluded by franchise operators. By way of security for the loan receivables or in forfaiting agreements, the franchisees have assigned both title to the leased assets and the claim to lease receivables. Accordingly, interest income generated in this context of EUR 3,324k (previous year: EUR 3,457k) (see also note 3.1.1) is reported as interest income under net interest income. Refinancing granted in foreign currencies is translated using the closing rate. None of the receivables are past due or impaired.

In addition, EUR 4,425k (previous year: NOK 34,513k) related to loan receivables maturing on December 30, 2011 and February 29, 2012 from the company in Norway. The shareholder of the debtor has provided a letter of comfort for these receivables dated January 11, 2011. This item also relates to a loan to the franchisee GC Autoleasing GmbH, Karlsruhe in the amount of EUR 561k with a term to February 29, 2012. The shareholder has also provided a letter of comfort for this receivable dated January 13, 2011.

In addition to the liquidity reserve of between 8.0 percent and 30 percent, depending on country of origin and vehicle utilised, based on the volume of lease receivables sold for the purpose of refinancing, the ABCP loans and the ABS bond include loans to the SPEs which need to be granted as collateral for the refinancing volume under the respective agreements. These loans are based on the refinancing volume and the origin of the receivables refinanced through the SPEs. The interest income generated in this connection is netted with the interest expense from refinancing liabilities. None of the receivables are past due or impaired.

In connection with the issue of the ABS bond (GOALS 2006), GRENKE FINANCE Plc., Dublin, Ireland, had originally granted a subordinated loan of EUR 5,625k, which bore interest at a floating rate. The nominal amount of the loan was fixed until August 15, 2007 and will then be gradually reduced to 2.25 percent of the outstanding nominal amount of the tranches issued. The total amount of EUR 651k was classified as current due to the expected pattern of repayment (see note 4.12.1). In addition, GRENKE FINANCE Plc. was required to set up interest-bearing reserve accounts totalling EUR 2,500k. The assets shown are not past due nor considered to be impaired. GOALS 2006 was terminated early in February 2010 as part of a clean-up call. As of the reporting date, the receivables from the lending business of GRENKE BANK AG acquired at the start of 2009 had a volume of EUR 6,020 (previous year: EUR 10,168k) relating to the bank's old business. In addition, receivables from lending business of EUR 6,232k (previous year: EUR 10,168k) include receivables from borrowers of business start-up loans of EUR 148k. Interest income is recognised as such under net interest income.

Owing to GRENKE FACTORING GmbH acquired in August, the Group reported total receivables from factoring business as of December 31, 2009 of EUR 1,733k. The factoring fees and income similar to interest generated in rendering factoring services are reported as similar income under net interest income.

4.5 Trade Receivables

Trade receivables of EUR 3,845k (previous year: EUR 3,046k) mainly relate to receivables from resellers and third parties resulting from the disposal of lease assets. EUR 946k (previous year: EUR 1,367k) of these receivables are overdue and EUR 425k (previous year: EUR 1,124k) of this amount is impaired.

Trade receivables include other receivables from franchisees of EUR 2,116k (previous year: EUR 1,531k).

4.6 Tax Receivables

EURk	Dec. 31, 2010	Dec. 31, 2009
Corporate income tax receivables	48	314
Trade tax receivables	398	59
Other items	126	465
Total	572	838

The corporate income tax and trade tax receivables are the result of prepayments being too high.

4.7 Other Current Assets

EURk	Dec. 31, 2010	Dec. 31, 2009
VAT receivable	48,098	19,455
Prepaid expenses	3,496	732
Amounts in transit	726	205
Insurance claims	1,105	534
Merchandise	165	42
Creditors with debit balances	141	180
Other items	1,182	928
Total	54,913	22,076

4.8 Property, Plant and Equipment

4.8.1 Overview for Fiscal Year 2009

	Land and	Operating and	Assets under	Lease assets from
EURk	buildings	office equipment	construction	operating leases	Total
Cost
Jan. 1, 2009	16,623	11,158	0	17,845	45,626
Currency translation differences	0	23	0	26	49
Additions	63	1,743	0	33,414	35,220
Of which additions in the context of an
acquisition	0	950	0	0	950
Disposals	0	296	0	33,764	34,060
Reclassifications	0	0	0	0	0
Cost
Dec. 31, 2009	16,686	12,628	0	17,521	46,835
Accumulated depreciation
Jan. 1, 2009	2,279	6,711	0	922	9,912
Currency translation differences	0	14	0	2	16
Additions	476	1,448	0	718	2,642
Disposals	0	210	0	919	1,129
Reclassifications	0	0	0	0	0
Accumulated depreciation
Dec. 31, 2009	2,755	7,963	0	723	11,441
Net carrying amounts Dec. 31, 2009	13,931	4,665	0	16,798	35,394

4.8.2 Overview for Fiscal Year 2010

	Land and	Operating and	Assets under	Lease assets from
EURk	buildings	office equipment	construction	operating leases	Total
Cost
Jan. 1, 2010	16,686	12,628	0	17,521	46,835
Currency translation differences	0	95	0	172	267
Additions	0	1,357	0	37,630	38,987
Of which additions in the context of an
acquisition	0	0	0	0	0
Disposals	0	215	0	36,793	37,008
Reclassifications	0	0	0	0	0
Cost
Dec. 31, 2010	16,686	13,865	0	18,530	49,081
Accumulated depreciation
Jan. 1, 2010	2,755	7,963	0	723	11,441
Currency translation differences	0	64	0	9	74
Additions	477	1,331	0	1,185	2,993
Disposals	0	180	0	891	1,072
Reclassifications	0	0	0	0	0
Accumulated depreciation
Dec. 31, 2010	3,232	9,178	0	1,026	13,436
Net carrying amounts Dec. 31, 2010	13,454	4,687	0	17,504	35,645

The operating leases are mainly lease contracts whose basic lease term has expired and which may be terminated at any time. Depreciation on lease assets from operating leases is shown in profit from disposals (see note 3.5).

4.9 Goodwill

EURk	2010	2009
Acquisition cost as of Jan. 1	11,178	8,239
Currency translation differences	275	191
Additions in the context of an acquisition	1,532	2,748
Disposals	0	0
Acquisition cost as of Dec. 31	12,985	11,178
Accumulated depreciation as of Jan. 1	0	0
Currency translation differences	0	0
Additions	0	0
Disposals	0	0
Accumulated depreciation as of Dec. 31	0	0
Net carrying amounts Dec. 31, 2010	12,985
Net carrying amounts Jan. 1, 2010	11,178
Net carrying amounts Dec. 31, 2009		11,178
Net carrying amounts Jan. 1, 2009		8,239

With regard to the additions in 2010, please refer to the comments on the finalisation of the purchase price allocations for GRENKE BANK AG and GRENKEFACTORING GmbH under note 6.2.

4.9.1 Goodwill Impairment

The goodwill acquired in business combinations was tested for impairment on the basis of the 2010 half-year figures as of September 30, 2010 in accordance with IAS 36. GRENKELEASING tests goodwill for impairment at least once a year. The basic assumptions which are used in calculating cash flow which can be generated in the respective entity are based on growth rates of up to 46 percent in new business and euro discount factors of 6.4 percent. Discounting factors are calculated based on the CAPM (capital asset pricing model), taking into account a risk-free euro interest rate of 2.6 percent (previous year: 3.2 percent) and a beta factor of 0.86 (previous year: 0.63). Overall, there are country- and currencyspecific discount rates of between 6.41 percent and 11.18 percent.

Forecasts for the development of new business have proved to be stable in the past. Due to the particular business alignment of the Group, the forecasting parameters available on the market are not suitable for providing forecasting quality, since they relate only to the entire leasing market, which is heavily influenced by the leasing of property, capital goods and vehicles. Forecasts for the development of new business are therefore based on the company's past experience. The recoverable amount of each of the cash-generating units was determined based on a value-in-use calculation using cash flow projections derived from five-year financial plans approved by senior management. Fair value less setup costs is currently not available. Cash flows after this five-year period were extrapolated using a growth rate of 10 to 15 percent depending on the respective year of purchase.

The cash-generating units used as a basis for testing the impairment of goodwill are usually legal entities. The key parameters for determining their value are the future expectations with regard to the development of new business and profitability. No impairment was identified in any of these cases.

Carrying amounts of goodwill relate to the following cash-generating units:

EURk	Dec. 31, 2010	Dec. 31, 2009
GRENKE SERVICE AG, Baden-Baden	379	379
GRENKELEASING s.r.o., Prague/Czech Republic	1,353	1,281
GRENKE LEASING S.r.l. and GRENKE Locazione S.r.l. Milan/Italy	504	504
Grenke Leasing Ltd., Guildford/UK	1,969	1,909
GRENKELEASING Sp. z o.o, Poznan/Poland	4,500	4,357
GRENKE BANK AG, Hamburg	1,582	592*
GRENKEFACTORING GmbH, Baden-Baden	2,698	2,156*
Total	12,985	11,178

* Provisional goodwill in 2009 as purchase price allocation was not finalised until 2010 (see note 6.2).

4.9.2 Sensitivity of Assumptions

The fair value of a cash-generating unit where the major value drivers are cash flow generated – and the discount rate – is very sensitive to changes in the discount rate. The discount rate is largely determined on the basis of a risk-free interest rate, a market risk premium and a beta factor for systematic risk. These values were based on external sources of information. Fluctuations in the components stated above may affect the discount rate.

As part of the validation of the fair values determined for the cash-generating units, the major value drivers are reviewed annually for each unit. In addition, to test the resilience of the fair values a sensitivity test was performed on discount rates and growth rates of new business – the key determinants used for the discounted cash flow modelling. In this context, the management is of the opinion that realistic changes to the assumptions used for implementing impairment tests within the Group do not result in any impairment. The changes arising in parameters since the routine impairment test on September 30, 2010 on the basis of the six-month figures and the reporting date do not affect the impairment of the individual cash-generating units.

4.10 Other Intangible Assets

4.10.1 Overview For Fiscal Year 2009

EURk	Development costs	Software licences	Dealer network	Total
Acquisition cost Jan. 1, 2009	820	2,260	1,626	4,706
Currency translation differences	0	0	48	48
Additions	0	215	656	871
Disposals	619	1	0	620
Subsidiary additions	0	110	0	110
Reclassifications	0	0	0	0
Acquisition cost Dec. 31, 2009	201	2,584	2,330	5,115
Accumulated amortisation Jan. 1, 2009	651	1,488	271	2,410

EURk	Development costs	Software licences	Dealer network	Total
Currency translation differences	0	0	19	19
Additions	125	474	378	977
Disposals	619	5	0	624
Reclassifications	0	0	0	0
Accumulated amortisation Dec. 31, 2009	157	1,957	668	2,782
Net carrying amounts Dec. 31, 2009	44	627	1,662	2,333

4.10.2 Overview for Fiscal Year 2010

EURk	Development costs	Software licences	Dealer network	Total
Acquisition cost Jan. 1, 2010	201	2,584	2,330	5,115
Currency translation differences	0	37	55	92
Additions	0	157	0	157
Disposals	0	1	0	1
Subsidiary additions	0	0	0	0
Reclassifications	0	0	0	0
Acquisition cost Dec. 31, 2010	201	2,779	2,385	5,365
Accumulated amortisation Jan. 1, 2010	157	1,957	668	2,782
Currency translation differences	0	40	17	57
Additions	31	416	419	866
Disposals	0	0	0	0
Reclassifications	0	0	0	0
Accumulated amortisation Dec. 31, 2010	188	2,413	1,104	3,705
Net carrying amounts Dec. 31, 2010	13	366	1,281	1,660

Development costs mainly relate to internally developed factoring software and webshop programming. Additions to the dealer network relate solely to the acquisitions concluded in the previous years.

4.11 Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities break down as follows:

	Balance sheet		Income statement
EURk	Dec. 31, 2010	Dec. 31, 2009	2010	2009
Deferred tax assets
Tax loss carryforwards	11,984	11,034	–950	1,107
Remeasurement of lease liabilities	9,669	2,024	–7,645	3,207
Remeasurement of lease receivables	31	2,124	1,153	–2,124
Pensions	671	113	0	0
Other remeasurements (derivatives)	220	262	0	0
Total	22,575	15,557	–7,442	2,190

	Balance sheet		Income statement
EURk	Dec. 31, 2010	Dec. 31, 2009	2010	2009
Deferred tax liabilities
Remeasurement of lease receivables	35,022	35,120	–98	–12,314
Remeasurement of lease liabilities	1,297	3,424	–2,127	3,424
Other remeasurements	42	36	6	–533
Total	36,361	38,580	–2,219	–9,423
Deferred tax liabilities/(assets)			–9,661	–7,233
Net deferred tax liabilities	13,786	23,023
Reported on the balance sheet as follows:
Deferred tax assets	22,575	15,557
Deferred tax liabilities	36,361	38,580

A total of EUR 502k of deferred taxes on loss carryforwards relates to the subsidiary in Belgium. At this company, deferred tax assets on loss carryforwards exceed deferred tax liabilities for temporary differences by a total of EUR 86k.

However, based on the budget of the Belgian subsidiary, we believe that sufficient taxable profit will be generated to enable these tax loss carryforwards to be utilised. At the Danish company, the deferred tax assets on tax loss carryforwards were limited to EUR 363k (previous year: EUR 161k) to match the deferred tax liabilities.

Deferred tax assets of EUR 151k were reversed directly in equity in the fiscal year (previous year: reversal of deferred tax assets EUR 176k). These liabilities resulted from the cash flow hedge reserve recognised directly in equity. Deferred tax assets of EUR 28k (previous year: EUR 85k) were also taken into account in connection with the recognition of actuarial losses in equity. In accordance with IAS 12, deferred taxes in consolidated financial statements on differences between the proportionate equity of a subsidiary recognised in the consolidated balance sheet and the carrying amount of equity investment for the subsidiary, are to be recognised in the parent company's tax balance sheet ("outside basis differences") if the difference is likely to be realised.

As both GRENKELEASING AG and the relevant subsidiaries are corporations, these differences are largely tax-free upon realisation in line with Section 8b of the German Corporation Tax Act and are therefore of a permanent nature.

Also in the case of any temporary differences (e.g. those resulting from the 5 percent global calculation in Section 8b of the German Corporation Tax Act), in line with IAS 12.39, there should be no recognition of deferred tax liabilities unless – in the case of control on the part of the parent company – it is probable that these differences will reverse in the foreseeable future.

As this reversal is currently only expected in relation to a partial amount for the subsidiary in Switzerland, only deferred taxes amounting to EUR 42k (previous year: EUR 23k) were included in the balance sheet. No deferrals were recognised for the remaining differences of EUR 551k (previous year: EUR 564k).

As the EU Commission resolved on January 26, 2011 that the restructuring clause contained in Section 8c (1a) and applicable from January 1, 2008 constitutes a form of state aid incompatible with European law , the restructuring clause (note 2.5.17) is note taken into account in the final purchase price allocation for GRENKEFACTORING GmbH. The tax asset of EUR 543k (corporation tax: EUR 299k; trade income tax: EUR 244k) recognised as part of the first-time consolidation and provisional purchase price allocation of GRENKEFACTORING GmbH was reversed accordingly.

4.12 Current and Non-current Bank Liabilities

GRENKELEASING's financial liabilities comprise liabilities from the refinancing of the leasing business, bank liabilities and liabilities from deposit business.

EURk	Dec. 31, 2010	Dec. 31, 2009
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	320,582	379,343
ABS/ABCP related liabilities	70,362	124,644
Bonds, revolving facilities, debentures and private placements	219,635	226,072
Committed development loans	187	0
Sales of receivables agreements	30,398	28,627
Current liabilities from deposit business	87,624	75,817
Current bank liabilities	684	2,346
thereof current account liabilities	113	1,131
Total current financial liabilities	408,890	457,506
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	786,961	601,822
ABS/ABCP related liabilities	214,602	383,506
Bonds, debentures and private placements	528,689	189,461
Committed development loans	15,000	0
Sales of receivables agreements	28,670	28,855
Non-current liabilities from deposit business	34,615	30,561
Non-current bank liabilities	3,094	6,516
Total non-current financial liabilities	824,670	638,899
Total financial liabilities	1,233,560	1,096,405

The volume of non-current bank liabilities payable in one to five years and more was as follows as of December 31, 2010.

EURk		Total		1 to 5 years More than 5 years	Secured amount
Type of liability
Liabilities from the refinancing of the	2010	786,961	786,614	347	258,272
leasing business	(Previous year)	601,822	601,173	649	412,362
Liabilities	2010	34,615	34,615	0	0
from deposit business	(Previous year)	30,561	30,561	0	0
	2010	3,094	2,750	344	10,800
Bank liabilities	(Previous year)	6,516	4,421	2,095	10,800

The foreign currency (CHF) loan reported under bank liabilities was repaid in full at the end of December. The land charge of EUR 8,000k on the office building for Commerzbank Aktiengesellschaft, Baden-Baden (Oos land register, no. 6080) is still in place.

A ten-year loan of EUR 5,500k bearing interest at 3.1 percent was raised to finance the construction of a new office building. Interest is payable quarterly in arrears. The loan has been repaid semi-annually since September 30, 2008. 96 percent of the loan amount was paid out. A further land charge of EUR 2,800k was registered as security on October 11, 2006.

Bank liabilities also include the liabilities from the utilisation of cash lines (current account liabilities). As of the reporting date these lines had been utilised to the amount of EUR 113k (previous year: EUR 1,131k).

The liabilities from deposit business comprise deposits by customers of GRENKE BANK AG. EUR 18,282k (previous year: EUR 24,286k) of the total current liabilities of EUR 87,624k (previous year: EUR 75,817k) relate to deposits payable on demand as of the reporting date. Appropriate terms have been arranged for the other deposits consisting of time and fixedterm deposits.

Current and non-current lease receivables totalling EUR 209,519k (previous year: EUR 412,362k) have been assigned to the refinancing institutions to secure the liabilities from the refinancing of the leasing business. Each individual item of security is assigned until the outstanding receivable on the lease has been settled. The collateral is then reassigned. The items of security for assigned receivables are marked so that they can be clearly distinguished from non-assigned receivables.

Further details on the refinancing sources and the main categories of financial liabilities are given below:

4.12.1 ABS Bond

The first ABS bond of EUR 250,000 was placed on August 4, 2006 via the SPE GOALS (GRENKE Ongoing Asset Lease Securitisation) with a planned term of six years. The interest rate was variable at three-month EURIBOR plus a spread ranging between 0.08 and 1.75 percent depending on the tranche.

85 percent (EUR 212,500k) of the bond was given the highest rating by Standard & Poor's (AAA) and Moody's (Aaa). The wholly-owned subsidiary of GRENKELEASING AG, GRENKE FINANCE Plc., Dublin, Ireland, subscribed to the last tranche (nominal value EUR 5,000k) of the ABS bond. As a result, funds of only EUR 245,000k flowed to the Group.

In December 2009, GRENKELEASING applied for the early repayment of the ABS bond, referred to as a clean-up call, as provided for by the terms of the agreement. On January 15, 2010, GRENKELEASING AG exercised the option granted under its first ABS bond to buy it back early. Receivables of EUR 8,624k were bought back.

On February 4, 2010, a new ABS bond amounting to EUR 160,000k was then placed via the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS 2009-1). The contracts with GOALS FINANCING 2009 LIMITED allow GRENKELEASING to sell further lease agreements on a revolving basis for a total of 3 years and up to a maximum amount of EUR 300,000k. The interest rate is variable at three-month EURIBOR plus a spread ranging between 1.25 and 3.5 percent depending on the tranche. Three tranches of bonds with different ratings (risk classes) were issued by the SPE. The size of the best rated tranche is a reflection of the quality of the leasing portfolio and internal risk management and directly impacts the costs of this type of financing. 76.5 percent (EUR 122,400k) of the bond was given the highest rating by Standard & Poor's (AAA) and FITCH (AAA). The wholly-owned subsidiary of GRENKELEASING AG, GRENKE FINANCE Plc., Dublin, Ireland, subscribed on a pro rata basis to the second tranche and subscribed fully to the last tranche (nominal value EUR 24,200k) of the ABS bond. As a result, funds of only EUR 135,800k flowed to the Group. The carrying amount of the total liability was EUR 135,800k on the balance sheet date.

4.12.2 ABCP Programmes

The GRENKELEASING Group has several asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 400,000k as of the reporting date (previous year: EUR 662,200k). The overview of the programmes as of the reporting date is as follows:

	Initiating	Refinanceable lease	Programme volumes in EURk	Programme volumes in EURk
ABCP Programme/SPE	bank	receivables	as of Dec. 31, 2010	as of Dec. 31, 2009
		German and Austrian lease
Compass Variety Funding Limited	WestLB	receivables	40,000	250,000
		German and French lease
Kebnekaise Funding Limited	SEB AB	receivables	110,000	112,200
CORAL PURCHASING Limited	DZ-Bank	German lease receivables	150,000	150,000
Weinberg Capital Limited*	LBBW	German lease receivables	0	150,000
Arabella Finance Limited**	Unicredit	French lease receivables	100,000	0
Total			400,000	662,200

* The programme was dissolved by mutual consent by way of agreement dated November 19, 2010 and the receivables sold to the conduit at this time were repaid at present value

** The agreement was signed on November 24, 2010. The programme has not yet been used for refinancing as of the balance sheet date.

The ABCP programmes grant the company the right to sell receivables to the respective programmes for a certain period or to refinance through these. The cap on the purchase volume is determined by the volume of the programme, which is normally backed by a liquidity commitment in the corresponding amount by the organising bank. The ABCP programme Compass Variety Funding Limited with WestLB was fixed at EUR 40,000k and extended until January 22, 2012, after the bulk of the portfolio originally refinanced there has now been refinanced via the new ABS bond GOALS FINANCING 2009 LIMITED (GOALS 2009-1). The programme commitment for the Kebnekaise Funding Limited ABCP programme was extended and runs until November 30, 2011.

On December 6, the volume for the Weinberg Capital Limited ABCP programme as at the reporting date was bought back in full. The programme commitment for the CORAL Purchasing Limited ABCP programme runs until September 9, 2011 and until July 30, 2011 for the Arabella Finance Limited ABCP programme.

A further FCT (Fonds Commun de Titrisation á Compartments/French issuer) used by GRENKELEASING for French securitisation in line with the current general conditions for securitisation was founded to purchase French lease receivables via the SPE initiated by Unicredit, Arabella Finance Limited, from November 24, 2010. The sole purpose of this FCT is to securitise French lease receivables under the ABCP programme through Arabella Finance Limited.

At the end of the 2010 fiscal year, 37.01 percent of the refinancing framework of the ABCP programmes was utilised (previous year: 55 percent).

The SPEs conclude sometimes different interest rate hedges (caps and swaps) to hedge the variable cash flows from the placement of commercial papers under the ABCP programmes. Any costs incurred in this context are recharged to GRENKELEASING AG. In return, the company participates in the interest rate hedge as the benefit paid to the ABCP programme resulting from the related hedge is passed on to GRENKELEASING via the excess spread. The costs incurred by GRENKELEASING are classified as transaction costs under IAS 39 and amortised over the term of the underlying refinancing packages.

There are no currency risks in ABCP refinancing as only euro transactions and euro-based leases are involved. The present value of the programmes was EUR 297,524k as of the balance sheet date (previous year: EUR 382,950k). As the amount of financing provided is always identical to the balance of sold receivables (less discounts, etc.), the hedging strategy must be based on the receivables portfolio sold.

Unlike the sales of receivables described in note 4.12.3, however, the interest rates on the assets and liabilities side do not match because the purchase of the receivables is financed via the ABCP programmes in the commercial paper market. The reference rate for all programmes is one-month EURIBOR, i.e. interest is variable. The programmes' average interest rate in 2010 was 1.29 percent (previous year: 2.03 percent).

GRENKELEASING does not derecognise the future lease receivables sold as part of the ABCP programmes. Although from a legal perspective, all rights to the receipt of cash flows are transferred to the relevant SPEs, the company or the Group retains all economic risks and rewards. This ensures that the rating and thus the interest on the refinancing liability remain constant. The sale of the future lease receivables is treated in all cases as a loan and is shown as such on the balance sheet. Except for the FCT, GRENKELEASING does not include any of the SPEs used in the ABCP programmes. There is no off-balance sheet recognition (see note 2.5.16).

Nevertheless, the FCT founded by GRENKELEASING as part of the transaction involving French lease receivables through the SPE CORAL PURCHASING Limited is fully included in consolidation. The SPE CORAL PURCHASING Limited is not included in consolidation on the basis of the above argument.

4.12.3 Sales of Receivables Agreements

Such agreements are currently in place with Stadtsparkasse Baden-Baden, Sparkasse Karlsruhe, Commerzbank AG, UBS AG in Switzerland and with the Commerzbank subsidiary BRE-Bank SA in Poland. The agreements with Commerzbank AG and BRE-Bank SA in Poland were terminated in 2009. Repayments are being made in line with the portfolios contracted and new acquisitions are currently not possible.

On March 31, 2010, a framework agreement was signed between Norddeutsche Landesbank and Grenke Leasing Limited, UK, relating to the sale of receivables from UK lease agreements with a total volume of GBP 18 million. The first utilisation of this took place in April 2010.

In all cases, they are concluded to refinance lease contracts with matching tenors. For this purpose, individual lease contracts with similar tenors are grouped together and lease receivables are purchased for the same tenor.

This ensures that at any time in the future the interest charge for GRENKELEASING is fixed and known for the entire tenor of the contract. There is therefore no interest risk. For this reason, derivatives are not used for this type of financing.

There was no requirement to derecognise any items. The present value of the obligations is EUR 59,068k (previous year: EUR 57,482k).

4.12.4 Bonds, Debentures and Private Placements

Unless stated otherwise, the reference interest rate for the floating-rate bonds, promissory notes and private placements is three-month EURIBOR. The discounts and the initial expenses directly corresponding to the transaction concerned are reversed over the term of the debt securities using the effective interest method.

All debentures are bullet debt securities and are subject to constant rating. If the Standard & Poor's rating were to be downgraded, the agreed interest rate would be contractually adjusted (increased). As a downgrade is not expected, no hedge has been concluded to date.

Debt Issuance Programme

The relevant terms for bonds using the debt issuance programme are as follows:

					Nominal amount	Nominal amount
		Term	Coupon	Discount	Dec. 31, 2010	Dec. 31, 2009
Description	from	to	Percent p.a.	EURk	EURk	EURk
Euro bond	22.03.2005	22.03.2010	Euribor + 0.60	486	--	100,000
Euro bond	20.04.2009	20.04.2011	Euribor + 2.80	25	10,000	10,000
			Euribor + 0.75
Euro bond	18.05.2009	04.07.2011	(gradually + 0.50)	252	11,750	11,950
Euro bond	13.08.2009	13.08.2012	6.125	157	100,000	100,000
Euro bond	04.03.2010	04.03.2013	4.25	389	75,000	--
Euro bond	21.06.2010	21.01.2014	4.50	797	100,000	--
Euro bond	18.10.2010	22.04.2014	4.00	779	100,000	--

In 2010, three new bonds with a total nominal volume of EUR 275,000k were issued. The conditions can be seen in the table above.

For the EUR 100,000k bond issued on August 13, 2009, GRENKELEASING AG was replaced as the bond debtor by GRENKE FINANCE Plc., Dublin/Ireland. There were no other changes associated with this replacement; in particular, all rights of the bond creditors in connection with the bond remain unaffected in terms of their content and GRENKELEASING AG has assumed a guarantee for all obligations of GRENKE FINANCE Plc. with regard to the bond.

Promissory Note Loan (PNL)

The general data for the promissory note loans can be seen in the following table:

					Nominal amount	Nominal amount
Description		Term	Coupon	Discount	Dec. 31, 2010	Dec. 31, 2009
	from	to	Percent p.a.	EURk	EURk	EURk
EUR-PNL	06.12.2005	05.12.2010	3.7730	--	--	20,000
EUR-PNL	22.12.2005	22.12.2010	Euribor + 0.61	62	--	17,000
EUR-PNL	13.09.2007	06.12.2010	5.0920	--	--	15,000
EUR-PNL	10.03.2008	10.03.2011	4.7190	57	2,500	2,500
EUR-PNL	10.03.2008	10.03.2011	Euribor + 0.85	86	35,500	35,500
EUR-PNL	30.04.2008	30.04.2011	4.6905	--	40,000	40,000
EUR-PNL	30.07.2008	30.07.2011	6.0500	--	7,000	14,000
EUR-PNL	10.03.2009	10.03.2014	5.8900	50	10,000	10,000
EUR-PNL	10.03.2009	11.03.2013	5.1680	24	4,000	4,000
EUR-PNL	19.03.2009	10.03.2014	5.1374	45	10,000	10,000
EUR-PNL	30.03.2009	10.03.2014	5.8800	15	14,500	14,500
EUR-PNL	30.03.2009	28.03.2013	5.7610	45	10,000	10,000
EUR-PNL	30.03.2009	28.03.2013	5.7610	45	10,000	10,000
EUR-PNL	25.05.2009	25.05.2012	5.5400	133	26,500	26,500
EUR-PNL	15.06.2009	15.06.2012	Euribor + 3.75	--	--1)	15,000
EUR-PNL	15.06.2009	15.06.2012	Euribor + 3.75	--	10,000	10,000
EUR-PNL	24.03.2010	15.06.2012	Euribor + 3.75	--	10,000	--
EUR-PNL	29.10.2010	29.10.2013	4.162	50	10,000	--
EUR-PNL	06.12.2010	30.06.2020	4.85	--	7,500	--
EUR-PNL	06.12.2010	30.06.2020	4.85	--	7,500	--
EUR-PNL	16.12.2010	16.12.2013	Euribor + 2.1	--	15,000	--
EUR-PNL	16.12.2010	16.12.2013	4.08	145	10,500	--

1) This promissory note loan was repaid on July 15, 2010.

In the third quarter of 2008, a fixed-interest promissory note loan with an interest rate of 6.05 percent and a nominal value of EUR 21,000k was concluded. Annual repayments of EUR 7,000k will be made over the three-year term.

A new promissory note loan with a volume of EUR 10,000k was issued on March 24, 2010. The underlying conditions were fixed in June 2009. The loan is used to refinance the bond from the debt issuance programme, which matures in March 2010.

Three new promissory notes that GRENKELEASING AG issued on June 9, 2009 for a total of EUR 35,000k were changed on April 15, 2010 so that GRENKELEASING AG was replaced as the bond debtor by GRENKE FINANCE Plc. All other parameters of the emission are not affected by the change of debtor.

A promissory note in the amount of EUR 15,000k was paid back early on July 15, 2010.

A fixed-interest promissory note loan of EUR 10,000k was concluded on October 29, 2010.

The fixed-interest promissory note loans concluded on December 6, 2010 in the amount of EUR 7,500k each will be repaid over ten years with annual payments of EUR 750k each. GRENKELEASING AG is the guarantor of this promissory note loan. On December 16, a new fixed-interest promissory note loan of EUR 10,500k and a floating-rate promissory note loan of EUR 15,000k were concluded.

4.12.5 Loan Agreement

On June 29, 2009, GRENKELEASING AG's French subsidiary concluded a loan agreement with a nominal volume of EUR 5,000k with the Banque Populaire d'Alsace. The duration of the agreement is from July 1, 2009 to July 1, 2011, over which period the utilisation of the loan volume can be variably structured. The interest rate on the utilised loan volume amounts to the average of the three-month Euribor, which is calculated on a quarterly basis plus a margin of 1.80 percent. There was no utilisation in the fiscal year 2010.

4.12.6 Development Loans

On February 18, 2010, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with NRW.Bank, the development bank of the state of North Rhine-Westphalia. This opens up a new opportunity for incorporating development funding into lease financing.

The refinancing of lease agreements, which are available exclusively for investment plans in North Rhine-Westphalia of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500,000k, takes place through the purchase of receivables by GRENKE BANK AG.

GRENKE BANK AG was granted a global loan of EUR 15,000k by NRW.Bank for precisely this purpose. The loan was drawn on for the first time in the amount of EUR 7,500k on March 22, 2010; the interest rate related to the 6-month Euribor plus a margin of 0.21 percent and a term of three years. The second draw-down on November 25, 2010 also had a reference interest rate of 6-month Euribor and a bullet maturity of three years, only with a margin of 0.19 percent in this case.

4.12.7 Revolving Credit Facility

In the context of revolving credit facilities with a total volume of EUR 120,000k available to GRENKE FINANCE Plc., Dublin/Ireland, the Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k and a term of at least one month at any time. The revolving credit facilities of EUR 120,000k in total are arranged with four banks with a volume of EUR 30,000k each. As in previous years, all four of the credit facilities with a total volume of EUR 120,000k which have existed since 2006 have again been extended by one year. The facility with SEB was prolonged until July 2011, while the facility with WestLB was extended to August 2011, the facility with Deutsche Bank until September 2011 and the facility with DZ-Bank was extended to October 2011.

On April 19, 2010, a money market line for GRENKE FINANCE Plc. was agreed with Bayerische Landesbank for EUR 20,000k.

As of December 31, 2010, these credit lines had been utilised to the amount of a total volume of EUR 100,000k (previous year: EUR 60,000k). Utilisation is disclosed under current liabilities from refinancing of the leasing business.

4.13 Financial Instruments with Negative Fair Value

EURk	Dec. 31, 2010	Dec. 31, 2009
Hedging derivatives as defined by IAS 39	1,172	3,715
Non-hedging derivatives as defined by IAS 39	5,860	1,117
Total	7,032	4,832

The company has reported negative fair values in connection with interest rate swaps (see note 5.2.3) and forward exchange contracts (see 5.2.2) for the current fiscal year.

The forward exchange contracts are disclosed as non-hedging derivatives as defined by IAS 39. As of December 31, 2010, forward exchange contracts on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Swedish krona, Norwegian krone and Danish krone had a negative fair value of EUR 3,100k (previous year: negative fair value of EUR 1,107k on the Swiss franc, Polish zloty, pound sterling, Hungarian forint, Swedish krona, Norwegian krone and Danish krone). These forward exchange contracts have a total volume of EUR 76,953k (previous year: EUR 74,939k) and residual maturities of between one and 80 months (see note 5.2.2).

In addition to the forward exchange contracts, non-hedge derivatives as defined under IAS 39 include interest rate swaps of EUR 2,760k (previous year: EUR 10k). All other contracted interest rate swaps, which are all included in hedge accounting in line with IAS 39, had a negative fair value of EUR 1,172k (previous year: EUR 3,715k) as of the reporting date and were in highly effective hedges in line with IAS 39.

4.14 Tax Liabilities

EURk	Dec. 31, 2010	Dec. 31, 2009
Corporate income tax	7,832	4,386
Trade tax	6,963	7,135
Total	14,795	11,521

4.15 Provisions

The liability risks of GRENKE BANK AG are shown under this item.

In addition, in the context of the relocation of GRENKE BANK AG from Hamburg to Baden-Baden, liabilities were recognised in a total amount of EUR 423k for onerous contracts. The amounts were discounted accordingly.

		Currency translation
EURk	Jan. 1	differences	Addition	Utilisation	Reversals	Dec. 31
2010
Liability risks	0	0	3,029	0	0	3,029
Onerous contracts	0	0	423	0	0	423
Total	0	0	3,452	0	0	3,452

EUR 1,429k of the liability risks relates to contingent liabilities recognized as part of the purchase price allocation on acquisition of GRENKE BANK AG.

All provisions are current.

4.16 Deferred Liabilities

The deferred liabilities item shows the following facts:

		Currency translation
	01.01.	differences	Addition	Utilisation	Reversals	31.12.
	EURk	EURk	EURk	EURk	EURk	EURk
2010
Consulting services	561	10	1,038	522	70	1,017
Personnel services	1,138	1	1,724	999	46	1,818
Other costs	2,184	30	1,480	1,454	362	1,878
Total	3,883	41	4,242	2,975	478	4,713
2009
Consulting services	424	0	809	610	62	561
Personnel services	926	0	1,182	937	33	1,138
Other costs	960	3	3,183	1,641	320	2,185
Total	2,310	3	5,174	3,188	415	3,884

All deferred liabilities are current.

4.17 Pensions

The provision for pensions relates to compulsory funded retirement benefit plans (endowment insurance) in Switzerland obliging companies to make additional contributions for GRENKELEASING AG, Zurich, and the pension obligations from final salary and flat salary pension plans in Germany for GRENKE BANK AG, Hamburg. A total net pension expense of EUR101k(previous year:EUR127k)wasrecognisedforexistingpensionplansinpersonnelexpensesinthefiscalyear2010.

4.17.1 Pensions in Germany

The pension obligations of GRENKE BANK AG relate to direct and vesting pension commitments made in the past exclusively for former employees. The accounting provisions for defined benefit plans are applied to these commitments. The pension provisions were calculated on the basis of the following parameters:

	Dec. 31, 2010	Dec. 31, 2009
Discount rate	4.66%	5.75%
Estimated future pension increases	1.70%	2.00%
Expected return on plan assets	2.00%	2.00%

The defined benefit obligations developed as follows:

EURk	2010	2009
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,173	1,153
Interest expense	66	57
Current service cost	0	41
Benefits paid	55	46
Actuarial gains and losses recognised in equity	–109	–32
Increase due to plan change in fiscal year	258	0
Defined benefit obligations at end of period	1,333	1,173

The amounts recognised in the balance sheet are calculated as follows:

EURk	2010	2009
Present value of defined benefit obligation	1,442	1,205
Unrecognised actuarial gains and losses	–109	–32
Present value of defined benefit obligation	1,333	1,173

4.17.2 Pensions in Switzerland

As of January 1, 2010, the present value of the obligations (DBO) under the defined benefit pension plans for Switzerland amounted to EUR 636k (CHF 943k). Minus the fair value of the plan assets of EUR 452k (CHF 670k), the net obligations was EUR 184k (CHF 273k). The external expert opinion is based on the following actuarial assumptions:

	Dec. 31, 2010	Dec. 31, 2009
Discount rate	2.75%	3.25%
Estimated future salary increases	3.50%	3.50%
Estimated future pension increases*	0.00%	0.00%
Expected return on plan assets	2.00%	2.00%

* Assuming a zero percent pension increase as no pensions are currently being paid to employees.

	Dec. 31, 2010	Dec. 31, 2009
Mortality	BVG 2005	BVG 2005
Probability of invalidity	BVG 2005	BVG 2005
Probability of departure	BVG 2005	BVG 2005

On the basis of the actuarial report, the following income and expenses were recognised in fiscal year 2010:

Service cost	EUR 70k (CHF 97k)
Interest expense	EUR 20k (CHF 27k)
Income from interest on plan assets	EUR 9k (CHF 12k)

The service cost is recognised as personnel expenses, while interest expenses and income from interest on plan assets are shown under other interest income or expenses.

As of December 31, 2010, the provision for pensions disclosed under non-current liabilities amounted to EUR 234k (CHF 292k). This amount comprises the present value of the obligations (DBO) of EUR 600k (CHF 750k), the fair value of the plan assets of EUR 366k (CHF 458k) and an actuarial gain of EUR 20k (CHF 28k). The actuarial gain was recognised in equity in a separate line under other reserves in accordance with the revised IAS 19.

EURk (CHFk)	2010	2009	2008	2007	2006
Present value of the obligations (DBO)	600 (750)	636 (943)	532 (790)	373 (618)	268 (431)
Present value of plan assets	366 (458)	452 (670)	442 (656)	285 (471)	207 (333)
Net obligation	234 (292)	184 (273)	90 (134)	88 (147)	61 (98)

Experience adjustments totalled EUR –55k (CHF –76k) to the obligations and EUR –35k (CHF –48k) to assets. Employer contributions in the next period are estimated at EUR 52k (CHF 65k).

EURk	2010	2009
Change in defined benefit obligations
Defined benefit obligations at beginning of period	636	532
Interest expense	20	19
Current service cost	70	64
Employer contributions	35	29
Benefits paid	–228	–12
Actuarial gains and losses recognised in equity	–55	3
Currency translation differences from foreign plans	123	1
Defined benefit obligations at end of period	600	636

EURk	2010	2009
Change in plan assets
Fair value of plan assets at beginning of period	452	442
Expected return	9	9
Employer contributions	87	72
Benefits paid	–228	–12
Actuarial losses recognised in equity	–35	–26
Currency translation differences from foreign plans	81	–33
Fair value of plan assets as of Dec. 31, 2010	366	452

4.18 Other Non-current Liabilities

The following schedule of liabilities, which primarily comprise security deposit liabilities and deferred income, illustrates how other non-current liabilities break down by residual maturities:

EURk	Total	1 to 5 years	More than 5 years	Secured amount
Other Non-current Liabilities	836	835	1	0
(Previous year)	1,112	1,074	38	0

4.19 Equity

For details of changes in equity, please see the consolidated statement of changes in equity.

The fully paid-in subscribed capital of GRENKELEASING AG amounts to EUR 17,491k (previous year: EUR 17,491k). It is divided into 13,684,099 (previous year: 13,684,099) no-par value bearer shares.

On May 9, 2006, the Annual General Meeting adopted a resolution authorising the Board of Directors, with the approval of the Supervisory Board, to increase the company's capital stock by up to a nominal amount of EUR 8,500k by issuing new no-par bearer shares in return for cash and/or non-cash contributions until April 30, 2010.

The authorised capital increase can be split into tranches. The shareholders will be granted a subscription right. However, under certain conditions, the Board of Directors is authorised, with the approval of the Supervisory Board, to wholly or partly disapply the right of shareholders to subscribe to capital increases in return for cash contributions.

By way of resolution of the Annual General Meeting of May 11, 2010, the existing authorised capital was revoked and new authorised capital was created – in the same amount and at the same conditions. Thus, the Board of Directors is still authorised, with the corresponding approval of the Supervisory Board, to increase the capital stock of the company by up to EUR 8,500k against cash and non-cash contributions until May 11, 2014.

4.19.1 Contingent Capital

At the Annual General Meeting of GRENKELEASING AG on May 9, 2006, it was decided to increase capital contingently by a nominalamountofuptoEUR3,834,690byissuingupto3,000,000newno-par valuebearershares("ContingentCapital III"). The creation of contingent capital also entitles the Board of Directors, with the consent of the Supervisory Board, to issue ononeormoreoccasionsuntilMay 8, 2011optionsorconvertiblebondswithatotalnominalvalueofuptoEUR 150,000,000 and a maximum term of ten years.

Existing shareholders' subscription rights can be disapplied. In addition, the Annual General Meeting authorised the Board of Directors, with the consent of the Supervisory Board, to issue until May 8, 2011 participation certificates on one or more occasions up to a maximum of EUR 150,000,000. The subscription rights of shareholders have been disapplied in this case. To date, no options or convertible bonds have been issued from Contingent Capital III.

4.19.2 Authorisation to Acquire Treasury Shares in accordance with Section 71 (1) No. 8 AktG

The Annual General Meeting on May 11, 2010 again authorised the company to acquire treasury shares. Following the amendment of Section 71 (1) no. 8 of the German Stock Corporation Act [Aktiengesetz (AktG)] by the German Act Implementing the Shareholders' Rights Directive [Gesetz zur Umsetzung der Aktionärsrechterichtlinie (ARUG)] of July 30, 2009, the authorisation has now been granted for five years until May 10, 2015.

The company is authorised to acquire treasury shares of up to a total of ten percent of the capital stock existing at the time of the resolution. The authorisation can be exercised in whole or in part, on one or more occasions, by the company itself or by third parties assigned by the company.

At the discretion of the Board of Directors, the shares will be acquired (1) on the stock exchange or (2) by way of a public purchase-option offer to all shareholders of GRENKELEASING AG or a public invitation to all shareholders of the company to submit offers for sale.

(1) If the shares are acquired on the stock exchange, the price paid per share by the company (not including incidental costs of acquisition) must be within ten percent of the average closing price of the shares of GRENKELEASING AG in Xetra trading on the Frankfurt stock exchange (or a corresponding successor system) on the last three trading days before entering into the obligation to acquire treasury shares.

(2) If the shares are acquired by way of a public purchase-option offer to all shareholders of the company or a public invitation to all shareholders of the company to submit offers for sale, the purchase or sale price offered or the bid/ask spread offered per share (not including incidental costs of acquisition) must be within 20 percent of the average closing price of the shares of GRENKELEASING AG in XETRA trading on the Frankfurt stock exchange (or a corresponding successor system) on the last three trading days before the day of the publication of the offer or public invitation to submit offers for sale.

If the price of shares fluctuates significantly following the publication of a formal offer or invitation to submit offers for sale, the offer or the invitation to submit offers for sale can be adjusted. In event of this, any adjustment will be based on the average price on the last three trading days before the public announcement of such adjustment; the 20 percent limit for variation will also still apply.

The offer or invitation to the shareholders to submit offers for sale can include further conditions and the option to specify the purchase price or purchase price spread during the offer period.

If the shares offered for acquisition by the shareholders exceed the company's intended buy-back volume, they will be purchased proportionately according to the shares offered. Preferred purchase or preferred acceptance of smaller lots up to 50 shares in the company per shareholder can be provided for.

The provisions of the German Securities Acquisition and Takeover Act [Wertpapiererwerbs- und Übernahmegesetz (WpÜG)] must be complied with, if and to the extent that they apply.

The Board of Directors is authorised, with the approval of the Supervisory Board, to use the shares in the company acquired under the above authorisation as follows:

(1) The shares can be sold against non-cash contributions, particularly to offer them to third parties in the context of business combinations or to acquire companies, investments in companies or parts of companies.

(2)Thesharescanbesoldagainstcashtothirdpartiesinawayotherthanonthestockexchangeorofferedtoallshareholdersif thetreasurysharesacquiredforcasharesoldatapricenotsignificantlylessthanthemarketpriceofthesharesofthecompanyat thetimeofthedisposal.Thisauthorisationislimitedtoamaximumoftenpercentofthecapitalstockofthecompanyatthetimeof the resolution by the Annual General Meeting, including other authorisations to issue new shares with subscription rights disapplied in accordancewith Section 186 (3)sentence 4 AktG and taking into accountsuch sharesissued on the exercise of options orthe conversion of options or convertible bondswith shareholdersubscription rights disapplied in accordancewith Section221(4)sentence2inconjunctionwithSection186(3)sentence4AktG.

(3) The shares can be redeemed without a further resolution by the Annual General Meeting.

The authorisations listed under (1), (2) and (3) can be exercised in full or in part, on one or several occasions and individually or together.

The subscription rights of shareholders to the treasury shares acquired are disapplied to the extent that these shares are used in line with the above authorisations under (1) and (2).

On taking effect, this authorisation replaces the current authorisation granted by the Annual General Meeting of May 12, 2009 and limited until November 11, 2010.

No treasury shares have been purchased to date.

4.19.3 Participation Certificate Capital

By resolution of the Annual General Meeting on May 9, 2006, the Board of Directors was authorised, with the consent of the Supervisory Board, to issue participation certificates of up to EUR 150,000k with an indefinite term. The authorisation expires on May 8, 2011.

The subscription rights of shareholders have been disapplied. The participation certificates do not grant shareholder status, they merely confer creditor rights on a contractual basis. A conversion or option right in respect of shares in the company is expressly precluded. No participation rights have been issued to date.

4.19.4 Balance Sheet Profit

The Annual General Meeting on May 11, 2010 adopted the resolution on the appropriation of GRENKELEASING AG's profits for fiscal year 2009 of EUR 23,263,815.44. The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the balance sheet profit for 2009 as follows:

Balance sheet profit for 2009	EUR 23,263,815.44
Distribution of a dividend of EUR 0.60 per share for a total of 13,684,099 shares	EUR 8,210,459.40
Appropriation to revenue reserves	EUR 0.00
Profit carryforward (to new account)	EUR 15,053,356.04

The dividend was paid to the shareholders of GRENKELEASING AG on May 12, 2010.

In the prior year, the Annual General Meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate, and appropriating, the balance sheet profit for 2008 as follows:

Balance sheet profit for 2008	EUR 55,711,683.62
Distribution of a dividend of EUR 0.60 per share for a total of 13,684,099 shares	EUR 8,210,459.40
Appropriation to revenue reserves	EUR 45,048,353.78
Profit carryforward (to new account)	EUR 2,452,870.44

The management will propose the distribution of a dividend of EUR 0.70 per share for the fiscal year 2010 to the Annual General Meeting. This distribution has not been recognised as a liability as of December 31, 2010.

4.19.5 Reserves

The capital reserves of EUR 60,166k (previous year: EUR 60,166k) mainly result from the IPO of GRENKELEASING AG in April 2000. The company opted to offset these IPO costs against the capital reserves in 2000. The reversal resulted in an effect of EUR 211k in 2003, including the effect of deferred taxes of EUR 81k.

The change in the capital reserves in 2006 and 2007 was due to stock options being exercised under a stock option programme. On this basis, an amount of EUR 114k was appropriated to the capital reserves in fiscal year 2007.

In addition to GRENKELEASING AG's revenue reserves, revenue reserves also comprise the revenue reserves and profits of the consolidated subsidiaries. By way of resolution of the Annual General Meeting on May 12, 2009, EUR 45,048,353.78 of GRENKELEASING AG was appropriated to the revenue reserves.

Additions to revenue reserves were made by the following subsidiaries in 2010:

Name	Registered office	Dec. 31, 2010	Dec. 31, 2009
GRENKE LOCATION SAS	Schiltigheim/France	2,967	11,059
GRENKELEASING AG	Zurich/Switzerland	965	1,311
GRENKELEASING Sp. z o.o	Poznan/Poland	397	1,028
GRENKE Locazione S.r.l.	Milan/Italy	593	0
GRENKE ALQUILER S.A.	Barcelona/Spain	229	–281
GRENKELEASING AG	Vienna/Austria	2	20
GRENKE FINANCE Plc.	Dublin/Ireland	--	20,397
GRENKE BANK AG	Baden-Baden/Germany	247	--
Total		5,400	33,534

A hedge reserve was recognised in equity in fiscal year 2003, when cash flow hedges were recognised for the first time. Changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in equity so long as an appropriate effectiveness in terms of IAS 39 can be demonstrated.

The change in fair value during the fiscal year was EUR 2,087k (previous year: EUR 614k) plus deferred taxes of EUR –151k (previous year: EUR –176k).

AsaresultoftherecognitionofpensionprovisionsinaccordancewithIAS19,anamountofEUR–88k(previousyear:EUR–131k) foractuarialgainsandlossesanddeferredtaxestotallingEUR28k(previousyear:EUR85k)wererecognisedinequity.

5 DISCLOSURES ON FINANCIAL INSTRUMENTS

5.1 Additional Information on Financial Instruments

						Carrying amount in accordance with
				Carrying amount in accordance with IAS 39		IAS 17
Dec. 31, 2009	Measurement	Carrying amount	Fair value in	Fair value through profit	Amortised
EURk	category	Dec. 31, 2009	equity	or loss	cost
Financial instruments with positive
market value
Cash on hand and balances with banks	L&R	109,865			109,865
Financial instruments with positive fair
value	FVPL/n.a.	2,023		2,023
Lease receivables	L&R/n.a.	1,134,879			86,329	1,048,550
Trade receivables	L&R	3,046			3,046
Other financial assets	L&R	151,436			151,436
Aggregated categories
	L&R				350,676
	FVPL/n.a.			2,023
Financial liabilities
Liabilities from the refinancing of lease
receivables	ol	981,165			981,165
Liabilities from deposit business	ol	106,378			106,378
Trade payables	ol	5,766			5,766
Bank liabilities	ol	8,862			8,862
Financial instruments with negative fair
value	FVPL/n.a.	4,832	3,715	1,117
Aggregated categories
	ol				1,102,171
	FVPL/n.a.		3,715	1,117

Abbreviations:

FVPL Financial assets and liabilities measured at fair value through profit and loss

L&R Loans and receivables

n.a. Not applicable

ol Other liabilities

Net gains and losses		Currency	Valuation
Dec. 31, 2009 (EURk)	From interest	translation	allowance	From disposal	Net earnings
Loans and receivables	1,039	4,641	–11,920	–21,811	–28,051
At fair value through profit and loss	–63	–4,521		–216	–4,800
Other liabilities	–1,242	6			–1,236

				Carrying amount in accordance with IAS 39		Carrying amount in accordance with IAS 17
		Carrying		Fair value
Dec. 31, 2010	Measurement	amount	Fair value in	through profit	Amortised
EURk	category	Dec. 31, 2010	equity	or loss	cost
Financial instruments with positive
market value
Cash on hand and balances with banks	L&R	78,297			78,297
Financial instruments with positive fair
value	FVPL/n.a.	2,370		2,370
Lease receivables	L&R/n.a.	1,328,224			86,849	1,241,375
Trade receivables	L&R	3,845			3,845
Other financial assets	L&R	121,265			121,265
Aggregated categories
	L&R				290,256
	FVPL/n.a.			2,370
Financial liabilities
Liabilities from the refinancing of lease
receivables	ol	1,107,543			1,107,543
Liabilities from deposit business	ol	122,239			122,239
Trade payables	ol	6,194			6,194
Bank liabilities	ol	3,778			3,778
Financial instruments with negative fair
value	FVPL/n.a.	7,032	1,172	5,860
Aggregated categories
	ol				1,239,754
	FVPL/n.a.		1,172	5,860

Abbreviations:

FVPL Financial assets and liabilities measured at fair value through profit and loss

L&R Loans and receivables

n.a. Not applicable

ol Other liabilities

Net gains and losses		Currency	Valuation
Dec. 31, 2010 (EURk)	From interest	translation	allowance	From disposal	Net earnings
Loans and receivables	414	2,855	3,258	24,915	31,442
At fair value through profit and loss		–3,875			–3,875
Other liabilities	1,187	–292			895

Net gains from lease receivables comprise interest income, profit from new business and profit from disposals and amounted to EUR 152,838k (previous year: EUR 137,301k). Net gains and losses from financial instruments include not only the changes in fair value (for forward exchange contracts shown as the effect from the currency translation and for interesthedgesasinteresteffect),theresultsfromaccruedinterestandfromtheearlydisposalinthecontextofanearlysale.

5.2 Derivative Financial Instruments

5.2.1 Financial Risk Strategy

Business Model

As a small-ticket IT leasing company, GRENKELEASING leases mobile IT assets to B2B customers among other things.

To date, the contractual terms for the lease portfolio, i.e. all lease contracts, have been fixed for the duration of each individual contract, fixing both the periodical payments and the interest rate used to calculate the payments when the contract is concluded. Neither of the parties can subsequently amend these terms.

GRENKELEASING only dissolves or agrees to dissolve contracts prematurely (repurchase, exchange option, termination, etc.) if the lessee bears the potential loss (i.e. due to lost interest). Please refer to the risk report and the report on the financial position and net assets for quantitative disclosures regarding credit risk, liquidity risk and market risks.

Hedging Policy

Derivatives are used when, and only when, underlying contracts need to be hedged. Underlying contracts are the contractual obligations entered into by GRENKELEASING AG in order for it to achieve its objectives. Treasury is not a separate profit centre. The use of derivatives is limited to hedging the profits of GRENKELEASING AG to the extent stipulated in the company's articles of incorporation.

Items are hedged in terms of volume or amount, with various instruments being used. The choice of instrument is always a management decision based on the risk profile, i.e. the potential income associated with the risk in question. For example, besides benefiting from falling interest rates, interest rate caps also entail a risk of rising finance costs until the strike is reached, whereas swaps fix a specified interest rate for the term of the swap.

Measurement

Because the derivatives used are so-called OTC derivatives rather than standardised listed financial instruments, recognised measurement models are used for calculating fair values. The necessary parameters for measurement, such as interest rates, yield curves and foreign exchange spot and forward rates can be observed on the market at all times and can be accessed via external sources of information.

As of each balance sheet date, GRENKELEASING receives a measurement overview or the current fair value measurement from the perspective of the bank counterparty. In cases of interest rate swaps, GRENKELEASING calculates the corresponding fair values on a parallel basis through Bloomberg.

5.2.2 Currency Risk Management

GRENKELEASING is exposed to currency risks because of its European activities and the growing significance of its foreign markets. Derivatives are used to mitigate or eliminate these risks.

Derivative Financial Instruments for Hedging Currencies

Forward exchange contracts were and are used to hedge the cash flows from the refinancing of the franchise companies in Norway and Hungary and of the British, Polish, Czech, Swedish and Danish subsidiaries. The company finances the lease receivables generated by the franchisees and the subsidiaries in the foreign currencies and receives payments in those currencies over the term of the underlying lease contracts.

Hedge accounting was not applied. The fair values of the forward exchange contracts are posted on the balance sheet under financial instruments with positive fair value/financial instruments with negative fair value and are allocated at fair value through profit or loss according to their category in IAS 39 (see note 5.1).

As of the balance sheet date, there were forward exchange contracts with positive and negative fair values, leading to disclosure as assets (see note 4.2) and liabilities (see note 4.13). As of the balance sheet date, there were forward exchange contracts with a nominal volume of EUR 102,334k (previous year: EUR 74,939k) on the basis of the euro.

EURk	Nominal volume		Maturity of the nominal volume as of Dec. 31, 2010					Hedged average
	Dec. 31, 2009	Dec. 31, 2010	2011	2012	2013	later	rate
EUR buying
CZK	5,818	7,253	3,269	2,205	1,224	555	26.69
GBP	36,153	46,031	24,299	9,605	5,468	6,659	0.86
CHF 1)	2,350	1,304	1,068	200	36	--	1.47
HUF	2,259	3,712	1,746	1,211	604	151	312.03
NOK	5,036	4,229	4,099	130	--	--	8.50
SEK	6,847	12,828	3,445	4,058	5,325	--	10.26
DKK	6,404	14,659	3,021	3,384	8,254	--	7.51
PLN 2)	7,618	11,952	5,830	3,954	1,948	220	4.33
EUR selling
PLN 2)	2,454	366	366	--	--	--	3.48

They break down by currency as follows:

1) The outstanding forward exchange contracts in Swiss francs result from the refinancing of the franchisee based in Hungary, which offers lease contracts, etc. on the basis of Swiss francs due to the local market conditions and the refinancing of the franchiser based in Switzerland.

2) In the context of the possibility for refinancing in the local currency with BRE-Bank SA in Poland (see note 4.12.3), all outstanding forward exchange contracts, i.e. purchase of EUR, were closed out in fiscal year 2008 with respective counter-transactions, i.e. sale of EUR.

5.2.3 Interest Rate Risk Management

The interest rate risk for GRENKELEASING's operations stems mainly from the sensitivity of its financial liabilities to changes in market interest rates. GRENKELEASING endeavours to limit the impact of such risks on interest expense and net interest income by employing appropriate derivatives.

Derivative Financial Instruments for Hedging Interest Rates

Issuing bonds and contracting interest rate swaps are elements of a financing strategy under which GRENKELEASING separates refinancing from interest rate hedging in order to obtain maximum flexibility for its refinancing activities. The resulting risks (variable cash flows) are hedged by appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and designated as hedges in accordance with IAS 39 if the appropriate requirements have been met. As all interest rate derivatives used in hedge accounting have been proven to be virtually 100 percent effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised fully in equity except for an amount of EUR 1k (previous year: EUR 73k) for hedge derivatives in line with IAS 39.

Under the ABCP programme with DZ-Bank (CORAL) and LBBW (Weinberg, previous year only), GRENKELEASING is responsible for interest rate hedging and thus interest rate risk management. The ABCP transaction also serves here as an underlying transaction with a floating rate and cash flows are being hedged by deploying interest rate swaps.

Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes. However, the contracting parties are the SPEs. Therefore GRENKELEASING does not account for the derivatives and does not apply hedge accounting.

Notes on Comparative Prior-year Figures

A total of six new swaps were contracted in the 2009 fiscal year with a nominal volume of EUR 57 million as of December 31, 2009. The fixed interest rate of the new contracted swaps was between 1.38 percent and 2.20 percent.

The fixed interest actually paid in 2009 across all existing swaps was between 1.38 percent and 4.22 percent. The variable side of the swaps was in the range of between 0.43 percent and 2.614 percent. The swaps in place at the balance sheet date have a nominal volume of EUR 273 million as of December 31, 2009 and contracted fixed interest rates over the relevant maturities of between 1.87 percent and 4.22 percent. The duration of the longest contracted interest rate swap is until April 2012.

Interest rate caps were sold in the fiscal year generating revenue of EUR 158k recognised in profit and loss. In addition, interest rate swaps that no longer met the requirements for hedge accounting were closed out and an expense of EUR 157k was recognised in profit and loss.

Fiscal Year 2010

The fixed interest actually paid in 2010 across all existing swaps was between 1.87 percent and 4.04 percent. The variable side of the swaps was in the range of between 0.402 percent and 1.043 percent. The swaps in place at the balance sheet date have a nominal volume of EUR 97 million as of December 31, 2010 and contracted fixed interest rates over the relevant maturities of between 1.87 percent and 3.78 percent. The duration of the longest contracted interest rate swap is until April 2012. The table below shows the development of the nominal volume as of the balance sheet date for the coming years. The average interest rate is the arithmetic mean of the existing swaps. In the reporting year we contracted both payer swaps and a receiver swap from the perspective of GRENKELEASING. The payer swaps bear the agreed fixed interest rate from interest rate swaps. The interest on the only receiver swap contracted under the second ABS bond is variable (see note 4.12.1).

	Average interest rate
EURk	2009	2010	2011	2012	2013	2010
Contracted prior to 2009	216,964	35,000	5,000	0	0	3.40
Contracted in 2009	56,500	62,000	13,500	0	0	2.05
Total	273,464	97,000	18,500	0	0

5.2.4 Hedge Effectiveness

Accounting in accordance with IFRSs requires documentation and a risk analysis when derivative financial instruments are used. The relationship between the hedged item and the hedging instrument determines the effectiveness of a hedge. As it uses derivatives for interest rate hedging, GRENKELEASING applies hedge accounting in accordance with IAS 39. Hedge effectiveness, as required by IFRSs, is in line with GRENKELEASING's intention of using derivatives only to hedge risks from designated hedged items and to never enter into derivatives for speculative reasons.

The tests of effectiveness for each financial derivative accounted for in a hedge in accordance with IAS 39 were performed as of the end of the quarter using the hypothetical derivative method. The documentation of each hedging relationship describes the hedged item, hedged risk, strategy, hedging instrument, estimate of effectiveness and names the counterparty.

A hedging relationship only exists in substance for currency hedging. Although the hedging instruments are specifically designated, hedge accounting pursuant to IAS 39 is not applied.

Forward Exchange Contracts

The hedged item for all forward exchange hedges is determined by the payments resulting from the financing of the leasing business in the respective currency area. These foreign currency cash flows are the basis for the forward contracts. The hedge can be classified as highly effective because only the actual cash flows and never a higher amount, are hedged. Ideally, the dates of the financing and the foreign exchange hedge coincide to ensure the best possible hedge of the exposure to variable cash flows.

Interest Rate Swaps

The parameters of the underlying contract, i.e. those of the financing (liability), are considered first and foremost when contracting interest rate swaps. For this reason, the interest rate terms of the swaps on the variable side are the same as those of the hedged item. Furthermore, the volume contracted in the swaps is never greater than the volume of the hedged financing.

The active integration of existing and future planned refinancing transactions allows a forward-looking risk management. Quarterly tests of effectiveness will from now on be conducted as part of this ongoing analysis, in which the effectiveness of the hedges is tested using a method allowed under IFRSs. To date, the hedging relationships between interest rate swaps and existing and planned financing have proven to be highly effective. Under the hypothetical derivative method, effectiveness was almost 100 percent. For all derivatives in hedge accounting, both the retrospective and the prospective effectiveness of the hedging relationships are confirmed as of the balance sheet date.

The interest rate derivatives not included in hedge accounting in line with the provisions of IAS 39 are effective as hedges for interest rate risks in the opinion of GRENKELEASING and risk management in the Group.

5.3 Fair Value of Financial Instruments

5.3.1 Fair Value

All derivative financial instruments, which include interest rate swaps and caps and forward exchange contracts, in the Group on the balance sheet date are recognised at fair value. All other items are not recognised at the fair value (see note 2.5.3). As per the hierarchy of measurement of financial instruments at the fair value of IAS 39, which is composed of the following:

• Level 1: quoted (unadjusted) prices on active markets for the same type of assets or liabilities,
• Level 2: procedures in which all input parameters, which have a significant effect on the fair value recognised, are directly or indirectly observable,
• Level 3: procedures which use input parameters that have a significant effect on the fair value recognised and are not based on observable market data most financial instruments which are accounted for at fai value are assigned to level 2 (see note 2.5.3). An exception to this are the call options relating to franchise companies, which are assigned to level 3 and all have a value of "zero". The purchase price resulting from the options is based on the respective annual net profit or loss of the franchise company multiplied by a P/E multiple derived from the market at the time of the acquisition.

There were no reclassifications between the three levels of the measurement hierarchy in the year under review.

5.3.2 Fair Value of Derivative Financial Instruments

The interest rate swaps have a total negative fair value of EUR 1,173k on the balance sheet date (previous year: negative fair value of EUR 3,725k). The fair value of the caps recognised in the Group amounts to EUR 157k (previous year: EUR 6k) as of the balance sheet date.

EURk	Fair value 2010	Fair value 2009
EUR buying
CZK	–172	90
GBP	13	1,834
CHF	–182	–81
HUF	–94	–151
NOK	–493	–145
SEK	–1,407	–285
DKK	–80	–3
PLN 1)/2)	–549	–2
EUR selling
PLN 1)	–46	–413

The forward currency transactions have the following fair values for the individually contracted currencies:

1) In the context of the possibility for refinancing in the local currency with BRE-Bank SA in Poland, which is no longer available for new business, (see note 4.12.3), all outstanding forward exchange contracts, i.e. purchase of EUR, were closed out with respective counter-transactions, i.e. sale of EUR.

2) This includes both the closed out positions and the new forwards from ongoing new business.

5.3.3 Fair Value of Primary Financial Instruments

Fair value is the amount for which financial instruments would be exchanged, sold, bought or settled on the balance sheet date between knowledgeable, willing contracting parties in an arm's length transaction.

The fair value of lease receivables is estimated by using, instead of the internal rate, an interest rate which would be charged if the full amount were refinanced. A market rate of interest on December 31, 2010 was used for liabilities from the refinancing of lease receivables.

Financial instruments whose fair value differs from their carrying amount are listed below:

EURk		Fair value 2010 Carrying amount 2010		Fair value 2009 Carrying amount 2009
Lease receivables	1,349,992	1,327,782	1,229,149	1,134,879
Liabilities from refinancing	1,109,139	1,107,542	983,793	981,165

5.4 Maturity of Financial Obligations

The table below shows the maturities of the earliest possible non-discounted contractual cash flows of the financial obligations on the balance sheet date of the last and penultimate fiscal years. Some amounts do not match the amounts shown on the balance sheet as they generally relate to undiscounted cash flows.

As of Dec. 31, 2010

EURk		Due on demand Less than 3 months	3 to 12 months	1 to 5 years	More than 5 years
Type of liability
Liabilities from refinancing	0	203,726	221,154	783,386	9,614
Liabilities from deposit business	18,282	37,749	31,593	34,615	0
Bank liabilities	113	227	344	2,750	344
Other liabilities	0	7,134	277	835	1
Trade payables 1)	0	6,194	0	0	0
Negative fair values from
derivative financial instruments 2)	7,032	0	0	0	0
Total	25,427	255,030	253,368	821,586	9,959

1) The carrying amounts are categorised according to their individual class of maturity if this is considered possible and appropriate.

2) The present values of all future cash flows are shown here. The Group considers this to be the appropriate representation for cash flows where payment is outstanding, if these positions had to be closed. Derivative holdings are shown in the due on demand category as this representation shows the earliest possible outflow of liquidity. The actual duration of a contract may extend to a much longer period.

As of Dec. 31, 2009
EURk	Due on demand	Less than 3 months	3 to 12 months	1 to 5 years	More than 5 years
Type of liability
Liabilities from refinancing	0	233,937	256,504	605,634	322
Liabilities from deposit business	24,286	24,878	26,654	30,561	0
Bank liabilities	1,131	533	897	5,362	1,844
Other liabilities	0	9,508	2,154	1,074	38
Trade payables 1)	0	5,766	0	0	0
Negative fair values from
derivative financial instruments 2)	4,832	0	0	0	0
Total	30,249	274,622	286,209	642,631	2,204

1) The carrying amounts are categorised according to their individual class of maturity if this is considered possible and appropriate.

2) The present values of all future cash flows are shown here. The Group considers this to be the appropriate representation for cash flows where payment is outstanding, if these positions had to be closed. Derivative holdings are shown in the due on demand category as this representation shows the earliest possible outflow of liquidity. The actual duration of a contract may extend to a much longer period.

6 CHANGES IN CONSOLIDATION

6.1 First-time Consolidation of GOALS FINANCING 2009 LIMITED in 2010

The issue of the ABS bond means that GRENKELEASING AG has gained control of the special-purpose entity GOALS FINANCING 2009 LIMITED, Dublin in accordance with SIC-12. SPEs are often subject to legal arrangements imposing decision-making restrictions on their management ("autopilot"). This provision states that business policy as regards the operating activities of the SPE cannot be changed. Also, on account of the chosen structure, the significant risks and rewards remain with the GRENKELEASING Group.

GOALSFINANCING2009LIMITEDwasfoundedunderIrishlawonSeptember15,2009withequityofEUR3. GRENKELEASINGAG does not hold any of its shares. The consolidated financial statements are not significantly affected by the first-time consolidationofGOALSFINANCING2009LIMITED.

As of the time of its inclusion in consolidation, GOALS FINANCING 2009 LIMITED reported bond liabilities of EUR 160,000k. These are backed with purchased lease receivables (reported under assets, please refer to the section on financial liabilities) that, unlike other ABCP refinancing, are not initially repaid.

6.2 Acquisitions in Fiscal Year 2009

Effective February 12, 2009, GRENKELEASING AG acquired all of the shares in the Hamburg-based private bank GRENKE BANK AG, which at that time was still operating as "Hesse Newman & Co. AG". In accordance with the requirements of the purchase agreement, the date of purchase/closing date (date control was obtained) as defined by IFRS 3 was February 25, 2009. On May 7, 2009, the bank changed its name to GRENKE BANK AG by way of entry in the commercial register. In addition, the GRENKELEASING AG Annual General Meeting on May 12, 2009 resolved that a profit transfer agreement be concluded between GRENKE BANK AG and GRENKELEASING AG.

On August 19, 2009, GRENKELEASING AG acquired 100 percent of GRENKEFACTORING GmbH, which had previously been operating as a franchisee. GRENKEFACTORING GmbH operates on the German market as a factoring service provider.

The fair values of the identifiable assets and liabilities at the acquisition date and the corresponding carrying amounts immediately before the date of acquisition of GRENKE BANK AG are as follows:

GRENKE BANK AG, Baden-Baden

EURk	Fair value under IFRSs	Derived IFRS carrying amount EURk
Cash and cash equivalents	39,072	39,072
Loans and advances to customers	18,395	18,395
Equity investments	38	38
Intangible assets (incl. customer base)	705	48
Property, plant and equipment	944	944
Deferred tax assets*	461	63
Other assets	542	542
Total assets	60,157	59,102
Liabilities from deposit business	48,038	48,038
Pensions	1,153	1,285
Other provisions*	2,706	1,277
Deferred tax liabilities	208	6
Other liabilities	2,362	2,362
Total liabilities	54,467	52,968
Net assets*	5,690
Goodwill arising on acquisition*	1,582
Total acquisition cost	7,272

* The IFRS fair value has been adjusted as against the amount reported in the previous year as the purchase price allocation was not finalised until the first quarter of 2010.

The acquisition cost of the merger with GRENKE BANK AG totalled EUR 7,272k and included costs directly attributable to the business combination.

Acquisition cost	EURk
Purchase price	6,888
Cost directly attributable to the acquisition	384
Total	7,272
Cash inflow on acquisition	EURk
Net cash acquired with the subsidiary	39,072
Cash paid	7,272
Net cash inflow	31,800

In other liabilities, the bank reported a subordinated loan with a nominal value of EUR 2,000k. This loan, which was originally given to the bank by the previous shareholder, was acquired at nominal value by GRENKELEASING AG as part of the purchase agreement. As a result of the consolidation of this intra-Group transaction, this loan was not shown in the consolidated balance sheet. The loan has since been repaid.

Due to the extraordinary liquidity situation of the acquired bank, cash totalling EUR 31,800k (after deduction of the purchase price paid) flowed to GRENKELEASING as a result of the purchase. The purchase price allocation in line with IAS 3.62 was provisional as of December 31, 2009 as all the relevant information for a final purchase price allocation was not available at the end of the 2009 fiscal year. The definitive purchase price was determined in the first quarter of 2010, and the final risk attribution was determined for certain areas. This resulted in the recognition of a contingent liability in the amount of EUR 1,429k and the related deferred tax assets. Goodwill of EUR 1,582k was therefore reported as of the balance sheet date (previous year: provisionally EUR 592k).

EUR 656k of the intangible assets relates to measured customer relationships. This customer base is written down over a scheduled useful life of five years starting from the acquisition date. The bank's contribution to the net profit for the period before taxes in 2009 was a loss of EUR 1,437k.

EUR 1,527k of this related to net interest income for the period from the acquisition until December 31, 2009. The bank's total net interest income in the current calendar year up to December 31, 2009 amounts to EUR 1,937k.

EURk	Fair value under IFRSs	Derived IFRS carrying amount EURk
Cash and cash equivalents	596	596
Trade receivables (factoring)	2,483	2,483
Intangible Assets	62	62
Property, plant and equipment	4	4
Other assets	64	64
Total assets	3,209	3,209
Financial liabilities	5,185	5,185
Trade payables	290	290
Provisions	39	38
Deferred tax liabilities	136	136
Total liabilities	5,650	5,649
Net assets	–2,441
Goodwill arising on acquisition	2,698
Total acquisition cost	257

GRENKEFACTORING GmbH, Baden-Baden

The acquisition cost of the merger with GRENKEFACTORING GmbH totalled EUR 257k and included costs directly attributable to the business combination.

Acquisition cost	EURk
Purchase price	250
Cost directly attributable to the acquisition	7
Total	257
Cash inflow on acquisition	EURk
Net cash acquired with the subsidiary	596
Cash paid	257
Net cash inflow	339

On August 19, 2009, GRENKELEASING AG also acquired GRENKEFACTORING GmbH, which had previously been operating as a franchise. GRENKEFACTORING GmbH operates on the German market as a factoring service provider. The corresponding purchase price allocation was not final owing to a lack of information as of December 31, 2009. Provisional goodwill of EUR 2,156k was reported as of the balance sheet date.

The factoring company's contribution to the net profit for the period before taxes was a loss of EUR 395k, of which EUR 253k related to net interest income for the period from the takeover to December 31, 2009. Total interest income from GRENKEFACTORING GmbH until December 31, 2010 amounts to EUR 835k.

In the preliminary purchase price allocation in accordance with IAS 3.62, a tax asset of EUR 542k was recognised on the basis of the restructuring clause under Section 8c (1a) of the German Corporation Tax Act, whilst goodwill was reported lower by this amount.

In a letter dated April 30, 2010, the German Federal Ministry of Finance announced that, with a resolution on February 24, 2010, the EU Commission had opened a formal investigation under Article 108 (2) of the Treaty on the Functioning of the European Union (TFEU) against the restructuring clause of the regulation on loss set-off restrictions for corporations (Section 8c (1a) KStG). The EU Commission has doubts regarding the compatibility of the regulation on the restructuring clause of Section 8c (1a) KStG with the common market.

As the results of the formal investigation are still pending and its outcome is not sufficiently certain, the restructuring clause is not applied in the purchase price allocation. As a result of this, the previously capitalised tax asset in the amount of EUR 542k no longer applies and the goodwill was increased accordingly.

7 SEGMENT REPORTING

Since the acquisition of the bank, the Group manages its reportable segments of Leasing Business, Banking Business and Factoring Business on the basis of the available financial information.

7.1 Description of Reportable Segments

Leasing Business

The Leasing Business segment accounts for all activities performed by GRENKELEASING AG and its subsidiaries until the acquisition of GRENKE BANK AG and GRENKEFACTORING GmbH. In managing Leasing Business, the Group essentially focuses on the individual regions and countries. Thus, the Leasing Business segment is a combination of several operative segments defined by countries or groups of countries and the reportable Leasing Business segment.

Banking Business

The Banking Business segment comprises the activities of GRENKE BANK AG, which have mainly focused on the Internet site and the associated sales activities since its acquisition by GRENKELEASING AG. The bank's business focuses mainly on German customers.

Factoring Business

The Factoring segment includes the activities of GRENKEFACTORING GmbH, which performs traditional factoring services in Germany and is a financial services provider.

7.2 Segment Data

The accounting policies used to gather segment information are the same as those used for the consolidated financial statements (see note 2.5). Intragroup transactions are performed at standard market prices.

The Board of Directors of GRENKELEASING AG is responsible for assessing the performance of the GRENKELEASING Group. In addition to its new business volume and contribution margin 2, the main performance figures for the Leasing segment are operating segment income, segment results before other net financial income and personnel expenses.

Other net financial income and tax expenses/income are the main components of the consolidated income statement not included in the individual segment information.

The segment information was calculated as follows:

• Operating segment income consists of net interest income after settlement of claims and risk provisioning, profit from insurance business, profit from new business and profit from disposal.
• The segment result is calculated as an operating result before taxes.
• Segment assets are operating assets excluding tax assets.
• Segment liabilities are the liabilities attributable to the respective segment with the exception of tax liabilities.

							Banking	Factoring
			Leasing Business segment				Business segment	Business segment	Total segments	Consoli dation	Group
	Germany	France	Switzerland	Italy	Others
As per Dec. 31, 2009 (EURk)	region	region	region	region	region	Total
Operating segment income	39,321	20,618	3,903	5,025	13,328	82,195	1,296	137	83,628	0	83,628
Personnel expenses	16,768	3,754	1,208	1,314	4,642	27,686	1,300	320	29,306	0	29,306
Segment result	14,770	13,572	2,188	1,841	3,616	35,987	–1,575	–415	33,997	0	33,997
Reconciliation to consoli										0
dated financial statements
Operating result									33,997	0	33,997
Net other financial income									–362	0	–362
Taxes									9,023	0	9,023
Net profit for the period									24,612	0	24,612
Segment assets	720,904	302,078	41,155	19,921		356,128 1,440,186	120,495		2,631 1,563,312		–78,047 1,485,265
Reconciliation to consoli
dated financial statements
Unallocated items											16,394
Total assets											1,501,659
Segment liabilities	533,326	252,444	25,271	10,558		332,653 1,154,252	108,722		3,747 1,266,721		–78,047 1,188,674
Reconciliation to consoli
dated financial statements
Unallocated items											50,101
Total liabilities											1,238,775

							Banking Business	Factoring Business	Total	Consoli
			Leasing Business segment				segment	segment	segments	dation	Group
	Germany	France	Switzerland	Italy	Others
As per Dec. 31, 2010 (EURk)	region	region	region	region	region	Total
Operating segment income	39,275	22,554	4,340	9,749	16,682	92,600	3,499	731	96,830	0	96,830
Personnel expenses	17,715	4,164	1,139	1,881	5,593	30,492	1,408	773	32,673	0	32,673
Segment result	9,577	15,106	1,897	5,479	5,058	37,117	421	–515	37,023	0	37,023
Reconciliation to consoli
dated financial statements
Operating result											37,023
Net other financial income											–498
Taxes											8,689
Net profit for the period											27,836
Segment assets	657,898	347,967	47,440	110,520		455,459 1,619,285	171,392		4,183 1,794,860 –147,014 1,647,846
Reconciliation to consoli
dated financial statements
Unallocated items											23,147
Total assets											1,670,993
Segment liabilities	503,576	276,439	27,595	90,892		435,820 1,334,322	137,234		7,522 1,479,078 –147,014 1,332,064
Reconciliation to consoli
dated financial statements
Unallocated items											51,156
Total liabilities											1,383,220

8 OTHER NOTES

8.1 Capital Management

8.1.1 Economic Capital

The primary goal of the Group's capital management activities is to maintain its credit rating in order to support its operations and safeguard liquidity and to maintain risk-bearing capacity at all times within the requirements placed on the Group by the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)].

The Group monitors capital using the equity ratio, the ratio of equity to total assets. In accordance with group guidelines, we are aiming for an equity ratio of 16 percent, as we did in the previous year.

In addition, the Group's determination of risk-bearing capacity and the risk-limiting system, i.e. the limiting of risk positions, guarantees that economic capital is monitored and safeguarded.

8.1.2 Regulatory Capital

Owing to the acquisition of GRENKE BANK AG and the fact that GRENKELEASING AG has been a financial services provider as defined by the German Banking Act since the end of 2008, the Group must comply with the requirements of the German Solvency Regulation [Solvabilitätsverordnung (SolvV)] at Group level.

As the parent company, GRENKELEASING AG also reports the Group's overall capital ratio in accordance with the provisions of Section 3 of the German Solvency Regulation in conjunction with Section 10a of the German Banking Act.

The overall capital ratio is calculated on the basis of the IFRS financial statements. Here, the Group's equity consists of the Tier 1 capital components of capital stock (EUR 17,491k; previous year: EUR 17,491k), the capital reserve (EUR 60,166k; previous year: EUR 60,166k) and revenue reserves (EUR 89,054k; EUR 83,900k).

There are also other reserves of EUR 1,175k (previous year: negative amount of EUR 4,088k) and deductions, characterised by intangible assets, of EUR 14,644k (EUR 13,511k). No other equity is included in the calculation of regulatory equity. The Group's total equity as of the reporting date amounted to EUR 153,242k (previous year: EUR 143,958k).

8.2 Franchise System

GRENKELEASING provides its expertise, infrastructure and funds for refinancing lease contracts under a franchise arrangement. However, it does not own shares in these franchisees, nor does it have any control over the franchisees' business policies. In addition to the franchise charge totalling EUR 805k (previous year: EUR 686k), the Group generated income from interest on loans of EUR 3,325k (previous year: EUR 3,457k). As of the balance sheet date, in addition to loans (see note 4.4) there were further receivables from franchisees totalling EUR 2,089k (previous year: EUR 1,232k).

8.3 Contingent Liabilities and Other Financial Obligations

As of the balance sheet date there were no contingent liabilities requiring comment on the balance sheet or disclosure in the notes. The company has other financial obligations related to rent, building maintenance and lease contracts. The resulting financial obligations are presented below:

EURk	Dec. 31, 2010	Dec. 31, 2009
Rent, maintenance and lease obligations
due in the subsequent year	5,346	5,023
due in 2 to 5 years	11,599	7,719
due in more than 5 years	1,212	1,084
Total	18,157	13,826

There are extension options of between one and five years on leases for rented premises.

Under three agreements on the sale of receivables of Grenke Investionen Verwaltungs KGaA to secure all receivables of the holding company (Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien) from the operating company, the operating company (GRENKELEASING AG) assigns to the holding company the following from lease contracts with end lessees (sublease contract) for leasing assets which are the subject of a purchase agreement between the operating company and the holding company:

All receivables, claims and rights arising from these sublease contracts, including any claims from extended leases following expiry of the original lease term, any claims for compensation payments, residual values, and payment of a purchase price from the sale of the respective lease asset. Claims from credit and property insurance from the sublease contract are also assigned, as are any claims from repurchase obligations on the part of suppliers of lease assets or of third parties. The buyer of the receivables acquires the equitable lien on the lease assets underlying the receivables purchase agreement.

Our Irish subsidiary, GRENKE FINANCE Plc., Dublin, Ireland, realised income from intragroup factoring, loans and leasing in 2009 and 2010. With its above-mentioned income in Ireland, GRENKE FINANCE Plc. is subject to a nominal income tax charge of 12.5 percent in 2009 and 2010 and consequently a lower level of taxation in the meaning of the International Transactions Tax Act (AStG). Special tax liability treatment of the income of GRENKE FINANCE Plc. does not occur according to the current legal position, pursuant to the effects of the decision by the European Court of Justice on the Cadbury Schweppes case as well as pursuant to the memorandum dated January 8, 2007, issued by the Federal Ministry of Finance, in the instance that GRENKE FINANCE Plc. exercises an economic activity.

In 2008, GRENKE FINANCE Plc. put forward an application at the Central German Tax Office under Section 50d of the German Income Tax Act [Einkommensteuergesetz (EStG)] for the issuance of an exemption certificate and/or reimbursement of tax deductions for licence fees and similar remuneration on the grounds of the Double Taxation Agreement between Germany and Ireland.

In processing the application, the Central German Tax Office holds additional information and notifications in terms of the meeting the requirements of economic activity at GRENKE FINANCE Plc in Ireland. After an extensive examination, the Central German Tax Office considered the requirements to be fulfilled and issued the exemption certificate. In our opinion, the pre-conditions for economic activity on the part of GRENKE FINANCE Plc. were therefore satisfied in 2009 and 2010. No contingent liabilities or other obligations therefore arise from this matter as of the reporting date.

8.4 Tax Audit in Germany

The tax audit at GRENKELEASING AG for fiscal years 2000 to 2004 that commenced in September 2006 ended in September 2010. The material effects of the audit consist of tax and interest payments of around EUR 10k.

The tax audit at GRENKE BANK AG for fiscal years 2004 to 2007 that commenced in July 2009 ended in June 2010. The material effects of the audit consist of sales tax payments and interest on payment in arrears of around EUR 40k.

A tax audit of GRENKELEASING AG, GRENKE Investitionen Verwaltungs KGaA, GRENKE Service AG and GRENKEFACTORING GmbH for the fiscal years 2005 to 2009 started in November 2010. There were no conclusive audit findings as of the balance sheet date.

8.5 International Tax Audits

The tax audit at GRENKE LOCATION SAS, France, for the fiscal years 2007 to 2008 that commenced in April 2010 ended in September 2010. The material effects of the audit consist of tax payments of around EUR 16k. These result from the nondeductibility for tax purposes of a provision recognised in line with commercial law in 2008 of EUR 47k . The income under commercial law from the reversal of the provision is not subject to taxation.

The audit at GRENKELEASING s.r.o., Czech Republic, for the fiscal years 2005 and 2006 began in May 2009. There were no conclusive audit findings as of the balance sheet date.

8.6 Related Party Disclosures

Third parties are considered related if one party directly or indirectly controls the other or if it exercises considerable influence over the business or operative decisions of the other party. Related third parties include people in key positions and their family members and subsidiaries of GRENKELEASING AG.

GRENKELEASING AG renders various services for subsidiaries in its ordinary business activities. Conversely, the various group companies also render services within the GRENKELEASING AG Group as part of their business purpose. These extensive business transactions are performed at market conditions.

As part of its ordinary business activities, GRENKE BANK AG offers related third parties services under normal market conditions. At the balance sheet date, the bank has received deposits totalling EUR 5,537k (previous year: EUR 6,325k) from members of the Group's Board of Directors and their close family members. The Bank received deposits totalling EUR 101k from members of the Group's Supervisory Board and their close relatives in the previous year, though there were no deposits from this group of people. There were no changes as against the previous year. No loans were granted to any of these individuals during the reporting period.

In accordance with the articles of incorporation, the Supervisory Board of GRENKELEASING AG has six members. The members of the Supervisory Board in fiscal year 2010 were:

• Prof. Dr. Ernst-Moritz Lipp, Baden-Baden, Chairman, Professor of International Finance and General Manager of ODEWALD & COMPAGNIE Gesellschaft für Beteiligungen mbH
• Gerhard E. Witt, Baden-Baden, Deputy Chairman, public auditor and tax advisor
• Dieter Münch, Weinheim, retired bank officer, member of foundation board
• Florian Schulte, Baden-Baden, CEO of the Board of Directors of Deltavista AG (from May 11, 2010)
• Dr. Oliver Nass, Paris, general manager of ESG France (until May 11, 2010)
• Erwin Staudt, Leonberg, economics graduate, president of the soccer club VfB Stuttgart 1893 e.V.
• Dr. Brigitte Sträter, Dusseldorf, owner and manager of the PR agency CENA (until May 11, 2010)
• Prof. Dr. Thilo Wörn, Essen, Professor at the Fachhochschule für öffentliche Verwaltung NRW (from May 11, 2010)

The shares held by the Supervisory Board members are listed below:

	Shares as of Dec. 31
No.	2010	2009
Dieter Münch	75	75
Prof. Dr. Ernst-Moritz Lipp	23,800	21,000
Erwin Staudt	1,000	1,000
Total	24,875	22,075

Prof. Dr. Ernst-Moritz Lipp is also the Chairman of the Supervisory Board of GRENKE BANK AG, Baden-Baden and he is a member of the Supervisory Board of Winter Holding Verwaltungs GmbH, Nußloch, the Oystar Holding GmbH, Karlsruhe, and the Sodexo Beteiligungs B.V. & Co.KG, Heidelberg.

Mr Gerhard E. Witt and Mr Dieter Münch have also been Supervisory Board members of Grenke Investitionen Verwaltungs KGaA, Baden-Baden, a GRENKELEASING Group company, since February 20, 2003. Mr Dieter Münch is also a member of the supervisory board of Weisenburger Bau + Grund AG, Halle/Saale, Germany.

Mr Erwin Staudt is a member of the Supervisory Boards of PROFI Engineering Systems AG, Darmstadt, USU AG, Möglingen, and Hahn Verwaltungs-GmbH, Fellbach.

Dr. Oliver Nass, Mr Florian Schulte and Dr. Brigitte Sträter are not members of any other supervisory boards or comparable oversight bodies of companies in Germany or abroad within the meaning of Section 125 (1) sentence 3 AktG.

Prof. Dr. Thilo Wörn is a partner of Dr. Wörn GmbH, Essen, a member of the advisory board of DIHAG Deutsche Giesserei- und Industrie-Holding Aktiengesellschaft, Essen and representative of the memebers of GENO BANK ESSEN AG, Essen.

Pursuant to Section 102 (1) AktG and Article 7 (2) of the articles of incorporation of GRENKELEASING AG, the terms in office of the Supervisory Board members Dr. Brigitte Sträter, Mr Dieter Münch, Dr. Oliver Nass and Mr Erwin Staudt ended as of the end of the Annual General Meeting on May 11, 2010.

The Annual General Meeting approved the proposal of the Supervisory Board to re-elect Mr Dieter Münch and Mr Erwin Staudt. They were elected for the period until the end of the Annual General Meeting that resolves the official approval of the actions of the Supervisory Board for the fiscal year 2014.

The term of office of Prof. Dr. Ernst-Moritz Lipp and Mr Gerhard E. Witt continues until the end of the Annual General Meeting that resolves the official approval of their actions for the fiscal year 2012.

The remaining members of the Supervisory Board have been appointed until the end of the Annual General Meeting which decides on their exoneration for fiscal year 2014.

The Supervisory Board's remuneration (including payments for supplementary services) totalled EUR 83k (previous year: EUR 68k). In accordance with Section 113 (1) sentence 2 no. 1 AktG, Supervisory Board remuneration is defined in Article 10 of GRENKELEASING AG's articles of incorporation. This provision does not provide for the participation of the members of the Supervisory Board in any of the employee stock option programmes. Remuneration of the Supervisory Board breaks down as follows:

							Payments for supplementary
EURk	Total		Remuneration AG		Remuneration KGaA		services
	2010	Previous year	2010	Previous year	2010	Previous year	2010	Previous year
Total	92	77	79	68	9	9	4	0

The Board of Directors of GRENKELEASING AG is comprised as follows:

• Mr Wolfgang Grenke, businessman, Baden-Baden (Chairman) Special responsibility: strategy, company development, internal audit, information technology, e-business
• Dr. Uwe Hack, business administration graduate, Metzingen (Deputy Chairman) Special responsibility: investor relations, treasury, controlling
• Mr Mark Kindermann, business graduate, Bühl Special responsibility: accounting, quality management, human resources, legal, administration
• Mr Thomas Konprecht, programming graduate, certified leasing and financial consultant (VWA), Dusseldorf Special responsibility: marketing, sales, management services (until April 30, 2010)
• Mr Michael Kostrewa, businessman and industrial IT graduate, Gaggenau Special responsibility: information technology, e-business (until April 30, 2010)
• Mr Gilles Christ, MBA, Souffelweyersheim/France Special responsibility: marketing, sales, management services (from May 1, 2010)

Mr Wolfgang Grenke holds sole power of representation. The other members of the Board of Directors represent GRENKELEASING AG jointly with another member of the Board of Directors or with an authorised signatory.

The Board of Directors agreements of Mr Thomas Konprecht and Mr Michael Kostrewa expired as of April 30, 2010. Both left the Board of Directors of GRENKELEASING AG.

The Board of Directors agreement of Dr. Uwe Hack was prolonged to September 30, 2015 on March 26, 2010.

The German Federal Office for Supervision of Financial Services approved Mr Gilles Christ's appointment to the Board of Directors for three years starting on May 1, 2010 in accordance with a resolution of the Supervisory Board.

The remuneration of the Board of Directors for 2010 is as follows:

EURk	Total remuneration	of which fixed	of which variable
Total	1,739	963	776
Total (previous year)	2,078	1,046	1,032

An annual pension premium of EUR 21k (previous year: EUR 21k) is included for a provident fund for Dr. Hack.

Dr. Hack's claim to payment in the amount of EUR 300k from the phantom stock agreement for the 2009 fiscal year was settled in January 2010.

Dr. Hack bought a total of 2,000 shares in GRENKELEASING AG via the stock exchange (Xetra) in February 2010.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded additional phantom stock agreements with Board of Directors members Dr. Hack and Mr Gilles Christ.

Under this agreement, Dr. Hack and Mr Christ receive entitlements to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG in relation to a defined basic share price for the current fiscal year and for each of the next two fiscal years. The share price is the arithmetic mean of the Xetra closing prices on all trading days from December 1 to December 23 of the respective prior year. The basic share price for 2010 is EUR 28.68. The maximum payment arising from this agreement is limited to EUR 600,000 or EUR 300,000 for the period of three years. Under the program, Dr. Hack and Mr Christ are required to invest the respective net amount paid plus a personal contribution of 25 percent of that amount in GRENKELEASING AG shares. A pro rata calculation will be applied to Mr Christ's first year of membership on the Board of Directors.

The value of the phantom stocks agreement granted totalled EUR 374k as at December 31, 2010. This was recognised under personnel expenses accordingly in the income statement. In the previous year, EUR 301k was reported for Dr. Hack from previous agreements.

Shareholdings are shown by the table below:

	Shares as of Dec. 31
No.	2010	2009
Wolfgang Grenke	4,916,619	4,916,619
Dr. Uwe Hack	7,000	5,000
Mark Kindermann	52,053	52,053
Thomas Konprecht	*	330,730
Michael Kostrewa	*	27,500
Gilles Christ	0	0
Total	4,975,672	5,331,902

* Members who left the Board of Directors as of April 30, 2010

Mr Wolfgang Grenke is also the Chairman of the Supervisory Board of GRENKELEASING AG, Vienna/Austria, and a member of the Supervisory Board of GRENKE SERVICE AG, Baden-Baden and GRENKE BANK AG, Baden-Baden. He is also a member of the Advisory Board of Deutsche Bank AG, Freiburg region.

Dr. Uwe Hack is also the Board of Directors of GRENKE BANK AG, Baden-Baden and the Supervisory Board of GRENKE SERVICE AG, Baden-Baden.

Mr Mark Kindermann is also the Board of Directors of GRENKE LIMITED, Dublin/Ireland and GRENKE SERVICE AG, Baden-Baden. In addition, he is on the Supervisory Board of GRENKELEASING AG, Vienna/Austria, GRENKELEASING AB, Stockholm/Sweden, Grenkefinance N.V., Vianen/Netherlands and GRENKE BANK AG, Baden-Baden.

Mr Gilles Christ is also member of the Board of Directors of GRENKE ALQUILER S.A., Barcelona/Spain and of GRENKELEASING AB, Stockholm/Sweden. In addition, he is on the Supervisory Board of GRENKE SERVICE AG, Baden-Baden, GRENKELEASING AG, Vienna/Austria and the President of the Administrative Board of GRENKELEASING AG, Zurich. He is also the general manager of GRENKE Locazione S.r.l., GRENKELEASING S.r.l., Milan/Italy and GRENKELEASING ApS, Herlev, Denmark.

8.7 Events after the Balance Sheet Date

The Asset-Backed Commercial Paper Programme of Arabella Finance Limited in the amount of EUR 39.6 million was utilised for the first time on January 18, 2011.

On Januar 26, 2011 the ABCP Programme Compass Variety Funding Limited with WestLB was extended until Januar 22, 2012.

8.8 Declaration in Accordance with Section 161 AktG

The Board of Directors and Supervisory Board of GRENKELEASING AG have issued the declaration for 2009 pursuant to Section 161 AktG and made this available to shareholders.

AUDIT OPINION

"We have audited the consolidated financial statements prepared by GRENKELEASING AG, Baden-Baden, Germany, comprising the income statement, the statement of comprehensive income, the balance sheet, , the statement of changes in equity, the cash flow statement and the notes to the consolidated financial statements, together with the group management report for the fiscal year from January 1 to December 31, 2010. The preparation of the consolidated financial statements and group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) HGB is the responsibility of the legal representatives of the company. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the group's position and suitably presents the opportunities and risks of future development."

Eschborn/Frankfurt/Main, Germany, February 3, 2011

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

von Seidel Kirch Auditor Auditor

DECLARATION IN ACCORDANCE WITH SECTION 297 (2) SENTENCE 4 AND SECTION 315 (1) SENTENCE 6 HGB

We confirm that, to the best of our knowledge, the consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group and the Group management report gives a true and fair view of business performance including financial performance and the situation of the Group and describes the main opportunities and risks relating to the Group's anticipated development in accordance with the applicable financial reporting framework.

Baden-Baden, Germany, February 3, 2011

The Board of Directors

CALENDAR OF EVENTS

10/02/2011 Publication Annual Account for 2010, Annual Press and DVFA Analysts Conference
04/05/2011 Publication Quarterly Financial Report as per March 31, 2011
10/05/2011 Annual General Meeting (Kongress-Haus Baden-Baden)
01/08/2011 Publication Quarterly Financial Report as per June 30, 2011
03/11/2011 Publication Quarterly Financial Report as per September 30, 2011

CONTACT

Renate Hauss Corporate Communications

Phone: +49 7221 5007-204 Fax: +49 7221 5007-112

E-mail: investor@grenke.de

Figures in this annual financial report are usually presented in thousands and millions of euro. Due to rounding, differences as against the actual number in euro may emerge in individual figures. Naturally, such differences are not of a significant nature.

The report is published in German and as an English translation. In the event of any conflict or inconsistency between the English and the German versions, the German original shall prevail.

Headquarters GRENKELEASING AG Neuer Markt 2 76532 Baden-Baden Germany

Phone: +49 7221 5007-204 Fax: +49 7221 5007-112 E-mail: investor@grenke.de

www.grenke.de www.grenkebank.de www.grenkefactoring.de