Grenke AG — Annual Report 2011

Feb 10, 2012

GRENKELEASING AG Group Financial Report 2011

Key figures GRENKE Group

	Jan. 1 to		Jan. 1 to
	Dec. 31, 2011	Change (%)	Dec. 31, 2010	Unit
New business
GRENKE Group including franchise partners and factoring	857,514	23.7	692,979	EURk
– of which Germany	330,189	14.5	288,437	EURk
– of which international	442,835	23.6	358,294	EURk
– of which franchise international	84,490	82.7	46,248	EURk
Leasing business	770,133	18.5	649,892	EURk
– of which Germany	267,090	8.4	246,497	EURk
– of which international	442,835	23.6	358,294	EURk
– of which franchise international	60,208	33.5	45,101	EURk
Factoring	87,381	102.8	43,087	EURk
– of which Germany	63,099	50.5	41,940	EURk
– of which franchise international (CH)	24,282	n.a.	1,147	EURk
Contribution margin 2 (CM2) of new business
GRENKE Group including franchise partners and factoring	124,748	21.4	102,796	EURk
– of which Germany	37,109	9.8	33,799	EURk
– of which international	76,116	26.1	60,362	EURk
– of which franchise international	11,524	33.5	8,635	EURk
Leasing business	123,023	21.1	101,594	EURk
– of which Germany	35,877	10.1	32,597	EURk
– of which international	76,116	26.1	60,362	EURk
– of which franchise international	11,030	27.7	8,635	EURk
Further information leasing business
Number of new contracts	94,176	11.5	84,482	units
Share of IT products in the lease portfolio	87	–1.1	88	percent
Share of corporate customers in the lease portfolio	100	0	100	percent
Mean acquisition value	8.2	7.9	7.7	EURk
Mean term of contract	47	2.2	46	months
Volume of leased assets	2,209	15.0	1,921	EURm
Number of current contracts	283,051	12.7	251,265	units
GRENKE Bank
Deposits	155,127	26.9	122,239	EURk
Business start-up financing volume	1,506	439.8	279	EURk

Key figures GRENKE Consolidated Group

	Jan. 1 to		Jan. 1 to
	Dec. 31, 2011	Change (%)	Dec. 31, 2010	Unit
Key figures income statement
Net interest income	92,691	15.8	80,029	EURk
Settlement of claims and risk provision	34,415	2.0	33,724	EURk
Profit from insurance business	25,703	15.6	22,236	EURk
Profit from new business	31,021	18.1	26,263	EURk
Profit from disposals (income exceeding the calculated residual value)	1,653	–18.4	2,026	EURk
Other operating income	3,755	11.1	3,381	EURk
Costs of new contracts	21,660	14.8	18,864	EURk
Costs of current contracts	6,646	10.0	6,043	EURk
Project costs and basic distribution costs	19,812	11.1	17,831	EURk
Management costs	17,069	1.1	16,875	EURk
Other costs	4,498	25.8	3,575	EURk
Operating result	50,723	37.0	37,023	EURk
Other net interest income	–389	–49.7	–773	EURk
Expenses / income from fair value measurement	98	–64.4	275	EURk
EBT (earnings before taxes)	50,432	38.1	36,525	EURk
Net profit	39,251	41.0	27,836	EURk
Earnings per share (according to IFRS)	2,87	41.4	2.03	EUR
Further information
Dividend	0,75	7.1	0.70	EUR
Embedded value of the leasing contract portfolio (incl. equity before taxes)	472	16.3	406	EURm
Embedded value of the leasing contract portfolio (incl. equity after taxes)	428	15.1	372	EURm
Cost / income ratio	58.1	–8.5	63.5	percent
Return on equity (ROE) after taxes	12.4	27.8	9.7	percent
Average number of employees	585	8.7	538	employees
Staff costs	36,695	12.3	32,673	EURk
– of which total remuneration	30,545	11.8	27,327	EURk
– of which fixed remuneration	23,515	8.5	21,673	EURk
– of which variable remuneration	7,030	24.3	5,654	EURk

GRENKE Group = GRENKE Consolidated Group including franchise partners

GRENKE Consolidated Group = all consolidated subsidiaries and special-purpose entities according to IFRS

Ouraccomplishmentsin2011:

Growthinnewbusinesswasmorethandoubleour long-termtarget.

Netprofitexceededtheguidancethatwasraised inthecourseoftheyear.

Content

Letter to Shareholders from the Board of Directors	2
Report of the Supervisory Board	4
The Board of Directors of GRENKELEASING AG	9
The Supervisory Board of GRENKELEASING AG	10
Corporate Governance Report	11
Our Shares and Investor Relations	17
Group Management Report for Fiscal Year 2011	22
Consolidated Financial Statements for Fiscal Year 2011 Notes to the Consolidated Financial Statements for Fiscal Year 2011	62 69
Audit Opinion	144
Declaration in Accordance with Sec. 297 (2) Sentence 4 and Sec. 315 (1) Sentence 6 (HGB)	145
Calendar of Events 2012 and Contact Information	146

Letter to Shareholders from the Board of Directors

Dear Shareholders, Ladies and Gentlemen,

It is with great pride and pleasure that we present our report on fiscal year 2011, a year in which the GRENKE Group demonstrated its strength and power in notable ways:

We have clearly exceeded our target of achieving growth in new business of more than 20 percent. The actual growth of 24 percent was more than double our long-term target of at least 10 percent per year. We are currently benefiting in particular from the international presence we have established over recent years. We are now well positioned and firmly established at a European level. At the same time, many European banks are not only suffering from the effects of the financial market crisis in 2008 and the current government debt crisis, but are also faced with even more stringent regulatory requirements.

This is leading to market opportunities throughout our entire network that we are leveraging systematically. The GRENKE Group is well prepared for this due to its strong sales and its precise management of volumes and contribution margins (CM2). This will ensure attractive and risk-adequate margins and the Group's long-term profitability.

The GRENKE Group is able to fully address the opportunities arising on its markets due to its large financial resources. Our strong reputation allowed us to choose from various financing alternatives in recent years: our programmes with banks, our direct access to the capital markets, or GRENKE BANK AG's actively managed deposit business. In October 2011, we expanded our portfolio of instruments by means of a new commercial paper programme in an amount of EUR 250 million.

In 2012 and 2013, only below-average volumes are due for repayment. The EUR 100 million bond that was successfully issued in January 2012, subsequent to the end of the reporting period, has provided us with even more room for manoeuvre.

We are also delighted to report a strong rise in the GRENKE Consolidated Group's net profit in fiscal year 2011. Our earnings are increasingly benefiting from the high-margin new business generated in previous years. At the same time, our loss rate has declined compared with 2010. This is in line with our expectations and serves to confirm the quality of our scoring model once again.

Accordingly, total operating income significantly increased while the corresponding expenses showed a more moderate rise. The startup costs for our international expansion recorded in previous years are starting to pay off. At the same time, the relative impact of the on-going expansion in the number of new locations is diminishing due to size already achieved.

This allowed us to take GRENKE Consolidated Group's profitability to a new dimension in 2011, with net profit rising by 41 percent to EUR 39.3 million. Not least, we exceeded our profit guidance that was raised in August 2011.

We have set our course for the future: in the past fiscal year, theGRENKE ConsolidatedGroup opened a total of seven new locations in Denmark,France,theUnitedKingdom,IrelandandItaly,whileourfranchisepartnersinSpainandPortugaleachopenedanewlocation.

Thanks to the conclusion of a new franchise agreement for Turkey – the fastest-growing economy in Europe – we have secured our foothold in this highly attractive market. We are also looking and planning beyond Europe, with intensive preparations underway for our market entry in Brazil, the most populous country in South America and the world's sixth-largest economy.

We are confident that the GRENKE Group will continue its strong development in the future. We expect further growth in new business of around 15 percent in 2012, while the net profit of the GRENKE Consolidated Group is forecast to rise to EUR 41 – 44 million. As a result, the Supervisory Board and the Board of Directors will propose to the Annual General Meeting of GRENKELEASING AG that the dividend be increased for the second consecutive year, from EUR 0.70 per share in the previous year to EUR 0.75 per share.

We would like to thank our shareholders for standing by us in times of extreme volatility on the capital markets. We feel obliged to realise the opportunities available to the GRENKE Group on your behalf and hence increase our enterprise value. We would like to express our particular gratitude to our employees, without whose commitment the recent development of the GRENKE Group would have been impossible.

Wolfgang Grenke Chairman of the Board of Directors

Report of the Supervisory Board

The Supervisory Board of GRENKELEASING AG performed the activities required of it by law and under the articles of incorporation in the fiscal year 2011. It worked with the Board of Directors on an on-going basis, advised it regularly and monitored its management of business. The Board of Directors and the Supervisory Board closely coordinated the strategic orientation of the GRENKE Consolidated Group with one another. The Supervisory Board was directly involved by the Board of Directors in all decisions of fundamental significance to the company.

The Supervisory Board also received information regularly, comprehensively and in a timely manner, both orally and in writing, on all key issues, including on the basis of submissions by the Board of Directors and minutes of meetings. In particular, the Board of Directors provided the Supervisory Board with detailed information on the strategic development of the GRENKE Consolidated Group, its economic situation, the current course of business including the business of GRENKE BANK AG, and on current events, the status of corporate planning and the personnel situation.

The Supervisory Board monitored the Consolidated Group-wide risk management system, the internal control systems in the areas of internal audit, accounting and compliance – including compliance with the German Banking Act (KWG) – and the operating risk control system. To this end, it regularly received reports from the Board of Directors on the risk management system of the GRENKE Consolidated Group and its on-going development, the current risk situation and sales management. The GRENKE Consolidated Group's current refinancing situation was a regular issue at the meetings of the Supervisory Board. In the 2011 fiscal year again, the refinancing of the GRENKE Consolidated Group was ensured at all times on account of its diversified sources of capital and targeted liquidity management.

The reports from the Board of Directors were critically reviewed by the Supervisory Board with regard to their plausibility. The subject and scope of reporting by the Board of Directors met the requirements of the Supervisory Board in full. If so required by law and the articles of incorporation, the Supervisory Board closely examined, discussed and then voted on the reports and resolution proposals of the Board of Directors. The Board of Directors submitted matters requiring approval in a timely manner.

The key issues at the meetings of the Supervisory Board included discussing the current business performance, monitoring the international entities, the risk strategy and its implementation, checking the efficiency of the Supervisory Board's work, and adopting the annual financial statements of GRENKELEASING AG and approving the consolidated financial statements as at December 31, 2010.

In the reporting year, the Supervisory Board dealt in depth with the German Corporate Governance Code in its versions applicable at the time. In this context, it also checked and established that the requirements for Supervisory Board members of companies that are subject to the KWG were fulfilled. Together with the Board of Directors, on May 3, 2011 it issued the declaration of compliance of GRENKELEASING AG in accordance with Section 161 of the German Stock Corporation Act on the recommendations of the Government Commission on the German Corporate Governance Code – initially in the version dated June 18, 2009 and then, since it became applicable, in the supplemented version dated May 26, 2010.

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 2011. 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 four times in fiscal year 2011, on February 4, May 9, July 31 and November 7. In addition, the Supervisory Board discussed and approved the acquisition of the Hungarian franchise company by telephone on May 27, 2011.

At its meeting on February 4, 2011, the Supervisory Board reviewed in detail, discussed and adopted or approved the annual financial statements of GRENKELEASING AG as at December 31, 2010, the management report for the fiscal year 2010, the consolidated financial statements as at December 31, 2010 and the group management report for the fiscal year 2010. It also adopted the resolution on the proposal for the appropriation of balance sheet profits. The auditor responsible, Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main, took part in the discussions and reported on the key results of its prior audit.

The audit assignment was issued by the Supervisory Board at its meeting on May 9, 2011. On July 31, 2011, one main focus of the Board's discussions was the development of the international companies and in particular the entry on the Turkish market.

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

In accordance with the articles of incorporation, the Supervisory Board of GRENKELEASING AG is comprised of six members. There were no changes in the composition of the Supervisory Board in the reporting year. The members of the Supervisory Board in fiscal year 2011 were:

• Prof. Dr. Ernst-Moritz Lipp, Chairman
• Mr. Gerhard E. Witt, Deputy Chairman
• Mr. Dieter Münch
• Mr. Florian Schulte
• Mr. Erwin Staudt
• Prof. Dr. Thilo Wörn

In accordance with its Rules of Procedure, the Supervisory Board formed two committees to allow it to perform its duties efficiently: the Audit Committee, and the Personnel Committee (Executive Committee). The chairs of the committees reported in detail to the Supervisory Board, in its' entirety, on the work of their committee meetings.

The Audit Committee consists of the following three members:

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

The Audit Committee primarily deals with the issues of internal and external accounting, the corporate planning policies, corporate risk management, and compliance. Its members have specialized knowledge in the areas of accounting, corporate planning and risk management. The Audit Committee commissioned the auditor, determined the audit focus, and concluded the fee agreement with the auditor. In the reporting year, the Audit Committee did not learn of any circumstances which would call the independence of the auditor into question.

The Audit Committee prepared the Supervisory Board meeting for the adoption of the annual financial statements and the approval of the consolidated financial statements. In the presence of the auditor, the Supervisory Board dealt with the 2011 annual financial statements and discussed these in-depth. The Audit Committee also discussed the quarterly financial statements to be published in depth with the Board of Directors.

The Personnel Committee (Executive Committee) consists of the following three members:

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

The Personnel Committee primarily deals with personnel decisions by the Supervisory Board. It is also responsible for concluding, amending, and terminating employment agreements with the members of the Board of Directors.

GRENKELEASING AG's annual financial statements as at December 31, 2011, which were prepared by the Board of Directors, as well as the company's management report for the fiscal year 2011, the consolidated financial statements as at December 31, 2011, and the group management report for the fiscal year 2011, were all submitted to the Supervisory Board in a timely manner, as was the Board of Directors' proposal for the appropriation of the balance sheet profits of GRENKELEASING AG. The annual financial statements were audited by Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main.

The accounting of the separate financial statements of GRENKELEASING AG was prepared in accordance with the provisions of the German Commercial Code (HGB), taking the regulations for bank accounting into consideration. The HGB annual financial statements as of December 31, 2011 were audited in accordance with the rules and regulations 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).

The consolidated financial statements and the group management report for the fiscal year from January 1 to December 31, 2011, were prepared in accordance with Section 315a (1) HGB on the basis of the International Financial Reporting Standards as adopted in the EU. The consolidated financial statements were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW (IDW PS 200). Unqualified audit opinions were issued for both the annual financial statements of GRENKELEASING AG and the consolidated financial statements of the GRENKELEASING AG Consolidated Group.

The Supervisory Board carried out a detailed review of the annual financial statements submitted to it by the Board of Directors and the auditor and discussed the result at its meeting on February 3, 2012. The auditor responsible took part and reported on the key results of the audit. After completing its own review, the Supervisory Board did not raise any objections to the result of the audit of the annual financial statements by the auditor and therefore adopted the annual financial statements of GRENKELEASING AG and approved the consolidated financial statements of GRENKELEASING AG. The Supervisory Board also endorsed the Board of Director's proposal on the appropriation of GRENKELEASING AG's balance sheet profits.

On January 30, 2012, the auditor Ernst & Young has examined the dependence report and issued the following opinion:

"On the basis of our audit performed in accordance with professional care and our assessment, we confirm that

• 1. the factual information contained in the report is correct,
• 1. the consideration given by the Company for the legal transactions referred to in the report was not unreasonably high or that disadvantages have been compensated,
• 1. and that for the measures mentioned in the report there are no circumstances supporting a judgement materially different from that reached by the Management Board."

At its meeting on February 3, 2012 the Audit Committee dealt at length with the dependence report and accepted the auditor's report. Based on its own careful examination, the Audit Committee had no objections to the dependence report. In the Supervisory Board meeting on February 3, 2012, the Chairman of the Audit Committee reported on the audit of the dependence report by the Audit Committee. The Supervisory Board accepted the audit result of the auditor and came to the conclusion that there were no objections raised to the Board's explanation at the end of the report regarding relationships to affiliated companies

At the same meeting, the Supervisory Board dealt with the mandatory disclosures in accordance with Section 289 (4) and Section 315 (4) HGB and the related report. Please refer to the corresponding explanations in the management report of GRENKELEASING AG and in the group management report. The Supervisory Board has reviewed these disclosures and this information, which it believes to be complete, and has adopted them. Also at the meeting, the Supervisory Board resolved to broadcast the Board of Directors' speech and the general debate at the 2012 Annual General Meeting on the Internet. The Supervisory Board also discussed this report in detail and approved it at this meeting.

Following a 29 percent rise in the previous year and a rise of 50 percent in 2009, the GRENKE share was up slightly by 2.7 percent, in the fiscal year 2011. In contrast, the DAX and the SDAX fell by 15 percent, chiefly due to the sharp correction in general share prices in connection with the spiralling debt crisis in Europe.

The GRENKE share was unable to remain unscathed from this setback in the summer. However, despite 2011 being a difficult year for the stockmarket, the capitalmarket still acknowledged theGRENKE ConsolidatedGroup's robust domestic business and its successful international growth strategy. The better performance of GRENKE shares is clearly attributable to its favourable business development: Following the announcement of the growth in new business in the first half of the year and the subsequent increase in fiscal year 2011 forecasts, the share price saw a substantial rise in early July – even after previously having already outperformed the market.

The Supervisory Board wishes to thank all the employees in the 15 European countries in which the GRENKE Consolidated Group now operates and the members of the Board of Directors for their high level of commitment and the work they have done. Their personal commitment made it possible for the GRENKE Consolidated Group to continue developing successfully and to make 2011 another successful year.

Baden-Baden, Germany, February 3, 2012 For the Supervisory Board

Prof. Dr. Ernst-Moritz Lipp Chairman

The Board of Directors of the GRENKELEASING AG

The Supervisory Board of GRENKELEASING AG

Name / Residence	Activity / Occupation	Other Supervisory Board / Advisory Board Functions
Prof. Dr. Emst-Moritz Lipp Baden-Baden, DE Born 1951 First elected: 2003 Elected until the Annual General Meeting 2013	Chairman of the Supervisory Board, Professor of international finance. General manager of ODEWALD & COMPAGNIE Gesellschaft für Beteiligungen 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 2013	Deputy Chairman of the Supervisory Board. Public auditor and tax advisor	Grenke Investitionen Verwaltungs 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 Verwaltungs 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, General manager of Deltavista GmbH
▶ Erwin Staudt Leonberg, DE Born 1948 First elected: 2005 Elected until the Annual General Meeting 2015	Member of the Supervisory Board, Economics graduate	PROFI Engineering Systems AG, Darmstadt, DE; USU Software AG, Möglingen, DE; Hahn Verwaltungs- 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	Tiemeyer Automobile AG, Bochum, DE; agathon GmbH & Co. KG, Bottrop, DE

Corporate Governance Report

The GRENKE Consolidated Group is governed by a sense of responsibility. Therefore, an important part of our sense of identity is corporate governance that is effective and complies with the relevant laws and the requirements of the German Corporate Governance Code. The Board of Directors, the Supervisory Board, and executive employees, all identify with the principles of good corporate governance and compliance. They are committed to managing and monitoring the GRENKE Consolidated Group in a value-oriented and transparent manner. They are also aware of the special significance these principles hold with shareholder and capital providers on the capital market when making an assessment of the company. They also know that good corporate governance represents an important basis for maintaining and increasing confidence among present and future customers, employees and business partners. Transparent accounting and early reporting are essential to us for dealing with the public in a way that creates confidence.

GRENKELEASING AG complies with the recommendations of the German Corporate Governance Code in the version dated June 18, 2009 and, since enforcement, in the amended version dated May 26, 2010 with few exceptions. The Board of Directors and the Supervisory Board have discussed their compliance with the Code in their meetings and have passed the declaration of compliance with the Code which has been duplicated at the end of this report. The declaration can also be found on the website of GRENKELEASING AG.

Consolidated Group Management and Monitoring

TheBoardofDirectorsofGRENKELEASINGAGiscomprisedoffourmembersandtheSupervisoryBoardiscomprisedof sixmembers.

Supervisory Board

During the fiscal year 2011, the Board of Directors provided the Supervisory Board with regular, detailed, and extensive information on the company's economic situation, the status of corporate planning, and current events. In this context, the status of refinancing and liquidity also remained a key focus. The Supervisory Board coordinated strategic development with the Board of Directors and discussed issues related to risk provisions, risk management, the internal control system and the internal audit system.

Further responsibilities of the Supervisory Board include appointing and monitoring the members of the Board of Directors, reviewing and adopting the annual financial statements of GRENKELEASING AG, and reviewing and approving the consolidated financial statements of the company, while taking into consideration the auditors' reports and the findings of the reviews by the Audit Committee (see "Report by the Supervisory Board"). Another key activity is examining and approving company acquisitions.

The Supervisory Board of GRENKELEASING AG has formed two committees in order to allow it to perform its duties efficiently. These committees have been given certain authorizations which are in line with the Supervisory Boards' Rules of Procedure. The committees prepare the issues and resolutions which are relevant to them and which are then discussed by the Supervisory Board as a whole. The chairs of the committees report to the Supervisory Board, in its entirety, on the work accomplished in the committeemeetings.

Audit Committee

The Audit Committee is comprised of three members who have specialized knowledge in the areas of accounting, corporate planning, riskmanagement and compliance.Thecommittee primarily dealswithissuesof external and internal accounting, thesystems of corporate planning, and the company's riskmanagement. It reviews andmonitors the independence of the auditor in accordance with Article 7.2.1 of the German Corporate Governance Code, determines the audit focus, and is responsible for and agrees on the fee with the auditor.

The Audit Committee also prepares the decision by 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 in the company, including compliance with the German Banking Act (KWG).

Personnel Committee (Executive Committee)

The Personnel Committee is comprised of three members. In particular, this committee prepares the Supervisory Board decisions on personnel and makes proposals for concluding, amending, and terminating employment agreements with the members of the Board of Directors.

Board of Directors

The Board of Directors autonomously manages the GRENKE Consolidated Group and is responsible for the company's strategic orientation and compliance with the 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 issues such as strategy and implementation, planning, business performance, the financial and earnings situation, the strategic and operational business risks, their respective management, and activities involving the company in its entirety. 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

					Total	Total
EUR	Christ	Grenke	Dr. Hack	Kindermann	2011	2010
Gross salary	182,500.68	331,241.47	269,112.51	148,541.83	931,396.49	942,119.73
Performance bonus	87,093.25	174,186.50	149,800.39	76,642.06	487,722.20	402,712.64
Bonus*	60,000.00	120,000.00	103,200.00	52,800.00	336,000.00	343,200.00
Phantom stocks	0.00	0.00	0.00	0.00	0.00	373,550.00
Pensions	0.00	0.00	21,000.00	0.00	21,000.00	21,000.00
Total costs	329,593.93	625,427.97	543,112.90	277,983.89	1,776,118.69	2,082,582.37

Remuneration of the Board of Directors

*For fiscal year 2011, the bonus is reported according to principle of causation. The amount of EUR 0.00 previously reported for fiscal year 2010,was reclassified accordingly.

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 component. Some members of the Board of Directors also receive phantom stocks. The structure of the remuneration system, including phantom stocks, is aimed at promoting the company's long-term success and creating incentives to only enter into risks that are easily controllable statistically and that involve appropriate remuneration for the respective risk. No incentive is provided for entering into inappropriate risks. Furthermore, the regulatory capital of GRENKELEASING AG is neither jeopardised by its remuneration practice, nor does this restrict the long-term retention of its equity.

In the year under review, the remuneration paid to the members of the Board of Directors totalled EUR 1,776k (previous year: EUR 2,083k), of which EUR 931k (previous year: EUR 942k) was attributable to gross salaries and EUR 488k (previous year: EUR 403k) to performance bonuses. An annual pension premium of EUR 21k (previous year: EUR 21k) was also paid to an external provident fund for Dr. Uwe Hack.

The criteria for the variable remuneration components are defined in advance each year. They are based on the increase in EBIT (earnings before interest and taxes) and the development of the key performance indicators forming part of the GRENKE balanced scorecard (BSC). The attainment of the EBIT growth target is measured at the end of each year. Failure to achieve the targets means that no payment is made. The relevant BSC criteria correspond to the key performance indicators for the Consolidated Group's longterm success, and hence the long-term growth in enterprise value. Among other things, this includes the development in the number of leases and the volume of new business. The attainment of the BSC criteria is measured at the end of each quarter.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Dr. Uwe Hack and Mr. Gilles Christ. Under these agreements, Dr. Uwe Hack and Mr. Gilles Christ receive entitlements to payment equal to the increase in value of 30,000 and 15,000 shares in GRENKELEASING AG respectively in relation to a defined basic share price for fiscal years 2010, 2011 and 2012. 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 basic share price for 2011 was EUR 37.72. 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 programme, Dr. Uwe Hack and Mr. Gilles 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 was applied for Mr. Gilles Christ in fiscal year 2010, his first year of membership of the Board of Directors.

As of December 31, 2011, the value of the phantom stock agreements granted for 2011 totalled EUR 0. For 2010, a total of EUR 374k was paid out based on the phantom stock agreements for Dr. Uwe Hack and Mr. Gilles Christ.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance policy for members of the Board of Directors. This prescribes a fixed deductible of 10 percent per claim for each member of the Board of Directors; however, this is limited to a maximum of one and a half times the annual fixed remuneration for all claims per year. No further benefits have been agreed with any members of the Board of Directors in connection with the termination of their appointment. Moreover, none of the members of the Board of Directors received benefits or corresponding commitments from third parties relating to their position as a member of the Board of Directors in the past fiscal year.

		Basic
		remuneration	Audit	Personnel	Variable	Travel	Total	Total
Name	Function	2011	Committee	Committee	remuneration	expenses	2011*	2010*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	12,750.00	573.35	26,073.35	18,936.08
	Deputy
Witt	Chairman	7,500.00	900.00	600.00	9,000.00	0.00	18,000.00	13,361.40
Münch	Member	7,500.00	600.00	0.00	8,100.00	333.00	16,533.00	12,033.90
Dr. Nass
(until May 11, 2010)	Member	0.00	0.00	0.00	0.00	0.00	0,00	6,389.57
Schulte
(from May 11, 2010)	Member	7,500.00	0.00	0.00	7,500.00	0.00	15,000.00	4,791.67
Staudt	Member	7,500.00	0.00	600.00	8,100.00	0.00	16,200.00	11,524.00
Dr. Sträter
(until May 11, 2010)	Member	0.00	0.00	0.00	0.00	0.00	0.00	6,186.37
Prof. Dr. Wörn
(from May 11, 2010)	Member	7,500.00	0.00	0.00	7,500.00	1,167.72	16,167.72	6,123.23
Total		48,750.00	2,100.00	2,100.00	52,950.00	2,074.07	107,974.07	79,346.22

Remuneration of the Supervisory Board

* Fixed remuneration (basic remuneration, Audit and Personnel Committee), variable remuneration and travel expenses

In fiscal year 2011, the members of the Supervisory Board received a total of EUR 108k (previous year: EUR 79k) including travel expenses in remuneration for their work. The remuneration for each individual member can be seen in the table above.

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. In accordance with the new version of the Articles of Incorporation based on 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, except for the Chairman who receives EUR 11,250, plus EUR 600 for each committee membership and EUR 900 for each committee chaired.

If members are only on the Supervisory Board for part of a fiscal year, the basic remuneration and the remuneration for committee memberships and chairmanships are calculated on a pro rata basis. 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; however, the variable component may not exceed 100 percent of the fixed remuneration.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance policy for members of the Supervisory Board. This prescribes a fixed deductible of 10 percent per claim claim for each member of the Supervisory Board; however, this is limited 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

Consolidated Group accounting for the fiscal year from January 1 to December 31, 2011 was conducted in accordance with the rules and regulations of International Financial Reporting Standards as adopted in the European Union. In preparing the consolidated financial statements and the group management report, the company was also subject to and applied the provisions of German commercial law under Section 315a (1) HGB. The consolidated financial statements were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW (IDW PS 200). The Audit Committee ensures the independence of the auditor and proposes an auditor to be elected by the Annual General Meeting. The auditor is elected by the Annual General Meeting in accordance with the statutory provisions.

Transparency and Reporting to Shareholders

GRENKE uses the Internet in order to promptly, equally, and thoroughly report to shareholders, capital market participants, and the media. 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 GRENKE's website (www.grenke.de/en/investor-relations).

Shareholders can use the internet to find information on the GRENKE Consolidated Group and its management and organisational structure. Notifications by the company are published in the electronic Federal Gazette (Bundesanzeiger). Shareholders can also 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 and on GRENKE's website. GRENKE shares are reported on in detail in the "Investor Relations – GRENKELEASING share" section.

Controlling and Risk Management

The purpose of GRENKE Consolidated Group's risk management system is the systematic identification, assessment, documentation and disclosure of risks posed to the parent company and subsidiaries. It is designed to enable employees and management to address risks responsibly andmake themost of the opportunities that present themselves. TheGRENKELEASINGAGriskmanagement system is being continually expanded and is operated using a risk management tool on the intranet of the GRENKE Consolidated 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. The appropriate risk management and controlling processes demanded by MaRisk for the key types of risks – counterparty, market price, liquidity and operational risks – have been implemented in the GRENKE Consolidated 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. The details of the risk management system are given in the management report.

Declaration of compliance with the German Corporate Governance Code (DCGK) by the Board of Directors and Supervisory Board in accordance with Section 161 AktG

The Board of Directors and Supervisory Board of GRENKELEASING AG issued the following declaration of compliance on May 3, 2011:

"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 26, 2010, the recommendations of the Government Commission on the German Corporate Governance Code initially in the version dated June 18, 2009 and, since it became applicable, the amended version dated May 26, 2010 have been complied with and will also be complied with in future with the following exceptions:

The currently applicable version of the company's articles of incorporation provides neither for the option of a postal vote for the shareholders nor for a corresponding authorisation of the Board of Directors. The company does not currently intend to provide for postal voting before and during the Annual General Meeting in addition to voting using proxies bound by instructions. Introducing the option of a postal vote entails legal risks and also additional administrative expense and does not provide any significant added value as compared to voting using proxies bound by instructions, as is practised by the company. For this reason, the recommendations in Articles 2.3.1 and 2.3.3 of the DCGK in relation to holding a postal vote are not followed.

In deviation from the recommendation in accordance with Article 4.2.3 of the DCGK, the Board of Directors agreements with incumbent members of the Board of Directors do not provide for a maximum severance payment. The reason for this is that some Board of Directors agreements were concluded before the recommendation in question was included in the German Corporate Governance Code and consequently enjoy the right of continuance. However, a maximum severance payment also has not been agreed for newly concluded Board of Directors agreements, as the Board of Directors agreements are regularly concluded for the length of the appointment period only and are not subject to ordinary termination. Therefore, early termination of the Board of Directors agreement without an important reason is possible only by mutual agreement. In the related negotiations, the Supervisory Board aims to take into account the recommendation in Article 4.2.3 of the DCGK.

Both in the composition of the Board of Directors and in proposals for the election of members of the Supervisory Board, the recommendations under Articles 5.1.2 and 5.4.1 of the DCGK stipulate that attention should be paid to a specifiable age limit and to diversity, among other things. The company does not comply with either of these proposals, as in the company's opinion neither of the two criteria is a suitable deciding factor for appointing members of the Board of Directors or for electing 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, May 3, 2011

GRENKELEASING AG

The Supervisory Board The Board of Directors"

Our Shares and Investor Relations

In fiscal year 2011, the price of GRENKE shares improved by 2.7 percent, in net terms. Following a closing price of EUR 37.99 at the end of 2010, it ended the fiscal year 2011 at EUR 39.00 (XETRA closing prices, also in the following). The shares outperformed its benchmark price indices, the SDAX and the sector index DAXsector Financial Services, throughout most of the year. By mid-year, the shares were up 15 percent, whereas the SDAX price index had risen by only 6.7 percent. The German financial services providers remained at a steady level overall in net terms. Following the announcement on the development of new business development in the first half of 2011, and the raised forecasts for the year as a whole, GRENKE shares initially saw a significant climb and reached their high for the year of EUR 45.83 on July 7.

However, this very positive performance was halted abruptly as the European debt crisis escalated, causing the capital markets to undergo some turbulence. GRENKE shares were also unable to escape the general correction on the markets. The share, the SDAX and the DAXsector Financial Services all dropped by around 25 percent from their respective peak levels. This drop brought the share price to its lowest level of the year of EUR 34.06 on August 19, the temporary end of the correction.

Over the remainder of the year, this level was tested twice: on September 13 – marking the low for the year of EUR 33.98 – and on December 1 at EUR 34.00. The indices did not manage to recover significantly after the steep correction in the summer and overall had displayed a sideways trend at the new, lower level until the end of the year. In contrast, GRENKE shares rose considerably again in December. Thus, it was up by almost 15 percent compared to its low in September and closed the year 2011 with a slight increase in share price.

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 expansion. For this reason, GRENKE shares offer investors continuous income combined with attractive growth prospects and high intrinsic value.

Traditionally, the GRENKE Consolidated Group has had a strong 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 of the international financial sector crisis, the equity ratio was purposely increased above this level owing to risk considerations. Due to a considerably stronger focus on our business growth which began in the second half of 2009, the ratio was then gradually brought back to the target level. At the end of 2010, it was 17.2 percent, and as at the balance sheet date in the reporting year, it had reached 16.1 percent.

The solid, actively managed equity base of the GRENKE Consolidated Group will remain the most important basis for our continued rapid expansion in the future. In the context of this long-term strategic goal, we organise the dividend distribution policy in a profitoriented way. Accordingly, we increased the dividend last year due to our confidence that we could maintain the increased dividend level in the future. Our assessment was validated by the earnings performance in the reporting year. In the coming years, we anticipate further rapid expansion of business with increasing earnings. Therefore, the Board of Directors and the Supervisory Board will propose a dividend of EUR 0.75 per share for the fiscal year 2011 at the Annual General Meeting of GRENKELEASING AG on May 10, 2012. A dividend of EUR 0.70 per share was distributed in the previous year.

Investment Case

We position our shares on the capital market with four distinguishing criteria:

• our sustainably successful growth strategy,
• market leadership in our core business,
• our long-standing, proven risk management including the requirements of MaRisk,
• the high intrinsic value of our shares measured in terms of return on equity and embedded value.

We focus our operations on high-margin business areas and systematically gear them towards the contribution margin 2 (operating income from leases less risk costs and variable administrative costs). Our aim remains rapid expansion and the resulting 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 to be highly effective during the financial market crisis.

In 2011, as in the previous years, we were able to fully pass on the refinancing costs to the market and significantly increase net interest income. This allowed us to effectively cushion the inevitable rise in the loss rate following the recession. Another very important aspect of our cost and risk management system is its function as a barrier to market entry by potential competitors. This, together with our finely honed sales system, keeps us well equipped for future growth.

Investor Relations

In our investor relations activities, we maintain an open and continuous exchange of information with investors, analysts, and media representatives. Again in 2011, the Board of Directors explained GRENKE Group's business model to capital market participants and reported on the company's performance by undertaking a number of road shows and participating in investor conferences in Europe's leading financial centres. In addition, we frequently speak to market participants and media representatives in one-on-one discussions and in conference calls. Thanks to this active communication policy, we have steadily expanded our investor base in recent years.

We also consider the Annual General Meeting to be a central forum for maintaining our contact with shareholders. The general public can participate via our website: we broadcast the Board of Directors' speech to the Annual General Meeting and the general debate as a live stream. All current investor relations news, press releases and annual and quarterly reports can of course be viewed on the website at all times. Interested parties can also use our news service.

We also aspire to be among the leading companies in terms of the quality and timeliness of the information we provide. We publish the new business figures and contribution margins for the previous 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 annual financial report. In addition, in keeping with the spirit of high transparency, our reporting goes well beyond the required minimum.

Rating

In an analysis dated December 8, 2011, the agency Standard & Poor's again confirmed GRENKELEASING AG rating with a stable outlook. The key factors emphasised were the broad diversification of our receivables portfolio, strong risk management, very solid capitalisation, adequate liquidity, and very high profitability. With this very positive rating, our standing on the capital markets remains favourable. The individual assessments by Standard & Poor's are as follows:

Issuer credit rating

	Counterparty credit rating		BBB+ Stable / A-2
	Senior unsecured	BBB

Short-term debt A-3

GRENKE shares at a glance

Code	GLJ
Bloomberg code	GLJ_GR
Reuters code	GKLG.DE
ISIN	DE0005865901
Market segment	Prime Standard
Index	SDAX
Designated sponsors	Close Brothers Seydler Bank AG;
	WestLB
Total number of registered shares outstanding	13,684,099
Class	No-par-value shares
Nominal value per share (rounded)	EUR 1.28
Shareholder structure:
Free float according to Section 1.7 of the current Deutsche Börse stock indices guidelines	54.90%
Pooling agreement with the Grenke family (Wolfgang, Anneliese, Moritz, Roland, Oliver Grenke)	45.10%

	2011	2010	2009	2008	2007
Closing price on last trading day
(XETRA)	EUR 39.00	EUR 37.99	EUR 29.50	EUR 17.82	EUR 22.90
Highest intraday price	EUR 46.00	EUR 38.50	EUR 30.22	EUR 28.20	EUR 42.00
Lowest intraday price	EUR 32.55	EUR 28.70	EUR 17.82	EUR 17.40	EUR 19.60
Market capitalisation (closing price)	EUR 534 million	EUR 520 million	EUR 404 million	EUR 243 million	EUR 313 million
Earnings per share	EUR 2.87	EUR 2.03	EUR 1.80	EUR 2.42	EUR 2.35
Price-earnings ratio
(Basis: closing price)	13.6	18.7	16.4	7.4	9.8

Content

Group Management Report for Fiscal Year 2011	22
Corporate Legislative Framework	22
Company Profile	22
Business Model	22
Development and Structure of Services	23
International Presence	24
Growth Strategy of the GRENKE Group	24
Corporate Management	25
Fiscal Year 2011	27
Economic Conditions and Sector Trends	27
Significant Developments in the Fiscal Year	28
Report on the Results of Operations	29
Report on the Financial Position and Net Assets	32
Overall Statement on the Financial Situation of the GRENKE Consolidated Group	34
Additional Information	34
Sales, Customer and Supplier Structure	34
Research and Development	35
Non-Financial Performance Indicators	35
Personnel	37
Changes in the Executive Bodies	37
Remuneration Report	38
Directors' Holdings and Transactions Dependence Report	40 41
Disclosures pursuant to Section 315 (4) HGB	41
Corporate Governance	43
Declaration on Company Management pursuant to Section 289a HGB	44
Risk Management Report	47
Significant Events subsequent to the End of Fiscal Year 2011	59
Report on Forecasts and the Outlook for the Consolidated Group	60
Consolidated Financial Statements for Fiscal Year 2011	62
Consolidated Income Statement	62
Consolidated Statement of Comprehensive Income	63
Consolidated Statement of Financial Position	64
Consolidated Statement of Cash Flows	66
Consolidated Statement of Changes in Equity	68
Notes to the Consolidated Financial Statements for Fiscal Year 2011	69
Audit Opinion	144
Declaration in Accordance with Section 297 (2) Sentence 4 HGB and Section 315 (1) Sentence 6 HGB	145

Group Management Report for Fiscal Year 2011

Corporate Legislative Framework

The GRENKELEASING AG Consolidated Group (hereinafter: "GRENKE Consolidated Group") dates back to a sole proprietorship that was formed in 1978. GRENKELEASING AG was formed in 1997. It is operationally separate from GRENKE Investitionen Verwaltungs KGaA, with the former serving as the operating company and the latter as the holding company. The companies were originally formed to bundle the activities of various companies controlled by Wolfgang Grenke.

The GRENKE Consolidated Group is internationally active and is continuously expanding its presence. Two expansion models are used for this purpose. Firstly, we are represented by subsidiaries in a number of countries, some of which have set up branches in their respective local markets. Secondly, we have established a franchise model for both the development of new regional markets and for expansion with new financing products.

We do not own shares in the legally independent companies of our franchisees. However, GRENKELEASING AG has the right to acquire such companies after an agreed period of several years. The purchase price is based on a formula that is agreed when the contract is agreed. The formula takes into account both market parameters, and the individual performance of the company.

Companies are generally acquired after a period of four to six years.Underthe terms of the franchise agreement,GRENKELEASINGAG provides its franchise partners with expertise, the operational infrastructure, a range of services, and the right to use its name. In the year under review, we acquired the company of our former Hungarian franchisee. This transaction did not have a material impact on the net assets, financial position, nor on the results of operations of the GRENKE Consolidated Group. In other countries, there is an option to acquire the respective local companies with effect for fiscal year 2012.

The GRENKE Consolidated Group generally refinances the financing agreements concluded between franchisees and their customers via its subsidiary in Ireland by purchasing the receivables of the respective franchisee or through sale-and-leaseback transactions. The GRENKE Consolidated Group generates a portion of its new business from this refinancing activity. In some cases, franchisees conclude leases under a commission model, meaning that the GRENKE Consolidated Group acts as the direct lessor.

Accordingly, this management report differentiates between the GRENKE Consolidated Group, i.e. GRENKELEASING AG and all of its consolidated subsidiaries and special-purpose entities in accordance with IFRS, and the GRENKE Group, i.e. the GRENKE Consolidated Group and its franchise partners.

Company Profile

Business Model

The origins of the GRENKE Group are rooted in the business idea of standardising lease finance using IT-based processes, thereby allowing lease finance to be offered in an economically feasible manner even for small IT products. We defined and developed a market that did not exist at the time and that is still not addressed by the vast majority of leasing providers. We finance IT products starting from a net acquisition cost of EUR 500. In fiscal year 2011, the average acquisition cost per lease concluded was around EUR 8,178, compared with around EUR 7,693 in the previous year.

To allow such low-volume financing to be realised in an economically efficient manner, it must be possible to conclude the corresponding leases at an extremely low cost per contract. Accordingly, the GRENKE Group's business model is focused on maximising efficiency. Standardisation, comprehensive IT-based automation, and speed are major unique selling points and represent key barriers to entering our market.

We continue to further develop our broad-based range of financing products. However, the various alternatives are all highly standardised, and the parameters that can be selected by customers are limited. All of the GRENKE Consolidated Group's leases are centrally managed at its head office in Baden-Baden and processed on an automated basis. We measure and calculate the risk and default rates of our financing using our internally developed IT-based scoring procedure which is continuously optimised. This serves to limit the cost of credit checks and allows contract and payment approvals to be issued in a short period of time. Our receivables portfolio is diversified thanks to both the low volume of the individual contracts, as well as our focus on IT products for commercial use in office environments, which allows us to achieve broad distribution across a wide range of industries.

Also in the area of sales, our business model is focused on diversification, speed, and cost containment. Accordingly, we have adopted an indirect sales organisation via independent specialist reseller partners, who offer various financing alternatives to their clients – small and medium-sized enterprises (SMEs) – at the point of sale. In addition to a price that reflects market conditions, the decisive factor in selecting the GRENKE Group as a financing partner is the support provided to resellers in concluding their own transactions by issuing approvals as quickly as possible. Our web-based online tool generally allows us to do this within ten minutes. The tool now generates 74 percent of all the GRENKE Group's financing requests, with the figure for Germany rising to 79 percent. In addition, our in-house sales team actively supports our reseller partners in all leasing-related matters. This allows us to provide a unique product range for small-ticket leases that clearly sets us apart within our competitive environment.

Risk limitation through diversification is our philosophy. We aim to avoid cluster risks in terms of our lessees and sales partners, and our IT products are similarly manufacturer-independent. Last but not least, we are systematically expanding our already broad range of refinancing instruments.

We have developed and established this business model in the market for small-ticket IT leasing. Meanwhile, we have successively expanded our activities to include financing for other goods and are adding new financial products on the asset and liability side of our balance sheet. Our business model will continue to be characterised by the IT-based standardisation of our business processes, indirect or pure online sales, and broad diversification with a view to limiting risks.

Development and Structure of Services

Our financing activities remain focused on small-ticket IT leasing. We finance a wide range of goods, primarily in the area of information technology, with a particular focus on IT equipment and systems, printers, copiers, and telecommunications products as well as software. The structure of the financed goods portfolio did not change significantly in the year under review. This portfolio results from the nature and extent of product usage in the office environments of European SMEs.

We are in the process of adding new financing products to the GRENKE Group's product range for SMEs. This includes purchasing lower-volume receivables (factoring) and car leasing, in addition to various financing alternatives from GRENKE BANK AG, which are offered in cooperation with NRW.Bank (the development bank of North Rhine-Westphalia state), KfW Mittelstandsbank and L-Bank in Baden-Württemberg. In January 2012, a similar cooperation was established with Thüringer Aufbaubank, the development bank of the state of Thuringia.

GRENKE BANK AG now also offers a wide range of additional products, such as payment transaction accounts in euro or foreign currencies, and simple investment products such as fixed-term deposits and savings bonds for our commercial customers. Our call money and fixed-term products are also addressed to private customers.

International Presence

The GRENKE Group is a European provider of financial services for SMEs. In the past fiscal year, we generated 62 percent of our new business outside of Germany. Key individual markets are France and Italy, where we have been rapidly expanding our business for a number of years. In the UK, we are gaining market share rapidly and as a result, this market has become our fourthlargest international market. In Switzerland, as in Germany, we are the clear market leader for small-ticket IT leasing.

Currently we are focusing on consolidating our network and increasing our proximity to our customers. To this end, the GRENKE Consolidated Group opened a total of seven new locations in Denmark, France, the United Kingdom, Ireland, and Italy in the year under review. Furthermore, one additional location was added by each of our franchise partners in Spain and Portugal. Finally, thanks to the conclusion of a new franchise agreement for Turkey – the fastest-growing economy in Europe – we have secured our foothold in this highly attractive market. We are also looking and planning beyond Europe, with intensive preparations underway for our market entry in Brazil – the most populous country in South America and the world's sixth-largest economy.

Growth Strategy of the GRENKE Group

The GRENKE Group is focused on growth. Over the past five years, we have expanded our new business by an average of 13 percent every year. With our established business model, our sophisticated business processes and our finely honed IT-based scoring model, we can benefit in both expansionary and recessionary macroeconomic periods in equal measure. This is something that we have be able to demonstrate in recent years. With our international presence, our market entry in Turkey in 2011, and the preparations for our expansion into Brazil, it will be even easier for us to address the opportunities arising in our individual sales markets in a targeted manner in future.

The GRENKE Group currently has an international presence in 23 European countries, with a total of 23 locations in Germany and 52 international. We are looking to expand our market share further in the future by establishing additional locations. In the wake of the financial market crisis in 2008 and the current government debt crisis, many competitors have scaled back their activities in the smallticket IT leasing market and in some cases have withdrawn from the market altogether. Many of the providers from the banking industry are also facing losses in other business areas and are being confronted with significantly more stringent regulatory requirements. This improved our outlook even further. In order to accelerate our entry into new countries, we often refrain from forming our own subsidiary right away and instead enter into an agreement with an entrepreneurial franchisee that has a good knowledge of the respective target market. In the first few years, the franchisee performs the development work and positions the GRENKE brand on the market.

Above and beyond our regional growth, we are continuously expanding our product range and the financing solutions we offer. We do this by focussing on indirect and online sales channels as well as on automated contract processing. In order to limit risks, we manage our expansion with consideration to ensuring a broad diversification of our portfolio in terms of customers and industries and low average financing volumes. In addition, our range of financing products is primarily aimed at commercial customers. We do not compromise on our strategic targets for capital resources and profitability, nor do we make any concessions with regard to maintaining an adequate risk / return profile.

Since spring 2010 and 2011, our newer products have included additional offerings from GRENKE BANK AG in the area of start-up financing. This business is developing well. The volume contracted by us in the year under review amounted to EUR 1.5 million after EUR 0.3 million in the previous year.

In cooperation with NRW.Bank, the development bank of North Rhine-Westphalia state, we place development funds with small and medium-sized enterprises and self-employed professionals in the state for the purposes of financing new purchases of operating equipment through leases. This cooperation was expanded in the year under review, and NRW.Bank granted us a further global loan with a total volume of EUR 15.0 million in summer 2011. By the end of 2011, a total of 3,319 contracts were generated (previous year: 1,805). In January 2012, a similar cooperation was also established with Thüringer Aufbaubank, the development bank of the state of Thuringia, which has granted us an initial global loan of EUR 5.0 million.

In spring 2011, GRENKE BANK AG also celebrated its first year of accreditation by KfW Mittelstandsbank for its "KfW-StartGeld" business start-up programme, which supports new business start-ups, self-employed professionals, and small companies in existence for less than three years. Based on our many years of extensive experience in the field of IT-based contract processing, our bank subsidiary has developed an innovative Internet platform that offers quick and easy access to "KfW-StartGeld".

Since the start of 2011, GRENKE BANK AG has also provided new business start-ups with access to funding from the "Startfinanzierung 80" development programme initiated by L-Bank in Baden-Württemberg. Bürgschaftsbank Baden-Württemberg is providing an 80 percent indemnification to GRENKE BANK AG for each case of approved financing.

The maximum credit volume supported by KfW Mittelstandsbank has recently been raised from EUR 50,000 to EUR 100,000 per application, which means that the L-Bank and KfW programmes now both offer funding of EUR 100,000 for new business start-ups. KfW's "StartGeld" start-up loans can be used throughout Germany, while L-Bank's "Startfinanzierung 80" is restricted to Baden-Württemberg state.

Corporate Management

Equity Ratio and Return on Equity Remain the Key Performance Targets

Our corporate management approach focuses on generating a sustainably high return on equity while ensuring solid capital resources. For a number of years, our targets in terms of the equity ratio and the post-tax return on equity have both been 16 percent. We consider these two parameters to be key conditions for safeguarding our good rating, as well as being central to ensuring that our shares enjoy an attractive valuation.

Due to our considerable earnings strength, the equity ratio remained solid in fiscal year 2011 despite our sustained rapid expansion. At 16.1 percent at the end of the year under review, it was down only slightly on the figure of 17.2 percent at the end of fiscal year 2010 and remains above our target of 16 percent. At the same time, we have moderately reduced the slight overcapitalisation that we deliberately established during the last recession to protect against risks, investing these funds in our operating business.

The return on equity after taxes increased substantially, from 9.7 percent in the previous year to 12.4 percent in fiscal year 2011. The burdens resulting from the financial market crisis in 2008, that have affected our loss rate with a typical time delay, are starting to diminish. We are well on track to return to our target level of 16 percent. The stability of our profitability is another important factor. This is controlled using our finely honed risk measurement scoring model. Our aim is to measure risk precisely in all of our markets in order to achieve an attractive risk / return profile. We now also have a sufficiently broad European base, which allows us to concentrate our growth on markets with above-average potential. Last but not least, we have been extremely successful in expanding our non-interest income sources over recent years. These accounted for half of our total operating income in the year under review.

With regard to expenses, our international network is now sufficiently large enough that the relative importance of new locations and the accompanying start-up costs are significantly lower than in the past. Accordingly, the rise in operating expenses in fiscal year 2011 was substantially lower than the corresponding growth in total operating income.

Broad Range of Instruments for Optimising the GRENKE Consolidated Group's Refinancing

For a number of years, the GRENKE Consolidated Group has used a wide range of refinancing instruments. This ensures not only that sufficient refinancing is available at all times, but also that we can use developments on individual debt markets to strengthen our competitive position.

We cultivate all of our instruments through a continuous market presence. This proximity to the markets ensures that we can always rely on our own assessment of market developments the receptivity for our placements. In light of the likely intensification of regulatory requirements for lending banks, we expect to see growing competition for capital on the credit markets in future. We are confident that our long-standing reputation on these markets gives us a strategic competitive advantage.

For this reason, we are traditionally committed to the principle of comprehensive transparency when it comes to presenting our activities on the refinancing markets. If for no other reason than to ensure our transparent and competitive rating, we have always structured our instruments in a form that requires them to be recognised on the balance sheet from the beginning, in full. Off-balancesheet structures are deliberately avoided. We will continue to apply this policy in order to ensure full transparency with regard to the GRENKE Consolidated Group's commitments at all times.

We make use of asset-backed commercial paper (ABCP) programmes via special-purpose entities. We have also issued promissory note loans, debentures and bonds under the terms of a debt issuance programme (DIP). Furthermore, we placed our second ABS bond in February 2010. In October 2011, we successfully initiated a programme for financing via commercial paper, thereby expanding our financing alternatives in the area of issues with a term of up to one year. The development loans we contract are refinanced via global loans from the respective development banks.

Last but not least, a substantial portion of our refinancing is provided by banking deposits via GRENKE BANK AG's online platform, www.grenkebank.de. Together with the solid capital resources of the GRENKE Consolidated Group, we have the instruments at our disposal to allow us to leverage significant growth opportunities on short notice. We demonstrated this ability once again in the year under review.

Our day-to-day business focuses on ensuring that the GRENKE Consolidated Group is able to meet its payment obligations at all times. To this end, GRENKELEASING AG always maintains sufficient funds to refinance its own lease receivables as well as those of its subsidiaries. The GRENKE Consolidated Group's cash and cash equivalents are managed for the Consolidated Group companies by the Irish subsidiary GRENKE FINANCE Plc. under a cash pool arrangement. In certain cases, we also seek financing for our international expansion by obtaining funding on the respective local markets or in the respective local currencies. Corresponding master agreements are currently in place particularly in the United Kingdom, Poland, and Switzerland.

Fiscal Year 2011

Economic Conditions and Sector Trends

The GRENKE Group's business is only to a limited extent dependent on the performance of the overall economy. In the recent past, we have demonstrated our ability to grow even in economically difficult times. This applies in particular to our new business, which we actively manage. Key industry trends – such as the business policy of banks in the leasing sector and rising regulatory requirements in this industry – are considerably more important.

In terms of the economy as a whole, the fluctuations in the number of insolvencies have a certain influence on the loss rate of the GRENKE Consolidated Group. This is shown by the development of this figure compared with the EULER HERMES insolvency index (see chart). The general interest rate trend also has consequences for the GRENKE Group's refinancing costs. However, these factors are effectively cushioned.

Approvals of lease applications can be managed at very short notice in line with our own risk assessments thanks to our scoring model, which has proved itself over a number of years. Risk management is based on individual risk classes with regard to the absolute number of approvals and the risk-weighted margin. Both approaches were applied following the onset of the financial market crisis in anticipation of the expected rise in the loss rate: approvals were subject to more restrictive control and margins were increased. As a result, the increase in the loss rate during the recent crisis did not exceed the level typically seen during an economic downturn.

The influence of market and central bank interest rates on our refinancing costs is also limited. The GRENKE Group has a wide range of refinancing instruments that it employs flexibly depending on the market situation and expected interest rate developments. Our strong credit rating secured our access to funding even during the financial crisis, whether via programmes with banks, our direct access to the capital markets or GRENKE BANK AG's actively managed deposit business.

Significant Developments in the Fiscal Year

Strong Growth in New Business and Profitability accompanied by Continued Systematic Risk Management In fiscal year 2011, the main developments included sustained strong growth in our key markets accompanied by an improved contribution margin 2 (CM2) from new business and systematic risk management, and a substantial increase in profitability.

Our broad international presence allows us to adopt a regional focus on particularly attractive opportunities in target markets with below-average competitive intensity, thereby enabling us to expand our business rapidly and with rising CM2 margins while maintaining our policy of active risk management and realising risk-adequate margins. In the year under review, the GRENKE Group's new business increased by 24 percent year-on-year, from EUR 693.0 million to EUR 857.5 million. This meant that we clearly exceeded our growth target of more than 20 percent. The CM2 from our leasing business rose from 15.6 percent in the previous year to 16.0 percent.

There was extremely encouraging development in our largest international market, France, where new business increased by 19 percent. In Italy, growth in new business of 43 percent meant that we broke through the major barrier of EUR 100 million for the first time. We also achieved growth rates of between 30 percent and 40 percent in the United Kingdom, Portugal, and Spain. Expansion in our German domestic market, where we are the clear market leader for small-ticket IT leasing, is less rapid due to our market position. Despite this, we succeeded in increasing our new business by 15 percent year-on-year, from EUR 288.4 million to EUR 330.2 million.

In fiscal year 2011, the number of lease applications in the GRENKE Group increased from 194,913 in the previous year to a total of 217,129. There was particularly pronounced growth in the number of applications from our international markets, which amounted to 156,399 after 133,086 in the previous year. These applications resulted in 94,176 new leases (previous year: 84,482) and thereof a total of 64,909 new leases in our international markets (previous year: 55,333).

The conversion rate (conversion of lease applications into contracts) remained unchanged year-on-year at 43 percent, thereby again remaining below our target. However, this was due in part to the above-average expansion in our international markets, which have a lower conversion rate than the German market (42 percent compared with 48 percent) on account of our active risk policy.

In fiscal year 2011, we not only expanded our new business, but also significantly increased the net profit of the GRENKE Consolidated Group by 41 percent, from EUR 27.8 million to EUR 39.3 million. This is particularly attributable to the strong and high-margin new business generated in the past fiscal year, which is having a positive impact on our results of operations over the term of the respective leases. As expected, the losses showed only a slight increase as compared to the previous year. This contributed favourably to the earnings of the GRENKE Consolidated Group.

Furthermore, we are now benefiting substantially from economies of scale. On the one hand, the relative importance of start-up costs from new locations is lower than in the past on account of the critical mass we have achieved as a company. On the other hand, we now have a presence in a number of international markets, where cell divisions are less cost-intensive and require shorter ramp-up periods than when entering new countries.

Successful Performance on the Refinancing Markets once again

Toward the end of the financial market crisis, we became one of the first companies in the leasing industry to successfully generate refinancing funds on the capital markets in 2010. We achieved this at an extremely early stage and across a number of instruments. By contrast, there were no significant maturities in 2011. In the first quarter of 2011, we made our largest single placement of the past fiscal year, issuing a new bond with a volume of EUR 75 million with a lower financing margin than in 2010. This represented a significant part of the refinancing requirements. In addition, for the first time, French lease receivables were sold to Elektra Purchase No. 25, a special-purpose entity initiated by UniCredit Bank AG in fiscal year 2010. The Elektra ABCP programme has a volume of EUR 100 million.

Since October 2011, we have also had a platform for issuing commercial paper (CP). With a maximum volume of EUR 250 million, this will provide us with further alternatives for refinancing during the course of the year. Standard & Poor's has given the CP programme a short-term rating of "A-3", which is comparable to the "BBB" rating for the bonds issued under our DIP programme. The first issue, with a volume of EUR 5 million, was conducted in December 2011. We also successfully employed and maintained a continuous market presence for our other instruments in the year under review. The overall maturity structure of our refinancing instruments remained geared towards the term of our receivables portfolio.

We are excellently positioned for growth over the coming years. The next highest volume of EUR 100 million is not scheduled for refinancing until August 2012. A relatively minor volume of instruments is due for repayment and refinancing in 2012 and 2013. This means that we can press ahead with the further development of the GRENKE Group with a focus on our strategic objectives and, to a large extent, without exposure to the potential volatility on the capital markets.

This situation is also helped by the policy of refinancing via GRENKE BANK AG, which has now proven its worth over a number of years. As of December 31, 2011, we increased the volume of bank deposits to EUR 155.1 million after EUR 122.2 million in the previous year. This provides a significant portion of our refinancing and has allowed us to expand our positioning on the liability side of the balance sheet above and beyond commercial customers to also include private customers.

This form of financing is also independent of the banking and capital markets, thereby making us less reliant on cyclical developments in these markets. Our presence is aimed at continually maintaining this investor base while controlling the inflow of bank deposits via a corresponding interest policy in conjunction with inflows and outflows of funds from our other instruments and with the aim of matching maturities when refinancing our assets.

GRENKELEASING Ratings Confirmed

Since May 2003, we have had a Standard & Poor's issuer credit rating of BBB+ with a stable long-term outlook and a short-term rating of A-2. These ratings were again confirmed on December 8, 2011. The broad diversification of our receivables portfolio, strong risk management, extremely solid capitalisation, an appropriate level of liquidity and extremely high profitability are considered to be the key factors. Thanks to this extremely positive assessment, we continue to enjoy a good standing on the capital markets.

Report on the Results of Operations

In fiscal year 2011, the GRENKE Consolidated Group enjoyed a highly satisfactory business development, increasing its net profit by 41 percent to EUR 39.3 million. The first-time consolidation of the company of the former Hungarian franchisee did not have a material impact on income.

The success in the year under review is attributable to the strong, high-margin new business generated in recent years, which is increasingly generating income for us as the terms of the respective leases progress. At the same time, the rise in interest expenses was comparatively low. This allowed us to increase net interest income by 16 percent year-on-year to EUR 92.7 million in the year under review. While growth rates are expected to level off to a certain extent in future due to base effects and the fact that we deliberately scaled back our requirements for the CM2 as we left the last recession, this development is yet to become particularly apparent. Expenses for the settlement of claims and risk provision remained essentially unchanged, thereby again underscoring the success of our management approach using our long-standing and proven scoring model.

Profit frominsurance business and newbusiness sawsimilar development to net interest income,rising by 16 percent toEUR25.7million and 18 percent to EUR 31.0 million respectively. The profit from disposals shows the excess generated over the calculated residual value. As a net amount, it generally makes only a minor contribution to earnings and tends to be volatile. In the year under review, it declined as against the previous year to total EUR 1.7 million. In total, income from operating business increased by 20 percent to EUR 116.7 million.

Staff costs rose by 12 percent to EUR 36.7 million in the period under review, thereby outstripping the growth in the number of employees, which increased by 8.9 percent. In addition to the usual annual salary increases, this was due in particular to the payment of performance-related remuneration. In order to ensure the transparency of our fixed cost base and our variable remuneration, both components are reported separately for the first time for the year under review. The fixed annual remuneration increased from EUR 21.7 million in the previous year to EUR 23.5 million in the reporting period while the variable remuneration rose from EUR 5.7 million to EUR 7.0million.

As mentioned previously, the 9 percent rise in selling and administrative expenses to EUR 26.4 million was considerably lower than the growth in income from operating business. The significant increase in operating and administrative expenses due to the company's growth was offset by falling expenses in other areas. Other operating expenses were also lower than in the previous year. Other operating income increased largely as a result of higher franchise fees on the back of substantial new business at many of our franchise partners.

All in all, earnings before taxes in fiscal year 2011 increased by 38 percent year-on-year to EUR 50.4 million. Net profit rose by 41 percent to EUR 39.3 million and earnings per share amounted to EUR 2.87 compared to EUR 2.03 in the previous year.

Report on Segment Development

The GRENKE Consolidated Group divides its activities into the segments of 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 its leasing business, the GRENKE Consolidated Group essentially focuses on the individual countries and regions. Thus, the Leasing Business segment is a combination of several operating segments defined by countries or groups of countries that, taken together, make up the reportable Leasing Business segment.

The Banking Business segment comprises the activities of GRENKE BANK AG, which primarily focus on German customers. The Factoring Business segment contains the activities of GRENKEFACTORING GmbH, which performs traditional factoring services in Germany and is a financial services provider. Besides new business volume and the CM2 for the Leasing Business segment, the key performance indicators for the segments are operating segment income, the segment result before net other financial income, and staff costs. The disclosures in the previous chapter on the individual items of the GRENKE Consolidated Group affect the segments in the same way – particularly the Leasing Business segment, which accounts for the largest share of our business.

Operating segment income in some of our international market saw extremely substantial growth in the year under review on the back of the strong, high-margin new business generated in the previous years. This relates in particular to the German market, where development in the past was often more muted than in the other regions. One exception was the France region, where operating segment income in fiscal year 2011 was lower than in the previous year.

Staff costs increased across all regions, although this development was, in most cases, substantially less pronounced than the growth in operating segment income. Although there was an above-average increase in the Switzerland region, this was limited in absolute terms. Staff costs in the Italy region rose tangibly. This was the result of performance-related remuneration due to the strong growth in fiscal year 2011 and the appointment of additional employees to leverage the further potential in this market.

Due to the considerable growth in operating segment income, segment earnings in the Germany, Italy and Others regions improved significantly. In the France region, segment earnings declined year-on-year in line with the trend in operating segment income. In the Switzerland region, segment earnings were down slightly as against the previous year.

In fiscal year 2011, we substantially increased the GRENKE Group's new business volume. With a growth of 24 percent to EUR 857.5 million after EUR 693.0 million in the previous year, we clearly exceeded our target of more than 20 percent for 2011. We again successfully combined our rapid expansion with attractive and risk-adequate CM2 margins. In the year under review, we even increased the CM2 margin in the Leasing Business segment to 16.0 percent after 15.6 percent in the previous year.

Our international business was the GRENKE Group's growth driver once again in fiscal year 2011, accounting for 62 percent of the new business volume compared to 58 percent in the previous year. However, the development in our domestic market of Germany was also encouraging, although our expansion is naturally less rapid on account of the high regional density of our network and our position as market leader for small-ticket IT leasing. In fiscal year 2011, the GRENKE Group's new business in Germany increased by 15 percent to EUR 330.2 million, while new business in the Leasing Business segment rose by 8 percent to EUR 267.1 million. The CM2 of the Leasing Business segment in Germany improved slightly to 13.4 percent.

As in Germany, we are the clear market leader for small-ticket IT leasing in Switzerland. Here, new business grew by 4 percent to EUR 18.3 million. The CM2 margin was slightly weaker than in the previous year, but remained at a very good level of just under 20 percent. In our largest international market, France, we expanded our business volume by a further 19 percent to EUR 176.2 million. The CM2 margin declined slightly but remained in excess of 17 percent.

Italy, a region which has seen high growth in recent years, again enjoyed an extremely encouraging development in the year under review. New business increased by 43 percent to EUR 102.4 million, while the CM2 margin rose significantly to 15.1 percent. In the United Kingdom, Portugal and Spain, we recorded growth rates of between 30 percent and 40 percent accompanied by largely unchanged CM2 margins. In Poland, business integration following the acquisition of the company of the former franchise partner is now complete. As a result, new business increased by 24 percent on the back of a slightly reduced margin.

Operating segment income in the Banking Business segment remained largely unchanged year-on-year in fiscal year 2011. By contrast, segment earnings increased significantly from EUR 0.4 million to EUR 3.3 million in the second full year after the acquisition of GRENKE BANK AG. This was due in part to the fact that the prior-year figure included the costs of relocating from Hamburg to Baden-Baden. In addition, we have also now developed a range of products that are enjoying market success. This means that our expansion into the banking business is already bearing fruit not long after the acquisition of GRENKE BANK AG.

Factoring is still a relatively small business segment at present, although it is growing rapidly. The GRENKE Group's new factoring business increased by 103 percent to EUR 87.4 million in the year under review. We are currently primarily managing this business with a view to risk and cost limitation. The profit margin on the factoring volume amounted to 2.28 percent after 2.30 percent in the previous year. This margin is based on an average factoring period of around 37 days compared with 31 days in the previous year. The segment broke even in terms of earnings in fiscal year 2011 after recording a slightly negative figure in the previous year.

Report on the Financial Position and Net Assets

Due to our strong new business volume, the lease receivables of the GRENKE Consolidated Group increased by 18 percent to EUR1,568.8millioninfiscalyear2011afterEUR1,328.2million.Reflectingthisdevelopment,totalassetsroseby18percent year-on-year, fromEUR1,671.0milliontoEUR1,969.0million.CashandcashequivalentsincreasedfromEUR78.3milliontoEUR104.2million.

Equity rose by 10 percent to EUR 317.7 million on the back of the income development. Despite strong growth once again, the equity ratio of 16.1 percent for the year under review remained at our long-term target level of at least 16 percent. At the same time, we have reduced the slight overcapitalisation that we deliberately established during the last recession to protect against risks, investing these funds in our operating business.

To finance the lease receivables, we made use of our wide range of refinancing sources. In fiscal year 2011, all of our four ABCP programmes with a total volume of EUR 400.0million and all four existing revolving loan facilities with a total volume of EUR120.0million were extended. As at December 31, 2001, EUR 55.0 million of those were utilized. In addition, four new bonds with a total nominal volume of EUR 107.5 million were issued, eleven new promissory note loans were taken out, and a debenture was initially issued with a relatively small volume that was increased shortly afterwards. We also concluded a receivables purchase agreement for receivables in the United Kingdom with Norddeutsche Landesbank. In the area of money market facilities, an existing facility was increased and two new facilities were agreed. In total, we have money market facilities available in an amount of EUR 50.0 million, which are utilized in an amount of EUR 45.0 million as at the end of the reporting period.

As part of the new CP programme that was launched in October 2011 with a volume of up to EUR 250.0 million, the first issue of EUR 5.0 million was conducted in December 2011. Refinancing via bank deposits of GRENKE BANK AG was also used extremely successfully once again, with liabilities from deposit business increasing to EUR 155.1 million after EUR 122.2 million.

The GRENKE Consolidated Group uses various instruments for refinancing, the maturities of which are spread across several periods. This allows us to respond flexibly to changes in the refinancing markets. The following table shows the expected cash outflows resulting from contractual obligations as of December 31, 2011.

		Payments falling due
			between
		within	3 months	between 1
EURk	Total	3 months	and 1 year	and 5 years	after 5 years
Financial liabilities	1,663,505	234,230	412,778	1,008,601	7,896
Leases and rentals	19,823	1,630	4,392	10,645	3,156
Purchase obligations*	170,899	170,899	0	0	0
Obligations from onerous contracts**	7,029	7,029	0	0	0
Contractual commitments (total)	1,861,256	413,788	417,170	1,019,246	11,052

* Legally binding obligation to purchase goods and services and trade payables

** This item contains the present values of all future cash flows. The GRENKE Consolidated Group considers this to be the correct presentation of the cash flows that would be due for payment if these positions had to be closed out. Derivative holdings are allocated to the due on demand category as this reflects the earliest possible outflow of liquidity. The actual duration of the contracts concerned may extend to a much longer period.

See also the notes to the consolidated financial statements

As atDecember31, 2011, obligations in an amount ofEUR5 millionwere reported forthe expansion of an office building. In addition to the usual purchase obligations as part of ordinary business activities, interest and principal payments for financial liabilities in particularwill fall dueinfiscalyear2012.Thefinancial liabilities due in 2012 have a comparatively low volume. Of the financial liabilities of EUR 647 million falling due in 2012, EUR 552 million is attributable to ABS and ABCP programmes. As a matter of principle, they consist of individual short-term tranches, are generally fixed for a period of 12 months and can be utilised on a revolving basis during this period.

This means that the amounts released by the repayment of lease receivables can be reused. The largest other individual item of financial liabilities falling due in 2012 are a bond with a volume of EUR 100 million maturing in July, and two promissory note loans in a total amount of EUR 36.5 million maturing in May and August. Financial liabilities are repaid from the Consolidated Group's operating cash flow, the available refinancing facilities and the potential utilisation of further refinancing. The GRENKE Consolidated Group manages the utilisation of funding based on the development of new business and the cash flow from the receivables portfolio. In light of the high level of growth in the year under review and the continued prospects for 2012, we increased cash inflows from refinancing to EUR 258.5 million in 2011. This not only exceeded the prior-year figure of EUR 126.4 million by a considerable distance, but was also slightly higher than the increase in lease receivables of EUR 238.1 million in 2011.

Asmentionedpreviously,refinancingviathedepositbusinessofGRENKEBANKAGwasalsousedtoagreaterextentthan intheprevious year. The cash inflow from this areamore than doubled to EUR 32.9 million after EUR 15.9million in the previous year. By contrast, the increaseinotherassetsresultedinacashoutflowofEUR45.2millionafterEUR16.8millionintheprevious year.All inall,thecashflowfrom operatingactivitiesincreasedfromEUR1.6millioninthepreviousyeartoEUR71.9millionintheyearunderreview.Less taxespaidandnet interest, the net cash flow from operating activities amounted to EUR 41.6 million after EUR –13.6 million in the previous year.

The cash flow from investing activities amounted to EUR –5.8 million after EUR –4.0 million in the previous year. In addition to payments for the usual annual purchase of operating and office equipment and intangible assets, the figure for the period under review includes payments for the acquisition of subsidiaries in the amount of EUR 2.3 million, which related to the acquisition of the company of the former Hungarian franchisee. The cash flow from financing activities amounted to EUR –10.2 million after EUR –12.3 million in the previous year and primarily resulted from the dividend distribution in the period under review. Total cash flows increased significantly, from EUR –29.9 million in the previous year to EUR 25.5 million in fiscal year 2011.

Overall Statement on the Financial Situation of the GRENKE Consolidated Group

We have sustainably demonstrated the success of our business model and our international growth strategy over a number of years. In fiscal year 2011, we also achieved a further improvement in our already impressive earnings strength, increasing our net profit by 41 percent. Today, we have the international presence, experience and profitability that will allow us to continue to identify and successfully leverage opportunities in a targeted manner in the future.

We have emerged from the recent volatility on the financial markets in a stronger position. We have underlined our ability to continue to use our entire range of refinancing options in such phases. In October 2011, we expanded our portfolio of instruments to include a new CP programme. Only below-average volumes are due for repayment in 2012 and 2013. In January 2012, after the end of the year under review, we successfully issued a bond in an amount of EUR 100 million, which has provided us with even more room for manoeuvre when it comes to managing our business with an exclusive focus on the opportunities arising in our markets.

Therefore, as of the preparation date of this annual financial report, the GRENKE Consolidated Group is in an ideal position to continue its international expansion and further improve its profitability. It is capable of dealing successfully with the heightened risks on the capital markets in recent years providing that they remain within normal parameters and do not develop into a systemic crisis; however, this is not something we are anticipating at present.

Additional Information

Sales, Customer and Supplier Structure

The GRENKE Group's business model is focused on diversification, and our customer and supplier portfolio is managed in line with this principle. We finance small-volume receivables in the areas of IT leasing and factoring in particular, meaning that we are represented in office environments in almost all sectors of the economy. Our deposit business also offers investment opportunities for private and commercial customers. We avoid cluster risks in terms of customers and industries in a targeted manner. As previously, no individual customer of the GRENKE Consolidated Group accounts for a total exposure of more than two percent of consolidated equity.

Our sales organisation also supports the broad-based diversification of our customer portfolio. The low volume of the individual contracts means that direct sales would not be economically viable. Therefore, we primarily pursue a policy of "sales leasing" in our leasing business. Financing agreements with end customers are primarily concluded via our specialist reseller partners.

Our in-house employees at local sales offices rapidly establish a broad network of partners in our respective target markets. Reseller partners make it easier for their customers to make new purchases with the help of our financing. We also market our range of financing products via the manufacturers of IT products, for whom we perform key account management. Furthermore, selected corporate customers are addressed as part of a direct sales model.

Above and beyond these channels, our online activities represent an important additional sales channel – and one that is continually growing, both for our traditional small-ticket IT leasing business and our other financial products. We operate our deposit business solely as an online bank, and we have developed an innovative Internet platform for start-up financing.

As our lease finance products are manufacturer-independent, the structure of our supplier portfolio and the individual manufacturers largely reflects the demand structure of SMEs for IT products. The structure changes depending on the range of available IT products, the product policy of the respective manufacturers and user behaviour, and we are unable to actively influence this process. However, the end result is that the GRENKE Consolidated Group's supplier structure is also broadly diversified. Risks resulting from obsolete technology are prevented by ensuring that our leases are typically full pay-out leases, meaning that realisation risks are largely excluded.

Research and Development

The GRENKE Consolidated Group is a financial services company, meaning that it is not involved in basic research and development. However, the core competency of the GRENKE Consolidated Group is the provision of efficient lease logistics through the use of centralised and highly standardised IT processes. To this end, standard products are optimised for our requirements via individually programmed applications. This means that IT development work is performed to a limited extent in conjunction with the establishment of online platforms for the specific requirements of our individual markets.

Non-Financial Performance Indicators

Above and beyond the financial and organisational management of the GRENKE Consolidated Group, our success is attributable to non-financial services to a significant extent. In this context, we have defined the following performance indicators:

Modern Human Resources Management

GRENKE is a services group. This means that our employees play a particularly central role when it comes to establishing the profile of the GRENKE Consolidated Group in our target markets. Modern human resources work is something we concern ourselves with and something that is necessary in order for us to remain successful in the long term. This is all the more important in light of the fact that competition for qualified employees in many of our target markets is set to increase in future as a result of demographic change.

The way in which we interact and work with each other internally is set out in a manual that describes the obligations of employees towards the company as well as the obligations of the GRENKE Consolidated Group towards its employees. Appreciation, fairness and respect are key aspects of the way we treat each other. We support personal responsibility and equal opportunity, encourage the individual strengths of our employees, and take their requirements into account wherever possible in terms of shaping their work environment and working hours. Our arrangements are geared towards enabling a healthy work-life balance. We offer further training and qualification programmes to help our employees meet the demands made of them while expanding their opportunities for professional and personal development.

Integrity in Relationships with Business Partners

Integrity is the key to the long-running success of the GRENKE Consolidated Group. The binding GRENKE Code of Conduct sets out the ethical framework for our actions and decisions. The aim is to ensure that our corporate values are maintained across national borders and in spite of the variety within our international organisation.

Feedback from our employees, suppliers, lessees and other partners, their suggestions, requests and complaints, are systematically recorded and analysed. "Internal recipient satisfaction" with managers and other departments is measured on a quarterly basis. This forms part of the balanced scorecard assessment, and hence the performance bonus paid to the managers and departments concerned. With regard to "external recipient satisfaction", written suggestions and criticism from our financing recipients and reseller partners are evaluated continuously. Telephone conversations over a defined period are regularly documented in detail and analysed on a quarterly basis. This is intended to ensure that feedback from our business partners is recorded within a structured process and taken into account in the further development of our product and service range.

Knowledge of the Markets and Individuality of the Product Range

The GRENKE Group is active internationally in a number of countries, some of which have extremely varied cultures, structures and requirements. We serve our markets with individual financing products, contractual arrangements and contribution margin requirements. As well as simple, standardised financing, we offer a broad range of contractual options that are tailored to the different needs of our customers. This is a key factor in ensuring our success.

When developing a new market, we start by examining the conditions and the statutory environment from Germany. We then either form a local subsidiary or enter into a contract with an entrepreneurial franchisee with a good knowledge of the local market. Our range of leases is continually optimised on the basis of a close exchange between the local sales team and the GRENKE Consolidated Group's head office in Germany. The contribution margin requirements for the local units are fine-tuned in a continuous and standardised process that is increasingly also being implemented online.

Quality of Receivables

Since 1994, we have assessed our customers' creditworthiness using an internally developed, IT-based scoring model. By combining information from publicly available databases and our own criteria, which are continuously refined, we classify risks and the contribution margins that are required to generate our yield targets on a sustainable basis. This forms the basis for our contract and payment approvals, which are generally issued within ten minutes.

The aim of our scoring model is not to minimise, but rather to correctly assess risk. The losses calculated in advance as part of our contribution margin calculation come as close as possible to the actual loss rates. This ensures that we achieve our yield targets while offering the most competitive conditions we can.

Reputation on the Equity and Debt Capital Markets

Our reputation on the debt capital markets largely determines our access to funding, and hence the competitive strength and growth potential of the GRENKE Group. Our strategy focuses on the maintenance and further expansion of our already highly diversified refinancing.

We have cultivated our presence on the debt capital markets for a number of years, thereby allowing us to continuously expand our refinancing options. We are confident that this represents a major competitive advantage for us. This is particularly relevant since regulatory requirements are likely to intensify as a result of the recent financial and government debt crisis, making it more expensive for companies in all industries to obtain refinancing. Competition for financing options will increase as a result.

Our positioning on the debt capital markets is based on a policy of full transparency with regard to the GRENKE Consolidated Group's commitments, and operational management that helps us to maintain our good long-term and short-term ratings on the back of solid capital resources and returns on equity. This serves to ensure that the GRENKE Consolidated Group has sufficient refinancing for its day-to-day business at all times. Furthermore, we have established bank deposits from private and commercial customers via GRENKE BANK AG as an additional source of refinancing. We also address this market with an attractive and sustainable range of products.

Last but not least, our strong reputation on the stock market is extremely important to us. We pursue our goal of maintaining this reputation strategically and independently of our capital requirements. In light of our current capital resources and profitability, external equity financing is not currently necessary or planned. Our presence is characterised by timely, transparent and regular reporting, personal discussions with capital market participants at the level of the Board of Directors, and a consistent, shareholder-friendly dividend policy.

Personnel

In the year under review, the GRENKE Consolidated Group increased its workforce (excluding the Board of Directors) to an average of 585 employees (previous year: 538) in order to support its strong growth and allow it to leverage opportunities for expansion. However, at 8.7 percent, the growth in the number of employees was again substantially lower than the growth in our new business volume – something that is continuing to help us strengthen our profitability.

The average fluctuation rate for the Consolidated Group was 10.8 percent after 12.0 percent in the previous year. As in the previous years, the level of fluctuation at management level, and particularly among senior executives, was lower.

Promoting the further training and qualification of our employees, and hence providing them with personal and professional opportunities, is an obligation that we are happy to meet irrespective of the short-term interests of the company. Accordingly, we offer a wide range of extensive programmes. In fiscal year 2011, we had a total of 26 young trainees. We regularly support new apprenticeships – such as in the area of dialogue marketing, where we currently have four trainees. We are also training three employees as IT specialists at present: two in the field of application development and one as a system integrator.

In addition, seven students are currently undertaking the tri-national International Business Management Degree programme that combines work and study from the Cooperative University of Lörrach, the University of Applied Sciences Arts Northwestern Switzerland in Basel and Haute Alsace University in Colmar. This opportunity for young people is offered by GRENKELEASING AG as well as our subsidiaries in Switzerland and France.

We have worked with the Cooperative University of Lörrach since 2004. At the Cooperative University of Karlsruhe – with which we have a cooperation dating back to 2007 – three students are currently enrolled on business information systems courses, while another is studying applied computer science. We have also worked with Baden-Württemberg Cooperative State University Mannheim since 2007, and currently have three students in the areas of accounting and controlling. We expanded this cooperation in October 2011 and now also offer International Business as a dual course of study. Four students have taken up this opportunity to date.

Changes in the Executive Bodies

The composition of the Board of Directors and the Supervisory Board remained unchanged in fiscal year 2011.

Remuneration Report

Remuneration of the Board of Directors

					Total	Total
EUR	Christ	Grenke	Dr. Hack	Kindermann	2011	2010
Gross salary	182,500.68	331,241.47	269,112.51	148,541.83	931,396.49	942,119.73
Performance bonus	87,093.25	174,186.50	149,800.39	76,642.06	487,722.20	402,712.64
Bonus*	60,000.00	120,000.00	103,200.00	52,800.00	336,000.00	343,200.00
Phantom stocks	0.00	0.00	0.00	0.00	0.00	373,550.00
Pensions	0.00	0.00	21,000.00	0.00	21,000.00	21,000.00
Total costs	329,593.93	625,427.97	543,112.90	277,983.89	1,776,118.69	2,082,582.37

*For fiscal year 2011, the bonus is reported according to principle of causation. The amount of EUR 0.00 previously reported for fiscal year 2010,was reclassified accordingly.

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 component. Some members of the Board of Directors also receive phantom stocks. The structure of the remuneration system, including phantom stocks, is aimed at promoting the company's long-term success and creating incentives to only enter into risks that are easily controllable statistically and that involve appropriate remuneration for the respective risk. No incentive is provided for entering into inappropriate risks.

Furthermore, the regulatory capital of GRENKELEASING AG is neither jeopardised by its remuneration practice, nor does this restrict the long-term retention of its equity.

In the year under review, the remuneration paid to the members of the Board of Directors totalled EUR 1,776k (previous year: EUR 2,083k), of which EUR 931k (previous year: EUR 942k) was attributable to gross salaries and EUR 488k (previous year: EUR 403k) to performance bonuses. An annual pension premium of EUR 21k (previous year: EUR 21k) was also paid to an external provident fund for Dr. Uwe Hack.

The criteria for the variable remuneration components are defined in advance each year. They are based on the increase in EBIT (earnings before interest and taxes) and the development of the key performance indicators forming part of the GRENKE balanced scorecard (BSC). The attainment of the EBIT growth target is measured at the end of each year. Failure to achieve the targets means that no payment is made. The relevant BSC criteria correspond to the key performance indicators for the Consolidated Group's longterm success, and hence the long-term growth in enterprise value. Among other things, this includes the development in the number of leases and the volume of new business. The attainment of the BSC criteria is measured at the end of each quarter.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Dr. Uwe Hack and Mr. Gilles Christ. Under these agreements, Dr. Uwe Hack and Mr. Gilles Christ receive entitlements to payment equal to the increase in value of 30,000 and 15,000 shares in GRENKELEASING AG respectively in relation to a defined basic share price for fiscal years 2010, 2011 and 2012. 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 basic share price for 2011 was EUR 37.72. 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 programme, Dr. Uwe Hack and Mr. Gilles 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 was applied for Mr. Gilles Christ in fiscal year 2010, his first year of membership of the Board of Directors.

As of December 31, 2011, the value of the phantom stock agreements granted for 2011 totalled EUR 0. For 2010, a total of EUR 374k was paid out on the basis of the phantom stock agreements for Dr. Uwe Hack and Mr. Gilles Christ.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance policy for members of the Board of Directors. This prescribes a fixed deductible of 10 percent per claim for each member of the Board of Directors; however, this is limited to a maximum of one and a half times the annual fixed remuneration for all claims per year. No further benefits have been agreed with any members of the Board of Directors in connection with the termination of their appointment. Moreover, none of the members of the Board of Directors received benefits or corresponding commitments from third parties relating to their position as a member of the Board of Directors in the past fiscal year.

		Basic
		remuneration	Audit	Personnel	Variable	Travel	Total	Total
Name	Function	2011	Committee	Committee	remuneration	expenses	2011*	2010*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	12,750.00	573.35	26,073.35	18,936.08
	Deputy
Witt	Chairman	7,500.00	900.00	600.00	9,000.00	0.00	18,000.00	13,361.40
Münch	Member	7,500.00	600.00	0.00	8,100.00	333.00	16,533.00	12,033.90
Dr. Nass
(until May 11, 2010)	Member	0.00	0.00	0.00	0.00	0.00	0,00	6,389.57
Schulte
(from May 11, 2010)	Member	7,500.00	0.00	0.00	7,500.00	0.00	15,000.00	4,791.67
Staudt	Member	7,500.00	0.00	600.00	8,100.00	0.00	16,200.00	11,524.00
Dr. Sträter
(until May 11, 2010)	Member	0.00	0.00	0.00	0.00	0.00	0.00	6,186.37
Prof. Dr. Wörn
(from May 11, 2010)	Member	7,500.00	0.00	0.00	7,500.00	1,167.72	16,167.72	6,123.23
Total		48,750.00	2,100.00	2,100.00	52,950.00	2,074.07	107,974.07	79,346.22

Remuneration of the Supervisory Board

* Fixed remuneration (basic remuneration, Audit and Personnel Committee), variable remuneration and travel expenses

In fiscal year 2011, the members of the Supervisory Board received a total of EUR 108k (previous year: EUR 79k) including travel expenses in remuneration for their work. The remuneration for each individual member can be seen in the table above.

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. In accordance with the new version of the Articles of Incorporation based on 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, except for the Chairman who receives EUR 11,250, plus EUR 600 for each committee membership and EUR 900 for each committee chaired.

If members are only on the Supervisory Board for part of a fiscal year, the basic remuneration and the remuneration for committee memberships and chairmanships are calculated on a pro rata basis. 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; however, the variable component may not exceed 100 percent of the fixed remuneration.

GRENKELEASING AG has also taken out a directors' and officers' liability insurance policy for members of the Supervisory Board. This prescribes a fixed deductible of 10 percent per claim for each member of the Supervisory Board; however, this is limited 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.

Directors' Holdings and Transactions

The following table provides a summary of directors' holdings as of December 31, 2011. The members of the Board of Directors do not currently hold any options for shares in GRENKELEASING AG. The granting of options to the members of the Supervisory Board has not been provided for in the past, and this remains the case.

	Number of shares as of Dec. 31, 2011		Number of shares as of Dec. 31, 2011
Board of Directors		Supervisory Board
Gilles Christ	1,600	Prof. Dr. Ernst-Moritz Lipp	28,300
Wolfgang Grenke*	4,925,619	Dieter Münch	75
Dr. Uwe Hack	9,500	Erwin Staudt	1,000
Mark Kindermann	52,053
Total	4,988,772	Total	29,375

*excluding voting rights from the GRENKE family pooling agreement – see the disclosures in accordance with section 315 (4) HGB below

In fiscal year 2011, the following transactions in shares of GRENKELEASING AG were conducted by members of the Board of Directors and the Supervisory Board: In February, Mr. Gilles Christ purchased 1,600 shares via the stock exchange (XETRA). In May, Dr. Uwe Hack purchased 2,500 shares via the stock exchange (XETRA), while Mr. Wolfgang Grenke purchased 9,000 shares via the stock exchange (Frankfurt). Prof. Dr. Ernst-Moritz Lipp purchased 2,000 shares via the stock exchange (Frankfurt) in July and 2,500 shares over-the-counter in December.

Dependence report

As the pooling agreement between Mr. Wolfgang Grenke and Ms. Anneliese Grenke, Mr. Moritz Grenke, Mr. Roland Grenke and Mr. Oliver Grenke came into effect on November 6, 2011 and acclamation is concluded by majority within the pooling agreement, 45.10 percent of the voting rights representing GRENKELEASING AG's share capital as at December 31, 2011, are attributable to Mr. Wolfgang Grenke (previously 36 percent). Assuming the average attendance level of around 80.89 percent at the last three Annual General Meetings of GRENKELEASING AG, Mr. Wolfgang Grenke has reached the factual majority of GRENKELEASING AG's voting rights as of that date. As the Board of Directors currently assumes no future changes in the share of voting rights, a dependence report was compiled pursuant to Section 312 AktG.

We hereby declare pursuant to Section 312 AktG:

In the case of the legal transactions and measures listed in the report on relationships with affiliated companies, our company received appropriate compensation for every legal transaction, and has not been placed at a disadvantage due to measures that were implemented or not implemented, according to the circumstances known to us at the time the legal transactions were concluded or the measures were implemented or not implemented.

Disclosures pursuant to Section 315 (4) HGB

The shares ofGRENKELEASINGAGare admitted to trading on the Frankfurt StockExchange in thePrimeStandard, the segment of the regulatedmarket with additional post-admission obligations. The company's fully paid-up issued capital amounts to EUR 17,491,421.86 and is divided into 13,684,099 no-par value bearer shares each with a notional interest in the capital stock of around EUR 1.28. All shares carry the same rights; there are no restrictions on voting rights, preference shares, or special control rights.

As of December 31, 2011, the Chairman of the Board of Directors of GRENKELEASING AG, Wolfgang Grenke, held 4,925,619 shares in the company, corresponding to 36.00 percent of the capital stock. Including the aforementioned shares held byWolfgangGrenke, a total of 45.10 percent of the capital stock or 6,170,947 shares were attributable to theGrenke family pooling agreement at this date. The Board of Directors is not aware of any other restrictions agreed between shareholders and relating to voting rights or the transfer of shares.

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 the members of the Board of Directors are appointed for a maximum of five years. Reappointment is permitted. The Board of Directors of GRENKELEASING AG consists of at least two members. The Supervisory Board determines the number of members of the Board of Directors. It decides on their appointment and dismissal and the conclusion, amendment and termination of their contracts of employment. The Supervisory Board can appoint a Chairman and Deputy Chairman of the Board of Directors as well as alternative members of the Board of Directors.

In accordance with statutory requirements, amendments to the Articles of Incorporation must be adopted by resolution of the Annual General Meeting. Unless otherwise required by law, resolutions by the Annual General Meeting are passed by a simple majority of the votes cast and, if legislation requires, a capital majority as well as a majority vote, by a simple majority of the capital stock represented. The Supervisory Board is authorised to decide on amendments to the Articles of Incorporation that relate solely to their wording. In addition, the Supervisory Board is authorised to amend the wording of Article 4 of the Articles of Incorporation governing the amount and division of the capital stock, among other things, to reflect the utilisation of authorised capital or after the end of the authorisation period.

There are no compensation agreements with the members of the Board of Directors or with employees in the event of a takeover bid. No further disclosures are made in accordance with German Accounting Standard 15a.27 (change of control clauses), as such disclosures could be substantially disadvantageous to the parent company.

In accordance with the resolution adopted by the Annual General Meeting on May 12, 2009, the Board of Directors is authorised, with the approval of the Supervisory Board, to increase the company's capital stock on one or more occasions up to and including May 11, 2014 by a nominal amount of up to EUR 8,500,000 by issuing new no-par value bearer shares in exchange for cash and / or non-cash contributions (authorised capital). Shareholders shall be granted a subscription right in this case.

In the case of cash capital increases, however, the Board of Directors is authorised, with the approval of the Supervisory Board, to partially or completely disregard shareholders' subscription rights for up to 10 percent of the company's capital stock if the issue price of the new shares is not significantly lower than the market price. In addition, shareholders' subscription rights may be partially or completely disregarded in the case of non-cash capital increases for the purpose of acquiring entities, parts of entities or equity investments.

In accordance with the resolution adopted by the Annual General Meeting on May 10, 2011, the company's capital stock was also contingently increased by up to 3,000,000 new no-par value bearer shares or up to EUR 3,834,690 (contingent capital 2011). The contingent capital serves to cover options and / or convertible bonds with a total nominal volume of up to EUR 150,000,000 and a maximum term of 10 years that may be issued by the Board of Directors, with the approval of the Supervisory Board, on one or more occasions up to and including May 9, 2016. Existing shareholders' subscription rights may be disregarded. No options or convertible bonds have been issued since this authorisation was granted.

By resolution of the Annual General Meeting on May 11, 2010, the company was also authorised in accordance with section 71 (1) no. 8 of the German Stock Corporation Act (AktG) to acquire treasury shares of up to 10 percent of the total capital stock 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 commissioned by the company.

The shares may be withdrawn without requiring a further resolution by the Annual General Meeting for the withdrawal or the execution of the withdrawal. The shares may be sold in exchange for non-cash contributions. They may also be sold for cash to third parties by other means than via the stock exchange or an offer to all shareholders if the sale price is not significantly lower than the market price at the transaction date.

The utilisation of the various authorisations for the issue of new shares, not including shareholders' subscription rights, may not exceed 10 percent of the company's capital stock at the date on which the respective resolution was adopted by the Annual General Meeting. The authorisation applies until May 10, 2015. No treasury shares have been acquired to date.

Corporate Governance

In accordance with the German Transparency and Disclosure Act (TransPUG), companies that are listed and have their registered office in Germany are required to declare 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-oriented, transparent company management and controlling, is an integral part of how GRENKELEASING AG – i.e. the Board of Directors, the Supervisory Board and senior executives – does business. GRENKELEASING AG and the GRENKE Consolidated Group identify very strongly with the principles of the German Corporate Governance Code and see their implementation as a key factor in helping to build trust among all current and future stakeholders – customers, shareholders, lenders, employees, business partners and the general public. This plays an important role in increasing the company's enterprise value and securing and expanding its access to the capital markets.

GRENKELEASING AG deviates from the selected recommendations in only a few aspects. These are listed in the declaration of conformity, which is reproduced hereafter. On May 3, 2011, the Board of Directors and the Supervisory Board of the company signed the declaration of conformity with the German Corporate Governance Code in the initial version dated June 18, 2009 and the subsequent revised version dated May 26, 2010.

The company's current declaration of conformity is reproduced below as part of the declaration on corporate governance in accordance with section 289a HGB and is published on GRENKE's website, www.grenke.de, in German and English. The German Corporate Governance Code can also be viewed at the same address.

Declaration on Company Management pursuant to Section 289a HGB

As a listed stock corporation, we are required to submit a declaration on corporate governance in accordance with section 289a HGB that contains the declaration of conformity in accordance with section 161 AktG, disclosures on corporate management practices and a description of the working practices of the Board of Directors and the Supervisory Board.

Declaration of conformity by the Board of Directors and Supervisory Board with the German Corporate Governance Code in accordance with section 161 AktG

"The Board of Directors and Supervisory Board of GRENKELEASING AG hereby declare in accordance with section 161 of the German Stock Corporation Act (AktG) that, since issuing their last declaration of conformity on April 26, 2010, the recommendations of the Government Commission on the German Corporate Governance Code in the version dated June 18, 2009 and, since it came into force, in the revised version dated May 26, 2010 have been complied with and will be complied with in future with the following exceptions:

The current Articles of Incorporation of the company do not provide for the possibility of a postal vote by shareholders or a corresponding authorisation of the Board of Directors. The company does not currently intend to provide for a postal vote prior to or at the Annual General Meeting in addition to the exercise of voting rights by shareholder representatives following instructions. The introduction of the possibility of postal voting involves legal risks as well as additional administrative expenses and does not offer significant value added compared with the exercise of voting rights by shareholder representatives following instructions as currently practiced by the company. Accordingly, the company does not comply with the recommendations set out in section 2.3.1 and 2.3.3 of the German Corporate Governance Code on the implementation of a postal vote.

In derogation from the recommendation set out in section 4.2.3 of the German Corporate Governance Code, the contracts of the current members of the Board of Directors do not provide for a severance pay cap. This is because some of the contracts of members of the Board of Directors were concluded before the recommendation in question was included in the German Corporate Governance Code, and hence are protected accordingly. However, a severance pay cap has also not been agreed for newly concluded contracts with members of the Board of Directors, as these contracts are often only concluded for the respective term of office and cannot be terminated by giving regular notice. Accordingly, the early termination of the contracts of members of the Board of Directors without good cause is only possible by mutual consent. In any such negotiations, the Supervisory Board shall endeavour to take account of the recommendation set out in section 4.2.3 of the German Corporate Governance Code.

The recommendations of section 5.1.2 and 5.4.1 of the German Corporate Governance Code require that, among other things, the composition of the Board of Directors and proposals for the election of Supervisory Board members take account of diversity and a specified age limit. The company does not comply with these recommendations, as it is of the opinion that neither criterion is suitable for determining the appointment of members of the Board of Directors or the election of Supervisory Board members. Taking into account the other relevant aspects, the company instead believes that, with regard to the composition of the Board of Directors and proposals for the election of Supervisory Board members, the knowledge, skills and experience required in the respective area of business or responsibility should be key when selecting suitable candidates.

Baden-Baden, May 3, 2011

GRENKELEASING AG

The Supervisory Board The Board of Directors"

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 matters assigned to it by law. In particular, this includes the election of shareholder representatives to the Supervisory Board, the approval of the actions of the Board of Directors and the Supervisory Board, amendments to the Articles of Incorporation, the appropriation of profits and capital measures.

Supervisory Board

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

Board of Directors

The Board of Directors is the company's management body. It manages the company's business in accordance with the provisions of the German Stock Corporation Act and the Articles of Incorporation resolved by the shareholders. As such, it is bound by the company's interests and the principles of its business policy.

Shareholdings of the Board of Directors and the Supervisory Board

Members of the Board of Directors and the Supervisory Board hold shares in GRENKELEASING AG. In the course of fiscal year 2011, the following securities transactions requiring notification in accordance with section 15a of the German Securities Trading Act (WpHG) were conducted: In February, Mr. Gilles Christ purchased 1,600 shares via the stock exchange (XETRA). In May, Dr. Uwe Hack purchased 2,500 shares via the stock exchange (XETRA), while Mr. Wolfgang Grenke purchased 9,000 shares via the stock exchange (Frankfurt). Prof. Dr. Ernst-Moritz Lipp purchased 2,000 shares via the stock exchange (Frankfurt) in July and 2,500 shares over-thecounter in December.

Transparency

The business situation and results of the GRENKE Consolidated Group are reported in the annual report, the quarterly financial reports and the half-yearly financial report. Information is also published in ad hoc disclosures and press releases. All notifications and reports are available in the Investor Relations section of the company's website.

GRENKELEASING AG has created the insider register prescribed by section 15b WpHG. The persons concerned have been advised of their statutory duties and sanctions.

Accounting and Audit of Financial Statements

The annual financial statements of the GRENKELEASING AG are prepared by the Board of Directors in accordance with the principles of the German Commercial Code (HGB). After examination 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 elected Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main as the auditor for fiscal year 2011. The latter also carries out the audit review of the half-yearly financial report for the fiscal year as applicable.

Working Practices of the Board of Directors and the Supervisory Board

The Board of Directors and the Supervisory Board work in close cooperation for the benefit of the company.

The Board of Directors informs the Supervisory Board regularly, promptly, and comprehensively on all issues of corporate strategy, planning, business development, the financial position and results of operation and on particular business risks and opportunities that are relevant to the company as a whole. 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 central function of the Supervisory Board is to advise and monitor the Board of Directors. The Supervisory Board of GRENKELEASING AG meets once a quarter; extraordinary meetings and conference calls are also held if necessary. The Supervisory Board has established an Audit Committee and a Personnel Committee.

Audit Committee

The central function of the Audit Committee is to support the Supervisory Board in fulfilling its monitoring duties with regard to the accuracy of the single-entity and consolidated financial statements of GRENKELEASING AG, compliance with legal and statutory provisions within the GRENKE Consolidated Group, the qualification and performance of the external auditor and internal control functions. It is also responsible for the fee agreement with the auditor. In fiscal year 2011, the members of the Audit Committee were again Mr. Gerhard E. Witt (Chairman), Prof. Dr. Ernst-Moritz Lipp and Mr. Dieter 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 final approval is granted. It also monitors the search for suitable candidates for appointment to the Board of Directors and submits corresponding proposals to the Supervisory Board. The Personnel Committee prepares contracts with the members of the Board of Directors for the Supervisory Board, particularly with regard to their remuneration. In fiscal year 2011, the members of the Personnel Committee were again Prof. Dr. Enst-Moritz Lipp (Chairman), Mr. Erwin Staudt and Mr. Gerhard E.Witt.

Risk Management Report

General

The risk management system of the GRENKE Consolidated Group identifies, records, and documents the risks of the parent company and its subsidiaries. Risks are also structured, classified and precisely assessed. This is intended to allow employees and the management to deal with risk in a responsible manner. Opportunities arising from risk assessment are also leveraged in a targeted manner. The GRENKE Consolidated Group's risk management is a coordinated, clearly defined, and documented process at all relevant levels of the Consolidated Group organisation. It is also closely coordinated with the activities of the Consolidated Group's divisions. Its functionality and the status and results of the measures initiated are regularly reviewed by Internal Audit, which reports directly to the Board of Directors. The Board of Directors bears overall responsibility for the monitoring of and compliance with risk management at the GRENKE Consolidated Group.

The risk management system introduced in 2003 has continued to develop organically since then. It is operated via a tool on the GRENKE Consolidated Group intranet, which is used to carry out regular risk surveys in which employees are requested to assess actual and potential risks. If risks are considered to be relevant, corresponding risk management measures are resolved.

In addition to regular surveys and ad hoc risk reporting, comprehensive instruments are used for handling risks in the areas of financial and risk controlling in particular. These include monthly calculations of financial market risk positions and the regular presentation and discussion of the interest rate risk and liquidity position. The Consolidated Group-wide risk work group meets regularly, and at least three times a year. In addition to the CEO, the CFO and the member of the Board of Directors responsible for human resources, the risk work group includes the managers responsible for accounting, administration, internal audit, credit management, sales and controlling, as well as GRENKE BANK AG.

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

Minimum Requirements for Risk Management (MaRisk)

Since the German Annual Tax Act 2009 came into force, leasing companies have also had to comply with the Minimum Requirements for Risk Management (MaRisk) published by Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin). MaRisk contains qualitative requirements on risk management to be implemented by financial service providers in line with the scale, nature, extent, complexity and risk content of their business. The GRENKE Consolidated Group implements the majority of the appropriate management and controlling processes demanded by MaRisk for the key risk types – counterparty default, market price, liquidity and operational risk – in full.

GRENKELEASING AG, domiciled in Baden-Baden, is among others the parent company of GRENKE BANK AG, also domiciled in Baden-Baden, which is subject to the regulatory requirements of the German Banking Act (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 subject to the KWG and regulation by BaFin and the Bundesbank.

The latter two institutions again utilised the waiver provided by section 2a (1) KWG in the year under review. This allows subordinate entities to demonstrate to BaFin and the Bundesbank that certain regulatory provisions are applied and incorporated at Group level rather than having to be applied at the level of the individual entities, providing that the necessary organisational requirements are met in full by the parent company.

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

The GRENKE Consolidated Group's Risk Policy

Our risk policy is aimed at precisely measuring the risks arising from our operating activities in order to allow us to assume these risks and actively manage them. We focus not only on individual risks, but also on potential risk clusters and wider interdependencies in particular. Our risk management benefits from a long-standing and proven track record.

We are able to measure the risks of default in our business with a high degree of accuracy. Our strategy is aimed at the broad diversification of our receivables, something which is already an integral part of our business model. For example, our focus on smallticket business (leasing, banking, factoring) means there is no risk concentration in our lease portfolio or our new business. This applies to both customers and industries. Similarly, we are manufacturer-independent and have diversified our refinancing across various banks and our own sources of capital. Our international growth strategy also results in an even broader diversification of our receivables portfolio.

Asset and income risks resulting from open residual values are largely avoided in our leasing model. Contractual risks are limited by holding as a matter of principle only full payout leases in our portfolio, and by not assuming maintenance or warranty risks. While the residual amounts for the recognition of lease receivables are calculated in accordance with IAS 17 as part of IFRS accounting, the consistently positive profit from disposals in normal economic circumstances shows that we do not recognise excessively high portfolio residual values as a result of these calculations.

One key element of our risk management system is extensive quality management, which affords the additional benefit of ensuring a high level of service quality and satisfaction among our customers and business partners. The systematic and on-going improvement of our quality management forms 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 default 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 key principles are as follows:

• Avoidance of transactions that are incompatible with the GRENKE Consolidated Group's risk strategy
• Potential yield and risks must be in reasonable proportion to one another
• Risk clusters are to be largely avoided
• Derivatives must be used for hedging purposes only, i.e. to limit a risk position; yield aspects should not be taken into consideration
• Management of bad debts with the aim of limiting losses
• Forms and agreements with third parties are generally subject to legal review

Risk-Bearing Capacity

In the year under review, the GRENKE Consolidated Group redefined its calculation of risk-bearing capacity to reflect Circular 51 / 11 of the German Association of Credit Banks dated July 19, 2011. Accordingly, GRENKELEASING AG has selected the going concern approach for its risk-bearing capacity concept, with risk cover being derived from the income statement and the balance sheet. With regard to the liability function, all equity items recognised on the face of the balance sheet are recognised as risk cover in addition to the forecast annual net income after recalculation and distributions (for which the level for the current year is assumed). With regard to minimum capitalisation, the capital requirement set out in the SolvV is deducted from risk cover if this is higher than the minimum capital prescribed by the AktG.

Sufficient risk-bearing capacity was previously deemed to exist if the material risks on a continuous basis were not higher than the available risk cover. The risk cover essentially consisted of the Consolidated Group's IFRS equity. It was broken down into several levels to which individual risk items were assigned in accordance with the value-at-risk model. In normal loss situations, the total risk potential and the individual risks were not supposed to exceed level 1 risk cover, which consisted of pre-tax earnings and the provision for possible loan losses. The reorientation of the calculation of risk-bearing capacity has not led to any significant changes in the results obtained.

Emergency Concept

The emergency concept is documented in the form of an emergency plan that details all of the measures to be taken in the event of an emergency and all of 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 concept can be accessed by the employees concerned in both digital and paper form at several locations.

A crisis unit consisting of a manager and his team serves as a central instrument in responding to a potential crisis. The responsibilities of the crisis unit can be broken down into the areas of situation assessment, coordination of measures, communication with the parties involved, activation of measures to restart processes, and restoring operational 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 various plans are regularly reviewed in tests, exercises, and simulations. The tests take place at least once a year and cover all salient points.

Counterparty Default and Credit Risk

Receivables Volume

The IFRS receivables volume held by the GRENKE Consolidated Group is broken down as follows:

EURk	Dec. 31, 2011	Dec. 31, 2010
Current receivables
Cash and cash equivalents	104,234	78,297
Lease receivables	568,799	508,325
Financial instruments that are assets (short-term portion)	1,883	1,255
Other current financial assets	89,976	77,434
Trade receivables	4,560	3,845
Total current receivables	769,452	669,156
Non-current receivables
Lease receivables	999,955	819,899
Other non-current financial assets	34,576	43,831
Financial instruments that are assets (long-term portion)	2,516	1,115
Total non-current receivables	1,037,047	864,845
Total receivables volume	1,806,499	1,534,001

Cash and cash equivalents include central bank balances amounting to EUR 19,063k as of December 31, 2011. The remaining cash and cash equivalents consist of balances at German and international banks (with the exception of cash in hand of EUR 15k). Financial instruments that are assets represent the GRENKE Consolidated Group's derivatives carried at fair value as of the reporting date.

Leasing business

The GRENKE Consolidated Group defines counterparty default risk as the risk of 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 demonstrated by the levels of loss experienced since its implementation, particularly during the global financial market crisis. This applies to our established domestic business as well as to the international markets that we are gradually entering.

An annual review is performed on the basis of the actual loss figures using automated database reports that contain both publicly available data and internally generated historical data. The scoring system is enhanced on an on-going basis by in-house specialist staff. A further key element of risk mitigation is the fact that no single lessee represents more than one percent of the new business generated in a fiscal year.

Even in years with extremely low actual loss rates, we continued to factor the average loss rate of the previous recession into our contribution margin 2 management. The GRENKE Consolidated Group is also structured in such a way that it will continue to cover its operating costs even if the loss rate were to significantly exceed this level. Loss rates are measured at all times throughout the Consolidated Group.

This is performed by comparing over a defined period of time, the historical acquisition costs of the volume of leased assets with the contracts that have become bad debt. Over time, this analysis serves as an early indicator of expected defaults, and hence the quality of the portfolio. The company aims for a situation where the losses calculated in advance as part of the contribution margin calculation come as close as possible to the actual loss rates. The main risks in the leasing business are counteracted using the scoring model. This is combined with a hierarchical authority structure reflecting the volumes involved, which extends from sales employees to the Board of Directors.

The GRENKE Consolidated 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 and warranty risks are typically borne by suppliers / manufacturers
• Lease agreements: large number of current agreements with a portfolio duration of less than 2 years and a focus on small-tickets below EUR 25k (95 percent of all leases)
• Sales channels: represented in virtually all sales channels
• Geographical presence: the GRENKE Consolidated Group is represented in all major European economies with locations in 15 countries (GRENKE Group: 23)

Risks that could arise from the different legal systems in the respective countries are discussed with local legal and tax advisors prior to market entry and taken into account in the lease agreements. The business model is adjusted as necessary.

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 its acquisition. This residual business has now been significantly reduced: as of December 31, 2011, the credit volume of GRENKE BANK AG (credit as defined by section 19 (1) KWG) amounted to EUR 3.6 million (previous year: EUR 6 million). Accordingly, the remaining risks to the GRENKE Consolidated Group are continuing to decrease. The bank's new business model is guided by Consolidated Group strategy, and currently, its asset business is still focused on the purchase of lease receivables from the GRENKE Consolidated Group. In addition, GRENKE BANK AG provides business start-ups with easy and rapid access to various development loans. GRENKE BANK AG has also offered bridging loans for IT projects since 2011.

Factoring Business of GRENKEFACTORING GmbH

Owing to risk considerations, we essentially offer small-ticket factoring as "notification factoring". As opposed to non-notification factoring, this also means additional security as debtors are only discharged in respect to their payment obligations if they pay directly to us. In the case of non-notification factoring, payments which discharge obligations can usually only be paid to a bank account pledged to us. In both cases, however, GRENKEFACTORING GmbH assumes the default risk for the purchased receivables.

Financing of Franchise Companies

The franchise companies of the GRENKE Group operate in 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, as well as factoring in Switzerland. The leases contracted by the franchise companies are predominantly refinanced by the GRENKE Consolidated Group. In some cases, franchisees conclude leases under a commission model, meaning that the GRENKE Consolidated Group acts as the direct lessor. The basis for this is provided by the refinancing framework agreement concluded between the franchisee and the GRENKE Consolidated Group. If refinancing is offered, it is provided in the form of either loans or forfaiting. Future lease instalments are generally discounted at the refinancing rate.

Derivatives

The GRENKE Consolidated Group uses derivative financial instruments exclusively and only when ordinary business activities involve risks that can be minimised or eliminated by using suitable derivatives. Interest rate swaps, caps, and forward exchange contracts are the instruments employed by the GRENKE Consolidated Group. Each derivative contract is subject to an economic hedged item with a corresponding opposing risk position. The partners are exclusively banks having a good credit standing. For this reason, and due to the diversification of our contract partners, counterparty default risk plays a limited role.

Financial Market Risk

Fluctuations in prices on the financial markets can have a significant effect on cash flow and net profit. Particularly, changes on the interest rate markets and in certain currencies can affect the GRENKE Consolidated Group. We actively manage these risks as part of our continuous risk management and monitoring of interest rate and currency positions.

In addition to assessing risk-prone, market-sensitive positions such as floating-rate notes or receivables in currencies other than the euro, we consider sensitivity and elasticity to be important when handling financial market risk. We aim to limit the sensitivity of net profit to the volatility of market prices. This means endeavouring to ensure the lowest possible correlation between net profit and 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 assumed for risk analysis purposes:

• a concurrent, parallel increase or decrease in the value of the euro of 10 percent compared with all foreign currencies
• a parallel shift in the term structure of interest rates of 100 basis points (1 percentage point)

The potential economic effects identified in the analyses are estimates. They assume artificial market conditions and are based on the assumption that all other conditions will remain unchanged. 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 consolidated income statement can differ significantly from this due to actual developments.

The main market price risks and the outstanding interest rate and currency risk items are discussed at least once a month at the level of the Board of Directors or in Controlling on the basis of on-going reports. The GRENKE Consolidated Group is not exposed to risks from changes in share prices as it does not hold any listed shares. Changes in the prices of commodities also have no effect on the risk position, as no positions are held in these categories.

Interest Rate Risk

Identification

The interest rate risk for the operations of the GRENKE Consolidated Group primarily results 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 can be found in the "Financial risk strategy" section of the notes to the consolidated financial statements.

Sensitivity to financial performance is crucial in the identification of an open risk position, which results in corresponding protection using derivative instruments. This means that, on the whole, we endeavour to achieve net interest income that demonstrates minimal sensitivity to interest rates. According to estimates from the sensitivity analysis, a parallel shift in the term structure of interest rates for the past fiscal year of +100 basis points would result in pre-tax earnings being EUR 896k lower (previous year: EUR 631k). This corresponds to around 1.0 percent (previous year: 0.8 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 using appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and recognised 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 in equity almost in full.

Under the ABCP programme with DZ-Bank (CORAL) and Hypovereinsbank / UniCredit Bank AG (Elektra), GRENKELEASING AG is responsible for interest rate hedging, and hence interest rate risk management. The ABCP transaction also serves as an underlying transaction with a floating rate, while cash flows are hedged using 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 in this case are the respective SPEs, meaning that we do not recognise the derivatives on our balance sheet and hedge accounting is not applied.

The parameters of the underlying contract, i.e. those of the financing (liability), are always the primary consideration when contracting interest rate swaps. Accordingly, 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 is never 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 on-going analysis in the form of 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 had a negative fair value of EUR 265k at the balance sheet date (previous year: negative fair value of EUR 1,172k), would have had a positive fair value of EUR 886k (previous year: negative fair value of EUR 951k) if the above interest rate scenario were applied (parallel shift in the term structure of interest rates of 100 basis points). Due to hedge accounting under IAS 39, the corresponding change would largely be recognised in equity or in the hedging reserve.

A corresponding downward shift in the term structure of interest rates would lead to an increase of EUR 1,004k in pre-tax earnings (previous year: increase of EUR 889k). In terms of the fair value measurement of the interest rate swaps for the purposes of hedge accounting, this interest rate scenario would result in a fair value which was EUR 1,133k lower (previous year: EUR 223k), the majority of which would be taken directly to equity.

Interest rate risk is usually calculated once a month as an open position. This is performed by comparing the floating- and fixed-rate assets with the corresponding 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 included in the calculations. The results are regularly analysed at the level of the Board of Directors.

Currency Risk

The GRENKE Consolidated Group is exposed to currency risks as a result of its European activities and the growing significance of its international markets. Derivatives are used to mitigate or eliminate these risks. These derivatives are reported as financial assets or financial liabilities at their fair value on the respective balance sheet date. Changes in value due to the translation from a foreign currency of the net profit of Consolidated Group companies domiciled in non-euro countries have not occurred to date on account of the relative insignificance of the companies concerned.

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

However, in the course of the companies' growth there are still risks with respect to open tranches that fall below 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.

Switzerland and the United Kingdom are subject to only very limited currency risks as we have agreements to provide lease refinancing in local currency. In addition, cash flows are also hedged in the context of economic hedging.

All in all, risks arise from currency fluctuations relating to financial assets and receivables, from pending transactions denominated in foreign currency, and from the translation of Consolidated 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. Hedge accounting will not be used for currency positions for the foreseeable future.

Value-at-risk

To identify open positions that are subject to currency risk, foreign currency cash flows are compared with the forward exchange contracts concluded. The cash flows from the refinancing of franchise operations in foreign currency, the cash flows or refinancing of Consolidated Group companies in foreign currency and the cash flows of forward exchange contracts are relevant for the calculation of open risk positions.

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

It should also be taken into account that the contractually agreed term of a lease must be hedged. With a lease volume outside the euro zone of EUR 187.3 million as of the reporting date, and in periods of above-average currency fluctuation, even minor deviations such as extraordinary repayments, cancellations and delays in instalment payments can accumulate negatively for the entire portfolio merely on account of unfavourable transaction delays caused by banks.

For our foreign currency sensitivity analysis, we assume that the euro will gain or lose value against all currencies that are relevant to the GRENKE Consolidated Group. As of December 31, 2011, an appreciation of the euro of 10 percent would have resulted in a rise in consolidated earnings before taxes of EUR 1,031k (previous year: EUR 1,200k). A corresponding depreciation of the euro would have resulted in a EUR 1,015k (previous year: EUR 1,171k) decrease in pre-tax earnings based on the estimates and assumptions applied in the sensitivity analysis. In total, assets negatively impacted by foreign exchange rates totalled around EUR 217 million (previous year: EUR 175 million) at 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 appreciation of the euro against the pound sterling would have had a positive earnings effect of EUR 336k. A depreciation of 10 percent would have led to a corresponding reduction in earnings of EUR 325k. Positions in Swiss francs and the Polish zloty would have led to an increase in pre-tax earnings of EUR 163k and EUR 77k based on a corresponding appreciation of the euro and a decrease in pre-tax earnings of EUR 164k and EUR 70k based on a corresponding depreciation.

Refinancing Risk

We refinance ourselves independently of individual banks and also have direct access to the capital markets. This ensures that the structure of our liabilities is well diversified and allows us to work together with several banking partners.

Our portfolio of refinancing instruments is extremely broad. It ranges from traditional bank financing to revolving loan facilities and ABCP programmes. These financing products are fixed for defined periods with agreed terms and maturities so that there are no risks relating to their availability within the agreed framework. The ABCP programmes are funding arrangements based on defined underlying assets, i.e. lease receivables. We can currently use them to refinance our business in Germany, France and Austria. We also have conventional bank financing with a similarly asset-oriented structure for the United Kingdom, Poland and Switzerland.

However, we also use refinancing instruments that are not asset-oriented and are hence used at our discretion and depending upon our business development. For example, we have direct access to the capital markets through our debt issuance programme (DIP). Since October 2011, we have also had a platform for issuing commercial paper (CP) with a maximum volume of EUR 250 million. While the DIP bonds have terms of more than one year, the CP platform provides us with alternatives for refinancing during the course of the year. Standard & Poor's has given the CP programme a short-term rating of "A-3", which is comparable to the "BBB" rating for the bonds issued under our DIP programme.

We also take advantage of financing opportunities via GRENKE BANK AG's deposit business. These instruments enable us to use the most attractive financing channels depending on the sentiment on the capital markets at the given time.

Since 2010, the supply of funding has continued to improve on the back of the general economic recovery. However, the financial markets remain subject to high risks. In the year under review, these risks culminated particularly as a result of the escalating debt crisis in a number of European states around the middle of the year. The interest rate spreads between benchmark government bonds, such as German government bonds, and the countries hit by the crisis increased to record levels. Corporate bonds were also impacted by this turbulence. However, the GRENKE Consolidated Group's refinancing was still not materially affected, and its already belowaverage funding requirements were met in full, quickly and at attractive conditions once again in the year under review.

Liquidity Risk

The management of liquidity risk ensures that the GRENKE Consolidated 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 is discussed at the level of the Board of Directors. 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 GRENKE Consolidated Group. It focuses on cash flows from leasing business.

Reporting distinguishes between four liquidity levels:

• Cash liquidity: deposits in 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 monetised 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 monetised 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 monetised 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 usually prepared on a monthly basis, and in any case at least once a quarter. The aim of cash planning in this context is to map out the liquidity status for the coming periods. The more detailed presentations will be carried out on a quarterly level and for four quarters.

Operational Risk

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

Certification

TÜV Management Service GmbH certified GRENKELEASING AG 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 DIN EN ISO 9001:2008 standard. In addition to the German locations, GRENKEFACTORING GmbH (Germany) and GRENKE Investitionen Verwaltungs KGaA, which is responsible for asset sales, the subsidiaries in Austria, France, the Netherlands, Switzerland, Spain and Italy and the franchisees in Romania (GRENKELEASING SRL), Hungary (Grenkeleasing kft), Finland (GC Leasing s.r.o), Slovakia (GC Leasing s.r.o.) and Portugal (Grenke Renting S.A.) 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 ISO 9001 dated September 16, 2011 confirms that GRENKELEASING AG (including the aforementioned subsidiaries and franchise partners) has an effective and highly functional management system. 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, meaning that sufficient precautions are in place even in the event of property damage. Contract data is stored and updated in our IT system mainly using programmes especially developed for this purpose. Original contract data is stored at the locations as well as at the central contract management division in Baden-Baden, Germany. Automatic backup programmes and power interruption facilities serve to 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

On-goingmarketing measures serve to mitigate sales risk. These include:

• gathering information
• product development
• procedural improvements
• development of 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 just lasting high growth. We now consider this experience and the reputation we have built up to be an important barrier to market entry for potential competitors.

The draft of the International Financial Reporting Standard on accounting for leases, which is the subject of intense discussion in the leasing sector, stipulates that in principal each leased item must be accounted for by the lessee (either as an asset or as a right of use on the asset side and a matching payment obligation on the liability side), and could affect the investment propensity of the companies affected in such a way that leasing is viewed as a less attractive alternative when making investment decisions.

As far as we are aware at present, however, 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 markets and usually prepare their accounts in accordance with local accounting standards. Therefore, the risks arising from the implementation of the IFRS draft are likely to be limited both for clients and with regard to the accounting requirements within the GRENKE Consolidated Group.

Indeed, we believe that the proportion of IT expenditure devoted to leasing in our target market will actually continue to increase in the medium to long term. Banks are likely to be generally restrictive in granting refinancing in light of the more stringent capital requirements imposed by the Basel III regime, while some are withdrawing from the leasing business altogether due to cost considerations. This development is also beneficial to our market position.

Key Features of the Internal Control System and the Risk Management System of the GRENKE Consolidated Group with regard to the Accounting Process

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

The system is not defined by law. We interpret the internal control and risk management system as a comprehensive system and follow the definitions of the Institute of Public Auditors in Germany (IDW), Dusseldorf, with regard to 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 that are 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 identification and the handling of risks relating to the company's business activities. The following structures and processes have been implemented in the Consolidated Group with regard to the accounting and consolidated accounting processes:

The Board of Directors bears overall responsibility. All of the companies included in the consolidated financial statements are also incorporated into a clearly 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 Consolidated Group are documented in a manual that is adapted to reflect external and internal developments at regular intervals.

With regard to the accounting and consolidated accounting processes, we consider features of the internal control and risk management system to be significant if they can have a material effect on the Consolidated Group's accounting and the overall view presented by the consolidated financial statements including the Group management report. In particular, this relates to the following elements:

• the identification of significant risk and control areas of relevance to the Consolidated Group-wide accounting process
• controls to monitor the Consolidated 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 GRENKE Consolidated 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 the orderly IT-based processing of matters and data that are relevant to Consolidated 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 Consolidated Group has also implemented a risk management system for the Consolidated Group-wide accounting process that contains measures aimed at identifying and assessing significant risks and corresponding risk mitigation measures to ensure the correctness of the consolidated financial statements. The risk management system established throughout the Consolidated Group for the accounting process thereby guarantees the preparation of accurate and reliable information for the public.

Risk Summary

The GRENKE Consolidated Group largely implemented the Minimum Requirements for Risk Management (MaRisk) published by Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin) in 2009. This process was completed in 2010. Sufficient precautions have been taken to offset identified counterparty default 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 level.

Significant Events subsequent to the End of Fiscal Year 2011

On January 17, 2012, GRENKE FINANCE Plc. successfully placed a new bond with a volume of EUR 100 million and a term of 3.5 years. Within a very short period of time, the offer was oversubscribed by 50 percent. Hence, very early in the year we already secured a large amount of liquidity for our on-going high growth.

Report on Forecasts and the Outlook for the Consolidated Group

Report on Risks and Opportunities

The following report describes the opportunities and risks of forecasts for the GRENKE Consolidated Group as a whole and the Leasing Business, Banking Business and Factoring Business segments individually. The basic information on the leasing business in Germany also applies to the reportable regional segments of the leasing business as broken down on the basis of foreign markets.

With regard to economic expectations, the general forecasts for Europe for the current fiscal year 2012 are projecting a considerably weaker development than in the year under review. A recession is even forecast in some countries, particularly in southern Europe, while Germany is expected to continue to grow in 2012 on the back of robust domestic demand. The German Federal Government is forecasting real GDP growth of 0.7 percent. The quarterly survey by the European Central Bank last November suggested a similar development, with the economic experts surveyed stating that they expected real GDP growth in the euro zone to halve from 1.6 percent in 2011 to 0.8 percent in 2012.

The credit insurance company EULER HERMES S.A. expects that the downward trend in the number of corporate insolvencies in most regions of the world that has been observed since 2010 will continue until 2012. However, it points out certain risk factors, including in particular the slowdown in global economic drivers, higher raw material and production costs, increasingly restrictive fiscal policy measures and – in some countries – lower competitiveness due to exchange rate developments. Following the expected decrease in the global insolvency risk of 7 percent in 2011, the credit insurance company is forecasting a further decline of 5 percent for 2012. Within Europe, Greece and Portugal are cited as exceptional cases with higher default risks due to their respective economic situations.

Following a fall of 4.7 percent in the previous year, the development in Germany is expected to all but come to a standstill with only 0.7 percent fewer insolvencies in 2012. Accordingly, the extensive rise that accompanied the international financial market crisis will still not be offset in 2012, meaning that the insolvency risk in many countries will remain above the pre-crisis level recorded in 2007. As the GRENKE Consolidated Group covers the entire SME sector with its non-industry-specific customer structure, potential cluster risks with significantly higher probabilities of insolvency, such as those identified by EULER HERMES in the service industry, are effectively smoothed. Risks of this nature are also taken into account through our active, scoring-based management of new business.

As in the previous year, the opportunities for additional growth clearly outweigh the associated risks. The loss rate went beyond its cyclical high in the past fiscal year, and a stable level is expected in the current year. With regard to interest rate development, refinancing risks are not likely to increase in 2012. Given the sustained problems on the financial markets, a sustained rise in interest rates is extremely unlikely in the current fiscal year. Following the issue of a bond with a volume of EUR 100 million in January 2012, the GRENKE Consolidated Group has covered the majority of its expected refinancing requirements for the current fiscal year at an early stage, meaning that the forecast growth for 2012 is secured from a refinancing perspective.

Generally speaking, the interest rate risk to which the GRENKE Consolidated Group is exposed in connection with the refinancing of its lease receivables is only limited, as this refinancing – if it is subject to a floating rate at all – is hedged using derivatives. However, in new business, risks may arise as a result of changes in interest rates and spreads. In particular, the time lag with which we pass on changes in interest rates to customers can have a temporary influence on the profitability of new business. However, we still expect to be able to reflect future fluctuations in refinancing costs in our conditions, and hence to limit the associated income risks.

On account of the extremely strong growth in our international markets, including outside the euro zone, changes in exchange rates are increasingly relevant for our business. On the one hand, this can affect the translation of the equity of subsidiaries domiciled in non-euro zone countries, thereby having an impact on consolidated equity. On the other hand, currency effects can result from the fact that the GRENKE Consolidated Group's refinancing is primarily conducted in euros, resulting in a disparity between this refinancing and receivables from lessees (indirectly via intragroup refinancing). Although we are pressing ahead with our conservative risk policy with regard to currency risks and hedging all risks of this nature where it is economically feasible to do so, the possibility of temporary effects in particular cannot be excluded in full. For example, this may result from deviations between the hedged foreign-currency cash flows and the realised cash flows due to delayed payments or early settlements and terminations, meaning that the respective hedges are required to be adjusted or reversed. Substantial fluctuations in the respective currencies could have a tangible impact on earnings.

Outlook for the Consolidated Group

Fiscal Year 2012

In 2012, we are aiming to continue the extremely encouraging business development we recorded in the past fiscal year and again exceed our long-term target of growth in new business volume of at least 10 percent. The GRENKE Group expects new business to increase by around 15 percent, with CM2 margins remaining attractive and risk-adequate. This will be driven in part by our broadbased international focus, which allows us to leverage opportunities in the individual regions on a targeted basis. At the same time, we will benefit significantly from the general trend towards more stringent regulatory requirements for the banking sector, particularly in Europe, which will require banks to adopt a more restrictive lending policy.

The net profit of the GRENKE Consolidated Group is also expected to improve considerably reaching a range of EUR 41 – 44 million for the year. This is the result of the high-margin new business generated in recent years, which is increasingly generating income for us and thereby favourably impacting the income statement as the terms of the respective leases progress. Meanwhile, we expect the loss rate to remain at the level recorded in fiscal year 2011. We will continue to invest in our rapid international expansion. Given the sizethattheGRENKEConsolidatedGrouphasnowachieved, the corresponding start-up costs will have less of an impact on profitability than in the past. Expenses are therefore expected to rise less pronounced than income, meaning that – as presented above – we are forecasting a strong rise in net profit.

Subsequent Years

In principle, the key factors affecting the business development in 2012 also apply to subsequent years. We will maintain our target of annual growth in new business of more than 10 percent. Our international activities will make a key contribution to achieving this target. With the planned market entry in Brazil in the current fiscal year, we are focusing on a non-European region for the first time, thereby opening up considerable additional potential for subsequent years. In the near future, we expect our business to continue to benefit from the dwindling of competitive intensity that is currently being observed. Banks have been sustainably weakened by the latest financial market and government debt crises and are no longer able to finance our target customers, SMEs, to the same extent as prior to 2008. This favourable change in the market environment from our perspective is likely to remain in place for the foreseeable future. This will help us to continue to manage our new business with a focus on achieving a high CM2 margin, thereby ensuring the GRENKE Consolidated Group's profitability and a sustainable return on equity of 16 percent.

Baden-Baden, January 31, 2012

The Board of Directors

Consolidated Financial Statements for Fiscal Year 2011

Consolidated Income Statement

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2011	Dec. 31, 2010
Interest and similar income from financing business	3.1	144,547	124,549
Expenses from interest on refinancing and deposit business	3.1	51,856	44,520
Net interest income		92,691	80,029
Settlement of claims and risk provision	3.2	34,415	33,724
Net interest income after settlement of claims and risk provision		58,276	46,305
Profit from insurance business	3.3	25,703	22,236
Profit from new business	3.4	31,021	26,263
Profit from disposals	3.5	1,653	2,026
Income from operating business		116,653	96,830
Staff costs	3.6	36,695	32,673
Depreciation and impairment	3.7	3,225	2,674
Selling and administrative expenses (not including staff costs)	3.8	26,373	24,275
Other operating expenses		3,392	3,566
Other operating income	3.9	3,755	3,381
Operating result		50,723	37,023
Expenses / income from fair value measurement		98	275
Other interest income		489	414
Other interest expenses		878	1,187
Earnings before taxes		50,432	36,525
Income taxes	3.10	11,181	8,689
Net profit		39,251	27,836
Earnings per share (basic) in EUR	3.11	2.87	2.03
Earnings per share (diluted) in EUR	3.11	2.87	2.03
Average shares outstanding (basic)	3.11	13,684,099	13,684,099
Average shares outstanding (diluted)	3.11	13,684,099	13,684,099

Consolidated Statement of Comprehensive Income

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2011	Dec. 31, 2010
Net profit		39,251	27,836
Appropriation to / reduction of hedging reserve (before taxes)	4.19.6	856	2,087
Income taxes		–99	–151
Appropriation to / reduction of hedging reserve (after taxes)		757	1,936
Appropriation to / reduction of reserve for actuarial gains and losses
(before taxes)	4.17	91	–88
Income taxes		–24	28
Appropriation to / reduction of reserve for actuarial gains and losses
(after taxes)		67	–60
Change in currency translation differences		–612	3,387
Other comprehensive income		212	5,263
Total comprehensive income		39,463	33,099

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2011	Dec. 31, 2010
Assets
Current assets
Cash and cash equivalents	4.1	104,234	78,297
Financial instruments that are assets (short-term portion)	4.2	1,883	1,255
Lease receivables	4.3	568,799	508,325
Other current financial assets	4.4	89,976	77,434
Trade receivables	4.5	4,560	3,845
Lease assets for sale		8,115	8,159
Tax assets	4.6	1,298	572
Other current assets	4.7	83,817	54,913
Total current assets		862,682	732,800
Non-current assets
Lease receivables	4.3	999,955	819,899
Financial instruments that are assets (long-term portion)	4.2	2,516	1,115
Other non-current financial assets	4.4	34,576	43,831
Property, plant and equipment	4.8	35,653	35,645
Goodwill	4.9	13,441	12,985
Other intangible assets	4.10	2,176	1,660
Deferred tax assets	4.11	17,280	22,575
Other non-current assets		689	483
Total non-current assets		1,106,286	938,193
Total assets		1,968,968	1,670,993

continued on next page

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2011	Dec. 31, 2010
Liabilities and equity
Liabilities
Current liabilities
Refinancing liabilities	4.12	438,624	320,582
Liabilities from deposit business	4.12	93,897	87,624
Current bank liabilities	4.12	1,073	684
Liability financial instruments (short-term portion)	4.13	3,547	5,449
Trade payables		7,031	6,194
Tax liabilities	4.14	1,847	14,795
Deferred liabilities	4.16	4,309	4,713
Current provisions	4.15	2,807	3,452
Other current liabilities		4,686	7,411
Deferred lease payments		69,241	67,300
Total current liabilities		627,062	518,204
Non-current liabilities
Refinancing liabilities	4.12	929,008	786,961
Liabilities from deposit business	4.12	61,230	34,615
Non-current bank liabilities	4.12	2,406	3,094
Liability financial instruments (long-term portion)	4.13	3,481	1,583
Deferred tax liabilities	4.11	26,078	36,361
Pensions	4.17	1,590	1,566
Non-current provisions	4.15	328	0
Other non-current liabilities	4.18	128	836
Total non-current liabilities		1,024,249	865,016
Equity	4.19
Share capital		17,491	17,491
Capital reserves		60,166	60,166
Retained earnings		148,917	89,054
Other components of equity		1,386	1,175
Unappropriated surplus		89,697	119,887
Total equity		317,657	287,773
Total liabilities and equity		1,968,968	1,670,993

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2011	Dec. 31, 2010
	Earnings before taxes	50,432	36,525
	Non-cash items contained in net profit and reconciliation to cash flow from
	operating activities
+ / –	Depreciation and impairment	3,225	2,674
– / +	Profit / loss from the disposal of operating and office equipment and intangible assets	–20	–15
– / +	Net income from non-current financial assets	389	773
– / +	Non-cash changes in equity	931	5,892
+ / –	Increase / decrease in deferred liabilities, provisions and pensions	–713	4,489
–	Additions to lease receivables	–796,313	–669,807
+	Payments by lessees	581,521	506,004
+	Disposals / reclassifications of lease receivables at residual carrying amounts	118,629	105,456
–	Interest and similar income from financing business	–144,547	–124,549
–	Decrease / increase in other receivables from lessees	3,425	–521
+ / –	Currency translation differences	–847	–9,928
=	Change in lease receivables	–238,132	–193,345
+	Addition to liabilities from refinancing	1,257,601	1,290,465
–	Payment of annuities to refinancers	–253,935	–257,596
–	Disposal of liabilities from refinancing	–798,992	–955,919
+	Expenses from interest on refinancing and on deposit business	51,856	44,520
+ / –	Currency translation differences	1,920	4,908
=	Change in refinancing liabilities	258,450	126,378
+ / –	Increase / decrease in liabilities from deposit business	32,888	15,861
– / +	Increase / decrease in loans to franchisees	11,145	17,330
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	–45,215	–16,750
+ / –	Increase / decrease in deferred lease payments	1,941	–411
+ / –	Increase / decrease in other liabilities	–3,389	2,157
=	Cash flow from operating activities	71,932	1,558

continued on next page

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2011	Dec. 31, 2010
– / +	Taxes paid / received	–29,959	–14,387
–	Interest paid	–878	–1,187
+	Interest received	489	414
=	Net cash flow from operating activities	41,584	–13,602
–	Purchase of operating and office equipment and intangible assets	–3,586	–4,094
– / +	Payments / proceeds from acquisition of subsidiaries	–2,343	0
+	Proceeds from the sale of operating and office equipment and intangible assets	126	51
=	Cash flow from investing activities	–5,803	–4,043
+ / –	Borrowing / repayment of bank liabilities	–668	–4,066
–	Dividend payments	–9,579	–8,210
=	Cash flow from financing activities	–10,247	–12,276
	Cash funds at beginning of period
	Cash in hand and bank balances	78,297	109,865
–	Bank liabilities from overdrafts	–113	–1,131
=	Cash and cash equivalents at beginning of period	78,184	108,734
+ / –	Change due to currency translation	34	–629
=	Cash funds after currency translation	78,218	108,105
	Cash funds at end of period
	Cash in hand and bank balances	104,234	78,297
–	Bank liabilities from overdrafts	–482	–113
=	Cash and cash equivalents at end of period	103,752	78,184
	Change in cash and cash equivalents during the period (= total cash flow)	25,534	–29,921
	Net cash flow from operating activities	41,584	–13,602
+	Cash flow from investing activities	–5,803	–4,043
+	Cash flow from financing activities	–10,247	–12,276
=	Total cash flow	25,534	–29,921

Consolidated Statement of Changes in Equity

			Retained
			earnings and		Reserve for
	Share	Capital	unappropriated	Hedging	actuarial gains /	Currency	Total
EURk	capital	reserves	surplus	reserve	losses	translation	equity
Equity as at
Jan. 1, 2011	17,491	60,166	208,941	–1,005	–172	2,352	287,773
Comprehensive
income			39,251	757	67	–612	39,463
Dividend payment in
2011 for 2010			–9,579				–9,579
Equity as at
Dec. 31, 2011	17,491	60,166	238,613	–248	–105	1,740	317,657
Equity as at
Jan. 1, 2010	17,491	60,166	189,315	–2,941	–112	–1,035	262,884
Comprehensive
income			27,836	1,936	–60	3,387	33,099
Dividend payment
in 2010 for 2009			–8,210				–8,210
Equity as at
Dec. 31, 2010	17,491	60,166	208,941	–1,005	–172	2,352	287,773

Notes to the Consolidated Financial Statements for Fiscal Year 2011

1 Purpose of the Company

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

The GRENKE Consolidated Group conducts financing business and is a partner for mainly small and medium-sized enterprises. Its products and services range from leases to factoring, various payment transaction services, and deposits business with private customers. The GRENKE Consolidated 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.

The leasing business focuses on the small-ticket leasing of IT products, such as PCs, notebooks, servers, monitors and peripheral devices, software, telecommunication, 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 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, as in the previous year. The consolidated financial statements of GRENKELEASING AG (hereafter referred to as the "consolidated financial statements") comply with IFRSs as published by the International Accounting Standards Board (IASB) and as adopted in the EU as at December 31, 2011.

All International Financial Reporting Standards (IFRSs) (formerly International Accounting Standards (IAS)) applicable to fiscal year 2011 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, 2011 are prepared for GRENKELEASING AG and all the companies it controls. The annual financial statements of the companies included in the consolidated financial statements are all based on uniform accounting policies. The annual financial statements in accordance with local commercial law have been prepared as at the end of the reporting period 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 note 2.2.

The consolidated financial statements are based on historical cost accounting. Assets and liabilities are recognised at nominal value less necessary valuation allowances, unless otherwise stated. The only exception is the recognition of the derivative financial instruments used in the Consolidated 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 3, 2012.

2.2 Effects of New or Amended IFRSs

2.2.1 Accounting Standards Implemented in 2011

In recent years, the IASB has published various amendments to 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:

• IAS 24 "Related Party Disclosures" (January 1, 2011)
• IAS 32 "Financial Instruments: Classification of Rights Issues" (February 1, 2010)
• IFRS 1 "Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters" (July 1, 2010)
• IFRIC 14 "IAS 19 Prepayments of a Minimum Funding Requirement" (January 1, 2011)
• IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" (July 1, 2010)

The IFRSs listed had no effect on accounting policies for the consolidated financial statements.

The amended IFRSs published in the 2010 Annual Improvements Process (AIP) project were not and are not relevant to the accounting policies for these financial statements, with the result that their first-time adoption had no effect on the consolidated financial statements – except for additional or amended disclosures and reporting.

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.

The IASB also amended or released the following IFRSs:

• IAS 1 "Presentation of Financial Statements" (July 1, 2012)
• IAS 12 "Income Taxes" (January 1, 2012)
• IAS 19 "Employee Benefits" (January 1, 2013)
• IAS 27 "Separate Financial Statements" (January 1, 2013)
• IAS 28 "Investments in Associates" (January 1, 2013)
• IAS 32 and
• IFRS 7 "Offsetting Financial Assets and Financial Liabilities" (January 1, 2013)
• IFRS 1 "First-time Adoption of International Financial Reporting Standards" (July 1, 2011)
• IFRS 7 "Financial Instruments: Disclosures" (July 1, 2011)
• IFRS 9 "Financial Instruments" (January 1, 2015)
• IFRS 10 "Consolidated Financial Statements" (January 1, 2013)
• IFRS 11 "Joint Arrangements" (January 1, 2013)
• IFRS 12 "Disclosure of Interests in Other Entities" (January 1, 2013)
• IFRS 13 "Fair Value Measurement" (January 1, 2013)
• IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" (January 1, 2013)

In November 2009, the IASB published IFRS 9 "Financial Instruments", which relates only to financial assets, as part of a project to revise accounting for financial instruments. In October 2010, it added regulations for financial liabilities including new regulations to include own credit risk when exercising the fair value option. The new standard regulates the recognition of financial assets and financial liabilities in terms of classification and measurement and is the first phase in the project to revise the financial instruments defined in IAS 39. Further phases in this project have been delayed and are expected in 2012.

On December 16, 2011, the IASB postponed the mandatory date of first-time adoption for IFRS 9 by a further two years. In principle, these regulations will take effect prospectively for fiscal years beginning on or after January 1, 2015. However, the regulations regarding the classification in categories will have to be applied respectively. Early adoption is permitted. The convenience of general prospective adoption will result in additional disclosures in the notes at the transition date. GRENKELEASING AG is currently examining the effects of this adoption on the consolidated financial statements.

In May 2011, the IASB released three new standards regulating the recognition of the investments of a reporting entity in its consolidated financial statements. IFRS 10 "Consolidated Financial Statements" introduces a uniform consolidation model for all companies on the basis of control and replaces the regulations of IAS 27 "Consolidated and Separate Financial Statements" and SIC-12 "Consolidation – Special Purpose Entities". IFRS 11 "Joint Arrangements" covers the recognition of joint arrangements. These occur when two or more parties have joint control. IFRS 10 and 11 must be applied retrospectively to financial statements for fiscal years beginning on or after January 1, 2013. Early adoption is permitted.

IFRS 12 "Disclosure of Interests in Other Entities" expands the disclosures in the notes for investments in other companies. This involves the compilation of disclosures from several standards that have already been published in IFRS 12. IFRS 12 must be applied prospectively to financial statements for fiscal years beginning on or after January 1, 2013. Early adoption is permitted. Following its amendment, the amended IAS 27 "Separate Financial Statements" only includes regulations for separate financial statements and is therefore not relevant to the consolidated financial statements.

IFRS 11 has no effect on the consolidated financial statements of GRENKELEASING AG as no companies of the GRENKE Consolidated Group have joint arrangements in investments. GRENKELEASING AG is currently examining the effects of IFRS 10 and the extended disclosures of IFRS 11 on the consolidated financial statements.

With the amendment of the above standards, the IASB also amended IAS 28 "Investments in Associates". This standard is not relevant to the GRENKE Consolidated Group as it holds no investments in associates.

In May 2011, the IASB also published IFRS 13 "Fair Value Measurement" which compiles the regulations on fair value measurement previously found in individual IFRSs and replaces them with a uniform regulation. IFRS 13 applies for the first time to fiscal years beginning on or after January 1, 2013. Early adoption is also permitted. GRENKELEASING AG is currently examining the effects on the consolidated financial statements. However, only minor effects are anticipated as several changes were already introduced as a result of the amendments to IFRS 7, "Financial Instruments: Disclosures".

In June 2011, the IASB published amendments to IAS 19 "Employee Benefits" that result in the abolition of the corridor method. In future, actuarial gains and losses will be recognised in equity. In addition, income from expected interest on plan assets can be recognised only in the amount of the discount rate used to calculate the defined benefit obligation. With a few exceptions, the amendments to IAS 19 must be applied with retrospective effect to financial statements for fiscal years beginning on or after January 1, 2013. Early adoption is permitted.

The abolition of the corridormethod has no effect on the consolidated financial statements ofGRENKELEASINGAGas it is not applied in theGRENKEConsolidatedGroupandactuarialgainsandlossesarealreadyrecognisedinothercomprehensiveincome.It isnotexpected that the adoption of a uniformnet interest component for interest fromplan assets and the interest expense of plan obligations will have a significant effect on the consolidated financial statements of GRENKELEASING AG. Similarly, the amendments to requirements for termination benefitswill not have a significant influence on the consolidated financial statements ofGRENKELEASINGAG.

The IASB published amendments to IAS 1 "Presentation of Financial Statements" in June 2011. The presentation of other comprehensive income was changed so that the items of other comprehensive income must be grouped according to whether they can be recycled (such as cash flow hedges, foreign currency translation) or not (such as actuarial gains and losses on IAS 19 defined benefit plans). Furthermore, subtotals must also be added for the above groups. The changes must be adopted for the first time for fiscal years beginning on or after July 1, 2012. Early adoption is permitted. GRENKELEASING AG is currently examining the amended disclosure requirements. Only minor changes in presentation are anticipated.

In December 2010, the IASB published an amendment to IAS 12 "Income Taxes" on the recovery of underlying taxed assets. At the same time, SIC-21 "Income Taxes – Recovery of Revalued Non-depreciable Assets" was withdrawn. For the first time, the changes must be adopted for fiscal years beginning on or after January 1, 2012. Early adoption is permitted. GRENKELEASING AG is not anticipating that this change will have any impact on its consolidated financial statements.

On October 7, 2010, the IASB published an amendment to IFRS 7 "Financial Instruments: Disclosures". This addition expanded the disclosure requirements for transfers of financial assets. For the first time, these changes must be adopted for fiscal years beginning on or after July 1, 2011. Early adoption is permitted. GRENKELEASING AG is currently examining the amended disclosure requirements.

The amended pronouncements of IFRS 1 "First-time Adoption of International Financial Reporting Standards" and IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" have no effect on the consolidated financial statements of GRENKELEASING AG.

In December 2011, the amendments to IAS 32 and IFRS 7 were published. The changes must be adopted for fiscal years beginning on or after January 1, 2013. The amendments clarify existing inconsistencies in the application guidelines. However, the existing basic regulations concerning the offsetting of financial instruments remain unchanged. The amendments also define expanded disclosure requirements. GRENKELEASING AG is not anticipating that this change will have any impact on its consolidated financial statements.

2.3 Consolidation Policies

2.3.1 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 "GRENKE Consolidated 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 Consolidated 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:

		Equity investment	Equity investment
Name	Registered office	2011	2010
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%
GRENKELEASING S.r.l.	Milan/Italy	100%	100%
GRENKELEASING AB	Stockholm/Sweden	100%	100%
GRENKE LEASE Sprl 1)	Brussels/Belgium	100%	100%
Grenke Leasing Ltd.	Guildford/UK	100%	100%
GRENKELEASING Sp.z o.o	Poznan/Poland	100%	100%
GRENKELEASING Magyarország Kft.	Budapest/Hungary	100%	--

		Equity investment	Equity investment
Name	Registered office	2011	2010
FCT "GK"-COMPARTMENT "G1" 2)	Pantin/France	--	100%
FCT "GK"-COMPARTMENT "G2" 3)	Pantin/France	100%	--
GOALS FINANCING 2009 LIMITED 4)	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 Purchasing Limited for French lease receivables. GRENKELEASING AG holds indirect interests in this company through its Irish subsidiary GRENKE FINANCE Plc. (EUR 150) and its German subsidiary GRENKE SERVICE AG (EUR 150). This compartment was replaced at the start of 2011 by the compartment FCT "G2".

3) Included in consolidation from 2011 as a result of the addition of the refinancing activities of this compartment in the context of the Elektra Purchase No. 25 Limited ABCP programme for French lease receivables. GRENKELEASING AG holds indirect interests in this company of EUR 150 each through its Irish subsidiary GRENKE FINANCE Plc. and its German subsidiary GRENKE SERVICE AG.

4) 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.

2.3.2 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 GRENKE Consolidated 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 end of the reporting period. Income and expenses of these subsidiaries are translated at the average exchange rates prevailing during the fiscal year (the arithmetic mean of the daily rates during the fiscal 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 as a profit or loss.

	Closing rate on	Average rate	Closing rate on	Average rate
	Dec. 31, 2011	2011	Dec. 31, 2010	2010
CHF	1.2156	1.2326	1.2504	1.3803
CZK	25.7870	24.5900	25.0610	25.2840
DKK	7.4342	7.4506	7.4535	7.4473
GBP	0.8353	0.8679	0.8608	0.8578
HUF 3)	314.5800	289.2050	277.9500	275.4800
NOK 1)	7.7540	7.7934	7.8000	8.0043
PLN	4.4580	4.1206	3.9750	3.9947
RON 1)	4.3233	4.2391	4.2620	4.2122
SEK	8.9120	9.0298	8.9655	9.5373
USD 2)	1.2939	--	1.3362	--
CAD 2)	1.3215	--	1.3322	--
JPY 2)	100.20	--	108.6500	--

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

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

3) Acquisition of the subsidiary in Hungary as at June 21, 2011. Therefore, the currency of the franchise company in 2010 and the average rate in the year 2011 is shown from the date of the acquisition.

2.4 General Accounting Policies

2.4.1 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 fulfilment 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;
• d. there is a substantial change to the asset.

The Consolidated 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 statement of financial position 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 as such that a constant periodic rate of return on the outstanding residual receivable is generated.

Operating Leases

Leases where the GRENKE Consolidated 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 statement of financial position 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 a reassessment of the lease. 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 Consolidated Group is the Lessee

Finance leases, which transfer all the significant risks and rewards incidental to ownership of the leased asset to the GRENKE Consolidated 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 GRENKE Consolidated 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 statement of comprehensive income on a straight-line basis over the lease term. Contingent rents are recognised as an expense in the period in which they are incurred.

2.4.2 Cash and Cash Equivalents

The cash and cash equivalents item in the consolidated statement of financial position comprises cash on hand, bank balances, and balances at banks and central banks with a maturity of less than three months. Current account liabilities are deducted from cash and cash equivalents for the statement of cash flows.

2.4.3 Borrowing costs

Borrowing costs that can be directly attributed to the acquisition, construction, or manufacture of an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as a portion of the cost of the corresponding asset. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs are interest and other costs incurred by an entity in connection with the borrowing of funds. In the GRENKE Consolidated Group, all borrowing costs incurred in fiscal 2011 were recognised in profit or loss.

2.4.4 Financial Assets and Liabilities

Depending on their characteristics, financial assets, as defined by IAS 39, are 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 at the end of a given fiscal year where permissible and appropriate. No reclassifications took place in the reporting period. 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 GRENKE Consolidated 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 Consolidated Group are measured using either Bloomberg (interest rate swaps and caps) or the measurement bases provided by the banks (forward exchange contracts).

The assessment of 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 unrecognised or impaired and through the amortisation process.

The GRENKE Consolidated Group held no available-for-sale financial assets and no held-to-maturity financial instruments at the end of the reporting period. 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. Refinancing liabilities 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.

Refinancing liabilities 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.

2.4.5 Impairment of Financial Assets

At the end of each reporting period, the GRENKE Consolidated 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). An objective indication for an impairment is assumed if the debtor is experiencing significant financial difficulties, which are characterized by default or delinquency on interest or principal payments. In addition, past payment behaviour, age structure, a substantial deterioration in credit standing, and a high probability of insolvency are taken into consideration. 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.

2.4.6 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 at the end of the reporting period using the hypothetical derivative method.

2.4.7 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 Consolidated 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 Consolidated 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 GRENKE Consolidated 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 GRENKE Consolidated Group continues to recognise the transferred asset to the extent of its continuing involvement.

Financial liabilities are not recognised 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.

2.4.8 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 GRENKE Consolidated 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.

2.4.9 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 weremet. In prior periods, this was treated as an expense in the period incurred. Property, plant and equipment are depreciated on a straight-line basis 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 statement of comprehensive income.

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.

2.4.10 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 at the date of acquisition plus the directly attributable cost. Goodwill was amortised on a straight-line basis over its economic life until December 31, 2004. Following the implementation of IFRS 3, all goodwill was frozen at the value recognised as at 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.

2.4.11 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 amortisation on a straight-line basis over their economic life which is generally three years.

Internally generated Intangible Assets

An intangible asset developed as part of a project is only recognised if the GRENKE Consolidated 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 on a straight-line basis 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). As a result of the acquisition of GRENKELEASING Magyarország Kft., Budapest/Hungary in fiscal 2011, GRENKELEASING AG acquired a further dealer network worth HUF 96,332k (EUR 362k).

Dealer networks are amortised on a straight-line basis over their economic life of six years. The initial measurement of the dealer network used the cost approach system. Estimated 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 which stemmed 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.

2.4.12 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 cashgenerating unit to which the asset belongs.

The carrying amounts of goodwill are reviewed in order to assess the probability of continuing future benefits in accordance with the rules described in note 2.4.10. 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.

2.4.13 Provisions

Provisions are carried at their probable settlement amount if a present obligation (legal or constructive) exists for the GRENKE Consolidated Group due to an event occurring prior to the end of the reporting period, 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 the end of each reporting period and adjusted to reflect the current best estimate.

2.4.14 Pensions and Other Post-Employment Benefits

Defined benefit plans relate to benefits following 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 statement of financial position for defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period, 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 the forecasted future cash outflows using 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 Consolidated Group has set up a defined benefit pension plan in Switzerland which requires that contributions 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, acquired in fiscal year 2009, of employees of GRENKE BANK AG that had left the company by the end of the reporting period. 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.

2.4.15 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 at the end of the reporting period.

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 at the end of the reporting period 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 statement of comprehensive income. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the entity at the end of the reporting period expects 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 statement of financial position.

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 statement of financial position.

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 GermanBankingAct [Kreditwesengesetz (KWG)].Thus, on the one hand, the companieswere 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 has eliminated the competitive disadvantage that had been experienced by leasing and factoring companies in comparison with banks which resulted from the 2008 Annual Tax Act. 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 agreement of finance lease contracts 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 in 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 Section1(1a)sentence 2of theGermanBankingAct,arewaivedforfinancial servicesproviderswithinthemeaning ofSection1 (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. As of the 2011 assessment period, there will be a 50 percent minimum required. 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".

As at least 50 percent of sales relate to financial services in accordance with section 19 (4) sentence 2 Trade Tax Implementation Regulations, in calculating the trade tax provision for the German Consolidated 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 to 2011 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.

2.4.16 Revenue Recognition

Income from Leasing when the Consolidated Group is the Lessor Please see the information in note 2.4.1.

Income from Insurance Business

Income from insurance business is comprised of 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 rights and obligations.

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.

2.4.17 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 Consolidated 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") and ABS bond

The Consolidated Group uses various ABCP programmes for refinancing. In the cases where these programmes deal with special purpose entities established by various banks who purchase lease receivables from GRENKE Consolidated Group companies, bundle them and then issue short-term commercial papers for their own refinancing, then in these cases they are not included in the Consolidated Group. As part of an analysis of the contractual terms of the individual programmes, the Consolidated Group had reviewed a potential consolidation requirement in accordance with SIC-12 "Consolidation – Special Purpose Entities".

It is true that this financing structure provides the Consolidated Group access to a broader form of refinancing and to the corresponding benefits. However, the organising banks carry relevant and material risks due to the liquidity commitments they provide. After weighing the benefits created for the GRENKE Consolidated Group against the risks borne in relation to the assessment in accordance with SIC-12, consolidation in the GRENKE Consolidated 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 for the GRENKE Consolidated Group to exercise 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 or not a recognition of the underlying financial assets should be undertaken, the Consolidated 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 AG's consolidated 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 GRENKE Consolidated Group, GOALS 2009 was included in consolidation in 2010 and 2011.

2.4.18 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 following: the uniform determination of useful lives of assets within the Consolidated Group; the measurement of provisions; the recoverability of receivables from terminated contract; the recognition of realisable residual values for leased asset; and the identification of parameters for assessing the on-going value of intangible assets and other nonfinancial assets as well as the probability of future tax benefits. In some cases, the actual figures may differ from the assumptions and estimates. Any changes will be recognised in profit or loss as and when better information is available.

The main uncertainties in relation to estimates, 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 respective company's operations were made on the basis of historical figures and historical income patterns which were projected into the future. If significant assumptions differ from actual figures, adjustments may have to be made in the future. Depending on the country and currency, the average costs of equity of between 7.1 percent (EUR) and 11.0 percent (PLN) (previous year unweighted average: 7.3 percent) were used in discounting the 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 statisticalmethods.They are reviewedonceayearforvalidity.Processingstatusesaregroupedtogetherinprocessingcategorieswhicharesetupwithaviewtorisk.

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

The following table lists the processing categories:

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 and dependent on the terms of the lease, residual values of additions up until the end of fiscal 2006, ranged between 11 percent and 15 percent of historical cost. In fiscal year 2007, due to the strengthening of forecasting capabilities for the statistical population, this allocation could be further broken down into more detailed maturity groups.

For additions from 2007 to 2008, the residual values range between 7.7 and 28.4 percent of historical cost depending upon the duration of the lease. Residual values of between 6.5 percent and 28.4 percent were used for additions in 2009 and 2010. For additions after April 1, 2011, residual values of between 6.5 percent and 23.5 percent were applied. The effect of the change on the reporting period was impracticable due to the disproportionate expense. The effects of these changes on future periods are indeterminable due to their dependence on future new business.

Proceeds are at best estimated based on statistical analyses. If the post-transaction recoverable amount is lowerthan expected (fromsale and subsequent lease), the lease receivables are written down. However, an increase in recoverable amount remains unrecognised.

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 cost. Lease assets for sale are measured at historical residual values, taking their actual saleability into account. As at the end of the reporting period, the residual values used had amounted to between 3.0 percent and 18.3 percent of the historical cost (previous year: between 3.3 percent and 17.0 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. This means that the loss carryforwards can in fact be used. In calculating the level of the deferred tax assets, a 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 to the 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, in order 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 had 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. Thus, the formal investigation under Article 108 (2) of the TFEU, which was initiated on February 24, 2010, was officially concluded. The Federal Republic of Germany has filed an action with the European Court of Justice (ECJ) for an annulment of the resolution of the European Commission. Since the outcome of these proceedings is still unclear, the restructuring clause has not been 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	2011	2010
Net interest income from leasing business	140,211	119,701
Interest income from the bank's lending business	358	571
Interest and similar income from factoring business	1,443	953
Interest income from the refinancing of franchisees	2,535	3,324
Total	144,547	124,549

3.1.2 Expenses from Interest on Refinancing and Deposit Business

Interest expenses from refinancing and deposit business liabilities amounted to EUR 51,856k (previous year: EUR 44,520k). Deposit business interest for 2011 amounted to EUR 3,417k (previous year: EUR 2,894k). This item also includes the interest income of EUR 2,144k (previous year: EUR 1,888k) generated by the loans issued under the ABCP programmes and the ABS bond (assetbacked securities) (see note 4.4).

3.2 Settlement of Claims and Risk Provision

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

EURk	2011	2010
Income from settlement of claims	36,442	24,113
Derecognition of and net addition to flat-rate specific bad debt allowances	31,382	25,502
Expenses from the derecognition of performing lease receivables	37,016	32,149
Allowance for losses on the bank's loans and advances	1,150	–263
Allowance for losses in factoring business	10	103
Expenses for del credere fees to franchiser	1,299	346
Total	34,415	33,724

3.3 Profit from Insurance Business

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

EURk	2011	2010
Income from insurance business	27,586	24,132
Expenses from insurance business	1,883	1,896
Profit from insurance business	25,703	22,236

3.4 Profit from New Business

Revenues from new contracted lease business are comprised as follows:

EURk	2011	2010
Recognition of new lease receivables	796,313	669,807
Share of revenues from leasing down payments	4,540	3,850
Revenues from processing fees	2,490	2,212
Revenues from special lease payments	1,715	1,589
Total	805,058	677,458

Expenses for new contracted lease business are comprised as follows:

EURk	2011	2010
Cost of newly acquired leased assets	759,594	638,735
Commissions paid to dealers	14,443	12,460
Total	774,037	651,195
Profit from new business	31,021	26,263

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 are equal to or greater than their costs. Related costs are capitalised when the contract is concluded.

3.5 Profit from Disposals

EURk	2011	2010
Revenues from subsequent leases	24,212	22,273
Depreciation of leased assets in the subsequent lease period	–1,323	–1,185
Accounting losses from disposal after end of the basic lease term	–21,844	–18,947
Accounting profits / losses from mutually agreed early termination of contracts	608	–115
Total	1,653	2,026

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 following the end of the basic lease term and from mutually agreed early dissolution of contracts.

3.6 Staff costs

The average number of staff during the fiscal year totalled 585 (previous year: 538). Part-time staff was converted into fulltime equivalents.

EURk	2011	2010
Salaries	30,545	26,953
Social security and other benefit costs	6,150	5,346
Board of Directors' phantom stock programme (note 8.6)	0	374
Total	36,695	32,673

Almost all company pensions in the Consolidated Group are defined contribution schemes. Under defined contribution plans, the entity pays contributions to public or private pension insurance schemes voluntarily or on the basis of statutory or contractual requirements. The entity does not have any other benefit obligations beyond the contribution payments. The current contribution payments are recognised as an expense for the respective year. In 2011, they came to EUR 1,422k (previous year: EUR 1,231k) and had mainly comprised contributions to the statutory pension insurance scheme in Germany.

A total net pension expense of EUR 142k (previous year: EUR 70k) for existing pension plans was recognised in staff costs in the fiscal year 2011.

The staff costs also included EUR 354k (previous year: EUR 370k) for the employee participation programme of the French subsidiary.

3.7 Depreciation, Amortisation and Impairments

EURk	2011	2010
Operating and office equipment	1,850	1,348
Office buildings	477	460
Other intangible assets	898	866
Total	3,225	2,674

In the reporting period, impairment charges on operating and office equipment of EUR 467k were recoded (previous year: EUR 0k).

3.8 Selling and Administration Expenses (not including Staff Costs)

Selling and administrative expenses break down into the following categories:

EURk	2011	2010
Operating expenses	11,237	9,203
Administrative expenses	4,441	3,753
Consulting and audit fees	4,753	4,884
Distribution costs (without commissions)	4,711	4,716
Other taxes	1,106	1,604
Remuneration of the Supervisory committees	125	115
Total selling and administrative expenses (excluding staff costs)	26,373	24,275

Consulting and audit fees

The consulting and audit fees of EUR 4,753k (previous year: EUR 4,884k) include fees (and expenses) for the auditor of GRENKELEASING AG totalling EUR 545k (previous year: EUR 594k). The auditor's fees in fiscal year 2010 break down as follows:

EURk	2011	2010
Audits of financial statements	435	461
Other assurance or valuation services	99	92
Other services	11	41
Total	545	594

EUR 117k of the total fees (previous year: EUR 163k) related to prior periods.

Expenses from Rent and Lease Contracts

Expenses of EUR 5,925k (previous year: EUR 5,484k) 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	2011	2010
Franchise fees received	1,144	805
Rent and ancillary rental costs	598	501
Prior-period income	315	168
Reversal of provisions	288	0
Revenues from the disposal of merchandise	267	154
Commission income from banking business	242	304
Administration fees received	198	367
Income from written-off receivables	165	19*
Income from reversal of deferred liabilities	106	478
Court costs allocated to lessees	77	103
Insurance compensation	49	36
Accounting gains from the disposal of non-current assets	46	29
Derecognition of liabilities	0	2
Other items	260	415
Total	3,755	3,381

* In the previous year reported under "other items".

3.10 Income Tax Expenses

EURk	2011	2010
Current taxes	16,155	18,350
Deferred taxes	–4,974	–9,661
Total	11,181	8,689

Current taxes include income relating to previous years of EUR 73k.

In fiscal year 2010, current taxes had included expenses of EUR 1,834k relating to underfunded income taxes of GRENKELEASING AG from the previous year. Due to opposite effects in the other leasing companies, the result was a real net tax expenses of EUR 1,584k.

In return, additional deferred tax assets were recognised in the same amount, meaning that this did not have an impact on Consolidated Group earnings.

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	2011	2010
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%
Other	2.13%	1.15%
Average effective tax rate for the Consolidated Group	22.17%	23.80%
Applicable tax rate	2011	2010
Average expected tax rate GRENKELEASING AG	30.02%	30.02%
Tax increases due to non-deductible expenses	0.06%	0.02%
Changes due to foreign taxes	–9.46%	−11.29%
Balance of tax reductions and increases due to changes in tax rates	0.00%	0.11%
Utilisation of non-capitalised loss carryforwards	–0.44%	−0.55%
Back payments and tax rebates from previous years 1)	–0.14%	4.34%
Other	2.13%	1.15%
Average effective tax rate for the Consolidated Group	22.17%	23.80%

1) Tax rebates for prior years amounted to EUR 73k in 2011 (previous year: backpayments of tax less tax rebates EUR 1,584k).

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 2011 or the previous year. Earnings per share came in at EUR 2.87 for the year under review (previous year: EUR 2.03).

No.	2011	2010
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 Statement of Financial Position

4.1 Cash and Cash Equivalents

EURk	Dec. 31, 2011	Dec. 31, 2010
Cash in hand	15	7
Balances at central banks	19,063	15,157
Bank balances	85,156	63,133
Total	104,234	78,297

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

EURk	Dec. 31, 2011	Dec. 31, 2010
Cash and cash equivalents as per the statement of financial position	104,234	78,297
Less current account liabilities	482	113
Cash and cash equivalents as per the statement of cash flows	103,752	78,184

4.2 Financial Instruments that are Assets

In 2011, financial instruments that are assets in the amount of EUR 4,399k (previous year: EUR 2,370k) related solely to non-hedge derivates. The main item here is the fair value of an interest rate swap concluded under the ABS bond in an amount of EUR 3,183k (previous year: 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, 2011	Dec. 31, 2010
Outstanding minimum lease payments	1,550,324	1,285,922
+ non-guaranteed residual values	189,114	168,414
Gross investment	1,739,438	1,454,336
– unrealised (outstanding) finance income	254,504	212,962
Net investment	1,484,934	1,241,374
– Present value of non-guaranteed residual values	138,271	124,446
Present value of minimum lease payments	1,346,663	1,116,928

EURk	Less than 1 year	1 to 5 years	More than 5 years
Gross total investment	606,437	1,121,425	11,576
Gross total investment (previous year)	523,122	922,620	8,594
Present value of outstanding minimum lease payments	439,820	899,943	6,900
Present value of outstanding minimum lease payments (previous year)	364,753	746,973	5,202

The reconciliation of gross investment only contains contracts which were still in effect at the end of the reporting period. The following adjustments must be made in order to reconcile the net investment with the carrying amount of lease receivables disclosed in the statement of financial position:

EURk	Dec. 31, 2011	Dec. 31, 2010
Changes in performing lease receivables
Balance at beginning of period	1,241,374	1,048,550
+ Change during the period	243,560	192,824
Lease receivables (current + non-current) from current contracts at end of period	1,484,934	1,241,374
Changes in non-performing lease receivables
Gross receivables at beginning of period	170,346	169,389
– accumulated valuation allowances at beginning of period	–83,496	−83,060
= non-performing lease receivables at beginning of period	86,850	86,329
+ Additions to gross receivables during the period	31,443	26,911
– Disposals of gross receivables during the period	33,396	25,954
+ Disposal of accumulated valuation allowances during the period	18,275	11,727
– Addition of accumulated valuation allowances during the period*	19,352	12,163
non-performing lease receivables at end of period	83,820	86,850
Lease receivables (carrying amounts of current and non-current receivables)
at beginning of period	1,328,224	1,134,879
Lease receivables (carrying amounts of current and non-current receivables)
at end of period	1,568,754	1,328,224

* Item contains exchange differences of EUR 400k (previous year: EUR 500k).

	Present value of
	minimum lease	Present value of	Other receivables from
EURk	payments	residual values	lessees	Carrying amount
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
2011
Current lease receivables	439,820	45,159	83,820	568,799
Non-current lease receivables	906,843	93,112	0	999,955
Total (2011)	1,346,663	138,271	83,820	1,568,754

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.

				Past due at the end of the reporting period in the following
				time bands
			Receivables
			subject to bad
		thereof past due	debt allowances		Between	Between	Between 1
Lease receivables	Net carrying	at the end of the	at the end of the		91 and 180	181 and	and 5
EUR m	amount	reporting period	reporting period	< 90 days	days	360 days	years	> 5 years
As at 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
As at Dec. 31, 2011
Not impaired	16.0	16.0	0.0	14.6	0.7	0.4	0.3	0.0
Impaired	67.8	152.6	84.8	10.0	8.1	15.8	68.3	50.4
Total	83.8	168.6	84.8	24.6	8.8	16.2	68.6	50.4

There were no indications that performing lease receivables were impaired as at the end of the reporting period.

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

As at December 31, 2011, 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. In the majority of cases, the Grenke Consolidated Group remains the legal owner of the leased assets, which are used as collateral for the lease receivables.

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

EURm	Dec. 31, 2011	Dec. 31, 2010
Valuation allowances as at the beginning of the fiscal year	83.4	83.0
Addition to specific bad debt allowance	22.6	18.0
Utilisation of specific bad debt allowance	15.8	14.2
Reversal of specific bad debt allowance	5.8	3.9
Currency translation differences	0.4	0.5
Valuation allowances as at the end of the fiscal year	84.8	83.4

4.4 Other Financial Assets

EURk	Dec. 31, 2011	Dec. 31, 2010
Other current financial assets
Receivables from franchisees (refinancing)	26,158	20,141
ABCP loans	19,829	13,710
Instalments collected at end of month	23,890	23.198
Loans (bank)	1,622	2,137
Receivables from refinancers	4,116	3,045
Receivables from factoring business	7,206	3,972
Restricted cash	7,155	11,231
Total other current financial assets	89,976	77,434
Other non-current financial assets
ABCP loans	18,197	9,270
Receivables from franchisees (refinancing)	13,305	30,467
Loans (bank)	3,074	4,094
Total other non-current financial assets	34,576	43,831
Total financial assets	124,552	121,265

Restricted cash refers to the cash and cash equivalents in the bank accounts of GOALS 2009. This amount represented the liquidity reserve of the SPE. The GRENKE Consolidated Group cannot access these funds. In the previous year, the position restricted cash also included the collected instalments for GOALS 2009 in an amount of EUR 22,681.

Receivables from franchisees (see also note 2.4.4) include receivables resulting from the refinancing of leases concluded by franchise operators. In order to provide security for loan receivables or in forfaiting agreements, the franchisees have assigned both the title to the leased assets and the claim to lease receivables. Accordingly, interest income generated in this context of EUR 2,535k (previous year: EUR 3,324k) (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 5,894k (previous year: NOK 45,700k) is related to loan receivables from the company in Norway which will mature on February 29, 2012. The shareholder of the debtor has provided a letter of comfort for these receivables dated January 17, 2012. This item also relates to a loan made to the franchisee GC Autoleasing GmbH, Karlsruhe, in the amount of EUR 595k maturing on February 29, 2012. The shareholder has also provided a letter of comfort for this receivable dated January 17, 2012.

In addition to the liquidity reserve of between 8.0 percent and 35.0 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.

At the end of the reporting period, the receivables from the lending business of GRENKE BANK AG which related to the bank's prior business amounted to EUR 3,565k (previous year: EUR 6,020k). In addition, receivables from the lending business of EUR 4,697k (previous year: EUR 6,232k) include receivables from the borrowers of business start-up loans in the amount of EUR 948k (previous year: EUR 148k) and receivables from the borrowers from project financing in the amount of EUR 163k (previous year: EUR 0k). Interest income is recognised as such under net interest income. All other financial assets were neither past due nor impaired as at the end of the reporting period.

4.5 Trade Receivables

Trade receivables of EUR 4,560k (previous year: EUR 3,845k) mainly relate to receivables from resellers and third parties resulting from the disposal of lease assets. EUR 1,082k (previous year: EUR 946k) of these receivables are overdue and EUR 545k (previous year: EUR 425k) of this amount is impaired. Trade receivables include other receivables from franchisees of EUR 2,627k (previous year: EUR 2,116k).

4.6 Tax Assets

EURk	Dec. 31, 2011	Dec. 31, 2010
Corporate income tax assets	765	48
Trade tax assets	492	398
Other items	41	126
Total	1,298	572

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

4.7 Other Current Assets

EURk	Dec. 31, 2011	Dec. 31, 2010
VAT receivables	74,879	48,098
Prepaid expenses	6,071	3,496
Insurance claims	363	1,105
Orders in progress	232	0
Merchandise	218	165
Amounts in transit	144	726
Creditors with debit balances	63	141
Other items	1,847	1,182
Total	83,817	54,913

4.8 Property, Plant and Equipment

4.8.1 Overview for Fiscal Year 2010

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

EURk	Land and	Assets under	Operating and	Lease assets from	Total
	buildings	construction	office equipment	operating leases
Acquisition cost Jan. 1, 2011	16,686	0	13,865	18,530	49,081
Currency translation differences	0	0	–45	24	–21
Additions	0	866	1,618	12,150	14,634
Of which additions in the context of an
acquisition	0	0	50	164	214
Disposals	0	0	296	11,994	12,290
Reclassifications	0	0	0	0	0
Acquisition cost Dec. 31, 2011	16,686	866	15,142	18,710	51,404
Accumulated depreciation and
impairments Jan. 1, 2011	3,232	0	9,178	1,026	13,436
Currency translation differences	0	0	−23	2	−21
Additions to depreciation	477	0	1,383	1,323	3,183
Additions of impairments	0	0	467	0	467
Disposals of depreciation	0	0	190	1,124	1,314
Reclassifications	0	0	0	0	0
Accumulated depreciation and
impairments Dec. 31, 2011	3,709	0	10,815	1,227	15,751
Net carrying amounts Dec. 31, 2011	12,977	866	4,327	17,483	35,653

4.8.2 Overview for Fiscal Year 2011

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).

The expenses for assets under construction relate to the extension of an office building and following completion were recognised under land and buildings.

4.9 Goodwill

EURk	2011	2010
Acquisition cost as at Jan. 1	12,985	11,178
Currency translation differences	–633	275
Additions in the context of an acquisition	1,089	1,532
Disposals	0	0
Acquisition cost as at Dec. 31	13,441	12,985
Accumulated depreciation as at Jan. 1	0	0
Currency translation differences	0	0
Additions	0	0
Disposals	0	0
Accumulated depreciation as at Dec. 31	0	0
Net carrying amounts Dec. 31, 2011	13,441
Net carrying amounts Jan. 1, 2011	12,985
Net carrying amounts Dec. 31, 2010		12,985
Net carrying amounts Jan. 1, 2010		11,178

With regard to the additions in 2011, please refer to the comments on the acquisition of GRENKELEASING Magyarország Kft. Hungary under note 6.1.

4.9.1 Goodwill Impairment

The goodwill acquired in business combinations was examined for impairment on the basis of the 2011 half-year figures as at September 30, 2011, and in accordance with IAS 36. GRENKELEASING AG examines 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 new business growth rates of up to 40 percent in individual units, and discount factors specific to countries and currencies of between 7.1 percent and 11.0 percent (previous year: between 6.41 percent and 11.18 percent).

Discounting factors are calculated based on the CAPM (capital asset pricing model), taking into account a risk-free euro interest rate of 3.0 percent (previous year: 2.6 percent) and a beta factor of 0.80 (previous year: 0.86) for the Leasing segment and 0.81 percent for the Bank and Factoring segment. Forecasts for the development of new business have proven to be stable in the past. Due to the particular business alignment of the Consolidated 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. Therefore, forecasts for the development of new business are 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 carried forward without using a growth rate.

The cash-generating units used as a basis for examining 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, 2011	Dec. 31, 2010
GRENKE SERVICE AG, Baden-Baden	379	379
GRENKELEASING s.r.o., Prague/Czech Republic	1,315	1,353
GRENKE LEASING S.r.l. and GRENKE Locazione S.r.l. Milan/Italy	504	504
Grenke Leasing Ltd., Guildford/UK	2,028	1,969
GRENKELEASING Sp.z o.o, Poznan/Poland	4,013	4,500
GRENKE BANK AG, Hamburg	1,582	1,582
GRENKEFACTORING GmbH, Baden-Baden	2,698	2,698
GRENKELEASING Magyarország Kft., Budapest/Hungary	922	--
Total	13,441	12,985

The goodwill from the acquisition of GRENKELEASING Magyarország Kft., Budapest/Hungary, in 2011 is still provisional as purchase price allocation will not be finalised until 2012 (see note 6.2). The goodwill is assigned to the Hungary cash-generating unit.

4.9.2 Sensitivity of Assumptions

The fair value of a cash-generating unit where the major value drivers are generated cash flow and the discount rate, cause the unit to be 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 are 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 for each unit are reviewed annually. In addition, in order to test the resilience of the fair values, a sensitivity test was performed on discount rates and growth rates of new business: which are 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 Consolidated Group do not result in any impairment. The changes arising since the routine impairment test on the basis of six-month figures on September 30, 2011, and the end of the reporting period, do not affect the parameters for the evaluation of the individual cash-generating units.

4.10 Other Intangible Assets

4.10.1 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

4.10.2 Overview for Fiscal Year 2011

EURk	Development costs	Software licenses	Dealer network	Total
Acquisition cost Jan. 1, 2011	201	2,779	2,385	5,365
Currency translation differences	0	0	−170	−170
Additions	0	1,152	0	1,152
Disposals	24	2	0	26
Subsidiary additions	0	0	362	362
Reclassifications	0	0	0	0
Acquisition cost Dec. 31, 2011	177	3,929	2,577	6,683
Accumulated amortisation Jan. 1, 2011	188	2,413	1,104	3,705
Currency translation differences	0	0	−71	−71
Additions	13	446	439	898
Disposals	24	1	0	25
Reclassifications	0	0	0	0
Accumulated amortisation Dec. 31, 2011	177	2,858	1,472	4,507
Net carrying amounts Dec. 31, 2011	0	1,071	1,105	2,176

Development costs mainly relate to internally developed factoring software and the webshop programming. Additions to the dealer network relate solely to the acquisition concluded in the fiscal year.

4.11 Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities break down as follows:

	Statement of financial position			Statement of comprehensive income
EURk	Dec. 31, 2011	Dec. 31, 2010	2011	2010
Deferred tax assets
Tax loss carryforwards	12,370	11,984	–386	−950
Remeasurement of lease liabilities	4,217	9,669	5,452	−7,645
Remeasurement of lease receivables	43	31	243	1,153
Pensions	475	671	0	0
Other remeasurements (derivatives)	175	220	0	0
Total	17,280	22,575	5,309	−7,442
Deferred tax liabilities
Remeasurement of lease receivables	24,472	35,022	–10,550	−98
Remeasurement of lease liabilities	1,578	1,297	281	−2,127
Other remeasurements	28	42	–14	6
Total	26,078	36,361	–10,283	−2,219
Deferred tax liabilities / (assets)			–4,974	−9,661
Net deferred tax liabilities	8,798	13,786
Reported in the statement of financial
position as follows:
Deferred tax assets	17,280	22,575
Deferred tax liabilities	26,078	36,361

The total of EUR 520k 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 78k.

However, based on the budget of the Belgian subsidiary, we believe that sufficient taxable profit will be generated in order to utilize these tax loss carryforwards. At the Danish company, the deferred tax assets on tax loss carryforwards were limited to EUR 586k (previous year: EUR 363k) in order to match the deferred tax liabilities.

Deferred tax assets of EUR 99k were directly reversed in equity in the fiscal year (previous year: reversal of deferred tax assets EUR151k).Theseliabilities resultedfromthecashflowhedgereservedirectly recognised in equity. Deferred tax assets of EUR 24k were also directly reversed in equity in connection with the recognition of actuarial gains in equity. In the previous year, the recognition of actuarial losses in equity had resulted in an increase of deferred tax assets of EUR 28k. In the consolidated financial statements and in accordance with IAS 12, deferred taxes on differences between the proportionate equity of a subsidiary recognised in the consolidated statement of financial position, and the carrying amount of equity investment for the subsidiary, are to be recognised in the parent company's tax accounts ("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.

In cases of temporary differences (e.g. those resulting from the 5 percent global calculation in Section 8b of the German Corporation Tax Act), and in line with IAS 12.39, there should not be a recognition of deferred tax liabilities unless, as in the case of control on the part of the parent company, it is probable that these differences will reverse in the foresee-able future.

Currently this reversal is only expected in relation to a partial amount for the subsidiary in Switzerland. Therefore, only deferred taxes amounting to EUR 26k (previous year: EUR 42k) were included in the statement of financial position. No deferrals were recognised for the remaining differences of EUR 617k (previous year: EUR 551k).

4.12 Current and Non-current Bank Liabilities

The GRENKE Consolidated Group's financial liabilities comprise liabilities from the refinancing of the leasing business, bank liabilities and liabilities from deposit business.

EURk	Dec. 31, 2011	Dec. 31, 2010
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	438,624	320,582
ABS / ABCP related liabilities	95,269	70,362
Bonds, revolving facilities, debentures and private placements	301,393	219,635
Committed development loans	164	187
Sales of receivables agreements	41,798	30,398
Current liabilities from deposit business	93,897	87,624
Current bank liabilities	1,073	684
thereof current account liabilities	482	113
Total current financial liabilities	533,594	408,890
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	929,008	786,961
ABS / ABCP related liabilities	254,768	214,602
Bonds, debentures and private placements	606,955	528,689
Committed development loans	23,384	15,000
Sales of receivables agreements	43,901	28,670
Non-current liabilities from deposit business	61,230	34,615
Non-current bank liabilities	2,406	3,094
Total non-current financial liabilities	992,644	824,670
Total financial liabilities	1,526,238	1,233,560

EURk		Total		1 to 5 years More than 5 years	Secured amount
Type of liability
Liabilities from the refinancing of the	2011	929,008	922,097	6,911	322,053
leasing business	(Previous year)	786,961	786,614	347	258,272
Liabilities	2011	61,230	61,230	0	0
from deposit business	(Previous year)	34,615	34,615	0	0
	2011	2,406	2,406	0	10,800
Bank liabilities	(Previous year)	3,094	2,750	344	10,800

The volume of non-current bank liabilities payable in one to five years or more was as follows as at December 31, 2011.

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 of 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 at the end of the reporting period these lines had been utilised in the amount of EUR 482k (previous year: EUR 113k).

The liabilities from the deposit business comprise deposits by customers of GRENKE BANK AG. The amount of EUR 13,874k (previous year: EUR 18,282k) of the total current liabilities of EUR 93,897k (previous year: EUR 87,624k) relate to deposits payable on demand as at the end of the reporting period. Appropriate terms have been arranged for the other deposits consisting of restricted and fixed-term deposits.

Current and non-current lease receivables totalling EUR 459,284k (previous year: EUR 359,219k) have been assigned to the refinancing institutions in order to secure the liabilities stemming 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

On February 4, 2010, an ABS bond amounting to EUR 160,000k was placed via the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS 2009-1). The contracts with GOALS FINANCING 2009 LIMITED allow GRENKELEASING AG to sell further lease receivables on a revolving basis in the three years following the first sale 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 highest rated tranche is a reflection of the quality of the leasing portfolio and the 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 whollyowned 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 Consolidated Group. The carrying amount of the total liability was EUR 135,961k at the end of the reporting period (previous year: EUR 135,800k).

4.12.2 ABCP Programmes

The GRENKE Consolidated Group has several asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 400,000k as at the end of the reporting period (previous year: EUR 400,000k). An overview of the programmes as at the end of the reporting period is as follows:

	Initiating	Refinanceable lease	Programme volumes in EURk	Programme volumes in EURk
ABCP Programme / SPE	bank	receivables	as at Dec. 31, 2011	as at Dec. 31, 2010
		German and Austrian lease
Compass Variety Funding Limited	WestLB	receivables	40,000	40,000
		German and French lease
Kebnekaise Funding Limited	SEB AB	receivables	110,000	110,000
CORAL PURCHASING Limited	DZ-Bank	German lease receivables	150,000	150,000
Elektra Purchase No. 25 Limited	UniCredit	French lease receivables	100,000	100,000
Total			400,000	400,000

The ABCP programmes grant the GRENKE FINANCE Plc. and Grenke Investitionen Verwaltungs KGaA the right to refinance or to sell receivables to the respective programmes for a certain period of time. The cap on the purchase volume is determined by the volume of the programme, which is normally backed by the organising bank in the form of a liquidity commitment in the corresponding amount.

The ABCP programme Compass Variety Funding Limited with WestLB was fixed at EUR 40,000k and extended on January 19, 2012 by an additional two years until January 19, 2014. The programme commitment for the Kebnekaise Funding Limited ABCP programme was extended and will run until November 30, 2012. The programme commitment for the CORAL Purchasing Limited ABCP programme will run until September 5, 2012, while the programme commitment for the Elektra Purchase No. 25 ABCP programme will run until July 30, 2012.

To reflect the current legal conditions in France in the securitisation of French lease receivables (separate French securitisation act), a French securitisation vehicle (FCT = fonds commun de titrisation à compartiments / French issuer) was founded in 2009. The FCT initially consisted of just one so-called compartment ("FCT GK 1"). A second compartment was founded on January 18, 2011 ("FCT GK 2"). Within the FCT, the individual compartments are kept strictly separate from each other ("ring-fenced"). At a later date, it is possible that the GRENKE Consolidated Group will form further compartments within the FCT to finance further or other ABCP transactions.

"FCT GK 2" is refinanced through the issue of FCT notes which are exclusively subscribed to by SPE Elektra Purchase No. 25 Limited. Therefore, the "FCT GK 2" compartment serves the sole purpose of the securitisation of French lease receivables within the ABCP programme through Elektra Purchase No. 25 Limited.

At the end of the 2011 fiscal year, 53.52 percent of the refinancing framework of the ABCP programmes was utilised (previous year: 37.29 percent).

The special-purpose entities (SPEs) are refinanced by issuing commercial papers, usually with a term of one month, on a revolving basis. The interest on the commercial papers is based on one-month Euribor. This is a floating interest rate. The SPEs manage the interest rate risk (fixed-rate lease receivables versus floating-rate refinancing) with interest rate hedges (caps and swaps). Any costs incurred in this context are recharged to the corresponding companies of the GRENKE Consolidated Group.

In return, these companies participate in the interest rate hedge as the benefit paid to the ABCP programme resulting from the related hedge is passed on to the companies of the GRENKE Consolidated Group via the excess spread. The costs incurred by the GRENKE Consolidated Group are classified as transaction costs under IAS 39 and amortised over the term of the underlying refinancing packages.

In contrast to the sales of receivables shown under note 4.12.3, the interest rates on the assets and liabilities side do not match.

There are no currency risks in ABCP refinancing since only euro transactions and euro-based leases are involved. The present value of the programmes was EUR 214,976k as at the end of the reporting period (previous year: EUR 149,164k). Since 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.

The GRENKE Consolidated Group 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, all economic risks and rewards are retained by the selling company or the Consolidated Group. This ensures that the rating and thus the interest on the refinancing liability remain constant.

In all cases, the sales of future lease receivables are treated as a loan and are shown as such in the statement of financial position. Except for the FCT, the GRENKE Consolidated Group does not include any of the SPEs used in the ABCP programmes in its consolidation. There is no off-balance sheet recognition (see note 2.4.17).

4.12.3 Sales of Receivables Agreements

Such agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, Commerzbank AG, UBS AG in Switzerland, the Commerzbank subsidiary BRE-Bank SA in Poland and Norddeutsche Landesbank for receivables in the UK. The agreements with Commerzbank AG and BRE-Bank SA in Poland were terminated in 2009, and since this time no new refinancing has been performed. Nevertheless, the portfolios contracted until that time, were repaid as scheduled.

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

This ensures that at any time in the future the interest charge for the GRENKE Consolidated Group is fixed and known for the entire term of the contract. Therefore, there is no interest risk. For this reason, derivatives are not used for this type of financing. It was not necessary to derecognise any items. The present value of the obligations as at the end of the reporting period is EUR 85,699k (previous year: EUR 59,068k) and coincides with the value of the receivables sold (less reductions et cetera).

4.12.4 Bonds, Debentures and Private Placements

Unless stated otherwise, three-month EURIBOR is the reference interest rate for floating-rate bonds, promissory notes, and private placements. 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. Two debentures (starting dates July 4, 2011 and October 24, 2011) feature a termination option on the part of the investor regardless of the rating.

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, 2011	Dec. 31, 2010
Description	from	to	Percent p.a.	EURk	EURk	EURk
Euro bond	20/04/2009	20/04/2011	Euribor + 2.80	25	0	10,000
			Euribor + 0.75
Euro bond	18/05/2009	04/07/2011	(gradually + 0.50)	252	0	11,750
Euro bond	13/08/2009	13/08/2012	6.125	757	100,000	100,000
Euro bond	04/03/2010	04/03/2013	4.25	389	75,000	75,000
Euro bond	21/06/2010	21/01/2014	4.50	797	100,000	100,000
Euro bond	18/10/2010	22/04/2014	4.00	779	100,000	100,000
Euro bond	09/03/2011	09/03/2015	4.00	440	75,000	--
Euro bond	20/04/2011	21/07/2014	Euribor + 1.15	135	10,000	--
			Euribor + 0.50
Euro bond	04/07/2011	04/07/2013	(gradually + 0.10)	82	6,800	--
			Euribor + 0.75
Euro bond	24/10/2011	04/10/2014	(gradually + 0.20)	452	15,650	--

In 2011, four new bonds with a total nominal volume of EUR 107,450k were issued. The conditions can be seen in the table above. The bonds issued on July 4, 2011, and October 24, 2011, feature a quarterly termination option on the part of the investor. For this reason, on October 4, 2011, a repayment of EUR 100k was made on the July 4, 2011 bond, which was originally EUR 6,900k. A further repayment on the same bond of EUR 1,000k was made on January 4, 2012.

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. Additionally, all of the rights of the bond creditors in connection with the bond remained unaffected in terms of their content. GRENKELEASING AG has assumed a guarantee for all obligations of GRENKE FINANCE Plc. with regard to the bond. On January 24, 2012, following the close of the financial year, GRENKE FINANCE Plc., Dublin/Ireland, purchased parts of the bond in the amount of EUR 8,000k.

The floating-rate debenture of EUR 10,000k was repaid as scheduled on April 20, 2011. Furthermore, the cancellable debenture of EUR 11,750k running from May 18, 2009 to July 4, 2011 was repaid on July 4, 2011.

The cancellable, floating-rate debenture issued on October 24, 2011 with a nominal amount of EUR 7,000k was increased by EUR 8,650k on December 7, 2011. Therefore, as at the end of the reporting period, the debenture had a nominal volume of EUR 15,650k. The debenture will be repaid upon maturity on October 4, 2014. Early repayments may also occur if individual creditors exercise their put option.

Promissory Note Loans (PNL)

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

					Nominal amount	Nominal amount
		Term	Coupon	Discount	Dec. 31, 2011	Dec. 31, 2010
Description	from	to	Percent p.a.	EURk	EURk	EURk
EUR-PNL	10/03/2008	10/03/2011	4.7190	57	0	2,500
EUR-PNL	10/03/2008	10/03/2011	Euribor + 0.85	86	0	35,500
EUR-PNL	30/04/2008	30/04/2011	4.6905	--	0	40,000
EUR-PNL	30/07/2008	30/07/2011	6.0500	--	0	7,000
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	--	0	10,000
EUR-PNL*	24/03/2010	15/06/2012	Euribor + 3.75	--	0	10,000
EUR-PNL	29/10/2010	29/10/2013	4.1620	50	10,000	10,000
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	6,750	7,500
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	6,750	7,500
EUR-PNL	16/12/2010	16/12/2013	Euribor + 2.10	--	15,000	15,000
EUR-PNL	16/12/2010	16/12/2013	4.0800	145	10,500	10,500
EUR-PNL	11/02/2011	13/08/2012	3.7170	--	10,000	--
EUR-PNL	30/04/2011	30/04/2014	Euribor + 1.70	--	33,333	--
EUR-PNL	08/06/2011	06/06/2014	4.0000	--	25,000	--
EUR-PNL	08/06/2011	08/06/2014	3.8000	--	8,333	--
EUR-PNL	04/07/2011	04/07/2014	3.6900	62.5	12,500	--
EUR-PNL	28/07/2011	28/01/2015	3.8900	20	5,000	--
EUR-PNL	28/07/2011	28/01/2015	3.9400	20	5,000	--
EUR-PNL	26/08/2011	26/08/2014	3.8500	22.5	15,000	--
EUR-PNL	24/10/2011	15/12/2016	Euribor +3.00	185	30,000	--
EUR-PNL	16/11/2011	16/11/2016	5.0000	60	15,000	--
EUR-PNL	09/12/2011	09/12/2014	3.7300	--	10,000	--

*These promissory note loans were terminated early on October 24, 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 were made over the three-year term. The last repayment was made as scheduled in the third quarter of 2011.

The first repayments of EUR 750k were made in the second quarter of 2011 on each of the two fixed-interest promissory note loans concluded in the amount of EUR 7,500k each on December 6, 2010 with a term of ten years.

Two promissory note loans with a total nominal volume of EUR 38,000k were repaid on maturity on March 10, 2011.

On April 15, 2010, the three promissory note loans that GRENKELEASING AG had concluded on June 15, 2009 and March 24, 2010 with a total amount of EUR 35,000k were transferred to GRENKE FINANCE Plc. by means of a borrower change. While the promissory note loan's new obligor GRENKE FINANCE Plc. repaid EUR 15,000k on July 15, 2010, the two other promissory note loans of EUR 10,000k each were terminated on October 24, 2011.

In this context, a new promissory note loan of EUR 30,000k running from October 24, 2011 to December 15, 2016 was concluded. The interest on the promissory note loan is floating-rate and based on six-month Euribor. As a result, the net cash inflow (not including costs) at GRENKE FINANCE Plc. on October 24, 2011 amounted to EUR 10,000k.

A fixed-interest promissory note loan of EUR 40,000k maturing on April 30, 2011 was replaced by a new floating-rate promissory note loan of the same amount on April 30, 2014. The repayments are due in equal instalments of EUR 6,667k on October 30 and April 30 of each year.

A fixed-interest bullet promissory note loan with a volume of EUR 25,000k maturing on June 6, 2014 and a further fixed-interest promissory note loan with a volume of EUR 10,000k maturing on June 6, 2014 were issued on June 8. The repayments for the promissory note loan with a volume of EUR 10,000k are due in equal instalments of EUR 1,667k on June 8 and December 8 of each year. The fixed-interest promissory note loan with a volume of EUR 10,000k concluded on December 9 will also be repaid in six-month instalments of EUR 1,667k over a period of three years.

Overall, eleven new promissory note loans with a total nominal volume of EUR 177,500k were concluded in the 2011 fiscal year. The details can be found in the table above.

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 was July 1, 2009 to July 1, 2011, over which period it was possible to structure utilisation of the loan volume variably. The loan was not utilised in the 2010 or 2011 fiscal years.

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

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 of a further EUR 7,500k on November 25, 2010 also had a reference interest rate of 6-month Euribor and a bullet maturity of three years. Its margin is 0.19 percent. Hence, the volume of EUR 15,000k of the first global loan is fully utilized.

On July 28, 2011, GRENKELEASING AG and GRENKE BANK AG together with NRW.Bank, the development bank of the state of North Rhine-Westphalia, continued and expanded the cooperation, which concluded on February 18, 2010, by issuing another global loan totalling EUR 15,000k. This second loan was first drawn in the amount of EUR 7,500k with a bullet maturity of three years on August 29, 2011. The interest rate relates to the 6-month Euribor plus a margin of 0.07 percent.

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 GRENKE Consolidated Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k and a term of usually 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 March 2012, while the facility with WestLB was extended until April 2012. The facility with Deutsche Bank was prolonged until September 2012 and the facility with DZ-Bank was extended to October 2012. As at December 31, 2011, this revolving credit facility had been utilised in the amount of EUR 55,000k.

4.12.8 Money Market Trading

GRENKE FINANCE Plc., Dublin/Ireland has a non-committed money market facility of EUR 20,000k from Bayerische Landesbank until April 4, 2012. In April 2011, this non-committed money market facility was increased by EUR 5,000k to a total of EUR 25,000k. As at December 31, 2011, this credit line had been utilised in the amount of EUR 25,000k (previous year: EUR 10,000k).

A further money market facility of EUR 15,000k was agreed with Norddeutsche Landesbank on August 25, 2011. This line had also been fully utilised as at December 31, 2011.

On November 17, 2011 GRENKE FINANCE Plc., GRENKELEASING AG agreed on a further money market line of EUR 10,000k with Commerzbank AG. As at December 31, 2011, EUR 5,000k of this line had been utilised.

Utilisation is reported under current liabilities from the refinancing of leasing business.

4.12.9 Commercial Papers

On October 27, 2011, a general agreement was signed for a commercial paper programme. This gives the GRENKE Consolidated Group the opportunity to issue commercial paper of up to a total volume of EUR 250,000k with a term of between 1 and 364 days. On December 20, 2011, the first commercial paper with a volume of EUR 5,000k was issued under the commercial paper programme. The commercial paper was repaid on January 13, 2012. Therefore, at December 31, 2011, utilisation of the commercial paper programme had amounted to EUR 5,000k. The commercial paper was repaid on January 13, 2012.

4.13 Liability Financial Instruments

EURk	Dec. 31, 2011	Dec. 31, 2010
Hedging derivatives as defined by IAS 39	265	1,172
Non-hedging derivatives as defined by IAS 39	6,763	5,860
Total	7,028	7,032

The GRENKE Consolidated Group 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 at December 31, 2011, forward exchange contracts on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Turkish lira, Swedish krona, Norwegian krone and Danish krone had a negative fair value of EUR 3,200k (previous year: negative fair value of EUR 3,100k on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Swedish krona, Norwegian krone and Danish krone). These forward exchange contracts have a total volume of EUR 130,367k (previous year: EUR 76,953k) and residual maturities of between one and 77months (see note 5.2.2).

In addition to the forward exchange contracts in the amount of EUR 3,200k (previous year: EUR 3,100k), non-hedge derivatives, as defined under IAS 39, include interest rate swaps of EUR 3,563k (previous year: EUR 2,760k). 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 265k (previous year: EUR 1,172k) as at the end of the reporting period and were in highly effective hedges in line with IAS 39.

4.14 Tax Liabilities

EURk	Dec. 31, 2011	Dec. 31, 2010
Corporate income tax	1,147	7,832
Trade tax	700	6,963
Total	1,847	14,795

4.15 Provisions

The liability risks of GRENKE BANK AG are shown under this item. In addition, liabilities from onerous contracts due to the relocation of GRENKE BANK AG from Hamburg to Baden-Baden are shown. The split is as follows:

EURk	Jan. 1	Addition	Utilisation	Reversals	Dec. 31
2011
Liability risks	3,029	0	199	214	2,616
Onerous contracts	423	319	149	74	519
Total	3,452	319	348	288	3,135

Within the liability risks, an amount of EUR 1,215k relates to contingent liabilities recognised as part of the purchase price allocation for the acquisition of GRENKE BANK AG. Initially, this amount was EUR 1,429k. The difference of EUR 214k was released in the reporting period as the contingent liability was assumed lower. As an outflow of funds can occur at any time, this contingent liability was classified as current. However, full utilisation is not anticipated in the coming fiscal year. Reimbursement options from third parties do not exist.

Of the total provisions, an amount of EUR 328k is non-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
2011
Consulting services	1,017	3	1,159	958	21	1,200
Personnel services	1,818	0	1,662	1,630	21	1,829
Other costs	1,878	2	632	1,168	64	1,280
Total	4,713	5	3,453	3,756	106	4,309
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

All deferred liabilities are current.

4.17 Pensions

The provision for pensions relates to the compulsory funded retirement benefit plans (endowment insurance) in Switzerland for GRENKELEASING AG, Zurich, and the pension obligations from final salary and flat salary pension plans in Germany for GRENKE BANK AG, Baden-Baden. A total net pension expense of EUR 142k (previous year: EUR 70k) was recognised in staff costs for existing pension plans in the fiscal year 2011.

4.17.1 Pensions in Germany

The pension obligations of GRENKE BANK AG relate to direct and vesting pension commitments which were 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, 2011	Dec. 31, 2010
Discount rate	4.50%	4.66%
Estimated future pension increases	1.70%	1.70%

The Heubeck 2005 G mortality tables were used as the basis of calculations.

The defined benefit obligations developed as follows:

EURk	2011	2010
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,333	1,173
Interest expense	61	66
Current service cost	0	0
Benefits paid	−61	55
Actuarial gains and losses recognised in equity	0	−109
Increase due to plan change in fiscal year	0	258
Defined benefit obligations at end of period	1,333	1,333

The amounts recognised in the statement of financial position are calculated as follows:

EURk	2011	2010	2009
Present value of defined benefit obligations	1,333	1,442	1,205
Unrecognised actuarial gains and losses	0	−109	−32
Present value of defined benefit obligations	1,333	1,333	1,173

4.17.2 Pensions in Switzerland

As at January 1, 2011, the present value of the obligations (DBO) under the defined benefit pension plans for Switzerland amounted to EUR 600. After the deduction of the fair value of EUR 366K of the plan assets, the net obligations were EUR 234k. The external expert opinion is based on the following actuarial assumptions:

	Dec. 31, 2011	Dec. 31, 2010
Discount rate	2.25%	2.75%
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, 2011	Dec. 31, 2010
Mortality	BVG 2010	BVG 2005
Probability of invalidity	BVG 2010	BVG 2005
Probability of departure	BVG 2010	BVG 2005

On the basis of the actuarial report, the following income and expenses were recognised in fiscal year 2011:

Service cost	EUR 142k
Interest expense	EUR 15k
Income from interest on plan assets	EUR 7k

Theservicecostisrecognisedasstaffcosts,whileinterestexpensesandincomefrominterestonplanassetsareshownunderotherinterest income or expenses. The expected return on plan assets is based on past experience. The assets are invested in a collective insurance agreementwithalifeinsurancecompanybywayofafollow-upagreementwiththeBVGpensionfund(ProfessionalPensionAct).

As at December 31, 2011, the provision for pensions disclosed under non-current liabilities amounted to EUR 258k. This amount comprises the present value of the obligations (DBO) of EUR 590k, the fair value of the plan assets of EUR 332k and an actuarial gain of EUR 94k. The actuarial gain was recognised in a separate line under other comprehensive income in accordance with IAS 19.

EURk	2011	2010	2009	2008	2007
Present value of obligations (DBO)	590	600	636	532	373
Present value of plan assets	332	366	452	442	285
Net obligation	258	234	184	90	88

Experience adjustments totalled EUR –71k to the obligations, and EUR 3k to assets. Employer contributions in the next period are estimated at EUR 39k.

EURk	2011	2010
Change in defined benefit obligations
Defined benefit obligations at beginning of period	600	636
Interest expense	15	20
Current service cost	142	70
Employer contributions	26	35
Benefits paid	–119	−228
Actuarial gains and losses recognised in equity	–92	−55
Currency translation differences from foreign plans	18	123
Defined benefit obligations at end of period	590	600
EURk	2011	2010
Change in plan assets
Fair value of plan assets at beginning of period	366	452
Expected return	7	9
Employer contributions	65	87
Benefits paid	–119	−228
Actuarial losses / gains recognised in equity	2	−35
Currency translation differences from foreign plans	11	81
Fair value of plan assets at end of period	332	366

4.18 Other Non-current Liabilities

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

EURk	Total	1 to 5 years	More than 5 years	Secured amount
Other non-current liabilities	128	128	0	0
(Previous year)	836	835	1	0

4.19 Equity

For the 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 11, 2010, the Annual General Meeting adopted a resolution authorising the Board of Directors, with the approval of the Supervisory Board, to increase the company's share capital by up to a nominal amount of EUR 8,500k. This can be undertaken by issuing new no-par bearer shares in return for cash and / or non-cash contributions until May 11, 2014 (Authorised Capital).

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 refrain from applying the right of shareholders to subscribe to capital increases in return for cash contributions.

The option to increase share capital by issuing new shares was not utilised as at December 31, 2011.

4.19.1 Contingent Capital

At the Annual General Meeting of GRENKELEASING AG on May 9, 2006, a decision was made to increase capital contingently by a nominal amount of up to EUR 3,834,690 by issuing up to 3,000,000 new no-par value bearer shares (Contingent Capital III). As this authorisation was limited to May 8, 2011, the Annual General Meeting on May 10, 2011 resolved to revoke Contingent Capital III and to create new contingent capital ("Contingent Capital 2011").

The creation of Contingent Capital 2011 of up to EUR 3,834,690 also entitles the Board of Directors, with the consent of the Supervisory Board, to issue up to 3,000,000 bearer or registered options or convertible bonds with a total nominal value of up to EUR 150,000,000 and a maximum term of ten years on one ormore occasions until May 9, 2016.

Shareholders will be granted statutory pre-emption rights when these bonds are issued. Nonetheless, the Board of Directors is authorised, with the approval of the Supervisory Board, to suspend pre-emption rights if certain conditions are met. This includes the suspension of pre-emption rights for fractional amounts that can arise from the amount of the respective issue volume and the determination of a practical subscription ratio or the suspension of pre-emption rights for the benefit of bearers of options or convertible bonds already issued. In the latter case, pre-emption rights can instead be granted as dilution protection. Furthermore, the Board of Directors is authorised to suspend shareholders' pre-emption rights if the respective options or convertible bonds are issued against cash at a price not significantly less than the hypothetic market value of these bonds. To date, no options or convertible bonds have been issued under Contingent Capital 2011.

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 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 share capital 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 by 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 by 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 this event, 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 in cases of offering them to third parties in the context of business combinations, company acquisitions, as well as investments in companies, or in parts of companies.

(2)The shares can be sold against cash to third parties in a way other than on the stock exchange or can be offered to all shareholders if the treasury shares acquired for cash are sold at a price not significantly less than the market price of the shares of the company at the time of disposal. This authorisation is limited to a maximum of ten percent of the share capital of the company at the time of the resolution by the Annual General Meeting. It includes other authorisations to issue new shares with subscription rights suspended in accordance with Section 186(3) sentence 4 AktG and taking into account such shares issued on the exercise of options or the conversion of options or convertible bonds with shareholder subscription rights disapplied in accordance with Section 221(4) sentence 2 in conjunction with Section 186(3) sentence 4 AktG.

(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).

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 expired on May 8, 2011. The Annual General Meeting of May 10, 2011 replaced the existing authorisation with a new one that allows the Board of Directors, with the approval of the Supervisory Board, to issue participation certificates on one or several occasions up to a total nominal amount of EUR 150,000k until May 9, 2016.

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 Unappropriated Surplus

The Annual General Meeting on May 10, 2011 adopted the resolution on the appropriation of GRENKELEASING AG's unappropriated surplus for fiscal year 2010 of EUR 41,832,253.42. The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the unappropriated surplus for 2010 as follows:

Unappropriated surplus for 2010	EUR 41,832,253.42
Distribution of a dividend of EUR 0.70 per share for a total of 13,684,099 shares	EUR 9,578,869.30
Appropriation to retained earnings	EUR 29,000,000.00
Profit carryforward (to new account)	EUR 3,253,384.12

The dividend was paid to the shareholders of GRENKELEASING AG on May 11, 2011.

In the previous year, the Annual General Meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving and performing the appropriation of the unappropriated profit for 2009 as follows:

Unappropriated surplus 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 retained earnings	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.

The management will propose the distribution of a dividend of EUR 0.75 per share for the fiscal year 2011 to the Annual General Meeting. This distribution has not been recognised as a liability as at December 31, 2011.

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.

In addition to GRENKELEASING AG's retained earnings, retained earnings also comprise the retained earnings and profits of the consolidated subsidiaries. By way of resolution of the Annual General Meeting on May 10, 2011, EUR 29,000k was appropriated to the retained earnings of GRENKELEASING AG.

Additions to retained earnings were made by the following subsidiaries in 2011:

Name	Registered office	Dec. 31, 2011	Dec. 31, 2010
GRENKE LOCATION SAS	Schiltigheim/France	4,037	2,967
GRENKELEASING AG	Zurich/Switzerland	2,084	965
GRENKELEASING Sp.z o.o	Poznan/Poland	409	397
GRENKE Locazione S.r.l.	Milan/Italy	565	593
GRENKE ALQUILER S.A.	Barcelona/Spain	0	229
GRENKELEASING AG	Vienna/Austria	7	2
GRENKE FINANCE Plc.	Dublin/Ireland	23,760	--
GRENKE BANK AG	Baden-Baden/Germany	--	247
GRENKELEASING AG	Baden-Baden/Germany	29,000	--
Total		59,862	5,400

4.19.6 Other Components of Equity

Changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in equity as long as an appropriate effectiveness in terms of IAS 39 can be demonstrated.

The change in fair value during the fiscal year was EUR 856k (previous year: EUR 2,087k) plus deferred taxes of EUR −99k (previous year: EUR –151k).

As a result of the recognition of pension provisions in accordance with IAS 19, an amount of EUR 91k (previous year: EUR –88k) for actuarial gains and losses and deferred taxes totalling EUR −24k (previous year: EUR 28k) were recognised in equity.

5 Disclosures on Financial Instruments

5.1 Additional Information on Financial Instruments

						Carrying amount in
						accordance
				Carrying amount in accordance with IAS 39		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 assets
Cash and cash equivalents	L&R	78,297			78,297
Financial instruments that are assets	AtFVtPL / 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
	AtFVtPL / 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
Liability financial instruments	AtFVtPL / n.a.	7,032	1,172	5,860
Aggregated categories
	OL				1,239,754
	AtFVtPL / n.a.		1,172	5,860

Abbreviations:

AtFVtPL: 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 disposals	Net profit
Loans and receivables	414	2,855	5,467	–24,915	−27,113
At fair value through profit and loss		−3,875			−3,875
Other liabilities	−1,187	−292			−1,479

						Carrying amount in
						accordance
				Carrying amount in accordance with IAS 39		with IAS 17
		Carrying		Fair value
Dec. 31, 2011	Measurement	amount	Fair value in	through profit
EURk	category	Dec. 31, 2011	equity		or loss Amortised cost
Financial assets
Cash and cash equivalents	L&R	104,234			104,234
Financial instruments that are assets	AtFVtPL / n.a.	4,399		4,399
Lease receivables	L&R / n.a.	1,568,754			83,820	1,484,934
Trade receivables	L&R	4,560			4,560
Other financial assets	L&R	124,552			124,552
Aggregated categories
	L&R				317,166
	AtFVtPL / n.a.			4,399		1,484,934
Financial liabilities
Liabilities from the refinancing of lease
receivables	OL	1,367,632			1,367,632
Liabilities from deposit business	OL	155,127			155,127
Trade payables	OL	7,031			7,031
Bank liabilities	OL	3,479			3,479
Liability financial instruments	AtFVtPL / n.a.	7,028	265	6,763
Aggregated categories
	OL				1,533,269
	AtFVtPL / n.a.		265	6,763

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, 2011 (EURk)	From interest	translation	allowance	From disposals	Net profit
Loans and receivables	489	–2,358	–1,336	–32,527	–35,732
At fair value through profit and loss	0	1,048	0	0	1,048
Other liabilities	–878	0	0	0	–878

Interest rates are calculated according to the effective interest method.

Net gains from lease receivables are comprised of interest income, profit from new business, and profit from disposals. This amounted to EUR 177,221k (previous year: EUR 152,838k). 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 interest hedges as interest effect), but also the results fromaccrued interest and fromthe early disposal resulting froman early sale.

5.2 Derivative Financial Instruments

5.2.1 Financial Risk Strategy

Business Model

As a small-ticket IT leasing company, GRENKE Consolidated Group 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 defined for the duration of each individual contract, setting out both the periodical payments and the interest rate used to calculate the payments when the contract is agreed. Neither of the parties can subsequently amend these terms.

GRENKE Consolidated Group 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 qualitative and quantitative disclosures regarding default risk, liquidity risk, and market risks. In addition, we refer to the notes to the Consolidated Statement of Financial Position.

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 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, in addition to 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 at the end of each reporting period, GRENKE Consolidated Group receives a valuation overview or a measurement of the current fair value from the perspective of the bank counterparty. In cases of interest rate swaps, GRENKE Consolidated Group calculates the corresponding fair values on a parallel basis through Bloomberg.

5.2.2 Currency Risk Management

GRENKE Consolidated Group 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, Switzerland (factoring), and Turkey, and of the British, Polish, Czech, Swedish, and Danish subsidiaries. The GRENKE Consolidated Group finances the lease receivables generated by the franchisees and the subsidiaries in the corresponding foreign currencies and receives payments in those currencies over the term of the underlying lease contracts.

Hedgeaccountingwasnotapplied.Thefairvaluesoftheforwardexchangecontractsarepostedinthestatementoffinancialpositionunder asset/liabilityfinancial instrumentsandareallocatedatfairvaluethroughprofitorlossaccordingtotheircategoryinIAS39(seenote5.1).

As at the end of the reporting period, there were asset and liability forward exchange contracts, leading to their disclosure as assets (see note 4.2) as well as liabilities (see note 4.13). As at the end of the reporting period, there were forward exchange contracts with a nominal volume of EUR 130,368k (previous year: EUR 102,334k) on the basis of the euro.

EURk	Nominal volume				Maturity of the nominal volume as at Dec. 31, 2011
	Dec. 31, 2010	Dec. 31, 2011	2012	2013	2014	later	Hedged average rate
EUR buying
TRY	0	1,235	1,235				2.50
CZK	7,253	11,189	4,421	3,436,	2,055	1,277	25.51
GBP	46,031	50,544	23,777	9,698	8,063	9,006	0.87
CHF 1)	1,304	2,562	2,526	36			1.44
HUF	3,712	3,921	2,014	1,331	546	30	317.37
NOK	4,229	5,475	5,475				8.20
SEK	12,828	12,301	6,687	5,325	289	0	10.05
DKK	14,659	21,806	5,353	9,328	4,057	3,068	7.50
PLN	11,952	15,234	8,700	4,502	1,772	260	4.41
EUR selling
GBP	0	6,101	6,101				0.83
PLN	366	0					0

They break down by currency as follows:

1) The outstanding forward exchange contracts in Swiss francs result from the refinancing of the subsidiary 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 franchisee based in Switzerland.

5.2.3 Interest Rate Risk Management

The interest rate risk for GRENKE Consolidated Group's operations stems mainly from the sensitivity of its financial liabilities to changes in market interest rates. GRENKE Consolidated Group 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 GRENKE Consolidated Group 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 210k (previous year: EUR 1k) for hedge derivatives in line with IAS 39.

Under the ABCP programme with DZ-Bank (CORAL), and the refinancing through FCT "GK"-COMPARTMENT "G2", the respective special purpose entity is responsible for interest rate hedging and thus interest rate risk management. Here, the ABCP transaction serves as an underlying transaction with a floating rate and cash flows are being hedged by deploying interest rate swaps. The same applies to the refinancing through GOALS Financing 2009 Ltd. However, here the GRENKE Consolidated Group is responsible for interest rate hedging. All three cases are receiver swaps. In return, a floating-rate interest is exchanged for a fixed interest.

Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes. However, the contracting partner to the receivables buyer (SPEs of the individual programmes) is the respective initiating bank. Therefore GRENKE Consolidated Group does not account for the derivatives and does not apply hedge accounting.

Notes on Comparative Prior-year Figures

In the 2010 fiscal year, both payer swaps and a receiver swap were contracted by the GRENKE Consolidated Group. 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.

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 end of the reporting period have a nominal volume of EUR 97 million as at December 31, 2010 and contracted fixed interest rates over the relevant maturities of between 1.87 percent and 3.78 percent. The longest contracted interest rate swap matures in April 2012.

Fiscal Year 2011

In the 2011 fiscal year, apart from the ABCP programmes, only payer swaps were contracted. The payer swaps bear the agreed fixed interest rate from interest rate swaps. The swaps in place as at the end of the reporting period had a nominal volume as at December 31, 2011 of EUR 212 million and contracted fixed interest rates in the range of 0.932 percent to 3.78 percent over the respective duration. The duration of the longest contracted interest rate swap is until June 2013.

The table below shows the development of the nominal volumes of the payer swaps as at the end of the reporting period for the coming years. The average interest rate is defined as the arithmetic mean of the existing swaps.

			Nominal volume as at Dec. 31			Average interest rate
EURk	2010	2011	2012	2013	2014	2011
Contracted prior to 2011	97,000	18,500	0	0	0	2.65%
Contracted in 2011	0	193,333	50,000	0	0	1.38%
Total	97,000	211,833	50,000	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. Since the GRENKE Consolidated Group uses derivatives for interest rate hedging, it also applies hedge accounting in accordance with IAS 39. Hedge effectiveness, as required by IFRSs, is in line with GRENKE Consolidated Group'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 at 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 swap volume contracted is never greater than the volume of the hedged financing.

The active integration of existing and future planned refinancing transactions allows for anticipatory risk management. Going forward, quarterly tests of effectiveness will be conducted as part of this on-going 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 at the end of the reporting period.

In the opinion of the GRENKE Consolidated Group, and of the risk management in the Consolidated Group, interest rate derivatives outside of hedge accounting according to of IAS 39, are effective as hedges for interest rate risks.

5.3 Fair Value of Financial Instruments

5.3.1 Fair Value

At the end of the reporting period, all derivative financial instruments, which include interest rate swaps and caps and forward exchange contracts, are recognised at fair value in the GRENKE Consolidated Group.

All other items are not recognised at the fair value (see note 2.4.4). According to the valuation hierarchy for financial instruments at fair value of IAS 39, this 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 that 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 fair value are assigned to level 2 (see note 2.4.4). Exceptions 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 in an effective hedge relationship have a total negative fair value of EUR 265k as at the end of the reporting period (previous year: negative fair value of EUR 1,173k). The interest rate swaps without an effective hedge relationship have a total negative fair value of EUR 3,563k and / or a total positive fair value of EUR 3,183k at the end of the reporting period. The payment streams of these hedges are expected to impact the net profit in the next two years.

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

EURk	Fair value 2011	Fair value 2010
EUR buying
TRY	–23	0
CZK	134	−172
GBP	–1,577	13
CHF	–84	−182
HUF	275	−94
NOK	–44	−493
SEK	–1,188	−1,407
DKK	–234	−80
PLN	803	−549
EUR selling
GBP	–44	0
PLN	0	−46

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 at the end of the reporting period between knowledgeable, willing, contracting parties in an arm's length transaction.

The fair value of lease receivables is estimated by using an interest rate which would be charged if the full amount were refinanced, instead of the internal rate. A market rate of interest on December 31, 2011 was used for liabilities from the refinancing of lease receivables.

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

EURk		Fair value 2011 Carrying amount 2011		Fair value 2010 Carrying amount 2010
Lease receivables	1.713.194	1.568.815	1,436,841	1,328,224
Refinancing liabilities	1.370.284	1.367.632	1,109,139	1,107,543

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 at the end of the reporting period of the most recent and last fiscal years. Some amounts do not match the amounts shown in the statement of financial position as they generally relate to undiscounted cash flows.

As at Dec. 31, 2011
EURk		Due on demand Less than 3 months	3 to 12 months	1 to 5 years	More than 5 years
Type of liability
Refinancing liabilities	1	185,717	366,137	944,834	7,896
Liabilities from deposit business	13,874	33,787	46,236	61,230	0
Bank liabilities	483	368	405	2,537	0
Other liabilities	0	4,099	587	128	0
Trade payables 1)	0	7,031	0	0	0
Negative fair values from
derivative financial instruments 2)	0	984	3,259	2,881	35
Total	14,358	231,986	416,624	1,011,610	7,931

1) The carrying amounts are categorised according to their individual class of maturity if this is considered possible and appropriate.

As at 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
Refinancing liabilities	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 classes of maturity when it is considered possible and appropriate.

2) The present values of all future cash flows are shown here. The Consolidated Group considers this to be the appropriate representation of 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 for a much longer period.

Regarding the notes on the management of the liquidity risk, we refer to the explanations in the group management report.

6 Changes in Consolidation

6.1 Acquisitions in Fiscal Year 2011

By way of purchase agreement dated June 6, 2011, GRENKELEASING AG acquired 100 percent of the voting shares in GRENKELEASING Magyarország Kft., Budapest/Hungary. Control over the acquired company was assumed on June 21, 2011.

Prior to the acquisition, the acquired company was active within GRENKELEASING AG's franchise system, specialising in the sale of small-ticket leases with a strong focus on IT equipment. As the relevant information for final purchase price allocation was not yet available in full, the fair values of the assets and liabilities are preliminary and may need adjustment if additional information is obtained in the course of the acquisition process.

The following table shows the preliminary fair values of the identifiable assets and liabilities at the date of the company's acquisition:

EURk	Fair value
Intangible assets	362
Property, plant and equipment	214
Trade receivables	784
Lease receivables	2,398
Cash and cash equivalents	57
Deferred tax assets	67
Other assets	74
Total assets	3,956
EURk	Fair value
Liabilities from the refinancing of lease receivables	1,641
Trade payables	224

Trade payables	224
Deferred tax liabilities	200
Other liabilities	178
Provisions	402
Total liabilities	2,645
Total identified net assets	1,311
Goodwill from acquisition	1,089
Total consideration	2,400

The total consideration paid for the business combination with GRENKELEASING Magyarország Kft. amounted to EUR 2,400k and consisted solely of cash.

EURk
Consideration
Purchase price in cash	2,400
Total consideration	2,400
EURk
Cash outflow due to business combination
Net cash acquired with the subsidiary	57
Cash paid	2,400
Actual cash outflow	2,343

The intangible assets are completely omitted from the valuation of the relationships with resellers. This reseller base will be written down over a useful life of six years starting from the acquisition date.

TheprovisionalfairvalueoftradereceivableswasEUR784k;this figureisequaltothegrossamount.Thesereceivablesareexpectedtobe collectible in full. The provisional fair value of lease receivables was EUR 2,398k. The gross amount of these receivables is EUR 2,656k. Valuation allowances have been recognised for EUR 258k of these lease receivables, which are not expected to be collectible.

GRENKELEASING Magyarország Kft.'s liabilities for the refinancing of lease receivables relate entirely to loans from GRENKE FINANCE Plc., Dublin/Ireland. These loans were granted to the former franchise company for the purpose of refinancing its lease receivables.

The loans, some of which are denominated in foreign currency, are measured at the closing rate at both companies. Due to consolidation, these amounts will be eliminated which means they are not reported in the consolidated statement of financial position. Due to the short-term and negligible change in the interest rates of the liabilities, there was no significant deviation between the amount measured at the end of the reporting period and the fair value. The goodwill arising on acquisition was attributable to the forecasted business growth in Hungary and other benefits arising from the full integration of the assets and activities within the GRENKE Consolidated Group. The goodwill recognised is not tax-deductible.

Since the date of acquisition, goodwill has decreased by EUR 168k owing to currency translation. Since the date of its acquisition, the acquired company has contributed net interest income of EUR 68k and a negative result of EUR 181k to the consolidated net profit. Had GRENKELEASING Magyarország Kft. been consolidated as of January 31, 2011, the contribution to net interest income would have been EUR 195k and the contribution to the consolidated net profit would have been EUR 187k. The relatively lower level of interest income in the second half of the year as compared to the full year is due to the continuous reduction of the existing portfolio of lease receivables as new lease contracts are exclusively signed under a commission model with GRENKE FINANCE Plc. since 2010.

6.2 Additional Changes to the Scope of Consolidation in Fiscal Year 2011

On January 18, 2011, GRENKE Consolidated Group founded the FCT "GK"-COMPARTMENT "G2",for the securitisation of French lease receivables within the ABCP programme through Elektra Purchase No. 25 Limited. Since GRENKELEASING AG holds an indirect interest in this company through GRENKE FINANCE Plc. and GRENKE SERVICE AG of EUR 150 each, the FCT "GK"- COMPARTMENT "G2" was included in the consolidated financial statements for the first time.

The FCT "GK"-Compartment "G1", was founded in 2009, and as part of the ABCP programme Coral for French lease receivables was wound down on January 25, 2011. GRENKELEASING AG held an indirect interest in this company of EUR 150 each through its Irish subsidiary GRENKE FINANCE Plc. and its German subsidiary GRENKE SERVICE AG. Consequently, this subsidiary was no longer included in the consolidated financial statements. This had no impact on net profit.

6.3 Entities Included in Consolidation for the First Time in Fiscal Year 2011

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 in regards to the operating activities of the SPE cannot be changed. Also, on account of the chosen structure, the significant risks and rewards remain with the GRENKE Consolidated Group.

GOALSFINANCING2009 LIMITEDwas founded underIrish law on September 15, 2009 with equity of EUR 3. GRENKELEASING AG does not hold any of its shares. The consolidated financial statements were not significantly affected by the first-time consolidation of GOALS FINANCING 2009 LIMITED.

As at 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 and reported under assets, (please refer to the section on financial liabilities) that, unlike other ABCP refinancing, are not initially repaid.

6.4 Acquisitions in Fiscal Year 2009

As at the end of the reporting period, there was a contingent liability of EUR 1,215k resulting from the acquisition of GRENKE BANK AG in the 2009 fiscal year. Please see note 4.15 for further information.

7 Segment Reporting

Since the acquisition of the bank, the GRENKE Consolidated Group has managed 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 except for GRENKE BANK AG and GRENKEFACTORING GmbH, which form separate segments. In managing the Leasing Business, the GRENKE Consolidated 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. The bank's business is mainly focussed 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 2.4). Intragroup transactions are performed at standard market prices.

The Board of Directors of GRENKELEASING AG is responsible for assessing the performance of the GRENKE Consolidated 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 staff costs. The main components of the consolidated statement of comprehensive income are other net financial income, and tax expenses / income. These are 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 provision, 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			Consoli
							Business	Business	Total	Consoli	dated
			Leasing Business segment				segment	segment	segments	dation	Group
			Switzer
As at Dec. 31, 2010	Germany	France	land	Italy	Others
(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
Staff costs	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
consolidated financial
statements
Operating result											37,023
Net other financial income											−498
Taxes											8,689
Net profit											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
consolidated 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
consolidated financial
statements
Unallocated items											51,156
Total liabilities											1,383,220

							Banking	Factoring			Consoli
							Business	Business	Total	Consoli	dated
				Leasing Business segment			segment	segment	segments	dation	Group
			Switzer
As at Dec. 31, 2011	Germany	France	land	Italy	Others
(EURk)	region	region	region	region	region	Total
Operating segment
income	45,324	20,953	4,661	12,322	27,862	111,122	4,262	1,269	116,653	0	116,653
Staff costs	18,993	4,684	1,535	3,043	6,555	34,810	1,126	759	36,695	0	36,695
Segment result	10,773	13,071	1,790	7,063	14,559	47,256	3,314	153	50,723	0	50,723
Reconciliation to
consolidated financial
statements
Operating result											50,723
Net other financial income											–291
Taxes											11,181
Net profit											39,251
Segment assets	661,491	402,776	47,659	176,685	616,315	1,904,926	218,419	10,703	2,134,048	–183,658	1,950,390
Reconciliation to
consolidated financial
statements
Tax assets											18,578
Total assets
Segment liabilities	523,236	339,361	27,227	152,444	568,574	1,610,842	182,389	13,813	1,807,044	–183,658	1,623,386
Reconciliation to
consolidated financial
statements
Tax liabilities											27,925
Total liabilities											1,651,311

8 Other Notes

8.1 Capital Management

8.1.1 Economic Capital

The primary goal of the GRENKE Consolidated 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 Consolidated Group by the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)].

The GRENKE Consolidated Group monitors capital using the equity ratio: the ratio of equity to total assets. In accordance with Consolidated Group guidelines, we aimfor an equity ratio of 16 percent, as we did in the previous year.

In addition, the Consolidated Group's determination of risk-bearing capacity, and its risk-limiting system through the limiting of risk positions, the safeguarding and monitoring of economic capital is guaranteed.

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 GRENKE Consolidated Group must comply with the requirements of the German Solvency Regulation [Solvabilitätsverordnung (SolvV)] at the Consolidated Group level. As the parent company, GRENKELEASING AG also reports the Consolidated 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 Consolidated Group's equity consists of the Tier 1 capital components of share capital (EUR 17,491k; previous year: EUR 17,491k), the capital reserves (EUR 60,166k; previous year: EUR 60,166k) and retained earnings (EUR 148,917k; previous year: EUR 89,054k).

There are also other reserves of EUR 1,386k (previous year: EUR 1,175k) and deductions, characterised by intangible assets, of EUR 15,617k (EUR 14,644k). No other equity is included in the calculation of regulatory equity. The Group's total equity as at the end of the reporting period amounted to EUR 212,343k (previous year: EUR 153,242k).

8.2 Franchise System

GRENKELEASING AG 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, which totalled EUR 1,144k (previous year: EUR 805k), the Consolidated Group generated income from interest on loans of EUR 2,535k (previous year: EUR 3,324k) (see note 3.1). As at the end of the reporting period, there were further receivables from franchisees totalling EUR 2,627k (previous year: EUR 2,116k) (see notes 4.4 and 4.5) in addition to loans in an amount of EUR 39,463k (previous year: EUR 50,608k).

8.3 Contingent Liabilities and Other Financial Obligations

As at the end of the reporting period there were no contingent liabilities requiring comment in the statement of financial position 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, 2011	Dec. 31, 2010
Rent, maintenance and lease obligations
due in the subsequent year	6,022	5,346
due in 2 to 5 years	10,645	11,599
due in more than 5 years	3,156	1,212
Total	19,823	18,157

The rent payments are offset by forecast rental income from subleases of EUR 388k (previous year: EUR 358k). There are extension options of between one and five years on leases for rented premises.

As at December 31, 2011, there were obligations of EUR 5,538k for the extension of an office building.

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 2010 and 2011. With its above-mentioned income in Ireland, GRENKE FINANCE Plc. is subject to a nominal income tax charge of 12.5 percent in 2010 and 2011 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 theGerman Income TaxAct[Einkommensteuergesetz (EStG)]fortheissuanceofanexemptioncertificateand/orreimbursement 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 2010 and 2011. No contingent liabilities or other obligations therefore arise from this matter as at the end of the reporting period.

8.4 Tax Audit in Germany

A tax audit of GRENKELEASING AG, Grenke Investitionen Verwaltungs KGaA, GRENKE Service AG and GRENKEFACTORING GmbH for the fiscal years 2005 to 2009 began in November 2010. There were no conclusive audit findings as at the end of the reporting period.

8.5 International Tax Audits

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 at the end of the reporting period.

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 Consolidated Group companies also render services within the GRENKELEASING AG Consolidated 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 end of the reporting period, the bank had received deposits totalling EUR 6,049k (previous year: EUR 5,537k) from members of the GRENKE Consolidated Group's Board of Directors and their close family members.

The Bank received deposits totalling EUR 1,010k (previous year: EUR 0k) from members of the GRENKE Consolidated Group's Supervisory Board and their close relatives. 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 is comprised of six members. The members of the Supervisory Board in fiscal year 2011 were:

• Prof. 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, General Manager of Deltavista GmbH
• Mr. Erwin Staudt, Leonberg, economics graduate
• Prof. Thilo Wörn, Essen, professor at the Fachhochschule für öffentliche Verwaltung NRW

The shares held by the Supervisory Board members are listed below:

		Shares as at Dec. 31
No.	2011	2010
Dieter Münch	75	75
Prof. Ernst-Moritz Lipp	28,300	23,800
Erwin Staudt	1,000	1,000
Total	29,375	24,875

Prof. 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 OYSTAR Holding GmbH, Karlsruhe Stutensee, and Sodexo Beteiligungs B.V. & Co. KG, Heidelberg. Prof. Ernst-Moritz Lipp is also a member of the Advisory Board of Winter Holding Verwaltungs GmbH, Nußloch.

Mr. Gerhard E. Witt is at the same time a Supervisory Board member of Grenke Investitionen Verwaltungs KGaA, Baden-Baden, a subsidiary of the GRENKELEASING AG.

Mr. Dieter Münch is Deputy Chairman of the Supervisory Board member of Grenke Investitionen Verwaltungs KGaA, Baden-Baden. In addition, Mr. Dieter Münch is also the chairman 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 Software AG, Möglingen, and a member of the Administrative Board of Hahn Verwaltungs-GmbH, Fellbach.

Mr. Florian Schulte is not a member of any other supervisory boards or comparable oversight bodies of companies in Germany or abroad within the meaning of Section 125 (1) sentence 5 AktG.

Prof. Thilo Wörn is the chairman of the supervisory board of Tiemeyer Automobile AG, Bochum, and chairman of the advisory board of agathon GmbH& Co. KG, Bottrop.

The term of office of Prof. Ernst-Moritz Lipp and Mr. Gerhard E. Witt will continue 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 108k (previous year: EUR 83k). 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
	2011	Previous year	2011	Previous year	2011	Previous year	2011	Previous year
Total	117	92	108	79	9	9	0	4

The Board of Directors of GRENKELEASING AG is comprised as follows:

• Mr. Wolfgang Grenke, businessman, Baden-Baden (Chairman), CEO
• Dr. Uwe Hack, business administration graduate, Metzingen (Deputy Chairman), CFO
• Mr. Mark Kindermann, business graduate, Bühl, COO
• Mr. Gilles Christ, MBA, Souffelweyersheim/France, CSO

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 remuneration of the Board of Directors for 2011 is as follows:

EURk	Total remuneration	of which fixed	of which variable
Total	1,776	952	824
Total (previous year)	2,083	963	1,120

An annual pension premium of EUR 21k (previous year: EUR 21k) is included for a provident fund for Dr. Uwe Hack.

By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Dr. Uwe Hack and Mr. Gilles Christ.

Under these agreements, Dr. Uwe Hack and Mr. Gilles Christ receive entitlements for the fiscal years 2010, 2011 and 2012 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 basic share price for 2011 was EUR 37.72. 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 programme, Dr. Uwe Hack and Mr. Gilles 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 was applied to Mr. Gilles Christ's first year of membership on the Board of Directors.

The value of the phantom stocks agreement granted totalled EUR 0k (previous year: EUR 374k) as at December 31, 2011. This was recognised under staff costs accordingly in the statement of comprehensive income for the previous year.

In May 2011, Mr. Wolfgang Grenke acquired a total of 9,000 shares on the stock exchange (Frankfurt). Dr. Uwe Hack purchased a total of 2,500 shares on the stock exchange (XETRA) in May 2011 and Mr. Gilles Christ acquired a total of 1,600 shares in February 2011, also on the stock exchange (XETRA).

Shareholdings are shown by the table below:

	Shares as at Dec. 31
No.	2011	2010
Wolfgang Grenke	4,925,619	4,916,619
Dr. Uwe Hack	9,500	7,000
Mark Kindermann	52,053	52,053
Gilles Christ	1,600	0
Total	4,988,772	4,975,672

* excluding the voting rights of the Grenke family's pooling agreement – please refer to the CorporateGovernanceReport.

Mr. Wolfgang Grenke is also the Chairman of the Supervisory Board of GRENKELEASING AG, Vienna/Austria, and 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 Chairman of the Board of Directors of GRENKE BANK AG, Baden-Baden and a member of the Supervisory Board of GRENKE SERVICE AG, Baden-Baden.

Mr. Mark Kindermann is also the Director of GRENKE LIMITED, Dublin/Ireland and Chairman of the Board of Directors of 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.GillesChristisalsomemberof 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 GRENKELEASING ApS, Herlev, Denmark, and GRENKELEASING Sp.z.o.o., Poznan, Poland.

8.7 Releases pursuant to section 21, paragraph 1, and section 22 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG)

Releases prior to 2011

Convenience Translation

We received with letter of August 7, 2002 the notice in accordance with section 21 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) that the voting rights in GRENKELEASING AG have changed on July 31, 2002 due to resolution of the previously existing pooling agreement. We were informed about the number of voting rights from own shares held and the number of voting rights attributed to in accordance with section 22 paragraph 1 no. 6 WpHG as follows: Mr. Wolfgang Grenke (Germany), own shares: 44.20% – attributed to in accordance with section 22 paragraph 1 no. 6: 8.64%.

T. Rowe Price Associates, Inc. would like to make the following notifications in their own name and in the name and on behalf of the following of their group companies: T. Rowe Price International, Inc.; TRP Finance, Inc.; T. Rowe Price Group, Inc.

We hereby give notice, pursuant to section 21 paragraph 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price International, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price International, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 of the WpHG.

We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of TRP Finance, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to TRP Finance, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG.

We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price Associates, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price Associates, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG.

We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price Group, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price Group, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG.

By fax dated August 19, 2010, Threadneedle Asset Management Holding Limited, Swindon, UK, notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) that on August 12, 2010, Threadneedle Investment Funds ICVC, London, UK, exceeded the threshold of 5% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 5.01% (685,478 voting rights).

By fax dated August 19, 2010, Threadneedle Asset Management Holding Limited, Swindon, UK, notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) that on August 12, 2010, Threadneedle Investment Services Limited, London, UK, exceeded the threshold of 5% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 5.01% (685,478 voting rights).

These voting rights are in their entirety attributable to Threadneedle Investment Services Limited, London, UK, pursuant to § 22 paragraph 1 sentence 1 No. 6 WpHG. These voting rights are held by Threadneedle Investment Funds ICVC.

1. On September 23, 2010 Jupiter Asset Management Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Asset Management Limited according to article 22, paragraph 1, sentence 1, number 6 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Jupiter Asset Management Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG.

2. On September 23, 2010 Jupiter Investment Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Investment Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Jupiter Investment Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG.

3. On September 23, 2010 Comasman Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Comasman Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Comasman Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG.

4. On September 23, 2010 Jupiter Asset Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Asset Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Jupiter Asset Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG.

5. On September 23, 2010 Jupiter Fund Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Fund Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Jupiter Fund Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG.

6. On September 23, 2010 Jupiter Fund Management PLC (Formerly Jupiter Investment Management Holdings Limited), London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Fund Management PLC (Formerly Jupiter Investment Management Holdings Limited), according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG. 2.570% (351,942 voting rights) of these voting rights were attributable to Jupiter Fund Management PLC according to article 22, paragraph 1, sentence 1, number 1 WpHG.

Releases throughout Fiscal Year 2011

Convenience Translation

On November 10, 2011, PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, Germany sent us the following notifications in accordance with section 21 (1) WpHG:

"1. Ms. Anneliese Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Ms. Anneliese Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by M.s Anneliese Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on 6 November 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Ms. Anneliese Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Ms. Anneliese Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke.

1. Mr. Moritz Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Moritz Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Moritz Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on 6 November 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Moritz Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Moritz Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke.

2. Mr. Roland Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Roland Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Roland Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on 6 November 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Roland Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Roland Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke.

3. Mr. Oliver Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Oliver Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Oliver Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on 6 November 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Oliver Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Oliver Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke."

Convenience Translation

PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 on behalf of its client, Ms. Anneliese Grenke, (Germany): "The share of the voting rights in GRENKELEASING AG, Baden-Baden, held by Ms. Anneliese Grenke fell below the threshold of 5% on August 23, 2006 and now amounts to 4.55% (622,664 voting rights). 2.28% (311,332 voting rights) of this is assigned to Ms. Anneliese Grenke in accordance with section 22 (1) sentence 1 no. 6 WpHG."

Convenience Translation

PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 on behalf of its client, Ms. Anneliese Grenke, (Germany): "The share of the voting rights in GRENKELEASING AG, Baden-Baden, held by Ms. Anneliese Grenke fell below the threshold of 3% on September 12, 2009 and now amounts to 2.28% (311,332 voting rights)."

8.8 Events after the Reporting Period

On January 5, 2012, commercial papers were issued under the commercial paper programme with a volume of EUR 3,000k. They will mature on April 5, 2012.

On January 19, 2012 the ABCP Programme Compass Variety Funding Limited with WestLB in the amount of EUR 40,000k was extended until January 19, 2014.

GRENKE FINANCE Plc.'s non-committed money market facility from Bayerische Landesbank in the amount of EUR 25,000k was extended by three months until April 4, 2012.

OnJanuary16,2012,GRENKELEASINGAG and GRENKE BANK AG signed a cooperation agreement with Thüringer Aufbaubank for a development programme. Through this programme, small and medium-sized industrial enterprises and self-employed professionals, that are located in Thuringia and that have an annual turnover of up to EUR 500 million, can access development funds for investments in operating equipment if they lease it through GRENKELEASING AG.

The refinancing of lease agreements under the development programme takes place through the purchase of receivables by GRENKE BANK AG. GRENKE BANK AG was granted a global loan of EUR 5 million from Thüringer Aufbaubank for this specific purpose. The global loan has not been drawn yet. The development programme is limited until December 31, 2012.

On January 17, 2012, GRENKE FINANCE Plc. has issued a bond under the DIP in an amount of EUR 100 million. The bond has a maturity of 3.5 years and has an interest coupon of 4.5 percent p.a.

On January 24, 2012, GRENKE FINANCE Plc. repurchased EUR 8 million of a bond of a total amount of EUR 100 million that it had issued on August 13, 2009. The bond is part of a debt issuance programme described in note 4.12.4. The bond bears an interest of 6.125 percent and will mature on August 13, 2012. Thus, the net cash outflow for the Grenke Consolidated Group for the remaining repayment will amount to EUR 92 million.

8.9 Declaration in Accordance with Section 161 AktG

The Board of Directors and Supervisory Board of GRENKELEASING AG have issued the declaration pursuant to Section 161 AktG and made this available to shareholders on the company's website (www.grenke.de/de/investor-relations/corporate-governance/).

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 statement of financial position, the statement of changes in equity, the statement of cash flows, and the notes to the consolidated financial statements, together with the group management report for the fiscal year from January 1 to December 31, 2011. 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 Consolidated 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 Consolidated 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 Consolidated Group's position and suitably presents the opportunities and risks of future development."

Eschborn/Frankfurt/Main, Germany, January 31, 2012

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Frey Werner 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 Consolidated Group and that the group management report gives a true and fair view of business performance including financial performance and the situation of the Consolidated Group and describes the main opportunities and risks relating to the Consolidated Group's anticipated development in accordance with the applicable financial reporting framework.

Baden-Baden, Germany, January 31, 2012

The Board of Directors

Calender of Events

February 8, 2012	Publication of Consolidated Financial Statements for 2011, Annual Press and DVFA Analysts Conference
April 26, 2012	Publication of Quarterly Financial Report as per March 31, 2012
May 10, 2012	Annual General Meeting (Kongress-Haus Baden-Baden)
July 26, 2012	Publication of Quarterly Financial Report as per June 30, 2012
October 25, 2012	Publication of Quarterly Financial Report as per September 30, 2012

Contact Information

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