Grenke AG — Annual Report 2013

Feb 18, 2014

GRENKELEASING AG Group Financial Report 2013

Key Figures GRENKE Group

	Jan. 1, 2013 to		Jan. 1, 2012 to
	Dec. 30, 2013	Change (%)	Dec. 30, 2012	Unit
New business
GRENKE Group Leasing + Factoring + Business start-up
financing incl. franchise partners	1,188,214	15.6	1,027,565	EURk
– of which Germany	400,659	13.6	352,669	EURk
– of which international	787,555	16.7	674,896	EURk
GRENKE Group Leasing	1,002,250	11.5	898,562	EURk
– of which international	684,661	12.3	609,690	EURk
– of which franchise international	22,308	–5.0	23,482	EURk
– of which Germany	295,281	11.3	265,390	EURk
Western Europe (without Germany)*	319,450	13.7	280,950	EURk
Southern Europe*	220,806	13.0	195,408	EURk
Northern / Eastern Europe*	152,078	9.8	138,496	EURk
Other regions*	14,635	–20.1	18,318	EURk
GRENKE Group Factoring	179,372	46.0	122,859	EURk
– of which Germany	98,786	21.8	81,135	EURk
– of which franchise international	80,586	93.1	41,724	EURk
GRENKE Bank
Deposits	255,637	22.1	209,367	EURk
Business start-up financing volume	6,592	7.3	6,144	EURk
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	190,181	8.4	175,482	EURk
– of which international	142,419	9.8	129,663	EURk
– of which franchise international	7,385	6.2	6,957	EURk
– of which Germany	40,377	3.9	38,862	EURk
Western Europe (without Germany)*	68,053	16.4	58,466	EURk
Southern Europe*	46,657	5.3	44,299	EURk
Northern / Eastern Europe*	29,676	5.5	28,135	EURk
Other regions*	5,418	–5.3	5,720	EURk
Further information leasing business
Number of new contracts	122,248	13.7	107,528	units
Share of IT products in lease portfolio	85	–1.2	86	percent
Share of corporate customers in lease portfolio	100	0.0	100	percent
Mean acquisition value	8.2	–2.4	8.4	EURk
Mean term of contract	48	0.0	48	months
Volume of leased assets	3,023	16.2	2,602	EURm
Number of current contracts	369,591	13.9	324,446	units

* Regions: Western Europe (without Germany): Austria, Belgium, France, Luxembourg, the Netherlands, Switzerland

Southern Europe: Italy, Malta, Portugal, Slovenia, Spain

Northern / Eastern Europe: Denmark, Finland, Ireland, Norway, Sweden, UK / Czech Republic, Hungary, Poland, Romania, Slovakia Other regions: Brazil, Canada, Dubai, Turkey

GRENKE Group = GRENKE Consolidated Group including franchise partners

GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and special-purpose entities

Key Figures GRENKE Consolidated Group

	Jan. 1, 2013 to		Jan. 1, 2012 to
	Dec. 30, 2013	Change (%)	Dec. 30, 2012	Unit
Key figures income statement
Net interest income	130,466	17.0	111,465	EURk
Settlement of claims and risk provision	49,794	14.7	43,421	EURk
Profit from insurance business	35,837	18.8	30,156	EURk
Profit from new business	43,932	23.1	35,698	EURk
Profit from disposals (income exceeding the calculated residual
value)	710	–82.2	3,982	EURk
Other operating income	3,058	–12.7	3,501	EURk
Cost of new contracts	27,505	11.9	24,572	EURk
Cost of current contracts	8,519	12.6	7,566	EURk
Project costs and basic distribution costs	33,245	41.6	23,484	EURk
Management costs	23,297	24.7	18,682	EURk
Other costs	6,940	–4.6	7,276	EURk
Operating result	64,703	8.2	59,801	EURk
Other interest income (expense)	547	114.5	255	EURk
Income / expenses from fair value measurement	102	–32.9	152	EURk
EBT (earnings before taxes)	64,258	7.6	59,698	EURk
Net Profit	47,012	10.7	42,461	EURk
Earnings per share (according to IFRS)	3.23	4.2	3.10	EUR
Further Information
Dividends	1.00	25.0	0.80	EUR
Embedded value, leasing contract portfolio
(incl. equity before taxes)	672	23.1	546	EURm
Embedded value, leasing contract portfolio
(incl. equity after taxes)	607	23.1	493	EURm
Cost / income ratio	60.8	5.2	57.8	percent
Return on equity (ROE) after taxes	10.7	–11.6	12.1	percent
Average number of employees	819	20.3	681	employees
Staff costs	51,756	20.9	42,809	EURk
– of which total remuneration	42,748	20.8	35,402	EURk
– of which fixed remuneration	31,772	19.9	26,498	EURk
– of which variable remuneration	10,976	23.3	8,904	EURk

GRENKE Group = GRENKE Consolidated Group including franchise partners

GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and special-purpose entities

Steady growth and a targeted expansion of our product range are the hallmarks of our road to becoming a globally-operating financial services provider.

Content

Letter to Shareholders from the Board of Directors	2
The Board of Directors of GRENKELEASING AG	4
Report of the Supervisory Board	5
The Supervisory Board of GRENKELEASING AG	10
Corporate Governance Report; Remuneration Report (Part of the Management Report)	11
Our Shares and Investor Relations	19
Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group	23
Fundamentals of the Consolidated Group	23
Economic Report	28
Remuneration Report (also Corporate Governance Report)	42
Events Subsequent to the End of the Fiscal Year	42
Report on Risks, Opportunities, and Forecasts	42
Acquisition-Related Information	60
Corporate Governance Statement Pursuant to Section 289a HGB	62
Responsibility Statement	63
GRENKELEASING AG (Comments on HGB Basis)	64
Consolidated Financial Statements for Fiscal Year 2013	70
Income Statement	70
Statement of Comprehensive Income	71
Statement of Financial Position	72
Statement of Cash Flows	74
Statement of Changes in Equity	76
Notes to the Consolidated Financial Statements for Fiscal Year 2013	77
Audit Opinion	162
Calendar of Events and Contact Information	163

Letter to Shareholders from the Board of Directors

Dear Shareholders, Ladies and Gentlemen,

In fiscal year 2013, the GRENKE Group experienced a seamless continuation of the successful development of recent years. With new business volume totalling EUR 1,188.2 million, amounting to an increase of approximately 16 percent, we have clearly reached the upper end of our 13 to 16 percent growth target for 2013. Once again, our growth is far above our medium-term target of at least ten percent per year. At 19 percent, the contribution margin 2 of our new business in the Leasing segment remained at the high level of the previous year. This can be attributed to our consistent entry into new markets as well as the favourable interest rate environment. In this context, it is important that we were able to maintain our loss rate at last year's level using our sophisticated IT-based model for forecasting losses. We achieved this despite a sharp rise in corporate insolvencies in the past year in recession-plagued Europe. We continue to achieve high growth, without risk-induced losses, even in times of economic difficulty.

GRENKE Consolidated Group's net profit rose eleven percent to EUR 47.0 million in 2013. We have also achieved the upper end of our forecasts of EUR 44 to 48 million and have thus accelerated our earnings development compared to the previous year. Our perception of ourselves as a growth company was reconfirmed once again with the results of fiscal year 2013.

Our business model for traditional small-ticket IT leasing with its essential elements – standardisation, comprehensive ITsupported automation, speed, and efficient measurement and diversification of risk – has fully proven itself once again. Within this environment, we have expanded and solidified our European market position in a targeted manner. We continue to refrain from relying on the avoidance of risk, but rather, aim to correctly assess risk and manage our business along an attractive opportunity and risk profile. As a result, we are able to remain successful and penetrate new markets, even in times of macroeconomic difficulty.

Therefore, we are confident that in the coming years we will continue to be able to successfully position the GRENKE Group as a globally-operating financial services provider. During the past two years, we have already made the first steps in this direction through our entry into the markets of Brazil, Dubai, and Canada. This year we intend to establish an initial presence in Chile. Naturally, in the course of this, we will not neglect our core markets in Europe. In fact, in the previous year, we have condensed our market position through cell divisions in nine European countries. In the current fiscal year, we plan to enter the Croatian market and undergo further cell divisions in five of our European markets, including Germany.

Furthermore, we will not curtail our efforts at further expanding our offers of financing solutions. Our factoring business has experienced favourable growth rates. With a 46 percent increase in new business to EUR 179.4 million, we have even exceeded the rapid 41 percent growth rate seen in the previous year. Similarly dynamic, is the development of our relatively new offers in start-up financing and our provision of development loans. Our collaborations with development banks of the Federal government and individual states continued to grow in the reporting year through another new partnership. The number of lease contracts concluded within these collaborations for financing new investments, grew by more than twothirds during the reporting year. Deposit volumes at GRENKE BANK AG also saw substantial growth in 2013. After growing 40 percent in 2012, deposits grew a further 22 percent to EUR 255.6 million in 2013.

The financing of our expansion continues to be well secured. With our broad range of refinancing instruments we are exceptionally positioned and we pay special attention to maintaining our reputation in the capital markets. Some of the special transactions in the past year include two new bond issues with a nominal volume totalling EUR 225.0 million at attractive conditions, as well as the placement of new shares in a period of hours by way of an accelerated book building process. We would like to extend our appreciation to our shareholder for the trust they have shown us. Despite the increased number of shares, the share price grew strongly in fiscal year 2013 allowed GRENKELEASING AG's capitalisation to reach the billion euro level for the first time. We take great pride in this.

Our successful strategy should also flourish in the future: In 2014, we expect growth in GRENKE Group's new business in the range of 13 and 16 percent while maintaining profitable and risk-appropriate CM2 margins. GRENKE Consolidated Group's net profit should reach a range of EUR 52 to 56 million. In view of the favourable development in the reporting period, and the positive outlook for the future, the Supervisory Board and the Board of Directors will propose a dividend to the Annual General Meeting on April 10, 2014 of EUR 1.00 per share for the 2013 fiscal year. For the previous year, EUR 0.80 per share was distributed. For the first time, we intend to offer our shareholders the option to receive the dividend entirely in cash, or to receive part of the dividend in cash and the remaining portion in shares of GRENKELEASING AG.

We would like to thank our employees for their commitment and flexibility. We would like to invite our shareholder again this year to join the GRENKE Group in its next period of growth and to participate in the Group's further increase in value.

Wolfgang Grenke Chairman of the Board of Directors

The Board of Directors of GRENKELEASING AG

Report of the Supervisory Board

In fiscal year 2013, the Supervisory Board of GRENKELEASING AG performed the activities required of it by law and under the Articles of Association. It collaborated with the Board of Directors on an on-going basis, advised it regularly, and monitored its management of the business. The strategic orientation of the GRENKE Consolidated Group was closely coordinated by the Board of Directors and the Supervisory Board. The Board of Directors involved the Supervisory Board in all decisions of fundamental significance to the Company.

Moreover, the Supervisory Board was informed of all key issues regularly, comprehensively, and in a timely manner. This took place both orally and in writing as well as on the basis of submissions by the Board of Directors and meeting protocols. In particular, the Board of Directors provided the Supervisory Board with detailed information on all relevant issues and topics relating to the strategic development of the GRENKE Consolidated Group, its economic situation, and the current course of business. This included information on the business of GRENKE BANK AG, information on GRENKEFACTORING GmbH, including the factoring business of the franchise partners, the management of the sales organisation and recent events, the status of corporate planning, and the personnel situation.

In the reporting year, a key element of GRENKE Consolidated Group's on-going strategic development was the expansion in countries outside of Europe and thereby the Group's positioning as a global company. The proven and successful path of the past was embarked upon using franchise partners as a means of penetrating new markets.

All 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 fully met the requirements of the Supervisory Board at all times. As far as required by law and the Articles of Association, the Supervisory Board closely examined, discussed, and then voted on the Board of Directors' reports and resolution proposals. The Board of Directors submitted matters requiring approval in a timely manner.

The Chairman of the Supervisory Board was also informed, in detail, by the Board of Directors of events of particular significance between meetings of the Supervisory Board. As the Chairman of the Supervisory Board, I kept myself informed at all times of current business developments including the banking business and key transactions. Other issues discussed in personal talks with the Board of Directors included the capital increase successfully placed in February 2013, the preparation of refinancing decisions, compliance issues, internal controlling, risk management and its on-going development, as well as personnel issues.

During the year under review, 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) – as well as the operating risk control system, the risk strategy, and its implementation. To this end, the Supervisory Board received reports from the Board of Directors on GRENKE Consolidated Group's risk management and control systems and their further development, as well as reports on the current risk situation. The GRENKE Consolidated Group's liquidity and refinancing situation was a regular topic of discussion at the Supervisory Board meetings. As a result of its diversified sources of refinancing and effective liquidity management, the GRENKE Consolidated Group's refinancing was ensured at all times, once again, in fiscal year 2013.

The key issues at the Supervisory Board meetings also included regular discussions on current business performance, the monitoring of international entities, as well as evaluating the efficiency of the work of the Supervisory Board, adoption of the annual financial statements of GRENKELEASING AG, and approval of the consolidated financial statements as per December 31, 2012. Furthermore, the Supervisory Board discussed issues relating to the Rules of Procedure of the Supervisory Board and the Board of Directors, and – on the occasion of the appointment of Ms. Antje Leminsky to the Board of Directors – the Board of Directors' schedule of responsibilities.

The Supervisory Board dealt with the status and the progress of a comprehensive IT project for internal process optimisation. Further issues included the possible impact on the Company's rating resulting from the growing macroeconomic risks occurring in individual countries, the exercise of the purchase options for the former franchise companies in Finland and Slovakia, and GRENKE Group's positioning as a globally-operating company.

Also in the reporting year, the Supervisory Board dealt in depth with the German Corporate Governance Code. In this context, it also assessed and determined that the requirements were met for Supervisory Board members of companies that are subject to the German Banking Act. On April 17, 2013 together with the Board of Directors, the Supervisory Board issued the GRENKELEASING AG Declaration of Conformity in accordance with Section 161 of the German Stock Corporation Act on the recommendation of the "Government Commission on the German Corporate Governance Code" in the version dated May 15, 2012.

In this financial report for fiscal year 2013, the Board of Directors report on corporate governance at GRENKELEASING AG, is also on behalf of the Supervisory Board. All members of the Supervisory Board have personally pledged to comply with the principles of corporate governance that are applicable in the reporting year.

The Supervisory Board met on four occasions in fiscal year 2013: The meetings took place on January 31, May 6, July 21 and 22, and on November 22.

In accordance with the Articles of Association, 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. With the conclusion of the Annual General Meeting on May 7, 2013 the terms of office ended for Supervisory Board members Prof. Dr. Ernst-Moritz Lipp and Gerhard E. Witt. Both gentlemen were re-elected by the Annual General Meeting. Subsequent to the Annual General Meeting, the Supervisory Board re-elected Prof. Dr. Ernst-Moritz Lipp as its Chairman and Mr. Gerhard E. Witt as its Deputy Chairman. The following members formed the Supervisory Board in fiscal year 2013:

• 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 chairmen of the committees reported in detail to the Supervisory Board as a whole, at its meetings, on the committees' work.

The Audit Committee is comprised 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, corporate planning policies, the Consolidated Group's risk management, as well as compliance. Its members have expertise in these areas. The Audit Committee commissioned the auditor and determined the focus of the audit. The Committee verified the auditor's independence and concluded the auditor's fee agreement. 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 2012 annual financial statements and discussed these statements in depth. The Audit Committee and the Board of Directors also thoroughly discussed the quarterly financial statements to be published.

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 made by the Supervisory Board. It is also responsible for proposals regarding the conclusion, amendment, and termination of employment agreements with members of the Board of Directors. In fiscal year 2013, the Personnel Committee and, subsequently, the Supervisory Board in its entirety, also dealt extensively with the appointment of the Representative of the Board, Ms. Antje Leminsky, as a member of the Board of Directors and her appointment as Deputy Chairman of the Board of Directors.

Ms. Antje Leminsky joined the Company on August 1, 2012, and has since strengthened the Company's expertise in the area of IT, which is of particular importance to the GRENKE Consolidated Group. As of August 1, 2013 Ms. Leminsky assumed the position of Chief Information Officer (CIO) and the corresponding position in the Board of Directors from Mr. Wolfgang Grenke. She was also simultaneously appointed Deputy Chairperson of the Board of Directors.

The annual financial statements of GRENKELEASING AG and the consolidated financial statements prepared by the Board of Directors as per December 31, 2013 and the combined presentation of the management reports of GRENKELEASING AG and of the GRENKE Consolidated Group for fiscal year 2013 in accordance with Section 315 (3) and Section 298 (3) HGB, and the Board of Directors' proposal on the appropriation of GRENKELEASING AG's unappropriated surplus, were all submitted to the Supervisory Board in a timely manner.

The annual financial statements were audited by Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart. 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 per December 31, 2013 were audited in accordance with the rules and regulations of Section 317 HGB and in accordance with 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, 2013 were prepared in accordance with Section 315a (1) HGB on the basis of the International Financial Reporting Standards as adopted in the EU and for the first time in accordance with the new German Accounting Standard No. 20. 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 GRENKE 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, 2014. The auditor responsible took part and reported on the key findings 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 endorsed the Board of Directors' proposal on the appropriation of GRENKELEASING AG's unappropriated surplus.

On January 31, 2014, the auditor, Ernst & Young GmbH, issued the following opinion on the dependence report:

"Following our audit and assessment in discharge of our duties 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 and any disadvantages would have been compensated;
• 1. and finally, that for the measures mentioned in the report there are no circumstances supporting a judgement materially different from that reached by the Board of Directors."

At its meeting on February 3, 2014 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. At the Supervisory Board meeting on February 3, 2014, 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 of Directors' 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 combined management report of GRENKELEASING AG and the GRENKE Consolidated Group. The Supervisory Board has reviewed these disclosures and explanations, which it believes to be complete, and has adopted them.

Capital market participants placed their trust in GRENKE shares once again in fiscal year 2013 and acknowledged the GRENKE Consolidated Group's successful international growth strategy. The share price saw an impressive increase of 34 percent on balance. Thus, the GRENKE shares clearly stood out once again from the DAX and SDAX, whose price indices rose by 21 percent and 27 percent respectively. The sector index for German financial service providers, to which the GRENKE shares belong, showed considerably weaker development. With an increase of just twelve percent, this index's performance was well below that of the DAX, SDAX, and the shares of GRENKELEASING AG.

All employees of the GRENKE Group contributed to the Company's success and to the positive performance of GRENKE's shares in fiscal year 2013. The Supervisory Board extends its thanks to all employees of the GRENKE Consolidated Group and its franchise companies in the 27 countries in Europe and overseas, where GRENKE is now represented. The Supervisory Board also thanks the members of the Board of Directors for their efforts. Only as a result of their personal commitment can GRENKE Consolidated Group record another successful year and look to the future with confidence.

Baden-Baden, February 3, 2014 For the Supervisory Board

Prof. Dr. Ernst-Moritz Lipp Chairman of the Supervisory Board

The Supervisory Board of GRENKELEASING AG

Name / Residence	Activity / Occupation	Other Supervisory Board /
		Advisory Board Functions
▶ Prof. Dr. Ernst-Moritz Lipp	Chairman of the Supervisory Board,	GRENKE BANK AG, Baden-
Baden-Baden, DE	Professor of international finance.	Baden, DE; OYSTAR Holding
Born 1951	General manager of ODEWALD &	GmbH, Karlsruhe, DE; Oberberg
First elected: 2003	COMPAGNIE Gesellschaft für	Klinik Holding GmbH, Berlin, DE
Elected until the Annual General Meeting 2018	Beteiligungen mbH
Gerhard E. Witt	Deputy Chairman of the	Grenke Investitionen Verwaltungs
Baden-Baden, DE	Supervisory Board,	KGaA, Baden-Baden, DE
Born 1945	Public auditor and tax advisor
First elected: 1997
Elected until the Annual General Meeting 2018
Dieter Münch	Member of the Supervisory Board,	Grenke Investitionen Verwaltungs
Weinheim, DE	Retired bank officer,	KGaA, Baden-Baden, DE
Born 1943	Chairman of a foundation
First elected: 2000
Elected until the Annual General Meeting 2015
Florian Schulte	Member of the Supervisory Board,	Global Group Dialog Solutions AG,
Baden-Baden, DE	Managing Director of Fines Holding	Idstein, DE
Born 1971	GmbH
First elected: 2010
Elected until the Annual General Meeting 2015
Erwin Staudt	Member of the Supervisory Board,	PROFI Engineering Systems AG,
Leonberg, DE	Economics graduate	Darmstadt, DE; USU Software AG,
Born 1948		Möglingen, DE; Hahn Verwaltungs-
First elected: 2005		GmbH, Fellbach, DE; Interstuhl
Elected until the Annual General Meeting 2015		Büromöbel GmbH & Co. KG.
		Meßstetten-Tieringen, DE
$\blacktriangleright$ Prof. Dr. Thilo Wörn	Member of the Supervisory Board,	agathon GmbH & Co. KG, Bottrop,
Essen, DE	Professor at the University of Public	DE; DEFLEX-Dichtsysteme GmbH,
Born 1968	Administration in North Rhine-	Moers-Genend, DE
First elected: 2010	Westphalia
Elected until the Annual General Meeting 2015

Corporate Governance Report

All activity in the GRENKE Consolidated Group is governed by a sense of responsibility. Therefore, effective corporate governance that complies with the relevant laws and the requirements of the German Corporate Governance Code is an integral part of how we conduct business. The Board of Directors, the Supervisory Board, and senior executives identify with the principles of good corporate governance. They are committed to complying with the ethical and legal rules of conduct and standards and to managing and monitoring the GRENKE Consolidated Group in a value-oriented and transparent manner. They know that good corporate governance represents an important basis for maintaining and increasing confidence among present and future customers, employees, and business partners. They are especially aware of the special significance these principles hold with providers of capital when making an assessment of the Company. At GRENKE, transparent accounting and early reporting are essential for dealing with the public in a manner that creates confidence.

GRENKELEASING AG complies with the recommendations of the German Corporate Governance Code in the version dated May 15, 2012 with only a few exceptions. The Board of Directors and the Supervisory Board have discussed their compliance with the Code in depth and have adopted the Declaration of Conformity of the Code which has been duplicated at the end of this corporate governance report. The declaration can also be found on the website of GRENKELEASING AG.

Consolidated Group Management and Monitoring

The Board of Directors of GRENKELEASING AG is currently comprised of five members. The Supervisory Board is comprised of six members.

Supervisory Board

During the 2013 fiscal year, 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, a regular and a key component of these reports was the presentation of the refinancing and liquidity status. The Supervisory Board coordinated strategic developments with the Board of Directors and discussed issues related to risk management, risk provisions, the internal control system, and the internal audit system.

Further Supervisory Board responsibilities 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 while taking into consideration the auditors' reports and the findings of the reviews by the Audit Committee (see "Report of the Supervisory Board"). Another key activity is the examination and approval of 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 authorisations 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 in the plenum. The chairmen of the committees report to the Supervisory Board plenum on the work of their committees.

Audit Committee

The Audit Committee is comprised of three members who have expertise in the areas of accounting, corporate planning, risk management, and compliance. The Committee primarily deals with external and internal accounting issues, as well as with corporate planning systems, and the Consolidated Group's risk management. It reviews and monitors the independence of the auditor in accordance with Article 7.2.1 of the German Corporate Governance Code. It determines the audit's focus and is responsible for and agrees to the fee with the auditor.

Furthermore, it prepares the decision of the Supervisory Board on the adoption of the annual financial statements and the approval of the consolidated financial statements. As part of the Supervisory Board's activities under the German Corporate Governance Code, the Audit Committee also deals with compliance issues. The Board of Directors regularly reports to the Audit Committee on the Company's compliance situation, including compliance with the 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 submits proposals for concluding, amending, and terminating employment agreements with members of the Board of Directors.

Board of Directors

The Board of Directors autonomously manages the GRENKE Consolidated Group and is responsible for the Consolidated Group's operational management and strategic orientation and compliance with the principles of corporate policy. In addition, it prepares the annual financial statements of GRENKELEASING AG, as well as the quarterly financial statements and the annual consolidated financial statements. The Board of Directors reports to the Supervisory Board regularly and comprehensively by way of reports and meeting documents on issues such as strategy and its implementation, planning, business development, the financial and earnings situation, and the strategic and operational business risks and their management, and activities involving the Company in its entirety. Key decisions by the Board of Directors – such as acquisitions and financial measures – require the approval of the Supervisory Board. The Board of Directors' Rules of Procedure contains a list of transactions requiring approval. The Board of Directors and the Supervisory Board are liable to pay damages to the Company in the event of culpable neglect.

Remuneration Report (Part of the Combined Management Report)

Remuneration of the Board of Directors

					Long-term
		Fixed remuneration		Variable	remuneration
		components		remuneration components	components	Total	Total
			Performance		Share-based
EUR	Annual salary	Other claims	bonus	Bonus	compensation	2013	2012
Christ	184,853.61	--	77,982.00	60,000.00	300,000.00	622,835.61	538,437.27
Eicker	307,274.26	--	50,688.30	78,000.00	600,000.00	1,035,962.56	144,753.68
Grenke	332,386.92	--	155,964.00	120,000.00	--	608,350.92	607,060.42
Dr. Hack	--	--	--	--	--	0.00	565,334.08
Kindermann	156,955.92	--	72,480.75	55,800.00	87,680.00	372,916.67	270,312.26
Leminsky	99,782.20	--	24,103.69	72,600.00	300,000.00	496,485.89	0.00
Total	1,081,252.91	--	381,218.74	386,400.00	1,287,680.00	3,136,551.65	2,125,897.71

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.

The structure of the remuneration system is aimed at promoting the Consolidated Group's long-term success and creating incentives to enter into only those risks that are easily controllable by employing statistical tools and that generate appropriate income for the respective risk. No incentive is provided for entering into inappropriate risks. Furthermore, the regulatory capital of GRENKELEASING AG is neither jeopardised by the remuneration practice, nor does this restrict the long-term retention of its equity.

During the year under review, the remuneration paid to the members of the Board of Directors totalled EUR 3,137k (previous year: EUR 2,126k) of which EUR 1,081k (previous year: EUR 970k) was attributable to gross salaries and EUR 381k (previous year: EUR 427k) to performance bonuses. Ms. Leminsky's annual salary and performance bonus were calculated on a pro rata basis as per August 1, 2013. Following Dr. Hack's departure from the Board of Directors as per September 30, 2012, he received monthly compensation in the amount of EUR 15k for a period of one year as a result of an agreed non-competitive clause.

The criteria for the variable remuneration components are defined in advance each year. They are based on the increase in the GRENKE Consolidated Group's operating result ("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 retrospectively each year. Failure to achieve the targets means that no variable remuneration will be paid. The relevant BSC criteria correspond to the key performance indicators for the Consolidated Group's longterm success, and hence the long-term increase in the shareholder value. Among others, this includes the development in the number of lease contracts and the volume of new business. The attainment of the BSC criteria is measured retrospectively each quarter.

The Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Mr. Gilles Christ, Mr. Jörg Eicker, Mr. Mark Kindermann, and Ms. Antje Leminsky.

Under these agreements, Mr. Gilles Christ, Mr. Jörg Eicker, Mr. Mark Kindermann, and Ms. Antje Leminsky each receive entitlements to payment (tranche) for fiscal years 2013, 2014, and 2015 equal to the increase in value of 15,000 shares, 30,000 shares, 4,000 shares, and 15,000 shares, in GRENKELEASING AG, respectively, in relation to a defined basic share price. The basic 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 the year 2012 was EUR 52.01. The maximum payment arising from this agreement is limited to EUR 300,000, EUR 600,000, EUR 100,000, and EUR 300,000 for the three tranches. The participants in the programme are required to invest the respective net amount paid, plus a personal contribution of 25 percent of that amount, in GRENKELEASING AG shares. The Company is entitled but not required to render the payment, in whole or in part, in shares rather than in cash for one or more tranches. In this case, the personal contribution is not applicable. The shares are subject to a vesting period of four years.

As per December 31, 2013, the value of the phantom stock agreements granted totalled EUR 1,288k.

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 ten 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. In case of a termination of their appointment, the employment agreements of the members of the Board of Directors include a provision of a possible non-competitive clause. This non-competitive clause provides for the payment of compensation for a period of two years (cap). The amount is limited to 50 percent of the most recent annual remuneration (cap). The fixed remuneration and the paid variable remuneration actually paid in the fiscal prior to the termination of the appointment are the basis for calculating the payment of compensation. No settlement agreements are in place. 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			Variable
		remune	Audit	Personnel	remune	Travel	Total	Total
Name	Function	ration 2013	Committee	Committee	ration	expenses	2013*	2012*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	12,750.00	293.93	25,793.93	25,915.43
	Deputy
Witt	Chairman	7,500.00	900.00	600.00	9,000.00	250.00	18,250.00	18,348.00
Münch	Member	7,500.00	600.00	0.00	8,100.00	546.80	16,746.80	16,748.50
Schulte	Member	7,500.00	0.00	0.00	7,500.00	0.00	15,000.00	15,000.00
Staudt	Member	7,500.00	0.00	600.00	8,100.00	249.12	16,449.12	16,535.00
Prof. Dr. Wörn	Member	7,500.00	0.00	0.00	7,500.00	1,293.28	16,293.28	16,631.46
Total		48,750.00	2,100.00	2,100.00	52,950.00	2,633.13	108,533.13	109,178.39

Remuneration of the Supervisory Board

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

In fiscal year 2013, the members of the Supervisory Board received a total of EUR 109k (previous year: EUR 109k), including travel expenses, in remuneration for their work. The remuneration of 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 Association of GRENKELEASING AG, which in turn is determined by the Annual General Meeting. In accordance with the Articles of Association, the members of the Supervisory Board receive a 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.

The basic remuneration and the remuneration for committee memberships and chairmanships are calculated on a pro rata basis for members who are on the Supervisory Board for only part of a fiscal year. 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 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 ten 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.

Accounting, Audits of Financial Statements, and Financial Reporting

Starting with the fiscal year 2012 report, the management report for the GRENKE Consolidated Group and the management report for the separate financial statements of GRENKELEASING AG, in accordance with Section 315 (3) and Section 298 (3) HGB, are presented as a combined section. This procedure was also followed for the 2013 fiscal year report. If substantial differences arise between the corporate entities, these are discussed in a separate section. The financial statements of GRENKELEASING AG and the financial statements of the GRENKE Consolidated Group for fiscal year 2013 are published jointly in the Federal Gazette (Bundesanzeiger).

The accounting policies applied to the consolidated financial statements for the January 1 to December 31, 2013 fiscal year were 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. In addition, the Group management report was prepared in accordance with the new German Accounting Standard No. 20 (DRS20) for the first time. 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 recommends an auditor for election to the Annual General Meeting. The election of the auditor is carried out at the Annual General Meeting in accordance with statutory provisions.

Transparency and Reporting to Shareholders

GRENKE uses the internet in order to promptly, equitably, and thoroughly report to shareholders, capital market participants, and the public. All ad hoc publications 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 Declaration of Conformity with the German Corporate Governance Code is available on GRENKE's website (www.grenke.de/en/investorrelations).

Shareholders may use the internet to find information on the GRENKE Consolidated Group, its management, and the organisational structure. Notifications by the Company are published in the Federal Gazette (Bundesanzeiger). Shareholders may also watch the report of the Board of Directors and the general debate on the internet during the Annual General Meeting. 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. The GRENKE shares are reported on in detail in the "Investor Relations" section.

Compliance

Our compliance department ensures compliance with legal provisions, company-internal regulations, as well as with the ethical standards we are committed to. At GRENKE, compliance spans over all operational activities and business processes and embraces all governing bodies, senior management, and employees. The core tasks of our compliance officer include the compilation of relevant provisions, the collaboration with the respective departments of the Company, and the training of senior management and employees. In addition, the compliance officer supports the Board of Directors preventing breaches of the law, corruption, and fraudulent acts and their clarification. In fiscal year 2013, the compliance officer was invited to a meeting of the Supervisory Board to report her findings.

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 its subsidiaries. It is designed to enable employees and management to address risks responsibly and make the most of the opportunities that present themselves. The GRENKELEASING AG risk management system is being continually expanded and is operated using a risk management tool on the intranet of the GRENKE Consolidated Group.

Leasing companies must also comply with the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)] published by the Deutsche Bundesbank and the German Federal Office for Supervision of Financial Services. The appropriate risk management and controlling processes required by MaRisk for the key types of risks – counterparty, market price, liquidity, and operational risks – have been implemented accordingly 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 which reports directly to the Board of Directors. The details of the risk management system are presented in the management report.

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

On April 17, 2013 the Board of Directors and Supervisory Board of GRENKELEASING AG issued the following Declaration of Conformity:

"The Board of Directors and Supervisory Board of GRENKELEASING AG hereby declare, in accordance with Section 161 AktG, that since the issue of the last Declaration of Conformity on April 21, 2012 the recommendations of the "Government Commission on the German Corporate Governance Code" initially in the version dated May 26, 2010 and then in its revised version of May 15, 2012 have been complied with and will be complied with in the future with the following exceptions:

By derogation from Item 2.3.2 of the DCGK, GRENKELEASING AG does not transmit the convening of the Annual General Meeting together with the convention documents to shareholders, shareholders' associations, and domestic and foreign financial service providers by electronic means. Automatic electronic transmission in accordance with Item 2.3.2 of the DCGK cannot take place as GRENKELEASING AG has issued ordinary bearer shares and it does not know the identities and email addresses of its shareholders. Collecting and updating all relevant email addresses would therefore represent a disproportionately large bureaucratic burden. Furthermore, transmission by electronic means is permitted only with the corresponding approval of the Annual General Meeting. No such approval resolution has been adopted. In accordance with Section 30b (3) No. 1 Letter d WpHG, electronic transmission would also have to be explicitly consented to, or at least not objected to, by the shareholders.

Notwithstanding the recommendation set out in Item 4.2.3 of the DCGK, the contracts of the current members of the Board of Directors do not provide for a severance payment cap. The reason is that some of the contracts of members of the Board of Directors were concluded before the recommendation in question was included in the DCGK, and hence their continuance is protected. However, a severance payment cap has also not been agreed for newly concluded contracts with members of the Board of Directors as these contracts are regularly concluded only 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 and not unilaterally. The contracts of the members of the Board of Directors do not include any severance payment provisions linked to events at the Company or, in particular, a change of control.

The recommendations of Item 5.1.2 and 5.4.1 of the DCGK require that the composition of the Board of Directors, as well as proposals for the election of Supervisory Board members take into account diversity and a specified age limit, among others. The Company is of the opinion 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 for the respective area of business or responsibility should be the key criteria when selecting suitable candidates. The above recommendations of the DCGK are taken into consideration with regard to the composition of the Board of Directors and proposals for the election of Supervisory Board members.

In accordance with Item 5.3.3 of the DCGK, the Supervisory Board should form a nomination committee, composed exclusively of shareholder representatives, to suggest suitable candidates to the Supervisory Board for nomination to the Annual General Meeting. The Supervisory Board of GRENKELEASING AG currently consists of a total of six members, who are to be elected exclusively by the shareholders. The Board of Directors and Supervisory Board do not consider it necessary to form an additional committee. The Company believes that the transparency of the selection procedure intended by the Commission with Item 5.3.3 of the DCGK is already ensured without such a committee. Therefore, the Company does not comply with the recommendation in Item 5.3.3.

Currently, the Company deviates from the recommendation of Item 5.4.6 (2) of the DCGK. According to Section 10 (3) of the Articles of Association, each Supervisory Board member is entitled to variable remuneration in addition to fixed remuneration when the shareholders receive a dividend distribution in excess of EUR 0.20 per share. In this case, the 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 remuneration component may not exceed 100 percent of the fixed remuneration of the Supervisory Board member. Therefore, the applicable Articles of Association concerning the variable remuneration component no longer meet the Code's recommendation since its revision. However, the Board of Directors and the Supervisory Board are of the opinion that the current, rather conservative dividend policy, and thus also the remuneration of the Supervisory Board members, are consistent with sustainable company development, as required by the DCGK.

Baden-Baden, April 17, 2013

GRENKELEASING AG

For the Board of Directors For the Supervisory Board

Wolfgang Grenke Prof. Dr. Ernst-Moritz Lipp"

Our Shares and Investor Relations

In fiscal year 2013, GRENKE shares continued their multi-year climb. The share price increased 34 percent on balance. After a year-end closing price in 2012 of EUR 50.61, the shares ended fiscal year 2013 at EUR 68.00 (XETRA closing prices, also used hereafter). With this share price increase, GRENKELEASING AG's capitalisation reached the billion euro level in 2013 for the first time. As was the case in the previous year, GRENKE shares have developed better than their benchmark indices, the SDAX price index (annual performance 2013: +27 percent) and the DAXsector Financial Services price index (+12 percent) for nearly the entire year of 2013. The GRENKE shares have nearly quadrupled in the ten-year period that began at the end of 2003 when they closed at EUR 17.54. The DAX (+77 percent), SDAX (+108 percent), and the DAXsector Financial Services (+77 percent) price indices had a much lower gain in the same period.

The lowest share price for GRENKE shares in fiscal year 2013 occurred on the first trading day of the year at EUR 50.25 (closing price: EUR 50.40). With the exception of the share's consolidation between approximately EUR 65 and EUR 70 from the beginning of July until mid-August, the share's development was continuously on the rise over the course of the year. The high of the year was EUR 76.38 and was reached during the trading day on November 1, 2013 and the highest closing price was EUR 75.00 on December 13.

Dividend Policy

The dividend policy at GRENKELEASING AG is long-term oriented. It is based on the criteria of continuity, profit, and safeguarding the equity base for future expansion. Thus, GRENKE shares offer investors an investment with high intrinsic value, attractive growth prospects and, at the same time, a continual flow of current revenues. GRENKE Consolidated Group traditionally has had a strong equity base to secure favourable refinancing opportunities. Our strategic target for the equity ratio is 16 percent. This is the basis for our strong rating and, accordingly, ensures that we have access to attractive refinancing opportunities from different sources. During the financial crisis starting in 2008, which was an extremely difficult period for the international financial sector, the equity ratio was purposely increased above this level due to risk considerations. In the meantime, it has been gradually reduced to the target level. At the end of 2012, it amounted to 14.9 percent, and as per the reporting date of this year, it was 16.7 percent.

The solid, actively-managed equity base of the GRENKE Consolidated Group will remain the most important basis for our future growth. With this crucial, long-term strategic requirement in mind, we conduct our dividend policy in a profit-oriented manner. Since we continue to anticipate further rapid expansion in our business, and increasing earnings in the coming years, we remain confident in the continuity of our dividend distributions. Hence, the Board of Directors and the Supervisory Board will propose a dividend of EUR 1.00 per share to the Annual General Meeting of GRENKELEASING AG on April 10, 2014 for fiscal year 2013. For the first time, we intend to offer our shareholders the option to receive the dividend entirely in cash, or to receive part of the dividend in cash and the remaining portion in shares of GRENKELEASING AG. For the previous year, a dividend of EUR 0.80 per share was distributed and for the year prior to that, the dividend had amounted to EUR 0.75 per share.

Investment Case

We position our shares in the capital market by focusing on the following outstanding unique selling points:

• competitive advantage through standardization, all-encompassing IT based automation, and speed;
• international roll-out of these unique selling points on the basis of our continued successful growth strategy;
• market leadership in Central Europe;
• our long-standing, proven management of risk;
• 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 steer them according to the contribution margin 2 (present value of operating income from a lease, less the cost of risk and individual contract costs). Our goal remains sustainable expansion and, consequently, dynamic profit development. The key requirement for this – the efficient control of costs and risks – is ensured by our sophisticated and continually improving risk management strategy. Furthermore, we can respond in a flexible manner to changes in market conditions and at the same time achieve appropriate risk premiums. We have definitively proven this ability consistently in the past.

With a significant improvement in net interest income in the reporting year, we effectively countered the inevitable rise in the loss rate in the wake of the recessionary economic development in several European countries and the resulting increase in revenue-related risks. We will maintain this successful risk-oriented management of our conditions in the future. 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 that we are continually expanding, we remain well equipped for future growth.

Investor Relations

As part of our investor relations activities, we maintain an open and continuous exchange of information with investors, analysts, and media representatives. Again in fiscal year 2013, the Board of Directors reported extensively to capital market participants on the Consolidated Group's development – particularly with regard to its international expansion. In addition, we are frequently available to market participants and media representatives for one-on-one discussions and conference calls. Thanks to this active communication policy, we have been able to expand our investor base again in this reporting year.

We 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 as well as the general debate as a live stream on our website at www.grenke.de. All current investor relations news, press releases, and annual and quarterly reports can also be viewed here 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 our new business figures and our contribution margin as early as the second working day subsequent to the end of the quarter. The audited consolidated financial statements for the fiscal year are published at the beginning of February of the following year. In addition, our website offers a user-friendly, interactive annual financial report. In keeping with the spirit of high transparency, our reporting goes well beyond the required minimum.

Rating

In an analysis dated September 12, 2013 the Standard & Poor's rating agency confirmed the counterparty credit rating for GRENKELEASING AG as well as the ratings of GRENKE Finance PLC. For both companies, the rating for short-term debt, including commercial paper, is "A-2", and "BBB+" for senior unsecured debt. Thus, GRENKE continues to enjoy investment grade status with both short and long-term maturities. Due to the observation that GRENKE is growing particularly strong in countries that, in the agencies view, display increased economic risks, it has retained its outlook ("negative") and has reduced its so-called "baseline assessment" from "a-" to "bbb+". At the same time, the agency expressly highlights our excellent risk management and ability to receive risk-appropriate prices even during recessionary periods. As a result, Standard & Poor's raised its assessment of GRENKE's risk position from "moderate" to "adequate". In the view of the agency, GRENKE has an outstanding position relative to the competition. Other key factors for the rating – broad diversification of our receivables portfolio, very solid capitalisation, adequate liquidity, and continual high profitability – have remained unchanged.

The individual assessments by Standard & Poor's as per the end of fiscal year 2013 are as follows:

Issuer Credit Rating

	Counterparty credit rating	BBB+/Negative/A-2
	Senior unsecured	BBB+
	Short-term debt	A-2

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;
	HSBC Trinkaus und Burkhardt AG
Total number of registered shares outstanding	14,700,000
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"	57.40%
Pooling agreement of the Grenke family (Wolfgang, Anneliese, Moritz, Roland, Oliver Grenke)	42.60%

	2013	2012	2011	2010	2009
Closing price on last trading day
(XETRA)	EUR 68.00	EUR 50.61	EUR 39.00	EUR 37.99	EUR 29.50
Highest intraday price (XETRA)	EUR 76.38	EUR 54.46	EUR 46.00	EUR 38.50	EUR 30.22
Lowest intraday price (XETRA)	EUR 50.25	EUR 37.45	EUR 32.55	EUR 28.70	EUR 17.82
Market capitalisation (closing price)	EUR 1,000 million	EUR 693 million	EUR 534 million	EUR 520 million	EUR 404 million
Earnings per share	EUR 3.23	EUR 3.10	EUR 2.87	EUR 2.03	EUR 1.80
Price-earnings ratio
(Basis: closing price)	21.1	16.3	13.6	18.7	16.4

Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group

In the following, we present the management report for the GRENKE Consolidated Group and GRENKELEASING AG for the 2013 fiscal year (reporting date: December 31) as a combined section. With this management report, the German Accounting Standard No. 20 (DRS 20) has been applied for the first time. The GRENKE Consolidated Group continues to report in accordance with International Financial Reporting Standards (IFRS), and GRENKELEASING AG reports in accordance with the German Commercial Code (HGB). The main comments with regard to the general conditions, strategy, and performance of GRENKE Consolidated Group and GRENKELEASING AG apply to both corporate entities. If there were any substantial differences between the entities during the fiscal year, these are discussed in the section titled "GRENKELEASING AG (Comments on HGB basis)" found at the end of this report.

The annual financial statements of GRENKE Consolidated Group and GRENKELEASING AG for fiscal year 2013 are published jointly in the Federal Gazette (Bundesanzeiger). The 2013 fiscal year report is also available online for download as a PDF document at http://www.grenke.de/en/investor-relations/financial-reports.

The GRENKE Consolidated Group operates internationally. A franchise model has been established for the development of new regional markets and for expansion using new financing products. GRENKELEASING AG does not own shares in the legally independent companies of its franchisees. Accordingly, this management report distinguishes between the GRENKE Consolidated Group, which refers to GRENKELEASING AG and all of its consolidated subsidiaries and specialpurpose entities in accordance with IFRS, and the GRENKE Group, which refers to the GRENKE Consolidated Group including its legally independent franchise partners.

Fundamentals of the Consolidated Group

The Consolidated Group's Business Model

Organisational Structure

We are specialised in small and medium-sized volumes of financing. To offer these volumes successfully, our organisational structure is built as a lean organisation with a maximum level of efficiency in our business processes.

As the parent company and from its headquarters in Baden-Baden, GRENKELEASING AG assumes the management role of the GRENKE Consolidated Group, which is represented internationally through its own subsidiaries located in numerous countries. In some cases, the subsidiaries have established their own branch offices in their respective local markets.

Additionally, as previously mentioned, a franchise model was established. Within the context of this model, GRENKELEASING AG provides its partners with know-how, an operational infrastructure, numerous services, and permission to use the brand name, all based on a franchise contract. In addition, GRENKELEASING AG retains the right to acquire the respective franchise company according to a pre-arranged term of typically four to six years. The purchase price is based on a formula determined upon the signing of the contract and takes market parameters and the company's individual performance into account.

The GRENKE Consolidated Group refinances the financing agreements and leasing contracts concluded between franchisees and their customers generally through its subsidiary in Ireland. A portion of the GRENKE Consolidated Group's new business is generated by this refinancing activity. In some cases, franchisees conclude leases with their customers under a commission model, which means that the GRENKE Consolidated Group acts as the direct lessor.

The management of GRENKELEASING AG is performed by a Board of Directors consisting of 5 members and is headquartered in Baden-Baden. The Company's Supervisory Board is comprised of six members.

Segments

The GRENKE Consolidated Group's business segments are aligned along its prevailing organisational structure. Based on the management of the Company's divisions, the Leasing, Banking, and Factoring segments comprise the operating segments of the GRENKE Consolidated Group.

The Leasing segment continues to represent the GRENKE Consolidated Group's most important segment and comprises all of the processes connected to the leasing activities of the Consolidated Group. The Factoring segment includes traditional factoring services with a focus on lower amounts of contractual receivables in Germany. The Banking segment incorporates the activities of GRENKE BANK AG, which is positioned as a financing partner for mainly small and mid-sized companies (SMEs). This segment works together with a growing number of development banks to offer these banks' clientele start-up financing. Furthermore, GRENKE BANK AG offers straightforward investment products to private and business customers via its internet site.

The GRENKE Group is present throughout Europe and also active in Brazil, Dubai, Canada, and Turkey. In terms of the GRENKE Consolidated Group, Germany, France, and Italy are the key geographical regions on a country basis in which revenues with external customers are generated.

Business Processes and Services

With the aim of providing lease financing at an economically feasible level, even for small IT products, we have defined and developed a market that still today is not addressed by the vast majority of leasing providers. We finance mainly IT products such as printers, copiers, and communication products and software for commercial customers starting at a net acquisition cost of EUR 500. The average acquisition cost per lease concluded was approximately EUR 8,199 in the reporting year after EUR 8,357 in the previous year. The structure of the financed goods portfolio was virtually unchanged in the reporting year. This structure is the result of the type and scope of the product's use in the office environments of European mid-sized companies. We are also further expanding our factoring services business, the financing of start-ups, and our provision of development loans to commercial customers.

A prerequisite for processing contracts efficiently – even low volume contracts – is a very low cost per contract. Accordingly, GRENKE Group's business model is geared towards maximising the Group's efficiency. Standardisation, comprehensive IT-supported automation, and speed are the key unique selling points of our business and represent important barriers to entry in our market.

Due to the small size of the individual contracts, direct selling of single contracts does not make economic sense. Therefore, in our leasing business, we rely primarily on so-called "sales leasing". The financing contracts with the final customers are largely concluded through our retail partners. For this purpose, our own employees in local sales offices are rapidly building an extensive network of partners in our respective target markets. We also sell our financing products through IT product manufacturers who we support using a key account management system. Furthermore, we approach select corporate customers directly. Beyond these channels, our online activities provide an important and growing additional distribution channel.

This is not only true for our traditional business with small-ticket IT leasing but also true for our other financial products. Thus, we operate the deposit business solely as an online bank and have developed an innovative internet platform for the processing of start-up financing. The purchase of factoring receivables is also carried out using an IT-supported, automated process. In contrast to our other activities, in this area we acquire customers directly and actively through mailings and telephone campaigns.

All of the contracts related to the GRENKE Consolidated Group's operating business are centrally administered and automatically processed at our headquarters in Baden-Baden. We calculate and measure the financing's risks and loss rates with our IT-based model for forecasting losses which was constructed internally and is continuously improved. This is how we are able to limit the cost of credit checks and can issue contracts and payment approvals within a short period of time.

Sales Markets

The GRENKE Group operates internationally. Sustainable and rapid geographic expansion is our specialty. This includes the penetration of new international markets such as, most recently, those of Brazil, Dubai, Canada, and Turkey. It also embraces the continuous concentration of our proximity to our customers in our existing markets. In the reporting year, we opened new locations in Belgium, France, UK, Italy, Romania, Switzerland, Spain, and Austria. Furthermore, we have acquired the businesses of our previous franchise partners in Finland and Slovakia. Currently, the GRENKE Group is present in 27 countries with 100 locations, whereby 25 of those locations are in our home market of Germany. As in the previous year, our international business in the reporting year contributed approximately 66 percent of the new business of the GRENKE Group.

External Factors Influencing our Business

Key external factors which influence the business of the GRENKE Consolidated Group are, to a larger extent, industryspecific trends and, to a lesser extent, general macroeconomic conditions. While in the recent past we have already shown that we can continually increase our new business, even in the face of economically challenging times, changes in the business policy of banks in the leasing business or in the regulatory environment may have an impact on the GRENKE Consolidated Group's business. Additional external influential factors such as the rate of insolvencies or changes in currencies and interest rates are described in the risk report in the section titled "Macroeconomic and Industry-specific Conditions".

Targets and Strategy

As a growth company, we pursue a clear goal: market leadership in the field of financial services for SMEs. In terms of the individual countries where we are present and in terms of the products we offer, we are already the current market leader in small-ticket IT leasing in Germany and Switzerland. At a European level, we are one of the primary providers of financing services for SMEs. Over the past several years, we have entered the markets of various other countries outside of Europe.

In our international business, we do not necessarily aim at achieving market leadership in each individual country we operate in, but rather we concentrate on those markets which, over time, offer the most attractive risk-reward profile. Our assessment is based on the competitive environment in those respective markets at that time. We then press ahead with our growth in these markets. Following the recent financial and sovereign debt crisis, many competitors reduced their offers in small-ticket IT leasing, or even exited the market entirely. In addition, providers from the banking industry are burdened by losses in other business areas and are faced with a notable increase in regulatory requirements. This presents us with an attractive opportunity to continue expanding our position as a leading provider of financial services for SMEs.

We do this by continually increasing the geographic penetration of our network of subsidiaries and branch offices in order to increase our proximity to customers. We are rapidly penetrating new markets through franchisees that have a good understanding of their local markets. Opportunities for growth through acquisition result mainly from acquiring the companies of our franchisees a few years after they have been established. This is how we ensure we are familiar with and are able to reliably judge the quality of the receivables portfolio when undertaking these acquisitions.

With new business growth in the GRENKE Group averaging 16 percent over the past five years, we are highlighting our ability to profit equally in times of economic strength and weakness. During the year under review, we were successful once again in increasing our new business and this achieved growth of approximately 16 percent. The number of lease applications rose to 296,800 in the reporting year after 256,772 in the prior year, whereby 234,423 lease applications stemmed from our international markets. The conversion rate (conversion of lease applications into contracts) amounted to 41 percent.

Beyond our regional growth, we continue to further diversify our product range and our offers for finance solutions. This includes, for example, various financing, investment, and payment products of GRENKE BANK AG. In cooperation with an increasing number of development banks of individual German states and the federal government, GRENKE BANK also finances start-ups and provides development funds. Until now, 8,847 lease contracts have been concluded as part of these collaborations. In addition, we offer the purchase of lower-volume receivables (factoring) in various European countries as a permanent component of our extensive product range. In terms of factoring, we offer an added financing alternative, especially for our small and medium-sized leasing customers. Due to the low contract volumes, this alternative is only offered by our competitors to a limited extent, as is the case in small-ticket IT leasing.

Strategically, we rely on diversification to limit risk. The broad diversification of our portfolio across customers and industries and the low average volumes of our contracts characterise our business. Thus, in the 2013 fiscal year, once again no single lessee accounted for more than a one percent share in GRENKE Group's new business and not one of GRENKE Consolidated Group's customers had total liabilities of more than two percent of the Consolidated Group's equity. Our aim is also to avoid cluster risks with our sales partners and remain independent of any one manufacturer with respect to IT products. We shape our factoring business and our banking services in a similar manner. And finally, we rely on the ongoing expansion of our existing broad range of refinancing instruments, so that we are always able to take advantage of a variety of options when financing our growth.

Management System

Our management focus is on gaining further market share, not only in our home market of Germany, but also in our international markets. Therefore, at the GRENKE Group, we strive for long-term growth in our new business – that is, the total of the acquisition costs of newly purchased lease assets, factoring volume, and business start-up financing – of at least ten percent annually. In fiscal year 2013, we greatly surpassed this target once again with growth of 16 percent.

We rely on a balanced risk/return profile. This means we do not attempt to avoid risk all together; rather, we strive to assess risk appropriately and to achieve margins that adequately reflect this risk. We do this using our proven longstanding and continuously refined IT-based model for forecasting losses at the time of concluding the contract and according to our own risk assessment. In our leasing business, we manage according to the contribution margin 2 (CM2 margin) in particular. This is the present value of the lease contract's operating income less the costs of risk and the individual contract costs. Owing to the consistent penetration of markets we consider attractive, and the continued favourable interest rate environment, the CM2 margin in the reporting year remained at an agreeable 19 percent after a level of 20 percent in the previous year. The key performance indicators applied to our factoring business are the factoring margin and the number of days of the respective transaction. With a margin of 2.3 percent and an average term of 36 days for a factoring transaction in fiscal year 2013, we remained precisely at the previous year's level. We manage the approvals of financing applications graded according to risk categories both in terms of the absolute number of approvals and according to a riskweighted margin. At the same time, we use this method to reach a stable level of profitability upon which we continue to place great importance. The key performance indicators for GRENKE Bank's business are not only the volume of deposits, but also the volume of start-up financing, which increased 22 percent and 7 percent in the reporting year. As the primary institution of GRENKE BANK AG, GRENKELEASING AG and hence, the GRENKE Consolidated Group, regularly comply with the requirements of the Solvency Regulation.

Additional key performance indicators in the GRENKE Consolidated Group include a sustainable high return on equity (ROE) while maintaining a solid equity base. For many years, our targeted after-tax return on equity and the targeted equity ratio have remained at 16 percent. We consider these targets to be an essential prerequisite for ensuring our good rating. As a result of our strong growth over the past few years, the ROE was below our target level of 16 percent. The expenses that were occurred for our expansion into new markets, for "cell divisions", and for the opening of new locations in existing markets, are not directly covered by income, but rather, following the end of the start-up phase, we use embedded value as an additional key performance indicator. Embedded value represents the present value of all outstanding instalments after costs and risk provisions. If the embedded value at the end of the fiscal year exceeds the level at the beginning of the fiscal year, then the enterprise value of the Company will increase. Even if the ROE does not change materially in a given year, but the embedded value still increases, this would result in a positive effect for the Company. The combination of ROE and embedded value are the basis for value-oriented corporate management. Hence, we rely on active value-based management, which focuses on achieving growth and operating earnings.

In managing the refinancing of GRENKE Group, we apply a broad range of instruments which we maintain steadily. On the one hand, we strive for the most attractive refinancing conditions possible and, on the other hand, we ensure that cluster risks also do not occur on the liability side of the balance sheet. We also ensure that we are present on the market at all times with all of our instruments in order to form our own opinion of the current market conditions and to react in a timely manner, when necessary.

Research and Development

The GRENKE Consolidated Group is a financial services provider and is not involved in any basic research or development activities. GRENKE Consolidated Group's core competency is providing efficient risk processing and lease logistics through the employment of centralised and highly standardised IT processes. To do this, we routinely refine marketable products with individually programmed applications for our requirements. In the reporting year, we developed an additional application which will serve in the future as a centralised database for administering all of the operational processes, for example from the point of the customer's application to the disposal of the leasing object.

Economic Report

Macroeconomic and Industry-Specific Conditions

The GRENKE Group's potential is determined much more by general sector trends, such as the business policies of banks in the leasing business and increasing regulatory requirements in this sector, than by the overall macroeconomic development. The general economic trend has an impact on the purchase of capital goods and the development of insolvencies. However, we are able to effectively cushion the impact of insolvencies. This is reflected in the development of the loss rate in comparison to the development of corporate insolvencies as tracked by EULER HERMES. Whereas EULER HERMES expects a global increase of two percent in the number of corporate insolvencies for 2013, the loss rate of the GRENKE Consolidated Group has remained at the prior year's level.

The importance of these results becomes particularly evident when considering the vast regional differences. Insolvencies in recession-hit Southern Europe have increased significantly in 2013. According to EULER HERMES, insolvencies rose 12 percent in the eurozone. In those markets important to GRENKE, insolvencies increased higher-than average in Spain (+25 percent) and Italy (+10 percent), whereas the two percent increase in France was rather moderate. In Germany (–6 percent) and the UK (–14 percent), the level of insolvencies experienced considerable a decline.

* Information regarding the eurozone based on EULER HERMES Economic Outlook (November 2013); final publication

Capital market and central bank interest rates affect GRENKE Group's refinancing costs. However, since we can use a broad range of refinancing instruments – including the possibility of obtaining bank deposits via the GRENKE Bank – we have the possibility of using a variety of instruments in a flexible manner dependent upon the expected market situation and interest rate development. GRENKE Bank AG provides the Group access to not only institutional investors, but also to private investors and effectively diversifies the Group's investor base. This broad mix of products and investors gave the bank sufficient access to refinancing funds at all times in fiscal year 2013, which could be obtained at attractive conditions.

Business Performance

The renewed successful business performance, in line with our strategic targets, marked the key event of the 2013 fiscal year. Our growth continued to clearly exceed our long-term target level of ten percent. New business soared by 16 percent to EUR 1,188.2 million. As a result, we also achieved our target for 2013 and reached the upper end of our guidance range of growth of 13 to 16 percent. The CM2 margin from new business remained at the high level of the previous year, thanks to our consistent risk management with risk-appropriate margins. In the reporting year, we have laid the groundwork for sustainable new business growth in the future and we advanced our regional expansion and the diversification of our financial services.

Our refinancing activities went smoothly in fiscal year 2013. Thanks to its stable and high ratings, GRENKE enjoys an excellent reputation in the capital markets. The two bond issues in June and at year-end with a total volume of EUR 225 million were particularly well received by the market and seamlessly replaced the outstanding bonds which became due shortly after. The follow-on financing of debentures coming due was also successful. Furthermore, we were able to win additional refinancing partners once again during the reporting year and significantly expand GRENKE BANK AG's deposit business.

The capital increase of February 2013 marked a special highlight. Within just a few hours, we were able to place 1,015,901 new no-par value bearer shares at a price of EUR 53.50 per share by way of an accelerated book building process. The offer was heavily oversubscribed. Equity was significantly strengthened due to the net proceeds of EUR 53.7 million. This performance, along with our placement power in the debt capital markets, allows us to consistently bring the GRENKE Group forward in line with its strategic targets. Our refinancing activities during the fiscal year are discussed in detail in the section titled "Report on Net Assets".

In the 2013 fiscal year, we acquired franchise companies in Finland and Slovakia. Overall, funds totalling EUR 5.8 million were used for the acquisition of subsidiaries in the reporting year. In January 2013, the last tranche of EUR 10.7 million became due from the acquisition of a franchise company in 2012. Further information on acquisitions can be found in the sub-sections on the "Financial Situation" of the GRENKE Consolidated Group.

Above and beyond these acquisitions, we have laid the groundwork in 2013 for expansion into new markets and for increasing our presence in existing markets. We continued with the path of establishing GRENKE as a global company which we set out on in 2012 through the establishment of new franchise companies in Dubai, Toronto, and Montreal. We carried out ten "cell divisions" in nine different countries. This underlines our commitment to maintaining the closest proximity to our customers possible in all of the markets we operate in.

Since May 2003, we have had a long-term issuer credit rating from Standard & Poor's of "BBB+" and a short-term rating of "A-2" with a stable outlook. This good rating contributes greatly to our standing in the capital markets. In September 2013, the ratings were reconfirmed once again (issuer credit rating of "BBB+" for long-term and "A-2" for short-term maturities). The ratings raised in the previous year, were also reaffirmed (rating of senior unsecured debt from "BBB" to "BBB+" and short-term debt from "A-3" to "A-2"). In December 2012, the outlook was downgraded to "negative". This outlook has been maintained even though the risk position has a more favourable rating (upgraded from "moderate" to "adequate"). The cause for this negative outlook is Standard & Poor's continued opinion that we have carried on expanding in markets subject to higher general economic risks.

Taking risks forms a significant part of our business model. Due to the experience of our continuously enhanced model for forecasting losses, we are confident that, on the basis of this model, we can accurately assess risks and can thus determine financing conditions with an appropriate premium, even in these still challenging times. Therefore, we will work diligently on communicating these and the other strengths of our business model. Detailed information on the workings of our model for forecasting losses is provided in the Risk Report.

Financial Situation

Report on the Results of Operations

Selected Information from the Consolidated Income Statement

	Jan. 1, 2013	Jan. 1, 2012
EURk	to Dec. 31, 2013	to Dec. 31, 2012
Net interest income	130,466	111,465
Settlement of claims and risk provision	49,794	43,421
Net interest income after settlement of claims and risk provision	80,672	68,044
Profit from insurance business	35,837	30,156
Profit from new business	43,932	35,698
Profit from disposals	710	3,982
Income from operating business	161,151	137,880
Staff costs	51,756	42,809
of which total remuneration	42,748	35,402
of which fixed remuneration	31,772	26,498
of which variable remuneration	10,976	8,904
Selling and administrative expenses (not including staff costs)	38,543	30,395
Earnings before taxes	64,258	59,698
Net profit	47,012	42,461
Earnings per share (basic) in EUR	3.23	3.10
Earnings per share (diluted) in EUR	3.23	3.10

In fiscal year 2013, the GRENKE Consolidated Group continued with the positive business development seen in the past years. Following an increase in net profit of eight percent in the previous year, net profit improved eleven percent in the reporting year. The former franchise companies in Spain (Madrid/Malaga), Romania, and Portugal, which have been consolidated since the third quarter of 2012, contributed solid results to the Consolidated Group's profit on a full-year basis. In the reporting year, the FCT "GK" Compartment "G3", for the securitisation of French lease receivables was included in the scope of consolidation for the first time as per the end of the first quarter 2013 (March 31). The former franchisees in Finland and Slovakia were included as per the end of the first-half (June 30, 2013). The newly consolidated companies did not yet have a noticeable impact on net profit. Currency effects to be recognised in profit and loss also did not have a material impact on net profit.

The increase in earnings in the reporting year was again largely the result of the strong level of high-margin new business generated in recent years, which has been generating income for us gradually as the terms of the leases progress. Therefore, the trend continued toward a significantly more pronounced rise in interest income and similar income from the financing business. At the same time, interest expenses of the refinancing and deposit business only saw a moderate one percent increase to EUR 58.3 million from EUR 58.0 million in the prior year. Accordingly, net interest income rose 17 percent in the reporting year. By consistently managing our new business margin, we are able to achieve a disproportional rise in income and take into account future risks in our financing conditions. Consequently, we are always prepared for a possible rise in losses. During the 2013 fiscal year, the trend of rising expenses for the settlement of claims and risk provision of the previous years has reversed. Following a 26 percent jump in the prior year, it rose only 15 percent in 2013. Hence, the net interest income after settlement of claims and risk provision grew 19 percent. The loss rate remained at the level of the two previous years and amounted to 1.7 percent.

Profit from insurance business grew 19 percent and was in line with the net interest income after settlement of claims and risk provision. Profit from new business performed even better with an increase of 23 percent. As a net amount, the profit from disposals tends to be volatile and usually makes only a minor contribution to earnings. In the reporting year, it declined sharply following a comparatively high level in the previous year. In total, the income from operating business grew 17 percent.

The number of employees rose by 20 percent. At the same time, total remuneration increased by a total of 21 percent and consisted of fixed and varaiable personnel expenses. In order to ensure the transparency of the development of our fixed cost base and our variable remuneration, both components are reported separately. Compared to the previous year, fixed remuneration increased 20 percent, while variable remuneration rose 23 percent. This resulted not only from the usual annual salary increases and payments of performance-related remuneration, but also from first-time consolidations.

Selling and administrative expenses grew disproportionately higher and increased 27 percent. This was primarily the result of higher investments in our IT systems and increased consulting and auditing fees in connection with market entries in new countries. Following a strong rise in the previous year, other operating expenses declined significantly by 25 percent from EUR 5.0 million to EUR 3.8 million in the year under review. The 13 percent decline in other operating income to EUR 3.1 million from EUR 3.5 million in the prior year was the result of lower franchise fees following the recent acquisitions.

In fiscal year 2013, earnings before taxes increased eight percent year-on-year. Earnings per share amounted to EUR 3.23 compared to EUR 3.10 in the previous year based on the average number of shares outstanding.

Report on Segment Development

Business Segments

GRENKE Consolidated Group's reporting on the development of its segments is aligned along its prevailing organisational structure within the GRENKE Consolidated Group. Therefore, operating segments are divided into Leasing, Banking, and Factoring based on the management of the Company's segments. The result of intra-group risk provisions resulting from GRENKE BANK AG's purchase of lease receivables, which had been reported as other comprehensive income in the segment reporting in fiscal year 2012, has been reclassified as operating segment income in fiscal year 2013. The previous year's figure has been adjusted accordingly to EUR 9,168k. This had no impact on the segment results.

Selected Information on the Business Segments

	Segments
	Leasing			Banking		Factoring
EURk	2013	2012	2013	2012	2013	2012
New business (Leasing) / Receivables volume (Factoring)	1,002,250	898,562	--	--	179,372	122,859
Contribution margin 2 (CM2)	190,181	175,482	--	--	--	--
CM2 margin	19,0	19,5	--	--	--	--
Operating segment income	147,096	131,314	12,510	9,168	1,545	1,589
Staff costs	49,407	40,694	1,344	1,259	1,005	856
Segment result	55,535	53,641	9,165	5,844	3	316

Business Performance

The information in the previous section on the results of operations of the GRENKE Consolidated Group also essentially apply to this section since the Leasing segment continues to be the most important earnings pillar for the GRENKE Consolidated Group.

In the fiscal year 2013, the operating segment income for the Leasing segment grew twelve percent to EUR 147.1 million from EUR 131.3 million in the previous year. Segment results increased four percent to EUR 55.5 million from EUR 53.6 million. Operating segment income of the still relatively new Factoring segment remained nearly unchanged at EUR 1.5 million after EUR 1.6 million. Following a profit of EUR 0.3 million in the prior year, the segment broke even in 2013. The Banking segment experienced exceptionally favourable development. Operating segment income grew an above-average 36 percent to EUR 12.5 million from EUR 9.2 million, whereas the segment result soared 57 percent to EUR 9.2 million after EUR 5.8 million. After having stepped into the banking business at the beginning of 2009, it has developed into a main earnings pillar of the GRENKE Consolidated Group

From regional viewpoint, our operating income in Germany remained at the previous year level. In France, which continues to be our largest international market, operating income grew clearly above-average by 52 percent to EUR 37.7 million. Italy, our fastest growing market in recent years, also achieved favourable growth of 24 percent to EUR 24.1 million. The success in Italy, which is still hard hit be recession, proves the effectiveness of managing our rapid growth while maintaining a balanced risk/return profile. The operating income in the countries combined under "Others" grew 14 percent to EUR 45.3 million.

New Business of the GRENKE Group

During the 2013 fiscal year, GRENKE Group Leasing's new business performed in line with our expectations and grew twelve percent to EUR 1,002.3 million from EUR 898.6 million in the previous year. Thus, new business exceeded the EUR 1 billion threshold for the first time. The growth of the domestic business was only slightly lower at eleven percent, increasing to EUR 295.3 million after EUR 265.4 million in the prior year. This was the result of increased sales activities and further gains in market share in the highly-penetrated German market. International markets demonstrated aboveaverage growth. In Western Europe (without Germany), new business increased 14 percent and reached a volume of EUR 319.5 million after EUR 281.0 million. We continued to achieve stable growth in Southern Europe and in Northern/ Eastern Europe with new business expanding 13 percent and ten percent, respectively. In our other regions, which include the countries of Brazil, Dubai, Canada, and Turkey, we have purposely reduced the rate of new business growth in the fourth quarter of 2013 due to risk considerations. Here, we continue to be in a phase of careful observation of these markets which are still new to us. As a result, new business volume remains at a very low level. Overall, new business declined from EUR 18.3 million to EUR 14.6 million in fiscal year 2013.

The contribution margin 2 of GRENKE Group Leasing's new business rose eight percent to EUR 190.2 million compared to EUR 175.5 million in the previous year. At 19.0 percent, the CM2 margin was slightly below the prior year's level of 19.5 percent (the prior year's figure has been adjusted due to a modified calculation method). This development underpins our ability to generate significant growth even in the highly-penetrated, established, and lower-risk markets of Germany and Western Europe, without accepting substantially lower margins.

We were also very successful with our factoring offers in 2013: new business volume soared 46 percent to EUR 179.4 million from EUR 122.9 million. Again, this was largely supported by our international business which nearly doubled its new business. In our domestic market of Germany, we continued to experience a high level of new business growth of 22 percent. GRENKE Group's Factoring profit margin of 2.3 percent was once again at the previous year's level. As in the previous year, this margin is based on an average factoring period of approximately 36 days.

GRENKE Bank's business also performed very favourably in the reporting year. The deposit volume grew 22 percent to EUR 255.6 million after EUR 209.4 million in the previous year. The volume of business start-up financing increased seven percent and reached EUR 6.6 million after EUR 6.1 million. Various partnerships with German state development banks give us the opportunity to provide small and medium-sized companies and self-employed professionals' with access to development funds when they finance business investments through lease financing. In the third quarter of 2013, we added a new agreement for a global loan with Thüringer Aufbaubank.

Growth rates in new business of GRENKE Group Leasing as per December 31, 2013 (as against the comparable period of 2012)
20%
10%	11.3	13.7	13.0	9.8
0%
–10%
–20%
–30%					–20.1
	Germany	Western Europe (without Germany)	Southern Europe	Northern / Eastern Europe	Other regions

Regions: Western Europe (without Germany): Austria, Belgium, France, Luxembourg, the Netherlands, Switzerland Southern Europe: Italy, Malta, Portugal, Slovenia, Spain

Northern / Eastern Europe: Denmark, Finland, Ireland, Norway, Sweden, UK / the Czech Republic, Hungary, Poland, Romania, Slovakia Other regions: Brazil, Canada, Dubai, Turkey

Report on the Financial Position

Selected Information from the Consolidated Statement of Cash Flows

EURk	Dec. 31, 2013	Dec. 31, 2012
Cash flow from operating activities	–3,905	80,067
Net cash flow from operating activities	–25,829	62,597
Cash flow from investing activities	–22,307	–39,333
Cash flow from financing activities	41,225	–10,752
Total cash flow	–6,911	12,512

In the reporting year, cash inflows from refinancing amounted to EUR 163.9 million and were significantly below the previous year's level of EUR 262.2 million. Refinancing via GRENKE BANK AG's deposit business was also used to a lesser extent and amounted to EUR 46.3 million after EUR 54.2 million. The cash outflow for other assets was reduced for the second consecutive year and reached EUR 1.9 million compared to EUR 33.5 million. As a result of our actively managed refinancing activities, cash flow from operating activities was slightly negative in the reporting year at EUR –3.9 million (previous year: EUR 80.1 million). The net cash flow from operating activities amounted to EUR –25.8 million after EUR 62.6 million in the prior year.

The cash flow from investing activities totalled EUR –22.3 million. In addition to payments for the usual annual purchase of operating and office equipment and intangible assets, cash flow from investing activities for the period under also includes payments for the acquisition of subsidiaries in the amount of EUR 15.9 million after EUR 31.4 million in the previous year. In the reporting year, this included a payment of EUR 10.7 million for the last instalment of the purchase price of the former franchise company in Portugal acquired in 2012. In the year under review, the cash flow from financing activities was largely impacted by proceeds of EUR 53.7 million from the cash capital increase mentioned above and amounted to EUR 41.2 million after a dividend distribution of EUR 11.8 million compared to EUR –10.8 million in the prior year. In the previous year, cash flow from financing activities had primarily included the dividend payment. Total cash flows in fiscal year 2013 amounted to EUR –6.9 million after EUR 12.5 million in the previous year.

Report on Net Assets

Selected Information from the Consolidated Statement of Financial Position

EURk	Dec. 31, 2013	Dec. 31, 2012
Current assets	1,104,995	1,020,928
of which cash and cash equivalents	109,770	116,707
of which lease receivables	775,167	688,141
Non-current assets	1,533,093	1,331,364
of which lease receivables	1,374,702	1,185,787
Total assets	2,638,088	2,352,292
Current liabilities	880,293	758,164
of which financial liabilities	778,979	639,199
Non-current liabilities	1,318,333	1,243,155
of which financial liabilities	1,272,584	1,203,107
Equity	439,462	350,973
Equity ratio in percent	16.7	14.9
Total assets	2,638,088	2,352,292

As a result, our high new business volume, lease receivables of the GRENKE Consolidated Group increased 15 percent in fiscal year 2013. Lease receivables represent 81 percent of total assets and are thus by far the largest asset category. The twelve percent growth in total assets to EUR 2,638.1 million was also largely the result of the rise in lease receivables.

Equity was significantly strengthened in 2013. On the one hand, this was the result of the solid income development. Retained earnings including the unappropriated surplus rose 13 percent or EUR 35.3 million to EUR 306.1 million, net of the dividend payment. On the other hand, capital increase the successfully placed in February 21, 2013 resulted in proceeds of new equity of EUR 53.7 million. With the issuance of 1,015,901 new ordinary no-par value bearer shares at a price of EUR 53.50 the share capital rose by EUR 1.3 million or seven percent to EUR 18.8 million. Capital reserves grew 87 percent, or EUR 52.6 million, to EUR 112.8 million. In total, equity expanded 25 percent, or EUR 88.5 million, to EUR 439.5 million after amounting to EUR 351.0 million in the previous year. At 16.7 percent as per the end of the reporting year, the equity ratio has exceeded our long-term target level of 16 percent.

To finance the lease receivables, we made use of our wide range of refinancing sources. In fiscal year 2013, we added an additional asset-backed commercial paper (ABCP) programme with HSBC bank with a volume of EUR 133.3 million for the financing of French lease receivables to the four existing ABCP programmes having a volume of EUR 400.0 million. Hence, the total volume as per the end of the fiscal year amounted to EUR 533.3 million. As per the reporting date, 63 percent of this volume was utilised (previous year: 53 percent). In January 2014, one programme for the financing of German and Austrian lease receivables with a volume of EUR 40 million expired with no prolongation. The number of existing revolving credit facilities increased from four to five. Here, we have total financing volume of EUR 125.0 million. As per the reporting date, these were utilised in an amount of EUR 25.0 million. In addition, two new bonds with a total nominal volume of EUR 225.0 million were issued in the reporting year and two bonds with a volume of EUR 80.8 million were repaid as scheduled. Three new promissory note loans with a total volume of EUR 45.0 million were taken, of which one is already in the redemption phase. As per the reporting date, EUR 3.3 million has been repaid. A total of six promissory note loans with a total volume of EUR 59.5 million were redeemed.

As per the reporting date, EUR 10.0 million and CHF 2.0 million of the EUR 45.0 million in available money market facilities was utilised. The CP programme with a volume of up to EUR 250.0 million was utilised in an amount of EUR 5.0 million as per the end of the reporting period. Refinancing via GRENKE BANK AG bank deposits was also used very successfully once again, with the liabilities of the deposit business increasing significantly by 22 percent to EUR 255.6 million after EUR 209.4 million.

Unused credit lines (bank credit lines plus the available volume of DIP and ABCP programmes) amounted to EUR 960.4 million as per the reporting date.

In 2013, we expanded our cooperation with the development banks of individual German states by adding LfA Förderbank Bayern as a new partner. Generally, we refinance the development funds we contract via global loans from the respective development banks. As per the reporting date, global loans totalled EUR 70.0 million (previous year: EUR 40.0 million). Of this amount, EUR 29.6 million were utilised as per the 2013 reporting date.

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 per December 31, 2013.

		Payments falling due
		within	3 months	1 – 5	after
EURk	Total	3 months	to 1 year	years	5 years
Financial liabilities	1,945,748	280,118	415,832	1,198,235	51,562
Leases and rentals	30,001	2,462	6,967	17,339	3,234
Purchase obligations*	318,522	318,522	0	0	0
Obligations from onerous contracts**	3,710	925	2,018	768	0
Total contractual commitments	2,297,980	602,026	424,816	1,216,342	54,796

* 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 appropriate presentation of the cash flows that would be due for payment should these positions be closed out.

See the notes to the consolidated financial statements

In addition to the usual purchase obligations as part of ordinary business activities, interest and principal payments for financial liabilities in particular will become due in the current 2014 fiscal year. Of the EUR 696 million in financial liabilities coming due in 2014, EUR 203 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. Thus, the amounts released by the repayment of lease receivables can be reemployed.

The largest other individual items of financial liabilities coming due in 2014, are two bonds with a volume of EUR 100.0 million each to be redeemed in January and April. The EUR 125 million bond issuance in December 2013 secured the redemption of the bond coming due in January. Furthermore, two additional bonds with a total volume of EUR 25.7 million and ten promissory note loans totalling EUR 108.7 million will mature in 2014. The promissory note loans will come due in the following months: February (EUR 10.0 million); March (EUR 34.5 million); April (EUR 6.7 million); June (EUR 26.7 million); July (EUR 12.5 million); August (EUR 15.0 million); and December (EUR 3.3 million). The liabilities will be repaid from operating cash flow, available refinancing facilities and the potential use of further refinancing activities. The GRENKE Consolidated Group manages the use of refinancing funds based on the development of new business and the cash flow of the receivables portfolio.

Financial and Non-Financial Performance Indicators

Financial performance indicators used in the GRENKE Consolidated Group and their development in fiscal year 2013 are discussed in the section titled "Management System". Above and beyond the financial and organisational management of the GRENKE Consolidated Group, our success is due to a large extent from non-financial activities. These activities are related primarily to the following areas:

Commitment to Corporate Responsibility

Integrity is the key to the long-running success of the GRENKE Consolidated Group. We conduct business based on the binding GRENKE Code of Conduct. This Code goes above and beyond the statutory and regulatory requirements in our markets and binds us to an ethical framework. This is how we ensure that our Company's fundamental values are maintained and practiced across national borders and surrounded by all of the diversity characterising our international organisation.

The response from our employees, suppliers, lessees, and other business partners, as well as their suggestions, requests, and complaints, have been systematically recorded and analysed for many years. The so-called "internal recipient satisfaction" assessment of senior managers and other departments contributes to the balanced scorecard assessment and hence influences the performance bonus paid to the senior managers and departments assessed. As part of the so-called "external recipient satisfaction", the suggestions and criticism of our financing recipients and specialist reseller partners are continually evaluated. This is how we ensure that the feedback from our business partners is recorded within a structured process so that we may take it into consideration when expanding our range of products and services.

Contemporary Human Resource Management

GRENKE is a service Group. Thus, our employees play a particularly central role in establishing GRENKE Consolidated Group's profile in our target markets through their talents, capabilities, and commitment. Contemporary human resource management is one of our concerns and an obligation, so that we may continue to be successful for many years to come. The aim of our human resource management is to support our continued strategic development and our international growth as best as possible. We want to employ qualified and committed employees at all levels and keep them with us by offering attractive employment conditions and a future with an international company. This is also how we want to confront the growing competition for qualified personnel in the course of demographic change.

Beyond legal and regulatory requirements, we take employee matters very seriously in terms of our corporate identity in relation to corporate responsibility. Therefore, the manner in which we work alongside and treat one another within the Company has been summarised in a handbook. This handbook describes the responsibilities of our employees to the Company as well as the responsibilities of the GRENKE Consolidated Group to its employees. We emphasise appreciation, fairness, and respect in dealing with one another. We support personal responsibility and equal opportunity, encourage the individual strengths of our employees, and take their requirements in terms of shaping their work environment and working hours, into account wherever possible. The reconciliation of family life and career are taken into consideration. Through further training and qualification programmes we place our employees in a position to meet the demands made of them while expanding their opportunities for professional and personal development.

The number of employees at the GRENKE Consolidated Group (excluding the Board of Directors) rose to an average of 819 employees in the reporting year (previous year: 681). In addition to hiring new staff to achieve our growth targets and to take advantage of other opportunities for expansion, employee numbers also increased due to the first-time consolidation of newly acquired companies. There was an average of 378 people employed in Germany (previous year: 344 people) and 441 people employed at our international locations (previous year: 337). The 20 percent increase in the number of employees in the reporting year was slightly above the increase seen in our new business.

The average fluctuation rate for the Consolidated Group was 5.7 percent after 6.5 percent in the previous year and thus, has gladly continued to a lower level. As in the previous years, the level of fluctuation at the management level and among senior executives was substantially lower.

Further promoting the 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. Across all locations, we offer our employees attractive options for further training via the GRENKE Academy. Here, further personal development stands at the forefront. Regularly conducted evaluation processes and the use of modern E-Learning programmes not only ensure that our high demands for quality are met, but also secure the transfer of knowledge within the GRENKE Group. This has had much success: In the reporting year, 83 percent of the GRENKE Consolidated Group's employees had taken part in various training.

We also offer a wide range of vocational training and dual-study courses. In fiscal year 2013, we had a total of 32 young trainees. We also regularly support new apprenticeships such as those in the area of dialogue marketing, where we currently have two trainees. In the area of specialist IT, we are currently training three employees in the field of systems integration and two employees in the field of application development. We also have two young colleagues completing their training as office administrators.

Additionally, seven students are currently undertaking the tri-national International Business Management degree programme that combines work and study from the Baden-Württemberg Cooperative University of Lörrach (DHWB), the University of Applied Sciences Arts Northwestern Switzerland in Basel, and the Haute Alsace University in Colmar. This opportunity is offered to young people by GRENKELEASING AG as well as our subsidiaries in Switzerland and France. We have worked with the Cooperative University of Lörrach since 2004. In addition to the tri-national degree programme, we also offer a dual course of study in Lörrach which leads to a Bachelor of Science degree in Business Information Systems. Two young people started this degree programme in 2013.

At the Cooperative University of Karlsruhe – with which we have a cooperation dating back to 2007 – one student is currently enrolled in business information systems courses, while another is studying applied computer science. We have also worked with DHBW Mannheim since 2007 in the area of accounting and controlling, and currently have four students enrolled. We expanded this cooperation in October 2011 and now also offer International Business as a dual course of study. Six students have taken up this opportunity to date.

Knowledge of the Markets and Individuality of the Product Range

The GRENKE Group is active in Europe and also in a growing number of other 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. Beyond simple, standardised financing, we offer a broad range of contractual options that are tailored to the various traditions of the local markets and to the very different needs of our customers. This is what makes our success possible.

When developing a new market, we start with a detailed examination of the conditions and the legal environment from our location in Germany. Then, we either form a local subsidiary or enter into a contract with an entrepreneurial franchisee that has extensive knowledge of the local market. Our range of contracts 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 local unit's contribution margin requirements are fine-tuned in a continuous and standardised process that is also increasingly being processes online.

International Customer Base

Over decades, we have established our broad international customer base. The number of current contracts in the GRENKE Group's Leasing segment amounted to 369,591 as per the end of the reporting year. In addition, we have further increased our customer base over the past several years by offering additional financing and investment products. Today we can continue to expand from an established base from which we can generate recurring business. Moreover, a variety of cross-selling opportunities present themselves since we also offer these customers our successively expanding product range.

Thus, our established customer base represents a key competitive advantage and, owing to the low average volumes of our individual contracts, also represents a significant barrier to market entry for other providers. Finally, our international focus has given us extensive experience in developing new markets and leveraging their potential. The proven high scalability of our business model, which is continuously implemented in practice, allows us to quickly and efficiently address new regional markets and thereby expand our growth potential largely independent of local market developments.

Business Excellence in all Corporate Divisions

We differentiate ourselves from the competition through the excellent quality of our processes. The continual improvement of our quality management forms part of our corporate philosophy. This enables us to provide a high level of service quality and satisfaction among our customers and business partners. Our quality management system was certified for the first time in as early as 1998. It primarily consists of our model for forecasting losses, evaluation of our reseller relationships, documentation of our business processes, and development of software designed to meet our specific needs

The internally developed, IT-based model for forecasting losses was introduced in 1994 and has been enhanced on an ongoing basis ever since. By combining information from publicly available databases and our own criteria – which is continually refined – we categorise risks and the contribution margins required in order to generate our return targets on a sustainable basis. The aim of the model is not to minimise risk, but to assess it correctly. Losses calculated in advance as part of our contribution margin calculation come very close to actual loss rates. This ensures that we achieve our return targets while offering the most competitive conditions possible. Further information on our quality management system and on our model for forecasting losses is provided in the Risk Report, which forms a part of the "Report on Risks, Opportunities, and Forecasts".

Reputation on the Equity and Debt Capital Markets

Our reputation in the debt capital markets largely determines our access to funding, and the conditions at which we can assume debt. Therefore, it comprises one of the primary factors influencing the GRENKE Group's competitive strength and growth potential.

We have cultivated our presence on the debt capital markets for a number of years, and thereby rely on the continual expansion of our existing and widely diversified refinancing options. We are convinced that this is how we have been able to create a significant competitive advantage. This is particularly relevant since regulatory requirements are intensifying as a result of the recent financial and sovereign debt crisis, making it more expensive for companies in all industries to obtain refinancing. Competition for financing and equity has already increased significantly and this trend is set to continue.

Finally, we place a high value on our strong reputation in the stock market. We strategically pursue this aim independently of our capital requirements. Our presence is characterised by timely, transparent, and regular reporting according to global standards, personal discussions with capital market participants at the level of the Board of Directors, and a consistent, shareholder-friendly dividend policy. This is the result of a sustainable and attractive equity story.

Overall Statement on the Business Performance and the Financial Situation of the GRENKE Consolidated Group

In fiscal year 2013, we were able to continue with our positive development of past years, increase the penetration of our network of locations, and in turn, also strengthen our market position. Once again, GRENKE Consolidated Group managed to continue its growth. We also continued expanding our existing and new regional markets as scheduled and diversify our range of finance solutions beyond our leasing business. The factoring business in particular is developing positively and has grown into a further source of growth in the meantime. The GRENKE Consolidated Group possesses a broad international presence with its diversified range of services which extends beyond Europe. With our experience, financial resources, and profitability, we see ourselves in an excellent position to manage the risks inherent in our business in the future and to recognise and seize the opportunities in our markets in a targeted manner.

As a result of the successful capital increase in fiscal year 2013, we were able to strengthen our equity base beyond earnings-induced accumulation in line with our strategic requirements for on-going dynamic growth. We continue to have full access to a variety of refinancing options, which are tailored to our needs, via the capital markets and through our deposit business. We steer our business exclusively along the lines of our strategic planning and concentrate on those markets which offer an attractive risk-reward profile. In 2014, a comparatively high volume of repayments is due. We have already prepared for the redemption through the successful bond issue at end of fiscal year 2013. Until recently, there was an increased level of interest in GRENKE as an issuer on the capital markets so that risk in this area is limited – and finally because of our continued high rating. Nevertheless, we expecting a high level of volatility in the capital markets overall in the future, especially since interest rate risks are rising in the face of an accelerating global economy. Over the past years, we have proven our ability to successfully handle the various situations and conditions in the capital markets.

Therefore, at the time of completing this combined management report, the GRENKE Consolidated Group finds itself in a very strong economic position which will allow it to continue with its international expansion, grow new business, and further increase its profits in the future.

Remuneration Report

The corporate governance report in this Annual Report includes the remuneration report, which presents the principles of the remuneration system for the Board of Directors and the Supervisory Board with the individualised remuneration of the members. This remuneration report forms part of this summarised management report.

Significant Events Subsequent to the End of the Financial Year

No events of material importance with regards to the results of operations, financial position, and net assets have occurred, subsequent to the end of the fiscal year, which require reporting.

Report on Risks, Opportunities, and Forecasts

Opportunities Report

For years, the GRENKE Group has had a continuously expanding and dense network throughout Europe in the area of small-ticket leasing. With the opening of a franchise company in Brazil, we have now begun to expand our business activities to countries beyond Europe and have started to establish GRENKE as a global company. This reporting year was marked again by the global expansion of our successful business model. We added further overseas locations with Dubai and Canada – also by initially employing our proven franchise strategy which we are also using in the area of factoring. Next to Germany and Switzerland, we also offer these solutions in the UK and Hungary, together with our partners. In addition to the targeted development of such markets, we are also taking advantage of opportunities in the markets where we have already successfully established ourselves. Thus, in the medium term, we will particularly profit from significantly expanding our market share in those existing markets. We will take particular advantage of opportunities where there is a significant improvement in the risk situation of SMEs due to the withdrawal of competitors and the limitation in their offers, or in the course of a macroeconomic recovery, which would then lead to the possibility of high-margin growth.

This will not entail additional substantial selling expenses since, in most countries, we already have many more financing applications than we can accommodate. Therefore, we may be able to rapidly expand our business by raising the conversion rate in individual markets. However, we will only do this to the extent feasible and without compromising our risk-adequate margin policy. Beyond regional expansion, we have also continually extended our range of financing solutions in the past several years. In this area, we benefit from our established customer base with which we can generate additional business.

By using these opportunities we will increase our new business in the future and strengthen our market position. However, a major impact on the earnings of the GRENKE Consolidated Group, which is in excess of our current expectations, should not be expected in the near term; the nature of our business dictates that income from new contracts accumulates successively throughout the contract's total term.

Risk Report

Risk Management

Risk management in the GRENKE Consolidated Group is carried out as a coordinated process at all relevant levels of the Consolidated Group's organisation and is closely coordinated with the activities of the individual divisions. The Board of Directors carries full responsibility for the supervision of and compliance with the risk management requirements of the GRENKE Consolidated Group. To meet supervision requirements, risk control is implemented within the GRENKE Consolidated Group. It is responsible for the assessment and evaluation of risks and for the independent monitoring, control, and communication of risks. Additionally, the Risk Task Force (AK Risk) is an important committee for risk management. This committee is comprised of the Chairman of the Board of Directors as well as all of the Chief Financial Officer as well as representatives from all of the relevant divisions. This guarantees a comprehensive flow of information.

The risk strategy determines the strategic and risk policy framework for the risk management of GRENKE Consolidated Group. The overall risk targets and the use of consistent standards, methods, procedures, and instruments to achieve them are defined within this framework. The establishment of requirements aims at creating a high quality standard, a highlevel integration, and a high recognition of strategic risk objectives. The risk strategy is derived from the business strategy and dictates the following strategic business targets:

• diversifying risk to avoid cluster risks
• a reduction in complexity through the streamlining and standardisation of processes in order to reduce operational risks
• a reduction in market price risks to the minimum level necessary for the operating business
• the use of technology (IT-based model for forecasting losses and early warning system) for measuring and managing risks

Should one of these or other elements of uncertainty occur, or should the assumptions upon which the statements are based prove to be incorrect, then the actual results could differ materially from those stated or implied in these statements.

Through the broad diversification of our business, we are not exposed to significant individual risks. Therefore, a concentration of risk can be just as effectively counteracted from the fact that only relatively small acquisition values are inherent in our core business of small-ticket leasing. Accordingly, cluster risks are not incurred: No individual lessee exceeds a one percent share in the GRENKE Consolidated Group's new business, nor does any customer of the GRENKE Consolidated Group account for a total exposure of more than two percent of the Consolidated Group equity. Large commitments are also monitored closely. We act accordingly with our business partners and we manage our factoring business and our banking services in the same manner.

The total of all risks is managed using a sophisticated risk management system which we established internally at an early stage and have consistently expanded. Here our aim is to measure risks accurately in order to be able to assume them under reasonable terms. We not only pay attention to individual risks, but also to possible risk clusters and overarching interdependencies in particular.

We are not exposed to residual value risks in our leasing business model. Basically, we only hold full payout leases in our lease portfolio. Under IFRS accounting, we calculate residual values for the recognition of lease receivables pursuant to IAS 17. However, our sustained positive profit from disposals demonstrates that we regularly do not apply excessive residual portfolio values when using these imputed variables.

Risk Management Process

The risk management process is based on the risk strategy and includes a regular cycle of risk identification, risk assessment, risk control, risk monitoring, and risk reporting. The aim and duty of risk management are to recognise, disclose, evaluate, and document internal and external risk and opportunities within the Consolidated Group in a systematic and structured manner. This procedure is designed to enable employees and the Board of Directors to address risks responsibly and make the most of opportunities that present themselves. The risk management process is developed on an ongoing basis and, among others, includes a risk management tool as part of drawing up an inventory of risks which is administered in the intranet of the GRENKE Consolidated Group. The system's functions and the results of the measures initiated are reviewed by the internal audit department which reports directly to the Board of Directors.

All-encompassing quality management is a key component of our risk management process and its consistent and continual improvement is a component of our corporate philosophy. This includes an assessment of our reseller relationships based on the risk of default, documentation of our business processes, and the development of a software system tailor made to our requirements for processing the contractual relationships with our lessees and franchise partners. For the renewed certification of our quality management in the reporting year, please see the separate section below.

Furthermore, the accuracy of the financing (avoidance of double-financing or actual purchase of the leased item) is examined and recorded semi-annually by external consultants. Apart from this, our procedures of assessing credit risks associated with lease contracts, but also from lending and factoring agreements, represent an integral part of our risk management system.

Regular employee risk surveys are carried out using a risk management tool, in which employees are expected to assess both existing as well as potential risks. The results of these surveys are subsequently discussed and analysed by the Risk Task Force. When risks are categorised as relevant, counteractive measures are determined to manage the risks. The Risk Task Force meets several times a year. It deals in particular with the risk surveys, ad hoc risk reports, and current challenges relating to risk management. To enable individual risks to be handled and assessed more intensively, risk task force sub-groups have been established to deal with the three areas of credit risks, market price risk, liquidity risks, and operational risks. These risk task force sub-groups report directly to the Risk Task Force and meet more frequently.

A risk inventory, i.e. an appraisal of all relevant and significant risks, is performed at least once annually as part of risk controlling. In particular, this involves an analysis of the latest risk surveys and ad hoc risk reports by the Risk Task Force. If changes or new risks arise, the Risk Task Force immediately informs the entire Board of Directors of the GRENKE Consolidated Group so that these can be taken into account in the business and risk strategy.

In addition to the annual risk inventory, regular risk surveys, and ad hoc risk reporting, we also consider risk management to include the use of comprehensive instruments for handling risks in the areas of financial and risk controlling in particular. Monthly calculations of risk positions are used with regard to financial market risks and the interest rate risk and liquidity position are regularly presented to and discussed with the Board of Directors of the GRENKE Consolidated Group.

The internal risk-bearing capacity model is an essential basis for the Consolidated Group-wide management and monitoring of our total risk profile and the economic capitalisation. The risk-bearing capacity model includes all risks identified as material (market price risk, credit risk, operational risk, and liquidity risk). The defined areas and types of risks are to be limited and covered by risk cover in the context of risk-bearing capacity considerations,

The GRENKE Consolidated Group has also established the independent functions of the compliance office, the anti-money laundering officer, the data protection officer, and those of risk control. The compliance office monitors insider information and rules of good conduct. It identifies and manages conflicts of interest with risk potential throughout the Group. The data protection officer monitors compliance with and implementation of data protection laws. The anti-money laundering officer monitors compliance with the duty of care resulting from the Prevention of Money Laundering Act. He also takes appropriate risk-based measures to counter legal and reputation risks with his policy in accordance with the regulatory requirements, including a current risk analysis of the GRENKE Consolidated Group, as well as through the use of monitoring and research instruments. These special officers report directly to the management. Therefore, as required by regulatory law, there are adequate and effective internal control mechanisms with regard to structure and process organisation for managing and monitoring the risks specified. As explained in the section titled "Risk Management", these risks are assessed and evaluated by the risk controlling and independently monitored, managed, and communicated.

Implementation of Regulatory Requirements (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 the Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin). These requirements contain qualitative requirements with regard to risk management, which are to be implemented by financial institutions in line with the scale, nature, extent, complexity, and risk content of their business. The GRENKE Consolidated Group fully complies with the appropriate management and controlling processes required by the fourth MaRisk amendment for the key types of risk: counterparty default; market price; liquidity; and operational risk.

GRENKELEASING AG, headquartered in Baden-Baden, is among other things the primary institution of GRENKE BANK AG, which is also headquartered in Baden-Baden and 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 also subject to the KWG and regulation by BaFin and the Bundesbank.

The latter two institutions have again utilised the waiver provided by Section 2a (1) KWG in the year under review. This allows subordinate institutions to notify BaFin and the Bundesbank that certain regulatory provisions have been applied and incorporated at a Group level rather than being applied at the level of the individual institutions, providing that the necessary organisational requirements are met in full by the primary institution.

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

Risk-Bearing Capacity

		Credit risks	Possible impairments as a result of deteriorated credit-worthiness or default of a business partner
		Market price risks	Possible impairments as a result of a change of interest rate risks, currency rates, and market volatility
		Liquidity risks	Possible default as a result of the insolvency und bottlenecks in refinancing
		Operational risks	Possible impairments as a result of unsuitability or failure of internal procedures, systems, or people or other external events
Risk-bearing capacity		Risks from investments	Possible impairments as a result of write-downs to the going concern value and disposals
	Other	Strategic risks	Possible impairments as a result of inappropriate business strategies
		Operational risks	Possible impairments as a result of a lack of diversification in the customer portfolio or faulty contract conditions
		Reputation risks	Possible adverse economic effects as a result of negative press coverage
			The internal model of risk-bearing capacity contains a value-oriented as well as a period-based assessment of risk-bearing
			capacity. These assessments serve to continuously ensure the Company's existence and also place the considerations of
			creditor protection (liquidation perspective) at the forefront. The fundamental objective of measuring risk-bearing capacity is
			to quantify existing risks from an earnings perspective in order to identify potential burdens on equity at an early stage and
			to be able to take the appropriate measures. The combination of risk cover (capital provided to cover risks), risk limitation,
			and risk capital requirements (risk) is called the risk-bearing capacity system. This system is integrated into the company
	wide strategy, planning, and management processes. Risk cover is the maximum amount of financial resources available
			to cover risk (primarily equity). The calculation of risk-bearing capacity has been modified to conform with the requirements
			pursuant to AT 4.1 and AT 4.3.3 MaRisk. The integrated stress tests were adjusted while taking the future-oriented capital
			planning process into consideration according to AT 4.1 item 9 MaRisk.

Counterparty Default Risk

Credit Volume – GRENKE Consolidated Statement of Financial Position

According to IFRS, GRENKE Consolidated Group's receivables volume is comprised as follows:

EURk	Dec. 31, 2013	Dec. 31, 2012
Current receivables
Cash and cash equivalents	109,770	116,707
Lease receivables	775,167	688,141
Financial instruments that are assets	2,123	3,248
Other current financial assets	77,546	84,903
Trade receivables	4,395	3,726
Total current receivables	969,001	896,725
Non-current receivables
Lease receivables	1,374,702	1,185,787
Other non-current financial assets	28,882	29,056
Financial instruments that are assets	590	990
Total non-current receivables	1,404,174	1,215,833
Total receivables volume	2,373,175	2,112,558

As per December 31, 2013 cash and cash equivalents included Bundesbank balances amounting to EUR 32,927k. The remaining cash and cash equivalents consist of balances at domestic and international banks (with the exception of cash in hand of EUR 7k). Financial instruments which are assets represent the derivatives of the GRENKE Consolidated Group carried at their fair value as per the reporting date.

Leasing Business

Counterparty default risk is defined as potential losses which can occur from a default or deterioration in the solvency of borrowers and obligors. Since 1994, we have assessed the creditworthiness of our customers based on the expected value of payment defaults. Meanwhile, the quality of this system has been consistently and sufficiently demonstrated by the development of losses, particularly during the global financial market crisis. This applies to our established domestic business as well as to those international markets, which we are entering gradually.

An annual review is performed on the basis of actual loss figures using automated database reports containing both publicly available data and internally generated historical data. The system is continually enhanced by in-house specialists.

Even in years of extremely low actual loss rates, we continued to factor the average loss rate of the previous recession into our CM2 management. The calculated cost of risk for the new business portfolio in 2013 was six percent on average. Additionally, the GRENKE Consolidated Group is managed in such a way that it can continue to cover its operating costs even if the loss rate were to significantly exceed this level.

Loss rates are measured continuously throughout the Consolidated Group. This is done by comparing the level of new business and the acquisition costs or the initial financing volume of the contracts which have become impaired over a defined period of time. Over time, this analysis serves as an early signal of expected defaults, and hence improves the quality of the portfolio. The aim is to have a reasonable relationship between the losses calculated in advance as part of the contribution margin calculation and the potential income associated with the lease portfolio, and the later losses which are actually recorded. The main risks in our business are counteracted by the derivation of expected values of losses. This is combined with a hierarchical authority structure according to the volumes involved, which extends from sales employees to the Board of Directors.

The GRENKE Consolidated Group employs a portfolio approach when contracting lease agreements. Differentiation occurs 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 values (full cost recovery); maintenance and warranty risks are typically borne by suppliers/manufacturers
• Lease agreements: large number of current contracts 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 19 countries (in the GRENKE Group: 27)

Nearly all leases concluded provide for full cost recovery. 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.

Risks that could arise due to 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 accordingly if necessary.

Lending Business of GRENKE BANK AG

The main financial risk at GRENKE BANK AG is risk of default. Loans to customers consist of purchased lease receivables, start-up financing, project financing, and the legacy portfolio of personal loans.

Purchased lease receivables account by far for the greatest portion of the loan portfolio. They represent a broadly diversified portfolio with small-scale receivables to small and medium-sized companies from the European Economic Area that GRENKE BANK AG has acquired exclusively from companies of the GRENKE Consolidated Group. Thus, the counterparty risks of this nature of business are correspondingly low. Credit risk is taken into account by means of an appropriate margin regulation based on the GRENKE Consolidated Group's long-standing, proven method for forecasting losses, and in some cases additional security is also provided by guarantee agreements.

Due to GRENKE BANK AG's orientation as a provider of financing for small and medium-sized companies, it began collaborating with development banks in 2010 with the particular aim of providing smaller business start-ups with funds for their business plans. The associated credit risk for GRENKE BANK AG is reduced, especially through the 80 percent indemnification provided by the development bank or guarantee bank. In addition, financing for business start-up plans is generally limited to a maximum credit exposure of EUR 100k per borrower unit so that credit risks in this area can be broadly diversified.

The legacy portfolio, which mainly includes small-scale equity financing of private individuals, is being liquidated according to plan. As a result of on-going repayments and loan clearance, this part of the loan portfolio has now been reduced to less than EUR 1.54 million.

Factoring Business of GRENKEFACTORING GmbH

We offer small-ticket factoring mainly in the form of so-called "notification factoring". This results in the advantage for ourselves and our customers that the invoice recipient (debtor) is notified of the assignment of existing receivables and that we can address the recipient directly in the event of default. This is always carried out in coordination with the customer. Here, we not only take the burden away from our customers, but also make it easier for us trace outstanding receivables. Under certain conditions, we also offer non-notification factoring. As opposed to notification factoring, the debtor is not notified that their outstanding payment obligations have been assigned to GRENKEFACTORING GmbH. In both cases, we assume the default risk for the purchased receivables.

We selectively acquire customers by applying a variety of criteria using mailing and telephone campaigns. The main criteria include the customer's credit quality as well as their average annual sales. They are then selected further, according to sectors.

Financing of Franchise Companies

The franchise companies of the GRENKE Group operate in their respective leasing markets as lessors. Generally, they operate within the small-ticket IT segment. Additionally, we offer factoring as part of our franchise models in Switzerland, UK, and Hungary. 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, so that the GRENKE Consolidated Group can act as direct lessor. The basis for this is provided by the refinancing framework agreement concluded between the respective franchisee and the GRENKE Consolidated Group. If refinancing is offered, it is provided in the form of either loans or forfaiting. Future related lease instalments are generally discounted at the refinancing rate.

Market Price Risk

Market price risks should be understood as potential losses that may result from the uncertainty regarding the future development (amount and volatility) of market risk factors. Such market risk factors, mainly relate to interest rates and currency rates.

Price fluctuations in the financial markets can have a significant effect on cash flow and net profit. Particularly, changes in 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 our net profit to the volatility of market prices. This means endeavouring to ensure the lowest possible correlation between net profit and interest rate and currency market developments while maintaining a good balance between the costs and benefits of hedge relationships. The following parameters are used for risk analysis purposes:

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

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 positions are discussed on the basis of ongoing reports at least once each month with the responsible member of the Board of Directors in the task force sub-group. The GRENKE Consolidated Group is not exposed to the risk of changes in share prices since it does not hold any listed shares. Changes in the prices of commodities also have no effect on the risk position since there are also no positions held in these categories.

Derivatives for Hedging Purposes

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, and forward exchange contracts are the instruments employed by the GRENKE Consolidated Group. Each derivative contract relates to an underlying economic transaction with a corresponding opposing risk position. Contract partners are exclusively banks having an excellent credit standing. For this reason, and due to the diversification of our contract partners, counterparty default risk plays a limited role.

Interest Rate Risk

The GRENKE Consolidated Group's interest rate risk, mainly results from the sensitivity of its financial liabilities to changes in market interest rates. Financial liabilities primarily consist of floating-rate debentures, ABCP programmes, and the ABS bond. Further details on these risks and the management of interest rate and currency risks can be found in the notes to the consolidated financial statements in section "6.3 Derivative Financial Instruments".

Sensitivity to financial success is decisive for the identification of an open risk position, which then results in an economically feasible hedge using derivative instruments. This means that, on the whole, we aim to achieve a net interest income that has a low sensitivity to interest rates. According to the estimates of the sensitivity analysis, a parallel shift of +100 basis points in the term structure of interest rates for the past fiscal year would have resulted in lower pretax earnings of EUR 1,763k (previous year: EUR 1,698k). This corresponds to approximately 1.4 percent (previous year: 1.5 percent) of net interest income.

As per the reporting date, the interest rate swaps recognised under hedge accounting pursuant to IAS 39 had a negative fair value of EUR 73k (previous year: negative fair value of EUR 606k). Assuming the above scenario (a parallel shift in the term structure of interest rates of +100 basis points), the interest rate swaps would have a positive fair value of EUR 1,085k as per the reporting date (previous year: positive fair value of EUR 279k). Due to hedge accounting pursuant to IAS 39, the corresponding change would be largely recognised in equity and in the hedging reserve, respectively.

A corresponding downward shift in the term structure of interest rates or a lowering of the interest rate level to zero would lead to an increase in pre-tax earnings of EUR 533k (previous year: increase of EUR 1,183k). When applying hedge accounting, this interest rate scenario would result in a lower fair value in the interest rate swaps of EUR 1,147k (previous year: EUR 62k) and would thus largely be recognised directly in equity. Issuing bonds and contracting interest rate swaps are elements of a financing strategy that separate the procurement of liquidity from interest rate hedging in order to obtain maximum flexibility for refinancing activities. The risks that could possibly result (variable cash flows) are hedged using appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and recognised as hedge transactions pursuant to IAS 39. As all interest rate derivatives used in hedge accounting have been proven to be almost 100 percent effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised directly in equity.

Under the ABCP programmes with DZ-Bank (CORAL), Hypovereinsbank/UniCredit Bank AG (Elektra), and HSBC France (Regency), 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 generally hedged using interest rate swaps. 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 special purpose entities. Therefore, we do not recognise the derivatives on our balance sheet and hedge accounting is not applied.

The parameters of the underlying transaction which result from the financing (liability), are always considered first and foremost when contracting interest rate swaps. Accordingly, the interest rate terms of the swaps on the variable side are largely identical to those of the underlying transaction. Furthermore, the swap volume contracted is never greater than the volume of the hedged financing. Existing and planned refinancing transactions are actively incorporated into risk management and the related hedge relationships are subject to on-going analysis in the form of quarterly effectiveness tests using a method permitted under IFRS. These tests have proven highly effective in the past.

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 current 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 international activities. Derivatives are used to mitigate or eliminate these risks. These derivatives are recognised as financial assets or financial liabilities at their fair value as per the reporting date.

Currency risks currently exist in the context of financing for Consolidated Group companies or franchisees outside of the eurozone. These risks are generally hedged once the amount of the outstanding financing volume reaches around EUR 1,000k. This amount was exceeded in Poland, Denmark, Dubai (United Arab Emirates), the United Kingdom, Sweden, Switzerland, the Czech Republic, Turkey, and Hungary. This means that the exchange rate is known and firmly contracted for the main part of the financing provided in Polish zloty, United Arab Emirates Dirham, pound sterling, Hungarian forint, Swiss francs (for the refinancing of the Swiss factoring business), Turkish lira, Danish krone, Swedish krona, and Czech koruna for holdings of lease receivables at the respective subsidiaries and franchise companies. However, in the course of the companies' growth there are still risks with respect to open tranches that fall below the hedging threshold.

Switzerland, Brazil, Poland, and the United Kingdom are subject to only a very limited amount of currency risks in the refinancing of leases since we have agreements to provide lease refinancing in local currencies. 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 onerous contracts 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 the underlying transaction, i.e. cash flows from financial assets and receivables. Ideally, the instruments should be almost entirely offset. Hedge accounting will not be used for currency positions for the foreseeable future.

Within the scope of our sensitivity analysis, performed in the foreign currency area, we assume depreciation as well as appreciation of the euro against all currencies important for the GRENKE Consolidated Group. A ten percent appreciation of the euro as per 31 December 2013 would have increased the Consolidated Group's earnings before taxes by EUR 921k. According to the estimates and assumptions of the sensitivity analysis, a corresponding depreciation would have reduced the Consolidated Group's earnings before taxes by EUR 967k. As per the reporting date, assets exposed to foreign currencies totalled EUR 307 million (previous year: EUR 274 million). Measured by the nominal value and the new lease business, the British pound, the Polish zloty, and the Swiss franc, represent the predominant share

An isolated analysis of a ten percent appreciation of the euro against the British pound, would result in a positive earnings effect of EUR 226k. A 10 percent depreciation, would result in an earning's burden of EUR 226k on positions denominated in British pound. With regard to positions denominated in the Swiss franc and Polish zloty, a corresponding appreciation of the euro would result in an increase in earnings before taxes of EUR 144k and EUR 10k, respectively. A corresponding depreciation of the euro would result in a decline of EUR 144k and EUR 10k, respectively.

Liquidity Risk

Liquidity risk should be understood as potential losses that may result from a lack of liquidity, or liquidity that can only be procured at costs which are higher than anticipated in order to meet payment obligations when due.

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 the leasing business. Wages and taxes are also taken into account.

Reporting differentiates between four liquidity levels:

• Cash liquidity: cash in all bank accounts plus overdrafts at banks and all "immediate" (one week) cash flows;
• Liquidity 1 (Cash liquidity): cash liquidity plus cash flows due or to be received within one month. This also includes assets that are committed, but can be monetised within this time horizon;
• Liquidity 2: Liquidity 1 plus cash flows due or received within three months. This also includes assets which are tiedup, but can be monetised within this period;
• Liquidity 3: Liquidity 2 cash flows due or received within more than three months. This also includes assets which are tied-up, but 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 prepared at least once a quarter. The aim of cash planning in this context is to map out the liquidity status for the coming periods. There is a more condensed presentation on a quarterly level for the next two years. As the duration of the asset side of the portfolio roughly corresponds to this period, this constitutes a significant parameter for liquidity management at the Consolidated Group level.

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 broadly 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 set for defined periods with agreed terms and maturities so that there is no risk 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 similar asset-based structure for Brazil, Germany, the United Kingdom, Poland, and Switzerland.

However, we also use refinancing instruments that are not asset-based 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) having a maximum volume of EUR 250 million. While the DIP bonds have terms of one year or more, the CP platform provides us with alternatives for refinancing during the course of the year. We also take advantage of financing opportunities via GRENKE BANK AG's deposit business. Above and beyond commercial customers, GRENKE BANK AG also offers investment products to private customers. This is how we have further diversified our sources of refinancing.

These instruments enable us to use the most attractive financing channels from a variety of alternatives depending on the sentiment on the capital markets at the given time. Due to the continued unresolved sovereign debt crisis, the financial markets remained subject to high risks in the year under review. This is expected to continue to be the case in the foreseeable future. However, central banks worldwide are reacting to the crisis by extensively supplying the markets with liquidity at historically low interest rates. It is to be expected that this monetary policy will generally be maintained in the years to come, especially in Europe. Together with the deterioration in the credit quality of many sovereign debtors this has led investors to search for alternative investments. This resulted in a very high availability of refinancing funds for companies possessing a high rating and strong reputation in the capital market – like the GRENKE Consolidated Group. In the reporting year, we took advantage of this market situation not only to meet our current refinancing requirements in full, promptly, and at attractive conditions, but also to cover parts of the capital requirements for our future growth.

Operational Risk

Risk Survey

Surveys on operational risks are conducted several times per year using the intranet-based risk management tool. These surveys ask employees from all divisions about the risks affecting their divisions. The overall results in the general areas of legal and taxes, IT, internationalisation and franchise, organisation, HR, sales and marketing, and disposals are evaluated based on the average estimated loss and the stated probability of occurrence in the calculation of risk-bearing capacity. The most significant net risks indicated in the 2013 surveys were as follows:

• an increase in taxes and duties
• defaults in leasing business
• risks relating to expansion
• risks relating to IT security
• risks relating to IT data quality
• risks from false purchases

With one exception, all of these six key risk areas were assessed as having a probability of occurrence rated "possible" and a potential loss rated "serious", i.e. between EUR 500k and EUR 4,999k. Risks relating to IT data quality were assigned with a probability of occurrence of "probable" and a potential loss rated "average" (EUR 150k and EUR 499k). Such risk areas are analysed in depth by the risk task force and feedback on possible countermeasures is obtained from the divisions that are directly affected.

Certification of Quality Management

In 1998, TÜV SÜD Management Service GmbH certified GRENKELEASING AG in line with DIN EN ISO 9001:1994. The quality management was tested and certified in 2010 by the Technical Certification Body of TÜV SÜD 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, Italy, Romania, Hungary, Portugal, Finland, Slovakia, and the franchisees in Luxemburg (GCLUX Location SàRL), GRENKE Factoring AG (Switzerland), and GC Leasing d.o.o. (Slovenia) 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 30, 2013 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 have been met.

Any original lease contracts which have not been electronically stored are kept in fireproof cabinets or safes. This means that sufficient precautions are in place, even in the event of damage to property. Contract data is stored and updated in our IT system chiefly through the use of 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.

Business Continuity Management

The GRENKE Consolidated Group has established a business continuity management system. The measures to be taken in the event of an emergency and all necessary information are documented in writing, including plans for the continuation and restart of business. The aim is to reduce the extent of possible losses.

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 accuracy 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 relevant issues.

ICS and Risk Management System with regard to Accounting Process of the Consolidated Group

We define the internal control and risk management system (ICS) as all principles, procedures, and measures introduced in the 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 Board of Directors bears overall responsibility for the accounting process of GRENKELEASING AG and the GRENKE Consolidated Group. All of the companies included in the annual financial statements and the consolidated financial statements are also incorporated into a clearly defined management and reporting organisation. The principles, structure, and process organisation, as well as the processes of the ICS for accounting are documented in a manual that is developed at regular intervals.

With regard to the accounting and consolidated accounting processes, we consider features of the ICS to be significant if they can have a material effect on the accounting and the overall view presented in the financial statements, including the management report. In particular, this relates to the following elements:

• the identification of significant risk and control areas of relevance to the accounting process
• controls to monitor the accounting process and its results at the level of the Board of Directors and at the level of the companies included in the financial statements
• preventative control measures in the finance and accounting system and in the operative, performance-oriented company processes that generate material information for the preparation of the financial statements, including the 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 issues and data relevant to accounting
• the establishment of an internal audit system to monitor the accounting-related ICS

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. This system also fully incorporates GRENKELEASING AG's accounting process. The risk management system established for the accounting process of GRENKELEASING AG and the GRENKE Consolidated Group thereby guarantees the preparation of accurate and reliable information for the public.

Risk Reporting Concerning the Use of Financial Instruments

For the objectives and management procedures for the use of financial instruments and for the individual types of risks covered with such instruments, please refer to the section titled "Derivatives Used for Hedging" and the explanations on interest rate and currency risk management in this Risk Report. No other financial instruments are utilised.

Information regarding the Core Capital

As per the end of the reporting year, the total core capital, pursuant to Section 10 (2a) KWG, amounted to EUR 277.2 million (previous year: EUR 203.0 million). Supplementary capital and Tier 3 capital are not in place. Thus, total equity pursuant to KWG consists solely of core capital.

Dec. 31, 2013	Dec. 31, 2012
18,790	17,491
112,757	60,166
131,547	77,657
214,302	186,062
–68,617	–60,748
277,232	202,972
--	--
--	--
--	--
277,232	202,972

Table: Composition of core capital before adoption

EURk	Dec. 31, 2013	Dec. 31, 2012
Public authorities	--	--
Institutions	1,280	1,280
Corporates	38,975	34,990
Retail business	95,760	86,240
Other items	21,200	25,360
Overdue items	87	94
Capital requirements for credit risk – standardised approach	157,302	147,964
Capital requirements for market risk positions	1,601	1,567
Capital requirements for operational risk	23,600	20,000
Total capital requirements	182,503	169,531

Table: Significant types of risk

The Consolidated Group's equity (regulatory equity) is comprised of the so-called core capital components of share capital, capital reserves, and other eligible reserves, less the most recent amount of intangible assets and goodwill.

Since GRENKELEASING AG is a financial services institution within the meaning of the KWG (German Banking Act), the GRENKE Consolidated Group must comply regularly with the provisions of the German Solvency Regulation [Solvabilitätsverordnung (SolvV)] at the Consolidated Group level. Pursuant to the provisions of Section 3 SolvV in conjunction with Section 10a KWG, GRENKELEASING AG, as the primary institution of GRENKE BANK AG, is also reporting the Consolidated Group's overall ratio on the basis of IFRS accounting. In the course of the year, the GRENKE Consolidated Group's overall ratio has been consistently above ten percent. As per the reporting date, the GRENKE Consolidated Group's overall ratio amounted to 12.11 percent (previous year: 9.61 percent) and thus significantly exceeded the capital requirements for the group of institutions, offering sufficient room for the additional development planned.

Summary

Controlled risk-taking forms a significant part of the GRENKE Consolidated Group's business model. To manage risks, the Consolidated Group has implemented an extensive system for risk identification, quantification, monitoring, and management, which fulfils all statutory and regulatory requirements. This system is appropriate and suitable for identifying significant risks at an early stage, has already reached a sophisticated level, and is enhanced on an on-going basis.

Sufficient precautions have been taken to offset counterparty default risk, market price risk, and operational risks arising from our leasing, banking, and factoring business which have been identified. The corresponding write-downs, impairments, and provisions considered in the annual financial statements were recognised at an appropriate level using conservative benchmarks. Risk-bearing capacity in the reporting year was ensured in its entirety for the crisis scenario, the extreme scenario, and also for the worst-case scenario.

With respect to the future development of the GRENKE Consolidated Group and of GRENKELEASING AG and its subsidiaries, no particular business-related risks can be identified that exceed the customary level. The risk cover is sufficient enough to map out the planned future business activities.

Report on Forecasts and Outlook

Business Performance and Future Direction

Development of the GRENKE Consolidated Group

In view of the risks and opportunities described, we expect the following development during the present 2014 fiscal year. The Consolidated Group's scope of consolidation may change once again in 2014 as a result of acquisitions of franchise partners. However, this is not expected to result in any significant discrepancies.

The strong momentum of our new business growth in recent years represents the key basis for the GRENKE Consolidated Group's further profit development in the present fiscal year and beyond. Accordingly, the net profit of the GRENKE Consolidated Group should be in a range of EUR 52 to 56 million in 2014 and thus reach a new record level. Furthermore, we expect a rise in new business in the range of 13 percent to 16 percent in the current fiscal year – once more, above our long-term minimum target of 10 percent. We are confident that we can easily finance this growth using the variety of different channels at our disposal when we access the capital markets. Thus, we expect the refinancing environment to remain almost unchanged, despite slightly higher interest rate risks. Thanks to our equity ratio, which is above our long-term target level of a minimum of 16 percent, the GRENKE Consolidated Group's equity base will support this development.

The Consolidated Group's profit growth in the current year will mainly be fuelled by the net interest income once again. Here, we continue to benefit from the strong growth in recent years of our new business, favourable financing conditions, and our risk-appropriate conditions. By virtue of our strong competitive position, we will also be able to achieve such riskappropriate conditions in the market in 2014. We expect a significant contribution to the Consolidated Group's net interest income in 2014 from GRENKE BANK AG, whose deposit business is actively managed. In addition, rising income from our new business will continue to be the source of our profit growth. Here, we remain firmly committed to the high level of CM2 which is based on the margins of recent years. The factoring business, which is still in the ramp-up phase, has achieved very positive growth in the previous fiscal year. We will leverage upon this development in 2014.

This development should provide us with the necessary leeway in fiscal year 2014 to continue our dividend policy which enables our shareholders to participate in the success of the Company.

In terms of costs, there is the potential for cost reductions in 2014 in relation to consulting and auditing expenses. This also applies to selling expenses (excluding provisions), distribution and administrative expenses, which experienced a higherthan-average increase in the previous fiscal year. In terms of consulting and auditing costs, the expenses for expansion into new overseas markets will decline. With regards to the latter two items, we expect the investments in IT equipment to be lower than the high level invested in 2013. Overall, despite our attention to costs, we traditionally have not pursued a policy that focuses on cutting costs "at any price". As a growth company with a strong market position, we benefit from the strong dynamics of our new business and our ability to achieve risk-appropriate margins. This is the focus of our operational management as long as the related expenses do not preclude this.

In the following, we list the main risks that could cause actual results to deviate from the plan described for fiscal year 2014.

• A significant trend reversal in the capital markets (interest rate risk): rising coupons for bonds of sovereign debtors especially in the upper range of ratings – as a result of economic developments could lead to the increased attractiveness of government bonds and a widening of spreads on the capital markets. This could result in changes to the overall refinancing situation for companies. Although we can pass on higher refinancing costs through our conditions, there may be a certain time gap. We assess the risk of such a development as rather low.
• Significant changes in the business policies of banks and financial service providers of IT equipment manufacturers towards re-entering the leasing business. This could lead to higher (margin) competition and thus pricing pressure. The probability of such a development in 2014 is considered to be low and would require comparatively long lead times. Additionally, the small-ticket segment should be less affected since it has traditionally had high barriers to entry.
• Strong rise in losses: Losses traditionally follow economic development with a certain time lag. Therefore, even the assumption of a sharp economic downturn in 2014, this would only lead to a notable increase in losses over time. First, we have an effective management in place that can effectively limit the development of losses. Secondly, it is more likely to expect that there will be a recovery of the global economy in fiscal year 2014 which would ultimately need to be supported by an improved situation in Europe. Therefore, we also assess the probability of occurrence of this scenario as very low.

Financial Position and Net Assets

GRENKE Consolidated Group's financial position and net assets are expected to further improve in 2014 due to higher profits, primarily as a result of the further rise in net interest income and continued dynamic growth in new business. Based on the expected increase in profits, we anticipate higher cash flows from operating activities which will fully cover our planned level of investments. In addition, since September 2013, GRENKE Bank has direct access to the European payment transaction system through the routing control, which is a service offered by the Deutsche Bundesbank. This helps us to control our cash management even more efficiently.

The equity ratio is expected to remain at the long-term target level of 16 percent.

Overall Statement on the Future Development

With its solid financial resources, strong positioning in the capital markets, and long standing and proven risk-appropriate pricing policy, the GRENKE Consolidated Group is excellently positioned to continue the steady growth path of the recent years also in the future. We will consistently continue to leverage our strong market position in our traditional core markets and, in addition, establish GRENKE's business model in new markets on a global scale. We stand by our goal of establishing the GRENKE Consolidated Group as a globally operating company. From today's perspective, there are no special factors which have presented themselves after the end of the fiscal year that could materially and sustainably jeopardise the Consolidated Group's future development.

Acquisition-Related Information

Share Trading and Shares Held by the Governing Bodies

Detailed information regarding directors' holdings and directors' dealings as per December 31, 2013 and during the fiscal year, are presented in the Notes in the section titled "8.6 Related Party Disclosures".

Dependence Report

Wolfgang Grenke, Ms. Anneliese Grenke, Mr. Moritz Grenke, Mr. Roland Grenke, and Mr. Oliver Grenke have concluded a pooling agreement which was last amended on May 2, 2013 following the cash capital increase on February 21, 2013. Subsequent to the cash capital increase, 42.60 percent of the voting rights of the share capital have been allocated to Mr. Wolfgang Grenke, as acclamation is concluded by the majority within the pooling agreement. Assuming the average attendance level at the last three Annual General Meetings of GRENKELEASING AG of approximately 80 percent, Wolfgang Grenke has commanded the factual majority of GRENKELEASING AG's voting rights as per that date. As the Board of Directors presently assumes no further 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.

Explanatory Report on the Disclosures Pursuant to Section 289 (4) and Section 315 (4) HGB

The shares of GRENKELEASING AG have been admitted to trading on the Frankfurt Stock Exchange in the Prime Standard, the segment of the regulated market with additional post-admission obligations. The Company's fully paid-up issued capital amounts to EUR 18,789,976.70 and is divided into 14,700,000 no-par value bearer shares each with a notional interest in the share capital 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 per December 31, 2013, the Chairman of the Board of Directors of GRENKELEASING AG, Wolfgang Grenke, held 4,980,619 shares in the Company, corresponding to 33.88 percent of the share capital. Including the aforementioned shares held by Wolfgang Grenke, a total of 42.60 percent of the share capital or 6,262,447 shares were attributable to the Grenke family pooling agreement at this date. The Board of Directors is not aware of any other restrictions agreed between shareholders, which relate to voting rights or the transfer of shares.

The Articles of Association of GRENKELEASING AG 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 Association must be adopted by resolution of the Annual General Meeting. Unless otherwise required by law, the resolutions of 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 share capital represented. The Supervisory Board is authorised to decide on amendments to the Articles of Association that relate solely to their wording. In addition, the Supervisory Board is authorised to amend the wording of Article 4 of the Articles of Association governing the amount and division of the share capital, 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 pursuant to DRS 20 K211 (conditions of a change of control in case of a takeover bid), as such disclosures could be substantially disadvantageous to the parent company.

Detailed information regarding authorised and contingent capital is presented in the notes in the section titled "4.20 Equity".

Matters Concerning the Board of Directors and the Supervisory Board

Ms Antje Leminsky, who initially joined the Company as a Representative of the Board on August 1, 2012, was appointed to the Board of Directors by the Supervisory Board of GRENKELEASING AG on August 1, 2013. She assumed the responsibility for IT on the Board of Directors and the position of Chief Information Officer (CIO) from Mr Wolfgang Grenke as planned. In addition, she was appointed Deputy Chairman of the Board of Directors of GRENKELEASING AG by the Supervisory Board. IT is of strategic importance to the GRENKE Group since the business model is geared towards the highest efficiency and reliability of its IT systems as possible. Standardisation, IT-supported automation, and quick response times are essential barriers to entry in our market.

In the year under review, no personnel changes occurred in the Supervisory Board of GRENKELEASING AG. With the conclusion of the Annual General Meeting of May 7, 2013, the term of office of Supervisory Board members Prof. Dr. Ernst-Moritz Lipp and Gerhard E. Witt ended. Both were re-elected by the Annual General Meeting.

Corporate Governance Statement Pursuant to Section 289a HGB

As a listed stock corporation, we are required to submit a Corporate Governance pursuant to 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.

The Declaration of Conformity in accordance with Section 161 AktG of GRENKELEASING AG and the Corporate Governance Statement are available online at www.grenke.de/en/investor-relations/corporate-governance.html.

Responsibility Statement

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, January 31, 2014

The Board of Directors

GRENKELEASING AG (Comments on HGB Basis)

In addition to the reporting on the GRENKE Consolidated Group, the development of GRENKELEASING AG is explained below. In terms of the economic environment and sector trends, there were no material differences to report that would have only affected the development of GRENKELEASING AG. In addition to the key events of the fiscal year already described, GRENKELEASING AG must also report that in November 2010 the tax audit for fiscal years 2005 to 2009 had begun. As per the end of the reporting period, the audit was still in progress and there were no audit findings yet available.

Corporate Law Framework, Affiliation to the Consolidated Group

GRENKELEASING AG was formed in 1997. The same year also saw the formation of Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien ("KGaA"). GRENKELEASING AG is structurally and operationally separate from the KGaA, with the former serving as the operating company and the latter as the holding company. Under a two-level model, the operating company rents lease assets from the holding company and then leases them out to sub-lessees. GRENKELEASING AG holds a direct and indirect interest of 100 percent in the KGaA, and a control and profit transfer agreement has been effective since January 1, 2002. Together with the subsidiaries and special-purpose entities of GRENKELEASING AG consolidated in accordance with the International Financial Reporting Standards, it forms the GRENKE Consolidated Group.

Overview of Subsidiaries and Branches

GRENKELEASING AG has branches in Berlin, Bremen, Cologne, Dortmund, Dresden, Düsseldorf, Erfurt, Freiburg, Frankfurt am Main, Hamburg, Hanover, Kassel, Kiel, Leipzig, Magdeburg, Mannheim, Memmingen, Mönchengladbach, Munich, Neckarsulm, Nuremberg, Potsdam, Rostock, and Stuttgart. In addition, GRENKELEASING AG also holds 100 percent each of the shares in GRENKE SERVICE AG, Baden-Baden, GRENKEFACTORING GmbH, Baden-Baden, and GRENKE BANK AG, Baden-Baden via its investment in Grenke Investitionen Verwaltungs KGaA.

Outside Germany, GRENKELEASING AG holds a direct 100 percent interest in each of the following companies as per the end of the reporting year: GRENKELEASING GmbH, Vienna/Austria; GRENKELEASING AG, Zurich/Switzerland; GRENKELEASING s.r.o., Prague/Czech Republic; GRENKE ALQUILER S.A., Barcelona/Spain; GRENKELEASING ApS, Herlev/Denmark; Grenkefinance N.V., Vianen/Netherlands; GRENKE LIMITED and GRENKE FINANCE Plc., Dublin/Ireland; GRENKE LOCATION SAS, Schiltigheim/France; GRENKE Locazione S.r.l., Milan/Italy; GRENKELEASING AB, Stockholm/Sweden; Grenke Leasing Ltd., Guildford/UK; GRENKELEASING Sp. z o.o., Poznan/Poland; GRENKELEASING Magyarország Kft. Budapest/Hungary; GRENKE LEASE Sprl, Brussels/Belgium; S.C. Grenke Renting S.R.L, Bucharest/Romania; GRENKE RENTING S.A., Lisbon/Portugal; GRENKELEASING Oy, Vantaa/Finland; and GRENKELEASING s.r.o., Bratislava/Slovakia. It also holds an indirect 100 percent interest in FCT "GK"-Compartment "G2", Pantin, France, and GRENKE RENT S.A, Madrid, Spain.

Financial Situation

The annual financial statements of GRENKELEASING AG as per December 31, 2013 were prepared in accordance with the provisions of the German Commercial Code and the German Stock Corporation Act in connection with the German Ordinance Regulating the Accounting Requirements for Financial Institutions.

Selected Key Figures from the Income Statement and the Statement of Financial Position

EURk	2013	2012
Income from leases	479,306	460,043
Expenses from leases	–347,281	–332,361
Profit from leases	132,024	127,682
Net interest income	2,034	1,771
Other operating income	20,687	20,382
General and administrative expenses	39,976	33,598
Staff costs	23,039	19,990
Depreciation and impairment	99,342	98,020
Net profit	10,399	17,130
	Dec. 31, 2013	Dec. 31, 2012
Investments in associated companies	159,914	144,787
Leased assets	208,293	235,768
Property, plant, and equipment	21,775	20,602
Other assets	70,260	44,225
Receivables	60,622	60,868
Bank liabilities	236,737	183,747
Investments in associated companies	1,744	2,407
Payables	35,404	34,999
Accruals and deferrals	254,989	257,808
Total assets	535,892	512,153

Results of Operations

Once again, GRENKELEASING AG acquired leased assets from the KGaA in several tranches during the reporting year, although they were again at a much lower level than in the previous year. As a result, the balance of income from leases and expenses from leases grew only slightly to EUR 132.0 million (previous year: EUR 127.7 million). The continuous acquisition of leased assets from the KGaA by GRENKELEASING AG leads to a lower business volume of the KGaA. Accordingly, this also leads to a successively declining net profit of the KGaA, which is then transferred to GRENKELEASING AG under a profit transfer agreement. In the reporting year, income from profit transfer agreements decreased to EUR 12.9 million (previous year: EUR 15.7 million). Beyond these transaction-based impacts on GRENKELEASING AG's income statement, the changes in the other line items of the income statement were within the normal range of business fluctuation.

Other operating income of EUR 20.7 million remained nearly unchanged at the prior year's level of EUR 20.4 million. General and administrative expenses and, in particular, staff costs and other administrative expenses, rose to EUR 40.0 million (previous year: EUR 33.6 million), mainly due to the business expansion. In contrast, depreciation and impairment of intangible assets and property, plant, and equipment of EUR 99.3 million remained at the prior year's level of EUR 98.0 million. Write-downs and impairments on receivables and certain securities, as well as additions to loan loss provisions rose to EUR 9.0 million in the reporting year (previous year: EUR 7.3 million) following a decline in the prior year.

In total, GRENKELEASING AG's result of normal business activity amounted to EUR 14.1 million in fiscal year 2013 (previous year: EUR 22.7 million). Net of taxes of the entire fiscal entity of GRENKELEASING AG as the controlling company, net profit amounted to EUR 10.4 million (previous year: EUR 17.1 million).

Financial Position and Net Assets

In fiscal year 2013, GRENKELEASING AG's total assets increased. On the one hand, this resulted from higher investments in associated companies in the context of the acquisition of the former franchise companies in Finland and Slovakia. On the other hand, other assets grew significantly due to a receivable from GRENKE FINANCE Plc. resulting from the cash pool procedure of the GRENKE Consolidated Group as per the reporting date. In the previous year, an obligation to this company existed. Lease assets decline compared to the prior year since the amount of acquired lease assets from the KGaA was clearly below the previous year's level, as already mentioned.

As in the previous year, the largest line item on the equity and liabilities side of the balance sheet was accruals and deferrals which amounted to 48 percent of total assets (previous year: 50 percent). Within this item, accruals from the forfeiting of leasing contract instalments were the main item and amounted to EUR 186.7 million (previous year: EUR 200.2 million). As a result of the successful capital increase of GRENKELEASING AG, the Company's equity rose significantly to EUR 236.7 million (previous year: EUR 183.7 million). As per December 31, 2013, the equity ratio improved to 44.2 percent (previous year: 35.9 percent).

Liquidity and Refinancing

The financing of the leasing business (new business) is on sound footing. GRENKELEASING AG's direct refinancing partners are the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS 2009-1) and GRENKE BANK AG. On February 4, 2010, an ABS bond was successfully placed via the special-purpose entity. This marked the second successful placing of an ABS bond via a special-purpose entity. It allows lease agreements to be sold on a revolving basis in the amount of EUR 300 million for a total of three years. The last purchase occurred on January 15, 2013 and subsequently, the ABS bond entered into the redemption phase. GRENKELEASING AG regularly sells lease receivables to GRENKE BANK AG, thus using bank deposits for its refinancing. In the reporting year, deposits of GRENKE BANK AG grew to EUR 263.86 million from EUR 217.6 million in the previous year.

In addition, private placements may be carried out directly or indirectly via our 100 percent subsidiary GRENKE FINANCE Plc. Dublin. In 2013, two new bonds with a total nominal volume of EUR 225 million were issued. We also have the option of utilising five revolving credit facilities with a total volume of EUR 125 million and three money market facilities with a total volume of EUR 45 million via our subsidiary in Ireland. One of the three money market facilities with Bayerische Landesbank in an amount of EUR 25 million can alternatively also be used for money-market trading in Swiss francs via our Swiss subsidiary.

In addition, there are five ABCP programmes with a total volume of EUR 533.3 million, which grant GRENKE FINANCE Plc. and the KGaA the right to refinance or to sell receivables to the respective programmes for a certain period of time. Since October 2011, we have also had a platform for issuing commercial paper. Using this platform, GRENKELEASING AG and GRENKE FINANCE Plc. can issue commercial paper of up to a total volume of EUR 250 million with a term of between 1 and 364 days.

Overall Statement on the Business Performance and Financial Situation of GRENKELEASING AG

At the time of completing the financial statements and the management report, GRENKELEASING AG found itself in a very favourable economic position which will allow it to continue with its international expansion, grow new business, and achieve net profits at the level of the reporting year.

Two-Level Model

The leasing objects of new the business were partially rented from the KGaA as part of a two-level model. The rent receivables of the KGaA was sold to financial institutes via special-purpose entities as part of three ABCP programmes or to two local savings banks (forfeited). The underlying contractual agreements secure financing for new business, even in the case of increasing volumes.

Dividend

The Board of Directors and the Supervisory Board will propose a dividend of EUR 1.00 per share for fiscal year 2013 to the Annual General Meeting of GRENKELEASING AG on April 10, 2014. For the first time, we intend to offer our shareholders the option to receive the dividend entirely in cash, or to receive part of the dividend in cash and the remaining portion in shares of GRENKELEASING AG. In the previous year, a dividend EUR 0.80 was distributed.

Employees

The number of employees of GRENKELEASING AG in terms of full-time equivalents (excluding the Board of Directors) rose to an average of 325 in the year under review (previous year: 294). The fluctuation rate increased to 4.7 percent after 4.3 percent in the previous year. As in the previous years, the level of fluctuation at the management level and among senior executives in particular was substantially lower.

Report on Subsequent Events

No events of material importance with regard to the results of operations, financial position, or net assets and which require reporting have occurred subsequent to the end of the fiscal year.

Report on Risks, Opportunities, and Forecasts

Report on Risks and Opportunities

The risk and opportunities described for the GRENKE Consolidated Group are also largely valid for GRENKELEASING AG. However, the German domestic market continues to play a special and more important role for GRENKELEASING AG than for the GRENKE Consolidated Group overall. GRENKELEASING AG is not exposed to currency risk since it does not enter into cross-border transactions with countries outside the eurozone.

Outlook

The future results of GRENKELEASING AG may be greatly influenced by changes in the legal framework or in refinancing possibilities which, as a result, could lead to changes in the refinancing decisions of the Board of Directors. Overall, we are optimistic with regard to fiscal year 2014. In Germany, we expect to be able to achieve new business growth in the midsingle-digit percent range. For the single entity GRENKELEASING AG, we expect net profit to be at the level of the reporting year. The key factors which will have an influence on the operating development in 2014 will continue to apply in subsequent years. Further information on the development of the GRENKE Consolidated Group can be found in the section "Report on Forecasts and Outlook" of the combined management report.

Baden-Baden, January 31, 2014

The Board of Directors

Consolidated Financial Statements for Fiscal Year 2013

Consolidated Financial Statements for Fiscal Year 2013

Consolidated Income Statement

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2013	Dec. 31, 2012
Interest and similar income from financing business	3.1	188,803	169,489
Expenses from interest on refinancing and deposit business	3.1	58,337	58,024
Net interest income		130,466	111,465
Settlement of claims and risk provision	3.2	49,794	43,421
Net interest income after settlement of claims and risk provision		80,672	68,044
Profit from insurance business	3.3	35,837	30,156
Profit from new business	3.4	43,932	35,698
Profit from disposals	3.5	710	3,982
Income from operating business		161,151	137,880
Staff costs	3.6	51,756	42,809
Depreciation and impairment	3.7	5,444	3,355
Selling and administrative expenses (not including staff costs)	3.8	38,543	30,395
Other operating expenses	3.9	3,763	5,021
Other operating income	3.10	3,058	3,501
Operating result		64,703	59,801
Expenses / income from fair value measurement		102	152
Other interest income		482	1,047
Other interest expenses		1,029	1,302
Earnings before taxes		64,258	59,698
Income taxes	3.11	17,246	17,237
Net profit		47,012	42,461
Earnings per share (basic) in EUR	3.12	3.23	3.10
Earnings per share (diluted) in EUR	3.12	3.23	3.10
Average shares outstanding (basic)	3.12	14,558,052	13,684,099
Average shares outstanding (diluted)	3.12	14,558,052	13,684,099

Consolidated Statement of Comprehensive Income

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2013	Dec. 31, 2012
Net profit		47,012	42,461
Items that may be reclassified to profit and loss
in future periods
Appropriation to / reduction of hedging reserve (before taxes)	4.20.6	409	–236
Income taxes		–21	39
Appropriation to / reduction of hedging reserve (after taxes)		388	–197
Change in currency translation differences (before taxes)		–1,097	1,704
Income taxes		0	0
Change in currency translation differences (after taxes)		–1,097	1,704
		–709	1,507
Items that will not be reclassified to profit and loss
in future periods
Appropriation to / reduction of reserve for actuarial gains and losses
(before taxes)	4.18	78	–525
Income taxes		–22	136
Appropriation to / reduction of reserve for actuarial gains and losses
(after taxes)		56	–389
		56	–389
Other comprehensive income		–653	1,118
Total comprehensive income		46,359	43,579

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2013	Dec. 31, 2012
Assets
Current assets
Cash and cash equivalents	4.2	109,770	116,707
Financial instruments that are assets	4.1	2,123	3,248
Lease receivables	4.3	775,167	688,141
Other current financial assets	4.4	77,546	84,903
Trade receivables	4.5	4,395	3,726
Lease assets for sale		9,418	8,588
Tax assets	4.6	14,176	4,838
Other current assets	4.7	112,400	110,777
Total current assets		1,104,995	1,020,928
Non-current assets
Lease receivables	4.3	1,374,702	1,185,787
Financial instruments that are assets	4.1	590	990
Other non-current financial assets	4.4	28,882	29,056
Property, plant, and equipment	4.8	40,067	37,035
Goodwill	4.9	52,747	48,815
Other intangible assets	4.10	12,917	10,328
Deferred tax assets	4.11	22,337	18,622
Other non-current assets		851	731
Total non-current assets		1,533,093	1,331,364
Total assets		2,638,088	2,352,292

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2013	Dec. 31, 2012
Liabilities and equity
Liabilities
Current liabilities
Financial liabilities	4.12	778,979	639,199
Liability financial instruments	4.13	2,942	3,800
Trade payables		10,747	14,828
Tax liabilities	4.14	4,110	2,836
Deferred liabilities	4.17	7,688	5,146
Current provisions	4.16	1,821	2,251
Other current liabilities	4.15	8,932	19,824
Deferred lease payments		65,074	70,280
Total current liabilities		880,293	758,164
Non-current liabilities
Financial liabilities	4.12	1,272,584	1,203,107
Liability financial instruments	4.13	768	3,553
Deferred tax liabilities	4.11	42,576	33,987
Pensions	4.18	2,168	2,156
Non-current provisions	4.16	237	322
Other non-current liabilities	4.19	0	30
Total non-current liabilities		1,318,333	1,243,155
Equity	4.20
Share capital		18,790	17,491
Capital reserves		112,757	60,166
Retained earnings		306,064	270,812
Other components of equity		1,851	2,504
Total equity		439,462	350,973
Total liabilities and equity		2,638,088	2,352,292

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2013	Dec. 31, 2012
	Earnings before taxes	64,258	59,698
	Non-cash items contained in net profit and reconciliation to cash flow from
	operating activities
+	Depreciation and impairment	5,444	3,355
– / +	Profit / loss from the disposal of property, plant, and equipment and intangible assets	–63	54
– / +	Net income from non-current financial assets	547	255
– / +	Non-cash changes in equity	–308	453
+ / –	Increase / decrease in deferred liabilities, provisions and pensions	1,929	708
–	Additions to lease receivables	–1,032,845	–916,990
+	Payments by lessees	795,521	684,746
+	Disposals / reclassifications of lease receivables at residual carrying amounts	156,037	135,360
–	Interest and similar income from financing business	–188,803	–169,489
+ / –	Decrease / increase in other receivables from lessees	–3,038	–9,073
+ / –	Currency translation differences	4,164	–4,652
=	Change in lease receivables	–268,964	–280,098
+	Addition to liabilities from refinancing	1,486,541	1,391,659
–	Payment of annuities to refinancers	–327,520	–281,211
–	Disposal of liabilities from refinancing	–1,053,116	–908,115
+	Expenses from interest on refinancing and on deposit business	58,337	58,024
+ / –	Currency translation differences	–343	1,799
=	Change in refinancing liabilities	163,899	262,156
+ / –	Increase / decrease in liabilities from deposit business	46,270	54,240
– / +	Increase / decrease in loans to franchisees	–1,424	2,217
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	–1,867	–33,502
+ / –	Increase / decrease in deferred lease payments	–5,245	759
+ / –	Increase / decrease in other liabilities	–8,381	9,772
=	Cash flow from operating activities	–3,905	80,067

continued on next page

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2013	Dec. 31, 2012
– / +	Income taxes paid / received	–21,377	–17,215
–	Interest paid	–1,029	–1,302
+	Interest received	482	1,047
=	Net cash flow from operating activities	–25,829	62,597
–	Payments for the acquisition of property, plant, and equipment and intangible assets	–6,690	–8,117
– / +	Payments / proceeds from acquisition of subsidiaries	–15,930	–31,358
+	Proceeds from the sale of property, plant, and equipment and intangible assets	313	142
=	Cash flow from investing activities	–22,307	–39,333
+ / –	Borrowing / repayment of bank liabilities	–706	–489
+	Proceeds from cash capital increase	53,691	0
–	Dividend payments	–11,760	–10,263
=	Cash flow from financing activities	41,225	–10,752
	Cash funds at beginning of period
	Cash in hand and bank balances	116,707	104,234
–	Bank liabilities from overdrafts	–637	–482
=	Cash and cash equivalents at beginning of period	116,070	103,752
+ / –	Change due to currency translation	179	–194
=	Cash funds after currency translation	116,249	103,558
	Cash funds at end of period
	Cash in hand and bank balances	109,770	116,707
–	Bank liabilities from overdrafts	–432	–637
=	Cash and cash equivalents at end of period	109,338	116,070
	Change in cash and cash equivalents during the period (= total cash flow)	–6,911	12,512
	Net cash flow from operating activities	–25,829	62,597
+	Cash flow from investing activities	–22,307	–39,333
+	Cash flow from financing activities	41,225	–10,752
=	Total cash flow	–6,911	12,512

Consolidated Statement of Changes in Equity

			Retained
			earnings /		Reserve for
	Share	Capital	consolidated	Hedging	actuarial gains /	Currency	Total
EURk	capital	reserves	net profit	reserve	losses	translation	equity
Equity as per
Jan. 1, 2013	17,491	60,166	270,812	–445	–494	3,443	350,973
Total comprehensive
income			47,012	388	56	–1,097	46,359
Dividend payment in
2013 for 2012			–11,760				–11,760
Capital increase
(issuance of shares)	1,299	52,591					53,890
Equity as per
Dec. 31, 2013	18,790	112,757	306,064	–57	–438	2,346	439,462
Equity as per
Jan. 1, 2012	17,491	60,166	238,614	–248	–105	1,739	317,657
Total comprehensive
income			42,461	–197	–389	1,704	43,579
Dividend payment in
2012 for 2011			–10,263				–10,263
Equity as per
Dec. 31, 2012	17,491	60,166	270,812	–445	–494	3,443	350,973

Notes to the Consolidated Financial Statements for Fiscal Year 2013

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 in 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 deposit business with private customers. The GRENKE Consolidated Group's business areas constitute: the leasing of all types of movable assets; the management of lease contracts for third parties; the brokering 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 and copier equipment, and other IT products. Almost all leases concluded, provide for full cost recovery (full payout leases). This means that the payments made by the lessee during the basic lease period, including the guaranteed residual values, exceed the acquisition and contract cost.

2 Basic Principles of the Consolidated Financial Statements

2.1 Basis of Preparation

GRENKELEASING AG, as the 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 (IFRS), 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 European Union (EU) as per December 31, 2013, and the regulations under German commercial law as complementarily applicable under Section 315a HGB.

All International Financial Reporting Standards (IFRSs) – formerly International Accounting Standards (IAS) – applicable to fiscal year 2013 and the interpretations by the International Financial Reporting Interpretations Committee (IFRIC) – formerly the Standing Interpretations Committee (SIC) – were considered in these financial statements. Certain standards have been applied in advance.

The consolidated financial statements comprise the financial statements of GRENKELEASING AG and its subsidiaries as per December 31, 2013.

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 applied correspond with those of the previous year. Exceptions are listed in note 2.2 and relate to changes resulting from the mandatory adoption of new or amended accounting standards.

The Supervisory Board plans to adopt these consolidated financial statements prepared by the Board of Directors and will approve them for publication at its meeting on February 3, 2014.

2.2 Effects of New or Amended IFRSs

2.2.1 Accounting Standards Implemented in 2013

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

The IASB also published amendments to existing standards as part of an annual procedure (Annual Improvements Project). The primary aim of the collective standard is to eliminate inconsistencies and to clarify formulations.

In May 2012, various standards were amended, "Improvements to IFRSs 2009 – 2011 Cycle" (January 1, 2013), in the context of the Annual Improvements Project (AIP). These relate to IAS 1, IAS 16, IAS 32, IAS 34, and IFRS 1. The amended standards have no relevance for the accounting and valuation in the consolidated financial statements of GRENKELEASING AG.

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

• IAS 1 "Presentation of Financial Statements" (July 1, 2012)
• IAS 19R "Employee Benefits" (January 1, 2013)
• IFRS 7 "Disclosures: Offsetting Financial Assets and Financial Liabilities" (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 June 2011, the IASB published amendments to IAS 1 "Presentation of Financial Statements" (July 1, 2012). The presentation of other comprehensive income was changed to that effect that the items of other comprehensive income are presented dependent upon the possibility of whether or not they may be reclassified to profit and loss. GRENKELEASING AG has applied these amendments prematurely as per December 31, 2012.

In June 2011, the IASB published amendments to IAS 19 "Employee Benefits" (revised in 2011, IAS 19R) that resulted in the abolition of the corridor method. In the future, actuarial gains and losses must be directly recognised in equity and not affect profit and loss. In addition, income from the expected interest on plan assets may only be recognised in the amount of the discount rate used to calculate the defined benefit obligation. The amendments to IAS 19R must be applied retroactively to financial statements in fiscal years beginning on or after January 1, 2013.

The abolition of the corridor method has no effect on the consolidated financial statements of GRENKELEASING AG since it was not applied to the GRENKE Consolidated Group and actuarial gains and losses have already been recognised in other comprehensive income. The adoption of a uniform net interest component of interest from plan assets and the interest expense of plan obligations has a moderate impact on the consolidated financial statements of GRENKELEASING AG as plan assets only exist for defined benefit obligations in Switzerland. Furthermore, disclosure requirements have increased. The amendments to requirements for termination benefits have no impact on GRENKELEASING AG's consolidated financial statements.

The amendments to IFRS 7 were published in December 2011 and must be adopted for the first time in fiscal years beginning on or after January 1, 2013. The changes define additional quantitative disclosure requirements regarding the gross amounts of financial assets and liabilities which were offset. This amendment had no impact on the consolidated financial statements.

In May 2011, the IASB published IFRS 13 "Fair Value Measurement" which compiles the regulations of 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. Therefore, the Consolidated Group has revised its valuation principles for measurement at fair value. GRENEKELEASING AG has a manageable derivative business ("plain vanilla"). The derivatives are measured at fair value. The measurement includes additional input parameters, such as the counterparty risk and own credit risk. The changes to the measurement of derivatives had an insignificant effect on the consolidated financial statements. Moreover, the reporting was supplemented by additional disclosures as required by IFRS 13 and is explained in the respective chapters on financial instruments.

The amended pronouncements of IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" have no effect on the consolidated financial statements of GRENKELEASING AG.

On May 29, 2013, the IASB published amendments to IAS 36 "Impairment of Assets". The amendments must be adopted for the first time in fiscal years beginning on or after January 1, 2014. Early adoption is permitted. The European Union has adopted the amendments to IAS 36 into EU law in the Official Gazette on December 20, 2013. GRENKELEASING AG has applied these amendments prematurely as per December 31, 2013. With the amendments to IAS 36, the IASB has limited the scope of disclosure requirements introduced by IFRS 13 regarding the recoverable amount. At the same time, the scope of disclosure requirements in the notes has been expanded in the case of impairment or a reversal of impairment. According to the current amendment to IAS 36, in the future, the recoverable amount must only be disclosed if impairment or a reversal of impairment has occurred in the current period. This amendment clarifies the disclosure requirements regarding the recoverable amount. The corresponding disclosures are presented in note 4.9.

2.2.2 Accounting Standards and Interpretations Already Published but not yet Implemented

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

In December 2013, various standards were amended ("Improvements to IFRSs 2010 – 2012 Cycle", July 1, 2014), in the context of the Annual Improvements Project (AIP). Early adoption of any individual amendments within the cycle is permitted. This relates to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, and IAS 38. The amended standards clarify existing issues. The amended standards have no relevance for the accounting and valuation in the consolidated financial statements of GRENKELEASING AG since the issue either do not apply to the GRENKE Consolidated Group or have already been interpreted accordingly.

In December 2013, various standards were amended, "Improvements to IFRSs 2011 – 2013 Cycle" (July 1, 2014), in the context of the Annual Improvements Project (AIP). Early adoption of any individual amendments within the cycle is permitted. This relates to IFRS 1, IFRS 3, IFRS 13, and IAS 40. The amended standards have no relevance for the accounting and valuation used in the consolidated financial statements of GRENKELEASING AG.

The IASB also amended or released the following standards and interpretations:

• IAS 27 "Separate Financial Statements" (January 1, 2014)
• IAS 28 "Investments in Associates" (January 1, 2014)
• IAS 32 "Financial Instruments: Presentation" (January 1, 2014)
• IAS 39 "Financial Instruments: Recognition and Measurement" (January 1, 2014)
• IFRS 9 "Financial Instruments" (January 1, 2017)
• IFRS 10 "Consolidated Financial Statements" (January 1, 2014)
• IFRS 11 "Joint Arrangements" (January 1, 2014)
• IFRS 12 "Disclosure of Interests in Other Entities" (January 1, 2014)

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. In the EU, the new standards must be applied retroactively to financial statements in fiscal years beginning on or after January 1, 2014. Early adoption is permitted. GRENKELEASING AG has examined the effects of this adoption on the consolidated financial statements. In particular, the existing ABCP programmes as well as franchise relationships have been observed. GRENKELEASING AG still does not expect the amendment to have a significant impact on the recognition and measurement in the Consolidated Group. ABCP programmes with special purpose entities which have not yet been consolidated were presented so that the transferred financial assets and the corresponding liabilities were not shown as a disposal since a continuing involvement in the transferred assets remained. GRENKELEASING AG does not expect a change in the scope of consolidation.

IFRS 11 has no effect on the consolidated financial statements of GRENKELEASING AG as no companies of the GRENKE Consolidated Group have investments in joint arrangements.

IFRS 12 "Disclosure of Interests in Other Entities" expands the disclosure requirements for investments in other companies. This involves the compilation of disclosures from several standards that have already been published in IFRS 12. In the EU, IFRS 12 must be applied prospectively to financial statements in fiscal years beginning on or after January 1, 2014. Early adoption is permitted. The disclosure requirements were expanded significantly. Following the amendment, the amended IAS 27 "Separate Financial Statements" now only includes regulations for separate financial statements and is therefore not relevant to the consolidated financial statements.

In October 2012, the IASB published amendments to the transitional provisions of the amended IFRS 10, 11, and 12. Exceptions and simplifications were published regarding restated comparative figures, as well as disclosure requirements of comparative information regarding non-consolidated structured entities for the first-time adoption of IFRS 12. In the EU, the adoption of these amendments will also be mandatory as per January 1, 2014. The amendments will not have an effect 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 since it holds no investments in associates.

In November 2009, the IASB published IFRS 9 "Financial Instruments", which only relates 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 in order to include own credit risk when exercising the fair value option. The new standard regulates the "classification and measurement" of financial instruments defined under IAS 39 and is the first phase in the project to revise the accounting of financial instruments in IFRS 9. Financial assets are classified according to two valuation categories: "amortised cost" and "fair value". On November 19, 2013, the IASB published an amendment to IFRS 9 "Hedging Relationships" as part of the project's third phase. This amendment introduced a new general model for the accounting of hedging relationships to the standard. The final version of the second phase of the project "Impairment and Risk Provision" has not yet been disclosed.

The new standard must generally be applied prospectively. However, the regulations regarding the classification into categories must be applied respectively. The convenience of general prospective adoption will result in additional disclosures at the transition date. In July 2013, the IASB decided to postpone the mandatory date of first-time adoption, once again, and to leave the date open until the completion of the limited changes and the completion of the second phase of IFRS 9 regarding "Impairment and Risk Provision". Early adoption continues to be permissible. Endorsement into European law by the EU has been suspended since the European Financial Reporting Advisory Group has postponed the recommendation for the adoption of the currently published IFRS 9 in the EU. As a result of the on-going adjustments to IFRS 9 by the IASB, GRENKELEASING AG has not yet completed its examination as to the impact of IFRS 9 on the consolidated financial statements. Any statement regarding the effects is currently not possible.

The amendments to IAS 32 were published by the IASB in December 2011. The changes must be adopted in fiscal years beginning on or after January 1, 2014. Early adoption is permitted. These changes are intended to clarify existing inconsistencies via amendments to the application guidelines. However, the existing basic regulations concerning the offsetting of financial instruments remain unchanged. These amendments have no impact on the consolidated financial statements.

On June 27, 2013, the IASB published amendments to IAS 39 "Financial Instruments: Recognition and Measurement" with the title "Novation of Derivatives and Continuation of Hedge Accounting". The amendment must be adopted for the first time in fiscal years beginning on or after January 1, 2014. Early adoption is permitted. The changes are intended to clarify situations in which a derivative, which has been designated as a hedging instrument, is novated from one counterpart to a central counterparty as a consequence of laws or regulations. The amendments allow for the continued recognition of the hedging transaction independent of the novation, which would have not been permissible without the amendment. This change has no impact on GRENKELEASING AG. As a result of the settlement of derivative transactions of a Consolidated Group company, which is not defined as a financial counterparty and due to the low level of derivative business involved, these transactions are not subject to the EU regulation of the European Market Infrastructure Regulation (EMIR). Thus, these derivatives are not required to be settled via a central counterparty.

2.3 General Accounting Policies

2.3.1 Scope of Consolidation

The consolidated financial statements contain all assets and liabilities as well as all expenses and income of GRENKELEASING AG and of the subsidiaries it controls (hereinafter referred to as the "GRENKE Consolidated Group") after eliminating all material intragroup transactions. Subsidiaries are included in the scope of consolidation for as long as they are under the control of the parent company. Control is normally evidenced when the Consolidated Group holds, either directly or indirectly, 50% (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 in order to 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	2013	2012
Germany
GRENKE SERVICE AG	Baden-Baden	100%	100%
Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien
(84.4% directly, 15.6% 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 GmbH	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 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%	100%
S.C. Grenke Renting S.R.L	Bucharest/Romania	100%	100%
GRENKE RENT S.A. 2)	Madrid/Spain	100%	100%
GRENKE RENTING S.A.	Lisbon/Portugal	100%	100%
GRENKELEASING s.r.o.	Bratislava/Slovakia	100%	--
GRENKELEASING Oy	Vantaa/Finland	100%	--

		Equity investment	Equity investment
Name	Registered office	2013	2012
International
FCT "GK"-COMPARTMENT "G2" 3)	Pantin/France	100%	100%
FCT "GK"-COMPARTMENT "G3" 4)	Pantin/France	--	--
GOALS FINANCING 2009 LIMITED 5)	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) GRENKELEASING AG holds an indirect interest of 100% through GRENKE ALQUILER S.A.

3) Included in consolidation from 2011 as a result of the commencement 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 through its Irish subsidiary GRENKE FINANCE Plc. and its German subsidiary GRENKE SERVICE AG of 50% each.

4) Included in consolidation from March 31, 2013 as a result of the commencement of the refinancing activities of this compartment in the context of the Regency Assets Limited ABCP programme for French lease receivables. There are no participating interests.

5) Founded in 2009 in connection with the issue of the ABS bond. Through the issue of the ABS bond in 2010, GRENKELEASING AG has gained control of the special-purpose entity GOALS FINANCING LIMITED 2009 in accordance with SIC-12. There are no participating interests.

In the reporting year, GRENKELEASING S.r.l., Milan, Italy, was merged with GRENKE Locazione S.r.l.

For disclosures regarding additions in the fiscal year, we refer to note 5.1.

2.3.2 Foreign Currency Translation

Foreign Currency Transactions

Foreign currency transactions are generally translated at the closing rate at the time of the transaction. Monetary items denominated in foreign currency (e.g. cash and cash equivalents, receivables, and liabilities) are subsequently translated using the respective closing rate, with any translation differences reported in profit and loss. Non-monetary items carried at historical cost are not subsequently translated; the rate upon initial recognition is used.

Foreign Currency Translation in the Consolidated Group

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 transactions 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 and loss.

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

The respective 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 rate differences arising upon translation are recognised as a separate component of equity. Upon disposal of a foreign entity, the cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit and loss.

	Closing rate on	Average rate	Closing rate on	Average rate
	Dec. 31, 2013	2013	Dec. 31, 2012	2012
AED1)	5.063	4.87896	--	--
CAD1)	1.4671	1.3684	--	--
CHF	1.2276	1.2311	1.2072	1.2053
CZK	27.427	25.9800	25.151	25.149
DKK	7.4593	7.4579	7.461	7.4437
GBP	0.8337	0.84926	0.8161	0.81087
HUF	297.04	296.87	292.3000	289.2500
NOK 1)	8.363	7.8067	7.3483	7.4751
PLN	4.1543	4.1975	4.074	4.1847
RON 3)	4.4710	4.4190	4.5800	4.5199
SEK	8.8591	8.6515	8.582	8.7041
TRY 1)	2.9605	2.5335	2.3551	2.3135
USD 2)	1.3783	--	1.3183	--

The development of exchange rates used in the GRENKE Consolidated Group in relation to the euro is as follows:

1) Currency of the franchise companies, refinancing carried out partly in foreign currency. The companies in Canada and in the United Arab Emirates (UAE) were established in 2013.

2) Foreign currencies which are only relevant in the credit and deposit portfolios of GRENKE BANK AG.

3) The average rate in 2012 is presented as per the acquisition of the subsidiary in July 2012.

2.3.3 Leases

Determining Whether an Arrangement Contains a Lease

The determination of whether an arrangement is, or contains, a lease is based on the economic substance of the arrangement at the time the contract is concluded, and requires an assessment as to whether the fulfilment of the arrangement is dependent on the use of a specific asset, and whether 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 conditions, unless the change only renews or extends the arrangement;
• b. a renewal option is exercised or an extension is granted, unless the term of the renewal or extension had initially been considered in the lease term;
• c. there is a change in the determination of whether fulfilment is dependent on a specified asset; or
• d. there is a substantial change to the asset.

The Consolidated Group is the Lessor

Finance Leases

Under a finance lease, all of the significant risks and rewards of legal ownership are transferred from the lessor to the lessee. The outstanding lease payments are thus treated by the lessor as repayments of principal and finance income to reimburse and reward the lessor for his financial 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 asset, 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. These initial direct costs are recognised in profit and loss under profit from new business upon occurrence. 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 does not transfer all the significant risks and rewards of ownership of the asset to the lessee 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 lease agreement. Contingent rents are recognised as income in the period in which they are generated. Operating lease assets are typically recorded in the statement of financial position as property, plant, and equipment 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 may be concluded. This leads to a reassessment of the lease. In cases where the criteria for an operating lease are met, the leased asset is recorded 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 on the date of inception of the lease at the fair value of the leased asset, or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance expense and the retirement of the remaining lease liability so as to achieve a constant rate of interest on the remaining balance of the liability over the period. Finance expenses are immediately recognised in profit and loss.

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

2.3.4 Measurement of Fair Values

The GRENKE Consolidated Group measures derivative financial instrument at their fair value. Additionally, the fair values of financial instrument measured at cost are presented in note 6.4.

The fair value is the amount to be achieved upon the sale of an asset in an arm's length transaction between market participants at the valuation date as part of an orderly business transaction under current market conditions or the amount to be paid for the transfer of a liability. Measuring the fair value assumes that the transaction leading to the sale of the asset or the transfer of the liability, takes place on the asset's principal market or the principal market for the transfer of the liability or, if such a principal market is not available, on the most favourable market for the asset or for the transfer of the liability.

Fair value is determined as per a certain period in time and by applying those assumptions that representative market participants would take into consideration in pricing. With regard to pricing, it is assumed that market participants act in their own best economic interests.

When measuring the fair value of non-financial assets, that market participant's ability to generate an economic benefit is taken into account through the greatest and best use of the asset or through the sale of the asset to another market participant who finds the greatest and best use for the asset.

The GRENKE Consolidated Group uses observable market data, as far as possible for determining the fair value of an asset or a liability. Based on the input parameters used in the valuation methods, the fair values are assigned to different levels in the fair value hierarchy:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: measurement procedures in which all input factors are directly or indirectly observable and have a significant effect on the fair value recognised;
• Level 3: measurement procedures which use input factors that have a significant effect on the fair value recognised and are not based on observable market data.

If the input factors used to determine the fair value of an asset or a liability may be assigned to different levels in the fair value hierarchy, then the measurement at fair value is completely assigned to that level in the fair value hierarchy which corresponds to the lowest input factor that is material for the overall measurement.

The GRENKE Consolidated Group recognises reclassifications between the different levels of the fair value hierarchy at the end of the reporting period in which the change has occurred. In the reporting year, there were no reclassifications between the three levels of the measurement hierarchy.

2.3.5 Financial Instruments

Derivatives

The derivative financial instruments (derivatives) used in the GRENKE Consolidated Group other than those deployed as hedging instruments in a hedging relationship pursuant to IAS 39, are classified as assets held for trading and must therefore be recognised at fair value in profit and loss.

Financial assets held for trading are initially recognised at acquisition costs and are carried at fair value on subsequent measurement.

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 and 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.

Under hedge accounting, the GRENKE Consolidated Group only accounts for hedging of interest derivatives for the hedging of cash flows from the value change of interest rates. These interest rate swap contracts are allocated to the variable cash flows of the underlying bonds and private placement transactions as well as to the variable cash flows of the underlying ABCP and ABS refinancing transactions. The Consolidated Group recognises changes in the fair value of the interest rate swaps in the other comprehensive income (hedging reserve) taking deferred taxes into consideration. Ineffectiveness is recognised in profit and loss. The underlying effectiveness is measured as per the end of each reporting period using the hypothetical derivative method. More information is provided in note 6.3.

Financial Assets

According to IAS 39 and depending on their characteristics, financial assets are classified as financial assets to be measured at fair value through profit and loss, as loans and receivables, as held-to-maturity investments, or as availablefor-sale financial assets. Receivables from finance leases are classified according to IAS 17. Please refer to note 2.3.3.

Loans and Receivables Category

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In the statement of financial position, the Consolidated Group's loans and receivables are recorded under trade receivables, other financial assets as well as under cash and cash equivalents.

Others Category

At the end of the reporting period, the GRENKE Consolidated Group did not hold financial assets in the categories of available-for-sale financial assets, held-to-maturity financial instruments, or assets measured at fair value through profit and loss, except for derivatives.

Recognising and Measuring 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 and loss, also 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 per the end of a given fiscal year where permissible and appropriate. No reclassifications took place in the reporting periods. All regular way purchases and sales of financial assets use settlement date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

After initial recognition, loans and receivables are measured at amortised cost using the effective interest method less any impairment.

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

Impairment of Financial Assets

At the end of each reporting period, the GRENKE Consolidated Group assesses whether a financial asset or a group of financial assets are impaired. If there is an objective indication of an impairment on 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 (with the exception of 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 upon initial recognition).

An objective indication of impairment is assumed if the debtor is experiencing significant financial difficulties, which are characterised by a default or delinquency in interest or principal payments. In addition, past payment behaviour, age structure, a substantial deterioration in credit standing, and a high probability of insolvency of the debtor are taken into consideration. The asset's carrying amount is reduced using an allowance account. The impairment is recognised directly in profit and loss under settlement of claims and risk provision.

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 and loss under settlement of claims and risk provision.

Adequate flat-rate specific bad debt allowances are recognised in order to account for the credit risk from terminated lease contracts or contracts in arrears ("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 and the present value of the outstanding payments is claimed as damages. This amount is considered impaired. It is recorded under settlement of claims and risk provision in the income statement.

Derecognition of Financial Assets

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 have expired;
• the Consolidated Group retains the right to receive cash flows from the financial asset, but has assumed an obligation to pay the cash flows immediately to a third party under a "pass-through" arrangement pursuant to IAS 39.19;
• the Consolidated Group has transferred its 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 substantially retains all of the risks and rewards of the asset's ownership, and also retains control of the transferred asset, then the GRENKE Consolidated Group continues to recognise the transferred asset to the extent of its continuing involvement.

Cash and Cash Equivalents

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

Other Financial Assets

The GRENKE Consolidated Group initially recognises other financial assets at fair value and subsequently at amortised cost.

Trade Receivables

The GRENKE Consolidated Group initially recognises trade receivables at fair value and subsequently at amortised cost.

Financial Liabilities

Financial liabilities are initially recognised at fair value and net of transaction costs. In subsequent periods, they are recognised at amortised cost. The deducted transaction costs and any debt discounts are amortised over the lease term in profit and loss using the effective interest method.

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 interest 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 recognised as expenses from interest on refinancing.

A financial guarantee is a contract, which contains an obligation to effect payments by the guarantor which compensate the guarantee holder for a loss which arises because a given debtor fails to meet its payment obligations on time and according to the terms of the debt instrument. Liabilities from financial guarantee contracts are initially recognised at fair value. The fair value typically corresponds to the net present value of the consideration received in return for the provision of the financial guarantee. Subsequently, the liability's measurement is based on the best estimate of the payment required to fulfil the current obligation as per the end of the reporting period or at the higher recognised value less accumulated amortisation. In line with these accounting policies, there are no financial guarantees to be recognised in the financial statements of the GRENKE Consolidated Group.

Financial liabilities are derecognised if the contractual obligation underlying the liability is discharged or definitively expires. If an existing financial liability is exchanged with another financial liability of 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 derecognition of the original liability and recognition of a new liability. The difference between the corresponding carrying amounts is recognised in profit and loss.

Trade Payables

The GRENKE Consolidated Group initially recognises trade payables at fair value and subsequently at amortised cost.

2.3.6 Lease Assets for Sale

Lease assets for sale are recognised at the recoverable amount on the basis of historical figures. Appropriate measurement is ensured through the use of maturity bonds.

2.3.7 Property, Plant, and Equipment

Property, plant, and equipment are recognised at acquisition costs, net of accumulated depreciation and impairments. Financing costs are capitalised when the necessary requirements are met. 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 derecognised and any gains or losses resulting from their disposal are recognised in the consolidated income statement as other operating income or expenses.

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

Office buildings	33 years
Operating and office equipment
IT hardware	3 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.

2.3.8 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 per the date of acquisition.

Goodwill is not subject to scheduled amortisation. Following initial recognition, goodwill is tested for impairment at least once a year (a so-called "impairment test") to prove its adequate valuation (the "impairment-only approach"). If there are indications that goodwill might be impaired, further tests must be conducted in addition to the mandatory annual impairment test. In subsequent periods, goodwill is recognised at cost less accumulated impairment.

The impairment test for goodwill is carried out on the basis of the cash-generating units. In the Leasing segment, these are equivalent to the business activities in the respective regions (countries) and typically correspond to the legal entities. The cash-generating unit represents the lowermost level at which goodwill is monitored internally. The recoverable amount is the higher of the fair value less selling costs and the value in use of the cash-generating unit. If one of these amounts exceeds the carrying amount, then it is not always necessary to determine both amounts. 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.

Impairment charges for goodwill are not recovered in subsequent periods.

2.3.9 Other Intangible Assets

Licenses, Software

Purchased licenses and software are capitalised at amortised cost. The acquisition costs include the purchase price plus directly attributable costs necessary to prepare the asset for its intended use. The acquisition costs are reduced by scheduled 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 single 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 also prove the intention to complete the intangible asset and use or sell it. In addition, the asset's generation of future economic benefits, 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 annually for impairment.

Customer Relations/Dealer Network

Customer relations/dealer networks acquired in a business combination are recognised at fair value. Until 2011, the determination of the fair value of customer relations/dealer networks was based on a cost-oriented method. For business combinations as of 2012, the determination of fair value is based on a net present value method by applying the residual value method. Customer relations and dealer networks are amortised on a straight-line basis over their economic life of six or five years.

Non-Competitive Clauses

Non-competitive clauses contractually acquired in a business combination are recognised at fair value upon acquisition. The fair value is determined based on a net present value method, an excess profit method. Non-competitive clauses are subject to scheduled amortisation over the contractually agreed useful life which is typically two years.

2.3.10 Impairment of Non-Financial Assets

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

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

The carrying amounts of goodwill are tested in order to assess the probability of continuing future benefits in accordance with the rules described in note 2.3.8. Impairment is recognised in profit and loss if the recoverable amount 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 must be reversed. Exceptions to this rule exist only for impairment of goodwill, the reversal of which is expressly prohibited.

2.3.11 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, and it is probable that the 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.

2.3.12 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 the plan assets. Current and past service costs for benefits following the end of employment are recorded under staff costs. Interest expenses resulting from defined benefit obligations and interest income on plan assets are recorded as net interest expenses under other interest income. Past service costs resulting from plan adjustments are directly recognised in profit and loss.

The present value of the defined benefit obligation is calculated annually by an independent actuarial expert using the projected unit credit method of 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 the current interest rate on the market 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. In addition, GRENKE BANK AG, which was acquired in fiscal year 2009, still has defined benefit pension plans for employees who had left the Company by the end of the reporting period. These benefits are not financed by funds. The underlying pension plans relate to both final salary and flat salary pension plans. Actuarial gains and losses, for example, due to adjustment of the discount rate, are recognised as other comprehensive income in equity.

The amount to be recognised as an asset or a liability under a defined benefit plan is the total of the present value of the defined benefit obligation less the fair value of the plan assets of 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. The GRENKE Consolidated Group primarily uses defined contribution plans.

2.3.13 Taxes

Actual Tax Assets and Tax Liabilities

Actual 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 per the end of the reporting period.

Deferred Tax Liabilities and Deferred Tax Assets

Deferred tax liabilities are calculated using the liability method. 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 tax-loss carryforwards are recognised to the extent that it is probable that taxable profit will be available in the future 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 per the end of the reporting period or will be applicable in the near future.

Deferred taxes relating to items which are recognised directly in equity are recognised in shareholders' equity and not in the income statement. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the entity 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 noncurrent 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:

• 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 acquisition costs of the asset or as part of the expense item;
• receivables and liabilities are stated including 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

In calculating the trade tax provisions for the German Consolidated Group companies GRENKELEASING AG, Grenke Investitionen and Verwaltungs KGaA, and GRENKEFACTORING GmbH, Section 19 GewStDV was applied to the 2008 to 2013 assessment periods and charges, and similar amounts relating directly to financial services within the meaning of Section 1 (1a) sentence 2 of the KWG were not added. For GRENKE BANK AG, Section 19 GewStDV is applied in the relevant manner for banks.

2.3.14 Revenue Recognition

Income from Leasing when the Consolidated Group is the Lessor Please see the information in note 2.3.3.

Income from Insurance Business

Income from insurance business is comprised of premiums for insurance policies in the lease business that must be concluded by the lessees 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 on a pro rata temporis basis.

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.

2.3.15 Judgement

In applying 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 those 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. Accordingly, 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. They are not included in the Consolidated Group insofar as these programmes deal with special purpose entities which are established by various banks and which purchase lease receivables from GRENKE Consolidated Group companies, bundle them, and then issue short-term commercial papers for their own refinancing. 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".

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. It is not possible for the GRENKE Consolidated Group to exercise influence over the trust or the management of 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 et seq. as to whether or not a derecognition of the underlying financial assets should be undertaken, the Consolidated Group must evaluate to what extent it is transferring the 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.

At FCT GK 2, shares of the funds are held by two subsidiaries and are included in consolidation accordingly. GOALS Financing 2009 Ltd. is the SPE for an ABS bond (note 4.12.1). Since this special entity does not have any liquidity guarantees and the majority of risks and rewards are assigned to the GRENKE Consolidated Group, this special purpose entity was included in consolidation. There was no participating interest in FCT GK 3. This entity was included in consolidation due to the majority of risks and rewards assigned to the Consolidated Group.

2.3.16 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 group-wide uniform determination of the useful lives of assets; the measurement of provisions; the recoverability of receivables from terminated contracts; the recognition of realisable residual values of leased assets; and the determination of parameters for assessing the ongoing value of intangible assets and other non-financial assets as well as the probability of future tax benefits. In individual cases, the actual amounts may differ from the assumptions and estimates. Any changes will be recognised in profit and 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

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 the future growth rates of the respective cash-generating unit were made on the basis of historical figures and historical income patterns which were projected into the future. These estimates, and the underlying methodology, may have a significant impact on the values determined. If significant assumptions differ from actual figures, impairments may have to be made in the future in profit and loss.

Determination of Impairments for Non-Performing Lease Receivables from Terminated Lease Contracts or Contracts in Arrears on the Basis of the Recoverability Rate

Lease receivables from terminated lease contracts or contracts in arrears are carried at amortised cost less appropriate bad debt allowances. The amount of bad debt allowances is determined using percentages and processing categories. Percentages are calculated using statistical methods. They are reviewed once a year for validity. Processing statuses are grouped together in processing categories which are set up with a view to risk.

The following table lists the processing categories:

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

Impairment is assumed for categories 2 to 7 as the contracts have been terminated due to defaults in payment. The allowance rates range between 5% and 100%. 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.

Use of Estimated Residual Values at the End of the Lease Term to Determine the Present Value of Lease Receivables

Based on experience and depending on the terms of the lease, the residual values of additions up until the end of 2006, ranged between 11% and 15% of historical cost. In fiscal year 2007, due to the strengthening of forecasting capabilities for the statistical population, this allocation could be further divided into more detailed maturity groups. For additions from 2007 to 2008, the residual values range between 7.7% and 28.4% of historical cost depending upon the duration of the lease. For additions from 2009, residual values of between 6.5% and 23.5% were applied and continue to be valid.

Proceeds are best estimated on the basis of statistical analyses. If the post-transaction recoverable amount is lower than expected (from sale and subsequent lease), the lease receivables are impaired. However, an increase in the recoverable amount remains unrecognised.

Recognition of Lease Assets for Sale at Estimated Residual Values

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 per the end of the reporting period, the residual values used amounted to between 3.2% and 17.3% of the historical cost (previous year: between 3.3% and 16.9%). If a sale is considered unlikely due to the condition of the asset, the asset is impaired in profit and loss.

Fair Value of Financial Instruments

The fair values of financial assets and financial liabilities, not derived from information on active markets, are determined using a valuation model. The input parameters of these models are based on observable market data, if possible. If this is not possible, determining the fair values requires a certain degree of judgment. This judgment relates to input parameters such as liquidity risk, credit risk, and volatility. Changes regarding the assumptions of these input parameters may have an effect of the recognised fair value of financial instruments. If observable prices and parameters are available, they are to determine the fair value which in turn avoids the large scale use of estimates.

Recognition and Measurement of Deferred Taxes on Tax-loss Carryforwards

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 tax-loss carryforwards may in fact be used. In determining the amount 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.

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 are divided as follows:

EURk	2013	2012
Interest income from the leasing business	185,311	165,108
Interest income from the refinancing of franchisees	764	2,185
Interest and similar income from the factoring business	2,287	1,849
Interest income from the bank's lending business	441	347
Total	188,803	169,489

3.1.2 Interest Expenses from Refinancing and Deposit Business

Interest expenses from the refinancing and deposit business are divided as follows:

EURk	2013	2012
Interest expenses from refinancing	52,479	53,125
Interest expenses from deposit business	5,858	4,899
Total	58,337	58,024

Interest expenses from refinancing also include the interest income of EUR 1,651k (previous year: EUR 1,775k) generated by the loans issued under the ABCP programmes and the ABS bond (asset-backed securities) (see note 4.4).

3.2 Settlement of Claims and Risk Provision

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

EURk	2013	2012
Retirement of the carrying amount of performing lease receivables due to premature damages	54,361	51,653
Income from settlement of claims	56,087	49,086
Derecognition of and net addition to flat-rate specific bad debt allowances	47,378	37,408
Expenses for del credere fees to franchiser	418	1,852
Allowance for losses on the bank's loans and advances	3,151	1,500
Allowance for losses in factoring business	573	94
Total	49,794	43,421

3.3 Profit from Insurance Business

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

EURk	2013	2012
Income from insurance business	38,021	32,184
Expenses from insurance business	2,184	2,028
Profit from insurance business	35,837	30,156

3.4 Profit from New Business

Revenues from new contracted lease business are comprised as follows:

EURk	2013	2012
Recognition of new lease receivables	1,032,845	916,990
Share of revenues from leasing down payments	5,452	4,985
Revenues from processing fees	3,180	2,806
Revenues from special lease payments	2,746	2,202
Total	1,044,223	926,983

Expenses for new contracted lease business are comprised as follows:

EURk	2013	2012
Cost of newly acquired leased assets	985,356	874,795
Commissions paid to dealers	14,935	16,490
Total	1,000,291	891,285
Profit from new business	43,932	35,698

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

3.5 Profit from Disposals

EURk	2013	2012
Revenues from subsequent leases	27,541	26,107
Capital losses from disposal after end of the basic lease term	–27,485	–22,719
Capital gains/losses from mutually agreed early termination of contracts	1,571	1,516
Depreciation of leased assets in the subsequent lease period	–917	–922
Total	710	3,982

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 capital 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 819 (previous year: 681). Part-time staff is converted into full-time.

EURk	2013	2012
Salaries	41,460	35,031
Social security and other benefits	9,008	7,407
Board of Directors' phantom stock programme (note 8.5)	1,288	371
Total	51,756	42,809

A total net pension expense of EUR 171k (previous year: EUR 124k) for existing defined pension plans was recognised in staff costs in the fiscal year 2013. The staff costs also included EUR 411k (previous year: EUR 448k) for the employee participation programme of the French subsidiary.

3.7 Depreciation, Amortisation, and Impairment

EURk	2013	2012
Other intangible assets	2,984	1,522
Operating and office equipment	1,796	1,356
Office buildings	664	477
Total	5,444	3,355

3.8 Selling and Administration Expenses (not including Staff Costs)

Selling and administrative expenses are divided into the following categories:

EURk	2013	2012
Operating expenses	14,097	11,523
Consulting and audit fees	8,585	6,168
Distribution costs (without commissions)	7,179	5,613
Administrative expenses	5,381	4,713
Other taxes	3,177	2,255
Remuneration of the Supervisory committees	124	123
Total selling and administrative expenses (excluding staff costs)	38,543	30,395

Consulting and Audit Fees

The consulting and audit fees of EUR 8,585k (previous year: EUR 6,168k) include fees (and expenses) for the auditor of GRENKELEASING AG totalling EUR 582k (previous year: EUR 481k).

The auditor's fees in fiscal year 2013 are divided as follows:

EURk	2013	2012
Fees for the audit of financial statements	426	379
Fees for other assurance or valuation services	65	68
Fees for other services	91	34
Total	582	481

EUR 68k of the total fees (previous year: EUR 52k) related to prior periods.

Expenses from Rent and Lease Contracts

In the fiscal year, expenses for rent and lease contracts amounted to EUR 7,200k (previous year: EUR 5,827k). They are recognised under operating expenses and mainly relate to the rental of offices for the individual branches and company car leases.

3.9 Other Operating Expenses

Other operating expenses are divided as follows:

EURk	2013	2012
Currency translation differences	1,625	2,724
Revenue deductions	1,112	1,104
Additions to provisions	0	219
Capital losses from the disposal of operating and office equipment	15	100
Other items	1,011	874
Total	3,763	5,021

From fiscal year 2013, additions to provisions have been reported under the corresponding expense items.

3.10 Other Operating Income

Other operating income breaks down as follows:

EURk	2013	2012
Franchise fees received	658	1,180
Rent and ancillary rental costs	584	473
Revenues from the disposal of merchandise	522	325
Income from reversal of deferred liabilities	0	309
Commission income from banking business	307	229
Prior-period income	164	134
Administration fees received	22	76
Income from impaired receivables	46	61
Derecognition of liabilities	0	55
Insurance compensation	49	51
Capital gains from the disposal of non-current assets	79	46
Other items	627	562
Total	3,058	3,501

From fiscal year 2013, the reversal of accrued liabilities has been offset against the corresponding expenses.

3.11 Income Taxes

EURk	2013	2012
Current taxes	13,093	14,663
Deferred taxes	4,153	2,574
Total	17,246	17,237

Current taxes include income relating to previous years of EUR 478k (previous year: EUR 183k).

Reconciliation from the Average Effective Tax Rate to the Expected Tax Rate

The reconciliation of the expected applicable tax rate of GRENKELEASING AG to the effective tax rate based on earnings before taxes (100%) is as follows:

Applicable tax rate	2013	2012
Trade tax	14.19%	14.19%
Corporate income tax	15.00%	15.00%
Solidarity surcharge (5.5% of corporate income tax)	0.83%	0.83%
Average expected tax rate GRENKELEASING AG	30.02%	30.02%

Applicable tax rate	2013	2012
Average expected tax rate GRENKELEASING AG	30.02%	30.02%
Tax increases due to non-deductible expenses	0.05%	0.07%
Changes due to foreign taxes	–5.04%	–3.09%
Balance of tax reductions and increases due to changes in tax rates	–0.12%	–0.03%
Utilisation of non-capitalised loss carryforwards	–0.13%	–0.28%
Back payments and tax rebates from previous years 1)	–0.74%	–0.31%
Other	2.80%	2.49%
Average effective tax rate for the Consolidated Group	26.84%	28.87%

1) Tax refunds for prior years amounted to EUR 478k in 2013 (previous year: tax refunds of EUR 183k).

3.12 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 2013 or the previous year. Earnings per share amounted EUR 3.23 for the year under review (previous year: EUR 3.10).

Number	2013	2012
Shares outstanding at beginning of period	13,684,099	13,684,099
Average number of shares outstanding at end of period (basic)	14,558,052	13,684,099
Average number of shares outstanding at end of period (diluted)	14,558,052	13,684,099
Shares outstanding at end of period	14,700,000	13,684,099

3.13 Other Comprehensive Income

The reclassification of realised gains and losses before taxes in profit and loss are divided as follows:

EURk	2013	2012
Gains (losses) from interest rate contracts arising in the current period	136	460
Reclassification adjustments to the income statement	–545	–224
Total comprehensive income from hedge accounting	–409	236

4 Selected Notes on the Statement of Financial Position

4.1 Financial Instruments that are Assets

In both reporting periods, financial instruments that are assets, was comprised solely of derivatives without hedging relationship. Accordingly, there were no hedging derivatives as defined by IAS 39 that were assets.

EURk	Dec. 31, 2013	Dec. 31, 2012
Market value of interest rate swaps	1,623	3,325
Foreign currency forwards	1,090	913
Total	2,713	4,238

For a discussion of interest rate and currency derivatives please refer to note 6.3.

4.2 Cash and Cash Equivalents

EURk	Dec. 31, 2013	Dec. 31, 2012
Bank balances	76,836	71,424
Balances at central banks	32,927	45,276
Cash in hand	7	7
Total	109,770	116,707

For the purposes of the statement of cash flows, cash and cash equivalents are divided as follows:

EURk	Dec. 31, 2013	Dec. 31, 2012
Cash and cash equivalents as per the statement of financial position	109,770	116,707
Less current account liabilities	432	637
Cash and cash equivalents as per the statement of cash flows	109,338	116,070

4.3 Lease Receivables

EURk	Dec. 31, 2013	Dec. 31, 2012
Outstanding minimum lease payments	2,116,906	1,843,940
+ non-guaranteed residual values	256,662	226,216
Gross investment	2,373,568	2,070,156
– unrealised (outstanding) finance income	329,664	298,483
Net investment	2,043,904	1,771,673
– Present value of non-guaranteed residual values	191,362	166,905
Present value of minimum lease payments	1,852,542	1,604,768

EURk	Less than 1 year	1 to 5 years	More than 5 years
Total gross investment	825,595	1,530,358	17,615
Total gross investment (previous year)	727,049	1,329,324	13,783
Present value of outstanding minimum lease payments	606,547	1,235,019	10,976
Present value of outstanding minimum lease payments (previous year)	530,691	1,065,924	8,153

The reconciliation of gross investment only contains current contracts as per 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, 2013	Dec. 31, 2012
Changes in lease receivables from current contracts
(performing lease receivables)
Balance at beginning of period	1,771,673	1,484,934
+ Change during the period	272,231	286,739
Lease receivables (current + non-current) from current contracts at end of period	2,043,904	1,771,673
Changes in lease receivables from terminated contracts/contracts in arrears
(non-performing lease receivables)
Gross receivables at beginning of period	198,623	168,393
– accumulated valuation allowances at beginning of period	96,368	84,573
= Non-performing lease receivables at beginning of period	102,255	83,820
+ Additions to gross receivables during the period	52,333	63,851
– Disposals of gross receivables during the period	33,846	33,621
+ Disposal of accumulated valuation allowances during the period	16,778	17,636
– Addition of accumulated valuation allowances during the period*	31,555	29,431
Non-performing lease receivables at end of period	105,965	102,255
Lease receivables (carrying amount, current and non-current) at beginning of period	1,873,928	1,568,754
Lease receivables (carrying amount, current and non-current) at end of period	2,149,869	1,873,928

* Item contains exchange rate differences in the amount of EUR 330k (previous year: EUR 270k).

	Present value of
	minimum lease	Present value of	Other receivables
EURk	payments	residual values	from lessees	Carrying amount
2012
Current lease receivables	530,691	55,195	102,255	688,141
Non-current lease receivables	1,074,077	111,710	0	1,185,787
Total (2012)	1,604,768	166,905	102,255	1,873,928
2013
Current lease receivables	606,547	62,655	105,965	775,167
Non-current lease receivables	1,245,995	128,707	0	1,374,702
Total (2013)	1,852,542	191,362	105,965	2,149,869

Receivables from terminated contracts and contracts in arrears are included in current lease receivables.

				past due as per the reporting date in the following time bands
		thereof past	Allowances for			Between
		due as per	receivables as		Between 91	181 days
Lease receivables	Net carrying	the report	per the reporting		days and	and	Between 1
EURm	amount	ing date	date	< 90 days	180 days	360 days	and 5 years	> 5 years
As per Dec. 31, 2012
Not impaired	20.4	20.4	0.0	18.8	0.9	0.4	0.3	0.0
Impaired	81.9	178.5	96.6	20.9	13.4	20.9	76.6	46.7
Total	102.3	198.9	96.6	39.7	14.3	21.3	76.9	46.7
As per Dec. 31, 2013
Not impaired	20.3	20.3	0.0	18.5	0.6	0.7	0.4	0.0
Impaired	85.7	196.8	111.1	17.5	11.7	27.2	95.6	44.8
Total	106.0	217.1	111.1	36.0	12.3	27.9	96.0	44.8

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

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

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

As per December 31, 2013, 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 allowances for current and non-current receivables:

EURm	Dec. 31, 2013	Dec. 31, 2012
Allowances at the beginning of the fiscal year	96.6	84.8
Addition to specific bad debt allowance	36.0	33.5
Utilisation of specific bad debt allowance	16.8	17.6
Reversal of specific bad debt allowance	5.0	4.4
Currency translation differences	0.3	0.3
Allowances at the end of the fiscal year	111.1	96.6

The interest income resulting from the addition of accrued interest on the allowance expenses amounted to EUR 1,918k (previous year: EUR 419k) and is reported under settlement of claims and risk provision.

4.4 Other Financial Assets

EURk	Dec. 31, 2013	Dec. 31, 2012
Other current financial assets
Instalments collected before end of month	14,134	21,550
ABCP loans	20,522	19,987
Receivables from franchisees (refinancing)	15,879	18,932
Receivables from factoring business	10,762	9,444
Restricted cash	6,915	6,180
Receivables from refinancers	3,150	4,896
Loans (bank)	5,114	2,859
Other	1,070	1,055
Total other current financial assets	77,546	84,903
Other non-current financial assets
ABCP loans	18,172	19,114
Loans (bank)	8,391	5,738
Receivables from refinancers	1,685	0
Receivables from franchisees (refinancing)	30	3,135
Other	604	1,069
Total other non-current financial assets	28,882	29,056
Total financial assets	106,428	113,959

Instalments collected before the end of the month primarily include instalments collected before the reporting date of GOALS Financing 2009 which are presented as deferred rental income in the same amount.

In addition to the liquidity reserve of between 8.0% and 35.0%, depending on country of origin and vehicle utilised, based on the volume of lease receivables sold for the purpose of refinancing, the ABCP loans include loans to the special purpose entities 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 special purpose entities. The interest income generated in this context is offset against the interest expense from refinancing liabilities.

Receivables from franchisees (see also note 2.3.5) include receivables resulting from the refinancing of leases concluded by franchise operators. As collateral 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 764k (previous year: EUR 2,185k) (see also note 3.1.1) is reported as interest income within the net interest income. Refinancing granted in foreign currencies is translated using the closing rate.

Receivables from factoring business include receivables from customers resulting from purchased invoices from factoring.

Restricted cash refers to the cash and cash equivalents in the bank accounts of GOALS 2009. This amount represents the liquidity reserve of the special purpose entity. The GRENKE Consolidated Group cannot access these funds.

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 1,790k (previous year: EUR 2,513k). In addition, receivables from the lending business of in total EUR 13,505k (previous year: EUR 8,597k) include receivables from granting business start-up loans in the amount of EUR 10,933k (previous year: EUR 5,774k) and receivables from granting project financing in the amount of EUR 782k (previous year: EUR 282k). Interest income is recognised as such under net interest income.

The item "Others", includes financial assets that were recognised in the context of purchase price accounting of business combinations.

Of the other financial assets, EUR 5,108k (previous year: EUR 3,372k) were past due, of which EUR 5,077k (previous year: EUR 757k) were impaired. As per December 31, 2013, other financial assets in the amount of EUR 31k (previous year: EUR 2,615k) were past due but not impaired. The level of impairment is determined by the respective processing categories (see note 2.3.16). In the past fiscal year, the impairment loss amounted to EUR 823k (previous year: EUR 254k).

The following table lists the past due other financial assets with the number of days past due:

				past due as per the reporting date in the following time bands
		thereof past	Allowances for			Between
Other financial		due as per	receivables as		Between	181 days
assets	Net carrying	the report	per the reporting		91 days and	and	Between 1
EURk	amount	ing date	date	< 90 days	180 days	360 days	and 5 years	> 5 years
As per Dec. 31, 2012
Not impaired	2,615	2,615	0	2,601	1	3	10	0
Impaired	238	757	519	323	129	66	211	28
Total	2,853	3,372	519	2,924	130	69	221	28
As per Dec. 31, 2013
Not impaired	31	31	0	29	0	2	0	0
Impaired	3,978	5,077	1,099	2,639	332	1,727	197	182
Total	4,009	5,108	1,099	2,668	332	1,729	197	182

The maximum credit risk, without taking into account collateral, credit assessment systems, and other tools, is limited to the carrying amount of the other financial assets.

Except for the receivables from factoring business and the receivables from loans, all other financial assets were neither past due nor impaired as per the end of the reporting period.

4.5 Trade Receivables

Trade receivables of EUR 4,395k (previous year: EUR 3,726k) mainly relate to receivables from franchisees, resellers, and third parties resulting from the disposal of lease assets. An amount of EUR 1,210k (previous year: EUR 879k) of these receivables is overdue and EUR 1,173k (previous year: EUR 584k) of this amount is impaired. As per December 31, 2013, trade receivables of EUR 37k (previous year: EUR 295k) were overdue but not impaired. The level of impairment is determined by the respective processing categories (see note 2.3.16). In the past fiscal year, the impairment loss amounted to EUR 449k (previous year: EUR 40k).

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

Trade receivables include other receivables from franchisees of EUR 659k (previous year: EUR 1,501k).

4.6 Tax Assets

EURk	Dec. 31, 2013	Dec. 31, 2012
Corporate income tax assets	6,850	3,580
Trade tax assets	2,928	385
Other items	4,398	873
Total	14,176	4,838

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

4.7 Other Current Assets

EURk	Dec. 31, 2013	Dec. 31, 2012
VAT receivables	103,893	103,849
Prepaid expenses	3,727	3,096
Amounts in transit	1,287	818
Merchandise	804	724
Insurance claims	352	408
Creditors with debit balances	206	151
Orders in progress	53	97
Other items	2,078	1,634
Total	112,400	110,777

4.8 Property, Plant, and Equipment

4.8.1 Overview of Fiscal Year 2013

	Land and	Assets under	Operating and	Lease assets from
EURk	buildings	construction	office equipment	operating leases	Total
Acquisition costs
Jan. 1, 2013	16,713	6,292	17,010	14,507	54,522
Currency translation differences	0	0	–57	–29	–86
Additions	7,007	0	3,815	9,789	14,319
Of which additions in the context of a
business combination	0	0	50	28	78
Disposals	0	0	415	8,522	8,937
Reclassifications	0	–6,292	0	0	0
Acquisition costs
Dec. 31, 2013	23,720	0	20,353	15,745	59,818
Accumulated depreciation and
impairments Jan. 1, 2013	4,186	0	11,774	1,527	17,487
Currency translation differences	0	0	–40	–3	–43
Additions to depreciation	664	0	1,796	917	3,377
Additions of impairments	0	0	0	0	0
Disposals of depreciation	0	0	217	853	1,070
Reclassifications	0	0	0	0	0
Accumulated depreciation and
impairment Dec. 31, 2013	4,850	0	13,313	1,588	19,751
Net carrying amounts Dec. 31, 2013	18,870	0	7,040	14,157	40,067

4.8.2 Overview of Fiscal Year 2012

	Land and	Assets under	Operating and	Lease assets from
EURk	buildings	construction	office equipment	operating leases	Total
Acquisition costs
Jan. 1, 2012	16,686	866	15,142	18,710	51,404
Currency translation differences	0	0	79	56	135
Additions	27	5,426	2,424	7,895	15,772
Of which additions in the context of a
business combination	0	0	366	611	977
Disposals	0	0	635	12,154	12,789
Reclassifications	0	0	0	0	0
Acquisition costs
Dec. 31, 2012	16,713	6,292	17,010	14,507	54,522
Accumulated depreciation and
impairments Jan. 1, 2012	3,709	0	10,815	1,227	15,751
Currency translation differences	0	0	43	3	46
Additions to depreciation	477	0	1,356	923	2,756
Additions of impairments	0	0	0	0	0
Disposals of depreciation	0	0	440	626	1,066
Reclassifications	0	0	0	0	0
Accumulated depreciation and
impairment Dec. 31, 2012	4,186	0	11,774	1,527	17,487
Net carrying amounts Dec. 31, 2012	12,527	6,292	5,236	12,980	37,035

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

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

4.9 Goodwill

EURk	2013	2012
Carrying amounts as per Jan. 1	48,815	13,441
Currency translation differences	–264	570
Additions through business combinations	4,196	34,804
Impairments	0	0
Carrying amounts as per Dec. 31	52,747	48,815

With regard to the additions in 2013, please refer to the comments on the business combinations of GRENKELEASING Oy, Finland and GRENKELEASING s.r.o., Slovakia (see note 5.1).

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

EURk	Dec. 31, 2013	Dec. 31, 2012
Grenke Renting S.A. (Lisbon) – Portugal	28,472	28,472
GRENKE RENT S.A. (Madrid) – Spain	5,015	5,015
GRENKELEASING Sp. z o.o. (Poznan) – Poland	4,306	4,391
GRENKEFACTORING GmbH (Baden-Baden) – Factoring	2,698	2,698
Grenke Leasing Ltd. (Guildford) – UK	2,033	2,077
GRENKE BANK AG (Baden-Baden) – Bank	1,582	1,582
S.C. Grenke Renting S.R.L. (Bucharest) – Romania	1,350	1,358
GRENKELEASING s.r.o. (Prague) – Czech Republic	1,236	1,347
GRENKELEASING Magyarország Kft. (Budapest) – Hungary	975	992
GRENKE Locazione S.r.l. (Milan) – Italy	504	504
GRENKE SERVICE AG (Baden-Baden)	379	379
GRENKELEASING Oy (Vantaa) – Finland	3,608	--
GRENKELEASING s.r.o. (Bratislava) – Slovakia	589	--
Total	52,747	48,815

The goodwill resulting from the business combination with GRENKELEASING Oy (Vantaa), Finland and GRENKELEASING s.r.o (Bratislava), Slovakia in 2013 is still provisional as the purchase price allocation will only be finalised in 2014 (see note 5.1). The goodwill is assigned to the cash-generating units in Finland and Slovakia.

4.9.1 Goodwill Impairment Test

The impairment test for goodwill is carried out on the basis of the cash-generating units. In the Leasing segment, these are equivalent to the business activities in the respective regions (countries) and typically correspond to the legal entities. The cash-generating units represent the lowermost level at which goodwill is monitored internally. The recoverable amount is the higher of the fair value less selling costs and the value in use of the cash-generating units. If one of these amounts exceeds the carrying amount, then it is not always necessary to determine both amounts. The recoverable amount of each of the cash-generating units was determined on the basis of a value-in-use calculation using cash flow projections derived from five-year financial plans which have been approved by senior management.

The key parameters for determining their value are the future expectations with regard to the development of new business and profitability.

GRENKELEASING AG tests goodwill for impairment once a year. The basic assumptions used in calculating the cash flows which may be generated by the respective entities are based on new business growth rates of the cash-generating units of up to 40% in the Leasing segment in individual regions and in individual years. The discount factors, specific to countries, financial structure, and currencies, range between 6.6% and 12.2% (previous year: between 6.6% and 11.3%).

Discount factors are calculated based on the "capital asset pricing model" (CAPM), taking into account a risk-free interest rate of 2.4% (previous year: 2.2%) and a beta factor of 0.71 (previous year: 0.73) for all cash-generating units. Cash flows after a five-year period were carried forward using growth rates of between 0.0% and 1.0%. 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.

For Portugal, one of our relevant cash-generating units, the key assumptions used are a discount factor of 12.2% and a growth rate for new business of up to 12.0% in individual years. The perpetual growth rate is 1%. The key assumptions of the parameters used correspond to the approach mentioned above, which holds true for all cash-generating units.

No impairment was identified in any of these cases.

4.9.2 Sensitivity of Assumptions

The fair value of a cash-generating unit, where the major value drivers are cash flows and the discount rate, is sensitive to changes in the discount rate. The discount rate is largely determined by the risk-free interest rate, a market risk premium, and a beta factor for systematic risk. Specific features with regard to countries, financial structure, and currencies were taken into consideration. These parameters are based on external sources of information. Therefore, 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 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 in the discounted cash flow model.

Against this background, 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 annual impairment test, did not affect the parameters for the evaluation of the individual cash-generating units.

4.10 Other Intangible Assets

4.10.1 Overview of Fiscal Year 2013

			Customer relations/
EURk	Development costs	Software licences	non-competitive clauses	Total
Acquisition costs as per Jan. 1, 2013	177	4,539	11,725	16,441
Currency translation differences	0	–1	–50	–51
Additions	388	1,822	0	2,210
Disposals	0	52	0	52
Additions through business combinations	0	0	3,434	3,434
Reclassifications	0	0	0	0
Acquisition costs as per Dec. 31, 2013	565	6,308	15,109	21,982
Accumulated amortisation as per
Jan. 1, 2013	177	3,473	2,463	6,113
Currency translation differences	0	–1	–31	–32
Additions	0	794	2,190	2,984
Disposals	0	0	0	0
Reclassifications	0	0	0	0
Accumulated amortisation as per
Dec. 31, 2013	177	4,266	4,622	9,065
Net carrying amounts Dec. 31, 2013	388	2,042	10,487	12,917

4.10.2 Overview of Fiscal Year 2012

			Customer relations/
EURk	Development costs	Software licences	non-competitive clauses	Total
Acquisition costs as per Jan. 1, 2012	177	3,929	2,577	6,683
Currency translation differences	0	1	189	190
Additions	0	606	0	606
Disposals	0	1	0	1
Additions through business combinations	0	4	8,959	8,963
Reclassifications	0	0	0	0
Acquisition costs as per Dec. 31, 2012	177	4,539	11,725	16,441
Accumulated amortisation as per
Jan. 1, 2012	177	2,858	1,472	4,507
Currency translation differences	0	0	85	85
Additions	0	616	906	1,522
Disposals	0	1	0	1
Reclassifications	0	0	0	0
Accumulated amortisation as per
Dec. 31, 2012	177	3,473	2,463	6,113
Net carrying amounts Dec. 31, 2012	0	1,066	9,262	10,328

Additions in "customer relations/non-competitive clauses" resulted exclusively from business combinations in the reporting year and in the previous years.

4.11 Deferred Tax Assets and Deferred Tax Liabilities

Deferred tax assets and liabilities are divided as follows:

	Statement of financial position		Income statement
EURk	Dec. 31, 2013	Dec. 31, 2012	2013	2012
Deferred tax assets
Tax-loss carryforwards	10,773	11,353	580	1,643
Remeasurement of liabilities	8,928	6,411	–2,517	1,400
Remeasurement of lease receivables	812	62	–750	147
Pensions	501	534	0	0
Other remeasurements (derivatives)	1,323	262	0	0
Total	22,337	18,622	–2,687	3,190
Deferred tax liabilities
Remeasurement of lease receivables	34,482	29,250	5,232	2,151
Remeasurement of liabilities	7,600	4,167	3,433	–3,316
Other remeasurements	494	570	–76	549
Total	42,576	33,987	8,589	–616
Deferred tax expense/(income)			5,902	2,574
Deferred tax liabilities, net	20,239	15,365
Reported in the statement of financial
position as follows:
Deferred tax assets	22,337	18,622
Deferred tax liabilities	42,576	33,987

At the Danish company, the deferred tax assets on tax-loss carryforwards were limited to the EUR 832k (previous year: EUR 751k) of deferred tax liabilities.

Deferred tax assets of EUR 21k were directly released in equity in the fiscal year (previous year: recognition of deferred tax assets of EUR 39k). These resulted from the cash flow hedge reserve directly recognised in equity. Additionally, deferred tax assets of EUR 22k were released in connection with the direct recognition of actuarial losses (previous year: recognition of deferred tax assets of EUR 136k). 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 GRENKELEASING AG and the relevant subsidiaries are corporations, these differences are largely tax-free upon realisation in line with Section 8b KStG and are therefore of a permanent nature.

In cases of temporary differences (e.g. those resulting from the 5% global calculation in Section 8b KStG), 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 foreseeable future.

Currently this reversal is only expected with regards to a partial amount for the subsidiary in Switzerland. Therefore, only deferred taxes amounting to EUR 5k (previous year: EUR 17k) were recognised in the statement of financial position.

4.12 Current and Non-Current Financial 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, 2013	Dec. 31, 2012
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	663,486	521,883
ABS/ABCP related liabilities	177,047	168,739
Bonds, revolving facilities, debentures, and private placements	404,594	287,873
Committed development loans	16,506	18,645
Sales of receivables agreements	65,339	46,626
Current liabilities from deposit business	114,292	115,890
Current bank liabilities	1,201	1,426
thereof current account liabilities	432	637
Total current financial liabilities	778,979	639,199
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	1,130,208	1,107,911
ABS/ABCP related liabilities	209,775	182,009
Bonds, debentures, and private placements	811,873	873,778
Committed development loans	24,154	19,672
Sales of receivables agreements	84,406	32,452
Non-current liabilities from deposit business	141,345	93,477
Non-current bank liabilities	1,031	1,719
Total non-current financial liabilities	1,272,584	1,203,107
Total financial liabilities	2,051,563	1,842,306

As per December 31, 2013 the volume of non-current financial liabilities with a remaining term of one to five years or more was as follows:

EURk		Total amount		1 to 5 years More than 5 years	Secured amount
Type of liability
Liabilities from the refinancing of the	2013	1,130,208	1,081,280	48,928	267,925
leasing business	(Previous year)	1,107,911	1,054,444	53,467	234,133
Liabilities	2013	141,345	141,345	0	0
from deposit business	(Previous year)	93,477	93,477	0	0
Bank liabilities	2013	1,031	1,031	0	10,800
	(Previous year)	1,719	1,719	0	10,800

A foreign currency loan (denominated in CHF), reported under bank liabilities, was repaid in full at the end of December 2010. The land charge of EUR 8,000k on the office building in favour of Commerzbank Aktiengesellschaft, Baden-Baden (Oos land register, no. 6080) is still in place.

A ten-year loan in the amount of EUR 5,500k bearing interest of 3.1% 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. The pay-out was 96% of the loan amount. A further land charge in the amount of EUR 2,800k was registered as collateral on October 11, 2006.

Bank liabilities also include the liabilities from the utilisation of cash lines (current account liabilities). As per the end of the reporting period these lines had been utilised in the amount of EUR 432k (previous year: EUR 637k).

The liabilities from the deposit business comprise deposits by customers of GRENKE BANK AG. The total current liabilities totalling EUR 114,292k (previous year: EUR 115,890k) include an amount of EUR 18,633k (previous year: EUR 16,652k) of deposits payable on demand as per the end of the reporting period. For the other deposits consisting of restricted and fixed-term deposits, corresponding terms have been arranged.

Current and non-current lease receivables totalling EUR 267,925k (previous year: EUR 247,754k) have been assigned to the refinancing institutions in order to secure the liabilities stemming from the refinancing of the leasing business. The transferred assets (lease receivables) are no longer included in the secured amount as of this reporting year. The prior year's amount was adjusted accordingly by EUR 220,390k. Each individual item of collateral is assigned until the outstanding receivable on the lease has been settled. The collateral is then reassigned. The items of collateral for assigned receivables are marked so that they may be clearly distinguished from non-assigned receivables.

Further details on the refinancing sources and the main categories of financial liabilities are discussed 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% depending on the tranche.

Three tranches of bonds with different ratings (risk classes) were issued by the special purpose entity. The portion 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% (EUR 122,400k) of the bond was given the highest rating by Standard & Poor's (AAA) and FITCH (AAA). The wholly-owned subsidiary of GRENKELEASING AG, GRENKE FINANCE Plc., Dublin, Ireland, subscribed on a pro rata basis to the second tranche and subscribed fully to the last tranche (nominal value EUR 24,200k) of the ABS bond. As a result, the Consolidated Group had a cash inflow of only EUR 135,800k. The carrying amount of the total liability was EUR 78,660k at the end of the reporting period (previous year: EUR 135,960k).

4.12.2 ABCP Programmes

The GRENKE Consolidated Group has several asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 533,333k as per the end of the reporting period (previous year: EUR 400,000k). The following is an overview of the programmes as per the end of the reporting period:

		Refinanceable	Programme volume EURk	Programme volume EURk
ABCP Programme/SPE	Initiating Bank	lease receivables	as per Dec. 31, 2013	as per Dec. 31, 2012
Compass Variety Funding		German and Austrian lease
Limited	Portigon	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/(FCT GK 2)	UniCredit	French lease receivables	100,000	100,000
Regency Assets Limited/
(FCT GK 3)	HSBC	French lease receivables	133,333	0
Total			533,333	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. As per the reporting date, the carrying amount of the utilised volume was EUR 308,162k (previous year: EUR 211,326k).

The ABCP programme Compass Variety Funding Limited with Portigon AG (formerly WestLB) was fixed at EUR 40,000k and will run until January 19, 2014.

The programme commitment for the Kebnekaise Funding Limited ABCP programme will run until November 30, 2014. The programme commitment for the CORAL Purchasing Limited ABCP programme will run until September 3, 2014, while the programme commitment for the Elektra Purchase No. 25 ABCP programme will run until July 15, 2014.

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"). "FCT GK 2" is refinanced through the issue of FCT notes which are exclusively subscribed by the SPE Elektra Purchase No. 25 Limited. A third compartment was founded on March 26, 2013 ("FCT GK 3"). This third compartment is refinanced through the issue of so-called FCT senior notes and FCT subordinated notes. The FCT senior notes are exclusively subscribed by Regency Assets Limited while the FCT subordinated notes are exclusively subscribed by GRENKE FINANCE Plc. Within the FCT, the individual compartments are kept strictly separate from each other ("ring-fenced") and all serve the sole purpose of the securitisation of French lease receivables. The latter two compartments are included in the scope of consolidation of the Consolidated Group.

As per the reporting date, 57.78% of the refinancing framework of the ABCP programmes was utilised (previous year: 52.83%). The respective amount of receivables has been assigned as collateral.

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 (interest rate caps and interest rate 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 as only euro transactions and euro-based leases are involved. The present value of the programmes was EUR 308,162k as per the end of the reporting period (previous year: EUR 211,326k). 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. The GRENKE Consolidated Group only includes those special purpose entities (SPE) used in the ABCP programmes in its consolidated financial statements which are covered by the French securitisation law. This relates to the actively operating French securitisation vehicles (FCT compartments) "FCT GK 2" and "FCT GK3". There is no off-balance sheet recognition (see note 2.3.1).

Transfer-related restrictions are in place with regards to the use of the transferred assets of the ABCP programmes to an extent that all leased assets of the respective underlying lease contract have been assigned as collateral to the respective seller of the receivables. The same principle also applies to the sales of receivables agreements explained in note 4.12.3. Opportunities from the continuing ownership of the lease receivable result primarily the continued future generation of operating income by the leasing business. Risks may arise from the fact that cash reserves as advance payments are restricted as deposits at the special purpose entities.

4.12.3 Sales of Receivables Agreements

Such agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, UBS AG in Switzerland, the Commerzbank subsidiary BRE-Bank SA and DZ Bank Polska in Poland, and Norddeutsche Landesbank for receivables in the UK. The existing agreements allow for revolving sales of new receivables up to a maximum amount of the following: Stadtsparkasse Baden-Baden Gaggenau EUR 10,000k; Sparkasse Karlsruhe EUR 10,000k; UBS AG CHF 50,000k; BRE-Bank PLN 50,000k; DZ Bank Polska PLN 50,000k; Norddeutsche Landesbank GBP 70,000k.

All such agreements represent refinancing of lease contracts with matching maturities. 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. There were no indications for a possible derecognition of any items. The present value of the obligations as per the end of the reporting period was EUR 149,745k (previous year: EUR 79,079k) 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, debentures, 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 and conditions for bonds using the debt issuance programme are as follows:

					Nominal	Nominal
					amount	amount
		Term	Interest coupon	Discount	Dec. 31, 2013	Dec. 31, 2012
Description	from	to	percent p. a.	EURk	EURk	EURk
Euro bond	04/03/2010	04/03/2013	4.25	389	0	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
			4.00
Euro bond	09/03/2011	09/03/2015	(gradually + 0.10)	440	75,000	75,000
Euro bond	20/04/2011	21/07/2014	Euribor + 1.15	135	10,000	10,000
			Euribor + 0.50
Euro bond	04/07/2011	04/07/2013	(gradually + 0.10)	82	0	5,800
			Euribor + 0.75
Euro bond	24/10/2011	04/10/2014	(gradually + 0.20)	452	15,650	15,650
Euro bond	24/01/2012	24/07/2015	4.25	875	100,000	100,000
Euro bond	30/05/2012	30/03/2016	3.75	500	100,000	100,000
Euro bond	23/10/2012	24/10/2016	3.125	625	125,000	125,000
Euro bond	13/12/2012	13/12/2019	3.75	576	41,000	41,000
Euro bond	07/06/2013	07/06/2017	2.00	350	100,000	--
Euro bond	09/12/2013	10/12/2018	2.25	500	125,000	--

In 2013, two new bonds with a total nominal volume of EUR 225,000k were issued. The conditions can be seen in the table above.

The bonds issued on July 4, 2011 and on October 24, 2011 both feature a quarterly termination option on the part of the investor. In 2013, the termination option regarding the bond issued on October 24, 2011 was not exercised. On July 4, 2013, the bond issued on July 4, 2011 was repaid as scheduled.

Promissory Note Loans (PNL)

The terms and conditions for the promissory note loans can be seen in the following table:

					Nominal amount	Nominal amount
		Term	Interest coupon	Discount	Dec. 31, 2013	Dec. 31, 2012
Description	from	to	percent p. a.	EURk	EURk	EURk
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	0	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	0	10,000
EUR-PNL	30/03/2009	28/03/2013	5.7610	45	0	10,000
EUR-PNL	29/10/2010	29/10/2013	4.1620	50	0	10,000
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	5,250	6,000
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	5,250	6,000
EUR-PNL	16/12/2010	16/12/2013	Euribor + 2.10	--	0	15,000
EUR-PNL	16/12/2010	16/12/2013	4.0800	145	0	10,500
EUR-PNL	30/04/2011	30/04/2014	Euribor + 1.70	--	6,667	20,000
EUR-PNL	08/06/2011	08/06/2014	4.0000	--	25,000	25,000
EUR-PNL	08/06/2011	06/06/2014	3.8000	--	1,667	5,000
EUR-PNL	04/07/2011	04/07/2014	3.6900	62.5	12,500	12,500
EUR-PNL	28/07/2011	28/01/2015	3.8900	20	5,000	5,000
EUR-PNL	28/07/2011	28/01/2015	3.9400	20	5,000	5,000
EUR-PNL	26/08/2011	26/08/2014	3.8500	22.5	15,000	15,000
EUR-PNL	24/10/2011	15/12/2016	Euribor + 3.00	185	30,000	30,000
EUR-PNL	16/11/2011	16/11/2016	5.0000	60	15,000	15,000
EUR-PNL	09/12/2011	09/12/2014	3.7300	--	3,333	6,667
EUR-PNL	14/06/2012	14/06/2015	3.25	--	10,000	10,000
EUR-PNL	25/07/2012	25/07/2015	2.99	--	10,000	10,000
EUR-PNL	13/08/2012	13/02/2014	2.46	--	10,000	10,000
EUR-PNL	17/08/2012	17/08/2015	Euribor + 2.00	--	20,750	20,750
EUR-PNL	17/08/2012	17/08/2015	Euribor + 2.20	--	2,000	2,000
EUR-PNL	21/12/2012	21/12/2020	2.80	--	7,000	8,000
EUR-PNL	01/03/2013	01/06/2016	2.15	--	16,666	--
EUR-PNL	28/03/2013	05/01/2017	2.41	--	20,000	--
EUR-PNL	01/08/2013	01/08/2020	2,41	15	5,000	--

In 2013, four promissory note loans with a total nominal volume of EUR 39,500k were repaid on maturity on March 11, October 29, and on December 16.

Two promissory note loans due on March 28 with a nominal value of EUR 10,000k each were repaid and replaced by a new promissory note loan in the amount of EUR 20,000k with the same partner.

The promissory note loan issued on March 1, 2013 with a volume of EUR 20,000k and a term of 3 years will be redeemed by semi-annual instalments in the amount of EUR 3,333k. The first redemption took place in September 2013.

On August 1, 2013, a bullet promissory note loan was initiated with a term until August 1, 2016 and a volume of EUR 5,000k.

4.12.5 Development Loans

NRW.Bank

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 down 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% 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, the margin is 0.19%. Hence, the volume of EUR 15,000k of the first global loan is fully utilised. On March 22, 2013, the first draw-down in an amount of EUR 7,500k was redeemed as scheduled and on November 25, 2013, the second draw-down in an amount of EUR 7,500k was redeemed as scheduled.

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 down 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%.

The second draw-down of EUR 7,500k took place on August 3, 2012 with a term of 4 years. The loan will be redeemed by semi-annual instalments. Hence, the second global loan is fully utilised up to the planned volume of EUR 15,000k. The interest rate over the total term amounts to 0.82%.

On March 25, 2013, the third global loan in the amount of EUR 15,000k was concluded between GRENKELEASING AG, GRENKE BANK AG, and NRW.BANK, the development bank of the state of North Rhine-Westphalia. The second loan was first drawn down in an amount of EUR 7,500k on November 25, 2013. The loan will be redeemed by semi-annual instalments and the interest rate over the entire term amounts to 0.562%.

Thüringer Aufbaubank

On January 16, 2012, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with Thüringer Aufbaubank (TAB), the development bank of the state of Thuringia, similar to the agreement with NRW.Bank. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. These lease agreements are available exclusively for investments made by small and medium-sized enterprises and self-employed professionals located in Thuringia with annual sales of up to EUR 500,000.

GRENKE BANK AG was granted a global loan of EUR 5,000k by TAB for precisely this purpose. The loan was drawn down for the first time in the amount of EUR 2,500k on August 3, 2012 with a term of 4 years. The loan is redeemed retroactively on a yearly basis at fixed instalments. The interest rate over the total term amounts to 1.385%. The second drawdown of an additional EUR 2,500k took place on March 22, 2013 with a term of 3 years. The loan is redeemed retroactively on a yearly basis at fixed instalments. The interest rate over the total term amounts to 1.153%.

On September 27, 2013, a third global loan in an amount of EUR 5,000k was concluded between GRENKE BANK AG and TAB. As per the time this report was prepared, this loan had not yet been drawn down. A specific interest rate will not be determined until the amount of the first borrowing limit has been drawn down.

Investitionsbank Berlin

On June 6, 2012, GRENKELEASING AG and GRENKE BANK AG also entered into a cooperation agreement with Investitionsbank Berlin (IBB), the development bank of Berlin. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. These lease agreements are available exclusively for investments made by small and medium-sized enterprises and self-employed professionals located in Berlin with annual sales of up to EUR 500,000.

GRENKE BANK AG was granted a global loan of EUR 5,000k by IBB for this purpose. The loan was drawn down for the first time in the amount of EUR 2,500k on April 2, 2013 with a term of 3 years. The loan will be redeemed retroactively on a semi-annual basis at fixed instalments. The interest rate over the total term amounts to 0.968%. The second draw-down of an additional EUR 2,500k took place on October 25, 2013 with a term of 3 years. The loan will be redeemed retroactively on a semi-annual basis at fixed instalments. The interest rate over the total term amounts to 1.04%.

LfA Förderbank Bayern

On January 30, 2013, GRENKELEASING AG and GRENKE BANK AG have established a further cooperation agreement with LfA Förderbank Bayern by means of a global loan in the amount of EUR 25,000k. Through this collaboration, small and medium-sized enterprises and self-employed professionals located in Bavaria can access development funds for investments via leasing. The lease agreements are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500.000 located in Bavaria. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. This loan had not yet been drawn down.

L-Bank

Since the beginning of 2011, GRENKE BANK AG also offers the business start-up programme "ERP Gründungskredit Startgeld" of L-BANK, the State bank of Baden-Württemberg, next to the "KfW-Startgeld" of KfW-Mittelstandsbank. The loans are refinanced directly by the respective bank.

4.12.6 Revolving Credit Facility

In the context of five revolving credit facilities with a total volume of EUR 125,000k 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 facility with HSBC with a volume of EUR 15,000k was prolonged at the beginning of July 2013 and will run until the end of June 2014. The facility with Nord LB with a volume of EUR 20,000k was newly concluded in the first quarter of 2013 and will run until March 2014. The facilities with SEB, Deutsche Bank, and DZ-Bank which have been in place for several years have a volume of EUR 30,000k each and have the following terms: SEB (until March 2014), Deutsche Bank (until September 2014), DZ-Bank (until October 2014). On February 28, 2013, the facility with Portigon AG expired with no prolongation.

As per December 31, 2013 the revolving credit facilities were utilised in the amount of EUR 25,000k (previous year: EUR 45,000k).

4.12.7 Money Market Trading

GRENKE FINANCE Plc., Dublin/Ireland and GRENKELEASING AG Switzerland have a non-committed money market facility totalling EUR 25,000k from Bayerische Landesbank. As per December 31, 2013, this credit line was utilised in the amount of EUR 10,000k + CHF 2,000k (previous year: EUR 25,000k).

A further money market facility in the amount of EUR 10,000k is in place with Norddeutsche Landesbank. As per December 31, 2013 and as per December 31, 2012 this line was not utilised.

A further money market facility in the amount of EUR 10,000k is in place with Commerzbank AG. As per December 31, 2013 this line was not utilised as in the previous year.

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

4.12.8 Commercial Papers

The GRENKE Consolidated Group has the possibility of issuing commercial paper of up to a total volume of EUR 250,000k with a term of between 1 and 364 days. As per December 31, 2013 the commercial paper programme was utilised in the amount of EUR 5,000k (previous year: EUR 20,000k).

4.13 Liability Financial Instruments

EURk	Dec. 31, 2013	Dec. 31, 2012
Derivatives with hedging relationship	73	606
Derivatives without hedging relationship	3,637	6,747
Total	3,710	7,353

The GRENKE Consolidated Group has reported negative fair values in connection with interest rate swaps (see note 6.3.3) and forward exchange contracts (see note 6.3.2) for the current fiscal year.

The forward exchange contracts are disclosed as non-hedging derivatives as defined by IAS 39. As per December 31, 2013 forward exchange contracts on the Swiss franc, Polish zloty, pound sterling, Hungarian forint, and Danish krone had a negative fair value of EUR 1,907k (previous year: negative fair value of EUR 3,213k on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Turkish lira, Swedish krona, Norwegian krone, and Danish krone). These forward exchange contracts have a total volume of EUR 131,837k (previous year: EUR 167,505k) and residual maturities of between one and fifty-four months (see note 6.3.2).

In addition to the forward exchange contracts in the amount of EUR 1,907k (previous year: EUR 3,213k), non-hedge derivatives, as defined under IAS 39, include interest rate swaps of EUR 1,730k (previous year: EUR 3,534k). All other contracted interest rate swaps, which are all included in hedge accounting as defined by IAS 39, had a negative fair value of EUR 73k (previous year: EUR 606k) as per the end of the reporting period and were in highly effective hedge relationships in accordance with IAS 39.

4.14 Tax Liabilities

EURk	Dec. 31, 2013	Dec. 31, 2012
Corporate income tax	3,317	2,033
Trade tax	793	803
Total	4,110	2,836

4.15 Other Current Liabilities

EURk	Dec. 31, 2013	Dec. 31, 2012
Liabilities from business combinations	0	10,748
Value-added tax	4,465	4,750
Debtors with credit	1,475	1,493
Contributions to social security	439	384
Outstanding charges from refinancers	799	323
Wages/church tax	276	302
Liabilities for salaries	312	276
Liabilities from security deposits	47	102
Settlement accounts with companies	25	0
Other	930	1,123
Other deferred income	799	323
Total	8,932	19,824

In the previous year, the last instalment of the purchase price resulting from the business combinations was recognised under liabilities from business combinations as per the end of the reporting period. The instalment was due and paid at the beginning of January 2013.

4.16 Provisions

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

EURk	Jan. 1	Addition	Utilisation	Reversals	Dec. 31
2013
Liability risks	2,183	0	419	0	1,764
Onerous contracts	390	22	118	0	294
Total	2,573	22	537	0	2,058

Of the liability risks, an amount of EUR 796k 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. In the reporting year, an amount of EUR 419k of these liability risks was utilised. As an outflow of funds can occur at any time, this contingent liability was classified as a current liability. Reimbursement options from third parties do not exist.

Of the total provisions, an amount of EUR 237k (previous year: EUR 322k) is non-current.

4.17 Deferred Liabilities

The item deferred liability is comprised of the following:

EURk	Dec. 31, 2013	Dec. 31, 2012
Consulting services	1,418	1,160
Personnel services	3,883	2,494
Other costs	2,387	1,492
Total	7,688	5,146

All deferred liabilities are of current nature.

4.18 Pensions

4.18.1 Defined Benefit Plans

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 171k (previous year: EUR 124k) was recognised for existing pension plans in the 2013 fiscal year.

The weighted-average duration of the predominant share of the pension obligations amounts to 13.2 years.

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 pension provisions were calculated on the basis of the following parameters:

	Dec. 31, 2013	Dec. 31, 2012
Discount rate	3.20%	3.00%
Estimated future pension increases	1.70%	1.70%

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

The development of the defined benefit obligations are as follows:

EURk	2013	2012
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,563	1,333
Interest expense	46	58
Current service cost	0	0
Benefits paid	–58	–59
Actuarial gains and losses recognised in equity	–65	231
Past service costs resulting from amendments to plan	0	0
Defined benefit obligations at end of period	1,486	1,563

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

EURk	2013	2012	2011	2010	2009
Present value of defined benefit obligations	1,553	1,332	1,333	1,442	1,205
Unrecognised actuarial gains and losses	–65	231	0	–109	–32
Present value of defined benefit
obligations	1,486	1,563	1,333	1,333	1,173

Pensions in Switzerland

As per January 1, 2013, the present value of the obligations (DBO) under the defined benefit pension plans for Switzerland amounted to EUR 1,368k. After the deduction of the fair value of the plan assets in the amount of EUR 775k, the net obligations were EUR 593k. The external expert opinion is based on the following actuarial assumptions:

	Dec. 31, 2013	Dec. 31, 2012
Discount rate	2.00%	1.75%
Estimated future salary increases	3.50%	3.50%
Estimated future pension increases*	0.00%	0.00%

* Assuming a 0% pension increase as no pensions are currently being paid to employees.

The input factors of the Swiss Occupational Pensions Act (BVG) were used as the calculation basis for measurement.

On the basis of the actuarial report, the following income and expenses were recognised:

EURk	Dec. 31, 2013	Dec. 31, 2012
Service cost	171	124
Interest expense	25	17
Income from interest on plan assets	15	12

The assets are invested in a collective insurance agreement with a life insurance company by way of a follow-up agreement with the BVG pension fund (Professional Pension Act).

As per December 31, 2013, the provision for pensions recognised under non-current liabilities amounted to EUR 681k. This amount comprises the present value of the obligations (DBO) of EUR 1,643k, the fair value of the plan assets of EUR 962k, and an actuarial gain of EUR 72k.

EURk	2013	2012	2011	2010	2009
Present value of obligations (DBO)	1,643	1,368	590	600	636
Present value of plan assets	775	775	332	366	452
Net obligation	681	593	258	234	184

Based on experience, adjustments to obligations totalled EUR 15k, and EUR –60k to assets. Employer contributions in the next period are estimated at EUR 74k.

EURk	2013	2012
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,368	590
Interest expense	25	17
Current service cost	171	124
Contributions paid	108	60
Benefits paid	65	331
Actuarial gains and losses recognised in equity	–72	241
Currency translation differences from foreign plans	–22	5
Defined benefit obligations at end of period	1,643	1,368
EURk	2013	2012
Change in plan assets
Fair value of plan assets at beginning of period	775	332
Expected return	15	12
Contributions of the employer and the participants of the plan	180	150
Benefits paid	65	331
Actuarial losses/gains recognised in equity	–60	–53
Currency translation differences from foreign plans	–13	3
Fair value of plan assets at end of period	962	775

Sensitivity Analysis

A change of the aforementioned assumption applied to determine the DBO as per December 31, 2013 would increase or decrease the DBO as follows:

	Change of assumptions	Increase of assumptions	Decrease of assumptions
	in percentage points	Change of DBO in EURk	Change of DBO in EURk
Discount rate	0.25	–130	140
Future salary increases	0.25	14	–13
Future pension increases	0.25	41	–40

4.18.2 Defined Contribution Plans

Defined contribution plans represent an additional part of the occupational pension schemes within the Consolidated Group. 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 2013, they amounted to a total of EUR 1,440k (previous year: EUR 1,361k) and had mainly comprised contributions to the statutory pension insurance scheme in Germany. Going forward, the level of expenses primarily depends on the development of the underlying pension insurance schemes.

4.19 Other Non-Current Liabilities

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

EURk	Total	1 to 5 years	More than 5 years	Secured amount
Other non-current liabilities	0	0	0	0
(Previous year)	30	30	0	0

4.20 Equity

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

On February 21, 2013, GRENKELEASING AG carried out a capital increase. The share capital was increased by EUR 1,298,554.84 to EUR 18,789,976.70 against cash contribution through the partial exercise of the authorised capital which was resolved upon by the Annual General Meeting on May 12, 2009. Shareholders' subscription rights were excluded. In total, 1,015,901 new ordinary no-par value bearer shares were issued at a price of EUR 53.50. The new shares have the same dividend entitlement as the existing shares. Hence, the Company's share capital is divided into 14,700,000 no-par value bearer shares.

The fully paid-in subscribed capital of GRENKELEASING AG amounts to EUR 18,790k (previous year: EUR 17,491k). It is divided into 14,700,000 (previous year: 13,684,099) no-par value bearer shares.

4.20.1 Authorised Capital

On May 12, 2009, 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 contribution in kind until May 11, 2014 (Authorised Capital).

The authorisation can be utilised in partial amounts. The shareholders shall be granted a subscription right. However, under certain conditions, the Board of Directors is authorised, with the approval of the Supervisory Board, to partly or entirely exclude the subscription right of shareholders for capital increases in return for cash contributions.

In fiscal year 2013, the option to increase the share capital by issuing new shares was partially utilised in an amount of EUR 1,299k. Thus, the remaining authorised capital amounted to EUR 7,201k as per December 31, 2013.

4.20.2 Contingent Capital

On May 10, 2011 the Annual General Meeting of GRENKELEASING AG resolved the resolution to contingently increase the capital 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 2011"). The creation of the Contingent Capital 2011 also entitles the Board of Directors, with the consent of the Supervisory Board, to issue up to 3,000,000 bearer and/or registered options and/or convertible debenture bonds with a total nominal value of up to EUR 150,000,000 and a maximum term of ten years on one or more occasions until May 9, 2016.

Shareholders will be granted statutory pre-emption rights when these debenture 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 and/or convertible debenture 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 debenture bonds are issued against cash at a price not significantly less than the hypothetic market value of these debenture bonds. To date, no options or convertible debenture bonds have been issued under Contingent Capital 2011.

4.20.3 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 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 10% 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 10% 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% 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 share price 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% limit for variation will 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] 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 may be sold against contribution in kind, particularly in cases where they are offered 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 may be sold against cash to third parties in a manner other than on the stock exchange or may 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 10% 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 may be redeemed without a further resolution by the Annual General Meeting.

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

The subscription rights of shareholders to the treasury shares acquired are not applicable 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.

4.20.4 Participation Certificate Capital

By resolution of the Annual General Meeting on May 10, 2011 the Board of Directors was authorised, with the consent of the Supervisory Board, to issue participation certificates on one or several occasions of up to EUR 150,000k.

The subscription rights of shareholders have been excluded. 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.

4.20.5 Unappropriated Surplus

On May 7, 2013, the Annual General Meeting adopted the resolution on the appropriation of GRENKELEASING AG's unappropriated surplus for fiscal year 2012 in the amount of EUR 18,151,428.39. The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the unappropriated surplus as follows:

Unappropriated surplus for 2012	EUR 18,151,428.39
Distribution of a dividend of EUR 0.80 per share for a total of 14,700,000 shares	EUR 11,760,000.00
Appropriation to retained earnings	EUR 6,300,000.00
Profit carryforward (to new account)	EUR 91,428.39

The dividend was paid to the shareholders of GRENKELEASING AG on May 8, 2013.

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 2011 as follows:

Unappropriated surplus for 2011	EUR 22,284,787.12
Distribution of a dividend of EUR 0.75 per share for a total of 13,684,099 shares	EUR 10,263,074.25
Appropriation to retained earnings	EUR 11,000,000.00
Profit carryforward (to new account)	EUR 1,021,712.87

The dividend was paid to the shareholders of GRENKELEASING AG on May 11, 2012.

The Board of Directors will propose the distribution of a dividend of EUR 1.00 per share for the fiscal year 2013 to the Annual General Meeting. This distribution has not been recognised as a liability as per December 31, 2013.

4.20.6 Reserves

The capital reserves of EUR 112,757k (previous year: EUR 60,166k) mainly result from the IPO of GRENKELEASING AG in April 2000 and the capital increase of February 2013.

In addition to GRENKELEASING AG's retained earnings, retained earnings of the Consolidated Group also comprise the retained earnings and profits of the consolidated subsidiaries. By way of resolution of the Annual General Meeting on May 7, 2013, EUR 6,300k was appropriated to the retained earnings of GRENKELEASING AG.

4.20.7 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 409k (previous year: EUR –236k) less deferred taxes of EUR –21k (previous year: EUR 39k).

As a result of the recognition of pension provisions in accordance with IAS 19R, an amount of EUR 78k (previous year: EUR –525k) for actuarial gains and losses and deferred taxes totalling EUR –22k (previous year: EUR 136k) were also recognised in equity.

5 Changes in the Scope of Consolidation

5.1 Acquisitions in Fiscal Year 2013

GRENKELEASING Oy, Vantaa/Finland

On June 24, 2013 which is both the date of the purchase agreement and the date of acquisition, GRENKELEASING AG acquired 100% of the voting shares in GRENKELEASING Oy (formerly: GC Leasing Finland Oy), Vantaa/Finland.

Prior to the acquisition, GRENKELEASING Oy, Vantaa/Finland was active within GRENKELEASING AG's franchise system specialising in the sale of small-ticket leases with a strong focus on IT and IT equipment. Since not all of the relevant information needed for determining the final purchase price allocation is yet available, the fair values of the assets and liabilities are preliminary and may be subject to adjustments as a result of additional information gained in the acquisition process.

The following information relates to the preliminary fair value of the significant categories of the identifiable assets and liabilities at the date of acquisition of the company. The fair values have changed slightly compared to the initial values as per June 30, 2013 on the basis of better knowledge gained: Intangible assets EUR 2,955k, lease receivables EUR 1,482k, other assets EUR 1,114k, refinancing liabilities EUR 945k, and other liabilities EUR 3,030k. Intangible assets are largely attributable to non-contractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables, an amount of EUR 164k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland. Other liabilities mainly include other intra-group liabilities and deferred tax liabilities. The intra-group liabilities were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position. The deferred tax liabilities resulted from the revaluation and identification of assets in the course of the purchase price allocation. The purchase price allocation, which is still preliminary, resulted in goodwill of EUR 3,608k which is not tax deductible. Goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. The total consideration paid for the business combination amounted to EUR 5,184k and consisted solely of cash. Cash acquired with the business combination amounted to EUR 645k. All costs related to the acquisition were recognised in profit and loss. Since the date of acquisition, the acquired company has contributed net interest income of EUR 56k and a negative net profit of EUR 69k to the Consolidated Group's net profit. Had the company been acquired as per January 1, 2013 its contribution to the Consolidated Group's net interest income would have been EUR 143k and the subsidiary's contribution to the Consolidated Group's net profit would have been a loss of EUR 127k.

GRENKELEASING s.r.o., Bratislava/Slovakia

In addition, by way of a purchase agreement dated June 21, 2013 GRENKELEASING AG acquired 100% of the voting shares in GRENKELEASING s.r.o. (formerly: GC Leasing Slovensko s.r.o.), Bratislava/Slovakia. Control was assumed on June 28, 2013.

Prior to the acquisition, GRENKELEASING s.r.o., Bratislava/Slovakia was active within GRENKELEASING AG's franchise system and specialised in the sale of small-ticket leases with a strong focus on IT and IT equipment. Since not all of the relevant information needed for determining the final purchase price allocation is yet available, the fair values of the assets and liabilities are preliminary and may be subject to adjustments as a result of additional information gained in the acquisition process.

The following information relates to the preliminary fair value of the significant categories of the identifiable assets and liabilities at the date of acquisition of the company. The fair values have changed slightly compared to June 30, 2013 on the basis of better knowledge gained: Intangible assets EUR 479k, lease receivables EUR 5,497k, other assets EUR 1,436k, refinancing liabilities EUR 5,025k, other intra-group liabilities EUR 949k, deferred tax liabilities EUR 966k, and other liabilities EUR 410k. Intangible assets are largely attributable to non-contractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables, an amount of EUR 254k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland and the other intra-group liabilities are also mainly owed to GRENKE FINANCE Plc. and GRENKELEASING AG. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position. The deferred tax liabilities resulted from the revaluation and identification of assets and liabilities in the course of the purchase price allocation. The purchase price allocation which is still preliminary resulted in goodwill of EUR 589k which is not tax deductible. Goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. The total consideration paid for the business combination amounted to EUR 650k and consisted solely of cash. Cash acquired with the business combination amounted to EUR 7k. All costs related to the acquisition were recognised in profit and loss. Since the date of acquisition, the acquired company has contributed net interest income of EUR 298k and a negative net profit of EUR 71k to the Consolidated Group's net profit. Had the company been acquired as per January 1, 2013, its contribution to the Consolidated Group's net interest income would have been EUR 599k and the subsidiary's contribution to the Consolidated Group's net profit would have been a loss of EUR 246k.

Additional Changes to the Scope of Consolidation in the Fiscal Year

On March 26, 2013 the GRENKE Consolidated Group founded the FCT compartment "GK"-COMPARTMENT "G3" for the securitisation of French lease receivable in the context of the Regency Assets Limited ABCP programme. The consolidation results from the fact that GRENKE Finance PLC has subscribed 100% of the FCT's subordinated units and thus carries the risk of any possible bad debt. The date of the first-time consolidation is determined by the compartment's assumption of refinancing activity as per March 31, 2013.

5.2 Acquisitions in Fiscal Year 2012

S.C. Grenke Renting S.R.L., Bucharest/Romania

By way of purchase agreement dated May 17, 2012, GRENKELEASING AG acquired 100% of the voting shares in S.C. GRENKELEASING S.R.L., Bucharest/Romania. With the acquisition, a name change to S.C. Grenke Renting S.R.L. was resolved. Control over the acquired company was assumed on July 19, 2012 due to certain conditions in the purchase agreement.

Prior to the acquisition, S.C. GRENKELEASING S.R.L., Bucharest/Romania was active within GRENKELEASING AG's franchise system, specialising in the sale of small-ticket leases with a strong focus on IT and IT equipment. The preliminary purchase price allocation was finalised in the third quarter of 2013. There were no changes to the preliminary fair values.

The following information relates to the fair values of the significant categories of the identifiable assets and liabilities of the company at the date of acquisition: intangible assets EUR 1,688k, lease receivables EUR 8,669k, other assets EUR 710k, refinancing liabilities EUR 6,638k, and other liabilities EUR 1,194k. Intangible assets are largely attributable to noncontractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables, an amount of EUR 237k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position.

The purchase price allocation resulted in goodwill of EUR 1,318k which is not tax deductible. The goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. Since the date of acquisition, goodwill has increased by EUR 40k due to currency translation effects. The total consideration paid for the business combination amounted to EUR 4,553k and consisted solely of cash. Cash acquired with the subsidiary amounted to EUR 37k.

GRENKE RENT S.A., Madrid/Spain

By way of a purchase agreement dated July 13, 2012 the GRENKE Consolidated Group acquired 100% of the voting shares in GRENKE RENT S.A., Madrid/Spain through its group company GRENKE ALQUILER S.A., Barcelona/Spain. Control was also assumed on July 13, 2012.

Prior to the acquisition, GRENKE RENT S.A. was active within GRENKELEASING AG's franchise system specialising in the sale of small-ticket leases in its branches in Madrid and Málaga. The preliminary purchase price allocation was finalised in the third quarter of 2013. There were no changes to the preliminary fair values.

The following information relates to the fair values of the significant categories of the identifiable assets and liabilities at the date of acquisition of the company: intangible assets EUR 1,038k, lease receivables EUR 5,020k, other assets EUR 1,529k, refinancing liabilities EUR 4,213k, deferred tax liabilities EUR 573k, other liabilities EUR 2,226k, and other remaining liabilities EUR 310k. Intangible assets are largely attributable to non-contractual customer relations of resellers, non-competitive clauses, and other contractual rights. Of the lease receivables, an amount of EUR 1,523k is impaired and is not expected to be recovered. Deferred tax assets of EUR 370k have been recognised as a result of utilisable tax-loss carryforwards. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position.

The purchase price allocation resulted in goodwill of EUR 5,015k which is not tax deductible. The goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. The total consideration paid for the business combination amounted to EUR 5,280k and consisted solely of cash. Cash acquired with the subsidiary amounted to EUR 117k.

Grenke Renting S.A., Lisbon/Portugal

On September 14, 2012, which is both the date of the purchase agreement and the date of acquisition, GRENKELEASING AG acquired 100% of the voting shares in Grenke Renting S.A., Lisbon/Portugal.

Prior to the acquisition, S.C. Grenke Renting S.A., Lisbon/Portugal was active within GRENKELEASING AG's franchise system specialising in the sale of small-ticket leases with a strong focus on IT and IT equipment. The preliminary purchase price allocation was finalised in the third quarter of 2013. There were no changes to the preliminary fair values.

The purchase price allocation resulted in goodwill of EUR 28,472k which is not tax deductible. The goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. Intangible assets are largely attributable to non-contractual relationships of resellers with clients, non-competitive clauses, and other contractual rights. Of the lease receivables, an amount of EUR 3,748k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland.

EURk	Fair value
Intangible assets	6,237
Property, plant, and equipment	733
Trade receivables	78
Lease receivables	11,298
Cash and cash equivalents	321
Deferred tax assets	49
Other assets	2,064
Total assets	20,780

EURk	Fair value
Refinancing liabilities	4,328
Trade payables	172
Deferred tax liabilities	3,269
Other liabilities	8,735
Total liabilities	16,504
Total identified net assets	4,276
Goodwill arising from acquisition	28,472
Total consideration	32,748

The total consideration paid for the business combination with Grenke Renting S.A. amounted to EUR 32,748k and consisted solely of cash. Cash acquired with the subsidiary amounted to EUR 321k. The remaining purchase price liability of EUR 10,748k as per December 2012 was paid in January 2013.

6 Disclosures on Financial Instruments

6.1 Additional Information on Financial Instruments

						Valuation in
						accordance
				Valuation in accordance with IAS 39		with IAS 17
		Carrying
		amount
Dec. 31, 2013	Measurement	Dec. 31,	Fair Value	Fair Value in	Amortised
EURk	category	2013	in equity	profit and loss	cost
Financial assets
Cash and cash equivalents	L&R	109,770			109,770
Financial instruments that are assets
without hedging relationship	AtFVtPL	2,713		2,713
Lease receivables (performing)	n.a.	2,043,904				2,043,904
Lease receivables (non-performing)	L&R	105,965			105,965
Trade receivables	L&R	4,395			4,395
Other financial assets	L&R	106,428			106,428
Aggregated categories
	L&R				326,558
	AtFVtPL			2,713
	n.a.					2,043,904
Financial liabilities
Liabilities from the refinancing of lease
receivables	oL	1,793,694			1,793,694
Liabilities from deposit business	oL	255,637			255,637
Trade payables	oL	10,747			10,747
Bank liabilities	oL	2,232			2,232
Liability financial instruments without
hedging relationship	AtFVtPL	3,637		3,637
Liability financial instruments with
hedging relationship	n.a.	73	73
Aggregated categories
	oL				2,062,310
	AtFVtPL			3,637
	n.a.		73

Abbreviations:

AtFVtPL: At Fair Value through Profit and Loss/ Financial assets and financial liabilities measured at fair value through profit and loss

L&R: Loans and Receivables

n.a. not applicable/no category according to IFRS 7.8

oL other financial Liabilities

						Valuation in
						accordance
				Valuation in accordance with IAS 39		with IAS 17
		Carrying
		amount
Dec. 31, 2012 EURk	Measurement category	Dec. 31, 2012	Fair Value in equity	Fair Value in profit and loss	Amortised cost
Financial assets
Cash and cash equivalents	L&R	116,707			116,707
Financial instruments that are assets
without hedging relationship	AtFVtPL	4,238		4,238
Lease receivables (performing)	n.a.	1,771,673				1,771,673
Lease receivables (non-performing)	L&R	102,255			102,255
Trade receivables	L&R	3,726			3,726
Other financial assets	L&R	113,959			113,959
Aggregated categories
	L&R				336,647
	AtFVtPL			4,238
	n.a.					1,771,673
Financial liabilities
Liabilities from the refinancing of lease
receivables	oL	1,629,794			1,629,794
Liabilities from deposit business	oL	209,367			209,367
Trade payables	oL	14,828			14,828
Bank liabilities	oL	3,145			3,145
Liability financial instruments without
hedging relationship	AtFVtPL	6,747		6,747
Liability financial instruments with
hedging relationship	n.a.	606	606
Aggregated categories
	oL				1,857,134
	AtFVtPL			6,747
	n.a.		606

Abbreviations:

AtFVtPL: At Fair Value through Profit and Loss/Financial assets and financial liabilities measured at fair value through profit and loss

L&R: Loans and Receivables

n.a. not applicable/no category according to IFRS 7.8

oL other financial Liabilities

Net gains and losses		Currency
Dec. 31, 2013 (EURk)	From interest	translation	Impairment	From disposal	Net profit
Loans and Receivables	3,210	–3,102	–17,227	–33,912	–51,031
At Fair Value through Profit and Loss	0	1,484	0	0	1,484
Other financial Liabilities	–1,029	0	0	0	–1,029
Dec. 31, 2012 (EURk)
Loans and Receivables	1,047	–2,739	–8,424	–34,178	–44,294
At Fair Value through Profit and Loss	0	316	0	0	316
Other financial Liabilities	–1,302	0	0	0	–1,302

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. They amounted to EUR 233,445k (previous year: EUR 209,169k). Net gains and losses from financial instruments recognised at fair value through profit and loss 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 from accrued interest and from the early disposal resulting from an early sale.

6.2 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 the previous fiscal years. Some amounts do not match the amounts shown in the statement of financial position as they relate to undiscounted cash flows.

	Due	Less than	3 to	1 to	More than
EURk	on demand	3 months	12 months	5 years	5 years
Type of liability
Refinancing liabilities	0	281,350	431,106	1,220,278	53,673
Liabilities from deposit business	18,633	30,222	76,473	130,309	0
Bank liabilities	432	426	343	1,031	0
Other liabilities	0	8,923	9	0	0
Trade payables	0	10,747	0	0	0
Negative fair values from derivative
financial instruments	0	925	2,017	768	0
Total	19,065	332,593	509,948	1,352,386	53,673

As per Dec. 31, 2013

As per Dec. 31, 2012

	Due	Less than 3	3 to	1 to	More than
EURk	on demand	months	12 months	5 years	5 years
Type of liability
Refinancing liabilities	0	278,792	282,097	1,171,332	52,940
Liabilities from deposit business	9,306	35,489	71,095	93,476	0
Bank liabilities	637	445	344	1,719	0
Other liabilities	0	19,802	71	29	0
Trade payables	0	14,828	0	0	0
Negative fair values from derivative
financial instruments	0	1,699	3,591	2,308	8
Total	9,943	351,055	357,198	1,268,864	52,948

Regarding the disclosures regarding the management of the liquidity risk, we refer to the explanations in the Group management report.

6.3 Derivative Financial Instruments

6.3.1 Financial Risk Strategy

Business Model

As a small-ticket IT leasing company, GRENKE Consolidated Group offers lease contracts to B2B customers for mobile IT assets, among others. The lease portfolio, i.e. all lease contracts in their entirety, has fixed contractual terms over the duration of each individual contract. Upon conclusion of the contract, both the periodical payments as well as the interest rate used to calculate the payments are set out. 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 combined management report, and particularly 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 must be hedged. Underlying contracts are the contractual obligations entered into by GRENKELEASING AG in order to achieve its objectives. The treasury department 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 Association.

Items are largely 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

Since 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 may be accessed via external sources of information.

6.3.2 Currency Risk Management

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.

Derivative Financial Instruments for Currency Hedging

Forward exchange contracts were and are used to hedge the cash flows from the refinancing of the international franchise companies in Switzerland (factoring), Turkey, and in Dubai, and of the British, Polish, Czech, Swedish, Hungarian, and Danish subsidiaries. GRENKELEASING AG 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.

Hedge accounting was not applied. The fair values of the forward exchange contracts are recorded under financial instruments that are asset/liability financial instruments in the statement of financial position and are allocated to their category according to IAS 39 at fair value through profit and loss (see note 6.1). As per the end of the reporting period, there were asset and liability forward exchange contracts, leading to their disclosure as assets (see note 4.1) as well as liabilities (see note 4.13). As per the end of the reporting period, forward exchange contracts totalled a nominal volume equivalent to EUR 131,837k (previous year: EUR 167,216k).

EURk	Nominal volume as per				Maturity of the nominal volume as per Dec. 31, 2013		Hedged
	Dec. 31, 2012	Dec. 31, 2013	2014	2015	2016	later	average rate
EUR buying
TRY	8,584	8,965	8,965				3.01
CZK	10,004	8,226	3,715	2,482	1,328	701	25.69
GBP	89,536	54,219	45,213	6,055	2,265	686	0.85
CHF 1)	4,991	5,694	5,694				1.23
HUF	4,440	4,865	2,562	1,337	731	235	319.75
NOK	1,627	0					--
SEK	7,740	11,633	5,695	4,906	1,032		8.90
DKK	27,196	32,518	21,485	8,239	2,794		7.50
PLN	6,534	2,033	1,772	261			4.53
AED	0	1,640	808	383	330	119	5.02
EUR selling
PLN	6,564	2,044	1,773	271			4.45

They are divided 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, among others, lease contracts on the basis of Swiss francs based on local market conditions as well as the refinancing of the franchisee based in Switzerland.

6.3.3 Interest Rate Risk Management

The interest rate risk for GRENKE Consolidated Group's operations results 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 Interest Rate Hedging

Issuing bonds and contracting interest rate swaps are elements of implementing a financing strategy under which GRENKE Consolidated Group separates refinancing from interest rate hedging in order to obtain maximum flexibility for optimising its refinancing activities. The risks (variable cash flows) which may result are hedged by appropriate interest rate derivatives.

Interest rate swaps are used as hedging instruments and are 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 100% effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised in other comprehensive income.

Under the ABCP programme with DZ-Bank (CORAL), and the refinancing through FCT "GK"-COMPARTMENT "G2" and FCT "GK"-COMPARTMENT "G3", the respective special purpose entity is responsible for interest rate hedging and thus interest rate risk management. The variable refinancing of the ABCP transaction is economically hedged by the employment of interest rate swaps. From the perspective of the GRENKE Consolidated Group, both are receiver swaps. A floating-rate interest is exchanged for a fixed interest.

The same applies to the refinancing through GOALS Financing 2009 Ltd. However, here the GRENKE Consolidated Group as well as the special purpose entity GOALS Financing 2009 Ltd. are responsible for interest rate hedging. Here, back-toback swaps are employed. Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes (Portigon and SEB). However, the contracting partner to the receivables buyer (SPEs of the individual programmes) is the respective initiating bank. Therefore, the derivatives are not recognised in the consolidated financial statements.

Notes on Comparative Prior-Year Figures

In fiscal year 2012, 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 paid in 2012 across all existing swaps ranged from 0.19% to 3.78%. The variable side of the swaps was in the range of between 0.108% and 1.245%. The swaps in place at the end of the reporting period have a nominal volume of EUR 180 million as per December 31, 2012 and contracted fixed interest rates over the relevant maturities of between 0.19% and 3.78%. The longest contracted interest rate swap has matured in October 2013.

Fiscal Year 2013

In fiscal year 2013, 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 at the end of the reporting period had a nominal volume as per December 31, 2013 of EUR 230 million and contracted fixed interest rates in the range of 0.189% to 0.537% over the respective duration. The duration of the longest contracted interest rate swap is until December 2014. The table below shows the development of the nominal volumes of the payer swaps as per the end of the reporting period of the coming years. The average interest rate is defined as the arithmetic mean of the existing swaps.

EURk		Average interest rate
2012 2013 2014 2015 2016						2013
Contracted prior to 2013	50,000	180,000	0	0	0	0.83%
Contracted in 2013	130,000	50,000	0	0	0	0.25%
Total	180,000	230,000	0	0	0

6.3.4 Hedge Effectiveness

IFRS accounting requires documentation and a risk analysis when derivative financial instruments are employed. The appropriation between the underlying transaction and the hedging instrument determines the effectiveness of a hedging relationship. By employing derivatives for interest rate hedging, the GRENKE Consolidated Group 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 underlying transaction 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 per the end of each quarter using the "hypothetical derivative method". The documentation of each hedging relationship describes the underlying transaction, 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 underlying transaction for all forward exchange hedges is determined by the payments resulting from the financing of the leasing business in the respective currency area. The cash flows denominated in foreign currency are the basis for the forward contracts. The hedge may be classified as highly effective because only the actual cash flows are hedged and never a higher amount. Ideally, the dates of the financing and the foreign exchange hedge coincide to ensure the best possible hedge of the cash flow risk.

Interest Rate Swaps

The parameters of the underlying transaction resulting from 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 underlying transaction. 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 hedging relationships is tested using a method allowed under IFRS.

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%. For all derivatives in hedge accounting, both the retrospective and the prospective effectiveness of the hedging relationships are confirmed as per the end of the reporting period. In the opinion of the GRENKE Consolidated Group and the risk management, interest rate derivatives outside of hedge accounting according to IAS 39 are also considered effective instruments for hedging interest rate risks in the Consolidated Group.

The hedged interest payments will presumably be recognised in profit in loss in their entirety in 2014. This will result in a reclassification of the corresponding net gains and losses previously recognised in the other comprehensive income into interest expenses in an amount of EUR 73k.

6.4 Fair Value of Financial Instruments

6.4.1 Fair Values of Derivative Financial Instruments

At the end of the reporting period, all derivative financial instruments, which include interest rate derivatives (interest rate swaps) and forward exchange contracts, are recognised at fair value in the GRENKE Consolidated Group. Forward exchange contracts are recognised without hedging relationship. All derivative financial instruments are assigned to level 2 of the fair value hierarchy.

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	2013	2013	2012	2012
Financial Assets
Interest rate derivatives with hedging
relationship	0	0	0	0
Interest rate derivatives without hedging
relationship	1,623	1,623	3,325	3,325
Forward exchange contracts	1,090	1,090	913	913
Total	2,713	2,713	4,238	4,238
Financial Liabilities
Interest rate derivatives with hedging
relationship	73	73	606	606
Interest rate derivatives without hedging
relationship	1,730	1,730	3,534	3,534
Forward exchange contracts	1,907	1,907	3,213	3,213
Total	3,710	3,710	7,353	7,353

The GRENKE Consolidated Group uses so-called OTC derivatives ("over the counter"). These are directly concluded with counterparties having at least an investment grade status. Thus, there are no market prices available. Fair values of forward exchange contracts and interest rate derivatives are determined based on valuation models which include observable input parameters. Forward exchange contracts are measured on the basis of a market-to-market valuation model. The fair value of interest rate derivatives is determined on the basis of the net present value method. The input parameters applied in the valuation models are derived from market quotes. Interest rates with matching maturities in the traded currencies are used for forward exchange contracts and interest rates are used for interest rate derivatives. In order to obtain the fair value of such OTC derivatives, the determined amounts are multiplied with the counterparty's credit default swaps (CDS) with matching maturities which are observable on the market or the own credit risk using a so-called "add-on method".

The predominant portion of cash flows of these hedges is expected to impact the net profit over the next two years.

EURk 2013 2012 EUR buying TRY 349 –117 CZK 483 –80 GBP –1,433 –996 CHF –13 –23 HUF –150 –78 NOK 0 3 SEK 116 –790 DKK –186 –189 PLN –125 –312 AED 30 0 EUR selling

GBP 0 0 PLN 113 283

As per the reporting date, the forward exchange contracts have the following fair values for the individually contracted currencies:

6.4.2 Fair Value of Primary Financial Instruments

The following table presents the carrying amounts and fair values of financial assets and financial liabilities by category of financial instruments which are not measured at fair value. The table does not contain information on the fair value of financial assets and financial liabilities if the carrying amount represents an appropriate approximation to the fair value. This includes the following line items of the statement of financial position: cash and cash equivalents, trade receivables, non-performing lease receivables, and trade payables. All primary financial instruments are assigned to level 2 of the fair value hierarchy except for exchange-listed bonds which are included in refinancing liabilities and which are assigned to level 1 of the fair value hierarchy. As per the reporting date, the carrying amount of exchange-listed bonds was EUR 891,650k and their fair value amounted to EUR 910,352k. All financial assets are allocated to the loans and receivables measurement category except for performing lease receivables. All financial liabilities are allocated to the other financial liabilities measurement category.

	Fair Value	Carrying amount	Fair Value	Carrying amount
EURk	2013	2013	2012	2012
Financial assets
Lease receivables (performing)	2,260,874	2,043,904	1,954,842	1,771,673
Other financial assets	107,124	106,428	114,297	113,959
Financial liabilities
Refinancing liabilities	1,810,517	1,793,694	1,631,159	1,629,794
Liabilities from deposit business	262,492	255,637	211,524	209,367
Bank liabilities	2,270	2,232	3,020	3,145

6.4.3 Measurement Methods and Input Parameters Used

The following table presents the measurement methods used to determine the fair values and the applied input parameters and assumptions:

Type and Level	Measurement method	Input parameters
Fair value hierarchy Level 1
Exchange-listed bonds	n/a	quoted market price as per the reporting date
Fair value hierarchy Level 2
Other financial assets	discounted present value of estimated	available interest rates at comparable conditions and
	future cash flows	residual terms using the counterparty's credit risk
Financial liabilities (liabilities from the	discounted present value of estimated	available interest rates at comparable conditions and
refinancing of the leasing business,	future cash flows	residual terms using the own credit risk (Debt Value
promissory note loans, bank liabilities)		Adjustment [DVA])
Forward exchange contracts	market-to-market	available interest rates at the end of the term in the
	discounted present value of estimated	traded currencies using the own counterparty risk
	future cash flows	(Debt Value Adjustment [DVA]) or the counterparty's
		credit risk (CVA [Credit Value Adjustment]) derived
		from available credit default swap (CDS) quotes
Interest rate derivatives	net present value model	available interest rates at comparable conditions and
	discounted present value of estimated	residual terms using the own counterparty risk DVA
	future cash flows	(Debt Value Adjustment) or the counterparty's credit
		risk CVA (Credit Value Adjustment) derived from
		available credit default swap (CDS) quotes

6.5 Transfer of Financial Assets

The following table lists transferred, but not fully derecognised financial assets, and the corresponding liabilities at their respective carrying amount and fair value.

		Carrying amount		Fair Value
		of corresponding		of corresponding
EURk	Carrying amount	liability	Fair Value	liability	Net position
Transferred lease receivables
Dec. 31, 2012	348,247	309,301	380,862	311,778	38,946
Transferred lease receivables
Dec. 31, 2012	250,185	220,390	270,204	221,755	29,795

7 Segment Reporting

GRENKE Consolidated Group's reporting on the development of its segments is aligned along its prevailing organisational structure within the GRENKE Consolidated Group. Therefore, operating segments are divided into Leasing, Banking, and Factoring based on the management of the Company's segments. Separate financial information is available for the three operating segments. The result of intra-group risk provisions resulting from GRENKE BANK AG's purchase of lease receivables, which had previously been reported as other comprehensive income in the segment reporting, has been reclassified as operating segment income. The previous year's figure has been adjusted accordingly by EUR 4,191k. This had no impact on the segment results. Furthermore, the segment liabilities in the segments were newly presented to improve their appearance. This also had an effect on the previous year's figures. Compared to the figures reported for the prior year, segment liabilities of the Leasing segment increased by EUR 9,296k and segment liabilities of the factoring segment decline by the same amount.

7.1 Description of Reportable Segments

Leasing

The Leasing segment comprises all of the activities that are related to the Consolidated Group's leasing business. The service offer encompasses the provision of financing to commercial lessees, rental, insurance, service, and maintenance offerings, as well as the disposal of used equipment.

Banking

The Banking segment comprises the activities of GRENKE BANK AG, which regards itself as a financing partner particularly to small- and medium-sized companies. Additionally, GRENKE BANK AG cooperates with development banks in providing financing to this clientele in the context of business start-ups. Furthermore, fixed-term deposits are offered to investors via its internet presence. The bank's business is focused primarily on German customers.

Factoring

The Factoring segment contains the activities of GRENKEFACTORING GmbH, which performs traditional factoring services and which is focused on small-ticket factoring in Germany.

7.2 Segment Data

The accounting policies employed to gather segment information are the same as those used for the consolidated financial statements (see note 2.3). 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 new business volume and contribution margin 2 for the Leasing segment, the key performance indicators are defined as operating segment income, segment result before other net financial income, and staff costs. Other net financial income as well as income tax expenses/income represent the main components of the consolidated income statement that are not allocated to individual segments.

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 disposals;
• the segment result is calculated as the operating result before taxes;
• segment assets comprise of the operating assets excluding tax assets;
• segment liabilities correspond to the liabilities attributable to the respective segment with the exception of tax liabilities.

EURk	Leasing segment		Banking segment		Factoring segment		Total segments				Consolidation effects Consolidated Group
January to December	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
Operating segment income	147,096	131,314	12,510	9,168	1,545	1,589	161,151	142,071	0	0	161,151	142,071
Staff costs	49,407	40,694	1,344	1,259	1,005	856	51,756	42,809	0	0	51,756	42,809
Segment result	55,535	53,641	9,165	5,844	3	316	64,703	59,801	0	0	64,703	59,801
Reconciliation to consoli
dated financial statements
Operating result											64,703	59,801
Other financial income											–445	–103
Taxes											17,246	17,237
Net profit according to
consolidated income
statement											47,012	42,461
As per December 31
Segment assets	2,536,538	2,258,346	386,525	330,839	15,145	13,247	2,938,208	2,602,432	–336,633	–273,600	2,601,575	2,328,832
Reconciliation to consoli
dated financial statements
Tax assets											36,513	23,460
Total assets according to
consolidated statement of
financial position											2,638,088	2,352,292
Segment liabilities	2,165,996	1,966,963	310,808	261,255	11,769	9,878	2,488,573	2,238,096	–336,633	–273,600	2,151,940	1,964,496
Reconciliation to consoli
dated financial statements
Tax liabilities											46,686	36,823
Liabilities according to
consolidated statement of
financial position											2,198,626	2,001,319

7.3 Information on Geographical Segments

Germany, France, and Italy are the main geographical segments on a country level in which revenues are generated with external customers. All other countries are combined under "Other countries". Operating income and non-current assets are presented for reporting countries. The allocation to the individual geographical segments is based on the country of origin of the external customers with which revenues are generated. Non-current assets are allocated according to the countries in which they originated.

Operating income consists of the same items as discussed above for the operating segment income. Non-current assets are comprised of non-current lease receivables, property, plant, and equipment, goodwill, other intangible assets, and other non-current assets.

EURk	Germany		France		Italy		Other countries		Consolidated Group
	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
Operating income
(January to December)	54,031	53,829	37,724	24,770	24,065	19,427	45,331	39,854	161,151	137,880
Non-current assets
(as per December 31)	459,667	424,887	361,963	311,789	190,754	157,414	468,900		388,606 1,481,284 1,282,696

8 Other Disclosures

8.1 Capital Management

8.1.1 Economic Capital

The primary goal of the GRENKE Consolidated Group's capital management is to ensure that its credit rating is maintained in order to support its operations and safeguard liquidity, as well as 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].

The GRENKE Consolidated Group monitors its capital among other using the equity ratio, i.e. the ratio of equity to total assets. In accordance with the Consolidated Group guidelines, we aim for an equity ratio of 16% as 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

As a result of the acquisition of GRENKE BANK AG and the fact that GRENKELEASING AG has been a financial services provider as defined by the KWG (German Banking Act) since the end of 2008, the GRENKE Consolidated Group must regularly comply with the requirements of the German Solvency Regulation [Solvabilitätsverordnung] 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 (SolvV) in conjunction with Section 10a KWG.

The overall capital ratio is calculated on the basis of the IFRS financial statements. Following the adoption of the consolidated financial statements, the Group's total equity amounted to EUR 280,385k (previous year: EUR 205,376k) as per the end of the reporting period.

The Consolidated Group's equity consists of the core capital components of share capital (EUR 18,790k; previous year: EUR 17,491k), capital reserves (EUR 112,757k; previous year: EUR 60,166k), and retained earnings (EUR 210,202k; previous year: EUR 186,862k).

Deductions of EUR 65,664k (previous year: EUR 59,143k) are comprised of intangible assets. No other components of equity are included in the calculation of regulatory equity.

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 totalling EUR 658k (previous year: EUR 1,181k), the Consolidated Group generated income from interest on loans of EUR 764k (previous year: EUR 2,185k) (see note 3.1) as well as from the rental of software in an amount of EUR 22k (previous year: EUR 38k). As per the end of the reporting period, there were further receivables from franchisees totalling EUR 659k (previous year: EUR 1,501k) (see notes 4.4 and 4.5) in addition to loans in an amount of EUR 15,922k (previous year: EUR 22,067k).

8.3 Contingencies (Contingent Liabilities) and Other Financial Obligations

As per 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, 2012	Dec. 31, 2011
Rent, maintenance, and lease obligations
due in the subsequent year	9,428	8,281
due in 2 to 5 years	17,339	18,563
due in more than 5 years	3,234	5,056
Total	30,001	31,900

The rent payments are partly offset by expected rental income from subleases of EUR 500k in fiscal year 2014 (previous year: EUR 391k). In subsequent year, additional rental income of EUR 698k will occur. There are extension options ranging from one to five years on leases for rented premises. As per December 31, 2013, there were obligations of EUR 0k (previous year: EUR 389k) 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

In 2012 and 2013, our Irish subsidiary, GRENKE FINANCE Plc., Dublin, Ireland, generated income from intragroup factoring, loans, and leasing. With its income mentioned above, GRENKE FINANCE Plc. is subject to a nominal income tax charge of 12.5% in Ireland in 2012 and 2013, 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 (EStG) for the issuance of an exemption certificate and/or reimbursement of tax deductions for licence fees and similar remuneration on the grounds of the Double Taxation Agreement between Germany and Ireland. In processing the application, the Central German Tax Office holds additional information and notifications in terms of the meeting the requirements of economic activity at GRENKE FINANCE Plc. in Ireland. After an extensive examination, the Central German Tax Office considered the requirements to be fulfilled and issued the exemption certificate. In our opinion, the preconditions for economic activity on the part of GRENKE FINANCE Plc. were therefore satisfied in 2012 and 2013. Therefore, no contingent liabilities or other obligations arise from this matter as per the end of the reporting period.

8.4 Tax Audit in Germany

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

8.5 International Tax Audits

As per the end of the reporting period, there were no authoritative audit findings available with regards to the ongoing audit of international subsidiaries.

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 of the GRENKE Consolidated Group 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 3,793k (previous year: EUR 7,831k) from members of the GRENKE Consolidated Group's Board of Directors and their close family members. The Bank received deposits totalling EUR 1,207k (previous year: EUR 1,031k) from members of the GRENKE Consolidated Group's Supervisory Board and their close relatives. As per the reporting date, unsettled credit card accounts of members of the Board of Directors amounted to EUR 1k. No further loans were granted to any of these individuals during the reporting period.

In accordance with the Articles of Association, the Supervisory Board of GRENKELEASING AG consists of six members. In fiscal year 2013, the members of the Supervisory Board were:

• Prof. Dr. Ernst-Moritz Lipp, Baden-Baden, Chairman, Professor of International Finance and General Manager of ODEWALD & COMPAGNIE Gesellschaft für Beteiligungen mbH , Berlin
• Mr. Gerhard E. Witt, Baden-Baden, Deputy Chairman, public auditor and tax advisor
• Mr. Dieter Münch, Weinheim, retired bank officer, Member of the Foundation's Board
• Mr. Florian Schulte, Baden-Baden, General Manager of Fines Holding GmbH
• Mr. Erwin Staudt, Leonberg, graduate economics
• Prof. Dr. Thilo Wörn, Essen, Professor at the Fachhochschule für öffentliche Verwaltung NRW

The number of shares held by Supervisory Board members is listed below:

	Number of shares as per December 31
	2013	2012
Dieter Münch	75	75
Prof. Dr. Ernst-Moritz Lipp	31,325	28,300
Erwin Staudt	1,000	1,000
Florian Schulte	2,365	2,365
Prof. Dr. Thilo Wörn	1,060	1,060
Total	35,825	32,800

Prof. Dr. Ernst-Moritz Lipp is also the Chairman of the Supervisory Board of GRENKE BANK AG, Baden-Baden, and he is a member of the Supervisory Board of OYSTAR Holding GmbH, Stutensee, and Oberberg Klinik Holding GmbH, Berlin.

Mr. Gerhard E. Witt is at the same time Chairman of the Supervisory Board 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.

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. 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. Additionally, Mr. Erwin Staudt is a member of the Advisory Board of Interstuhl Büromöbel GmbH & Co. KG, Meßstetten-Tieringen.

Mr. Florian Schulte is also the Chairman of the Supervisory Board of Global Group Dialog Solutions AG, Idstein.

Prof. Dr. Thilo Wörn is the Chairman of the Advisory Boards of agathon GmbH& Co. KG, Bottrop, and of DEFLEX-Dichtsysteme GmbH, Moers-Genend.

The term of office of Prof. Dr. 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 fiscal year 2017.

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 109k (previous year: EUR 109k). 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 Association. This provision does not provide for the participation of the members of the Supervisory Board in any of the employee stock option programmes. The remuneration of the Supervisory Board breaks down as follows:

						Payments for supplementary
EURk	Total		Remuneration AG		Remuneration KGaA		services
	2013	Previous year	2013	Previous year	2013	Previous year	2013	Previous year
Total	116	116	109	109	7	7	0	0

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

• Mr. Wolfgang Grenke, business man, Baden-Baden, CEO Chairman of the Board of Directors
• Ms. Antje Leminsky, graduate business administration, Baden-Baden (since August 1, 2013), CIO Deputy Chairman of the Board of Directors
• Mr. Gilles Christ, MBA, Wissembourg/France, CSO
• Mr. Jörg Eicker, bank officer, Düsseldorf, CFO
• Mr. Mark Kindermann, graduate business administration, Bühl, COO

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 2013 breaks down as follows:

EURk	Total remuneration	of which fixed	of which variable
Total	3,137	1,081	2,056
Total (previous year)	2,126	991	1,135

In fiscal year 2013, the Supervisory Board of GRENKELEASING AG concluded individual phantom stock agreements with Board of Directors members Mr. Gilles Christ, Mr. Jörg Eicker, Mr. Mark Kindermann, and Ms. Antje Leminsky.

Under these agreements, Mr. Gilles Christ, Mr. Jörg Eicker, Mr. Mark Kindermann, and Ms. Antje Leminsky each receive entitlements to payments (tranche) for fiscal years 2013, 2014, and 2015 equal to the increase in value of 15,000 shares, 30,000 shares, 4,000 shares, and 15,000 shares, respectively, in GRENKELEASING AG in relation to a defined basic share price. The basic 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 the year 2012 was EUR 52.01. The maximum payment arising from this agreement is limited to EUR 300,000, EUR 600,000, EUR 100,000, and EUR 300,000 for the three tranches. The participants in the programme are required to invest the respective net amount paid plus a personal contribution of 25% of that amount in GRENKELEASING AG shares. The Company is entitled but not required to render the payment, in whole or in part, in shares rather than in cash for one or more tranches. In this case, the personal contribution is not applicable. The shares are subject to a vesting period of four years.

As per December 31, 2013, the value of the phantom stock agreements granted totalled EUR 1,288k (previous year: EUR 371k). This was recognised under staff costs in the income statement and is included under variable remuneration components.

Shareholdings are shown in the table below:

	Number of shares as per December 31
	2013	2012
Wolfgang Grenke*	4,980,619	4,925,619
Jörg Eicker	100	100
Mark Kindermann	52,053	52,053
Gilles Christ	4,450	1,600
Antje Leminsky	0	n.a.
Total	5,037,222	4,979,372

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

Mr. Wolfgang Grenke is the Chairman of the Supervisory Board of GRENKE SERVICE AG, Baden-Baden, and a member of the Supervisory Board of GRENKE BANK AG, Baden-Baden. He is also the President of the Advisory Board of GRENKELEASING AG, Zurich/Switzerland.

Mr. Mark Kindermann is a 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 AB, Stockholm/Sweden, Grenkefinance N.V., Vianen/Netherlands, and GRENKE BANK AG, Baden-Baden. He is also a member of the Advisory Board of GRENKELEASING AG, Zurich, Switzerland.

Mr. Gilles Christ is member of the Advisory Board of GRENKE ALQUILER S.A., Barcelona/Spain. In addition, he is on the Supervisory Board of GRENKE SERVICE AG, Baden-Baden, and member of the Advisory Board of GRENKELEASING AG, Zurich, Switzerland. He is also the General Manager of GRENKELEASING ApS, Herlev, Denmark and GRENKELEASING Sp.z.o.o., Poznan, Poland.

Mr. Eicker was a Director of GRENKE BANK AG, Baden-Baden, until December 31, 2013. In addition, he is on the Supervisory Board of GRENKE SERVICE AG.

Ms. Antje Leminsky is also a Director of GRENKE SERVICE AG, Baden-Baden, and on the Supervisory Board of GRENKE BANK AG, Baden-Baden.

8.7 Notifications pursuant to Section 21 (1) and Section 22 of the German Securities Trading Act [Wertpapierhandelsgesetz (WpHG)]

Notifications in Fiscal Year 2013

Convenience Translation:

T. Rowe Price Associates, Inc., Baltimore, Maryland, USA, has notified us that on March 20, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, decreased below the threshold of 3% and amounted to 2.94% (432,622 voting rights). These voting rights of 2.94% (432,622 voting rights) were attributable to T. Rowe Price Associates, Inc. according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

T. Rowe Price Group, Inc., Baltimore, Maryland, USA, has notified us that on March 20, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, decreased below the threshold of 3% and amounted to 2.94% (432,622 voting rights). These voting rights of 2.94% (432,622 voting rights) were attributable to T. Rowe Price Group, Inc. according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

T. Rowe Price International Ltd, London, UK, has notified us that on December 31, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% and amounted to 3.66% (501,415 voting rights). These voting rights of 3.66% (501,415 voting rights) were attributable to T. Rowe Price International Ltd according to article 22, paragraph 1, sentence 1, number 6 WpHG.

T. Rowe Price International Ltd, London, UK, has notified us that on March 20, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, decreased below the threshold of 3% and amounted to 2.94% (432,622 voting rights). These voting rights of 2.94% (432,622 voting rights) were attributable to T. Rowe Price International Ltd according to article 22, paragraph 1, sentence 1, number 6 WpHG.

Jupiter Unit Trust Managers Limited, London, UK, has notified us that its voting rights in GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 29 April 2013 and amounts to 5.06% (this corresponds to 744,230 voting rights) as per this date. Of these voting rights, 5.06% (this corresponds to 744,230 voting rights) are to be attributed to Jupiter Unit Trust Managers Limited pursuant to section 22 (1) sentence 1 no. 6 WpHG.

Correction of our publication regarding voting rights from March 08, 2010:

Jupiter Asset Management Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

Of these voting rights, 3.15% (this corresponds to 430,961 voting rights) are to be attributed to Jupiter Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 WpHG and 1.97% (this corresponds to 269,320 voting rights) are to be attributed to Jupiter Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Investment Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Investment Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Knightsbridge Asset Management Limited (formerly known as Comasman Limited), London, UK hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Knightsbridge Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Asset Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Asset Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Fund Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Fund Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Fund Management PLC (formerly known as Jupiter Investment Management Holdings Limited), London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 3 March 2010 and amounts to 3.15% (this corresponds to 430,961 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Fund Management PLC pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Correction of our publication regarding voting rights from September 24, 2010:

Jupiter Asset Management Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

Of these voting rights, 5.004% (this corresponds to 684,708 voting rights) are to be attributed to Jupiter Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 WpHG and 2.68% (this corresponds to 366,942 voting rights) are to be attributed to Jupiter Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Investment Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Investment Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Knightsbridge Asset Management Limited (formerly known as Comasman Limited), London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Knightsbridge Asset Management Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Asset Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Asset Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Fund Management Group Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Fund Management Group Limited pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Jupiter Fund Management PLC (formerly known as Jupiter Investment Management Holdings Limited), London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 5% on 7 July 2011 and amounts to 5.004% (this corresponds to 684,708 voting rights) as per this date.

All of the aforementioned voting rights are to be attributed to Jupiter Fund Management PLC pursuant to section 22 (1) sentence 1 no. 6 in connection with sentence 2 WpHG.

Correction of our publication regarding voting rights from July 4, 2012:

Jupiter Unit Trust Managers Limited, London, UK, hereby notified us that its share in the voting rights of GRENKELEASING AG, Baden-Baden, Germany, exceeded the threshold of 3% on 16 February 2012 and amounts to 3.09% (this corresponds to 422,930 voting rights) as per this date.

All of these voting rights are to be attributed to Jupiter Unit Trust Managers Limited pursuant to section 22 (1) sentence 1 no. 6 WpHG.

Threadneedle Investment Services Limited, London, United Kingdom has informed us according to Article 21 Section 1 WpHG, that on July 26, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (733,490 voting rights). These voting rights of 4.99% (733,490 voting rights) were attributable to Threadneedle Investment Services Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

The voting rights were attributed to Threadneedle Investment Services Limited from Threadneedle Investment Funds ICVC, being a shareholder holding 3% or more of the voting rights in GRENKELEASING AG.

Threadneedle Investment Funds ICVC, London, United Kingdom has informed us according to Article 21 Section 1 WpHG, that on July 26, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (733,490 voting rights).

Correction of our publication regarding voting rights from July 31, 2013:

Threadneedle Investment Services Limited, London, United Kingdom has informed us according to Article 21 Section 1 WpHG, that on July 26, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (733,490 voting rights). These voting rights of 4.99% (733,490 voting rights) were attributable to Threadneedle Investment Services Limited according to article 22, paragraph 1, sentence 1, number 6 WpHG.

The voting rights were attributed to Threadneedle Investment Services Limited from Threadneedle Investment Funds ICVC, being a shareholder holding 3% or more of the voting rights in GRENKELEASING AG.

Notifications in Fiscal Year 2012

On July 4, 2012 Jupiter Unit Trust Managers Limited, London, UK, has notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) that on February 16, 2012, Jupiter Unit Trust Managers Limited, London, UK, exceeded the threshold of 3% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 3.091% (422,930 voting rights).

Notifications in Fiscal Year 2011

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 Ms. Anneliese Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on November 6, 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 November 6, 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 November 6, 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 November 6, 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."

PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 in the name and 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."

PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 in the name and 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)."

Notifications prior to Fiscal Year 2011

We received with letter of August 7, 2002 the notice in accordance with Section 21 WpHG that the voting rights in GRENKELEASING AG have changed with effect from 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 (1) no. 6 WpHG as follows: Mr. Wolfgang Grenke (Germany), own shares: 44.20% – attributed to in accordance with Section 22 (1) no. 6: 8.64%.

Convenience Translation:

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.

Convenience Translation:

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.

Convenience Translation:

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.

8.8 Events after the Reporting Period

No events of material importance have occurred subsequent to the end of the fiscal year.

8.9 Declaration in Accordance with Section 161 AktG

The Board of Directors and the Supervisory Board of GRENKELEASING AG have issued the declaration pursuant to Section 161 AktG and made this permanently 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 which is combined with the management report of the Company for the fiscal year from January 1 to December 31, 2013. The preparation of the consolidated financial statements and group management report in accordance with IFRS 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 and in the group management report 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 IFRS 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."

Stuttgart, January 31, 2014

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Frey Witt Auditor Auditor

Calendar of Events

February 7, 2014	Publication of Annual Financial Report 2013 – Annual Press and
	DVFA Analysts Conference
April 29, 2014	Publication of Financial Report for the 1st Quarter of 2014
April 10, 2014	Annual General Meeting (Kurhaus Baden-Baden)
July 25, 2014	Publication of Financial Report for the 2nd Quarter and Half-Year of 2014
October 28, 2014	Publication of Financial Report for the 3rd Quarter and the First Nine Months of 2014

Contact Information

Renate Hauss Corporate Communications

Telephone: +49 7221 5007-204 Fax: +49 7221 5007-4218

Email: 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 5007-4218 E-mail: investor@grenke.de

www.grenke.de www.grenkebank.de www.grenkefactoring.de