Grenke AG — Annual Report 2014

Mar 11, 2015

GRENKELEASING AG Group Financial Report 2014

Key Figures GRENKE Group

	Jan. 1, 2014 to		Jan. 1, 2013 to
	Dec. 30, 2014	Change (%)	Dec. 30, 2013	Unit
New business
GRENKE Group Leasing + Factoring + Business start-up
financing incl. franchise partners	1,352,903	13.9	1,188,214	EURk
– of which Germany	404,228	0.9	400,659	EURk
– of which international	948,675	20.5	787,555	EURk
GRENKE Group Leasing	1,132,777	13.0	1,002,250	EURk
– of which international	826,486	20.3	686,929	EURk
– of which franchise international	20,229	0.9	20,040	EURk
– of which Germany	286,062	–3.1	295,281	EURk
Western Europe (without Germany)*	389,939	22.1	319,450	EURk
Southern Europe*	264,137	19.6	220,806	EURk
Northern / Eastern Europe*	179,623	18.1	152,078	EURk
Other regions*	13,016	–11.1	14,635	EURk
GRENKE Group Factoring	208,777	16.4	179,372	EURk
– of which Germany	106,817	8.1	98,786	EURk
– of which international	70,777	4.5	67,723	EURk
– of which franchise international	31,183	142.4	12,863	EURk
GRENKE Bank
Deposits	300,358	17.5	255,637	EURk
Business start-up financing volume	11,349	72.2	6,592	EURk
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	218,424	14.9	190,181	EURk
– of which international	173,514	21.4	142,964	EURk
– of which franchise international	4,326	–36.8	6,840	EURk
– of which Germany	40,584	0.5	40,377	EURk
Western Europe (without Germany)*	78,917	16.0	68,053	EURk
Southern Europe*	60,364	29.4	46,657	EURk
Northern / Eastern Europe*	36,019	21.4	29,676	EURk
Other regions*	2,540	–53.1	5,418	EURk
Further information leasing business
Number of new contracts	138,775	13.5	122,248	units
Share of IT products in lease portfolio	83	–2.4	85	percent
Share of corporate customers in lease portfolio	100	0.0	100	percent
Mean acquisition value	8.2	0.0	8.2	EURk
Mean term of contract	48	0.0	48	months
Volume of leased assets	3,530	16.8	3,023	EURm
Number of current contracts	427,212	15.6	369,591	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, Chile, Dubai, Turkey

GRENKE Group = GRENKE Consolidated Group including franchise partners

GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and structured entities according to IFRS

Key Figures GRENKE Consolidated Group

	Jan. 1, 2014 to		Jan. 1, 2013 to
	Dec. 30, 2014	Change (%)	Dec. 30, 2013	Unit
Key figures income statement
Net interest income	157,528	20.7	130,466	EURk
Settlement of claims and risk provision	53,748	7.9	49,794	EURk
Profit from insurance business	42,078	17.4	35,837	EURk
Profit from new business	45,461	3.5	43,932	EURk
Gains from disposals (income exceeding the calculated
residual value)	1,607	126.3	710	EURk
Other operating income	3,579	17.0	3,058	EURk
Cost of new contracts	30,886	12.3	27,505	EURk
Cost of current contracts	9,512	11.7	8,519	EURk
Project costs and basic distribution costs	35,163	5.8	33,245	EURk
Management costs	26,304	12.9	23,297	EURk
Other costs	7,168	3.3	6,940	EURk
Operating result	87,472	35.2	64,703	EURk
Other interest income (expense)	652	19.2	547	EURk
Income / expenses from fair value measurement	89	–12.7	102	EURk
EBT (earnings before taxes)	86,909	35.3	64,258	EURk
Net profit	65,040	38.3	47,012	EURk
Earnings per share (according to IFRS)	4.41	36.5	3.23	EUR
Further Information
Dividends	1.10	10.0	1.00	EUR
Embedded value, leasing contract portfolio
(incl. equity before taxes)	771	14.7	672	EURm
Embedded value, leasing contract portfolio
(incl. equity after taxes)	696	14.7	607	EURm
Economic result (after taxes)	150	40.2	107	EURm
Cost / income ratio	55.7	–8.4	60.8	percent
Return on equity (ROE) after taxes	13.2	23.4	10.7	percent
Average number of employees	874	6.7	819	employees
Staff costs	55,028	6.3	51,756	EURk
– of which total remuneration	45,038	5.4	42,748	EURk
– of which fixed remuneration	34,267	7.9	31,772	EURk
– of which variable remuneration	10,771	–1.9	10,976	EURk

GRENKE Group = GRENKE Consolidated Group including franchise partners

GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and structured entities according to IFRS

Der internationale Anteil am Neugeschäft wächst kontinuierlich. Die erfolgreiche weltweite Expansion basiert auf unserem validen und werthaltigen Geschäftsmodell. The international share of our new business is continuously increasing. The successful global expansion is based on our proven and valued business model.

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	9
Corporate Governance Report; Remuneration Report (Part of the Management Report)	10
GRENKE Shares and Investor Relations	19
Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group	24
Consolidated Group Principles	24
Report on Business Development	29
Remuneration Report (see also Corporate Governance Report)	43
Events Subsequent to the End of the Fiscal Year	43
Report on Risks, Opportunities, and Forecasts	43
Acquisition-Related Information	66
Corporate Governance Statement Pursuant to Section 289 a HGB	68
GRENKELEASING AG (Comments on HGB Basis)	69
Consolidated Financial Statements for Fiscal Year 2014	74
Income Statement	74
Statement of Comprehensive Income	75
Statement of Financial Position	76
Statement of Cash Flows	78
Statement of Changes in Equity	80
Notes to the Consolidated Financial Statements for Fiscal Year 2014	81
Responsibility Statement	175
Audit Opinion	176
Calendar of Events and Contact Information	177

Letter to Shareholders from the Board of Directors

Dear Shareholders, Ladies and Gentlemen,

In fiscal year 2014, the GRENKE Group continued the dynamic growth trend it has experienced in recent years. We increased our new business volume by 14 percent to EUR 1,352.9 million. This growth represents a tremendous accomplishment; especially in view of the foundation we have achieved, which is now well above the billion-euro mark after breaking through this level for the first time in 2013. The GRENKE Group continues to have the capacity to exceed our mid-term growth target of at least ten percent per year. Our growth is not only driven by our established markets in Europe, where we are continually consolidating our presence, but is increasingly driven by markets we have only just entered in the course of our global expansion. In the reporting period, these markets were Croatia and Chile. The GRENKE Group is becoming an increasingly international company. Altogether, the international share of our new business in the reporting period amounted to 70 percent after 66 percent last year.

This performance is not coming at the expense of our profitability. The contribution margin 2 (CM2) of GRENKE Group Leasing's new business expanded by 15 percent in 2014 and the CM2 margin, at 19.3 percent, even exceeded the previous year's level. With an increase in the volume of purchased receivables of 16 percent to EUR 208.8 million, our factoring business experienced similarly strong growth rates. We saw the same momentum in our comparatively young offers for business start-up financing and development loans. A new partnership initiated in the reporting year enhanced our cooperation with the development banks of the Federal Government and individual federal states. The number of lease contracts concluded for the financing of new investments under these collaborations grew by more than two-thirds in the reporting year. The deposit volume at GRENKE BANK AG has also risen sharply in 2014 by 18 percent. The GRENKE Consolidated Group's net profit grew by 38 percent to EUR 65.0 million. These results even exceed our net profit forecast of EUR 62 to 64 million, which we had raised with the publication of the report for the third quarter of 2014

The following can be said in conclusion of the 2014 fiscal year: Our business model – both in traditional small-ticket IT leasing and increasingly in the factoring business – has brilliantly proven itself once again. We do not rely on avoiding risks but on estimating them correctly and managing our business along an attractive risk-reward profile. Once again, we have demonstrated that even in times of economic difficulty we can still generate profitable growth and open up new markets.

The financing we need for our expansion remains well secure. Our broad range of refinancing instruments places us in an outstanding position in the capital markets, and we pay close attention to preserving our reputation. In 2014, we issued bonds totalling EUR 340.0 million. The issues were extremely well received by the market and all follow-up financing went smoothly. We were also able to attract new funding partners over this past year. In addition, Standard & Poor's confirmed our solid rating and the Gesellschaft für Bonitätsbeurteilung (GBB) awarded us with a rating of "high creditworthiness" in their initial analysis of GRENKELEASING AG. We were able to impress these agencies with our clearly focused and well-implemented strategy as well as with our track record for earnings and new business development. There was also an emphasis on our lean processes and our excellent corporate management supported by timely and sophisticated instruments for control. The good GBB rating is particularly significant in terms of the further development of our banking activities.

The stock exchange also recognised our favourable performance during fiscal year 2014. During the year, GRENKE shares gained 31 percent and clearly distinguished themselves once again from the relevant benchmark price indices, such as the DAX, SDAX and the sector index of German financial services companies. A new indicator, the "economic result", is an indicator we will start to report routinely on in the future, beginning with the 2014 fiscal year. We want to use this indicator to give the capital markets even more confidence in our value-based corporate strategy. The economic result of any given fiscal year adds the change in embedded value after tax to the net profit. Since the embedded value represents the present value of all outstanding lease instalments after costs and risk provisions, a positive difference between the value at the beginning and the end of a fiscal year shows that the Company's enterprise value has increased. We will present our active, growth-oriented value management in this manner in the future.

We remain optimistic about the current 2015 fiscal year. In addition to the cell divisions in existing countries such as Germany, France, the United Kingdom, and Sweden, we are also planning our entries into the Irish market (factoring) and the market in Singapore (leasing). In our leasing business, we expect new business to grow between 11 and 15 percent while maintaining continued high profitability and risk adequate CM2 margins. In the factoring business, we anticipate new business to grow in the range of 20 to 24 percent. Net profit for the GRENKE Consolidated Group is expected to be in the range of EUR 71 to 75 million. In light of the positive development during the reporting year and the favourable prospects for the future, the Supervisory Board and the Board of Directors will propose to the Annual General Meeting on May 12, 2015 a dividend in the amount of EUR 1.10 per share for fiscal year 2014. The previous year's dividend was EUR 1.00 per share.

We would like to thank our employees for their commitment and flexibility. We would also like to thank our shareholders and invite them again this year to accompany us in our next phase of growth.

Wolfgang Grenke Chairman of the Board of Directors

The Board of Directors of GRENKELEASING AG

Report of the Supervisory Board

In fiscal year 2014, the Supervisory Board of GRENKELEASING AG performed the activities required of it by law and under the Articles of Association. It maintained its collaboration with the Board of Directors on a continuous basis, advised it regularly, and monitored its management of the business. The Board of Directors and the Supervisory Board closely coordinated the strategic orientation of the GRENKE Consolidated Group.

The Board of Directors routinely informed the Supervisory Board of all key issues in a timely and comprehensive manner and involved the Supervisory Board in all decisions of fundamental significance to the Company. 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.

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. Matters requiring approval were submitted by the Board of Directors in a timely manner.

As Chairman of the Supervisory Board, I kept myself informed of current business developments at all times including those in the banking business and key transactions. Outside of the Supervisory Board meetings, I was also informed by the Board of Directors, in detail, of events of particular significance. The key issues discussed in personal talks with the Board of Directors included the preparation of refinancing decisions, compliance issues, internal controlling, risk management and its on-going development, as well as personnel issues. In advance of the corresponding resolution by the Supervisory Board on February 3, 2014, the granting of a Scrip Dividend for the 2013 fiscal year was also a key topic of our conversations. Subsequently, at the 2014 Annual General Meeting, the Board of Directors and the Supervisory Board proposed that the shareholders of GRENKELEASING AG receive the dividend exclusively in cash or partly in cash and partly in the form of GRENKELEASING AG shares from the existing authorised capital.

During the year under review, the Supervisory Board monitored the Consolidated Group-wide risk management system and the internal control systems in the areas of internal audit, accounting, and compliance – including compliance with the German Banking Act (KWG) – and also oversaw the operating risk control system as well as 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 2014.

Other key issues at the Supervisory Board meetings included regular discussions on current business performance, the monitoring of international entities, the acquisition of GRENKEFACTORING AG Switzerland and the franchise company in Luxembourg. These meetings also included an evaluation of the efficiency of the work of the Supervisory Board, the adoption of the annual financial statements of GRENKELEASING AG, and the approval of the consolidated financial statements as per December 31, 2013. Issues concerning the Rules of Procedure were also discussed. On several occasions, the Supervisory Board also dealt with the status and progress of an ongoing and comprehensive IT project for internal process optimisation as well as with the general IT strategy of the GRENKE Consolidated Group.

On April 2, 2014, the Supervisory Board and the Board of Directors issued the GRENKELEASING AG Declaration of Conformity in accordance with Section 161 of the German Stock Corporation Act. In consideration of the exceptions named in the Declaration, the recommendations of the "Government Commission on the German Corporate Governance Code" in the version dated May 15, 2012, and since the revised version of May 13, 2013 and its entry into force have been complied with and will continue to be complied with. In this annual financial report for fiscal year 2014, the Board of Directors' report on corporate governance at GRENKELEASING AG is also made on behalf of the Supervisory Board. All members of the Supervisory Board have personally pledged to comply with the principles of corporate governance that were applicable in the reporting year.

The Supervisory Board met on four occasions in fiscal year 2014: the meetings took place on February 3, April 9, July 26-28, and on November 17. All members of the Supervisory Board attended all meetings.

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. The following members formed the Supervisory Board in fiscal year 2014:

• 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 chairpersons of the committees reported on the committees' work in detail to the Supervisory Board at its meetings.

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 that 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 2013 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.

The annual financial statements of GRENKELEASING AG and the consolidated financial statements prepared by the Board of Directors as per December 31, 2014 and the combined presentation of the management reports of GRENKELEASING AG and of the GRENKE Consolidated Group for fiscal year 2014 in accordance with Section 315 (3) and Section 298 (3) HGB, and the Board of Directors' proposal for 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, 2014 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, 2014 were prepared in accordance with Section 315 a (1) HGB on the basis of the International Financial Reporting Standards as adopted in the EU and in accordance with the 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, 2015. 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 for the appropriation of GRENKELEASING AG's unappropriated surplus.

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.

GRENKE shares enjoyed the trust of capital market participants again in the 2014 fiscal year. Investors rewarded the successful international growth strategy and strong profitability of the GRENKE Consolidated Group with significant share price increases: in 2014, GRENKE's shares climbed 31 percent.

During fiscal year 2014, all employees of the GRENKE Group contributed once again to the Company's success and to the positive performance of GRENKE shares. The Supervisory Board extends its thanks to all employees of the GRENKE Consolidated Group and its franchise companies in the 29 countries in Europe and overseas where GRENKE is represented. The Supervisory Board also thanks the members of the Board of Directors for their tremendous personal commitment and service. The positioning and strategy of the entire GRENKE Group as well as the motivation of all those involved give the Supervisory Board immense confidence in the Company's future.

Baden-Baden, February 3, 2015 On behalf of 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, Public auditor	KGaA, Baden-Baden, DE
Born 1945	and tax advisor, Legal counsel for
First elected: 1997	succession law, company law, and
Elected until the Annual General Meeting 2018	insolvency law
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,	Deltavista International AG,
Baden-Baden, DE	Managing Director of Fines Holding	Küsnacht, CH; Global Group
Born 1971	GmbH, Managing Director of	Dialog Solutions AG, Idstein, DE
First elected: 2010	S.K. Management- und Beteili-
Elected until the Annual General Meeting 2015	qungs GmbH
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
▶ Prof. Dr. Thilo Wörn	Member of the Supervisory Board,	agathon GmbH & Co. KG, Bottrop,
Essen, DE	Professor at the University of Public	DE; BEST SALES + SERVICES
Born 1968	Administration in North Rhine-	GmbH, Bocholt, DE; DEFLEX-
First elected: 2010	Westphalia	Dichtsysteme GmbH, Moers-
Elected until the Annual General Meeting 2015		Genend, DE

Corporate Governance Report

A sense of responsibility governs all activities of the GRENKE Consolidated Group. Thus, a key component of our philosophy is responsible and effective corporate governance that complies with the relevant laws and the requirements of the German Corporate Governance Code. The Board of Directors, the Supervisory Board, and senior executives identify with the principles of good corporate governance. They are committed to complete compliance, including compliance with the ethical and legal rules of conduct and standards, because 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 committed to leading and directing the GRENKE Consolidated Group in a value-oriented and transparent manner. They are particularly aware of the special significance these principles hold with providers of capital when assessing 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 revised version dated May 13, 2013 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 that 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 2014 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 key and regular 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.

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 that are in line with the Supervisory Boards' Rules of Procedure. The committees prepare the issues and resolutions that are relevant to them that are then discussed in the plenum. The chairpersons 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. These members possess 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 decisions 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 tasks 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. It also 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 as well as activities involving the Company in its entirety. Key decisions by the Board of Directors, such as those pertaining to acquisitions and financing measures, in particular, require the approval of the Supervisory Board. The Board of Directors' Rules of Procedure contains a list of those 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	2014	2013
Christ	192,420.36	600.00	81,858.25	60,000.00		334,878.61	622,835.61
Eicker	310,619.99		53,207.89	78,000.00		441,827.88	1,035,962.56
Grenke	337,947.84		163,716.50	120,000.00		621,664.34	608,350.92
Kindermann	173,004.60		81,858.25	60,000.00	12,320.00	327,182.85	372,916.67
Leminsky*	241,564.44		61,393.71	90,000.00		392,958.15	496,485.89
Total	1,255,557.23	600.00	442,034.60	408,000.00	12,320.00	2,118,511.83	3,136,551.65

* Calculation of annual salary and performance bonus for fiscal year 2013 on a pro-rata basis from August 1, 2013

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

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

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 each year retrospectively. 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 each quarter retrospectively.

Total remuneration of the Board of Directors in the reporting year totalled EUR 2,119k (previous year: EUR 3,137k), of which EUR 1,256k (previous year: EUR 1,081k) was attributable to gross salaries and EUR 442k (previous year: EUR 381k) to performance bonuses. Mr. Gilles Christ also received a pension commitment concluded as per December 1, 2014 amounting to EUR 7,200 annually. For the fiscal year just ended, the pension commitment was awarded on a pro rata basis.

The Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with several Board of Directors members.

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, 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 years 2012 and 2103 was EUR 52.01 and EUR 73.13, respectively. 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. This maximum payment applies to the respective agreement in its entirety, i.e., the total payment for all three tranches may not exceed the maximum payment amount. If an annual tranche exceeds the maximum total entitlement and the agreement is still in force for several more years (tranches), then no further claims can be acquired in the future. 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. Due to the strong rise in the share price in 2013, the maximum payment was made in 2014, which was one year before the agreement's term had ended.

As per December 31, 2014, the value of the phantom stock agreements granted totalled EUR 12k. (December 31, 2013: 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 the 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 variable remuneration actually paid in the fiscal prior to the termination of the appointment are the bases 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.

Remuneration of the Supervisory Board

		Basic			Variable
		remune	Audit	Personnel	remune	Travel	Total	Total
Name	Function	ration 2014	Committee	Committee	ration	expenses	2014*	2013*
EUR
Prof. Dr. Lipp	Chairman	11,250.00	600.00	900.00	12,750.00	652.31	26,152.31	25,793.93
	Deputy
Witt	Chairman	7,500.00	900.00	600.00	9,000.00	618.60	18,618.60	18,250.00
Münch	Member	7,500.00	600.00	0.00	8,100.00	964.80	17,164.80	16,746.80
Schulte	Member	7,500.00	0.00	0.00	7,500.00	618.60	15,618.60	15,000.00
Staudt	Member	7,500.00	0.00	600.00	8,100.00	618.60	16,818.60	16,449.12
Prof. Dr. Wörn	Member	7,500.00	0.00	0.00	7,500.00	2,449.49	17,449.49	16,293.28
Total		48,750.00	2,100.00	2,100.00	52,950.00	5,922.40	111,822.40	108,533.13

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

The Articles of Association of GRENKELEASING AG resolved by the Company's shareholders also regulate the remuneration of the members of the Supervisory Board. 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, and 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 and 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.

Share Trading and Shares Held by the Governing Bodies

Detailed information regarding directors' holdings as per December 31, 2014 presented in the notes to the consolidated financial statements in the section titled "Related Party Disclosures". Information on directors' dealings during the fiscal year can be found on our homepage www.grenke.de/en under the section Investor Relations/Corporate Governance.

Accounting, Audits of Financial Statements, and Financial Reporting

The management report for the GRENKE Consolidated Group and the management report for the separate financial statements of GRENKELEASING AG are prepared in accordance with Section 315 (3) and Section 298 (3) HGB and presented as a combined section. Substantial differences arising between the corporate entities are discussed in a separate section. The financial statements of GRENKELEASING AG and the financial statements of the GRENKE Consolidated Group for fiscal year 2014 are published jointly in the Federal Gazette (Bundesanzeiger).

The accounting policies applied to the consolidated financial statements for the January 1 to December 31, 2014 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 315 a (1) HGB. The consolidated financial statements were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW (IDW PS 200). The Audit Committee ensures the independence of the auditor and 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 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/investor-relations).

Shareholders and the public may use the internet to find information on the GRENKE Consolidated Group, the organisational structure, and on members of management. Notifications by the Company are published in the Federal Gazette (Bundesanzeiger). The report of the Board of Directors and the general debate is available as a live stream on the internet to everyone 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

At GRENKE, compliance spans over all operational activities and business processes and embraces all governing bodies, senior management, and employees. The Compliance Department, under the supervision of the responsible compliance officer, oversees the adherence to the relevant legal provisions, internal company guidelines, and the ethical standards to which we are committed. Core responsibilities also include the compilation of the relevant regulations, 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 in preventing breaches of the law, corruption, and fraudulent acts and in their clarification.

Controlling and Risk Management

At GRENKE, risk management and risk management systems have been governed and implemented throughout the Consolidated Group. The purpose of the 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 the Board of Directors to address risks responsibly and make the most of the opportunities that present themselves. The risk management system is continuously expanded and 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 Consolidated Group-wide. 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

The Board of Directors and the Supervisory Board of GRENKELEASING AG issued the following Declaration of Conformity on April 2, 2014:

"The Board of Directors and the Supervisory Board of GRENKELEASING AG hereby declare, in accordance with Section 161 of the German Stock Corporation Act, that since the issue of the last Declaration of Conformity dated April 17, 2013, the Company has complied with the recommendations of the "Government Commission on the German Corporate Governance Code", initially in the version dated May 15, 2012 and then in the revised version dated May 13, 2013 since it became applicable with the following exceptions and will continue to comply with these in the future:

In determining the total compensation of the individual members of the Board of Directors, the Supervisory Board shall ensure that there is an appropriate relationship between the compensation, performance, and the tasks of the individual Director, as well as the situation of the Company. The Supervisory Board is to review the appropriateness of the compensation of the Board of Directors on a regular basis. Nevertheless, by derogation from Article 4.2.2 (2) of the DCGK, when assessing the compensation of the Board of Directors, the assessment currently does not explicitly take into consideration the relationship of the compensation of the Board of Directors, senior management, and the staff overall, and does not explicitly take into account its development over time. The reason being, that almost all of the service contracts with members of the Board of Directors were concluded prior to the entry of the relevant recommendation into the DCGK and therefore include the features of the previous provisions. This system was maintained with regard to the newly concluded service contract for a Director in 2013 in order to ensure uniform wording in the contracts. For this reason, the recommendation of Article 4.2.2 (2) was not satisfied.

By derogation from Article 4.2.3 (2) Sent. 6 of the DCGK, the amount of compensation of the Board of Directors Board does not provide for a cap overall or for variable compensation components. The reason being, that almost all of the service contracts with members of the Board of Directors were concluded prior to the entry of the relevant recommendation into the DCGK, meaning that they include the features of the previous provisions. This system was also maintained with regard to the newly concluded service contract for a Director in 2013 in order to ensure uniform wording in the contracts. The variable compensation component is calculated based on a fixed intra-Group assessment system that already provides for a factual cap of the variable compensation. Therefore, the recommendation of Article 4.2.3 (2) Sent. 6 was not fully satisfied.

Notwithstanding the recommendation in accordance with Article 4.2.3 (4) of the DCGK, the Board of Directors' service contracts for the members of the Board of Directors in office do not provide for a settlement cap. This is because some Board of Directors' contracts were concluded before the recommendation in question was included in the DCGK, meaning that their continuance is protected. However, recently signed Board of Directors' contracts do not include a settlement cap either, as the Board of Directors' contracts are usually concluded for the length of the term of appointment only and cannot be terminated with a notice period. Therefore, a Board of Directors' contract cannot be unilaterally terminated early without good cause but only by means of a mutual resolution. The Board of Directors' contracts contain no regulations on severance linked to events at the Company, especially a change of control.

Various aspects are to be observed in accordance with the recommendations given under Article 5.1.2 and 5.4.1 of the DCGK, including determination of an age limit as well as diversity, both in terms of the composition of the Board of Directors and with regard to persons nominated to be elected to the Supervisory Board. The Company is of the opinion that the knowledge, skill, and experience required for the respective division or area of responsibility should in fact be the decisive factor when selecting suitable candidates, both in terms of the composition of the Board of Directors and when nominating persons to be elected to the Supervisory Board. The above-mentioned recommendations of the DCGK are considered with regard to the composition of the Board of Directors and the nominations for elections to the Supervisory Board.

In accordance with Article 5.3.3 of the DCGK, the Supervisory Board shall form a nomination committee composed exclusively of shareholder representatives who propose suitable candidates to the Supervisory Board for the nominations to be proposed to the Annual General Meeting. Currently, the Supervisory Board of GRENKELEASING AG consists of a total of six members, who are to be elected exclusively by shareholders. The Board of Directors and the Supervisory Board do not consider it necessary to create an additional committee. The Company believes that the transparency of the selection procedure desired by the Commission in Article 5.3.3 of the DCGK is ensured even without a corresponding committee. For this reason, the recommendation of Article 5.3.3 has not been satisfied.

The Company currently does not comply with the recommendation of Article 5.4.6 (2) of the DCGK. In accordance with Article 10(3) of the Articles of Association, each member of the Supervisory Board is granted variable remuneration in addition to fixed remuneration if a dividend higher than EUR 0.20 per share is distributed to shareholders. In this case, the remuneration increases by half of the percentage by which the dividend per share exceeds the amount of EUR 0.20. However, the variable remuneration component must not exceed a maximum level of 100% of the fixed remuneration of the Supervisory Board member. Therefore, the applicable regulation of the Articles of Association with the variable remuneration component does not comply with the recommendation of the Code. However, the Board of Directors and the Supervisory Board believe that the previous generally conservative dividend policy and the remuneration of Supervisory Board members are consistent with the sustainable development of the Company, as required by the DCGK.

The Company does not comply with the recommendation of Article 6.3 of the DCGK (new version) to provide information in the Corporate Governance Report on the ownership of shares in the Company or related financial instruments of members of the Board of Directors or Supervisory Board. The purchase and sale of shares in the Company, including options by members of the Board of Directors or Supervisory Board and by closely related persons mentioned in the law, are reported to the Company and to the German Federal Financial Supervisory Authority pursuant to statutory regulations and are disclosed by the Company pursuant to the provisions of statutory regulations. The relevant disclosures can be found in the notes to the consolidated financial statements and on the Company's website. However, the relevant shareholdings, related purchase, and sales rights (e.g., options) of individual members of the Board of Directors or Supervisory Board are not published separately in the Corporate Governance Report. The Supervisory Board and the Board of Directors believe that complying with the statutory provisions provides sufficient transparency.

Baden-Baden, April 2, 2014

GRENKELEASING AG

The Board of Directors The Supervisory Board"

By resolution of February 3, 2015, the Declaration of Conformity was updated as follows:

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

"The Board of Directors and the Supervisory Board of GRENKELEASING AG hereby declare that since the issue of the last Declaration of Conformity dated April 2, 2014, the Company has complied with the recommendations of the "Government Commission on the German Corporate Governance Code", initially in the version dated May 13, 2013 and then in the revised version dated June 24, 2014 with the following exceptions:

• Article 4.2.2 (2) (vertical remuneration comparison);
• Article 4.2.3 (2) Sent. 6 (cap in the remuneration of the Board of Directors);
• Article 4.2.3 (4) (severance payment cap);
• Articles 5.1.2 and 5.4.1 (age limit of members of Board of Directors and Supervisory Board and diversity in the composition of the governing bodies);
• Article 5.3.3 (formation of a nomination committee);
• Article 5.4.6 (2) (performance-based remuneration of the Supervisory Board); and
• Article 6.3 (separate reporting of share ownership of members of Board of Directors and Supervisory Board in the Corporate Governance Report)

The Board of Directors and the Supervisory Board of GRENKELEASING AG hereby declare that the aforementioned Declaration of Conformity dated April 2, 2014 is qualified to the extent that the recommendations set forth in Article 4.2.5 (3) and (4) of the DCGK, which were applicable in fiscal year 2014 for the first time, were not complied with. In particular, the "model tables" of the "German Corporate Governance Code" for reporting the remuneration of the Board of Directors have not been used. The individualised remuneration for each member of the Board of Directors is presented in a transparent manner and pursuant to statutory provisions in the remuneration report, which forms part of this combined management report for fiscal year 2014. The Board of Directors and the Supervisory Board are of the opinion that an additional or deviating presentation of the remuneration components of the individual members of the Board of Directors is neither necessary in the interest of shareholders nor for transparency reasons.

Baden-Baden, February 3, 2015

GRENKELEASING AG

The Board of Directors The Supervisory Board"

GRENKE Shares and Investor Relations

The GRENKE shares' long-term trend of appreciation continued during fiscal year 2014. After closing at EUR 68.00 at the end of 2013, the shares closed the 2014 fiscal year at EUR 88.99 (XETRA closing prices also used hereafter) achieving a price increase of 31 percent. As was the case in the previous two fiscal years, GRENKE shares outperformed the benchmark indices the SDAX price index (annual performance 2014: +4 percent) and the DAXsector Financial Services price index (+21 percent) for nearly the whole of 2014. In 2004, the shares closed the year at EUR 35.00 and over the subsequent tenyear period they went on to increase by more than two and a half times. The DAX (+68 percent), SDAX (+81 percent), and the DAXsector Financial Services (+82 percent) price indices saw much lower gains over the same period.

The lowest share price for GRENKE shares in fiscal year 2014 was marked with a closing price on February 3 of EUR 68.14 after starting the year at a level of EUR 68.19. From mid-April to the beginning of November, the shares fluctuated within a range of approximately EUR 72 to EUR 79. With the recovery in the overall market in mid-October and the positive development of our new business in the first nine months of 2014, GRENKE shares rose strongly and increased more than 25 percent during this period to reach their high for 2014 on December 8 with a closing price of EUR 91.13. The interim high that day was EUR 91.61.

Our offer to shareholders in the reporting year to choose for the first time whether to receive the dividend exclusively in cash or partly in cash and partly in shares of GRENKELEASING AG (Scrip Dividend) was well received by our shareholders. Shareholders holding 39.4 percent of the outstanding shares chose the Scrip Dividend. At a subscription ratio of 106.9:1, a total of 54,199 new shares were issued. This increased the total number of shares outstanding to 14,754,199 for fiscal year 2014. The higher number of outstanding shares coupled with the rise in the Company's share price led to a 31 percent increase in the market capitalisation of GRENKELEASING AG for a total of EUR 1,313 million.

Dividend Policy

The dividend policy at GRENKELEASING AG is long-term oriented and based on the criteria of continuity, profitability, and safeguarding the equity base for future expansion. Thus, GRENKE shares offer investors an investment with attractive growth prospects and, at the same time, high intrinsic value and a continual flow of income. Traditionally, GRENKE has had a strong equity base to secure favourable refinancing opportunities. Our strategic equity ratio target is 16 percent. This target along with a high return on equity also in times of strong growth, are the basis of our sustained good rating. This gives us access to a variety of refinancing alternatives at attractive conditions. At the end of the 2014 reporting year, the GRENKE Consolidated Group's equity ratio was 16.9 percent after 16.8 percent in the previous year.

Actively managing our solid equity base is of key importance for our future growth. We conduct our dividend policy in a profit-oriented manner keeping this crucial, long-term strategic requirement in mind. We are confident that we will maintain continuity in our dividend distributions because we anticipate further rapid business expansion and rising revenues in the coming years.

For the 2014 fiscal year, the Board of Directors and the Supervisory Board will propose a dividend of EUR 1.10 per share to the Annual General Meeting of GRENKELEASING AG on May 12, 2015. This would mean the fourth consecutive rise in dividend per share: in the previous year the dividend per share was EUR 1.00, in 2012 it amounted to EUR 0.80, and in 2011 it totalled EUR 0.75 per share.

Investment Case

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

• A competitive advantage and high barriers to entry for potential competitors through extensive standardisation using IT-based automation and increasing speed directly at the POS;
• the international roll-out of these unique selling points as a success factor of our sustainably successful growth strategy;
• market leadership in Central Europe;
• our long-standing, proven risk management as essential drivers of revenue and value, even in times of economic crisis;
• our shares' high intrinsic value measured by return on equity and embedded value.

Our strategic company objective is further expansion to achieve dynamic profit development. This is the reason our business is focused on high-margin activities. We consistently steer our business according to the contribution margin 2 (present value of operating income from a lease, less the cost of risk and individual contract costs). The key requirement for this – efficient risk and cost control – is ensured by our sophisticated and improving risk management strategy. This is how we are able to respond flexibly to changes in market conditions and achieve appropriate risk premiums at the same time. We have always proven our ability to do so in a consistent and impressive manner.

Another significant improvement in net interest income in the reporting year allowed us to effectively counter an inevitable rise in the loss rate in the wake of recessionary developments in several European countries and the resulting increase in incomerelated risks. We will maintain the proven and 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 for potential competitors. This keeps us well equipped for future growth along with our sophisticated and expanding sales system.

Investor Relations

As part of our investor relations activities, we maintain an open and ongoing exchange of information with shareholders, investors, analysts, and media representatives. Again, in fiscal year 2014, the Board of Directors communicated extensively with capital market participants on the development of the now globally-positioned Consolidated Group. In addition, we are frequently available to market participants and media representatives for one-on-one discussions and conference calls. Thanks to our active communication policy, we have been able to further grow our investor base throughout the reporting year.

The Annual General Meeting is the central forum for maintaining contact with our shareholders. The general public can participate via our website where we broadcast the Board of Directors' speech to the Annual General Meeting and transmit 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. We also offer a customised news service.

At GRENKE, our information should meet the highest standards of quality and timeliness and go above and beyond the information that is required. Therefore, we publish our new business figures and contribution margins for the quarter just ended as early as the second workday of the subsequent quarter. The fiscal year's audited consolidated financial statements are already published by the beginning of February of the following year. Our website also provides a userfriendly, interactive annual financial report.

Ratings

Standard & Poor's

In a Standard & Poor's analysis dated October 9, 2014, the agency confirmed its counterparty credit rating for GRENKELEASING AG as well as its rating for bonds issued by 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 for both short- and long-term maturities. GRENKE has retained its "negative" outlook because it is growing especially strong in countries that the agency believes are displaying increased economic risks. At the same time, the agency explicitly highlights our excellent risk management and our ability to attain risk-appropriate prices, even in times of recession. Consequently, Standard & Poor's classifies GRENKE's risk position as "adequate". The agency believes that GRENKE possesses an outstanding position relative to the competition. Other key factors for the rating such as the broad diversification of our receivables portfolio, very solid capitalisation, adequate liquidity, and continual high profitability have remained unchanged.

Standard & Poor's ratings as per the end of fiscal year 2014 are as follows:

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

Gesellschaft für Bonitätsbeurteilung

The Gesellschaft für Bonitätsbeurteilung mbH ("GBB") issued a good rating to GRENKE and certified the Company as having "high creditworthiness". On October 1, 2014, the GBB published its first analysis of the GRENKE Consolidated Group. The "A-" rating with a "stable" outlook was justified by the Company's sharply focused and successful strategy, its convincing track record for profit and new business development, its lean process resulting from its high degree of standardisation and automation, and the excellent management of the Company thanks to its fine-tuned and timely controlling instruments. The agency highlighted our high degree of risk diversification and our granular portfolio. The positive GBB rating is important for the further development or our banking activities.

	Rating		A-
---	--------	--	----

Outlook Stable

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	ODDO SEYDLER BANK AG;
	HSBC Trinkaus und Burkhardt AG
Total number of registered shares outstanding	14,754,199
Class	No-par-value shares
Nominal value per share (rounded)	EUR 1.28
Shareholder structure:
Free float according to Section 1.9 of the current "Deutsche Börse stock indices guidelines"	57.36%
Grenke Beteiligung GmbH & Co. KG*	42.64%

* General partner: Grenke Vermögensverwaltung GmbH

Limited partners: Grenke family (Wolfgang, Anneliese, Moritz, Roland, Oliver Grenke)

	2014	2013	2012	2011	2010
Closing price on last trading day
(XETRA)	EUR 88.99	EUR 68.00	EUR 50.61	EUR 39.00	EUR 37.99
Highest intraday price (XETRA)	EUR 91.79	EUR 76.38	EUR 54.46	EUR 46.00	EUR 38.50
Lowest intraday price (XETRA)	EUR 66.46	EUR 50.25	EUR 37.45	EUR 32.55	EUR 28.70
Market capitalisation (closing price)	EUR 1,313 million	EUR 1,000 million	EUR 693 million	EUR 534 million	EUR 520 million
Earnings per share	EUR 4.41	EUR 3.23	EUR 3.10	EUR 2.87	EUR 2.03
Price-earnings ratio
(Basis: closing price)	20.2	21.1	16.3	13.6	18.7

Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group

The combined management report for the GRENKE Consolidated Group (hereinafter also referred to as the "Consolidated Group") and GRENKELEASING AG (hereinafter also referred to as the "Company") for the 2014 fiscal year (effective date: December 31) is presented in a combined section. The Consolidated Group continues to report in accordance with International Financial Reporting Standards (IFRS) as applicable in the European Union, and the Company continues to report in accordance with the German Commercial Code (HGB). Any key statements concerning the general environment, our strategy, and the business performance 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 combined Management Report.

The consolidated financial statements and the Company's annual financial statements for fiscal year 2014 are published jointly in the Federal Gazette (Bundesanzeiger). The 2014 annual financial report is also available online and may be downloaded as a PDF document at www.grenke.de/en/investor-relations/financial-reports.

The Consolidated Group operates internationally. For many years, we have been enhancing the Consolidated Group's growth by means of an internationally successful franchise model. This has enabled us to introduce new financing products and enter new regional markets. The Company does not own interests in the legally independent companies of its franchisees. Accordingly, this management report distinguishes between the Consolidated Group, namely the Company and all of its consolidated subsidiaries and structured entities in accordance with IFRS, and the GRENKE Group, which refers to the GRENKE Consolidated Group including its legally independent franchise partners.

Consolidated Group Principles

Consolidated Group Business Model

Organisational Structure

We are specialised in small- to medium-sized volumes of financing. To offer these volumes profitably, our organisational structure is built as a lean organisation containing a maximum degree of efficiency in our business processes. From its headquarters in Baden-Baden, GRENKELEASING AG, as the parent company, assumes the management role of the GRENKE Consolidated Group, which is represented internationally by its subsidiaries located in numerous countries. In some cases, the subsidiaries have established branch offices in their respective local markets.

Within the context of the franchise model and based on the franchise contract, the Company provides its partners with expertise, an operational infrastructure, numerous services, and permission to use the brand name. In addition, the Company 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 at the signing of the contract and takes market parameters and the company's individual performance into account.

Typically, the Consolidated Group refinances the financing and lease contracts concluded between franchisees and their customers 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 under which the Consolidated Group acts as the direct lessor.

The management of the Company is performed by the Board of Directors consisting of five members and headquartered in Baden-Baden. The Company's Supervisory Board is comprised of six members.

Segments

The Consolidated Group's business segments are aligned with the prevailing organisational structure. The Leasing, Banking, and Factoring segments comprise the Consolidated Group's operating segments that are modelled in line with the Company's management of its divisions.

The Leasing segment continues to represent the Consolidated Group's most important segment and comprises all of the processes connected with its leasing activities. The Factoring segment includes traditional factoring services with a focus on lower amounts of contractual receivables in Germany and Switzerland. The Banking segment incorporates the activities of GRENKE BANK AG, which is positioned as a financial partner for mainly small- and mid-sized companies (SMEs). It also works together with a growing number of development banks of the Federal Government and individual federal states to provide for business start-up financing and development loans. The latter addresses SMEs and self-employed professionals' when they finance business investments through lease financing. Furthermore, GRENKE BANK AG offers straightforward investments to private and business customers via its internet site.

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

Business Processes and Services

We have defined and developed a market with the aim of providing lease financing at economically feasible conditions, even for small IT products that still today are not addressed by the vast majority of leasing providers. We finance primarily IT products such as printers, copiers, and communications products, and software for commercial customers starting at a net purchasing price of EUR 500. This market differentiates itself from the traditional leasing business by having ticket prices that are usually significantly higher. This market is only loosely correlated with economic investment overall and, therefore, is much less affected by economic fluctuations. The mean acquisition value per leasing contract was approximately EUR 8,163 in the reporting year after EUR 8,199 in the previous year. The structure of the financed goods portfolio was virtually unchanged. This was a result of the type and scope of the use of products in the office environments of European mid-sized companies. Since September 2014, in cooperation with the German guarantee banks, we have been offering SMEs the chance to apply for so-called "lease guarantees". These lease guarantees are aimed at giving access to larger leasing investments, especially for young companies. Depending on the case, the banks may guarantee 30 or 60 percent of the financing volume.

In addition, we are rapidly expanding our business in the areas of factoring services, the financing of business start-ups, and the provision of development loans to commercial customers.

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

In our Leasing business, we rely mainly on so-called "sales leasing". Here we use multiple approaches to cover all sales channels in an economically sensible way. Financing contracts made with end customers are mostly concluded through our specialist reseller partners. For this purpose, our own employees located in local sales offices are rapidly building an extensive network of partners in the respective target markets. We also sell our financing products through IT product manufacturers whom we support through key account management. Select business customers are approached directly. Our online activities provide an important and growing distribution channel above and beyond these channels.

This is particularly true for our other financing products. 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 carried out using an IT-supported, automated process. In contrast to our other activities, in this segment we acquire customers directly and actively through mailing and telephone campaigns.

All of the contracts of the GRENKE Consolidated Group's operating business are centrally administered and automatically processed at the Consolidated Group's headquarters in Baden-Baden. Our calculation and measurement of the financing risks and loss rates are done using our IT-based model for forecasting losses that was constructed internally and continuously optimised. This is how we are able to limit the costs of credit checks and 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 speciality. This includes the recent penetration of new international markets such as those of Brazil, Dubai, Canada, and Turkey and our market entry into Chile and Croatia in the reporting year. We are also solidifying our network on a continuous basis through cell divisions throughout the Consolidated Group and acquisitions of franchise companies in existing markets to bring us systematically closer to our customers. During the reporting year, we acquired the leasing franchise company in Luxembourg and the factoring franchise company in Switzerland. In the context of our cell division strategy, we opened three additional locations in France as well as new locations in Amsterdam, Bern, and Saarbrücken. The GRENKE Group is currently present in 29 countries with 108 locations, whereby 26 of those locations are in Germany. In our most important other European countries – France and Italy – we are present with 16 and 11 locations, respectively. In this reporting year, our international business contributed a share of approximately 70 percent to the GRENKE Group's new business; in 2013, it contributed 66 percent.

External Factors Influencing our Business

Key external factors that influence the business of the GRENKE Consolidated Group are mainly industry-specific trends and, to a lesser extent, general macroeconomic conditions. While we have recently shown that we can consistently increase our new business, even in the face of economically challenging times, changes in the business policies of banks that are active in the leasing business or in the regulatory environment may have an impact on the GRENKE Consolidated Group's business. Other external influential factors such as the rate of insolvencies or changes in currencies and interest rates are described in the chapter titled "Macroeconomic and Industry-Specific Conditions" and in the risk report.

Targets and Strategy

As a growth company, our explicit strategic and long-term aim is to become the market leader in financing services to SMEs. In both Germany and Switzerland, we are already the market leader in small-ticket IT leasing and, at a European level, we are one of the primary providers of various financing services for SMEs. Beyond Europe, we have entered several countries in the Middle East and in North and South America over the past several years.

In our international business, we do not necessarily aim at achieving market leadership in every country we operate, but rather concentrate on those markets that will offer the most attractive risk-reward profile, based on the current competitive environment, and press ahead with our growth in these markets. Many competitors reduced their small-ticket IT leasing offers or even exited the market entirely because of the financial and sovereign debt crisis. In addition, providers from the banking industry have been burdened by losses from other business areas and see themselves faced with a significant increase in regulatory requirements. This presents us with attractive opportunities to continue expanding our position as a leading provider of financing services for SMEs over the medium-term (a time horizon of approximately five years). At the same time, the development of maximum process efficiency required for commercially feasible small-ticket IT leasing poses high barriers to re-entry, also for those businesses who want to re-establish themselves after previously withdrawing from the business.

We are continually densifying our network of subsidiaries and branch offices in order to keep the barriers to entry high and improve our proximity to our customers. We are rapidly penetrating new markets through franchisees that have a good understanding of their local markets. Opportunities for growth through takeovers result mainly from the acquisition of the companies of our franchisees several years after they have been established. This is how we ensure our familiarity with the quality of the receivables portfolio and our ability to reliably judge this portfolio when undertaking these acquisitions.

The GRENKE Group's new business growth averaged 16 percent over the past six years and clearly exceeding our longterm target of a minimum of ten percent per year. This performance highlights our ability to profit in times of both economic strength and weakness. During the year under review, we were successful once again at increasing our new business and achieved growth of approximately 14 percent. Additional information on GRENKE Group's new business is discussed on page 35 of this annual report.

In addition to our regional growth, we are continually diversifying our product range and offers for financing solutions even further. This includes, for example, our participation in the "lease guarantee" programmes of German guarantee banks as well as offers of various financing, investment, and payment products from GRENKE BANK AG. In cooperation with a growing number of development banks of individual German states and the federal government, GRENKE Bank also finances business start-ups and provides development funds for business investments that are financed through leasing. Until now, 12,924 leasing contracts have been concluded as part of these collaborations.

In various European countries, we also offer the purchase of lower-volume receivables (factoring) as a permanent component of our extensive product range. As part of our factoring business, we offer additional financing alternatives especially for our small- and medium-sized leasing customers. Our competitors can only offer these alternatives to a limited extent for the same reasons given for small-ticket IT leasing. Our long-term goal is to expand this area by gaining market share and at the same time maintain adequate margins.

Strategic diversification in terms of regions, products, and industries limit our risk. The broad diversification of our portfolios across customers and industries and the low average volumes of our contracts are customary for our business. In fiscal year 2014, 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. We avoid cluster risks with our sales partners both in Germany and internationally and operate independently of any one manufacturer with respect to IT products. We shape our factoring business and our banking services in a similar manner. Finally, we rely on the ongoing expansion of our already broad range of refinancing instruments so that we are always able to flexibly take advantage of a variety of options when financing our growth.

Management System

We manage with the aim of gaining further market share wherever we operate. The GRENKE Group strives to achieve minimum annual long-term growth of ten percent in its new business – that is, the total of the acquisition costs of newly purchased lease assets, factoring volume, and business start-up financing.

This growth strategy goes hand in hand with careful attention to a balanced risk-reward profile. This does not mean that we aim to avoid risk entirely, but strive to give these risks proper consideration. We do this using our proven, long-standing and continuously refined IT-based model for forecasting losses at the time of concluding the contract according to our own risk assessments. At the same time, we want to achieve margins that take these risks adequately into account. In our leasing business, we focus on the contribution margin 2 (CM2) in particular. This margin is defined as the sum of the present value of a lease contract's operating income less the cost of risk and specific contract costs.

Our factoring business is also managed with a return-oriented focus. The factoring margin and the number of days covered by the respective transactions serve as performance indicators. Our long-term focus is the factoring volume since an increase in volume usually coincides with winning new customers. Approvals of financing applications are managed according to their risk classification, both in terms of the absolute number of approvals and according to the risk-weighted margin. This also enables us to reach stable profitability, a factor we continue to consider extremely important.

In line with the regulatory requirements, we have defined the equity ratio as the key performance indicator for GRENKE Bank's business.

In addition, our management of the GRENKE Consolidated Group is value-based. Key performance indicators include the net profit and a sustainable high return on equity (ROE) while maintaining a solid equity base. While earnings growth is linked mainly to the new business of previous fiscal years and, as a result, is subject to a certain degree of fluctuation, our targets for after-tax return on equity and the equity ratio have been 16 percent for several years. We consider this level to be a crucial prerequisite for ensuring our good ratings. Our rapid growth in recent years has caused our ROE to be below our 16 percent target. We also use embedded value (based on a net asset value calculation) as a further key performance indicator since expenses incurred as a result of our expansion into new markets, cell divisions, and the opening of new locations in existing markets are not covered directly by income, but usually only after the completion of the start-up phase. Embedded value represents the present value of all remaining outstanding instalments after costs and risk provisions. If the difference in embedded value from the beginning to the end of the fiscal year is positive, then the enterprise value of the Company has increased. Even if the fiscal year's ROE does not change significantly, but the embedded value still increased, this would have a positive effect for the Consolidated Group. It is the combination of ROE and embedded value that makes our management approach value-based. Thus, we conduct active, growth-oriented value management.

In managing the refinancing of GRENKE Group, we rely on a broad range of instruments that we continuously maintain. In doing so, we not only strive to offer the most attractive refinancing conditions as possible, but also we make sure there are no cluster risks on the liabilities side of the balance sheet. We continuously use all of the instruments in the market so that we can form our own opinion about the current state of the market and react quickly when appropriate.

Research and Development

The Consolidated Group provides financing services and is not involved in basic research and development. The Consolidated Group's core competence is to provide efficient risk processing and lease logistics through the use of centralised and highly standardised IT processes. To do this, we routinely enhance marketable products with individually programmed applications in accordance with our requirements. One example is the development of a core application for managing all operational processes from the customer's application to the disposal of a leased asset that has progressed as planned. The system has been implemented in some areas and is operational. In the reporting year, development costs totalling EUR 2.0 million (previous year: EUR 0.4 million) were capitalised, and the corresponding amortisation amounted to EUR 0.1 million. No amortisation has occurred in the prior year. The capitalisation ratio was 45 percent (previous year: 28 percent).

Report on Business Development

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

As in prior years, the Consolidated Group has performed well in the 2014 fiscal year, and its net profit has grown once again. We even exceeded our original plan and our forecasts. Further expansion in our existing and new regional markets also proceeded according to plan, as did the diversification of our financing service offers. This resulted in the expansion of our network of locations and a strengthening of our market position. Our factoring business with its sustainable and positive performance has since become an established growth driver for the Consolidated Group.

Given our experience, our capital resources, and our profitability we believe we are optimally positioned to continue successfully to manage the risks associated with our business and to identify and seize the opportunities in our markets. We continue to be in a position to take advantage of the refinancing options offered on the capital markets and make full use of our deposit business as needed. Our refinancing risks are limited thanks to our continued good rating.

At the time of the completion of this combined management report, the Consolidated Group was in an excellent position to continue with its international expansion, gain new business, and further increase its profits.

Macroeconomic and Industry-Specific Environment

The GRENKE Group's growth potential is determined much more by general sector trends, such as the business policies of banks in the leasing business and higher regulatory requirements in the sector, than by macroeconomic developments; for example, general economic developments affect equipment purchases and insolvencies. However, for the smaller IT products we finance, macroeconomic effects are of much less importance and the impact of insolvencies can be absorbed effectively. This is demonstrated by the development of our loss rate across economic cycles.

Capital market and central bank interest rates have an effect on GRENKE Group's refinancing costs. Nevertheless, we have the option of using a variety of instruments from our broad range of refinancing instruments in a flexible manner dependent upon the expected market situation and interest rate development. This includes the option of obtaining bank deposits from the GRENKE Bank. GRENKE Bank provides the GRENKE Group access not only to institutional investors, but also to private investors, which effectively diversifies its investor base. This broad mix of products and investors gave GRENKE sufficient access to refinancing funds at all times in fiscal year 2014, which could be obtained at attractive conditions.

Business Performance

The development of the GRENKE Consolidated Group in tune with our long-term strategy and the effective implementation of this strategy in the context of our operational controls were fully achieved in fiscal year 2014. The entire reporting period was characterised by high growth. The Consolidated Group's net profit grew 38 percent to EUR 65.0 million.

The internationalisation of both the GRENKE Group and the GRENKE Consolidated Group progressed swiftly in fiscal year 2014. Today, we generate approximately 70 percent of the GRENKE Group's business internationally. We are well on track particularly in our key markets of France, the United Kingdom, and Italy, and we also see strong growth in the Spanish market. We were not surprised by the somewhat subdued performance in Germany. Germany, by international comparison, is very advanced and, therefore, intensely competitive. Despite this, we have consistently pushed ahead with our market penetration during the reporting year. In sync with our long-term strategy, the performance of the dynamic international business more than offsets our performance in Germany.

We also achieved attractive margins, which carried on the trend of high margins from previous years. Given our consistent risk management using risk-adequate margins, the contribution margin-2 margin of GRENKE Group Leasing improved to 19.3 percent after 19.0 percent in the previous year. This secures the future earnings growth of the GRENKE Group and the GRENKE Consolidated Group. During the reporting year, we have laid the foundation for sustainable new business growth and have forged ahead with our regional expansion and our diversification of financing services.

Our earnings benefited from the high-margin new leasing business in recent years and the equally strong growth of our factoring products. In addition, low interest rates reduced our refinancing expenses and expenses for the settlement of claims and risk provision developed at a slower pace. The latter two positions clearly demonstrate the success of our longproven and constantly refined IT-based model for forecasting losses. Selling and administrative expenses in the reporting year also rose less than revenues in the absence of the start-up costs reported in the past.

As in previous years, refinancing in fiscal 2014 ran smoothly. GRENKE enjoys a stable and good rating and has a first-class standing in the capital market. The bonds issued in the reporting period having a total volume of EUR 340.0 million were extremely well received by the market and all follow-up financing went smoothly. We were able to win over new refinancing partners again in 2014. The successful management of GRENKE BANK AG's deposit business was demand-driven.

In fiscal year 2014, we acquired the leasing franchise company in Luxembourg and the factoring franchise company in Switzerland. We also densified our penetration of the German and Swiss markets further by opening new locations in Saarbrücken and Bern and also prepared for additional cell divisions in several countries and for our market entry into Chile and Croatia. A total net cash outflow of EUR 5.8 million occurred in the reporting year for the acquisition of subsidiaries. Further information on these acquisitions may be found in the sub-chapter "Financial Situation of the Consolidated Group".

Since May 2003, Standard & Poor's has awarded us a long-term Issuer Credit Rating of "BBB+" and a short-term rating of "A-2". These good ratings contribute significantly to our standing in the capital markets. In its recent analysis on October 9, 2014, Standard & Poor's confirmed our counterparty credit rating of BBB+/A-2 each with a negative outlook (outlook unchanged since December 2012). Thus, the Company continues to enjoy a stable investment grade rating. The Gesellschaft für Bonitätsbeurteilung mbH ("GBB"), who published their first analysis of the GRENKE Consolidated Group on October 1, 2014, came to a similar conclusion. The "A–" rating with a stable outlook was justified by GRENKE's compelling track record, lean processes, its high degree of standardisation and automation, and its excellent corporate management. The favourable GBB rating is of particular importance in terms of the further development of our banking activities.

Comparison of Actual with Forecasted Operating Development

The targets formulated for the 2014 fiscal year were exceeded significantly in some areas. We clarified our original expectation of a net profit between EUR 52 and 56 million after the first half of the year in more detail to an expectation of approximately EUR 56 million. Our overall excellent performance in the first nine months was followed by our raising our earnings forecast to a range of EUR 62 to 64 million in the wake of the publication of the third quarter interim financial report. We even exceeded this higher forecast by reaching a net profit of EUR 65.0 million in the reporting year. New business volume rose 14 percent and was within our target range of 13 to 16 percent. At 16.9 percent, the equity ratio reached our targeted level as per the reporting date and was noticeably above our long-term target rate of a minimum of 16 percent.

Financial Situation

Results of Operations

Selected Information from the Consolidated Income Statement

	Jan. 1, 2014	Jan. 1, 2013
EURk	to Dec. 31, 2014	to Dec. 31, 2013
Net interest income	157,528	130,466
Settlement of claims and risk provision	53,748	49,794
Net interest income after settlement of claims and risk provision	103,780	80,672
Profit from insurance business	42,078	35,837
Profit from new business	45,461	43,932
Gains from disposals	1,607	710
Income from operating business	192,926	161,151
Staff costs	55,028	51,756
of which total remuneration	45,038	42,748
of which fixed remuneration	34,267	31,772
of which variable remuneration	10,771	10,976
Selling and administrative expenses (not including staff costs)	44,381	38,543
of which IT project costs	2,420	977
Earnings before taxes	86,909	64,258
Net profit	65,040	47,012
Earnings per share (basic/diluted, in EUR)	4.41	3.23

In fiscal year 2014, we managed successfully to continue the profitable growth generated in recent years and even increase it further. In the reporting year, the GRENKE Consolidated Group achieved a net profit of EUR 65.0 million amounting to a strong 38 percent increase (previous year: plus eleven percent). A major contribution was made by the high-margin new business we have attained in recent years and the income accruing to us as the terms of the leases progress. Additionally, the solid results of former franchise companies acquired during the 2013 fiscal year were included on a full-year basis for the first time. Even acquisitions carried out in the reporting year made a contribution, albeit a small one, to the Consolidated Group's earnings. More information on the scope of consolidation is presented in the notes to the consolidated financial statements on page 87.

Further increases in interest and similar income from financing business as well as declining expenses from interest on refinancing as a result of persistent low interest rates, allowed net interest income to rise by a pleasing 21 percent. After an eight percent increase in expenses for the settlement of claims and risk provision, net interest income after settlement of claims and risk provision grew by a substantial 29 percent. As a result of the active and risk-oriented management of our new business margin, the rise in losses declined for the second consecutive year (2012: 26 percent; 2013: 15 percent). The loss rate fell by 0.2 percentage points to 1.5 percent.

While the profit from insurance business grew a strong 17 percent compared to the previous year, the profit from new business reported a moderate increase of three percent due to a lower amount of capitalised costs. The somewhat volatile gains from disposals more than doubled compared to the previous year. In total, income from operating business grew 20 percent.

Following the further increase in the headcount and the consolidation effects of the reporting year, the number of employees rose seven percent compared to the previous year. Accordingly, total remuneration, i.e. the sum of fixed and variable remuneration, increased five percent.

Depreciation and amortisation as well as impairments developed as expected and increased by a third in the reporting year but still remained at a low level in absolute terms. In addition, we recorded a 15 percent increase in selling and administrative expenses, which can be attributed to a significant increase in IT project costs (+148 percent) for the development and optimisation of our systems, and higher spending on marketing and sales, mainly from our entry into new countries. Nevertheless, the related consulting and audit fees during the reporting period decreased slightly. While other operating expenses over the previous year declined 16 percent, other operating income grew by 17 percent. In total, this resulted in a 35 percent increase in the operating result.

After interest paid and received, earnings before taxes also rose 35 percent in comparison to the previous year. Based on the average number of shares outstanding, earnings per share amounted to EUR 4.41 after EUR 3.23 for the previous year.

Segment Development

Business Segments

The reporting on segment development is aligned with the prevailing organisational structure within the GRENKE Consolidated Group. Accordingly, the operating segments are divided into Leasing, Banking, and Factoring based on the management of the Company's segments. More detailed information on the business segments can be found in the Consolidated Group's segment report on page 156 of this annual report.

Selected Information on the Business Segments

	Segments
	Leasing		Banking		Factoring
EURk	2014	2013	2014	2013	2014	2013
New business (Leasing) / Receivables volume (Factoring)	1,132,777	1,002,250	--	--	208,777	179,372
Contribution margin 2 (CM2)	218,424	190,181	--	--	--	--
CM2 margin (in percent)	19.3	19.0	--	--	--	--
Deposit volume	--	--	300,358	255,637	--	--
Operating segment income	177,245	147,096	13,006	12,510	2,675	1,545
Staff costs	52,092	49,407	1,525	1,344	1,411	1,005
Segment result	77,236	55,535	9,792	9,165	444	3

Business Performance

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

Our segments developed very favourably in the reporting year. Operating segment income in the leasing business grew 20 percent. Since expenses grew below average, this resulted in a strong increase in the segment result of 39 percent. We also achieved high growth rates in our Factoring segment. Operating segment income soared 73 percent and the segment result – which broke even in the prior year – made a positive contribution to the Consolidated Group's earnings. We are also pleased with the development of our banking activities. Operating segment income improved four percent compared to the previous year, and the segment result rose seven percent despite an above-average increase in expenses.

From a regional standpoint, we experienced a small four percent increase in operating income in Germany compared to the previous year. In France, which continues to be our most important international market, we achieved very dynamic growth of 18 percent and in Italy, our fastest growing market in recent years, growth stood at 40 percent. The operating income in the countries combined under "Others" advanced by 30 percent.

GRENKE Group's New Business

By achieving new business growth of 14 percent in fiscal year 2014, we were again able to build on previous years' success and were fully in line with our forecast range of 13 percent to 16 percent. The volume of new business overall, which is the sum of the acquisition costs of newly purchased lease assets, factoring volume, and business start-up financing, amounted to EUR 1,352.9 million compared to EUR 1,188.2 million in the previous year. The driver of this continued high growth was again our international markets, where we have expanded our new business in the reporting year by 21 percent. We achieved high growth rates particularly in our largest international and now second home market of France (+23 percent), and in our key markets of Italy (+26 percent) and the United Kingdom (+ 23 percent). The relatively modest development of our still very competitive home market Germany (plus one percent) was more than compensated for by our geographic diversification. The overall international share of business for the GRENKE Group during the reporting year amounted to 70 percent after totalling 66 percent last year.

New business at GRENKE Group Leasing increased by 13 percent during the year. While we recorded a slight decline of three percent in Germany, new business in Western Europe (excluding Germany) climbed by 22 percent and grew 20 percent in Southern Europe. In Northern/Eastern Europe, new business increased by 18 percent. We continue to apply the appropriate attention to risks in the other regions, which include the still relatively recent additions of Brazil, Chile, Dubai, Canada, and Turkey. Accordingly, the Group's new business growth in these countries equalled a negative eleven percent after a negative 20 percent last year. The number of lease applications increased in the reporting year to 318,809 after 296,800 in the previous year. Of those, 256,910 (previous year: 234,423) were lease applications originating from our international markets. The conversion rate (conversion of lease applications into contracts) was 44 percent compared to 41 percent last year.

The CM2 of the new business of GRENKE Group Leasing grew 15 percent from EUR 190.2 million in the previous year to EUR 218.4 million. At 19.3 percent, the CM2 margin remained at a high level and exceeded its level of 19.0 percent in the prior year.

Our factoring offers were successful again and we were able to expand the volume of new business by 16 percent in the reporting year. In absolute terms, the new business from our factoring activities grew to EUR 208.8 million compared to EUR 179.4 million in the previous year and made an important contribution to the new business of the GRENKE Group. In contrast to the GRENKE Group Leasing, our factoring business in Germany was able to record comparatively high growth rates (plus eight percent). The income margin on our factoring volume was 2.0 percent after 2.3 percent the previous year. This margin is based on the average period for a factoring transaction of around 34 days after about 36 days in the previous year.

Our banking business also performed well: the two existing collaborations with development banks were able to raise the volume of business start-up financing – not least because of the high attractiveness of these offers – by 72 percent to EUR 11.3 million compared to EUR 6.6 million in the previous year. Deposits at GRENKE Bank increased by 18 percent to EUR 300.4 million as per the reporting date as part of our refinancing strategy.

Previous year: Germany 33.7%; Western Europe (without Germany) 32.6%; Southern Europe 18.6%; Northern / Eastern Europe 13.9%; Other regions 1.2%

Growth rates in new business of GRENKE Group Leasing as per December 31, 2014 (as against the comparable period of 2013)
	30%
	20%			22.1			19.6		18.1
	10%
	0%
	–10%	–3.1
	–20%										–11.1
		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: Croatia, 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, Chile, Dubai, Turkey

Previous year: Germany +11.3%; Western Europe (without Germany) +13.7%; Southern Europe +13.0%; Northern / Eastern Europe +9.8%; Other regions –20.1%

Financial Position

Selected Information from the Consolidated Statement of Cash Flows

EURk	Dec. 31, 2014	Dec. 31, 2013
Cash flow from operating activities	3,558	–3,905
Net cash flow from operating activities	–9,257	–25,829
Cash flow from investing activities	–11,260	–22,307
Cash flow from financing activities	–11,188	41,225
Total cash flow	–31,705	–6,911

In the reporting year, the cash inflows from refinancing amounted to EUR 205.0 million compared to EUR 145.3 million in the previous year. Refinancing through the deposit business of GRENKE BANK AG amounted to EUR 44.7 million compared to EUR 46.3 million in the previous year. Due to higher deferred lease payments, the cash outflow from other assets/liabilities was EUR 29.7 million in the reporting year after a cash inflow of EUR 3.1 million in the prior year. Thus, cash flow from operating activities for the year under review totalled EUR 3.6 million (previous year: EUR –3.9 million). Net cash flow from operating activities after taxes and interest paid/received came to EUR –9.3 million after EUR –25.8 million in the previous year.

Cash flow from investing activities totalled EUR –11.3 million after EUR –22.3 million in the previous year. It includes payments for the customary yearly purchases of operating and office equipment and intangible assets, as well as payments for the acquisition of subsidiaries of EUR 5.8 million after EUR 15.9 million in the previous year.

Cash flow from financing activities, which in 2013 was largely impacted by proceeds from the capital increase of EUR 53.7 million, reached a volume of EUR –11.2 million in the reporting year after EUR 41.2 million in the previous year and included the dividend payment of EUR 10.6 million (previous year: EUR 11.8 million). Total cash flow for fiscal year 2014 amounted to EUR –31.7 million after EUR –6.9 million in the prior year.

Net Assets

Selected Information from the Consolidated Statement of Financial Position

EURk	Dec. 31, 2014	Dec. 31, 2013
Current assets	1,179,250	1,096,395
of which cash and cash equivalents	88,395	109,770
of which lease receivables	876,781	775,167
Non-current assets	1,745,700	1,523,051
of which lease receivables	1,579,317	1,374,702
Total assets	2,924,950	2,619,446
Current liabilities	849,974	872,907
of which financial liabilities	779,319	771,593
Non-current liabilities	1,581,990	1,307,119
of which financial liabilities	1,531,880	1,261,370
Equity	492,986	439,420
Equity ratio in percent	16.9	16.8
Total liabilities and equity	2,924,950	2,619,446

The strong growth of our new business resulted in a 14 percent rise in our lease receivables as per December 31, 2014. As the largest single item on the asset side of the balance sheet, lease receivables accounted for an 84 percent share of the total assets after 82 percent in the previous year. Accordingly, total assets of the GRENKE Consolidated Group climbed twelve percent to EUR 2,925.0 million.

Due to outstanding lease instalments, among others, the Consolidated Group's cash and cash equivalents came to EUR 88.4 million as per the reporting date. Although this was below the level of EUR 109.8 million reported at the end of the previous fiscal year, they remained at a high level overall. The total of current and non-current financial and other assets increased ten percent in the context of our business expansion.

On the liabilities side of the balance sheet, liabilities from refinancing increased 13 percent in the course of expanding our new business, and the liabilities of the deposit business of GRENKE Bank rose by 17 percent (total of current and noncurrent). We successfully took advantage of the option to refinance through bank deposits in the reporting year. Our strong earnings growth and the widespread acceptance of our first Scrip Dividend, an instrument that is still relatively unknown in Germany, helped strengthen our equity base: the Consolidated Group's equity increased by twelve percent to EUR 493.0 million as per the reporting date. Thus, our equity ratio of 16.9 percent once again exceeded our long-term target of a minimum of 16 percent.

To finance our lease receivables, we continue to rely on a wide range of refinancing sources that we continually evaluate and expand. This includes both debt and equity-like instruments. Of the five existing asset-backed commercial paper programmes (ABCP) in the first quarter of the reporting year, one programme for financing German and Austrian lease receivables with a volume of EUR 40 million was completed. In the same quarter, a new programme to replace this programme was initiated with a volume of EUR 100 million. The total volume of the ABCP programmes as per the end of the reporting year was EUR 593.3 million, of which 69 percent had been utilised (previous year: 63 percent). As per the reporting date, EUR 30.0 million and CHF 4.5 million, compared to EUR 25.0 million in the previous year, of the five existing revolving credit facilities with a volume of EUR 125.0 million had been utilised. In addition, seven new bonds with a total volume of EUR 340.0 million were issued in fiscal year 2014, and four bonds with a nominal value of EUR 225.7 million were repaid on schedule. Of the existing promissory note loans (PNL), nine were repaid on schedule in the year under review, all of which were replaced, and two PNLs denominated in Swiss francs with a volume of CHF 14.8 million were added.

Of the EUR 45.0 million of available money market facilities at various institutes, an amount of EUR 25.0 million and CHF 3.5 million had been utilised as per the reporting date (previous year: EUR 10.0 million and CHF 2.0 million). Of the EUR 250.0 million commercial paper (CP) programme, an amount of EUR 26.0 million had been utilised as per the balance sheet date.

The open lines of credit (i.e., credit lines plus the available volume of bonds and ABCP programmes) amounted to EUR 571.4 million as per the reporting date (previous year: EUR 960.4 million).

In the area of development loans, we have continued to work successfully with the development banks during the reporting year. New partnerships were not added. The total volume of global loans, which we use to refinance the development loans provided, amounted to EUR 90.0 million as per the reporting date after EUR 70.0 million at the end of the previous fiscal year. Of this amount, EUR 41.1 million was utilised (previous year: EUR 29.6 million).

In order to respond flexibly to changes in the refinancing markets, the instruments used for these purposes are staggered according to their maturity. The following table shows the expected cash outflows resulting from contractual obligations as per December 31, 2014:

		Payments falling due
		1 - 3	4 months	1 – 5	after
EURk	total	months	to 1 year	years	5 years
Financial liabilities	2,194,656	273,717	411,345	1,502,795	6,799
ABS/ABCP/ABS bond related liabilities	484,150	57,320	152,590	273,644	596
Bonds, debentures, private placements
(denominated in EUR)	1,462,159	184,810	187,624	1,087,124	2,601
Bonds, debentures, private placements
(not denominated in EUR)	21,926	8,422	1,316	12,188	0
Sales of receivables agreements
(denominated in EUR)	20,380	2,827	8,119	9,434	0
Sales of receivables agreements
(not denominated in EUR)	145,960	17,929	46,880	81,151	0
Payments related to bank liabilities	60,081	2,409	14,816	39,254	3,602
Leases and rentals	28,356	2,862	7,930	15,189	2,375
Purchase obligations *	359,834	359,834	0	0	0
Obligations from onerous contracts **	4,583	937	2,569	1,077	0
Total contractual commitments	2,587,429	637,350	421,844	1,519,061	9,174

* 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

During fiscal year 2015, in the ordinary course of business, interest and principal payments on debt will be due in addition to the customary purchase obligations. Major sub-items are the liabilities from the ABS/ABCP programmes and ABS bonds as well as EUR-denominated bonds, debentures, and private placements. Of the EUR 685.1 million of financial liabilities that are repayable in 2015, an amount of EUR 209.9 million relates to ABS/ABCP programmes and ABS bonds and EUR 372.4 million relates to EUR-denominated bonds, debentures, and private placements. Details of the maturities of the individual instruments are shown in the notes to the consolidated financial statements.

Financial and Non-Financial Performance Indicators

The financial performance indicators used in the Consolidated Group and their development in fiscal year 2014 are discussed in the section titled "Management System". Above and beyond the financial and organisational management of the Consolidated Group, our success is also due in large part to our non-financial activities. These activities primarily include the following areas:

Commitment to Corporate Responsibility

Integrity is the key to sustainable success. We conduct business based on the GRENKE Code of Conduct, which is binding for all. This Code goes above and beyond the statutory and regulatory requirements in our markets and commits us to conducting our activities within an ethical framework. This is how we ensure that our Company's fundamental values are maintained and practiced amid all of the diversity characterising our international organisation and across national borders.

The response from our employees, suppliers, lessees, and other business partners, and 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. As part of the so-called "external recipient satisfaction", the suggestions and criticism of our financing recipients and specialist reseller partners are also continually evaluated. This is how we ensure that the feedback from our business partners is recorded as part of a structured process so that we may consider this feedback when expanding our range of products and services.

Contemporary Human Resource Management

GRENKE is committed to customer service. Through their talents, capabilities, and commitment, our employees play a very central role in establishing the Consolidated Group's image in our target markets. Contemporary human resource management is one of our concerns and an obligation enabling us to 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 retain them by offering attractive employment conditions and a future with a globally operating service group. This also helps us to confront the growing competition for qualified personnel in the course of demographic change.

Above and beyond the 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 are to work alongside and treat one another within the Company has been summarised in a handbook. This handbook clearly defines the responsibilities of our employees to the Company as well as the responsibilities of the Consolidated Group to its employees. We emphasise mutual appreciation, fairness, and respect. We support personal responsibility and equal opportunity, encourage the individual strengths of our employees, and take their wishes in terms of shaping their work environment and working hours into account wherever possible. The reconciliation of family life and career are also given consideration. Through qualified training and qualification programmes, we place our employees in a position to meet the demands placed on 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 874 employees in the reporting year (previous year: 819). In addition to hiring new staff to achieve our growth targets and to take advantage of other opportunities for expansion, employee numbers also increased because of the first-time consolidation of newly acquired companies. There was an average of 399 people employed in Germany (previous year: 378 people) and 475 people employed at our international locations (previous year: 441). The seven percent increase in the number of employees in the reporting year was noticeablybelow the increase seen in our new business.

The average fluctuation rate for the Consolidated Group gladly continued to a lower level and was 5.2 percent after 5.7 percent in the previous year. As in the previous years, the level of fluctuation at the management level and among senior executives was substantially lower.

Targeted training and qualification programmes offer our employees additional personal and professional opportunities. The GRENKE Academy offers employees attractive training options across all locations. In addition, regular evaluation processes and the use of modern e-learning programmes not only ensure that our high demands for quality are met, but also assure the transfer of knowledge within the GRENKE Group. Our training offers have been well received: 85 percent of the GRENKE Consolidated Group's employees have taken part in a variety of training on offer during the reporting year.

We also provide a wide range of vocational training and dual-study courses. In fiscal year 2014, we had a total of 35 young trainees. We also regularly support new apprenticeships such as those in the area of dialogue marketing, where we currently have one trainee. In the area of specialist IT, we are now training two employees in the field of systems integration and two other employees in the field of application development. One employee is completing his training as information assistant while three young colleagues are currently completing their training as office administration assistants.

Additionally, five students are now enrolled in the tri-national International Business Management degree programme that is a work/study programme 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 by our subsidiaries in Switzerland and France. We have collaborated 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 that leads to a Bachelor of Science degree in Business Information Systems. Currently, two students are enrolled in this programme.

We have collaborated with the Cooperative University of Karlsruhe since 2007 and currently have one student enrolled in the Business Information Systems programme. In addition to Business Information Systems, we also offer an Applied Computer Science programme in cooperation with the DHWB Karlsruhe.

We have also been cooperating in Accounting & Controlling studies with DHBW Mannheim since 2007 and currently have four students enrolled in the programme. We expanded this cooperation in October 2011 and now offer International Business as a dual course of study. Four students are currently enrolled.

Knowledge of the Markets and Individuality of the Product Range

The GRENKE Group is active worldwide in a number of countries, some of which have extremely varied cultures, structures, and requirements. We operate in our international markets using 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.

When penetrating a new market, our first step is a detailed examination of local market 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 product range is continually optimised on the basis of a close exchange between the local sales team and the Consolidated Group's head office in Germany. The local unit's contribution margin requirements are fine-tuned in a continuous and standardised procedure that is mostly processed online.

International Customer Base

We have established our broad international customer base over decades. The number of current contracts in the GRENKE Group's Leasing segment amounted to 427,212 as per the end of the reporting year (2013: 369,591 contracts). In addition, we have further increased our customer base over the past several years by offering a wider range of financing and investment products. This systematically expanded the basis from which we could generate recurring business. We also take advantage of the variety of cross-selling opportunities that are continually presenting themselves as a result of our expanding product range.

Our broad and established customer base represents a key competitive advantage. The low average volumes of our individual contracts represent 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 address new regional markets quickly and efficiently and thereby expand our growth potential with little dependence on local market developments.

Business Excellence in all Corporate Divisions

We differentiate ourselves effectively from the competition by the outstanding quality and safety of our processes. Thus, an essential aspect of our corporate philosophy is the continual improvement of our quality management. This allows us to guarantee a high level of service quality and satisfaction among our customers and business partners. Our quality management system was certified 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 proprietary IT-based model for forecasting losses was introduced in 1994 and has been continually enhanced ever since. By combining information from publicly available databases and our own criteria – which are 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 section titled "Report on Risks, Opportunities, and Forecasts".

Reputation in 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. As a result, we have created a further significant competitive advantage. This is particularly relevant since regulatory requirements have risen following the recent financial and sovereign debt crisis and are expected to continue rising.

Finally, we place a high value on our strong reputation in the stock market. We strategically pursue this aim independently of our respective capital requirements. Our focus is on the communication of our sustainable and attractive equity story. Therefore, our image 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.

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 combined management report.

Events Subsequent to the End of the Fiscal 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

The GRENKE Group has operated a continuously expanding and dense network throughout Europe in the area of smallticket leasing for many years. We have recently expanded our business activities to include non-European countries by the opening a franchise company in Brazil. Outside of Europe, GRENKE is also present in Chile, Dubai, and Canada. We continue to work on our strategic aim of establishing the GRENKE brand and our successful business model on a global basis. We have been able to employ our proven franchise model, which is also used in the area of factoring, outside of Europe, in particular. Next to Germany and Switzerland, we also offer these solutions together with our partners in the United Kingdom and Hungary.

Opportunities also arise in markets where we have already successfully established ourselves. Therefore, in the medium term, we will profit from an expansion in our market share particularly in the markets we have already penetrated. We will also take advantage of opportunities where there is a significant improvement in the risk situation of SMEs due to the withdrawal of competitors and the limitation of their offers, or in the course of a macroeconomic recovery, which would then lead to the possibility of high-margin growth.

This will not lead to additional substantial selling expenses since, in most of these countries, we already have many more financing applications than we can accommodate. Therefore, there is considerable business potential in raising the conversion rates alone. However, we will only do this under the terms of our risk-adequate margin policy: anything less is not an option.

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 continue to increase our new business in the future and strengthen our market position. However, a major impact on the earnings of the GRENKE Consolidated Group in excess of our current expectations should not be expected; 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 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 its supervision and Consolidated Group-wide compliance. Risk control has also been implemented on a Consolidated Group-wide basis in order to meet regulatory requirements. This includes the assessment and evaluation of risks and the independent monitoring, control, and communication of risks. Additionally, the Risk Task Force (AK Risk) represents an important committee for risk management. This committee comprises the Chairman of the Board of Directors, the Chief Financial Officers, and representatives from all relevant divisions to ensure a comprehensive flow of information.

The risk strategy sets out the framework for the strategy and risk policy framework for the risk management of the 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 clearly defined requirements aims at creating a high standard of quality, a high-level integration, and the 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 risk;
• a reduction in market price risks to the minimum level necessary for the operating business;
• the measurement and management of risk through the use of technology (IT-based model for forecasting losses and early warning system).

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

Due to the broad diversification of our business, we are not exposed to significant individual risks. Therefore, a concentration of risk can be effectively avoided. This is also true since we only engage in relatively small acquisition values in our core business of small-ticket leasing. Accordingly, there are no cluster risks in this area: no individual lessee within the GRENKE Consolidated Group accounts for a total exposure of more than one percent of the Consolidated Group's equity. Significant commitments, in particular, are carefully monitored. We act accordingly with our sales partners and manage our factoring business and our banking services in the same manner.

A sophisticated risk management system that was established internally at an early stage and continually expanded, controls the sum of all risk. Risks are measured as accurately as possible and assumed under reasonable terms. We not only pay attention to individual risks, but also to possible risk clusters and overarching interdependencies, in particular.

Our leasing business model is not exposed to residual value risk since our leasing portfolio generally consists only of full payout leases. 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 input parameters.

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. This process helps us to recognise, disclose, evaluate, and document internal and external risks and opportunities within the Consolidated Group in a systematic and structured manner. This places employees and the Board of Directors in a position to address risks responsibly within the risk policy guidelines and make the most of the opportunities that present themselves. The risk management process is developed on an on-going basis and, among others, includes a risk management tool as part of drawing up an inventory of risks that is administered in the intranet of the 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 part 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 handling the contractual relationships with our lessees and franchise partners. For the renewed certification of our quality management for the reporting year, please see the separate section on page 60.

Furthermore, our procedures for assessing credit risks associated with lease contracts and lending and factoring agreements represent another integral part of our risk management system.

The risk management tool facilitates the carrying out of employee risk surveys that require employees to reassess both existing as well as potential risks for a certain point in time. The results of this survey are subsequently discussed and analysed by the Risk Task Force. When new or known risks are categorised as relevant, counteractive measures are determined to manage the risks. The Risk Task Force meets at least once a year. It deals in particular with the risk survey, ad hoc risk reports, and other 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 and liquidity risks, and operational risks. These Risk Task Force sub-groups report directly to the Risk Task Force.

The appraisal of all relevant and significant risks (a risk inventory) is performed once annually as part of risk controlling. In particular, this involves an analysis of the risks identified in the risk survey by the Risk Task Force and the Risk Controlling Department in cooperation with the risk owners. If required, the risks identified are adjusted. If changes or new risks arise, the Risk Task Force immediately submits proposals to the Board of Directors so that these can be taken into account in the business and risk strategy.

In addition to the annual risk inventory, the risk survey, and ad hoc risk reporting, we also consider risk management to include the use of comprehensive instruments for handling risks, particularly in the areas of financial and risk controlling. Against the backdrop of the past financial market risks, these include the use of monthly calculations of risk positions and the regular presentation and discussion of market price risks and of the liquidity position with the Board of Directors.

The Risk Controlling Department prepares a comprehensive risk report on a quarterly basis that describes the current risk situation. The internal risk-bearing capacity model included in this report is the essential basis for the Consolidated Groupwide management and monitoring of our total risk profile and the economic capitalisation. This model includes all risks identified as material (market price risk, credit risk, operational risk, liquidity risk, and strategic risk). The defined areas and types of risks are to be limited and covered by risk coverage in the context of risk-bearing capacity considerations.

The 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 the handling of insider information and compliance with the 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 Consolidated Group, as well as through the use of monitoring and research instruments. The special officers report directly to the relevant member of the Board of Directors. 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 Department and independently monitored, managed, and communicated.

Implementation of Regulatory Requirements

The GRENKE Consolidated Group is obliged to comply with the Minimum Requirements for Risk Management (MaRisk) published by the Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin). These conditions 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 has fully implemented the appropriate management and controlling processes required by the current MaRisk in the version dated December 14, 2012.

GRENKELEASING AG, headquartered in Baden-Baden, is the primary institution of GRENKE BANK AG, Baden-Baden. According to Section 10 a of the German Banking Act (KWG), the GRENKE Consolidated Group is a banking group and thus a CRR institute because it owns a credit institution, GRENKE BANK AG. Both the GRENKE Consolidated Group and GRENKE BANK AG are subject, inter alia, to the regulatory provisions of the KWG, the Capital Requirement Regulation (CRR I), and the Capital Requirements Directive (CRD IV). In addition to the GRENKE Consolidated Group 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.

During the reporting year, the latter two institutions have continued to make use of to the waiver according to Section 2 a (1) KWG in the valid version of December 31, 2013, which still exists as amended by Section 2 a (1) KWG in conjunction with Section 2 a (5) KWG. This allows subordinate institutions to notify BaFin and the Bundesbank that certain regulatory provisions have been applied at a Group level rather than 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 for recognising 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 structured entities, are included in the regulatory scope of consolidated companies.

Risk-Bearing Capacity

		Credit Risk	Potential losses that may result from the default or deterioration in the creditworthiness of borrowers or debtors
		Market Price Risk	Potential losses that may result from uncertainty about the future development (level and volatility) of market risk factors (e.g. interest rates, foreign exchange rates, and stock prices)
		Liquidity Risk	Potential losses that may arise from a lack in liquid funds or are more expensive to attain than expected to meet payment obligations when they become due
Risk-bearing Capacity		Operational Risk	Potential losses that may result from inadequate or failed internal processes, errors performed by people or systems, or from externally driven events
		Business Risk	Risk of loss arising from the Company's general business operations
	Strategic Risk	Reputation Risk	Risk of loss from the possible damage to the Company's reputation or brand (damage to image)
		Other Risks	Includes residual value risk, sales risk, inventory risk

The internal model of risk-bearing capacity contains a period-based assessment of risk-bearing capacity that serves the continued existence of the Company and thus focuses on a going concern view. The fundamental objective of the riskbearing model 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), the process of risk limitation, and the quantified risk capital requirements (risk), integrated in the Consolidated Group's corporate strategy, planning, and management processes are defined as the risk-bearing capacity system. Risk coverage is the maximum amount of financial resources available to cover risk – primarily equity. The following stress test scenarios are calculated across all risk areas as part of the quarterly determination of risk-bearing capacity.

• EU currency crisis after sovereign default: This scenario assumes a partial collapse of the euro area after a sovereign default, for example, in Greece, Portugal or Spain. It assumes, among other things, that the exposure to these states will need to be written-off on a large scale, leading to an increase in risk premiums in the money and capital markets and to further rating downgrades for corporations, banks and governments. The subsequent related loss of confidence would then lead to a massive devaluation of the euro.
• Severe economic downturn: This scenario assumes a severe economic downturn and stagnation in the years that follow, caused, for example, by the sudden default of a state. It is assumed that stock prices plummet due to the uncertainty in the financial markets, the risk premiums in the money and capital markets increase, rating downgrades are performed, exports and investments in Germany cease accompanied by a marked increase in unemployment. There tends to be a higher incidence of fraud resulting from acts of rage and desperation.
• Price decline in the IT sector: A worldwide shift in the IT industry leads to a decline in demand for IT products. This results in a price drop that, in turn, causes a decline in new business and lower earnings for the Company.
• Loss of investment grade status: Due to stricter regulatory requirements, the equity requirements increase. Prolonged pressure on the country ratings of the growth markets leads to a deterioration in the equity structure of the GRENKE Consolidated Group. This may result in a downgrade in the Consolidated Group's rating and increase funding costs accordingly.

In addition, a reverse stress test analysis takes place annually as per the reporting date. It is based on the assumption that business will become unviable. From this assumption, it is tested in reverse to see at which stress scenario level the business failure occurs. This is the case if the aggregate risk cover is no longer sufficient to cover the risks involved.

The calculation of risk-bearing capacity and the integrated stress tests of the Consolidated Group conform to the requirements set out in AT 4.1 and AT 4.3.3 MaRisk. The regulatory requirements relating to the integration of a forwardlooking capital planning process according to AT 4.1 Article 9 MaRisk were also complied with.

Counterparty Default Risk

Risk Definition

Counterparty default risk is defined as the potential loss that may result from the default or deterioration in the creditworthiness of borrowers or debtors. The aim is to achieve an adequate risk premium for the given amount of risk so that risks can be borne. Within the GRENKE Consolidated Group, counterparty default risks are considered material risks. They occur in the on-balance and off-balance customer and proprietary businesses, whereby the on-balance leasing business is dominant.

Credit Volume – GRENKE Consolidated Statement of Financial Position

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

EURk	Dec. 31, 2014	Dec. 31, 2013
Current receivables
Cash and cash equivalents	88,395	109,770
Lease receivables	876,781	775,167
Financial instruments with positive fair value	768	2,123
Other current financial assets	59,816	68,946
Trade receivables	4,793	4,395
Total current receivables	1,030,553	960,401
Non-current receivables
Lease receivables	1,579,317	1,374,702
Other non-current financial assets	30,714	18,882
Financial instruments with positive fair value	341	590
Total non-current receivables	1,610,372	1,394,174
Total receivables volume	2,640,925	2,354,575

As per December 31, 2014, cash and cash equivalents included Bundesbank balances amounting to EUR 32,513k (previous year: 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 11k; previous year: EUR 7k). Financial instruments with positive fair value represent the derivatives of the Consolidated Group carried at their fair value as per the reporting date.

Leasing Business

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 domestic business and to the international markets where we operate.

Our business is concentrated mainly in Germany, France, and Italy. The related risks are manageable given the good to very good S&P ratings for Germany (AAA) and France (AA), and the average rating for Italy (BBB-). The diversification we have already achieved across several other countries also reduces concentration risk.

An annual review of counterparty default risk 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 factor the average loss rate of the previous recession into our CM2 management. Accordingly, the calculated cost of risk for the new business portfolio in 2014 remained at the previous year's level of an average of six percent. The Consolidated Group is managed so that it could continue to cover its operating costs should the loss rate significantly exceed this level.

Loss rates are measured continuously throughout the Consolidated Group. This is done by bringing into relation the level of new business, acquisition costs, and the initial financing volume of the contracts that have become impaired over a defined period of time. The long-term analysis of these relationships serves as an early signal of expected defaults and 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 that 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.

All lessees are classified in terms of their credit creditworthiness in classes ranging from 1 to 6. This is based on the German system of school marks whereby risk class "1" represents the best and risk class "6" represents the worst possible classification.

The average risk class of the portfolio of lease contracts is 1.83 (GRENKE Consolidated Group, on the basis of all existing contracts as per the reporting date December 31, 2014) after 1.83 in the previous year.

Throughout the Consolidated Group, we employ a portfolio approach when contracting lease agreements. Differentiation occurs according to the following criteria:

• 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: a large number of current contracts with a portfolio duration of less than two years and a focus on small-tickets below EUR 25k each (95 percent of all leases)
• Sales channels: represented in virtually all sales channels
• Geographic presence: the GRENKE Consolidated Group is represented in all major European economies with locations in 20 countries (in the GRENKE Group: 29)

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.

Adequate allowances are recognised for receivables from terminated lease contracts and those in arrears. The amount of the necessary allowances is generally determined on the basis of percentages and processing categories of the lease contracts. Percentages are calculated using statistical methods. As per the reporting date, the amount of allowances totalled EUR 121.6 million (previous year: EUR 111.1 million). In comparison to the previous year, expenses for risk provision for the leasing business increased by EUR 4.4 million to EUR 50.5 million.

Lending Business

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

Purchased lease receivables account by far for the greatest portion of GRENKE BANK AG's loan portfolio. They represent a broadly diversified portfolio with small-scale receivables to small- and medium-sized companies from the European Economic Area that the Bank has acquired exclusively from companies of the Consolidated Group. Thus, the counterparty risks for this type of business are correspondingly low. Credit risk is taken into account by appropriately regulating the margin based on the Consolidated Group's long-standing, proven method for forecasting losses. In some cases, additional security is also provided by guarantee agreements. The purchased lease receivables are measured based on the decision value method for determining the expected loss to GRENKELEASING AG.

In cooperation with German guarantee banks, we have been offering SMEs the opportunity to apply for a so-called "lease guarantees" since September 2014. Depending on the individual case, the banks provide a guarantee for 30 or 60 percent of the financing volume.

GRENKE BANK AG's orientation as a provider of financing to small- and medium-sized companies led to its collaboration with development banks in as early as 2010. The particular aim of these collaborations was to provide 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 respective 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. In the field of small-scale business start-up financing, we introduced our own version of this product (GRENKE starter loan) in the second half of 2014. It is based on the conditions of the development loans but does not include indemnification by development banks.

The legacy portfolio, which mainly includes the 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 EUR 0.9 million (previous year: EUR 1.5 million).

In the context of risk provisions, allowances are recognised according to the level of creditworthiness or the processing class. In addition, a measurement of the securities to be pledged at their probable realisation value is carried out in individual cases.

The expenses for risk provisions for the traditional lending business of GRENKE BANK AG remained at the previous year's level of EUR 3.2 million.

Factoring Business

The factoring business is also focused on the small-ticket segment. Our factoring entities located in Germany and Switzerland mainly offer so-called "notification factoring". The advantage for the Company and for the factoring customers is that the invoice recipient (debtor) is notified of the assignment of existing receivables, which provides an opportunity to address the recipient directly in the event of default. This leads to relief for the factoring customers and also provides transparency with regard to the monitoring of the outstanding receivables. Under certain conditions, we also offer nonnotification factoring contracts. As opposed to notification factoring, the debtor is not notified of their outstanding receivables being assigned to the factoring company.

Adequate allowances are recognised for factoring receivables in arrears based on percentages and processing categories of customer receivables. Percentages are calculated using statistical methods and based on historical experience. As per the reporting date, the amount of allowances in the factoring business totalled EUR 0.8 million (previous year: EUR 0.7 million).Expenses for risk provision for the factoring business decreased by EUR 0.6 million to less than EUR 0.1 million (previous year: EUR 0.6 million).

Acquisition is carried out as part of mailing and telephone campaigns. The main criteria for selection include creditworthiness, average annual revenues, industry affiliation, and the accounts receivables master of the factoring clients. The ongoing monitoring of factoring customers allows for risk-adjusted pricing. Under the loan decision, a credit check of the accounts receivable of the factoring clients on the basis of data from external credit reporting agencies is performed, which is evaluated by GRENKELEASING AG's credit support centre. For the most part, contracts with domestic debtors are processed since the verifiability of foreign debtors is associated with significant risks. An ongoing review and evaluation of the customer is made within the contract period on the basis of payment history. With only a few exceptions, the factoring company is exposed to counterparty default risk solely with respect to the debtor.

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. Factoring is also offered as part of the franchise models in the United Kingdom and Hungary. The leases contracted by the franchise companies are predominantly refinanced by the Consolidated Group. In some cases, franchisees conclude leases under a commission model so that the Consolidated Group can act as a direct lessor. The basis for this is provided by the refinancing framework agreement concluded between the respective franchisee and the Consolidated Group. If refinancing is offered, it is supplied in the form of either loans or forfeiting. Future related lease instalments are generally discounted at the refinancing rate. In addition, GRENKELEASING AG acts as guarantor for individual franchise companies.

Market Price Risk

Risk Definition

Market price risk is defined as potential losses that may result from uncertainty about the future development (amount and volatility) of market risk factors. Such market risk factors mainly relate to interest rates and currency rates. Market price risks at the GRENKE Consolidated Group are considered significant. The aim is to engage in market risk only in conjunction with operative customer business and reduce them to an appropriate minimum.

Price fluctuations in the financial markets can have a significant effect on the Consolidated Group's cash flow and net profit. Changes in interest rate markets and in certain currencies are of particular importance. We actively manage these risks as part of our continuous risk management and monitoring of interest rate and currency positions.

In addition to risk-prone, market-sensitive positions, such as floating-rate notes or receivables in currencies other than the euro, we also 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 striving to ensure the lowest possible correlation between net profit and interest rate and currency market developments while maintaining a proper 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 major 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 impact on the consolidated income statement can differ significantly from this as a result of the actual developments.

The main market price risks and the outstanding interest rate and currency risk positions are discussed at least once every month on the basis of on-going analyses with the responsible member of the Board of Directors in the task force subgroup. The Consolidated Group is not exposed to the risk of changes in share prices or raw material prices since it does not hold positions in any listed shares, raw materials, or their derivatives.

Derivatives for Hedging Purposes

The 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 sole instruments employed. Each derivative contract relates to an underlying economic transaction with a corresponding opposing risk position. Contract partners are only those 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 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 economic success is decisive in identifying open risk positions that then results in an economically feasible hedge using derivative instruments. This means that, overall, we aim to achieve a net interest income that has a low sensitivity to interest rates.

The potential impact on equity and net profit (each before income taxes) of a change in interest rates of 100 basis points (bps) as per the reporting date is shown in the table below. With regard to the impact on net profit, the lowering of the interest rate level is limited to "zero" interest rates. It is assumed that all other influencing factors, particularly the exchange rates, remain unchanged.

	Net profit before income taxes		Equity before income taxes
		100 bps (up to 0.0%
EURk	+100 bps	interest rate level)	+100 bps	–100 bps
December 31, 2014
Variable-rate instruments	–2,680	479	--	--
Fair value measurement of interest rate
swaps	--	--	341	–391
December 31, 2013
Variable-rate instruments	–1,763	533	--	--
Fair value measurement of interest rate
swaps	--	--	1,158	–1,147

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 gain maximum flexibility for our refinancing activities. The risks that could possibly result (variable cash flows) are hedged using appropriate interest rate derivatives. As all designated hedging transactions have been proven almost 100 percent effective, the changes in fair value of interest rate derivatives as hedging transactions, in relation to their clean value (excluding accrued interest), were recognised directly in equity.

Under the ABCP programmes with Helaba (Opusalpha Purchaser II), DZ-Bank (CORAL), Hypovereinsbank/UniCredit Bank AG (Elektra), and HSBC France (Regency), GRENKELEASING AG or the respective structured entity is responsible for interest rate hedging and hence interest rate risk management. The ABCP transaction serves as the 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.

The parameters of the underlying transaction that result from the financing (liability) are always the first consideration when contracting interest rate swaps. Accordingly, the interest rate terms of the swaps on the variable side are largely identical to those of the 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.

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 respective current yield curves, exchange rates, and all derivative positions are included in the calculations. The results are regularly analysed at the level of the Board of Directors.

Currency Risk

The Consolidated Group is exposed to currency risks as a result of its broad international activities. Derivatives are used to mitigate or eliminate these risks. These derivatives are accounted for as financial assets or financial liabilities at their fair value as per the reporting date.

Currency risk currently exists in the context of financing provided to Consolidated Group companies or franchisees operating outside of the eurozone. These risks are generally hedged once the amount of the outstanding financing volume reaches an amount of around EUR 1,000k. As in the previous year, this amount was exceeded in Poland, Denmark, Dubai (United Arab Emirates), the United Kingdom, Sweden, Switzerland, the Czech Republic, Turkey, and Hungary. Although this threshold had not yet been exceeded in Canada, some first hedges were still applied. This means that the exchange rate is known and firmly contracted for the majority of the financing provided in Canadian dollar, 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, Chile, 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, 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.

Foreign Currency Sensitivity Analysis

In the opinion of the management, the Consolidated Group is mainly exposed to foreign exchange risk with regard to the British pound (GBP), Hungarian forint (HUF), and the Turkish lira (TRY). Last year, this list also included the Polish zloty (PLN) and the Swiss franc (CHF).

The impact on net profit before income taxes results from the changes in the fair value of monetary assets and liabilities, including those not designated as a hedging transaction of foreign currency derivatives and from actual cash flows, which were recognised in whole or in part in profit or loss in the reporting period and were converted during consolidation into euros under the condition that all other influencing factors, in particular interest rates, remain unchanged. A direct impact on equity does not occur since foreign currency derivatives are not recognised for as hedging transactions. The influence of projected sales and purchase transactions are disregarded.

The following table shows the Consolidated Group's sensitivity to a 10 percent appreciation or depreciation in the euro against the respective other currencies as per December 31 and during the reporting period and their impact on the net profit before income taxes.

	2014		2013
EURk	Appreciation	Depreciation	Appreciation	Depreciation
GBP	–658	655	–226	226
HUF	–319	338	--	--
TRY	–311	270	--	--
CHF	--	--	–145	144
PLN	--	--	–10	10

Liquidity Risk

With regard to liquidity risks, please refer to the overview of the expected cash outflows from contractual obligations in the section titled "Net assets" on page 39 of this annual report.

Risk Definition

Liquidity risk is defined 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. Liquidity risks within the Group are appraised as significant but are well controlled because of adequate management measures by the existing systems and methods.

Liquidity Management

The solvency of the Company is ensured at all times through the adequate provision of liquidity lines. The ability to meet its financial obligations is covered by cash holdings, committed credit lines, and long-established money market and capital market programmes. Emissions under existing money and capital market programmes are carried out exclusively on liquid markets and in liquid currencies. Financing conditions have been agreeable during the reporting year. Liquidity management is based on the three pillars of money and capital market programmes, sales of receivables, and financing via GRENKE Bank. Thanks to this diversified refinancing structure, we were able to raise sufficient liquidity for the Consolidated Group and the global business at all times. A downgrade in the Company's rating by Standard and Poor's or GBB could affect our external refinancing. Market liquidity risk plays only a minor role since no realisable assets are held.

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 the first working day of the 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 Consolidated Group. It focuses on cash flows from the leasing business. Wages and taxes are also taken into account.

Reporting differentiates between three liquidity levels:

• Liquidity 1: cash in all accounts plus overdrafts at banks and all "immediate" (time horizon of approximately one week) cash flows;
• Liquidity 2: Liquidity 1 plus cash flows due or to be received within one month. This also includes assets that are currently committed but can be monetised within this time horizon without significant losses in value;
• Liquidity 3: Liquidity 2 plus cash flows due or received within more than one month. This also includes assets that are currently committed and require a period of more than one month to be monetised without significant losses in value.

EURk	Dec. 31, 2014	Dec. 31, 2013
Liquidity 1 (cash liquidity)	140,195	158,793
Liquidity 2 (up to 4 weeks)	350,743	300,248
Liquidity 3 (more than 4 weeks)	429,813	340,164

The main sources of refinancing to ensure the Company's short-term ability to meet its financial obligations are cash holdings, EUR and CHF money market lines, EUR and CHF revolving credit facilities, and overdraft facilities. Some of these short-term lines of refinancing are firm commitments and subject to only small market fluctuation in relation to the EONIA and EURIBOR/LIBOR reference interest rates. In addition, the refinancing agreements in place do not provide for ordinary early termination rights and have firm commitments and maturities of at least one year. To bridge short-term liquidity constraints, we have contractually agreed revolving credit facilities available for EUR 125.0 million with a variety of banks.

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. The condensed presentation is done on a quarterly basis for the next five 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.

A total of EUR 259.0 million is to be redeemed in the current 2015 fiscal year in the form of bonds and promissory note loans. The refinancing of these debentures could be subject to refinancing risk on their due date. However, we expect this refinancing risk to be limited for fiscal year 2015 given the variety of refinancing instruments, sufficient control measures, and our favourable experience in the capital markets. The duration of the assets and liabilities is calculated on a monthly basis to provide a relevant benchmark for managing the maturities of the new refinancing and of the liquidity structure. As per December 31, 2014, the assets had a duration of 19 months (previous year: 20 months), and the liabilities had a duration of 24 months (previous year: 23 months). Based on this data, the maturity transformation risk can be minimised using suitable measures.

We refinance ourselves independently of any single bank and also have direct access to a variety of refinancing alternatives available on 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 as to their availability within the agreed framework.

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 access to conventional bank financing, which has a similar asset-based structure, for Brazil, Chile, Germany, the United Kingdom, Poland, and Switzerland.

However, we also use refinancing instruments that are not asset-based and are, therefore, 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) which has a maximum volume of EUR 250.0 million and can be issued with terms ranging from 1 to 364 days. This CP platform provides us with refinancing alternatives with terms of less than one year while DIP bonds offer terms starting at one year. We also use the financing opportunities available to us via GRENKE BANK AG's deposit business. GRENKE BANK AG offers investment products to both private and commercial customers.

These broadly diversified instruments allow us to use the most attractive financing channels available from a variety of alternatives depending on the capital market sentiment at the given time. Due to the unresolved sovereign debt crisis, financial markets remained subject to high risks in the year under review. This is expected to continue in the foreseeable future particularly as a result of the historically low level of long-term interest rates, especially in Germany, and the significantly higher level of interest rate risk. Nevertheless, central banks worldwide continue to supply the markets with extensive liquidity. Europe is expected to maintain this monetary policy in the years to come while the US is showing signs of a change in monetary policy in light of the robust performance of its economy.

Together with the deterioration in the credit quality of many sovereign debtors this has led investors to search for alternative investments. As a result, there is a very high availability of refinancing funds available for companies such as GRENKE, who possess a good rating and a strong reputation in the capital market. During the reporting year, we promptly took advantage of this market situation once again to meet our current refinancing requirements in full and at attractive conditions to cover a portion of the capital requirements necessary for our future growth.

Operational Risk

Risk Definition

Operational risks are defined as potential losses that can result from inadequate or failed internal processes, errors performed by people or systems, or from externally driven events (e.g., system failure, fraud, legal and tax proceedings). Reputational risks are not included in this category. Operational risks at GRENKE Consolidated Group are considered significant. The risks are quantified on the basis of the risk survey evaluations in the context of risk-bearing capacity.

Risk Survey

Surveys on operational risks are conducted at least once per year using the Consolidated Group's intranet-based risk management tool. These surveys ask employees from all divisions about the risks affecting their divisions. The overall results in the general legal and tax areas, 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. A new assessment of the risk inventory within the risk tool was conducted in the course of the reporting year. The most significant operational net risks indicated in the 2014 survey were as follows:

• external communication with the capital market
• inadequate/incorrect management of investments
• unattainable follow-up business
• dependency on resellers

The probability of occurrence of the risk of external communication with the capital markets was evaluated as "possible". The potential loss was rated as "serious", implying an amount ranging from EUR 500k to EUR 4,999k. This risk includes possible negative effects from communication with analysts and shareholders. Risks that lead to the insufficient control of foreign subsidiaries due to growing internationalisation were also given the probability of occurrence of "possible" and the potential loss was judged to be "serious". The chance that proceeds from disposals cannot be realised due to a possible miscalculation of the lease contract was given the probability of occurrence "possible". The evaluation of the potential loss was judged to be "medium", i.e., in the order of EUR 150k to EUR 499k. The threat of higher cluster risks that may arise from dependence on individual resellers was given a "possible" probability of occurrence and the potential loss was rated "medium". The assessments with regard to the amounts of the potential losses were unchanged compared to the previous year.

The most relevant risk areas are analysed in detail in the Risk Task Force and any feedback on the possible countermeasures is gathered from the areas directly affected. A net volume of losses of EUR 3.5 million was determined during the fiscal year with regard to operational risks. Most of the loss will be classified in the category of external fraud. When individual amounts of losses cannot be accurately determined, the values are then estimated. Some values can only be specified after a considerable time lag.

Certification of Quality Management

In 1998, TÜV SÜD Management Service GmbH certified GRENKELEASING AG in accordance 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), 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. Luxemburg (GCLUX Location SàRL), GRENKEFACTORING AG (Switzerland), GC Leasing d.o.o. (Slovenia), and the franchise companies GC Locação de Equipamentos LTDA Brasil and GC Renting Ofis Donanimlari Kiralama Limited Sirketi Türkiye were also 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 24, 2014, 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 many by 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 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 are 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 the Accounting Process of the Consolidated Group

The internal control and risk management system (ICS) constitutes all principles, procedures, and measures introduced in the Company by its management that are geared towards the organisational implementation of management decisions:

• ensuring the effectiveness and efficiency of business activities, including the protection of assets and the prevention and coverage of losses to assets;
• ensuring the correctness and reliability of internal and external accounting;
• ensuring compliance with the legal provisions relevant to the Company.

The Board of Directors bears overall responsibility for the accounting process of the Company and the Consolidated Group. All of the companies included in the annual financial statements and in the consolidated financial statements are also incorporated into a clearly defined management and reporting organisation. This Consolidated Group's accounting and consolidation are organised centrally. The posting of each country's transactions is centrally recorded and processed by the responsible administrators in accordance with mandatory schedules for the generation of qualitative and quantitative information. The four-eyes principle is applied. The principles, structure, and process organisation, as well as the accounting methods used by the ICS, are documented in a manual that is developed further at regular intervals.

The electronic accounting systems and the necessary IT infrastructure used for the Consolidated Group's accounting process are regularly reviewed for the necessary safety requirements by the Internal Audit Department. The same applies to the further development of the systems and processes of the Consolidated Group's accounting process and ensuring their effectiveness, especially in terms of new products, issues, and changes in the legal regulations. Here we also use external consultants if necessary. To guarantee the quality of the Consolidated Group's accounting, the employees involved are regularly trained when required.

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 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 the Company's accounting process. Therefore, the risk management system established for the accounting processes of the Company and the Consolidated Group guarantees the preparation of accurate and reliable information for the public.

Risk Reporting Concerning the Use of Financial Instruments

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

Information regarding Equity

As per the end of the reporting year, the total equity pursuant to Section 25ff CRR amounted to EUR 310 million (previous year: EUR 277 million). Supplementary capital and Tier 3 capital are not in place. Thus, total equity pursuant to CRR consists solely of Tier 1 capital. Tier 3 capital is no longer applied following the introduction of Basel III.

Composition of Core Capital before Adoption

EURk	Dec. 31, 2014	Dec. 31, 2013
Share capital	18,859	18,790
Capital reserves	116,491	112,757
Paid-in capital	135,350	131,547
Other eligible reserves	245,332	214,302
Deductions from the core capital	–79,032	–68,617
Transitional provisions pursuant to Section 478 CCR	8,083
Total Tier 1 capital pursuant to Section 26 CRR	309,734	277,2321
Total additional core capital pursuant to Section 51 CRR	--	--
Total supplementary capital pursuant to Section 62 CRR	--	-- 2
Total Tier 3 capital	--	-- 3
Total equity pursuant to Section 25ff CRR	309,734	277,2324

Relevant Risk Positions

EURk	Dec. 31, 2014	Dec. 31, 2013
Equity requirements for risk exposure to public authorities	--	--
Equity requirements for risk exposure to regional/local authorities	--5	--
Equity requirements for risk exposure to institutions/corporations with short-term rating	1,310	1,2806
Equity requirements for risk exposure to corporations	90,986	38,9757
Equity requirements for risk exposure from retail business	56,566	95,7608
Equity requirements for risk exposure from other positions	4,463	21,2009
Equity requirements for risk exposure from non-performing positions	8,249	8710
Total equity requirements for credit risk	161,573	157,302
Total equity requirements for market risk	15,490	1,601
Total equity requirements for operational risk	27,622	23,600
Total equity requirements for credit valuation adjustments	183	--11
Total equity requirements	204,868	182,503

¹ Total core capital pursuant to Section 10 (2a) KWG in the version of December 31, 2013

² Total supplementary capital pursuant to Section 10 (2b) KWG in the version of December 31, 2013

³ Total Tier 3 capital pursuant to Section 10 (2c) KWG in the version of December 31, 2013; information is no longer provided under CRR

⁴ Total modified available equity pursuant to Section 10 (1d) KWG in the version of December 31, 2013

⁵ Exposure class public authorities pursuant to SolvV

⁶ Exposure class institutions pursuant to SolvV

⁷ Exposure class corporations pursuant to SolvV

⁸ Exposure class retail business pursuant to SolvV

⁹ Exposure class other positions pursuant to SolvV

¹⁰ Exposure class non-performing positions pursuant to SolvV

¹¹ No disclosure in 2013 since the risk position was to be measured for the first time under CRR (Section 381)

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 banking group as defined by Section 10 a KWG, the Consolidated Group must regularly comply with the provisions of the Capital Requirement Regulation (CRR) at the Consolidated Group level. Pursuant to the provisions of Section 92 CRR I in conjunction with Section 10 a 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.

Summary Overview

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 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 consolidated financial statements were recognised at an appropriate level using objective indications. Risk-bearing capacity in the reporting year was ensured in its entirety for all scenarios. No individual lessee within the GRENKE Consolidated Group accounts for a total exposure of more than one percent of the Consolidated Group equity.

In the course of the year, the Consolidated Group's overall ratio has been consistently above ten percent. As per the reporting date, the Consolidated Group's overall ratio amounted to 12.09 percent (previous year: 12.11 percent) and thus significantly exceeded the capital requirements for the group of institutions, offering sufficient room for their planned development.

With respect to the future development of the Consolidated Group, the Company, 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 light of the risks and opportunities previously presented, we assume the following developments in our forecasts for the current 2015 fiscal year (the forecast period of precisely one year):

The scope of consolidation is also likely to change in 2015 due to acquisitions of franchise partners. Significant deviations are not to be expected.

Our expectations of a further increase in net profit for the current fiscal year are mainly based on the further rise in interest income resulting from the strong momentum seen in the leasing new business over the past few years. The current highmargin new business, GRENKE Bank's deposit business, and the rapidly growing factoring business will all make a contribution. In fiscal year 2015, we expect net profit in the range of EUR 71 to 75 million.

With regard to the growth in our new business volume, we are optimistic given our competitive strength and our excellent market position. We expect new business growth in our leasing business (GRENKE Group Leasing) to be in the range of 11 to 15 percent and range between 20 and 24 percent in the factoring business (GRENKE Group Factoring). Overall, we are confident that we can easily refinance our new business at attractive rates through our access to the capital market through a variety of instruments. We are also holding tight to our ambitious CM2 goal that is based on the margins we have achieved in the past several years.

On the cost side, there is still some potential to reduce selling and administrative expenses: this item has risen sharply in the past, particular because of consultancy, audit, and selling costs (excluding commissions). Both positions were affected by our entry into new countries, for which appropriate preparations had to be taken. Our cost-consciousness will not distract us from our policy of not sacrificing our operations for cost savings. As a growth company, we see a larger benefit from strong new business momentum and the ability to achieve adequate margins. This is clearly a priority in our management of the business, as long as the associated expenses do not stand in the way.

Overall, this development should give us the necessary leeway for maintaining our dividend policy in the current 2015 fiscal year, which gives our shareholders a chance to participate in the Company's success.

The main risks that can lead to deviations from the plans presented are listed below:

• 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 – due to 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 the higher refinancing costs via our conditions, there may be a certain time gap. We estimate the risk of such a development to be rather low.
• Significant changes in the business policies of banks and financial service providers of IT equipment manufacturers in the direction of re-entering the leasing business. This could lead to higher (margin) competition and pricing pressure. The probability of such a development in 2015 is considered to be rather low and would require comparatively long lead times. Moreover, the small-ticket segment should be less affected since it has traditionally high barriers to entry.
• Strong rise in losses: Losses traditionally follow economic development with a certain time lag. Therefore, even assuming of a sharp economic downturn in 2015, this would only lead to a notable increase in losses over time. First, we have capable management in place that can effectively limit the development of losses. Second, although a slowdown in economic growth is to be expected in 2015, a sharp economic downturn is unlikely. Therefore, we also estimate this scenario's probability of occurrence to be very low.

Net Assets and Financial Position

GRENKE Consolidated Group's financial position and net assets are expected to improve further in 2015 due to the strong profitability of the business. Net interest income is set to continue to rise thanks to the high level of new business in recent years and due to GRENKE Bank's actively managed deposit business. Based on the expected increase in profits, we anticipate higher cash flows from operating activities that will fully cover our planned level of investments. The equity ratio is expected to remain at least at the long-term target level of 16 percent.

Overall Statement on the Future Development

In summary, from today's perspective, no negative factors can currently be identified that could significantly and sustainably influence the further development of the GRENKE Consolidated Group. Our sound financial base, our favourable position in the capital markets, and our ability to enforce risk-adequate margins, all form the foundation that will allow us to successfully continue our steady growth path of recent years and proceed on our way to becoming a global enterprise. We will not only consistently enhance our market strength in our traditional core markets, but also establish the GRENKE business model in new markets on a global scale.

Acquisition-Related Information

Share Trading and Shares Held by the Governing Bodies

Detailed information regarding directors' holdings as per December 31, 2014 presented in the notes to the consolidated financial statements in the section titled "Related Party Disclosures". Information on directors' dealings during the reporting year can be found on our homepage www.grenke.de/en under the section Investor Relations/Corporate Governance.

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 defined by Deutsche Börse AG. The Company's fully paid-up share capital amounts to EUR 18,859,255.47 and is divided into 14,754,199 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.

In July 2014, Mr Wolfgang and Mrs Anneliese Grenke, together with their sons Moritz Grenke, Roland Grenke, and Oliver Grenke ("the Grenke family"), have formed a family holding under the name of Grenke Beteiligung GmbH & Co. KG in order to ensure continuity and a stable shareholder structure. On September 17, 2014, the Grenke family contributed all of their shares held in GRENKELEASING AG into this company. The pooling agreement concluded by the members of the Grenke family was cancelled upon the contribution of the shares in Grenke Beteiligung GmbH & Co. KG.

As per December 31, 2014, the family holding Grenke Beteiligung GmbH & Co. KG held 6,291,733 shares in the Company, corresponding to 42.64 percent of the share capital. Grenke Vermögensverwaltung GmbH is the general partner of Grenke Beteiligung GmbH & Co. KG. Wolfgang, Anneliese, Moritz, Roland, and Oliver Grenke are limited partners. Grenke Vermögensverwaltung GmbH does not have an interest in Grenke Beteiligung GmbH & Co. KG's assets and earnings. Mr Wolfgang Grenke and Mrs Anneliese Grenke each have the right to sole representation as Executive Director. Mr Wolfgang Grenke exercises significant influence over Grenke Vermögensverwaltung GmbH and, therefore, indirectly over Grenke Beteiligung GmbH & Co. KG. At the same time, Mr Wolfgang Grenke acts the Chairman of the Board of Directors of GRENKELEASING AG. By decision of September 1, 2014, German Federal Financial Supervisory Authority granted Grenke Beteiligung GmbH & Co. KG and die Grenke Vermögensverwaltung GmbH each from the duties of Section 35 (1) sentence 1 and Section 35 (2) sentence 1 WpÜG according to Section 37 WpÜG (obligation to make a mandatory offer for the shares of GRENKELEASING AG).

The Board of Directors is not aware of any other restrictions agreed on between shareholders that relate to voting rights or the transfer of shares.

The Articles of Association of GRENKELEASING AG do not provide for any regulations that 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 a 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 and 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) since such disclosures could be substantially disadvantageous to the parent company.

Detailed information regarding authorised and contingent capital is presented in the notes the consolidated financial statements in the section titled "4.19 Equity".

Matters Concerning the Board of Directors and the Supervisory Board

During the reporting year, no changes in the composition of the Board of Directors or the Supervisory Board have occurred.

Corporate Governance Statement Pursuant to Section 289 a HGB

As a listed stock corporation, we are required to submit a Corporate Governance Statement pursuant to Section 289 a 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.

GRENKELEASING AG (Comments on HGB Basis)

In addition to the reporting on the GRENKE Consolidated Group, the development of GRENKELEASING AG (the "Company") 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 the Company. In addition to the key events of the fiscal year already described, the Company must also report the start of a tax audit in November 2010 for fiscal years 2005 to 2009. As per the end of the reporting period, this audit was still in progress, and there were no audit findings 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 (the "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 structured entities of GRENKELEASING AG consolidated in accordance with the International Financial Reporting Standards, it forms the GRENKE Consolidated Group.

Overview of Subsidiaries and Branches

The Company has branches in Berlin, Bremen, Cologne, Dortmund, Dresden, Düsseldorf, Erfurt, Freiburg, Frankfurt am Main, Hamburg, Hanover, Kassel, Kiel, Leipzig, Magdeburg, Mannheim, Mönchengladbach, Munich, Neckarsulm, Neu-Ulm, Nuremberg, Potsdam, Rostock, Saarbrücken, and Stuttgart. It 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 of 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; GRENKEFACTORING AG, Basel/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; GRENKELEASING s.r.o., Bratislava/Slovakia; and GRENKELOCATION SARL, Munsbach/Luxembourg. 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, 2014 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	2014	2013
Income from leases	499,655	479,306
Expenses from leases	–367,870	–347,281
Profit from leases	131,785	132,024
Net interest income	563	2,034
Other operating income	21,593	20,687
General and administrative expenses	44,446	39,976
Staff costs	23,981	23,039
Depreciation and impairment	94,375	99,342
Net profit	16,440	10,399
	Dec. 31, 2014	Dec. 31, 2013
Investments in associated companies	191,674	159,914
Leased assets	201,724	208,293
Property, plant, and equipment	20,970	21,775
Other assets	37,211	70,260
Receivables	57,531	60,622
Equity	242,533	236,737
Bank liabilities	1,031	1,744
Payables	38,005	35,404
Accruals and deferrals	218,127	254,989
Total assets	541,463	535,892

Results of Operations

In this past reporting year, GRENKELEASING AG once again acquired leased assets from the KGaA in several tranches. The volume of these transactions was higher than in the previous year. Although income from leases increased correspondingly, due to an above-average rise in expenses from leases the balance of both items amounted to EUR 131.8 million and was slightly below the previous year's level of EUR 132.0 million. With the continued acquisition of leased assets from the KGaA by GRENKELEASING AG, the business volume of the KGaA has declined and has led to a successive decrease in the KGaA's net profit, which is subsequently transferred to GRENKELEASING AG under the existing profit transfer agreement. In contrast, the profits transferred from GRENKE BANK AG to GRENKELEASING AG have increased leading to income from profit transfer agreements of EUR 12.4 million in the reporting year after EUR 12.9 million in the prior year.

Net interest income also declined in the reporting year and amounted to EUR 0.6 million after EUR 2.0 million in the previous year. This was the result of lower interest income from lending and money market transactions and a slight increase in interest expenses. Current income from investments in associated companies contributed EUR 10.0 million. This position related to a distribution of profits from the French subsidiary GRENKE LOCATION SAS in Schiltigheim, France and was not included in the Company's previous year's income statement. Commission expenses were virtually at last year's level and amounted to EUR 5.1 million after EUR 4.9 million.

There was a moderate rise in other operating income to EUR 21.6 million in the reporting year after EUR 20.7 million. General and administrative expenses grew from EUR 40.0 million to EUR 44.4 million particularly due to the targeted expansion of our business. This position primarily consists of staff costs and other administrative expenses. In contrast, depreciation and impairment of intangible assets and property, plant, and equipment declined from EUR 99.3 million to EUR 94.4 million after rising slightly in the previous year. Write-downs and impairments on receivables and certain securities as well as additions to loan loss provisions increased from EUR 9.0 million in the previous year to EUR 12.4 million.

In total, the result from normal business activity amounted to EUR 19.6 million in the reporting year after EUR 14.1 million in the previous year. Net profit climbed to EUR 16.4 million after EUR 10.4 million in the prior year.

Financial Position and Net Assets

GRENKELEASING AG's total assets climbed from EUR 535.9 million as per the previous year's reporting date to EUR 541.5 million as per December 31, 2014. This rise was the result of a considerable increase in receivables from credit institutions as well as from investments in associated companies that was up against a significant decline in other assets. The latter included a receivable in the previous year from GRENKE FINANCE Plc. resulting from the cash pool procedure of the GRENKE Consolidated Group. In the reporting year, this was recorded as a credit balance under other liabilities. Leased assets remained slightly below the level in the prior year.

As one of the larger positions on the equity and liabilities side of the balance sheet, accruals and deferrals declined significantly. The cause of the decrease was the collection of instalments for the month of January of the upcoming year that in the prior year had been credited prematurely in December. The Company's other liabilities, in contrast, expanded. This resulted primarily from the previously mentioned recording of the credit balance due to GRENKEFINANCE Plc resulting from the cash pool procedure that, in turn, resulted in the also previously mentioned collection of instalments in the subsequent year. The Company's equity increased to EUR 242.5 million (previous year: EUR 236.7 million). As per December 31, 2014, the equity ratio improved to 44.8 percent (previous year: 44.2 percent).

Liquidity and Refinancing

The financing of the new leasing business is on sound footing. The Company's direct refinancing partners are the structured entities GOALS FINANCING 2009 LIMITED (GOALS 2009-1) and GRENKE BANK AG. As per the reporting date, the redemption phase was still in progress for the ABS bond placed on February 4, 2010, and for which the last purchase occurred on January 15, 2013. GRENKELEASING AG regularly sells lease receivables to GRENKE BANK AG for its refinancing. The bank deposits of the GRENKE Bank used for this purpose were increased to EUR 314.1 million in the reporting year after EUR 266.7 million in the prior year.

In addition, private placements may be carried out either directly or indirectly via our wholly owned subsidiary GRENKE FINANCE Plc., Dublin, Ireland. In the reporting year, seven new bonds with a total nominal volume of EUR 340.0 million were issued. Four bonds with a volume of EUR 225.7 million were repaid on schedule. We also have the option of utilising five revolving credit facilities with a total volume of EUR 125.0 million and three money market facilities with a total volume of EUR 45.0 million via our subsidiary in Ireland. One of the three money market facilities and one of the revolving credit facilities can also be used for drawing Swiss francs via our Swiss subsidiary.

In addition, there are five ABCP programmes with a total volume of EUR 593.3 million that grant GRENKE FINANCE Plc. and the KGaA the right to refinance or to sell receivables to the respective programmes for a certain period. Furthermore, GRENKELEASING AG and GRENKE FINANCE Plc. have the option to issue commercial paper up to a total volume of EUR 250.0 million with a term of between 1 and 364 days.

Overall Statement on the Company's Business Performance and Financial Situation

At the time of completing the 2014 financial statements and management report, the Company found itself in a very favourable economic position that 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 the new business are partially rented from the KGaA as part of a two-level model. The rent receivables of the KGaA are sold to financial institutions via structured 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 Supervisory Board and the Board of Directors will propose to the Annual General Meeting of the Company on May 12, 2015 a dividend in the amount of EUR 1.10 per share for fiscal year 2014. In the previous year, the Company distributed a dividend of EUR 1.00 per share.

Employees

The number of employees (full-time equivalents) at the Company (excluding the Board of Directors) rose to an average of 345 in the year under review (previous year: 325). The fluctuation rate declined to 4.4 percent after 4.7 percent in the prior 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 Consolidated Group are also largely valid for the Company. However, the German domestic market continues to play a special and more important role for the Company than for the Consolidated Group overall. The Company 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 the Company could be significantly influenced by changes in the legal framework or by refinancing possibilities that could lead to changes in the refinancing decisions of the Board of Directors. Overall, we are optimistic with regard to fiscal year 2015. In Germany, we expect to generate new business growth in the mid-single-digit percent range. For the single entity GRENKELEASING AG, we expect net profit to be at the level of the reporting year – subject to income from investments and profit transfers of subsidiaries. The key factors that will have an influence on the operating development in 2015 will continue to apply in subsequent years. Further information on the development of the Consolidated Group can be found in the section "Report on Forecasts and Outlook" of the combined management report.

Baden-Baden, January 31, 2015

The Board of Directors

Consolidated Financial Statements for Fiscal Year 2014

Consolidated Income Statement

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2014	Dec. 31, 2013
Interest and similar income from financing business	3.1	211,592	188,803
Expenses from interest on refinancing and deposit business	3.1	54,064	58,337
Net interest income		157,528	130,466
Settlement of claims and risk provision	3.2	53,748	49,794
Net interest income after settlement of claims and risk provision		103,780	80,672
Profit from insurance business	3.3	42,078	35,837
Profit from new business	3.4	45,461	43,932
Gains from disposals	3.5	1,607	710
Income from operating business		192,926	161,151
Staff costs	3.6	55,028	51,756
Depreciation and impairment	3.7	6,448	5,444
Selling and administrative expenses (not including staff costs)	3.8	44,381	38,543
Other operating expenses	3.9	3,176	3,763
Other operating income	3.10	3,579	3,058
Operating result		87,472	64,703
Expenses / income from fair value measurement		89	102
Other interest income		264	482
Other interest expenses		916	1,029
Earnings before taxes		86,909	64,258
Income taxes	3.11	21,869	17,246
Net profit		65,040	47,012
Of which, attributable to:
non-controlling interests		–4	0
shareholders of GRENKELEASING AG		65,044	0
Earnings per share (basic) in EUR	3.12	4.41	3.23
Earnings per share (diluted) in EUR	3.12	4.41	3.23
Average number of shares outstanding (basic)	3.12	14,735,489	14,558,052
Average number of shares outstanding (diluted)	3.12	14,735,489	14,558,052

Consolidated Statement of Comprehensive Income

		Jan. 1 to	Jan. 1 to
EURk	Note	Dec. 31, 2014	Dec. 31, 2013
Net profit		65,040	47,012
Items that may be reclassified to profit and loss in future periods
Appropriation to / reduction of hedging reserve (before taxes)	4.19.7	56	409
Income taxes		–6	–21
Appropriation to / reduction of hedging reserve (after taxes)		50	388
Change in currency translation differences (before taxes)		828	–1,097
Income taxes		0	0
Change in currency translation differences (after taxes)		828	–1,097
		878	–709
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	–668	78
Income taxes		186	–22
Appropriation to / reduction of reserve for actuarial gains and losses
(after taxes)		–482	56
		–482	56
Other comprehensive income		396	–653
Total comprehensive income		65,436	46,359
Of which, attributable to:
non-controlling interests		–4	0
shareholders of GRENKELEASING AG		65,440	46,359

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2014	Dec. 31, 2013
Assets
Current assets
Cash and cash equivalents	4.2	88,395	109,770
Financial instruments that are assets	4.1	768	2,123
Lease receivables	4.3	876,781	775,167
Other current financial assets	4.4	59,816	68,946
Trade receivables	4.5	4,793	4,395
Lease assets for sale		8,756	9,418
Tax assets	4.6	10,940	14,176
Other current assets	4.7	129,001	112,400
Total current assets		1,179,250	1,096,395
Non-current assets
Lease receivables	4.3	1,579,317	1,374,702
Financial instruments that are assets	4.1	341	590
Other non-current financial assets	4.4	30,714	18,882
Property, plant, and equipment	4.8	40,411	40,067
Goodwill	4.9	57,351	52,549
Other intangible assets	4.10	14,264	12,917
Deferred tax assets	4.11	21,869	22,493
Other non-current assets		1,433	851
Total non-current assets		1,745,700	1,523,051
Total assets		2,924,950	2,619,446

Consolidated Statement of Financial Position

EURk	Note	Dec. 31, 2014	Dec. 31, 2013
Liabilities and equity
Liabilities
Current liabilities
Financial liabilities	4.12	779,319	771,593
Liability financial instruments	4.13	3,506	2,942
Trade payables		9,821	10,747
Tax liabilities	4.14	7,043	4,110
Deferred liabilities	4.17	10,312	7,688
Current provisions	4.16	1,887	1,821
Other current liabilities	4.15	11,214	8,932
Deferred lease payments		26,872	65,074
Total current liabilities		849,974	872,907
Non-current liabilities
Financial liabilities	4.12	1,531,880	1,261,370
Liability financial instruments	4.13	1,077	768
Deferred tax liabilities	4.11	45,692	42,576
Pensions	4.18	3,281	2,168
Non-current provisions	4.16	60	237
Total non-current liabilities		1,581,990	1,307,119
Equity	4.19
Share capital		18,859	18,790
Capital reserves		116,491	112,757
Retained earnings		355,389	306,022
Other components of equity		2,247	1,851
Total equity attributable to shareholders of GRENKELEASING AG		492,986	439,420
Non-controlling interests		0	0
Total equity		492,986	439,420
Total liabilities and equity		2,924,950	2,619,446

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2014	Dec. 31, 2013
	Earnings before taxes	86,909	64,258
	Non-cash items contained in earnings and reconciliation to cash flow from
	operating activities
+	Depreciation and impairment	6,448	5,444
– / +	Profit / loss from the disposal of property, plant, and equipment and intangible assets	26	–63
– / +	Net income from non-current financial assets	652	547
– / +	Other non-cash effective income / expenses	255	–308
+ / –	Increase / decrease in deferred liabilities, provisions, and pensions	3,297	1,929
–	Additions to lease receivables	–1,169,892	–1,032,845
+	Payments by lessees	910,105	795,521
+	Disposals / reclassifications of lease receivables at residual carrying amounts	166,596	156,037
–	Interest and similar income from leasing business	–208,013	–188,803
+ / –	Decrease / increase in other receivables from lessees	4,417	–3,038
+ / –	Currency translation differences	–9,356	4,164
=	Change in lease receivables	–306,143	–268,964
+	Addition to liabilities from refinancing	911,218	1,467,941
–	Payment of annuities to refinancers	–717,566	–327,520
–	Disposal of liabilities from refinancing	–48,312	–1,053,116
+	Expenses from interest on refinancing and on deposit business	54,064	58,337
+ / –	Currency translation differences	5,586	–343
=	Change in refinancing liabilities	204,990	145,299
+ / –	Increase / decrease in liabilities from deposit business	44,721	46,270
– / +	Increase / decrease in loans to franchisees	–7,898	–1,424
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	7,075	16,733
+ / –	Increase / decrease in deferred lease payments	–38,202	–5,245
+ / –	Increase / decrease in other liabilities	1,428	–8,381
=	Cash flow from operating activities	3,558	–3,905

continued on next page

Consolidated Statement of Cash Flows

		Jan. 1 to	Jan. 1 to
	EURk	Dec. 31, 2014	Dec. 31, 2013
– / +	Income taxes paid / received	–12,163	–21,377
–	Interest paid	–916	–1,029
+	Interest received	264	482
=	Net cash flow from operating activities	–9,257	–25,829
–	Payments for the acquisition of property, plant, and equipment and intangible assets	–5,708	–6,690
– / +	Payments / proceeds from acquisition of subsidiaries	–5,846	–15,930
+	Proceeds from the sale of property, plant, and equipment and intangible assets	294	313
=	Cash flow from investing activities	–11,260	–22,307
+ / –	Borrowing / repayment of bank liabilities	–544	–706
+	Proceeds from cash capital increase	0	53,691
–	Dividend payments	–10,644	–11,760
=	Cash flow from financing activities	–11,188	41,225
	Cash funds at beginning of period
	Cash in hand and bank balances	109,770	116,707
–	Bank liabilities from overdrafts	–432	–637
=	Cash and cash equivalents at beginning of period	109,338	116,070
+ / –	Change due to currency translation	–138	179
=	Cash funds after currency translation	109,200	116,249
	Cash funds at end of period
	Cash in hand and bank balances	88,395	109,770
–	Bank liabilities from overdrafts	–10,900	–432
=	Cash and cash equivalents at end of period	77,495	109,338
	Change in cash and cash equivalents during the period (= total cash flow)	–31,705	–6,911
	Net cash flow from operating activities	–9,257	–25,829
+	Cash flow from investing activities	–11,260	–22,307
+	Cash flow from financing activities	–11,188	41,225
=	Total cash flow	–31,705	–6,911

Consolidated Statement of Changes in Equity

							Total equity
			Retained				attributable to
			earnings /		Reserve for		shareholders	Non
	Share	Capital	Consolidated	Hedging	actuarial	Currency	of GRENKE	controlling	Total
EURk	capital	reserves	net profit	reserve	gains / losses	translation	LEASING AG	interests	equity
Equity as per
Jan. 1, 2014 before
adjustment	18,790	112,757	306,064	–57	–438	2,346	439,462	0	439,420
Effects from retro
active adjustment
pursuant to IFRS 3			–42				–42	0	–42
Equity as per
Jan. 1, 2014
adjusted	18,790	112,757	306,022	–57	–438	2,346	439,420	0	439,420
Total comprehensive
income			65,044	50	–482	828	65,440	–4	65,436
Dividend payment
in 2014 for 2013			–14,700				–14,700		–14,700
Capital increase
(shares issued from
Scrip Dividend)	69	3,734					3,803		3,803
Changes in the scope
of consolidation							0	33	33
Transactions with
shareholders			–977				–977	–29	–1,006
Equity as per
Dec. 31, 2014	18,859	116,491	355,389	–7	–920	3,174	492,986	0	492,986
Equity as per
Jan. 1, 2013	17,491	60,166	270,812	–445	–494	3,443	350,973	0	350,973
Total comprehensive
income			47,012	388	56	–1,097	46,359		46,359
Dividend payment
in 2013 for 2012			–11,760				–11,760		–11,760
Capital increase
(issuance of shares)	1,299	52,591					53,890		53,890
Equity as per
Dec. 31, 2013	18,790	112,757	306,064	–57	–438	2,346	439,462	0	439,462

Notes to the Consolidated Financial Statements for Fiscal Year 2014

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 are engaged in 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 and 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, the listed parent company traded on an organised market as defined by 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 it had done 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, 2014, and as supplemented in accordance with the regulations applicable under German commercial law in accordance with Section 315a HGB.

All International Financial Reporting Standards (IFRSs) – previously referred to as International Accounting Standards (IAS) – applicable to fiscal year 2014 and the interpretations by the International Financial Reporting Interpretations Committee (IFRIC) – formerly the Standing Interpretations Committee (SIC) – were considered in these financial statements.

The consolidated financial statements comprise the financial statements of GRENKELEASING AG and its subsidiaries and consolidated structured entities as per December 31, 2014.

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, 2015.

2.2 Effects of New or Amended IFRSs

2.2.1 Accounting Standards Implemented in 2014

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 has also published amendments to existing standards as part of an annual procedure (Annual Improvements Project; AIP). The primary aim of the collective standard is to eliminate inconsistencies and to clarify formulations. In the reporting year, there were no new or amended standards in the context of the annual improvements project to be applied. Individual amendments within the annual improvements project to IFRS "Improvements to IFRS 2010 – 2012 Cycle" (July 1, 2014) as well as "Improvements to IFRS 2011 – 2013 Cycle" (July 1, 2014) that were made are applicable immediately after their recognition in European law. These amendments to IFRS 13 and IFRS 1 had no effect on the consolidated financial statements. We also refer to Section 2.2.2.

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

• 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)
• IAS 27 "Separate Financial Statements" (January 1, 2014)
• IAS 28 "Investments in Associates and Joint Ventures" (January 1, 2014)
• IAS 32 "Financial Instruments: Presentation" (January 1, 2014)
• IAS 39 "Financial Instruments: Recognition and Measurement" (January 1, 2014)
• IAS 36 "Impairment of Assets"

In May 2011, the IASB released three new standards regulating the recognition of a reporting entity's investments in its consolidated financial statements. IFRS 10 "Consolidated Financial Statements" introduces a uniform consolidation model for all companies based on control and replaces the regulations of IAS 27 "Consolidated and Separate Financial Statements" and SIC-12 "Consolidation – Structured Entities". IFRS 11 "Joint Arrangements" relates to 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.

For GRENKELEASING AG, the retrospective application of the new IFRS 10 did not result in any significant changes to the recognition or measurement of items in its consolidated financial statements. The Company still classifies the consolidation of franchise relationships as non-compulsory. A detailed analysis of the individual ABCP programmes revealed that according to IFRS 10 control was exerted over individual units of accounting (silos) as a result of the existing silo structures. The changed assessment only had a negligible impact because the ABCP programmes have already been accounted for so that any of the financial assets and corresponding liabilities transferred were not shown as disposals. As a result of additional consolidation measures, financial assets and financial liabilities were reduced by EUR 28.7 million each. The previous year's figures were reduced by EUR 18.7 million with retrospective effect. Additional information resulting from IFRS 7 was adjusted retrospectively, if required. Thus, the first-time application of IFRS 10 did not have a material impact on GRENKELEASING AG's consolidated financial statements.

IFRS 11 has no effect on the consolidated financial statements of GRENKELEASING AG since none of the companies of the GRENKE Consolidated Group have investments in joint arrangements.

IFRS 12 "Disclosure of Interests in Other Entities" combines the disclosures on subsidiaries, joint arrangements, associates and consolidated and non-consolidated structured entities into one single standard. Through the application of IFRS 12, GRENKELEASING AG's disclosure information in the consolidated financial statements was expanded and is presented in notes 2.3.15 and 4.12.

Following this 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 IFRSs 10, 11, and 12. Exceptions and simplifications were published regarding restated comparative figures as well as disclosure requirements for comparative information regarding non-consolidated structured entities for the first-time adoption of IFRS 12. These amendments will not have an effect on the consolidated financial statements.

Along 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 the Consolidated Group holds no investments in associates.

The amendments to IAS 32 are especially intended to clarify the existing application problems regarding the existing regulations concerning the offsetting of financial instruments. These amendments have no impact on the consolidated financial statements.

On May 29, 2013, the IASB published amendments to IAS 36 "Recoverable Amount Disclosures for Non-Financial Assets". GRENKELEASING AG has applied these amendments prematurely as per December 31, 2013. With the amendments to IAS 36, the IASB has corrected 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 impairments or reversals of impairments. According to the amendment to IAS 36, the recoverable amount must only be disclosed in the period in which an impairment or a reversal of impairment has occurred. The corresponding disclosures are presented in note 4.9.

The amendments to IAS 39 "Novation of Derivatives and Continuation of Hedge Accounting" 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.

2.2.2 Accounting Standards and Interpretations Already Published but not yet Implemented

In addition to the mandatorily applicable IFRSs mentioned above, the IASB has also published other amended IASs and IFRSs that have already received partial endorsement into European law by the EU, but will only become mandatory at a later date. Voluntary early application of these standards is expressly 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 IFRS 2010 – 2012 Cycle", July 1, 2014), in the context of the Annual Improvements Project to IFRS (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 measurement used for the consolidated financial statements of GRENKELEASING AG since the issues either do not apply to the GRENKE Consolidated Group or have already been interpreted accordingly.

In December 2013, various standards were amended ("Improvements to IFRS 2011 – 2013 Cycle", July 1, 2014), in the context of the Annual Improvements Project to IFRS. 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 measurement used in the consolidated financial statements of GRENKELEASING AG.

In September 2014, various standards were amended ("Improvements to IFRS 2012 – 2014 Cycle", July 1, 2016), in the context of the Annual Improvements Project to IFRS. Early adoption of any individual amendments within the cycle is permitted. This relates to IFRS 5, IFRS 7, IAS 19, and IAS 34. The amended standards have no relevance for the accounting and measurement used in the consolidated financial statements of GRENKELEASING AG.

The changes made to the above-mentioned three cycles of the annual improvements to IFRS are not relevant for the recognition and measurement in the consolidated financial statements of GRENKELEASING AG, because the issues either do not apply to the GRENKE Consolidated Group or have been interpreted that way.

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

• IFRS 9 "Financial Instruments" (January 1, 2018)
• IFRS 14 "Regulatory Deferral Accounts" (January 1, 2016)
• IFRS 15 "Revenue from Contracts with Customers" (January 1, 2017)
• Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" (January 1, 2016)
• Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations" (January 1, 2016)
• Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortisation" (January 1, 2016)
• Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants" (January 1, 2016)
• Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions" (July 1, 2014)
• Amendments to IAS 27 "Equity Method in Separate Financial Statements" (January 1, 2016)
• Amendments to IFRS 10, IFRS 12, and IAS 28 "Investment Entities: Applying the Consolidation Exception" (January 1, 2016)
• IFRIC 21 "Levies" (June 17, 2014)

On July 24, 2014, the IASB published the final version of IFRS 9 "Financial Instruments" in the context of the project to revise the accounting of financial instruments. This standard contains provisions for recognition, measurement, and derecognition as well as for the accounting of hedging relationships. The standard replaces the previous accounting regulations for financial instruments of IAS 39 "Financial Instruments: Recognition and Measurement" and the previously released versions of IFRS 9. The standard refers to the cash flow characteristics and the business model used to manage financial instruments as the basis for categorisation. It also introduces a new impairment model based on expected credit losses. IFRS 9 also contains new provisions for the application of hedge accounting to better reflect the risk management activities of an entity, especially with regard to the control of non-financial risks. The new standard must be applied for fiscal years beginning on or after January 1, 2018; early adoption is permitted. The Company is currently assessing the impact the application of IFRS 9 will have on its consolidated financial statements.

IFRS 14 "Regulatory Deferral Accounts" permits a first-time adopter of IFRS to continue to account, with some limited changes, for regulatory deferral accounts. Since the Consolidated Group is not an IFRS first-time adopter, there is no effect on the accounting of the Consolidated Group.

In May 2014, the IASB published IFRS 15 "Revenue from Contracts with Customers". Under the new standard, the recognition of revenue should depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Revenue is recognised when the customer receives the economic power of the goods or services. IFRS 15 also contains reporting requirements. The new standard also requires the disclosure of a number of quantitative and qualitative items to give the users of the consolidated financial statements an understanding of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. IFRS 15 supersedes IAS 11 "Construction Contracts" and IAS 18 "Revenue" and the related interpretations. The standard is to be applied to fiscal years beginning on or after January 1, 2017; early application is permitted. GRENKELEASING AG is currently assessing the effects of the application of IFRS 15 on the Company's consolidated financial statements.

The amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" are to be applied for the first time in fiscal years beginning on or after January 1, 2016. The amendment clarifies that in the case of transactions with an associate or joint venture, the extent of recognition of gains or losses is dependent on whether the assets sold or contributed constitute a business as defined in IFRS 3. The management does not believe that the amendments to IFRS 10 and IAS 28 will have an effect on the consolidated net profit.

The amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations" include regulations such as how to account for interests in joint operations if these constitute a business as defined in IFRS 3. The amendments are not expected to affect the consolidated financial statements.

The amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortisation" are applicable to fiscal years beginning on or after January 1, 2016. The amendment to IAS 16 clarifies that depreciation methods for property, plant, and equipment based on revenue are not appropriate methods. A refutable presumption was introduced by the amendment to IAS 38 stating that revenues are not an appropriate basis for the amortisation of intangible assets. This amendment does not have an effect on the GRENKELEASING AG consolidated financial statements since the Consolidated Group does not apply revenue-based depreciation and amortisation methods.

The amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants" set out that bearer plants used only to produce agricultural products are to be included in the scope of IAS 16. The amendments will not have an effect on the GRENKELEASING AG consolidated financial statements since the Consolidated Group does not have any bearer plants in stock.

The amendments to IAS 19 "Defined Benefit Plans: Employee Contributions" set out the accounting for employee contributions or contributions from third parties to defined benefit plans. Accounting is based on whether the contributions should be attributed to the years of service. The Company is currently assessing the amendments and, at this point, does not believe that they will have a material effect on the consolidated financial statements.

The amendments to IAS 27 "Equity Method in Separate Financial Statements" have no effect on the Company's consolidated financial statements since the regulations of IAS 27 onto apply to separate financial statements.

On December 18, 2014, the IASB published amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying the Consolidation Exception". This standard clarifies issues with regard to the consolidation exception for investment entities that account for their subsidiaries at fair value. This amendment will not have an effect on the GRENKELEASING AG consolidated financial statements since the Consolidated Group does not hold any interests in investment entities.

IFRIC 21 "Levies" provides guidelines on when to recognise a liability for a levy imposed by governments based on statutory regulations. IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment in accordance with the relevant legislation. Recognition of a liability only occurs when the obligating event occurs. The obligating event can occur progressively over a period of time so that the liability is recognised on a pro rata basis. Since the Consolidated Group is subject to only minor levies as defined by IFRIC 21, GRENKELEASING AG does not believe that IFRIC 21 will have a material impact on the consolidated financial statements.

2.3 General Accounting Policies

2.3.1 Composition of the Consolidated Group

The Consolidated Group consists of 32 consolidated entities (previous year: 30), of which six (previous year: five) are consolidated structured entities. The Consolidated Group holds either directly or indirectly 100% of the interest in 27 (previous year: 25) entities controlled by the Consolidated Five. Five of the consolidated entities (previous year: five) are held by third parties. Three of the structured entities concern parts of investees (silos).

Subsidiaries

Subsidiaries are entities in which the Consolidated Group holds either a direct or indirect interest and over which GRENKELEASING AG exerts controlling influence. An entity is controlled, if the GRENKE Consolidated Group possesses power over the investee, i.e., the GRENKE Consolidated Group is exposed to variable returns from its involvement with the investees, and has the ability to use its power to influence the amount of the returns.

Structured entities are entities in which voting or similar rights are not the dominant factor in determining control, for example, when voting rights only relate to administrative tasks and the relevant activities are governed by contractual agreements.

Control is usually presumed when the Consolidated Group, directly or indirectly, holds 50% (or more) of the voting rights or of a company's subscribed capital and/or can direct the financial and operating policies of an entity so as to obtain benefits from its activities.

Subsidiaries are consolidated from the date control is assumed by the GRENKE Consolidated Group and are no longer consolidated from the date that control ceases.

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 Consolidated Group companies it controls (hereinafter referred to as the "GRENKE Consolidated Group") after eliminating all material intragroup transactions. Uniform accounting policies have been applied consistently throughout the Consolidated Group for preparing consolidated financial statements.

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

Name	Registered office	Equity investment	Equity investment
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/United Kingdom	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%	100%
GRENKELEASING Oy	Vantaa/Finland	100%	100%

Name	Registered office	Equity investment	Equity investment
International
GRENKELOCATION SARL	Munsbach/Luxembourg	100%	--
GRENKEFACTORING AG	Basel/Switzerland	100%	--
FCT "GK"-COMPARTMENT "G2" 3)	Pantin/France	100%	100%
FCT "GK"-COMPARTMENT "G3" 4)	Pantin/France	--	--
Opusalpha Purchaser II Limited 5)	Dublin/Ireland	--	--
Kebnekaise Funding Limited 5)	St. Helier/Jersey	--	--
CORAL PURCHASING Limited 5)	St. Helier/Jersey	--	--
GOALS FINANCING 2009 LIMITED 6)	Dublin/Ireland	--	--

1) GRENKELEASING AG holds a direct interest amounting to EUR 1,749k (of a total of EUR 1,750k) in GRENKE LEASE Sprl in Brussels/Belgium and an indirect interest amounting to EUR 1k through its German subsidiary, GRENKE SERVICE AG.

• 2) GRENKELEASING AG holds an indirect interest of 100% through GRENKE ALQUILER S.A.
• 3) GRENKELEASING AG holds indirect interests 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) Consolidation in 2014; with retrospective effect as per January 1, 2013 due to first-time application of IFRS 10
• 6) 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 structured entity GOALS FINANCING 2009 LIMITED. There are no participating interests.

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 and any translation differences are reported in profit and loss. Non-monetary items are carried at historical currency rates.

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, as well as 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. The 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.

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

	Closing rate on	Average rate	Closing rate on	Average rate
	Dec. 31, 2014	2014	Dec. 31, 2013	2013
AED	4.4445	4.8793	5.063	4.87896
CAD	1.4063	1.4661	1.4671	1.3684
CHF1)	1.2024	1.2146	1.2276	1.2311
CZK	27.7350	27.5360	27.427	25.9800
DKK	7.4453	7.4548	7.4593	7.4579
GBP	0.7789	0.8061	0.8337	0.84926
HUF	315.5400	308.7100	297.04	296.87
NOK	9.0420	8.3544	8.363	7.8067
PLN	4.2732	4.1843	4.1543	4.1975
RON	4.4828	4.4437	4.4710	4.4190
SEK	9.3930	9.0985	8.8591	8.6515
TRY	2.8320	2.9065	2.9605	2.5335
USD	1.2160	--	1.3783	--

1) The average CHF rate for GRENKEFACTORING AG Basel/Switzerland deviates from the table above due to the acquisition of a subsidiary during the course of 2014 and was 1.2079 for fiscal year 2014.

2.3.3 Leases

Determining Whether an Arrangement Contains a Lease

Whether an arrangement is, or contains, a lease is determined by the economic substance of the arrangement at the time the contract is concluded. It 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 as to whether an arrangement contains a lease is only required after the start of the lease when one of the following conditions has been met:

• a. there was a change in the contractual conditions, unless the change only renewed or extended the arrangement;
• b. a renewal option was exercised or an extension was granted, unless the term of the renewal or extension had initially been considered in the lease term;
• c. there was a change in determination of whether fulfilment is dependent on a specified asset; or
• d. there was a substantial change made 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. The lease payments are used to reimburse the lessor for his financial investment and to compensate him for his services.

Assets from finance leases are initially recognised in the statement of financial position as lease 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. Lease payments are divided into interest payments and repayments in such a manner that they reflect a constant periodic rate of return for the receivable. Initial direct costs incurred in connection with the conclusion of the contract e.g., reseller commissions, are taken into consideration when calculating the net investment value. These initial direct costs are recognised in profit and loss under profit from new business upon occurrence.

The profit from new business also includes income from lease down-payments, which is the fee paid by the lessee for the use of the lease object during the period from the transfer of the object until the issuance of the lease acceptance letter. Commissions which are not included in the net investment value of the lease receivable but are recognised in profit and loss are also a component of the profit from new business.

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 the negotiation and conclusion of an operating lease are added to the carrying amount of the leased asset. These amounts are and depreciated together over the term of the lease agreement until the residual value is reached. 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 carried at fair value.

The Consolidated Group is the Lessee

Finance leases, which transfer all the significant risks and rewards incidental to owning the leased asset to the GRENKE Consolidated Group, are capitalised on the date of the lease's inception 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.

The capitalised leased assets are fully depreciated over the shorter of the lease term or its useful life if there is no reasonable certainty that the GRENKE Consolidated Group will obtain ownership by the end of the lease term. 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 they are incurred.

2.3.4 Measurement of Fair Values

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

The fair value is the amount that would be obtained 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. The fair values are assigned to different levels in the fair value hierarchy based on the input parameters used in the valuation methods:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: measurement procedures in which all input factors having a significant effect on the recognition of fair value are directly or indirectly observable;
• 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

Categories of Financial Instruments

Financial instruments within the scope of IFRS 7 are classified according to the nature of the respective balance sheet item. Financial assets and liabilities measured at fair value refer exclusively to derivatives. Other financial assets and liabilities are measured at (amortised) cost except for performing lease receivables.

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 their fair value in profit and loss.

Financial assets held for trading are recognised at fair value both upon initial recognition and their 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 interest rate 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 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, and under cash and cash equivalents.

Others Category

At the end of the reporting period, the GRENKE Consolidated Group did not hold any 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 upon 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 customary purchases and sales of financial assets use settlement date accounting. Customary purchases or sales are transactions 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 that 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 has been 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 does not transfer or retain substantially 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.

Financial assets are derecognised, including the related impairment, if the financial assets are classified as irrecoverable and all collateral was utilised and sold.

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 that arises because a given debtor fails to meet their 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.

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 it is not impaired (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 units 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.

Any impairment charges for goodwill are not recovered in subsequent periods.

2.3.9 Other Intangible Assets

Licences, Software

Purchased licences 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 expected economic life that, according to individual assessment, is usually either three or five years.

Internally Generated Intangible Assets (Development Costs)

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. Based on the technical developments expected in the future, the economic life is assumed to be three to five years, depending on the development project.

Customer Relations/Dealer Network

Customer relations/dealer networks acquired in a business combination are measured at fair value upon initial recognition. 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 five to seven 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

Non-financial assets 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.

Internally generated intangible assets are tested once annually for impairment during the period in which they are not yet used.

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 for defined benefit plans in the statement of financial position 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. The calculation takes the current interest rate on the market into particular account 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 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 the employees have rendered services. These expenses include contributions to statutory pension schemes and especially 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;
• stated receivables and liabilities include 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 2014 assessment periods and charges and similar amounts relating directly to financial services as defined by 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

Income from the sale of lease assets is recognised when the relevant risks and rewards incidental to the ownership of the sold goods have been assigned to the customer. Usually, this occurs upon the delivery of the goods to the customer.

Income from the sale after the basic lease contract has ended or from lease contracts prematurely terminated by mutual agreement are recorded under gains from disposals and income from the sale due to defective lease agreements are recorded under settlement of claims and risk provision.

Interest Income

Interest and similar income from financing business (interest-like charges such as factoring fees) are recognised using the effective interest method.

2.3.15 Judgement

In applying the accounting policies, the senior management has made the following judgements that substantially influence the recognition and amounts in the financial statements. This does not include those decisions involving estimates.

Principles of Consolidation

When deciding whether to consolidate an entity, the following control factors, among others, are evaluated, namely: the purpose and design of the entity; the relevant activities and how these are determined; whether the Consolidated Group's rights result in the ability to direct the relevant activities; whether the Consolidated Group has risk exposure or rights to variable returns; whether the Consolidated Group has the ability to use its power to influence the amount of its returns.

When voting rights are decisive, the Consolidated Group is said to have control over an entity where it holds, directly or indirectly, more than half of the voting rights. This is the case unless there is evidence that another investor has the practical ability to unilaterally direct the relevant activities, as indicated by one or more of the following factors: another investor has the power over more than half of the voting rights by virtue of an agreement with the Consolidated Group; another investor has the power to govern the financial and operating policies of the investee under a statute or an agreement; another investor controls the investee as a result of his power to appoint or remove the majority of the members of the board of directors or equivalent governing body; another investor controls the investee as a result of his power to cast the majority of votes at meetings of the board of directors or equivalent governing body.

In determining control, potential voting rights are also considered if they are deemed as substantial.

The Consolidated Group gives a similar assessment on the existence of control where it does not control the majority of the voting rights, but has the practical ability to unilaterally direct the relevant activities. This may arise in circumstances where the size and dispersion of the voting rights of the shareholders give the Consolidated Group the power to direct the activities of the investee.

Moreover, when assessing whether to consolidate an entity, the possibility to control parts of the investee as a fictitious separate entity, a so-called "silo", is also considered.

If any facts or circumstances indicate changes in one or more of the control factors listed in IFRS 10, the Consolidated Group reviews the adequacy of previous decisions. The Consolidated Group reassesses the consolidation status on an annual basis. This includes changes in decision-making rights, changes in contractual arrangements, changes in the financing, ownership or capital structure, as well as changes triggered by an event which was anticipated in the original contractual agreements.

Consolidation of Structured Entities

For refinancing, the Consolidated Group uses various structured entities in the form of asset-backed commercial paper programmes ("ABCP programmes") and asset-backed security bonds ("ABS bonds").

Control over the investee as a fictitious separate entity (so-called "silo" structure) was determined for the structured entities and ABCP programmes of CORAL PURCHASING Limited, Kebnekaise Funding Limited, and Opusalpha Purchaser Limited. Although this concerns so-called "multi-sellers" in which banks create securitisation vehicles to give customers access to specific portfolios of assets and provide market liquidity through the securitisation of the financial assets, this financing structure opens up a further form of refinancing for the Consolidated Group and thus provides it with the corresponding benefits. The GRENKE Consolidated Group does not have the power to exercise influence over the trust or the management of structured entities.

A significant activity over the term of these programmes is the selection of the receivables to be transferred. Furthermore, the initial selection of the receivables for each silo is defined according to specific selection criteria. In the event of a default of receivables, the settlement is managed by GRENKE. The opportunities and risks of the receivables of the silos remain in the GRENKE Consolidated Group. In the case of a revolving receivables purchases or sales, the variable returns may be affected in such a manner that the part of the investee is controlled as a fictitious separate entity.

At FCT GK 2, shares of the funds are held by two subsidiaries and are included in consolidation. The shares that are directly and indirectly held by the Consolidated Group are an indication for the inclusion in the scope of consolidation, but not the decisive criteria since all assumptions must be met for consolidation according to IFRS 10. FCT GK 2 is included in the scope of consolidation since all control factors are met and the Consolidated Group controls the entity by having the power to direct the relevant activities, having the right of variable returns, and also having the power to affect the amount of the returns. In contrast to FCT GK2, there are no participating interests in the case of FCT GK 3. As is the case with FCT GK 2, consolidation is based on control factors and not on the share ownership, since the voting or similar rights are not the dominant factors in determining control. For both, FCT GK2 and FCT GK3, the control factors are to be confirmed, which results in a consolidation requirement.

GOALS Financing 2009 Ltd. is the structured entity for an ABS bond (note 4.12.2). The GRENKE Consolidated Group was instrumental in establishing the contractual arrangements and can thus control the essential activities of the structured entity and therefore has the power of disposition. Furthermore, it is at the discretion of the GRENKE Consolidated Group in which amount receivables are sold and thus has the right and risk of variable returns. A control without voting rights is therefore assumed and the structured entity is thus consolidated.

As per December 31, 2013 and 2014 as well as during both years, the GRENKE Consolidated Group did not hold any interests where it did not have the controlling influence. Therefore, there were no significant restrictions due to protection rights in favour of these shareholders.

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 the lease assets are transferred to the lessee in almost all leases. Accordingly, these leases are shown entirely as finance leases.

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 in the leasing business:

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.

Determination of Impairments for Factoring Receivables in Arrears

Factoring receivables 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. Processing statuses are grouped together in processing categories.

The following table lists the processing categories in the factoring business:

Category	Description
0	Receivables waiting to be processed
1	Accepted receivables due and not due before debt collection measures
2	Receivables in own debt collection
3	Receivables in third-party debt collection or payment being serviced in instalments
4	Receivables directly before or after applying for a default notice
5	Receivables directly before or after action is filed
6	Receivables of insolvent debtor
7	Derecognised receivables due
8	Fully paid receivables

Impairment is assumed for categories 2 to 7 due to defaults in payment, whereby recoverability consistent with the processing category is assumed. The allowance rates range between 3% and 100%. The allowance rates are determined on the basis of past experience and statistical methods.

Determination of Impairments from the Lending Business (Risk Provision)

For receivables from the lending business, compliance with contractual agreements regarding interest payments and repaying the principal is continuously observed. In case of defaults or overdrafts, suitable measures in the form of a structured delinquency procedure in written form are initiated at an early stage. If the delinquency procedure turns out to be unsuccessful or the customer becomes insolvent, then the unsecured portion of the receivable is fully impaired unless the customer can repay the outstanding portion of the loan in due time in coordination with the development bank.

Determination of Impairments for Trade Receivables

The Consolidated Group continuously assesses whether trade receivables are impaired. An objective indication for impairment is assumed in case of default or delinquency of a debtor, indications for insolvency, and other features that indicate a significant reduction in the expected payment of the debtor. The amount of the allowance is based on the processing category in the leasing business and is determined on a case-by-case basis.

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 28.4% were applied. For additions from April 1, 2011, 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 2.8% and 18.6% of the historical cost (previous year: between 3.2% and 17.3%). 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 judgement. This judgement 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	2014	2013
Interest income from the leasing business	207,353	185,311
Interest income from the refinancing of franchisees	659	764
Interest and similar income from the factoring business	2,955	2,287
Interest income from the bank's lending business	625	441
Total	211,592	188,803

3.1.2 Interest Expenses from Refinancing and Deposit Business

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

EURk	2014	2013
Interest expenses from refinancing	48,703	52,479
Interest expenses from deposit business	5,361	5,858
Total	54,064	58,337

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	2014	2013
Retirement of the carrying amount of performing lease receivables due to premature damages	50,809	54,361
Income from settlement of claims	49,531	56,087
Derecognition of and net addition to flat-rate specific bad debt allowances	48,895	47,378
Expenses for del credere fees to franchiser	313	418
Allowance for losses on the bank's loans and advances	3,242	3,151
Allowance for losses in factoring business	20	573
Profit	53,748	49,794

3.3 Profit from Insurance Business

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

EURk	2014	2013
Income from insurance business	44,669	38,021
Expenses from insurance business	2,591	2,184
Profit	42,078	35,837

3.4 Profit from New Business

Revenues from the new business of contracted leases are comprised as follows:

EURk	2014	2013
Recognition of new lease receivables	1,169,892	1,032,845
Share of revenues from leasing down payments	6,295	5,452
Revenues from processing fees	3,739	3,180
Revenues from special lease payments	3,259	2,746
Total	1,183,185	1,044,223

Expenses from the new business of contracted leases are comprised as follows:

EURk	2014	2013
Cost of newly acquired leased assets	1,119,232	985,356
Commissions paid to dealers	18,492	14,935
Total	1,137,724	1,000,291
Profit from new business	45,461	43,932

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.

Based on the calculations related to the lease agreement, the initial direct costs and the attributable share of revenues from leasing down payments are recorded in the profit from new business. Another component of profit from new business is commissions which are recognised in profit or loss and are not included in the net investment value of the lease receivables.

3.5 Profit from disposals (income exceeding the calculated residual value)

EURk	2014	2013
Revenues from subsequent leases	31,079	27,541
Capital losses from disposal after end of the basic lease term	–34,190	–27,485
Capital gains from mutually agreed early termination of contracts	5,556	1,571
Depreciation of leased assets in the subsequent lease period	–838	–917
Profit	1,607	710

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

EURk	2014	2013
Salaries	45,026	41,460
Social security and other benefits	9,990	9,008
Board of Directors' phantom stock programme (note 8.6)	12	1,288
Total	55,028	51,756

A total net pension expense of EUR 277k (previous year: EUR 171k) for existing defined pension plans was recognised in staff costs in the fiscal year 2014. The staff costs also included EUR 583k (previous year: EUR 411k) for the employee participation programme of the French subsidiary.

3.7 Depreciation, Amortisation, and Impairment

EURk	2014	2013
Other intangible assets	3,203	2,984
Operating and office equipment	2,105	1,796
Goodwill	451	0
Office buildings	689	664
Total	6,448	5,444

For impairment losses, we refer to note 4.9.

3.8 Selling and Administration Expenses (not including Staff Costs)

Selling and administrative expenses are divided into the following categories:

EURk	2014	2013
Operating expenses	16,217	14,097
Consulting and audit fees	7,590	7,608
Distribution costs (without commissions)	8,082	7,179
Administrative expenses	5,957	5,381
Other taxes	3,991	3,177
IT project costs	2,420	977
Remuneration of the Supervisory committees	124	124
Total	44,381	38,543

IT project costs that are not capitalised as development costs are shown as a separate line item as of this reporting period. These expenses occur as a result of the involvement of external expertise particularly for process optimisation projects of the central and standardised IT processes. The previous year's figure was adjusted accordingly and EUR 977k of the consulting and audit fees were reclassified.

Consulting and Audit Fees

The consulting and audit fees include fees (and expenses) for the auditor of GRENKELEASING AG totalling EUR 607k (previous year: EUR 582k).

The auditor's fees in fiscal year 2014 are divided as follows:

EURk	2014	2013
Fees for the audit of financial statements	414	426
Fees for other assurance or valuation services	65	65
Fees for other services	128	91
Total	607	582

EUR 84k of the total fees (previous year: EUR 68k) related to prior periods.

Expenses from Rent and Lease Contracts

In the fiscal year, expenses for rent and lease contracts amounted to EUR 7,744k (previous year: EUR 7,200k). 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	2014	2013
Currency translation differences	1,102	1,625
Revenue deductions	778	1,112
Rental expenses	567	527
Capital losses from the disposal of operating and office equipment	42	15
Other items	687	484
Total	3,176	3,763

3.10 Other Operating Income

Other operating income breaks down as follows:

EURk	2014	2013
Franchise fees received	541	658
Rent and ancillary rental costs	626	584
Revenues from the disposal of merchandise	384	522
Commission income from banking business	366	307
Prior-period income	200	164
Administration fees received	13	22
Income from impaired receivables	54	46
Insurance compensation	86	49
Capital gains from the disposal of non-current assets	16	79
Income from dunning charges	613	242
Other items	680	385
Total	3,579	3,058

Dunning fees are recorded as per the reporting date. The line item "other items" was adjusted accordingly by EUR 242k in the previous year.

3.11 Income Taxes

EURk	2014	2013
Current taxes	18,330	13,093
Deferred taxes	3,539	4,153
Total	21,869	17,246

Current taxes include income relating to previous years of EUR 22k (previous year: EUR 478k).

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	2014	2013
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	2014	2013
Average expected tax rate GRENKELEASING AG	30.02%	30.02%
Tax increases due to non-deductible expenses	0.09%	0.05%
Changes due to foreign taxes	–5.41%	–5.04%
Balance of tax reductions and increases due to changes in tax rates	–0.75%	–0.12%
Utilisation of non-capitalised loss carryforwards	0.00%	–0.13%
Back payments and tax rebates from previous years1)	–0.02%	–0.74%
Tax increase due to non-tax-effective goodwill adjustment	0.15%	0.00%
Other	1.08%	2.80%
Average effective tax rate for the Consolidated Group	25.16%	26.84%

1) Tax refunds for prior years amounted to EUR 22k in 2014 (previous year: tax refunds of EUR 478k).

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 2014 or the previous year. Earnings per share amounted EUR 4.41 for the year under review (previous year: EUR 3.23).

Number	2014	2013
Shares outstanding at beginning of period	14,700,000	13,684,099
Average number of shares outstanding at end of period (basic)	14,735,489	14,558,052
Average number of shares outstanding at end of period (diluted)	14,735,489	14,558,052
Shares outstanding at end of period	14,754,199	14,700,000

3.13 Other Comprehensive Income

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

EURk	2014	2013
Gains (losses) from interest rate contracts arising in the current period	120	136
Reclassification adjustments to the income statement	–64	–545
Income from hedge relationships	56	–409

4 Selected Notes on the Statement of Financial Position

4.1 Financial Instruments with Positive Fair Value

Financial instruments with positive fair value were comprised solely of derivatives without hedging relationship. There were no hedging derivatives as defined by IAS 39 that had a positive fair value.

EURk	Dec. 31, 2014	Dec. 31, 2013
Fair value of interest rate swaps	298	1,623
Foreign currency forwards	811	1,090
Total	1,109	2,713

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

4.2 Cash and Cash Equivalents

EURk	Dec. 31, 2014	Dec. 31, 2013
Bank balances	55,871	76,836
Balances at central banks	32,513	32,927
Cash in hand	11	7
Total	88,395	109,770

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

EURk	Dec. 31, 2014	Dec. 31, 2013
Cash and cash equivalents as per the statement of financial position	88,395	109,770
Less current account liabilities	10,900	432
Cash and cash equivalents as per the statement of cash flows	77,495	109,338

4.3 Lease Receivables

EURk	Dec. 31, 2014	Dec. 31, 2013
Outstanding minimum lease payments	2,427,236	2,116,906
+ non-guaranteed residual values	296,769	256,662
Gross investment	2,724,005	2,373,568
– unrealised (outstanding) finance income	369,566	329,664
Net investment	2,354,439	2,043,904
– Present value of non-guaranteed residual values	223,136	191,362
Present value of minimum lease payments	2,131,303	1,852,542

EURk	Less than 1 year	1 to 5 years	More than 5 years
Total gross investment	952,371	1,751,454	20,180
Total gross investment (previous year)	825,595	1,530,358	17,615
Present value of outstanding minimum lease payments	701,662	1,416,888	12,753
Present value of outstanding minimum lease payments
(previous year)	606,547	1,235,019	10,976

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, 2014	Dec. 31, 2013
Changes in lease receivables from current contracts
(performing lease receivables)
Balance at beginning of period	2,043,904	1,771,673
+ Change during the period	310,535	272,231
Lease receivables (current + non-current) from current contracts at end of period	2,354,439	2,043,904
Changes in lease receivables from terminated contracts/contracts in arrears
(non-performing lease receivables)
Gross receivables at beginning of period	217,110	198,623
– accumulated valuation allowances at beginning of period	111,145	96,368
= Non-performing lease receivables at beginning of period	105,965	102,255
+ Additions to gross receivables during the period	45,871	52,333
– Disposals of gross receivables during the period	39,724	33,846
+ Disposal of accumulated valuation allowances during the period	23,525	16,778
– Addition of accumulated valuation allowances during the period*	33,978	31,555
Non-performing lease receivables at end of period	101,659	105,965
Lease receivables (carrying amount, current and non-current) at beginning of period	2,149,869	1,873,928
Lease receivables (carrying amount, current and non-current) at end of period	2,456,098	2,149,869

* Item contains exchange rate differences in the amount of EUR 508k (previous year: EUR 330k).

	Present value of	Present value of	Other receivables
EURk	minimum lease	residual values	from lessees	Carrying amount
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
2014
Current lease receivables	701,662	73,460	101,659	876,781
Non-current lease receivables	1,429,641	149,676	0	1,579,317
Total (2014)	2,131,303	223,136	101,659	2,456,098

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

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

				past due as per the reporting date in the following time bands
			Allowances for			Between
		thereof past	receivables as		Between 91	181 days
Lease receivables	Net carrying	due as per the	per the		days and	and	Between 1
EURm	amount	reporting date	reporting date	< 90 days	180 days	360 days	and 5 years	> 5 years
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
As per Dec. 31, 2014
Not impaired	18.3	18.3	0.0	16.9	0.7	0.3	0.4	0.0
Impaired	83.4	205.0	121.6	15.1	13.7	25.8	108.4	42.0
Total	101.7	223.3	121.6	32.0	14.4	26.1	108.8	42.0

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

As per the reporting date, lease receivables which were neither impaired nor past due amounted to EUR 2,354k (previous year: EUR 2,044k)

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, 2014, there were no indications that financial assets (in particular lease receivables) that 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, 2014	Dec. 31, 2013
Allowances at the beginning of the fiscal year	111.1	96.6
Addition to specific bad debt allowance	37.0	36.0
Utilisation of specific bad debt allowance	21.2	16.8
Reversal of specific bad debt allowance	5.8	5.0
Currency translation differences	0.5	0.3
Allowances at the end of the fiscal year	121.6	111.1

The interest income resulting from the addition of accrued interest on the allowance expenses amounted to EUR 348k (previous year: EUR 1,918k) and is reported under settlement of claims and risk provision.

4.4 Other Financial Assets

EURk	Dec. 31, 2014	Dec. 31, 2013
Other current financial assets
Instalments collected before end of month	980	14,134
ABCP-related loans	12,594	11,922
Receivables from franchisees (refinancing)	13,770	15,879
Receivables from factoring business	17,550	10,762
Restricted cash	2,745	6,915
Receivables from refinancers	4,018	3,150
Loans (bank)	7,859	5,114
Other	300	1,070
Total other current financial assets	59,816	68,946
Other non-current financial assets
ABCP-related loans	12,127	8,172
Loans (bank)	12,597	8,391
Receivables from refinancers	1,457	1,685
Receivables from franchisees (refinancing)	4,436	30
Other	97	604
Total other non-current financial assets	30,714	18,882
Total financial assets	90,530	87,828

The ABCP-related loans mainly include liquidity reserves, which under the respective agreements must be granted to the sponsor of the programme as collateral for the refinancing volumes. These loans are based on the refinancing volume and the origin of the receivables refinanced through the structured entities. The interest income generated in this context is offset against the interest expense from refinancing liabilities.

Receivables from franchisees 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 659k (previous year: EUR 764k) (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 structured 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 that related to the bank's prior business amounted to EUR 1,239k (previous year: EUR 1,790k). In addition, receivables from the lending business of in total EUR 20,456k (previous year: EUR 13,505k) include receivables from granting business start-up loans in the amount of EUR 19,151k (previous year: EUR 10,933k) and receivables from granting project financing in the amount of EUR 66k (previous year: EUR 782k). Interest income is recognised as such under net interest income.

Of the other financial assets, a total of EUR 6,842k (previous year: EUR 5,108k) were past due, of which EUR 2,495k (previous year: EUR 5,077k) were impaired. As per December 31, 2014, other financial assets in the amount of EUR 4,347k (previous year: EUR 31k) were past due but not impaired. The level of impairment is determined according to the procedures described in note 2.3.16. In the past fiscal year, the impairment loss amounted to EUR 248k (previous year: EUR 733k).

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

				past due as per the reporting date in the following time bands
			Allowances for			Between
Other financial		thereof past	receivables as		Between	181 days
assets	Net carrying	due as per the	per the		91 days and	and	Between 1
EURk	amount	reporting date	reporting date	< 90 days	180 days	360 days	and 5 years	> 5 years
As per Dec. 31, 2013
Not impaired	31	31	0	29	0	2	0	0
Impaired	3,849	5,077	1,228	2,639	332	1,727	197	182
Total	3,880	5,108	1,228	2,668	332	1,729	197	182
As per Dec. 31, 2014
Not impaired	4,347	4,347	0	4,277	17	44	9	0
Impaired	1,464	2,495	1,031	429	152	160	1,748	6
Total	5,811	6,842	1,031	4,706	169	204	1,757	6

In addition, financial assets of EUR 532k that were not past due were impaired by an amount of EUR 284k, which results in a net carrying amount of EUR 248k. In the previous year figures, the impairment and the net carrying amount of overdue and impaired receivables were adjusted by an amount of EUR 129k.

In addition, financial assets which were neither impaired nor past due amounted to EUR 84,471k (previous year: EUR 83,948k).

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.

The following table provides an overview of changes in allowances for other financial assets:

EURk	Dec. 31, 2014	Dec. 31, 2013
Allowances at the beginning of the fiscal year	1,228	543
Addition of subsidiaries	38	--
Addition to specific bad debt allowance	467	1,028
Utilisation of specific bad debt allowance	199	48
Reversal of specific bad debt allowance	219	295
Currency translation differences	0	0
Allowances at the end of the fiscal year	1,315	1,228

4.5 Trade Receivables

Trade receivables of EUR 4,793k (previous year: EUR 4,395k) mainly relate to receivables from franchisees, resellers, and third parties resulting from the disposal of lease assets. An amount of EUR 2,108k (previous year: EUR 1,210k) of these receivables is overdue and EUR 1,319k (previous year: EUR 1,173k) of this amount is impaired. As per December 31, 2014, trade receivables of EUR 789k (previous year: EUR 37k) were overdue but not impaired. The level of impairment is determined by the procedures described in note 2.3.16. In the past fiscal year, the impairment loss amounted to EUR 209k (previous year: EUR 449k).

In addition, trade receivables which were neither impaired nor past due amounted to EUR 2,685k (previous year: EUR 3,185k).

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 426k (previous year: EUR 659k).

4.6 Tax Assets

EURk	Dec. 31, 2014	Dec. 31, 2013
Corporate income tax assets	895	6,850
Trade tax assets	1,923	2,928
Other items	8,122	4,398
Total	10,940	14,176

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

4.7 Other Current Assets

EURk	Dec. 31, 2014	Dec. 31, 2013
VAT receivables	122,944	103,893
Prepaid expenses	1,703	3,727
Amounts in transit	752	1,287
Merchandise	973	804
Insurance claims	423	352
Creditors with debit balances	284	206
Orders in progress	23	53
Other items	1,899	2,078
Total	129,001	112,400

4.8 Property, Plant, and Equipment

4.8.1 Overview of Fiscal Year 2014

				Lease assets
	Land and	Assets under	Operating and	from operating
EURk	buildings	construction	office equipment	leases	Total
Acquisition costs
Jan. 1, 2014	23,720	0	20,353	15,745	59,818
Currency translation differences	0	0	36	80	116
Additions	157	0	1,825	10,258	12,240
Of which additions in the context of a
business combination	0	0	49	0	49
Disposals	0	0	2,545	8,936	11,481
Reclassifications	0	0	0	0	0
Acquisition costs
Dec. 31, 2014	23,877	0	19,669	17,147	60,693
Accumulated depreciation and
impairments Jan. 1, 2014	4,850	0	13,313	1,588	19,751
Currency translation differences	0	0	9	10	19
Additions to depreciation	689	0	2,105	838	3,632
Additions of impairments	0	0	0	0	0
Disposals of depreciation	0	0	2,334	786	3,120
Reclassifications	0	0	0	0	0
Accumulated depreciation and
impairment Dec. 31, 2014	5,539	0	13,093	1,650	20,282
Net carrying amounts Dec. 31, 2014	18,338	0	6,576	15,497	40,411

4.8.2 Overview of Fiscal Year 2013

				Lease assets
	Land and	Assets under	Operating and	from operating
EURk	buildings	construction	office equipment	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

The operating leases are mainly lease contracts whose basic lease term has expired and 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	2014	2013
Carrying amounts as per Jan. 1 (as previously reported)	52,747	48,815
Effects from retroactive adjustment pursuant to IFRS 3	–198	0
Carrying amounts as per Jan. 1 (adjusted)	52,549	48,815
Currency translation differences	–9	–264
Additions through business combinations	5,262	4,196
Impairments	451	0
Carrying amounts as per Dec. 31	57,351	52,747

With regard to the additions in 2014, please refer to the comments on the business combinations of GCLUX Location S.à.r.l., Luxembourg, and GRENKEFACTORING AG, Switzerland (see note 5.1).

The previous preliminary purchase price allocation for the Finish subsidiary was finalised in the second quarter of 2014. Due to additional information gained, this resulted in changes to deferred tax assets for tax-loss carryforwards amounting to EUR 198k in the reporting period, which were recognised as per the date of the initial consolidation with retrospective effect.

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

EURk	Dec. 31, 2014	Dec. 31, 2013
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	4,186	4,306
GRENKEFACTORING GmbH (Baden-Baden) – Factoring	2,698	2,698
Grenke Leasing Ltd. (Guildford) – UK	2,176	2,033
GRENKE BANK AG (Baden-Baden) – Bank	1,582	1,582
S.C. Grenke Renting S.R.L. (Bucharest) – Romania	1,346	1,350
GRENKELEASING s.r.o. (Prague) – Czech Republic	772	1,236
GRENKELEASING Magyarország Kft. (Budapest) – Hungary	918	975
GRENKE Locazione S.r.l. (Milan) – Italy	504	504
GRENKE SERVICE AG (Baden-Baden)	379	379
GRENKELEASING Oy (Vantaa) – Finland	3,410	3,608
GRENKELEASING s.r.o. (Bratislava) – Slovakia	589	589
GRENKELOCATION SARL (Munsbach) – Luxembourg1)	1,464	--
GRENKEFACTORING AG (Basel) – Switzerland1)	3,840	--
Total	57,351	52,747

1) The goodwill resulting from the business combination of GRENKELOCATION SARL (formerly GCLUX Location S.à.r.l.) (Munsbach), Luxembourg, and GRENKEFACTORING AG (Basel), Switzerland, in 2014 is still provisional as the purchase price allocation will only be finalised in 2015 (see note 5.1). The goodwill is assigned to the cash-generating units Luxembourg and Factoring Switzerland.

4.9.1 Goodwill Impairment Test

GRENKELEASING AG tests goodwill for impairment once a year. The key parameters for determining the recoverable amount based on the value in use are the future expectations with regard to the development of new business and profitability.

The basic assumptions used in calculating the cash flows that may be generated by the respective entities are based on new business growth rates of the cash-generating units of up to 20% in the Leasing segment in individual regions and in individual years. The discount factors, specific to countries, financial structure, and currencies, range between 6.35% and 9.4% (previous year: between 6.6% and 12.2%).

Discount factors are calculated based on the "capital asset pricing model" (CAPM), taking into account a risk-free interest rate of 2.25% (previous year: 2.4%) and a beta factor of 0.68 (previous year: 0.71) for the cash-generating units in the Leasing and Banking segments. A beta factor of 0.77 (previous year: 0.71) was used for the cash-generating units in the Factoring segment. Cash flows after a five-year period were carried forward using a growth rate of 1.0% (previous year: 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 9.4% (previous year: 12.2%) and a growth rate for new business of 8.0% (previous year: 12.0%) in individual years. The perpetual growth rate is 1.0% (previous year: 1.0%). The key assumptions of the parameters used correspond to the approach mentioned above, which holds true for all cash-generating units.

During the annual impairment test, GRENKELEASING determined an impairment loss for the cash-generating unit Czech Republic in the Leasing segment due to the recoverable amount of EUR 2,460k being estimated as lower than the carrying amount of EUR 2,911k. The circumstances that led to this were lower estimates for the future growth of new business. The recoverable amount was calculated based on the value in use and by using a discount rate of 8.5% (previous year: 6.2%). The impairment reduced the amount of goodwill recognised for this unit to EUR 451k. Other impairments could not be identified.

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 additional impairment beyond the one mentioned above. 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 2014

			Customer relations/
			non-competitive
EURk	Development costs	Software licences	clauses	Total
Acquisition costs as per Jan. 1, 2014	565	6,308	15,109	21,982
Currency translation differences	0	1	–11	–10
Additions	1,971	1,804	0	3,775
Disposals	0	2,127	2,807	4,934
Additions through business combinations	0	2	782	784
Reclassifications	0	0	0	0
Acquisition costs as per Dec. 31, 2014	2,536	5,988	13,073	21,597
Accumulated amortisation as per Jan. 1, 2014	177	4,266	4,622	9,065
Currency translation differences	0	–175	64	–111
Additions	61	997	2,145	3,203
Disposals	0	2,398	2,426	4,824
Reclassifications	0	0	0	0
Accumulated amortisation as per Dec. 31, 2014	238	2,690	4,405	7,333
Net carrying amounts Dec. 31, 2014	2,298	3,298	8,668	14,264

4.10.2 Overview of Fiscal Year 2013

			Customer relations/
			non-competitive
EURk	Development costs	Software licences	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

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, 2014	Dec. 31, 2013	2014	2013
Deferred tax assets
Tax-loss carryforwards	10,104	10,929	669	580
Remeasurement of lease receivables	935	812	–123	–750
Remeasurement of liabilities	10,049	8,928	–1,121	–2,517
Pensions	784	501	0	0
Other remeasurements	–3	1,323	0	0
Total	21,869	22,493	–575	–2,687
Deferred tax liabilities
Remeasurement of lease receivables	38,829	34,482	5,345	5,232
Intangible assets	2,687	2,677	10	0
Remeasurement of liabilities	4,063	4,923	–860	3,433
Other remeasurements	113	494	–381	–76
Total	45,692	42,576	4,114	8,589
Deferred tax expense/(income)			3,539	5,902
Deferred tax liabilities, net	23,823	20,239
Reported in the statement of financial
position as follows:
Deferred tax assets	21,869	22,493
Deferred tax liabilities	45,692	42,576

Deferred tax assets of EUR 6k were directly released in equity in the fiscal year (previous year: release of deferred tax assets of EUR 21k). These resulted from the cash flow hedge reserve directly recognised in equity. Additionally, deferred tax assets of EUR 186k were recognised in connection with the direct recognition of actuarial losses (previous year: release of deferred tax assets of EUR 22k). 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 accordance with IAS 12.39, deferred tax liabilities should not be recognised unless it is probable that these differences will reverse in the foreseeable future, as in the case of control on the part of the parent company.

Since this reversal is currently only expected for a partial amount from the French subsidiary (previous year: Switzerland), only the corresponding deferred tax liabilities of EUR 12k (previous year: EUR 5k) were recognised.

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, 2014	Dec. 31, 2013
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	607,923	656,100
ABS/ABCP related liabilities	170,268	169,661
Bonds, revolving facilities, debentures, and private placements	355,955	404,594
Committed development loans	16,846	16,506
Sales of receivables agreements	64,854	65,339
Current liabilities from deposit business	159,582	114,292
Current bank liabilities	11,814	1,201
thereof current account liabilities	10,900	432
Total current financial liabilities	779,319	771,593
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	1,390,761	1,118,994
ABS/ABCP related liabilities	211,398	198,561
Bonds, debentures, and private placements	1,048,486	811,873
Committed development loans	41,709	24,154
Sales of receivables agreements	89,168	84,406
Non-current liabilities from deposit business	140,775	141,345
Non-current bank liabilities	344	1,031
Total non-current financial liabilities	1,531,880	1,261,370
Total financial liabilities	2,311,199	2,032,963

As per December 31, 2014 the volume of non-current financial liabilities with a remaining term of one to five years or more was as follows:

	Total amount			Secured amount
2014	1,390,761	1,384,247	6,514	440,221
(Previous year)	1,118,994	1,070,066	48,928	408,881
2014	140,775	140,775	0	0
(Previous year)	141,345	141,345	0	0
				10,800
(Previous year)	1,031	1,031	0	10,800
	2014	344	344	1 to 5 years More than 5 years 0

Bank liabilities also include the liabilities from the utilisation of cash lines (current account liabilities). As per the end of the reporting period, EUR 10,900k (previous year: EUR 432k) of these lines had been utilised.

The liabilities from the deposit business comprise deposits by customers of GRENKE BANK AG. The total current liabilities totalling EUR 159,582k (previous year: EUR 114,292k) include an amount of EUR 9,145k (previous year: EUR 18,633k) 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 440,221k (previous year: EUR 408,881k) have been assigned to the refinancing institutions in order to secure the liabilities stemming from the refinancing of the leasing business. Each individual item of 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.

Land charges in the amount of EUR 10,800k are in place in favour of Commerzbank Aktiengesellschaft, Baden-Baden.

Further details on the refinancing sources and the main categories of financial liabilities are discussed below.

4.12.1 Structured Entities

The following consolidated structured entities were in place as per the balance sheet date: GOALS FINANCING 2009 LIMITED (GOALS 2009-1), Opusalpha Purchaser II Limited, Kebnekaise Funding Limited, CORAL PURCHASING Limited, FCT "GK" COMPARTMENT "G2" (FCT GK 2), FCT "GK" COMPARTMENT "G3" (FCT GK 3); (previous year: in addition Compass Variety Funding Limited). In the following, the consolidated structured entities initiated as asset-backed commercial paper (ABCP) programmes or ABS bonds are further explained.

4.12.2 ABS Bond

On February 4, 2010, an ABS bond amounting to EUR 160,000k was placed via the structured 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 structured 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 24,592k at the end of the reporting period (previous year: EUR 78,660k).

4.12.3 ABCP Programmes

The GRENKE Consolidated Group has several asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 593,333k as per the end of the reporting period (previous year: EUR 533,333k). The following is an overview of the programmes as per the end of the reporting period:

ABCP Programme/	Initiating	Refinanceable	Programme volume EURk	Programme volume EURk
Structured Entities	Bank	lease receivables	as per Dec. 31, 2014	as per Dec. 31, 2013
		German and Austrian lease
Compass Variety Funding Limited	Portigon	receivables	--	40,000
		German and Austrian lease
Opusalpha Purchaser II Limited	HeLaBa	receivables	100,000	--
		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
(FCT GK 2)
Elektra Purchase No. 25 Limited	UniCredit	French lease receivables	100,000	100,000
(FCT GK 3)
Regency Assets Limited	HSBC	French lease receivables	133,333	133,333
Total			593,333	533,333

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 357,074k (previous year: EUR 289,562k).

The ABCP programme Compass Variety Funding Limited with Portigon AG (formerly WestLB) was closed as per February 17, 2014.

The programme commitment for the Kebnekaise Funding Limited ABCP programme will run until November 30, 2015. The programme commitment for the CORAL PURCHASING Limited ABCP programme will run until September 3, 2015, while the programme commitment for the Elektra Purchase No. 25 ABCP programme will run until July 15, 2015.

In the first quarter of 2014, the new Opusalpha Purchaser II Limited ABCP programme was initiated with Landesbank Hessen-Thüringen (shortened: HeLaBa). The programme volume amounts to EUR 100,000k and allows Grenke Investitionen Verwaltungs KGaA to sell German and Austrian receivables.

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 structured entity 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.

As per the reporting date, 60.18% of the refinancing framework of the ABCP programmes was utilised (previous year: 54.29%).

The structured entities 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 structured entities manage the interest rate risk (fixed-rate lease receivables versus floating-rate refinancing) with interest rate hedges (interest rate caps and interest rate swaps).

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.

There are no currency risks in ABCP refinancing as only euro transactions and euro-based leases are involved. As per the end of the reporting period, the present value of all programmes was EUR 357,074k (previous year: EUR 289,562k).

4.12.4 Sales of Receivables Agreements

Sales of receivables agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, UBS AG in Switzerland, the Commerzbank subsidiary mBank S.A. (formerly: BRE-Bank S.A.), and DZ Bank Polska in Poland, as well as with 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 154,022k (previous year: EUR 149,745k) and coincides with the value of the receivables sold (less reductions et cetera).

4.12.5 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.

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, 2014	Dec. 31, 2013
Description	from	to	percent p. a.	EURk	EURk	EURk
Euro bond	21/06/2010	21/01/2014	4.50	797	0	100,000
Euro bond	18/10/2010	22/04/2014	4.00	779	0	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	0	10,000
			Euribor + 0.75
Euro bond	24/10/2011	04/10/2014	(gradually + 0.20)	452	0	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	100,000
Euro bond	09/12/2013	10/12/2018	2.25	500	125,000	125,000
Euro bond	21/02/2014	21/08/2018	1.90	105	30,000	0
Euro bond	04/03/2014	04/03/2019	2.17	75	30,000	0
Euro bond	17/04/2014	17/10/2017	1.625	375	125,000	0
Euro bond	06/05/2014	06/05/2016	1.37	25	10,000	0
Euro bond	27/06/2014	27/08/2018	1.50	25	10,000	0
Euro bond	07/07/2014	07/07/2017	1.25	32	10,000	0
Euro bond	26/11/2014	27/05/2019	1.50	313	125,000	0

In 2014, a total of seven new bonds with an aggregated nominal volume of EUR 340,000k were issued. The conditions can be seen in the table above.

Four bonds with an aggregated nominal volume of EUR 225,650k were redeemed as scheduled in the past fiscal year.

Promissory Note Loans (PNL)

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

					Nominal	Nominal
					amount	amount
		Term	Interest coupon	Discount	Dec. 31, 2014	Dec. 31, 2013
Description	from	to	percent p. a.	EURk	EURk	EURk
EUR-PNL	10/03/2009	10/03/2014	5.8900	50	0	10,000
EUR-PNL	19/03/2009	10/03/2014	5.1374	45	0	10,000
EUR-PNL	30/03/2009	10/03/2014	5.8800	15	0	14,500
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	4,500	5,250
EUR-PNL	06/12/2010	30/06/2020	4.8500	--	4,500	5,250
EUR-PNL	30/04/2011	30/04/2014	Euribor + 1.70	--	0	6,667
EUR-PNL	08/06/2011	08/06/2014	4.0000	--	0	25,000
EUR-PNL	08/06/2011	06/06/2014	3.8000	--	0	1,667
EUR-PNL	04/07/2011	04/07/2014	3.6900	62,5	0	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	0	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	--	0	3,333
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	--	0	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	--	6,000	7,000
EUR-PNL	01/03/2013	01/03/2016	2.15	--	10,000	16,666
EUR-PNL	28/03/2013	05/01/2017	2.41	--	20,000	20,000
EUR-PNL	01/08/2013	01/08/2016	2.41	15	5,000	5,000
EUR-PNL	31/01/2014	31/01/2019	2.25	20	10,000	0
EUR-PNL	13/02/2014	13/08/2015	1.162	--	10,000	0
EUR-PNL	18/07/2014	18/07/2017	1.43	--	25,000	0
EUR-PNL	28/07/2014	28/07/2019	1.644	30	10,000	0
EUR-PNL	12/08/2014	12/08/2017	1.20	--	15,000	0
EUR-PNL	26/08/2014	26/08/2017	1.26	--	15,000	0
EUR-PNL	04/09/2014	04/09/2017	1.18	--	10,000	0
EUR-PNL	18/09/2014	18/09/2017	1.05	--	21,000	0
EUR-PNL	12/12/2014	12/12/2017	1.21	--	25,000	0

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

					Nominal	Nominal
					amount	amount
		Term	Interest coupon	Discount	Dec. 31, 2014	Dec. 31, 2013
Description	from	to	percent p. a.	CHFk	CHFk	CHFk
CHF-PNL	03/02/2014	10/01/2017	1.59	--	3.600	0
CHF-PNL	29/09/2014	29/09/2017	0.82	56	10.000	0

A total of two promissory note loans with volumes of EUR 10,000k and EUR 15,000k were repaid and replaced by new promissory note loans having the same nominal volumes and partners.

All repayments were on schedule in the past fiscal year.

4.12.6 Development Loans

NRW.Bank

Since 2010, GRENKELEASING AG, GRENKE BANK AG, and NRW.Bank, the development bank of the state of North Rhine-Westphalia, have had a cooperation agreement in place. This cooperation presents a new opportunity for incorporating public development funding into lease financing. The development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in North Rhine-Westphalia.

In the reporting period, new loans totalling EUR 7,500k were issued and loans with a total volume of EUR 12,812k were redeemed.

Thüringer Aufbaubank

On January 16, 2012 and on September 27, 2013, 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 development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in Thuringia.

In the reporting period, new loans totalling EUR 5,000k were issued and loans with a total volume of EUR 1,458k were redeemed.

Investitionsbank Berlin

On June 6, 2012 and on May 30, 2014, GRENKELEASING AG and GRENKE BANK AG also entered into a cooperation agreement with Investitionsbank Berlin (IBB), the development bank of Berlin. The development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in Berlin.

In the reporting period, no new loans were drawn down and loans with a total volume of EUR 1,666k were redeemed.

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 development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in Bavaria. The loan was drawn down for the first time in the amount of EUR 10,000k on June 11, 2014 with a term of 4 years.

In the reporting period, new loans totalling EUR 15,000k were issued while no loans were redeemed yet.

KfW

In cooperation with KfW, GRENKE BANK AG offers the nationwide "ERP-Startgeld" for business start-ups and young enterprises. Hereby, KfW provides both low-interest loans and 80% exemption from liability for the firm's bank. The maximum permitted loan amount is limited to EUR 100k.

L-Bank, State bank of Baden-Württemberg

Since the beginning of 2011, GRENKE BANK AG has also been offering the business development programme "Startfinanzierung80" in Baden-Württemberg in addition to the business start-up programme "KfW-Startgeld" of KfW-Mittelstandsbank. The programme targets business start-ups and is jointly offered by L-BANK and Bürgschaftsbank Baden-Württemberg. Whereas L-BANK offers low-interest loans, Bürgschaftsbank provides 80% guarantees.

4.12.7 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 and partially to GRENKELEASING AG, Zurich, Switzerland, the GRENKE Consolidated Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k (or CHF 1,500k) 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 2014 and will run until the end of June 2015. The facility with Nord LB with a volume of EUR 20,000k concluded in the first quarter of 2013 was prolonged for the first time in March 2014 and run until the end of March 2015. 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 2015, Deutsche Bank until September 2015, DZ-Bank until October 2015.

As per December 31, 2014 the revolving credit facilities were utilised in the amount of EUR 30,000k and CHF 4,500k (previous year: EUR 25,000k).

4.12.8 Money Market Trading

GRENKE FINANCE Plc., Dublin/Ireland and GRENKELEASING AG, Zurich, Switzerland have a non-committed money market facility totalling EUR 25,000k from Bayerische Landesbank.

Further money market facilities in the amount of EUR 10,000k each are in place with Norddeutsche Landesbank and Commerzbank AG.

As per December 31, 2014, these credit lines were utilised in an amount of EUR 25,000k and CHF 3,500k (previous year: EUR 10,000k + CHF 2,000k). The amount of utilisation is reported in current liabilities under the refinancing of leasing business.

4.12.9 Commercial Papers

The GRENKE Consolidated Group has the option 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, 2014, EUR 26,000k (previous year: EUR 5,000k) of the commercial paper programme was utilised.

4.13 Financial Instruments with Negative Fair Value

EURk	Dec. 31, 2014	Dec. 31, 2013
Derivatives with hedging relationship	9	73
Derivatives without hedging relationship	4,574	3,637
Total	4,583	3,710

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 reported as derivatives without hedging relationship as defined by IAS 39. As per December 31, 2014, forward exchange contracts on the pound sterling, Swiss franc, and partially Hungarian forint, Danish krone, Polish zloty, Canadian dollar, Turkish lira, and United Arab Emirates dirham had a negative fair value of EUR 4,259k (previous year: negative fair value of EUR 1,907k on the pound sterling, Swiss franc, Hungarian forint, Danish krone, and Polish zloty). We refer to the more detailed information in note 6.3.2.

In addition to the forward exchange contracts in the amount of EUR 4,259k (previous year: EUR 1,907k), derivatives without hedging relationship, as defined under IAS 39, include interest rate swaps of EUR 315k (previous year: EUR 1,730k). 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 9k (previous year: EUR 73k) 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, 2014	Dec. 31, 2013
Corporate income tax	7.043	3.317
Trade tax	0	793
Total	7.043	4.110

4.15 Other Current Liabilities

EURk	Dec. 31, 2014	Dec. 31, 2013
Value-added tax	5,604	4,465
Debtors with credit	1,905	1,475
Contributions to social security	520	439
Outstanding charges from refinancers	302	164
Wages/church tax	299	276
Liabilities for salaries	344	312
Liabilities from security deposits	99	47
Settlement accounts with companies	665	25
Other	1,338	930
Other deferred income	138	799
Total	11,214	8,932

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
2014
Liability risks	1,764	0	0	0	1,764
Onerous contracts	294	11	122	0	183
Total	2,058	11	122	0	1,947

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. 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 60k (previous year: EUR 237k) is non-current.

4.17 Deferred Liabilities

The item deferred liability is comprised of the following:

EURk	Dec. 31, 2014	Dec. 31, 2013
Consulting services	2,346	1,418
Personnel services	3,190	3,883
Other costs	4,776	2,387
Total	10,312	7,688

All deferred liabilities are of current nature.

4.18 Pensions

4.18.1 Defined Benefit Plans

The provisions for pensions relate to the compulsory funded retirement benefit plans (endowment insurance) with supplementary payment obligation on part of the employers in Switzerland for GRENKELEASING AG, Zurich and GRENKEFACTORING AG, Basel, 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 277k (previous year: EUR 171k) was recognised for existing pension plans in the 2014 fiscal year.

The weighted-average duration of the predominant share of the pension obligations amounts to 14.2 years.

Pensions in Germany

The pension obligations of GRENKE BANK AG relate to direct and vesting pension commitments that were made in the past exclusively for former employees.

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

	Dec. 31, 2014	Dec. 31, 2013
Discount rate	1.75%	3.20%
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	2014	2013
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,486	1,563
Interest expense	47	46
Current service cost	0	0
Benefits paid	–58	–58
Actuarial gains and losses recognised in equity	344	–65
Past service costs resulting from amendments to plan	0	0
Defined benefit obligations at end of period	1,819	1,486

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

EURk	2014	2013	2012	2011	2010
Present value of defined benefit obligations	1,475	1,553	1,332	1,333	1,442
Unrecognised actuarial gains and losses	344	–65	231	0	–109
Present value of defined benefit
obligations	1,819	1,486	1,563	1,333	1,333

Pensions in Switzerland

As per January 1, 2014, the present value of the obligations (DBO) under the defined benefit pension plans for Switzerland amounted to EUR 1,643k. After the deduction of the fair value of the plan assets in the amount of EUR 1,181k, net obligations totalled EUR 681k. Obligations totalling EUR 300k were assumed as per June 30, 2014 as a result of the acquisition of GRENKEFACTORING AG, Basel. These obligations include the present value of the obligations (DBO) under the defined benefit pension plans of EUR 686k, less the fair value of the plan assets in the amount of EUR 386k. The external expert opinion is based on the following actuarial assumptions:

	Dec. 31, 2014	Dec. 31, 2013
Discount rate	1.50%	2.00%
Estimated future salary increases	3.00%	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, 2014	Dec. 31, 2013
Service cost	277	171
Interest expense	37	25
Income from interest on plan assets	25	15

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). The investment all consist exclusively of direct entitlements against the pension fund.

As per December 31, 2014, the provision for pensions recognised under non-current liabilities amounted to EUR 1,460k. This amount comprises the present value of the obligations (DBO) of EUR 3,268k, the fair value of the plan assets of EUR 1,808k, and an actuarial loss of EUR 187k.

EURk	2014	2013	2012	2011	2010
Present value of obligations (DBO)	3,268	1,643	1,368	590	600
Present value of plan assets	1,808	962	775	332	366
Net obligation	1,460	681	593	258	234

The experienced-based adjustments made to the obligations totalled EUR –20k (previous year: EUR 15k), and EUR –118k (previous year: EUR –60k) to assets. Employer contributions in the next period are estimated to be EUR 163k.

EURk	2014	2013
Change in defined benefit obligations
Defined benefit obligations at beginning of period	1,643	1,368
Interest expense	37	25
Current service cost	277	171
Contributions paid	100	108
Benefits paid	287	65
Actuarial gains and losses recognised in equity	195	–72
Currency translation differences from foreign plans	43	–22
Changes due to change in scope of consolidation	686	0
Defined benefit obligations at end of period	3,268	1,643
EURk	2014	2013
Change in plan assets
Fair value of plan assets at beginning of period	962	775
Expected return	25	15
Contributions of the employer and the participants of the plan	242	180
Benefits paid	287	65
Actuarial losses/gains recognised in equity	–118	–60
Currency translation differences from foreign plans	24	–13
Changes due to change in scope of consolidation	386	0
Fair value of plan assets at end of period	1,808	962

Sensitivity Analysis

A change of the aforementioned assumption applied to determine the DBO as per December 31, 2014 and December 31, 2013 would increase or decrease the DBO as follows:

	Change of assumptions	Increase of assumptions	Decrease of assumptions
Dec. 31, 2014	in percentage points	Change of DBO in EURk	Change of DBO in EURk
Discount rate	0.25	–234	250
Future salary increases	0.25	43	–41
Future pension increases	0.25	57	–54

	Change of assumptions	Increase of assumptions	Decrease of assumptions
Dec. 31, 2013	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

In calculating the sensitivity of the DBO for the relevant actuarial assumptions, the same method was used as for the calculation of the recognised obligation.

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 2014, they amounted to a total of EUR 1,606k (previous year: EUR 1,440k) 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 Equity

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

On May 7, 2014, GRENKELEASING AG carried out a capital increase in the context of the Scrip Dividend. The share capital was increased by EUR 69,278.77 to EUR 18,859,255.47 through partial use of the authorised capital, which was resolved upon by the Annual General Meeting on May 12, 2009. A total of 54,199 new ordinary bearer shares (no-par value) were issued. The new shares carry the same dividend rights as the existing shares. Hence, the Company's share capital is now divided into 14,754,199 ordinary bearer shares.

The fully paid-in subscribed capital of GRENKELEASING AG amounts to EUR 18,859k (previous year: EUR 18,790k). It is divided into 14,754,199 (previous year: 14,700,000) no-par value bearer shares.

4.19.1 Authorised Capital

On May 12, 2009, the Annual General Meeting adopted a resolution authorising the Board of Directors, with the consent 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 consent 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.

In fiscal year 2014, the Authorised Capital was again utilised in an amount of EUR 69k before the Authorised Capital expired.

4.19.2 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 consent 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.

4.19.3 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 made possible.

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 consent 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.

4.19.4 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.

4.19.5 Unappropriated Surplus

On April 10, 2014, the Annual General Meeting adopted the resolution on the appropriation of GRENKELEASING AG's unappropriated surplus for fiscal year 2013 in the amount of EUR 14,790,501.93. 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 2013	EUR 14,790,501.93
Distribution of a dividend of EUR 1.00 per share for a total of 14,700,000 shares	EUR 14,700,000.00
Profit carryforward (to new account)	EUR 90,501.93

The dividend was paid to the shareholders of GRENKELEASING AG on May 6, 2014.

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 2012 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.

The Board of Directors will propose the distribution of a dividend of EUR 1.10 per share for the fiscal year 2014 to the Annual General Meeting. This distribution has not been recognised as a liability as per December 31, 2014.

4.19.6 Reserves

The capital reserves of EUR 116,491k (previous year: EUR 112,757k) mainly result from the IPO of GRENKELEASING AG in April 2000 and the capital increases of February 2013 and May 2014.

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 and consolidated structured entities.

As a result of the purchase of additional interests of non-controlling interests during fiscal year 2014, retained earnings declined by EUR 977k.

4.19.7 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 56k (previous year: EUR 409k) less deferred taxes of EUR –6k (previous year: EUR –21k).

As a result of the recognition of pension provisions, an amount of EUR –668k (previous year: EUR 78k) for actuarial gains and losses and deferred taxes totalling EUR 186k (previous year: EUR –22k) was also recognised in equity.

5 Changes in the Scope of Consolidation

5.1 Acquisitions in Fiscal Year 2014

GCLUX Location S.à.r.l., Munsbach/Luxembourg

On March 31, 2014, which is both the date of the purchase agreement and the date of acquisition, GRENKELEASING AG acquired 56% of the voting shares in GCLUX Location S.à.r.l., Munsbach/Luxembourg. On April 14, 2014, GRENKELEASING AG acquired the remaining 44% of the voting shares. Thus, GRENKELEASING holds 100% of the voting shares in this company.

Prior to the acquisition, GCLUX Location S.à.r.l., Munsbach/Luxembourg 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 value 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, 2014 on the basis of better knowledge gained: intangible assets EUR 630k, lease receivables EUR 111k, other assets EUR 202k, deferred tax liabilities EUR 219k, and other liabilities EUR 648k. Intangible assets are largely attributable to non-contractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables with a gross amount of EUR 225k, an amount of EUR 114k is impaired and is not expected to be recovered. Other liabilities include intra-group liabilities and consist of a risk allocation (EUR 394k) and a current liability (EUR 61k). The intra-group liabilities were eliminated as a result of the consolidation and, therefore, are 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 1,464k which is expected to be not tax deductible. Goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. Since the date of acquisition, the acquired company has contributed a net result of EUR –142k to the Consolidated Group's net profit after consolidation effects and effects from the purchase price allocation. Had the company been acquired by GRENKE as per January 1, 2014, its contribution to the Consolidated Group's net profit would have been a loss of EUR –232k.

The total consideration paid for the business combination amounted to EUR 2,511k and consisted solely of cash. Cash acquired with the business combination amounted to EUR 60k. All costs related to the acquisition were recognised in profit and loss. Non-controlling interests were measured as per March 31, 2014 at the proportionate fair value of acquired assets and assumed liabilities.

In the meantime, the company has been renamed GRENKELOCATION SARL.

GRENKEFACTORING AG, Basel/Switzerland

By way of a purchase agreement dated June 15, 2014, GRENKELEASING AG acquired 100% of the voting shares in GRENKEFACTORING AG, Basel/Switzerland and control was assumed on June 30, 2014.

Prior to the acquisition, GRENKEFACTORING AG, Basel/Switzerland was active within GRENKELEASING AG's factoring franchise system and specialised in traditional factoring services focussed on lower value receivables in Switzerland. Since not all of the relevant information needed for determining the final purchase price allocation is yet available, the fair value 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, 2014 on the basis of better knowledge gained: intangible assets EUR 155k, receivables from factoring business EUR 5,834k, cash and cash equivalents EUR 524k, other assets EUR 135k, deferred tax assets EUR 175k, trade payables EUR 598k, pensions EUR 300k, deferred tax liabilities EUR 34k, and other liabilities EUR 5,771k. Intangible assets are largely attributable to client relationships and non-competitive clauses. Of the receivables from factoring business with a gross amount of EUR 5,892k, an amount of EUR 58k is impaired and is not expected to be recovered. Other liabilities include intra-group liabilities (EUR 5,732k) and primarily consist of current liabilities for the refinancing of the factoring business (EUR 5,602k). The intra-group liabilities were eliminated as a result of the consolidation and therefore are not reported in the consolidated statement of financial position. Deferred tax assets largely relate to tax-loss carryforwards. 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 3,799k. Since the date of acquisition, goodwill has increased by EUR 41k due to currency translation effects and is not expected to be tax deductible. Goodwill includes intangible assets, such as employees and expected synergy effects, which could not be separately identified. Since the date of acquisition, the acquired company has contributed a net result of EUR 7k to the Consolidated Group's net profit after consolidation effects and effects from the purchase price allocation. Had the company been acquired as per January 1, 2014, its contribution to the Consolidated Group's net interest income would have been EUR 1,143k and under the assumptions mentioned above, the subsidiary's contribution to the Consolidated Group's net profit would have been EUR 95k.

The total consideration paid for the business combination amounted to EUR 3,919k and consisted solely of cash. The cash acquired with the business combination amounted to EUR 524k. All costs related to the acquisition were recognised in profit and loss.

Additional Changes to the Scope of Consolidation in Fiscal Year 2014

The first-time application of IFRS 10 resulted in changes in the scope of consolidation due to structured entities. We refer to the explanations in notes 2.2.1 and 2.3.1.

5.2 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. The previously preliminary purchase price allocations was finalised in the second quarter of 2014 resulting in changes to deferred tax assets for tax-loss carryforwards. Due to additional information gained, an amount of EUR 198k was capitalised as per the date of the initial consolidation.

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 previous year on the basis of better knowledge gained: Intangible assets EUR 2,955k, lease receivables EUR 1,482k, other assets EUR 1,114k, deferred tax assets EUR 198k, 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 final purchase price allocation resulted in goodwill of EUR 3,410k 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.

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. The previously preliminary purchase price allocations was finalised in the second quarter of 2014 resulting in no changes.

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 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 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 and liabilities in the course of the purchase price allocation. The purchase price allocation 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.

Additional Changes to the Scope of Consolidation in Fiscal Year 2013

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 GRENKE FINANCE Plc. is exposed to variable returns from its involvement and has the ability to use its power over the investee to influence the amount of these returns. The date of the first-time consolidation is determined by the compartment's assumption of refinancing activity as per March 31, 2013.

The first-time application of IFRS 10 resulted in changes in the scope of consolidation due to structured entities. We refer to the explanations in notes 2.2.1 and 2.3.1.

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	At fair value	At fair value
Dec. 31, 2014	Measurement	amount	directly in	through profit	Amortised
EURk	category	Dec. 31, 2014	equity	and loss	cost
Financial assets
Cash and cash equivalents	L&R	88,395			88,395
Financial instruments with positive
fair value without hedging relationship	AtFVtPL	1,109		1,109
Lease receivables (performing)	n.a.	2,354,439				2,354,439
Lease receivables (non-performing)	L&R	101,659			101,659
Trade receivables	L&R	4,793			4,793
Other financial assets	L&R	90,530			90,530
Aggregated categories
	L&R				285,377
	AtFVtPL			1,109
	n.a.					2,354,439
Financial liabilities
Liabilities from the refinancing of lease
receivables	oL	1,998,684			1,998,684
Liabilities from deposit business	oL	300,357			300,357
Trade payables	oL	9,821			9,821
Bank liabilities	oL	12,158			12,158
Financial instruments with negative
fair value without hedging relationship	AtFVtPL	4,574		4,574
Financial instruments with negative
fair value with hedging relationship	n.a.	9	9
Aggregated categories
	oL				2,321,020
	AtFVtPL			4,574
	n.a.		9

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	At fair value	At fair value
Dec. 31, 2013	Measurement	amount	directly in	through profit	Amortised
EURk	category	Dec. 31, 2014	equity	and loss	cost
Financial assets
Cash and cash equivalents	L&R	109,770			109,770
Financial instruments with positive
fair value 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	87,828			87,828
Aggregated categories
	L&R				307,958
	AtFVtPL			2,713
	n.a.					2,043,904
Financial liabilities
Liabilities from the refinancing of lease
receivables	oL	1,775,094			1,775,094
Liabilities from deposit business	oL	255,637			255,637
Trade payables	oL	10,747			10,747
Bank liabilities	oL	2,232			2,232
Financial instruments with negative
fair value without hedging relationship	AtFVtPL	3,637		3,637
Financial instruments with negative
fair value with hedging relationship	n.a.	73	73
Aggregated categories
	oL				2,043,710
	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

Net gains and losses		Currency
Dec. 31, 2014 (EURk)	From interest	translation	Impairment	From disposal	Net profit
Loans and Receivables	3,844	1,518	–12,414	–39,755	–46,807
At Fair Value through Profit and Loss	0	–2,631	0	0	–2,631
Other Financial Liabilities	–916	0	0	0	–916
Dec. 31, 2013 (EURk)
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

Interest is 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 255,080k (previous year: EUR 230,717k). 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	Up to	3 to	1 to	More than
EURk	on demand	3 months	12 months	5 years	5 years
Type of liability
Refinancing liabilities	0	271,308	369,529	1,463,541	3,197
Liabilities from deposit business	9,145	52,852	97,585	140,775	0
Bank liabilities	10,900	570	344	344	0
Other liabilities	0	11,214	0	0	0
Trade payables	0	9,821	0	0	0
Negative fair values from derivative financial
instruments	0	937	2,569	1,077	0
Total	20,045	346,702	497,027	1,605,737	3,197

As per Dec. 31, 2014

As per Dec. 31, 2013

	Due	Up to	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	1,201,678	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	1,333,786	53,673

Regarding the disclosures on 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 GRENKE Consolidated Group 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 GRENKE Consolidated Group 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 Turkey, Dubai, and Canada, and of the British, Polish, Czech, Swedish, Hungarian, Swiss (factoring), 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 with positive fair value and financial instruments with negative fair value. 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 163,213k (previous year: EUR 131,837k).

EURk	Nominal volume as per		Maturity of the nominal volume as per Dec. 31, 2014		Hedged
	Dec. 31, 2013	Dec. 31, 2014	2015	2016	2017	later	average rate
EUR buying
TRY	8,965	8,717	8,717				3.13
CZK	8,226	7,533	3,325	2,265	1,288	655	26.61
GBP	54,219	71,440	51,095	19,659	566	120	0.81
CHF	5,694	6,632	6,632				1.21
HUF	4,865	5,089	2,304	1,655	791	339	319.99
CAD	0	501		501
SEK	11,633	16,649	5,124	5,385	4,257	1,883	9.21
DKK	32,518	38,840	8,770	8,180	19,623	2,267	7.51
PLN	2,033	261	261
AED	1,640	7,280	3,156	1,942	1,345	837	4.85
EUR selling
PLN	2,044	271	271				4.50

They are divided by currency as follows:

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 programmes as well as the FCT "GK"-COMPARTMENT "G2" and FCT "GK"-COMPARTMENT "G3", the respective structured entity or GRENKELEASING AG 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 prayer swaps. A fixed interest rate is exchanged for a floating-rate interest.

The same applies to the refinancing through GOALS Financing 2009 Ltd. However, here the GRENKE Consolidated Group as well as the structured entity GOALS Financing 2009 Ltd. are responsible for interest rate hedging. Here, back-to-back swaps are employed.

In fiscal year 2013 and 2014, 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, 2014 of EUR 110 million (previous year: EUR 230 million) and contracted fixed interest rates in the range of 0.022% and 0.1945% (previous year: 0.189% to 0.537%) over the respective duration. The duration of the longest contracted interest rate swap is until December 2015 (previous year: 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	Nominal volume as per Dec. 31
	2013	2014	2015	2016	2017	2014
Contracted prior to 2014	230,000	0	0	0	0	0.83%
Contracted in 2014	0	110,000	0	0	0	0.25%
Total	230,000	110,000	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 2015. 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 9k (previous year: EUR 73k).

6.4 Fair Value of Financial Instruments

6.4.1 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 1,006,000k and their fair value amounted to EUR 1,032,929k. 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	2014	2014	2013	2013
Financial assets
Lease receivables (performing)	2,612,422	2,354,439	2,260,874	2,043,904
Other financial assets	92,667	90,530	88,524	87,828
Financial liabilities
Refinancing liabilities	2,027,409	1,998,648	1,791,917	1,775,094
Liabilities from deposit business	300,547	300,357	262,492	255,637
Bank liabilities	12,155	12,158	2,270	2,232

6.4.2 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	2014	2014	2013	2013
Financial Assets
Interest rate derivatives with hedging
relationship	0	0	0	0
Interest rate derivatives without hedging
relationship	297	297	1,623	1,623
Forward exchange contracts	812	812	1,090	1,090
Total	1,109	1,109	2,713	2,713

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	2014	2014	2013	2013
Financial Liabilities
Interest rate derivatives with hedging
relationship	9	9	73	73
Interest rate derivatives without hedging
relationship	315	315	1,730	1,730
Forward exchange contracts	4,259	4,259	1,907	1,907
Total	4,583	4,583	3,710	3,710

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.

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

EURk	2014	2013
EUR buying
TRY	–502	349
CZK	290	483
GBP	–2,814	–1,433
CHF	–19	–13
HUF	20	–150
CAD	–21	0
SEK	485	116
DKK	–329	–186
PLN	–21	–125
AED	–548	30
EUR selling
PLN	11	113

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, 2014	430,213	374,127	468,530	383,933	56,086
From sale of receivable agreements	186,363	154,021	206,633	163,826	32,342
Transferred lease receivables
Dec. 31, 2013	348,247	309,301	380,862	311,778	38,946
From sale of receivable agreements	171,829	149,745	192,234	152,222	22,084

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. Thus, 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.

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 as well as of GRENKEFACTORING AG, Switzerland, which was newly acquired in the reporting year. Both entities perform traditional factoring services focussing on small-ticket factoring.

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 (Leasing and Factoring segments) 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	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Operating segment income	177,245	147,096	13,006	12,510	2,675	1,545	192,926	161,151	0	0	192,926	161,151
Staff costs	52,092	49,407	1,525	1,344	1,411	1,005	55,028	51,756	0	0	55,028	51,756
Segment result	77,236	55,535	9,792	9,165	444	3	87,472	64,703	0	0	87,472	64,703
Reconciliation to
consolidated financial
statements
Operating result											87,472	64,703
Other financial income											–563	–445
Taxes											21,869	17,246
Net profit according to
consolidated income
statement											65,040	47,012
As per December 31
Segment assets	2,810,407	2,517,938	476,522	386,525	25,904	15,145	3,312,833	2,919,608	–420,692	–336,633	2,892,141	2,582,975
Reconciliation to
consolidated financial
statements
Tax assets											32,809	36,513
Total assets according to
consolidated statement of
financial position											2,924,950	2,619,488
Segment liabilities	2,384,591	2,147,396	394,265	310,808	21,065	11,769	2,799,921	2,469,973	–420,692	–336,633	2,379,229	2,133,340
Reconciliation to
consolidated financial
statements
Tax liabilities											52,735	46,686
Liabilities according to
consolidated statement of
financial position											2,431,964	2,180,026

7.3 Information on Geographical Segments

On a country level, Germany, France, and Italy are the main geographical segments 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
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Operating income
(January to December)	56,107	54,031	44,357	37,724	33,707	24,065	58,755	45,331	192,926	161,151
Non-current assets
(as per December 31)	475,038	459,667	428,114	361,963	231,212	190,754	558,412		468,900 1,692,776 1,481,284

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 its equity according to the statement of financial position 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 financial services provider and parent company of the banking group, GRENKELEASING AG must meet the equity requirements of banking groups pursuant to Section 10a KWG in conjunction with Article 25ff of EU Regulation No. 575/2013 (Capital Requirement Regulation [CRR])

The regulatory scope of consolidated companies of GRENKELEASING AG is determined by the Consolidated Group's scope of consolidation. The solvency of the banking group is also measured based on the affiliation to the Consolidated Group. Equity is calculated in the context of the COREP reporting (Common Solvency Ratio Reporting) pursuant to Article 72ff CRR.

For the presentation of equity, please refer to the combined management report.

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 541k (previous year: EUR 658k), the Consolidated Group generated income from interest on loans of EUR 659k (previous year: EUR 764k) (see note 3.1) as well as from the rental of software in an amount of EUR 13k (previous year: EUR 22k). As per the end of the reporting period, there were further receivables from franchisees totalling EUR 426k (previous year: EUR 659k) (see notes 4.4 and 4.5) in addition to loans in an amount of EUR 18,206k (previous year: EUR 15,922k).

8.3 Contingencies (Contingent Liabilities) and Other Financial Obligations

GRENKELEASING AG, as guarantor for individual franchise companies, has granted financial guarantees of EUR 43.9 million (previous year: EUR 30.2 million).

The Company has other financial obligations related to rent, building maintenance, and lease contracts. The resulting financial obligations are presented below:

EURk	Dec. 31, 2014	Dec. 31, 2013
Rent, maintenance, and lease obligations
due in the subsequent year	10,792	9,428
due in 2 to 5 years	15,189	17,339
due in more than 5 years	2,375	3,234
Total	28,356	30,001

The rent payments are partly offset by expected rental income from subleases of EUR 502k in fiscal year 2015 (previous year: EUR 500k). In subsequent years, additional rental income of EUR 167k will occur. There are extension options ranging from one to five years on leases for rented premises.

Under three agreements on the sale of receivables of GRENKE Investionen Verwaltungs KGaA to secure all receivables of the holding company (Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien) from the operating company, the operating company (GRENKELEASING AG) assigns to the holding company the following from lease contracts with end lessees (sublease contract) for leasing assets which are the subject of a purchase agreement between the operating company and the holding company:

All receivables, claims and rights arising from these sublease contracts, including any claims from extended leases following expiry of the original lease term, any claims for compensation payments, residual values, and payment of a purchase price from the sale of the respective lease asset. Claims from credit and property insurance from the sublease contract are also assigned as are any claims from repurchase obligations on the part of suppliers of lease assets or of third parties. The buyer of the receivables acquires the equitable lien on the lease assets underlying the receivables purchase agreement.

In 2013 and 2014, 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 2013 and 2014, 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 2013 and 2014. 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 controls GRENKELEASING AG or has joint control over GRENKELEASING AG, or has the power to exercise considerable influence over its business or operating decisions. Related third parties of the GRENKE Consolidated Group include people in key positions and their family members, subsidiaries of GRENKELEASING AG, and entities that exercise a considerable influence. 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 3,861k (previous year: EUR 3,793k) from members of the GRENKE Consolidated Group's Board of Directors and their close family members. The Bank received deposits totalling EUR 1,234k (previous year: EUR 1,207k) 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 and their family members amounted to EUR 2k (previous year: 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 2014, 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, Baden-Baden, and General Manager of S.K. Management- und Beteiligungs GmbH, Baden-Baden
• Mr. Erwin Staudt, Leonberg, graduate economics
• Prof. Dr. Thilo Wörn, Essen, Professor at the Fachhochschule für öffentliche Verwaltung NRW, Essen

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

	Number of shares as per December 31
	2014	2013
Dieter Münch	75	75
Prof. Dr. Ernst-Moritz Lipp	32,618	31,325
Erwin Staudt	1,009	1,000
Florian Schulte	2,365	2,365
Prof. Dr. Thilo Wörn	1,060	1,060
Total	37,127	35,825

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 simultaneously Chairman of the Supervisory Board of Grenke Investitionen Verwaltungs KGaA, Baden-Baden, a subsidiary of 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. Additionally, Mr. Erwin Staudt is a member of the Advisory Board of Interstuhl Büromöbel GmbH & Co. KG, Meßstetten-Tieringen.

Mr. Florian Schulte is the Chairman of the Supervisory Board of Global Group Dialog Solutions AG, Idstein, and member of the Board of Directors of Deltavista International AG, Küsnacht, Switzerland.

Prof. Dr. Thilo Wörn is the Chairman of the Advisory Boards of agathon GmbH& Co. KG, Bottrop, DEFLEX-Dichtsysteme GmbH, Moers-Genend, and of BEST SALES + SERVICES GmbH/LOGISTIK, Bocholt.

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 discharge for fiscal year 2014.

The Supervisory Board's remuneration (including payments for supplementary services) totalled EUR 112k (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
EURk	Total		Remuneration AG		Remuneration KGaA			supplementary services
	2014	Previous year	2014	Previous year	2014	Previous year	2014	Previous year
Total	118	116	112	109	6	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, 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 2014 breaks down as follows:

EURk	Total remuneration	of which fixed	of which variable
Total	2,119	1,256	863
Total (previous year)	3,137	1,081	2,056

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 years 2012 and 2013 was EUR 52.01 and EUR 73.13, respectively. 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. This maximum payment applies to the respective agreement in its entirety, i.e., the total payment for all three tranches may not exceed the maximum payment amount. If an annual tranche exceeds the maximum total entitlement and the agreement is still in force for several more years (tranches), then no further claims can be acquired in the future. 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, 2014, the value of the phantom stock agreements granted totalled EUR 12k (previous year: EUR 1,288k). Due to the limitation mentioned above, the maximum payment for three members of the Board of Directors was achieved in the previous year. In the current year, the maximum payment for all members of the Board of Directors was achieved. The payments are recognised under staff costs in the income statement and are included under variable remuneration components.

Shareholdings are shown in the table below:

	2014	2013
Wolfgang Grenke*	0	4,980,619
Jörg Eicker	5,172	100
Mark Kindermann	53,087	52,053
Gilles Christ	7,282	4,450
Antje Leminsky	2,823	0
Total	68,364	5,037,222

Number of shares as per December 31

* direct share ownership; previous year: without the voting rights of the Grenke family's pooling agreement.

In July 2014, Mr Wolfgang Grenke and his family ("the Grenke family") have formed a family holding under the name of Grenke Beteiligung GmbH & Co. KG, Baden-Baden. On September 17, 2014, the Grenke family contributed all of their shares held in GRENKELEASING AG into this company. Previously, these shares were pooled in a pooling agreement. Since that date, Grenke Beteiligung GmbH & Co. KG holds 6,291,733 shares in GRENKELEASING AG, corresponding to 42.64% of GRENKELEASING AG's share capital. Grenke Vermögensverwaltung GmbH, Baden-Baden, as the general partner, is authorised to exercise management functions. Mr Wolfgang Grenke and Mrs Anneliese Grenke are the Executive Directors of Grenke Vermögensverwaltung GmbH.

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, and of GRENKEFACTORING AG, Basel, 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, and of GRENKEFACTORING AG, Basel, Switzerland.

Mr. Gilles Christ is member of the Board of Directors 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 2014

Convenience Translation:

On January 2, 2014 Threadneedle Asset Management Holdings Limited, London, UK has informed us according to Article 21 Section 1 WpHG, that on December 27, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (733,808 voting rights). These voting rights of 4.99% (733,808 voting rights) were attributable to Threadneedle Asset Management Holdings Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

On January 2, 2014 Threadneedle Asset Management Limited, London, UK has informed us according to Article 21 Section 1 WpHG, that on December 27, 2013 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (733,808 voting rights). These voting rights of 4.99% (733,808 voting rights) were attributable to Threadneedle Asset Management Limited according to article 22, paragraph 1, sentence 1, number 6 WpHG.

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

On May 15, 2014 Ameriprise Financial, Inc., Minneapolis, USA has informed us according to Article 21 Section 1 WpHG, that on May 7, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights). These voting rights of 4.99% (735,808 voting rights) were attributable to Ameriprise Financial, Inc. according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

On May 15, 2014 Threadneedle Asset Management Holdings SARL, Luxembourg has informed us according to Article 21 Section 1 WpHG , that on May 7, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights ). These voting rights of 4 .99% (735,808 voting rights) were attributable to Threadneedle Asset Management Holdings SARL according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

On September 22, 2014 and in accordance with Article 21, Section 1 WpHG, we were notified of the following:

Mrs Anneliese Grenke, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 her voting rights in GRENKELEASING AG, Baden-Baden, Germany, have fallen below the threshold of 30%, 25%, 20%, 15%, 10%, 5%, and 3% and amounted to 0% (0 voting rights) as per this date.

Mr Moritz Grenke, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 his voting rights in GRENKELEASING AG, Baden-Baden, Germany, have fallen below the threshold of 30%, 25%, 20%, 15%, 10%, 5%, and 3% and amounted to 0% (0 voting rights) as per this date.

Mr Roland Grenke, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 his voting rights in GRENKELEASING AG, Baden-Baden , Germany, have fallen below the threshold of 30%, 25%, 20%, 15%, 10%, 5%, and 3% and amounted to 0% (0 voting rights) as per this date.

Mr Oliver Grenke, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 his voting rights in GRENKELEASING AG, Baden-Baden, Germany, have fallen below the threshold of 30%, 25%, 20%, 15%, 10%, 5%, and 3% and amounted to 0% (0 voting rights) as per this date.

Grenke Beteiligung GmbH & Co. KG, Baden-Baden, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, have exceeded the threshold of 3%, 5%, 10%, 15%, 20%, 25%, and 30% and amounted to 42.64% (6,291,733 voting rights) as per this date.

Grenke Vermögensverwaltung GmbH, Baden-Baden, Germany, has notified us according to Article 21, Section 1 WpHG that on September 17, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany, have exceeded the threshold of 3%, 5%, 10%, 15%, 20%, 25%, and 30% and amounted to 42 .64% (6,291,733 voting rights) as per this date. These voting rights of 42 .64% (6,291,733 voting rights) were attributable to Grenke Vermögensverwaltung GmbH through Grenke Beteiligung GmbH & Co. KG according to Article 22, Section 1, Sentence 1, Nurnber 1 WpHG.

On September 27, 2014, Grenke Beteiligung GmbH & Co. KG and its sole general partner, Grenke Vermögensverwaltung GmbH, both headquartered in Baden-Baden, Germany, notified GRENKELEASING AG of the following in accordance with Article 27a, Section 1 WpHG in relation to the transmission of voting right notifications on September 22, 2014:

'The voting rights threshold was exceeded by Grenke Beteiligung GmbH & Co. KG as the result of obtaining shares in GRENKELEASING AG, which were contributed to Grenke Beteiligung GmbH & Co. KG, free of charge, by the members of the Grenke family. Exceedance of the voting rights threshold by Grenke Vermögensverwaltung GmbH was not the result of the purchase of shares in GRENKELEASING AG by Grenke Vermögensverwaltung GmbH, but was the result of the firsttime attribution of voting rights from the shares obtained by Grenke Beteiligung GmbH & Co. KG (Article 22, Section 1 Number 1 WpHG).

a) Objectives pursued through the obtainment of the voting rights

– The exceedance of the voting rights threshold in shares of GRENKELEASING AG stated in the aforementioned voting rights notifications will not be used to implement strategic objectives or generate trading profits, but have occurred solely in the context of succession planning for the Grenke family.

– There is no intention to obtain further voting rights by acquisition or otherwise within the next twelve months. However, if the Annual General Meeting of GRENKELEASING AG in 2015 decides not to pay the dividend exclusively in cash, but rather gives shareholders the option to contribute parts of their dividend rights in return for new shares in GRENKELEASING AG, it should not be ruled out that use of this option may be made, at least in part.

– There is no intention to exert influence on the composition of the administrative, management, or supervisory bodies of GRENKELEASING AG.

– There is no intention to make a significant change in the capital structure of GRENKELEASING AG, particularly with regard to the proportion of equity and debt financing, or in the dividend policy.

b) Origin of funds used

– The contribution and transfer of shares in GRENKELEASING AG to Grenke Beteiligung GmbH & Co. KG was performed free of charge. Neither equity nor debt funds were used for this purpose.

– The shares held by Grenke Beteiligung GmbH & Co. KG were attributed to Grenke Vermögensverwaltung GmbH as the general partner of Grenke Beteiligung GmbH & Co. KG. Neither equity nor debt funds were used for this purpose.'

On October 06, 2014 Threadneedle Asset Management UK Ltd, London, UK, has informed us according to Article 21 Section 1 WpHG, that on May 7, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights). These voting rights of 4.99% (735,808 voting rights) were attributable to Threadneedle Asset Management UK Ltd according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

On October 06, 2014 TAM UK Holdings Limited , London, UK, has informed us according to Article 21 Section 1 WpHG, that on May 7, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights). These voting rights of 4.99% (735,808 voting rights) were attributable to TAM UK Holdings Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

On October 06, 2014 Threadneedle Holdings Limited, London, UK, has informed us according to Article 21 Section 1 WpHG, that on May 7, 2014 its voting rights in GRENKELEAS ING AG, Baden-Baden, Germany have fallen below the threshold of 5%and amounted to 4.99% (735,808 voting rights) . These voting rights of 4.99% (735,808 voting rights) were attributable to Threadneedle Holdings Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

Correction of our publication regarding voting rights from January 03, 2014:

On October 06, 2014 Threadneedle Asset Management Holdings Limited, London, UK, has informed us according to Article 21 Section 1 WpHG, that on May 07, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights). These voting rights of 4.99% (735,808 voting rights) were attributable to Threadneedle Asset Management Holdings Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG.

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

Correction of our publication regarding voting rights from January 03, 2014:

On October 06, 2014 Threadneedle Asset Management Limited, London, UK has informed us according to Article 21 Section 1 WpHG, that on May 07, 2014 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have fallen below the threshold of 5% and amounted to 4.99% (735,808 voting rights) . These voting rights of 4.99% (735,808 voting rights) were attributable to Threadneedle Asset Management Limited according to article 22, paragraph 1, sentence 1, number 6 WpHG.

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

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 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/).

Responsibility Statement

We confirm that, to the best of our knowledge and according to the applicable accounting standards, 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 conveys 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.

Baden-Baden, January 31, 2015

The Board of Directors

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, 2014. 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 the assessment of 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. The audit also includes an evaluation of 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, 2015

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Frey von Wirth Auditor Auditor

Calendar of Events

February 10, 2015	Publication of Annual Financial Report 2014 – Annual Press and
	DVFA Analysts Conference
April 29, 2015	Publication of Financial Report for the 1st Quarter of 2015
May 12, 2015	Annual General Meeting (Kongresshaus Baden-Baden)
July 28, 2015	Publication of Financial Report for the 2nd Quarter and Half-Year of 2015
October 27, 2015	Publication of Financial Report for the 3rd Quarter and the First Nine Months of 2015

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