GRENKELEASING AG GROUP SIX-MONTH'S REPORT 2006 REPORTING PERIOD: JANUARY 1, 2006 TO JUNE 30, 2006

GRENKELEASING®

Important Key Figures of the GRENKELEASING AG Group	03

Letter to the Shareholders from the Board of Directors	04
Expansion in Europe	07
The GRENKELEASING Franchise System	08
Risk Categories	09
Explanation of the Key Figures	10
From Contract to Balance Sheet	12
Overview of the Group	14
GRENKELEASING Locations in Europe	15
The Board of Directors of GRENKELEASING AG	16
The Members of the Supervisory Board of GRENKELEASING AG	17
Directors' Holdings as per June 30, 2006	18

Consolidated Income Statement for the Period from January 1, 2006 to June 30, 2006	19
Consolidated Balance Sheet as of June 30, 2006	20
Consolidated Cash Flow Statements for the Period from January 1, 2006 to June 30, 2006	21
Statement of Changes in Consolidated Equity	23
Segment Reporting as of June 30, 2006	24
Selected Explanatory Notes	25

Dates 2006 31

IMPORTANT KEY FIGURES OF THE GRENKELEASING AG GROUP

	Jan. 1. - June 30, 2006	Change	Jan. 1. - June 30, 2005	Unit

New business*	228,841	13%	202,232	EURk
New business franchise partners	16,875	147%	6,836	EURk
Contribution margin 1 of new business**	23,830	--	23,755	EURk
Number of new contracts***	29,901	8%	27,628	Units
Number of new contracts without projects	27,752	8%	25,711	Units
Net interest income from leasing business	31,028	3%	30,105	EURk
Expenses from settlement of claims	7,252	-13%	8,335	EURk
Profit from insurance business	7,759	16%	6,689	EURk
Profit from new business	9,215	21%	7,640	EURk
Profit from disposals	2,134	5%	2,041	EURk
(income exceeding the calculated residual value)
Result from currency translation	-73	-10%	-81	EURk
Other operating income	345	-7%	369	EURk
Costs of new contracts	6,453	10%	5,851	EURk
Costs of current contracts	2,053	4%	1,976	EURk
Project costs and basic distribution costs	4,492	53%	2,933	EURk
Management costs	4,432	8%	4,096	EURk
Other costs	705	4%	676	EURk
Amortization/ depreciation on Goodwill	0	-100%	6	EURk
EBIT (Profit from ordinary operations)	25,021	9%	22,890	EURk
Other interest	-331	15%	-288	EURk
Income from the fair value measurement	271	--	44	EURk
EBT (Net profit for the period before taxes)	24,961	10%	22,890	EURk
Net profit for the period (consolidated pursuant to IFRS)	15,495	10%	14,037	EURk
Earnings per share (IFRS)	1.14	11%	1.03	EUR
Dividend****	0.50		0.40	EUR

Embedded value of the lease portfolio***	266	11%	239	EURm
(incl. Equity before taxes)
Embedded value of the lease portfolio***	235	13%	208	EURm
(incl. Equity after taxes)
Cost/Income Ratio***	42.4	4%	40.7	%
Share of IT products in the lease portfolio***	87	-1%	88	%
Share of corporate customers in the lease portfolio***	100	1%	99	%
Mean acquisition value***	7.7	5%	7.3	EURk
Mean term of contract	46	2%	45	Months
Volume of leased assets***	1,297	18%	1,102	EURm
Number of current contracts	178,415	14%	156,082	Units
Average number of employees***	379	18%	321	Persons

* Cost of new lease contracts and receivables (incl. currency adjustment and franchise partners)

** Incl. franchise partners

*** Explanation on page 10-11

**** Distribution in the reporting year out of profit of the previous year (explanation concerning dividend on page 29)

GRENKELEASING AG is the parent company of the GRENKELEASING AG Group - referred to below as "GRENKELEASING".

All the figures and statements published in the Six-Month's Report refer to the GRENKELEASING AG Group.

LETTER TO THE SHAREHOLDERS FROM THE BOARD OF DIRECTORS

Dear Shareholders, Ladies and Gentlemen,

GRENKELEASING closed the first half of 2006 with growth in new business and earnings on target.

The first six months of 2006 ended for GRENKELEASING with a new business volume – i.e. the total acquisition costs of new leased assets plus receivables – of EUR 229m (HY1 2005: EUR 202m). This translates into 13.2% growth in new business against the same period in the prior year.

As anticipated, the growth rate of new business slowed due to the lower number of working days in the second quarter. Double-digit growth in new business is developing in line with our expectations for the first half of 2006.

The Group's foreign operations continued to see dynamic growth. Overall, our foreign markets reported 27.4% growth year on year, contributing 36% (HY1 2005: 32%) to the Group's new business, with the French subsidiary achieving 27.4% growth, business in Switzerland increasing by 15.4%, and new business in Germany also rising by 6.8%. New business generated by our franchise partners increased by 146.9% to EUR 16.8m (HY1 2005: EUR 6.8m).

In the first half of 2006, the Group had 58,468 leasing inquiries (thereof 25,167 abroad), of which 29,901 led to new lease contracts (thereof 11,300 abroad). The mean contract value was EUR 7,653, a slight increase on the prior year (HY1 2005: EUR 7,324).

Our European expansion strategy has proven to be successful, as evidenced not only by our growth figures but also by the most recent data from Leaseurope. Leaseurope, the European Federation of Leasing Company Associations, estimated 14% growth in new lease business to a total of EUR 270b. This makes Europe the world's biggest leasing market. The largest markets besides Germany, with a new business volume of EUR 50b, are the UK with EUR 55b, Italy with EUR 44b, France with EUR 29b and Spain with EUR 17b.

Despite interest rates continuing to rise over the second quarter, the contribution margin 1 exceeded our target of 10% in the first six months of 2006, although this margin's growth lags behind new business growth in such phases. We expect that we will be able to compensate for this slight disadvantage through improved post-transaction business relating to current contracts, and have managed our new business accordingly.

In assessing net interest income, it should be taken into account that rising interest rates are typically a sign of economic recovery, which usually leads to a decrease in insolvencies and lower risk costs. The balance of interest income and risk costs is reflected at GRENKELEASING in net interest income after settlement of claims and is up 9.2% year on year. The other components of earnings also developed positively, as we expected. Profit from insurance business in the first half rose to EUR 7.8m (up 16.0%), profit from new business grew by 20.6% to EUR 9.2m and profit from disposals to EUR 2.1m (up 4.6%).

As planned, our earnings before taxes (EBT) grew 10.2% to EUR 25.0m year on year in the first six months of 2006, despite the fact that personnel and other operating expenses rose disproportionately as a result of our international expansion. The result was generated by 379 employees, compared with 321 in the first half of 2005 (full-time employees excluding directors). There are 51 employees working in franchise operations.

Compared to the prior-year period, after-tax profit was also up in the first half of 2006, increasing by 10.4% to EUR 15.5m (HY1 2005: EUR 14.0m). This translates into earnings per share of EUR 1.14 (HY1 2005: EUR 1.03). In view of our performance in the first half of 2006, we have reaffirmed our target of double-digit growth rates for new business and profit for fiscal year 2006 as a whole.

The standardized and cost-effective management of lease contracts is one of GRENKELEASING's core competencies. The still low cost-income ratio reflects the fact that our strategy of expanding throughout Europe does not increase costs. Again, the cost-income ratio reached a very good level of 42.4% in the first half of 2006.

GRENKELEASING is active in 16 European countries, thereof in four with franchise partners. We are represented in 20 German cities. In addition to the six branches in France and three in Switzerland, GRENKELEASING has subsidiaries in Austria, Italy, the Czech Republic, Spain, the Netherlands, Denmark, Sweden, Ireland and Belgium. GRENKELEASING is represented in the UK, Poland, Norway and Hungary through a franchise system.

We want to further increase the transparency of our reports in order to illustrate the relationship between the individual earnings components and the growing importance of earnings other than net interest income in more detail in our reports. We have therefore extended our contribution margin to include the expected profit from insurance business and disposals as well as all personnel expenses not related to sales, and other operating expenses. This contribution margin 2 came to EUR 31.1m in the first half of 2006 and reflects the earnings potential of our new business.

We extended our refinancing base in July of this year by placing an ABS bond for approx. EUR 250m. This step gives us access to a highly liquid and stable refinancing market for our business, paving the way for further growth.

Baden-Baden, July 2006

Wolfgang Grenke CEO

EXPANSION IN EUROPE

We have steadily expanded our market share and presence throughout Europe thanks to our European expansion strategy. Our business model has proven successful and is well established in Europe.

* Belgium, Denmark, Ireland, Italy, the Netherlands, Austria, Sweden, Spain, Czech Republic

** UK, Norway, Poland, Hungary

THE GRENKELEASING FRANCHISE SYSTEM

	Franchise partners

GRENKEFACTORING GmbH			GRENKELEASING AS
Baden-Baden (Germany)			Oslo (Norway)

GRENKEAUTOLEASING GmbH			GRENKELEASING Sp.z o.o
Bremen (Germany)			Poznan (Poland)

Grenke Leasing Ltd.			GRENKELEASING Kft./Rt.
Guildford (UK)			Budapest (Hungary)

GRENKELEASING is active in 16 European countries, thereof in four with franchise partners. GRENKELEASING is represented in the UK, Poland, Norway, and Hungary through a franchise system.

GRENKELEASING uses a tailor-made franchise system to minimize the risks and costs in the start-up phase after founding new companies. GRENKELEASING does not hold an interest in these legally independent entities, but has the option of acquiring them at pre-defined terms after a certain period. The design of the purchase option provides an excellent balance between growth incentives for the franchise partners and risk limitation for GRENKELEASING.

Under the franchise agreement, we provide expertise with regard to credit rating checks and processing lease contracts, management tools, back office support and refinancing. The franchise partner is allowed to use the "GRENKE" and "GRENKELEASING" trademarks.

In this way, we ensure that, if and when we decide to acquire the franchise company, we are thoroughly familiar with its receivables portfolio and that the "GRENKE" name is well established in the market.

The franchise concept was launched in the UK and Poland in 2003. In 2005, franchising was introduced in Norway, and, broadening our product range in Germany, GRENKEFACTORING GmbH in Baden-Baden and GRENKEAUTOLEASING GmbH in Bremen, were also founded. We signed the agreement with our franchise partner in Hungary in February of this year.

The franchise strategy has proven a successful way to penetrate new markets quickly and for the long term.

New business generated by our franchise partners increased by 146.9 % to EUR 16.8m (HY1 2005: EUR 6.8m). There are 51 employees working in franchise operations.

RISK CATEGORIES

One of the main core competencies of GRENKELEASING is the ability to assess credit risks and account for them appropriately in its pricing policy. For the sake of transparency, we have defined risk categories, determining a "contribution margin 1 after loss settlement" which provides an indication of how the contract margins relate to risk. Risk is defined as a function of score, contract term and saleability.

As the actual loss can only be determined precisely towards the end of the contract term, the contingent residual risk associated with current contracts is estimated on the basis of historical risk curves. Estimates obviously become more precise the older the portfolio or the shorter the residual term.

If lease contracts are terminated due to arrears, a termination claim (claim to damages) arises against the lessee. The calculations are based on an average collection rate for such claims. Likewise, an average residual term is assumed for each portfolio. Under this method, inaccuracies are inevitable, but should not diminish the informative value of the results.

The table shows that the best financial results are obtained with medium risks. Very good risks put pressure on margins, and defaults on bad risks have a negative effect.

Crucial for understanding these figures is the fact that even when the "contribution margin 1 after loss" is slightly negative, contribution margin 2 is nevertheless usually positive, because additional income from asset insurance and sale considerably exceed the ongoing costs of contract management.

	Risk Categories (figures stated in EUR)	2002	2003	2004	2005	6-Month's 2006

Category 1	Acquisition cost	72,453,823	97,023,937	104,515,781	126,708,580	76,943,838
	Forecast loss	2,144,672	3,017,566	3,591,504	4,414,986	2,346,485
	M1* after loss	5.8%	6.3%	5.7%	5.6%	5.2%
Category 2	Acquisition cost	59,043,477	74,270,343	92,435,888	113,922,397	65,065,019
	Forecast loss	2,080,432	3,177,344	3,871,828	4,347,498	2,097,071
	M1* after loss	7.3%	7.5%	7.8%	7.6%	7.2%
Category 3	Acquisition cost	46,859,252	55,041,326	62,606,845	89,440,278	45,349,931
	Forecast loss	2,686,533	2,983,805	3,439,884	5,237,460	2,015,343
	M1* after loss	5.7%	6.2%	6.7%	6.5%	7.4%
Category 4	Acquisition cost	49,835,184	48,028,936	58,635,191	57,601,730	28,600,299
	Forecast loss	4,065,559	4,105,154	6,017,024	6,101,362	2,688,826
	M1* after loss	3.0%	3.4%	1.8%	1.9%	2.7%
Category 5	Acquisition cost	49,848,385	34,939,909	45,053,526	31,375,206	12,882,137
	Forecast loss	5,802,394	4,131,666	5,984,079	4,242,407	1,521,829
	M1* after loss	-2.6%	-1.5%	-3.2%	-2.1%	0.5%

*M1 = Contribution margin 1

EXPLANATION OF THE KEY FIGURES

Average number of employees This is the average number of employees working within the GRENKELEASING Group during the reporting period. Members of the executive board are not included. Part-time workers were taken into account on a proportional basis.

Contribution Margin/M The contribution margin (M), also known as gross profit, is a corporate cost accounting term. The contribution margin is the amount which, for example, is needed to cover the fixed costs of a product and generate a net profit. It is calculated as the difference between income and the variable costs which are triggered directly by the product.

At GRENKELEASING, contribution margin 1 is calculated on the basis of the present value of the interest margin less commissions to third parties. Contribution margin 2 comprises all cash flows from expected income (e.g. profit from insurance business) and expenses (excluding selling expenses) over the entire term of a lease contract.

Cost/Income Ratio A comparison of costs and income provides the cost/income ratio. As opposed to the usual approach adopted by banking analysts, we deduct expenses for claims settlement/bad debt provisioning from income – even if this produces a somewhat less favourable key figure. The leasing market would generate higher sales if greater risks were taken. However, this would be unlikely to improve the cost/income ratio.

We thus determine the cost/income ratio from the total of all expenses (minus valuation expenses and taxes) and revenues comprising net interest income from leasing activities after claims settlement, net income from insurance activities, net income of new business, additional earnings from realisation, other operating income and (non-leasing) net interest income.

Embedded Value	Under IAS/IFRS accounting, the income generated by a leasing contract is distributed over the contract's duration. This means that, on any given balance sheet closing date, a large part of the profit generated by the portfolio of contracts lies in the future. Along the lines of comparative considerations in the insurance sector, we roughly compute the current value of future surpluses from the existing contracts portfolio on the closing date of the balance sheet as the "embedded value", deducting estimated expenses and adding equity.
Mean acquisition value	The mean acquisition value is determined as the arithmetic mean of the acquisition costs of all leased assets acquired in the reporting period.
Number of New Contracts/New Business	New business comprises the acquisition costs of all assets newly acquired under lease and lease-purchase contracts as well as receivables arising during the reporting period. This also includes the acquisition costs of franchise partners.
Share of corporate customers in the lease portfolio	We understand corporate customers to represent all lessees who are not subject to specific consumer protection provisions. The number given represents the newly concluded contracts in the reporting period.
Share of IT Products in the lease portfolio	We understand IT products to mean information technology equipment (such as PCs, servers, printers), copying equipment and communications equipment. The number given represents the newly concluded contracts in the reporting period.
Volume of leased assets	The volume of leased assets is the sum of all (historic) acquisition costs of assets acquired under leasing and lease purchase contracts as well as receivables not yet terminated as per closing date of the balance sheet.

FROM CONTRACT TO BALANCE SHEET

Despite the differences, the financial results of GRENKELEASING's various types of contract are presented similarly in the balance sheet according to IFRSs. Contrary to German accounting standards, the lease contracts concluded by GRENKELEASING are treated as loan agreements under IFRSs.

The accounting basis (100%) of every lease is the acquisition cost of the newly acquired leased asset: the purchase price excluding VAT that GRENKE-LEASING pays the dealer for the acquisition of the leased asset – whether this is a PC, a photocopier or a telephone system.

In some cases, the dealer receives a commission on these acquisition costs. The average commission paid in 2006 was 1.69% of the acquisition cost.

The conclusion of a lease contract incurs direct costs – e.g. for the aforementioned commission, for the procurement of information from a credit agency or for the preparation of the contract – that are capitalized. However, we also receive processing fees for preparing the lease contract or special lease payments. Adding the direct costs that are incurred when a contract is concluded to the acquisition costs and subtracting from this amount all customer payments received at the start of the contractual term economically results in the net investment (accounting for new lease receivables) in the lease contract. The average net investment for fiscal year 2006 was 104.6% of the acquisition cost. The adjusted difference between this amount and the acquisition cost is the profit from new business.

Since, in accordance with IFRSs, our lease contracts are accounted for as loan agreements, and the resulting income must be distributed as interest income over the contractual term, the net investment is equal to the amount receivable from the lessee (lease receivables) at the start of the contractual term. We have to break down lease payments received from the lessee during the term of the agreement into interest (income from the interest on lease receivables) and the repayment of principal such that the interest rate remains constant while the repayments reduce the lease receivables each quarter so that at the end of the contract the economic value of the leased asset (estimated sales proceeds) remains as the residual value, i.e. is not repaid.

GRENKELEASING uses various financing instruments to fund its leasing business – including three ABCP programs, corporate bonds and loans against borrower's note. In the balance sheet, these are grouped together under refinancing liabilities, and the resulting interest under interest expenses from the refinancing of lease receivables. The net interest income from the leasing business is the balance of the interest income and interest expenses.

If a lessee is more than two consecutive payments in arrears, the lease contract is terminated and the actual loss is called in. This loss claim is simultaneously written down using a lump-sum item-by-item measurement in accordance with the percentage of receivables approach (statistically determined percentage of cash flows from different loss categories). Combined with additional specific write-offs of receivables, this results in the expenses from settlement of claims.

If the lessee uses our insurance service – as of June 30, 2006, 63% of our customers had chosen this option – we manage the customer's, or lessee's interests as a service provider. We receive a fee for this which is recognized as income from insurance business and offset against the corresponding expenses from insurance business. The balance is profit from insurance business.

At the end of the contract, the lessee may renew the lease contract. In this case, we generate revenues from subsequent leases. During this period, the leased asset is measured at fair value at the end of each quarter. The lessee may also return the leased asset to us. In both cases, the leased assets are recognized in the balance sheet at market prices under leased assets for sale and depreciated over time (depreciation of leased assets for sale). The sale of such assets may result in accounting gains/losses from the disposal of leased assets for sale. Combined, all of these income and expense items result in the net profit/loss from disposals.

In addition to direct costs on the conclusion of a contract, further costs are incurred for marketing/ advertising/projects, ongoing contract management and the management. In the income statement, these costs are classified as personnel expenses, operating costs etc.

The following table showing the effects of these items on the income statement over time (expressed as % of acquisition costs) enables an estimate of what percentage of the profit on each lease contract will be realized in the future. We calculate this projected future net income from current lease contracts at the end of each quarter for the entire contract portfolio and publish this figure – after deducting estimated taxes – as the embedded value of the contract portfolio.

																		Total
Quarters	0	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	in % *

Net interest income from leasing business 0.71 2.10 2.01 1.92 1.82 1.72 1.62 1.51 1.40 1.28 1.16 1.04 0.91 0.78 0.64 0.49 0.00																		21.11
Expenses from settlement of claims															0.00 -0.07 -0.24 -0.39 -0.48 -0.53 -0.54 -0.49 -0.47 -0.46 -0.42 -0.37 -0.34 -0.31 -0.30 -0.29 0.00			-5.70
Net income from insurance business															0.10 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.00			4.60
Net income from new business															3.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00			3.78
Profit from disposals															0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.95			0.95
Costs															-8.07 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14			-10.31
EBIT/EBT															–3.48 2.19 1.93 1.69 1.50 1.35 1.24 1.18 1.09 0.98 0.90 0.83 0.73 0.63 0.50 0.36 0.81			14.43

*of the acquisition costs of a leased asset (new business)

OVERVIEW OF THE GROUP

GRENKELEASING LOCATIONS IN EUROPE

** GRENKEFACTORING GmbH, Baden-Baden (DE), GRENKEAUTOLEASING GmbH, Bremen (DE)

THE BOARD OF DIRECTORS OF GRENKELEASING AG

Wolfgang Grenke Chairman of the Board 55 years old

Strategy, corporate development, internal audit

Dr. Uwe Hack 44 years old

Investor relations, treasury, financial control

Mark Kindermann 44 years old

Accounting, quality management, human resources, legal, administration

Thomas Konprecht Vice-Chairman of the Board 47 years old

Marketing, sales, management services

Michael Kostrewa 38 years old

Information technology, e-Business

THE MEMBERS OF THE SUPERVISORY BOARD OF GRENKELEASING AG

Name	Activity	Other Supervisory Board/ Advisory Board Functions

Prof. Dr. Ernst-Moritz Lipp	Chairman of the Supervisory Board,	TFL International GmbH, Weil a. Rhein, DE,
Age: 55	Professor of international	Burkart Verwaltungen GmbH, Singen, DE,
First elected: 2003	finance and general manager,	2D Holding GmbH, Laichingen, DE
Elected until the shareholders' meeting 2008	Baden-Baden, DE
Gerhard E. Witt	Deputy Chairman of the	GRENKE Investitionen
Age: 61	Supervisory Board,	Verwaltungs KGaA, Berlin, DE
First elected: 1997	Public auditor and tax advisor,
Elected until the shareholders' meeting 2008	Baden-Baden, DE
Dr. Brigitte Sträter	Member of the Supervisory Board,
Age: 66	Owner and manager of
First elected: 2001	the PR agency CENA,
Elected until the shareholders' meeting 2010	Dusseldorf, DE
Dieter Münch	Member of the Supervisory Board,	GRENKE Investitionen
Age: 63	Retired bank officer,	Verwaltungs KGaA, Berlin, DE,
First elected: 2000	Weinheim, DE	Weisenburger Bau + Grund AG, DE,
Elected until the shareholders' meeting 2010		Halle/Saale, DE
Dr. Oliver Nass	Member of the Supervisory Board,
Age: 38	Commercial general manager,
First elected: 2005	Paris, France
Elected until the shareholders' meeting 2010
Erwin Staudt	Member of the Supervisory Board,	PROFI Engineering Systems AG,
Age: 58	Economics graduate, President	Darmstadt, DE,
First elected: 2005	of the soccer club VfB Stuttgart	USU AG, Möglingen, DE,
Elected until the shareholders' meeting 2010	1893 e.V, Leonberg, DE	Hahn Verwaltungs-GmbH, Fellbach, DE

DIRECTORS' HOLDINGS AS PER JUNE 30, 2006

Shares held by members of Board of Directors

	Wolfgang	Thomas	Mark	Michael
	Grenke	Konprecht	Kindermann	Kostrewa
	Units	Units	Units	Units
Status as per: June 30, 2006	4,969,419*	329,080	50,953*	59,600

Options held by members of Board of Directors**

	Wolfgang	Thomas	Mark	Michael
	Grenke	Konprecht	Kindermann	Kostrewa
	Units	Units	Units	Units
Status as per: June 30, 2006	13,252	9,938	6,628	6,628

Shares held by Supervisory Board members

	Dieter
	Münch
	Units
Status as per: June 30, 2006	75

* The Board of Directors granted the following call option: Wolfgang Grenke: 300,000 shares, Mark Kindermann: 20,000 shares.

** Granting of options within the scope of the stock option programme. Subscription right to 1 share each.

GRENKELEASING AG, BADEN-BADEN CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006

		3-Month's Report	6-Month's Report
	Apr. 1. - June 30, 2006	Apr. 1. - June 30, 2005	Jan. 1. - June 30, 2006	Jan. 1. - June 30, 2005
EURk

Income from interest
on lease receivables	22,269	20,433	44,099	40,214
Expenses from interest
on refinancing liabilities	6,717	5,187	13,071	10,109
Net interest income from leasing business	15,552	15,246	31,028	30,105
Expenses from settlement of claims	3,619	4,385	7,252	8,335
Net interest income after settlement
of claims from leasing business Income from insurance business	11,933 4,297	10,861 3,746	23,776 8,640	21,770 7,335
Expenses from insurance business	471	274	881	646
Profit from insurance business	3,826	3,472	7,759	6,689
Profit from new business	4,867	4,150	9,215	7,640
Income from disposals	2,513	2,732	6,213	5,595
Expenses from disposals	1,014	1,515	4,079	3,554
Profit from disposals	1,499	1,217	2,134	2,041
Other operating income	136	138	345	288
Personnel expenses	5,217	4,456	10,193	8,627
Operating expenses	1,139	962	2,292	1,843
Administrative expenses	635	655	1,283	1,233
Consulting and audit fees	609	621	1,112	1,029
Distribution costs (without commissions)	877	676	1,674	1,392
Amortization/ depreciation	446	353	876	737
Other operating expenses	152	225	497	490
Other taxes	159	101	281	187
Profit/ loss from ordinary operations	13,027	11,789	25,021	22,890
Income from the fair value measurement	137	43	271	44
Other interest income	365	318	517	519
Other interest expenses	663	464	848	807
Net profit for the period before taxes	12,866	11,686	24,961	22,646

Income taxes	-2,664	4,634	1,967	9,297
Deferred taxes	7,542	-83	7,499	-688
Net profit for the period	7,988	7,135	15,495	14,037

Profit/ loss attributable to
equity holders of the parent	7,988	7,135	15,495	14,037

Earnings per share (basic)	0.59 EUR	0.52 EUR	1.14 EUR	1.03 EUR
Earnings per share (diluted)	0.58 EUR	0.52 EUR	1.13 EUR	1.03 EUR

Average shares outstanding (basic)	13,644,075 Units	13,619,019 Units	13,643,859 Units	13,610,431 Units
Average shares outstanding (diluted)	13,693,155 Units	13,634,371 Units	13,692,939 Units	13,625,783 Units

GRENKELEASING AG, BADEN-BADEN CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2006

Assets	6-Months Report June 30, 2006	Annual Accounts Dec. 31, 2005
EURk

Current assets
Cash on hand and balances with banks	55,635	55,677
Financial assets	1,135	374
Lease receivables	352,759	326,783
Trade receivables	1,220	1,471
Lease assets for sale	13,672	13,483
Tax receivables	8,351	3,578
Other current assets	28,309	20,190
Total current assets	461,081	421,556
Non-current assets
Lease receivables	565,850	534,045
Property, plant and equipment	25,449	23,656
Intangible assets	2,726	2,568
Deferred tax assets	18,367	20,094
Other non-current assets	78,322	72,848
Total non-current assets	690,714	653,211
Total assets	1,151,795	1,074,767

Liabilities and equity
Liabilities
Current liabilities
Liabilities from the refinancing of lease receivables	332,065	341,011
Trade payables	7,368	6,917
Tax liabilities	3,951	3,728
Provisions	1,584	1,318
Current portion of non-current bank liabilities	566	614
Financial instruments with negative fair value	211	1,039
Other current liabilities	7,725	3,646
Deferred lease payments	58,626	56,316
Total current liabilities	412,096	414,589
Non-current liabilities
Liabilities from the refinancing of lease receivables	494,596	430,587
Non-current bank liabilities, less the current portion	4,420	4,710
Deferred tax liabilities	53,483	47,500
Other non-current liabilities	1,515	1,239
Total non-current liabilities	554,014	484,036
Equity
Capital stock	17,441	17,440
Capital reserve	59,494	59,485
Revenue reserves	1,919	705
Currency translation	-340	-274
Hedging reserve	733	-192
Pension reserve	-7	-8
Profit carryforward	106,445	98,986
Total equity	185,685	176,142
Total liabilities and equity	1,151,795	1,074,767

GRENKELEASING AG, BADEN-BADEN CONSOLIDATED CASH FLOW STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006

	Jan. 1. - June 30, 2006	Jan. 1. - June 30, 2005
EURk
Net profit for the period before taxes	24,961	22,646

Non-cash items contained in net profit for the period and
reconciliation to cash flow from operating activities
+ Amortization/ depreciation	876	737
-/+ Profit/ loss from the disposals	-15	1
of equipment and intangible assets
-/+ Investment income	331	288

-/+ Non-cash changes in equity	995	-2,330
+/- Increase/ decrease in other provisions	266	19

- Additions of lease receivables	-222,976	-203,787
+ Payments by lessees	176,917	155,296
+ Disposals/ reclassifications of lease receivables at residual carrying values	34,502	32,046
+/- Changes from other set-offs	-40	-63
- Interest income from lease receivables	-44,099	-40,214
- Increase in other receivables from lessees	-2,246	-2,188
+/- Currency translation differences	160	88
= Change in lease receivables	-57,782	-58,822

+ Additions of liabilities from the refinancing of lease receivables	181,671	254,781
- Payment of annuities to refinancers	-100,552	-79,316
- Disposal of liabilities from the refinancing of lease receivables	-38,664	-135,588
+ Interest expenses from lease liabilities	13,058	10,109
+ Change from fair value measurement	-269	-269
+/- Currency translation differences	-181	-97
= Change in liabilities from the refinancing of lease receivables	55,063	49,620

Changes in other assets/liabilities
-/+ Increase/decrease in other assets	-6,590	-17,899
+/- Increase/decrease in deferred lease payments	2,310	418
+/- Increase/decrease in other liabilities	3,978	6,404
= Cash flow from operating activities	24,393	1,082
-/+ Taxes paid/ received	-6,517	-10,618
- Interest paid	-848	-807
+ Interest received	517	519
= Net cash flow from operating activities	17,545	-9,824

continued on page 22

EURk	Jan. 1. - June 30, 2006	Jan. 1. - June 30, 2005

- Purchase of equipment and intangible assets	-2,098	-472
+ Proceeds from sale of equipment and intangible assets	26	10

= Cash flow from investing activities	-2,072	-462

+/- Raising/ repayment of bank liabilities	-349	-407
- Dividend payment	-6,822	-5,441
+ Payments from Stock option program	10	704
- Issue of loans	-8,363	-4,992
= Cash flow from financing activities	-15,524	-10,136

Cash funds at beginning of period
Cash on hand and balances with banks	55,677	62,166
- Bank liabilities from overdrafts	-6	-36
= Cash and cash equivalents at beginning of period	55,671	62,130

+/- Change due to currency translation	-2	-55
= Cash funds after currency translation	55,669	62,075

Cash funds at the end of period
Cash on hand and balances with banks	55,635	41,941
- Bank liabilities from overdrafts	-17	-288
= Cash and cash equivalents at the end of period	55,618	41,653

Change in cash funds during period	-51	-20,422

Net cash flow from operating activities	17,545	-9,824
+ Cash flow from investing activities	-2,072	-462
+ Cash flow from financing activities	-15,524	-10,136
= Total cash flow	-51	-20,422

GRENKELEASING AG, BADEN-BADEN STATEMENT OF CHANGES IN CONSOLIDATED EQUITY

Jan. 01. - June 30, 2005 EURk	capital Subscribed	Capital reserve	Revenue reserves	reserve Hedging	Reserve for actuarial gains and losses	Currency translation	Profit carryforward	equity Consolidated

Equity as of Jan. 1, 2005	17,387	58,682	53	-1,676	0	-95	76,051	150,402
Payment of dividend 2005 for 2004							-5,441	-5,441
Pension-reserve					-14			-14
Deferred taxes on pension reserve					5			5
Fair value measurement of hedging instruments				-2,387				-2,387
Deferred taxes on hedging reserve				261				261
Issue of shares	43	661						704
Net profit for 2005							14,037	14,037
Currency translation						16		16

Equity as of June 30, 2005	17,430	59,343	53	-3,802	-9	-79	84,647	157,583

Jan. 01. - June 30, 2006	capital Subscribed	Capital reserve	Revenue reserves	reserve Hedging	Reserve for actuarial gains and	Currency translation	Profit carryforward	equity Consolidated
EURk					losses

Equity as of Jan. 1, 2006	17,440	59,485	705	-192	-8	-274	98,986	176,142
Payment of dividend 2006 for 2005							-6,822	-6,822
Pension-reserve					1			1
Fair value measurement of hedging instruments				1,056				1,056
Deferred taxes on hedging reserve				-131				-131
Allocation into legal reserves			1,214				-1,214	0
Issue of shares	1	9						10
Net profit for 2006							15,495	15,495
Currency translation						-66		-66

Equity as of June 30, 2006

17,441

59,494

1,919

733

-7

-340

106,445

185,685

GRENKELEASING AG, BADEN-BADEN SEGMENT REPORTING AS OF JUNE 30, 2006 REGIONS (PRIMARY REPORTING FORMAT)

		Segment Germany		Segment France	Segment	Switzerland		Segment other Countries		Reporting Segments

	June 30, 2006	June 30, 2005	June 30, 2006	June 30, 2005	June 30, 2006	June 30, 2005	June 30, 2006	June 30, 2005	June 30, 2006	June 30, 2005
k EUR

Revenues	48,639	46,419	11,193	10,338	3,303	2,831	5,030	4,314	68,165	63,902

Segment result	15,585	18,612	5,807	2,869	1,654	1,065	1,915	100	24,961	22,646
Earnings before taxes									24,961	22,646
Income taxes									9,466	8,609
Net profit for the period									15,495	14,037

Segment Reporting

In keeping with the rules on segment reporting, the individual data of the financial statements were broken down into regions ("Primary Segments"). The regional breakdown shows whether the lessees are resident in Germany, France, Switzerland or in other foreign countries. The segment "other foreign countries" comprises Austria, Italy, the Czech Republic, Spain, the Netherlands, Denmark, Sweden, Ireland and Belgium.

Determination of Segment Data

The segment earnings comprise the proceeds from the capitalisation of lease receivables, from the sale of leasing items, insurance revenues and interest income. The segment result is determined without consideration of taxes (EBT).

SELECTED EXPLANATORY NOTES

Accounting Policies

Like the consolidated financial statements as of December 31, 2005, GRENKELEASING AG's (hereinafter also referred to as the "Company") interim financial reporting as of June 30, 2006 complies with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and adopted by the EU.

The provisions of IAS 34 concerning interim financial reporting have been applied.

All interim financial statements of the companies included in the consolidated financial statements of GRENKELEASING AG have been prepared in accordance with uniform accounting policies.

As the interim financial statements are based on the consolidated financial statements, we refer to the detailed description of accounting, measurement and consolidation methods in the notes to the consolidated financial statements as of December 31, 2005.

Changes in Recognition and Measurement

The account allocation in the income statement with regard to the settlement of claims and profit from disposals was changed during the fiscal year. The prior-year figures were adjusted accordingly.

New Mandatory Accounting Standards

Various changes to IFRSs as well as new IFRSs and International Financial Reporting Interpretations Committee interpretations (IFRICs) have been published by the IASB during the past few years. The provisions which have been applicable since January 1, 2006 and are relevant or potentially relevant for GRENKELEASING as well as their impact on the consolidated financial statements are outlined below. Changes to the IFRSs which have not been explicitly mentioned are not relevant for the Company's financial statements.

The financial statements were not affected by the compulsory application of IFRIC 4, "Determining whether an Arrangement contains a Lease". IFRIC 4 specifies which contracts should be treated as leases even if they are not designated as such.
The amendment to IAS 19, "Employee Benefits Actuarial Gains and Losses, Group Plans and Disclosures" was applied early on a voluntary basis in the financial statements as of December 31, 2005. As such, there were no changes to accounting policies in this respect.
The amendments/additions to IAS 39, "Cash Flow Hedge Accounting of Forecast Intragroup Transactions", "Fair Value Option", and "Financial Guarantee Contracts" have not had any effects to date as the additional accounting options granted there have not been exercised or circumstances do not warrant application of the provision.
Under IAS 29, "Financial Reporting in Hyperinflationary Economies", financial statements of an entity reporting in the currency of a hyperinflationary economy shall be stated in terms of the measuring unit current at the balance sheet date. The corresponding figures for earlier periods shall be stated in terms of the same measuring unit. IFRIC 7 provides guidance on how an entity shall restate its financial statements in the first year in which it identifies the existence of hyperinflation in the economy of its functional currency. Adoption of IFRIC 7 is mandatory for fiscal years beginning on or after March 1, 2006.

Voluntary Adoption of New Accounting Standards

On August 18, 2005, the IASB published the standard IFRS 7, "Financial Instruments: Disclosures". This standard supersedes the existing IAS 30 and adopts all provisions regarding disclosures in the notes contained in IAS 32. In this connection, the capital disclosure requirements in IAS 1 were amended or supplemented. This standard has completely restructured the disclosure requirements for financial instruments. Disclosures on the objectives, methods, risks, security and management processes are now required. The disclosure provisions of IFRS 7 and the modified capital disclosure requirements of IAS 1 shall apply to periods beginning on or after January 1, 2007; earlier application is encouraged. The new provisions of IFRS 7 do not affect measurement at GRENKELEASING, but more detailed disclosures and presentations are required. However, the Company has not exercised its option to apply the provision early.

Use of Judgment and Main Sources of Estimating Uncertainties

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

Measurement of allowances on non-performing lease receivables on the basis of the recoverability rate
Consideration of estimated residual values at the end of the lease term in determining the present value of lease receivables
Recognition of leased assets for sale at estimated residual values

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

Category	Type
0	Current contract not in arrears
1	Current contract in arrears
2	Terminated contract with serviced installment 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
6	Statement in lieu of oath (applied for or issued)
7	Derecognized
8	Being settled (not terminated)
9	Discharged (completely paid)

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

Receivables from non-performing contracts are included in other current lease receivables. Lease receivables break down as follows:

EURk	June 30, 2006	June 30, 2005

Changes in performing lease receivables
Balance at beginning of period	797,159	680,895
+ Change in the period	55,536	56,634
Lease receivables (current + non-current) from
current contracts at period-end	852,695	737,529

Changes in non-performing lease receivables
Gross receivables at beginning of period	136,097	130,101
- Accumulated valuation allowances at beginning of period	-72,428	-69,593
= Non-performing lease receivables at beginning of period	63,669	60,508
+ Change in gross receivables during the period	9,353	12,734
- Disposal of gross receivables during the period	10,107	6,293
+ Disposal of accumulated valuation allowances during the period	6,064	3,448
- Addition of accumulated valuation allowances during the period	3,065	7,700
= Non-performing lease receivables at period-end	65,914	62,697

Lease receivables (carrying amounts of current and non-current receivables)
at beginning of period	860,828	741,403
Lease receivables (carrying amounts of current and non-current receivables)
at period-end	918,609	800,226

Unguaranteed residual values are used in calculating lease receivables in accordance with the definition in IAS 17. They are calculated on the basis of past experience and statistical methods. Based on experience, residual values range between 11% and 15% of historical cost, depending on the term of the lease contract.

Leased assets for sale are measured at historical residual values, taking into account their actual saleability. As of the balance sheet date, the residual values used amounted to between 6.5% and 19.6% of the original acquisition cost. If a sale is considered unlikely due to the condition of the asset, the asset is written off and recognized as an expense.

Refinancing

As part of the Debt Issuance Program (DIP), an additional debenture was issued by GRENKE FINANCE Plc., Dublin, Ireland, on April 20, 2006. This debenture is a bullet debt security with a nominal amount of EUR 100,000k, a term of three years and an interest rate of 4.00%.

GRENKELEASING AG has assumed the unconditional and irrevocable guarantee for the proper and timely payment of interest and principal and any other amounts payable for the debenture.

The principal repayment on the zero bond with a nominal amount of EUR 20,000k was made on time on June 13, 2006.

Pensions

As of the balance sheet date, the provision for pensions disclosed under non-current liabilities amounted to EUR 33k (CHF 51k). This amount comprises a present value of the obligation (DBO) of EUR 247k (CHF 387k), a fair value of plan assets of EUR 214k (CHF 336k) and an actuarial loss of EUR 7k (CHF 11k). The actuarial loss was recognized in equity in a separate item under the capital reserve in accordance with the revised IAS 19. No currency differences were accounted for.

In the first half of 2006, income and expenses developed as follows:

Service cost:	EUR 17k (CHF 27k)
Interest expense:	EUR 4k (CHF 6k)
Income from interest
on plan assets:	EUR 2k (CHF 3k)

Employee Stock Option Programs

The last measurement period for the targets of the second tranche of the first employee stock option program ended on October 20, 2005. The average price of EUR 58.10 for the measurement period was not reached; this meant that all options issued in this tranche (297,108 units) expired.

A total of 49,080 stock options can be exercised and therefore have a dilutive effect as of June 30, 2006 (prior year: 15,352 stock options). As of June 30, zero stock options are potentially dilutive (prior year: 367,990 stock options).

As all of the stock option programs were launched before November 7, 2002, the options do not need to be measured in accordance with IFRS 2, i.e. recognizing any changes in value in profit or loss.

The options were measured using option pricing models. This resulted in a value of EUR 37.49 per option for outstanding options from the second employee stock option program as of June 30, 2006.

In the exercise period from May 10 to June 7, 2006, it was possible to exercise options from the second employee stock option program not exercised in the prior year. The exercise price is determined for each exercise period on the basis of the average price of 20 trading days. The average price in the relevant exercise period between March 31 and May 2, 2006 was EUR 58.14. The exercise price was EUR 11.65. During this period, 848 options were exercised by employees.

Total conditional capital of EUR 948,446.66 divided by 742,000 options yields a nominal value per option of EUR 1.278230. The 848 options exercised led to a EUR 1,083.94 increase in capital stock and a EUR 8,795.26 increase in capital reserves.

Dividend Payment

The ordinary shareholders' meeting on May 9, 2006 adopted the resolution on the appropriation of GRENKELEASING AG's retained earnings for fiscal year 2005 of EUR 46,906,004.09. The shareholders' meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate, and appropriating, the retained earnings for 2005 as follows:

Retained earnings	EUR 46,906,004.09

Distribution of the dividend
of EUR 0.50 per no-par share for
a total of 13,643,646
no-par shares	EUR 6,821,823.00
Transfer to revenue reserves	--
Profit carried forward	EUR 40,084,181.09
(to new account)

The dividend was paid to the shareholders of GRENKELEASING AG on May 10, 2006.

Commercial Register

The register court responsible for GRENKELEASING AG since July 5, 2006 is the local court of Mannheim. GRENKELEASING AG is registered under the new number HRB No. 201836.

Further Relevant Resolutions by the Shareholders' Meeting

At the shareholders' meeting of GRENKELEASING AG, it was decided to conditionally increase capital by a nominal amount of up to EUR 3,834,690 by issuing up to 3,000,000 new no-par bearer shares (conditional capital III). The creation of conditional capital entails the right for the Board of Directors, with the consent of the Supervisory Board, to issue on one or more occasions options or convertible bonds with a total nominal value of up to EUR 150,000,000 with a maximum term of ten years. It is possible to preclude existing shareholders' subscription rights.

In addition, the shareholders' meeting authorized the Board of Directors, with the consent of the Supervisory Board, to issue until May 8, 2011 participation certificates on one or more occasions up to a maximum of EUR 150,000,000. The shareholders may not subscribe in this case.

Equity

For the development of equity, we refer to the statement of changes in equity.

Statement of recognized income and expense	June 30, 2006	June 30, 2005
EURk

Change in the fair value of financial instruments using for
hedging purposes recognized under equity	1,056	-2,387
Adjustment item for the currency translation of foreign subsidiaries	-66	16
Actuarial gains/losses from defined benefit pension commitments
and similar obligations	1	-14
Deferred taxes on changes in value recognized directly under equity	-131	266

Changes in value recognized directly under equity	860	-2,119
Net profit for the period after tax	15,495	14,037

Total net profit for the period and changes in value recognized under equity	16,355	11,918

Extension of the Franchise System

Outlook

A franchise agreement was concluded with Grenkeleasing Magyarország Kft., Budapest, Hungary, on February 14, 2006. The franchise partners are entitled to use the "GRENKE" brand name, but are legally and financially independent entities.

Employees

During the reporting period, the GRENKELEASING AG Group employed an average of 379 persons (prior year: 321), excluding directors.

Europe as a key step in the Group's development. We will expand on the sales side by opening new branches and entering into more franchise partnerships, underpinned by the extension of our financing options. In this regard, the first issue of an ABS bond in July of this year is an important step towards securing liquidity at attractive conditions for the Group's further growth.

For 2006, we have defined the further expansion in

Although the Group's expansion in Europe will lead to a disproportionate rise in our personnel expenses, we see this step as an investment in developing new markets. We still expect to achieve our double-digit growth targets for new business and earnings in 2006.

DATES 2006

27/07/2006	Publication of Financial Statements of Q2 2006
04/10/2006	Publication New Business and Contribution Margin1
26/10/2006	Publication of Financial Statements of Q3 2006 DVFA Analyst Conference in Frankfurt

CONTACT

GRENKELEASING AG Neuer Markt 2 76532 Baden-Baden

Tel.: +49 (0) 7221 - 5 00 72 04 Fax: +49 (0) 7221 - 5 00 71 12

www.grenkeleasing.com www.weblease-europe.com www.asset-broker.com

E-mail: [email protected]

You may find the detailed glossary to this report on www.grenkeleasing.com