Grenke AG — Interim / Quarterly Report 2006

Apr 27, 2006

GRENKELEASING AG GROUP THREE-MONTH'S REPORT 2006 REPORTING PERIOD: JANUARY 1, 2006 TO MARCH 31, 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
Risk Categories	08
Explanation of the Key Figures	09
From Contract to Balance Sheet	11
Overview of the Group	13
GRENKELEASING Locations in Europe	14
The Board of Directors of GRENKELEASING AG	15
Members of the Supervisory Board of the GRENKELEASING AG	16
Directors' Holdings as per March 31, 2006	17

Consolidated Income Statement for the Period from January 1, 2006 to March 31, 2006	18
Consolidated Balance Sheet as of March 31, 2006	19
Consolidated Cash Flow Statements for the Period from January 1, 2006 to March 31, 2006	20
Statement of Changes in Consolidated Equity	22
Segment Reporting as of March 31, 2006	23
Selected Explanatory Notes	24

Dates 2006	29
------------	----

IMPORTANT KEY FIGURES OF THE GRENKELEASING AG GROUP

	Jan. 1. - Mar. 31, 2006	Change	Jan. 1. - Mar. 31, 2005	Unit
New business (cost of new lease contracts)*	115,216	21%	95,314	EURk
Contribution margin 1 of new business	12,038	10%	10,921	EURk
Number of new contracts*	15,166	14%	13,328	Units
Number of new contracts without projects	14,293	15%	12,480	Units
Net interest income from leasing business	15,475	4%	14,860	EURk
Expenses from settlement of claims	3,633	-20%	4,559	EURk
Profit from insurance business	3,933	22%	3,216	EURk
Profit from new business	4,348	25%	3,489	EURk
Profit from disposals	635	-56%	1,433	EURk
(income exceeding the calculated residual value)
Result from currency translation	-39	-286%	21	EURk
Other operating income	208	63%	128	EURk
Costs of new contracts	3,301	13%	2,920	EURk
Costs of current contracts	991	6%	935	EURk
Project costs and basic distribution costs	2,306	38%	1,675	EURk
Management costs	1,909	19%	1,605	EURk
Other costs	428	22%	349	EURk
Amortization/ depreciation on Goodwill	0	-100%	3	EURk
EBIT (Profit from ordinary operations)	11,992	8%	11,101	EURk
Other interest	-34	-76%	-143	EURk
Expenses from the fair value measurement	134	--	1	EURk
EBT (Net profit for the period before taxes)	12,092	10%	10,959	EURk
Net profit for the period (consolidated pursuant to IFRS)	7,504	9%	6,901	EURk
Earnings per share (IFRS)	0.55	8%	0.51	EUR
Dividend**	0.50		0.40	EUR
Embedded value of the lease portfolio*	270	17%	231	EURm
(incl. Equity before taxes)
Embedded value of the lease portfolio*	237	18%	202	EURm
(incl. Equity after taxes)
Cost/Income Ratio	42.9	6%	40.6	%
Share of IT products in the lease portfolio*	87	-2%	89	%
Share of corporate customers in the lease portfolio*	100	1%	99	%
Mean acquisition value*	7.6	6%	7.2	EURk
Mean term of contract	46	2%	45	Months
Volume of leased assets*	1,251	19%	1,050	EURm
Number of current contracts	172,641	15%	150,276	Units
Average number of employees*	375	21%	311	Persons

* cf. explanation on page 9-10.

** will be proposed to the shareholders' meeting on May 9, 2006. Concerning dividend cf. explanation on page 27.

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

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

LETTER TO THE SHAREHOLDERS FROM THE BOARD OF DIRECTORS

Dear Shareholders, Ladies and Gentlemen,

GRENKELEASING started 2006 with strong growth in all markets. In the first quarter of 2006, the GRENKELEASING Group increased its new business volume, i.e. total acquisition costs of newly purchased lease assets, by 20.9% to EUR 115.2m (prior year: EUR 95.3m) against the prior year.

In line with the strategic focus of the Group, foreign markets made an above-average contribution to this growth, up 42.4% on the prior year, with the French subsidiary achieving 42.5% growth, business in Switzerland increasing by 15.1%, and new business in Germany also developing very well with an increase of 11.8%.

This excellent result allowed us to further expand our market share in Europe and increase the contribution made by the foreign markets to new business to 34.9% (29.7% in the prior year). However, the fact that the first quarter of the year had three extra working days and Easter break fell in April this year had a positive effect, which will be reversed in the second quarter.

The latest studies by the European Information Technology Observatory (EITO) and Leaseurope also confirm that the market we operate in offers above-average opportunities for growth and that we are in a good position to take advantage of these opportunities. EITO forecasts growth of 3.2% for the information and telecommunications (ITC) markets of the EU this year. The ITC sector continues to see strong growth, particularly in the new middle and eastern European EU member states with 6%. Leaseurope expects double-digit growth in new business for the leasing industry in 2006 after very strong growth in 2005 and forecasts particularly positive development in central and eastern Europe.

Growth of 2.4% to a sales volume of EUR 137.4b is forecasted for the ITC market in Germany in 2006. The German Association for the Information Industry (BITKOM) thus confirmed its forecast for the current year.

The growth of the contribution margin 1 (M1), which is a key ratio for the profitability of new business, could not quite keep pace with the significant growth in new business, reaching EUR 12m in the first quarter of 2006, which corresponds to an increase of 10.2% on the prior-year figure of EUR 10.9m. The M1 (M1 at acquisition cost) did, however, exceed our target margin of 10%.

Particularly in times when interest rates are on the rise, there is a delay in passing on higher refinancing costs to the market, which temporarily reduces the M1. In addition, our average acquisition cost per new contract has increased. Higher acquisition costs always result in a lower M1 due to market conditions. We expect that we will be able to compensate for this slight disadvantage through improved post-transaction activities relating to current contracts.

Consolidated earnings before interest and taxes (EBIT) developed as expected during the first quarter of 2006 compared to the same period of the prior year, increasing by 8% to EUR 12m (first quarter of 2005: EUR 11m), a little lower than our historical growth rate.

The reasons for this include the effects of an increase in interest rates over the last few months and a slightly disproportionate rise in certain expense items constituting an investment in further growth. In accordance with our policy stating that personnel expenses can only increase as much as the consolidated EBIT growth, these expenses increased by 19% in line with the development of earnings for 2005 and the anticipated new business in the current year. This increase is expected to slow down during the course of the year.

Accordingly, after-tax profit increased by 9% to EUR 7.5m in the first quarter of 2006 (first quarter of 2005: EUR 6.9m). Earnings per share increased to EUR 0.55 in the first quarter of 2006, compared with EUR 0.51 in the first quarter of the prior year.

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 disproportionally increase cost. The cost-income ratio reached a very good level of 42.9% in the first quarter of 2006. The slight increase against the prior year is also due to the above-described effects, especially personnel expenses.

The result was generated by 375 employees, compared with 311 in the first quarter of 2005 (full-time employees excluding Board of Directors). There were 46 employees working in franchise operations.

In the first quarter of 2006, the Group had 30,878 leasing inquiries (thereof 13,309 abroad), of which 15,166 led to new lease contracts (thereof 5,543 abroad). The mean contract value was EUR 7,597, a slight increase on the prior year (first quarter of 2005: EUR 7,154).

We are aiming to become the market leader in small ticket IT leases in Europe through the consistent expansion of our European activities, continued development of our cooperation agreements, and the expansion of our franchise partnerships. In an additional step in this direction, we signed an agreement with our franchise partner in Hungary in February. The franchise strategy has proven to be a successful way to penetrate new markets quickly and sustainably.

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 United Kingdom, Poland, Norway, and Hungary with a franchise system.

In 2006, we want to achieve double-digit growth in new business and profits through steady and profitable growth.

Baden-Baden, Germany, April 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

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	3-Month's 2006
Category 1	Acquisition cost	72,453,823	97,023,937	104,515,781	126,708,580	36,953,392
	Forecast loss	2,251,618	3,065,005	3,565,921	3,905,711	1,036,654
	M1* after loss	5.6%	6.2%	5.7%	6.0%	5.7%
Category 2	Acquisition cost	59,043,477	74,270,343	92,435,888	113,922,397	33,833,880
	Forecast loss	2,224,901	3,158,772	3,882,222	3,819,669	1,019,449
	M1* after loss	7.0%	7.5%	7.8%	8.0%	7.2%
Category 3	Acquisition cost	46,859,252	55,041,326	62,606,845	89,440,278	22,583,118
	Forecast loss	2,782,046	3,100,804	3,442,326	4,773,361	970,487
	M1* after loss	5.5%	5.9%	6.7%	7.0%	7.6%
Category 4	Acquisition cost	49,835,184	48,028,936	58,635,191	57,601,730	14,980,318
	Forecast loss	4,361,441	4,357,153	6,061,643	5,696,187	1,333,811
	M1* after loss	2.4%	2.9%	1.7%	2.6%	2.7%
Category 5	Acquisition cost	49,848,385	34,939,909	45,053,526	31,375,206	6,677,919
	Forecast loss	6,108,192	4,245,965	5,990,125	3,932,709	700,774
	M1* after loss	-3.2%	-1.9%	-3.2%	-1.1%	1.7%

*M1 = Contribution margin 1

EXPLANATION OF THE KEY FIGURES

New business / Number of new contracts	The new business figure comprises the acquisition costs of all leasing and lease purchase contracts newly concluded in the reporting period incl. franchise partners.
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.
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.
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.
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 not yet terminated as per closing date of the balance sheet.
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.

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 balancesheet 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.

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.

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 1.61% 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 104.5% 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 December 31, 2005, 64.3% 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 AG
	Head office, Baden-Baden (Germany)
WEBLEASE NETBUSINESS AG			Branches
Baden-Baden (Germany)				Berlin, Bremen, Dortmund, Dresden, Dusseldorf, Erfurt, Frankfurt,
GLG Grenke-Leasing GmbH				Hamburg, Hanover, Cologne, Leipzig, Magdeburg, Mannheim, Memmingen,
Baden-Baden (Germany)				Mönchengladbach, Munich,
				Nuremberg, Rostock, Stuttgart
Grenke Investitionen Verwaltungs KGaA
Baden-Baden (Germany)
GRENKE LEASE SPRL			Grenkefinance N.V.
Brussels (Belgium)				Maasbree (Netherlands)
GRENKELEASING ApS			GRENKELEASING AG
Herlev (Denmark)			Vienna (Austria)
GRENKE LOCATION SAS			GRENKELEASING AB
Schiltigheim (France)			Stockholm (Sweden)
Branches			GRENKELEASING AG
Aix-en-Provence, Lyon, Nantes,			Basel (Switzerland)
Paris I, Paris II (Intramuros)
			Branches
GRENKE LIMITED			Lausanne, Zurich
GRENKE FINANCE Plc.
Dublin (Ireland)				GRENKE ALQUILER S.A.
			Barcelona (Spain)
GRENKE Locazione S.r.l. GRENKE LEASING S.r.l.
Milan (Italy)				GRENKELEASING s.r.o.
				Prague (Czech Republic)
		Franchise partners
GRENKEFACTORING GmbH Baden-Baden (Germany)			GRENKELEASING AS Oslo (Norway)

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 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

MEMBERS OF THE SUPERVISORY BOARD OF THE 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 MARCH 31, 2006

Shares held by members of Board of Directors
	Wolfgang	Thomas	Mark	Michael
	Grenke	Konprecht	Kindermann	Kostrewa
	Units	Units	Units	Units
Status as per: Mar. 31, 2006	5,019,419*	384,080*	70,953*	84,600*
Options held by members of Board of Directors**
	Wolfgang	Thomas	Mark	Michael
	Grenke	Konprecht	Kindermann	Kostrewa
	Units	Units	Units	Units
Status as per: Mar. 31, 2006	13,252	9,938	6,628	6,628
Shares held by Supervisory Board members
	Dieter
	Münch
	Units
Status as per: Mar. 31, 2006	75

* The Board of Directors granted the following call option: Wolfgang Grenke: 250,000 shares, Thomas Konprecht: 55,000 shares, Mark Kindermann: 20,000 shares, Michael Kostrewa: 25,000 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 MARCH 31, 2006

	Jan. 1. - Mar. 31, 2006	Jan. 1. - Mar. 31, 2005
EURk
Income from interest on lease receivables	21,830	19,781
Expenses from interest on refinancing liabilities	6,355	4,921
Net interest income from leasing business	15,475	14,860
Expenses from settlement of claims	3,633	4,559
Net interest income after settlement of claims from leasing business	11,842	10,301
Income from insurance business	4,343	3,588
Expenses from insurance business	410	372
Profit from insurance business	3,933	3,216
Profit from new business	4,348	3,489
Income from disposals	3,700	3,279
Expenses from disposals	3,065	1,846
Profit from disposals	635	1,433
Other operating income	208	150
Personnel expenses	4,976	4,171
Operating expenses	1,153	881
Administrative expenses	648	578
Consulting and audit fees	503	408
Distribution costs (without commissions)	796	716
Amortization/ depreciation	431	384
Other operating expenses	345	264
Other taxes	122	86
Profit/ loss from ordinary operations	11,992	11,101
Expenses from the fair value measurement	134	1
Other interest income	151	200
Other interest expenses	185	343
Net profit for the period before taxes	12,092	10,959
Income taxes	4,631	4,663
Deferred taxes	-43	-605
Net profit for the period	7,504	6,901
Earnings per share (basic)	0.55	0.51
Earnings per share (diluted)	0.55	0.51
Average shares outstanding (basic)	13,643,646	13,601,938
Average shares outstanding (diluted)	13,693,574	13,651,072

GRENKELEASING AG, BADEN-BADEN CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2006

Assets	3-Months Report Mar. 31, 2006	Annual Accounts, Dec. 31, 2005
EURk
Current assets
Cash on hand and balances with banks	48,325	55,677
Financial assets	920	374
Lease receivables	340,440	326,783
Trade receivables	682	1,471
Lease assets for sale	12,382	13,483
Tax receivables	3,480	3,578
Other current assets	25,726	20,190
Total current assets	431,955	421,556
Non-current assets
Lease receivables	555,481	534,045
Property, plant and equipment	24,347	23,656
Intangible assets	2,684	2,568
Deferred tax assets	19,815	20,094
Other non-current assets	84,235	72,848
Total non-current assets	686,562	653,211
Total assets	1,118,517	1,074,767
Liabilities and equity
Liabilities
Current liabilities
Liabilities from the refinancing of lease receivables	348,485	341,011
Trade payables	7,941	6,917
Tax liabilities	5,146	3,728
Provisions	1,268	1,318
Current portion of non-current bank liabilities	4,057	614
Financial instruments with negative fair value	400	1,039
Other current liabilities	5,052	3,646
Deferred lease payments	59,631	56,316
Total current liabilities	431,980	414,589
Non-current liabilities
Liabilities from the refinancing of lease receivables	448,820	430,587
Non-current bank liabilities, less the current portion	4,504	4,710
Deferred tax liabilities	47,363	47,500
Other non-current liabilities	1,506	1,239
Total non-current liabilities	502,193	484,036
Equity
Capital stock	17,440	17,440
Capital reserve	59,485	59,485
Revenue reserves	1,831	705
Currency translation	-318	-274
Hedging reserve	550	-192
Pension reserve	-8	-8
Profit carryforward	105,364	98,986
Total equity	184,344	176,142
Total liabilities and equity	1,118,517	1,074,767

GRENKELEASING AG, BADEN-BADEN CONSOLIDATED CASH FLOW STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2006 TO MARCH 31, 2006

EURk Net profit for the period before taxes 12,092 10,959 Non-cash items contained in net profit for the period and reconciliation to cash flow from operating activities + Amortization/ depreciation 431 384 -/+ Profit/ loss from the disposals -10 -7 of equipment and intangible assets -/+ Investment income 34 142 -/+ Non-cash changes in equity 797 -490 +/- Increase/ decrease in other provisions -50 -225 - Additions of lease receivables -115,048 -96,308 + Payments by lessees 87,063 76,626 + Disposals/ reclassifications of lease receivables at residual carrying values 16,374 14,682 +/- Changes from other set-offs -21 -34 - Interest income from lease receivables -21,830 -19,781 - Increase in other receivables from lessees -2,066 -1,724 +/- Currency translation differences 434 52 = Change in lease receivables -35,094 -26,487 + Additions of liabilities from the refinancing of lease receivables 77,969 60,696 - Payment of annuities to refinancers -49,210 -37,283 - Disposal of liabilities from the refinancing of lease receivables -8,906 -6,797 + Interest expenses from lease liabilities 6,354 4,921 + Change from fair value measurement -134 -134 +/- Currency translation differences -365 -79 = Change in liabilities from the refinancing of lease receivables 25,708 21,324 Changes in other assets/liabilities -/+ Increase/decrease in other assets -12,380 3,772 +/- Increase/decrease in deferred lease payments 3,315 1,084 +/- Increase/decrease in other liabilities 2,058 506 = Cash flow from operating activities -3,099 10,962 -/+ Taxes paid/ received -3,115 2,640 - Interest paid -185 -343 + Interest received 151 201		Jan. 1. - Mar. 31, 2006	Jan. 1. - Mar. 31, 2005
	= Net cash flow from operating activities	-6,248	13,460

continued on page 21

EURk	Jan. 1. - Mar. 31, 2006	Jan. 1. - Mar. 31, 2005
- Purchase of equipment and intangible assets	-1,013	-266
+ Proceeds from sale of equipment and intangible assets	17	8
= Cash flow from investing activities	-996	-258
+/- Raising/ repayment of bank liabilities	-266	64,722
- Issue of loans	-3,351	-2,662
= Cash flow from financing activities	-3,617	62,060
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	7	-25
= Cash funds after currency translation	55,678	62,105
Cash funds at the end of period
Cash on hand and balances with banks	48,325	137,370
- Bank liabilities from overdrafts	-3,508	-3
= Cash and cash equivalents at the end of period	44,817	137,367
Change in cash funds during period	-10,861	75,262
Net cash flow from operating activities	-6,248	13,460
+ Cash flow from investing activities	-996	-258
+ Cash flow from financing activities	-3,617	62,060
= Total cash flow	-10,861	75,262

GRENKELEASING AG, BADEN-BADEN STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FROM JANUARY 1, 2005 TO MARCH 31, 2005

EURk	capital Subscribed	Capital reserve	Revenue reserves	reserve Hedging	Reserve for actuarial losses gains and	Currency translation	Profit carryforward	equity Consolidated
Equity as of January 1, 2005	17,387	58,682	53	-1,676	0	-95	76,051	150,402
Fair value measurement of hedging instruments				-541				-541
Deferred taxes on hedging reserve				50				50
Net profit for 2005							6,901	6,901

						27		27
Equity as of March 31, 2005	17,387	58,682	53	-2,167	0	-68	82,952	156,839

GRENKELEASING AG, BADEN-BADEN STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FROM JANUARY 1, 2006 TO MARCH 31, 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 January 1, 2006	17,440	59,485	705	-192	-8	-274	98,986	176,142
Fair value measurement of hedging instruments				847				847
Deferred taxes on hedging reserve				-105				-105

184,344
105,364
-318
-8
550
1,831
59,485
17,440
Equity as of March 31, 2006

1,126

-1,126 7,504

-44

7,504

-44

0

Allocation into legal reserves

Net profit for 2006

Currency translation

GRENKELEASING AG, BADEN-BADEN SEGMENT REPORTING AS OF MARCH 31, 2006 REGIONS (PRIMARY REPORTING FORMAT)

		Segment Germany		Segment France	Segment	Switzerland		Segment other Countries		Reporting Segments
	Mar. 31, 2006	Mar. 31, 2005	Mar. 31, 2006	Mar. 31, 2005	Mar. 31, 2006	Mar. 31, 2005	Mar. 31, 2006	Mar. 31, 2005	Mar. 31, 2006	Mar. 31, 2005
k EUR
Revenues	23,565	22,773	5,961	4,948	1,643	1,443	2,498	2,015	33,667	31,179
Segment result	7,140	8,541	3,560	1,202	833	714	559	502	12,092	10,959
Earnings before taxes									12,092	10,959
Income taxes									4,588	4,058
Net profit for the period									7,504	6,901

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 March 31, 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 income 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.

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 added. 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:

	Mar. 31, 2006	Mar. 31, 2005
EUR k
Changes in performing lease receivables
Balance at beginning of period	797,159	680,895
+ Change in the period	33,028	24,763
Lease receivables (current + non-current) from
current contracts at period-end	830,187	705,658
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	6,175	6,616
- Disposals of gross receivables during the period	5,407	2,612
+ Disposal of accumulated valuation allowances during the period	3,374	1,465
- Addition of accumulated valuation allowances during the period	2,077	3,745
= Non-performing lease receivables at period-end	65,734	62,232
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	895,921	767,890

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 acquisition 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 6.1% and 21.4% 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.

Pensions

As of the balance sheet date, the provision for pensions disclosed under non-current liabilities amounted to EUR 34k (CHF 54k). This amount comprises a present value of the obligation (DBO) of EUR 225k (CHF 356k), a fair value of the plan assets of EUR 191k (CHF 302k) and an actuarial loss of EUR 11k (CHF 17k). The actuarial loss was recognized in equity in a separate item under the capital reserve in accordance with the revised IAS 19. Currency translation differences totaling EUR 1k were taken into account.

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

Service cost:	EUR 6k (CHF 10k)
Interest expense:	EUR 2k (CHF 3k)
Income from interest

on plan assets: EUR 1k (CHF 2k)

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) expired as of March 31, 2006.

A total of 49,928 stock options can be exercised and therefore have a dilutive effect as of March 31, 2006 (prior year: 49,134 stock options). As of March 31, 2006, no stock options are potentially dilutive (prior year: 401,772 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 43.68 per option for outstanding options from the second employee stock option program as of March 31, 2006.

Dividend Payment

The ordinary shareholders' meeting on May 9, 2006 will adopt the resolution on the appropriation of GRENKELEASING AG's retained earnings for fiscal year 2005 of EUR 46,906,004.09. The Board of Directors and the Supervisory Board will propose a dividend of EUR 0.50 per share. The remainder of 40,084,181.09, after the deduction of the dividend of EUR 6,821,823.00, shall be carried forward to new account.

In the prior year, the shareholders' meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate, and appropriating, the retained earnings for 2004 as follows:

Retained earnings	EUR 31,054,189.70
Distribution of the dividend
of EUR 0.40 per no-par share for
a total of 13,601,938
no-par shares	EUR 5,440,775.20
Transfer to revenue reserves	--
Profit carried forward	EUR 25,613,414.50
(to new account)

The dividend was paid to the shareholders of GRENKELEASING AG on May 4, 2005.

Equity

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

Statement of recognized income and expense	2006	2005
EURk
Change in the fair value of financial instruments using for
hedging purposes recognized under equity	847	-541
Adjustment item for the currency translation of foreign subsidiaries	-44	27
Actuarial gains/losses from defined benefit pension commitments
and similar obligations	0	0
Tax on items taken directly to or transferred from equity	-105	50
Net income recognized directly in equity	698	-464
Net profit for the period after tax	7,504	6,901
Total recognized income and expense for the period	8,202	6,437

Extension of the Franchise System

A franchise agreement was concluded with GRENKE-LEASING Magyarország Kft./Rt. in 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 quarter, the GRENKELEASING AG Group employed an average of 375 persons (prior year: 311), excluding Board of Directors.

Subsequent Events

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 accrues interest at a 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.

Outlook

2006 will be shaped by consistent expansion of our international activities. We want to use this expansion to improve our position in existing markets and to gain market share. We also want to develop new markets through our own activities or through our franchise system. We have already taken the first step in this direction with our franchise partner in Hungary.

Although all of these measures will entail costs, we still expect double-digit growth in new business and earnings again in this fiscal year.

DATES 2006

27/04/2006	Publication of Financial Statements of Q1 2006
09/05/2006	General Meeting, Baden-Baden
04/07/2006	Publication New Business and Contribution Margin1
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: investor@grenkeleasing.com

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

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: investor@grenkeleasing.com