Grenke AG — Interim / Quarterly Report 2009

Jul 28, 2009

GRENKELEASING AG GROUP QUARTERLY FINANCIAL REPORT AS PER June 30, 2009

KEY FIGURES	2
LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS	3
THE GRENKELEASING AG SHARE	4
Development of the Share Price and Daily Turnover	5
Directors' Holdings	6
Shareholder Structure	6
GRENKE GROUP GROWTH STRATEGY	7
Expansion in Europe	8
GRENKE Group Locations in Europe	9
INTERIM MANAGEMENT REPORT	10
Economic Environment	10
Report on the Results of Operations	10
Report on the Financial Position and Net Assets	12
Report on Forecasts and the Outlook for the Group	13
INTERIM FINANCIAL STATEMENTS	16
SELECTED EXPLANATORY NOTES	25
CONFIRMATION BY THE COMPANY'S MANAGEMENT	36
THE BOARD OF DIRECTORS OF GRENKELEASING AG	37
THE SUPERVISORY BOARD OF GRENKELEASING AG	38
OVERVIEW OF THE GROUP	39
THE GRENKELEASING FRANCHISE SYSTEM	40
THE GRENKEFACTORING GMBH	41
GLOSSARY	42
CALENDAR OF EVENTS 2009 AND CONTACT	47

KEY FIGURES

	Jan 1, 2009 to June 30, 2009	Change in %	Jan. 1, 2008 to June30, 2008	Units
Key figures of GRENKE Group including franchise partners
New business of GRENKE Group	228,539	-19.6	284,085	EURk
- of which: Germany	121,573	-18.4	148,955	EURk
-of which: International	106,966	-20.8	135,129	EURk
New business of franchise partners	47,166	20.9	39,009	EURk
- of which: Factoring business (Germany)	26,697	9.5	24,390	EURk
Deposits bank	76,852	n.a.	0	EURk
Key figures of GRENKE Group leasing business excluding factoring / bank New business GRENKE Group leasing business	201,841	-22.3	259,694	EURk
Contribution margin 2 of new business	39,445	1.2	38,964	EURk
Number of new contracts	28,248	-17.4	34,217	Units
Share of IT products in the lease portfolio	85	0.0	85	percent
Share of corporate customers in the lease portfolio	100	0.0	100	percent
Mean acquisition value	7,1	-6.6	7.6	EURk
Mean term of contract	45	-2.2	46	Months
Volume of leased assets	1,678	5.3	1,594	EURm
Number of current contracts	221,096	4.5	211,610	Units
GRENKELEASING AG Group, consolidated figures
Net interest income	36,145	7.4	33,666	EURk
Settlement of claims and risk provision	14,109	40.7	10,026	EURk
Profit from insurance business	9,619	0.2	9,598	EURk
Profit from new business	11,632	-5.2	12,264	EURk
Profit from disposals (income exceeding the calculated residual value)	860	-48.7	1,675	EURk
Result from currency translation difference	332	-151.5	-645	EURk
Other operating income	1,392	233.8	417	EURk
Costs of new contracts	6,190	-20.9	7,821	EURk
Costs of current contracts	2,863	14.4	2,502	EURk
Project costs and basic distribution costs	9,652	34.5	7,175	EURk
Management costs	5,568	6.2	5,241	EURk
Other costs	1,269	10.9	1,144	EURk
Costs of the bank	1,231	n.a.	0	EURk
EBIT (Earnings before interest and taxes)	19,099	-17.2	23,066	EURk
Other interest result	-245	-1,461.1	18	EURk
Income / expenses from market valuation of financial instruments	-222	n.a.	0	EURk
EBT (Earnings before taxes)	18,632	-19.3	23,084	EURk
Net profit for the period	13,110	-19.8	16,344	EURk
Earnings per share	0.96	-19.3	1.19	EUR
Dividend	0.60	0.0	0.60	EUR
Embedded value of the lease portfolio (incl. equity before taxes)	347	3.6	335	EURm
Embedded value of the lease portfolio (incl. equity after taxes)	319	3.9	307	EURm
Cost / income ratio	58.7	14.0	51.5	percent
Return on equity (ROE) after taxes	10.5	-23.9	13.8	percent
Average number of employees	503	4.6	481	persons

LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS

Dear shareholders, dear ladies and gentlemen,

The GRENKE Group is successfully defying the difficult conditions of the banking crisis and global recession. In the face of these challenges, we took an early decision to place securing liquidity, strengthening the balance sheet and ensuring the profitability of new business at the heart of our policy. In order to provide for increasing defaults, we systematically increased contribution margins and reduced risks. The contribution margins have risen since the first quarter of 2008 and in the second quarter 2009 the Contribution margin 2-(CM2)-margin for new business exceeded the twenty percent mark for the first time. We intentionally allowed new business volume to decrease as a result of stricter risk criteria – no new contracts below the increased tolerance thresholds. When the overall economic situation begins to improve, we will switch back to targeting further growth – without losing sight of the issue of profitability.

The early contribution margins increase undertaken in reaction to the deteriorating general economic situation has shown a positive impact on net interest income, which we increased by EUR 2.5 million in the first half of 2009 despite a EUR 25.3 million decline in the leasing portfolio. However, due to the severity of the current recession, claims increased faster and more significantly than expected in the first half, to the extent that this rise could be only partially offset by the increased net interest income. This accordingly led to a decrease in net interest income after settlement of claims and risk provisioning. Together with an equity base which remains stronger than average despite dividend payment in the current quarter, overall our business model has shown itself to be well equipped for the current very difficult general economic conditions and is extremely stable. Because the targeted reduction in new business meant that other earnings items also fell below the previous year's values, net profit for the first half of 2009 dropped to EUR 13.1 million following EUR 16.3 million in the previous year.

The GRENKELEASING AG Group's balance sheet reflects the first-time consolidation of GRENKE BANK. For instance, we are now posting substantial deposits business. The name GRENKE BANK AG conveys a message and a plan: with it, we are determinedly expanding our range of services for our large existing customer base and for new customers. The current development in deposit business shows that we are on the right track. In addition, with GRENKE BANK AG we are also adding an instrument with good growth potential and a high level of stability and security to our range of refinancing. Overall, our diversified refinancing base has also proved its strength in the financial crisis. For instance, we took up a total of EUR 88.6 million through various instruments. At the same time as this borrowing, during the quarter we also repaid on schedule two bonds with a volume of EUR 125.0 million.

Overall, our diversified refinancing base has proved its strength in the financial crisis too. For instance, we took up a total of EUR 88.6 million through various instruments. Moreover, after the end of the reporting period a new ABCP programme with a volume of up to EUR 150 million could be signed. In addition to this, two bonds with a volume of EUR 125.0 million were repaid on schedule during the reporting quarter. Liquidity, profitability and strengthening the balance sheet continue to be our top priorities. We are managing new business with risk-adequate adjusted conditions and a restrained lending policy, thereby generating sustained higher interest income and partially compensating for the claims settlement. For fiscal year 2009, we are expecting absolute growth of 5 to 10 percent in the CM2 for new business and overall earnings after taxes in the region of EUR 25 to 28 million.

Baden-Baden, July 2009

Wolfgang Grenke Chairman of the Board of Directors

THE GRENKELEASING AG SHARE

The share price of GRENKELEASING AG evidences a clear upwards trend for the first six months of fiscal year 2009. At the beginning of the year the share was quoted at EUR 18.80 and on June 30, it was at EUR 26.51 – a price increase of 41 percent which places it considerably above its benchmark indices. The SDAX Index and the index of German financial securities in the Prime Standard (DAXsector Financial Services) increased by just 3.7 and 8.5 percent respectively in the first half of 2009. Furthermore, the GRENKELEAS-ING AG share did not fall below its price for the beginning of the year at any point, whereas both SDAX and DAXsector Financial Services have decreased significantly since the beginning of the year.

The performance of the GRENKELEASING AG share was thus impacted by the worldwide financial markets crisis and the global recession to a much lesser extent than its reference indices. In fact, the share price benefited from the favourable company development. This shows that the GRENKE Group's business model and business development continue to be very well received on the stock market. This is underpinned by the very positive margin development for new business, even during the current difficult economic period.

Generally positive estimates by analysts were confirmed after our report on new business for the second quarter. In mid July 2009, Reuters Consensus Estimates had five "Buy"/"Overweight" recommendations and three "Hold" recommendations for the GREN-KELEASING AG share. This compared to just one "Underweight" and two "Sell" recommendations. On average, the analysts set their price target at EUR 26.74, as against an average price target of EUR 22.88 at the end of the first quarter. The convincing nature of GRENKELEASING's business model and our capital market communication building on this, as well as the proven success of our international expansion strategy, continue to support the share's fundamental valuation.

DEVELOPMENT OF THE SHARE PRICE AND DAILY TURNOVER

DIRECTORS' HOLDINGS

Shares held by managing board members
	Wolfgang	Thomas	Mark	Michael	Dr. Uwe
	Grenke	Konprecht	Kindermann	Kostrewa	Hack
Status as per June 30, 2009	Units	Units	Units	Units	Units
	4,916,619	330,730	52,053	27,500	5,000

Shares held by supervisory board members
	Prof. Dr. Ernst- Moritz Lipp	Dieter Münch	Erwin Staudt
	Units	Units	Units
Status as per June 30, 2009	21,000	75	1,000

SHAREHOLDER STRUCTURE

GRENKE GROUP GROWTH STRATEGY

The development of the GRENKE Group in the face of an international financial markets crisis with market jitters of historic proportions and the most severe recession since the Second World War has been impressive. GRENKELEASING's business model is crisis-proof, and we are able to react to market challenges with rapid, flexible responses. In the past six months, we have focussed rigorously on the profitability of our new business and have generated growth only under strict consideration of risks. This applies both to existing business and to recognising possibilities for expansion with new international locations. Our strategy of rigorously tapping into the European market remains unaffected by this.

An important key component of our business model is its focus on generating stable income. To this end, over many years we have very successfully developed a stringent system for measuring the inherent risks of lease contracts. This allows us to ensure both sufficient risk cover through the price and the management of default rates though defined tolerance thresholds. In addition, with this system we can seamlessly satisfy the new legal requirements for leasing companies in the German Banking Act [Kreditwesengesetz (KWG)] and the German Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)]. Last but not least, it ensures a consistently high return on equity together with a strong equity base. Our success is reflected on the capital market in our high rating and the associated possibilities for access to a wide range of refinancing instruments.

With the acquisition of the private bank Hesse Newman & Co. AG, we have significantly broadened our operating range on both sides of our business – the capital market and our customers. We want its renaming as GRENKE BANK AG to be understood on the market as a message and a plan: we are determinedly expanding its strong position in the deposit business. In the future, GRENKE BANK will offer our small and medium-sized corporate customers a wide range of specialised banking and financial services products, which should cover their typical needs as comprehensively as possible. Here, the focus is on products which are suitable for indirect sale or to which there is direct access on the internet. It is precisely the development in the current year which gives us confidence that we are on the right track here. With this business, for example, we are expanding our range of refinancing with an additional instrument which possesses a high level of stability and security together with good growth opportunity.

At present, we have 221,096 current contracts at the GRENKE Group including franchise partners. These provide us with effective, low-cost access to a large number of small and medium-sized corporate customers in Europe and thus huge sales potential which would not be economically possible for competitors without this access. We currently support this customer base particularly through a continually growing network of more than 14,000 specialist reseller partners, including over 7,000 in our international markets. The specialist reseller partners are dealt with directly by our decentralised sales or through our franchise partners.

Another product which we sell very successfully through a franchise partner to our customer base in Germany is factoring, which was expanded by 9.5 percent to a volume of EUR 26.7 million in the first half of 2009. The profit margin in relation to the volume was 1.8 percent, compared to 2.2 percent in the same period of the previous year. This decline in the margin in the reporting period primarily results from the fact that the average period for a factoring transaction decreased from 35 days in the previous year to 30 days. It does not have any impact on profitability.

EXPANSION IN EUROPE

GRENKE GROUP LOCATIONS IN EUROPE

INTERIM MANAGEMENT REPORT

ECONOMIC ENVIRONMENT

The most recent economic indicators in many countries suggest that the steep economic downturn in the first quarter of 2009 has now come to at least a temporary halt and the huge state stimulus schemes are beginning to take effect. In the spring only the futureoriented expectation indicators had become positive, but recently slight improvements could also be observed in the so-called "hard" indicators. In Germany, these particularly include the slight increase in exports in June, the improved orders situation in the manufacturing Industry, and higher industrial production. There have also been initial trends towards improvement in the USA and particularly in China.

This development has caused some governments and institutions to slightly increase their forecasts, particularly those for the coming year. The German government even expects the gross domestic product (GDP) to have risen up again slightly in the second quarter in comparison to the first quarter of the year. At the same time, however, all forecasts are pointing out in unison that the potential trend reversal is still at an early, fragile stage and that there is a risk of setbacks. Fears of setbacks arise primarily from the sustained rise in unemployment and the growing number of company insolvencies in most industrialised countries.

REPORT ON THE RESULTS OF OPERATIONS

In view of the growing number of company insolvencies, we are currently managing our new business strictly according to the criteria of quality and profitability. Our objective is to limit the negative impact on earnings from increasing claims through a high and increasing CM2. Our success in achieving higher CM2 margins on the market was demonstrated once again in the second quarter of 2009, during which we increased the margin from 15.4 percent in the previous year to 20.2 percent. This also represented another considerable increase in comparison to the first quarter of 2009, when a margin of 19.1 percent was achieved (see also the Report on the Development of the Segments).

In a recession like the current one, in which general economic growth rates plunge drastically in a very short space of time, the readjustment of the margins does not always take effect quickly enough and will not always be successful on a quarterly basis. Claims increased substantially in the reporting quarter, leading to a 12.5 percent year-on-year decline in net interest income after settlement of claims and risk provisioning – from EUR 12.0 million to EUR 10.5 million – despite the EUR 2.5 million increase in net interest income. On a six-month basis, there was a decrease from EUR 23.6 million to EUR 22.0 million - at 6.8 percent, this constitutes a much more moderate decrease

Due to the targeted reduction in new business growth rates, the other earnings items were also mostly lower than the figures for the previous year. However, one positive aspect which should be mentioned is the development of profit from disposals. In the past quarters we repeatedly noted, including with regard to profit from disposals, that this business is by its nature highly cyclical from a quarterly perspective. This cyclicity was reflected in the first quarter of 2009 in a EUR 0.79 million decrease in profit from disposals. However, in the second quarter the year-on-year decrease was just EUR 0.03 million, meaning that overall the profit from disposals amounted to EUR 0.9 million following EUR 1.7 million in the equivalent period of the previous year.

Effective 12 February of the reporting year, GRENKELEASING AG acquired all of the shares in the Hamburg-based private bank Hesse Newman & Co. AG (now "GRENKE BANK AG"). The first-time consolidation of the company did not have any significant impact on the operating income of the GRENKELEASING AG Group in the first half of 2009 (see also the "Report on the Development of the Segments" chapter).

In contrast, overall there was a significant increase in the expense items in comparison to the previous year, primarily due to the firsttime consolidation of GRENKE BANK AG, which was consolidated for a full three-month period for the first time in the second quarter. However, a sequential comparison of the second quarter of 2009 with the first reveals that this increase has already begun to level out, and in some cases expenses have even decreased, with the exception of sales and administrative costs, which by their nature are incurred in repositioning the Bank on the market.

There was a positive development regarding other operating income, for instance franchise fees, which were up significantly on the previous year for both the second quarter and the first half of the year. However, this also includes non-recurring items (e.g. profit from currency translation), meaning that this trend cannot be carried forward for the year as a whole. Expense from financial income also decreased in comparison to the first quarter of 2009, in which it was negatively impacted by expenses from the fair value measurement of EUR 0.2 million.

Overall, there was thus a year-on-year decrease in profit before taxes from EUR 11.9 million to EUR 8.4 million for the second quarter, and a year-on-year decrease from EUR 23.1 million to EUR 18.6 million for the first half of the year. Net profit for the period fell year-on-year from EUR 8.5 million to EUR 5.9 million for the second quarter, and from EUR 16.3 million to EUR 13.1 million for the first half of the year.

Report on the Development of the Segments

Since the takeover of GRENKE BANK, the Group has managed the Leasing and Banking Business segments on the basis of available financial information. All activities which were managed by GRENKELEASING AG and its subsidiaries prior to the takeover of GRENKE BANK now form part of Leasing business. Banking business consists of the activities of GRENKE BANK AG. In managing the Leasing business, the Group is essentially aligned to the individual regions/countries. The Leasing Business segment is thus a grouping of several reportable segments which are defined by country: Germany, France, Italy, Switzerland and Other Countries.

With income from operating business of EUR 43.7 million following EUR 47.2 million in the previous year, and a segment result of EUR 19.1 million following EUR 23.1 million, the Leasing Business segment generated the majority of the GRENKELEASING AG Group's results and revenue in the first half of 2009, since the newly acquired GRENKE BANK constitutes a considerably smaller unit than the Group. Correspondingly, the comments on the Group's results performance which were shown in the previous chapter (Report on the Results of Operations) relate in a similar way to the reportable Leasing Business segments. Similar trends can be observed on the regional markets in terms of the levels of loss, which then lead to overall decreases in operating segment revenues. This naturally impacts negatively on the margins in the individual countries, which have therefore declined in all the regional markets. The German market proved to be more stable than the international markets, since at present domestically oriented medium-sized business in Germany is still less heavily impacted by the global recession.

Operating segment revenues from the Banking Business segment amounted to EUR 0.4 million in the first half of 2009. Due to the integration costs currently incurred for the Bank as well as its repositioning on the market, there was a negative segment result of EUR 0.8 million in the first half of 2009.

New business in the Leasing Business segment was managed in a very restrained way, in the first two quarters of the fiscal year 2009. High margins together with a low risk profile were the key parameters for our management strategy – the focus was not on growth. Accordingly, although the Group's new business shrank by 26.0 percent to EUR 181.4 million in the first six months of the year, over this same period the CM2 margin rose to 19.7 percent following 15.0 percent in the previous year. In the second quarter there was even an increase from 15.4 to 20.2 percent – a new record for the Group.

We achieved margin increases in all of our markets, some of which were even extremely substantial increases. With the exception of Poland, where we managed our new subsidiary rather more generously, we now have a CM2 margin of at least 15 percent in all our markets and even of more than 20 percent in many markets. This group of highly profitable markets also includes our largest international market.

A detailed examination of the development over the course of the first half of the year shows that we managed the markets in very different ways. In countries where the competitive situation allowed for growth to be achieved together with high margins and low risk, in some cases we already permitted significant growth of new business again in the second quarter in comparison to the first quarter. These countries include Switzerland, which increased by 5.4 percent; Spain, where our subsidiary and the franchisee there grew by 5.9 percent; our company in the UK – also still very young – with growth of 16.0 percent; and the fastest growing international market in 2008, Italy, which increased by 36 percent. This attests to the continued high level of demand for our services and the attractive growth opportunities which are available even in the present economic environment.

REPORT ON THE FINANCIAL POSITION AND NET ASSETS

In examining the development of the GRENKELEASING AG Group's balance sheet, the changes resulting from the first-time consolidation of GRENKE BANK must be taken into account. In particular, the Group is now posting substantial deposits business. We are rapidly and rigorously developing this into a key pillar of refinancing. For instance, we increased short-term and long-term deposits by EUR 20.1 million to EUR 76.9 million in the reporting quarter.

In addition, we also made further significant use of our other, widely diversified refinancing instruments in the second quarter. Across the whole range of refinancing sources, we took up a total of EUR 88.6 million. In view of the continued tense state of international financial markets, we are very satisfied with this success. At the same time as this borrowing, during the quarter we also repaid on schedule two bonds with a volume of EUR 125.0 million.

Overall, total assets – which had still been at EUR 1,455.4 million at the end of fiscal year 2008 and rose to EUR 1,498.6 in the first quarter following the first-time consolidation – decreased to EUR 1,436.7 million in the reporting quarter. This primarily results from two factors: firstly, our still very restrained acceptance policy for new business in the second quarter, resulting in a EUR 13.7 million reduction in lease receivables in the three-month period; and secondly, the EUR 40.6 million decrease in the liquidity position, now at EUR 72.3 million, following repayment of bonds.

Despite the dividend payment in the second quarter, the equity ratio was still at a very comfortable 17.4 percent at the reporting date. It thus exceeds the ratio of 16,9 percent at the end of fiscal year 2008 and is still above our target of 16 percent. It must also be taken into account that cash flows overlapped in an unfavourable way at the reporting date, such that non-current bank liabilities increased to EUR 20.3 million following EUR 1.4 million as at 31 March 2009. Shortly after the end of the quarter, the expected cash inflows were received, returning bank liabilities back to their usual level.

Because cash outflows were unusually high for a three-month period due to the repayment of the two bonds, we did not offset cash flows entirely in the second quarter, but also partly utilised available liquid funds. For example, the cash flow statement for the first half of 2009 shows a refinancing volume from payments of annuities to refinancers and from disposal of liabilities from refinancing amounting to EUR 732.6 million, as compared to EUR 495.6 million in the previous year. We financed this volume through the addition of liabilities from refinancing of EUR 599.3 million, following EUR 538.0 million in the previous year.

In addition, we had available to us funds from pre-tax profits, adjusted by the non-cash items, in the amount of EUR 18.1 million following EUR 27.0 million in the previous year, as well as from an inflow of funds from changes in lease receivables – due to the restrictively managed new business – in the amount of EUR 25.2 million following a EUR 51.6 million outflow of funds in the previous year. And not least, we were able to utilise refinancing funds from deposits business of EUR 28.8 million for the first time in 2009. Overall, there was thus a net amount of EUR 41.2 million to be financed in the first half of 2009, relating primarily to the second quarter. In the first half of 2008, a cash inflow of EUR 38.4 million had been generated.

Following an increase in loans to franchisees from EUR 7.6 million in the previous year to EUR 9.3 million due to the good business performance of some of these partners, and in particular due to a cash inflow from the decrease in other assets in the amount of EUR 11.4 million, net cash flow from operating activities after taxes and interest amounted to EUR -42.8 million in the first half of 2009. In the previous year, above all the increase in other assets – which have now partly been reduced again – had resulted in additional cash in the amount of EUR 18.3 million, and higher tax payments had to be made, with the effect that in the first half of 2008 net cash flow from operating activities of EUR 10.8 million was generated.

Cash flow from investing activities amounted to EUR 31.4 million, primarily due to the cash inflow from the acquisition of GRENKE BANK in the first quarter of 2009, as well as low payments for the acquisition of equipment. In the previous year, there had been an overall outflow of EUR 8.3 million, particularly as a result of the acquisition of the two former franchise companies in the United Kingdom and Poland in the first quarter of 2008. Cash flow from financing activities in the amount of EUR -8.9 million in the first half of 2009 as compared to EUR -8.3 million in the first half of 2008 results primarily from the dividend payment following the Annual General Meeting on May 12, 2009.

In the total cash flow, there was therefore a cash outflow of EUR 20.2 million in the first half of 2009, following an outflow of EUR 5.9 million in the previous year.

REPORT ON FORECASTS AND THE OUTLOOK FOR THE GROUP

Opportunities and Risks

The following opportunities and risks report relates to both the Group and the segments. The risks affecting the GRENKELEASING AG Group which were described in the 2008 Annual Report are still relevant. No additional risks have emerged which relate to this group of risks. The takeover of the private bank Hesse Newman & Co. AG (renamed GRENKE BANK AG effective May 7, 2009) in the first quarter of 2009 (effective February 12) results in additional risks but also opportunities for the GRENKELEASING AG Group from the traditional banking business which is GRENKE BANK's focus. The risks chiefly relate to risk provisioning for the portfolio of loans and advances and punctual repayment of liabilities from deposits business. However, this also provides the GRENKELEASING AG Group with opportunities on the refinancing side, which are among the most important aspects of the rationale for the acquisition.

The assumption of leasing companies into the scope of the German Banking Act [Kreditwesengesetz (KWG)] and Deutsche Bundesbank's and BaFin's Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)] has consequences for the GRENKELEASING AG Group with regard to restructuring its accounting and preparing the annual financial statements and the audit of the annual financial statements, which must satisfy the reporting obligations required by the KWG and MaRisk. We have carried out these restructuring measures in line with the requirements. In addition, there are further reporting obligations to Deutsche Bundesbank and to BaFin which we fulfil as part of the requirements already formulated by Deutsche Bundesbank and BaFin. Here, matters are still under discussion: the dialogue between the companies concerned and Deutsche Bundesbank is not yet complete either in terms of a concrete catalogue of requirements or in terms of a final procedure.

As described in detail in the 2008 Annual Report, the GRENKELEASING AG Group has a fully developed, well-proven internal risk management and control system and has developed transparent and clearly documented regulations for managing, monitoring and controlling risks. As such, the Group already fulfilled many of the requirements of MA-Risk, meaning that no major changes to the risk management and control system have needed to be undertaken so far. The individual risk classes are differentiated based on:

• market risks (interest rate risks, currency risks)
• counterparty risks (credit risks, forced sale risks)

• liquidity risks (payment obligations, refinancing)

• operational risks (qualification of management and employees, organisational/operating, technical risks including IT risks)

• legal risks (particularly contractual risks).

As we already anticipated at an early stage, the recession has spread to our sales markets. However, the resulting risk of a decline in investments by our target customers and a fall in demand for leasing finance did not materialise during the first half of the fiscal year – in fact, lease applications continued to increase. There is also a risk of increasing claims, in particular relating to insolvencies. The development here accelerated rather more rapidly in the second quarter of 2009 than we had planned for. This is shown by the increase in the loss rate to 1.7 percent in the first half of the year. However, it should also be stressed that the loss rate remains very close to our average default rate of 1.5 percent and the recent increase was in relation to a three-year exceptionally low basis of 1.2 percent. We managed new business in a very restrained way in the first half of 2009, in order to reduce the average expected default rate.

Despite marked reticence in providing funds for refinancing as a result of the financial markets crisis, the considerably increased refinancing volume in the first half of the year as against the first half of 2008 did not present any significant problems. We chiefly concentrated on refinancing through promissory note loans. In the first half of 2009, a total of EUR 170 million of refinancing funds was either placed on the market by the Group for the first time (EUR 80.0 million, including EUR 51.5 million in the second quarter) or obtained by extending the duration of existing loans. This was offset by repayments from our debt issuance programme (DIP) in the amount of EUR125.0 million, which were made largely out of our own funds.

Including the existing refinancing line from our asset-backed commercial paper programmes (ABCPs) in the amount of EUR 128 million, which is not yet utilised at the end of the quarter as at 30 June, there is an additional/unutilised refinancing volume of more than EUR 173 million available from capital market sources alone at the half-year reporting date. The Group also has access to approximately EUR 75 million of unutilised credit lines at banks. In addition to these capital market oriented financial reserves, the GREN-KELEASING AG Group has further attractive refinancing possibilities from traditional banking business since the acquisition and integration of GRENKE BANK AG.

The risk of increasing interest rates continues to be of significance to the results performance. In particular, in view of the extreme global increase in liquidity we are expecting a more favourable economic development to be accompanied by increased inflation, leading to a rise in interest rates.

With regard to refinancing lease receivables, the Group is subject to interest rate risks only to a limited extent, since the refinancing – if subject to a floating rate – is hedged using derivatives. The relevant submarket for this type of hedging instrument has remained functional during the financial markets crisis. The necessary instruments were and are available at suitable prices. However, risks for the growth and profitability of new business may arise from changes in interest rates and spreads. The time delay with which we can pass on interest rate changes to customers therefore has a temporary impact on profitability.

We remain in a position to be able to pass on overall increases in the refinancing costs of our new business, due in particular to an extension of the interest spread on the capital markets, to the market. Through this and as a result of our clearly risk-oriented policy in the current fiscal year, we significantly increased the CM2 margin for new business in the Group in the first half of 2009 to a record level of 19.7 percent, following 15.0 percent in the first half of 2008. The trend in the first quarter thus continued, with the market change which had already been observable for some time – whereby banks tended to move away from leasing business in order to reduce their need for equity – working very much in our favour. Because in addition interest rates are staying at a very low level due to the global high levels of liquidity provisions from central banks, these effects compensate for the current increase in the interest spreads. The risk arising from our business model's sensitivity to interest rates thus remains clearly limited.

Currency risks tend to arise from refinancing our subsidiaries and franchise partners outside the euro zone. Where economically appropriate, we hedge against these with derivatives. Here, too, the financial products necessary to our business are still available with sufficient liquidity. It must be taken into account that the contractually agreed payment schedule of a lease contract is hedged using derivatives. However, with the current level of more than 220,000 contracts, in times of above-average currency volatility slight variations such as early repayments or cancellations and delays in instalments may accumulate negatively across the whole portfolio, for example, as a result of unfavourable bank processing periods. This can result in an observable negative impact, particularly on a quarterly basis.

Anticipated Development of Business

Despite the recent brightening in the economic climate, the overall economic environment will remain difficult for some time yet. In particular, most economists and institutions such as the Bundesagentur für Arbeit (German Federal Employment Office) believe that, particularly for the German employment market, the hardest times are still ahead. Furthermore, a significant increase in company insolvencies can be expected across Europe in the coming quarters.

The latter issue especially is of particular significance to the GRENKELEASING AG Group. We have taken account of this development in our planning and are managing business accordingly. Profitability, liquidity and strengthening the balance sheet continue to take precedence. New business is managed accordingly, although we intend to exploit growth opportunities without delay if the general economic development permits this. We are mainly using two instruments to manage the foreseeable further increase in losses of receivables as a result of insolvencies: firstly, our sophisticated risk management system, with which we can take account of increased general economic risks at an early stage, and secondly, risk-adequate and accordingly adjusted conditions for new business. We are thereby generating increases in the contribution margins and thus in interest income – a development which will continue and partially compensate for the claims settlement.

The development of the CM2 is of particular importance in our current company policy: following a significant rise in the CM2 rate in the first half of the year, we are targeting absolute growth of 5 to 10 percent for the year as a whole.

The strategically important acquisition of GRENKE BANK AG, which is also advantageous from an operating point of view, and its integration into the Group will of course lead to a certain negative impact on earnings for the current fiscal year. We have taken account of this in our planning. In this context, overall we are anticipating earnings after taxes in the region of EUR 25 to 28 million for fiscal year 2009.

CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2009

	3-month report		6-month report
EURk	Apr. 1, 2009 to June 30, 2009	Apr. 1, 2008 to June 30, 2008	Jan. 1, 2009 to June 30, 2009	Jan 1, 2008 to June 30, 2008
Interest and other income from financing business	28,712	27,186	57,924	53,413
Expenses from interest on refinancing and on deposit business	10,965	10,092	21,779	19,747
Net interest income	17,747	17,094	36,145	33,666
Settlement of claims and risk provision	7,273	5,070	14,109	10,026
Net interest income after settlement of claims and risk provision	10,474	12,024	22,036	23,640
Profit from insurance business	4,555	4,681	9,619	9,598
Profit from new business	5,608	6,260	11,632	12,264
Profit from disposal	740	766	860	1,675
Income from operating business	21,377	23,731	44,147	47,177
Personnel expenses	7,441	6,742	14,860	13,204
Depreciation	705	735	1,480	1,513
Selling and administration expenses
(excl. personnel expenses)	5,202	4,101	9,580	8,497
Other operating expenses	235	433	852	1,314
Other operating income	812	168	1,724	417
Profit / loss from operating business	8,606	11,888	19,099	23,066
Expenses / income from the fair value measurement	-19	0	-222	0
Other interest income	234	197	474	409
Other interest expenses	403	190	719	391
Earnings before taxes (EBT)	8,418	11,895	18,632	23,084
Income taxes	10,698	3,203	15,907	7,293
Deferred taxes	-8,184	229	-10,385	-553
Net profit for the period	5,904	8,463	13,110	16,344
Earnings per share (basic) in EUR	0.43	0.62	0.96	1.19
Earnings per share (diluted) in EUR	0.43	0.62	0.96	1.19
Average shares outstanding (basic)	13,684,099	13,684,099	13,684,099	13,684,099
Average shares outstanding (diluted)	13,684,099	13,684,099	13,684,099	13,684,099

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2009

		3-month report		6-month report
EURk	Apr. 1, 2009 to June 30, 2009	Apr. 1, 2008 to June 30, 2008	Jan. 1, 2009 to June 30, 2009	Jan. 1, 2008 to June 30, 2008
Net profit for the period	5,904	8,463	13,110	16,344
Allocation / reduction of the hedging reserve	1,186	1,889	-1,080	1,090
Allocation / reduction of the reserve for actuarial profits and losses	-9	-23	-38	-55
Currency translation adjustment	617	223	-749	1,159
Other comprehensive income (net of tax)	1,794	2,089	-1,867	2,194
Total comprehensive income	7,698	10,552	11,243	18,538

CONSOLIDATED BALANCE SHEET AS PER JUNE 30, 2009

EURk	June 30, 2009	Dec. 31, 2008
Assets
Current Assets
Cash	72,265	77,012
Financial instruments with positive market value (short termportion)	1,456	3,655
Lease receivables	450,308	438,868
Other current financial assets	62,121	32,047
Trade receivables	5,323	5,955
Lease assets for sale	13,328	12,151
Tax receivables	993	5,211
Other current assets	16,823	18,949
Total current assets	622,617	593,848
Non-current assets
Lease receivables	667,665	704,350
Financial instruments with positive market value (long term portion)	913	3,438
Other non-current financial assets	82,538	89,360
Property, plant and equipment	36,345	35,714
Goodwill	8,704	8,239
Other intangible assets	2,630	2,296
Deferred tax assets	15,002	17,442
Other non-current assets	305	710
Total non-current assets	814,102	861,549
Total assets	1,436,719	1,455,397

CONSOLIDATED BALANCE SHEET AS PER JUNE 30, 2009

EURk	June 30, 2009	Dec. 31, 2008
Liabilities and equity
Liabilities
Current liabilities
Refinancing liabilities	399,042	441,847
Liabilities from deposit business	61,867	0
Short-term debt	20,342	4,692
Financial instruments with negative market value (short term portion)	6,462	4,350
Trade payables	5,303	8,466
Tax liabilities	15,849	3,101
Deferred liabilities	3,244	2,310
Other current liabilities	8,095	5,465
Deferred lease payments	68,846	70,217
Total current liabilities	589,050	540,448
Non-current liabilities
Refinancing Liabilities	538,596	609,218
Liabilities from deposit business	14,985	0
Long term debt	7,112	7,819
Financial instruments with negative market value (long term portion)	886	1,084
Deferred tax liabilities	34,704	47,768
Pensions	1,338	90
Other non-current liabilities	601	2,556
Total non-current liabilities	598,222	668,535
Equity
Capital stock	17,491	17,491
Capital reserve	60,166	60,166
Retained earnings	83,969	5,317
Other components of equity	-6,023	-4,156
Balance sheet profit	93,844	167,596
Total equity	249,447	246,414
Total liabilities and equity	1,436,719	1,455,397

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2009

	EURk	Jan. 1, 2009 to June 30, 2009	Jan. 1, 2008 to June 30, 2008
	Earnings before taxes	18,632	23,084
	Non-cash items contained in net profit for the period and reconciliation to cash flow from operating activities
+ / -	Amortisation / depreciation	1,480	1,513
- / +	Profit / loss from the disposals of equipment and intangible assets	45	-51
- / +	Investment income	246	-18
- / +	Non-cash changes in equity	-2,010	2,132
+ / -	Increase / decrease in other provisions	-291	333
-	Additions of lease receivables	-199,369	-258,205
+	Payments by lessees	235,502	219,050
+	Disposals / reclassifications of lease receivables at residual carrying values	54,305	46,221
-	Interest and other income from financing business	-57,924	-53,413
-	Increase in other receivables from lessees	-6,335	-4,229
+ / -	Currency translation differences	-933	-1,009
=	Change in lease receivables	25,246	-51,585
+	Additions of liabilities from refinancing	599,280	538,029
-	Payment of annuities to refinancers	-142,423	-113,318
-	Disposal of liabilities from refinancing	-590,205	-382,299
+	Expenses from interest on refinancing and on deposit business	21,745	19,743
+ / -	Currency translation differences	-1,824	795
=	Change in refinancing liabilities	-113,427	62,950
+	Change in liabilities from deposit business	28,814	0
-	Change in loans to franchisees	-9,319	-7,592
	Changes in other assets / liabilities
- / +	Increase / decrease in other assets	11,398	-18,281
+ / -	Increase / decrease in deferred lease payments	-1,371	5,948
+ / -	Increase / decrease in other liabilities incl. pensions	-3,024	-3,564
=	Cash flow from operating activities	-43,581	14,869

Continued on next page

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2009: CONTINUED

	EURk	Jan. 1, 2009 to June 30, 2009	Jan. 1, 2008 to June 30, 2008
- / +	Taxes paid / received	1,058	-4,122
-	Interest paid	-720	-391
+	Interest received	474	409
=	Net cash flow from operating activities	-42,769	10,765
-	Purchase of equipment and intangible assets	-623	-921
+ / -	Acquisition of subsidiaries (net of cash acquired)	31,994	-7,544
+	Proceeds from sale of equipment and intangible assets	72	139
=	Cash flow from investing activities	31,443	-8,326
+ / -	Raising / repayment of bank liabilities	-690	-123
-	Dividend payment	-8,210	-8,210
=	Cash flow from financing activities	-8,900	-8,333
	Cash funds at the beginning of the period
	Cash on hand and balances with banks	77,012	53,395
-	Bank liabilities from overdrafts	-3,593	-4,604
=	Cash and cash equivalents at the beginning of the period	73,419	48,791
+ / -	Change due to currency translation	-154	-96
=	Cash funds after currency translation	73,265	48,695
	Cash funds at the end of the period
	Cash on hand and balances with banks	72,265	47,693
-	Bank liabilities from overdrafts	-19,226	-4,892
=	Cash and cash equivalents at the end of the period	53,039	42,801
	Change in cash and cash equivalents during the period
	(=Total cash flows)	-20,226	-5,894
	Net cash flow from operating activities	-42,769	10,765
+	Cash flow from investing activities	31,443	-8,326
+	Cash flow from financing activities	-8,900	-8,333
=	Total cash flow	-20,226	-5,894

STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY

EURk	Capital stock	Capital reserve	Retained earnings	Hedging reserve	Reserve for actuarial profits and losses	Currency translation	Total equity
Equity as per Jan. 1, 2008	17,491	60,166	147,980	1,200	-62	-608	226,167
Total comprehensive income			16,344	1,090	-55	1,159	18,538
Dividend in 2008 for 2007			-8,210				-8,210
Equity as per June 30, 2008	17,491	60,166	156,114	2,290	-117	551	236,495
Equity as per Jan. 1, 2009	17,491	60,166	172,913	-3,379	-66	-711	246,414
Total comprehensive income			13,110	-1,080	-38	-749	11,243
Dividend in 2009 for 2008			-8,210				-8,210
Equity as per June 30, 2009	17,491	60,166	177,813	-4,459	-104	-1,460	249,447

SEGMENT INFORMATION FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2009

Since the takeover of the Bank, the Group has managed the Leasing and Bank reportable segments on the basis of available financial information. All activities which were managed by GRENKELEASING AG and its subsidiaries previous to the takeover of GRENKE BANK AG (prior: Hesse Newman & Co. AG) are now part of the Leasing business. The Banking business consists of the activities of GRENKE BANK AG. In managing the Leasing business, the Group is essentially aligned to the individual regions/countries. The Leasing segment is thus a grouping of several operating segments which are defined by country/group of countries and which together make up the Leasing reportable segment.

	Segment Leasing					Segment Bank	Consoli dation	Total segments
As per June 30, 2008 (EURk)	Region Germany	Region France	Region Switzerland	Region Italy	Region Others	Total
Operational segment revenues	24,782	12,107	2,119	1,898	6,270	47,176	0	0	47,176
Segment result	11,541	8,527	976	664	1,358	23,066	0	0	23,066
Reconciliation to consoli dated financial statements
Operating result									23,066
Other interest result									18
Taxes									6,741
Net profit for the period									16,344
Segment assets	711,806	282,026	39,937	39,798	244,676	1,318,243	0		1,318,243
Reconciliation to consoli dated financial statements
Tax claims									24,309
Total assets									1,342,552
		Segment Leasing			Segment Bank	Consoli dation	Total segments
As per June 30, 2009 (EURk)	Region Germany	Region France	Region Switzerland	Region Italy	Region Others	Total
Operational segment revenues	23,008	10,554	2,025	2,343	5,816	43,746	401	0	44,147
Segment result	10,590	6,699	854	654	1,132	19,929	-830	0	19,099
Reconciliation to consoli dated financial statements
Operating result									19,099
Other interest result									-468
Taxes									5,522
Net profit for the period									13,110
Segment assets	665,088	318,268	41,229	56,612	309,991	1,391,188	31,536	-2,000	1,420,724
Reconciliation to consoli dated financial statements
Tax claims									15,995

The segment information was calculated as follows:

• The operating segment revenues consist of net interest income after settlement of claims and risk provisioning, profit from insurance business, profit from new business and the segments' realisation surplus.
• The segment result is calculated as an operating result before taxes.
• Segment assets are operating assets excluding tax assets.

SELECTED EXPLANATORY NOTES

ACCOUNTING POLICY

The interim reporting of GRENKELEASING AG (hereafter referred to as "Company") as at June 30, 2009 meets the requirements of the International Financial Reporting Standards (IFRSs) published by the International Accounting Standards Board (IASB) and assumed by the EU, as did the consolidated financial statements of December 31, 2008.

The regulations of IAS 34 on interim reporting were applied accordingly. All interim financial statements of the companies included in GRENKELEASING AG's consolidated financial statements have been prepared using uniform accounting policies.

Because interim reporting is based on the consolidated financial statements, information on this can be found in the accounting and consolidation policies as described in detail in the notes to the consolidated financial statements of December 31, 2008.

The accounting policies used are the same as those used in the previous year. Exceptions resulting from the application of new standards/changes in disclosures due to acquisition are described below.

CHANGES IN DISCLOSURES

The format of the balance sheet and of the income statement was adjusted in the first half of 2009 mainly due to the acquisition of GRENKE BANK AG (previously "Hesse Newman & Co. AG") and in order to improve clarity and informational content. Some items were reclassified/introduced for the first time. Wherever the figures for the previous year were affected, these were adjusted accordingly.

The following adjustments were made in the income statement. The figures for the previous year were not altered for any of the items concerned, since generally the adjustments involved clarifications of terms.

• The "Interest and other income from financing business" item replaces the previous term "Interest income from leasing business". Alongside interest income from leasing, interest income from the lending business of the acquired bank was also included here.
• "Interest expense from refinancing the lease business" was renamed "Expense from interest on refinancing and on deposit business".
• "Net interest income" includes the entire Group net interest income and the previous "Net interest income from leasing business".
• "Settlement of claims" was renamed "Settlement of claims and risk provisioning" and includes settlement of claims from leasing business and risk provisioning for the portfolio of loans and advances in banking activities.

The following changes appear in the balance sheet:

• "Cash" includes all cash assets, cash in accounts at central banks and all cash in bank accounts. This does not affect the figures for the previous year.
• Loans and advances to customers are included under other financial assets.
• Both "Financial instruments with a positive market value" on the assets side and "Financial instruments with a negative market value" on the liabilities side are divided into current and non-current categories. The figures for the previous year were adjusted accordingly.
• "Liabilities from deposit business" was introduced for the first time. This item consists of liabilities due to customers from GRENKE BANK AG deposit business. The figure for the previous year is thus zero.

"Pensions" are now shown in a separate line and are eliminated accordingly from "Other non-current liabilities". The figure for the previous year was adjusted accordingly to show pensions at EUR 90k.

MANDATORY NEW ACCOUNTING STANDARDS

In recent years, the IASB has published various different amendments of IFRSs and new IFRSs as well as International Financial Reporting Interpretations Committee interpretations (IFRICs). The following section describes those of the provisions mandatory as of January 1, 2009 which are relevant or potentially relevant to GRENKELEASING, as well as their effects on the consolidated financial statements. Non-explicit changes in the IFRS are not relevant to the Company's financial statements. However, this does not have any effect on accounting.

• IAS 1 "Presentation of financial statements" was published in September 2007 and is operative for the first time for the reporting period beginning on or after January 1, 2009. The new version of the standard includes significant changes in the presentation and reporting of financial information in financial statements. From now on, only transactions relating to equity holders acting in their capacity as equity holders are to be reported in the statement of changes in equity. Other changes in equity are to be shown in an "Overall statement of total income".
• IFRS 8 "Operating segments" was published in November 2006 and is operative for the first time for fiscal years beginning on or after January 1, 2009, replacing IAS 14 "Segment reporting". IFRS 8 requires reporting on financial and descriptive information relating to companies' reportable segments. Reportable operating segments are components of a company or groupings of operating segments in line with certain criteria. In particular, for these segments financial information must be available which is reviewed on a regular basis by the company's highest management committee in order to measure and evaluate business success. The financial information should be reported on the basis of internal management, since IFRS 8 follows the so-called "management approach".
• The amendments to IAS 32 "Financial instruments: Presentation" and IAS 1 "Presentation of financial statements" were issued on February 14, 2008 and become effective for fiscal years beginning on or after January 1, 2009. This did not result in any changes in the financial statements.
• On May 22, 2008, the IASB published changes to existing standards for the first time as part of an annual procedure ("Improvements to IFRS 2008"). The primary aim of the collective standard is to remedy inconsistencies and to clarify formulations. The changes are mandatory for fiscal years beginning on or after January 1, 2009. The following section describes only those standards which affect the financial statements. Specifically, the following standards are affected. Unless explicitly stated, the Group does not expect any effects as a result of the relevant application:
• − IAS 1 "Presentation of financial statements": In accordance with IAS 39 "Financial instruments: recognition and measurement", assets and liabilities which are classified as held for trading are not automatically classified as current in the balance sheet. As a result, derivatives are recognised under non-current financial instruments in the balance sheet.
• − IAS 36 "Impairment of assets": Where the "fair value less costs to sell" is calculated based on a discounted cash flow model, additional disclosures on the discount rate are required in line with obligatory disclosures when a discounted cash flow model is used in determining the "value in use". This change does not have a direct effect on consolidated financial statements, since the recoverable amount of the Group's cash-generating entities is currently calculated based on the "value in use".
• − IAS 8 "Accounting policy, changes in estimates and errors": It is clarified that only guidance which constitutes an integral part of the IFRS is mandatory when selecting accounting policies.
• − IAS 34 "Interim reporting": When an entity is within the scope of IAS 33, the presentation of earnings per share in the interim report is provided.

− IAS 39 "Financial instruments: recognition and measurement": After initial recognition, due to changed circumstances derivatives can be designated as "at fair value through profit and loss" or removed from this category because it is not a reclassification in line with IAS 39. In IAS 39 the reference to "segment" in relation to the judgement as to which an instrument qualifies as a hedging instrument is deleted. The use of the recalculated effective interest rate is required when a debt instrument is revalued after ending the fair value hedge accounting for hedging the fair value.

NEW ACCOUNTING STANDARDS WITH VOLUNTARY APPLICATION/STANDARDS WHICH HAVE NOT YET BEEN ENDORSED BY THE EU

Apart from the IFRSs whose application is mandatory, the IASB has also published other IFRSs and IFRICs, some of which have already received EU endorsement but which will only become mandatory at a later date. Below, only those standards and interpretations which could be relevant for GRENKELEASING AG and which were not presented in the consolidated financial statements as at December 31, 2008 are described. Voluntary early application of these standards is explicitly permitted/recommended. GREN-KELEASING AG is not exercising this option.

IFRIC Interpretation 18 was published in January 2009 and is operative for the first time for the reporting period beginning on or after July 1, 2009. This interpretation provides guidance on the recognition of arrangements hereby an entity receives an item of property, plant or equipment or cash from a customer which the company must then use e.g. to connect the customer to a network and/or to provide the customer with ongoing access to a supply of goods or services. The interpretation particularly comments on the criteria for recognition of customer contributions and the time and extent of revenue recognition from such transactions. This interpretation is to be applied prospectively.

"Improvements to IFRSs" was published by the IASB on April 16, 2009. It is the second standard published as part of the Annual Improvements Process (AIP) project. Improvements to IFRSs includes 15 different changes to twelve existing IFRSs. In addition to the changes proposed in the exposure draft "Proposed improvements to IFRSs" in August 2008, these Improvements to IFRSs include five further changes, some of which were issued to the public for comment as part of the first improvements exposure draft "Proposed improvements to IFRSs" in October 2007, and others as part of the exposure draft "ED/2009/1" published at the end of January 2009. By grouping these changes together in a single document, the IASB intends to reduce the expense for all involved.

The revised version of IFRS 3 "Business Combinations" (IFRS 3R) published in January 2008 by the IASB and the amended version of IAS 27 "Consolidated and Separate Financial Statements" (IAS 27R) have been adopted into European law by the EU and will become obligatory for the Group as of January 1, 2010.

IFRIC 16 "Hedges of a Net Investment in a Foreign Operation" was adopted into European law on June 5, 2009. This has no effect on the consolidated financial statements.

On June 19, 2009, the IASB published an amended version of IFRS 2 "Share-based Payment". The revised Standard is operative for the first time for fiscal years beginning on or after January 1, 2010. In addition to a few clarifications, the IASB in particular incorporated IFRIC 8 "Scope of IFRS 2" and IFRIC 11 "IFRS 2 Group and Treasury Share Transactions" into IFRS 2.

ACQUISITIONS IN FISCAL YEAR 2009

Business combinations are recognised using the purchase method of accounting. Goodwill is initially measured at cost which is the excess of the purchase price over the fair value of the identifiable assets and liabilities of the acquired entity as of the date of acquisition plus the directly attributable acquisition costs.

After initial recognition, all goodwill is tested for impairment at least once a year pursuant to IAS 36 to prove its adequate valuation (impairment-only approach). This regular impairment test is conducted in the third quarter of each year on the basis of the six-month figures. If there are indications that goodwill might be impaired, more frequent tests must be conducted in addition to the mandatory annual impairment test.

Effective February 12, 2009, GRENKELEASING AG acquired all of the shares in the Hamburg-based private bank GRENKE BANK AG, which at that time was still operating as "Hesse Newman & Co. AG". In accordance with the requirements of the purchase agreement, the date of purchase/closing date (date control was obtained) as defined in IFRS 3 was February 25, 2009. On May 7, 2009, the Bank changed its name to GRENKE BANK AG through entry in the commercial register. In addition, the GRENKELEASING AG Annual General Meeting on May 12, 2009 resolved that a profit transfer agreement will be concluded between GRENKE BANK AG and GRENKELEASING AG.

The fair values of the identifiable assets and liabilities at the acquisition date and the corresponding carrying amounts immediately after the date of acquisition of GRENKE BANK AG are as follows:

GRENKE BANK AG/Hamburg

EURk	Fair value under IFRSs	Derived IFRS carrying amount
Cash and cash equivalents	39,072	39,072
Receivables from customers	18,395	18,395
Equity investment	38	38
Intangible assets (incl. customer base)	705	48
Property, plant and equipment	944	944
Deferred tax assets	25	63
Other assets	543	543
Total assets	59,721	59,103
Liabilities from deposit business	48,038	48,038
Pensions	1,160	1,285
Other provisions	1,277	1,277
Deferred tax liabilities	208	6
Other liabilities	2,362	2,362
Total liabilities	53,045	52,968
Net assets	6,676
Goodwill arising on acquisition	502

The acquisition cost of the merger with GRENKE BANK AG totalled EUR 7,178k and included costs directly attributable to the business combination.

Total acquisition cost 7,178

Acquisition cost	EURk
Purchase price	6,800
Cost directly attributable to the acquisition	378
Total	7,178

Cash outflow on acquisition	EURk
Net cash acquired with the subsidiary	39,072
Cash paid	7,178
Net cash inflow	31,894

In other liabilities, the Bank has a subordinated loan with a nominal value of EUR 2,000k. This loan, which was originally given to the Bank by the previous shareholder, was acquired at nominal value by GRENKELEASING AG as part of the purchase agreement. As a result of the consolidation of this intra-Group transaction, this loan is not shown in the consolidated balance sheet.

Due to the extraordinary liquidity situation of the acquired Bank, cash totalling EUR 31,894k (after deduction of the purchase price paid) flowed to GRENKELEASING as a result of the purchase. The purchase price allocation is provisional in line with IAS 3.62 and will be finalised by the end of the fiscal year, provided all relevant information for a final purchase price allocation is available. Goodwill of EUR 502k was disclosed at the balance sheet date. EUR 656k of the intangible assets relates to measured customer relationships. This customer base is thus to be written down over a useful life of five years. The Bank's contribution to the net profit for the period before taxes totals a loss of EUR 866k, EUR 422k of which relates to net interest income for the period of the acquisition up until June 30, 2009. The Bank's total net interest income for the first half of 2009 amounts to EUR 519k.

USE OF JUDGEMENT AND MAIN SOURCES OF ESTIMATING UNCERTAINTIES

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

• Measurement of non-performing lease receivables on the basis of the recoverability rate
• Use of estimated residual values at the end of the lease term to determine the present value of lease receivables
• Recognition of lease assets for sale at estimated residual values.

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 lists the processing categories:

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

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

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

Non-guaranteed residual values are used to calculate lease receivables in accordance with the definition in IAS 17. They are determined on the basis of past experience and statistical methods. Based on experience, residual values for additions until 2006 range between 11 percent and 15 percent of historical acquisition cost, depending on the term of the lease. In fiscal year 2007, this classification was split further into several groups according to the contract term. For additions from 2007 onward, the residual values range between 7.7 percent and 28.4 percent of historical cost. For the additions from fiscal year 2009, the level of the residual values relative to the historical cost of the lease agreements is between 6.5 percent and 28.4 percent.

Lease 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 6.6 percent and 21.9 percent of the historical cost. If a sale is considered unlikely due to the condition of the asset, the asset is written off and recognised as an expense.

EURk	June 30, 2009	June 30, 2008
Changes in performing lease receivables
Balance at beginning of period	1,064,827	930,195
+ / - change in the period	-31,581	84,545
Lease receivables (current + non-current) from current contracts at period end	1,033,246	1,014,740
Changes in non-performing lease receivables
Gross receivables at beginning of period	151,667	139,435
- accumulated valuation allowances at beginning of period	-73,276	-69,572
= Non-performing lease receivables at beginning of period	78,391	69,863
+ change in gross receivables during the period	22,828	15,224
- disposals of gross receivables during the period	10,111	7,652
+ disposal of accumulated valuation allowances during the period	7,277	3,000
- addition of accumulated valuation allowances during the period	13,658	5,271
Non-performing lease receivables at period end	84,727	75,164
Lease receivables (carrying amounts of current + non-current receivables)
at beginning of period	1,143,218	1,000,058
Lease receivables (carrying amounts of current + non-current receivables) at period end	1,117,973	1,089,904

REFINANCING

ABCP Programmes

The GRENKELEASING Group has three asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 512,200k and 75 percent of which were used as of the reporting date. The ABCP programme of WestLB Compass Variety Funding Limited comprises a volume of EUR 250,000k. The volume of Kebnekaise Funding Limited, the ABCP programme of SEB AB, amounts to EUR 112,200k as of the reporting date. The programme of DZ-Bank CORAL PURCHASING Limited has a volume of EUR 150,000k.

Sales of receivables agreements

Together with Stadtsparkasse Karlsruhe, a new refinancing programme was launched on April 7, 2009, involving an agreement of EUR 10,000k for the purchase of German lease receivables. As at June 30, 2009, the framework agreement was utilised in full.

Debt Issuance Programme

At the specified date on April 20, 2009, the Group repaid the fixed-income bond of EUR 100,000k issued in 2006 under the DIP and the floating-rate bond of EUR 25,000k issued in 2007. The repayment was made predominantly from the Group's current cash flow. In addition, a bond of EUR 10,000k was issued on April 20, 2009 as part of the DIP, with a term of two years and a variable coupon with a premium of 2.80 percent.

A floating-rate debenture of EUR 12,050k was issued on May 18, 2009. The initial premium (up until October 4, 2009) for this floating-rate debenture is 0.75 percent, which is stepped up in the subsequent periods and increases by 50 basis points each quarter. In the final interest period from April 4, 2011 to July 4, 2011, the premium over Euribor is 4.25 percent.

Promissory note loans

Unless mentioned otherwise, the reference interest rate for the floating-rate bonds, promissory notes and private placements is the three-month EURIBOR. The key data for the newly issued/adjusted promissory note loans are as follows:

Description	Note	Term		Coupon	Discount	Nominal value	Nominal value
		from	to	percent p.a.		June 30, 2009	Dec. 31, 2008
					EURk	EURk	EURk
Adjustments to PNL
EUR–PNL	(I)	Mar. 19, 2009*	Mar. 10, 2014	5.1374	-	10,000	10,000
EUR–PNL	(II)	Mar 30, 2009*	Mar. 28, 2013	5.7610	-	10,000	10,000
EUR–PNL	(III)	Mar. 10, 2008	Mar. 10, 2011	4.719	57	2,500	25,500
EUR–PNL	(IV)	Mar. 10, 2008	Mar. 10, 2011	Euribor + 0.85	86	35,500	37,500
EUR–PNL	(V)	Mar. 30, 2009*	Mar. 28, 2013	5.7610	15	10,000	10,000
New PNL issues
EUR–PNL	(a)	Mar. 10, 2009	Mar. 10, 2014	5.8900	-	10,000	-
EUR–PNL	(b)	Mar. 10, 2009	Mar. 11, 2013	5.1680	-	4,000	-
EUR–PNL	(c)	Mar. 30, 2009	Mar. 10, 2014	5.8800	-	14,500	-
EUR-PNL	(d)	May 25, 2009	May 25, 2012	5.5400	-	26,500	-
EUR-PNL	(e)	June 15, 2009	June 15, 2013	Euribor + 3.75	-	10,000	-
EUR-PNL	(f)	June 15, 2009	June 15, 2013	Euribor + 3.75	-	15,000	-

Promissory note loan (PNL)

* Date of the extension / interest rate adjustment.

On March 19, 2009, the promissory note loan of EUR 10,000k – table (I) – which was originally due to mature on August 16, 2010 was extended until March 10, 2014. At the same time, the agreed variable interest rate was changed to a fixed interest rate, with a fixed coupon of 5.1374 percent valid as of March 19, 2009.

On March 30, 2009, the repayment date for the promissory note loan of October 25, 2007 – table (II) – which was originally due to mature on April 30, 2011 and had a fixed interest rate of 5.21 percent, was extended until March 28, 2013 and a new fixed interest rate of 5.761 percent was agreed.

The promissory note loan with an original notional amount of EUR 25,500k – table (III) – was adjusted overall in its nominal volume to EUR 2,500k. EUR 7,500k in nominal volume on this loan was repaid on March 10, 2009 and at the same time a new promissory note loan was issued – table (a) – with a volume of EUR 10,000k, a fixed interest rate of 5.89 percent and a term ending on March 10, 2014. In addition, on March 30, 2009, EUR 14,500k was issued as a new promissory note loan – table (c) – with a fixed interest rate of 5.88 percent and maturity on March 10, 2014, and the nominal volume of EUR 1,000k was also repaid on March 30, 2009. The discount on the original promissory note loan with an initial value of EUR 57k is recognised in profit or loss at the amount of EUR 37k as a result of adjustments in the first quarter of 2009.

The promissory note loan – table (IV) – with an initial volume of EUR 37,500k still has a nominal volume of EUR 35,500k on the balance sheet date. EUR 2,000k of this promissory note loan was repaid on March 10, 2009, and at the same time a new promissory note loan of EUR 4,000k was contracted – table (b) – with the redemption date on March 11, 2013. The newly issued promissory note loan has a fixed interest rate of 5.168 percent. The reversal of the discount related to the original issue, with an initial value of EUR 86k, was recognised in full in profit or loss at the amount of EUR 56k for the first quarter of 2009.

On March 30, 2009, the redemption date for the promissory note loan – table (V) – which was originally due to mature on April 30, 2011 was extended until March 28, 2013. In this context, the fixed interest rate of 5.21 percent was contracted at 5.761 percent for this term. The discount on the issue, initially totalling EUR 15k, was recognised as an expense with its residual carrying value at EUR 10k.

On May 25, 2009, a new promissory note loan was issued – table (d) – with a nominal volume of EUR 26,500k. It has a fixed interest rate of 5.54 percent over its entire term of three years.

Two floating-rate promissory note loans – table (e) and (f) – were issued by GRENKELEASING AG on June 15, 2009, with a nominal volume of EUR 10,000k and EUR 15,000k. They have a term of four years and a premium of 3.75 percent on the Euriborbased variable interest rate, which may rise up to 4.75 percent depending on the issuer's rating. At the same time, an issue of EUR 10,000k was contracted for March 24, 2010. This future issue has identical parameters to those of the two issues mentioned above, i.e. it matures on June 15, 2013 and its Euribor-based interest rate has a current premium of 3.75 percent. The loan is used to refinance the bond from the debt issuance programme, which matures in March 2010.

Revolving Credit Facility

In the context of revolving credit facilities with a total volume of EUR 150,000k, the Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k and a term of at least one month at any time. Three of the loan facilities in place since 2006 with a total volume of EUR 90,000k were prolonged for a further year in September 2008 at the same conditions. In January 2009, EUR 30,000k was prolonged by one year and in February 2009, EUR 30,000k was extended by half a year. As of June 30, 2009, a total volume of EUR 80,000k (previous year: EUR 115,000k) was drawn on these credit lines.

Loan agreement

On June 29, 2009, GRENKELEASING AG's French subsidiary concluded a loan agreement with a nominal volume of EUR 5,000k with the Banque Populaire d'Alsace. The duration of the agreement is from July 1, 2009 to July 1, 2011, over which period the utilisation of the loan volume can be variably structured. The interest rate on the utilised loan volume amounts to the average of the threemonth Euribor, which is calculated on a quarterly basis plus a margin of 1.80 percent.

DERIVATIVE FINANCIAL INSTRUMENTS

As a result of the adjustments to originally floating-rate promissory note loans as described above, GRENKELEASING terminated hedge accounting in the cases where these promissory note loans acted as hedging instruments in line with IAS 39. The change in the fair value of the agreed interest rate swaps was recognised in profit or loss as an expense totalling EUR 351k at the half-year point. Due to the discontinuation of the hedged item, the requirements for hedge accounting in line with IAS 39 are no longer met. Nevertheless, up to this point all hedge relationships have a high level of hedge effectiveness.

In addition, instances of ineffectiveness have arisen in the hedge relationships for the first time, although these vary within the 80 percent to 125 percent range tolerated under IAS 39. The hedge relationships affected in the Group have effectiveness rates of between 87 percent and 114 percent. This is because allowing for the necessary flexibility means that the framework parameters between the hedged items and the hedging instruments do not necessarily all correspond. At the half-year point, the resulting effect on income amounts to an expense of EUR 69k. The Group considers these hedge relationships to be effective, particularly from an economic and risk strategy point of view.

In total, the Group contracted interest rate swaps with an initial nominal volume of EUR 145,500k in the current fiscal year. The fixed interest rate for these swaps was set at between 1.380 percent and 2.195 percent.

On February 13, 2009, GRENKELEASING contracted interest rate caps for an initial nominal volume totalling EUR 50,000k. The longest of the five caps concluded has a term ending in January 2012. The strikes contracted for all the caps are at 2.50 percent. The cap premium paid amounts to EUR 375k and the fair value of the caps as at June 30, 2009 is EUR 203k.

PENSIONS

The disclosed provision for pensions totals EUR 1,339k at the balance sheet date.

EUR 1,176 k relates to GRENKE BANK AG. This amount essentially corresponds to the present value of the obligation. An actuarial loss of EUR 5k was recognized in the reserves. The Swiss subsidiary also has pension obligations of EUR 163 k (CHF 247k). This amount is the present value of the obligation (DBO) of EUR 562k (CHF 852k) minus the fair value of the plan assets of EUR 399k (CHF 605k). The actuarial loss of EUR 33k (CHF 46k) was recognized in the reserves. The actuarial loss was recognised in equity in a separate line under capital reserves in accordance with IAS 19.

DIVIDEND PAYMENT

The Annual General Meeting on May 12, 2009 was to resolve on the appropriation of GRENKELEASING AG's retained earnings for fiscal year 2008 of EUR 55,711,683.62. The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the retained earnings as follows:

Unappropriated profit carried forward	EUR 55,711,683.62
Distribution of a dividend of EUR 0.60 per share for a total of 13,684,099 shares	EUR 8,210,459.40
Transfer to revenue reserves	EUR 45,048,353.78
Profit carryforward (to new account)	EUR 2,452,870.44

The dividend was paid to the shareholders of GRENKELEASING AG on May 13, 2009.

In the prior year, the Annual General Meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate, and appropriating, the retained earnings for 2007 as follows:

Unappropriated profit carried forward	EUR 50,472,724.26
Distribution of a dividend of EUR 0.60 per share for a total of 13,684,099 shares	EUR 8,210,459.40
Transfer to revenue reserves	--
Profit carryforward (to new account)	EUR 42,262,264.86

RELATED PARTY DISCLOSURES

GRENKE BANK AG

The Chairman of the Supervisory Board of GRENKELEASING AG, Prof. Dr. Ernst-Moritz Lipp, is now the Chairman of the Supervisory Board of GRENKE BANK AG. In addition, the Chairman of the Board of Directors of GRENKELEASING AG, Mr. Wolfgang Grenke, and the members of the Board of Directors Mark Kindermann and Thomas Konprecht are also members of the Supervisory Board of the Bank. The Deputy Chairman of the Board of Directors of GRENKELEASING AG, Dr. Uwe Hack, is at the same time a member of the Board of Directors of GRENKE BANK AG.

As part of its ordinary business activities, GRENKE BANK AG offers related third parties services under normal market conditions. At the balance sheet date, the Bank has received deposits totalling EUR 9,275k from members of the Group's Board of Directors and their family members. It also received deposits totalling EUR 60k from members of the Group's Supervisory Board and their family members. No loans were granted to any of these individuals during the reporting period.

Phantom Stock Agreement

On March 12, 2007, the Supervisory Board of GRENKELEASING AG concluded a phantom stock agreement with, and for the benefit of, Dr. Hack. Under this agreement, Dr. Hack receives for the current fiscal year a claim to payment equal to the increase in value of 30,000 shares in GRENKELEASING AG in relation to a defined basic share price for the respective fiscal year.

The share price is the unweighted arithmetic mean of the Xetra closing prices on all trading days from December 1 to December 23 of the respective prior year. The basis share price for 2009 is EUR 19.28. The maximum payment arising from this agreement is limited to EUR 600,000 for the period of three years in total. Under the program, Dr. Hack is obligated to invest the respective net amount paid plus a personal contribution of 25 percent of that amount in GRENKELEASING AG shares.

The value of the phantom stocks agreement granted totalled EUR 231k as at June 30, 2009. The plan was treated as a cash settlement plan. Changes in value are accordingly recognised proportionally for the first half of the year as an expense in profit or loss in the amount of EUR 116k.

EMPLOYEES

In the reporting period, the GRENKELEASING AG Group employed an average of 503 employees (previous year: 481), excluding the Board of Directors.

SUBSEQUENT EVENTS

On July 22, 2009, GRENKELEASING signed a new ABCP programme with Landesbank Baden-Württemberg for a programme volume of maximum EUR 150,000k. The sale of German lease receivables is planned for the first time for October 2009.

As in the previous years, the revolving credit facilities in place since 2006 with three banks, each in the amount of EUR 30,000k, were once again extended for one year. The extensions were signed after June 30, 2009, meaning that the facility with SEB was extended until July 2010, the facility with WestLB until August 2010, and the facility with Deutsche Bank until September 2010.

REVIEW OF THE INTERIM FINANCIAL STATEMENT AND INTERIM MANAGEMENT REPORT

The presented interim financial statement and the interim management report have neither been audited or reviewed by an auditor.

CONFIRMATION BY THE COMPANY'S MANAGEMENT

We confirm that, to the best of our knowledge, the interim consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group and the group management report gives a true and fair view of business performance including the results of operations and the situation of the Group, and describes the main opportunities and risks and anticipated development of the Group in accordance with applicable financial framework for interim financial reporting.

THE BOARD OF DIRECTORS OF GRENKELEASING AG

THE SUPERVISORY BOARD OF GRENKELEASING AG

Name	Activity	Other Supervisory Board / Advisory Board Functions
Prof. Dr. Ernst-Moritz Lipp Born 1951 First elected: 2003 Elected until the Annual General Meeting 2012	Chairman of the Supervisory Board, Professor of international finance, General manager of ODEWALD & COMPAGNIE Gesellschaft für Betei- ligungen mbH, Baden-Baden, DE	TFL International GmbH, Weil am Rhein, DE; BOA Holding GmbH, Karlsruhe-Stutensee, DE; Oystar Holding GmbH, Karlsruhe, DE; walter services Holding GmbH, Ettlingen, DE
Gerhard E. Witt Born 1945 First elected: 1997 Elected until the Annual General Meeting 2012	Vice Chairman of the Supervisory Board, Public auditor and tax advisor, Baden-Baden, DE	Grenke Investitionen Verwal- tungs KGaA, Baden-Baden, DE
Dr. Bigitte Sträter Born 1940 First elected: 2001 Elected until the Annual General Meeting 2010	Member of the Supervisory Board, Owner and manager of the PR- Agency CENA, Düsseldorf, DE
Dieter Münch Born 1943 First elected: 2000 Elected until the Annual General Meeting 2010	Member of the Supervisory Board, Retired bank officer, Chairman of a foundation, Weinheim, DE	Grenke Investitionen Verwal- tungs KGaA, Baden-Baden, DE; Weisenburger Bau + Grund AG, Halle/Saale, DE
Dr. Oliver Nass Born 1968 First elected: 2005 Elected until the Annual General Meeting 2010	Member of the Supervisory Board, Commercial general manager of ESG France, Paris
Erwin Staudt Born 1948 First elected: 2005 Elected until the Annual General Meeting 2010	Member of the Supervisory Board, Economics graduate, President of the football club VfB Stuttgart 1893 e.V., Leonberg, DE	PROFI Engineering Systems AG, Darmstadt, DE; USU AG, Möglingen, DE; Hahn Verwaltungs-GmbH, Fellbach, DE

OVERVIEW OF THE GROUP

	GRENKELEASING AG
	Head office Baden-Baden (Germany)
WEBLEASE NETBUSINESS AG		Locations
Baden-Baden (Germany)		Berlin, Bremen, Dortmund, Dresden, Dusseldorf, Erfurt, Frankfurt, Hamburg, Hanover, Cologne, Leipzig, Magdeburg,
GLG Grenke-Leasing GmbH		Mannheim, Memmingen, Mönchenglad-
Baden-Baden (Germany)		bach, Munich, Nuremberg, Rostock, Stuttgart
Grenke Investitionen Verwaltungs KGaA		Grenkefinance N.V.
Baden-Baden (Germany)		Vianen (Netherlands)
GRENKE BANK AG		GRENKELEASING AG
Hamburg (Germany)		Vienna (Austria)
GRENKE LEASE Sprl		Location
Brussels (Belgium)		Salzburg
GRENKELEASING ApS		GRENKELEASING AB
Herlev (Denmark)		Stockholm (Sweden)
GRENKE LOCATION SAS		GRENKELEASING AG
Schiltigheim (France)		Zurich (Switzerland)
Locations		Locations
Aix-en-Provence, Lyon, Nantes, Lille, Paris I, Paris II, Paris III, Toulouse		Basel, Lausanne
		GRENKE ALQUILER S.A.
GRENKE LIMITED GRENKE FINANCE Plc.		Barcelona (Spain)
Dublin (Ireland)		GRENKELEASING s.r.o.
		Prague (Czech Republic)
GRENKE Locazione S.r.l. GRENKE LEASING S.r.l.
Milan (Italy)		GRENKELEASING Sp. z o.o.
		Poznan (Poland)
Locations		Location
Genoa, Bologna		Warsaw

THE GRENKELEASING FRANCHISE SYSTEM

	Franchise partners
GRENKEFACTORING GmbH	GC Leasing Slovensko s.r.o.
Baden-Baden (Germany)	Bratislava (Slovakia)
GC Autoleasing GmbH	GRENKELEASING Kft.
Karlsruhe (Germany)	Budapest (Hungary)
Kazenmaier FleetService GmbH	Grenke Leasing S.R.L.
Baden-Baden (Germany)	Bucharest (Romania)
	GC Leasing Finland Oy
	Helsinki (Finland)
	GRENKE RENTING S.A.
	Lisbon (Portugal)
	GRENKE RENT S.A.
	Madrid (Spain)
	GRENKELEASING AS
	Oslo (Norway)

We have used our franchise system since 2003 to develop new markets quickly and for the long term. We have customized the system in line with our business model. Our goal is to introduce our business model and the GRENKE brand to a country and make them known as quickly as possible. For this purpose, we rely on individuals with entrepreneurial spirit and a well-established network in the small-ticket IT business in each country. We give them an opportunity to establish their own company and work for the success of that company. The franchisees receive access to expertise, proven management tools, and back office support from GRENKELEASING and are entitled to use the "GRENKE" and "GRENKELEASING" brand names.

We also assume responsibility for the audit and refinancing of lease contracts. This is how we ensure that we are always informed of the exact quality of the receivables portfolio and that the GRENKE name becomes established on the market. GRENKELEASING does not hold a stake in these legally independent franchise entities, but after a specific period of usually four to six years, it has the option to buy the company on pre-defined terms. The structure of the purchase option creates incentives for growth as well as high level of quality of the receivables portfolio for the franchise partners.

In fiscal 2008, we expanded our franchise network considerably with a total of three new companies and, for the first time, acquired two franchise companies. We use the franchise system not only to penetrate new countries but also to develop new products beyond traditional small-ticket IT leasing. For instance, our partner Kazenmaier Fleetservice GmbH, Karlsruhe, Germany, has been offering financing for vehicle fleet management in the southern part of Germany since mid-2006. And at the beginning of 2006, GREN-KEFACTORING GmbH commenced its operations.

THE GRENKEFACTORING GMBH

With small-ticket factoring we are opening a market which does not currently exist in this form. Our goal is to offer to our existing customer network the factoring of smaller amounts which banks and traditional factoring companies would usually not purchase. This represents an organic development of our business model for small-ticket IT leasing, transferring our core competences – standardization and automation of business processes, efficiency and speed in their settlement – to additional types of financing.

We offer notification factoring, i.e., we take care of the entire receivables management, including the collection of receivables and any dunning letters to debtors. For small companies comprising our main target group, this is a significant additional service which relieves them of a substantial administrative burden. For GRENKELEASING, notification factoring, as opposed to non-notification factoring, means additional security against counterpartyrisk as debtors will only be discharged in respect to their payment obligations if they pay directly to us.

In Germany, factoring is still less common than in the rest of Europe, but is increasing significantly and is steadily developing into the third pillar of debt financing by companies in addition to bank loans and leasing. The general trend toward the use of factoring will be supported by the financial markets crisis as the banks will once again be much more restrictive in their lending.

GLOSSARY

ABCP Programme

Abbreviation for "Asset-backed commercial paper programme". Under ABCP programmes, companies such as leasing companies sell their receivables to a special-purpose entity which issues interest-bearing securities to investors through the capital market. Interest and the principal payments on these securities are made using the cash flows from the assigned receivables on these securities.

ABS bond

Type of refinancing with which several tranches of bonds with different ratings (risk classes) are issued by the SPE. The share of the best-rated tranche is a reflection of the quality of a company's leasing portfolio and risk management and directly impacts the cost of this type of financing.

Asset Broker

GRENKELEASING sells used leased assets in Germany, France, Austria, and Switzerland via its internet portal www.assetbroker.com. Our resellers can also use the portal to sell their own demonstration equipment or used goods.

Average number of employees

This is the average number of employees of the GRENKE Group in the reporting period. This figure does not include directors; parttime employees are included on a pro rata basis.

BDL

German Leasing Association "Bundesverband Deutscher Leasingunternehmen e.V." BDL, Berlin, www.leasing-verband.de

BITKOM

German Association for the Information Industry "Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V.", Berlin, www.bitkom.org

Contribution margin

The "contribution margin", also known as gross profit, is a term used in operational cost accounting. The contribution margin is the contribution made, for example, by a product to cover fixed costs and generate a net profit. It is calculated as the difference between revenues and variable costs incurred directly by the product.

At GRENKE, contribution margin 1 is calculated as the present value of the interest margin net of commissions to third parties. Contribution margin 2 is made up of the present value of operating income of a lease contract less risk and variable administrative costs.

Cost/income ratio

Comparing expenses with income produces the "cost/income ratio". Contrary to approaches typically used in the banking sector, we deduct the cost of loss settlement/risk provisioning from income, even though this results in a less favourable ratio. Increased sales revenue in the leasing market would be possible if greater risks were taken. However, such a cosmetic improvement of the cost/income ratio cannot be the motivation for our business activities, and consequently we do not report in this way.

We determine the cost/income ratio as the ratio of the total of all expenses (less settlement of claims and taxes) to income, comprising net interest income from leasing business after loss settlement, net income from insurance business, net income from new business, additional income from realisation of assets, other operating income and net interest income (other than from leasing business).

DAXsector Financial Services Index

That sector index tracks the performance of stocks in the financial sector (excluding banks, which constitute a separate index) admitted to the Prime Standard. The index consists of 50 stocks. The Prime Financial Services Index is one of 18 sector indices of Deutsche Börse AG for the Prime Standard, which include companies of all sizes.

Debt issuance programme

The debt issuance programme is a flexible refinancing programme with standardised documentation. It enables issuers to cover their financing needs by borrowing in various currencies and volumes and with varying terms. Within the scope of this programme (longterm issue), bonds can be issued on the stock exchange or off the floor. The interest rate is fixed or variable. Depending on the volume, the bonds are placed by one or more dealer banks. The participating banks do not usually assume any underwriting risk. The issuer bears the placement risk.

DISPO framework agreement

Major customers who invest regularly in new equipment conclude a framework agreement with GRENKELEASING and benefit from standardised, attractive terms within that framework. The agreed leasing volumes can be drawn on in individual tranches by customers. Hence, customers benefit from favourable terms, lower costs and greater flexibility. The customer's reseller is informed of the framework agreement, giving him additional options for increasing business with this customer.

EBT

Earnings before taxes.

Embedded value

The income generated from a leasing contract is distributed over the term of the contract under IAS/IFRS accounting. The majority of the profit from the contract portfolio on balance sheet date is therefore generated in the future. Based on similar approaches taken in the insurance industry, we calculate the approximate value of future net cash flows from the current contract portfolio on the balance sheet date as "embedded value", deduct the estimated expenses and add the equity.

Factoring

Factoring is a financial service for the purpose of short-term sales financing. The factor buys the factoring customer's receivables due from its debtor and collects them directly from the debtor. In return for relinquishing the receivables, the factor immediately pays the factoring customer a sum based on the value of the receivable.

Franchise system of GRENKELEASING

GRENKELEASING have used a franchise system since 2003 with the goal to introduce the business model and the GRENKE brand to a country and make them known as quickly as possible.

The franchisees receive access to expertise, proven management tools, and back office support from GRENKELEASING and are entitled to use the "GRENKE" and "GRENKELEASING" brand names. GRENKELEASING also assume responsibility for the audit and refinancing of lease contracts. This is how GRENKELEASING ensures that they are always informed of the exact quality of the receivables portfolio and that the GRENKE name becomes established on the market.

GRENKELEASING does not hold a stake in these legally independent franchise entities, but after a specific period of usually four to six years, it has the option to buy the company on pre-defined terms.

Ifo Institute

"Institut für Wirtschaftsforschung e.V." The ifo institute is one of the largest economic research institutions in Germany which regularly publishes economic research results (www.cesifo-group.de).

IFRS

The International Financial Reporting Standards (IFRS) are external reporting regulations developed by the International Accounting Standards Board (IASB), an independent private body. The IFRS, formerly known as the International Accounting Standards (IASs), comprise the standards themselves and the interpretations by the International Financial Reporting Interpretations Committee (IFRIC), formerly known as the Standing Interpretations Committee (SIC). As of fiscal year 2005, the application of these standards is compulsory for publicly traded companies with their registered office in the European Union (EU) in the form endorsed by the EU.

IT-Asset-Management

Customers who conclude a DISPO framework agreement (see above) are also offered active support for their IT infrastructure (inventory and cost management) in the form of our IT-Asset-Management tool ("ITAM"). This web based software facilitates the management of the customer' s entire asset portfolio using a standard platform.

ITC-Market

IT and telecommunications market.

Itraxx – Europe Index

The Itraxx Index is based on the most liquid 125 referencing European borrowers with good creditworthiness for credit default swaps (CDS). A CDS is an over-the-counter contract where a protection seller assumes a credit risk to which the protection buyer is exposed in return for a risk premium. The protection seller undertakes to make a compensatory payment to the protection buyer in the event of payment delay or failure by the borrower. The Itraxx Europe indicates the yields of the 125 most traded European corporate bonds in comparison to European government bonds with triple A rating. The Itraxx Europe Financial Senior contains 25 financial companies.

Mean acquisition value

The "mean acquisition value" is determined as the arithmetic mean of the acquisition costs of all leased assets for which lease agreements were concluded in the reporting period.

New business

"New business" comprises the acquisition costs of all newly acquired assets from leasing and lease-purchase contracts and the factoring volume in the reporting period.

Prime Financial Services Index

That sector index tracks the performance of stocks in the financial sector (excluding banks, which constitute a separate index) admitted to the Prime Standard. The index consists of 50 stocks. The Prime Financial Services Index is one of 18 sector indices of Deutsche Börse AG for the Prime Standard, which include companies of all sizes.

Prime Standard

The Prime Standard is a listing standard of the Frankfurt Stock Exchange with transparency requirements for issuers which exceed those of the General Standard (e. g. quarterly reports have to be published and all corporate communication must also be available in English). A listing in the Prime Standard is a requirement for a listing on one of Deutsche Börse's selective indices such as the DAX, MDAX, TecDAX, or SDAX. GRENKELEASING AG is listed in the SDAX.

Rating

Rating agencies rate the creditworthiness of an issuer over long and short-term periods using a standard rating method. "AAA", for example, is the highest solvency rating, and "C" or "D" indicates a low probability of payment. The leading rating agencies are Moody's and Standard & Poor's.

RoE

Abbreviation for "return on equity". The return on equity is calculated as a ratio of the net profit to the equity disclosed in the balance sheet. The ratio gives an indication as to the return on shareholder capital.

Scoring system

A scoring system is used at leasing companies to determine the creditworthiness of a potential lessee. Using a statistical calculation, the probability of default is determined for a new lease agreement, which forms the basis for a decision as to whether or not to accept the application for a lease.

Since 1994, GRENKELEASING has assessed the creditworthiness of its lessees using a scoring system, based on external sources of information, e.g. the credit rating agency Creditreform, and supplemented by its own database. Each potential lessee receives a score which ultimately sways the decision as to whether or not a lease agreement is concluded.

SDAX

The SDAX index contains the 50 largest and most liquid companies from classic sectors ranking just below the MDAX, which comprises 50 stocks, and the DAX, which comprises 30 stocks. These may include German and foreign companies, as long as they are listed in the Prime Standard. On January 1, 2003, GRENKELEASING was admitted to the Prime Standard and listed on the SDAX as of February 11, 2003. This new regulation became effective as of March 24, 2003.

Share of corporate customers in the lease portfolio

"Corporate customers" are all lessees who are not subject to specific consumer protection regulations. The figure relates to the number of newly concluded lease agreements in the reporting period.

Share of IT products in the lease portfolio

"IT products" refers to computer equipment (such as PCs, servers, printers), copiers and communication equipment. The figure relates to the number of newly concluded lease agreements in the reporting period.

Small caps

Small companies which do not belong to the highly traded companies of the main indices.

Small-ticket IT leasing

In this market segment, equipment such as notebooks, personal computers, monitors and other peripheral devices, smaller networks, software and telecommunications, backup and copier technology normally costing up to EUR 25,000 are leased.

Volume of leased assets

The volume of leased assets is the total of all (historical) acquisition costs of assets from ongoing leasing and lease purchase agreements.

CALENDAR OF EVENTS 2009

• July 28, 2009 Publication of Quarterly Financial Report as per June 30, 2009
• Oct. 28, 2009 Publication of Quarterly Financial Report as per September 30, 2009 DVFA Analyst Conference in Frankfurt (Main)

CONTACT

Renate Hauss Corporate Communications

GRENKELEASING AG Neuer Markt 2 76532 Baden-Baden

Tel.: +49 (0) 7221 5007-204 Fax: +49 (0) 7221 5007-112

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

E-Mail: investor@grenke.de

The report is published in German and as an English translation. In the event of any conflict or inconsistency between the English and the German versions, the German original shall prevail.

GRENKELEASING AG Neuer Markt 2 D–76532 Baden-Baden

Phone: +49 (0) 7221 5007-204 Fax: +49 (0) 7221 5007-112

www.grenke.de www.grenkebank.de www.grenkeleasing.de

E-mail: investor@grenke.de