Grenke AG — Interim / Quarterly Report 2014

Jul 25, 2014

GRENKELEASING AG Group

Financial Report for the 2nd Quarter and the First Half-Year 2014

Contents

Key Figures	2
Letter to Shareholders from the Board of Directors	4
The GRENKELEASING AG Share	5
Interim Management Report	6
Targets and Strategy	6
Macroeconomic and Sector-Specific Environment	7
New Business	7
Report on the Results of Operations	10
Report on Financial Position and Net Assets	12
Report on Risks, Opportunities, and Forecasts	14
Responsibility Statement	16
Interim Consolidated Financial Statements	17
Notes to the Interim Consolidated Financial Statements	25
Calendar of Events and Contact Information	41

Key Figures GRENKE Group

	Jan. 1, 2014 to		Jan. 1, 2013 to
	Jun. 30, 2014	Change (%)	Jun. 30, 2013	Unit
New business
GRENKE Group Leasing + Factoring + Business start-up
financing incl. franchise partners	656,110	14.2	574,714	EURk
– of which Germany	192,722	–0.8	194,215	EURk
– of which international	463,388	21.8	380,499	EURk
GRENKE Group Leasing	555,766	12.4	494,434	EURk
– of which international	407,915	22.3	333,566	EURk
– of which franchise international	8,799	–34.2	13,374	EURk
– of which Germany	139,052	–5.7	147,494	EURk
Western Europe (without Germany)*	190,940	18.8	160,757	EURk
Southern Europe*	132,078	26.9	104,056	EURk
Northern / Eastern Europe*	88,455	24.1	71,261	EURk
Other regions*	5,241	–51.8	10,866	EURk
GRENKE Group Factoring	94,927	21.8	77,922	EURk
– of which Germany	48,253	8.8	44,362	EURk
– of which franchise international	46,674	39.1	33,560	EURk
GRENKE Bank
Deposits	253,945	2.4	247,998	EURk
Business start-up financing volume	5,417	129.7	2,358	EURk
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	105,620	10.5	95,595	EURk
– of which international	83,979	18.5	70,881	EURk
– of which franchise international	1,987	–61.1	5,103	EURk
– of which Germany	19,654	0.2	19,611	EURk
Western Europe (without Germany)*	38,141	10.0	34,670	EURk
Southern Europe*	29,397	28.8	22,832	EURk
Northern / Eastern Europe*	17,343	23.4	14,052	EURk
Other regions*	1,085	–75.5	4,430	EURk
Further information leasing business
Number of new contracts	68,763	12.7	61,011	units
Share of IT products in lease portfolio	84	–3.4	87	percent
Share of corporate customers in lease portfolio	100	0.0	100	percent
Mean acquisition value	8.1	0.0	8.1	EURk
Mean term of contract	48	2.1	47	months
Volume of leased assets	3,270	16.3	2,811	EURm
Number of current contracts	397,979	14.7	346,951	units

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

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

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

GRENKE Group = GRENKE Consolidated Group including franchise partners

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

Key Figures GRENKE Consolidated Group

	Jan. 1, 2014 to		Jan. 1, 2013 to
	Jun. 30, 2014	Change (%)	Jun. 30, 2013	Unit
Key figures income statement
Net interest income	74,641	18.0	63,265	EURk
Settlement of claims and risk provision	24,810	0.4	24,716	EURk
Profit from insurance business	19,525	17.3	16,645	EURk
Profit from new business	23,181	8.3	21,410	EURk
Profit from disposals (income exceeding the calculated residual
value)	732	–45.6	1,346	EURk
Other operating income	1,657	14.1	1,452	EURk
Cost of new contracts	15,374	14.0	13,483	EURk
Cost of current contracts	4,477	12.2	3,989	EURk
Project costs and basic distribution costs	18,092	10.1	16,434	EURk
Management costs	11,450	8.4	10,559	EURk
Other costs	3,531	–6.1	3,759	EURk
Operating result	42,002	34.7	31,178	EURk
Other interest income (expense)	381	40.6	271	EURk
Income / expenses from fair value measurement	57	–35.2	88	EURk
EBT (earnings before taxes)	41,678	34.5	30,995	EURk
Net profit	31,182	39.5	22,351	EURk
Earnings per share (according to IFRS)	2.12	36.8	1.55	EUR
Further Information
Dividends	1.00	25.0	0.80	EUR
Embedded value, leasing contract portfolio
(incl. equity before taxes)	714	13.9	627	EURm
Embedded value, leasing contract portfolio
(incl. equity after taxes)	645	13.6	568	EURm
Cost / income ratio	56.0	–8.0	60.9	percent
Return on equity (ROE) after taxes	13.6	25.9	10.8	percent
Average number of employees	859	8.5	792	employees
Staff costs	26,546	6.8	24,861	EURk
– of which total remuneration	21,637	6.0	20,413	EURk
– of which fixed remuneration	16,530	8.8	15,199	EURk
– of which variable remuneration	5,107	–2.1	5,214	EURk

GRENKE Group = GRENKE Consolidated Group including franchise partners

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

Letter to Shareholders from the Board of Directors

Dear Shareholders,

Ladies and Gentlemen,

After an excellent start in fiscal year 2014, we continued to gain further momentum in the second quarter. The GRENKE Group's new business grew 16 percent in the reporting quarter, after attaining 13 percent in the first three months, and was at the upper end of our full-year expectations. The growth experienced in our international new business was particularly gratifying. In the first quarter, the seventy percent mark was exceeded for the first time. After the first six months, international business represented almost 71 percent of total new business volume. We continued to benefit from strong demand for our financing solutions in our key markets of France, the United Kingdom, and Italy, where the growth trend of the first quarter was reinforced once again. This more than compensated for the somewhat moderate development of our new business in Germany.

Overall, the advantages of the breadth of our international presence and sales management are becoming quite clear: interim slowdowns in some countries are not interrupting the growth of the GRENKE Group. On the contrary, we are not only able to maintain a high contribution margin 2 at GRENKE Group Leasing, but we even see a rising trend. After amounting to 18.7 percent in the first quarter, the CM2 margin reached 19.3 percent in the reporting quarter. In the comparable quarter of the previous year, the margin was still 19.1 percent. We have also continued to condense our network. After taking over the leasing franchise company in Luxembourg and opening a further location in Saarbrücken during the first quarter, the purchase of the factoring franchise company in Switzerland was carried out at the end of the second quarter. Further steps in growth are planned, including an entry into the Chilean and Croatian markets and several cell divisions.

Given our positive business performance, income and earnings are clearly headed for the upper end of our expectations. Following a 20 percent increase in the first quarter, we were able to expand the operating result by 51 percent in the reporting quarter. This amounts to a gratifying rise of 35 percent for the six-month period. This increase is not only the result of income generated from our thriving new business in recent quarters, but is also owed to the cost side where economies of scale are now becoming more noticeable after making upfront investments for our expansion. Therefore, GRENKE Consolidated Group's net profit for the six-month period rose 40 percent to EUR 31.2 million. This strong performance allows us to refine our previous 2014 forecast of between EUR 52 million and EUR 56 million in net profit for the GRENKE Consolidated Group. We now expect to reach around EUR 56 million, whereby the likelihood of even exceeding this level has become higher.

Our share price, which rose 14 percent, and the response from our shareholders to our offer to receive part of the dividend in the form of shares in GRENKELEASING AG for the first time, were both encouraging signs in the first half of the year. The Scrip Dividend was chosen by shareholders representing nearly 40 percent of the outstanding shares.

Baden-Baden, July 2014

Wolfgang Grenke Chairman of the Board of Directors

The GRENKELEASING AG Share

International stock markets began the new year with strong momentum after an overall positive year for the capital markets in 2013. Next to macroeconomic risks, the focus of market participants increasingly shifted towards geopolitical risks. The tense situation in the Ukraine and further unrest in the Middle East drew particular attention. Far-reaching monetary policy decisions made by the U.S. Federal Reserve and the European Central Bank were also among the dominant themes, since they could curtail the very high level of liquidity in the capital markets.

Accordingly, there were strong fluctuations in the German stock market in the first six months, which culminated in a sideways movement. Thus, despite the German DAX reaching record levels of over 10,000 points, it ultimately gained just close to three percent. Both the SDAX price index and the index of German financial shares in the Prime Standard segment (DAXsector Financial Services) performed better in the first half and achieved increases of seven percent and four percent, respectively.

An even better performance in the first half of the year was seen by the shares of GRENKELEASING AG. After starting the fiscal year with by continuing the positive share price performance of the previous year, the shares reached a new all-time high of EUR 80.60 in early April. Later in the second quarter, following the Annual General Meeting (ex-dividend), the shares were more volatile and underwent a correction until late June ending at EUR 71.97. The shares then rose quickly and ended at EUR 77.72 as per the June 30, 2014 reporting date. Hence, the shares saw a rise of 14 percent in the first half of the year.

By offering a Scrip Dividend – a type of offer which is still relatively unknown in Germany – we have proven our attractiveness to capital market investors in the current year once again. For the first time, GRENKE shareholders were given the option to receive the dividend exclusively in cash or as a combination of cash and shares in GRENKELEASING AG. The widespread acceptance of this alternative fully met our expectations: a Scrip Dividend was chosen by shareholders representing more than 39 percent of the outstanding shares. At an exchange ratio of 106.9:1, this resulted in 54,199 new shares. The cash payment amounted to approximately EUR 10.6 million. Our shareholders seized this opportunity to increase their commitment to GRENKE and through the investment of the dividend in the Company they have strengthened our financial position and equity base for our future growth.

Interim Management Report

Targets and Strategy

We are a leading Euopean company with a strategy for global expansion. We continuously aim to attain and expand the market leadership in the field of financial services to small and medium-sized enterprises (SMEs). We have already achieved this goal in numerous countries and with single products within our product range. In Germany and Switzerland, we are the market leader in small-ticket IT leasing and on a European level we are one of the primary providers of various financial services for SMEs. Over the past several years, we have even successfully entered several countries and continents outside of Europe.

The key aspects we consider when selecting new countries include a favourable competitive environment and an attractive risk-reward profile. We do not want to avoid risks altogether, but rather we strive to assess risk as appropriately as possible and achieve the appropriate margins. This is how we adequately cover existing and potential future risks. We do this by using our long-proven and continuously refined IT-based model for forecasting losses before concluding a contract. Moreover, this model also represents a significant growth driver. During the recent financial and sovereign debt crises, many providers needed to scale back their involvement in small-ticket IT leasing or, in some cases, even withdraw from the market altogether because they were no longer able to manage the risk situation. This presented us with a number of attractive opportunities to systematically expand our position as a leading provider of efficient services in the areas of small-ticket IT leasing, factoring, and banking for SMEs. In addition to entering new countries, we also achieved this by consolidating our presence in existing markets through our successful market entry in Brazil, Dubai, and Canada over the past two fiscal years and through the opening of a new location in our German home market in the first half of the current 2014 fiscal year. Further new locations and countries are scheduled for the second half of the year.

Beyond our regional growth, we are continuously diversifying our product range and our offers of finance solutions. These include, for example, various financing, investment, and payment products provided by GRENKE BANK AG that address both commercial and private customers through the use of an online sales model. GRENKE Bank also finances business start-ups and provides development funds in collaboration with a growing number of development banks of the federal government and individual states. Currently, collaborations exist with KfW Mittelstandsbank, Investitionsbank Berlin (IBB), L-Bank in Baden-Württemberg, LfA Förderbank Bayern, NRW.BANK in North Rhine-Westphalia, and the Thüringer Aufbaubank. The development funds offered are targeted at small and mid-sized companies and members of self-employed professions who finance new investments via leasing. Until now, 10,782 leasing contracts have been concluded as part of these collaborations. During the reporting quarter, the IBB provided an additional global loan of EUR 5 million. Moreover, the purchase of lower-volume receivables (factoring) in various European countries forms a permanent and very important component of our extensive product range.

Our business is characterised by the broad diversification of our portfolio across customers and industries and the low average volumes of our contracts. We also strive to avoid cluster risks in terms of our sales partners. When it comes to IT products, we are generally manufacturer-independent. We structure our factoring business and our banking services in a similar manner. We also rely on the continued diversification of our instruments when refinancing so that we may use different options for financing our growth at any time and in a flexible manner.

Macroeconomic and Sector-Specific Environment

Traditionally, GRENKE Group's new business has been moderately dependent on the macroeconomic development of its individual target countries. We can minimise the influence of the overall development in corporate insolvencies on our loss ratio by using our sophisticated method for forecasting losses. General sector trends, such as the business policies of banks and financial service providers in the leasing business and the sector's increasing regulatory requirements, are of greater importance. Potential changes in capital market and central bank interest rates have a limited impact on our refinancing costs since such changes are generally reflected in our conditions. Nevertheless, the time gap with which we adjust our conditions can have a temporary positive or negative effect on the profitability of our new business. We can use our broad range of refinancing instruments, which includes the option of raising bank deposits via the GRENKE Bank, in a flexible manner depending on the market situation and the expected development in interest rates.

New business

The high growth of the GRENKE Group's new business accelerated during the first half of 2014. After increasing 13 percent in the first quarter, we were able to expand new business by 16 percent in the second quarter compared to the previous year. In the first six months, the volume of new business, i.e. the total of the acquisition costs of newly purchased lease assets, factoring volume, and business start-up financing, amounted to EUR 656.1 million compared to EUR 574.4 million in the previous year. This represents an increase of 14 percent and places us fully in line with our forecast range of 13 percent to 16 percent.

Once again, our leasing business developed very positively in certain international markets, particularly France, which is our most important international market and our second core market. Here our new business grew 23 percent. In the United Kingdom and Italy, new business grew 38 percent and 35 percent, respectively. As a result, the high proportion of our international business– which had already exceeded the seventy percent level in the first quarter– continued to increase throughout the first half of the year. Overall, GRENKE Group Leasing's new business gained twelve percent from EUR 494.4 million in the previous year to EUR 555.8 million in the first half. Our home market of Germany continues to be extremely competitive. Here we recorded a six percent decline compared to the previous year; however, we were able to easily offset this decline through the breadth we have achieved with our international presence. Our new business in Western Europe (without Germany) rose 19 percent compared to the previous year, while the increase experienced in Southern Europe and Northern/Eastern Europe even reached 27 and 24 percent, respectively. We continue to be very focused on the risk in our other regions comprising Brazil, Dubai, Canada, and Turkey– countries which are still very new to us. Here, we have implemented measures which have been tailored to the respective markets. These measures resulted in a scheduled slowdown in new business growth of minus 52 percent to EUR 5.2 million after EUR 10.9 million in the previous year.

We received a total of 163,903 lease applications in the first half of the year which went on to generate 68,763 new lease contracts. Of those, 132,554 lease applications and 53,626 new lease contracts were attributable to our international markets. The conversion rate of GRENKE Group Leasing, based on the total number of lease applications received, amounted to 42 percent in the first half of the year. The conversion rate in our international markets totalled 40 percent and was still below the level achieved in our home market of Germany (48 percent). We will also see a successively rising conversion rate in these countries after gaining the necessary experience in individual countries and the more proven and refined our IT-based model for forecasting losses becomes. However, this does not mean that we are willing to accept higher credit risks in these countries in the future. Accordingly, the conversion rate has already increased considerably versus the level of 38 percent seen in the first quarter of 2014.

The contribution margin (CM) 2 of GRENKE Group Leasing's new business was highly satisfactory. At an increase of 11 percent, the CM2 amounted to EUR 105.6 million in the first half after EUR 95.6 million in the same period of the previous year. Despite a slight decline in new business growth in Germany, the CM2 here was virtually unchanged. Thus, even in the face of a very competitive market environment, we were able to expand our CM2 margin from 13.3 percent in the previous year to 14.2 percent in the half-year reporting period. The GRENKE Group Leasing segment's contribution margin 2 (CM2 margin) remained at a high level of 19.0 percent as a result of our efficient sales management and the persistently low interest rate environment (previous year: 19.3 percent).

Our factoring offers also proved to be very successful. New business volume increased 22 percent in the first six months to EUR 94.9 million after EUR 77.9 million in the previous year, whereby the factoring segment is making an ever greater contribution to the GRENKE Group's new business. The international share of our new business was also a clear driver of growth in this area. With an increase of 39 percent in the reporting year, international new business has now almost reached the level of our business in Germany. There we grew nine percent in the first six months. At 2.3 percent, the income margin of GRENKE Group Factoring was only slightly below the previous year's figure of 2.4 percent. This margin is based on the average period for a factoring transaction of around 31 days after approximately 29 days in the prior year.

GRENKE Bank's deposit volume increased two percent to EUR 253.9 million as per the reporting date compared to the previous year. We achieved clear and above-average growth in the field of business start-up financing. Various collaborations with development banks of the federal government and with individual states give us the option of financing business start-ups and providing small and mid-sized companies and members of self-employed professions access to development funds when they finance new investments via leasing. The strong appeal of these options and the demand that resulted led to a 130 percent increase in the volume of business start-up financing to EUR 5.4 million after EUR 2.4 million in the previous year.

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

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

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

Report on the Results of Operations

Selected information from the consolidated income statement

	Apr. 1, 2014 to	Apr. 1, 2013 to
EURk	Jun. 30, 2014	Jun. 30, 2013
Net interest income	38,415	32,444
Settlement of claims and risk provision	12,967	13,831
Net interest income after settlement of claims and risk provision	25,448	18,613
Profit from insurance business	10,109	8,760
Profit from new business	12,080	11,253
Profit from disposals	381	432
Income from operating business	48,018	39,058
Staff costs	13,462	12,785
Of which total remuneration	10,906	10,470
Of which fixed remuneration	8,330	7,703
Of which variable remuneration	2,576	2,767
Selling and administrative expenses (excluding staff costs)	10,843	9,698
Earnings before taxes	22,394	14,940
Net profit	16,677	10,859
Earnings per share (basic) in EUR	1.13	0.74
Earnings per share (diluted) in EUR	1.13	0.74

Once again, we were able to significantly expand the high level of profitability of the GRENKELEASING AG Consolidated Group (hereinafter referred to as "the GRENKE Consolidated Group") in the second quarter of the new fiscal year. We continued to benefit from the substantial amount of high-margin new business generated in recent quarters. Additionally, interest expenses from refinancing and from the deposit business declined in absolute terms as a result of the continued favourable interest rate environment. Thus, net interest income rose by a pleasing 18 percent.

Expenses for the settlement of claims and risk provision were six percent lower in the reporting period than in the previous year. This led to a lower loss rate of 1.6 percent following 2.0 percent in the second quarter of 2013. Accordingly, net interest income after settlement of claims and risk provision saw a sharp improvement and rose 37 percent. However, we cannot assume this level of performance will continue throughout the year as a whole due to the volatility of losses – especially on a quarterly basis. Given the continuing difficult economic situation in some of the European countries, the related risks will continue to exist in the future despite the positive trend in the second quarter.

Profit from insurance business grew an appreciable 15 percent. Profit from new business, however, had a comparatively lower increase of seven percent. Profit from disposals, which is of less significance for the GRENKE Consolidated Group and is very volatile on a quarterly basis, remained twelve percent below the previous year's level. In total, the income from the operating business increased by 23 percent over the prior year.

We are also very pleased with the development of our expenses. Currently, our high growth rate does not require any substantial increase in staff costs or selling and administrative expenses. Thus, both staff costs as well as selling and administrative expenses had below-average increases of five percent and twelve percent, respectively, in the reporting quarter. As a result, the high profitability of our business is now visible in our figures.

While other operating expenses declined by 42 percent compared to the previous year, other operating income rose a total of 24 percent. The operating result and earnings before taxes each exceeded the previous year's figure by approximately 50 percent. With a tax rate of 26 percent, after a level of 27 percent in the previous year, the reporting quarter's profit gained a strong 54 percent. The corresponding earnings per share amounted to EUR 1.13 after EUR 0.74 in the previous year.

Half-Year Comparison 2014 versus 2013

The information above pertaining to the quarter under review essentially also applies to the six-month period and includes positive trends in two key areas: while expenses for the settlement of claims and risk provision had increased in the first quarter, they declined in absolute terms in the second quarter. In addition, there was a lower rise in the levels of various expense items, particularly in the level of the selling and administrative expenses. This allowed GRENKE Consolidated Group's profitability to expand even more during the first half of the reporting year than was experienced in the first quarter of the current fiscal year.

Net interest income increased 18 percent to EUR 74.6 million in the first half of the year after totalling EUR 63.3 million in the previous year. At EUR 24.8 million, expenses for the settlement of claims and risk provision came in slightly above the previous year's level of EUR 24.7 million. The loss rate in the first half of the year was 1.55 percent. Net interest income after settlement of claims and risk provisions rose sharply by 29 percent to EUR 49.8 million after EUR 38.5 million.

Income from operating business rose a total of 20 percent to EUR 93.3 million after EUR 78.0 million and included the higher profit from insurance business, new business, and from disposals. The operating result rose a very satisfying 35 percent to EUR 42.0 million after EUR 31.2 million in the previous year.

At EUR 41.7 million, earnings before taxes exceeded the previous year's level of EUR 31.0 million by 34 percent. Net profit increased 40 percent to EUR 31.2 million compared to EUR 22.4 million in the prior year. Earnings per share reached EUR 2.12 after EUR 1.55.

Segment Development

Business segments

The reporting on segment development is aligned along the prevailing organisational structure within the GRENKE Consolidated Group. Accordingly, the operating segments are divided into Leasing, Banking, and Factoring based on the management of the Company's segments. A regional split of business activities is provided on a yearly basis as part of GRENKE's consolidated financial statements for each fiscal year. Separate financial information is available for the three operating segments. More detailed information on the business segments can be found in the Consolidated Group's segment report.

Business Development

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

The Leasing segment, our most important segment, developed very favourably in the first half. Operating segment income rose 19 percent year-on-year to EUR 85.3 million and the segment result experienced an above-average increase of 36 percent to EUR 36.5 million. The operating segment income of the relatively new Factoring segment also grew strongly – by more than fifty percent – from EUR 0.6 million to EUR 1.0 million compared to the previous year. After reporting a loss in the prior year period, the segment made a slightly positive contribution of EUR 0.2 million to the Consolidated Group's operating result. The Banking segment improved both its operating segment income and segment result by 22 percent each. Hence, operating segment income grew from EUR 5.8 million in the previous year to EUR 7.0 million, while the segment result advanced from EUR 4.3 million to EUR 5.3 million. Since the commencement of our banking activities, we have been able to grow this segment into a key earnings pillar.

Report on Financial Position and Net Assets

Selected information from the consolidated statement of financial position and the consolidated statement of cash flows

EURk	Jun. 30, 2014	Dec. 31, 2013
Current assets	1,116,243	1,104,995
thereof cash and cash equivalents	53,381	109,770
thereof lease receivables	824,409	775,167
Non-current assets	1,657,968	1,533,051
thereof lease receivables	1,483,216	1,374,702
Total assets	2,774,211	2,638,046
Current liabilities	855,221	880,293
thereof financial liabilities	761,550	778,979
Non-current liabilities	1,460,051	1,318,333
thereof financial liabilities	1,413,348	1,272,584
Equity	458,939	439,420
Equity ratio in percent	16.5	16.7
Total liabilities and equity	2,774,211	2,638,046
	Jan. 1, 2014 to	Jan. 1, 2013 to
	Jun. 30, 2014	Jun. 30, 2013
Cash flow from operating activities	–29,026	–17,651
Net cash flow from operating activities	–36,524	–28,763
Cash flow from investing activities	–8,968	–18,655
Cash flow from financing activities	–11,114	41,441
Total cash flow	–56,606	–5,977

Despite our high level of growth, total assets of the GRENKE Consolidated Group increased by only five percent in comparison to the close of the last fiscal year. In total, non-current and current lease receivables grew a solid seven percent. Cash and cash equivalents experienced a notable decline of EUR 56.4 million due to the introduction of SEPA and the corresponding outstanding collection of lease instalments as per the reporting date. At EUR 53.4 million, however, the level of cash and cash equivalents was virtually identical to the level as per the end of the first quarter of 2014 (EUR 53.6 million). The net profit achieved in the first half of the year and the very positive response from our shareholders to our Scrip Dividend offer, led to an increase in our equity of four percent. At 16.5 percent, the equity ratio was only slightly below the level as per December 31, 2013 of 16.7 percent – in spite of the dividend payment in May – and continued to exceed our long-term target of a minimum of 16 percent.

We are continuously working on fine-tuning our refinancing structure. On the one hand, we need to ensure that sufficient funds are available to seize growth opportunities and, on the other hand, we need to strive to avoid having any excess liquidity that can only be invested at low interest rates. Currently, we have a comfortable amount of cash and cash equivalents and therefore we generally issued smaller volumes of our various instruments in the second quarter and first half of the current fiscal year. Maintaining a continuous level of secondary market operations and preserving our market presence are cornerstones in positioning ourselves on the refinancing markets.

Larger transactions included the completion of a new ABCP programme with Landesbank Hessen Thüringen in February 2014 with a volume of EUR 100 million as well as the successful issue of a EUR 125 million bond in April 2014. In turn, two bonds with a total volume of EUR 200 million matured and were redeemed.

In line with our intention mentioned above to employ portions of the available cash and cash equivalents in the operating business, we did not refinance the full volume of the net new lease receivables provided in the first half of the year. Accordingly, the cash flow from operating activities in the first half amounted to EUR –29.0 million. However, cash flow from operating activities was significantly higher than the corresponding cash flow of EUR –52.8 million reported in the first quarter of 2014.

While the change in lease receivables resulted in a cash outflow of EUR 157.7 million in the half year, cash inflows from earnings before taxes amounted to EUR 41.7 million and cash inflows from the change in liabilities from the refinancing of lease receivables totalled EUR 125.2 million. The change in other assets and in deferred lease payments led to a cash outflow of EUR 44.8 million. After taxes paid in the amount of EUR 7.1 million and after interest paid and received, the net cash flow from operating activities amounted to EUR –36.5 million as per the end of the second quarter.

Cash flow from investing activities in the reporting quarter totalled EUR –9.0 million and mainly consisted of payments for the purchase of office and business equipment as well as intangible assets in the amount of EUR 3.3 million. The item also included an outflow of EUR 5.8 million for the acquisition of companies of the former franchisee in Luxembourg and our factoring business in Switzerland.

Cash flow from financing activities totaled EUR –11.1 million and was largely impacted by the dividend payment. Of the total dividend payment of EUR 14.7 million, an amount of only EUR 10.6 million was paid in cash to the shareholders due to the broad acceptance of the Scrip Dividend. As a result, the cash outflow from the distribution was below the previous year's figure of EUR 11.8 million, even though the 2012 fiscal year dividend of EUR 0.80 per share had a marked rise to EUR 1.00 for the 2013 fiscal year. Overall, total cash flow for the half-year reporting period amounted to EUR –56.6 million.

Report on Risks, Opportunities, and Forecasts

Opportunities and Risks

The following report on opportunities and risks relates to the GRENKE Consolidated Group and its individual segments. The opportunities and risks which were presented in the 2013 annual financial report continue to be relevant – additional fundamental risks or risks of particular importance have not arisen. Since the beginning of the current fiscal year, we see the opportunities for our operating development outweighing the risks inherent in our business model. This positive assessment was reconfirmed in the reporting quarter.

The demand for lease financing, as measured by the number of incoming applications described in the chapter on new business, remains high. This allows us to squarely place our focus on new business growth and systematically increase it, while at the same time attaining risk-appropriate margins. We aim to drive our future organic growth by adding new locations, branches, and franchise partners and through the penetration of new regional sales markets and by expanding our range of financial solutions.

We do not expect to incur any great risk in terms of refinancing since the capital market always provides sufficient funds at commercially reasonable terms to issuers with a solid reputation, even in difficult market situations. Accordingly, in the past, we have been able to repeatedly place new issues optimised for our needs such as promissory note loans, commercial paper, and ABS bonds successfully and in all types of market situations. Moreover, our access to bank deposits through GRENKE BANK AG offers us an attractive source of refinancing that we use with a high degree of flexibility.

Our earnings development is largely impacted by losses, particularly in recessionary periods. Traditionally, losses have shown a certain degree of volatility over the course of the year and a time lag of about two years in comparison to the underlying transaction. Accepting and managing these types of risks is a core aspect of our business model. The management of the GRENKE Consolidated Group strives to assess the risks as precisely as possible at the time of concluding the contract in order to set a sufficient premium for taking those risks.

The risk of increasing interest rates continues to be of key importance to the GRENKE Consolidated Group. However, in terms of the refinancing the portfolio of lease receivables, the amount of interest rate risk is limited. This risk is hedged using derivative instruments to the extent that interest rates are variable. In the case of new business, however, risks can occur, in principle, from interest and spread changes. Therefore, the time lag after which the change in interest rates is passed on to customers may have a temporary influence on the profitability of the new business. Currently, however, there is no reason to assume a substantial change in the present low interest rate policies of the major central banks.

Forecasts

In the course of the first half of the year, the growth in GRENKE Group's new business volume saw a noticeable acceleration from a level of 13 percent in the first quarter to 16 percent in the second quarter. With total growth of 14 percent, or EUR 656.1 million in the first half of the year, we are well on schedule for our targeted expansion of between 13 percent and 16 percent for the 2014 fiscal year. Thus, our rate of expansion continues to clearly exceed our long-term target rate of ten percent per annum. In addition, our net profit growth of 40 percent to EUR 31.2 million during the first six months is at the top end of our expectations. We are refining our previous forecast for 2014, which projected a net profit in the range of EUR 52-56 million for the GRENKE Consolidated Group, and now expect a figure of around EUR 56 million. The likelihood that we will exceed this level has increased. In the previous fiscal year, we reached a net profit of EUR 47.0 million.

Attractive and risk-adequate CM2 margins will remain at the focal point of our management in the future. We concentrate on those markets in which we can enforce the appropriate margins for the assumed amount of risk and thus secure the profitability of the GRENKE Consolidated Group. We will take specific advantage of the different opportunities offered to us in the various countries both within and especially outside of Europe. Next to the further expansion of our network in our established markets, our agenda for the current fiscal year also includes our entrance into the Croatian market as well as the establishment of our first local presence in Chile.

Responsibility Statement

We hereby confirm to the best of our knowledge, and in accordance with the accounting standards to be used for interim reporting, that the interim consolidated financial statements give a true and fair view of the net assets, financial position, and results of operations of the Consolidated Group. Furthermore, the interim Group management report conveys a fair review of the development of the business, including the results and the position of the Consolidated Group, together with a description of the important opportunities and risks for the expected development of the Consolidated Group for the remainder of the fiscal year.

Interim Consolidated Financial Statements

Consolidated Income Statement

	3-month report		6-month report
	Apr. 1, 2014 to	Apr. 1, 2013 to	Jan. 1, 2014 to	Jan. 1, 2013 to
EURk	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest and similar income from financing business	51,948	46,696	102,240	92,321
Expenses from interest on refinancing and deposit business	13,533	14,252	27,599	29,056
Net interest income	38,415	32,444	74,641	63,265
Settlement of claims and risk provision	12,967	13,831	24,810	24,716
Net interest income after settlement of claims and risk provision	25,448	18,613	49,831	38,549
Profit from insurance business	10,109	8,760	19,525	16,645
Profit from new business	12,080	11,253	23,181	21,410
Profit from disposals	381	432	732	1,346
Income from operating business	48,018	39,058	93,269	77,950
Staff costs	13,462	12,785	26,546	24,861
Depreciation and impairment	1,437	1,325	2,932	2,464
Selling and administrative expenses (not including staff costs)	10,843	9,698	21,744	18,557
Other operating expenses	582	1,006	1,702	2,342
Other operating income	872	701	1,657	1,452
Operating result	22,566	14,945	42,002	31,178
Expenses / income from fair value measurement	22	44	57	88
Other interest income	19	216	120	305
Other interest expenses	213	263	501	576
Earnings before taxes	22,394	14,940	41,678	30,995
Income taxes	5,717	4,081	10,496	8,644
Net profit	16,677	10,859	31,182	22,351
Of which, attributable to:
non-controlling interests	–3	--	–3	--
shareholders of GRENKELEASING AG	16,680	--	31,185	--
Earnings per share (basic) in EUR	1.13	0.74	2.12	1.55
Earnings per share (diluted) in EUR	1.13	0.74	2.12	1.55
Average number of shares outstanding (basic)	14,732,758	14,700,000	14,716,469	14,413,752
Average number of shares outstanding (diluted)	14,732,758	14,700,000	14,716,469	14,413,752

Consolidated Statement of Comprehensive Income

	3-month report		6-month report
	Apr. 1, 2014 to	Apr. 1, 2013 to	Jan. 1, 2014 to	Jan. 1, 2013 to
EURk	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net profit	16,677	10,860	31,182	22,351
Items that may be reclassified to profit and loss in future periods
Appropriation to / reduction of hedging reserve (before taxes)	–57	191	–36	459
Income taxes	6	–12	4	–28
Appropriation to / reduction of hedging reserve (after taxes)	–51	179	–32	431
Change in currency translation differences (before taxes)	432	–917	621	–1,700
Income taxes	0	0	0	0
Change in currency translation differences (after taxes)	432	–917	621	–1,700
Items that will not be reclassified to profit and loss in future periods
Appropriation to / reduction of reserve for actuarial gains and losses
(before taxes)	–403	–148	–403	–148
Income taxes	94	35	94	35
Appropriation to / reduction of reserve for actuarial gains and losses
(after taxes)	–309	–113	–309	–113
Other comprehensive income	72	–851	280	–1,382
Total comprehensive income	16,749	10,009	31,462	20,969
Of which, attributable to:
non-controlling interests	0	0	0	0
shareholders of GRENKELEASING AG	16,749	10,009	31,462	20,969

Consolidated Statement of Financial Position

EURk	Jun. 30, 2014	Dec. 31, 2013
Assets
Current assets
Cash and cash equivalents	53,381	109,770
Financial instruments that are assets	1,236	2,123
Lease receivables	824,409	775,167
Other current financial assets	78,782	77,546
Trade receivables	4,648	4,395
Lease assets for sale	9,817	9,418
Tax assets	13,837	14,176
Other current assets	130,133	112,400
Total current assets	1,116,243	1,104,995
Non-current assets
Lease receivables	1,483,216	1,374,702
Financial instruments that are assets	229	590
Other non-current financial assets	37,345	28,882
Property, plant, and equipment	40,491	40,067
Goodwill	57,836	52,549
Other intangible assets	14,357	12,917
Deferred tax assets	23,609	22,493
Other non-current assets	885	851
Total non-current assets	1,657,968	1,533,051
Total assets	2,774,211	2,638,046

Consolidated Statement of Financial Position

EURk	Jun. 30, 2014	Dec. 31, 2013
Liabilities and equity
Liabilities
Current liabilities
Financial liabilities	761,550	778,979
Liability financial instruments	3,636	2,942
Trade payables	15,838	10,747
Tax liabilities	7,893	4,110
Deferred liabilities	7,957	7,688
Current provisions	1,941	1,821
Other current liabilities	10,379	8,932
Deferred lease payments	46,027	65,074
Total current liabilities	855,221	880,293
Non-current liabilities
Financial liabilities	1,413,348	1,272,584
Liability financial instruments	578	768
Deferred tax liabilities	43,109	42,576
Pensions	2,952	2,168
Non-current provisions	64	237
Total non-current liabilities	1,460,051	1,318,333
Equity
Share capital	18,859	18,790
Capital reserves	116,491	112,757
Retained earnings	321,458	306,022
Other components of equity	2,131	1,851
Total equity attributable to shareholders of GRENKELEASING AG	458,939	439,420
Non-controlling interests	0	--
Total equity	458,939	--
Total liabilities and equity	2,774,211	2,638,046

Consolidated Statement of Cash Flows

		Jan. 1, 2014	Jan. 1, 2013
	EURk	to Jun. 30, 2014	to Jun. 30, 2013
	Earnings before taxes	41,678	30,995
	Non-cash items contained in earnings and reconciliation to cash flow from
	operating activities
+	Depreciation and impairment	2,932	2,464
– / +	Profit / loss from the disposal of property, plant, and equipment and intangible assets	7	–12
– / +	Net income from non-current financial assets	381	271
– / +	Non-cash changes in equity	77	–788
– / +	Other non-cash effective income / expenses	26	0
+ / –	Increase / decrease in deferred liabilities, provisions, and pensions	660	–440
–	Additions to lease receivables	–575,309	–505,065
+	Payments by lessees	439,018	383,869
+	Disposals / reclassifications of lease receivables at residual carrying amounts	83,627	80,007
–	Interest and similar income from leasing business	–100,851	–92,321
+ / –	Decrease / increase in other receivables from lessees	1,184	–5,688
+ / –	Currency translation differences	–5,339	7,988
=	Change in lease receivables	–157,670	–131,210
+	Addition to liabilities from refinancing	980,705	751,611
–	Payment of annuities to refinancers	–171,063	–163,925
–	Disposal of liabilities from refinancing	–715,471	–556,206
+	Expenses from interest on refinancing and on deposit business	27,599	29,056
+ / –	Currency translation differences	3,444	–2,988
=	Change in refinancing liabilities	125,214	57,548
+ / –	Increase / decrease in liabilities from deposit business	–1,692	38,607
– / +	Increase / decrease in loans to franchisees	–2,052	–150
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	–25,781	–11,807
+ / –	Increase / decrease in deferred lease payments	–19,047	3,880
+ / –	Increase / decrease in other liabilities	6,241	–7,009
=	Cash flow from operating activities	–29,026	–17,651

continued on next page

Consolidated Statement of Cash Flows

	Jan. 1, 2014	Jan. 1, 2013
EURk	to Jun. 30, 2014	to Jun. 30, 2013
– / + Income taxes paid / received	–7,117	–10,841
– Interest paid	–501	–576
+ Interest received	120	305
= Net cash flow from operating activities	–36,524	–28,763
– Payments for the acquisition of property, plant, and equipment and intangible assets	–3,269	–2,847
– / + Payments / proceeds from acquisition of subsidiaries	–5,846	–15,930
+ Proceeds from the sale of property, plant, and equipment and intangible assets	147	122
= Cash flow from investing activities	–8,968	–18,655
+ / – Borrowing / repayment of bank liabilities	–470	–490
+ Proceeds from cash capital increase	0	53,691
– Dividend payments	–10,644	–11,760
= Cash flow from financing activities	–11,114	41,441
Cash funds at beginning of period
Cash in hand and bank balances	109,770	116,707
– Bank liabilities from overdrafts	–432	–637
= Cash and cash equivalents at beginning of period	109,338	116,070
+ / – Change due to currency translation	–66	127
= Cash funds after currency translation	109,272	116,197
Cash funds at end of period
Cash in hand and bank balances	53,381	111,237
– Bank liabilities from overdrafts	–715	–1,017
= Cash and cash equivalents at end of period	52,666	110,220
Change in cash and cash equivalents during the period (= total cash flow)	–56,606	–5,977
Net cash flow from operating activities	–36,524	–28,763
+ Cash flow from investing activities	–8,968	–18,655
+ Cash flow from financing activities	–11,114	41,441
= Total cash flow	–56,606	–5,977

Consolidated Statement of Changes in Equity

							Total equity
			Retained				attributable to
			earnings /		Reserve for		shareholders	Non
	Share	Capital	Consolidated net	Hedging	actuarial gains /	Currency	of GRENKE	controlling	Total
EURk	capital	reserves	profit	reserve	losses	translation	LEASING AG	interests	equity
Equity as per
Jan. 1, 2014	18,790	112,757	306,022	–57	–438	2,346	439,420	--	439,420
Total comprehensive
income			31,185	–32	–309	621	31,465	–3	31,462
Dividend payment			–14,700				–14,700		–14,700
Capital increase
(Shares issued from
Scrip Dividend)	69	3,734					3,803		3,803
Changes in the
scope of consolida
tion							0	–42	–42
Transactions with
shareholders			–1,049				–1,049	45	–1,004
Equity as per
Jun. 30, 2014	18,859	116,491	321,458	–89	–747	2,967	458,939		458,939
Equity as per
Jan. 1, 2013	17,491	60,166	270,812	–445	–494	3,443	350,973		350,973
Total comprehensive
income			22,351	431	–113	–1,700	20,969		20,969
Dividend payment			–11,760				–11,760		–11,760
Capital increase
(issuance of shares)	1,299	52,591					53,890		53,890
Equity as per
Jun. 30, 2013	18,790	112,757	281,403	–14	–607	1,743	414,072		414,072

Consolidated Group Segment Report

EURk	Leasing segment		Banking segment		Factoring segment		Total segments				Consolidation effects Consolidated Group
January to June	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Operating segment income	85,257	71,545	7,025	5,759	987	646	93,269	77,950	0	0	93,269	77,950
Segment result	36,542	26,963	5,268	4,322	192	–107	42,002	31,178	0	0	42,002	31,178
Reconciliation to consoli
dated financial statements
Operating result											42,002	31,178
Other financial income											–324	–183
Taxes											10,496	8,644
Net profit according to
consolidated income
statement											31,182	22,351
As per June 30
Segment assets	2,678,448	2,396,101	425,473	371,198	23,218	12,535	3,127,139	2,779,834	–390,374	–306,314	2,736,765	2,473,520
Reconciliation to consoli
dated financial statements
Tax assets											37,446	26,547
Total assets according to
consolidated statement of
financial position											2,774,211	2,500,067

Business Segments

The reporting on segment development is aligned along the prevailing organisational structure within the GRENKE Consolidated Group. Accordingly, the operating segments are divided into Leasing, Banking, and Factoring based on the management of the Company's segments. A regional split of business activities is provided on a yearly basis as part of GRENKE's consolidated financial statements for each fiscal year. Separate financial information is available for the three operating segments.

Reportable Segments

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

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

The Factoring segment contains the activities which provide traditional factoring services focussed on small-ticket factoring. Previously, this segment only encompassed the activities of GRENKEFACTORING GmbH, Baden-Baden. As per the reporting date, the newly acquired GRENKEFACTORING AG, Basel was also allocated to this segment.

Notes to the Interim Consolidated Financial Statements

Accounting Policies

The interim consolidated financial statements of GRENKELEASING AG (hereafter also referred to as "GRENKE Consolidated Group") as per June 30, 2014 meet the requirements of the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and adopted by the EU, as did the consolidated financial statements as per December 31, 2013. The provisions on interim reporting set out in IAS 34 were applied accordingly. All interim financial statements of the companies included in the consolidated financial statements of the GRENKE Consolidated Group have been prepared using uniform accounting policies.

Since interim reporting is based on the consolidated financial statements, detailed information on accounting and consolidation policies can be found in the notes to the consolidated financial statements for the year ended December 31, 2013. The accounting policies used are the same as those used in the previous year with the exception of the new standards that have become mandatory, which are presented briefly in the paragraph below.

The interim consolidated financial statements and the interim management report as per June 30, 2014 were neither subject to an audit nor an audit review by an auditor.

Mandatory New Accounting Standards

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

In May 2011, the IASB released three new standards regulating the recognition of the investments of a reporting entity in its consolidated financial statements. IFRS 10 "Consolidated Financial Statements" introduces a uniform consolidation model for all entities on the basis of control and replaces the regulations of IAS 27 "Consolidated and Separate Financial Statements" and SIC-12 "Consolidation – Special Purpose Entities". IFRS 11 "Joint Arrangements" covers the recognition of joint arrangements. These occur when two or more parties have joint control. The first-time adoption of these provisions had no impact on the consolidated financial statements of GRENKELEASING AG. The scope of consolidation remained unchanged with regard to this amendment.

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

IFRS 12 "Disclosure of Interests in Other Entities" expands the disclosure requirements for investments in other companies. This involves the compilation of existing disclosures from several standards that have already been published in IFRS 12. The disclosure requirements are expanded significantly. Following the amendment, the amended IAS 27 "Separate Financial Statements" now only includes regulations for separate financial statements and is therefore not relevant to the consolidated financial statements.

In October 2012, the IASB published amendments to the transitional provisions of the amended IFRS 10, 11, and 12. Exceptions and simplifications were published regarding restated comparative figures, as well as disclosure requirements of comparative information regarding non-consolidated structured entities for the first-time adoption of IFRS 12. The amendment has no effect on the consolidated financial statements.

With the amendment of the above standards, the IASB also amended IAS 28 "Investments in Associates". This standard is not relevant to the GRENKE Consolidated Group since it holds no investments in associates.

The amendments to IAS 32 were published by the IASB in December 2011. These changes are intended to clarify existing inconsistencies via amendments to the application guidelines. However, the existing basic regulations concerning the offsetting of financial instruments remain unchanged. These amendments have no impact on the consolidated financial statements.

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

Use of Assumptions and Estimates

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

• Determination of impairments for non-performing lease receivables on the basis of the recoverability rate from terminated lease contracts or contracts in arrears
• 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

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

The following table lists the processing categories:

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

Impairment is assumed for categories 2 to 7 as the contracts have been terminated due to defaults in payment. The allowance rates range between 5% and 100%. Estimated residual values are used to determine the present value of lease receivables. Non-guaranteed residual values are used to calculate lease receivables in accordance with the definition in IAS 17. Estimated residual values comprise anticipated sales proceeds and any revenues generated in a renewal period. They are determined on the basis of past experience and statistical methods.

Based on experience and dependent upon the terms of the lease, the residual values of additions up until the end of 2006 ranged between 11% and 15% of historical cost. In fiscal year 2007, due to an improvement in forecasting capabilities for the statistical population, this allocation could be further broken down into more detailed maturity groups. For additions from 2007 to 2008, the residual values range between 7.7% and 28.4% of historical cost depending upon the duration of the lease. Residual values of between 6.5% and 28.4% were used for additions from 2009. For additions after April 1, 2011, residual values of between 6.5% and 23.5% were applied and continue to be valid.

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

Lease assets for sale are measured on the basis of the average sales proceeds per age group realised in the past fiscal year in relation to the original cost. Lease assets for sale are measured at historical residual values taking their actual saleability into account. As per the end of the reporting period, the residual values used had amounted to between 3.0% and 18.1% of the historical cost (previous year as per June 30, 2013: between 3.6% and 17.2%). If a sale is considered unlikely due to the condition of the asset, the asset is impaired in profit and loss.

Lease Receivables

EURk	June 30, 2014	June 30, 2013
Change in lease receivables from current contracts (performing lease receivables)
Balance at beginning of period	2,043,904	1,771,673
– Non-cash effective change during the period	–26	0
+ Cash effective change during the period	158,855	131,450
Lease receivables (current + non-current) from current contracts at end of period	2,202,733	1,903,123
Changes in lease receivables from terminated contracts / contracts in arrears
(non-performing lease receivables)
Gross receivables at beginning of period	217,110	198,623
– Accumulated valuation allowances at beginning of period	–111,145	96,368
= Non-performing lease receivables at beginning of period	105,965	102,255
+ Additions to gross receivables during the period	22,105	30,385
– Disposals of gross receivables during the period	19,275	16,731
+ Disposal of accumulated valuation allowances during the period	10,594	8,982
– Addition of accumulated valuation allowances during the period	14,497	16,276
Non-performing lease receivables at end of period	104,892	108,615
Lease receivables (carrying amount, current and non-current) at beginning of period	2,149,869	1,873,928
Lease receivables (carrying amount, current and non-current) at end of period	2,307,625	2,011,738

Financial Liabilities

The GRENKE Consolidated Group's financial liabilities comprise liabilities from the refinancing of the leasing business, bank liabilities, and liabilities from deposit business.

EURk	June 30, 2014	Dec. 31, 2013
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	621,125	663,486
ABS / ABCP related liabilities	182,206	177,047
Bonds, revolving facilities, debentures, and private placements	335,190	404,594
Committed development loans	34,650	16,506
Sales of receivables agreements	69,079	65,339
Current liabilities from deposit business	139,067	114,292
Current bank liabilities	1,358	1,201
thereof current account liabilities	715	432
Total current financial liabilities	761,550	778,979
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	1,297,782	1,130,208
ABS / ABCP related liabilities	245,118	209,775
Bonds, debentures, and private placements	939,371	811,873
Committed development loans	24,288	24,154
Sales of receivables agreements	89,005	84,406
Non-current liabilities from deposit business	114,878	141,345
Non-current bank liabilities	688	1,031
Total non-current financial liabilities	1,413,348	1,272,584
Total financial liabilities	2,174,898	2,051,563

ABS Bond

On February 4, 2010, an ABS bond amounting to EUR 160,000k was placed via the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS 2009-1). The contracts with GOALS FINANCING 2009 LIMITED allowed the GRENKE Consolidated Group to sell further lease agreements on a revolving basis for a total of three years and up to a maximum volume of EUR 300,000k. The interest rate is variable at three-month EURIBOR plus a spread ranging between 1.25% and 3.5% depending on the tranche. Three tranches of bonds with different ratings (risk classes) were issued by the SPE. The size of the highest rated tranche is a reflection of the quality of the leasing portfolio and the internal risk management and directly impacts the cost of this type of financing. Of this bond, 76.5% (EUR 122,400k) was given the highest rating by Standard & Poor's (AAA) and FITCH (AAA). The wholly-owned subsidiary of GRENKELEASING AG, GRENKE FINANCE Plc., Dublin/Ireland, subscribed on a pro rata basis to the second tranche and fully subscribed to the last tranche (nominal amount: EUR 24,200k) of the ABS bond. As a result, the Consolidated Group received a cash inflow of only EUR 135,800k. The carrying amount of the total liability was EUR 48,397k as per the end of the reporting period (previous year as per June 30, 2013: EUR 116,052k).

ABCP Programmes

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

	Initiating	Lease receivables eligible	Programme volume in	Programme volume in
ABCP programme / SPE	bank	for refinancing	EURk as per Jun. 30, 2014	EURk as per Dec. 31, 2013
		German and Austrian
Compass Variety Funding Limited	Portigon	lease receivables	--	40,000
		German and Austrian
Opusalpha Purchaser II Limited	HeLaBa	lease receivables	100,000	--
		German and French
Kebnekaise Funding Limited	SEB AB	lease receivables	110,000	110,000
CORAL PURCHASING Limited	DZ-Bank	German lease receivables	150,000	150,000
Elektra Purchase No. 25 Limited /
(FCT GK 2)	UniCredit	French lease receivables	100,000	100,000
Regency Assets Limited /
(FCT GK 3)	HSBC	French lease receivables	133,333	133,333
Total			593,333	533,333

The ABCP programmes grant GRENKE FINANCE Plc., Dublin/Ireland, and Grenke Investitionen Verwaltungs KGaA the right to refinance or to sell receivables to the respective programmes for a certain period of time. The cap on the purchase volume is determined by the volume of the programme, which is normally backed by the organising bank in the form of a liquidity commitment in the corresponding amount. As per the reporting date, a total volume of EUR 378,927k (previous year as per June 30, 2013: EUR 269,134k) at carrying amount was utilised.

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

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

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

To reflect the current legal conditions in France for the securitisation of French lease receivables (separate French securitisation act), a French securitisation vehicle (FCT = fonds commun de titrisation à compartiments/French issuer) was established in 2009. The FCT initially consisted of just one so-called compartment ("FCT GK 1"). A second compartment was established on January 18, 2011 ("FCT GK 2"). "FCT GK 2" is refinanced through the issue of FCT notes which are 100% subscribed by SPE Elektra Purchase No. 25 Limited. A third compartment was founded on March 26, 2013 ("FCT GK 3"). This third compartment is refinanced through the issue of so-called FCT senior notes and FCT subordinated notes. The FCT senior notes are 100% subscribed by Regency Assets Limited and the FCT subordinated notes are 100% subscribed by GRENKE FINANCE Plc., Dublin/Ireland. Within the FCT, the individual compartments are kept strictly separate from one another ("ring-fenced") and they all exclusively serve to finance French lease receivables. Both of the latter compartments are included in the scope of consolidation.

As per the reporting date, 63.86% of the refinancing framework of the ABCP programmes was utilised (previous year as per June 30, 2013: 50.46%). The corresponding amount of receivables is assigned by way of collateral.

Sales of Receivables Agreements

Such agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, UBS AG in Switzerland, the Commerzbank subsidiary mBank S.A. (formerly BRE-Bank S.A.) and DZ Bank AG S.A. Oddzial w Polsce (formerly DZ Bank Polska) in Poland, and Norddeutsche Landesbank for receivables in the UK. The existing agreements allow for revolving sales of new receivables up to a maximum amount of: Stadtsparkasse Baden-Baden Gaggenau EUR 10,000k; Sparkasse Karlsruhe EUR 10,000k; UBS AG CHF 50,000k; mBank S.A. PLN 50.000k, DZ Bank AG S.A. Oddzial w Polsce PLN 50.000k, Norddeutsche Landesbank GBP 70,000k.

Bonds, Debentures, and Private Placements

In the first quarter of 2014, two new promissory note loans with a volume of EUR 10,000k each and two new bonds with a volume of EUR 30,000k each were issued by GRENKE FINANCE Plc., Dublin/Ireland. All loans and bonds bear fixed interest rates.

The promissory note loan launched on January 31, 2014 has a term of five years and the interest coupon amounts to 2.25%. The promissory note loan launched on February 13, 2014 and maturing on August 13, 2015 is a prolongation of the promissory note loan which ran from August 13, 2012 until February 13, 2014. The interest coupon amounts to 1.162%.

The bond with a term running from February 21, 2014 to February 28, 2018 has an interest coupon of 1.90%. The bond running from March 4, 2014 until March 4, 2019 has an interest coupon of 2.17%.

In the second quarter of 2014, GRENKE FINANCE Plc., Dublin/Ireland issued three new fixed-rate bonds under the Debt Issuance Programme.

The bond with a volume of EUR 125,000k and a term from April 17, 2014 until October 17, 2017 has an interest coupon of 1.625%. The bond with a volume of EUR 10,000k and a term from May 6, 2014 until May 6, 2016 has an interest coupon of 1.37%. The third bond with term from June 27, 2014 until August 27, 2018 and a volume of EUR 10,000k has an interest coupon of 1.5%.

On January 21, 2014 and April 22, 2014, bonds with a volume of EUR 100,000k each were redeemed as scheduled.

In the first half of 2014, private placements denominated in euros in an amount of EUR 72,667k were redeemed as scheduled.

In the first half of 2014, we issued a promissory note loan denominated in Swiss franc for the first time. The promissory note loan in an amount of CHF 4,800k, which is owed by GRENKELEASING AG, Zurich/Switzerland, will be redeemed by twelve quarterly instalments in the amount of CHF 400k each plus interest. The first repayment took place in April 2014.

Development Loans

NRW.Bank

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

An initial global loan with a volume of EUR 15,000k and originating from the year 2010 has been redeemed in the previous year as scheduled.

In 2011, this cooperation continued and was broadened by the parties through a second global loan with a volume of EUR 15,000k. This second loan was first drawn down in the amount of EUR 7,500k with a bullet maturity of three years on August 29, 2011. The interest rate relates to the 6-month Euribor plus a margin of 0.07%. The second draw-down of EUR 7,500k took place on August 3, 2012 with a term of 4 years. The loan will be redeemed by semi-annual instalments. Hence, the second global loan is fully utilised up to the planned volume of EUR 15,000k. The interest rate over the total term amounts to 0.82%.

On March 25, 2013, the third global loan in the amount of EUR 15,000k was concluded between GRENKELEASING AG, GRENKE BANK AG, and NRW.BANK, the development bank of the state of North Rhine-Westphalia. The loan was first drawn down in an amount of EUR 7,500k on November 25, 2013. The loan will be redeemed by semi-annual instalments and the interest rate over the entire term amounts to 0.562%. The second draw-down of an additional EUR 7,500k took place on March 24, 2014. The loan will be redeemed by semi-annual instalments and has a term of 4 years. The interest rate over the total term amounts to 0.780%.

Thüringer Aufbaubank

On January 16, 2012, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with Thüringer Aufbaubank (TAB), the development bank of the state of Thuringia, similar to the agreement with NRW.Bank. The development loans are available exclusively for investment plans of commercial enterprises and members of selfemployed professions with annual sales of up to EUR 500 million and located in Thuringia.

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

On September 27, 2013, a second global loan in an amount of EUR 5,000k was concluded between GRENKE BANK AG and TAB. The loan was drawn down for the first time in the amount of EUR 2,500k on June 11, 2014 with a term of 4 years. The loan is redeemed retroactively on a yearly basis at fixed instalments. The interest rate over the total term amounts to 1.067%.

Investitionsbank Berlin

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

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

On May 30, 2014, a second global loan in an amount of EUR 5,000k was concluded between GRENKE BANK AG and IBB. As per the time this report was prepared, this loan had not yet been drawn down. A specific interest rate will not be determined until the loan has been drawn down.

LfA Förderbank Bayern

On January 30, 2013, GRENKELEASING AG and GRENKE BANK AG have established a further cooperation agreement with LfA Förderbank Bayern by means of a global loan in the amount of EUR 25,000k. Through this collaboration, small and medium-sized enterprises and self-employed professionals located in Bavaria can access development funds for investments via leasing. The development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in Bavaria. The loan was drawn down for the first time in the amount of EUR 10,000k on June 11, 2014 with a term of 4 years. The loan will be redeemed retroactively on an annual basis at fixed instalments. The interest rate over the total term will amount to 0.66%.

L-Bank

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

Revolving Credit Facility

In the context of five revolving credit facilities with a total volume of EUR 125,000k available to GRENKE FINANCE Plc., Dublin/Ireland, the GRENKE Consolidated Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k and a term of usually one month at any time.

The facility with HSBC with a volume of EUR 15,000k was prolonged at the beginning of July 2014 and will run until the end of June 2015. The facility with Nord LB with a volume of EUR 20,000k from the first quarter of 2013 was prolonged in March 2014 for the first time. This facility will run until March 2015. The facilities with SEB, Deutsche Bank, and DZ-Bank, which have been in place for several years, have a volume of EUR 30,000k each and have the following terms: SEB (until March 2015), Deutsche Bank (until September 2014), DZ-Bank (until October 2014).

As per June 30, 2014 the revolving credit facilities were utilised in the amount of EUR 70,000k (previous year as per June 30, 2013: EUR 40,000k).

Money Market Trading

GRENKE FINANCE Plc., Dublin/Ireland and GRENKELEASING AG Switzerland have a non-committed money market facility totalling EUR 25,000k from Bayerische Landesbank. As per June 30, 2014, this credit line was utilised in the amount of EUR 5,000k (previous year as per June 30, 2013: EUR 20,000k) and of CHF 5,000k (previous year as per June 30, 2013: CHF 0k), respectively. A further money market facility in the amount of EUR 10,000k is in place with Norddeutsche Landesbank. As per June 30, 2014 this line was not utilised (previous year as per June 30, 2013: EUR 5,000k). A further money market facility in the amount of EUR 10,000k is in place with Commerzbank AG. As per June 30, 2014 this line was not utilised as in the previous year.

Commercial Papers

The GRENKE Consolidated Group has the possibility of issuing commercial paper of up to a total volume of EUR 250,000k with a term of between 1 and 364 days. As per June 30, 2014 the commercial paper programme was utilised in the amount of EUR 82,000k (previous year as per June 30, 2013: EUR 0k).

Disclosures on Financial Instruments

Fair value hierarchy

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

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

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

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

Financial Instruments Recognised at Fair Value

In the reporting period, all derivative financial instruments, which include interest rate derivatives (interest rate swaps) and forward exchange contracts, are recognised at fair value in the GRENKE Consolidated Group. All derivative financial instruments are assigned to level 2 of the fair value hierarchy.

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	Jun. 31, 2014	Jun. 31, 2014	Dec. 31, 2013	Dec. 31, 2013
Financial Assets
Interest rate derivatives without hedging
relationship	778	778	1,623	1,623
Forward exchange contracts	687	687	1,090	1,090
Total	1,465	1,465	2,713	2,713
Financial Liabilities
Interest rate derivatives with hedging
relationship	104	104	73	73
Interest rate derivatives without hedging
relationship	828	828	1,730	1,730
Forward exchange contracts	3,282	3,282	1,907	1,907
Total	4,214	4,214	3,710	3,710

The following table presents the carrying amounts and fair values of financial assets and financial liabilities by category of financial instruments which are not measured at fair value. The table does not contain information on the fair value of financial assets and financial liabilities if the carrying amount represents an appropriate approximation to the fair value. This includes the following line items of the statement of financial position: cash and cash equivalents, trade receivables, non-performing lease receivables, and trade payables. All primary financial instruments are assigned to level 2 of the fair value hierarchy except for exchange-listed bonds which are included in refinancing liabilities and which are assigned to level 1 of the fair value hierarchy. As per the reporting date, the carrying amount of exchange-listed bonds was EUR 896,650k (December 31, 2013: EUR 891,650k) and their fair value amounted to EUR 921,739k (December 31, 2013: EUR 910,352k). All financial assets are allocated to the loans and receivables measurement category except for performing lease receivables. All financial liabilities are allocated to the other financial liabilities measurement category.

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2013
Financial assets
Lease receivables (performing)	2,440,717	2,202,733	2,260,874	2,043,904
Other financial assets	116,822	116,127	107,124	106,428
Financial liabilities
Refinancing liabilities	1,927,697	1,918,907	1,810,517	1,793,694
Liabilities from deposit business	265,454	253,945	262,492	255,637
Bank liabilities	2,078	2,046	2,270	2,232

Measurement Methods

Forward exchange contracts and interest rate derivatives assigned to level 2 of the fair value hierarchy are measured using the market-to-market method or the discounted present value model. Here, the present value of estimated future cash flows is used. Input factors include available interest rates at the end of the term in the traded currencies using the own counterparty risk (Debt Value Adjustment [DVA]) or the counterparty's credit risk (CVA [Credit Value Adjustment]) derived from available credit default swap (CDS) quotes.

Equity

On May 7, 2014, GRENKELEASING AG carried out a capital increase in the context of the Scrip Dividend. The share capital was increased by EUR 69,278.77 to EUR 18,859,255.47 through partial use of the authorised capital, which was resolved upon by the Annual General Meeting on May 12, 2009. A total of 54,199 new ordinary bearer shares (no-par value) were issued. The new shares carry the same dividend rights as the existing shares. Hence, the Company's share capital is now divided into 14,745,199 ordinary bearer shares.

Selling and Administrative Expenses (Not Including Staff Costs)

The Consolidated Group's investment in information technology (IT) resulting from IT project costs which cannot be capitalised, is reported separately within selling and administrative expenses for reasons of improved presentation and comparability. These expenses arise in particular through projects for the process optimisation of the central and standardised IT processes as a result of the involvement of external expertise.

EURk	Jan. 1 – Jun. 30, 2014	Jan. 1 – Jun. 30, 2013
IT project costs	1,104	359

Income Taxes

The main components of the income tax expense in the consolidated income statement are:

EURk	Jan. 1 – Jun. 30, 2014	Jan. 1 – Jun. 30, 2013
Income taxes
Current tax expense	11,217	11,065
Deferred taxes	–721	–2,421
Income tax expense	10,496	8,644

Other Financial Obligations

As per the end of the reporting period, there were no obligations to purchase property, plant, and equipment (previous year as per June 30, 2013: EUR 184k).

Acquisitions

Acquisitions in Fiscal Year 2013

The purchase price allocations for the acquisition of GRENKELEASING Oy, Vantaa/Finland (formerly GC Leasing Finland Oy) and GRENKELEASING s.r.o. (formerly GC Leasing Slovensko s.r.o.), Bratislava/Slovakia, which were acquired in the previous year, were finalised in the second quarter of 2014. With regard to the acquisition of GRENKELEASING s.r.o., there were no changes to the preliminary fair values of the assets and liabilities. In relation to the acquisition of GRENKELEASING Oy, a change was carried in the second quarter of 2014 as a result of the receipt of additional information. Deferred tax assets of EUR 198k were recognised for tax-loss carryforwards. Previously, it had been uncertain whether the tax-loss carryforwards could be transferred due to a change in ownership. Therefore, the goodwill resulting from the acquisition of the cash-generating unit in Finland was reduced to EUR 3,410k. This adjustment was carried out retrospectively. Hence, equity as per December 31, 2013 was reduced by EUR 42k as a result of the interim use of the losses carried forward. For further information regarding business combinations in the prior fiscal year, please refer to the notes to the Company's consolidated financial statements as per December 31, 2013.

For further information regarding business combinations in the previous year, please refer to the notes to the Company's consolidated financial statements as per December 31, 2013.

Acquisitions in Fiscal Year 2014

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

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

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

The following information relates to the preliminary fair value of the significant categories of the identifiable assets and liabilities at the date of acquisition of the company: intangible assets EUR 383k, lease receivables EUR 111k, other assets EUR 208k, deferred tax liabilities EUR 149k, and other liabilities EUR 648k. Intangible assets are largely attributable to non-contractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables with a gross amount of EUR 225k, an amount of EUR 114k is impaired and is not expected to be recovered. Other liabilities include intra-group liabilities and consist of a risk allocation (EUR 394k) and a current liability (EUR 61k). The intra-group liabilities were eliminated as a result of the consolidation and therefore are not reported in the consolidated statement of financial position. The deferred tax liabilities resulted from the revaluation and identification of assets in the course of the purchase price allocation. The purchase price allocation which is still preliminary resulted in goodwill of EUR 1,559k which is expected to be not tax deductible. Goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. Since the date of acquisition, the acquired company has contributed a net result of EUR –59k to the Consolidated Group's net profit after consolidation effects and effects from the purchase price allocation. The total consideration paid for the business combination amounted to EUR 2,511k and consisted solely of cash. Cash acquired with the business combination amounted to EUR 60k. All costs related to the acquisition were recognised in profit and loss. Non-controlling interests were measured as per March 31, 2014 at the proportionate fair value of acquired assets and assumed liabilities.

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

GRENKEFACTORING AG, Basel/Switzerland

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

Prior to the acquisition, GRENKEFACTORING AG, Basel/Switzerland was active within GRENKELEASING AG's factoring franchise system and specialised in traditional factoring services focussed on lower value receivables in Switzerland. Since not all of the relevant information needed for determining the final purchase price allocation is yet available, the fair value of the assets and liabilities are preliminary and may be subject to adjustments as a result of additional information gained in the acquisition process.

The following information relates to the preliminary fair value of the significant categories of the identifiable assets and liabilities at the date of acquisition of the company: intangible assets EUR 331k, receivables from factoring business EUR 5,834k, other assets EUR 135k, deferred tax assets EUR 175k, trade payables EUR 598k, pensions EUR 300k, deferred tax liabilities EUR 73k, and other liabilities EUR 5,771k. Intangible assets are largely attributable to client relationships and non-competitive clauses. Of the receivables from factoring business with a gross amount of EUR 5,777k, an amount of EUR 58k is impaired and is not expected to be recovered. Other liabilities include intra-group liabilities (EUR 5,732k) and primarily consist of current liabilities for the refinancing of the factoring business (EUR 5,602k). The intra-group liabilities were eliminated as a result of the consolidation and therefore are not reported in the consolidated statement of financial position. Deferred tax assets largely relate to tax-loss carryforwards. The deferred tax liabilities resulted from the revaluation and identification of assets in the course of the purchase price allocation. The purchase price allocation, which is still preliminary, resulted in goodwill of EUR 3,661k and is not expected to be tax deductible. Goodwill includes intangible assets, such as employees and expected synergy effects which could not be separately identified. Due to the first-time consolidation as per the closing date of the interim report, the consolidation had no impact on consolidated net income. The total consideration paid for the business combination amounted to EUR 3,919k and consisted solely of cash. The cash acquired with the business combination amounted to EUR 524k. All costs related to the acquisition were recognised in profit and loss.

Dividend payment

On April 10, 2014, the Annual General Meeting adopted the resolution on the appropriation of GRENKELEASING AG's unappropriated surplus for fiscal year 2013 in the amount of EUR 14,790,501.93. The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the unappropriated surplus as follows:

Unappropriated surplus for 2013	EUR 14,790,501.93
Distribution of a dividend of EUR 1.00 per share for a total of 14,700,000 no-par value shares	EUR 14,700,000.00
Profit carryforward (to new account)	EUR 90,501.93

For the first time, shareholders were offered the option to receive the dividend exclusively in cash or as a combination of cash and shares in GRENKELEASING AG (Scrip Dividend). The Scrip Dividend was chosen by 39.4% of the outstanding shares. At a subscription ratio of 106.9:1, a total of 54,199 new shares were issued. The cash payment amounted to EUR 10,644k.

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

In the previous year, the Annual General Meeting adopted the proposal of the Board of Directors and the Supervisory Board, resolving and performing the appropriation of the unappropriated profit for 2012 as follows:

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

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

Related Party Disclosures

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

Under this agreement, Mr. Gilles Christ, Mr. Jörg Eicker, Mr. Mark Kindermann, and Ms. Antje Leminsky each receive entitlements to payments (tranche) for fiscal years 2013, 2014, and 2015 equal to the increase in value of 15,000 shares, 30,000 shares, 4,000 shares, and 15,000 shares, respectively, in GRENKELEASING AG in relation to a defined basic share price. The basic share price is the arithmetic mean of the XETRA closing prices on all trading days from December 1 to December 23 of the respective prior year. The basic share price was EUR 52.01 for the year 2012 and EUR 73.13 for the year 2013. The maximum payment arising from this agreement is limited to EUR 300,000, EUR 600,000, EUR 100,000, and EUR 300,000 for the three tranches. The participants in the programme are required to invest the respective net amount paid plus a personal contribution of 25% of that amount in GRENKELEASING AG shares. The Company is entitled but not required to render the payment, in whole or in part, in shares rather than in cash for one or more tranches. In this case, the personal contribution is not applicable. The shares are subject to a vesting period of four years.

A proportionate amount of EUR 6k has been expensed for the first half of 2014. In fiscal year 2013, an amount totalling EUR 1,288k was paid out under the phantom stock agreement to the persons mentioned above.

Employees

In the interim reporting period, the GRENKE Consolidated Group had an average of 859 employees (previous year as per June 30, 2013: 792), not including the Board of Directors.

Events after the Balance Sheet Date

On July 18, 2014, a new bullet promissory note loan with a volume of EUR 25,000k and a term three years was issued. The interest coupon is 1.43%. An additional bullet promissory note loan with a volume of EUR 10,000k was signed on July 22, 2014. The term is five years and will commence on July 28, 2014. The interest coupon is 1.644%.

Calendar of Events

July 25, 2014 Publication of Financial Report for the 2nd Quarter and the First Half-Year of 2014 October 28, 2014 Publication of Financial Report for the 3rd Quarter and the First Nine Months of 2014

Contact Information

Renate Hauss Corporate Communications

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

Email: investor@grenke.de

Figures in this report are usually presented in thousands and millions of euro. Due to rounding, differences as against the actual number in euro may emerge in individual figures. Naturally, such differences are not of a significant nature.

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

Headquarters GRENKELEASING AG Neuer Markt 2 76532 Baden-Baden Germany

Phone: +49 7221 5007-204 Fax: +49 7221 5007-4218 E-mail: investor@grenke.de

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