Grenke AG — Interim / Quarterly Report 2015

Apr 29, 2015

GRENKELEASING AG Group Financial Report for the 1st Quarter 2015

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
Condensed Interim Consolidated Financial Statements	16
Consolidated Income Statement	16
Consolidated Statement of Comprehensive Income	17
Consolidated Statement of Financial Position	18
Consolidated Statement of Cash Flows	20
Consolidated Statement of Changes in Equity	22
Notes to the Condensed Interim Consolidated Financial Statements	23
Auditor's Review Report	38
Calendar of Events and Contact Information	39

Key Figures GRENKE Group

	Jan. 1, 2015 to		Jan. 1, 2014 to
	Mar. 31, 2015	Change (%)	Mar. 31, 2014	Unit
New business GRENKE Group Leasing	304,798	15.3	264,423	EURk
– of which international	224,649	16.0	193,606	EURk
– of which franchise international	7,100	80.7	3,930	EURk
– of which Germany	73,049	9.2	66,887	EURk
Western Europe (without Germany)*	108,582	20.4	90,212	EURk
Southern Europe*	72,004	15.9	62,133	EURk
Northern / Eastern Europe*	45,925	7.1	42,893	EURk
Other regions*	5,238	127.9	2,298	EURk
New business GRENKE Group Factoring	65,584	50.8	43,488	EURk
– of which Germany	24,606	7.7	22,844	EURk
– of which international	32,481	115.4	15,081	EURk
– of which franchise international	8,497	52.7	5,563	EURk
GRENKE Bank
Deposits	288,852	14.3	252,747	EURk
New business start-up financing	3,955	37.3	2,881	EURk
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	58,858	19.2	49,394	EURk
– of which international	46,903	19.8	39,148	EURk
– of which franchise international	1,352	47.9	914	EURk
– of which Germany	10,603	13.6	9,332	EURk
Western Europe (without Germany)*	21,930	24.4	17,622	EURk
Southern Europe*	16,501	20.3	13,722	EURk
Northern / Eastern Europe*	8,887	8.3	8,208	EURk
Other regions*	937	83.7	510	EURk
Further information leasing business
Number of new contracts	37,321	12.3	33,229	units
Share of IT products in lease portfolio	83	–2.4	85	percent
Share of corporate customers in lease portfolio	100	0.0	100	percent
Mean acquisition value	8.2	2.5	8.0	EURk
Mean term of contract	48	0.0	48	months
Volume of leased assets	3,660	16.8	3,133	EURm
Number of current contracts	442,070	15.6	382,469	units

*Regions: Western Europe (without Germany): Austria, Belgium, France, Luxembourg, the Netherlands, Switzerland Southern Europe: Croatia, Italy, Malta, Portugal, Slovenia, Spain

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

GRENKE Group = GRENKE Consolidated Group including franchise partners

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

Key Figures GRENKE Consolidated Group

	Jan. 1, 2015 to		Jan. 1, 2014 to
	Mar. 31, 2015	Change (%)	Mar. 31, 2014	Unit
Key figures income statement
Net interest income	44,480	22.8	36,226	EURk
Settlement of claims and risk provision	14,939	26.1	11,843	EURk
Profit from insurance business	11,261	19.6	9,416	EURk
Profit from new business	11,812	6.4	11,101	EURk
Gains from disposals (income exceeding the calculated
residual value)	733	108.8	351	EURk
Other operating income	1,011	28.8	785	EURk
Cost of new contracts	8,323	11.2	7,487	EURk
Cost of current contracts	2,476	9.0	2,271	EURk
Project costs and basic distribution costs	9,348	0.7	9,279	EURk
Management costs	6,391	14.7	5,571	EURk
Other costs	2,600	30.5	1,992	EURk
Operating result	25,220	29.8	19,436	EURk
Other interest income (expense)	236	26.2	187	EURk
Income / expenses from fair value measurement	10	–71.4	35	EURk
EBT (earnings before taxes)	24,994	29.6	19,284	EURk
Net profit	18,403	26.9	14,505	EURk
Earnings per share (according to IFRS)	1.25	26.3	0.99	EUR
Further Information
Dividends	1.10	10.0	1.00	EUR
Embedded value, leasing contract portfolio
(incl. equity before taxes)	789	13.5	695	EURm
Embedded value, leasing contract portfolio
(incl. equity after taxes)	721	14.4	630	EURm
Economic result (after taxes)*	25	8.7	23	EURm
Cost / income ratio	53.8	–7.2	58.0	percent
Return on equity (ROE) after taxes	14.2	10.9	12.8	percent
Average number of employees	895	9.1	820	employees
Staff costs	15,033	14.9	13,084	EURk
– of which total remuneration	12,311	14.7	10,731	EURk
– of which fixed remuneration	9,181	12.0	8,200	EURk
– of which variable remuneration	3,130	23.7	2,531	EURk

* Indicator that combines the net profit of one period with the change in the embedded value after tax (the present value of all outstanding lease instalments after costs and risk provisions). To determine the economic result, the method of calculation has been adjusted. The retained earnings are included in both the net profit for the period as well as in the embedded value at the end of the period. Therefore, they are eliminated once in the calculation of the economic result.

GRENKE Group = GRENKE Consolidated Group including franchise partners

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

Letter to Shareholders from the Board of Directors

Dear Shareholders,

Ladies and Gentlemen,

In the first quarter of 2015, we continued with the success we had achieved in the past fiscal year. The new business volume generated by GRENKE Group Leasing exceeded the previous year's level by a pleasing 15 percent and our Factoring segment grew its new business by even 51 percent.

Our home market of Germany and our international markets are both contributing positively to our growth. Even though we are already the market leader in Germany for small-ticket IT leasing, and the competition in this market is very intense, we were still able to expand our new business in the Leasing segment by nine percent in the first quarter. Internationally, we are currently experiencing particular success in Western Europe. Our new business in this region grew 16 percent. In France, which has become our second home market, our business has developed especially well as has our business in both Italy and Switzerland. In Northern/Eastern Europe, new business was seven percent higher. With twice the new business volume of the previous year, the international markets were also the key drivers of growth in our Factoring segment.

We are continuing to manage our margins actively and in a risk-oriented manner. At 19.3 percent in the first quarter, our contribution 2 margin in the Leasing segment considerably exceeded the previous year's level of 18.7 percent. The high contribution margins from the new business generated in the past quarters are accruing to us as those contracts progress. Simultaneously, we see a positive development in our expenses for the settlement of claims and risk provision. This contributed to an 18 percent rise in the income from operating business of the GRENKE Consolidated Group compared to the prior year. We are still profiting from the favourable environment on the capital markets, which offers a large number of refinancing instruments and low interest rates. In addition, due to the first quarter's lower-than-average rise in costs for expansion, our operating result was able to climb by 30 percent and net profit increased 27 percent. This places us fully on track to meet our 2015 annual forecast.

Our growth should continue in the future. During the reporting quarter, we acquired our existing franchise partner in Slovenia and opened new locations in Bielefeld and Malmö, Sweden. In 2015, cell divisions are planned in Germany, France, the United Kingdom and Sweden. We have also planned to enter the market in Singapore with our leasing offers and enter the market in Ireland with our factoring offers. Furthermore, we continue to diversify our broad product range and, in the first quarter, we were successful in attaining the concession from the Federal Ministry of Labour and Social Affairs for the continuation of our microcredit programme "Mikrokreditfonds Deutschland". This programme is aimed at small and young companies with a low credit standing. In the period 2010 to 2014, a total of 18,600 microcredit loans with a total volume of EUR 112 million were issued using budgetary resources and funds from the European Social Fund. GRENKE Bank will start to implement this contract throughout Germany in May 2015, which will underline the Group's mission to support small and medium-sized enterprises.

Baden-Baden, April 2015

Wolfgang Grenke Chairman of the Board of Directors

The GRENKELEASING AG Share

The year 2015 also began well for the international financial markets. Markets were positively influenced by the decision of the European Central Bank to maintain its expansive monetary policy and were also favourably affected by the delay in a turnaround in interest rates in the US. The conflicts and crises that had recently plagued the markets, which included a possible payment default by Greece or even the country's exit from the eurozone as well as armed conflicts in the Middle East and the Ukraine, did little to slow the rising trend of the global financial markets.

Consequently, the German stock market also performed well. The German benchmark index, the DAX, achieved one new record after the other in the first three months of 2015 and reached an all-time high of 12,167 points. On balance, the index rose over 20 percent in the first three months and marked its second best quarter since 2003. The SDAX price index had a similar development (+16 percent) as did the DAXsector Financial Services sector index (+21 percent), which includes the shares of GRENKELEASING AG.

During the 2015 trading year, GRENKELEASING AG's share has seen a marked continuation of its upward trend. After starting the year at a level slightly below EUR 90, the share price had an almost uninterrupted climb in the weeks to follow. Immediately after the publication of the 2014 fiscal year results, the share price shot past the EUR 100 level to reach an alltime high of EUR 111.30 in mid-March. Overall, the share rose a pleasing 18 percent in the first three months of the year.

Interim Management Report

Targets and Strategy

The GRENKE Consolidated Group and its subsidiaries and branches operate worldwide. A franchise model has been established for the development of new regional markets and for expansion through new financing products. GRENKELEASING AG does not hold interests in the legally independent companies of its franchisees. Therefore, this interim management report distinguishes between the GRENKE Consolidated Group, which refers to GRENKELEASING AG and all of its consolidated subsidiaries and structured entities in accordance with IFRS, and the GRENKE Group, which refers to the GRENKE Consolidated Group including its legally independent franchise partners.

We have a straight-forward, valid and value-oriented business model. As one of the leading European companies in our industry, we offer financial services to small and medium-sized enterprises (SMEs). The GRENKE Group began its operations by offering lease financing for smaller IT products (small-ticket IT leasing). As part of our global expansion strategy, we are entering new countries in various continents on a step-by-step basis. We continuously increase our market presence in these countries by opening new locations which gives us the opportunity to generate a high level of growth for a period of several years regardless of the prevailing economic trends. For example, in our home market of Germany, we are seeing increasing success in smaller cities and are uncovering new potential. In the first quarter of 2015, we opened new locations in the cities of Bielefeld, Germany, and Malmö, Sweden. We also acquired the company of our franchise partner in Slovenia in the reporting quarter.

The focus of our growth is in countries where we have a favourable competitive environment and thus an attractive risk-reward profile. We do not seek to avoid risk entirely but to correctly assess risk so that we can achieve adequate margins. This is how we sufficiently protect ourselves from existing and potential risks. Prior to the conclusion of each contract, we rely heavily on our long-proven and continuously refined IT-based model for forecasting losses. This model is also a key driver of our growth; a fact that was evident during the recent financial market and sovereign debt crises. During that time, many providers were forced to scale back their business in small-ticket IT leasing or, in some cases, withdraw from the market altogether because the risk situation became unmanageable. This development presented us with some attractive opportunities to further strengthen and expand our position as a leading provider of efficient services.

In addition to growth through regional expansion, we are also growing through the continuous diversification in our product range and offers for financial solutions. Examples of this diversification include our participation in the "lease guarantee" programme sponsored by German guarantee banks, as well as the various financing, investment, and payment products provided by GRENKE BANK AG (hereinafter also referred to as "GRENKE Bank"). With the concession granted by the Federal Ministry of Labour and Social Affairs for the continuation of the "Mikrokreditfonds Deutschland" throughout Germany and our cooperation with the "WeltSparen" portal as per April 2015, we were able to continue diversifying our product range during the reporting quarter. Whereas the microcredit offer is aimed at providing loans to small and young companies with a low credit standing, the offer in cooperation with the "WeltSparen" portal consists of various fixed-term deposits at attractive conditions. After a simple one-time registration, WeltSparen customers can conveniently take advantage of and manage savings products provided by a variety of banks. In collaboration with a growing number of development banks of individual German states and the federal government, GRENKE Bank also finances business start-ups and provides development funds for business investments that are financed through leasing. Until now, over 13,909 leasing contracts have been concluded as part of these collaborations. The cooperation with Thüringer Aufbaubank was extended successfully and, in the context of a third global loan, a further EUR 5 million was made available to small and medium-sized enterprises and members of selfemployed professions located in Thuringia at favourable conditions. Since entering into this successful collaboration more than three years ago, a total of over 1,300 sponsored lease contracts has been concluded.

In addition, we offer the purchase of lower-volume receivables (factoring) in various European countries as a permanent component of our extensive product range.

Our regional, product, and sector diversification strategically limit our risk. The broad diversification of our portfolios across customers and industries and the low average volumes of our contracts characterise our business. We avoid cluster risks with our sales partners, and we are not dependent on any single manufacturers for our IT products. We structure our factoring business and our banking services in a similar manner. We also rely on the continued expansion of our already broad range of refinancing instruments so that we are always able to take advantage of a variety of options when financing our growth.

Macroeconomic and Sector-Specific Environment

Macroeconomic cycles have relatively little impact on the development of GRENKE Group's new business. This factor allows us to grow profitably in both economically favourable and unfavourable periods. We minimise the impact of the overall development of corporate insolvencies on our loss rate by using our sophisticated method for forecasting losses. Sector trends such as the business policies of banks and financial service providers in the leasing, factoring, and deposit business and the sector's increasing regulatory requirements are of greater importance to our growth. The potential changes in capital market and central bank interest rates are always reflected in our contract terms. Nevertheless, the time gap between the changes in interest rates and the changes in our conditions can have a temporary positive or negative effect on the profitability of our new business. Our broad range of refinancing instruments and bank deposits at GRENKE Bank give us a high degree of flexibility so that we can react to various changes in the markets and expected developments in interest rates.

New Business

We had a good start to the 2015 fiscal year in all of our markets. GRENKE Group Leasing experienced a seamless continuation of the previous year's success and recorded growth in new business volume, i.e., the total of the acquisition costs of newly purchased lease assets, of 15 percent for a total of EUR 304.8 million. After achieving a record level of 70 percent in the first three months of the prior year, the international share of GRENKE Group's new business reached 73 percent in the reporting quarter. This positive development underscores our commitment to having a growing portion of our new business originating from our international markets. We were also very pleased with the development of our home market of Germany. Despite fierce competition in Germany's leasing sector, we achieved nine percent higher new business volume in the first quarter of the reporting year than in the comparable period of the previous year.

We continued to generate strong new business growth in Western Europe (without Germany). In this region, we reached a volume of EUR 108.6 million, or 20 percent growth compared to EUR 90.2 million reported in the first quarter of 2014. Our second core market of France contributed to this pleasing performance with a twelve percent rise in new business of our leasing activities. New business in Southern Europe and Northern/Eastern Europe was still satisfactory but somewhat more subdued. At 16 percent, double-digit growth was still achieved in Southern Europe, growth in Northern/Eastern Europe amounted to eight percent. Other regions generated much stronger growth. After carefully observing the markets of the countries that are still relatively new to us, we have focused our management efforts once again towards growth and saw new business volume more than double (+128 percent) in the first quarter compared to the comparable period of the previous year. Nevertheless, we continue to maintain our strong focus on risk.

In the first three months of the current fiscal year, we received a total of 89,787 lease applications that went on to generate 37,321 new lease contracts. These numbers represent a conversion rate (applications into contracts) of 42 percent. The international share of applications was 73,117, of which 29,505 led to new contracts. Accordingly, the international conversion rate of 40 percent was below the 47 percent rate in the German market. At EUR 8,167, the mean term per lease contract was only slightly higher than the level of EUR 7,958 recorded in the comparable period of the previous year.

The earnings strength of our new business improved further in the first quarter of the current fiscal year. The contribution margin 2 (CM2) of our new business in the Leasing segment – defined as the present value of the operating income of a lease contract less the cost of risk and individual contract costs – grew 19 percent to EUR 58.9 million after EUR 49.4 million in the first three months of the previous year and exceeded our new business growth. The CM2 margin of GRENKE Group Leasing had a corresponding rise to 19.3 percent after 18.7 percent. We continue to profit from our consistent application of our business model, our ongoing market penetration, and from the continual favourable interest rate environment.

Our factoring offers continued to grow strongly. New business volume in this area climbed significantly in the reporting quarter and increased by 51 percent from EUR 43.5 million to EUR 65.6 million. With new business growth of 115 percent, the international markets were the key drivers of this gratifying performance. Growth was stable in Germany and rose eight percent. The income margin on the new business in our international markets was 1.6 percent after 2.0 percent in the comparable period of the previous year. In Germany, the income margin amounted to 2.2 percent after 2.4 percent in the previous year. These margins are based on the average period for a factoring transaction of roughly 28 days internationally (first quarter of 2014: 39 days) and 31 days in Germany (first quarter of 2014: 35 days).

Through GRENKE Bank's collaboration with development banks, our banking business generated 37 percent growth in business start-up financing compared to the first quarter of the previous year. Volumes in the first quarter totalled EUR 4.0 million after EUR 2.9 million in the comparable period of the previous year. As per March 31, 2015, GRENKE Bank's deposit volumes rose by 14 percent in comparison to March 31, 2014 and amounted to EUR 288.9 million. This performance highlights the position GRENKE Bank holds in our refinancing mix. As per the reporting date, GRENKE Bank accounted for a share of 16 percent.

Previous year: Germany 29.8%; Western Europe (without Germany) 33.9%; Southern Europe 20.0%; Northern / Eastern Europe 15.6%; Other regions 0.7%

		(as against the comparable period of 2014)		Growth rates in new business of GRENKE Group Leasing as per March 31, 2015
	30%					127.9
	20%		20.4
	10%	9.2		15.9
	0%				7.1
		Germany	Western Europe (without Germany)	Southern Europe	Northern / Eastern Europe	Other regions
Regions:				Western Europe (without Germany): Austria, Belgium, France, Luxembourg, the Netherlands, Switzerland

Southern Europe: Croatia, Italy, Malta, Portugal, Slovenia, Spain Northern / Eastern Europe: Denmark, Finland, Ireland, Norway, Sweden, UK / the Czech Republic, Hungary, Poland, Romania, Slovakia Other regions: Brazil, Canada, Chile, Dubai, Turkey

Previous year: Germany –3.7%; Western Europe (without Germany) +13.1%; Southern Europe +22.4%; Northern / Eastern Europe +25.4%; Other regions –55.4%

Report on the Results of Operations

Selected information from the consolidated income statement

	Jan. 1, 2015 to	Jan. 1, 2014 to
EURk	Mar. 31, 2015	Mar. 31, 2014
Net interest income	44,480	36,226
Settlement of claims and risk provision	14,939	11,843
Net interest income after settlement of claims and risk provision	29,541	24,383
Profit from insurance business	11,261	9,416
Profit from new business	11,812	11,101
Gains from disposals	733	351
Income from operating business	53,347	45,251
Staff costs	15,033	13,084
Of which total remuneration	12,311	10,731
Of which fixed remuneration	9,181	8,200
Of which variable remuneration	3,130	2,531
Selling and administrative expenses (excluding staff costs)	11,017	10,901
Of which IT project costs	463	468
Earnings before taxes	24,994	19,284
Net profit	18,403	14,505
Earnings per share (basic/diluted, in EUR)	1.25	0.99

The strong, profitable growth of the previous quarters continued successfully into the first three months of the 2015 fiscal year. The key drivers of this performance were the profitable new business of previous quarters and the resulting income accruing successively as the contracts progress and the continued favourable interest rate environment. The impact of favourable interest rates is reflected to a large extent in the interest income of the GRENKE Consolidated Group: higher interest income from the financing business and lower interest expenses for refinancing led to an increase of 23 percent compared to the comparable period of the previous year.

In the reporting quarter, the expenses for the settlement of claims and risk provision grew slightly more than interest income, but were still within the usual fluctuation range for the quarter. The settlement of claims and risk provision, which is usually volatile on a quarterly basis, rose 26 percent compared to the first quarter of 2014. The Consolidated Group's loss rate amounted to 1.65 percent after 1.5 percent in the comparable period of the previous year. Net interest income after settlement of claims and risk provision developed positively with an increase of 21 percent.

We also had a pleasing increase in our profit from insurance business – based on new business growth – which exceeded the previous year's level by a solid 20 percent. We had comparatively weaker development in our profit from new business. This item increased six percent. Taking into account the volatile gains from disposals (+109 percent), the GRENKE Consolidated Group was able to significantly increase its income from operating business by 18 percent compared to the previous year's figure.

Overall expenses had a lower rise: whereas staff costs rose 15 percent as a result of the Company's growth and higher variable compensation linked to economic success in the year 2014, selling and administrative expenses remained essentially at the level of the first quarter of 2014 with an increase of just one percent. Other operating income and expenses continue to be immaterial overall for earnings development both in their absolute amounts and their rates of change.

The operating result reached EUR 25.2 million after recording EUR 19.4 million in the first three months of the previous year. Earnings before taxes developed similarly to the operating result and increased by a pleasing 30 percent. The tax rate increased slightly to 26 percent after 25 percent in the previous year's period, which is within the range of the usual quarterly fluctuations. Accordingly, net profit climbed 27 percent in the reporting quarter to EUR 18.4 million. Earnings per share were EUR 1.25 after EUR 0.99 in the first quarter of 2014.

Segment Development

Business segments

Segment reporting is based on the predominant organisational structure of the GRENKE Consolidated Group. Therefore, operating segments are divided in accordance with the management of the business areas in the Leasing, Banking, and Factoring segments. A regional split of the business activities is provided on a yearly basis as part of GRENKE Consolidated Group's 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 reporting.

Business Development

The Leasing segment continues to represent the most important earnings pillar for the GRENKE Consolidated Group and, therefore, the discussion on the results of operations essentially also applies to this section. Accordingly, the operating segment income of the Leasing segment climbed a pleasing 19 percent from EUR 41.2 million to EUR 49.2 million. The segment result increased from EUR 16.7 million in the comparable period of the previous year to EUR 22.6 million as a result of a below-average rise in expenses. In the Factoring segment, operating segment income in the first three months rose from EUR 0.5 million in the previous year to EUR 0.8 million. The segment result of EUR 0.1 million remained at the level of the first quarter of 2014 due to the still higher staff costs incurred in preparation for future growth. The Banking segment reported results slightly below the previous year's level. The operating segment income declined from EUR 3.5 million in the previous year's period to EUR 3.3 million and the segment result was EUR 2.5 million after EUR 2.6 million in the comparable period of the previous year.

Report on Financial Position and Net Assets

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

EURk	Mar. 31, 2015	Mar. 31, 2014
Current assets	1,235,931	1,179,250
thereof cash and cash equivalents	115,905	88,395
thereof lease receivables	916,257	876,781
Non-current assets	1,809,349	1,745,700
thereof lease receivables	1,641,826	1,579,317
Total assets	3,045,280	2,924,950
Current liabilities	913,937	849,974
thereof financial liabilities	761,873	779,319
Non-current liabilities	1,614,326	1,581,990
thereof financial liabilities	1,563,816	1,531,880
Equity	517,017	492,986
Equity ratio in percent	17.0	16.9
Total liabilities and equity	3,045,280	2,924,950
	Jan. 1, 2015 to	Jan. 1, 2014 to
	Mar. 31, 2015	Mar. 31, 2014
Cash flow from operating activities	49,207	–52,847
Net cash flow from operating activities	46,525	–57,219
Cash flow from investing activities	–8,826	–2,635
Cash flow from financing activities	581	–462
Total cash flow	38,280	–60,316

The GRENKE Consolidated Group's net asset position as per the March 31, 2015 reporting date remained solid. In the course of our steady growth, total assets increased four percent in comparison to the end of the 2014 fiscal year. Equity rose five percent and the Consolidated Group's equity ratio improved slightly from 16.9 percent to 17.0 percent and was above our long-term target of 16 percent.

Current and non-current lease receivables remained the largest single position on the asset side of the balance sheet. As per the reporting date, this item had grown four percent in the first three months of the current fiscal year and comprised a share of total assets of 84 percent (December 31, 2014: 84 percent). The Consolidated Group's cash and cash equivalents as per the reporting date were 31 percent above the level reported at the end of the previous fiscal year and remained at a comfortable level. A bond with a volume of EUR 75.0 million was redeemed as scheduled at the end of the reporing quarter. This bond was replaced by two new bonds in the amount of EUR 24.0 million and EUR 30.0 million. With respect to promissory note loans, we issued a total of three new promissory notes totalling EUR 10.0 million and CHF 18.4 million. Promissory notes amounting to EUR 19.3 million and CHF 0.4 million were repaid. We issued only small volumes of our various other instruments in the course of fine-tuning our funding structure, keeping in line with our goal to avoid excess liquidity when possible. These instruments included a total of five commercial papers that were issued in February and March 2015 for a total volume of EUR 60.0 million. At 70 percent, the level of utilisation of our asset-backed commercial paper programmes at the end of the quarter was equal to the level at the beginning of the quarter. Deposits held by GRENKE Bank, which are also one of the main pillars of our refinancing mix, were slightly reduced in comparison to their level at the end of the 2014 fiscal year.

At EUR 49.2 million, our cash flow from operating activities in the first three months was significantly above the previous year's level of EUR –52.8 million. Based on earnings before taxes of EUR 25.0 million, there were cash outflows originating primarily from changes in lease receivables (EUR –101.7 million) and refinancing by means of the deposit business of GRENKE Bank (EUR –11.5 million). Cash inflows resulted from a change in refinancing liabilities and deferred lease payments amounting to a total of EUR 98.0 million. An additional cash inflow of EUR 36.7 million originated from the area of other assets/liabilities. After taxes and interest paid and received, net cash flow from operating activities amounted to EUR 46.5 million after EUR –57.2 million in the first quarter of the previous year.

Cash flow from investing activities included payments for the purchase of operating and office equipment and intangible assets in the amount of EUR 1.2 million, as well as cash outflows for the acquisition of the franchise company in Slovenia totalling EUR 7.7 million.

Total cash flows as per the end of the first quarter amounted to EUR 38.3 million and also included cash flow from financing activities, which contained the assumption of bank liabilities in the amount of EUR 0.6 million.

Report on Risks, Opportunities, and Forecasts

Opportunities and Risks

The following opportunities and risks report relates to the GRENKE Consolidated Group and the individual segments. The opportunities and risks that were presented in the 2014 annual financial report continue to be relevant. No new risks or risks of significant importance occurred during the reporting period. For the 2015 fiscal year, we continue to believe – as we did in the previous year – that the opportunities for our further development outweigh the risks that are typically associated with our business model.

Measured by the number of incoming applications described in the chapter on new business, the demand for lease financing remains high. This allows us to squarely place our focus on growing our new business and systematically increasing it while at the same time achieving risk-appropriate margins. We will consistently drive ahead our future organic growth by adding new locations, branches, and franchise partners and by penetrating new regional sales markets and by expanding our range of financial services. We are not subject to substantial individual risks due to the broad diversification of our business.

One of the main factors influencing our earnings development is the rise in losses during recessionary periods. Most of the countries where we operate are currently experiencing positive economic development. However, since the number of countries where we operate has grown considerably, some of these countries are experiencing the opposite economic trend. Losses tend to be volatile during the course of the year, and there is roughly a two-year lag based on the underlying business transaction. Assuming and managing these types of risks are a central element of our business model. The management of the GRENKE Consolidated Group is focused on estimating risks as precisely as possible at the time of concluding a contract so that an appropriate margin can be included in the conditions offered. To accomplish this, a comprehensive system of risk identification, quantification, control and management has been implemented. This sophisticated system is continuously developed and is both appropriate and suitable for detecting significant risks at an early stage and to control them. We pay attention not only to individual risks, but especially to potential risk clusters and cross interdependencies.

The risk of rising interest rates remains of key importance. However, there is limited interest rate risk associated with the refinancing of our portfolio of existing lease receivables. Refinancing liabilities are hedged using derivatives to the extent that they carry variable interest rates. However, risks associated with new business can occur from changes in interest rates and spreads. Therefore, the potential time lag it takes to pass on a change in interest rates to customers may have a temporary influence on the profitability of the new business. The European Central Bank, however, has recently reaffirmed its current low interest rate policy. In the US, the Federal Reserve Bank is turning from an extremely expansive monetary policy to a more restrictive policy. US markets are expecting an increase in the key interest rates to occur sometime in the next several quarters. This move could lead to a continuation of the current weakness in the euro. These factors would not have a noticeable impact on the business of the GRENKE Consolidated Group.

Currently, we do not see any significant risks in terms of refinancing. The capital markets continue to be a good source of available liquidity, and with the recent decision by the European Central Bank to purchase government bonds amounting to EUR 60 billion per month, this liquidity has improved even further. Nevertheless, significant political and geostrategic risks exist, especially with respect to the Greek financial budget and the military conflicts in Ukraine and the Middle East. This can lead to substantial short-term pressure on the capital markets. However, history has shown that even in difficult times

the market provides sufficient funds on commercially reasonable terms to issuers with a good reputation. Accordingly, we have always been able to successfully place emissions, including promissory note loans, commercial paper and assetbacked securities in a variety of market situations, tailored to our requirements. In addition, our access to bank deposits via GRENKE Bank offers us an attractive source of refinancing that we use with a high level of flexibility.

Forecasts

The first quarter of the new fiscal year got off to a positive start. Our Leasing segment recorded new business growth of 15 percent and was at the upper end of our forecast range for the full year of 11 to 15 percent. Our Factoring segment significantly exceeded our expectations with a rise of 51 percent versus our projected rise of 20 to 24 percent. The rate of expansion was also far above our long-term growth target for the GRENKE Group of ten percent per year. Furthermore, with net profit growth of 27 percent for the GRENKE Consolidated Group, we are fully on track to achieve our earnings forecast for the year of a net profit in the range of EUR 71 million to EUR 75 million. After increasing our net profit by 38 percent in the previous year and exceeding our raised forecast, we expect net profit in the 2015 fiscal year to grow in a range of 9 to 15 percent.

In the future, we will continue to follow our proven and successful management strategy. We focus on those markets where we can achieve the margins appropriate for the risk assumed and thus secure the profitability of the GRENKE Consolidated Group. This strategy allows us to take specific advantage of the different developments of the various markets in which we operate. We are also undertaking a targeted expansion of our market presence. During the 2015 fiscal year, we plan to carry out further cell division and establish ourselves in new countries.

Condensed Interim Consolidated Financial Statements

Consolidated Income Statement

	Jan. 1, 2015 to	Jan. 1, 2014 to
EURk	Mar. 31, 2015	Mar. 31, 2014
Interest and similar income from financing business	57,252	50,292
Expenses from interest on refinancing and deposit business	12,772	14,066
Net interest income	44,480	36,226
Settlement of claims and risk provision	14,939	11,843
Net interest income after settlement of claims and risk provision	29,541	24,383
Profit from insurance business	11,261	9,416
Profit from new business	11,812	11,101
Gains from disposals	733	351
Income from operating business	53,347	45,251
Staff costs	15,033	13,084
Depreciation and impairment	1,491	1,495
Selling and administrative expenses (not including staff costs)	11,017	10,901
Other operating expenses	1,597	1,120
Other operating income	1,011	785
Operating result	25,220	19,436
Expenses / income from fair value measurement	10	35
Other interest income	99	101
Other interest expenses	335	288
Earnings before taxes	24,994	19,284
Income taxes	6,591	4,779
Net profit	18,403	14,505
Of which, attributable to:
non-controlling interests	0	0
shareholders of GRENKELEASING AG	18,403	14,505
Earnings per share (basic) in EUR	1.25	0.99
Earnings per share (diluted) in EUR	1.25	0.99
Average number of shares outstanding (basic)	14,754,199	14,700,000
Average number of shares outstanding (diluted)	14,754,199	14,700,000

Consolidated Statement of Comprehensive Income

	Jan. 1, 2015 to	Jan. 1, 2014 to
EURk	Mar. 31, 2015	Mar. 31, 2014
Net profit	18,403	14,505
Items that may be reclassified to profit and loss in future periods
Appropriation to / reduction of hedging reserve (before taxes)	–39	21
Income taxes	4	–2
Appropriation to / reduction of hedging reserve (after taxes)	–35	19
Change in currency translation differences (before taxes)	5,663	189
Income taxes	0	0
Change in currency translation differences (after taxes)	5,663	189
	5,628	208
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)	0	0
Income taxes	0	0
Appropriation to / reduction of reserve for actuarial gains and losses (after taxes)	0	0
	0	0
Other comprehensive income	5,628	208
Total comprehensive income	24,031	14,713
Of which, attributable to:
non-controlling interests	0	0
shareholders of GRENKELEASING AG	24,031	14,713

Consolidated Statement of Financial Position

EURk	Mar. 31, 2015	Dec. 31, 2014
Assets
Current assets
Cash and cash equivalents	115,905	88,395
Financial instruments that are assets	306	768
Lease receivables	916,257	876,781
Other current financial assets	64,905	59,816
Trade receivables	4,285	4,793
Lease assets for sale	8,597	8,756
Tax assets	11,129	10,940
Other current assets	114,547	129,001
Total current assets	1,235,931	1,179,250
Non-current assets
Lease receivables	1,641,826	1,579,317
Financial instruments that are assets	0	341
Other non-current financial assets	23,825	30,714
Property, plant, and equipment	41,039	40,411
Goodwill	63,454	57,351
Other intangible assets	17,713	14,264
Deferred tax assets	20,585	21,869
Other non-current assets	907	1,433
Total non-current assets	1,809,349	1,745,700
Total assets	3,045,280	2,924,950

Consolidated Statement of Financial Position

EURk	Mar. 31, 2015	Dec. 31, 2014
Liabilities and equity
Liabilities
Current liabilities
Financial liabilities	761,873	779,319
Liability financial instruments	7,536	3,506
Trade payables	16,664	9,821
Tax liabilities	11,876	7,043
Deferred liabilities	10,283	10,312
Current provisions	1,736	1,887
Other current liabilities	14,456	11,214
Deferred lease payments	89,513	26,872
Total current liabilities	913,937	849,974
Non-current liabilities
Financial liabilities	1,563,816	1,531,880
Liability financial instruments	2,409	1,077
Deferred tax liabilities	44,508	45,692
Pensions	3,564	3,281
Non-current provisions	29	60
Total non-current liabilities	1,614,326	1,581,990
Equity
Share capital	18,859	18,859
Capital reserves	116,491	116,491
Retained earnings	373,792	355,389
Other components of equity	7,875	2,247
Total equity attributable to shareholders of GRENKELEASING AG	517,017	492,986
Non-controlling interests	0	0
Total equity	517,017	492,986
Total liabilities and equity	3,045,280	2,924,950

Consolidated Statement of Cash Flows

		Jan. 1, 2015 to	Jan. 1, 2014 to
EURk		Mar. 31, 2015	Mar. 31, 2014
	Earnings before taxes	24,994	19,284
	Non-cash items contained in earnings and reconciliation to cash flow
	from operating activities
+	Depreciation and impairment	1,491	1,495
– / +	Profit / loss from the disposal of property, plant, and equipment and intangible assets	–6	19
– / +	Net income from non-current financial assets	236	187
– / +	Other non-cash effective income / expenses	5,192	26
+ / –	Increase / decrease in deferred liabilities, provisions, and pensions	69	–437
–	Additions to lease receivables	–313,259	–274,155
+	Payments by lessees	249,000	215,732
+	Disposals / reclassifications of lease receivables at residual carrying amounts	48,345	41,086
–	Interest and similar income from leasing business	–56,118	–50,292
+ / –	Decrease / increase in other receivables from lessees	–5,438	–3,593
+ / –	Currency translation differences	–24,276	–836
=	Change in lease receivables	–101,746	–72,058
+	Addition to liabilities from refinancing	276,286	378,753
–	Payment of annuities to refinancers	–261,198	–87,407
–	Disposal of liabilities from refinancing	–7,204	–316,277
+	Expenses from interest on refinancing and on deposit business	12,772	14,066
+ / –	Currency translation differences	14,713	683
=	Change in refinancing liabilities	35,369	22,511
+ / –	Increase / decrease in liabilities from deposit business	–11,500	–2,908
– / +	Increase / decrease in loans to franchisees	–4,197	–612
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	21,391	12,282
+ / –	Increase / decrease in deferred lease payments	62,641	–7,355
+ / –	Increase / decrease in other liabilities	15,273	7,255
=	Cash flow from operating activities	49,207	–52,847

continued on next page

Consolidated Statement of Cash Flows

	Jan. 1, 2015 to	Jan. 1, 2014 to
EURk	Mar. 31, 2015	Mar. 31, 2014
– / + Income taxes paid / received	–2,446	–4,185
– Interest paid	–335	–288
+ Interest received	99	101
= Net cash flow from operating activities	46,525	–57,219
Payments for the acquisition of property, plant, and equipment and intangible assets –	–1,164	–1,275
– / + Payments / proceeds from acquisition of subsidiaries	–7,709	–1,446
+ Proceeds from the sale of property, plant, and equipment and intangible assets	47	86
= Cash flow from investing activities	–8,826	–2,635
+ / – Borrowing / repayment of bank liabilities	581	–462
+ Proceeds from cash capital increase	0	0
– Dividend payments	0	0
= Cash flow from financing activities	581	–462
Cash funds at beginning of period
Cash in hand and bank balances	88,395	109,770
– Bank liabilities from overdrafts	–10,900	–432
= Cash and cash equivalents at beginning of period	77,495	109,338
+ / – Change due to currency translation	–809	–2
= Cash funds after currency translation	76,686	109,336
Cash funds at end of period
Cash in hand and bank balances	115,905	53,639
– Bank liabilities from overdrafts	–939	–4,619
= Cash and cash equivalents at end of period	114,966	49,020
Change in cash and cash equivalents during the period (= total cash flow)	38,280	–60,316
Net cash flow from operating activities	46,525	–57,219
+ Cash flow from investing activities	–8,826	–2,635
+ Cash flow from financing activities	581	–462
= Total cash flow	38,280	–60,316

Consolidated Statement of Changes in Equity

							Total equity
			Retained				attributable to
			earnings /		Reserve for		shareholders	Non
	Share	Capital	Consolidated	Hedging	actuarial gains /	Currency	of GRENKE	controlling	Total
EURk	capital	reserves	net profit	reserve	losses	translation	LEASING AG	interests	equity
Equity as per
Jan. 1, 2015	18,859	116,491	355,389	–7	–920	3,174	492,986	--	492,986
Total comprehensive
income	--	--	18,403	–35	--	5,663	24,031	--	24,031
Dividend payment
in 2015 for 2014	--	--	--	--	--	--	--	--	--
Equity as per
Mar. 31, 2015	18,859	116,491	373,792	–42	–920	8,837	517,017	--	517,017
Equity as per
Jan. 1, 2014 before
adjustment	18,790	112,757	306,064	–57	–438	2,346	439,462	--	439,462
Effects from retro
active adjustment
pursuant to IFRS 3	--	--	–42	--	--	--	–42	--	–42
Equity as per
Jan. 1, 2014
adjusted	18,790	112,757	306,022	–57	–438	2,346	439,420	--	439,420
Total comprehensive
income	--	--	14,505	19	--	189	14,713	--	14,713
Dividend payment
in 2014 for 2013	--	--	--	--	--	--	--	--	--
Changes in the
scope of consolida
tion	--	--	--	--	--	--	--	–42	–42
Equity as per
Mar. 31, 2014	18,790	112,757	320,527	–38	–438	2,535	454,133	–42	454,091

Notes to the Condensed Interim Consolidated Financial Statements

Accounting Policies

The subject of these condensed interim consolidated financial statements (interim consolidated financial statements) as per March 31, 2015 is the GRENKELEASING AG and its subsidiaries (the Consolidated Group). These interim consolidated financial statements have been prepared in accordance with the applicable IFRS provisions for interim reporting as published by the IASB and adopted by the EU. These interim consolidated financial statements should be read in conjunction with the IFRS consolidated financial statements as per December 31, 2014.

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 condensed interim consolidated financial statements and the interim group management report as per March 31, 2015 have not been audited by the auditor.

Mandatory New Accounting Standards

In December 2013, various standards were amended ("Annual Improvements to IFRS; 2011 – 2013 Cycle"), in the context of the Annual Improvements Project to IFRS (AIP). This relates to IFRS 1 "First-time Adoption of International Financial Reporting Standards", IFRS 3 "Business Combinations", IFRS 13 "Fair Value Measurement" and IAS 40 "Investment Property". The amended standards clarify existing issues. The amended standards have no relevance for the accounting and measurement used for the condensed interim consolidated financial statements of GRENKELEASING AG since the issues either do not apply to the GRENKE Consolidated Group or have already been interpreted accordingly.

IFRIC 21 "Levies" provides guidelines on when to recognise a liability for a levy imposed by governments based on statutory regulations. IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment in accordance with the relevant legislation. Recognition of a liability only occurs when the obligating event occurs. The obligating event can occur progressively over a period of time so that the liability is recognised on a pro rata basis. The issue of IFRIC 21 has no material impact on the interim consolidated financial statements.

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 from terminated lease contracts or contracts in arrears on the basis of the recoverability rate
• Use of estimated residual values at the end of the lease term to determine the present value of lease receivables
• Recognition of lease assets for sale at estimated residual values
• Consolidation of structured entities
• Assessment of the ongoing value of intangible assets and other non-financial assets
• Probability of future tax benefits.

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 depending on the term of the lease, the residual values of additions up until the end of 2006, ranged between 11% and 15% of historical cost. In fiscal year 2007, due to the strengthening of forecasting capabilities for the statistical population, this allocation could be further divided into more detailed maturity groups. For additions from 2007 to 2008, the residual values range between 7.7% and 28.4% of historical cost depending upon the duration of the lease. The residual values for additions from January 1, 2009 to March 31, 2011 changed to values of between 6.5% and 28.4% and for additions from April 1, 2011 to December 31, 2014 to values of between 6.5% and 23.5%. Based on more recent calculations and as a result of the introduction of new term groupings for lease contract with terms exceeding 60 months, the residual values were reduced to values between 3.0% and 21.5% from January 1, 2015.

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

Lease assets for sale are measured on the basis of the average sales proceeds per age group realised in the past fiscal year in relation to the original cost. Lease assets for sale are measured at historical residual values, taking their actual saleability into account. As per the end of the reporting period, the residual values used amounted to between 2.8% and 17.6% of the historical cost (December 31, 2014: between 2.8% and 16.6%). If a sale is considered unlikely due to the condition of the asset, the asset is impaired in profit and loss.

Lease Receivables

EURk	March 31, 2015	March 31, 2014
Changes in lease receivables from current contracts
(performing lease receivables)
Balance at beginning of period	2,354,439	2,043,904
– Non-cash effective change during the period	0	-26
+ Cash effective change during the period	96,307	68,465
Lease receivables (current + non-current) from current contracts at end of period	2,450,746	2,112,343
Changes in lease receivables from terminated contracts / contracts in arrears
(non-performing lease receivables)
Gross receivables at beginning of period	223,257	217,110
– Accumulated valuation allowances at beginning of period	–121,598	–111,145
= Non-performing lease receivables at beginning of period	101,659	105,965
+ Additions to gross receivables during the period	20,501	15,095
– Disposals of gross receivables during the period	15,519	9,696
+ Disposal of accumulated valuation allowances during the period	11,698	6,054
– Addition of accumulated valuation allowances during the period	11,002	7,749
Non-performing lease receivables at end of period	107,337	109,669
Lease receivables (carrying amount, current and non-current) at beginning of period	2,456,098	2,149,869
Lease receivables (carrying amount, current and non-current) at end of period	2,558,083	2,222,012

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	March 31, 2015	Dec. 31, 2014
Financial liabilities
Current financial liabilities
Liabilities from the refinancing of the leasing business	614,333	607,923
ABS / ABCP related liabilities	111,248	170,268
Bonds, revolving facilities, debentures, and private placements	414,964	355,955
Committed development loans	22,386	16,846
Sales of receivables agreements	65,735	64,854
Current liabilities from deposit business	144,762	159,582
Current bank liabilities	2,778	11,814
thereof current account liabilities	939	10,900
Total current financial liabilities	761,873	779,319
Non-current financial liabilities
Liabilities from the refinancing of the leasing business	1,419,720	1,390,761
ABS / ABCP related liabilities	255,549	211,398
Bonds, debentures, and private placements	1,017,190	1,048,486
Committed development loans	56,942	41,709
Sales of receivables agreements	90,039	89,168
Non-current liabilities from deposit business	144,096	140,775
Non-current bank liabilities	0	344
Total non-current financial liabilities	1,563,816	1,531,880
Total financial liabilities	2,325,689	2,311,199

Structured Entities

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

ABS Bond

On February 4, 2010, an ABS bond amounting to EUR 160,000k was placed via the structured entity GOALS FINANCING 2009 LIMITED (GOALS 2009-1). The contracts with GOALS FINANCING 2009 LIMITED allow GRENKELEASING AG to sell further lease receivables on a revolving basis in the three years following the first sale and up to a maximum amount of EUR 300,000k. The interest rate is variable at three-month EURIBOR plus a spread ranging between 1.25% and 3.5% depending on the tranche.

The carrying amount of the total obligation was EUR 14,986k at the end of the reporting period (December 31, 2014: EUR 24,592k).

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. The following is an overview of the programmes as per the end of the reporting period:

ABCP Programme/	Initiating	Refinanceable	Programme volume EURk	Programme volume EURk
Structured Entities	Bank	lease receivables	as per Mar. 31, 2015	as per Dec. 31, 2014
		German and Austrian lease
Opusalpha Purchaser II Limited	HeLaBa	receivables	100,000	100,000
		German and French lease
Kebnekaise Funding Limited	SEB AB	receivables	110,000	110,000
CORAL PURCHASING Limited	DZ BANK	German lease receivables	150,000	150,000
(FCT GK 2)/
Elektra Purchase No. 25 Limited	UniCredit	French lease receivables	100,000	100,000
(FCT GK 3)/
Regency Assets Limited	HSBC	French lease receivables	133,333	133,333
Total			593,333	593,333

The ABCP programmes grant the GRENKE FINANCE Plc. and Grenke Investitionen Verwaltungs KGaA the right to refinance or to sell receivables to the respective programmes for a certain period of time. The cap on the purchase volume is determined by the volume of the programme, which is backed by the organising bank in the form of a liquidity commitment in the corresponding amount.

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

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

As per the reporting date, 70.7% (December 31, 2014: 69.7%) of the refinancing framework of the ABCP programmes was utilised.

Sales of Receivables Agreements

Sales of receivables agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, UBS AG in Switzerland, the Commerzbank subsidiary mBank S.A. in Poland, and DZ BANK AG Poland Branch, as well as with Norddeutsche Landesbank for receivables in the UK. The existing agreements allow for revolving sales of new receivables up to a maximum amount of the following: Stadtsparkasse Baden-Baden Gaggenau EUR 15,000k; Sparkasse Karlsruhe EUR 10,000k; UBS AG CHF 50,000k; mBank S.A. PLN 50,000k; DZ BANK AG Poland Branch PLN 50,000k; Norddeutsche Landesbank GBP 80,000k.

Bonds, Debentures and Private Placements

In the fiscal year-to-date, two bonds were issued: the first bond on March 6, 2015 with a volume of EUR 24,000k and the second bond on March 26, 2015 with a volume of EUR 30,000k. Three new promissory note loans were launched in the first quarter of 2015: On January 29 (CHF 9,600k), March 26 (EUR 10,000k) and on March 30 (CHF 8,800k).

On March 9, 2015, a bond with a volume of EUR 75,000k was redeemed as scheduled. Additionally, promissory note loans totalling EUR 19,333k and CHF 400k were redeemed.

Development Loans

NRW.Bank

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

In the reporting period, new loans totalling EUR 7,500k were issued and loans with a total volume of EUR 1,875k were redeemed.

Thüringer Aufbaubank

On January 16, 2012, September 27, 2013, and April 2, 2015, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with Thüringer Aufbaubank (TAB), the development bank of the state of Thuringia, similar to the agreement with NRW.Bank. The development loans are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500 million and located in Thuringia.

In the reporting period, no new loans were drawn down and no loans were redeemed.

Investitionsbank Berlin

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

In the reporting period, new loans totalling EUR 2,500k were issued and no loans were redeemed.

LfA Förderbank Bayern

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

In the reporting period, new loans totalling EUR 10,000k were issued while no loans were redeemed yet.

KfW

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

L-Bank, State bank of Baden-Württemberg

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

Revolving Credit Facility

In the context of five revolving credit facilities with a total volume of EUR 125,000k available to GRENKE FINANCE Plc., Dublin/Ireland and partially to GRENKELEASING AG, Zurich, Switzerland, the GRENKE Consolidated Group has the possibility to take on short-term funds at any time with a minimum amount of EUR 5,000k (or CHF 1,500k) and a term of usually one month.

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 was prolonged in March 2015 and will run until March 2016. 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 2016, Deutsche Bank until September 2015, and DZ BANK until October 2015.

As per March 31, 2015 the revolving credit facilities were utilised in the amount of EUR 60,000k and CHF 0k (previous year as per December 31, 2014: EUR 30,000k and CHF 4,500k).

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.

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

As per March 31, 2015, these credit lines were utilised in an amount of EUR 8,000k and CHF 0k (previous year as per December 31, 2014: EUR 25,000k and CHF 3,500k). The amount of utilisation is reported in current liabilities from the refinancing of the leasing business.

Commercial Papers

The GRENKE Consolidated Group has the option of issuing commercial paper of up to a total volume of EUR 250,000k with a term of between 1 and 364 days. In the reporting period, a total amount of EUR 26,000k was redeemed as scheduled and an amount of EUR 60,000k was issued. As per March 31, 2015, the commercial paper programme was utilised in an amount of EUR 60,000k (previous year as per December 31, 2014: EUR 26,000k).

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. The fair values are assigned to different levels in the valuation hierarchy based on the input parameters used in the valuation methods:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: measurement procedures in which all input factors having a significant effect on the recognition of fair value are directly or indirectly observable in the market;
• 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 valuation hierarchy, then the measurement at fair value is completely assigned to that level in the valuation hierarchy which corresponds to the lowest input factor that is material for the overall measurement.

The GRENKE Consolidated Group recognises reclassifications between the different levels of the valuation 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 valuation hierarchy.

Fair Value of Financial Instruments

Fair value of derivative financial instruments

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

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	Mar. 31, 2015	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2014
Financial Assets
Interest rate derivatives without hedging
relationship	122	122	297	297
Forward exchange contracts	184	184	812	812
Total	306	306	1,109	1,109
Financial Liabilities
Interest rate derivatives with hedging
relationship	49	49	9	9
Interest rate derivatives without hedging
relationship	129	129	315	315
Forward exchange contracts	9,767	9,766	4,259	4,259
Total	9,945	9,945	4,583	4,583

Fair value of primary financial instruments

The following table presents the carrying amounts and fair values of financial assets and financial liabilities by category of financial instruments which are not measured at fair value. The table does not contain information on the fair value of financial assets and financial liabilities if the carrying amount represents an appropriate approximation to the fair value. This includes the following line items of the statement of financial position: cash and cash equivalents, trade receivables, non-performing lease receivables, and trade payables. All primary financial instruments are assigned to level 2 of the valuation hierarchy except for exchange-listed bonds which are included in refinancing liabilities and which are assigned to level 1 of the valuation hierarchy. As per the reporting date, the carrying amount of exchange-listed bonds was EUR 985,000k (December 31, 2014: EUR 1,006,000k) and their fair value amounted to EUR 1,012,730k (December 31, 2014: EUR 1,032,929k). All financial assets are allocated to the loans and receivables measurement category except for performing lease receivables. All financial liabilities are allocated to the other financial liabilities measurement category.

	Fair value	Carrying amount	Fair value	Carrying amount
EURk	Mar. 31, 2015	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2014
Financial assets
Lease receivables (performing)	2,714,917	2,450,746	2,612,422	2,354,439
Other financial assets	91,343	88,730	92,667	90,530
Financial liabilities
Refinancing liabilities	2,062,991	2,034,053	2,027,409	1,998,648
Liabilities from deposit business	294,676	288,858	300,547	300,357
Bank liabilities	2,778	2,778	12,155	12,158

Measurement Methods and Input Factors Used

The following table shows the applied measurement methods, the input factors used and the assumptions made for measuring fair value:

Type and level	Measurement method	Input parameters
Fair value hierarchy Level 1
Exchange-listed bonds	n/a	Quoted market price as per the reporting date
Fair value hierarchy Level 2
Other financial assets	Discounted present value of estimated	Available interest rates at comparable conditions and
	future cash flows	residual terms using the counterparty's credit risk
Financial liabilities (liabilities from the	Discounted present value of estimated	Available interest rates at comparable conditions and
refinancing of the leasing business,	future cash flows	residual terms using the own credit risk (Debt Value
promissory note loans, bank liabilities)		Adjustment [DVA])
Forward exchange contracts	Market-to-market	Available interest rates at the end of the term in the
	Discounted present value of estimated	traded currencies using the own counterparty risk
	future cash flows	(Debt Value Adjustment [DVA]) or the counterparty's
		credit risk (CVA [Credit Value Adjustment]) derived
		from available credit default swap (CDS) quotes
Interest rate derivatives	Net present value model	Available interest rates at comparable conditions and
	Discounted present value of estimated	residual terms using the own counterparty risk DVA
	future cash flows	(Debt Value Adjustment) or the counterparty's credit
		risk CVA (Credit Value Adjustment) derived from
		available credit default swap (CDS) quotes

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. 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 – Mar. 31, 2014	Jan. 1 – Mar. 31, 2014
IT project costs	463	468

Income Taxes

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

EURk	01.01. – 31.03.2015	01.01. – 31.03.2014
Income taxes
Current tax expense	7,192	7,822
Deferred taxes	–601	–3,043
Income tax expense	6,591	4,779

Consolidated Group Segment Reporting

EURk		Leasing segment	Banking segment		Factoring segment		Total segments				Consolidation effects Consolidated Group
January to March	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
Operating segment income	49,196	41,234	3,305	3,505	846	512	53,347	45,251	0	0	53,347	45,251
Segment result	22,605	16,740	2,520	2,583	95	113	25,220	19,436	0	0	25,220	19,436
Reconciliation to
consolidated financial
statements
Operating result											25,220	19,436
Other financial income											–226	–152
Taxes											6,591	4,779
Net profit according to
consolidated income
statement											18,403	14,505
As per March 31
(prev. year: Dec. 31, 2014)
Segment assets	2,930,307	2,810,407	501,602	476,522	27,884	25,904	3,459,793	3,312,833	–446,227	–420,692	3,013,566	2,892,141
Reconciliation to
consolidated financial
statements
Tax assets											31,714	32,809
Total assets according to
consolidated statement of
financial position											3,045,280	2,924,950

Business Segments

GRENKE Consolidated Group's reporting on the development of its segments is aligned along its prevailing organisational structure. Thus, 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 enterprises. 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 of GRENKEFACTORING GmbH and GRENKEFACTORING AG, Switzerland, which was acquired in the previous year. Both entities perform traditional factoring services focussing on small-ticket factoring.

Segment Data

The accounting policies employed to gather segment information are the same as those used for the consolidated financial statements as per December 31, 2014. Intragroup transactions are performed at standard market prices.

The Board of Directors of GRENKELEASING AG is responsible for assessing the performance of the GRENKE Consolidated Group. In addition to new business volume (Leasing and Factoring segments) and contribution margin 2 for the Leasing segment, the key performance indicators are defined as operating segment income, segment result before other net financial income, and staff costs. Other net financial income as well as income tax expenses/income represent the main components of the consolidated income statement that are not allocated to individual segments.

The segment information was calculated as follows:

• Operating segment income consists of net interest income after settlement of claims and risk provision, profit from insurance business, profit from new business, and profit from disposals.
• The segment result is calculated as the operating result before taxes.
• Segment assets comprise of the operating assets excluding tax assets.

Acquisitions

Acquisitions in Fiscal Year 2014

For information regarding business combinations in the previous year, please refer to the notes to the Company's consolidated financial statements as per December 31, 2014.

The purchase price allocation for the acquisition of GRENKELOCATION SARL, Munsbach/Luxembourg (formerly GCLUX Location S.à.r.l.), which was acquired in the previous year, were finalised in the first quarter of 2015. No changes were made to the preliminary fair values of the assets and liabilities.

Acquisitions in Fiscal Year 2015

GC Leasing d.o.o., Ljubljana /Slovenia

By way of a purchase agreement dated March 5, 2015, GRENKELEASING AG acquired 100% of the voting shares in GC Leasing d.o.o., Ljubljana /Slovenia and control was assumed on March 31, 2015.

Prior to the acquisition, GC Leasing d.o.o., Ljubljana /Slovenia 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 3,575k, lease receivables EUR 241k, other assets EUR 655k, deferred tax assets EUR 62k, deferred tax liabilities EUR 660k and other liabilities EUR 999k. 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 412k, an amount of EUR 171k is impaired and is not expected to be recovered. Other liabilities include intra-group liabilities and consist of a risk allocation (EUR 745k) and a current liability (EUR 73k). 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 5,106k 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. The company's contribution to consolidated net income, including the effects from purchase price allocation, has been negligible due to the short period of time that the company has been part of the GRENKE Consolidated Group. As a result of the first-time consolidation as per the reporting date, there was no impact on the consolidated net income. The total consideration paid for the business combination amounted to EUR 7,980k and consisted solely of cash. The cash acquired with the business combination amounted to EUR 271k. All costs related to the acquisition were recognised in profit and loss.

Dividend Payment

The resolution on the appropriation of GRENKELEASING AG's unappropriated surplus for fiscal year 2014 in the amount of EUR 16,530,911.12 will be adopted by the Annual General Meeting on May 12, 2015. The Board of Directors and the Supervisory Board will propose a dividend of EUR 1.10 per share. Following the dividend distribution, the remaining amount should be carried forward to new account.

Unappropriated surplus for 2014	EUR 16,530,911.12
Distribution of a dividend of EUR 1.10 per share for a total of 14,754,199 no-par value shares	EUR 16,229,618.90
Profit carryforward (to new account)	EUR 301,292.22

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 2013 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

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

Related Party Disclosures

In the 2013 fiscal year, 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 for the years 2012 and 2013 was EUR 52.01 and EUR 73.13, respectively. The maximum payment amount arising from this agreement is limited to EUR 300,000, EUR 600,000, EUR 100,000, and EUR 300,000 for the three tranches. This maximum payment applies to the respective agreement in its entirety, i.e., the total payment for all three tranches may not exceed the maximum payment amount. If an annual tranche exceeds the maximum total entitlement and the agreement is still in force for several more years (tranches), then no further claims can be acquired in the future. The participants in the programme are required to invest the respective net amount paid plus a personal contribution of 25% of that amount in GRENKELEASING AG shares. The Company is entitled but not required to render the payment, in whole or in part, in shares rather than in cash for one or more tranches. In this case, the personal contribution is not applicable. The shares are subject to a vesting period of four years.

As a result of this limitation, the maximum payment amount for the entire Board of Directors has already been reached as per December 31, 2014. For the year 2014, an amount totalling EUR 12k was paid out under the phantom stock agreement in the first quarter of 2015. Further payments will not be made due to the maximum utilisation of this programme.

Contingent Liabilities

GRENKELEASING AG, as guarantor for individual franchise companies, has granted financial guarantees of EUR 41.4 million (December 31, 2014: EUR 43.9 million).

Employees

In the interim reporting period, the GRENKE Consolidated Group had an average of 895 employees (previous year as per March 31, 2014: 821), not including the Board of Directors. A further 26 employees (previous year: 31) are in training.

Events after the Balance Sheet Date

On April 27, 2015, GRENKE FINANCE Plc., Dublin/Ireland issued a bond with a volume of EUR 30 million and a term of 5 years under the debt issuance programme.

Auditor's Review Report

To GRENKELEASING AG, Baden-Baden

We have reviewed the interim condensed consolidated financial statements, comprising the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash-flows, the statement of changes in equity and notes to the interim condensed consolidated financial statemens, and the interim group management report of GRENKELEASING AG, Baden-Baden for the period from January 1 to March 31, 2015, which are part of the quarterly financial report pursuant to Sec. 37x (3) WpHG ["Wertpapierhandelsgesetz": German Securities Trading Act]. The preparation of the interim condensed consolidated financial statements in accordance with IFRSs [International Financial Reporting Standards] on interim financial reporting as adopted by the EU and of the group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the Company's management. Our responsibility is to issue a report on the interim condensed consolidated financial statements and the interim group management report based on our review.

We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports. A review is limited primarily to making inquiries of company personnel and applying analytical procedures and thus does not provide the assurance that we would obtain from an audit of financial statements. In accordance with our engagement, we have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU or that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports.

Stuttgart, April 28, 2015

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Frey von Wirth German Public Auditor German Public Auditor

Calendar of Events

May 12, 2015	2015 Annual General Meeting, Baden-Baden
July 28, 2015	Publication of Financial Report for the 2nd Quarter and Half-Year of 2015
October 27, 2015	Publication of Financial Report for the 3rd Quarter and the First Nine Months of 2015

Contact Information

Renate Hauss Corporate Communications

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

Email: investor@grenke.de

Figures in this annual financial report are usually presented in thousands and millions of euro. Differences in individual figures compared to the actual numbers may arise due to rounding. 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-group.com