Grenke AG — Interim / Quarterly Report 2016

Apr 28, 2016

2016

GRENKELEASING AG GROUP

QUARTERLY STATEMENT FOR THE 1ST QUARTER 2016

KEY FIGURES GRENKE GROUP

	Jan. 1, 2016 to	Change	Jan. 1, 2015 to
	Mar. 31, 2016	(%)	Mar. 31, 2015	Unit
New business GRENKE Group Leasing	363,711	19.3	304,798	EURk
of which international	274,459	21.5	225,901	EURk
of which franchise international	7,388	26.3	5,848	EURk
of which Germany	81,864	12.1	73,049	EURk
Western Europe (without Germany)*	124,307	14.5	108,582	EURk
Southern Europe*	99,200	37.8	72,004	EURk
Northern / Eastern Europe*	53,465	16.4	45,925	EURk
Other regions*	4,875	–6.9	5,238	EURk
New business GRENKE Group Factoring (incl. collection services)	76,270	16.3	65,584	EURk
of which Germany	33,243	35.1	24,606	EURk
of which international	32,242	–0.7	32,481	EURk
of which franchise international	10,785	26.9	8,497	EURk
GRENKE Bank
Deposits	363,688	25.9	288,852	EURk
New business start-up financing (incl. microcredit business)	5,045	27.6	3,955	EURk
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	61,858	5.1	58,858	EURk
of which international	49,457	4.8	47,208	EURk
of which franchise international	1,326	26.5	1,048	EURk
of which Germany	11,075	4.5	10,603	EURk
Western Europe (without Germany)*	21,920	–0.1	21,930	EURk
Southern Europe*	18,301	10.9	16,501	EURk
Northern / Eastern Europe*	9,657	8.7	8,887	EURk
Other regions*	905	–3.4	937	EURk
Further information leasing business
Number of new contracts	43,228	15.8	37,321	units
Share of IT products in lease portfolio	80	–3.6	83	percent
Share of corporate customers in lease portfolio	100	0.0	100	percent
Mean acquisition value	8.4	2.4	8.2	EURk
Mean term of contract	47	–2.1	48	months
Volume of leased assets	4,305	17.6	3,660	EURm
Number of current contracts	508,976	15.1	442,070	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, Singapore, 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, 2016 to	Change	Jan. 1, 2015 to
	Mar. 31, 2016	(%)	Mar. 31, 2015	Unit
Key figures income statement
Net interest income	51,753	16.4	44,480	EURk
Settlement of claims and risk provision	15,672	4.9	14,939	EURk
Profit from insurance business	13,207	17.3	11,261	EURk
Profit from new business	14,309	21.1	11,812	EURk
Gains (+) / losses (–) from disposals	–23	–103.1	733	EURk
Other operating income	1,115	–10.9	1,251	EURk
Cost of new contracts	9,575	15.0	8,323	EURk
Cost of current contracts	2,824	14.1	2,476	EURk
Project costs and basic distribution costs	10,578	7.3	9,854	EURk
Management costs	8,646	35.3	6,391	EURk
Other costs	2,561	–1.5	2,600	EURk
Operating result	30,505	22.2	24,954	EURk
Other interest result (income (–) / expense (+))	80	–366.7	–30	EURk
Income / expenses from fair value measurement	0	–100.0	10	EURk
EBT (earnings before taxes)	30,425	21.7	24,994	EURk
Net profit	22,525	22.4	18,403	EURk
Earnings per share (according to IFRS)	1.50	20.0	1.25	EUR
Further Information
Dividends	1.50	36.4	1.10	EUR
Embedded value, leasing contract portfolio (incl. equity before taxes)	917	16.2	789	EURm
Embedded value, leasing contract portfolio (incl. equity after taxes)	840	16.5	721	EURm
Economic result (after taxes)*	20	–20.0	25	EURm
Cost / income ratio	52.9	–1.7	53.8	percent
Return on equity (ROE) after taxes	14.8	4.2	14.2	percent
Average number of employees	975	8.9	895	employees
Staff costs	17,079	13.6	15,033	EURk
– of which total remuneration	14,071	14.3	12,311	EURk
– of which fixed remuneration	10,361	12.9	9,181	EURk
– of which variable remuneration	3,710	18.5	3,130	EURk

* Indicator that combines the total comprehensive income of one period with the change in the embedded value (excluding equity) after tax (the present value of all outstanding lease instalments after costs and risk provisions).

GRENKE Group = GRENKE Consolidated Group including franchise partners

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

4

CONTENT

KEY FIGURES	2
LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS	5
GRENKE AT A GLANCE	6
INTERIM GROUP MANAGEMENT REPORT	7
Business Development	7
Selected Information from the Condensed Interim Consolidated Financial Statements	9
Report on Results of Operations	10
Report on Financial Position and Net Assets	11
Report on Risks, Opportunities and Forecasts	12
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS	13
Consolidated Income Statement	13
Consolidated Statement of Comprehensive Income	14
Consolidated Statement of Financial Position	15
Consolidated Statement of Cash Flows	17
Consolidated Statement of Changes in Equity	19
Group Segment Reporting	20
ADDITIONAL INFORMATION ON THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS	21
CALENDAR OF EVENTS AND CONTACT INFORMATION	26

LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS

Dear Shareholders, Ladies and Gentlemen,

The first quarter gave us a strong start to the 2016 fiscal year thanks to an uninterrupted trend in growth. GRENKE Group's new business increased in line with our expectations and gained 19 percent to reach EUR 445.0 million.

We strengthened our international business through our cell division strategy by adding a new location in Finland. We also acquired the business of our former franchisee in Turkey. The international share of new business in the reporting quarter was 73.0 percent following 72.9 percent in the previous year's comparable quarter. GRENKE Group Leasing's new business rose 19 percent overall in the first quarter. We were particularly successful in our core market of France (+19 percent) and in the important market of Italy (+44 percent). We were also pleased with the new business development in GRENKE Group Factoring, which exceeded the previous year's level by 16 percent. We expect growth momentum to increase in this segment as the year progresses. The contribution margin 2 (CM2) of the Leasing segment's new business narrowed slightly to 17.0 percent compared to 19.3 percent in the previous year's comparable period. An isolated comparison to the fourth quarter of 2015 shows a steady trend in the margin with the decline resulting mainly from the prior year's adjustment in the calculation method for forecasting subsequent income and expenses and the sales activities targeted at achieving high growth in individual markets.

Earnings continued to be very satisfactory supported by the below-average rise in expenses for the settlement of claims and risk provision and the continued favourable refinancing environment, among others. On the whole, we achieved a 22 percent rise in the GRENKE Consolidated Group's net profit in the first quarter of 2016. We maintain our guidance for the current fiscal year of net profit in the range of EUR 93 to 98 million.

We had solid share price performance in the reporting quarter. After starting the year at EUR 184.60, the shares climbed higher and reached a record high of EUR 189.75 at the end of March and proceeded to end the first three months about one percent higher. As per March 31, the shares had completed a twelve-month rise of an impressive 74 percent. After last year's offer to shareholders to receive their dividends in the form of additional GRENKE shares, we have decided to renew this offer in the current year. This gives shareholders another opportunity to strengthen their commitment to GRENKE and support the Company's clear growth strategy.

Wolfgang Grenke Chairman of the Board of Directors

975 17

March 31, 2015: 895 employees December 31, 2015: 17.0 percent

EQUITY .2% RATIO

INTERIM GROUP MANAGEMENT REPORT

Business Development

GRENKE Group's new business

Other regions: Brazil, Canada, Chile, Dubai, Singapore, Turkey

GRENKE Consolidated Group's Business Performance

In the first quarter of the current fiscal year, we acquired the business of our former franchisee in Turkey in order to densify our network. The payment of the purchase price for this acquisition will occur in the second quarter of 2016. Furthermore, we opened a new location in Oulu (Finland) as part of our cell division strategy. We are not only expanding geographically but also in terms of our product range. In the reporting quarter, we expanded our existing cooperation with Thüringer Aufbaubank and added a global loan of EUR 7.5 million. Together with a growing number of federal government and state development banks, GRENKE Bank finances business start-ups and provides development loans to small- and medium-sized companies and members of self-employed professions for business investments financed through leasing. Until now, over 16,529 leasing contracts have been concluded as part of these collaborations.

To refinance our new business, we continue to rely on a broad range of refinancing instruments from three categories: senior unsecured, asset based and the option to obtain bank deposits from GRENKE Bank. Because of our excellent reputation on the capital markets, all of our new issues in the reporting quarter were successfully placed in a short period of time. The key transactions include a bond issue with a volume of EUR 125 million, a coupon of 1.5 percent and a maturity of five years and one month.

Selected Information from the Condensed Interim Consolidated Financial Statements

Consolidated Income Statement

	Jan. 1, 2016 to		Jan. 1, 2015
EURk	Mar. 31, 2016	Change (%)	to Mar. 31, 2015
Net interest income	51,753	16.4	44,480
Settlement of claims and risk provision	15,672	4.9	14,939
Net interest income after settlement of claims and risk provision	36,081	22.1	29,541
Profit from insurance business	13,207	17.3	11,261
Profit from new business	14,309	21.1	11,812
Gains (+) / losses (–) from disposals	–23	–103.1	733
Income from operating business	63,574	19.2	53,347
Operating result	30,505	22.2	24,954
Earnings before taxes	30,289	21.2	24,994
Net profit	22,525	22.4	18,403
Earnings per share (basic/diluted, in EUR)	1.50	20.0	1.25

Consolidated Statement of Financial Position

EURk	Mar. 31, 2016	Change (%)	Dec. 31, 2015
Current assets	1,426,804	–0.1	1,427,593
of which cash and cash equivalents	142,956	–23.3	186,453
of which lease receivables	1,039,245	3.5	1,004,360
Non-current assets	2,111,051	3.1	2,046,937
of which lease receivables	1,905,275	3.0	1,849,812
Equity	609,765	3.2	590,654
Equity ratio (in percent)	17.2	1.2	17.0
Current liabilities	1,088,202	–9.2	1,199,096
of which financial liabilities	961,059	–9.5	1,061,744
Non-current liabilities	1,839,888	9.2	1,684,780
of which financial liabilities	1,782,030	9.3	1,630,600
Total assets	3,537,855	1.8	3,474,530

Report on the Results of Operations

The positive trend in income seen in previous quarters continued into the first quarter of the 2016 fiscal year. The operating result compared to the same period in the previous year grew a pleasing 22 percent.

A continued rise in interest and similar income from financing business and a renewed decline in expenses from interest on refinancing led to a 16 percent rise in net interest income over the comparable previous year's period. Expenses for the settlement of claims and risk provision increased just five percent thanks to our active and risk-oriented margin management and allowed us to achieve a welcome 22 percent rise in net interest income after settlement of claims and risk provision. The Consolidated Group's loss rate amounted to 1.5 percent compared to 1.65 percent in the previous year's reporting period.

The profit from insurance business and the profit from new business developed positively with the former rising 17 percent based on new business growth and the latter increasing 21 percent over the previous year's level. Taking into account the volatile quarterly result from disposals, which was slightly negative in the reporting period (losses from disposals), the Consolidated Group was able to significantly increase its income from operating business by 19 percent.

Staff costs increased at a slower pace than income and grew 14 percent to EUR 17.1 million (previous year: EUR 15.0 million) as a result of the higher year-on-year number of employees and a higher level of variable compensation following the extremely successful 2015 fiscal year. Another material expense item in the income statement was selling and administrative expenses, which increased 16 percent to EUR 13.4 million (previous year: EUR 11.5 million). This rise was spurred mainly by the growth-related rise in costs for operations, sales and administration as well as IT project costs that have increased considerably in the course of the systems' continued expansion. In contrast, consulting and auditing costs slightly declined.

Of lesser importance for the GRENKE Consolidated Group's net profit development, depreciation and amortisation of non-current assets increased 45 percent year-on-year assets.

Earnings before taxes increased 21 percent. Based on a slightly lower tax rate, net profit in the reporting quarter grew 22 percent generating earnings per share of EUR 1.50 compared to EUR 1.25 in the previous year.

Segment Development

Business Segments

Segment reporting is based on the prevailing organisational structure of the GRENKE Consolidated Group. Therefore, the formation of the operating segments is based on the management of the business areas in the Leasing, Banking and Factoring segments. Transactions between operating segments are eliminated (for more information, please see "The Consolidated Group's Segment Reporting"). 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 all three operating segments.

Business Development

The Leasing segment continues to represent the most important earnings pillar for the GRENKE Consolidated Group. Therefore, the discussion on income development essentially also applies to this section. Operating segment income increased 21 percent from EUR 49.2 million to EUR 59.4 million. With the disproportionate rise in expenses, the segment result climbed 25 percent and reached a level of EUR 28.2 million compared to EUR 22.6 million in the previous year's period. The operating segment income in the Factoring segment increased by seven percent and resulted in a slightly negative segment result of EUR –0.1 million compared to EUR 0.1 million in the prior year. At EUR 3.3 million, our Banking segment's operating income remained at the level of the first three months of the previous year. The segment result declined by seven percent to EUR 2.3 million compared to EUR 2.5 million in the previous year.

Report on Financial Position and Net Assets

As per the March 31, 2016 balance sheet date, the total assets of the GRENKE Consolidated Group increased two percent in comparison to the end of the previous fiscal year. With an equity ratio of 17.2 percent compared to 17.0 percent as per December 31, 2015, we continue to possess a solid equity base that exceeds our long-term target of 16 percent.

The current and non-current lease receivables in the first three months increased three percent. As the largest single position on the balance sheet as per the reporting date, they had a share in total assets of 83 percent, which was largely unchanged from the level at the end of the previous fiscal year. We reduced cash and cash equivalents as per the balance sheet date to EUR 143.0 million compared to EUR 186.5 million at the end of the 2015 fiscal year under our strategy to employee liquid funds for operational purposes, that is, to finance our growth and not to invest them at low interest rates. We continue to have a sufficient level of liquidity.

On the liability side of the balance sheet, the Consolidated Group's liabilities (current and non-current) were two percent higher as per the reporting date. Whereas financial liabilities, most of which are liabilities from refinancing, increased by a two percent, deferred lease payments as per the reporting date declined by 30 percent.

In the course of fine-tuning our refinancing structure, we placed two new bonds in the first quarter of 2016 with volumes of EUR 26 million and EUR 125 million. One bond with a volume of EUR 100 million was redeemed on schedule. In the short-term segment, we also had a total of nine commercial paper issues with a total volume of EUR 108 million and maturities ranging from two to four months. We took increased advantage of the third key pillar of our refinancing mix – deposits at GRENKE Bank – in the reporting quarter as part of our refinancing management. As per the reporting date, deposits amounted to EUR 363.7 million after their level of EUR 349.3 million at the end of the previous fiscal year.

Cash flow from operating activities totalled EUR –38.9 million in the first quarter. Earnings before taxes of EUR 30.3 million were offset by an outflow of funds in the amount of EUR 83.4 million for the purchase of lease receivables. In addition, a cash outflow of EUR 47.3 million resulted from an increase in other assets, deferred lease payments and other liabilities. Cash inflows of EUR 61.4 million as the single largest item resulted mainly from the sum of a change in refinancing liabilities, the deposit business and loans to franchisees. After interest and taxes paid and received, the net cash flow from operating activities amounted to EUR –40.8 million compared to EUR 46.5 million in the previous year's period.

Cash flow from investing activities included mainly payments for the purchase of office and operating equipment and intangible assets in the amount of EUR 1.8 million, as well as cash of EUR 1.2 million acquired in the purchase of a previous franchise company in Turkey. The net cash flow from investing activities amounted to EUR –0.6 million compared to EUR –8.8 million in the previous year's period.

Total cash flows in the first three months came to EUR –42.9 million compared to EUR 38.3 million in the previous year's comparable period and included cash flows from financing activities consisting of a slight increase in bank liabilities and the interest payment on hybrid capital (EUR 1.7 million).

Report on Risks, Opportunities and Forecasts

Opportunities and Risks

There has been no material change to the opportunities and risks in the reporting period compared to those presented in our 2015 Annual Financial Report. We believe the opportunities for our further development significantly outweigh the customary risks inherent in our business model.

Forecast

The current fiscal year has started off on a strong note. The new business in our Leasing segment grew 19 percent in the first quarter and was fully in line with our expectations. GRENKE Group Factoring's new business developed somewhat slower in the reporting quarter than the rate projected for the full year. New business increased 16 percent year-on-year and is currently below the targeted range of 30 to 35 percent. We are confident, however, that new business growth will accelerate in the further course of the year and meet our target. The 22 percent year-on-year increase in our net profit in the reporting quarter places us squarely on track to reach our full-year net profit target of EUR 93 to 98 million. In the previous year, we generated a net profit of EUR 80.8 million.

CONDENSED INTERIM CONSOLI-DATED FINANCIAL STATEMENTS

Consolidated Income Statement

	Jan. 1, 2016 to	Jan. 1, 2015 to
EURk	Mar. 31, 2016	Mar. 31, 2015
Interest and similar income from financing business	63,137	57,252
Expenses from interest on refinancing and deposit business	11,384	12,772
Net interest income	51,753	44,480
Settlement of claims and risk provision	15,672	14,939
Net interest income after settlement of claims and risk provision	36,081	29,541
Profit from insurance business	13,207	11,261
Profit from new business	14,309	11,812
Gains(+) / losses (–) from disposals	–23	733
Income from operating business	63,574	53,347
Staff costs	17,079	15,033
Depreciation and impairment	2,158	1,491
Selling and administrative expenses (not including staff costs)	13,405	11,523
Other operating expenses	1,542	1,597
Other operating income	1,115	1,251
Operating result	30,505	24,954
Expenses / income from fair value measurement	–136	0
Result from investments accounted for using the equity method	0	10
Other interest income	68	108
Other interest expenses	148	78
Earnings before taxes	30,289	24,994
Income taxes	7,764	6,591
Net profit	22,525	18,403
Of which, attributable to:
Hybrid capital holders of GRENKELEASING AG	431	0
Shareholders of GRENKELEASING AG	22,094	18,403
Earnings per share (basic) in EUR	1.50	1.25
Earnings per share (diluted) in EUR	1.50	1.25
Average number of shares outstanding (basic)	14,754,199	14,754,199
Average number of shares outstanding (diluted)	14,754,199	14,754,199

Consolidated Statement of Comprehensive Income

	Jan. 1, 2016 to	Jan. 1, 2015 to
EURk	Mar. 31, 2016	Mar. 31, 2015
Net profit	22,525	18,403
Items that may be reclassified to profit and loss in future periods
Appropriation to / reduction of hedging reserve (before taxes)	–48	–39
Income taxes	8	4
Appropriation to / reduction of hedging reserve (after taxes)	–40	–35
Change in currency translation differences (before taxes)	–1,995	5,663
Income taxes	0	0
Change in currency translation differences (after taxes)	–1,995	5,663
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
Other comprehensive income	–2,035	5,628
Total comprehensive income	20,490	24,031
Of which, attributable to:
Hybrid capital holders of GRENKELEASING AG	431	0
Shareholders of GRENKELEASING AG	20,059	24,031

Consolidated Statement of Financial Position

EURk	Mar. 31, 2016	Dec. 31, 2015
Assets
Current assets
Cash and cash equivalents	142,956	186,453
Financial instruments that are assets	3,567	250
Lease receivables	1,039,245	1,004,360
Other current financial assets	52,216	63,828
Trade receivables	4,659	4,272
Lease assets for sale	7,537	7,073
Tax assets	17,107	17,569
Other current assets	159,517	143,788
Total current assets	1,426,804	1,427,593
Non-current assets
Lease receivables	1,905,275	1,849,812
Financial instruments that are assets	167	27
Other non-current financial assets	46,563	47,195
Investments accounted for using the equity method	5,233	5,368
Property, plant, and equipment	46,937	46,351
Goodwill	65,916	62,161
Other intangible assets	18,975	17,171
Deferred tax assets	20,700	17,649
Other non-current assets	1,285	1,203
Total non-current assets	2,111,051	2,046,937
Total assets	3,537,855	3,474,530

Consolidated Statement of Financial Position

EURk	Mar. 31, 2016	Dec. 31, 2015
Liabilities and equity
Liabilities
Current liabilities
Financial liabilities	961,059	1,061,744
Liability financial instruments	520	2,124
Trade payables	16,092	10,489
Tax liabilities	15,258	10,107
Deferred liabilities	11,975	12,666
Current provisions	1,733	1,764
Other current liabilities	23,185	17,294
Deferred lease payments	58,380	82,908
Total current liabilities	1,088,202	1,199,096
Non-current liabilities
Financial liabilities	1,782,030	1,630,600
Liability financial instruments	1,331	1,316
Deferred tax liabilities	52,217	48,619
Pensions	4,310	4,245
Total non-current liabilities	1,839,888	1,684,780
Equity
Share capital	18,859	18,859
Capital reserves	116,491	116,491
Retained earnings	440,980	419,068
Other components of equity	3,430	5,465
Total equity attributable to shareholders of GRENKELEASING AG	579,760	559,883
Additional equity components *	30,005	30,771
Total equity	609,765	590,654
Total liabilities and equity	3,537,855	3,474,530

* Including an AT1 bond (hybrid capital), which represents an unsecured and subordinated bond of GRENKELEASING AG that is reported as equity under IFRS.

Consolidated Statement of Cash Flows

	EURk	Jan. 1, 2016 to Mar. 31, 2016	Jan. 1, 2015 to Mar. 31, 2015
	Earnings before taxes	30,289	24,994
	Non-cash items contained in earnings and reconciliation to cash flow from operating activities
+	Depreciation and impairment	2,158	1,491
– / +	Profit / loss from the disposal of property, plant, and equipment and intangible assets	27	–6
– / +	Net income from non-current financial assets	80	–30
– / +	Other non-cash effective income / expenses	–1,517	5,192
+ / –	Increase / decrease in deferred liabilities, provisions, and pensions	–658	69
–	Additions to lease receivables	–372,951	–313,259
+	Payments by lessees	286,396	249,000
+	Disposals / reclassifications of lease receivables at residual carrying amounts	51,789	48,345
–	Interest and similar income from leasing business	–61,486	–56,118
+ / –	Decrease / increase in other receivables from lessees	–1,766	–5,438
+ / –	Currency translation differences	14,630	–24,276
=	Change in lease receivables	–83,388	–101,746
+	Addition to liabilities from refinancing	469,588	276,286
–	Payment of annuities to refinancers	–428,566	–261,198
–	Disposal of liabilities from refinancing	–7,882	–7,204
+	Expenses from interest on refinancing and on deposit business	11,384	12,772
+ / –	Currency translation differences	–7,661	14,713
=	Change in refinancing liabilities	36,863	35,369
+ / –	Increase / decrease in liabilities from deposit business	14,383	–11,500
– / +	Increase / decrease in loans to franchisees	10,202	–4,197
	Changes in other assets / liabilities
– / +	Increase / decrease in other assets	–18,056	21,391
+ / –	Increase / decrease in deferred lease payments	–24,604	62,641
+ / –	Increase / decrease in other liabilities	–4,640	15,273
=	Cash flow from operating activities	–38,861	48,941

Continued on next page

Consolidated Statement of Cash Flows

	EURk	Jan. 1, 2016 to Mar. 31, 2016	Jan. 1, 2015 to Mar. 31, 2015
– / +	Income taxes paid / received	–1,886	–2,446
–	Interest paid	–148	–78
+	Interest received	68	108
=	Net cash flow from operating activities	–40,827	46,525
–	Payments for the acquisition of property, plant, and equipment and intangible assets	–1,828	–1,164
– / +	Payments / proceeds from acquisition of subsidiaries and associated entities	1,215	–7,709
+	Proceeds from the sale of property, plant, and equipment and intangible assets	15	47
=	Cash flow from investing activities	–598	–8,826
+ / –	Borrowing / repayment of bank liabilities	251	581
+	Proceeds from cash capital increase	0	0
+	Net proceeds from hybrid capital	0	0
–	Interest payment on hybrid capital	–1,711	0
–	Dividend payments	0	0
=	Cash flow from financing activities	–1,460	581
	Cash funds at beginning of period
	Cash in hand and bank balances	186,453	88,395
–	Bank liabilities from overdrafts	–875	–10,900
=	Cash and cash equivalents at beginning of period	185,578	77,495
+ / –	Change due to currency translation	140	–809
=	Cash funds after currency translation	185,718	76,686
	Cash funds at end of period
	Cash in hand and bank balances	142,956	115,905
–	Bank liabilities from overdrafts	–123	–939
=	Cash and cash equivalents at end of period	142,833	114,966
	Change in cash and cash equivalents during the period (= total cash flow)	–42,885	38,280
	Net cash flow from operating activities	–40,827	46,525
+	Cash flow from investing activities	–598	–8,826
+	Cash flow from financing activities	–1,460	581
=	Total cash flow	–42,885	38,280

Consolidated Statement of Changes in Equity

EURk	Share capital	Capital reserves	Retained earnings / Consoli dated net profit	Hedging reserve	Reserve for actuarial gains / losses	Currency translation	Total equity attributable to shareholders of GRENKE LEASING AG	Additional equity components	Total equity
Equity as per
Jan. 1, 2016	18,859	116,491	419,068	–25	–1,405	6,895	559,883	30,771	590,654
Total comprehensive income	--	--	22,094	–40	--	–1,995	20,059	431	20,490
Dividend payment in 2016 for 2015	--	--	--	--	--	--	--	--	--
Cost of issuance of hybrid capital	--	--	–182	--	--	--	–182	--	–182
Interest payment on hybrid capital (net)	--	--	--	--	--	--	--	–1,197	–1,197
Equity as per Mar. 31, 2016	18,859	116,491	440,980	–65	–1,405	4,900	579,760	30,005	609,765
Equity as per
Jan. 1, 2015	18,859	116,491	355,389	–7	–920	3,174	492,986	0	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

Group Segment Reporting

EURk	Leasing segment				Banking segment Factoring segment		Total segments		Cons. effects			Cons. Group
January to March	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Operating segment income	59,359	49,196	3,312	3,305	903	846	63,574	53,347	0	0	63,574	53,347
Segment result	28,222	22,605	2,343	2,520	–60	95	30,505	25,220	0	0	30,505	25,220
Reconciliation to consolidated financial statements
Operating result											30,505	25,220
Result from investments accounted for using the equity method											–136	0
Other financial income											–80	–226
Taxes											7,764	6,591
Net profit according to consolidated income statement											22,525	18,403
As per March 31 (prev. year: Dec. 31)
Segment assets	3,442,899 3,383,835		614,205	600,052	29,514			31,248 4,086,618 4,015,135 –586,570 –575,823 3,500,048 3,439,312
Reconciliation to consolidated financial statements Tax assets											37,807	35,218
Total assets according to consolidated statement of financial position											3,537,855 3,474,530
Segment liabilities	2,893,014 2,852,323		531,407	525,705	22,764			22,945 3,447,185 3,400,973 –586,570 –575,823 2,860,615 2,825,150
Reconciliation to consolidated financial statements
Tax liabilities											67,475	58,726
Liabilities according to consolidated statement of financial position											2,928,090 2,883,876

Leasing

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.

Banking

The Banking segment comprises the activities of GRENKE BANK AG, which regards itself as a financing partner particularly to small- and medium-sized companies (SMEs). 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 via its internet presence. The bank's business is focused primarily on German customers.

Factoring

The Factoring segment contains traditional factoring services focused on small-ticket factoring. Within non-recourse factoring, the segment offers both notification factoring, where the debtor is notified of the assignment of receivables, and non-notification factoring, where the debtor is not notified accordingly. The segment also offers collection services (recourse factoring) where the customer continues to bear the credit risk.

ADDITIONAL INFORMATION ON THE CONDENSED INTERIM CONSOLI-DATED FINANCIAL STATEMENTS

Accounting Policies

This quarterly statement of GRENKELEASING AG was prepared according to International Financial Reporting Standards (IFRS), as applicable in the EU. The accounting policies applied for the annual financial statements as per December 31, 2015, continue to apply. An audit review was not conducted.

Lease Receivables

EURk	Mar. 31, 2016	Mar. 31, 2015
Changes in lease receivables from current contracts
(performing lease receivables)
Balance at beginning of period	2,758,660	2,354,439
+ Change during the period	86,381	96,307
Lease receivables (current + non-current) from current contracts
at end of period	2,845,041	2,450,746
Changes in lease receivables from terminated contracts/contracts in arrears (non-performing lease receivables)
Gross receivables at beginning of period	221,847	223,257
+ Additions to gross receivables during the period	21,103	20,501
– Disposals of gross receivables during the period	11,026	15,519
Gross receivables at end of period	231,924	228,239
Impairment at beginning of period	126,335	121,598
+ Additions of accumulated impairment during the period*	20,003	11,002
– Disposals of accumulated impairment during the period	13,893	11,698
Impairments at end of period	132,445	120,902
Carrying amount of non-performing lease receivables at beginning of period	95,512	101,659
Carrying amount of non-performing lease receivables at end of period	99,479	107,337
Lease receivables (carrying amount, current and non-current)
at beginning of period	2,854,172	2,456,098
Lease receivables (carrying amount, current and non-current)
at end of period	2,944,520	2,558,083

* Item contains exchange rate differences in the amount of EUR 427k (previous year: EUR 924k).

Financial Liabilities

EURk	Mar. 31, 2016	Dec. 31, 2015
Financial liabilities
Current financial liabilities
Asset-Based	163,603	192,971
Senior Unsecured	553,294	637,002
Committed development loans	32,646	28,814
Liabilities from deposit business	210,057	200,997
Other bank liabilities	1,459	1,960
thereof current account liabilities	123	875
Total current financial liabilities	961,059	1,061,744
Non-current financial liabilities
Asset Based	342,974	341,503
Senior Unsecured	1,217,821	1,075,495
Committed development loans	67,604	65,295
Liabilities from deposit business	153,631	148,307
Total non-current financial liabilities	1,782,030	1,630,600
Total financial liabilities	2,743,089	2,692,344

Asset Based Financial Liabilities

Structured Entities

The following consolidated structured entities were in place as per the reporting date: 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). All structured entities have been initiated as asset-backed commercial paper (ABCP) programmes.

EURk	Mar. 31, 2016	Dec. 31, 2015
Programme volume	593,333	593,333
Utilisation	431,122	442,373
Carrying amount	365,722	377,331
thereof current	91,169	108,861
thereof non-current	274,553	268,470

Sales of Receivables Agreements

	Mar. 31, 2016	Dec. 31, 2015
Programme volume in local currency
EURk	25,000	25,000
GBPk	80,000	80,000
PLNk	60,000	60,000
CHFk	50,000	50,000
Programme volume in EURk	185,901	194,218
Utilisation in EURk	140,855	157,143
Carrying amount in EURk	140,855	157,143
thereof current	72,434	84,110
thereof non-current	68,421	73,033

Senior Unsecured Financial Liabilities

The following table provides an overview of the carrying amounts of the individual categories of refinancing instruments:

EURk	Mar. 31, 2016	Dec. 31, 2015
Bonds	1,094,640	1,044,164
thereof current	134,397	234,135
thereof non-current	960,243	810,029
Promissory notes	357,388	361,515
thereof current	104,271	99,684
thereof non-current	253,117	261,831
Commercial paper	158,000	196,000
Revolving credit facility	115,547	65,557
thereof current	111,084	61,922
thereof non-current	4,463	3,635
Money market trading	34,494	34,892
Accrued interest	11,048	10,369

The following table provides an overview of the refinancing volumes of the individual instruments:

	Mar. 31, 2016	Dec. 31, 2015
Bonds EURk	1,500,000	1,500,000
Commercial paper EURk	250,000	250,000
Revolving credit facility EURk	125,000	125,000
Revolving credit facility PLNk	25,000	25,000
Money market trading EURk	35,000	35,000

Bonds

In the fiscal year to date, two new bonds were issued with volumes of EUR 26,000k and EUR 125,000k. One bond with a volume of EUR 100,000k was redeemed on schedule.

Promissory Notes

In the fiscal year to date, one new promissory note has been issued with volumes of EUR 10,000k. Promissory notes with volumes of EUR 11,833k and CHF 2,000k were redeemed on schedule.

Committed Development Loans

The following table shows the carrying amounts of the utilised development loans at various development banks.

EURk	Mar. 31, 2016	Dec. 31, 2015
NRW.Bank	32,232	28,518
Thüringer Aufbaubank	10,011	7,520
Investitionsbank Berlin	5,179	5,473
LfA Förderbank Bayern	18,332	20,787
Investitionsbank des Landes Brandenburg	2,154	2,163
KfW	29,862	27,365
Landeskreditbank Baden-Württemberg – Förderbank	2,361	2,170
Accrued interest	119	113

In the reporting period, new loans were issued totalling EUR 13,726k and loans with a total volume of EUR 7,602k were redeemed on schedule.

Acquisitions in Fiscal Year 2016

GC Leasing Ofis Donanimlari Kiralama Limitd Sirketi., Istanbul/Turkey

On March 31, 2016, GRENKELEASING AG gained control of the interests in GC Leasing Ofis Donanimlari Kiralama Limitd Sirketi., Istanbul/ Turkey, and therefore included the entity in the consolidated financial statements as per the reporting date for the first time. Prior to the acquisition, GC Leasing Ofis Donanimlari Kiralama Limitd Sirketi., Istanbul/ Turkey, 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.

The purchase price allocation is preliminary because not all relevant information was available as per the date of firsttime consolidation. The preliminary purchase price allocation resulted in goodwill of EUR 3,933k. The first-time consolidation did not affect the Consolidated Group's net profit as per the reporting date. The total consideration for the business combination is expected to amount to EUR 1,700k and will consist solely of cash. The amount has not yet been recognised. Total cash of EUR 1,215k was acquired in the context of the first-time consolidation.

Contingent Liabilities

GRENKELEASING AG, as guarantor for individual franchise companies, provided financial guarantees of EUR 58.1 million (previous year as per December 31, 2015: EUR 42.2 million), which represents the maximum default risk. The actual utilisation of the guarantees by the guarantee recipients was lower and amounted to EUR 35.0 million (previous year as per December 31, 2015: EUR 31.6 million).

CALENDAR OF EVENTS

May 3, 2016 2016 Annual General Meeting, Baden-Baden July 28, 2016 Financial Report for the 2nd Quarter and Half-Year of 2016 October 28, 2016 Quarterly Statement for the 3rd Quarter of 2016

CONTACT INFORMATION

Renate Hauss Corporate Communications

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

Email: investor@grenke.de

Figures in this quarterly statement are generally 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. For better readability, gender-specific differentiation was avoided and the terms used refer equally to both genders.

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

GRENKELEASING AG Headquarters 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