GRENKELEASING AG Group Financial Report 2012

Transcription

1 GRENKELEASING AG Group Financial Report 2012

2 GRENKE Consolidated Group Key Figures GRENKE Group Jan. 1, 2012 to Dec. 31, 2012 Change (%) Jan. 1, 2011 to Dec. 31, 2011 Unit New business GRENKE Group including franchise partners, factoring, and business start-up financing 1,027, ,020 EURk of which Germany 352, ,695 EURk of which international* 598, ,292 EURk of which franchise international* 76, ,033 EURk Leasing segment 898, ,133 EURk of which Germany 265, ,090 EURk of which international* 598, ,292 EURk of which franchise international* 34, ,751 EURk Factoring 122, ,381 EURk of which Germany 81, ,099 EURk of which franchise international (CH) 41, ,282 EURk Contribution margin 2 on new business GRENKE Group including franchise partners and factoring 159, ,748 EURk of which Germany 37, ,109 EURk of which international* 112, ,324 EURk of which franchise international* 9, ,315 EURk Leasing business 156, ,023 EURk of which Germany 35, ,877 EURk of which international* 112, ,324 EURk of which franchise international* 8, ,822 EURk Further information Leasing segment Number of new contracts 107, ,176 units Share of IT products in lease portfolio percent Share of corporate customers in lease portfolio percent Mean acquisition value EURk Mean term of contract months Volume of leased assets 2, ,209 EURm Number of current contracts 324, ,051 units GRENKE BANK Deposits 217, ,127 EURk Business start-up financing volume 6, ,506 EURk *In the third quarter of 2012, we have acquired our franchise partners in Spain (Madrid/Málaga), Romania, and Portugal. Their new business volume is no longer included in the franchise partner s volume. The figures were adjusted for the full year. GRENKE Group = GRENKE Consolidated Group including franchise partners GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and special-purpose entities according to IFRS

3 GRENKE Consolidated Group Key Figures GRENKE Consolidated Group Jan. 1, 2012 to Dec. 31, 2012 Change (%) Jan. 1, 2011 to Dec. 31, 2011 Unit Key figures income statement Net interest income 111, ,691 EURk Settlement of claims and risk provision 43, ,415 EURk Profit from insurance business 30, ,703 EURk Profit from new business 35, ,021 EURk Profit from disposals (income exceeding the calculated residual value) 3, ,653 EURk Other operating income 3, ,755 EURk Costs of new contracts 24, ,660 EURk Costs of current contracts 7, ,646 EURk Project costs and basic distribution costs 23, ,812 EURk Management costs 18, ,069 EURk Other costs 7, ,498 EURk Operating result 59, ,723 EURk Other interest income (expense) EURk Income / expenses from fair value measurement EURk EBT (earnings before taxes) 59, ,432 EURk Net profit 42, ,251 EURk Earnings per share (according to IFRS) EUR Further information Dividend EUR Embedded value, leasing contract portfolio (incl. equity before taxes) EURm Embedded value, leasing contract portfolio (incl. equity after taxes) EURm Cost / income ratio percent Return on equity (ROE) after taxes percent Average number of employees employees Staff costs 42, ,695 EURk of which total remuneration 35, ,545 EURk of which fixed remuneration 26, ,515 EURk of which variable remuneration 8, ,030 EURk GRENKE Group = GRENKE Consolidated Group including franchise partners GRENKE Consolidated Group = GRENKELEASING AG and all consolidated subsidiaries and special-purpose entities according to IFRS

4 New business in 2012 exceeds EUR 1 billion. Growth in new markets outside of Europe. Expansion of product range.

5 GRENKE Consolidated Group 1 Content Letter to Shareholders from the Board of Directors 2 The Board of Directors of GRENKELEASING AG 4 Report of the Supervisory Board 5 The Supervisory Board of GRENKELEASING AG 10 Corporate Governance Report; Remuneration Report (Part of the Management Report) 11 Our Shares and Investor Relations 18 Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group 22 Company Profile 22 Economic Conditions and Sector Trends 27 Key Events in the Fiscal Year 28 Report on the Results of Operations 29 Report on the Financial Position and Net Assets 33 Overall Statement on the Financial Situation of the GRENKE Consolidated Group 35 Research and Development 35 Non-Financial Performance Indicators 35 Employees 38 Matters Concerning the Board of Directors 39 Remuneration Report 39 Share Trading and Shares Held by the Governing Bodies 39 Dependence Report 40 Explanatory Report on the Disclosures Pursuant to Section 289 (4) and Section 315 (4) HGB 40 Corporate Governance Statement Pursuant to Section 289a HGB 42 Events Subsequent to the End of the Fiscal Year 42 Report on Forecasts and Outlook (Including Report on Opportunities and Risks) 42 Management Report of GRENKELEASING AG (Condensed Version in Accordance with HGB) 57 Consolidated Financial Statements for Fiscal Year Consolidated Income Statement 64 Consolidated Statement of Comprehensive Income 65 Consolidated Statement of Financial Position 66 Consolidated Statement of Cash Flows 68 Consolidated Statement of Changes in Equity 70 Notes to the Consolidated Financial Statements for Fiscal Year Audit Opinion 147 Declaration in Accordance with Section 297 (2) Sentence 4 and Section 315 (1) Sentence 6 HGB 148 Calendar of Events and Contact Information 149

6 2 GRENKE Consolidated Group Letter to Shareholders from the Board of Directors Dear Shareholders, Dear Ladies and Gentlemen, In fiscal year 2012, the GRENKE Group achieved more than one billion euros in new business for the first time. With an increase of around 20 percent to EUR 1,027.6 million we have not only exceeded our forecast of around 15 percent but we have also realised almost double our mid-term growth target of at least ten percent growth per year. The contribution margin 2 in the Leasing segment increased to 17.4 percent after 16.0 percent in the previous year. With increasing income, a relatively unchanged loss rate, and moderate growth in expenses, the net profit of the GRENKE Consolidated Group reached EUR 42.5 million and thus occurred within the forecasted range of between EUR 41 and 44 million. After we were able to achieve a leap in net profit of 41 percent in fiscal year 2011, we were able to accomplish a further rise of eight percent in the year under review. This underlines once again our understanding of ourselves as a growth company and not only with respect to new business, but also of course in terms of our profit. In the past ten years, we have built an extensive European market position and are now reaping the fruits of these efforts. This lays the foundation for future growth through gains in market share. In the meantime however, we have also begun a new chapter and have defined new themes for the growth phase ahead. Expansion beyond Europe is on the GRENKE Group s agenda. Since the beginning of 2012, we have been active with our classic small-ticket IT leasing in Brazil the most populated country in South America and the sixth largest economy in the world. The first year has been very promising. In the fiscal year 2013 which has just begun, we will expand into Dubai and Canada. This not only means an expansion into new countries, but also the challenge of forging into a new culture with different societal, economic, and legal systems. Moreover, we have greatly expanded our current finance solution offers. Since 2010, we have been offering business start-up financing via GRENKE BANK AG and have had the opportunity to cooperate with development banks. In fiscal year 2012, we quadrupled the volume of business start-up financing to EUR 6.1 million. The collaboration with the development banks of the German states is being met with great interest so that the number of partner banks with whom we cooperate in this area has successively increased. In 2013, we will again expand our circle of partners.

7 GRENKE Consolidated Group 3 In addition, we are further expanding our factoring business. With an increase in new business of 41 percent to EUR million in fiscal year 2012, we have nearly tripled the annual amount of newly purchased volume versus Since the fourth quarter of 2012, we have been also providing this offer in Hungary and the preparations have already been completed for an upcoming entry into the United Kingdom and Austrian markets in GRENKE BANK AG is also growing strongly in the area of investment products. Here, beyond our commercial customers with whom we concentrate on financing, we also address private customers with interesting investment opportunities. This represents an important element in the diversification of our refinancing sources. As a result, we can use both institutional as well as private funds for our various refinancing instruments. In fiscal year 2012, we have expanded the volume of bank deposits by 40 percent to EUR million. This was equivalent to 20 percent of our refinancing requirements. We want to increase the share to around one third with great caution and on a sustainable basis. During the coming expansion phase we will abide by the proven cornerstones of our business model: Standardisation, comprehensive IT-supported automation, quickness, as well as the efficient measuring of risk and risk diversification. We do not favour avoidance of risk but rather the accurate assessment of risks and guided along with an attractive risk-opportunity profile. This is how we are able to continue to thrive and enter new markets successfully, even in overall difficult economic periods. In 2013, we are expecting GRENKE Group s new business to grow between 13 and 16 percent while maintaining profitability and riskadequate CM2 margins. GRENKE Consolidated Group s net profit should reach a range of EUR 44 to 48 million. Based on the favourable developments of the reporting year and the continued positive outlook for the future, the Supervisory Board and the Board of Directors are proposing an increase in the dividend distribution for the third consecutive time to the Annual General Meeting of GRENKELEASING AG. The dividend should increase to EUR 0.80 per share following EUR 0.75 per share in the previous year. We would like to thank our employees for their commitment and flexibility and their enthusiasm in always pursing new paths with us. We would like to invite our shareholders to join us again in the next period of growth for the GRENKE Group and to participate in the upcoming increase in value. Wolfgang Grenke Chairman of the Board of Directors

8 4 GRENKE Consolidated Group The Board of Directors of GRENKELEASING AG

9 GRENKE Consolidated Group 5 Report of the Supervisory Board In fiscal year 2012, the Supervisory Board of GRENKELEASING AG performed the activities required of it by law and under the Articles of Association. It collaborated with the Board of Directors on an on-going basis, advised it regularly and monitored its business management. The Board of Directors and the Supervisory Board closely coordinated with one another on the strategic orientation of the GRENKE Consolidated Group. The Supervisory Board was involved by the Board of Directors in all decisions of fundamental significance to the Company. The Supervisory Board also received information on all key issues regularly, comprehensively, and in a timely manner, both orally and in writing, including on the basis of submissions by the Board of Directors and minutes of the meetings. In particular, the Board of Directors provided the Supervisory Board with detailed information on all relevant issues and topics relating to the strategic development of the GRENKE Consolidated Group, its economic situation, the current course of business including the business of GRENKE BANK AG and the management of the sales organisation, as well as keeping it up to date with current events, the status of corporate planning, and the personnel situation. The reports from the Board of Directors were critically reviewed by the Supervisory Board with regard to their plausibility. The subject and scope of reporting by the Board of Directors met the requirements of the Supervisory Board in full. As far as required by law and the Articles of Association, the Supervisory Board closely examined, discussed, and then voted on the reports and resolution proposals of the Board of Directors. The Board of Directors submitted matters requiring approval in a timely manner. In the year under review, the Supervisory Board monitored the Consolidated Group-wide risk management system, the internal control systems in the areas of internal audit, accounting, and compliance including compliance with the German Banking Act (KWG) and the operating risk control system. To this end, it received reports from the Board of Directors on the risk management system of the GRENKE Consolidated Group, its on-going development, and on the current risk situation. The GRENKE Consolidated Group s liquidity and refinancing situation was a regular issue at the meetings of the Supervisory Board. As a result of its diversified sources of refinancing and targeted liquidity management, the GRENKE Consolidated Group s refinancing was again ensured at all times in fiscal year The key issues at the meetings of the Supervisory Board also included regular discussion on the current business performance, risk strategy and its implementation, the monitoring of the international entities particularly with regard to risks in connection with possible

10 6 GRENKE Consolidated Group consequences of the European sovereign debt crisis as well as evaluating the efficiency of the Supervisory Board's work. Additional issues included the adoption of the annual financial statements of GRENKELEASING AG, and approval of the consolidated financial statements as per December 31, The Supervisory Board also discussed issues relating to the Rules of Procedure of the Supervisory Board and of the Board of Directors and the schedule of responsibilities for the Board of Directors when there were impending changes in the Board of Directors. In the reporting year, the Supervisory Board again dealt in depth with the German Corporate Governance Code. In this context, it assessed and determined that the requirements were fulfilled for Supervisory Board members of companies that are subject to the KWG. On April 21, 2012, together with the Board of Directors, the Supervisory Board issued the GRENKELEASING AG Declaration of Conformity in accordance with Section 161 of the German Stock Corporation Act on the recommendation of the Government Commission on the German Corporate Governance Code in the version dated May 26, In this financial report for fiscal year 2012, the Board of Directors report on corporate governance at GRENKELEASING AG is also on behalf of the Supervisory Board. All members of the Supervisory Board have personally pledged to comply with the principles of corporate governance that are applicable in the reporting year. The Supervisory Board met five times in fiscal year 2012: February 3, April 21, May 9, July 22, and November 12. At its meeting on February 3, 2012, the Supervisory Board reviewed in detail, discussed, and adopted or approved the annual financial statements of GRENKELEASING AG as per December 31, 2011, the management report for fiscal year 2011, the consolidated financial statements as per December 31, 2011, and the Group management report for fiscal year It also reviewed the dependence report and adopted the resolution on the proposal for the appropriation of the 2011 unappropriated surplus. The auditor responsible, Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main, took part in the discussions and reported on the key results of its prior audit. Other topics of this meeting included discussion and approval of the report of the Supervisory Board in the 2011 annual financial report, the budget planning for fiscal year 2012, and the resolution on broadcasting the Board of Directors speech and the general debate at the 2012 Annual General Meeting on the internet in accordance with Section 13 of the Company's Articles of Association. On April 21, 2012, the Supervisory Board dealt in depth with the acquisition of the franchise companies in Portugal, Spain, and Romania and approved these acquisitions. It also adopted the resolution on the Declaration of Conformity by the Board of Directors and Supervisory Board with the German Corporate Governance Code. The audit assignment was issued by the Supervisory Board on March 13, The Board of Directors also informed the Chairman of the Supervisory Board of transactions of particular significance between the meetings of the Supervisory Board. As the Chairman of the Supervisory Board, I kept myself informed of the current business development including the banking business and key transactions at all times. Further issues discussed in personal talks with the Board of Directors included the preparation of refinancing decisions, compliance issues, internal controlling, risk management and its on-going development, and personnel issues. In accordance with the Articles of Association, the Supervisory Board of GRENKELEASING AG is comprised of six members. There were no changes in the composition of the Supervisory Board in the reporting year. The members of the Supervisory Board in fiscal year 2012 were:

11 GRENKE Consolidated Group 7 Prof. Dr. Ernst-Moritz Lipp, Chairman Mr. Gerhard E. Witt, Deputy Chairman Mr. Dieter Münch Mr. Florian Schulte Mr. Erwin Staudt Prof. Dr. Thilo Wörn In accordance with its Rules of Procedure, the Supervisory Board formed two committees to allow it to perform its duties efficiently: the Audit Committee and the Personnel Committee (Executive Committee). The chairmen of the committees reported in detail on their committees' work to the Supervisory Board as a whole at its meetings. The Audit Committee consists of the following three members: Mr. Gerhard E. Witt, Chairman Prof. Dr. Ernst-Moritz Lipp Mr. Dieter Münch The Audit Committee primarily deals with the issues of internal and external accounting, the corporate planning policies, corporate risk management, and compliance. Its members have specialised knowledge in these areas. The Audit Committee commissioned the auditor, determined the audit focus, and concluded the fee agreement with the auditor. In the reporting year, the Audit Committee did not learn of any circumstances which would call the independence of the auditor into question. The Audit Committee prepared the Supervisory Board meeting for the adoption of the annual financial statements and the approval of the consolidated financial statements. In the presence of the auditor, it dealt with the 2011 annual financial statements and discussed these in depth. The Audit Committee also discussed the quarterly financial statements to be published in depth with the Board of Directors. The Personnel Committee (Executive Committee) consists of the following three members: Prof. Dr. Ernst-Moritz Lipp, Chairman Mr. Erwin Staudt Mr. Gerhard E. Witt The Personnel Committee primarily deals with personnel decisions by the Supervisory Board. It is also responsible for proposals regarding the conclusion, amendment, and termination of employment agreements with the members of the Board of Directors. In fiscal year 2012, the Personnel Committee and subsequently the Supervisory Board in its entirety also dealt in depth with the selection and appointment of the new Representative of the Board of GRENKELEASING AG, Ms. Antje Leminsky, and the new member of the Board of Directors, Mr. Jörg Eicker. Ms. Antje Leminsky joined the Company on August 1, 2012, strengthening its expertise in the area of IT which is of particular importance to the GRENKE Consolidated Group. She will join the Board of Directors as per August 1, 2013 and take over responsibility for IT from Mr. Wolfgang Grenke. Mr. Jörg Eicker joined the Company's Board of Directors on September 1, 2012 and assumed responsibility for Treasury, Refinancing, Risk Management, Reporting, Investor Relations, and GRENKE BANK AG from Dr. Uwe Hack as per October 1, 2012.

12 8 GRENKE Consolidated Group Dr. Hack left the Company by mutual agreement on September 30, 2012 to take up a professorship at a university. The Supervisory Board and the Board of Directors have thanked Dr. Hack for his major contribution to GRENKELEASING AG's positive development in recent years, particularly his role in successfully securing the Company against the financial crisis and in the purchase and realignment of GRENKE Bank. They wish him all the best for his future. The annual financial statements of GRENKELEASING AG and the consolidated financial statements prepared by the Board of Directors as per December 31, 2012, the first-time combined presentation of the management reports of GRENKELEASING AG and of the GRENKE Consolidated Group for fiscal year 2012 in accordance with Section 315 (3) and Section 298 (3) HGB, and the Board of Directors proposal on the appropriation of GRENKELEASING AG s unappropriated surplus were all submitted to the Supervisory Board in a timely manner. The annual financial statements were audited by Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart. The accounting of the separate financial statements of GRENKELEASING AG was prepared in accordance with the provisions of the German Commercial Code (HGB), taking the regulations for bank accounting into consideration. The HGB annual financial statements as per December 31, 2012 were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). The consolidated financial statements and the Group management report for the fiscal year from January 1 to December 31, 2012 were prepared in accordance with Section 315a (1) HGB on the basis of the International Financial Reporting Standards as adopted in the EU. The consolidated financial statements were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW (IDW PS 200). Unqualified audit opinions were issued for both the annual financial statements of GRENKELEASING AG and the consolidated financial statements of the GRENKE Consolidated Group. The Supervisory Board carried out a detailed review of the annual financial statements submitted to it by the Board of Directors and the auditor and discussed the result at its meeting on January 31, The auditor responsible took part and reported on the key findings of the audit. After completing its own review, the Supervisory Board did not raise any objections to the result of the audit of the annual financial statements by the auditor and therefore adopted the annual financial statements of GRENKELEASING AG and approved the consolidated financial statements of GRENKELEASING AG. The Supervisory Board endorsed the Board of Directors proposal on the appropriation of GRENKELEASING AG s unappropriated surplus. It also discussed and approved this report of the Supervisory Board for the 2012 annual financial report at this meeting. On January 30, 2013, the auditor Ernst & Young GmbH issued the following opinion on the dependence report: "On the basis of our audit performed in accordance with professional care and our assessment, we confirm that 1. the factual information contained in the report is correct, 2. the consideration given by the Company for the legal transactions referred to in the report was not unreasonably high or had compensated for any disadvantages, 3. and that for the measures mentioned in the report there are no circumstances supporting a judgement materially different from that reached by the Board of Directors. At its meeting on January 31, 2013, the Audit Committee dealt at length with the dependence report and accepted the auditor's report. Based on its own careful examination, the Audit Committee had no objections to the dependence report. At the Supervisory Board

13 GRENKE Consolidated Group 9 meeting on January 31, 2013, the Chairman of the Audit Committee reported on the audit of the dependence report by the Audit Committee. The Supervisory Board accepted the audit result of the auditor and came to the conclusion that there were no objections raised to the Board of Directors explanation at the end of the report regarding relationships to affiliated companies. At the same meeting, the Supervisory Board dealt with the mandatory disclosures in accordance with Section 289 (4) and Section 315 (4) HGB and the related report. Please refer to the corresponding explanations in the combined management report of GRENKELEASING AG and the GRENKE Consolidated Group. The Supervisory Board has reviewed these disclosures and explanations, which it believes to be complete, and has adopted them. Also at this meeting, the Supervisory Board resolved, in accordance with the Articles of Association, to broadcast the Board of Directors speech and the general debate at the 2013 Annual General Meeting on the internet. The Supervisory Board also discussed this report in detail and approved it at this meeting. Capital market participants once again placed their trust in GRENKE shares in fiscal year 2012 and acknowledged the GRENKE Consolidated Group's successful international growth strategy. The share price saw an impressive increase of 30 percent on balance. Thus, the GRENKE shares clearly stood out from the DAX and SDAX, whose price indices rose by 24 percent and 15 percent respectively. The sector index for German financial service providers, to which the GRENKE shares belong, also did not perform as well and achieved a 26 percent increase. All employees of the GRENKE Group contributed to the Company's success and thus also to the positive performance of the GRENKE shares in fiscal year The Supervisory Board would like to thank all of the employees of the GRENKE Consolidated Group and its franchise companies in the 25 countries in Europe and overseas where GRENKE now operates, as well as the members of the Board of Directors for their work in fiscal year It is due to their personal commitment that the GRENKE Consolidated Group can record another successful year and look to the future with confidence. Baden-Baden, January 31, 2013 For the Supervisory Board Prof. Dr. Ernst-Moritz Lipp Chairman

14 10 GRENKE Consolidated Group The Supervisory Board of GRENKELEASING AG

15 GRENKE Consolidated Group 11 Corporate Governance Report All activity in the GRENKE Consolidated Group is governed by a sense of responsibility. Therefore, effective corporate governance that complies with the relevant laws and the requirements of the German Corporate Governance Code is an integral part of how we do business. The Board of Directors, Supervisory Board, and senior executives identify with the principles of good corporate governance and compliance with the ethical and legal rules of conduct and standards. They are committed to managing and monitoring the GRENKE Consolidated Group in a value-oriented and transparent manner. They are also aware of the special significance these principles hold with shareholders and debt capital providers on the capital market when making an assessment of the Company. They know that good corporate governance represents an important basis for maintaining and increasing confidence among present and future customers, employees, and business partners. Transparent accounting and early reporting are essential to GRENKE for dealing with the public in a way that creates confidence. GRENKELEASING AG complies with the recommendations of the German Corporate Governance Code in the version dated May 26, 2010 with only a few exceptions. The Board of Directors and the Supervisory Board have discussed their compliance with the Code in depth and have adopted the Declaration of Conformity of the Code which has been duplicated at the end of this corporate governance report. The declaration can also be found on the website of GRENKELEASING AG. Consolidated Group Management and Monitoring The Board of Directors of GRENKELEASING AG is currently comprised of four members. The Supervisory Board is comprised of six members. Supervisory Board During the 2012 fiscal year, the Board of Directors provided the Supervisory Board with regular, detailed, and extensive information on the Company s economic situation, the status of corporate planning, and current events. In this context, the presentation of the refinancing and liquidity status was a regular and key focus of the reports. The Supervisory Board coordinated strategic developments with the Board of Directors and discussed issues related to risk management, risk provisions, the internal control system, and the internal audit system. Further Supervisory Board responsibilities include appointing and monitoring the members of the Board of Directors, reviewing and adopting the annual financial statements of GRENKELEASING AG, and reviewing and approving the consolidated financial statements, while taking into consideration the auditors reports and the findings of the reviews by the Audit Committee (see Report of the Supervisory Board ). Another key activity is examining and approving the acquisition of companies. The Supervisory Board of GRENKELEASING AG has formed two committees in order to allow it to perform its duties efficiently. These committees have been given certain authorisations which are in line with the Supervisory Boards Rules of Procedure. The committees prepare the issues and resolutions which are relevant to them and which are then discussed by the Supervisory Board as a whole. At the meetings of the Supervisory Board, the chairmen of the committees report on the work of their committees. Audit Committee The Audit Committee is comprised of three members who have expertise in the areas of accounting, corporate planning, risk management, and compliance. The committee primarily deals with external and internal accounting issues, corporate planning systems, and the Consolidated Group s risk management. It reviews and monitors the independence of the auditor in accordance with

16 12 GRENKE Consolidated Group Article of the German Corporate Governance Code. It determines the audit s focus and is responsible for and agrees on the fee with the auditor. The Audit Committee also prepares the decision of the Supervisory Board on the adoption of the annual financial statements and the approval of the consolidated financial statements. As part of the Supervisory Board s activities under the German Corporate Governance Code, the Audit Committee also deals with compliance issues. The Board of Directors regularly reports to the Audit Committee on the Company s compliance situation, including compliance with the KWG. Personnel Committee (Executive Committee) The Personnel Committee is comprised of three members. In particular, this committee prepares the Supervisory Board decisions on personnel and submits proposals for concluding, amending, and terminating employment agreements with members of the Board of Directors. Board of Directors The Board of Directors autonomously manages the GRENKE Consolidated Group and is responsible for the Company's operational and strategic orientation and compliance with the principles of corporate policy. In addition, it prepares the quarterly financial statements, the annual financial statements of GRENKELEASING AG, and the consolidated financial statements. The Board of Directors reports to the Supervisory Board regularly and comprehensively by way of reports and proposals on issues such as strategy and its implementation, planning, business performance, the financial and earnings situation, the strategic and operational business risks, their respective management, and activities involving the Company in its entirety. The Rules of Procedure of the Board of Directors contain a list of transactions requiring approval. Key decisions by the Board of Directors such as acquisitions and financial measures require the approval of the Supervisory Board. The Board of Directors and the Supervisory Board are liable to pay damages to the Company in the event of culpable neglect. Remuneration Report (Part of the Combined Management Report) Remuneration of the Board of Directors Long-term Fixed remuneration components Variable remuneration components remuneration components Total Total Performance Share-based EUR Annual salary Other claims bonus Bonus compensation Christ 185, , , , , , Eicker 102, , , , Grenke 332, , , , , Dr. Hack 200, , , , , , , Kindermann 149, , , , , Total 970, , , , , ,125, ,776,118.69

17 GRENKE Consolidated Group 13 The principles of the remuneration system for the Board of Directors provide for a fixed, performance-unrelated basic annual salary and a variable performance-related component. In addition, agreements on granting phantom stocks were/are in place for Mr. Christ and for Dr. Hack, who left the Board of Directors in fiscal year The structure of the remuneration system is aimed at promoting the Consolidated Group s long-term success and creating incentives to enter into only those risks that are easily controllable by employing statistical tools and an appropriate return for the respective risk. No incentive is provided for entering into inappropriate risks. Furthermore, the regulatory capital of GRENKELEASING AG is neither jeopardised by its remuneration practice, nor does this restrict the long-term retention of its equity. In the year under review, the remuneration paid to the members of the Board of Directors totalled EUR 2,126k (previous year: EUR 1,776k), of which EUR 970k (previous year: EUR 931k) was attributable to gross salaries and EUR 427k (previous year: EUR 488k) to performance bonuses. An annual pension premium of EUR 21k (previous year: EUR 21k) was also paid to an external provident fund for Dr. Hack. Due to Dr. Hack s departure from the Board of Directors as per September 30, 2012 and Mr. Eicker s entry into the Board as per September 1, 2012, the remuneration for both Messieurs is presented on a pro rata basis according to their membership in the Board. Following his departure, Dr. Hack receives a monthly compensation in the amount of EUR 15k for a period of one year as a result of an agreed non-competitive clause. The criteria for the variable remuneration components are defined in advance each year. They are based on the increase in the GRENKE Consolidated Group's operating result ( EBIT Earnings before Interest and Taxes) and the development of the key performance indicators forming part of the GRENKE balanced scorecard (BSC). The attainment of the EBIT growth target is measured retrospectively each year. Failure to achieve the targets means that no variable remuneration is paid at all. The relevant BSC criteria correspond to the key performance indicators for the Consolidated Group s long-term success, and hence the long-term increase in the shareholder value. Among other things, this includes the development in the number of lease contracts and the volume of new business. The attainment of the BSC criteria is measured retrospectively each quarter. By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Dr. Hack and Mr. Christ. Under these agreements, Dr. Hack and Mr. Christ received entitlements to payment equal to the increase in value of 30,000 and 15,000 shares in GRENKELEASING AG, respectively, in relation to a defined basic share price for fiscal years 2010, 2011, and 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 2010, 2011, and 2012 was EUR 28.68, EUR 37.72, and EUR 35.81, respectively. The maximum payment arising from this agreement is limited to EUR 600,000 or EUR 300,000 for the period of three years. Due to Dr. Hack s departure from the Board of Directors as per September 30, 2012, his possible entitlement for 2012 was halved. Under the programme, Mr. Christ is required to invest the respective net amount paid plus a personal contribution of 25 percent of that amount in GRENKELEASING AG shares. For 2010, a total of EUR 374k was paid out on the basis of the phantom stock agreements to Dr. Hack and Mr. Christ. No payment was made for 2011 on the basis of the phantom stock agreements. As per December 31, 2012, the value of the phantom stocks agreement granted totalled EUR 371k. GRENKELEASING AG has also taken out a directors and officers liability insurance policy for members of the Board of Directors. This prescribes a fixed deductible of 10 percent per claim for each member of the Board of Directors; however, this is limited to a maximum of one and a half times the annual fixed remuneration for all claims per year. In case of a termination of their appointment, the employ-

18 14 GRENKE Consolidated Group ment agreements of the members of the Board of Directors include a provision of a possible non-competitive clause. This clause provides for the payment of compensation for a period of two years (cap). The amount is limited to 50 percent of the most recent annual remuneration (cap). The fixed remuneration and the actually paid variable remuneration in the fiscal prior to the termination of the appointment are the basis for calculating the payment of compensation. No settlement agreements are in place. Moreover, none of the members of the Board of Directors received benefits or corresponding commitments from third parties relating to their position as a member of the Board of Directors in the past fiscal year. Remuneration of the Supervisory Board Basic remuneration 2012 Audit Committee Personnel Variable Committee remuneration Travel expenses Total 2012* Total 2011* Name EUR Function Prof. Dr. Lipp Chairman 11, , , , Witt Deputy Chairman 7, , , , Münch Member 7, , , , Schulte Member 7, , , , Staudt Member 7, , , , Prof. Dr. Wörn Member 7, , , , , Total 48, , , , , , , * Fixed remuneration (basic remuneration, Audit and Personnel Committee), variable remuneration and travel expenses In fiscal year 2012, the members of the Supervisory Board received a total of EUR 109k (previous year: EUR 108k) including travel expenses in remuneration for their work. The remuneration for each individual member can be seen in the table above. The remuneration of the members of the Supervisory Board is regulated in the Articles of Association of GRENKELEASING AG and determined by the Annual General Meeting. In accordance with the Articles of Association, the members of the Supervisory Board receive a fixed remuneration of EUR 7,500 for each full year on the Board, except for the Chairman who receives EUR 11,250, plus EUR 600 for each committee membership and EUR 900 for each committee chaired. If members are on the Supervisory Board for only part of a fiscal year, the basic remuneration and the remuneration for committee memberships and chairmanships are calculated on a pro rata basis. The members of the Supervisory Board also receive a variable component if a dividend in excess of EUR 0.20 per share is paid to shareholders. In this case, the remuneration is increased by one half of the percentage by which the dividend per share exceeds the amount of EUR However, the variable component may not exceed 100 percent of the fixed remuneration. GRENKELEASING AG has also taken out a directors and officers liability insurance policy for members of the Supervisory Board. This prescribes a fixed deductible of 10 percent per claim for each member of the Supervisory Board; however, this is limited to a maximum of one and a half times the annual fixed remuneration for all claims per year. The Company also reimburses the members of the Supervisory Board for their cash expenses and VAT insofar as they are entitled to invoice the tax separately and actually do so.

19 GRENKE Consolidated Group 15 Accounting, Audits of Financial Statements, and Financial Reporting Beginning with the fiscal year 2012 report, the management report for the GRENKE Consolidated Group and the management report for the separate financial statements of GRENKELEASING AG in accordance with Section 315 (3) and Section 298 (3) HGB are presented as a combined section. If substantial differences arise between the corporate entities, these are discussed in a separate section. The financial statements of GRENKELEASING AG and the financial statements of the GRENKE Consolidated Group for fiscal year 2012 are published jointly in the Federal Gazette (Bundesanzeiger). The accounting policies applied to the consolidated financial statements for the January 1 to December 31, 2012 fiscal year were conducted in accordance with the rules and regulations of International Financial Reporting Standards as adopted in the European Union. In preparing the consolidated financial statements and the Group management report, the Company was also subject to and applied the provisions of German commercial law under Section 315a (1) HGB. The consolidated financial statements were audited in accordance with the rules and regulations of Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW (IDW PS 200). The Audit Committee ensures the independence of the auditor and recommends an auditor for election to the Annual General Meeting. The auditor is elected at the Annual General Meeting in accordance with statutory provisions. Transparency and Reporting to Shareholders GRENKE uses the internet in order to promptly, equitably, and thoroughly report to shareholders, capital market participants, and the public. All ad hoc publications and press releases, annual and quarterly reports and notifications in accordance with Section 15 of the German Securities Trading Act are published in German and English. The Declaration of Conformity with the German Corporate Governance Code is available on GRENKE s website ( Shareholders can use the internet to find information on the GRENKE Consolidated Group, the management, and the organisational structure. Notifications by the Company are published in the Federal Gazette (Bundesanzeiger). Shareholders can also watch the report by the Board of Directors and the general debate during the Annual General Meeting on the internet. Proxies appointed by the Company can be entrusted to exercise voting rights, even in absentia. The dates of regular financial reporting are shown in the financial calendar and on GRENKE s website. The GRENKE shares are reported on in detail in the Investor Relations section. Compliance The purpose of our new compliance department is to ensure compliance with legal provisions, company-internal regulations, as well as with the ethical standards we are committed to. At GRENKE, compliance spans over all operational activities and business processes and embraces all governing bodies, senior management, and employees. The core task of our compliance officer includes the compilation of relevant provisions, the collaboration with the respective departments of the Company, and the training of senior management and employees. In addition, the compliance officer supports the Executive Board preventing breaches of the law, corruption, and fraudulent acts and their clarification. In fiscal year 2012, the compliance officer was invited to a meeting of the Supervisory Board to report his findings.

20 16 GRENKE Consolidated Group Controlling and Risk Management The purpose of GRENKE Consolidated Group s risk management system is the systematic identification, assessment, documentation, and disclosure of risks posed to the parent company and its subsidiaries. It is designed to enable employees and management to address risks responsibly and make the most of the opportunities that present themselves. The GRENKELEASING AG risk management system is being continually expanded and is operated using a risk management tool on the intranet of the GRENKE Consolidated Group. Leasing companies must also comply with the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement (MaRisk)] published by the Deutsche Bundesbank and the German Federal Office for Supervision of Financial Services. The appropriate risk management and controlling processes demanded by MaRisk for the key types of risks counterparty, market price, liquidity, and operational risks have been implemented accordingly in the GRENKE Consolidated Group. The functionality of the risk management system and the results of its measures are reviewed by the internal audit department which reports directly to the Board of Directors. The details of the risk management system are presented in the management report. Declaration of Conformity of the Board of Directors and Supervisory Board on the German Corporate Governance Code (DCGK) in accordance with Section 161 AktG On April 21, 2012, the Board of Directors and Supervisory Board of GRENKELEASING AG issued the following Declaration of Conformity: The Board of Directors and Supervisory Board of GRENKELEASING AG hereby declare, in accordance with Section 161 AktG, that since the issue of the last Declaration of Conformity on May 3, 2011, the recommendations of the Government Commission on the German Corporate Governance Code in the version dated May 26, 2010 have been complied and will be complied in the future with the following exceptions: In their current valid version, the Company s Articles of Association do not provide for the possibility of absentee voting for shareholders or a corresponding authorisation of the Board of Directors. The Company does not currently intend to provide for absentee voting prior to or at the Annual General Meeting in addition to the proxy holders who are bound by instructions. The introduction of the possibility of absentee voting involves legal risks as well as additional administrative expenses and does not offer significant value to the Company s practice of using proxy holders who are bound by instructions. Accordingly, the recommendations set out in Item and of the DCGK relating to the conduction of absentee voting have not been complied with. By derogation from Item of the DCGK, GRENKELEASING AG does not transmit the convening of the Annual General Meeting together with the convention documents to shareholders, shareholders associations, and domestic and foreign financial service providers by electronic means. Automatic electronic transmission in accordance with Item of the DCGK cannot take place as GRENKELEASING AG has issued ordinary bearer shares and it does not know the identities and addresses of its shareholders. Collecting and updating all relevant addresses would therefore represent a disproportionately large bureaucratic burden. Furthermore, transmission by electronic means is permitted only with the corresponding approval of the Annual General Meeting. No such approval resolution has been adopted. In accordance with Section 30b (3) No. 1 Letter d WpHG, electronic transmission would also have to be explicitly consented to, or at least not objected to, by the shareholders.

21 GRENKE Consolidated Group 17 The contracts of the current members of the Board of Directors do not provide for a severance pay cap, which differs from the recommendation set out in Item of the DCGK. This is because some of the contracts of members of the Board of Directors were concluded before the recommendation in question was included in the DCGK, and hence are protected accordingly. However, a severance pay cap has also not been agreed for newly concluded contracts with members of the Board of Directors as these contracts are often concluded only for the respective term of office and cannot be terminated by giving regular notice. Accordingly, the early termination of the contracts of members of the Board of Directors without good cause is possible only by mutual consent, not unilaterally. The contracts of Board of Director members do not include any severance pay provisions relating to events at the Company and, in particular, a change of control. The recommendations of Item and of the DCGK require that the composition of the Board of Directors and proposals for the election of Supervisory Board members take account of diversity and a specified age limit among others. Instead, the Company believes that, with regard to the composition of the Board of Directors and proposals for the election of Supervisory Board members, the knowledge, skills, and experience required in the respective area of business or responsibility should be key when selecting suitable candidates. The above recommendations of the DCGK are taken into consideration with regard to the composition of the Board of Directors and proposals for the election of Supervisory Board members. In accordance with Item of the DCGK, the Supervisory Board should form a nomination committee composed exclusively of shareholder representatives to suggest suitable candidates to the Supervisory Board for recommendation to the Annual General Meeting. The Supervisory Board of GRENKELEASING AG currently consists of a total of six members, who are to be elected by the shareholders only. The Board of Directors and Supervisory Board do not consider it necessary to form an additional committee. The Company believes that the transparency of the selection procedure intended by the Commission with Item of the DCGK is already guaranteed without such a committee. It therefore does not comply with the recommendation in Item Baden-Baden, April 21, 2012 GRENKELEASING AG The Supervisory Board The Board of Directors

22 18 GRENKE Consolidated Group Our Shares and Investor Relations In fiscal year 2012, the price of GRENKE shares improved by 30 percent on balance. Following a year-end closing price in 2011 of EUR 39.00, the shares ended fiscal year 2012 at EUR (XETRA closing prices, also used hereafter). As in the previous year, the shares outperformed its benchmark price indices throughout most of the year: The SDAX (annual performance in 2012: up 17 percent) and the sector index DAXsector Financial Services (up 26 percent). By mid-year, the shares had increased 12 percent, whereas the SDAX price index was up by only slightly more than 7 percent and the index for German financial service providers increased 14 percent. After initially resisting the temporary overall correction on the markets during the renewed escalation of the euro crisis in the second quarter of 2012, GRENKE shares did eventually lose ground in May. GRENKE shares also saw a strong rebound during the subsequent market recovery which had resulted from the easing of the situation in some European problem countries and the statement by ECB President Draghi that within its mandate the European Central Bank was ready to do whatever it takes to preserve the euro. The rise in the share price was accelerated by the announcement of a dynamic development in new business in the first half of From their temporary low of EUR on June 4, GRENKE shares marked an upward trend of almost 34 percent to EUR on December 5 their year-high in Dividend Policy The dividend policy of GRENKELEASING AG has a long-term focus and is based on the criteria of continuity, yield, and safeguarding the equity base for future expansion. GRENKE shares offer investors high intrinsic value, continuous income, and attractive growth prospects. Traditionally, the GRENKE Consolidated Group has had a strong equity base. Our strategic target is 16 percent. This provides the basis for our high rating and grants us access to attractive refinancing opportunities from different sources. During the very difficult years of the international financial sector crisis starting from 2008, the equity ratio was purposely increased above this level owing to risk considerations. In the meantime, it has gradually been brought back to the target level. At the end of 2011, it was 16.1 percent, and as per the balance sheet date of the reporting year, it had reached 14.9 percent. The solid, actively managed equity base of the GRENKE Consolidated Group will remain the most important basis for our future growth. In view of this high-priority, long-term strategic goal, we manage the dividend policy in a profit-oriented way. Since we continue to anticipate a further rapid expansion in business and increasing earnings in the coming years, we remain confident regarding the continuity of dividend distributions. Therefore, the Board of Directors and the Supervisory Board will propose a dividend of EUR 0.80 per share for fiscal year 2012 to the Annual General Meeting of GRENKELEASING AG on May 7, In the previous year, a dividend of EUR 0.75 per share was distributed. Investment Case We traditionally position our shares on the capital market with four outstanding criteria, which we also intend to maintain in the future: our sustainably successful growth strategy, market leadership in our core business, our long-standing, proven risk management including the requirements of MaRisk the high intrinsic value of our shares measured in terms of return on equity and embedded value.

23 GRENKE Consolidated Group 19 We focus our operations on high-margin business areas and systematically gear them towards the contribution margin 2 (operating income from leases less risk costs and variable administrative costs). Our aim remains to expand sustainably and consequently achieve a dynamic development in profits. The key requirement for this efficient control of costs and risks is ensured by our sophisticated risk management strategy. Furthermore, we can react flexibly to changes in market conditions while at the same time achieving appropriate risk premiums. We have convincingly proven this ability on a continuous basis in the past, particularly during the financial market crisis. In fiscal year 2012, we were again able to fully pass on our refinancing costs to the market and significantly increase net interest income. This allowed us to effectively counter the inevitable rise in the loss rate in the wake of the recessionary economic development in several European countries and the resulting increase in revenue-related risks. We will maintain this successful risk-oriented management of our conditions in the future. Another very important aspect of our cost and risk management system is its function as a barrier to market entry by potential competitors. This, together with our finely honed sales system that we are continuously expanding, keeps us well equipped for future growth. Investor Relations In our investor relations activities, we maintain an open and continuous exchange of information with investors, analysts, and media representatives. Again in fiscal year 2012, the Board of Directors explained GRENKE Group's business model to capital market participants and reported on the Company's performance at numerous roadshows and investor conferences in Europe's leading financial centres. In addition, we are frequently available to market participants and media representatives for one-on-one discussions and conference calls. Thanks to this active communication policy, we have steadily expanded our investor base in recent years. We consider the Annual General Meeting to be a central forum for maintaining our contact with shareholders. The general public can participate via our website: we broadcast the Board of Directors speech to the Annual General Meeting and the general debate as a live stream on our website at All current investor relations news, press releases, and annual and quarterly reports can also be viewed here at all times. Interested parties can also use our news service. We also aspire to be among the leading companies in terms of the quality and timeliness of the information we provide. We publish the figures for new business and the contribution margin as early as the second working day subsequent to the end of the quarter. The audited consolidated financial statements for the fiscal year are published at the beginning of February of the following year. Our website also offers a user-friendly, interactive annual financial report. In keeping with the spirit of high transparency, our reporting goes well beyond the required minimum. Rating In an analysis dated September 12, 2012, the rating agency Standard & Poor's upgraded GRENKELEASING AG's rating for shortterm debt from A-3 to A-2 and its rating for senior unsecured debt from BBB to BBB+. Thus, the ratings for senior unsecured debt and for counterparty credit are identical. Another analysis dated December 6, 2012 reconfirmed the ratings. The key factors for the rating broad diversification of our receivables portfolio, strong risk management, very solid capitalisation, adequate liquidity, and very high profitability have remained unchanged. Particular emphasis was placed on GRENKE's ability to keep its net interest margin at a high level and to limit the loss rate. However, based on its observation that GRENKE is growing particularly strongly in countries that, in the agency's view, display increased economic risks, it has changed its outlook from "stable" to "negative".

24 20 GRENKE Consolidated Group We are confident that with our long-term, successful risk-oriented management of conditions we can continue to effectively counter the general economic risks in our respective target markets in the future, enabling us to generate continuously increasing earnings. With our unchanged rating, our standing on the capital markets remains favourable. The individual assessments by Standard & Poor's as per the end of fiscal year 2012 are as follows: Issuer Credit Rating Counterparty credit rating BBB+/Negative/A-2 Senior unsecured BBB+ Short-term debt A-2 GRENKE Shares at a Glance Code Bloomberg code Reuters code ISIN Market segment Index Designated Sponsors GLJ GLJ_GR GKLG.DE DE Prime Standard SDAX Close Brothers Seydler Bank AG; HSBC Trinkaus und Burkhardt AG Total number of registered shares outstanding 13,684,099 Class No-par-value shares Nominal value per share (rounded) EUR 1.28 Shareholder structure: Free float according to Section 1.7 of the current Deutsche Börse stock indices guidelines Pooling agreement of the Grenke family (Wolfgang, Anneliese, Moritz, Roland, Oliver Grenke) 54.90% 45.10% Closing price on last trading day (XETRA) EUR EUR EUR EUR EUR Highest intraday price (XETRA) EUR EUR EUR EUR EUR Lowest intraday price (XETRA) EUR EUR EUR EUR EUR Market capitalisation (closing price) EUR 693 million EUR 534 million EUR 520 million EUR 404 million EUR 243 million Earnings per share EUR 3.10 EUR 2.87 EUR 2.03 EUR 1.80 EUR 2.42 Price-earnings ratio (Basis: closing price)

25 GRENKE Consolidated Group 21 Source: Reuters 140% EUR GRENKELEASING AG 130% EUR 120% DAXsector Financial Services EUR price index 110% EUR 100% SDAX price index EUR 90% EUR 80% EUR 40,000 30,000 Number of shares traded (XETRA and regional exchanges) 20,000 10,000 0 Jan. 12 Feb. 12 March 12 April 12 May 12 June 12 July 12 Aug. 12 Sep. 12 Oct. 12 Nov. 12 Dec. 12

26 22 GRENKE Consolidated Group Combined Management Report of GRENKELEASING AG and GRENKE Consolidated Group In this combined management report for fiscal year 2012, the management report of the GRENKE Consolidated Group prepared in accordance with the International Financial Reporting Standards (IFRS) and the management report for the separate financial statements of GRENKELEASING AG prepared in accordance with the German Commercial Code (HGB) are presented as a combined section for the first time in accordance with Section 315 (3) and Section 298 (3) (HGB). The main comments on the general conditions, strategy, and performance of the GRENKE Consolidated Group and of GRENKELEASING AG apply to both entities. If there were any substantial differences between the entities in the fiscal year, these are discussed in the section "Management Report of GRENKELEASING AG (condensed version in accordance with HGB)" at the end of this report. The annual financial statements of GRENKELEASING AG and the financial statements of the GRENKE Consolidated Group for fiscal year 2012 are published jointly in the Federal Gazette (Bundesanzeiger). The report on fiscal year 2012 is also available for download online at The GRENKE Consolidated Group operates internationally. A franchise model has been established for both the development of new regional markets and for the expansion with new financing products. GRENKELEASING AG does not own shares in the legally independent companies of its franchisees. Accordingly, this management report distinguishes between the GRENKE Consolidated Group, i.e. GRENKELEASING AG and all of its consolidated subsidiaries and special-purpose entities in accordance with IFRS, and the GRENKE Group, i.e. the GRENKE Consolidated Group and its franchise partners. Company Profile Corporate Structure The GRENKE Consolidated Group dates back to a sole proprietorship that was formed in GRENKELEASING AG was formed in The GRENKE Consolidated Group is represented internationally by subsidiaries in a number of countries, some of which have set up branches in their respective local markets. In addition, as mentioned above, a franchise model has been established. Under this model, GRENKELEASING AG provides its partners with expertise, operational infrastructure, a range of services, and the right to use its name on the basis of a franchise agreement. GRENKELEASING AG has the right to acquire such franchise companies after an agreed period of several years. The purchase price is based on a formula that is agreed at the time the contract is agreed. The formula takes into account both market parameters and the individual performance of the company. Companies are generally acquired after a period of four to six years. The GRENKE Consolidated Group generally refinances the financing agreements concluded between franchisees and their customers via its subsidiary in Ireland by purchasing the receivables of the respective franchisee or through sale-and-leaseback transactions. The GRENKE Consolidated Group generates a portion of its new business from this refinancing activity. In some cases, franchisees conclude leases under a commission model, meaning that the GRENKE Consolidated Group acts as the direct lessor. Business Model The origins of the GRENKE Group are rooted in the business idea of standardising lease financing using IT-based processes, thereby allowing lease financing to be offered in an economically feasible manner even for small IT products. We have defined and developed a market that is still not addressed by the vast majority of leasing providers. We primarily finance IT products starting from a net

27 GRENKE Consolidated Group 23 acquisition cost of EUR 500. In fiscal year 2012, the average acquisition cost per lease concluded was around EUR 8,357, compared with around EUR 8,178 in the previous year. To realise such low-volume financing in an economically efficient manner, the corresponding leases must be concluded at an extremely low cost per contract. Accordingly, the GRENKE Group s business model is focused on maximising efficiency. Standardisation, comprehensive IT-based automation, and speed are major unique selling points and represent key barriers to entering our market. All of the GRENKE Consolidated Group s leases are centrally managed at its head office in Baden-Baden and processed on an automated basis. We measure and calculate the risk and loss rates of our financing using our internally developed IT-based scoring procedure which is continuously optimised. This serves to limit the cost of credit checks and allows contract and payment approvals to be issued in a short period of time. Risk limitation through diversification is our philosophy. We aim to avoid cluster risks not only in terms of our lessees but also with our sales partners, and we are also manufacturer-independent with regard to the IT products. Last but not least, we are systematically expanding our already broad range of refinancing instruments. We have developed and established this business model in the market for small-ticket IT leasing. Meanwhile, we have successively expanded our activities to include financing for other goods and are adding new financial products on the asset and liability sides of our balance sheet. Our business model will continue to be characterised by the IT-based standardisation of business processes, indirect or pure online sales, and broad diversification with a view to limiting risks. Growth Strategy of the GRENKE Group The GRENKE Group is focused on growth. Over the past five years, we have expanded our new business by an average of 17 percent per year. With our established business model, our sophisticated business processes, and our finely honed IT-based scoring model, we can benefit from both expansionary and recessionary macroeconomic periods. We have proven this in recent years. Our broad international presence also allows us to focus in a targeted manner on the sales markets with the most attractive risk/return profiles. In the wake of the recent financial and sovereign debt crisis, many competitors have scaled back their activities in the small-ticket IT leasing market and in some cases have withdrawn from the market altogether. Many of the providers from the banking industry are also facing losses in other business areas and are being confronted with significantly more stringent regulatory requirements. This results in attractive opportunities for us to systematically expand our leading position as a financial services provider for small and medium-sized enterprises (SMEs). In order to accelerate our entry into new countries, we often refrain from forming our own subsidiary right away and instead enter into an agreement with an entrepreneurial franchisee that has a good knowledge of the respective target market. In the first few years, the franchisee performs the development work and establishes the GRENKE brand on the local market. The GRENKE Group currently has an international presence in 25 countries, with a total of 25 locations in Germany and 62 international locations. In the past fiscal year, we generated 66 percent of our new business outside of Germany. Key individual markets are France and Italy, where we have been sustainably expanding our business for a number of years. In the UK, we are still gaining market share and as a result this market has become our fourth-largest international market. In Switzerland, as in Germany, we are the market leader for small-ticket IT leasing.

28 24 GRENKE Consolidated Group In fiscal year 2012, the number of lease applications in the GRENKE Group increased from 217,129 in the previous year to 256,772. There was particularly pronounced growth in the number of applications from our international markets, which amounted to 197,787 after 156,399 in the previous year. These applications resulted in 107,528 new leases (previous year: 94,176), including a total of 78,508 new leases in our international markets (previous year: 64,909). The conversion rate (conversion of lease applications into contracts) remained virtually unchanged at 42 percent after 43 percent in the previous year, thereby remaining below our target level once again. However, this was due in part to the above-average expansion in our international markets which have a lower conversion rate of 40 percent as a result of our active risk policy compared to 49 percent in the German market. We continue to focus on consolidating our network in the markets where we are already present and increasing our proximity to our customers. At the same time, we are also developing attractive new markets with high growth potential. For example, in the reporting year we opened a total of ten new locations in Germany (Freiburg and Kassel), France (Bordeaux and Montpellier), the UK (Tamworth), Ireland (Fingal), Italy (Florence, Rome, and Milan South) and Poland (Wroclaw). We also acquired and fully consolidated our franchise companies in Spain (with locations in Madrid and Málaga), Portugal (with locations in Lisbon, Porto, and Leiria) and Romania (with a location in Bucharest). In addition, we have signed a new franchise agreement for Malta. Market development activities in Turkey where we have been operating since 2011 through a franchise partner are progressing well. And following the conclusion of a franchise agreement for Brazil the most populous country in South America and the world s sixth-largest economy we are now also active outside Europe as per fiscal year Above and beyond our regional growth, we are continuously expanding our product range and the finance solutions we offer. For example, GRENKE BANK AG finances business start-ups and grants development funds in collaboration with a growing number of development banks of individual German states and the federal government. GRENKE BANK AG is currently cooperating with KfW Mittelstandsbank, Investitionsbank Berlin (IBB), L-Bank in Baden-Württemberg, NRW.BANK in North Rhine-Westphalia, and Thüringer Aufbaubank. In this way, small and medium-sized enterprises and self-employed professionals have been given access to development funds when they finance new business acquisitions through leasing. A total of 5,302 leasing contracts have been concluded thus far in the context of these collaborations. Last but not least, we offer the purchase of lower-volume receivables (factoring) in Germany and Switzerland and also in Hungary since the fourth quarter of With factoring, we offer an additional financing alternative for our small and medium-sized leasing customers in particular. The low contract volumes that are possible with us are only offered to a very limited extent by our competitors. Since fiscal year 2011, we have been stepping up growth in this area and also grew substantially in the reporting year while maintaining a high level of profitability. Overall, in the past two years we have almost tripled the annual factoring volume purchased when compared to fiscal year We intend to continue to develop this segment and further expand our presence within Europe in the future. For example, in the past fiscal year we have already made preparations for entering the UK market in the near future. In order to limit risks, we manage our expansion with an eye to ensuring a broad diversification of our portfolio in terms of customers and industries and low average contract volumes. In addition, our range of financing products is primarily aimed at commercial customers. We do not compromise on our strategic targets for capitalisation and profitability, nor do we make any concessions with regard to maintaining an adequate risk/return profile.

29 GRENKE Consolidated Group 25 Corporate Management Customer and Supplier Portfolio We finance small-volume receivables primarily in the area of IT leasing, such as IT equipment and systems, printers, copiers, telecommunications products, and software. The structure of the financed goods portfolio did not change significantly in the year under review. This portfolio results from the nature and extent of product usage in the office environment of European SMEs. We avoid cluster risks in terms of customers and industries in a targeted manner. As in the past, no individual customer of the GRENKE Consolidated Group accounts for a total exposure of more than two percent of the Consolidated Group s equity. As our lease financing is manufacturer-independent, the structure of our supplier portfolio and that of individual manufacturers largely reflects the demand structure of SMEs for IT products. The structure changes depending on the range of available IT products, the product policy of the respective manufacturers, and user behaviour, without an active influence on our part. As a result, the GRENKE Consolidated Group s supplier structure is also broadly diversified. Risks resulting from obsolete technology are prevented by ensuring that our leases are typically full pay-out leases, meaning that realisation risks are largely excluded. Financing and Investment Products In our traditional leasing business, we offer a wide range of different contractual arrangements for financing purchases of operating equipment. In addition, GRENKE BANK AG finances business start-ups and grants development funds in collaboration with a growing number of development banks of individual German states and the federal government. Its other products include payment accounts in euro or foreign currencies as well as easy-to-understand investment products such as fixed-term deposits and savings bonds for commercial clients. Call money and fixed-term products are also available for retail customers. The investment products offered by GRENKE BANK AG are a key element of the GRENKE Consolidated Group's refinancing strategy. Last but not least, we offer the purchase of lower-volume receivables (factoring) in Germany and Switzerland and also in Hungary since the fourth quarter of Sales Organisation Our sales organisation supports the broad-based diversification of our business. As a result of the low volume of the individual contracts, direct sales of individual contracts are not economically viable. Therefore, we primarily pursue a policy of sales leasing in our leasing business. Financing agreements with end customers are primarily concluded via our specialist reseller partners. For this purpose, our employees rapidly establish a broad network of partners in our respective target markets in local sales offices. Specialist reseller partners make it easier for their customers to make new purchases with the help of our financing. In addition to a price that reflects market conditions, the decisive factor in selecting the GRENKE Group as a financing partner is the support provided to resellers in concluding their own transactions by issuing approvals as quickly as possible. Our web-based online tool generally allows us to do this within ten minutes. The tool now generates 76 percent of all the GRENKE Group s financing requests, with the figure for Germany being even 80 percent. In addition, our in-house sales team actively supports our specialist reseller partners in all leasingrelated matters. We also market our range of financing products via the manufacturers of IT products, for whom we perform key account management. Furthermore, selected corporate customers are addressed as part of a direct sales model. Above and beyond these channels, our online activities represent an important additional sales channel and one that is continually growing. This is the case both for our traditional small-ticket IT leasing business and our other financial products. We operate our deposit business solely as an online bank, and we have developed an innovative internet platform for start-up financing. Factoring receivables are also purchased using an IT-based, automated process.

30 26 GRENKE Consolidated Group However, in contrast to our other activities, in this area we acquire customers directly and actively by means of letters, s, and telephone campaigns. When selecting our target customers, we take into account various criteria such as their credit quality and their average annual sales, which should be in the region of EUR 250,000 to EUR 2.5 million. In addition, certain sectors are not approached in the first place. In this way, we influence the quality of our future receivables even before the acquisition. As per the end of fiscal year 2012, our services were used by 160 customers in Germany and 46 customers in Switzerland. Management of Income and Balance Sheet Our corporate management focuses on a sustainably high return on equity while ensuring a solid equity basis. For a number of years, our targets in terms of equity ratio and return on equity after taxes have both been 16 percent. We consider these two parameters to be key conditions for safeguarding our good rating, as well as being central to ensuring that our shares enjoy an attractive valuation. Due to our high profitability, the equity ratio in fiscal year 2012 remained at a solid level despite our sustained rapid expansion. At 14.9 percent at the end of the year under review, it was down slightly from the figure of 16.1 percent at the end of fiscal year The return on equity after taxes amounted to 12.1 percent in fiscal year 2012 as compared to 12.4 percent at the end of the previous year. The stability of our profitability is another important factor. This is controlled using our finely honed risk measurement scoring model. Our aim is to measure risk precisely in all of our markets in order to achieve an attractive risk/return profile. Not least, we have successfully expanded our non-interest income sources over recent years. These accounted for approximately half of our total income from operating business in the year under review. Refinancing of the GRENKE Consolidated Group Our positioning on the debt capital markets is based on a policy of full transparency with regard to the GRENKE Consolidated Group s commitments, and operational management that helps us to maintain our good long-term and short-term ratings on the back of our solid capitalisation and return on equity. For a number of years, the GRENKE Consolidated Group has used a wide range of refinancing instruments. We make use of assetbacked commercial paper (ABCP) programmes. Our platform for issuing commercial paper (CP) provides us with additional financing alternatives in the area of issues with a term of up to one year, alongside bilateral framework agreements on revolving loans and money market facilities with various banks. We have also issued promissory note loans, debentures, and bonds under the terms of a debt issuance programme (DIP). The development loans we contract are refinanced via global loans from the respective development banks. Also, a substantial portion of our refinancing is provided by bank deposits from private and commercial customers via GRENKE BANK AG s online platform, Together with the solid capitalisation of the GRENKE Consolidated Group, we have the necessary instruments at our disposal to allow us to leverage significant growth opportunities at short notice. We have demonstrated this ability once again in the year under review. This ensures not only that sufficient refinancing is available at all times, but also that we can use developments on individual debt markets to strengthen our competitive position. We cultivate all of our instruments through a continuous market presence. This proximity to the markets ensures that we can always rely on our own assessment of the markets' development and their receptivity for our placements. In light of the current rapidly growing competition for capital on the credit markets, we are confident that our longstanding reputation on these markets provides us a strategic competitive advantage. Through GRENKE Bank, we have expanded our refinancing base and gained good access to private customer business via this sales channel.

31 GRENKE Consolidated Group 27 Our day-to-day business focuses on ensuring that the GRENKE Consolidated Group is able to meet its payment obligations at all times. To this end, GRENKELEASING AG always maintains sufficient funds to refinance its own lease receivables as well as those of its subsidiaries. The GRENKE Consolidated Group s cash and cash equivalents are managed for the Consolidated Group companies by the Irish subsidiary GRENKE FINANCE Plc. under a cash pool arrangement. In certain cases, we also seek financing for our international expansion by obtaining funding on the respective local markets or in the respective local currencies. Corresponding framework agreements are currently in place particularly in Brazil, the United Kingdom, Poland, and Switzerland. Economic Conditions and Sector Trends The growth potential of the GRENKE Group is much more dependent upon sector trends such as the business policies of banks in the leasing business and increasing regulatory requirements in the sector than on overall economic developments. We have just recently shown that even in economically difficult times we are able to expand new business. The general economic trend is essentially reflected when observing the development of the loss ratio of the GRENKE Consolidated Group. This shows the progression of the loss ratio in comparison to the EULER HERMES Insolvency Index (see chart below). However, we can buffer ourselves from these influencing factors. We manage the approvals of lease applications using our longstanding proven scoring process according to our own risk assessments. This is undertaken, ranked according to risk class, by taking the absolute number of approvals into account as well as the risk-weighted margins. As a result, we have been able to maintain our loss ratio within a narrow range since 2009 the first year following the start of the financial market and banking crisis while during this same time period, the EULER HERMES Insolvency Index for the eurozone rose continuously. Comparison of GRENKE Consolidated Group loss rate vs. EULER HERMES Insolvencies indices (2005 = 100) Sources: EULER HERMES 08/2012 (2012: forecast), GRENKE Consolidated Group 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 1.3% GRENKE Consolidated Group loss rate United Kingdom Germany 1.2% Italy France 1.2% 1.2% eurozone % 1.9% 1.7% 1.7% The market and central bank interest rates have an impact on our refinancing costs. Due to a broad range of refinancing instruments including GRENKE Bank, the GRENKE Group has the possibility of flexibly employing these instruments depending upon the expected market environment and interest rate development. In addition to the access to institutional investors, the Group also has access to private investors via GRENKE BANK AG and thus has consistently diversified its investor basis. Through the broad mix of instruments and investors we have had adequate access to refinancing options at all times, be it through bilateral programmes with banks, our issuance programmes on the capital market, or by using the deposit business of GRENKE BANK AG.

32 28 GRENKE Consolidated Group Key Events in the Fiscal Year In the reporting year, we once again generated strong growth in our key markets accompanied by an improved CM2 margin from new business and systematic risk management and an increase in profitability. We clearly exceeded our long-term objective of increasing new business by at least 10 percent per year and our growth target for fiscal year 2012 of around 15 percent. A volume of more than one billion euros was reached for the first time. Our broad international presence allows us to adopt a regional focus on particularly attractive opportunities in target markets with below-average competitive intensity. This enables us to expand our business rapidly and have rising CM2 margins while maintaining our policy of active risk management and realising risk-adequate margins. New business and its profitability in our individual sales markets are presented in the "Report on Segment Development". Other than a bond in the amount of EUR 100 million, only instruments having below-average volume were due for repayment and refinancing in This will also be largely the case in There is one larger bond maturing in March 2013 with a volume of EUR 75 million. Furthermore, only instruments with below-average volume are scheduled for repayment. Nonetheless, in the year under review we not only continued to attend to all of our instruments, gained new refinancing partners, and increased available credit lines, but we also took particular advantage of the historically favourable interest rate environment to issue four new bonds with a nominal volume totalling EUR 366 million. Therefore, we can press ahead with the further development of the GRENKE Group with a focus on our strategic objectives and, to a large extent, without exposure to the potential volatility on the capital markets. Our refinancing activities in the year under review are described in detail in the "Report on the Financial Position and Net Assets". The additional refinancing funds obtained were used partly to acquire companies of former franchise partners. In 2012, we acquired companies in Portugal, Romania, and Spain. In Portugal in particular, business development has progressed rapidly and successfully in recent years, meaning that we were able to acquire a large and attractive unit here. Overall, funds totalling EUR 31.4 million were used for the acquisition of subsidiaries in fiscal year In addition, a tranche of EUR 10.7 million is due in January Further information on the acquisitions can be found in the "Report on the Results of Operations" and "Report on the Financial Position and Net Assets". Since May 2003, we have had a Standard & Poor s long-term issuer credit rating of "BBB+" and a short-term rating of "A-2" with a stable outlook. This good rating greatly contributes to our standing on the capital markets. In September 2012, the ratings were reconfirmed with a stable outlook (issuer credit rating of BBB+ for long-term and A-2 for short-term maturities). For senior unsecured debt and short-term debt, our rating was even upgraded from BBB to BBB+ and from A-3 to A-2, respectively. In December 2012, the issuer credit rating was reconfirmed but the outlook was downgraded to "negative". The reason given for this was our continued high growth in markets that Standard & Poor s considers to be subject to higher general economic risks. Taking risks forms a significant part of our business model. Thanks to the experience of our continuously enhanced scoring model, we are confident that on the basis of this model we can accurately assess risks and can thus determine financing conditions with an appropriate premium, even in the current more challenging times. Therefore, we will work intensively on communicating these and the other strengths of our business models. Detailed information on how our scoring model works is provided in the Risk Report, which forms a part of the Report on Forecasts and the Outlook.

33 GRENKE Consolidated Group 29 Report on the Results of Operations Selected Information from the Consolidated Income Statement EURk Jan. 1, 2012 to Dec. 31, 2012 Jan. 1, 2011 to Dec. 31, 2011 Net interest income 111,465 92,691 Settlement of claims and risk provision 43,421 34,415 Net interest income after settlement of claims and risk provision 68,044 58,276 Profit from insurance business 30,156 25,703 Profit from new business 35,698 31,021 Profit from disposals 3,982 1,653 Income from operating business 137, ,653 Staff costs 42,809 36,695 Of which total remuneration 35,402 30,545 Of which fixed remuneration 26,498 23,515 Of which variable remuneration 8,904 7,030 Selling and administrative expenses (not including staff costs) 30,395 26,373 Earnings before taxes 59,698 50,432 Net profit 42,461 39,251 Earnings per share (basic) in EUR Earnings per share (diluted) in EUR In fiscal year 2012, the GRENKE Consolidated Group enjoyed a favourable business development and increased its net profit by 8 percent. The first-time consolidation of the companies of the former franchisees in Spain (Madrid/Málaga), Romania, and Portugal which were acquired in the third quarter of the reporting year, did not have a material impact on net profit. The success of the year under review is attributable to the high level, high-margin new business generated in recent years, which is increasingly generating income for us as the terms of the respective leases progress. Consequently, at 17 percent, the growth in interest and similar income from financing business was significantly more pronounced than the 12 percent increase in expenses from interest on refinancing and deposit business. Thanks to the consistent management of our margin in the new business, we are able to achieve a disproportional rise in income and take into account future risks in our financing conditions. Consequently, we are prepared for a rise in losses. Despite a 26 percent increase in expenses for the settlement of claims and risk provision over the previous year, the net interest income after settlement of claims and risk provision grew 17 percent in the reporting period. The loss rate remained at the previous year s level and amounted to 1.7 percent. Profit from insurance business and profit from new business both enjoyed a favourable increase of 17 percent and 15 percent, respectively. The profit from disposals shows the excess generated over the calculated residual value. As a net amount, it generally makes only a minor contribution to earnings and tends to be volatile. The rise of 141 percent in the reporting year proved this once again. In total, income from operating business grew 18 percent. In the period under review, staff costs rose by 17 percent thereby somewhat faster than the number of employees which increased 16 percent. This was due in particular to the payment of performance-related remuneration in addition to the usual annual salary increases. In order to ensure the transparency of our fixed cost base and our variable remuneration, both components are reported

34 30 GRENKE Consolidated Group separately. As compared to the previous year, the fixed remuneration increased 13 percent while the variable remuneration rose 27 percent. The rise of 15 percent in selling and administrative expenses was below the growth in income from operating business. While operating and administrative expenses increased below-average, consulting and audit fees grew above-average ahead of the market entry into new countries. Selling costs also grew above-average due to the strong growth in business. Other operating expenses rose 48 percent and resulted primarily from higher currency translation differences. Other operating income decreased slightly by 7 percent. In fiscal year 2012, earnings before taxes increased 18 percent year-on-year. Net profit rose 8 percent and earnings per share amounted to EUR 3.10 compared to EUR 2.87 in the previous year. Report on Segment Development Selected Information on the Leasing, Banking, and Factoring Segments Segments Leasing Banking Factoring EURk New business 898, , ,859 87,381 Contribution margin 2 (CM2) 156, , CM2 margin Operating segment income 131, ,122 4,977 4,262 1,589 1,269 Staff costs 40,694 34,810 1,259 1, Segment result 53,641 47,256 5,844 3, Due to the increase in internationalisation, the primary reporting of the GRENKE Consolidated Group s segments was aligned according to the dominant organisational structure which is based on its operating activities. Therefore, the operating segments are divided into Leasing, Banking, and Factoring in accordance with the management of the company s segments. The former regional split within the Leasing segment is combined for quarterly reporting since January 1, The previous year s figures were adjusted accordingly. A regional spit of the business activities is provided on a yearly basis as part of the consolidated financial statements for each fiscal year. Detailed financial information is available for the three operating segments. The Leasing segment comprises all of the activities that are related to the Consolidated Group s leasing business. The segment is still the most important earnings pillar for the GRENKE Consolidated Group. Consequently, the information in the previous section on the results of operations of the GRENKE Consolidated Group also essentially applies to the Leasing segment. In the reporting year, the operating segment income of the Leasing segment grew 18 percent and the segment result increased 14 percent. The Banking segment comprises the activities of GRENKE BANK AG. In the reporting year, operating segment income of the Banking segment grew 17 percent. Following a strong rise in the prior year, the segment result further soared by 76 percent in the reporting period and contributed almost than 10 percent to the Consolidated Group s profits.

35 GRENKE Consolidated Group 31 The Factoring segment contains the activities of GRENKEFACTORING GmbH. Although the Factoring segment still represents a small segment it experiences continuous growth. In fiscal year 2012, operating segment income rose 25 percent and the segment result more than doubled. Based on a regional split, our revenues in Germany developed more steadily than those of our international markets. In the reporting year, they grew 6 percent to EUR 53.8 million. In France, our largest international market, we realised growth of 18 percent to EUR 24.8 million. Italy, our fastest growing market in recent years, even reported an increase in operating income of 58 percent to EUR 19.4 million. This proves that we have successfully managed the rapid business expansion in recent years and that we did not generate growth at the expense of the quality of our receivables portfolio but maintained a balanced risk/return profile. The operating income in the countries combined under Others grew 23 percent to EUR 40.0 million. In fiscal year 2012, we continued to grow the new business of the GRENKE Group. In order to transparently present our organic growth, we have adjusted the prior year figures for the acquisitions of our former franchisees in the following. With growth of around 20 percent to EUR 1,027.6 million as compared to EUR million in the previous year, we noticeably exceeded our target of a 15 percent increase for We continued to successfully combine our sustainable expansion with attractive and risk-adequate CM2 margins. In the reporting period, the CM2 margin in our Leasing segment even improved to 17.4 percent from 16.0 percent in the prior year. This was the result of a consistent go-to-market strategy as well as favourable interest rates. In 2012, our international business continued to be the growth driver for the GRENKE Group and accounted for 66 percent of our new business volume as compared to 61 percent in the previous year. In our home market of Germany, we experienced a more moderate but encouraging development, although our expansion is naturally less rapid on account of the high regional density of our network and our position as market leader for small-ticket IT leasing. In fiscal year 2012, the GRENKE Group s new business in Germany increased 6 percent to EUR million. At EUR million ( 1 percent), new business in the Leasing segment remained at the prior year s level whereas the CM2 margin improved slightly to 13.5 percent from 13.4 percent in the previous year. In Switzerland, new business in the Leasing segment rose 33 percent to EUR 24.2 million. The CM2 margin improved considerably over last year from 19.8 percent to 21.8 percent and remained at an above-average level. In France, which continued to be our largest international market, we expanded our business by 19 percent to EUR million. Also in France we were able to significantly increase our CM2 margin to 19.3 percent from 17.3 percent in the prior year. Italy, a market which has seen very high growth in recent years, again performed very strong in the year under review. New business increased 25 percent to EUR million, while the CM2 margin rose from 15.1 percent to 17.7 percent. In the Netherlands, we also recorded strong growth of 34 percent. However, the CM2 margin declined from 18.8 percent to 15.7 percent. In the United Kingdom and Spain, our new business expanded 20 percent each, and in Poland and Portugal by somewhat more than 10 percent. CM2 margins remained largely unchanged with the exception of Spain, where we achieved a strong improvement to 18.5 percent from 15.9 percent in the prior year. The GRENKE Group s new factoring business continued to develop favourably in fiscal year 2012 increasing 41 percent to EUR million. The profit margin based on the factoring volume amounted to 2.25 percent compared to 2.28 percent in the previous year. This margin is based on an average factoring period of around 36 days compared with 37 days in the previous year.

36 32 GRENKE Consolidated Group Split of GRENKE Group s new business incl. franchise partners, factoring and business start-up financing as per December 31, 2012 France 20.5% Switzerland 6.4% of which factoring 4.1% Italy 12.4% Germany 34.3% (incl. franchise partners, car leasing and business start-up financing) of which factoring 7.9% Spain 2.8% United Kingdom 5.8% Poland 1.3% Other countries 11.1% incl. franchise partners* The Netherlands 1.9% Portugal 3.5% * Austria, Belgium, Brazil, Czech Republic, Denmark, Finland, Hungary, Ireland, Luxembourg, Norway, Romania, Slovak Republic, Slovenia, Sweden, Turkey Growth rates of the international Leasing Business as per December 31, 2012 (as against the comparable period of 2011) 40% 30% 20% % % FR CH IT ES UK PL NL PT GRENKE Group International

37 GRENKE Consolidated Group 33 Report on the Financial Position and Net Assets Selected Information from the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows EURk Dec. 31, 2012 Dec. 31, 2011 Current assets 1,020, ,682 Of which cash and cash equivalents 116, ,234 Of which lease receivables 688, ,799 Non-current assets 1,331,364 1,106,286 Of which lease receivables 1,185, ,955 Total assets 2,352,292 1,968,968 Current liabilities 758, ,062 Of which refinancing liabilities 521, ,624 Of which liabilities from deposit business 115,890 93,897 Non-current liabilities 1,243,155 1,024,249 Of which refinancing liabilities 1,107, ,008 Of which liabilities from deposit business 93,477 61,230 Equity 350, ,657 Equity ratio in percent Total assets 2,352,292 1,968,968 Cash flow from operating activities 80,067 71,932 Net cash flow from operating activities 62,597 41,584 Cash flow from investing activities 39,333 5,803 Cash flow from financing activities 10,752 10,247 Total cash flow 12,512 25,534 As a result our strong new business volume, lease receivables and total assets of the GRENKE Consolidated Group increased 19 percent each in fiscal year Cash and cash equivalents increased 12 percent. Equity rose 11 percent on the back of the income development. As a result of the continued strong growth, the equity ratio of 14.9 percent for the year under review was slightly below the level of our long-term target of at least 16 percent. To finance the lease receivables, we made use of our wide range of refinancing sources. In fiscal year 2012, all four of our ABCP programmes with a total volume of EUR million and all four existing revolving loan facilities with a total volume of EUR million were extended. We added one loan facility with a volume of EUR 15.0 million. As per December 31, 2012, these were utilised in an amount of EUR 45.0 million. In addition, four new bonds with a total nominal volume of EUR million were issued and six new promissory note loans were taken out. We also concluded a receivables purchase agreement for receivables in Poland with DZ Bank Polska and BRE Bank SA. For receivables in Brazil, we concluded local receivables sale agreements with Banco WestLB do Brazil and Deutsche Bank SA in The money market facilities available in an amount of EUR 50.0 million were utilised in an amount of EUR 25.0 million as per the end of the reporting period.

38 34 GRENKE Consolidated Group The new CP programme that was launched in October 2011 with a volume of up to EUR million was utilised in an amount of EUR 20 million as per the end of the reporting period. Refinancing via bank deposits of GRENKE BANK AG was also used extremely successfully once again, with liabilities from the deposit business increasing significantly by 35 percent to EUR million after EUR million. Generally, we refinance the development funds we contract via global loans from the respective development banks. As per the end of the reporting period, EUR 32.5 million of the EUR 40 million in loans granted was utilised. The GRENKE Consolidated Group uses various instruments for refinancing, the maturities of which are spread across several periods. This allows us to respond flexibly to changes in the refinancing markets. The following table shows the expected cash outflows resulting from contractual obligations as per December 31, Payments falling due within 3 months 1 5 after EURk Total 3 months to 1 year years 5 years Financial liabilities 1,997, , ,536 1,266,527 52,940 Leases and rentals 29,802 1,988 5,679 17,079 5,056 Purchase obligations * 265, , Obligations from onerous contracts ** 7,606 1,699 3,591 2,308 8 Total contractual commitments 2,300, , ,806 1,285,914 58,004 * Legally binding obligation to purchase goods and services and trade payables ** This item contains the present values of all future cash flows. The GRENKE Consolidated Group considers this to be the correct presentation of the cash flows that would be due for payment should these positions be closed out. See the notes to the consolidated financial statements In addition to the usual purchase obligations as part of ordinary business activities, interest and principal payments for financial liabilities in particular will fall due in fiscal year Of the EUR 543 million in financial liabilities coming due in 2013, EUR 186 million is attributable to ABS and ABCP programmes. As a matter of principle, they consist of individual short-term tranches, are generally fixed for a period of 12 months, and can be utilised on a revolving basis during this period. Thus, the amounts released by the repayment of lease receivables can be reused. The largest other individual items of financial liabilities coming due in 2013, are a bond having a volume of EUR 75.0 million maturing in March and six promissory note loans with a total amount of EUR 59.5 million maturing in March (EUR 24.0 million), October (EUR 10.0 million), and December (EUR 25.5 million). Financial liabilities are repaid from the Consolidated Group s operating cash flow, the available refinancing facilities, and the potential utilisation of further refinancing. The GRENKE Consolidated Group manages the utilisation of refinancing funds based on the development of new business and the cash flow from the receivables portfolio. Cash inflows from refinancing only increased moderately from EUR million in the prior year to EUR million in the reporting year. In contrast, as previously mentioned refinancing via the deposit business of GRENKE BANK AG was used to a greater extent and resulted in a cash inflow of EUR 54.2 million after EUR 32.9 million in the previous year. The cash outflow in the area of other assets was reduced to EUR 33.5 million compared to EUR 45.2 million in the previous year. In total, the cash flow from operating activities increased 11 percent in the year under review. The improvement of 51 percent in net cash flow from operating activities was significantly more pronounced as cash outflows for income taxes paid were lower as compared to the high level of the previous year.

39 GRENKE Consolidated Group 35 The cash flow from investing activities amounted to EUR 39.3 million. In addition to payments for the usual annual purchase of operating and office equipment and intangible assets, the figure for the period under review includes payments for the acquisition of subsidiaries in the amount of EUR 31.4 million. These payments relate to the acquisitions of the former franchisees in Spain (Madrid/Málaga), Romania, and Portugal. The cash flow from financing activities remained largely unchanged with an increase of 5 percent and primarily consists of the dividend distribution in the period under review. Total cash flows in fiscal year 2012 decreased 50 percent. Overall Statement on the Financial Situation of the GRENKE Consolidated Group In fiscal year 2012, we were able to further strengthen GRENKE Consolidated Group s market position and again increase the net profit even after the solid increase experienced in the prior year. Furthermore, we have solidified our network of locations and have made preparations for the continued further expansion in our new and existing regional markets in fiscal year Beyond our leasing business, we have consistently continued to proceed with the diversification of our range of finance solution services in the past fiscal year and will continue to pursue this in the fiscal year which has just begun. We have the international presence, the diversified range of services, the experience, and the profitability in order to also recognise and exploit opportunities in a targeted manner in the future. We continue to have full access to appropriate refinancing resources in order to steer our business exclusively along the lines of our strategic planning and to concentrate on those markets which offer an attractive risk-reward profile. In 2013, only a lower than average volume of repayments are due. Following the high volume placements in the reporting year, we currently even have liquidity reserves. There was an increased level of interest in our Company on the capital markets so that the risks in this area are now easing. Nevertheless, we are expecting a high level of volatility in the capital markets overall in the future. Over the past years, we have proven our ability to successfully handle different situations and conditions in the capital markets. Therefore, at the time of completing this annual financial report, the GRENKE Consolidated Group finds itself in a very favourable economic position which will allow it to continue with its international expansion, grow new business, and further increase its earnings in the future. Research and Development The GRENKE Consolidated Group is a financial services company, meaning that it is not involved in basic research and development. However, the core competency of the GRENKE Consolidated Group is the provision of efficient leasing logistics through the use of centralised and highly standardised IT processes. To this end, standard products are optimised for our requirements via individually programmed applications. Therefore, to a limited extent, IT development work is performed in conjunction with the establishment of online platforms for the specific requirements of our individual markets. Non-Financial Performance Indicators Above and beyond the financial and organisational management of the GRENKE Consolidated Group, our success is largely attributable to our non-financial performance. In this context, we have defined the following performance indicators:

40 36 GRENKE Consolidated Group Commitment to Corporate Responsibility Integrity is the key to the long-running success of the GRENKE Consolidated Group. We do business on the basis of the binding GRENKE Code of Conduct. In doing so, we go above and beyond the statutory and regulatory requirements in our markets and commit ourselves to an ethical framework. The aim is to ensure that our corporate values are maintained across national borders and despite the diversity found within our international organisation. Feedback from our employees, suppliers, lessees and other business partners, their suggestions, requests, and complaints, are systematically recorded and analysed. Internal recipient satisfaction with senior managers and other departments form part of the balanced scorecard assessment, and hence the performance bonus paid to the senior managers and departments concerned. As part of our so-called external recipient satisfaction, the suggestions and criticism of our financing recipients and reseller partners are continually evaluated. This is intended to ensure that feedback from our business partners is recorded within a structured process and taken into account in the further development of our product and service range. Modern Human Resources Management GRENKE is a services group. Thus, our employees play a particularly central role in establishing the profile of the GRENKE Consolidated Group in our target markets. We regard modern human resources work as a fundamental concern and obligation that is necessary for our long-term continued success. This is all the more important in light of the fact that competition for qualified employees in many of our target markets is set to increase in the future as a result of demographic changes. Above and beyond the statutory and regulatory requirements, we take employee issues very seriously as part of our commitment to corporate responsibility. The way in which we interact and work with each other internally is set out in a manual that describes the obligations of employees towards the Company as well as the obligations of the GRENKE Consolidated Group towards its employees. Appreciation, fairness, and respect are key aspects of how we treat each other. We support personal responsibility and equal opportunity, encourage the individual strengths of our employees, and take their requirements into account wherever possible in terms of shaping their work environment and working hours. Our arrangements are geared towards enabling a healthy work-life balance. We offer further training and qualification programmes to help our employees meet the demands made of them while expanding their opportunities for professional and personal development. Knowledge of the Markets and Individuality of the Product Range The GRENKE Group is active internationally in a number of countries, some of which have extremely varied cultures, structures and requirements. We serve our markets with individual financing products, contractual arrangements, and contribution margin requirements. In addition to simple, standardised financing, we offer a broad range of contractual options that are tailored to the different needs of our customers. This is a key factor in ensuring our success. When developing a new market, we start by examining the conditions and the legal environment from our location in Germany. Then, we either form a local subsidiary or enter into a contract with an entrepreneurial franchisee with extensive knowledge of the local market. Our range of leases is continually optimised on the basis of a close exchange between the local sales team and the GRENKE Consolidated Group s head office in Germany. The contribution margin requirements for the local units are fine-tuned in a continuous and standardised process that is also increasingly being implemented online.

41 GRENKE Consolidated Group 37 International Customer Base Over decades, we have built up a broad international customer base. As per the end of reporting year, the number of current contracts in the GRENKE Group s Leasing Business segment amounted to 324,446. In addition, over the past years we have further increased our customer base through additional financing and investment products offered by the GRENKE Consolidated Group. Therefore, we can now build on an established base from which we can generate recurring business. Moreover, a variety of crossselling opportunities present themselves since we will also be offering these customers our successively expanding product range. Therefore, our established customer base represents a key competitive advantage and, owing to the low average volumes of our individual contracts, a significant barrier to market entry for other providers. Last but not least, our international focus has given us extensive experience in developing new markets and leveraging the potential there. With the proven high scalability of our business model, which is continuously implemented in practice, we can quickly and efficiently address new regional markets, thereby expanding our customer base even further. Business Excellence in all Corporate Divisions It is our aim to stand out from the competition by ensuring the highest quality in our processes. The systematic and on-going improvement of our quality management forms part of our corporate philosophy. This enables us to ensure a high level of service quality and satisfaction among our customers and business partners. Our quality management system was certified for the first time in It primarily consists of our scoring model, evaluation of our reseller relationships, documentation of our business processes, and development of IT programmes designed to meet our specific needs. The internally developed, IT-based scoring model was introduced in 1994 and has been enhanced on an on-going basis ever since. By combining information from publicly available databases and our own criteria, which are continuously refined, we classify risks and the contribution margins that are required in order to generate our yield targets on a sustainable basis. The aim of the model is not to minimise risk, but rather to correctly assess it. The losses calculated in advance as part of our contribution margin calculation come very close to the actual loss rates. This ensures that we achieve our yield targets while offering the most competitive conditions we can. Further information on our quality management system and on how our scoring model works is provided in the Risk Report, which forms a part of the Report on Forecasts and the Outlook. Reputation on the Equity and Debt Capital Markets Our reputation on the debt capital markets largely determines our access to funding, and hence the competitive strength and growth potential of the GRENKE Group. Our strategy focuses on the further expansion of our already highly diversified refinancing. We have cultivated our presence on the debt capital markets for a number of years thereby allowing us to continuously broaden our refinancing options. We are confident that this represents a major competitive advantage for us. This is particularly relevant since regulatory requirements are intensifying as a result of the recent financial and sovereign debt crisis, making it more expensive for companies in all industries to obtain refinancing. Competition for financing options has already increased significantly and this trend is set to continue.

42 38 GRENKE Consolidated Group Last but not least, our strong reputation on the stock market is extremely important to us. We pursue our goal of maintaining this reputation strategically and independently of our capital requirements. Our presence is characterised by timely, transparent, and regular reporting, personal discussions with capital market participants at the level of the Board of Directors, and a consistent, shareholderfriendly dividend policy. Employees In the year under review, the GRENKE Consolidated Group increased its workforce (excluding the Board of Directors) to an average of 681 employees (previous year: 585 employees). In addition to recruiting additional staff to support our growth and allowing ourselves to leverage further opportunities for expansion, we have also recorded increases as a result of the first-time consolidation of the companies acquired. An average of 344 people (previous year: 310 people) were employed in Germany and 337 (previous year: 275) at our international locations. However, the 16 percent increase in the number of employees was again lower than the growth in our new business volume which continues to help us strengthen our profitability. The average fluctuation rate for the Consolidated Group was 6.5 percent after 10.8 percent in the previous year. As in the previous years, the level of fluctuation at the management level and among senior executives in particular was considerably lower. Promoting the further training and qualification of our employees, and hence providing them with personal and professional opportunities, is an obligation that we are happy to meet irrespective of the short-term interests of the Company. Across all locations, we offer our employees attractive options for further training via the GRENKE Academy. Here, further personal development is at the forefront. Regularly conducted evaluation processes and the use of modern E-Learning programmes ensure not only our high demands for quality are met but also ensure the transfer of knowledge within the GRENKE Group. This has been extremely successful: In the reporting year, 90 percent of GRENKE Consolidated Group employees have taken part in various trainings. We also offer a wide range of vocational training and dual-study courses. In fiscal year 2012, we had a total of 32 young trainees. We regularly support new apprenticeships such as in the area of dialogue marketing, where we currently have five trainees. We are currently training three employees as IT specialists in the field of systems integration. There are also two young employees completing training as office administrators. In addition, seven students are currently undertaking the tri-national International Business Management degree programme that combines work and study from the Baden-Württemberg Cooperative University of Lörrach, the University of Applied Sciences Arts Northwestern Switzerland in Basel, and the Haute Alsace University in Colmar. This opportunity for young people is offered by GRENKELEASING AG as well as our subsidiaries in Switzerland and France. We have worked with the Cooperative University of Lörrach since In addition to the tri-national degree, we also offer a dual course of study in Lörrach leading to a Bachelor of Science degree in Business Information Systems. Two young people started this course in At the Cooperative University of Karlsruhe with which we have a cooperation dating back to 2007 two students are currently enrolled in business information systems courses, while another is studying applied computer science. We have also worked with Baden-Württemberg Cooperative University of Mannheim since 2007, and currently have four students in the areas of accounting and controlling. We expanded this cooperation in October 2011 and now also offer International Business as a dual course of study. Five students have taken up this opportunity to date.

43 GRENKE Consolidated Group 39 Matters Concerning the Board of Directors The Supervisory Board of GRENKELEASING AG appointed two new members to the Board of Directors in the year under review. In order to bolster the company's IT function, which is of particular importance to GRENKE, Ms. Antje Leminsky (41) initially joined the Company as a Representative of the Board on August 1, She will take over IT responsibility on the Board of Directors from Mr. Grenke as per August 1, Mr. Jörg Eicker (47) joined the Board of Directors on September 1, 2012 and assumed responsibility for Treasury, Refinancing, Risk Management, Reporting, Investor Relations, and GRENKE Bank from Dr. Uwe Hack as per October 1, Dr. Uwe Hack left the Board of Directors as per September 30, 2012 by mutual arrangement to take up a professorship. On October 17, 2012, the Supervisory Board reappointed Mr. Wolfgang Grenke to the Board of Directors as Chairman of the Board of Directors for a further five year term until November Remuneration Report The corporate governance report in this annual report includes the remuneration report, which sets out the principles of the remuneration system for the Board of Directors and the Supervisory Board with the individualised remuneration of the members. This report forms part of this management report. Share Trading and Shares Held by the Governing Bodies The following table provides a summary of directors holdings as per December 31, The members of the Board of Directors do not currently hold any options for shares in GRENKELEASING AG. The granting of options to the members of the Supervisory Board has not been provided for in the past, and this remains the case. Number of shares as per Dec. 31, 2012 Number of shares as per Dec 31, 2012 Board of Directors Supervisory Board Gilles Christ 1,600 Prof. Dr. Ernst-Moritz Lipp 28,300 Jörg Eicker 100 Dieter Münch 75 Wolfgang Grenke* 4,925,619 Florian Schulte 2,365 Mark Kindermann 52,053 Erwin Staudt 1,000 Prof. Dr. Thilo Wörn 1,060 Total 4,979,372 Total 32,800 * excluding voting rights from the Grenke family pooling agreement see the disclosures in accordance with Section 315 (4) HGB below According to Section 15a WpHG, members of the Board of Directors and Supervisory Board and their close family members are obligated to disclose the purchase and sale of shares in the Company and related financial instruments. In fiscal year 2012, the following notifiable transactions were conducted: In February, Prof. Dr. Thilo Wörn purchased 650 shares. Also in February, Dr. Wörn GmbH purchased 200 shares and his sons Marc, Glen, and Phil Hans Wörn purchased 70 shares each. In May, Fines Holding GmbH, in which Mr. Florian Schulte in the Managing Director, purchased a total of 2,365 shares. In July, Dr. Uwe Hack (member of the Board of Directors until September 30, 2012) sold 5 shares and in August he sold an additional 5,495 shares. All transactions were carried out via the stock exchange (XETRA).

44 40 GRENKE Consolidated Group Dependence Report Since the pooling agreement between Mr. Wolfgang Grenke and Ms. Anneliese Grenke, Mr. Moritz Grenke, Mr. Roland Grenke, and Mr. Oliver Grenke came into effect on November 6, 2011, percent of the voting rights of GRENKELEASING AG s share capital as per 31 December 2010 have been allocated to Mr. Wolfgang Grenke, as acclamation is concluded by majority within the pooling agreement. Assuming the average attendance level of around percent at the last three Annual General Meetings of GRENKELEASING AG, Mr. Wolfgang Grenke has reached the factual majority of GRENKELEASING AG s voting rights as per that date. As the Board of Directors currently assumes no future changes in the share of voting rights, a dependence report was compiled pursuant to Section 312 AktG. We hereby declare pursuant to Section 312 AktG: In the case of the legal transactions and measures listed in the report on relationships with affiliated companies, our company received appropriate compensation for every legal transaction, and has not been placed at a disadvantage due to measures that were implemented or not implemented, according to the circumstances known to us at the time the legal transactions were concluded or the measures were implemented or not implemented. Explanatory Report on the Disclosures Pursuant to Section 289 (4) and Section 315 (4) HGB The shares of GRENKELEASING AG are admitted to trading on the Frankfurt Stock Exchange in the Prime Standard, the segment of the regulated market with additional post-admission obligations. The company s fully paid-up issued capital amounts to EUR 17,491, and is divided into 13,684,099 no-par value bearer shares each with a notional interest in the share capital of around EUR All shares carry the same rights; there are no restrictions on voting rights, preference shares, or special control rights. As per December 31, 2012, the Chairman of the Board of Directors of GRENKELEASING AG, Wolfgang Grenke, held 4,925,619 shares in the Company, corresponding to 36 percent of the share capital. Including the aforementioned shares held by Wolfgang Grenke, a total of percent of the share capital or 6,170,947 shares were attributable to the Grenke family pooling agreement at this date. The Board of Directors is not aware of any other restrictions agreed between shareholders and relating to voting rights or the transfer of shares. The Articles of Association of GRENKELEASING AG do not provide for any regulations which deviate from the statutory regulations on the appointment of members of the Board of Directors by the Supervisory Board. These stipulate that the members of the Board of Directors are appointed for a maximum of five years. Reappointment is permitted. The Board of Directors of GRENKELEASING AG consists of at least two members. The Supervisory Board determines the number of members of the Board of Directors. It decides on their appointment and dismissal and the conclusion, amendment, and termination of their contracts of employment. The Supervisory Board can appoint a Chairman and Deputy Chairman of the Board of Directors as well as alternative members of the Board of Directors. In accordance with statutory requirements, amendments to the Articles of Association must be adopted by resolution of the Annual General Meeting. Unless otherwise required by law, resolutions by the Annual General Meeting are passed by a simple majority of the

45 GRENKE Consolidated Group 41 votes cast and, if legislation requires, a capital majority as well as a majority vote, by a simple majority of the share capital represented. The Supervisory Board is authorised to decide on amendments to the Articles of Association that relate solely to their wording. In addition, the Supervisory Board is authorised to amend the wording of Article 4 of the Articles of Association governing the amount and division of the share capital, among other things, to reflect the utilisation of authorised capital or after the end of the authorisation period. There are no compensation agreements with the members of the Board of Directors or with employees in the event of a takeover bid. No further disclosures are made in accordance with German Accounting Standard 15a.27 (change of control clauses), as such disclosures could be substantially disadvantageous to the parent company. In accordance with the resolution adopted by the Annual General Meeting on May 12, 2009, the Board of Directors is authorised, with the approval of the Supervisory Board, to increase the company s share capital on one or more occasions up to and including May 11, 2014 by a nominal amount of up to EUR 8,500,000 by issuing new no-par value bearer shares in exchange for cash and/or contribution in kind (Authorised Capital). Shareholders shall be granted a subscription right in this case. This authorisation has not yet been utilised since it was granted. However, in the case of cash capital increases, the Board of Directors is authorised, with the approval of the Supervisory Board, to partially or completely disregard shareholders subscription rights for up to 10 percent of the company s share capital if the issue price of the new shares is not significantly lower than the market price. In addition, shareholders subscription rights may be partially or completely disregarded in the case of capital increases for contribution in kind for the purpose of acquiring entities, parts of entities, or equity investments. In accordance with the resolution adopted by the Annual General Meeting on May 10, 2011, the Company s share capital was also contingently increased by up to 3,000,000 new no-par value bearer shares or up to EUR 3,834,690 (Contingent Capital 2011). The contingent capital serves to cover options and/or convertible bonds with a total nominal volume of up to EUR 150,000,000 and a maximum term of 10 years that may be issued by the Board of Directors, with the approval of the Supervisory Board, on one or more occasions up to and including May 9, Existing shareholders subscription rights may be disregarded. No options or convertible bonds have been issued since this authorisation was granted. By resolution of the Annual General Meeting on May 11, 2010, the company was also authorised in accordance with Section 71 (1) no. 8 AktG to acquire treasury shares of up to 10 percent of the total share capital at the time of the resolution. The authorisation applies until May 10, 2015 and can be exercised in whole or in part, on one or more occasions, by the Company itself or by third parties assigned by the Company. The shares can be redeemed without a further resolution by the Annual General Meeting. The shares may be sold in exchange for non-cash contributions. They may also be sold for cash to third parties by other means than via the stock exchange or an offer to all shareholders if the sale price is not significantly lower than the market price at the transaction date. The utilisation of the various authorisations for the issue of new shares, not including shareholders subscription rights, may not exceed 10 percent of the company s share capital at the date on which the respective resolution was adopted by the Annual General Meeting. No treasury shares have been acquired to date.

46 42 GRENKE Consolidated Group Corporate Governance Statement Pursuant to Section 289a HGB As a listed stock corporation, we are required to submit a Corporate Governance Statement in accordance with Section 289a HGB that contains the Declaration of Conformity in accordance with Section 161 AktG, disclosures on corporate management practices, and a description of the working practices of the Board of Directors and the Supervisory Board. The Declaration of Conformity in accordance with Section 161 AktG of GRENKELEASING AG and the Corporate Governance Statement are available online at Events Subsequent to the End of the Fiscal Year In addition to the existing cooperation agreements with NRW.Bank, TAB, and IBB, on January 30, 2013, GRENKELEASING AG and GRENKE BANK AG have established a further cooperation agreement with LfA Förderbank Bayern by means of global loan in the amount of EUR 25 million. Through this collaboration, small and medium-sized enterprises and self-employed professionals, who are located in Bavaria, can access development funds for investments via leasing. The lease agreements are available exclusively for investment plans of commercial enterprises and members of self-employed professions located in Bavaria with annual sales of up to EUR 500 million. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. Report on Forecasts and Outlook Opportunities Over the past years, the GRENKE Group has built a European-wide network, and now with Brazil, also has activities outside of Europe. In the years to come, we will see a particular benefit from a significant expansion in our market share within our current markets. We will take advantage of opportunities especially in markets where there is a chance for high-margin growth due to the exit of competitors, a partial reduction in their services offered, or a significant improvement in the risk situation of SMEs as part of the overall growth in the economy. This will not entail additional substantial selling expenses since we currently already have many more financing applications than we can accommodate. Therefore, we could rapidly expand our business by raising the conversion rate in our individual markets. However, we will only do this to the extent feasible without compromising our risk-adequate margin policy. Furthermore, we have extended our range of finance solutions continually over the past years and are in the process of offering factoring solutions outside of Germany and Switzerland. Here we benefit from our established customer base with whom we will want to generate additional business. And finally, we will continue to proceed with the densification of our network in our current countries in a consistent manner as well as with the regional expansion into new markets. By exploiting these opportunities, we will increase our new business and strengthen our market position in the upcoming years. However, a considerable influence on the GRENKE Consolidated Group s earnings situation above and beyond current expectations cannot be expected over the near term as we receive the income from new contracts will only successively over the term of the contract corresponding to the nature of our business.

47 GRENKE Consolidated Group 43 Risk Strategy The GRENKE Consolidated Group s risk management is performed in a coordinated process at all relevant levels of the Consolidated Group organisation and is also closely coordinated with the activities of the respective segments. The Board of Directors bears overall responsibility for the monitoring of and compliance with risk management at the GRENKE Consolidated Group. The risk work group (AK Risk) is an important committee for risk management. In the GRENKE Consolidated Group, the purpose of risk management is not considered to be one of completely avoiding risks, but rather handling them systematically. The key principles that are adhered to in this context are as follows: Avoidance of transactions that are incompatible with the GRENKE Consolidated Group s risk strategy Potential yields and risks must be in reasonable proportion to one another Risks clusters are to be largely avoided Derivatives must be used for hedging purposes only, i.e. to limit a risk position yield prospects should generally not be taken into consideration Bad debts are managed in order to limit losses Forms and contracts with third parties must be subject to a legal review and in line with the current state of legal knowledge Should one or the other elements of uncertainty occur, or should one of our assumptions upon which these statements are based prove to be false, then the actual results could differ greatly from those contained either explicitly or implicitly in these statements. Owing to the broad diversification of our business, we are generally not exposed to any substantial individual risks. We manage the sum of all risks using a finely honed risk management system that we established within the Company at an early stage and are systematically developing further. The aim is to measure risks precisely, thereby enabling us to assume them at appropriate conditions. We focus not only on individual risks, but also on potential risk clusters and especially on wider interdependencies. We do not consider there to be any residual value risks in our leasing business model. Only full payout leases are held in our lease portfolio. While the residual values for the recognition of lease receivables are calculated in accordance with IAS 17 as part of IFRS accounting, our consistently positive profit from disposals shows that we do not recognise excessively high portfolio residual values as a result of these calculations. Risk Management System One key element of our risk management system is extensive quality management. Its systematic and on-going improvement forms a part of our corporate philosophy. This includes the evaluation of our reseller relationships based on counterparty default risks, documentation of our business processes, and development of IT programmes to meet our specific needs in administering contractual arrangements with our lessees and franchise partners. For information on the recertification of our quality management in the year under review, we refer to the separate section below. In addition, the correctness of financing (avoidance of double financing, actual acquisition of lease assets) is reviewed and documented by external advisors every six months. Independently of this, our scoring model for evaluating credit risks arising from lease agreements is a key element of our risk management system.

48 44 GRENKE Consolidated Group The purpose of the risk management system is to identify, disclose, assess, and document risks and opportunities in a systematic and structured manner. It is designed to enable employees and the Board of Directors to address risks responsibly and make the most of the opportunities that present themselves. Our risk management system is being continually expanded and is operated using a risk management tool on the intranet of the GRENKE Consolidated Group. Its functionality and the results of its measures are reviewed by the internal audit department, which reports directly to the Board of Directors. The risk management tool is used to carry out regular risk surveys in which employees are requested to assess actual and potential risks. The results of these surveys are then discussed and analysed in the risk work group. If risks are considered as relevant, countermeasures are resolved to manage these risks. The risk work group meets regularly at least four times a year. It is an important committee for reporting, managing, and discussing existing, new and potential risks. In addition to the CEO and CFO, it also includes representatives from all relevant divisions so as to ensure a comprehensive flow of information. The risk work group deals in particular with risk surveys, ad hoc risk reports, and current challenges relating to risk management. To enable individual risks to be handled and assessed more intensively, risk work sub-groups have been set up to deal with the three areas of credit risks, market price, liquidity risks, and operational risks. These risk work subgroups report directly to the risk work group and meet more frequently. A risk inventory, i.e. a stock-taking of all relevant and significant risks, is performed at least once a year as part of risk controlling. In particular, this involves an analysis of the latest risk surveys and ad hoc risk reports by the risk work group. If changes or new risks arise, the risk work group immediately informs the entire Board of Directors of the GRENKE Consolidated Group so that these can be taken into account in the business and risk strategy. In addition to the annual risk inventory, regular risk surveys and ad hoc risk reporting, we also consider risk management to include the use of comprehensive instruments for handling risks in the areas of financial and risk controlling in particular. Monthly calculations of risk positions are used with regard to financial market risks and the interest rate risk and liquidity position are regularly presented to and discussed with the Board of Directors of the GRENKE Consolidated Group. The GRENKE Consolidated Group has also established the independent functions of the compliance office, the anti-money laundering officer, and the data protection officer. The compliance office monitors insider information and rules of good conduct. It identifies and manages conflicts of interest with risk potential throughout the Group. The data protection officer monitors compliance with and implementation of data protection laws. The anti-money laundering officer takes appropriate risk-based measures to counter legal and reputation risks with a policy in accordance with the regulatory requirements with a current risk analysis by the GRENKE Consolidated Group and through the use of monitoring and research software. These special officers report directly to the management. Therefore, as required by regulatory law, there are adequate and effective internal control mechanisms with regard to structure and process organisation for managing and monitoring the specified risks. Implementation of Regulatory Requirements (MaRisk) Since the German Annual Tax Act 2009 came into force, leasing companies have also had to comply with the Minimum Requirements for Risk Management (MaRisk) published by Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin). MaRisk contains qualitative requirements on risk management which are to be implemented by financial service providers in line with the scale, nature, extent, complexity, and risk content of their business. The GRENKE Consolidated Group implements the appropriate

49 GRENKE Consolidated Group 45 management and controlling processes demanded by MaRisk for the key risk types counterparty default, market price, liquidity, and operational risk in full. The GRENKE Consolidated Group defines operational risk as the possible occurrence of losses in connection with contractual agreements, employees, technology and IT, the failure or collapse of infrastructure, customer relations and cooperation, projects, and other external influences. This does not include general business and reputation risks. Operational risks are essentially controlled as part of the GRENKE Consolidated Group s risk profile management. This is supplemented by regular employee surveys using the risk management tool on the GRENKE Consolidated Group s intranet. Their assessments of operational risks are therefore included in risk profile management on an on-going basis. GRENKELEASING AG, headquartered in Baden-Baden, is among other things the parent company of GRENKE BANK AG, which is also headquartered in Baden-Baden, and is subject to the regulatory requirements of the German Banking Act (KWG) and the German Solvency Regulation [Solvabilitätsverordnung (SolvV)]. In addition to the parent company GRENKELEASING AG and GRENKE BANK AG, the financial service providers GRENKEFACTORING GmbH and GRENKE Investitionen Verwaltungs KGaA are subject to the KWG and regulation by BaFin and the Bundesbank. The latter two institutions have again utilised the waiver provided by Section 2a (1) KWG in the year under review. This allows subordinate entities to demonstrate to BaFin and the Bundesbank that certain regulatory provisions are applied and incorporated at a Group level rather than having to be applied at the level of the individual entities, providing that the necessary organisational requirements are met in full by the parent company. Our application to BaFin to recognise the regulatory Consolidated Group as identical to the consolidated accounting group was approved in Thus, all Group companies of the GRENKE Consolidated Group, i.e. the parent company GRENKELEASING AG and all of its German and international subsidiaries, are included in the regulatory consolidation group. Risk-Bearing Capacity The GRENKE Consolidated Group continues to define its calculation of risk-bearing capacity to reflect Circular 51/11 of the German Association of Credit Banks dated July 19, Accordingly, GRENKELEASING AG has selected the going concern approach for its risk-bearing capacity concept, with risk cover being derived from the income statement and the statement of financial position. With regard to the liability function, all equity items of statement of financial position are recognised as risk cover in addition to the forecast annual net income after valuation adjustments and distributions (for which the level for the current year is assumed). With regard to the minimum equity base, the equity requirement set out in the SolvV is deducted from risk cover if this is higher than the minimum equity prescribed by the AktG. Furthermore, since fiscal year 2011 GRENKELEASING AG has also incorporated a consistent risk assessment in the risk-bearing capacity concept. All risks are assessed using the value-at-risk method, assuming a normal distribution. The existing risk cover potential offers sufficient scope to implement future activities as planned.

50 46 GRENKE Consolidated Group Credit risks Market price risks Possible impairments as a result of deteriorated credit-worthiness or default of a business partner Possible impairments as a result of a change of interest rate risks, currency rates, and market volatility Risk-bearing capacity Liquidity risks Operational risks Other Risks from investments Strategic risks Operational risks Possible default as a result of the insolvency und bottlenecks in refinancing Possible impairments as a result of unsuitability or failure of internal procedures, systems, or people or other external events Possible impairments as a result of write-downs to the going concern value and disposals Possible impairments as a result of inappropriate business strategies Possible impairments as a result of a lack of diversification in the customer portfolio or faulty contract conditions Reputation risks Possible adverse economic effects as a result of negative press coverage Certification of Quality Management TÜV SÜD Management Service GmbH certified GRENKELEASING AG in line with DIN EN ISO 9001:1994 in Our quality management system was tested and certified in 2010 by Technical Control Association officers from TÜV SÜD Management Service GmbH in accordance with the new DIN EN ISO 9001:2008 standard. In addition to the German locations, GRENKEFACTORING GmbH (Germany) and GRENKE Investitionen Verwaltungs KGaA, which is responsible for asset sales, the subsidiaries in Austria, France, the Netherlands, Switzerland, Spain, Italy, Romania (GRENKELEASING SRL), Hungary (Grenkeleasing kft), and Portugal (Grenke Renting S.A.), and the franchisees in Finland (GC Leasing s.r.o), Slovakia (GC Leasing s.r.o.), and Luxembourg (GCLUX Location SáRL) have also been certified. The Board of Directors regularly assesses the effectiveness of the management system. Any necessary corrective measures are taken promptly. The current audit report ISO 9001 dated October 1, 2012 confirms that GRENKELEASING AG (including the aforementioned subsidiaries and franchise partners) has an effective and highly functional management system. According to the report, the requirements of ISO 9001:2008 are met. Any original lease contracts which have not been electronically stored are kept in fireproof cabinets or safes, meaning that sufficient precautions are in place even in the event of damage to property. Contract data is stored and updated in our IT system mainly using programmes especially developed for this purpose. Original contract data is stored at the locations as well as at the central contract management division in Baden-Baden, Germany. Automatic backup programmes and power interruption facilities serve to safeguard data maintenance. IT systems play an important role in the processing and management of our leasing business. As such, the IT organisation and processes are subject to regular internal audits.

51 GRENKE Consolidated Group 47 Business Continuity Management The GRENKE Consolidated Group has established a business continuity management system. The measures to be taken in the event of an emergency and all necessary information are documented in writing, also including plans for the continuation and restart of business. The aim is to reduce the extent of possible losses. A crisis unit consisting of a manager and his team serves as a central instrument in responding to a potential crisis. The responsibilities of the crisis unit can be broken down into the areas of situation assessment, coordination of measures, communication with the parties involved, activation of measures to restart processes, and restoring operational continuity. In order to ensure the suitability, efficiency, and topicality of emergency planning and emergency and crisis management, the precautionary measures, organisational structures, and the various plans are regularly reviewed in tests, exercises, and simulations. The tests take place at least once a year and cover all salient points. Counterparty Default Risks Credit Volume GRENKE Consolidated Statement of Financial Position According to IFRS, GRENKE Consolidated Group s receivables volume breaks down as follows: EURk Dec. 31, 2012 Dec. 31, 2011 Current receivables Cash and cash equivalents 116, ,234 Lease receivables 688, ,799 Financial instruments that are assets (short-term portion) 3,248 1,883 Other current financial assets 84,903 89,976 Trade receivables 3,726 4,560 Total current receivables 896, ,452 Non-current receivables Lease receivables 1,185, ,955 Other non-current financial assets 29,056 34,576 Financial instruments that are assets (long-term portion) 990 2,516 Total non-current receivables 1,215,833 1,037,047 Total receivables volume 2,112,558 1,806,499 As per December 31, 2012, cash and cash equivalents include central bank balances amounting to EUR 45,276k. The remaining cash and cash equivalents consist of balances at German and international banks (with the exception of cash in hand of EUR 7k). Financial instruments that are assets represent the GRENKE Consolidated Group s derivatives carried at fair value as per the reporting date.

52 48 GRENKE Consolidated Group Leasing Business Portfolio of new leases by size 250, , , ,000 50,000 0 < 2.5 EURk EURk EURk EURk EURk EURk EURk > 250 EURk Term structure of the lease portfolio based on new business 350, , , , , ,000 50, months 37 to 48 months 49 to 60 months > 60 months

53 GRENKE Consolidated Group 49 The GRENKE Consolidated Group defines counterparty default risk as the risk of losses on receivables from business partners. Since 1994, we have assessed the creditworthiness of our lessees using a scoring system. The quality of this system has been consistently and sufficiently demonstrated by the levels of losses experienced since its implementation, particularly during the global financial market crisis. This applies to our established domestic business as well as to the international markets that we are gradually entering. An annual review is performed on the basis of the actual loss figures using automated database reports that contain both publicly available data and internally generated historical data. The scoring system is enhanced on an on-going basis by in-house specialist staff. A further key element of risk mitigation is the fact that no single lessee represents more than one percent of the new business generated in a fiscal year. Even in years with extremely low actual loss rates, we continued to factor the average loss rate of the previous recession into our CM2 management. The GRENKE Consolidated Group is also managed in such a way that it will continue to cover its operating costs even if the loss rate were to significantly exceed this level. Loss rates are measured at all times throughout the Consolidated Group. This is done by comparing new business over a defined period of time with the acquisition costs of the contracts that have become impaired. Over time, this analysis serves as an early indicator of expected defaults, and hence the quality of the portfolio. The Consolidated Group aims for a situation whereby the losses calculated in advance as part of the contribution margin calculation and the potential income associated with the lease portfolio are reasonable in relation to the losses actually recorded later. The main risks in the leasing business are counteracted using the scoring model. This is combined with a hierarchical authority structure reflecting the volumes involved, which extends from sales employees to the Board of Directors. The GRENKE Consolidated Group uses a portfolio approach for contracting lease agreements. The differentiation is as follows: Lessees: highly diversified portfolio of lessees that are almost entirely business or corporate clients Resellers/manufacturers: no individual dependencies Leased assets: no significant outstanding residual values (full cost recovery); maintenance and warranty risks are typically borne by suppliers/manufacturers Lease agreements: large number of current contracts with a portfolio duration of less than 2 years and a focus on small-tickets below EUR 25k (95 percent of all leases) Sales channels: represented in virtually all sales channels Geographical presence: the GRENKE Consolidated Group is represented in all major European economies with locations in 17 countries (GRENKE Group: 25) Almost all leases concluded provide for full cost recovery. This means that the payments made by the lessee during the basic lease period, including the guaranteed residual values, exceed the acquisition and contract cost. Risks that could arise from the different legal systems in the respective countries are discussed with local legal and tax advisors prior to market entry and taken into account in the lease agreements. The business model is adjusted as necessary. Lending Business of GRENKE BANK AG The main financial risk at GRENKE BANK AG is credit risk. Loans to customers consist of purchased lease receivables, start-up financing, project financing, and the old portfolio of personal loans.

54 50 GRENKE Consolidated Group Purchased lease receivables account for by far the greatest proportion of the loan portfolio. They represent a broadly diversified portfolio with small-scale receivables from small and medium-sized companies that GRENKE BANK AG has acquired exclusively from companies of the GRENKE Consolidated Group. Credit risk is taken into account by means of a corresponding margin regulation based on the GRENKE Consolidated Group's long-standing, proven scoring method, and in some cases additional security is also provided by guarantee agreements. In view of its orientation as a provider of financing for small and medium-sized companies, GRENKE BANK AG began collaboration with development banks in 2010 with the particular aim of providing smaller business startups with funds for their plans. The associated credit risk for GRENKE BANK AG is chiefly reduced by an 80 percent indemnification provided by the development bank or guarantee bank. In addition, financing for business start-up plans is generally limited to a maximum credit exposure of EUR 100k per borrower unit, with the effect that credit risks in this area are broadly diversified. The old portfolio consisting particularly of small-scale equity financing for private individuals is being wound up in line with planning. As a result of on-going repayments and loan clearance, this part of the loan portfolio has now been reduced to less than EUR 2.6 million. Factoring Business of GRENKEFACTORING GmbH Owing to risk considerations, we essentially offer small-ticket factoring as notification factoring. As opposed to non-notification factoring, this also means additional security as debtors are only discharged in respect to their payment obligations if they pay directly to us. In the case of non-notification factoring, payments which discharge obligations can usually only be paid to a bank account pledged to us. In both cases, however, GRENKEFACTORING GmbH assumes the default risk for the purchased receivables. Factoring business customers are acquired very selectively by means of letter, , and telephone campaigns, and on the basis of various criteria. One of the key criteria here is the customers' credit quality and their average annual sales. This enables the company to avoid activities for which a later refusal of the commitment is likely. In addition, certain sectors are not approached in the first place. Financing of Franchise Companies The franchise companies of the GRENKE Group operate in their respective leasing markets as lessors. They generally operate in the small-ticket IT segment, though we also offer factoring in Switzerland and Hungary under our franchise model. The leases contracted by the franchise companies are predominantly refinanced by the GRENKE Consolidated Group. In some cases, franchisees conclude leases under a commission model, meaning that the GRENKE Consolidated Group acts as the direct lessor. The basis for this is provided by the refinancing framework agreement concluded between the franchisee and the GRENKE Consolidated Group. If refinancing is offered, it is provided in the form of either loans or forfaiting. Future lease instalments are generally discounted at the refinancing rate. Market Price Risks Fluctuations in prices on the financial markets can have a significant effect on cash flow and net profit. Particularly, changes on the interest rate markets and in certain currencies can affect the GRENKE Consolidated Group. We actively manage these risks as part of our continuous risk management and monitoring of interest rate and currency positions. In addition to assessing risk-prone, market-sensitive positions such as floating-rate notes or receivables in currencies other than the euro, we consider sensitivity and elasticity to be important when handling financial market risk. We aim to limit the sensitivity of our net profit to the volatility of market prices. This means endeavouring to ensure the lowest possible correlation between net profit and interest rate and currency market developments while maintaining a good balance between the costs and benefits of hedge relationships. The following parameters are assumed for risk analysis purposes:

55 GRENKE Consolidated Group 51 a concurrent, parallel increase or decrease in the value of the euro of 10 percent compared with all foreign currencies a parallel shift in the term structure of interest rates of 100 basis points (1 percentage point) The potential economic effects identified in the analyses are estimates. They assume artificial market conditions and are based on the assumption that all other conditions will remain unchanged. This means that the shift in the term structure of interest rates is viewed independently of any related effects on other interest rate-induced market developments. The actual effects on the consolidated income statement can differ significantly from this due to actual developments. The main market price risks and the outstanding interest rate and currency risk items are discussed at least once a month with the responsible member of the Board of Directors in the work sub-group on the basis of on-going reports. The GRENKE Consolidated Group is not exposed to risks from changes in share prices as it does not hold any listed shares. Changes in the prices of commodities also have no effect on the risk position, as no positions are held in these categories. Derivatives for Hedging Purposes The GRENKE Consolidated Group uses derivative financial instruments exclusively and only when ordinary business activities involve risks that can be minimised or eliminated by using suitable derivatives. Interest rate swaps, caps, and forward exchange contracts are the instruments employed by the GRENKE Consolidated Group. Each derivative contract is subject to an economic hedged item with a corresponding opposing risk position. The partners are exclusively banks with an excellent credit standing. For this reason, and due to the diversification of our contract partners, counterparty default risk plays a limited role. Interest Rate Risks The interest rate risk for the GRENKE Consolidated Group stems mainly from the sensitivity of its financial liabilities to changes in market interest rates. Financial liabilities primarily consist of floating-rate debentures, ABCP programmes, and the ABS bond. Further information on these risks can be found in the Financial Risk Strategy section of the notes to the consolidated financial statements. Sensitivity to financial success is crucial in the identification of an open risk position, which results in corresponding protection using derivative instruments. This means that, on the whole, we endeavour to achieve net interest income that demonstrates minimal sensitivity to interest rates. According to estimates from the sensitivity analysis, a parallel shift in the term structure of interest rates for the past fiscal year of +100 basis points would result in pre-tax earnings being EUR 1,698k lower (previous year: EUR 896k). This corresponds to around 1.5 percent (previous year: 1.0 percent) of net interest income. Issuing bonds and contracting interest rate swaps are elements of a financing strategy that separates refinancing from interest rate hedging in order to obtain maximum flexibility for refinancing activities. The resulting risks (variable cash flows) are then hedged using appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and recognised as hedges in accordance with IAS 39. As all interest rate derivatives used in hedge accounting have been proven to be 100 percent effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised in equity in full. Under the ABCP programme with DZ-Bank (CORAL) and Hypovereinsbank/UniCredit Bank AG (Elektra), GRENKELEASING AG is responsible for interest rate hedging, and hence interest rate risk management. The ABCP transaction also serves as an underlying transaction with a floating rate, while cash flows are hedged using interest rate swaps. Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes. However, the contracting parties in this case are the respective SPEs, meaning that we do not recognise the derivatives on our balance sheet and hedge accounting is not applied.

56 52 GRENKE Consolidated Group The parameters of the underlying contract, i.e. those of the financing (liability), are considered first and foremost when contracting interest rate swaps. Accordingly, the interest rate terms of the swaps on the variable side are largely identical to those of the hedged item. Furthermore, the swap volume contracted is never greater than the volume of the hedged financing. Existing and planned refinancing transactions are actively incorporated into risk management and the related hedges are subject to on-going analysis in the form of quarterly effectiveness tests using a method permitted under IFRSs. These tests have proven highly effective in the past. The fair value of the interest rate swaps recognised in hedge accounting under IAS 39, which had a negative fair value of EUR 606k at the end of the reporting period (previous year: negative fair value of EUR 265k), would have had a negative fair value of EUR 279k (previous year: positive fair value of EUR 886k) if the above interest rate scenario were applied (parallel shift in the term structure of interest rates of 100 basis points). Due to hedge accounting under IAS 39, the corresponding change would largely be recognised in equity or in the hedging reserve. A corresponding downward shift in the term structure of interest rates would lead to an increase of EUR 1,183k in pre-tax earnings (previous year: increase of EUR 1,004k). In terms of the fair value measurement of the interest rate swaps for the purposes of hedge accounting, this interest rate scenario would result in a fair value which was EUR 62k lower (previous year: EUR 1,133k), i.e. largely directly recognised in equity. Interest rate risk is usually calculated once a month as an open position. This is performed by comparing the floating- and fixed-rate assets with the corresponding liabilities. The elasticity of the floating-rate positions is 1, as almost all reference interest rates reflect 1- to 3- or 6-month Euribor and are sufficiently mapped. In addition to the balance sheet items and their planned pattern of amortisation, the latest yield curves, exchange rates, and all derivative items are included in the calculations. The results are regularly analysed at the level of the Board of Directors. Currency Risk The GRENKE Consolidated Group is exposed to currency risks as a result of its international activities. Derivatives are used to mitigate or eliminate these risks. These derivatives are reported as financial assets or financial liabilities at their fair value on the respective reporting date. Changes in value due to the translation from a foreign currency of the net profit of Consolidated Group companies domiciled in non-euro countries have not occurred to date on account of the relative insignificance of the companies concerned. Currency risks currently exist in the context of financing for Consolidated Group companies or franchisees outside of the eurozone. These risks are generally hedged once the amount of the outstanding financing volume reaches around EUR 1,000k. This amount was exceeded in Poland, Denmark, the United Kingdom, Norway, Sweden, Switzerland, the Czech Republic, Turkey, and Hungary. This means that the exchange rate is known and contracted for the main part for financing in Polish zloty, pound sterling, Hungarian forint, Swiss francs (for the refinancing of Hungarian leases contracted in Swiss francs and for the Swiss factoring business), Turkish lira, Danish and Norwegian krone, Swedish krona, and Czech koruna for holdings of lease receivables at the respective subsidiaries and franchise companies. However, in the course of the Companies growth there are still risks with respect to open tranches that fall below the hedging threshold. Switzerland, Brazil, Poland, and the United Kingdom are subject to only a very limited amount of currency risks in the refinancing of leases since we have agreements to provide lease refinancing in local currencies. In addition, cash flows are also hedged in the context of economic hedging.

57 GRENKE Consolidated Group 53 All in all, risks arise from currency fluctuations relating to financial assets and receivables, from onerous contracts denominated in foreign currency, and from the translation of Consolidated Group companies financial statements. The use of derivatives (only forward exchange contracts are used for currency risk) offsets the market sensitivity of hedged items, i.e. cash flows from financial assets and receivables. Ideally, the instruments should achieve an almost full offsetting. Hedge accounting will not be used for currency positions for the foreseeable future. Liquidity Risk The management of liquidity risk ensures that the GRENKE Consolidated Group is always able to meet its payment obligations on time. Short-term Liquidity Liquidity risk management comprises the day-to-day management of incoming and outgoing payments. A liquidity overview is prepared for short-term reporting on a weekly basis, i.e. on the first working day of each calendar week, and is discussed at the level of the Board of Directors. It includes all relevant information on short-term cash developments in the coming weeks. The weekly liquidity overview provides the current liquidity status of the GRENKE Consolidated Group. It focuses on cash flows from the leasing business. In addition, wages and taxes are also taken into account. Reporting distinguishes between three liquidity levels: Liquidity 1 (cash liquidity): balances on all bank accounts plus overdrafts and all immediate (one-week) cash flows. Liquidity 2: liquidity 1 plus cash flows due or received within one month. This also includes tied-up assets that can be monetised within this period. Liquidity 3: liquidity 2 plus cash flows due or received within more than one month. This also includes tied-up assets that can only be monetised in a period of more than one month. Medium and Long-term Liquidity In addition to short-term liquidity management and weekly reporting, dynamic liquidity planning is prepared at least once a quarter. The aim of cash planning in this context is to map out the liquidity status for the coming periods. There is a more detailed presentation on a quarterly level for the next two years. As the duration on the asset side of the portfolio roughly corresponds to this period, this constitutes a significant parameter for liquidity management at Consolidated Group level. We refinance ourselves independently of individual banks and also have direct access to the capital markets. This ensures that the structure of our liabilities is well diversified and allows us to work together with several banking partners. Our portfolio of refinancing instruments is extremely broad. It ranges from traditional bank financing to revolving loan facilities and ABCP programmes. These financing products are fixed for defined periods with agreed terms and maturities so that there are no risks relating to their availability within the agreed framework. The ABCP programmes are funding arrangements based on defined underlying assets, i.e. lease receivables. We can currently use them to refinance our business in Germany, France, and Austria. We also have conventional bank financing with a similarly assetbased structure for Brazil, the United Kingdom, Poland, and Switzerland.

58 54 GRENKE Consolidated Group However, we also use refinancing instruments that are not asset-based and are hence used at our discretion and depending upon our business development. For example, we have direct access to the capital markets through our debt issuance programme (DIP). Since October 2011, we have also had a platform for issuing commercial paper (CP) with a maximum volume of EUR 250 million. While the DIP bonds have terms of one year or more, the CP platform provides us with alternatives for refinancing during the course of the year. We also take advantage of financing opportunities via GRENKE BANK AG s deposit business. Above and beyond commercial customers, GRENKE BANK AG also offers investment products to private customers. This is how we have further diversified our sources of refinancing. These instruments enable us to use the most attractive financing channels from a variety of alternatives depending on the sentiment on the capital markets at the given time. Due to the unresolved sovereign debt crisis, the financial markets remained subject to high risks in the year under review. This will continue to be the case in the foreseeable future. However, central banks worldwide are reacting to the crisis by extensively supplying the markets with liquidity at historically low interest rates. Together with the deterioration in the credit quality of many sovereign debtors, this has led to a currently very high availability of refinancing funds for companies with a strong reputation on the capital market like the GRENKE Consolidated Group. In the year under review, we took advantage of this market situation not only to meet our current refinancing requirements in full, promptly, and at attractive conditions, but also to prepare ourselves in advance for future growth. Operational Risk Risk Survey Surveys on operational risks are conducted on a quarterly basis using the intranet-based risk management tool. These surveys ask employees from all divisions about the risks affecting their divisions. The overall results for the general areas of legal and taxes, IT, internationalisation, organisation, HR, sales, and disposals are evaluated based on the average estimated loss and the stated probability of occurrence in the calculation of risk-bearing capacity. The most significant net risks indicated in the 2012 surveys were as follows: Defaults in leasing business Increase in taxes and duties Risks from changes in legislation Risks from expansion Risks relating to IT security Risks from false purchases These six key risk areas were all assessed as having a probability of occurrence rated "possible" and a potential loss rated "serious", i.e. between EUR 500k and EUR 4,999k. Such risk areas are analysed in depth in the risk work group and feedback on possible countermeasures is obtained from the divisions that are directly affected. Outsourcing In the fourth quarter of 2012, GRENKELEASING AG carried out a detailed outsourcing analysis for each institute of the GRENKE Consolidated Group with the aim of listing and examining all cases of outsourcing and evaluating their materiality pursuant to the KWG. This analysis showed that at that time, there was no material outsourcing in any of the institutes.

59 GRENKE Consolidated Group 55 Risks from Fluctuation in Demand for Lease Financing The risks arising from fluctuation in demand for lease financing are countered by means of on-going marketing measures. These include: gathering information product development procedural improvements development of sales channels During the history of our Company, which spans more than thirty years, we have gathered extensive experience in developing and managing our sales channels, which has enabled us to achieve more than just lasting high growth. We now consider this experience and the reputation we have built up to be an important barrier to market entry for potential competitors. Furthermore, we believe that the proportion of IT expenditure in our target markets devoted to leasing will continue to increase in the medium to long term. Firstly, banks are likely to be generally restrictive in granting refinancing even prior to the introduction of the more stringent capital requirements imposed by the Basel III regime, while some are withdrawing from the leasing business altogether due to cost considerations. Secondly, we now operate in various countries where small-ticket leasing and factoring are still very uncommon due to a lack of providers for historical reasons. These markets offer above-average growth prospects in the medium to long term, although the time required in advance to exploit these opportunities is longer than in the developed leasing markets. Internal Control System for the Accounting Process Pursuant to Section 289 (5) and Section 315 (2) No. 5 HGB We define the internal control and risk management system (ICS) as all of the principles, procedures, and measures introduced in a company by its management that are geared towards the organisational implementation of management decisions: to ensure the effectiveness and efficiency of business activities (including the protection of assets, which extends to preventing and covering asset losses), to ensure the correctness and reliability of internal and external accounting and to ensure compliance with the legal provisions relevant to the company. The Board of Directors bears overall responsibility for the accounting process of GRENKELEASING AG and the GRENKE Consolidated Group. All of the companies included in the annual financial statements and the consolidated financial statements are also incorporated into a clearly defined management and reporting organisation. The principles, structure and process organisation, and the processes of the ICS for accounting are documented in a manual that is developed further at regular intervals. With regard to the accounting and consolidated accounting processes, we consider features of the ICS to be significant if they can have a material effect on the accounting and the overall view presented in the financial statements including the management report. In particular, this relates to the following elements:

60 56 GRENKE Consolidated Group the identification of significant risk and control areas of relevance to the accounting process controls to monitor the accounting process and its results at the level of the Board of Directors and at the level of the companies included in the financial statements preventative control measures in the finance and accounting system and in the operative, performance-oriented company processes that generate significant information for the preparation of the financial statements including the management report, including a separation of functions and of pre-defined approval processes in relevant areas measures that safeguard the orderly IT-based processing of matters and data that are relevant to accounting the establishment of an internal audit system to monitor the ICS for accounting The GRENKE Consolidated Group has also implemented a risk management system for the Consolidated Group-wide accounting process that contains measures aimed at identifying and assessing significant risks and corresponding risk mitigation measures to ensure the correctness of the consolidated financial statements. This system also incorporates GRENKELEASING AG's accounting process in full. The risk management system established for the accounting process of GRENKELEASING AG and the GRENKE Consolidated Group thereby guarantees the preparation of accurate and reliable information for the public. Risk Summary Controlled risk-taking forms a significant part of the GRENKE Consolidated Group's business model. To manage risks, the Consolidated Group has implemented an extensive system for risk identification, quantification, monitoring, and management which fulfils all statutory and regulatory requirements. It is appropriate and suitable for identifying significant risks at an early stage, is already at a high level, and is enhanced on an on-going basis. Sufficient precautions have been taken to offset counterparty default risk, credit risk, and similar risks arising from our leasing, banking, and factoring business which have been identified. The corresponding write-downs, impairments, and provisions disclosed in the annual financial statements were recognised at an appropriate level using conservative benchmarks. Risk-bearing capacity was ensured in its entirety in the year under review, both for a normal scenario, a stress scenario, and also for the crisis scenario. With respect to the future development of the GRENKE Consolidated Group and of GRENKELEASING AG and its subsidiaries, there are no particular business-related risks exceeding the normal level. The risk cover is sufficient enough to map out the planned future business activities. Future General Conditions As was the case in this reporting year, the future business of the GRENKE Group and the GRENKE Consolidated Group will be much more strongly impacted by sector trends than by the overall economic development. We continue to assume that the regulatory requirements for the banking sector will tend to increase and result in correspondingly restrictive lending policies. Regarding the development of corporate insolvencies, the credit insurer EULER HERMES S.A., in its Global Macroeconomic and Insolvency Outlook of October 2012, is forecasting a reduction in the increase in insolvencies in 2013 after the significant increase forecasted for For the eurozone overall, the increase in the index should decline to +11 percent in 2013 following an expected +17 percent in 2012.

61 GRENKE Consolidated Group 57 Greece (number of expected corporate insolvencies in 2013: + 10 percent) where we do not operate and Spain (number of expected corporate insolvencies in 2013: + 22 percent) will remain those countries with the largest most visible problems. In other countries, the increase is expected to be a maximum of 5 percent, and for some countries the forecasted figures are stable or even slightly declining. The expectations are favourable for our most important markets of Germany (2013 expectation: + 1 percent), France (2013 expectation: +2 percent), Italy (2013 expectation: +2 percent), and Switzerland (2013 expectations: stagnation). The United Kingdom, the Netherlands, and even Portugal are expected to have declining figures. Since the receivables portfolio of the GRENKE Consolidated Group is diversified European wide and across industries, we are cushioned against possible insolvencies. In addition, we make allowances for such risks with our scoring-based active new business management and apply adequately higher margins where we incur higher risks. Outlook In the next two fiscal years, we aim to continue with our favourable business development and develop the GRENKE Consolidated Group further along our mid-term corporate strategy: Densification of our existing network of locations, penetration of new countries, and an expansion in our offers for finance solutions. These are the cornerstones of our strategy which will contribute to the GRENKE Group increasing its new business over the long term by a minimum of ten percent. Our broad international presence allows us to concentrate our growth on those markets where we can achieve adequate margins for the risks taken, and as a result, ensure the earnings strength of the GRENKE Consolidated Group. In the past fiscal year, considerable preparations have been made for the further growth of the GRENKE Group in 2013 which will expedite the continuation of our regional expansion and the diversification of our finance solutions. Therefore, for the current year, we expect a rise in new business of between 13 and 16 percent hence, above our long-term target with a continued attractive and risk adequate CM2 margin. The net profit of the GRENKE Consolidated Group should also visibly improve and reach EUR 44 to 48 million. This is the result of the high-margin new business generated in recent years, which is increasingly generating income for us and thereby favourably impacting the income statement as the terms of the respective leases progress. At the same time, we expect the loss rate to remain at the current level. Furthermore, thanks to our growing size, the up-front costs of the further expansion of the GRENKE Group will become relatively smaller so that the increase in expenses will remain below the increase in income, and consequently GRENKE Consolidated Group s net profit should rise significantly. Management Report of GRENKELEASING AG (Condensed Version in Accordance with HGB) In addition to the reporting on the GRENKE Consolidated Group, the development of GRENKELEASING AG will be explained below. In terms of the economic environment and sector trends, there were no material differences to report that would have only affected the development of GRENKELEASING AG. In addition to the key events of the fiscal year already described, GRENKELEASING AG has also to report that in November 2010 the tax audit for the fiscal years 2005 to 2009 had begun. As per the end of the reporting period, the audit was still in process and there were no audit findings available yet.

62 58 GRENKE Consolidated Group Corporate Law Framework, Affiliation to the Consolidated Group GRENKELEASING AG was formed in The same year also saw the formation of Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien ( KGaA ). GRENKELEASING AG is structurally and operationally separate from the KGaA, with the former serving as the operating company and the latter as the holding company. Under a two-level model, the operating company rents lease assets from the holding company and then leases them out to sub-lessees. GRENKELEASING AG holds a direct and indirect interest of 100 percent in the KGaA, and a control and profit transfer agreement has been effective since January 1, Together with the subsidiaries and special-purpose entities of GRENKELEASING AG consolidated in accordance with the International Financial Reporting Standards, it forms the GRENKE Consolidated Group. Overview of Subsidiaries and Branches GRENKELEASING AG has branches in Berlin, Bremen, Cologne, Dortmund, Dresden, Düsseldorf, Erfurt, Freiburg, Frankfurt am Main, Hamburg, Hanover, Kassel, Kiel, Leipzig, Magdeburg, Mannheim, Memmingen, Mönchengladbach, Munich, Neckarsulm, Nuremberg, Potsdam, Rostock, and Stuttgart. In addition, GRENKELEASING AG also holds 100 percent each of the shares in GRENKE SERVICE AG, Baden-Baden, GRENKEFACTORING GmbH, Baden-Baden, and GRENKE BANK AG, Baden-Baden via its investment in Grenke Investitionen Verwaltungs KGaA. Outside Germany, GRENKELEASING AG holds a direct 100 percent interest in each of the following companies as per the end of the reporting year: GRENKELEASING GmbH, Vienna/Austria; GRENKELEASING AG, Zurich/Switzerland; GRENKELEASING s.r.o., Prague/Czech Republic; GRENKE ALQUILER S.A., Barcelona/Spain; GRENKELEASING ApS, Herlev/Denmark; Grenkefinance N.V., Vianen/Netherlands; GRENKE LIMITED and GRENKE FINANCE Plc., Dublin/Ireland; GRENKE LOCATION SAS, Schiltigheim/France; GRENKELEASING S.r.l. and GRENKE Locazione S.r.l., Milan/Italy; GRENKELEASING AB, Stockholm/Sweden; Grenke Leasing Ltd., Guildford/UK; GRENKELEASING Sp. z o.o., Poznan/Poland; GRENKELEASING Magyarország Kft., Budapest/Hungary; GRENKE LEASE Sprl, Brussels/Belgium, S.C. Grenke Renting S.R.L, Bucharest/Romania; and GRENKE RENTING S.A., Lisbon/Portugal. It also holds an indirect 100 percent interest in FCT GK -COMPARTMENT G2, Pantin, France, and GRENKE RENT S.A, Madrid, Spain. Results of Operations, Financial Position, and Net Assets The annual financial statements of GRENKELEASING AG as per December 31, 2012 were prepared in accordance with the provisions of the German Commercial Code and the German Stock Corporation Act in conjunction with the German Ordinance on Accounting for Banks.

63 GRENKE Consolidated Group 59 Selected Key Figures from the Income Statement and the Statement of Financial Position EURk Income from leases 449, ,395 Expenses from leases 332, ,196 Profit from leases 117, ,199 Net interest income 1,772 2,011 Other operating income 30,810 32,045 General and administrative expenses 33,598 30,790 Staff costs 19,990 18,605 Depreciation and impairment 98,020 92,140 Net profit 17,130 19,031 Dec. 31, 2012 Dec. 31, 2011 Investments in associated companies 144,787 77,902 Leased assets 235, ,963 Property, plant, and equipment 20,602 15,808 Other assets 44,225 76,417 Receivables 60,868 60,351 Equity 183, ,881 Bank liabilities 2,407 3,101 Payables 34,999 30,206 Accruals and deferrals 257, ,328 Total assets 512, ,920 Results of Operations GRENKELEASING AG acquired leased assets from the KGaA in several tranches again in the reporting year, although not to the unusually high extent of the two previous years. As a result, income from leases grew slightly in the year under review whereas expenses from leases declined slightly due to lower reimbursement to the KGaA for the repurchased assets. The balance of income from leases and expenses from leases rose to EUR million. Other operating income declined primarily as a result of lower intra-group levies. At the same time, the volume of depreciation at GRENKELEASING AG increased as a result of the repurchases, leading to higher depreciation on leased assets and property, plant, and equipment in the reporting year. General and administrative expenses, and in particular staff costs and other administrative expenses, rose due to the business expansion. The continuous acquisition of leased assets of the KGaA by GRENKELEASING AG leads to lower business volume at the KGaA. Consequently, this also leads to a successively declining net profit which is then transferred to GRENKELEASING AG under a profit transfer agreement. In the reporting year, the KGaA s net profit declined to EUR 14.1 million (previous year: EUR 16.9 million). Beyond these transaction-based impacts on GRENKELEASING AG s income statement, the change in the other items was within the normal range of fluctuation. There was a favourable decrease in write-downs and impairments on lease receivables and certain securities, as well as allocations to provisions of EUR 7.3 million (previous year: EUR 8.4 million) for the lending business.

64 60 GRENKE Consolidated Group In total, GRENKELEASING AG s result of normal business activity amounted to EUR 22.7 million in fiscal year 2012 (previous year: EUR 27.5 million). Net of taxes of the entire fiscal entity of GRENKELEASING AG as the controlling company, net profit amounted to EUR 17.1 million (previous year: EUR 19.0 million). Financial Position and Net Assets In fiscal year 2012, GRENKELEASING AG s total assets increased. On the assets side of the balance sheet, the amount of leased assets remained at the level of fiscal year 2011, whereas investments in associated companies experienced a strong rise as a result of the acquisition of former franchisees in Portugal and Romania. The growth in property, plant, and equipment resulted primarily from an increase in assets under construction of EUR 5.4 million following the progress in the construction of the third office building at the headquarters in Baden-Baden. Other assets declined mainly due to a receivable to GRENKE FINANCE Plc. no longer existing. As in the previous year, the largest item on the equity and liabilities side was accruals and deferrals which amounted to 50 percent of total assets (previous year: 54 percent). Within this item, accruals from the forfeiting of leasing contract instalments were the main item and amounted to EUR million (previous year: EUR million). As per December 2012, GRENKELEASING AG s equity ratio declined to 35.9 percent (previous year: 37.6 percent). Liquidity and Refinancing The financing of the leasing business (new business) is on sound footing. GRENKELEASING AG's direct refinancing partners are the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS ) and GRENKE BANK AG. On February 4, 2010, an ABS bond was successfully placed via the special-purpose entity. This marked the second successful placing of an ABS bond via a specialpurpose entity. It allows lease agreements to be sold on a revolving basis in the amount of EUR 300 million for a total of three years. GRENKELEASING AG regularly sells lease receivables to GRENKE BANK AG, thus using bank deposits for its refinancing. In the reporting year, deposits of GRENKE BANK AG grew to EUR million from EUR million in the previous year. In addition, private placements can be carried out directly or indirectly via our 100 percent subsidiary GRENKE FINANCE Plc. Dublin. In 2012, four new bonds with a total nominal volume of EUR 366 million were issued. Also we have the option of utilising five revolving credit facilities with a total volume of EUR 135 million and three money market facilities with a total volume of EUR 50 million via our subsidiary in Ireland. In addition, there are four ABCP programmes with a total volume of EUR 400 million, which grant GRENKE FINANCE Plc. and the KGaA the right to refinance or to sell receivables to the respective programmes for a certain period of time. Since October 2011, we have also had a platform for issuing commercial paper. Using this platform, GRENKELEASING AG and GRENKE FINANCE Plc. can issue commercial paper of up to a total volume of EUR 250 million with a term of between 1 and 364 days. Overall Statement on the Financial Situation of GRENKELEASING AG At the time of completing the financial statements and the management report, GRENKELEASING AG finds itself in a very favourable economic position which will allow it to continue with its international expansion, grow new business, and achieve net profits at the level of the reporting year.

65 GRENKE Consolidated Group 61 Two-level Model The leasing objects of new the business were partially rented by the KGaA as part of a two-level model. The rent receivables of the KGaA were sold to financial institutes, via special-purpose entities as part of four ABCP programmes, an ABS bond, or locally to two savings banks (forfeited). The underlying contractual agreements secure financing for new business, even in the case of increasing volumes. Dividend The Board of Directors and the Supervisory Board will propose a dividend of EUR 0.80 per share for fiscal year 2012 to the Annual General Meeting of GRENKELEASING AG on May 7, In the previous year, a dividend EUR 0.75 was distributed. Employees The number of employees (not including the Board of Directors) in terms of full-time equivalents of GRENKELEASING AG rose to an average of 294 in the year under review (previous year: 266). The fluctuation rate decreased to 4.3 percent after 6.9 percent in the previous year. As in the previous years, the level of fluctuation at management level and among senior executives in particular was substantially lower. Significant Events Subsequent to the End of Fiscal Year 2012 In addition to the existing cooperation agreements with NRW.Bank, TAB, and IBB, on January 30, 2013, GRENKELEASING AG and GRENKE BANK AG have established a further cooperation agreement with LfA Förderbank Bayern by means of global loan in the amount of EUR 25 million. Through this collaboration, small and medium-sized enterprises and self-employed professionals, who are located in Bavaria, can access development funds for investments via leasing. The lease agreements are available exclusively for investment plans of commercial enterprises and members of self-employed professions located in Bavaria with annual sales of up to EUR 500 million. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. Report on Forecasts and Outlook Report on Risks and Opportunities The risk and opportunities described for the GRENKE Consolidated Group are also largely valid for GRENKELEASING AG. However, the German domestic market remains special and clearly more important for GRENKELEASING AG than for the GRENKE Consolidated Group overall. GRENKELEASING AG is not exposed to currency risk since it does not enter into cross-border transactions with countries outside the eurozone.

66 62 GRENKE Consolidated Group Outlook The future results of GRENKELEASING AG may be greatly influenced by changes in the legal framework or in refinancing possibilities which as a result could lead to changes in the refinancing decisions of the Board of Directors. Overall, we are optimistic with regard to fiscal year For Germany, we expect to be able to achieve growth in new business in the mid single-digit percent rate. For the single entity GRENKELEASING AG, we expect a net profit at the level of the reporting year. The key factors which have had an influence on the operating development in 2012 will continue to apply. Further information on the development of the GRENKE Consolidated Group can be found in the section Report on Forecasts and Outlook of the combined management report. Baden-Baden, January 30, 2013 The Board of Directors

67 Our business model does not aim at avoidance of risk but rather the accurate assessment of risks. For this, we have established our finely honed IT-based scoring model.

68 64 GRENKE Consolidated Group Consolidated Financial Statements for Fiscal Year 2012 Consolidated Income Statement EURk Note Jan. 1 to Dec. 31, 2012 Jan. 1 to Dec. 31, 2011 Interest and similar income from financing business , ,547 Expenses from interest on refinancing and deposit business ,024 51,856 Net interest income 111,465 92,691 Settlement of claims and risk provision ,421 34,415 Net interest income after settlement of claims and risk provision 68,044 58,276 Profit from insurance business ,156 25,703 Profit from new business ,698 31,021 Profit from disposals 3.5 3,982 1,653 Income from operating business 137, ,653 Staff costs ,809 36,695 Depreciation and impairment 3.7 3,355 3,225 Selling and administrative expenses (not including staff costs) ,395 26,373 Other operating expenses 3.9 5,021 3,392 Other operating income ,501 3,755 Operating result 59,801 50,723 Expenses / income from fair value measurement Other interest income 1, Other interest expenses 1, Earnings before taxes 59,698 50,432 Income taxes ,237 11,181 Net profit 42,461 39,251 Earnings per share (basic) in EUR Earnings per share (diluted) in EUR Average shares outstanding (basic) ,684,099 13,684,099 Average shares outstanding (diluted) ,684,099 13,684,099

69 GRENKE Consolidated Group 65 Consolidated Statement of Comprehensive Income Jan. 1 to Jan. 1 to EURk Note Dec. 31, 2012 Dec. 31, 2011 Net profit 42,461 39,251 Items that may be reclassified to profit and loss in future periods Appropriation to / reduction of hedging reserve (before taxes) Income taxes Appropriation to / reduction of hedging reserve (after taxes) Change in currency translation differences 1, , 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) Income taxes Appropriation to / reduction of reserve for actuarial gains and losses (after taxes) Other comprehensive income 1, Total comprehensive income 43,579 39,463

70 66 GRENKE Consolidated Group Consolidated Statement of Financial Position EURk Note Dec. 31, 2012 Dec. 31, 2011 Assets Current assets Cash and cash equivalents , ,234 Financial instruments that are assets (short-term portion) 4.2 3,248 1,883 Lease receivables , ,799 Other current financial assets ,903 89,976 Trade receivables 4.5 3,726 4,560 Lease assets for sale 8,588 8,115 Tax assets 4.6 4,838 1,298 Other current assets ,777 83,817 Total current assets 1,020, ,682 Non-current assets Lease receivables 4.3 1,185, ,955 Financial instruments that are assets (long-term portion) ,516 Other non-current financial assets ,056 34,576 Property, plant, and equipment ,035 35,653 Goodwill ,815 13,441 Other intangible assets ,328 2,176 Deferred tax assets ,622 17,280 Other non-current assets Total non-current assets 1,331,364 1,106,286 Total assets 2,352,292 1,968,968 continued on next page

71 GRENKE Consolidated Group 67 Consolidated Statement of Financial Position EURk Note Dec. 31, 2012 Dec. 31, 2011 Liabilities and equity Liabilities Current liabilities Refinancing liabilities , ,624 Liabilities from deposit business ,890 93,897 Current bank liabilities ,426 1,073 Liability financial instruments (short-term portion) ,800 3,547 Trade payables 14,828 7,031 Tax liabilities ,836 1,847 Deferred liabilities ,146 4,309 Current provisions ,251 2,807 Other current liabilities ,824 4,686 Deferred lease payments 70,280 69,241 Total current liabilities 758, ,062 Non-current liabilities Refinancing liabilities ,107, ,008 Liabilities from deposit business ,477 61,230 Non-current bank liabilities ,719 2,406 Liability financial instruments (long-term portion) ,553 3,481 Deferred tax liabilities ,987 26,078 Pensions ,156 1,590 Non-current provisions Other non-current liabilities Total non-current liabilities 1,243,155 1,024,249 Equity 4.20 Share capital 17,491 17,491 Capital reserves 60,166 60,166 Retained earnings 186, ,917 Other components of equity 2,504 1,386 Unappropriated surplus 83,950 89,697 Total equity 350, ,657 Total liabilities and equity 2,352,292 1,968,968

72 68 GRENKE Consolidated Group Consolidated Statement of Cash Flows EURk Jan. 1 to Dec. 31, 2012 Jan. 1 to Dec. 31, 2011 Earnings before taxes 59,698 50,432 Non-cash items contained in net profit and reconciliation to cash flow from operating activities + / Depreciation and impairment 3,355 3,225 / + Profit / loss from the disposal of property, plant, and equipment and intangible assets / + Net income from non-current financial assets / + Non-cash changes in equity / Increase / decrease in deferred liabilities, provisions and pensions Additions to lease receivables 916, ,313 + Payments by lessees 684, ,521 + Disposals / reclassifications of lease receivables at residual carrying amounts 135, ,629 Interest and similar income from financing business 169, ,547 Decrease / increase in other receivables from lessees 9,073 3,425 + / Currency translation differences 4, = Change in lease receivables 280, ,132 + Addition to liabilities from refinancing 1,391,659 1,257,601 Payment of annuities to refinancers 281, ,935 Disposal of liabilities from refinancing 908, ,992 + Expenses from interest on refinancing and on deposit business 58,024 51,856 + / Currency translation differences 1,799 1,920 = Change in refinancing liabilities 262, ,450 + / Increase / decrease in liabilities from deposit business 54,240 32,888 / + Increase / decrease in loans to franchisees 2,217 11,145 Changes in other assets / liabilities / + Increase / decrease in other assets 33,502 45,215 + / Increase / decrease in deferred lease payments 759 1,941 + / Increase / decrease in other liabilities 9,772 3,389 = Cash flow from operating activities 80,067 71,932 continued on next page

73 GRENKE Consolidated Group 69 Consolidated Statement of Cash Flows EURk Jan. 1 to Dec. 31, 2012 Jan. 1 to Dec. 31, 2011 / + Income taxes paid / received 17,215 29,959 Interest paid 1, Interest received 1, = Net cash flow from operating activities 62,597 41,584 Payments for the acquisition of property, plant, and equipment and intangible assets 8,117 3,586 / + Payments / proceeds from acquisition of subsidiaries 31,358 2,343 + Proceeds from the sale of property, plant, and equipment and intangible assets = Cash flow from investing activities 39,333 5,803 + / Borrowing / repayment of bank liabilities Dividend payments 10,263 9,579 = Cash flow from financing activities 10,752 10,247 Cash funds at beginning of period Cash in hand and bank balances 104,234 78,297 Bank liabilities from overdrafts = Cash and cash equivalents at beginning of period 103,752 78,184 + / Change due to currency translation = Cash funds after currency translation 103,558 78,218 Cash funds at end of period Cash in hand and bank balances 116, ,234 Bank liabilities from overdrafts = Cash and cash equivalents at end of period 116, ,752 Change in cash and cash equivalents during the period (= total cash flow) 12,512 25,534 Net cash flow from operating activities 62,597 41,584 + Cash flow from investing activities 39,333 5,803 + Cash flow from financing activities 10,752 10,247 = Total cash flow 12,512 25,534

74 70 GRENKE Consolidated Group Consolidated Statement of Changes in Equity Retained EURk Share capital Capital reserves earnings and unappropriated surplus Hedging reserve Reserve for actuarial gains / losses Currency translation Total equity Equity as per Jan. 1, ,491 60, , , ,657 Comprehensive income 42, ,704 43,579 Dividend payment in 2012 for ,263 10,263 Equity as per Dec. 31, ,491 60, , , ,973 Equity as per Jan. 1, ,491 60, ,941 1, , ,773 Comprehensive income 39, ,463 Dividend payment in 2011 for ,579 9,579 Equity as per Dec. 31, ,491 60, , , ,657

75 GRENKE Consolidated Group 71 Notes to the Consolidated Financial Statements for Fiscal Year Purpose of the Company GRENKELEASING AG is a stock corporation with its registered office located at Neuer Markt 2, Baden-Baden, Germany. The Company is recorded in the commercial register at the local court of Mannheim, Section B, under HRB GRENKELEASING AG is the parent company of the GRENKELEASING AG Consolidated Group (hereinafter referred to as the GRENKE Consolidated Group). The GRENKE Consolidated Group conducts financing business and is a partner for mainly small and medium-sized enterprises. Its products and services range from leases to factoring, various payment transaction services, and deposits business with private customers. The GRENKE Consolidated Group s business areas comprise: the leasing of all types of movable assets; the management of lease contracts for third parties; the broking of property insurance for leased assets; the purchase and management of receivables from and for third parties (factoring); banking business; and all other related transactions. The leasing business focuses on the small-ticket leasing of IT products, such as PCs, notebooks, servers, monitors and peripheral devices, software, telecommunication and copier equipment, and other IT products. Almost all leases concluded provide for full cost recovery (full payout leases). This means that the payments made by the lessee during the basic lease period, including the guaranteed residual values, exceed the acquisition and contract cost. 2 Basic Principles of the Consolidated Financial Statements 2.1 Basis of Preparation GRENKELEASING AG, as the listed parent company which is traded on an organised market within the meaning of Section 2 (5) WpHG, has prepared its consolidated financial statements in accordance with Section 315a of the German Commercial Code [Handelsgesetzbuch (HGB)] on the basis of the International Financial Reporting Standards (IFRS), as in the previous year. The consolidated financial statements of GRENKELEASING AG (hereafter referred to as the consolidated financial statements ) comply with IFRSs as published by the International Accounting Standards Board (IASB) and as adopted in the European Union (EU) as per December 31, 2012, and the regulations under German commercial law as complementarily applicable under Section 315a HGB. All International Financial Reporting Standards (IFRSs) formerly International Accounting Standards (IAS) applicable to fiscal year 2012 and the interpretations by the International Financial Reporting Interpretations Committee (IFRIC) formerly the Standing Interpretations Committee (SIC) were observed in these financial statements. Certain standards have been applied in advance. The consolidated financial statements comprise the financial statements of GRENKELEASING AG and its subsidiaries as per December 31, The consolidated financial statements have been prepared in euro (EUR). Unless stated otherwise, all figures are rounded and stated in thousands of euro (EURk). The accounting policies applied correspond with those of the previous year. Exceptions are listed in note 2.2. The consolidated financial statements are based on historical cost accounting. Assets and liabilities are recognised at nominal value less the necessary valuation allowances, unless otherwise stated. The only exception is the recognition of derivative financial instruments used in the Consolidated Group. These are generally recognised at fair value.

76 72 GRENKE Consolidated Group It is planned that the Supervisory Board will adopt these consolidated financial statements prepared by the Board of Directors and approve them for publication at its meeting on January 31, Effects of New or Amended IFRSs Accounting Standards Implemented in 2012 In recent years, the IASB has published various amendments to IFRSs and new IFRSs as well as interpretations of the International Financial Reporting Interpretations Committee (IFRICs). The IASB also published amendments to existing standards as part of an annual procedure (Annual Improvements Process). The primary aim of the collective standard is to eliminate inconsistencies and to clarify formulations. The new and revised IFRSs listed below entered into force for the past fiscal year: IFRS 7 Financial Instruments: Disclosures (July 1, 2011) IAS 12 Income Taxes (January 1, 2012) The first-time application of the amendment to IAS 12 Income Taxes Deferred Taxes: Recovery of Underlying Assets (January 1, 2012) published in December 2010 by the IASB had no impact on the accounting and valuation policies in the consolidated financial statements. The amendments to IFRS 7 Financial Instruments: Disclosures published on October 7, 2010 by the IASB, extended the disclosure requirements for the transfer of financial assets, if the transferring entity maintains a continuing involvement in the transferred assets. This amendment brought about additions to the disclosure requirements in the consolidated financial statements. In June 2011, the IASB published amendments to IAS 1 Presentation of Financial Statements (July 1, 2012). The presentation of other comprehensive income was changed to that effect that the items of other comprehensive income are presented dependent upon the possibility of whether or not they can be reclassified to profit and loss. GRENKELEASING AG applied these amendments prematurely as per December 31, Accounting Standards and Interpretations Already Published but not yet Implemented Apart from the IFRSs mentioned whose application is mandatory, the IASB has also published other IFRSs and IFRICs, which have already received partial endorsement into European law by the EU but which will only become mandatory at a later date. Voluntary early application of these standards is explicitly permitted/recommended. GRENKELEASING AG is not exercising this option. These standards will be implemented in the consolidated financial statements when their adoption becomes mandatory. In May 2012, various standards were amended, Improvements to IFRSs Cycle (January 1, 2013), in the context of the Annual Improvements Process (AIP) project. This relates to IAS 1, IAS 16, IAS 32, and IAS 34. The amended standards have no relevance for the accounting and valuation in the consolidated financial statements of GRENKELEASING AG.

77 GRENKE Consolidated Group 73 The IASB also amended or released the following IFRSs: IAS 19 Employee Benefits (January 1, 2013) IAS 27 Separate Financial Statements (January 1, 2014) IAS 28 Investments in Associates (January 1, 2014) IAS 32 and IFRS 7 Offsetting Financial Assets and Financial Liabilities (January 1, 2013) IFRS 9 Financial Instruments (January 1, 2015) IFRS 10 Consolidated Financial Statements (January 1, 2014) IFRS 11 Joint Arrangements (January 1, 2014) IFRS 12 Disclosure of Interests in Other Entities (January 1, 2014) IFRS 13 Fair Value Measurement (January 1, 2013) IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (January 1, 2013) In June 2011, the IASB published amendments to IAS 19 Employee Benefits (revised in 2011, IAS 19R) that resulted in the abolition of the corridor method. In the future, actuarial gains and losses must be directly recognised in equity not affecting profit and loss. In addition, income from the expected interest on plan assets can only be recognised in the amount of the discount rate used to calculate the defined benefit obligation. With a few exceptions, the amendments to IAS 19R must be applied retroactively to financial statements for fiscal years beginning on or after January 1, Early adoption is permitted. The abolishment of the corridor method has no effect on the consolidated financial statements of GRENKELEASING AG as it is not applied in the GRENKE Consolidated Group and the actuarial gains and losses are already being recognised in other comprehensive income. The adoption of a uniform net interest component for interest from plan assets and the interest expense of plan obligations will have no significant effect on the consolidated financial statements of GRENKELEASING AG as plan assets only exist for defined benefit obligations in Switzerland. Furthermore, disclosure requirements have increased. Similarly, the amendments to requirements for termination benefits will not have a significant influence on GRENKELEASING AG s consolidated financial statements. In May 2011, the IASB released three new standards regulating the recognition of investments of a reporting entity in its consolidated financial statements. IFRS 10 Consolidated Financial Statements introduces a uniform consolidation model for all companies on the basis of control and replaces the regulations of IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation Special Purpose Entities. IFRS 11 Joint Arrangements covers the recognition of joint arrangements. These occur when two or more parties have joint control. In the EU, the new standards must be applied retroactively to financial statements for fiscal years beginning on or after January 1, Early adoption is permitted. GRENKELEASING AG is currently examining the effects of this adoption on the consolidated financial statements. In particular, the existing ABCP programmes as well as franchise relationships are being observed. Until now, ABCP programmes with special purpose entities which have not been consolidated thus far have been presented so that the transferred financial assets and the corresponding liabilities were not shown as a disposal since a continuing involvement in the transferred assets remained. In this respect, a consolidation would not have a significant impact. Currently, GRENKELEASING AG does not expect the amendment to have a significant impact on the accounting and valuation in the consolidated financial statements. IFRS 11 has no effect on the consolidated financial statements of GRENKELEASING AG as no companies of the GRENKE Consolidated Group have investments in joint arrangements. IFRS 12 Disclosure of Interests in Other Entities expands the disclosure requirements for investments in other companies. This involves the compilation of disclosures from several standards that have already been published in IFRS 12. In the EU, IFRS 12 must be applied prospectively to financial statements for fiscal years beginning on or after January 1, Early adoption is permitted.

78 74 GRENKE Consolidated Group GRENKELEASING AG is currently examining the effects of this adoption on the consolidated financial statements. In particular, an increase in disclosure requirements is expected. Following the amendment, the amended IAS 27 Separate Financial Statements only includes regulations for separate financial statements and is therefore not relevant to the consolidated financial statements. In October 2012, the IASB published transitional provisions for the amendments to IFRS 10, 11, and 12. Here, exceptions and simplifications were published regarding restated comparative figures as well as disclosure requirements of comparative information regarding non-consolidated structured entities for the first-time adoption of IFRS 12. In the EU, the application of these amendments will be mandatory as per January 1, With the amendment of the above standards, the IASB also amended IAS 28 Investments in Associates. This standard is not relevant to the GRENKE Consolidated Group as it holds no investments in associates. In November 2009, the IASB published IFRS 9 Financial Instruments, which only relates to financial assets as part of a project to revise accounting for financial instruments. In October 2010, it added regulations for financial liabilities including new regulations to include own credit risk when exercising the fair value option. The new standard regulates the recognition of financial instruments in terms of classification and measurement and is the first phase in the project to revise the financial instruments defined in IAS 39. In the future, financial assets are classified according to two valuation categories: amortised cost and fair value. The new standard must generally be applied prospectively to financial statements for fiscal years beginning on or after January 1, However, the regulations regarding the classification in categories must be applied respectively. Early adoption is permitted. Endorsement into European law is still pending. The convenience of general prospective adoption will result in additional disclosures at the transition date. GRENKELEASING AG is currently examining the effects of IFRS 9 on the consolidated financial statements, but at the same time it also monitors phase two and three of this comprehensive amendment. However, owing to our business model, we currently consider the impact of IFRS 9 published thus far as immaterial. The amended pronouncements of phase two Impairments and Risk Provisions and phase three Presentation of Hedging Relationships of this project as well as the future provisions for offsetting financial assets and financial liabilities are still pending. Therefore, a conclusion as to the impact on the final version of IFRS 9 is not yet possible. In May 2011, the IASB published IFRS 13 Fair Value Measurement which compiles the regulations of fair value measurement previously found in individual IFRSs and replaces them with a uniform regulation. IFRS 13 applies for the first time to fiscal years beginning on or after January 1, Early adoption is also permitted. As the derivate business is not material, GRENKELEASING AG also considers the effects on the consolidated financial statements as insignificant. Moreover, several changes have already been introduced as a result of the amendments to IFRS 7, Financial Instruments: Disclosures. The amended pronouncements of IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine have no effect on the consolidated financial statements of GRENKELEASING AG. The amendments to IAS 32 and IFRS 7 were published in December The changes must be adopted for fiscal years beginning on or after January 1, These changes intend to clarify existing inconsistencies via amendments to the application guidelines. However, the existing basic regulations concerning the offsetting of financial instruments remain unchanged. The amendments also define increased disclosure requirements. GRENKELEASING AG is not anticipating that this change will have any impact on its consolidated financial statements.

79 GRENKE Consolidated Group Consolidation Policies Scope of Consolidation The consolidated financial statements contain all assets and liabilities as well as all expenses and income of GRENKELEASING AG and of the subsidiaries it controls (hereinafter referred to as the GRENKE Consolidated Group ) after eliminating all material intragroup transactions. Subsidiaries are included in the Consolidated Group for as long as they are under the control of the parent. Control is normally evidenced when the Consolidated Group holds, either directly or indirectly, 50% (or more) of the voting rights or the issued capital of an entity and/or has the power to govern the financial and operating policies of an entity in order to benefit from its activities. In addition to GRENKELEASING AG, the following subsidiaries and special purpose entities are also included in the consolidated financial statements: Equity investment Equity investment Name Registered office Germany GRENKE SERVICE AG Baden-Baden 100% 100% Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien (84.4% directly, 15.6% indirectly via GRENKE SERVICE AG) Baden-Baden 100% 100% GRENKE BANK AG Baden-Baden 100% 100% GRENKEFACTORING GmbH Baden-Baden 100% 100% International GRENKELEASING s.r.o. Prague/Czech Republic 100% 100% GRENKE ALQUILER S.A. Barcelona/Spain 100% 100% Grenkefinance N.V. Vianen/Netherlands 100% 100% GRENKELEASING AG Zurich/Switzerland 100% 100% GRENKELEASING GmbH Vienna/Austria 100% 100% GRENKELEASING ApS Herlev/Denmark 100% 100% GRENKE LIMITED Dublin/Ireland 100% 100% GRENKE FINANCE Plc. Dublin/Ireland 100% 100% GRENKE LOCATION SAS Schiltigheim/France 100% 100% GRENKE Locazione S.r.l. Milan/Italy 100% 100% GRENKELEASING S.r.l. Milan/Italy 100% 100% GRENKELEASING AB Stockholm/Sweden 100% 100% GRENKE LEASE Sprl 1) Brussels/Belgium 100% 100% Grenke Leasing Ltd. Guildford/UK 100% 100% GRENKELEASING Sp. z o.o. Poznan/Poland 100% 100% GRENKELEASING Magyarország Kft. Budapest/Hungary 100% 100% S.C. Grenke Renting S.R.L Bucharest/Romania 100% --

80 76 GRENKE Consolidated Group Name Registered office Equity investment 2012 Equity investment 2011 International GRENKE RENT S.A. 2) Madrid/Spain 100% -- GRENKE RENTING S.A. Lisbon/Portugal 100% -- FCT GK -COMPARTMENT G2 3) Pantin/France 100% 100% GOALS FINANCING 2009 LIMITED 4) Dublin/Ireland ) GRENKELEASING AG holds a direct interest of EUR 1,499k (of a total of EUR 1,500k) in GRENKE LEASE Sprl in Brussels/Belgium and an indirect interest of EUR 1k through its German subsidiary, GRENKE SERVICE AG. 2) GRENKELEASING AG holds an indirect interest of 100% through GRENKE ALQUILER S.A.. 3) Included in consolidation from 2011 as a result of the addition of the refinancing activities of this compartment in the context of the Elektra Purchase No. 25 Limited ABCP programme for French lease receivables. GRENKELEASING AG holds indirect interests in this company through its Irish subsidiary GRENKE FINANCE Plc. and its German subsidiary GRENKE SERVICE AG of 50% each. 4) Founded in 2009 in connection with the issue of the ABS bond. Through the issue of the ABS bond in 2010, GRENKELEASING AG has gained control of the special-purpose entity GOALS FINANCING LIMITED 2009 in accordance with SIC-12. There are no participating interests. For disclosures regarding additions in the fiscal year, we refer to note Foreign Currency Translation Foreign Currency Transactions Foreign currency transactions are generally translated at the closing rate at the time of the transaction. Foreign currency monetary items (e.g. cash and cash equivalents, receivables, and liabilities) are subsequently translated using the respective closing rate, with any translation differences reported in profit and loss. Non-monetary items carried at historical cost are not subsequently translated; the rate upon initial recognition is used. Foreign Entities Each company within the GRENKE Consolidated Group determines its own functional currency. Items included in the financial statements of the relevant company are measured using this functional currency. Foreign currency translations are translated into the functional currency at the spot rate on the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate. All currency translation differences are recognised in profit and loss. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate as per the date of the initial transaction. Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of such foreign operations are accounted for as assets and liabilities of the foreign operation and translated at the closing rate. The local currency is the functional currency of all foreign operations. The assets and liabilities of these subsidiaries are translated into euro at the closing rate at the end of the reporting period. Income and expenses of these subsidiaries are translated at the average exchange rates prevailing during the fiscal year (the arithmetic mean of the daily rates during the fiscal year). The exchange differences arising upon translation are recognised as a separate component of equity. Upon disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit and loss.

81 GRENKE Consolidated Group 77 The exchange rates used in the GRENKE Consolidated Group have developed in relation to the euro as follows: Closing rate on Dec. 31, 2012 Average rate 2012 Closing rate on Dec. 31, 2011 Average rate 2011 CHF CZK DKK GBP HUF NOK 1) PLN RON 3) SEK TRY 1) USD 2) CAD 2) JPY 2) ) Currency of the franchise companies, refinancing granted partly in foreign currency. 2) Foreign currencies relevant only in the credit and deposit portfolios of GRENKE BANK AG. 3) Acquisition of the subsidiary in Romania as per July 19, Therefore, the currency of the franchise company in 2011 and the average rate in the year 2012 is shown from the date of the acquisition. 2.4 General Accounting Policies Leases Determining Whether an Arrangement Contains a Lease The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment of whether an arrangement is a lease is only required after the inception of the arrangement when any one of the following conditions is met: a. there is a change in the contractual terms, unless the change only renews or extends the arrangement; b. a renewal option is exercised or an extension is agreed on by the parties to the arrangement, unless the term of the renewal or extension had initially been included in the lease term; c. there is a change in the determination of whether fulfilment is dependent on a specified asset; or d. there is a substantial change to the asset. The Consolidated Group is the Lessor Finance Leases Under a finance lease, all of the significant risks and rewards of legal ownership are transferred by the lessor to the lessee. The lease payment receivable is thus treated by the lessor as repayment of principal and finance income to reimburse and reward the lessor for its investment and services.

82 78 GRENKE Consolidated Group Assets from a finance lease are recognised in the statement of financial position as receivables at an amount equal to the net investment, i.e. the present value of the residual receivables of all lease contracts existing at the end of a fiscal year. The net investment value is calculated on the basis of the net purchase cost of the leased assets, less a special lease payment made by the lessee. Initial direct costs incurred in connection with contract conclusion are offset against income over the entire term of the lease contract by proportionately reducing the unearned finance income by these initial costs. These initial direct costs are recognised in profit and loss under profit from new business upon occurrence. Finance income is recognised as such that a constant periodic rate of return on the outstanding residual receivable is generated. Operating Leases Leases where the GRENKE Consolidated Group does not transfer all the significant risks and rewards of ownership of the asset to the lessee are classified as operating leases. Initial direct costs incurred in negotiating and concluding an operating lease are added to the carrying amount of the leased asset and depreciated along with that to the residual value over the term of the leasing agreement. Contingent rents are recognised as income in the period in which they are generated. Operating lease assets are typically recorded in the statement of financial position as property, plant, and equipment based on the type of asset (see note 4.8). After the original lease has expired, the contract may be extended or a follow-on contract may be concluded. This leads to a reassessment of the lease. In cases where the criteria for an operating lease are met, the leased asset is recorded as property, plant, and equipment from the start of the extension period and is carried at fair value. The Consolidated Group is the Lessee Finance leases, which transfer all the significant risks and rewards incidental to ownership of the leased asset to the GRENKE Consolidated Group, are capitalised on the date of inception of the lease at the fair value of the leased asset, or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability over the period. Finance charges are expensed immediately. If there is no reasonable certainty that the GRENKE Consolidated Group will obtain ownership by the end of the lease term, the capitalised leased assets are fully depreciated over the shorter of the lease terms or its useful life. The lease payments under an operating lease are recognised as selling and administrative expenses in the income statement on a straight-line basis over the lease term. Contingent rents are recognised as an expense in the period in which they are incurred Cash and Cash Equivalents The cash and cash equivalents item in the consolidated statement of financial position comprises cash on hand and balances at banks and central banks with a maturity of less than three months. Current account liabilities are deducted from cash and cash equivalents for the statement of cash flows Borrowing Costs Borrowing costs that can be directly attributed to the acquisition, construction, or manufacture of a qualified asset, and that take a substantial period of time to get ready for their intended use or sale, are capitalised as a portion of the acquisition costs of the corresponding asset. All other borrowing costs are recognised in profit and loss in the period in which they are incurred. Borrowing costs are interest and other costs incurred by an entity in connection with the borrowing of funds. In the GRENKE Consolidated Group, all borrowing costs incurred in fiscal 2012 were recognised in profit and loss.

83 GRENKE Consolidated Group Financial Assets and Financial Liabilities Depending on their characteristics, financial assets, as defined by IAS 39, are classified as financial assets at fair value through profit and loss, as loans and receivables, as held-to-maturity investments, or as available-for-sale financial assets. Financial assets are measured at fair value on initial recognition. The carrying amounts of financial instruments, other than those designated as at fair value through profit and loss, also include transaction costs that are directly attributable to the acquisition of the assets. Financial assets are allocated to the measurement categories following initial recognition. Reclassifications are made as per the end of a given fiscal year where permissible and appropriate. No reclassifications took place in the reporting periods. All regular way purchases and sales of financial assets use settlement date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. The derivatives used in the GRENKE Consolidated Group other than for hedging purposes in line with IAS 39 are classified as assets held for trading and must therefore be recognised at fair value in profit and loss. Financial assets held for trading are initially recognised at acquisition costs and are carried at fair value on subsequent measurement. The derivative financial instruments used by the Company are measured using either Bloomberg (interest rate swaps) or the measurement basis provided by the banks (forward exchange contracts). The assessment of whether a contract contains an embedded derivative is made when the entity first becomes party to the contract. Embedded derivatives are separated from the host contract if the latter is not measured at fair value through profit and loss and an analysis reveals that the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans and receivables are measured at amortised cost using the effective interest method less any impairment. Amortised cost includes all discounts and premiums paid upon acquisition and includes all fees which are an integral part of the effective interest rate and the transaction costs. Gains and losses are recognised in net profit when the loans and receivables are unrecognised or impaired and through the amortisation process. The GRENKE Consolidated Group held no available-for-sale financial assets and no held-to-maturity financial instruments at the end of the reporting period. No financial assets or liabilities were designated as at fair value through profit and loss at initial recognition ( fair value option ). Financial liabilities are generally recognised initially at cost and subsequently at amortised cost. Refinancing liabilities are recognised at nominal value less the transaction costs for the borrowing, except for refinancing using loans, bonds, or debentures with matching maturities. The deducted transaction costs and any debt discounts are amortised over the lease term. Liabilities from deposit business are also recognised at nominal value plus deferred interest components. Interest expenses are shown as expenses from interest on deposits business in net interest income.

84 80 GRENKE Consolidated Group Refinancing liabilities which result from the sale of the lease receivables to the respective refinancing party are recognised at the present value of the payments yet to be made to the refinancing party. The originally agreed rate is used as the discount rate for fixedinterest loans. Upon repayment, regular payments are split into an interest portion and a principal component. The interest portions are disclosed as expenses from interest on refinancing. A financial guarantee is a contract, which contains an obligation to effect payments by the guarantor which compensate the guarantee holder for a loss which arises because a given debtor fails to meet its payment obligations on time and according to the terms of the debt instrument. Liabilities from financial guarantee contracts are initially recognised at fair value and subsequently measured at fair value if not recognised in profit and loss. The fair value typically corresponds to the net present value of the consideration received in return for the provision of the financial guarantee. Subsequently, the liability is measured based on the best estimate of the required payment to fulfil the current obligation as per the end of the reporting period or at the higher recognised value less accumulated amortisation. In line with these accounting policies, there are no financial guarantees to be recognised in the financial statements of the GRENKE Consolidated Group Impairment of Financial Assets At the end of each reporting period, the GRENKE Consolidated Group assesses whether a financial asset or group of financial assets is impaired. If there is an objective indication of an impairment in loans and receivables carried at amortised cost, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (with the exception of expected future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate (i.e. the effective interest rate determined upon initial recognition). An objective indication for impairment is assumed if the debtor is experiencing significant financial difficulties, which are characterised by default or delinquency on interest or principal payments. In addition, past payment behaviour, age structure, a substantial deterioration in credit standing, and a high probability of insolvency are taken into consideration. The carrying amount of the asset is reduced using an allowance account. The impairment loss is recognised directly in profit and loss under settlement of claims and risk provision. If the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. The amount of the reversal is limited to amortised cost at the date of the reversal. The reversal is recognised in profit and loss under settlement of claims and risk provision Hedge Accounting Under hedge accounting, the GRENKE Consolidated Group only accounts for hedging of interest derivatives for the hedging of cash flows from the value change of interest rates. These interest rate swap contracts are allocated to the variable cash flows of the underlying financing transactions. The Consolidated Group recognises changes in the fair value of the interest rate swaps in the other comprehensive income (hedging reserve) taking deferred taxes into consideration. Ineffectiveness is recognised in profit and loss. The underlying effectiveness is measured as per the end of each reporting period using the hypothetical derivative method. More information is provided in note et seq Derecognition of Financial Assets and Financial Liabilities A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when any one of the following three conditions is met:

85 GRENKE Consolidated Group 81 The contractual rights to receive cash flows from the financial asset expire. The Consolidated Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them immediately to a third party under a pass-through arrangement pursuant to IAS The Consolidated Group has transferred its contractual rights to receive cash flows of a financial asset and has either (a) transferred substantially all the risks and rewards of ownership of the financial asset or has (b) neither transferred nor retained substantially all risks and rewards of ownership of the asset, but has transferred control of the asset. When the GRENKE Consolidated Group transfers its contractual rights to receive the cash flows of an asset, but neither transfers nor substantially retains all of the risks and rewards of the asset s ownership, and also retains control of the transferred asset, the GRENKE Consolidated Group continues to recognise the transferred asset to the extent of its continuing involvement. Financial liabilities are derecognised if the contractual obligation underlying the liability is discharged or finally expires. If an existing financial liability is exchanged with another financial liability to the same lender with substantially different terms, or if the terms of an existing liability are changed substantially, then such an exchange or change is treated as derecognition of the original liability and recognition of a new liability. The difference between the corresponding carrying amounts is recognised in profit and loss Receivables and Other Assets Receivables and other assets are initially recognised at fair value and subsequently at amortised cost by the GRENKE Consolidated Group. Adequate flat-rate specific bad debt allowances are recognised in order to account for the credit risk from terminated lease contracts and non-performing lease receivables. The GRENKE Consolidated Group generally treats a lease as a non-performing lease receivable as soon as the second lease payment is missed. The lease is then usually terminated and the present value of the outstanding payments is claimed as damages. This amount is considered impaired. It is recorded under settlement of claims and risk provision in the income statement Property, Plant, and Equipment Property, plant, and equipment are recognised at acquisition costs plus directly attributable costs net of accumulated depreciation and accumulated impairment losses. Since the start of fiscal year 2008, financing costs have been capitalised when the necessary requirements were met. In prior periods, this was treated as an expense in the period incurred. Property, plant, and equipment are depreciated on a straight-line basis over their expected economic life. When property, plant, and equipment are sold or retired, their cost and accumulated depreciation are derecognised and any gains or losses resulting from their disposal are recognised in the consolidated income statement as other operating income or expenses. The depreciation rates are based on the following estimated economic lives: Office buildings Operating and office equipment IT hardware Vehicle fleet Leasehold improvements Other (office equipment) 33 years 3 years 4 5 years 10 years 3 20 years The useful life and depreciation method for property, plant, and equipment are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant, and equipment.

86 82 GRENKE Consolidated Group Goodwill Goodwill resulting from acquisitions is initially measured at cost which is the excess of the purchase price over the fair value of the identifiable assets, liabilities, and contingent liabilities of the acquired entity as per the date of acquisition. Goodwill was amortised on a straight-line basis over its economic life until December 31, Following the implementation of IFRS 3, all goodwill was frozen at the value recognised as per December 31, 2004 and scheduled amortisation ceased at this time. This fixed value is now considered to be the new historical cost. Instead of straight-line amortisation/after initial recognition, goodwill is tested for impairment at least once a year pursuant to IAS 36 to prove its adequate valuation (impairment-only approach). This regular impairment test is conducted in the third quarter of each year on the basis of the half-year figures. If there are indications that goodwill might be impaired, further tests must be conducted in addition to the mandatory annual impairment test. In subsequent periods, goodwill is recognised at cost less accumulated impairments Intangible Assets Licenses, Software Licenses are carried at cost plus acquisition costs. The cost of software is capitalised and treated as an intangible asset if it is not an integral part of the related hardware. As licenses and software have limited useful lives, they are subject to amortisation on a straightline basis over their economic life which is generally three years. Internally Generated Intangible Assets An intangible asset developed as part of a single project is only recognised if the GRENKE Consolidated Group is able to prove the technical feasibility of completing the intangible asset for internal use or sale and the intention to complete the intangible asset and use or sell it. In addition, the asset s generation of future economic benefits, the availability of resources to complete the asset, and the ability to measure the expenditure attributable to the intangible asset during its development, must exist. Internally generated intangible assets are measured at cost. The cost comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended. The capitalised amounts are amortised on a straight-line basis over the period during which the project is expected to generate revenue or during which the software can probably be amortised. Given the technical developments expected in future years, the economic life is assumed to be three years. Before an internally generated asset is used, it is tested annually for impairment. Customer Relations/Dealer Network Customer relations/dealer networks acquired in a business combination are recognised at fair value. In the past, the determination of the fair value of customer relations/dealer networks was based on a cost-oriented method. For business combinations as from 2012, the determination of fair value is based on a net present value method by applying the residual value method. Customer relations and dealer networks are amortised on a straight-line basis over their economic life of six or five years. Non-competitive Clauses Non-competitive clauses contractually acquired in a business combination are recognised at fair value upon acquisition. The fair value was determined based on a net present value method, an excess profit method. Non-competitive clauses are subject to scheduled amortisation over the contractually agreed useful life which is typically two years.

87 GRENKE Consolidated Group Impairment of Non-financial Assets Assets within the meaning of IAS 36.1 are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is recognised in profit and loss as soon as the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm s length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The recoverable amount is estimated for individual assets or, if this is not possible, for the cashgenerating unit to which the asset belongs. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The recoverable amount is estimated for individual assets or, if this is not possible, for the cashgenerating unit to which the asset belongs. The carrying amounts of goodwill are reviewed in order to assess the probability of continuing future benefits in accordance with the rules described in note Impairment is recognised in profit and loss if the value in use is lower than the carrying amount of the respective cash-generating unit. If the reason for an impairment recorded in a prior period ceases to apply, an impairment loss must be reversed. Exceptions to this rule exist only for impairments of goodwill, reversal of which is expressly prohibited Provisions Provisions are carried at their probable settlement amount if a present obligation (legal or constructive) exists for the GRENKE Consolidated Group due to an event occurring prior to the end of the reporting period, it is probable that settlement of the obligation will lead to an outflow of resources embodying economic benefits, and if a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate Pensions and Other Post-Employment Benefits Defined benefit plans relate to benefits following the end of employment and are based on direct benefit commitments for which the amount of the benefit is determined and dependent on factors such as age, remuneration, and time employed. The provision recognised in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period, less the fair value of any plan assets adjusted for unrecognised past service cost. The unrecognised past service cost will be recognised on a straight-line basis over the average period until the entitlements become vested. The present value of the defined benefit obligation is calculated annually by an independent actuarial expert using the projected unit credit method by discounting the forecasted future cash outflows using the interest rate of industrial bonds of excellent credit standing. The industrial bonds are denominated in the currency of the payment amounts and their terms match those of the pension obligations. In particular, the calculation also takes into account the current interest rate on the market and forecasts of future salary and pension increases in addition to biometric assumptions. In accordance with Swiss law, the Consolidated Group has set up a defined benefit pension plan in Switzerland which requires that contributions be made to separately administered funds. The obligation under the defined benefit plans is calculated using the projected unit credit method. There are also defined benefit pension plans, acquired in fiscal year 2009, of GRENKE BANK AG employees that had left the company by the end of the reporting period. These benefits are not financed by funds. The underlying pension plans are for both final salary and flat salary pension plans. Actuarial gains and losses are directly recognised in equity in accordance with IAS 19.93A.

88 84 GRENKE Consolidated Group The carrying amount of the asset or liability under a defined benefit plan is the aggregate of the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are to be settled directly. Contributions to defined contribution plans are recognised as an expense when an employee has rendered service. They include contributions to statutory pension schemes and direct insurance premiums. The GRENKE Consolidated Group primarily uses defined contribution plans Taxes Actual Tax Assets and Tax Liabilities Actual tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. They are calculated based on the tax rates and tax laws applicable as per the end of the reporting period. Deferred Tax Liabilities and Deferred Tax Assets Deferred tax liabilities are calculated using the liability method in accordance with IAS 12. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of an asset or a liability for financial reporting purposes and its tax base. Deferred tax assets for previously non-utilised tax-loss carryforwards are recognised if it is probable that taxable profit will be available in the future to utilise these carryforwards. Deferred tax assets and liabilities are recognised on the basis of tax rates anticipated for the period in which the temporary differences will reverse. For this purpose, tax rates are used which are applicable as per the end of the reporting period or will be applicable in the near future. Deferred taxes relating to items which are recognised directly in equity are recognised in shareholders equity and not in the income statement. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the entity at the end of the reporting period expects to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are not discounted and are classified as non-current assets or liabilities in the consolidated statement of financial position. Value-added Tax Revenue, expenses, and assets are recognised net of VAT, with the following exceptions: If the VAT incurred on a purchase of assets or services is not recoverable from the tax authorities, in which case the VAT is recognised as part of the acquisition costs of the asset or as part of the expense item. Receivables and liabilities are stated including VAT. The net VAT recoverable from or payable to the tax authorities is stated under other receivables or liabilities in the consolidated statement of financial position. Trade Tax Leasing and factoring companies are considered as financial service institutions as defined by Section 1 (1a) sentence 2 numbers 9 and 10 of the German Banking Act [Kreditwesengesetz (KWG)]. On the one hand, these companies were already included in the so-called commercial trade tax banking privilege from 2008 under Section 19 of the Trade Tax Implementation Regulations [Gewerbesteuer-Durchführungsverordnung (GewStDV)], and on the other hand they have been subject to regulation by the German

89 GRENKE Consolidated Group 85 Federal Office for Supervision of Financial Services (BaFin) and by Deutsche Bundesbank since the 2009 Annual Tax Act came into effect on December 25, The inclusion in Section 19 GewStDV has eliminated the competitive disadvantage for leasing and factoring companies in comparison with banks which had resulted from the 2008 Annual Tax Act. The application of Section 19 of the GewStDV is subject to the requirement that the leasing company demonstrably undertakes financial services exclusively in terms of Section 1 (1a) Sentence 2 Number 10 of the German Banking Act. These are the conclusion of finance lease contracts and the administration of leasing companies. The Federal Ministry of Finance issued a statement on November 27, 2009 to clarify issues of interpretation. In line with the findings of the supreme financial authorities on the interpretation of the exclusivity rule, auxiliary and additional transactions accompanying financial services are not in violation of the exclusivity rule. Such transactions occur when they are essential to the performance of the respective financial services. According to the transitional regulations contained in the written statement by the Federal Ministry of Finance, companies that offered transactions other than factoring and finance leases before December 24, 2008 will only be affected by the exclusivity rule for the first time in the 2011 assessment period. By way of resolution of the German Bundestag on March 5, 2010, and its approval by the German Bundesrat on March 26, 2010 on the Act on the Implementation of EU Tax Requirements and the Amendment of Tax Provisions, Section 19 GewStDV was also amended in some cases retroactively to the 2008 assessment period. Accordingly, the addition of charges for liabilities and similar amounts, provided that these relate directly to financial services within the meaning of Section 1 (1a) sentence 2 KWG, are waived for financial services providers within the meaning of Section 1 (1a) KWG including finance leases and factoring retroactively to the 2008 assessment period. Such financial services also include factoring and finance leases. Since the 2011 assessment period, there will be a 50% minimum required. If the above financial services do not account for at least 50% of the revenues generated, the interest expenses must be added in full. The 50% threshold does not yet apply to the assessment periods. Therefore, charges and similar amounts relating directly to financial services within the meaning of Section 1 (1a) sentence 2 KWG are not to be added. As at least 50% of sales relate to financial services in accordance with Section 19 (4) sentence 2 GewStDV, in calculating the trade tax provision for the German Consolidated Group companies GRENKELEASING AG, Grenke Investitionen und Verwaltungs KGaA and GRENKEFACTORING GmbH, Section 19 GewStDV was applied to the 2008 to 2011 assessment periods and charges and similar amounts relating directly to financial services within the meaning of Section 1 (1a) sentence 2 of the KWG were not added. For GRENKE BANK AG, Section 19 GewStDV is applied in the relevant manner for banks Revenue Recognition Income from Leasing when the Consolidated Group is the Lessor Please see the information in note Income from Insurance Business Income from insurance business is comprised of premiums for insurance policies in the lease business that the lessees must conclude via GRENKELEASING if they do not insure the leased assets themselves. The insurance premiums are collected annually. These amounts are deferred and released to income pro rata temporis.

90 86 GRENKE Consolidated Group Sale of Lease Assets Revenues from sales are recognised upon transfer of rights and obligations. Interest Income Interest and similar income from financing business are recognised when interest or similar fees (e.g. factoring fees) arise using the effective interest method Judgement Using the accounting policies, the senior management has made the following judgements, which substantially influence the recognition and amounts in the financial statements. This does not include those decisions which include estimates. Leasing Based on an analysis of its contractual conditions, the Consolidated Group as lessor has come to the conclusion that during the basic lease term all relevant opportunities and risks related to the ownership of a lease asset are transferred to the lessee in almost all leases. Accordingly, these leases are shown entirely as finance leases. Asset-backed Commercial Paper Programmes ( ABCP Programmes ) and ABS Bond The Consolidated Group uses various ABCP programmes for refinancing. They are not included in the Consolidated Group insofar as these programmes deal with special purpose entities established by various banks which purchase lease receivables from GRENKE Consolidated Group companies, bundle them and then issue short-term commercial papers for their own refinancing. As part of an analysis of the contractual terms of the individual programmes, the Consolidated Group had reviewed a potential consolidation requirement in accordance with SIC-12 Consolidation Special Purpose Entities. This financing structure provides the Consolidated Group access to a broader form of refinancing and to the corresponding benefits. However, the organising banks carry relevant and material risks due to the liquidity commitments they provide. After weighing the benefits created for the GRENKE Consolidated Group against the risks borne in relation to the assessment in accordance with SIC-12, consolidation in the GRENKE Consolidated Group should be ruled out. In addition, in the assessment of the evaluation of the consolidation requirement it was taken into account that the legal owner of the above individual special purpose entities is a trust. This uses the services of various legal offices which are responsible for the relevant management on behalf of the trust. There is no possibility for the GRENKE Consolidated Group to exercise influence over the trust or the management of the special purpose entities. Refinancing via the ABCP programmes is based on the contractual sale of future lease payments. In the assessment according to IAS et seq. as to whether or not a derecognition of the underlying financial assets should be undertaken, the Consolidated Group must evaluate to what extent it transfers risks and rewards from the underlying financial assets to the purchasing vehicle. Due to the opportunity-reward ratio in connection with lease claims, there is no derecognition in the context of the sale. For this reason the use of refinancing via ABCP programmes in GRENKELEASING AG s consolidated financial statements is accounted for as a loan. There is no off-balance sheet recognition. At FCT, shares of the funds are held by two subsidiaries and are included in consolidation accordingly. GOALS 2009 is the SPE for an ABS bond (note ). As there are no liquidity guarantees here, and the majority of risks and rewards are assigned to the GRENKE Consolidated Group, GOALS 2009 was included in consolidation in 2010, 2011, and 2012.

91 GRENKE Consolidated Group Use of Assumptions and Estimates In preparing the consolidated financial statements, assumptions and estimates have been made which have had an effect on the recognition and carrying amounts of assets, liabilities, income, expenses, and contingent liabilities. Assumptions and estimates generally relate to the following: the uniform determination of useful lives of assets within the Consolidated Group; the measurement of provisions; the recoverability of receivables from terminated contract; the recognition of realisable residual values for leased asset; and the identification of parameters for assessing the on-going value of intangible assets and other nonfinancial assets as well as the probability of future tax benefits. In some cases, the actual figures may differ from the assumptions and estimates. Any changes will be recognised in profit and loss as and when better information is available. The main uncertainties in relation to estimates, and the associated disclosure requirements, are in the following areas: Assumptions made in impairment tests for measuring goodwill 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 Recognition and measurement of deferred tax on tax-loss carryforwards The cash flows used to measure goodwill under the discounted cash flow method are based on current business plans and internal plans for the next five years. This involved making assumptions as to future revenues and costs. Assumptions as to future investments in the respective company s operations were made on the basis of historical figures and historical income patterns which were projected into the future. If significant assumptions differ from actual figures, impairments may have to be made in the future in profit and loss. Depending on country, currency, and financial structure, the costs of equity of between 6.6% (Germany) and 11.3% (HUF) (previous year non-weighted average: 8.1%) were used in discounting cash flows. Non-performing lease receivables are carried at amortised cost 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)

92 88 GRENKE Consolidated Group 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. Nonguaranteed residual values are used to calculate lease receivables in accordance with the definition in IAS 17. Estimated residual values comprise anticipated sales proceeds and any revenues generated in a renewal period. They are determined on the basis of past experience and statistical methods. Based on experience and dependent on the terms of the lease, 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 broken down into more detailed maturity groups. For additions from 2007 to 2008, the residual values range between 7.7% and 28.4% of historical cost depending upon the duration of the lease. Residual values of between 6.5% and 28.4% were used for additions from For additions after April 1, 2011, residual values of between 6.5% and 23.5% were applied and continue to be valid. Proceeds are at best estimated based on statistical analyses. If the post-transaction recoverable amount is lower than expected (from sale and subsequent lease), the lease receivables are impaired. However, an increase in recoverable amount remains unrecognised. Lease assets for sale are measured on the basis of the average sales proceeds per age group realised in the past fiscal year in relation to the original cost. Lease assets for sale are measured at historical residual values, taking their actual saleability into account. As per the end of the reporting period, the residual values used had amounted to between 3.5% and 16.9% of the historical cost (previous year: between 3.3% and 18.3%). If a sale is considered unlikely due to the condition of the asset, the asset is impaired in profit and loss. Deferred tax assets are recognised for all unused tax-loss carryforwards to the extent to which it is likely that taxable income will be available. This means that the tax-loss carryforwards can in fact be used. In determining the level of the deferred tax assets, a considerable use of judgement is required on the part of the management with regard to the expected occurrence and level of the future taxable income, as well as to the future tax planning strategies. On July 22, 2009, the German Health Insurance Relief Act of July 16, 2009 was published in the Federal Law Gazette. The tax relief measures it contains, in order to combat the financial and economic crisis, include a temporary redevelopment privilege that eases the loss deduction restriction of Section 8c of the German Corporation Tax Act [Körperschaftsteuergesetz (KStG)] for certain cases. Under this privilege, an equity investment acquired after December 31, 2007 and before January 1, 2010 does not affect the restriction on loss utilisation of Section 8c (1) KStG if acquired for the purpose of the redevelopment of the operations of the loss-making company. An eligible redevelopment is defined as a measure intended to prevent or eliminate insolvency or overextension, while at the same time retaining the essential operating structures. In a letter dated April 30, 2010, the German Federal Ministry of Finance had announced that, with a resolution on February 24, 2010, the EU Commission had opened a formal investigation under Article 108 (2) of the Treaty on the Functioning of the European Union (TFEU) against the restructuring clause of the regulation on loss set-off restrictions for corporations (Section 8c (1a) KStG). The EU Commission has doubts regarding the compatibility of the regulation on the restructuring clause of Section 8c (1a) KStG with the common market. On January 26, 2011, the EU Commission resolved that the restructuring clause contained in Section 8c (1a) KStG, and applicable from January 1, 2008, constitutes a form of state aid incompatible with European law. Thus, the formal investigation under Article 108

93 GRENKE Consolidated Group 89 (2) of the TFEU, which was initiated on February 24, 2010, was officially concluded. The Federal Republic of Germany has filed an action with the European Court of Justice (ECJ) for an annulment of the resolution of the European Commission. Since the outcome of these proceedings is still unclear, the restructuring clause has not been taken into account. 3 Selected Notes on the Income Statement 3.1 Net Interest Income Interest and Similar Income from Financing Business Interest and similar income from financing business break down as follows: EURk Net interest income from the leasing business 165, ,211 Interest income from the bank s lending business Interest and similar income from the factoring business 1,849 1,443 Interest income from the refinancing of franchisees 2,185 2,535 Total 169, , Interest Expenses from Refinancing and Deposit Business Interest expenses from refinancing and deposit business break down as follows: EURk Interest expenses from deposit business 4,899 3,417 Interest expenses from refinancing 53,125 48,439 Total 58,024 51,856 Interest expenses from refinancing also include the interest income of EUR 1,775k (previous year: EUR 2,114k) generated by the loans issued under the ABCP programmes and the ABS bond (asset-backed securities) (see note 4.4).

94 90 GRENKE Consolidated Group 3.2 Settlement of Claims and Risk Provision Flat-rate specific bad debt allowances are calculated on the base of the historical rates for the collectability of a receivable in conjunction with its categorisation (percentage-of-receivables approach). EURk Income from settlement of claims 49,086 36,442 Derecognition of and net addition to flat-rate specific bad debt allowances 37,408 31,382 Expenses from the derecognition of performing lease receivables 51,653 37,016 Allowance for losses on the bank s loans and advances 1,500 1,150 Allowance for losses in factoring business Expenses for del credere fees to franchiser 1,852 1,299 Total 43,421 34, Profit from Insurance Business Revenues and expenses from the insurance business for leasing business are as follows: EURk Income from insurance business 32,184 27,586 Expenses from insurance business 2,028 1,883 Profit from insurance business 30,156 25, Profit from New Business Revenues from new contracted lease business are comprised as follows: EURk Recognition of new lease receivables 916, ,313 Share of revenues from leasing down payments 4,985 4,540 Revenues from processing fees 2,806 2,490 Revenues from special lease payments 2,202 1,715 Total 926, ,058 Expenses for new contracted lease business are comprised as follows: EURk Cost of newly acquired leased assets 874, ,594 Commissions paid to dealers 16,490 14,443 Total 891, ,037 Profit from new business 35,698 31,021

95 GRENKE Consolidated Group 91 The cost of newly acquired leased assets represents all expenses related to the acquisition of the assets. Revenue from capitalising lease receivables includes the present value of fixed lease payments and the present value of expected or fixed income from the post transaction. As almost all contracted lease contracts provide for full cost recovery, the total of expected cash flows is equal to or greater than their costs. Costs related to the conclusion of the contract are also capitalised. 3.5 Profit from Disposals EURk Revenues from subsequent leases 26,107 24,212 Depreciation of leased assets in the subsequent lease period 922 1,323 Capital losses from disposal after end of the basic lease term 22,719 21,844 Capital gains/losses from mutually agreed early termination of contracts 1, Total 3,982 1,653 Revenues from subsequent leases relate to lease income recognised after the end of the basic term of the respective lease. These compensate for the depreciation and the capital losses from the disposal of leased assets following the end of the basic lease term and from mutually agreed early dissolution of contracts. 3.6 Staff Costs The average number of staff during the fiscal year totalled 681 (previous year: 585). Part-time staff was converted into full-time equivalents. EURk Salaries 35,031 30,545 Social security and other benefits 7,407 6,150 Board of Directors phantom stock programme (note 8.6) Total 42,809 36,695 Almost all pensions in the Consolidated Group are defined contribution schemes. Under defined contribution plans, the entity pays contributions to public or private pension insurance schemes voluntarily or on the basis of statutory or contractual requirements. The entity does not have any other benefit obligations beyond the contribution payments. The current contribution payments are recognised as an expense for the respective year. In 2012, they amounted to EUR 1,361k (previous year: EUR 1,422k) and had mainly comprised contributions to the statutory pension insurance scheme in Germany. A total net pension expense of EUR 124k (previous year: EUR 142k) for existing pension plans was recognised in staff costs in the fiscal year The staff costs also included EUR 448k (previous year: EUR 354k) for the employee participation programme of the French subsidiary.

96 92 GRENKE Consolidated Group 3.7 Depreciation, Amortisation, and Impairments EURk Operating and office equipment 1,356 1,850 Office buildings Other intangible assets 1, Total 3,355 3,225 In the reporting period, impairment charges on operating and office equipment amounted to EUR 0k (previous year: EUR 467k). 3.8 Selling and Administration Expenses (not including Staff Costs) Selling and administrative expenses break down into the following categories: EURk Operating expenses 11,523 11,237 Administrative expenses 4,713 4,441 Consulting and audit fees 6,168 4,753 Distribution costs (without commissions) 5,613 4,711 Other taxes 2,255 1,106 Remuneration of the Supervisory committees Total selling and administrative expenses (excluding staff costs) 30,395 26,373 Consulting and Audit Fees The consulting and audit fees of EUR 6,168k (previous year: EUR 4,753k) include fees (and expenses) for the auditor of GRENKELEASING AG totalling EUR 481k (previous year: EUR 545k). The auditor s fees in fiscal year 2012 break down as follows: EURk Fees for the audit of financial statements Fees for other assurance or valuation services Fees for other services Total EUR 52k of the total fees (previous year: EUR 177k) related to prior periods. Expenses from Rent and Lease Contracts In the fiscal year, expenses from rent and lease contracts amounted to EUR 5,827k (previous year: EUR 5,925k). They are primarily recognised under operating expenses and mainly relate to the rental of offices for branches and company car leases.

97 GRENKE Consolidated Group Other Operating Expenses Other operating expenses break down as follows: EURk Revenue deductions 1,104 1,472 Currency translation differences 2,724 1,423 Additions to provisions Capital losses from the disposal of operating and office equipment Other items Total 5,021 3, Other Operating Income Other operating income breaks down as follows: EURk Franchise fees received 1,180 1,144 Rent and ancillary rental costs Prior-period income Reversal of provisions Revenues from the disposal of merchandise Commission income from banking business Administration fees received Income from impaired receivables Income from reversal of deferred liabilities Court costs allocated to lessees 0 77 Insurance compensation Capital gains from the disposal of non-current assets Derecognition of liabilities 55 0 Other items Total 3,501 3, Income Taxes EURk Current taxes 14,663 16,155 Deferred taxes 2,574 4,974 Total 17,237 11,181 Current taxes include income relating to previous years of EUR 183k (previous year: EUR 73k).

98 94 GRENKE Consolidated Group Reconciliation from the Average Effective Tax Rate and the Expected Tax Rate The reconciliation of the expected applicable tax rate of GRENKELEASING AG to the effective tax rate based on earnings before taxes (100%) is as follows: Applicable tax rate Trade tax 14.19% 14.19% Corporate income tax 15.00% 15.00% Solidarity surcharge (5.5% of corporate income tax) 0.83% 0.83% Average expected tax rate GRENKELEASING AG 30.02% 30.02% Applicable tax rate Average expected tax rate GRENKELEASING AG 30.02% 30.02% Tax increases due to non-deductible expenses 0.07% 0.06% Changes due to foreign taxes 3.09% 9.46% Balance of tax reductions and increases due to changes in tax rates 0.03% 0.00% Utilisation of non-capitalised loss carryforwards 0.28% 0.44% Back payments and tax rebates from previous years 1) 0.31% 0.14% Other 2.49% 2.13% Average effective tax rate for the Consolidated Group 28.87% 22.17% 1) Tax refunds for prior years amounted to EUR 183k in 2012 (previous year: tax refunds EUR 73k) Earnings per Share The calculation of both diluted and basic earnings is based on the net profit for the period. There was no dilutive effect in either fiscal year 2012 or the previous year. Earnings per share amounted EUR 3.10 for the year under review (previous year: EUR 2.87). Number Shares outstanding at beginning of period 13,684,099 13,684,099 Average number of shares outstanding at end of period (basic) 13,684,099 13,684,099 Average number of shares outstanding at end of period (diluted) 13,684,099 13,684,099 Shares outstanding at end of period 13,684,099 13,684, Other Comprehensive Income The reclassification of realised gains and losses before taxes in profit and loss breaks down as follows: EURk Gains (losses) from interest rate contracts arising in the current period 460 1,893 Reclassification adjustments to the income statement 224 1,037 Other comprehensive income from hedge accounting

99 GRENKE Consolidated Group 95 4 Selected Notes on the Statement of Financial Position 4.1 Cash and Cash Equivalents EURk Dec. 31, 2012 Dec. 31, 2011 Cash in hand 7 15 Balances at central banks 45,276 19,063 Bank balances 71,424 85,156 Total 116, ,234 For the purposes of the statement of cash flows, cash and cash equivalents break down as follows: EURk Dec. 31, 2012 Dec. 31, 2011 Cash and cash equivalents as per the statement of financial position 116, ,234 Less current account liabilities Cash and cash equivalents as per the statement of cash flows 116, , Financial Instruments that are Assets In both reporting periods, financial instruments that are assets comprised solely of derivatives without hedging relationship. Accordingly, there were no hedging derivatives as defined by IAS 39 that are assets. EURk Dec. 31, 2012 Dec. 31, 2011 Market value of interest rate swaps 3,325 3,183 Foreign currency forwards 913 1,216 Total 4,238 4,399 For a discussion of interest rate and currency derivatives please refer to note Lease Receivables EURk Dec. 31, 2012 Dec. 31, 2011 Outstanding minimum lease payments 1,843,940 1,550,324 + non-guaranteed residual values 226, ,114 Gross investment 2,070,156 1,739,438 unrealised (outstanding) finance income 298, ,504 Net investment 1,771,673 1,484,934 Present value of non-guaranteed residual values 166, ,271 Present value of minimum lease payments 1,604,768 1,346,663

100 96 GRENKE Consolidated Group EURk Less than 1 year 1 to 5 years More than 5 years Total gross investment 727,049 1,329,324 13,783 Total gross investment (previous year) 606,437 1,121,425 11,576 Present value of outstanding minimum lease payments 530,691 1,065,924 8,153 Present value of outstanding minimum lease payments (previous year) 439, ,943 6,900 The reconciliation of gross investment only contains current contracts as per the end of the reporting period. The following adjustments must be made in order to reconcile the net investment with the carrying amount of lease receivables disclosed in the statement of financial position: EURk Dec. 31, 2012 Dec. 31, 2011 Changes in lease receivables from current contracts (performing lease receivables) Balance at beginning of period 1,484,934 1,241,374 + Change during the period 286, ,560 Lease receivables (current + non-current) from current contracts at end of period 1,771,673 1,484,934 Changes in lease receivables from terminated contracts/contracts in arrears (non-performing lease receivables) Gross receivables at beginning of period 168, ,346 accumulated valuation allowances at beginning of period 84,573 83,496 = Non-performing lease receivables at beginning of period 83,820 86,850 + Additions to gross receivables during the period 63,851 31,443 Disposals of gross receivables during the period 33,621 33,396 + Disposal of accumulated valuation allowances during the period 17,636 18,275 Addition of accumulated valuation allowances during the period * 29,431 19,352 Non-performing lease receivables at end of period 102,255 83,820 Lease receivables (carrying amount, current and non-current) at beginning of period 1,568,754 1,328,224 Lease receivables (carrying amount, current and non-current) at end of period 1,873,928 1,568,754 * Item contains exchange rate differences in the amount of EUR 270k (previous year: EUR 400k). EURk Present value of minimum lease payments Present value of residual values Other receivables from lessees Carrying amount 2011 Current lease receivables 439,820 45,159 83, ,799 Non-current lease receivables 906,843 93, ,955 Total (2011) 1,346, ,271 83,820 1,568, Current lease receivables 530,691 55, , ,141 Non-current lease receivables 1,074, , ,185,787 Total (2012) 1,604, , ,255 1,873,928 Receivables from terminated contracts and contracts in arrears are included in current lease receivables.

101 GRENKE Consolidated Group 97 The following table lists non-performing receivables with the number of days past due: Past due at the end of the reporting period in the following time bands thereof past Allowances for due at the receivables as per Between 91 Between 181 Lease receivables EURm Net carrying amount end of the reporting the end of the reporting period < 90 days days and 180 days days and 360 days Between 1 and 5 years > 5 years As per Dec. 31, 2011 Not impaired Impaired Total As per Dec. 31, 2012 Not impaired Impaired Total There were no indications that performing lease receivables were impaired as per the end of the reporting period. The maximum credit risk, without taking into account collaterals, credit assessment systems, and other tools, is the carrying amount of the receivables. As per December 31, 2012, there were no indications that financial assets (in particular lease receivables) which are neither impaired nor past due will be defaulted upon. Thanks to effective risk management and a highly diversified contract and lessee portfolio, the lease receivables have a particularly diversified risk structure with regard to credit risk. In the majority of cases, the GRENKE Consolidated Group remains the legal owner of the leased assets, which are used as collateral for the lease receivables. The following table shows changes in allowances for current and non-current receivables: EURm Dec. 31, 2012 Dec. 31, 2011 Allowances at the beginning of the fiscal year Addition to specific bad debt allowance Utilisation of specific bad debt allowance Reversal of specific bad debt allowance Currency translation differences Allowances at the end of the fiscal year The interest income resulting from the addition of accrued interest on the allowance expenses amounted to EUR 419k (previous year: EUR 2,198k) and is reported under settlement of claims and risk provision.

102 98 GRENKE Consolidated Group 4.4 Other Financial Assets EURk Dec. 31, 2012 Dec. 31, 2011 Other current financial assets Receivables from franchisees (refinancing) 18,932 26,158 ABCP loans 19,987 19,829 Instalments collected at end of month 21,550 23,890 Loans (bank) 2,859 1,622 Receivables from refinancers 4,896 4,116 Receivables from factoring business 9,444 7,206 Restricted cash 6,180 7,155 Other 1,055 0 Total other current financial assets 84,903 89,976 Other non-current financial assets ABCP loans 19,114 18,197 Receivables from franchisees (refinancing) 3,135 13,305 Loans (bank) 5,738 3,074 Other 1,069 0 Total other non-current financial assets 29,056 34,576 Total financial assets 113, ,552 Restricted cash refers to the cash and cash equivalents in the bank accounts of GOALS This amount represented the liquidity reserve of the SPE. The GRENKE Consolidated Group cannot access these funds. Receivables from franchisees (see also note 2.4.4) include receivables resulting from the refinancing of leases concluded by franchise operators. As collateral for loan receivables or in forfaiting agreements, the franchisees have assigned both the title to the leased assets and the claim to lease receivables. Accordingly, interest income generated in this context of EUR 2,185k (previous year: EUR 2,535k) (see also note 3.1.1) is reported as interest income in the net interest income. Refinancing granted in foreign currencies is translated using the closing rate. In addition to the liquidity reserve of between 8.0% and 35.0%, depending on country of origin and vehicle utilised, based on the volume of lease receivables sold for the purpose of refinancing, the ABCP loans include loans to the SPEs which need to be granted as collateral for the refinancing volume under the respective agreements. These loans are based on the refinancing volume and the origin of the receivables refinanced through the SPEs. The interest income generated in this context is offset against the interest expense from refinancing liabilities. At the end of the reporting period, the receivables from the lending business of GRENKE BANK AG which related to the bank s prior business amounted to EUR 2,513k (previous year: EUR 3,565k). In addition, receivables from the lending business of in total EUR 8,597k (previous year: EUR 4,697k) include receivables from granting business start-up loans in the amount of EUR 5,774k (previous year: EUR 948k) and receivables from granting project financing in the amount of EUR 282k (previous year: EUR 163k). Interest income is recognised as such under net interest income. The item others includes financial assets that were recognised in the context of purchase price accounting of business combinations. All other financial assets were neither past due nor impaired as per the end of the reporting period.

103 GRENKE Consolidated Group Trade Receivables Trade receivables of EUR 3,726k (previous year: EUR 4,560k) mainly relate to receivables from resellers and third parties resulting from the disposal of lease assets. An amount of EUR 879k (previous year: EUR 1,082k) of these receivables is overdue and EUR 584k (previous year: EUR 545k) of this amount is impaired. Trade receivables include other receivables from franchisees of EUR 1,501k (previous year: EUR 2,627k). 4.6 Tax Assets EURk Dec. 31, 2012 Dec. 31, 2011 Corporate income tax assets 3, Trade tax assets Other items Total 4,838 1,298 The corporate income tax and trade tax assets are the result of prepayments being too high. 4.7 Other Current Assets EURk Dec. 31, 2012 Dec. 31, 2011 VAT receivables 103,849 74,879 Prepaid expenses 3,096 6,071 Insurance claims Orders in progress Merchandise Amounts in transit Creditors with debit balances Other items 1,634 1,847 Total 110,777 83,817

104 100 GRENKE Consolidated Group 4.8 Property, Plant, and Equipment Overview of Fiscal Year 2012 Land and Assets under Operating and Lease assets from EURk buildings construction office equipment operating leases Total Acquisition costs Jan. 1, , ,142 18,710 51,404 Currency translation differences Additions 27 5,426 2,424 7,895 15,772 Of which additions in the context of a business combination Disposals ,154 12,789 Reclassifications Acquisition costs Dec. 31, ,713 6,292 17,010 14,507 54,522 Accumulated depreciation and impairments Jan. 1, , ,815 1,227 15,751 Currency translation differences Additions to depreciation , ,756 Additions of impairments Disposals of depreciation ,066 Reclassifications Accumulated depreciation and impairments Dec. 31, , ,774 1,527 17,487 Net carrying amounts Dec. 31, ,527 6,292 5,236 12,980 37,035

105 GRENKE Consolidated Group Overview of Fiscal Year 2011 Land and Assets under Operating and Lease assets from EURk buildings construction office equipment operating leases Total Acquisition costs Jan. 1, , ,865 18,530 49,081 Currency translation differences Additions ,618 12,150 14,634 Of which additions in the context of a business combination Disposals ,994 12,290 Reclassifications Acquisition costs Dec. 31, , ,142 18,710 51,404 Accumulated depreciation and impairments Jan. 1, , ,178 1,026 13,436 Currency translation differences Additions to depreciation ,383 1,323 3,183 Additions of impairments Disposals of depreciation ,124 1,314 Reclassifications Accumulated depreciation and impairments Dec. 31, , ,815 1,227 15,751 Net carrying amounts Dec. 31, , ,327 17,483 35,653 The operating leases are mainly lease contracts whose basic lease term has expired and which may be terminated at any time. Depreciation on such lease assets from operating leases is shown in profit from disposals (see note 3.5). Expenditures for assets under construction relate to the extension of an office building and will be recognised under land and buildings following completion. 4.9 Goodwill EURk Carrying amounts as per Jan. 1 13,441 12,985 Currency translation differences Additions through business combinations 34,804 1,089 Disposals 0 0 Sub-total 48,815 13,441 Impairments 0 0 Carrying amounts as per Dec ,815 13,441 With regard to the additions in 2012, please refer to the comments on the business combinations of S.C. Grenke Renting S.R.L., Romania, GRENKE RENT S.A., Spain, and Grenke Renting S.A., Portugal (see note 5.1).

106 102 GRENKE Consolidated Group Goodwill Impairment Test The impairment test for goodwill is carried out on the basis of the cash-generating units. In the Leasing segment, these are equivalent to the business activities in the respective regions (countries) and correspond to the legal entities. The cash-generating units represent the lowermost level at which goodwill is monitored internally. The recoverable amount is the higher of the fair value less selling costs and the value in use of the cash-generating units. If one of these amounts exceeds the carrying amount, then it is not always necessary to determine both amounts. The recoverable amount of each of the cash-generating units was determined based on a value-in-use calculation using cash flow projections derived from five-year financial plans approved by senior management. The key parameters for determining their value are the future expectations with regard to the development of new business and profitability. The goodwill acquired in business combinations was tested for impairment on the basis of the 2012 half-year figures as per September 30, 2012, in accordance with IAS 36. GRENKELEASING AG tests goodwill for impairment at least once a year. The basic assumptions used in calculating the cash flows which can be generated by the respective entities are based on new business growth rates of up to 35% in individual regions and in individual years, as well as discount factors specific to countries, financial structure, and currencies of between 6.6% and 11.3% (previous year: between 7.1% and 11.00%). Discount factors are calculated based on the capital asset pricing model (CAPM), taking into account a risk-free interest rate of 2.2% (previous year: 3.0%) and a beta factor of (previous year: 0.800) for the Leasing segment and for the Bank and Factoring segment. Cash flows after a five-year period were carried forward without using a growth rate. Forecasts for the development of new business have proven to be stable in the past. Due to the particular business alignment of the Consolidated Group, the forecasting parameters available on the market are not suitable for providing forecasting quality, since they relate only to the entire leasing market, which is heavily influenced by the leasing of property, capital goods, and vehicles. Therefore, forecasts for the development of new business are based on the Company s past experience. No impairment was identified in any of these cases.

107 GRENKE Consolidated Group 103 Carrying amounts of goodwill relate to the following cash-generating units: EURk Dec. 31, 2012 Dec. 31, 2011 GRENKE SERVICE AG (Baden-Baden) GRENKELEASING s.r.o. (Prague) Czech Republic 1,347 1,315 GRENKE LEASING S.r.l. and GRENKE Locazione S.r.l. (Milan) Italy Grenke Leasing Ltd. (Guildford) UK 2,077 2,028 GRENKELEASING Sp. z o.o. (Poznan) Poland 4,391 4,013 GRENKE BANK AG (Hamburg) Banking 1,582 1,582 GRENKEFACTORING GmbH (Baden-Baden) Factoring 2,698 2,698 GRENKELEASING Magyarország Kft. (Budapest) Hungary S.C. Grenke Renting S.R.L. (Bucharest) Romania 1, GRENKE RENT S.A. (Madrid) Spain 5, Grenke Renting S.A. (Lisbon) Portugal 28, Total 48,815 13,441 The goodwill resulting from the business combination with S.C. Grenke Renting S.R.L. (Bucharest), Romania, GRENKE RENT S.A. (Madrid), Spain, and Grenke Renting S.A. (Lisbon), Portugal in 2012 is still provisional as the purchase price allocation will only be finalised in 2013 (see note 5.1. The goodwill is assigned to the cash-generating units in Romania, Spain, and Portugal Sensitivity of Assumptions The fair value of a cash-generating unit where the major value drivers are cash flows and the discount rate is very sensitive to changes in the discount rate. The discount rate is largely determined by the risk-free interest rate, a market risk premium, and a beta factor for systematic risk. Here, specifics to countries, financial structure, and currencies were taken into consideration. These parameters are based on external sources of information. Therefore, fluctuations in the components stated above may affect the discount rate. As part of the validation of the fair values determined for the cash-generating units, the major value drivers for each unit are reviewed annually. In addition, in order to test the resilience of the fair values, a sensitivity test was performed on discount rates and growth rates of new business which are the key determinants used in the discounted cash flow model. Against this background, the management is of the opinion that realistic changes to the assumptions used for implementing impairment tests within the Consolidated Group do not result in any impairment. The changes arising since the routine impairment test on the basis of six-month figures on September 30, 2012, and the end of the reporting period, did not affect the parameters for the evaluation of the individual cash-generating units.

108 104 GRENKE Consolidated Group 4.10 Other Intangible Assets Overview of Fiscal Year 2012 EURk Development costs Software licences Customer relations/noncompetitive clauses Total Acquisition costs as per Jan. 1, ,929 2,577 6,683 Currency translation differences Additions Disposals Additions through business combinations 0 4 8,959 8,963 Reclassifications Acquisition costs as per Dec. 31, ,539 11,725 16,441 Accumulated amortisation as per Jan. 1, ,858 1,472 4,507 Currency translation differences Additions ,522 Disposals Reclassifications Accumulated amortisation as per Dec. 31, ,473 2,463 6,113 Net carrying amounts Dec. 31, ,066 9,262 10, Overview of Fiscal Year 2011 EURk Development costs Software licences Customer relations Total Acquisition costs as per Jan. 1, ,779 2,385 5,365 Currency translation differences Additions 0 1, ,152 Disposals Additions through business combinations Reclassifications Acquisition costs as per Dec. 31, ,929 2,577 6,683 Accumulated amortisation as per Jan. 1, ,413 1,104 3,705 Currency translation differences Additions Disposals Reclassifications Accumulated amortisation as per Dec. 31, ,858 1,472 4,507 Net carrying amounts Dec. 31, ,071 1,105 2,176 Additions in the area customer relations/non-competitive clauses resulted exclusively from business combinations in the reporting year and in the previous year.

109 GRENKE Consolidated Group Deferred Tax Assets and Deferred Tax Liabilities Deferred tax assets and liabilities break down as follows: Statement of financial position Income statement EURk Dec. 31, 2012 Dec. 31, Deferred tax assets Tax-loss carryforwards 11,353 12,370 1, Remeasurement of liabilities 6,411 4,217 1,400 5,452 Remeasurement of lease receivables Pensions Other remeasurements (derivatives) Total 18,622 17,280 3,190 5,309 Deferred tax liabilities Remeasurement of lease receivables 29,250 24,472 2,151 10,550 Remeasurement of liabilities 4,167 1,578 3, Other remeasurements Total 33,987 26, ,283 Deferred tax expense/(income) 2,574 4,974 Deferred tax liabilities, net 15,365 8,798 Reported in the statement of financial position as follows: Deferred tax assets 18,622 17,280 Deferred tax liabilities 33,987 26,078 At the Danish company, the deferred tax assets on tax-loss carryforwards were limited to the EUR 751k (previous year: EUR 586k) of deferred tax liabilities. Deferred tax assets of EUR 39k were directly recognised in equity in the fiscal year (previous year: reversal of deferred tax assets EUR 99k). These resulted from the cash flow hedge reserve directly recognised in equity. Deferred tax assets of EUR 136k were also directly recognised in equity in connection with the recognition of actuarial losses (previous year: reversal of deferred tax assets of EUR 24k). In the consolidated financial statements and in accordance with IAS 12, deferred taxes on differences between the proportionate equity of a subsidiary recognised in the consolidated statement of financial position, and the carrying amount of equity investment for the subsidiary, are to be recognised in the parent company s tax accounts ( outside basis differences ) if the difference is likely to be realised. As GRENKELEASING AG and the relevant subsidiaries are corporations, these differences are largely tax-free upon realisation in line with Section 8b KStG and are therefore of a permanent nature. In cases of temporary differences (e.g. those resulting from the 5% global calculation in Section 8b KStG), and in line with IAS 12.39, there should not be a recognition of deferred tax liabilities unless, as in the case of control on the part of the parent company, it is probable that these differences will reverse in the foreseeable future.

110 106 GRENKE Consolidated Group Currently this reversal is only expected in relation to a partial amount for the subsidiary in Switzerland. Therefore, only deferred taxes amounting to EUR 17k (previous year: EUR 26k) were included in the statement of financial position Current and Non-current 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 Dec. 31, 2012 Dec. 31, 2011 Financial liabilities Current financial liabilities Liabilities from the refinancing of the leasing business 521, ,624 ABS/ABCP related liabilities 168,739 95,269 Bonds, revolving facilities, debentures, and private placements 287, ,393 Committed development loans 18, Sales of receivables agreements 46,626 41,798 Current liabilities from deposit business 115,890 93,897 Current bank liabilities 1,426 1,073 thereof current account liabilities Total current financial liabilities 639, ,594 Non-current financial liabilities Liabilities from the refinancing of the leasing business 1,107, ,008 ABS/ABCP related liabilities 182, ,768 Bonds, debentures, and private placements 873, ,955 Committed development loans 19,672 23,384 Sales of receivables agreements 32,452 43,901 Non-current liabilities from deposit business 93,477 61,230 Non-current bank liabilities 1,719 2,406 Total non-current financial liabilities 1,203, ,644 Total financial liabilities 1,842,306 1,526,238

111 GRENKE Consolidated Group 107 The volume of non-current financial liabilities payable in one to five years or more was as follows as per December 31, 2012: EURk Total 1 to 5 years More than 5 years Secured amount Type of liability Liabilities from the refinancing of the leasing business Liabilities from deposit business Bank liabilities ,107,911 1,054,444 53, ,133 (Previous 929, ,097 6, , ,477 93, (Previous 61,230 61, ,719 1, ,800 (Previous 2,406 2, ,800 A foreign currency loan (denominated in CHF) reported under bank liabilities was repaid in full at the end of December The land charge of EUR 8,000k on the office building in favour of Commerzbank Aktiengesellschaft, Baden-Baden (Oos land register, no. 6080) is still in place. A ten-year loan in the amount of EUR 5,500k bearing interest of 3.1% was raised to finance the construction of a new office building. Interest is payable quarterly in arrears. The loan has been repaid semi-annually since September 30, The pay-out was 96% of the loan amount. A further land charge in the amount of EUR 2,800k was registered as collateral on October 11, Bank liabilities also include the liabilities from the utilisation of cash lines (current account liabilities). As per the end of the reporting period these lines had been utilised in the amount of EUR 637k (previous year: EUR 482k). The liabilities from the deposit business comprise deposits by customers of GRENKE BANK AG. The total current liabilities of EUR totalling 115,890k (previous year: EUR 93,897k) include an amount of EUR 16,652k (previous year: EUR 13,874k) of deposits payable on demand as per the end of the reporting period. For the other deposits consisting of restricted and fixed-term deposits, corresponding terms have been arranged. Current and non-current lease receivables totalling EUR 468,144k (previous year: EUR 459,284k) have been assigned to the refinancing institutions in order to secure the liabilities stemming from the refinancing of the leasing business. Each individual item of collateral is assigned until the outstanding receivable on the lease has been settled. The collateral is then reassigned. The items of collateral for assigned receivables are marked so that they can be clearly distinguished from non-assigned receivables. Further details on the refinancing sources and the main categories of financial liabilities are discussed below ABS Bond On February 4, 2010, an ABS bond amounting to EUR 160,000k was placed via the special-purpose entity GOALS FINANCING 2009 LIMITED (GOALS ). 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. Three tranches of bonds with different ratings (risk classes) were issued by the SPE. The portion of the highest rated tranche is a reflection of the quality of the leasing portfolio and the internal risk management and directly impacts the costs of this type of financing. 76.5% (EUR 122,400k) of the bond was given the highest rating by Standard & Poor s (AAA) and FITCH (AAA). The wholly-owned subsidiary of GRENKELEASING AG, GRENKE FINANCE Plc., Dublin, Ireland, subscribed on a pro rata basis to the second tranche

112 108 GRENKE Consolidated Group and subscribed fully to the last tranche (nominal value EUR 24,200k) of the ABS bond. As a result, the Consolidated Group had a cash inflow of only EUR 135,800k. The carrying amount of the total liability was EUR 135,960k at the end of the reporting period (previous year: EUR 135,961k) ABCP Programmes The GRENKE Consolidated Group has several asset-backed commercial paper programmes (ABCPs) with a total volume of EUR 400,000k as per the end of the reporting period (previous year: EUR 400,000k). An overview of the programmes as per the end of the reporting period is as follows: ABCP Programme/SPE Compass Variety Funding Limited Kebnekaise Funding Limited Initiating Bank Portigon AG SEB AB Refinanceable lease receivables Programme volume EURk as per Dec. 31, 2012 Programme volume EURk as per Dec. 31, 2011 German and Austrian lease receivables 40,000 40,000 German and French lease receivables 110, ,000 CORAL PURCHASING Limited DZ-Bank German lease receivables 150, ,000 Elektra Purchase No. 25 Limited UniCredit French lease receivables 100, ,000 Total 400, ,000 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 normally backed by the organising bank in the form of a liquidity commitment in the corresponding amount. The ABCP programme Compass Variety Funding Limited with Portigon AG (formerly WestLB) was fixed at EUR 40,000k and extended on January 19, 2012 by an additional two years until January 19, The programme commitment for the Kebnekaise Funding Limited ABCP programme was extended and will run until November 30, The programme commitment for the CORAL Purchasing Limited ABCP programme will run until September 3, 2013, while the programme commitment for the Elektra Purchase No. 25 ABCP programme will run until July 30, To reflect the current legal conditions in France in the securitisation of French lease receivables (separate French securitisation act), a French securitisation vehicle (FCT = fonds commun de titrisation à compartiments/french issuer) was founded in The FCT initially consisted of just one so-called compartment ( FCT GK 1 ). A second compartment was founded on January 18, 2011 ( FCT GK 2 ). Within the FCT, the individual compartments are kept strictly separate from each other ( ring-fenced ). At a later date, it is possible that the GRENKE Consolidated Group will form further compartments within the FCT to finance further or other ABCP transactions. FCT GK 2 is refinanced through the issue of FCT notes which are exclusively subscribed by SPE Elektra Purchase No. 25 Limited. Therefore, the FCT GK 2 compartment serves the sole purpose of the securitisation of French lease receivables within the ABCP programme through Elektra Purchase No. 25 Limited. At the end of the 2012 fiscal year, 53.70% of the refinancing framework of the ABCP programmes was utilised (previous year: 53.52%). The special-purpose entities (SPEs) are refinanced by issuing commercial papers, usually with a term of one month, on a revolving basis. The interest on the commercial papers is based on one-month Euribor. This is a floating interest rate. The SPEs manage the

113 GRENKE Consolidated Group 109 interest rate risk (fixed-rate lease receivables versus floating-rate refinancing) with interest rate hedges (interest rate caps and interest rate swaps). Any costs incurred in this context are recharged to the corresponding companies of the GRENKE Consolidated Group. In return, these companies participate in the interest rate hedge as the benefit paid to the ABCP programme resulting from the related hedge is passed on to the companies of the GRENKE Consolidated Group via the excess spread. The costs incurred by the GRENKE Consolidated Group are classified as transaction costs under IAS 39 and amortised over the term of the underlying refinancing packages. In contrast to the sales of receivables shown under note , the interest rates on the assets and liabilities side do not match. There are no currency risks in ABCP refinancing as only euro transactions and euro-based leases are involved. The present value of the programmes was EUR 214,788k as per the end of the reporting period (previous year: EUR 214,076k). Since the amount of financing provided is always identical to the balance of sold receivables (less discounts, etc.), the hedging strategy must be based on the receivables portfolio sold. The GRENKE Consolidated Group does not derecognise the future lease receivables sold as part of the ABCP programmes. Although from a legal perspective, all rights to the receipt of cash flows are transferred to the relevant SPEs, all economic risks and rewards are retained by the selling company or the Consolidated Group. This ensures that the rating and thus the interest on the refinancing liability remain constant. In all cases, the sales of future lease receivables are treated as a loan and are shown as such in the statement of financial position. The GRENKE Consolidated Group does not include any of the SPEs used in the ABCP programmes in its consolidated financial statements. There is no off-balance sheet recognition (see note ). Transfer-related restrictions are in place with regards to the use of the transferred assets of the ABCP programmes to an extent that all leased assets of the respective underlying lease contract have been assigned as collateral to the respective seller of the receivables. The same principle also applies to the sales of receivables agreements explained in note Opportunities from the continuing ownership of the lease receivable result primarily the continued future generation of operating income by the leasing business. Risks may arise from the fact that cash reserves as advance payments are restricted as deposits at the special purpose entities Sales of Receivables Agreements Such agreements are currently in place with Stadtsparkasse Baden-Baden Gaggenau, Sparkasse Karlsruhe, UBS AG in Switzerland, the Commerzbank subsidiary BRE-Bank SA in Poland and Norddeutsche Landesbank for receivables in the UK. In February 2012, we also concluded such an agreement with DZ Bank Polska in Poland. The agreement with BRE-Bank SA in Poland, which was also terminated in mid-2009, was replaced by a new agreement in February 2012 and modified once again in September All such agreements represented refinancing of lease contracts with matching tenors. For this purpose, individual lease contracts with similar maturities are grouped together and lease receivables are purchased for the same maturities. This ensures that at any time in the future the interest charge for the GRENKE Consolidated Group is fixed and known for the entire term of the contract. Therefore, there is no interest risk. For this reason, derivatives are not used for this type of financing. There were

114 110 GRENKE Consolidated Group no indications for a possible derecognition of any items. The present value of the obligations as per the end of the reporting period is EUR 79,079k (previous year: EUR 85,699k) and coincides with the value of the receivables sold (less reductions et cetera) Bonds, Debentures and Private Placements Unless stated otherwise, three-month EURIBOR is the reference interest rate for floating-rate bonds, debentures, and private placements. The discounts and the initial expenses directly corresponding to the transaction concerned are reversed over the term of the debt securities using the effective interest method. All debentures are bullet debt securities and are subject to constant rating. If the Standard & Poor s rating were to be downgraded, the agreed interest rate would be contractually adjusted (increased). As a downgrade is not expected, no hedge has been concluded to date. Two debentures (starting dates July 4, 2011 and October 24, 2011) feature a termination option on the part of the investor regardless of the rating. Debt Issuance Programme The relevant terms and conditions for bonds using the debt issuance programme are as follows: Term Interest coupon Discount Nominal amount Dec. 31, 2012 Nominal amount Dec. 31, 2011 Description from to percent p. a. EURk EURk EURk Euro bond 13/08/ /08/ ,000 Euro bond 04/03/ /03/ ,000 75,000 Euro bond 21/06/ /01/ , ,000 Euro bond 18/10/ /04/ , ,000 Euro bond 09/03/ /03/ (gradually ) ,000 75,000 Euro bond 20/04/ /07/2014 Euribor ,000 10,000 Euro bond 04/07/ /07/2013 Euro bond 24/10/ /10/2014 Euribor (gradually ) 82 5,800 6,800 Euribor (gradually ) ,650 15,650 Euro bond 24/01/ /07/ , Euro bond 30/05/ /03/ , Euro bond 23/10/ /10/ , Euro bond 13/12/ /12/ , In 2012, four new bonds with a total nominal volume of EUR 366,000k were issued. The conditions can be seen in the table above. For the EUR 100,000k bond issued on August 13, 2009, GRENKELEASING AG was replaced as the bond debtor by GRENKE FINANCE Plc., Dublin/Ireland. There were no other changes associated with this replacement. In particular, all of the rights of the bond creditors in connection with the bond remained unaffected in terms of their content. GRENKELEASING AG has assumed a guarantee for all obligations of GRENKE FINANCE Plc. with regard to the bond. On August 13, 2012, the bond was repaid. The bonds issued on July 4, 2011 and on October 24, 2011 both feature a quarterly termination option on the part of the investor. For this reason, on October 4, 2011, a repayment of EUR 100k was made on the July 4, 2011 bond, which was original EUR 6,900k. A further repayment on the same bond in an amount of EUR 1,000k was made on January 4, 2012.

115 GRENKE Consolidated Group 111 Promissory Note Loans (PNL) The terms and conditions for the promissory note loans can be seen in the following table: Nominal amount Nominal amount Term Interest coupon Discount Dec. 31, 2012 Dec. 31, 2011 Description from to percent p. a. EURk EURk EURk EUR-PNL 10/03/ /03/ ,000 10,000 EUR-PNL 10/03/ /03/ ,000 4,000 EUR-PNL 19/03/ /03/ ,000 10,000 EUR-PNL 30/03/ /03/ ,500 14,500 EUR-PNL 30/03/ /03/ ,000 10,000 EUR-PNL 30/03/ /03/ ,000 10,000 EUR-PNL 25/05/ /05/ ,500 EUR-PNL 29/10/ /10/ ,000 10,000 EUR-PNL 06/12/ /06/ ,000 6,750 EUR-PNL 06/12/ /06/ ,000 6,750 EUR-PNL 16/12/ /12/2013 Euribor ,000 15,000 EUR-PNL 16/12/ /12/ ,500 10,500 EUR-PNL 11/02/ /08/ ,000 EUR-PNL 30/04/ /04/2014 Euribor ,000 33,333 EUR-PNL 08/06/ /06/ ,000 25,000 EUR-PNL 08/06/ /06/ ,000 8,333 EUR-PNL 04/07/ /07/ ,500 12,500 EUR-PNL 28/07/ /01/ EUR-PNL 28/07/ /01/ EUR-PNL 26/08/ /08/ EUR-PNL 24/10/ /12/2016 Euribor ,000 30,000 EUR-PNL 16/11/ /11/ ,000 15,000 EUR-PNL 09/12/ /12/ ,667 10,000 EUR-PNL 14/06/ /06/ , EUR-PNL 25/07/ /07/ , EUR-PNL 13/08/ /02/ , EUR-PNL 17/08/ /08/2015 Euribor EUR-PNL 17/08/ /08/2015 Euribor , EUR-PNL 21/12/ /12/ , In 2012, two promissory note loans with a total nominal volume of EUR 36,500k were repaid on maturity on May 25 and on August 13. On June 14, a fixed-interest bullet promissory note loan with a volume of EUR 10,000k maturing on June 14, 2015 was issued. In the third quarter, four new promissory note loans with a nominal volume totalling EUR 42,750k were issued of which two carry a variable interest coupon. The promissory note loan issued on December 21, 2012 with a term of 8 years and a volume of EUR 8,000k provides an annual repayment of EUR 1,000k.

116 112 GRENKE Consolidated Group Development Loans NRW.Bank On February 18, 2010, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with NRW.Bank, the development bank of the state of North Rhine-Westphalia. This opens up a new opportunity for incorporating development funding into lease financing. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. These lease agreements are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500,000k located in North Rhine-Westphalia. GRENKE BANK AG was granted a global loan of EUR 15,000k by NRW.Bank for precisely this purpose. The loan was drawn down for the first time in the amount of EUR 7,500k on March 22, The interest rate related to the 6-month Euribor plus a margin of 0.21% and a term of three years. The second draw-down of a further EUR 7,500k on November 25, 2010 also had a reference interest rate of 6-month Euribor and a bullet maturity of three years. Here, the margin is 0.19%. Hence, the volume of EUR 15,000k of the first global loan is fully utilised. On July 28, 2011, GRENKELEASING AG and GRENKE BANK AG together with NRW.Bank, the development bank of the state of North Rhine-Westphalia, continued and expanded the cooperation, which concluded on February 18, 2010, by issuing another global loan totalling EUR 15,000k. This second loan was first drawn down in the amount of EUR 7,500k with a bullet maturity of three years on August 29, The interest rate relates to the 6-month Euribor plus a margin of 0.07%. The second draw-down of EUR 7,500k took place on August 3, 2012 with a term of 4 years. The loan will be redeemed by semi-annual instalments. Hence, the second global loan is fully utilised up to the planned volume of EUR 15,000k. The interest rate over the total term amounts to 0.82%. Thüringer Aufbaubank On January 16, 2012, GRENKELEASING AG and GRENKE BANK AG entered into a cooperation agreement with Thüringer Aufbaubank (TAB), the development bank of the state of Thuringia, similar to the agreement with NRW.Bank. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. These lease agreements are available exclusively for investments made by small and medium-sized enterprises and self-employed professionals located in Thuringia with annual sales of up to EUR 500,000k. GRENKE BANK AG was granted a global loan of EUR 5,000k by TAB for this purpose. The loan was drawn down for the first time in the amount of EUR 2,500k on August 3, 2012 with a term of 4 years. The loan is redeemed retroactively on a yearly basis at fixed instalments. The interest rate over the total term amounts to 1.385%. Investitionsbank Berlin On June 6, 2012, GRENKELEASING AG and GRENKE BANK AG also entered into a cooperation agreement with Investitionsbank Berlin (IBB), the development bank of Berlin. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. These lease agreements are available exclusively for investments made by small and medium-sized enterprises and self-employed professionals located in Berlin with annual sales of up to EUR 500,000k. GRENKE BANK AG was granted a global loan of EUR 5,000k by IBB for this purpose. As per the time this report was prepared, this loan had not yet been drawn down. A specific interest rate will not be determined until the amount of the first borrowing limit has been drawn down. As an indication, 50 basis points will be added to the basic interest rate for both the fixed interest rate and the floating interest rate.

117 GRENKE Consolidated Group 113 L-Bank Since the beginning of 2011, GRENKE BANK AG also offers the business start-up programme ERP Gründungskredit Startgeld of L-BANK, the State bank of Baden-Württemberg, next to the KfW-Startgeld of KfW-Mittelstandsbank. The loans are refinanced directly by the respective bank Revolving Credit Facility In the context of revolving credit facilities with a total volume of EUR 135,000k available to GRENKE FINANCE Plc., Dublin/Ireland, the GRENKE Consolidated Group has the possibility to take on short-term funds with a minimum amount of EUR 5,000k and a term of usually one month at any time. The revolving credit facilities of EUR 135,000k in total are arranged with five banks. As in previous years, all four credit facilities already in place at the end of 2011 with a total volume of EUR 120,000k have again been extended by one year. The facility with SEB was prolonged until March 2013, while the facility with Portigon AG was extended until February The facility with Deutsche Bank was prolonged until September 2013 and the facility with DZ-Bank was extended to October In the third quarter of 2012, a facility with HSBC with a total volume of EUR 15,000k was added. As per December 31, 2012, the revolving credit facilities were utilised in the amount of EUR 45,000k Money Market Trading GRENKE FINANCE Plc., Dublin/Ireland has a non-committed money market facility of EUR 25,000k from Bayerische Landesbank until April 4, As per December 31, 2012, this credit line was utilised in the amount of EUR 25,000k (previous year: EUR 25,000k). A further money market facility in the amount of EUR 15,000k was agreed with Norddeutsche Landesbank on August 25, As per December 31, 2012, this line was not utilised. As per December 31, 2011, the line had been utilised in the amount of EUR 15,000k. The money market facility agreed on between GRENKE FINANCE Plc. and GRENKELEASING AG with Commerzbank AG on November 17, 2011 in the amount of EUR 10,000k was also not utilised as per December 31, As per December 31, 2011, the line had been utilised in the amount of EUR 5,000k. Utilisation is reported under current liabilities from the refinancing of leasing business Commercial Papers On October 27, 2011, a general agreement was signed for a commercial paper programme. This gives the GRENKE Consolidated Group the opportunity to issue commercial paper of up to a total volume of EUR 250,000k with a term of between 1 and 364 days. As per December 31, 2012, the commercial paper programme was utilised in the amount of EUR 20,000k Liability Financial Instruments EURk Dec. 31, 2012 Dec. 31, 2011 Hedging derivatives as defined by IAS Non-hedging derivatives as defined by IAS 39 6,747 6,763 Total 7,353 7,028 The GRENKE Consolidated Group has reported negative fair values in connection with interest rate swaps (see note 6.3.3) and forward exchange contracts (see note 6.3.2) for the current fiscal year.

118 114 GRENKE Consolidated Group The forward exchange contracts are disclosed as non-hedging derivatives as defined by IAS 39. As per December 31, 2012, forward exchange contracts on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Turkish lira, Swedish krona, Norwegian krone, and Danish krone had a negative fair value of EUR 3,213k (previous year: negative fair value of EUR 3,200k on the Swiss franc, Czech koruna, Polish zloty, pound sterling, Hungarian forint, Turkish lira, Swedish krona, Norwegian krone, and Danish krone). These forward exchange contracts have a total volume of EUR 167,505k (previous year: EUR 130,367k) and residual maturities of between one and 65 months (see note 6.3.2). In addition to the forward exchange contracts in the amount of EUR 3,213k (previous year: EUR 3,200k), non-hedge derivatives, as defined under IAS 39, include interest rate swaps of EUR 3,534k (previous year: EUR 3,563k). All other contracted interest rate swaps, which are all included in hedge accounting as defined by IAS 39, had a negative fair value of EUR 606k (previous year: EUR 265k) as per the end of the reporting period and were in highly effective hedges in accordance with IAS Tax Liabilities EURk Dec. 31, 2012 Dec. 31, 2011 Corporate income tax 2,033 1,147 Trade tax Total 2,836 1, Other Current Liabilities EURk Dec. 31, 2012 Dec. 31, 2011 Wages/church tax Value-added tax 4,750 1,186 Contributions to social security Liabilities for salaries Liabilities from security deposits Settlement accounts with companies 0 20 Outstanding charges from refinancers Liabilities from business combinations 10,748 0 Debtors with credit 1, Other 1,123 1,560 Other deferred income Total 19,824 4,686 The last instalment of the purchase price resulting from the business combinations is recognised under liabilities from business combinations as per the end of the reporting period. The instalment was already paid at the beginning of January 2013.

119 GRENKE Consolidated Group Provisions The liability risks of GRENKE BANK AG are shown under this item. In addition, this item also includes liabilities from onerous contracts due to the relocation of GRENKE BANK AG from Hamburg to Baden-Baden. The split is as follows: EURk Jan. 1 Addition Utilisation Reversals Dec Liability risks 2, ,183 Onerous contracts Total 3, ,573 Within the liability risks, an amount of EUR 915k relates to contingent liabilities recognised as part of the purchase price allocation for the acquisition of GRENKE BANK AG. Initially, this amount was EUR 1,429k. An amount of EUR 300k was released in the reporting period since the contingent liability had been assumed to be lower. As an outflow of funds can occur at any time, this contingent liability was classified as a current liability. However, full utilisation is not anticipated in the coming fiscal year. Reimbursement options from third parties do not exist. Of the total provisions, an amount of EUR 322k (previous year: EUR 328k) is non-current Deferred Liabilities The item deferred liability is comprised of the following: EURk Jan. 1 Currency translation differences Additions Utilisation Reversals Dec Consulting services 1, ,148 1, ,160 Personnel services 1, ,042 1, ,494 Other costs 1, , ,492 Total 4, ,262 3, , Consulting services 1, , ,200 Personnel services 1, ,662 1, ,829 Other costs 1, , ,280 Total 4, ,453 3, ,309 All deferred liabilities are current liabilities Pensions The provision for pensions relates to the compulsory funded retirement benefit plans (endowment insurance) in Switzerland for GRENKELEASING AG, Zurich, and the pension obligations from final salary and flat salary pension plans in Germany for GRENKE BANK AG, Baden-Baden. A total net pension expense of EUR 182k (previous year: EUR 203k) was recognised in staff costs for existing pension plans in the 2012 fiscal year.

120 116 GRENKE Consolidated Group Pensions in Germany The pension obligations of GRENKE BANK AG relate to direct and vesting pension commitments which were made in the past exclusively for former employees. The accounting provisions for defined benefit plans are applied to these commitments The pension provisions were calculated on the basis of the following parameters: Dec. 31, 2012 Dec. 31, 2011 Discount rate 3.00% 4.50% Estimated future pension increases 1.70% 1.70% The Heubeck 2005 G mortality tables were used as the basis of calculation. The development of the defined benefit obligations are as follows: EURk Change in defined benefit obligations Defined benefit obligations at beginning of period 1,333 1,333 Interest expense Current service cost 0 0 Benefits paid Actuarial gains and losses recognised in equity Increase due to plan change in fiscal year 0 0 Defined benefit obligations at end of period 1,563 1,333 The amounts recognised in the statement of financial position are calculated as follows: EURk Present value of defined benefit obligations 1,332 1,333 1, Unrecognised actuarial gains and losses Present value of defined benefit obligations 1,563 1,333 1,333 1, Pensions in Switzerland As per January 1, 2012, the present value of the obligations (DBO) under the defined benefit pension plans for Switzerland amounted to EUR 590k. After the deduction of the fair value of the plan assets in the amount of EUR 332K, the net obligations were EUR 258k. The external expert opinion is based on the following actuarial assumptions: Dec. 31, 2012 Dec. 31, 2011 Discount rate 1.75% 2.25% Estimated future salary increases 3.50% 3.50% Estimated future pension increases* 0.00% 0.00% Expected return on plan assets 1.75% 2.00% * Assuming a 0% pension increase as no pensions are currently being paid to employees.

121 GRENKE Consolidated Group 117 Dec. 31, 2012 Dec. 31, 2011 Mortality BVG 2010 BVG 2010 Probability of disablement BVG 2010 BVG 2010 Probability of departure BVG 2010 BVG 2010 On the basis of the actuarial report, the following income and expenses were recognised: EURk Dec. 31, 2012 Dec. 31, 2011 Service cost Interest expense Income from interest on plan assets 12 7 The service cost is recognised as staff costs, while interest expenses and income from interest on plan assets are shown under other interest income or expenses. The expected return on plan assets is based on past experience. The assets are invested in a collective insurance agreement with a life insurance company by way of a follow-up agreement with the BVG pension fund (Professional Pension Act). As per December 31, 2012, the provision for pensions disclosed under non-current liabilities amounted to EUR 593k. This amount comprises the present value of the obligations (DBO) of EUR 1,368k, the fair value of the plan assets of EUR 775k and an actuarial gain of EUR 241k. The actuarial gain was recognised in a separate line under other comprehensive income in accordance with IAS 19. EURk Present value of obligations (DBO) 1, Present value of plan assets Net obligation Based on experience, adjustments to obligations totalled EUR 182k, and EUR 64k to assets. Employer contributions in the next period are estimated at EUR 109k. EURk Change in defined benefit obligations Defined benefit obligations at beginning of period Interest expense Current service cost Employer contributions Benefits paid Actuarial gains and losses recognised in equity Currency translation differences from foreign plans 5 18 Defined benefit obligations at end of period 1,

122 118 GRENKE Consolidated Group EURk Change in plan assets Fair value of plan assets at beginning of period Expected return 12 7 Employer contributions Benefits paid Actuarial losses/gains recognised in equity 53 2 Currency translation differences from foreign plans 3 11 Fair value of plan assets at end of period Other Non-current Liabilities The following schedule of the other non-current liabilities, which primarily comprise security deposit liabilities and deferred income, illustrates the breakdown by residual maturities: EURk Total 1 to 5 years More than 5 years Secured amount Other non-current liabilities (Previous year) Equity For the details of changes in equity, please see the consolidated statement of changes in equity. The fully paid-in subscribed capital of GRENKELEASING AG amounts to EUR 17,491k (previous year: EUR 17,491k). It is divided into 13,684,099 (previous year: 13,684,099) no-par value bearer shares. On May 11, 2010, the Annual General Meeting adopted a resolution authorising the Board of Directors, with the approval of the Supervisory Board, to increase the Company s share capital by up to a nominal amount of EUR 8,500k. This can be undertaken by issuing new no-par bearer shares in return for cash and/or contribution in kind until May 11, 2014 (Authorised Capital). The authorisation can be utilised in partial amounts. The shareholders shall be granted a subscription right. However, under certain conditions, the Board of Directors is authorised, with the approval of the Supervisory Board, to partly or entirely exclude the subscription right of shareholders for capital increases in return for cash contributions. Until December 31, 2012, no use has been made of the option to increase the share capital by issuing new shares Contingent Capital On May 10, 2011, the Annual General Meeting of GRENKELEASING AG resolved the resolution to contingently increase the capital by a nominal amount of up to EUR 3,834,690 by issuing up to 3,000,000 new no-par value bearer shares (Contingent Capital 2011). The creation of the Contingent Capital 2011 also entitles the Board of Directors, with the consent of the Supervisory Board, to issue up to 3,000,000 bearer or registered options or convertible debenture bonds with a total nominal value of up to EUR 150,000,000 and a maximum term of ten years on one or more occasions until May 9, 2016.

123 GRENKE Consolidated Group 119 Shareholders will be granted statutory pre-emption rights when these debenture bonds are issued. Nonetheless, the Board of Directors is authorised, with the approval of the Supervisory Board, to suspend pre-emption rights if certain conditions are met. This includes the suspension of pre-emption rights for fractional amounts that can arise from the amount of the respective issue volume and the determination of a practical subscription ratio or the suspension of pre-emption rights for the benefit of bearers of options or convertible debenture bonds already issued. In the latter case, pre-emption rights can instead be granted as dilution protection. Furthermore, the Board of Directors is authorised to suspend shareholders pre-emption rights if the respective options or convertible debenture bonds are issued against cash at a price not significantly less than the hypothetic market value of these debenture bonds. To date, no options or convertible debenture bonds have been issued under Contingent Capital Authorisation to Acquire Treasury Shares in accordance with Section 71 (1) No. 8 AktG The Annual General Meeting on May 11, 2010 authorised the Company to acquire treasury shares. Following the amendment of Section 71 (1) no. 8 of the AktG by the German Act Implementing the Shareholders Rights Directive [Gesetz zur Umsetzung der Aktionärsrechterichtlinie (ARUG)] of July 30, 2009, the authorisation has now been granted for five years until May 10, The Company is authorised to acquire treasury shares of up to a total of 10% of the share capital existing at the time of the resolution. The authorisation can be exercised in whole or in part, on one or more occasions, by the Company itself or by third parties assigned by the Company. At the discretion of the Board of Directors, the shares will be acquired (1) on the stock exchange or (2) by way of a public purchaseoption offer to all shareholders of GRENKELEASING AG or by a public invitation to all shareholders of the Company to submit offers for sale. (1) If the shares are acquired on the stock exchange, the price paid per share by the Company (not including incidental costs of acquisition) must be within 10% of the average closing price of the shares of GRENKELEASING AG in XETRA trading on the Frankfurt Stock Exchange (or a corresponding successor system) on the last three trading days before entering into the obligation to acquire treasury shares. (2) If the shares are acquired by way of a public purchase-option offer to all shareholders of the Company, or by a public invitation to all shareholders of the Company to submit offers for sale, the purchase or sale price offered or the bid/ask spread offered per share (not including incidental costs of acquisition) must be within 20% of the average closing price of the shares of GRENKELEASING AG in XETRA trading on the Frankfurt Stock Exchange (or a corresponding successor system) on the last three trading days before the day of the publication of the offer or public invitation to submit offers for sale. If the share price fluctuates significantly following the publication of a formal offer or invitation to submit offers for sale, the offer or the invitation to submit offers for sale can be adjusted. In this event, any adjustment will be based on the average price on the last three trading days before the public announcement of such adjustment; the 20% limit for variation will also still apply. The offer or invitation to the shareholders to submit offers for sale can include further conditions and the option to specify the purchase price or purchase price spread during the offer period. If the shares offered for acquisition by the shareholders exceed the Company s intended buy-back volume, they will be purchased proportionately according to the shares offered. Preferred purchase or preferred acceptance of smaller lots up to 50 shares in the Company per shareholder can be provided for.

124 120 GRENKE Consolidated Group The provisions of the German Securities Acquisition and Takeover Act [Wertpapiererwerbs- und Übernahmegesetz] must be complied with, if and to the extent that they apply. The Board of Directors is authorised, with the approval of the Supervisory Board, to use the shares in the Company acquired under the above authorisation as follows: (1) The shares can be sold against contribution in kind, particularly in cases where they are offered to third parties in the context of business combinations, company acquisitions, as well as investments in companies, or in parts of companies. (2) The shares can be sold against cash to third parties in a way other than on the stock exchange or can be offered to all shareholders if the treasury shares acquired for cash are sold at a price not significantly less than the market price of the shares of the Company at the time of disposal. This authorisation is limited to a maximum of 10% of the share capital of the Company at the time of the resolution by the Annual General Meeting. It includes other authorisations to issue new shares with subscription rights suspended in accordance with Section 186 (3) sentence 4 AktG and taking into account such shares issued on the exercise of options or the conversion of options or convertible bonds with shareholder subscription rights disapplied in accordance with Section 221 (4) sentence 2 in conjunction with Section 186 (3) sentence 4 AktG. (3) The shares can be redeemed without a further resolution by the Annual General Meeting. The authorisations listed under (1), (2), and (3) can be exercised in full or in part, on one or several occasions, individually or together. The subscription rights of shareholders to the treasury shares acquired are not applicable to the extent that these shares are used in line with the above authorisations under (1) and (2). No treasury shares have been purchased to date Participation Certificate Capital By resolution of the Annual General Meeting on May 10, 2011, the Board of Directors was authorised, with the consent of the Supervisory Board, to issue participation certificates on one or several occasions of up to EUR 150,000k. The subscription rights of shareholders have been disapplied. The participation certificates do not grant shareholder status, they merely confer creditor rights on a contractual basis. A conversion or option right in respect of shares in the Company is expressly precluded. No participation rights have been issued to date Unappropriated Surplus On May 10, 2012, the Annual General Meeting adopted the resolution on the appropriation of GRENKELEASING AG s unappropriated surplus for fiscal year 2011 in the amount of EUR 22,284, The Annual General Meeting approved the proposal of the Board of Directors and the Supervisory Board, resolving to appropriate the unappropriated surplus as follows:

125 GRENKE Consolidated Group 121 Unappropriated surplus for ,284, EUR Distribution of a dividend of EUR 0.75 per share for a total of 13,684,099 shares 10,263, EUR Appropriation to retained earnings Profit carryforward (to new account) 11,000, EUR 1,021, EUR The dividend was paid to the shareholders of GRENKELEASING AG on May 11, 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 2010 as follows: Unappropriated surplus for ,832, EUR Distribution of a dividend of EUR 0.70 per share for a total of 13,684,099 shares 9,578, EUR Appropriation to retained earnings Profit carryforward (to new account) 29,000, EUR 3,253, EUR The dividend was paid to the shareholders of GRENKELEASING AG on May 11, The management will propose the distribution of a dividend of EUR 0.80 per share for the fiscal year 2012 to the Annual General Meeting. This distribution has not been recognised as a liability as per December 31, Reserves The capital reserves of EUR 60,166k (previous year: EUR 60,166k) mainly result from the IPO of GRENKELEASING AG in April In addition to GRENKELEASING AG s retained earnings, retained earnings of the Consolidated Group also comprise the retained earnings and profits of the consolidated subsidiaries. By way of resolution of the Annual General Meeting on May 10, 2012, EUR 11,000k was appropriated to the retained earnings of GRENKELEASING AG Other Components of Equity Changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in equity as long as an appropriate effectiveness in terms of IAS 39 can be demonstrated. The change in fair value during the fiscal year was EUR 236k (previous year: EUR 856k) plus deferred taxes of EUR 39k (previous year: EUR 99k). As a result of the recognition of pension provisions in accordance with IAS 19, an amount of EUR 525k (previous year: EUR 91k) for actuarial gains and losses and deferred taxes totalling EUR 136k (previous year: EUR 24k) were also recognised in equity.

126 122 GRENKE Consolidated Group 5 Changes in the Scope of Consolidation 5.1 Acquisitions in Fiscal Year 2012 S.C. Grenke Renting S.R.L., Bucharest/Romania By way of purchase agreement dated May 17, 2012, GRENKELEASING AG acquired 100% of the voting shares in S.C. GRENKELEASING S.R.L., Bucharest/Romania. With the acquisition, a name change to S.C. Grenke Renting S.R.L. was resolved. Control over the acquired company was assumed on July 19, 2012 due to certain conditions in the purchase agreement. Prior to this, S.C. GRENKELEASING S.R.L., Bucharest/Romania 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. As not all relevant information for determining the final purchase price accounting are 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 of the company at the date of acquisition: Intangible assets EUR 1,688k, lease receivables EUR 8,669k, other assets EUR 710k, refinancing liabilities EUR 6,638k, and other liabilities EUR 1,194k. Intangible assets are largely attributable to non-contractual relationships of resellers with clients and non-competitive clauses. Of the lease receivables, an amount of EUR 237k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position. The preliminary purchase price allocation resulted in goodwill of EUR 1,318k which is not tax deductible. The goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. Since the date of acquisition, goodwill has increased by EUR 40k due to currency translation effects. The total consideration paid for the business combination amounted to EUR 4,553k and consisted solely of cash. Cash acquired with the subsidiary amounted to EUR 37k. Since the date of acquisition, the acquired company contributed a net interest income of EUR 329k and a positive net profit of EUR 45k to the Consolidated Group s net profit. Had the company been acquired as per January 1, 2012, its contribution to the Consolidated Group s net interest income would have been EUR 771k and its contribution to the Consolidated Group s net profit would have been a loss of EUR 389k. GRENKE RENT S.A. By way of a purchase agreement dated July 13, 2012, the GRENKE Consolidated Group acquired 100% of the voting shares in GRENKE RENT S.A., Madrid/Spain through its group company GRENKE ALQUILER S.A., Barcelona/Spain. Control was also assumed on July 13, Prior to the acquisition, GRENKE RENT S.A. was active within GRENKELEASING AG s franchise system specialising in the sale of small-ticket leases in its branches in Madrid and Málaga. All of the relevant information for determining the final purchase price allocation was also not yet available for this business combination and therefore 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.

127 GRENKE Consolidated Group 123 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 1,038k, lease receivables EUR 5,020k, other assets EUR 1,529k, refinancing liabilities EUR 4,213k, deferred tax liabilities EUR 573k, other liabilities EUR 2,226k, and other remaining liabilities EUR 310k. Intangible assets are largely attributable to non-contractual customer relations of resellers, non-competitive clauses, and other contractual rights. Of the lease receivables, an amount of EUR 1,523k is impaired and is not expected to be recovered. Deferred tax assets of EUR 370k have been recognised as a result of utilisable tax-loss carryforwards. The refinancing liabilities are owed to GRENKE FINANCE Plc., Dublin/Ireland. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position. The preliminary purchase price allocation resulted in goodwill of EUR 5,015k which is not tax deductible. The goodwill includes intangible assets which could not be separately identified such as employees and expected synergy effects. The total consideration paid for the business combination amounted to EUR 5,280k and consisted solely of cash. Cash acquired with the subsidiary amounted to EUR 117k. Since the date of acquisition, the acquired company contributed a net interest income of EUR 124k and a negative net profit of EUR 267k to the Consolidated Group s net profit. Had the company been acquired as per January 1, 2012, its contribution to the Consolidated Group s net interest income would have been EUR 343k and its contribution to the Consolidated Group s net profit would have been a loss of EUR 1,033k. Grenke Renting S.A., Lisbon/Portugal On September 14, 2012, which is both the date of the purchase agreement and the date of acquisition, GRENKELEASING AG acquired 100% of the voting shares in Grenke Renting S.A., Lisbon/Portugal. Prior to the acquisition, S.C. Grenke Renting S.A., Lisbon/Portugal 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. Due to incomplete information on the purchase price allocation, 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. EURk Fair value Intangible assets 6,237 Property, plant, and equipment 733 Trade receivables 78 Lease receivables 11,298 Cash and cash equivalents 321 Deferred tax assets 49 Other assets 2,064 Total assets 20,780

128 124 GRENKE Consolidated Group EURk Fair value Refinancing liabilities 4,328 Trade payables 172 Deferred tax liabilities 3,269 Other liabilities 8,735 Total liabilities 16,504 Total identified net assets 4,276 Goodwill arising from acquisition 28,472 Total consideration 32,748 The total consideration paid for the business combination with Grenke Renting S.A. amounted to EUR 32,748k and consisted solely of cash. EURk Consideration 32,748 Purchase price in cash 32,748 Total consideration 32,748 EURk Cash outflow due to business combination Cash acquired with the subsidiary 321 Cash paid 22,000 Actual cash outflow 21,679 Outstanding liabilities from business combinations 10,748 Since the date of acquisition, the acquired company contributed a net interest income of EUR 220k and a positive net profit of EUR 108k to the Consolidated Group s net profit. Had Grenke Renting S.A. been acquired as per January 1, 2012, its contribution to the Consolidated Group s net interest income would have been EUR 1,151k and its contribution to the Consolidated Group s net profit would have been a loss of EUR 770k. 5.2 Acquisitions in Fiscal Year 2011 By way of purchase agreement dated June 6, 2011, GRENKELEASING AG acquired 100% of the voting shares in GRENKELEASING Magyarország Kft., Budapest/Hungary. Prior to the acquisition, the company 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. Control over the acquired company was assumed on June 21, The preliminary purchase price allocation was finalised in the second quarter of There were no adjustments to the preliminary fair value of the identifiable assets and liabilities. 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 362k, lease receivables EUR 2,398k, trade receivables EUR 784k, other assets EUR 198k, refinancing liabilities EUR 1,641k, deferred tax liabilities EUR 200k, trade payables EUR 224k, and other liabilities EUR 580k. Intangible assets are largely attributable to non-contractual customer relations of resellers. Of the lease receivables, an amount of EUR 258k is impaired and is not expected to be recovered. The refinancing liabilities are owed to GRENKE FINANCE Plc.,

129 GRENKE Consolidated Group 125 Dublin/Ireland. These loans were eliminated as a result of the consolidation and are therefore not reported in the consolidated statement of financial position. The purchase price allocation resulted in goodwill equivalent to EUR 1,089k which is not tax deductible. The goodwill includes intangible assets such as employees and expected synergy effects resulting from the expected growth in business and the advantages resulting from the complete integration which could not be separately identified. The total consideration paid for the business combination with GRENKELEASING Magyarország Kft. amounted to EUR 2,400k and consisted solely of cash. Cash acquired in the acquisition amounted to EUR 57k. 5.3 Additional Changes to the Scope of Consolidation in Fiscal Year 2011 On January 18, 2011, GRENKE Consolidated Group founded the FCT GK -COMPARTMENT G2 for the securitisation of French lease receivables within the ABCP programme through Elektra Purchase No. 25 Limited. Since GRENKELEASING AG holds an indirect interest in this company through GRENKE FINANCE Plc. and GRENKE SERVICE AG of 50% each, the FCT GK - COMPARTMENT G2 was included in the consolidated financial statements for 2011 for the first time. The FCT GK -Compartment G1 was founded in 2009, and as part of the ABCP programme Coral for French lease receivables was wound down on January 25, GRENKELEASING AG held indirect interests in this company of EUR 150 each through its Irish subsidiary GRENKE FINANCE Plc. and its German subsidiary GRENKE SERVICE AG. Consequently, this subsidiary was no longer included in the consolidated financial statements as per the reporting date. The deconsolidation had no effect on net profit. 5.4 Acquisitions in Previous Years As per the end of the reporting period, there was a contingent liability in the amount of EUR 915k resulting from the acquisition of GRENKE BANK AG in fiscal year Please see note 4.16 for further information.

130 126 GRENKE Consolidated Group 6 Disclosures on Financial Instruments 6.1 Additional Information on Financial Instruments Valuation in accordance Valuation in accordance with IAS 39 with IAS 17 Carrying amount Dec. 31, 2012 Measurement Dec. 31, Fair Value Fair Value in Amortised EURk category 2012 in equity profit and loss cost Financial assets Cash and cash equivalents L&R 116, ,707 Financial instruments that are assets without hedging relationship AtFVtPL 4,238 4,238 Lease receivables (performing) n.a. 1,771,673 1,771,673 Lease receivables (non-performing) L&R 102, ,255 Trade receivables L&R 3,726 3,726 Other financial assets L&R 113, ,959 Aggregated categories L&R 336,647 AtFVtPL 4,238 n.a. 1,771,673 Financial liabilities Liabilities from the refinancing of lease receivables ol 1,629,794 1,629,794 Liabilities from deposit business ol 209, ,367 Trade payables ol 14,828 14,828 Bank liabilities ol 3,145 3,145 Liability financial instruments without hedging relationship AtFVtPL 6,747 6,747 Liability financial instruments with hedging relationship n.a Aggregated categories ol 1,857,134 AtFVtPL 6,747 n.a. 606 Abbreviations: AtFVtPL: L&R: At Fair Value through Profit and Loss/Financial assets and financial liabilities measured at fair value through profit and loss Loans and Receivables n.a. not applicable/no category according to IFRS 7.8 ol other Liabilities

131 GRENKE Consolidated Group 127 Valuation in accordance Valuation in accordance with IAS 39 with IAS 17 Carrying amount Dec. 31, 2011 Measurement Dec. 31, Fair Value Fair Value in Amortised EURk category 2011 in equity profit and loss cost Financial assets Cash and cash equivalents L&R 104, ,234 Financial instruments that are assets without hedging relationship AtFVtPL 4,399 4,399 Lease receivables (performing) n.a. 1,484,934 1,484,934 Lease receivables (non-performing) L&R 83,820 83,820 Trade receivables L&R 4,560 4,560 Other financial assets L&R 124, ,552 Aggregated categories L&R 317,166 AtFVtPL 4,399 n.a. 1,484,934 Financial liabilities Liabilities from the refinancing of lease receivables ol 1,367,632 1,367,632 Liabilities from deposit business ol 155, ,127 Trade payables ol 7,031 7,031 Bank liabilities ol 3,479 3,479 Liability financial instruments without hedging relationship AtFVtPL 6,763 6,763 Liability financial instruments with hedging relationship n.a Aggregated categories ol 1,533,269 AtFVtPL 6,763 n.a. 265 Abbreviations: AtFVtPL: L&R: At Fair Value through Profit and Loss/Financial assets and financial liabilities measured at fair value through profit and loss Loans and Receivables n.a. not applicable/no category according to IFRS 7.8 ol other Liabilities

132 128 GRENKE Consolidated Group Net gains and losses Dec. 31, 2012 (EURk) From interest Currency translation Impairment From disposal Net profit Loans and Receivables 1,047 2,739 8,424 34,178 44,294 At Fair Value through Profit and Loss Other Liabilities 1, ,302 Dec. 31, 2011 (EURk) Loans and Receivables 489 2,358 1,336 32,527 35,732 At Fair Value through Profit and Loss 0 1, ,048 Other Liabilities Interest rates are calculated according to the effective interest method. Net gains from lease receivables are comprised of interest income, profit from new business, and profit from disposals. They amounted to EUR 209,169k (previous year: EUR 177,221k). Net gains and losses from financial instruments include not only the changes in fair value (for forward exchange contracts shown as the effect from the currency translation and for interest hedges as interest effect), but also the results from accrued interest and from the early disposal resulting from an early sale. 6.2 Maturity of Financial Obligations The table below shows the maturities of the earliest possible non-discounted contractual cash flows of the financial obligations at the end of the reporting period of the most recent and the previous fiscal years. Some amounts do not match the amounts shown in the statement of financial position as they generally relate to undiscounted cash flows. As per Dec. 31, 2012 EURk Type of liability Due on demand Less than 3 months 3 to 12 months 1 to 5 years More than 5 years Refinancing liabilities 0 278, ,097 1,171,332 52,940 Liabilities from deposit business 9,306 35,489 71,095 93,476 0 Bank liabilities ,719 0 Other liabilities 0 19, Trade payables 1) 0 14, Negative fair values from derivative financial instruments 0 1,699 3,591 2,308 8 Total 9, , ,198 1,268,864 52,948 1) The carrying amounts are categorised according to their individual class of maturity to the extent this is considered possible and appropriate.

133 GRENKE Consolidated Group 129 As per Dec. 31, 2011 EURk Type of liability Due on demand Less than 3 months 3 to 12 months 1 to 5 years More than 5 years Refinancing liabilities 1 185, , ,834 7,896 Liabilities from deposit business 13,874 33,787 46,236 61,230 0 Bank liabilities ,537 0 Other liabilities 0 4, Trade payables 1) 0 7, Negative fair values from derivative financial instruments ,259 2, Total 14, , ,624 1,011,610 7,931 1) The carrying amounts are categorised according to their individual class of maturity to the extent this is considered possible and appropriate. Regarding the disclosures regarding the management of the liquidity risk, we refer to the explanations in the Group management report. 6.3 Derivative Financial Instruments Financial Risk Strategy Business Model As a small-ticket IT leasing company, GRENKE Consolidated Group offers lease contracts to B2B customers for mobile IT assets, among other things. To date, the lease portfolio, i.e. all lease contracts in their entirety, has fixed contractual terms over the duration of each individual contract. Upon conclusion of the contract, both the periodical payments as well as the interest rate used to calculate the payments are set out. Neither of the parties can subsequently amend these terms. GRENKE Consolidated Group only dissolves or agrees to dissolve contracts prematurely (repurchase, exchange option, termination, etc.) if the lessee bears the potential loss (i.e. due to lost interest). Please refer to the combined management report, and particularly to the risk report and the report on the financial position and net assets for qualitative and quantitative disclosures regarding default risk, liquidity risk, and market risks. In addition, we refer to the notes to the Consolidated Statement of Financial Position. Hedging Policy Derivatives are used when, and only when, underlying contracts need to be hedged. Underlying contracts are the contractual obligations entered into by GRENKELEASING AG in order to achieve its objectives. The treasury department is not a separate profit centre. The use of derivatives is limited to hedging the profits of GRENKELEASING AG to the extent stipulated in the Company s Articles of Association. Items are largely hedged in terms of volume or amount, with various instruments being used. The choice of instrument is always a management decision based on the risk profile, i.e. the potential income associated with the risk in question. For example, in addition to benefiting from falling interest rates, interest rate caps also entail a risk of rising finance costs until the strike is reached, whereas swaps fix a specified interest rate for the term of the swap.

134 130 GRENKE Consolidated Group Measurement Since the derivatives used are so-called OTC derivatives rather than standardised listed financial instruments, recognised measurement models are used for calculating fair values. The necessary parameters for measurement, such as interest rates, yield curves, and foreign exchange spot and forward rates, can be observed on the market at all times and can be accessed via external sources of information. As per the end of each reporting period, GRENKE Consolidated Group receives a valuation overview or a measurement of the current fair value from the perspective of the bank counterparty for each contracted derivative financial instrument. In cases of interest rate swaps, GRENKE Consolidated Group calculates the corresponding fair values on a parallel basis through Bloomberg Currency Risk Management GRENKE Consolidated Group is exposed to currency risks as a result of its European activities and the growing significance of its international markets. Derivatives are used to mitigate or eliminate these risks. Derivative Financial Instruments for Currency Hedging Forward exchange contracts were and are used to hedge the cash flows from the refinancing of the franchise companies in Norway, Switzerland (factoring), and Turkey, and of the British, Polish, Czech, Swedish, Hungarian, and Danish subsidiaries. GRENKELEASING AG finances the lease receivables generated by the franchisees and the subsidiaries in the corresponding foreign currencies and receives payments in those currencies over the term of the underlying lease contracts. Hedge accounting was not applied. The fair values of the forward exchange contracts are recorded under financial instruments that are asset/liability financial instruments in the statement of financial position and are allocated to their category according to IAS 39 at fair value through profit and loss (see note 6.1). As per the end of the reporting period, there were asset and liability forward exchange contracts, leading to their disclosure as assets (see note 4.2) as well as liabilities (see note 4.12). As per the end of the reporting period, forward exchange contracts totalled a nominal volume equivalent to EUR 167,216k (previous year: EUR 130,368k). They break down by currency as follows: EURk Nominal volume as per Maturity of the nominal volume as per Dec. 31, 2012 Hedged Dec. 31, 2011 Dec. 31, later average rate EUR buying TRY 1,235 8,584 8,584 CZK 11,189 10,004 4,345 3,058 1,579 1, GBP 50,544 89,536 72,467 8,063 6,055 2, CHF 1) 2,562 4,991 4, HUF 3,921 4,440 2,159 1, NOK 5,475 1,627 1, SEK 12,301 7,740 7, DKK 21,806 27,196 11,869 7,756 7, PLN 15,234 6,534 4,502 1, EUR selling GBP 6,101 0 PLN 0 6,564 4,520 1, ) The outstanding forward exchange contracts in Swiss francs result from the refinancing of the subsidiary based in Hungary, which offers among others lease contracts on the basis of Swiss francs due to the local market conditions as well as the refinancing of the franchisee based in Switzerland.

135 GRENKE Consolidated Group Interest Rate Risk Management The interest rate risk for GRENKE Consolidated Group s operations results mainly from the sensitivity of its financial liabilities to changes in market interest rates. GRENKE Consolidated Group endeavours to limit the impact of such risks on interest expense and net interest income by employing appropriate derivatives. Derivative Financial Instruments for Interest Rate Hedging Issuing bonds and contracting interest rate swaps are elements of implementing a financing strategy under which GRENKE Consolidated Group separates refinancing from interest rate hedging in order to obtain maximum flexibility for optimising its refinancing activities. The risks (variable cash flows) which may result are hedged by appropriate interest rate derivatives. Interest rate swaps are used as hedging instruments and are designated as hedges in accordance with IAS 39 if the appropriate requirements have been met. As all interest rate derivatives used in hedge accounting have been proven to be 100% effective, the changes in fair value in relation to their clean value (excluding accrued interest) were recognised in other comprehensive income in line with IAS 39. Under the ABCP programme with DZ-Bank (CORAL), and the refinancing through FCT GK -COMPARTMENT G2, the respective special purpose entity is responsible for interest rate hedging and thus interest rate risk management. The variable refinancing of the ABCP transaction is economically hedged by the employment of interest rate swaps. From the perspective of the GRENKE Consolidated Group, both are receiver swaps. A floating-rate interest is exchanged for a fixed interest. The same applies to the refinancing through GOALS Financing 2009 Ltd. However, here the GRENKE Consolidated Group as well as the special purpose entity GOALS Financing 2009 Ltd. are responsible for interest rate hedging. Here, the instrument of back-to-back swaps is employed. Both interest rate caps and interest rate swaps are used to limit the interest rate risk under the remaining ABCP programmes (Portigon and SEB). However, the contracting partner to the receivables buyer (SPEs of the individual programmes) is the respective initiating bank. Therefore, the derivatives are not recognised in the consolidated financial statements. Notes on Comparative Prior-year Figures In fiscal year 2011, both payer swaps and a receiver swap were contracted by the GRENKE Consolidated Group. The payer swaps bear the agreed fixed interest rate from interest rate swaps. The interest on the only receiver swap contracted under the second ABS bond is variable. The fixed interest paid in 2011 across all existing swaps ranged from 0.932% to 3.78%. The variable side of the swaps was in the range of between % and 2.289%. The swaps in place at the end of the reporting period have a nominal volume of EUR 212 million as per December 31, 2011 and contracted fixed interest rates over the relevant maturities of between % and 3.78%. The longest contracted interest rate swap will mature in June Fiscal Year 2012 In fiscal year 2012, apart from the ABCP programmes, only payer swaps were contracted. The payer swaps bear the agreed fixed interest rate from interest rate swaps. The swaps in place at the end of the reporting period had a nominal volume as per December 31, 2012 of EUR 180 million and contracted fixed interest rates in the range of 0.19% to % over the respective duration. The duration of the longest contracted interest rate swap is until June The table below shows the development of the nominal volumes of the payer swaps as per the end of the reporting period of the coming years. The average interest rate is defined as the arithmetic mean of the existing swaps.

136 132 GRENKE Consolidated Group EURk Nominal volume as per Dec. 31 Average interest rate Contracted prior to ,000 50, % Contracted in , % Total 97, , Hedge Effectiveness IFRS accounting requires documentation and a risk analysis when derivative financial instruments are employed. The appropriation between the underlying transaction and the hedging instrument determines the effectiveness of a hedging relationship. By employing derivatives for interest rate hedging, the GRENKE Consolidated Group applies hedge accounting in accordance with IAS 39. Hedge effectiveness, as required by IFRSs, is in line with GRENKE Consolidated Group s intention of using derivatives only to hedge risks from designated underlying transaction and to never enter into derivatives for speculative reasons. The tests of effectiveness for each financial derivative accounted for in a hedge in accordance with IAS 39 were performed as per the end of each quarter using the hypothetical derivative method. The documentation of each hedging relationship describes the underlying transaction, hedged risk, strategy, hedging instrument, estimate of effectiveness and names the counterparty. A hedging relationship only exists in substance for currency hedging. Although the hedging instruments are specifically designated, hedge accounting pursuant to IAS 39 is not applied. Forward Exchange Contracts The underlying transaction for all forward exchange hedges is determined by the payments resulting from the financing of the leasing business in the respective currency area. The cash flows denominated in foreign currency are the basis for the forward contracts. The hedge can be classified as highly effective because only the actual cash flows are hedged and never a higher amount. Ideally, the dates of the financing and the foreign exchange hedge coincide to ensure the best possible hedge of the cash flow risk. Interest Rate Swaps The parameters of the underlying transaction resulting from the financing (liability) are considered first and foremost when contracting interest rate swaps. For this reason, the interest rate terms of the swaps on the variable side are the same as those of the underlying transaction. Furthermore, the swap volume contracted is never greater than the volume of the hedged financing. The active integration of existing and future planned refinancing transactions allows for anticipatory risk management. Going forward, quarterly tests of effectiveness will be conducted as part of this on-going analysis, in which the effectiveness of the hedging relationships is tested using a method allowed under IFRS. To date, the hedging relationships between interest rate swaps and existing and planned financing have proven to be highly effective. Under the hypothetical derivative method, effectiveness was almost 100%. For all derivatives in hedge accounting, both the retrospective and the prospective effectiveness of the hedging relationships are confirmed as per the end of the reporting period. In the opinion of the GRENKE Consolidated Group and the risk management, interest rate derivatives outside of hedge accounting according to IAS 39 are also considered effective instruments for hedging interest rate risks in the Consolidated Group. The hedged interest payments will presumably be recognised in profit in loss in their entirety in This results in a reclassification of the corresponding net gains and losses previously recognised in the other comprehensive income into interest expenses in an amount of EUR 606k.

137 GRENKE Consolidated Group Fair Value of Financial Instruments Fair Value At the end of the reporting period, all derivative financial instruments, which include interest rate swaps, interest rate caps, and forward exchange contracts, are recognised at fair value in the GRENKE Consolidated Group. All other items are not recognised at fair value (see note 2.4.4). According to the valuation hierarchy for financial instruments at fair value of IAS 39, this is composed of the following: Level 1: Level 2: Level 3: quoted (unadjusted) prices on active markets for the same type of assets or liabilities, procedures in which all input parameters are directly or indirectly observable and have a significant effect on the fair value recognised, procedures which use input parameters that have a significant effect on the fair value recognised and are not based on observable market data. Most financial instruments which are accounted for at fair value are assigned to level 2 (see note 2.4.4). Exceptions to this are the call options relating to franchise companies which are assigned to level 3 and all have a value of zero. The purchase price resulting from the options is based on the respective net profit and loss of the franchise company multiplied by a P/E multiple derived from the market at the time of the acquisition. In the reporting year, there were no reclassifications between the three levels of the measurement hierarchy Fair Value of Derivative Financial Instruments The interest rate swaps in an effective hedging relationship have a total negative fair value of EUR 606k as per the end of the reporting period (previous year: negative fair value of EUR 265k). The interest rate swaps without hedging relationship have a total negative fair value of EUR 3,534k (previous year: EUR 3,563k) and/or a total positive fair value of EUR 3,325k previous year: EUR 3,183k) at the end of the reporting period. The cash flows of these hedges are expected to impact the net profit over the next two years. As per the reporting date, the forward currency transactions have the following fair values for the individually contracted currencies: EURk EUR buying TRY CZK GBP 996 1,577 CHF HUF NOK 3 44 SEK 790 1,188 DKK PLN ) EUR selling GBP 0 44 PLN Fair Value of Primary Financial Instruments Fair value is the amount for which financial instruments would be exchanged, sold, bought, or settled at the end of the reporting period between knowledgeable, willing, contracting parties in an arm s length transaction. The fair value of lease receivables is estimated by

138 134 GRENKE Consolidated Group using an interest rate which would be charged if the full amount were refinanced, instead of the internal rate. A market interest rate for borrowing as per December 31, 2012 was used for liabilities from the refinancing of lease receivables. EURk Fair Value 2012 Carrying amount 2012 Fair Value 2011 Carrying amount 2011 Cash and cash equivalents 116, , , ,234 Lease receivables 2,057,204 1,873,928 1,713,194 1,568,754 Other financial assets 114, , , ,552 Trade receivables 3,726 3,726 4,560 4,560 Refinancing liabilities 1,631,159 1,629,794 1,370,284 1,367,632 Liabilities from deposit business 211, , , ,496 Bank liabilities 3,020 3,145 3,461 3,479 Trade payables 14,828 14,828 7,031 7, Transfer of Financial Assets The following table lists transferred but not fully derecognised financial assets and the corresponding liabilities at their respective carrying amount and fair value. EURk Carrying amount Carrying amount of corresponding liability Fair Value Fair Value of corresponding liability Net position Transferred lease receivables Dec. 31, , , , ,755 29,795 Transferred lease receivables Dec. 31, , , , ,733 33,887

139 GRENKE Consolidated Group Segment Reporting Due to the increase in internationalisation, the primary reporting of GRENKE Consolidated Group s segments was aligned according to the dominant organisational structure which is based on its operating activities. Therefore, the operating segments are divided into Leasing, Banking, and Factoring in accordance with the management of the company s segments. The former regional split within the Leasing segment is combined since January 1, The previous year s figures were adjusted accordingly. A regional spit of the business activities is provided within the information to the geographical segments. Detailed financial information is available for the three operating segments. 7.1 Description of Reportable Segments 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 smalland medium-sized companies. Additionally, GRENKE BANK AG cooperates with development banks in providing financing to this clientele in the context of business start-ups. Furthermore, fixed-term deposits are offered to investors via its internet presence. The bank s business is focused primarily on German customers. Factoring The Factoring segment contains the activities of GRENKEFACTORING GmbH, which performs traditional factoring services and which is focused on small-ticket factoring in Germany. 7.2 Segment Data The accounting policies employed to gather segment information are the same as those used for the consolidated financial statements (see note 2.4). 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 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. Segment liabilities correspond to the liabilities attributable to the respective segment with the exception of tax liabilities.

140 136 GRENKE Consolidated Group EURk Leasing segment Banking segment Factoring segment Total segments Consolidation effects Consolidated Group January to December Operating segment income 131, ,122 4,977 4,262 1,589 1, , , , ,653 Staff costs 40,694 34,810 1,259 1, ,809 36, ,809 36,695 Segment result 53,641 47,256 5,844 3, ,801 50, ,801 50,723 Reconciliation to consolidated financial statements Operating result 59,801 50,723 Other financial income Taxes 17,237 11,181 Net profit according to consolidated income statement 42,461 39,251 As per December 31 Segment assets 2,258,346 1,904, , ,419 13,247 10,703 2,602,432 2,134, , ,658 2,328,832 1,950,390 Reconciliation to consolidated financial statements Tax assets 23,460 18,578 Total assets according to consolidated statement of financial position 2,352,292 1,968,968 Segment liabilities 1,957,667 1,610, , ,389 19,174 13,813 2,238,096 1,807, , ,658 1,964,496 1,623,386 Reconciliation to consolidated financial statements Tax liabilities 36,823 27,925 Liabilities according to consolidated statement of financial position 2,001,319 1,651, Information on Geographical Segments Germany, France, and Italy are the main geographical segments on a country level in which revenues are generated with external customers. All other countries are combined under Other countries. Operating income and non-current assets are presented for reporting countries. The allocation to the individual geographical segments is based on the country of origin of the external customers with which revenues are generated. Non-current assets are allocated according to the countries in which they originated. Operating income consists of the same items as discussed above for the operating segment income. Non-current assets are comprised of noncurrent lease receivables, property, plant, and equipment, goodwill, other intangible assets, and other non-current assets. EURk Germany France Italy Other countries Consolidated Group Operating income (January to December) 53,829 50,855 24,770 20,953 19,427 12,322 39,854 32, , ,653 Non-current assets (as per December 31) 424, , , , , , , ,518 1,282,696 1,051,914

141 GRENKE Consolidated Group Other Disclosures 8.1 Capital Management Economic Capital The primary goal of the GRENKE Consolidated Group s capital management is to ensure that its credit rating is maintained in order to support its operations and safeguard liquidity, as well as to maintain risk-bearing capacity at all times within the requirements placed on the Consolidated Group by the Minimum Requirements for Risk Management [Mindestanforderungen an das Risikomanagement]. The GRENKE Consolidated Group monitors its capital among other using the equity ratio, i.e. the ratio of equity to total assets. In accordance with the Consolidated Group guidelines, we aim for an equity ratio of 16% as in the previous year. In addition, the Consolidated Group s determination of risk-bearing capacity, and its risk-limiting system through the limiting of risk positions, the safeguarding and monitoring of economic capital is guaranteed Regulatory Capital Owing to the acquisition of GRENKE BANK AG and the fact that GRENKELEASING AG has been a financial services provider as defined by the KWG (German Banking Act) since the end of 2008, the GRENKE Consolidated Group must regularly comply with the requirements of the German Solvency Regulation [Solvabilitätsverordnung] at the Consolidated Group level. As the parent company, GRENKELEASING AG also reports the Consolidated Group s overall capital ratio in accordance with the provisions of Section 3 of the German Solvency Regulation (SolvV) in conjunction with Section 10a KWG. The overall capital ratio is calculated on the basis of the IFRS financial statements. The Consolidated Group s equity consists of the core capital components of share capital (EUR 17,491k; previous year: EUR 17,491k), capital reserves (EUR 60,166k; previous year: EUR 60,166k), and retained earnings (EUR 186,862k; previous year: EUR k). In addition, other components of equity in an amount of EUR 2,504k (previous year: EUR 1,386k) net of deductions of EUR 59,143k (previous year: EUR 15,617k) for intangible assets are also considered. No other components of equity are included in the calculation of regulatory equity. As per the end of the reporting period, the Group s total equity amounted to EUR 207,880k (previous year: EUR 212,343k). 8.2 Franchise System GRENKELEASING AG provides its expertise, infrastructure, and funds for refinancing lease contracts under a franchise arrangement. However, it does not own shares in these franchisees, nor does it have any control over the franchisees business policies. In addition to the franchise charge totalling EUR 1,181k (previous year: EUR 1,144k), the Consolidated Group generated income from interest on loans of EUR 2,185k (previous year: EUR 2,535k) (see note 3.1) as well as from the rental of software in an amount of EUR 38k (previous year: EUR 9k). As per the end of the reporting period, there were further receivables from franchisees totalling EUR 1,501k (previous year: EUR 2,627k) (see notes 4.4 and 4.5) in addition to loans in an amount of EUR 22,067k (previous year: EUR 39,463k).

142 138 GRENKE Consolidated Group 8.3 Contingencies (Contingent Liabilities) and Other Financial Obligations As per the end of the reporting period, there were no contingent liabilities requiring comment in the statement of financial position or disclosure in the notes. The Company has other financial obligations related to rent, building maintenance, and lease contracts. The resulting financial obligations are presented below: EURk Dec. 31, 2012 Dec. 31, 2011 Rent, maintenance, and lease obligations due in the subsequent year 7,667 6,022 due in 2 to 5 years 17,079 10,645 due in more than 5 years 5,056 3,156 Total 31,900 19,823 The rent payments are partly offset by expected rental income from subleases of EUR 391k (previous year: EUR 388k). There are extension options of between one and five years on leases for rented premises. As per December 31, 2012, there were obligations of EUR 389k (previous year: 5,538k) for the extension of an office building. Under three agreements on the sale of receivables of GRENKE Investionen Verwaltungs KGaA to secure all receivables of the holding company (Grenke Investitionen Verwaltungs Kommanditgesellschaft auf Aktien) from the operating company, the operating company (GRENKELEASING AG) assigns to the holding company the following from lease contracts with end lessees (sublease contract) for leasing assets which are the subject of a purchase agreement between the operating company and the holding company: All receivables, claims and rights arising from these sublease contracts, including any claims from extended leases following expiry of the original lease term, any claims for compensation payments, residual values, and payment of a purchase price from the sale of the respective lease asset. Claims from credit and property insurance from the sublease contract are also assigned as are any claims from repurchase obligations on the part of suppliers of lease assets or of third parties. The buyer of the receivables acquires the equitable lien on the lease assets underlying the receivables purchase agreement In 2011 and 2012, our Irish subsidiary, GRENKE FINANCE Plc., Dublin, Ireland, generated income from intragroup factoring, loans, and leasing. With its above-mentioned income, GRENKE FINANCE Plc. is subject to a nominal income tax charge of 12.5% in Ireland in 2011 and 2012 and consequently a lower level of taxation in the meaning of the International Transactions Tax Act (AStG). Special tax liability treatment of the income of GRENKE FINANCE Plc. does not occur according to the current legal position, pursuant to the effects of the decision by the European Court of Justice on the Cadbury Schweppes case as well as pursuant to the memorandum dated January 8, 2007, issued by the Federal Ministry of Finance, in the instance that GRENKE FINANCE Plc. exercises an economic activity. In 2008, GRENKE FINANCE Plc. put forward an application at the Central German Tax Office under Section 50d (EStG) for the issuance of an exemption certificate and/or reimbursement of tax deductions for licence fees and similar remuneration on the grounds of the Double Taxation Agreement between Germany and Ireland. In processing the application, the Central German Tax Office holds additional information and notifications in terms of the meeting the requirements of economic activity at GRENKE FINANCE Plc. in Ireland. After an extensive examination, the Central German Tax Office considered the requirements to be fulfilled and issued the exemption certificate. In our opinion, the pre-conditions for economic activity on the part of GRENKE FINANCE Plc. were therefore satisfied in 2011 and Therefore, no contingent liabilities or other obligations arise from this matter as per the end of the reporting period.

143 GRENKE Consolidated Group Tax Audit in Germany In November 2010, tax audits began at GRENKELEASING AG, Grenke Investitionen Verwaltungs KGaA, GRENKE Service AG, and GRENKEFACTORING GmbH for the fiscal years 2005 to There were no conclusive audit findings as per the end of the reporting period. 8.5 International Tax Audits In May 2009, the audit at GRENKELEASING s.r.o., Czech Republic, for the fiscal years 2005 and 2006 began. There were no conclusive audit findings as per the end of the reporting period. 8.6 Related Party Disclosures Third parties are considered related if one party directly or indirectly controls the other or if it exercises considerable influence over the business or operative decisions of the other party. Related third parties of the GRENKE Consolidated Group include people in key positions and their family members and subsidiaries of GRENKELEASING AG. GRENKELEASING AG renders various services for subsidiaries in its ordinary business activities. Conversely, the various Consolidated Group companies also render services within the GRENKELEASING AG Consolidated Group as part of their business purpose. These extensive business transactions are performed at market conditions. As part of its ordinary business activities, GRENKE BANK AG offers related third parties services under normal market conditions. At the end of the reporting period, the bank had received deposits totalling EUR 7,831k (previous year: EUR 6,049k) from members of the GRENKE Consolidated Group s Board of Directors and their close family members. The Bank received deposits totalling EUR 1,031k (previous year: EUR 1,010k) from members of the GRENKE Consolidated Group s Supervisory Board and their close relatives. No loans were granted to any of these individuals during the reporting period. In accordance with the Articles of Association, the Supervisory Board of GRENKELEASING AG is comprised of six members. In fiscal year 2012, the members of the Supervisory Board were: Prof. Dr. Ernst-Moritz Lipp, Baden-Baden, Chairman, Professor of International Finance and General Manager of ODEWALD & COMPAGNIE Gesellschaft für Beteiligungen mbh Mr. Gerhard E. Witt, Baden-Baden, Deputy Chairman, public auditor and tax advisor Mr. Dieter Münch, Weinheim, retired bank officer, Member of the Foundation s Board Mr. Florian Schulte, Baden-Baden, General Manager of Deltavista GmbH Mr. Erwin Staudt, Leonberg, graduate economics Prof. Dr. Thilo Wörn, Essen, Professor at the Fachhochschule für öffentliche Verwaltung NRW

144 140 GRENKE Consolidated Group The number of shares held by Supervisory Board members is listed below: Number of shares as per December Dieter Münch Prof. Dr. Ernst-Moritz Lipp 28,300 28,300 Erwin Staudt 1,000 1,000 Florian Schulte 2, Prof. Dr. Thilo Wörn 1, Total 32,800 29,375 Prof. Dr. Ernst-Moritz Lipp is also the Chairman of the Supervisory Board of GRENKE BANK AG, Baden-Baden, and of Schlopp AG, Stuttgart, and he is a member of the Supervisory Board of OYSTAR Holding GmbH, Karlsruhe Stutensee, and Oberberg Klinik Holding GmbH, Berlin. In addition, Prof. Dr. Ernst-Moritz Lipp is a member of the Advisory Board of Winter Holding Verwaltungs GmbH, Nußloch. Mr. Gerhard E. Witt is at the same time Chairman of the Supervisory Board of Grenke Investitionen Verwaltungs KGaA, Baden-Baden, a subsidiary of the GRENKELEASING AG. Mr. Dieter Münch is Deputy Chairman of the Supervisory Board member of Grenke Investitionen Verwaltungs KGaA, Baden-Baden. In addition, Mr. Dieter Münch is also the Chairman of the Supervisory Board of Weisenburger Bau + Grund AG, Halle/Saale, Germany. Mr. Erwin Staudt is a member of the Supervisory Boards of PROFI Engineering Systems AG, Darmstadt, USU Software AG, Möglingen, and a member of the Administrative Board of Hahn Verwaltungs-GmbH, Fellbach. At the same time, Mr. Florian Schulte is the Chairman of the Supervisory Board Global Group Dialog Solutions AD, Idstein. Prof. Dr. Thilo Wörn is the Chairman of the Supervisory Board of Tiemeyer Automobile AG, Bochum, and Chairman of the Advisory Boards of agathon GmbH& Co. KG, Bottrop, and of DEFLEX-Dichtsysteme GmbH, Moers-Genend. The term of office of Prof. Dr. Ernst-Moritz Lipp and Mr. Gerhard E. Witt will continue until the end of the Annual General Meeting that resolves the official approval of their actions for fiscal year The remaining members of the Supervisory Board have been appointed until the end of the Annual General Meeting which decides on their exoneration for fiscal year The Supervisory Board s remuneration (including payments for supplementary services) totalled EUR 109k (previous year: EUR 108k). In accordance with Section 113 (1) sentence 2 no. 1 AktG, Supervisory Board remuneration is defined in Article 10 of GRENKELEASING AG s Articles of Association. This provision does not provide for the participation of the members of the Supervisory Board in any of the employee stock option programmes. The remuneration of the Supervisory Board breaks down as follows: EURk Total Remuneration AG Remuneration KGaA Payments for supplementary services 2012 Previous year 2012 Previous year 2012 Previous year 2012 Previous year Total

145 GRENKE Consolidated Group 141 The Board of Directors of GRENKELEASING AG is comprised as follows: Mr. Wolfgang Grenke, business man, Baden-Baden (Chairman), CEO Dr. Uwe Hack, graduate business administration, Metzingen (Deputy Chairman), CFO (until September 30, 2012) Mr. Mark Kindermann, graduate business administration, Bühl, COO Mr. Gilles Christ, MBA, Souffelweyersheim/France, CSO Mr. Jörg Eicker, bank officer, Düsseldorf, CFO (since September 1, 2012) Mr. Wolfgang Grenke holds sole power of representation. The other members of the Board of Directors represent GRENKELEASING AG jointly with another member of the Board of Directors or with an authorised signatory. The remuneration of the Board of Directors for 2012 breaks down as follows: EURk Total remuneration of which fixed of which variable Total 2, ,135 Total (previous year) 1, By way of signature dated June 29, 2010 and July 13, 2010, the Supervisory Board of GRENKELEASING AG concluded phantom stock agreements with Board of Directors members Dr. Uwe Hack and Mr. Gilles Christ. Under these agreements, Dr. Uwe Hack and Mr. Gilles Christ receive entitlements for fiscal years 2010, 2011, and 2012 to payment equal to the increase in value of 30,000 shares and 15,000 shares in GRENKELEASING AG respectively in relation to a defined basic share price. The basis 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 2010, 2011, and 2012 was EUR 28.68, EUR 37.72, and EUR 35.81, respectively. The maximum payment arising from this agreement is limited to EUR 600,000 or EUR 300,000 for the period of three years. Due to Dr. Hack s departure from the Board of Directors as per September 30, his possible entitlement for 2012 was halved. Under the programme, Mr. Gilles Christ is required to invest the respective net amount paid plus a personal contribution of 25% of that amount in GRENKELEASING AG shares. For 2010, a total of EUR 374k was paid out on the basis of the phantom stock agreements to Dr. Uwe Hack and Mr. Gilles Christ. No payment was made for 2011 on the basis of the phantom stock agreements. As per December 31, 2012, the value of the phantom stocks agreement granted totalled EUR 371k (previous year: EUR 0k). This was recognised under staff costs in the income statement.

146 142 GRENKE Consolidated Group Shareholdings are shown in the table below: Number of shares as per December Wolfgang Grenke* 4,925,619 4,925,619 Dr. Uwe Hack n.a. 9,500 Jörg Eicker 100 n.a. Mark Kindermann 52,053 52,053 Gilles Christ 1,600 1,600 Total 4,979,372 4,988,772 * excluding the voting rights of the Grenke family s pooling agreement please refer to the Corporate Governance Report. Mr. Wolfgang Grenke is also the Chairman of the Supervisory Board of GRENKELEASING GmbH, Vienna/Austria, and on the Supervisory Board of GRENKE SERVICE AG, Baden-Baden, and GRENKE BANK AG, Baden-Baden. He is also a member of the Advisory Board of Deutsche Bank AG, Freiburg region. Dr. Uwe Hack had also been on the Board of Directors of GRENKE BANK AG, Baden-Baden and a member of the Supervisory Board of GRENKE SERVICE AG, Baden-Baden. Dr. Hack left the Company by mutual agreement on September 30, Mr. Mark Kindermann is also still the Director of GRENKE LIMITED, Dublin/Ireland and Chairman of the Board of Directors of GRENKE SERVICE AG, Baden-Baden. In addition, he is on the Supervisory Board of GRENKELEASING GmbH, Vienna/Austria, GRENKELEASING AB, Stockholm/Sweden, Grenkefinance N.V., Vianen/Netherlands, and GRENKE BANK AG, Baden-Baden. He is also a member of the Advisory Board of GRENKELEASING AG, Zurich, Switzerland. Mr. Gilles Christ is also member of the Board of Directors of GRENKE ALQUILER S.A., Barcelona/Spain and of GRENKELEASING AB, Stockholm/Sweden. In addition, he is on the Supervisory Board of GRENKE SERVICE AG, Baden-Baden, GRENKELEASING AG, Vienna/Austria, and the President of the Advisory Board of GRENKELEASING AG, Zurich, Switzerland. He is also the General Manager of GRENKELEASING ApS, Herlev, Denmark and GRENKELEASING Sp.z.o.o., Poznan, Poland. Mr. Jörg Eicker joined the Company's Board of Directors on September 1, 2012 and assumed the responsibilities from Dr. Uwe Hack as per October 1, He is also on the Board of Directors of GRENKE BANK AG, Baden-Baden. 8.7 Notifications pursuant to Section 21 (1) and Section 22 of the German Securities Trading Act (Wertpapierhandelsgesetz (WpHG) Notifications in fiscal year 2012 On July 4, 2012 Jupiter Unit Trust Managers Limited, London, UK, has notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) that on February 16, 2012, Jupiter Unit Trust Managers Limited, London, UK, exceeded the threshold of 3% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 3.091% (422,930 voting rights).

147 GRENKE Consolidated Group 143 Notifications in fiscal year 2011 On November 10, 2011, PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, Germany sent us the following notifications in accordance with section 21 (1) WpHG: 1. Ms. Anneliese Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Ms. Anneliese Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Ms. Anneliese Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on November 6, 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Ms. Anneliese Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Ms. Anneliese Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke. 2. Mr. Moritz Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Moritz Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Moritz Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on November 6, 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Moritz Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Moritz Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke. 3. Mr. Roland Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Roland Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Roland Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on November 6, 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Roland Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Roland Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke. 4. Mr. Oliver Grenke (Germany): We hereby inform you on behalf of and with the full authority of our client Mr. Oliver Grenke (Germany) in accordance with section 21 (1) WpHG that the share of the voting rights in GRENKELEASING AG held by Mr. Oliver Grenke exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on November 6, 2011 and now amounts to 45.10% (6,170,947 voting rights), of which 42.82% (5,859,615 voting rights) are attributed to Mr. Oliver Grenke in accordance with section 22 (2) WpHG. Voting rights that are to be allocated to Mr. Oliver Grenke are held by the following shareholder, whose voting rights amount to 3% or more in GRENKELEASING AG: Mr. Wolfgang Grenke. PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 in the name and on behalf of its client, Ms. Anneliese Grenke, (Germany): The share of the voting rights in GRENKELEASING AG, Baden-Baden, held by Ms. Anneliese Grenke fell below the threshold of 5% on August 23, 2006 and now amounts to 4.55% (622,664 voting rights). 2.28% (311,332 voting rights) of this is assigned to Ms. Anneliese Grenke in accordance with section 22 (1) sentence 1 no. 6 WpHG. PricewaterhouseCoopers Legal Aktiengesellschaft Rechtsanwaltsgesellschaft, Karlsruhe, sent us the following notifications in accordance with section 21 (1) WpHG on November 28, 2011 in the name and on behalf of its client, Ms. Anneliese Grenke, (Germany): The share of the voting rights in GRENKELEASING AG, Baden-Baden, held by Ms. Anneliese Grenke fell below the threshold of 3% on September 12, 2009 and now amounts to 2.28% (311,332 voting rights).

148 144 GRENKE Consolidated Group Notifications prior to fiscal year 2011 We received with letter of August 7, 2002 the notice in accordance with Section 21 WpHG that the voting rights in GRENKELEASING AG have changed with effect from July 31, 2002 due to resolution of the previously existing pooling agreement. We were informed about the number of voting rights from own shares held and the number of voting rights attributed to in accordance with Section 22 (1) no. 6 WpHG as follows: Mr. Wolfgang Grenke (Germany), own shares: 44.20% attributed to in accordance with Section 22 (1) no. 6: 8.64%. Convenience Translation: T. Rowe Price Associates, Inc. would like to make the following notifications in their own name and in the name and on behalf of the following of their group companies: T. Rowe Price International, Inc.; TRP Finance, Inc.; T. Rowe Price Group, Inc. We hereby give notice, pursuant to section 21 paragraph 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price International, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price International, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 of the WpHG. We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of TRP Finance, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to TRP Finance, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG. We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price Associates, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price Associates, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG. We hereby give notice, pursuant to section 21 paragraph. 1 of the WpHG that on 18 December 2007 the voting interest of T. Rowe Price Group, Inc. in Grenkeleasing AG exceeded the threshold of 3% and on this date amounted to 3.58% (this corresponds to 490,000 voting rights). 3.58% of these voting rights (this corresponds to 490,000) are attributed to T. Rowe Price Group, Inc. in accordance with section 22 paragraph. 1 sentence 1 no. 6 and sentence 2 of the WpHG. Convenience Translation: By fax dated August 19, 2010, Threadneedle Asset Management Holding Limited, Swindon, UK, notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) that on August 12, 2010, Threadneedle Investment Funds ICVC, London, UK, exceeded the threshold of 5% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 5.01% (685,478 voting rights). By fax dated August 19, 2010, Threadneedle Asset Management Holding Limited, Swindon, UK, notified us pursuant to section 21 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) that on August 12, 2010, Threadneedle Investment Services Limited, London, UK, exceeded the threshold of 5% of the voting rights in GRENKELEASING AG, Baden-Baden, Germany, and on that date amounted to 5.01% (685,478 voting rights). These voting rights are in their entirety attributable to Threadneedle Investment Services Limited, London, UK, pursuant to 22 paragraph 1 sentence 1 No. 6 WpHG. These voting rights are held by Threadneedle Investment Funds ICVC.

149 GRENKE Consolidated Group 145 Convenience Translation: 1. On September 23, 2010 Jupiter Asset Management Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany have exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Asset Management Limited according to article 22, paragraph 1, sentence 1, number 6 WpHG % (351,942 voting rights) of these voting rights were attributable to Jupiter Asset Management Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG. 2. On September 23, 2010 Jupiter Investment Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Investment Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG % (351,942 voting rights) of these voting rights were attributable to Jupiter Investment Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG. 3. On September 23, 2010 Comasman Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Comasman Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG % (351,942 voting rights) of these voting rights were attributable to Comasman Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG. 4. On September 23, 2010 Jupiter Asset Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Asset Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG % (351,942 voting rights) of these voting rights were attributable to Jupiter Asset Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG. 5. On September 23, 2010 Jupiter Fund Management Group Limited, London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Fund Management Group Limited according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG % (351,942 voting rights) of these voting rights were attributable to Jupiter Fund Management Group Limited according to article 22, paragraph 1, sentence 1, number 1 WpHG. 6. On September 23, 2010 Jupiter Fund Management PLC (Formerly Jupiter Investment Management Holdings Limited), London, UK has notified us that on September 20, 2010 its voting rights in GRENKELEASING AG, Baden-Baden, Germany exceeded the threshold of 5% and amounted to 5.022% (687,213 voting rights). These voting rights of 5.022% (687,213 voting rights) were attributable to Jupiter Fund Management PLC (Formerly Jupiter Investment Management Holdings Limited), according to article 22, paragraph 1, sentence 1, number 6 in connection with sentence 2 WpHG % (351,942 voting rights) of these voting rights were attributable to Jupiter Fund Management PLC according to article 22, paragraph 1, sentence 1, number 1 WpHG.

150 146 GRENKE Consolidated Group 8.8 Events after the Reporting Period In addition to the existing cooperation agreements with NRW.Bank, TAB, and IBB, on January 30, 2013, GRENKELEASING AG and GRENKE BANK AG have established a further cooperation agreement with LfA Förderbank Bayern by means of global loan in the amount of EUR 25 million. Through this collaboration, small and medium-sized enterprises and self-employed professionals, that are located in Bavaria, can access development funds for investments via leasing. The lease agreements are available exclusively for investment plans of commercial enterprises and members of self-employed professions with annual sales of up to EUR 500,000k located in Bavaria. The refinancing of lease agreements takes place through the purchase of receivables by GRENKE BANK AG. 8.9 Declaration in Accordance with Section 161 AktG The Board of Directors and the Supervisory Board of GRENKELEASING AG have issued the declaration pursuant to Section 161 AktG and made this available to shareholders on the Company s website (

151 GRENKE Consolidated Group 147 Audit Opinion We have audited the consolidated financial statements prepared by GRENKELEASING AG, Baden-Baden, Germany, comprising the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows, and the notes to the consolidated financial statements, together with the group management report which is combined with the management report of the Company for the fiscal year from January 1 to December 31, The preparation of the consolidated financial statements and group management report in accordance with IFRS as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) HGB is the responsibility of the legal representatives of the Company. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and German generally accepted standards for the audit 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 audit such that misstatements materially affecting the presentation of the net assets, financial position, and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Consolidated Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and in the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS as adopted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) HGB and give a true and fair view of the net assets, financial position, and results of operations of the Consolidated Group in accordance with these requirements. The Group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Consolidated Group s position and suitably presents the opportunities and risks of future development. Stuttgart, January 30, 2013 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Frey Auditor Werner Auditor

152 148 GRENKE Consolidated Group Declaration in Accordance with Section 297 (2) Sentence 4 and Section 315 (1) Sentence 6 HGB We confirm that, to the best of our knowledge, the consolidated financial statements give a true and fair view of the net assets, financial position, and results of operations of the Consolidated Group and that the Group management report gives a true and fair view of business performance including financial performance and the situation of the Consolidated Group and describes the main opportunities and risks relating to the Consolidated Group s anticipated development in accordance with the applicable financial reporting framework. Baden-Baden, January 30, 2013 The Board of Directors

153 GRENKE Consolidated Group 149 Calendar of Events February 6, 2013 Publication of Consolidated Financial Statements for 2012, Annual Press and DVFA Analysts Conference April 25, 2013 Publication of Quarterly Financial Report as per March 31, 2013 May 7, 2013 Annual General Meeting (Kongress-Haus Baden-Baden) July 25, 2013 Publication of Quarterly Financial Report as per June 30, 2013 October 24, 2013 Publication of Quarterly Financial Report as per September 30, 2013 Contact Information Renate Hauss Corporate Communications Phone: Fax: Figures in this annual financial report are usually presented in thousands and millions of euro. Due to rounding, differences as against the actual number in euro may emerge in individual figures. Naturally, such differences are not of a significant nature. The report is published in German and as an English translation. In the event of any conflict or inconsistency between the English and the German versions, the German original shall prevail.

154 Headquarters GRENKELEASING AG Neuer Markt Baden-Baden Germany Phone: Fax: [email protected] D 01/13