GRENKELEASING AG GROUP NINE-MONTH S REPORT 2005 REPORTING PERIOD: JANUARY 1, 2005 TO SEPTEMBER 30, 2005 GRENKELEASING

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1 GRENKELEASING

2 CONTENTS Important Key Figures of the GRENKELEASING AG Group 03 Letter to the Shareholders from the Board of Directors 04 Recalculation of Cash funds 07 Risk Categories 08 Explanation of the Key Figures 09 From Contract to balance sheet 11 Overview of the group 13 GRENKELEASING Locations in Europe 14 The Board of Directors of the GRENKELEASING AG 15 Members of the Supervisory Board of the GRENKELEASING AG 16 Directors holdings as per September 30, Consolidated Income Statement for the period from January 1, 2005 to Sept. 30, Consolidated Balance Sheet as of September 30, Consolidated Cash Flow Statements for the period from January 1, 2005 to Sept. 30, Statement of Changes in Consolidated Equity 22 Consolidated Segment Reporting as of September 30, Selected Explanatory Notes 24 Dates 2005 /

3 IMPORTANT KEY FIGURES OF THE GRENKELEASING AG GROUP Jan Sept. 30, Change Jan Sept. 30, Unit New business (cost of new lease contracts)* Contribution margin 1 of new business Number of new contracts* Number of new contracts without projects 303, % 257,038 35, % 28,818 41, % 37,386 37, % 33,994 Units Units Net interest income from leasing business Settlement of claims Profit from insurance business Profit from new business Profit from disposals (income exceeding the calculated residual value) Result from currency translation Other operating income Costs of new contracts Costs of current contracts Project costs and basic distribution costs Management costs Other costs Amortization/ depreciation on Goodwill 45,419 9 % 41,786 12, % 10,189 10, % 8,758 11, % 9,838 3, % % % 299 8, % 7,864 3, % 2,730 4,542 6 % 4,302 6,182 4 % 5,934 1, % 1, % 229 EBIT (Profit from ordinary operations) Other interest profit Market valuation of financial instruments 35, % 29, % % -715 EBT (Net profit for the period before taxes) Net profit for the period (consolidated pursuant to IFRS) Earnings per share (IFRS) Dividend** 34, % 29,918 21, % 19, % *** 0.33*** EUR EUR Embedded value of the contract portfolio* % 216 EURm (incl. Equity before taxes) Embedded value of the contract portfolio* % 189 EURm (incl. Equity after taxes) Cost/Income Ratio* % 43.4 % Share of IT products in the lease portfolio* 88-1 % 89 % Share of corporate customers in the lease portfolio* 99 0 % 99 % Mean acquisition value* % 6.9 Mean term of contract 45 2 % 44 Months Volume of leased assets* 1, % 961 EURm Number of current contracts 160, % 140,368 Units Average number of employees* % 274 Persons * cf. Explanation on page ** Concerning dividend cf. explanation on page 33. *** Distribution in the reporting year out of profit of previous year. GRENKELEASING AG is the parent company of the GRENKELEASING AG Group - referred to below as GRENKELEASING. All the figures and statements published in the Nine-Month s Report refer to the GRENKELEASING AG Group.

4 4 LETTER TO THE SHAREHOLDERS FROM THE BOARD OF DIRECTORS Dear Shareholders, Ladies and Gentlemen, The latest industry barometer published by the German Association for the information industry, telecommunications and new media (BITKOM) lowered its growth forecast in October. The Association expects the German ITC market to expand by 2.6% in 2005; this contrasts with the 3.4% growth predicted in the spring. This means that in 2005 the market as a whole is likely to match the previous year s growth rates. BITKOM forecasts an upward trend for the German ITC market in 2006, which is estimated to grow by 2.4%. The latest edition of the periodical ifo Schnelldienst, which focuses on lease financing, reported that the leasing business climate had brightened up considerably. According to the recent results of the ifo research institute s survey on the leasing sector, leasing companies are extremely satisfied with their current business situation. Their success rests mainly on capturing new market shares from other types of financing. GRENKELEASING is getting an above average benefit from the trend towards leasing. In the first nine months of 2005, GRENKELEASING generated earnings from new business - i.e. the total acquisition cost of new leased assets of EUR 304m (9 months 2004: EUR 257m). This translates into a growth of 18.2% over the same period in the prior year. In Germany, new business was up 9.6%. GRENKELEASING s foreign subsidiaries contributed 32% to the Group s new business, with the French subsidiary achieving 33% growth, and business in Switzerland up 27%. Foreign business now accounts for 32% of new business, compared with 27% in the prior year. The new business margin (contribution margin 1), an important indicator of the profitability of new business, climbed to EUR 35m in the first nine months of 2005, against EUR 29m in the prior year. This represents an increase of 23%. The cost-income ratio which is calculated by dividing cost by income fell yet again in After the first three quarters in 2005, it is now at 40.5%, against 43.4% a year ago.

5 5 In the first nine months of 2005, the Group received a total of 79,786 leasing inquiries resulting in 41,231 new contracts. The mean contract value was EUR 7,364, an increase on the prior year (9 months 2004: EUR 6,872). In October, GRENKELEASING renewed its alliance with IBM which dates back to the framework agreement concluded in Germany in The project, which is initially limited to a few months, involves contract generation and management for small-ticket leasing for IBM in Germany, France, Spain and Belgium. EBIT in the first nine months rose to EUR 35m, compared to EUR 29m in This represents an increase of 20%. Compared to the prior-year period, after-tax profit also increased in the first nine months of 2005, up 12% to EUR 21.7m (9-month period 2004: EUR 19.4m). This translates into earnings per share of EUR 1.59 (prior year: EUR 1.43). New business was generated by 327 employees (9-month period 2004: 274) in the GRENKELEASING Group and 36 in the franchise operations in fifteen European countries. GRENKELEASING now has branches in 20 German cities. In addition to the six branches in France, GRENKELEASING has subsidiaries in Switzerland, Austria, Italy, the Czech Republic, Spain, the Netherlands, Denmark, Sweden and Ireland. GRENKELEASING is represented in the United Kingdom, Poland and Norway with a franchise system. Operations in Belgium were commenced in September. Our branch network in Germany and other countries is extended by means of cell division. As soon as a sales region reaches a specified number of contract inquiries per week, it is split into two branches. In October, we opened a second branch in Paris. An office is set to open in Zurich, Switzerland, in the near future. Cell division is also planned for Berlin. We are currently preparing our entry into the Hungarian market on the basis of our franchise system. We have used a franchise model, with great success, since 2003 to enable the cost-effective establishment of new businesses in other countries. GRENKELEASING does not hold an interest in the locally operating company, but provides it with the expertise, operating infrastructure and services. The benefits of this model are twofold: costs can be minimized during the start-up phase and at the same time we ensure that the people working there identify with the Group s strategic goals and reduce the integration costs and risk associated with the planned takeover of franchise operations.

6 6 In 2003, GRENKELEASING was rated by Standard & Poor s for the first time. The issuer rating of A-2 in the short term, BBB+ in the long term, and a stable outlook was confirmed at the beginning of October Quality management, which we have been developing and improving since 1997, is one of the keys to our success. GRENKELEASING has DIN EN ISO 9001:2000 certification and is audited each year by an external audit firm. The current audit report of September 2005 confirmed once again that GRENKELEASING creates, in an exemplary fashion, the conditions that allow competent and motivated employees to satisfy customers and business partners through a maximum of service quality. In view of the encouraging growth rates in the first nine months, we are confident of reaching our target for 2005 of matching prior-year growth. We are again aiming for substantial double-digit growth in profits. Baden-Baden, October 2005 Wolfgang Grenke CEO

7 7 RECALCULATION OF CASH FUNDS GRENKELEASING uses available cash for the advance financing of leasing transactions in order to save the interest that would be incurred through external refinancing. Thus the consolidated cash flow statement presented in the Nine-Month s Report 2005 gives a somewhat restricted picture of the actual liquidity situation. Viewed in conjunction with the cash flow statement, the table below gives an accurate picture of our financial situation. Dec. 31, 2003 Sept. 30, 2004 Dec. 31, 2004 Sept. 30, 2005 Cash and cash equivalents Transitory items Adjusted cash and cash equivalents Funds used for advance financing Loans for advance financing Readily available funds Receivables from tax authorities Discount ABCP 47,548 39,909 62,166 45,679-13,966-13,472-16,048-16,197 33,582 26,437 46,118 29,482 30,721 24,344 9,678 14,974-1,658-1, ,645 49,376 55,760 43,875 5,924 13,245 13,845 10,559 20,211 36,218 42,607 59,030 New balance 88,780 98, , ,464 Change in "new balance" Jan Sept. 31, Jan Dec. 31, Jan Sept. 30, Beginning of year to balance sheet date 10,059 23,432 1,252

8 8 RISK CATEGORIES GRENKELEASING is planning to align its pricing policy more closely to the credit risk in future. For the sake of transparency, we have defined risk categories, determining a margin 1 after loss settlement which provides an indication of how the contract margins relate to risk. Risk is defined as a function of score, contract term and opportunity of disposal. As the actual loss can only be determined precisely towards the end of the contract term, the contingent residual risk associated with current contracts is estimated on the basis of historical risk curves. Estimates obviously become more precise the older the portfolio or the shorter the residual term. If lease contracts are terminated due to arrears, a termination claim (claim to damages) arises against the lessee. The calculations are based on an average collection rate for such claims. Likewise, an average residual term is assumed for each portfolio. Under this method, inaccuracies are inevitable, but should not diminish the informative value of the results. Risk categories (figures stated in EUR) Months 2005 Category 1 Acquisition cost 47,347,531 73,470,362 97,183, ,495,279 88,507,220 Forecast loss 1,870,875 2,359,984 3,564,238 3,939,129 3,279,596 Margin 1 after loss settlement 4.7 % 5.5 % 5.3 % 6.9 % 6.9 % Category 2 Acquisition cost 41,176,045 60,060,016 74,429,540 92,415,387 82,012,547 Forecast loss 2,394,817 2,341,142 3,267,122 3,826,312 2,956,448 Margin 1 after loss settlement 4.2 % 6.7 % 7.4 % 7.9 % 7.9 % Category 3 Acquisition cost 35,199,140 47,875,791 55,200,523 62,586,343 65,692,594 Forecast loss 2,380,299 2,932,514 3,141,562 3,450,395 3,270,088 Margin 1 after loss settlement 4.2 % 5.1 % 5.9 % 6.7 % 7.4 % Category 4 Acquisition cost 44,173,183 50,851,723 48,188,133 58,614,690 42,807,434 Forecast loss 3,927,802 4,722,292 4,616,132 6,169,009 4,060,607 Margin 1 after loss settlement 1.8 % 1.7 % 2.3 % 1.5 % 3.0 % Category 5 Acquisition cost 67,676,269 50,864,924 35,099,106 45,033,025 24,539,349 Forecast loss 9,305,330 6,643,066 4,416,162 5,938,648 2,829,185 Margin 1 after loss settlement -3.5 % -4.2 % -2.3 % -3.1 % -0.1 % The table shows that the best financial results are obtained with medium risks. Very good risks put pressure on margins, and defaults on bad risks have a negative effect. Note: even when the margin 1 after loss settlement is slightly negative, margin 2 is nevertheless usually positive because additional income from property insurance and disposal considerably exceed the ongoing costs of contract management.

9 9 EXPLANATION OF THE KEY FIGURES New business / Number of new contracts The new business figure comprises the acquisition costs of all leasing and lease purchase contracts newly concluded in the reporting period incl. franchise partners. Share of IT Products in the lease portfolio We understand IT products to mean information technology equipment (such as PCs, servers, printers), copying equipment, and communications equipment. The number given represents the newly concluded contracts in the reporting period. Share of corporate customers in the lease portfolio We understand corporate customers to represent all lessees who are not subject to specific consumer protection provisions. The number given represents the newly concluded contracts in the reporting period. Mean acquisition value The mean acquisition value is determined as the arithmetic mean of the acquisition costs of all leased assets acquired in the reporting period. Volume of leased assets The volume of leased assets is the sum of all (historic) acquisition costs of assets acquired under leasing and lease purchase contracts not yet terminated as per closing date of the balance sheet. Average number of employees This is the average number of employees working within the GRENKELEASING Group during the reporting period. Members of the executive board are not included. Part-time workers were taken into account on a proportional basis.

10 10 Embedded Value Under IAS/IFRS accounting, the income generated by a leasing contract is distributed over the contract s duration. This means that, on any given balance-sheet closing date, a large part of the profit generated by the portfolio of contracts lies in the future. Along the lines of comparative considerations in the insurance sector, we roughly compute the current value of future surpluses from the existing contracts portfolio on the closing date of the balance sheet as the embedded value, deducting estimated expenses and adding equity. Cost/Income Ratio A comparison of costs and income provides the cost/income ratio. As opposed to the usual approach adopted by banking analysts, we deduct expenses for claims settlement/bad debt provisioning from income even if this produces a somewhat less favourable key figure. The leasing market would generate higher sales if greater risks were taken. However, this would be unlikely to improve the cost/income ratio. We thus determine the cost/income ratio from the total of all expenses (minus valuation expenses and taxes) and revenues comprising net interest income from leasing activities after claims settlement, net income from insurance activities, net income of new business, additional earnings from realisation, other operating income and (non-leasing) net interest income.

11 11 FROM CONTRACT TO BALANCE SHEET Despite the differences, the financial results of GRENKELEASING's various types of contract are presented similarly in the balance sheet according to IFRSs. Contrary to German accounting standards, the lease contracts concluded by GRENKELEASING are treated as loan agreements under IFRSs. The accounting basis (100%) of every lease is the acquisition cost of the newly acquired leased asset: the purchase price excluding VAT that GRENKELEASING pays the dealer for the acquisition of the leased asset - whether this is a PC, a photocopier or a telephone system. In some cases, the dealer receives a commission on these acquisition costs. The average commission paid in 2004 was 1.7% of the acquisition cost. The conclusion of a lease contract incurs direct costs - e.g. for the aforementioned commission, for the procurement of information from an economic information service or for the preparation of the contract - that are capitalized. However, we also receive processing fees for preparing the lease contract or special lease payments. Adding the direct costs that are incurred when a contract is concluded to the acquisition costs and subtracting from this amount all customer payments received at the start of the contractual term results in - in substance - the net investment in the lease contract. The average net investment for fiscal year 2004 was 104.2% of the acquisition cost. The difference between this amount and the acquisition cost is the net income from new business. Since, in accordance with IFRSs, our lease contracts are accounted for as loan agreements, and the resulting income must be distributed as interest income over the contractual term, the net investment is equal to the amount receivable from the lessee (lease receivables) at the start of the contractual term. During the term of the lease contract, we receive lease payments from the lessee that we break down into interest (income from interest on lease receivables) and repayment of principal such that the interest rate remains constant while the repayments reduce the lease receivables each quarter so that at the end of the contract the economic value of the leased asset (estimated sales proceeds) remains as the residual value, i.e. is not repaid. GRENKELEASING uses various financing instruments to fund its leasing business - including three ABCP programs, a corporate bond and loans against borrower's note. In the balance sheet, these are grouped together under refinancing liabilities, and the resulting interest under interest expense from the refinancing of lease receivables. The net interest income from the leasing business is the balance of the interest income and interest expenses. If a lessee is more than two consecutive payments in arrears, the lease contract is terminated and the actual loss is called in. This loss claim is simultaneously written down using a lump-sum item-by-item measurement in accordance with the percentage of receivables approach (statistically determined percentage of cash flows from different loss categories). Combined with additional specific write-offs of receivables, this results in the cost of settlement of claims.

12 12 If the lessee uses our insurance service - as of December 31, 2004, 66% of our customers had chosen this option - we take care of the insurance company's interests as a service provider. We receive a commission for these services which is offset against the corresponding expenses from insurance business. The balance is net income from insurance business. At the end of the contract, the lessee may renew the lease. In this case, we generate revenues from subsequent leases. During this period, the leased asset is measured at fair value at the end of each quarter. The lessee may also return the leased asset to us. In both cases, the leased assets are recognized in the balance sheet at market prices under leased assets for sale and depreciated over time (depreciation on leased assets for sale). The sale of such assets may result in accounting gains/losses from the disposal of leased assets for sale. Combined, all of these income and expense items result in the net profit/loss from disposals. In addition to direct costs at the conclusion of a contract, further costs are incurred for marketing/advertising/projects, ongoing contract management and the management. In the income statement, these costs are classified as personnel expenses, operating costs etc. The following table showing the effects of these items on the income statement over time (expressed as % of acquisition costs) enables an estimate of what percentage of the profit on each lease contract will be realized in the future. We calculate this projected future net income from current lease contracts at the end of each quarter for the entire contract portfolio and publish this figure - after deducting estimated taxes - as the embedded value of the contract portfolio. Total Quarters in % * Net interest income from leasing business Expenses from settlement of claims Net income from insurance business Net income from new business Profit from disposals Cost EBIT/EBT *of the acquisition costs of a leased asset (new business)

13 13 OVERVIEW OF THE GROUP GRENKELEASING AG Head office, Baden-Baden (Germany) Branches Berlin, Bremen, Dortmund, Dresden, Dusseldorf, Erfurt, Frankfurt, Hamburg, Hanover, Cologne, Leipzig, Magdeburg, Mannheim, Memmingen, Mönchengladbach, Munich, Nuremberg, Rostock, Stuttgart GRENKELEASING AG Vienna (Austria) GRENKE ALQUILER S.A. Barcelona (Spain) GRENKELEASING AG Basel, Lausanne (Switzerland) GRENKE LEASE SPRL Brussels (Belgium) GRENKE LOCATION SAS Schiltigheim (France) Branches Aix-en-Provence, Lyon, Nantes, Paris WEBLEASE NETBUSINESS AG Baden-Baden (Germany) GLG Grenke-Leasing GmbH Baden-Baden (Germany) Grenke Investitionen Verwaltungs KGaA Baden-Baden (Germany) GRENKELEASING s.r.o. Prague (Czech Republic) Grenkefinance N.V. Maasbree (Netherlands) GRENKE Locazione S.r.l. GRENKE LEASING S.r.l. Milan (Italy) GRENKELEASING ApS Herlev (Denmark) GRENKE LIMITED GRENKE FINANCE Plc. Dublin (Ireland) GRENKELEASING AB Stockholm (Sweden) Franchise partners Grenke Leasing Ltd. Guildford (UK) GRENKELEASING Sp.z o.o Poznan (Poland) GRENKELEASING AS Oslo (Norway) GRENKE AUTOLEASING GmbH Bremen (Germany) GRENKEFACTORING GmbH Baden-Baden (Germany)

14 14 GRENKELEASING LOCATIONS IN EUROPE * * ** * ** Expansion areas Countries with GRENKELEASING Locations With franchise agreement: * Poznan (PL), Guildford/London (UK), Oslo (NO) ** GRENKEFACTORING GmbH Baden-Baden (DE), GRENKE AUTOLEASING GmbH Bremen (DE)

15 15 THE BOARD OF DIRECTORS OF THE GRENKELEASING AG Wolfgang Grenke Chairman of the Board 54 years old Strategy, corporate development, internal audit Dr. Uwe Hack 43 years old Investor relations, treasury, financial control Mark Kindermann 44 years old Accounting, quality management, human resources, legal, administration Thomas Konprecht Vice-Chairman of the Board 46 years old Marketing, sales, management services Michael Kostrewa 37 years old Information technology, e-business

16 16 MEMBERS OF THE SUPERVISORY BOARD OF THE GRENKELEASING AG The resident supervisory board of GRENKELEASING AG is comprised as follows: Prof. Dr. Ernst-Moritz Lipp (Chairman) Professor of International Finance and Managing Director of a limited liability company Baden-Baden Mr. Gerhard E. Witt* (Deputy Chairman) Chartered Accountant and Tax Consultant Baden-Baden Mr. Dieter Münch* Qualified Bank Clerk Weinheim Dr. Brigitte Sträter Lawyer Dusseldorf Dr. Oliver Nass Commercial General Manager Paris Mr. Erwin Staudt Economics Graduate Leonberg * Mr. Dieter Münch, and Mr. Gerhard E. Witt have been members of the supervisory board of GRENKE Investitionen Verwaltungs KGaA, a group undertaking of the GRENKELEASING Group, since February 20, See further explanations on page 34.

17 17 DIRECTORS HOLDINGS AS PER SEPTEMBER 30, 2005 Shares held by members of board of directors Wolfgang Thomas Mark Michael Grenke Konprecht Kindermann Kostrewa Units Units Units Units Status as per: Sept. 30, 2005 *5,069,419 *439,080 *90,953 *114,600 Options held by members of board of directors** Wolfgang Thomas Mark Michael Grenke Konprecht Kindermann Kostrewa Units Units Units Units Status as per: Sept. 30, ,252 9,938 6,628 6,628 Shares held by supervisory board members Dieter Münch Units Status as per: Sept. 30, * The following call option was granted: Wolfgang Grenke: 200,000 shares, Thomas Konprecht: 110,000 shares, Mark Kindermann: 40,000 shares, Michael Kostrewa: 50,000 shares ** Granting of options within the scope of the stock option programme. Subscription right to 1 share each.

18 18 GRENKELEASING AG, BADEN-BADEN CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1, 2005 TO SEPT. 30, Month s Report 9-Month s Report June 1. - Sept. 30, June 1. - Sept. 30, Jan Sept. 30, Jan Sept. 30, Income from interest on lease receivables Expenses from interest on refinancing liabilities Net interest income from leasing business Settlement of claims Net interest income after settlement of claims from leasing business Income from insurance business Expenses from insurance business Profit from insurance business Profit from new business Income from disposals Expenses from disposals Profit from disposals Other operating income 20,721 18,795 60,935 54,997 5,407 4,747 15,516 13,211 15,314 14,048 45,419 41,786 3,818 3,630 12,153 10,189 11,496 10,418 33,266 31,597 3,838 3,468 11,173 9, ,117 1,132 3,366 3,037 10,056 8,758 4,002 3,135 11,642 9,838 2,883 2,233 8,478 6,707 1,860 1,958 5,414 5,905 1, , Personnel expenses Operating expenses Administrative expenses Consulting and audit fees Distribution costs (without commissions) Amortization/ depreciation Other operating expenses Other taxes Profit/ loss from ordinary operations Expenses/ income from the fair value measurement Other interest income Other interest expenses Net profit for the period before taxes 4,297 3,982 12,925 11,386 1, ,843 3, ,863 1, ,625 1, ,035 2, ,135 1, , ,161 9,720 35,053 29, , , ,961 11,185 34,610 29,918 Income taxes Deferred taxes Net profit for the period 2,399 2,440 11,696 11,496 1,942 1,124 1, ,620 7,621 21,660 19,374 Profit attributable to minority interest Profit attributable to equity holders of the parent ,620 7,621 21,660 19,373 Earnings per share (basic) Earnings per share (diluted) 0.56 EUR 0.56 EUR 1.59 EUR 1.43 EUR 0.56 EUR 0.56 EUR 1.59 EUR 1.43 EUR Average shares outstanding (basic) Average shares outstanding (diluted) 13,638,639 Units 13,538,098 Units 13,619,858 Units 13,538,098 Units 13,648,217 Units 13,564,644 Units 13,629,436 Units 13,564,644 Units

19 19 GRENKELEASING AG, BADEN-BADEN CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2005 Assets 9-Months Report Annual Accounts, Sept. 30, 2005 Dec. 31, 2004 Current assets Cash on hand and balances with banks Financial assets Lease receivables Trade receivables Lease assets for sale Tax receivables Other current assets Total current assets Non-current assets Lease receivables Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets 45,679 62, , , ,069 1,276 1,002 15,467 12,615 10,559 13,845 11,016 5, , , , ,334 21,809 19,323 2,016 2,027 19,655 18,218 70,382 49, , ,264 1,023, ,774 Liabilities and equity Liabilities Current liabilities Liabilities from the refinancing of lease receivables Trade payables Tax liabilities Provisions Current portion of non-current bank liabilities Financial instruments carried at negative fair value Other current liabilities Deferred lease payments Total current liabilities Non-current liabilities Liabilities from the refinancing of lease receivables Non-current bank liabilities, less the current portion Deferred tax liabilities Other non-current liabilities Total non-current liabilities Equity Capital stock Capital reserve Revenue reserves Currency translation Hedging reserve Minority interests Profit carryforward Total equity Total liabilities and equity 191, ,192 6,803 8,594 4,959 11,940 1,334 1,308 1, , ,020 1,644 48,126 49, , , , ,025 4,833 5,396 46,672 44, , , ,265 17,438 17,387 59,453 58, ,971-1, ,270 76, , ,402 1,023, ,774

20 20 GRENKELEASING AG, BADEN-BADEN CONSOLIDATED CASH FLOW STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2005 TO SEPTEMBER 30, 2005 Jan Sept. 30, Jan Sept. 30, Net profit for the period before taxes 34,610 29,918 Non-cash items contained in net profit for the period and reconciliation to cash flow from operating activities + Amortization/ depreciation -/+ Profit/ loss from the disposals of equipment and intangible assets -/+ Investment income 1,135 1, /+ Non-cash changes in equity +/- Increase/ decrease in other provisions -1, Additions of lease receivables + Payments by lessees + Disposals/ reclassifications of lease receivables at residual carrying values +/- Changes from other set-offs - Interest income from lease receivables - Increase in other receivables from lessees +/- Currency translation differences = Change in lease receivables -305, , , ,551 47,389 40, ,935 54,997-1,198 6, ,190 74,971 + Additions of liabilities from the refinancing of lease receivables - Payment of annuities to refinancers - Disposal of liabilities from the refinancing of lease receivables + Interest expense from lease liabilities + Change from fair value measurement +/- Currency translation differences = Change in liabilities from the refinancing of lease receivables 333, , , , ,264 23,785 15,516 13, , ,253 87,751 Changes in other assets/liabilities -/+ Increase/decrease in other assets +/- Increase/decrease in deferred lease payments +/- Increase/decrease in other liabilities = Cash flow from operating activities -22,808 22,881-1,727 3,469 1,665 2,278 14,012 13,953 -/+ Taxes paid/ received - Interest paid + Interest received = Net cash flow from operating activities -15,390 10,967-1, ,000 2,955 continued on page 21

21 21 Jan Sept. 30, Jan Sept. 30, Purchase of equipment and intangible assets -1, Proceeds from sale of equipment and intangible assets = Cash flow from investing activities -1, /- Raising/ repayment of bank liabilities - Dividend payment + Payments from stock option program - Issue of loans = Cash flow from financing activities ,396-5,441-4, ,534-8,519-5,300-13,674 9,625 Cash funds at beginning of period Cash on hand and balances with banks - Bank liabilities from overdrafts = Cash and cash equivalents at beginning of period 62,166 47, ,658 62,130 45,890 +/- Change due to currency translation = Cash funds after currency translation 62,075 45,916 Cash funds at the end of period Cash on hand and balances with banks - Bank liabilities from overdrafts = Cash and cash equivalents at the end of period 45,679 39, ,405 45,098 38,504 Change in cash funds during period -16,977-7,412 Net cash flow from operating activities + Cash flow from investing activities + Cash flow from financing activities = Total cash flow -2,000 2,955-1, ,674-9,625-16,977-7,412

22 22 GRENKELEASING AG, BADEN-BADEN STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FROM JANUARY 1, 2004 TO SEPTEMBER 30, 2004 GRENKELEASING AG GROUP Subscribed Capital Revenue Hedging Pension Currency Profit Equity Equity Consolidated capital reserve reserves* reserve reserve translation carryforward apportionable apportionable equity to shareholder to minority interests Equity as of Jan. 1, ,287 57, , , ,632 Payment of dividend 2004 for ,463-4,463-4,463 Fair value measurement of hedging instruments Deferred taxes on hedging reserve 0 0 Stock-option program 100 1,434 1,534 1,534 Net profit for ,373 19, ,374 Currency translation Equity as of September 30, ,387 58, , , , ,339 GRENKELEASING AG, BADEN-BADEN STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FROM JANUARY 1, 2005 TO SEPTEMBER 30, 2005 Subscribed Capital Revenue Hedging Pension Currency Profit Equity Equity Consolidated capital reserve reserves* reserve reserve translation carryforward apportionable apportionable equity to shareholder to minority interests Equity as of January 1, ,387 58, , , , ,402 Payment of dividend 2005 for ,441-5,441-5,441 Pension reserve Deferred taxes on pension reserve Fair value measurement of hedging instruments -1,455-1,455-1,455 Deferred taxes on hedging reserve Stock-option program Net profit for ,660 21,660 21,660 Currency translation Equity as of Sept. 30, ,438 59, , , , ,998 * The revenue reserves are made up of 5 legal reserves and 48 reserves in accordance with the articles of incorporation.

23 23 GRENKELEASING AG GROUP GRENKELEASING AG, BADEN-BADEN CONSOLIDATED SEGMENT REPORTING AS OF SEPTEMBER 30, 2005 Segment Germany Segment France Segment Switzerland Segment other countries Reporting Segments Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004 Revenues 70,153 64,936 15,931 12,304 4,390 3,561 6,336 3,801 96,810 84,602 Segment result 26,846 22,839 4,794 2,480 2,126 1, ,825 34,610 29,918 Earnings before taxes 34,610 29,918 Income taxes 12,950 10,544 Net profit for the period 21,660 19,374 Segment Reporting In keeping with the rules on segment reporting, the individual data of the financial statements were broken down into regions ( Primary Segments ). The regional breakdown shows whether the lessees are resident in Germany, France, Switzerland or in other foreign countries. The segment other foreign countries comprises Austria, Italy, the Czech Republic, Spain, The Netherlands, Denmark, Sweden, Belgium and Ireland. Determination of Segment Data The segment earnings comprise the proceeds from the capitalisation of lease receivables, from the sale of leasing items, insurance revenues and interest income. The segment result is determined without consideration of taxes (EBT). The segment other foreign countries as per September 30, 2004 also comprised the market valuation result of 773, since the bond was issued by GRENKE FINANCE Plc. in Ireland.

24 24 SELECTED EXPLANATORY NOTES Accounting Policies Like the consolidated financial statements as of December 31, 2004, GRENKELEASING AG s interim financial reporting as of September 30, 2005 complies with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). The provisions of IAS 34 concerning interim financial reporting have been applied. All interim financial statements of the companies included in the consolidated financial statements of GRENKELEASING AG have been prepared in accordance with uniform accounting policies. As the interim financial statements are based on the consolidated financial statements, we refer to the detailed description of accounting, measurement and consolidation methods in the notes to the consolidated financial statements as of December 31, New Mandatory Accounting Standards Since the end of 2003, the IASB has made various amendments to the existing IFRSs and published new IFRSs and International Financial Reporting Interpretation Committee interpretations (IFRICs) which, unless described otherwise below, are mandatory for companies for all fiscal years beginning on or after January 1, GRENKELEASING AG decided against earlier application, although it was permitted. The relevant amendments/publications are outlined below, followed by their impact, if any, on recognition and measurement in the financial statements of GRENKELEASING AG. On December 17, 2003, the IASB published the revised IAS 32 Financial Instruments Disclosure and Presentation and IAS 39 Financial Instruments - Recognition and Measurement. The Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk was published in March This amendment relates to macro hedging and allows interest rate risk to be hedged at portfolio level. The Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Transition and Initial Recognition of Financial Assets and Liabilities was published in December On December 18, 2003, the IASB published a number of revised accounting standards in the scope of its Improvement Project. These are the 13 standards IAS 1, IAS 2, IAS 8, IAS 10, IAS 16, IAS 17, IAS 21, IAS 24, IAS 27, IAS 28, IAS 31, IAS 33 and IAS 40. On February 19, 2004, the IASB published the standard IFRS 2, Share-based Payment, on accounting for share option plans and similar compensation based on the value of shares. This standard governs the financial reporting of transactions in which the reporting entity grants equity instruments such as its own shares or share options in return for goods or services received. On March 31, 2004, the IASB published the standard IFRS 3, Business Combinations, and the fundamentally revised IAS 36 and IAS 38. The main changes are the abolition of the pooling of interests method and of goodwill amortization in favor of the impairment-only approach. As a rule, adoption of IFRS 3 is compulsory for all business combinations which were closed on or after March 31, In relation to differences arising from transactions closed before this date, IFRS 3 allows the transition to the impairmentonly approach for fiscal years beginning on or after March 31, 2004.

25 25 On March 31, 2004, the IASB also published the standard IFRS 5 Non-current Assets Held for Sale and Discontinued Operations". This standard governs the measurement and presentation of non-current assets held for sale and discontinued operations. On November 11, 2004, the IFRIC published the interpretation, Amendment to the Scope of SIC-12 Consolidation - Special Purpose Entities. This amendment now includes equity compensation plans in the scope of SIC-12. Post-employment benefit plans as well as all other long-term employee benefits are no longer included in the scope of SIC-12. Voluntary Adoption of New Accounting Standards Apart from the IFRSs whose application is mandatory for fiscal year 2005, the IASB has also published other IFRSs and IFRICs which will only become mandatory at a later date. Below, only those standards and interpretations which could be relevant for GRENKELEASING AG are described. Voluntary early application of these standards is explicitly permitted or encouraged. However, GRENKELEASING AG does not make use of this option. On December 2, 2004, the IFRIC published IFRIC 4 Determining whether an Arrangement contains a Lease. IFRIC 4 defines which contracts should be treated as leases even if they are not designated as such. On December 16, 2004, the IASB published amendments to IAS 19 Employee Benefits Actuarial Gains and Losses, Group Plans and Disclosures. This amendment extends the disclosure requirements in the notes and introduces the recognition of actuarial gains and losses in equity as an alternative to the existing methods. fair value measurement in IAS 39 (2004). Other amendments in IAS 32 and IFRS 1 also arose in connection with the revision of the fair value option. Application of IFRIC 4, the amendments to IAS 19 and the fair value option, is mandatory for fiscal years beginning on or after January 1, 2006; earlier application is encouraged. With regard to the amendments to IAS 19, the recognition of actuarial gains and losses outside profit and loss may, however, only be applied in fiscal years ending on or after December 16, The Company does not expect application of these standards and interpretations to affect recognition, measurement and presentation in the consolidated financial statements. On August 18, 2005, the IASB published the standard IFRS 7 Financial Instruments: Disclosures. This Standard supersedes the existing IAS 30 and adopts all provisions regarding disclosures in the notes contained in IAS 32. In this connection, the capital disclosure requirements in IAS 1 were amended or added. This Standard has completely restructured the disclosure requirements for financial instruments. Disclosures on the objectives, methods, risks, security and management processes are now required. The disclosure provisions of IFRS 7 and the modified capital disclosure requirements of IAS 1 shall apply to periods beginning on or after January 1, 2007; earlier application is encouraged. The new provisions of IFRS 7 do not affect measurement at GRENKELEASING, but more detailed disclosures and presentations are required. On June 16, 2005, the IASB published the final fair value option according to IAS 39. These amendments restrict in some cases the previously applicable provisions on full

26 26 Effects of the New Standards on GRENKELEASING AG Under the transitional provisions, any changes arising as a result of the revised standards are applied retrospectively in accordance with IAS 8; this means that prior-year figures had to be adjusted where necessary. However, most of the new standards only have to be applied prospectively. The Improvement Project has led to the following changes in the presentation of the financial statements in relation to IAS 1: As a consequence of the clarification in IAS 32 (2004) of the classification of equity and financial liabilities, minority interests are now accounted for as an equity component, depending on the classification of the capital. Minority interests will therefore in future be shown in the balance sheet as an equity item (IAS 1.68). IAS requires the judgments management has made in the process of applying the entity s accounting policies that have a significant effect on the amounts recognized in the financial statements to be disclosed. Under IAS 1.116, information about assumptions concerning the future and other key sources of estimating uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in future fiscal years has to be disclosed in the notes to the financial statements. The nature and carrying amounts of such assets and liabilities on the balance sheet date must be disclosed. Columns will be added to the statement of changes in equity to allow the separate disclosure of amounts attributable to minority interests and the parent (IAS 1.96). The reconciliation of the consolidated profit or loss net of minority interests is no longer required. Instead, the shares in profit attributable to minority interests and the parent are disclosed on the face of the income statement (IAS 1.82) The net profit or loss for the period will be used as the basis for the cash flow statement instead of the net profit or loss for the period after minority interests.

27 27 Following the amendment to IAS 17, the initial direct costs must be recognized in measuring operating and finance leases. With operating leases, the lessor has to recognize initial direct costs and the cost of purchase of the leased asset as an asset and amortize them to the expected residual value over the useful life or the lease term. For a finance lease, the initial direct costs are considered in determining the present value, thereby increasing the net investment. Overheads are not included in initial direct costs as they are not directly attributable to a lease. This was an option allowed by the original IAS 17 which has now been made compulsory. The application of the new IAS 17 will not have any implications for GRENKELEASING AG as the option had already been exercised in prior years. GRENKELEASING AG does not offer land or property leases, which is why the amendments made in relation to such leases do not affect the financial statements. The amendment of IAS 21 relevant to GRENKELEASING AG concerns currency translation of goodwill arising on the acquisition of foreign operations. This now has to be disclosed in the functional currency of the foreign operation and shall be translated at the closing rate. This affects GRENKELEASING AG in relation to the goodwill arising on the acquisition of EKOMA s.r.o. (since September 26, 2005, GRENKELEASING s.r.o.), Prague, Czech Republic. The two other goodwill items relate to acquisitions of companies whose functional currency is the euro, which means that there are no changes as a result of the amendment to IAS 21. The goodwill arising from the acquisition of EKOMA s.r.o. (since September 26, 2005, GRENKELEASING s.r.o.), Prague, Czech Republic, was fixed as of December 31, 2004 in the local currency (CZK) and will be rolled forward in the same currency. The goodwill will therefore be translated at the closing rate on each balance sheet date, the difference being recognized in equity as a currency translation adjustment. As of September 30, 2005, goodwill increased by EUR 14k directly in equity. IAS 32 deals with the presentation of financial instruments and the related disclosure requirements. The relevant disclosures for GRENKELEASING AG were included in the financial statements as of December 31, Changes in the current year are described separately below. The disclosure requirements for the notes were extended in IAS 33. In addition to the number of shares outstanding, the number of dilutive potential ordinary shares and contingently issuable dilutive ordinary shares now have to be disclosed. These disclosures are also required for the comparative period. The revised IAS 39 provides for a further classification of financial assets. It also determines that all changes in the fair value of available-for-sale financial assets now have to be recognized in a separate item of equity until they are is derecognized or an impairment loss is charged. On disposal, the cumulative gain or loss is transferred to net profit or loss. The option was introduced of allowing an entity to measure a financial asset or financial liability that was originally carried at amortized cost to be measured at fair value through profit or loss (fair value option). Furthermore, the hedge accounting requirements were adapted. These changes do not directly affect GRENKELEASING AG because all of its securities were previously designated as held for trading. GRENKELEASING AG does not apply the fair value option or the amended/additional hedge accounting rules.

28 28 For the Company, the first-time mandatory application of IFRS 2 entails only extended disclosures in the notes as none of its employee stock option programs were issued or altered after November 7, 2002; these disclosures were already included in the financial statements as of December 31, The effects of the first-time application of IFRS 3 in conjunction with the amendments to IAS 36 and IAS 38 on GRENKELEASING AG are limited to the application of the impairment-only approach. In accordance with the transitional provision of IFRS 3.79, amortization of the goodwill arising from the acquisition of an operation prior to March 31, 2004 will be discontinued as of December 31, The net carrying amounts of goodwill are now classified as a new acquisition cost and are no longer amortized as of January 1, This resulted in a EUR 220k increase in earnings compared with the prior year. Under IAS 36.90, goodwill should be tested for impairment annually, regardless of whether or not there is evidence of an impairment. GRENKELEASING AG performs the compulsory annual impairment test of its goodwill on the basis of its semiannual financial statements. The other IFRSs revised as part of the Improvement Project or otherwise newly issued or amended which have not been explicitly mentioned above have no effect on the financial statements of GRENKELEASING AG because the relevant accounting alternatives were already permitted and applied under the original versions of the IFRSs concerned or the effects of any changes in relation to measurement were individually and in absolute terms immaterial for the financial statements, or the pertinent provisions are not currently relevant for the financial statements of GRENKELEASING AG. Apart from the adjustments made as a result of the application of new accounting standards, the following change in presentation was made to improve the clarity and transparency of the financial statements: Due to their immateriality for the financial statements, inventories, which were previously shown under a separate balance sheet item are now presented in the item other current assets. The prior year s disclosure was adjusted accordingly. As of September 30, 2005, the Company discloses a provision for pensions under non-current liabilities. First-time recognition was necessitated by a change in legislation in Switzerland which introduced an obligation for companies to make additional contributions to their compulsory funded retirement benefit plans as from January 1, However, this provision was not disclosed separately on grounds of immateriality. As of January 1, 2005, the present value of the obligation under the defined benefit plan amounted to EUR 196k (CHF 302k). Less the fair value of the plan assets of EUR 204k (CHF 315k), the notional carrying amount in the opening balance sheet would have been EUR 8k (CHF 13k).

29 29 As this amount is of secondary importance to the net assets, financial position and results of operations of GRENKELEASING AG, no retroactive adjustment was made and the amount to be recognized in the opening balance sheet was recognized in this period. The calculation according to the expert opinion by Expertisa AG is based on the following actuarial assumptions: Discount rate: 3,5 % Estimated future salary increases: 3,0 % Estimated future pension increases: 0,0 % Expected return on plan assets: 2,0 % On the basis of the actuarial report, the following income and expense items were recognized until September 30, 2005: Consideration of estimated residual values at the end of the lease term in determining the present value of lease receivables Recognition of leased assets for sale at estimated residual values Non-performing lease receivables are carried at nominal value less appropriate bad debt allowances. The amounts of bad debt allowances are determined using percentages and processing categories. Percentages are calculated using statistical methods. They are reviewed once a year for validity. Processing statuses are grouped together in processing categories set up with a view to risk. The following table illustrates the processing categories: Service cost: TEUR 17 (TCHF 26) Interest expense: TEUR 5 (TCHF 8) Income from interest on plan assets: TEUR 3 (TCHF 5) The liability disclosed in the balance sheet totaled EUR 21k (CHF 33k) as of September 30, This amount comprises a present value of the obligation (DBO) of EUR 210k (CHF 327k), a fair value of the plan assets of EUR 189k (CHF 294k) and an actuarial loss of EUR 11k (CHF 17k). The actuarial loss was recognized in equity in a separate item under the capital reserve in accordance with the revised IAS 19. Use of Judgment and Main Sources of Estimating Uncertainties The main estimating uncertainties and the associated disclosure requirements are in the following areas: Category Description 0 Current contract not in arrears 1 Current contract in arrears 2 Terminated contract with serviced installment 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 6 Statement in lieu of oath (applied for or issued) 7 Derecognized 8 Being settled (not terminated) 9 Discharged (completely paid) A decrease in value is assumed for categories 2 to 7 as the contracts have been terminated due to defaults in payment. The allowance rates range between 5% and 100%. Measurement of allowances on non-performing lease receivables on the basis of the recoverability rate