GRENKELEASING AG Group. Quarterly Financial Report as per March 31, 2011

Transcription

1 GRENKELEASING AG Group Quarterly Financial Report as per March 31, 2011

2 GRENKE GROUP 1 KEY FIGURES 2 LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS 4 THE GRENKELEASING AG SHARE 5 INTERIM MANAGEMENT REPORT 7 The Group s Growth Strategy 7 Economic Environment 9 Report on the Results of Operations 9 Report on the Financial Position and Net Assets 11 Report on Forecasts and the Outlook for the Group 12 INTERIM FINANCIAL STATEMENTS 15 SELECTED EXPLANATORY NOTES 24 CALENDAR OF EVENTS 2011 AND CONTACT 31

3 GRENKE GROUP 2 KEY FIGURES GRENKE GROUP Jan. 1 to March 31, 2011 Change (%) Jan. 1 to March 31, 2010 Units New business GRENKE Group incl. franchise partners* 191, ,148 EURk of which Germany 74, ,549 EURk of which International 102, ,468 EURk of which Franchise international 14, ,131 EURk Leasing business 178, ,045 EURk of which Germany 63, ,446 EURk of which International 102, ,468 EURk of which Franchise international 12, ,131 EURk Factoring 13, ,103 EURk of which Germany 11, ,103 EURk of which Franchise international (CH) 1,634 n. a. 0 EURk Contribution margin 2 (CM2) of New business GRENKE Group incl. franchise partners* 26, ,293 EURk of which Germany 8, ,864 EURk of which International 15, ,594 EURk of which Franchise international 2, ,835 EURk Leasing business 25, ,142 EURk of which Germany 8, ,713 EURk of which International 15, ,594 EURk of which Franchise international 2, ,835 EURk Further Information Leasing business Number of new contracts 22, ,311 units Share of IT products in the lease portfolio percent Share of corporate customers in the lease portfolio percent Mean acquisition value EURk Mean term of contract months Volume of leased assets 1, ,745 EURm Number of current contracts 258, ,172 units GRENKE BANK Deposits per March , ,666 EURk Business start-up financing volume per March n. a. 0 EURk * incl. Factoring

4 GRENKE GROUP 3 KEY FIGURES GRENKE CONSOLIDATED GROUP Jan. 1 to March 31, 2011 Change (%) Jan. 1 to March 31, 2010 Units Key figures income statement Net interest income 22, ,632 EURk Settlement of claims and risk provisioning 8, ,486 EURk Profit from insurance business 5, ,921 EURk Profit from new business 7, ,124 EURk Profit from disposals (income exceeding the calculated residual value) 1, EURk Other operating income EURk Costs of new contracts 4, ,024 EURk Costs of current contracts 1, ,414 EURk Project costs and basic distribution costs 4, ,746 EURk Management costs 4, ,222 EURk Other costs 2, EURk Profit from operating business 11, ,937 EURk Other interest result EURk Income/expenses from market valuation of financial instruments EURk EBT (Earnings before taxes) 11, ,054 EURk Net profit for the period 8, ,776 EURk Earnings per share (according to IFRS) EUR Further information Dividend (2011 planned distribution) EUR Embedded value of the leasing contract portfolio (incl. equity before taxes) EURm Embedded value of the leasing contract portfolio (incl. equity after taxes) EURm Cost/income ratio percent Return on equity (ROE) after taxes percent Average number of employees persons

5 GRENKE GROUP 4 LETTER TO SHAREHOLDERS FROM THE BOARD OF DIRECTORS Dear Shareholders, Ladies and Gentlemen, With the effects of the international financial crisis now fully surmounted, we saw a strong start to fiscal year Our expansion strategy is continuing in full swing: in the first quarter of 2011 the GRENKE Group including franchise partners increased its new business by almost 28 percent. This means that, without compromising our conservative risk orientation, we seamlessly matched our high growth in the previous year. At 14.3 percent, the contribution margin 2 for new business in the GRENKE Group s leasing business was back at the normal profitability level before the crisis. Our announcement that this systematic focus on growth would quickly translate into rising income was also substantiated. We are continuing to take advantage of the differing prospects in different European countries in a targeted way and are focusing primarily on regional target markets with lower-than-average competitive intensity. Our expansion throughout Europe continued to bear fruit, with international business once again accounting for the majority of the Group s new business (61.0 percent). At the same time, business within Germany has also been developing positively for several quarters despite stronger competition here. In the last three-month period, new business in Germany was expanded by 19.8 percent. We are generating this growth with continued sound capital resources. At 17.2 percent, the GRENKE Group s equity ratio as at 31 March 2011 was at the level at year-end 2010 and therefore is still higher than our long-term target level of 16 percent. We are thus securing our very good reputation on the debt markets. To finance our growth, we again made use of our wide range of refinancing sources in the reporting quarter. A particularly noteworthy recent measure was that we succeeded in refinancing French lease receivables trough an ABS transaction. In addition, the majority of repayments still due after the end of the reporting quarter in fiscal year 2011 have already been refinanced. There are therefore no further major refinancing measures pending for the rest of the fiscal year. Overall, a continued high level of growth can be expected over the remaining course of This should have a positive impact on earnings, especially since the high-margin new business of the previous two years is stimulating consolidated earnings more strongly as the term of these agreements progresses. Although our systematic expansion in Europe will result in increasing related expenses in 2011, too, this increase will be more moderate than the growth in our income and we are therefore maintaining our forecast of net profit of EUR 33 million to EUR 36 million in the current fiscal year. Baden-Baden, May 2011 Wolfgang Grenke Chairman of the Board of Directors

6 GRENKE GROUP 5 THE GRENKELEASING AG SHARE The GRENKELEASING AG share outperformed the market in the first three months of fiscal year Starting the year with a price on Xetra of EUR 38.65, the share rose by 9.3 percent to end the quarter at EUR on March 31. In the same period, the SDAX index fell by 2.1 percent since the beginning of the year. The DAXsector Financial Services index, which tracks the German financial sector in the Prime Standard, also decreased slightly by 0.5 percent. The GRENKELEASING AG share continued to perform positively from mid-february on, whilst the two benchmark indices have since entered a consolidation phase which continued after the end of the quarter until the current date. Another cause was the comparatively minor adjustment following the natural catastrophe and nuclear reactor disaster in Japan, which had a greater impact on both the SDAX and the sector index. Following our announcement on new business for the first quarter, the analysts maintained their predominantly positive assessments. In mid-april 2011, the Reuters Consensus Estimates showed four buy recommendations (including two strong buy ) and three recommendations to hold the GRENKELEASING AG share. There were no recommendations to sell the share. On average, the analysts set a target price of EUR (median: EUR 44.00).

7 GRENKE GROUP 6 DEVELOPMENT OF THE SHARE PRICE AND DAILY TURNOVER Development of the Share Price and Daily Turnover Source: Reuters 115% EUR 110% GRENKELEASING AG EUR DAXsector Financial Services price index 105% EUR 100% EUR 95% SDAX priceindex EUR 90% EUR 85% EUR 80% EUR 30,000 25,000 20,000 15,000 Number of shares traded (XETRA and regional exchanges) 10,000 5,000 0 Jan. 11 Feb. 11 March 11 April 11

8 GRENKE GROUP 7 INTERIM MANAGEMENT REPORT GROWTH STRATEGY GRENKELEASING is a growth company. This was highlighted impressively once again by the development of the GRENKELEASING AG Group (below: GRENKE Group or Group ) in the global financial markets crisis and the following recession. After we quickly returned to very high growth rates in 2010 already and this development persisted in the reporting quarter, the effects of the financial markets crisis and the recession are fully surmounted. In 2010 more than half of the Group s new business i.e. the sum of the cost of newly acquired leased assets and the factoring volume was generated in our international markets, a trend that likewise continued in the first quarter of We are systematically expanding the market presence we have now established in many countries. In the reporting quarter, we expanded the network of our locations with cell divisions in Italy (Brescia) and in Ireland (Cork). In addition, our franchise partner in Spain (Madrid) opened another location in Malaga. In April 2011, another cell division took place within the Group in France (Grenoble). We are also continuing to work on our market presence in Turkey. As a result, continued strong and profitable growth can be expected in the future, too. Alongside regional growth, we are also further broadening our product range and our range of financing solutions on an ongoing basis. Here, our focus is on indirect and online sales channels to commercial customers and on automated contract settlement. With this range we can also offer small contract volumes at attractive conditions for customers, while still generating attractive margins for GRENKE. We take care to ensure a broad diversification of our portfolio across different customers and sectors and small average financing volumes in order to limit risks. We do not compromise on our strategic targets for capital resources and profitability. In addition to purchasing lower-volume receivables (factoring) and car rental, since 2010 our new products include the following two new offers from GRENKE BANK AG. In March 2010 we established a cooperation agreement between NRW.BANK in Dusseldorf, GRENKELEASING AG and GRENKE BANK AG. Thanks to this cooperation agreement, small and medium-sized enterprises and freelance professionals in North Rhine-Westphalia will be able to obtain development funds if they finance new purchases of operating equipment through leases. This model has proved highly successful in just a very short time, with 1,805 contracts generated by the end of 2010 and an additional 447 in the reporting quarter. Also in March 2011, GRENKE BANK AG could look back at its first year of accreditation by KfW-Mittelstandsbank for its business start-up programme KfW-StartGeld. The innovative Internet platform developed by GRENKE BANK AG on the basis of our many years of extensive experience in the field of IT-based contract settlement offers entrepreneurs quick and simple access to KfW-StartGeld and is developing well. New business start-ups, self-employed professionals and small companies that have existed for no more than three years can receive support of up to EUR 50,000 per inquiry from KfW- Mittelstandsbank. The volume of business start-up financing transferred in the reporting quarter amounted to EUR 0.1 million after EUR 0.3 million in 2010 as a whole.

9 GRENKE GROUP 8 Expansion in Europe Shares in new business of the GRENKE Group incl. franchise partners as per March 31, 2011 France 21.4% Switzerland 2.1% Italy 13.3% Germany 39.0% (incl. franchise partner, car leasing) Spain 2.8% (incl. franchise partner) United Kingdom4.6% Poland 1.3% The Netherlands 1.9% Other countries 10.1% incl. franchise partners* Portugal 3.5% (franchise partner) * Austria, Belgium, Czech Republic, Denmark, Finland, Hungary, Ireland, Luxembourg, Norway, Romania, Slovakia, Slovenia, Sweden Growth rates leasing division 3M 2011 (compared to 3M 2011) 50% % 30% % % 7.4 0% % FR CH IT ES incl. Franchise Madrid UK PL NL PT (Franchise) GRENKE Group International

10 GRENKE GROUP 9 ECONOMIC ENVIRONMENT The economic development seen in the final quarter of 2010 continued in the first quarter of An encouraging development in Germany contrasted with a more mixed picture in the rest of Europe. Germany is still experiencing an upturn, with rising employment stimulating both domestic demand and the robust investing activities by companies, according to Deutsche Bundesbank in its monthly report from March At the same time, exports are running at full steam. German companies are accordingly highly confident in the economic survey conducted by the ifo Institute in March and rate their current business position better than previously. The Consumer Climate Index by market research company GfK rose again in March 2011 a trend that has persisted since mid The indicators for April and thus for the second quarter suggest that consumers and companies alike will continue to assess their position at a high level. The natural catastrophe and nuclear reactor disaster in Japan have not yet had any significant impact on expectations. In Europe, however, the high level of government debt in many countries and the resulting enforced public-sector austerity programmes and budget cuts are having a negative impact. These measures are reflected in generally weak domestic demand, particularly in private consumption, due to the continued high unemployment rates in these countries. REPORT ON THE RESULTS OF OPERATIONS The return to our previous growth strategy after the end of the financial market crisis and the related concentration on increasing new business were reflected in a sharp rise in earnings in the first quarter of In fiscal year 2010 the GRENKE Group increased its new leasing business by 43.3 percent to EUR million. Our announcement that this systematic focus on growth would quickly translate into rising income was thus substantiated. In fact, we can report increasing contributions from almost all income components. In the reporting quarter, net interest income rose by 18.9 percent year-on-year from EUR 18.6 million to EUR 22.2 million. This strong increase is due firstly to the contribution margin 2 for new business in 2009, which had been increased significantly in order to take into consideration the exceptional uncertainty of 2009 and is now reflected fully in net interest income. Secondly, the strong growth in 2010 also increased income where we re-adjusted the contribution margin 2 in order to stimulate growth. The development from quarter to quarter demonstrates the success of this strategy: the first quarter of 2011 is the fifth consecutive quarter with rising net interest income. The negative impact from settlement of claims and risk provisioning fell by 14.1 percent year-on-year to EUR 8.1 million. Irrespective of the usual fluctuations during the quarter, this decrease also shows that the effects of the financial crisis have been surmounted. At 1.7 percent, the loss rate has decreased significantly from the cyclical high point of the last recession. Profit from insurance business amounted to EUR 5.7 million in the first quarter of 2011 and was thus approximately at the previous year s level of EUR 5.9 million. Profit from the rapidly growing new business increased considerably by 20.7 percent to EUR 7.4 million after EUR 6.1 million. Profit from disposals, which often fluctuates considerably from quarter to quarter, climbed to EUR 1.2 million in the reporting quarter after EUR 0.4 million in the previous year. Total operating income therefore increased by 31.1 percent to EUR 28.4 million after EUR 21.6 million in the same quarter of the previous year.

11 GRENKE GROUP 10 Operating expenses reflected the Group s strong growth. For example, selling and administrative expenses climbed by a total of 30.7 percent to EUR 7.3 million after EUR 5.6 million in the previous year. However, the administrative expenses included in this amount saw a significantly lower increase of less than 10 percent. The increase in other operating expenses also resulted to a large extent from non-cash expenses from currency effects. Overall, the operating result in the opening quarter of 2011 grew by an impressive 41.8 percent to EUR 11.3 million after EUR 7.9 million in the previous year. This figure is higher than the result for the first quarter 2009 (EUR 10.5 million), when the effects of the financial markets crisis had not yet had much impact. The net profit for the reporting period increased even further due to a lower tax rate including deferred taxes. It rose by 45.2 percent to EUR 8.4 million after EUR 5.8 million in the previous year. Report on the development of the segments The Group divides its activities into the following segments: Leasing Business, Banking Business and Factoring Business. In managing the Leasing Business, the Group essentially focuses on the individual countries and regions. Thus, the Leasing Business segment represents a combination of several operating segments defined by countries or groups of countries and making up the reportable Leasing Business segment. The Banking Business segment comprises the activities of GRENKE BANK AG, whose business focuses primarily on German customers. The Factoring segment includes the activities of GRENKEFACTORING GmbH, which performs traditional factoring services in Germany as a financial services provider. With operating segment income of EUR 27.1 million after EUR 21.0 million in the previous year and a segment result of EUR 10.4 million after EUR 8.5 million, Leasing Business is still the GRENKE Group s main source of income, while the Banking and Factoring Business segments are relatively new activities that are still in the development stage and are also much less extensive. The results for these segments are therefore lower. GRENKE BANK AG generated a segment result of EUR 0.8 million in the reporting quarter after a loss of EUR 0.4 million, while Factoring Business was just above the breakeven point after a loss of EUR 0.2 million in the previous year. The comments on the Group s earnings performance presented in the previous chapter (Report on the results of operations) therefore also apply to the Leasing Business segment to a significant extent. The earnings contributions in Leasing Business vary depending on the individual regions. The growth rates in wellestablished markets are also naturally lower than in markets where we are still in the development phase. When considering the Germany segment it should be noted that part of the administrative functions of the GRENKE Group are located at headquarters in Baden-Baden and the costs of these are therefore incurred in this segment. This also includes costs for international expansion. In the reporting quarter, operating segment income of EUR 10.7 million was generated in Germany after EUR 9.1 million in the previous year. The segment result declined from EUR 2.5 million to EUR 1.5 million, primarily due to the reasons specified above. In addition, we have had very high market penetration on our domestic market of Germany for many years, meaning that the prospects for further growth are not as strong in comparison. The same generally applies in Switzerland, although high growth rates were generated here in the reporting quarter, with operating segment income rising by 51.4 percent from EUR 1.0 million to EUR 1.5 million and the segment result more than doubling from EUR 0.4 million to EUR 0.9 million. Our growth regions, above all France and Italy, produced particularly high earnings and growth contributions. We are continuously increasing our market penetration in France, the Group s largest international market, and in Italy and are generating correspondingly significant growth in both countries. This trend continued in the reporting quarter: in France, operating segment income increased by 23.0 percent to EUR 5.3 million after EUR 4.3 million and the segment result rose by 35.7 percent year-on-year to EUR 3.3 million after EUR 2.4 million. In

12 GRENKE GROUP 11 Italy, operating income was up 31.9 percent at EUR 3.7 million after EUR 2.8 million and the segment result climbed by 23.3 percent to EUR 2.3 million after EUR 1.8 million. Our other countries that comprise the Others region also now contribute significantly as a whole to consolidated earnings. Their operating segment income increased by 56.4 percent to EUR 5.9 million in the first quarter of 2011 after EUR 3.8 million in the previous year and their segment result was up 96.7 percent at EUR 2.5 million after EUR 1.3 million. With regard to the development of new business, the considerably stronger international growth continued in the reporting quarter, although Germany also saw double-digit growth again. New business in Germany rose, due partly to the economic environment, by 14.3 percent to EUR 63.4 million after EUR 55.4 million in the previous year. On the international markets, we increased new business particularly substantially by 32.4 percent to EUR million after EUR 77.5 million. Our largest international market, France, increased its volume by 18.3 percent to EUR 41.1 million in the reporting quarter after EUR 34.7 million. Italy and the UK, up by percent (EUR 25.6 million after EUR 12.6 million) and 31.3 percent (EUR 8.8 million after EUR 6.7 million) respectively, were our strongest growth markets. We see further considerable growth potential in both countries for the future. Following the cell division in Brescia, we are now represented by six locations in Italy, with three cell divisions taking place in the last twelve months alone. In the Factoring Business segment, the volume of new business of EUR 13.2 million was considerably higher than the previous year s figure of EUR 7.1 million. However, major fluctuations are not uncommon here for instance, in the first quarter of 2009, a volume of EUR 14.0 million was achieved. We are still not yet pressing ahead with this business, but instead are working on joint solutions for our factoring and banking subsidiaries to be launched in future. REPORT ON THE FINANCIAL POSITION AND NET ASSETS As a result of the expansion of our new business in the first quarter of 2011, lease receivables climbed by 3.7 percent to EUR 1,377.6 million after EUR 1,328.2 million at the end of fiscal year Overall, total assets increased roughly in line with the increase in lease receivables: by 2.9 percent to EUR 1,718.9 million after EUR 1,671.0 million at the end of fiscal year Despite the considerable growth in new business, the equity ratio as at March 31, 2011 remained at the high level as at the balance sheet date in At the end of the reporting quarter, the equity ratio was unchanged at 17.2 percent. In absolute terms, equity increased by EUR 8.2 million or 2.8 percent to EUR million. The equity ratio is still higher than our target level of 16 percent. To finance the lease receivables, we made use of our wide range of refinancing sources in the reporting quarter. We also employed available cash and cash equivalents in some cases, which consequently decreased to EUR 68.0 million after EUR 78.3 million at the end of fiscal year In addition to this, we used deposit business, which rose by EUR 11.7 million to EUR million. Liabilities from refinancing increased by EUR 32.5 million to EUR 1,140.0 million. Cash flow from operating activities increased significantly to EUR 8.5 million in the reporting quarter due to the earnings situation and as a result of borrowing to refinance lease receivables, after negative cash flow of EUR 24.4 million in the first quarter This significant change in other assets in comparison with the previous year (EUR 15.3 million after EUR 19.3 million) is due to the following factors: In the first quarter of 2010, the loan from an ABS transaction was settled

13 GRENKE GROUP 12 as against the comparison reporting date at the time, i.e (EUR 17.7 million), whilst loans from another ABS transaction were borrowed in the reporting quarter (EUR 12.0 million). After taxes and the still immaterial net interest, net cash flow from operating activities amounted to EUR 9.1 million after EUR 28.5 million in the same quarter of the previous year. Cash flow from investing activities remained low in the reporting quarter at EUR 1.2 million after EUR 0.2 million. Repayment of bank liabilities totalling EUR 0.3 million led to a corresponding cash outflow from financing activities, whereas in the past year there had been an inflow of EUR 7.2 million due to receiving development funding from NRW.Bank. In total, cash flows therefore amounted to EUR 10.6 million in the first quarter of 2011, compared with EUR 21.6 million in the previous year. The refinancing measures in the first quarter of 2011 included in particular the fact that in January we succeeded in selling French lease receivables for the first time to the special-purpose entity Arabella Finance Limited initiated by UniCredit Bank AG last year. The ABCP programme with Arabella has a volume of EUR 100 million. In addition, we issued a new promissory note loan with a volume of EUR 10 million in February 2011 and, in March, a new bond with a volume of EUR 75 million with a lower financing margin than in In the same month, promissory note loans worth EUR 38 million that had matured were repaid in full. The vast majority of repayments still due after the end of the reporting quarter in fiscal year 2011 have already been refinanced. There are therefore no further major refinancing measures pending for the remainder of this fiscal year. REPORT ON FORECASTS AND THE OUTLOOK FOR THE GROUP Opportunities and Risks The following opportunities and risks report relates to both the Group and the segments. The risks for the GRENKE Group described in the 2010 annual report are still relevant. No new risks have arisen. In general, we see considerably more opportunities for our business development than the usual risks related to our business model. For instance, demand for lease finance measured in terms of the number of inquiries received and the average value per lease has not only remained consistently high but is even continuing to increase. This allows us to strongly increase new business while also maintaining attractive margins and our well-developed risk limitation policy. Additional locations, branches and franchise partners will also contribute to continued high growth in the future. The availability of refinancing funds is not a limiting factor for our growth. The capital markets provide sufficient funds for issuers of good standing. We successfully made use of these possibilities in the reporting quarter as part of our currently only limited refinancing needs. Access to banking deposits at GRENKE BANK AG offers us an additional, very attractive source of refinancing that we employ flexibly. There are risks to income development arising in particular from the growth in losses due to the recession. The development of losses traditionally shows a certain degree of fluctuation during the year. However, the general development of losses confirms our expectations that the loss rate has passed its high point and is likely to decrease further on the whole over the course of 2011 as a result of the improving macroeconomic conditions. The risk of rising interest rates remains significant for the earnings performance. Our assessment last year that, in light of the extreme global increase in liquidity, rising inflation rate expectations as a result of a more favourable economic

14 GRENKE GROUP 13 development and therefore also increasing interest rates were to be expected, has since been confirmed. However, we consider the recent development as a normalisation that does not lead us to infer any increased risks for our refinancing needs. As mentioned above, our total refinancing needs for the current fiscal year are in any case only very limited. In fact, there are no further major refinancing measures pending for the rest of the year. With regard to refinancing lease receivables, the Group is subject to interest rate risks to only a limited extent as the refinancing if subject to a floating rate at all is hedged using derivatives. In new business, however, risks may arise as a result of changes in interest rates and spreads. The time lag with which we pass on interest rate changes to customers can therefore have a temporary impact on the profitability of new business. Overall economic outlook In their spring 2011 forecasts, the German federal government and German economic research institutes anticipate higher real economic growth in Germany than previously expected. The German federal government raised its growth expectation for real gross domestic product in 2011 to 2.6 percent, and the research institutes forecasts are even more optimistic at 2.8 percent. The main cause of this greater optimism is the increasing domestic impetus. Private consumption, driven by continued rising employment, is expected to grow by 1.2 percent according to the research institutes or by 1.3 percent according to the German federal government. This would mean that consumers contribution to growth in 2011 would be three times that of the previous year. Companies are expected to continue equipment investments with robust double-digit growth (10.5 percent and 10.7 percent respectively) at roughly the same level as in the previous year. Although export momentum, which was still very strong in 2010, will slow somewhat, the research institutes and government still expect persistent high export growth of 9.8 percent and 7.5 percent respectively. In our view, the recent interest rate measures taken by the European Central Bank represent a first step towards normalisation of the economic interest rate environment and will most likely affect the further economic development only slightly. Effective April 13, 2011, the ECB raised the interest rate for main refinancing transactions of the euro system by 25 basis points to 1.25 percent, the interest rate for the marginal lending facility by 25 basis points to 2.00 percent, and the interest rate for the deposits facility by 25 basis points to 0.50 percent. Refinancing shortages for the GRENKE Group as a result of these measures are not expected. According to the International Monetary Fund (IMF), the global economy will continue to be overshadowed by numerous risks in the current year. These include the economic effects of the natural and nuclear disaster in Japan, which cannot yet be foreseen; the risks of overheating in numerous emerging economies, particularly China; the undiminished debt issues in a large number of both industrialised nations and emerging and developing economies; the persistent global imbalances; and in particular the sharp increase in commodity prices and the associated inflation risks. However, the IMF still only expects a slight decline in global economic growth from 5.0 percent in 2010 to 4.4 percent in the current year. As was the case in 2010, developing and emerging economies will see much stronger growth (6.5 percent) than industrialised nations (2.4 percent). The IMF is also much more optimistic for Germany than for Europe as a whole. Whilst for Germany it anticipates growth of 2.5 percent in the real GDP, for the euro zone it forecasts significantly lower growth of only 1.6 percent, due in particular to the continued debt issues in certain European countries and the associated public-sector austerity budgets.

15 GRENKE GROUP 14 Expected business development In the first quarter of fiscal year 2011, we generated growth in new business of 27.8 percent to EUR million in the GRENKE Group including franchise partners. In the same quarter of the previous year, there had been growth of 26.6 percent to EUR million. The GRENKE Group has therefore also seamlessly continued the very positive growth trend of the closing quarter of Our confidence expressed in the 2010 annual report of generating growth of over 20 percent in 2011 was more than confirmed in the first quarter of the year. The contribution margin 2 for new business in the GRENKE Group was EUR 26.0 million and, measured by the contribution margin 2 for leasing business of 14.3 percent, reached the normal profitability of the pre-crisis level. We are continuing to take advantage of the differing prospects of the different European countries in a targeted way and are focusing primarily on the regional target markets where competitive intensity is lower than average. The continued high growth expected during 2011 not least for this reason should continue to positively impact net interest income. This also still applies to the previous years high-margin new business, which will stimulate consolidated earnings more strongly as the term of these agreements progresses. With regard to the loss rate, we anticipate a downwards trend over the course of the year, as the highly robust economic development in Germany should lead to considerably fewer insolvencies in industry. At the same time, these positive earnings prospects will be countered by higher expenses, particularly selling and administrative expenses, in 2011 too as a result of our systematic expansion in Europe. However, since this increase will be more moderate, we are maintaining our forecast of net profit of EUR 33 million to EUR 36 million in the current fiscal year.

16 GRENKE GROUP 15 CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2011 EURk Jan. 1 to March 31, 2011 Jan. 1 to March 31, 2010 Interest and other income from financing business 34,197 29,287 Expenses from interest on refinancing and on deposit business 12,037 10,655 Net interest income 22,160 18,632 Settlement of claims and risk provision 8,145 9,486 Net interest income after settlement of claims and risk provision 14,015 9,146 Profit from insurance business 5,709 5,921 Profit from new business 7,391 6,124 Profit from disposal 1, Income from operating business 28,355 21,635 Personnel expenses 8,638 7,371 Depreciation Selling and administration expenses (excl. personnel expenses) 7,267 5,562 Other operating expenses 1, Other operating income Profit/loss from operating business 11,252 7,937 Expenses/income from the fair value measurement Other interest income Other interest expenses Earnings before taxes (EBT) 11,192 8,054 Income taxes 5,698 3,516 Deferred taxes 2,892 1,238 Net profit for the period 8,386 5,776 Earnings per share (basic) in EUR Earnings per share (diluted) in EUR Average shares outstanding (basic) 13,684,099 13,684,099 Average shares outstanding (diluted) 13,684,099 13,684,099

17 GRENKE GROUP 16 STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2011 EURk Jan. 1 to March 31, 2011 Jan. 1 to March 31, 2010 Net profit for the period 8,386 5,776 Allocation/reduction of the hedging reserve (before taxes) Income taxes Allocation/reduction of the hedging reserve (after taxes) Allocation/reduction of reserve for actuarial profits and losses (before taxes) Income taxes 8 13 Allocation/reduction of reserve for actuarial profits and losses (after taxes) Change of currency translations 687 1,267 Other comprehensive income for the period 206 1,639 Total comprehensive income 8,180 7,415

18 GRENKE GROUP 17 CONSOLIDATED BALANCE SHEET AS PER MARCH 31, 2011 EURk March 31, 2011 Dec. 31, 2010 Assets Current Assets Cash 67,992 78,297 Financial instruments with positive market value (short term portion) 49 1,255 Lease receivables 517, ,325 Other current financial assets 81,327 77,434 Trade receivables 4,874 3,845 Lease assets for sale 8,044 8,159 Tax receivables 2, Other current assets 60,222 54,913 Total current assets 742, ,800 Non-current assets Lease receivables 859, ,899 Financial instruments with positive market value (long term portion) 1,423 1,115 Other non-current financial assets 45,573 43,831 Property, plant and equipment 36,368 35,645 Goodwill 12,923 12,985 Other intangible assets 1,555 1,660 Deferred tax assets 18,126 22,575 Other non-current assets Total non-current assets 976, ,193 Total assets 1,718,897 1,670,993

19 GRENKE GROUP 18 CONSOLIDATED BALANCE SHEET AS PER MARCH 31, 2011 EURk March 31, 2011 Dec. 31, 2010 Liabilities and equity Liabilities Current liabilities Refinancing liabilities 255, ,582 Liabilities from deposit business 91,013 87,624 Short-term debt Financial instruments with negative market value (short term portion) 2,028 5,449 Trade payables 13,864 6,194 Tax liabilities 4,925 14,795 Deferred liabilities 4,897 4,713 Provisions 3,367 3,452 Other current liabilities 6,225 7,411 Deferred lease payments 75,762 67,300 Total current liabilities 458, ,204 Non-current liabilities Refinancing liabilities 884, ,961 Liabilities from deposit business 42,898 34,615 Long term debt 2,750 3,094 Financial instruments with negative market value (long term portion) 3,158 1,583 Deferred tax liabilities 28,894 36,361 Pensions 1,557 1,566 Other non-current liabilities Total non-current liabilities 964, ,016 Equity Capital stock 17,491 17,491 Capital reserve 60,166 60,166 Retained earnings 114,897 89,054 Other components of equity 969 1,175 Balance sheet profit 102, ,887 Total equity 295, ,773 Total liabilities and equity 1,718,897 1,670,993

20 GRENKE GROUP 19 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2011 EURk Jan. 1 to March 31, 2011 Jan. 1 to March 31, 2010 Earnings before taxes 11,192 8,053 Non-cash items contained in net profit for the period and reconciliation to cash flow from operating activities +/ Amortisation/depreciation /+ Profit/loss from the disposals of equipment and intangible assets 3 2 /+ Investment income /+ Non-cash changes in equity 293 1,773 +/ Increase/decrease deferred liabilities, provisions and pensions 89 4,442 Additions of lease receivables 182, ,798 + Payments by lessees 137, ,924 + Disposals/reclassifications of lease receivables at residual carrying values 29,729 26,296 Interest and other income from financing business 34,197 29,287 Increase in other receivables from lessees 2,574 2,511 +/ Currency translation differences 3,018 3,196 = Change in lease receivables 49,378 36,572 + Additions of liabilities from refinancing 314, ,816 Payment of annuities to refinancers 63,522 68,454 Disposal of liabilities from refinancing 229, ,708 + Expenses from interest on refinancing and on deposit business 12,037 10,655 +/ Currency translation differences 1,496 1,617 = Change in refinancing liabilities 32,501 38,074 +/ Increase/decrease in liabilities from deposit business 11,672 25,894 /+ Increase/decrease in loans to franchisees 4,333 5,930 Changes in other assets/liabilities /+ Increase/decrease in other assets 15,310 19,338 +/ Increase/decrease in deferred lease payments 8,462 13,979 +/ Increase/decrease in other liabilities 4,468 2,007 = Cash flow from operating activities 8,509 24,409 continued on next page

21 GRENKE GROUP 20 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2011: CONTINUED EURk Jan. 1 to March 31, 2011 Jan. 1 to March 31, 2010 /+ Taxes paid / received 17,441 3,976 Interest paid Interest received = Net cash flow from operating activities 9,062 28,516 Purchase of equipment and intangible assets 1, /+ Payments / proceeds from acquisition of subsidiaries Proceeds from sale of equipment and intangible assets 28 3 = Cash flow from investing activities 1, / Raising / repayment of bank liabilities 342 7,164 Dividend payment 0 0 = Cash flow from financing activities 342 7,164 Cash funds at the beginning of the period Cash on hand and balances with banks 78, ,865 Bank liabilities from overdrafts 113 1,131 = Cash and cash equivalents at the beginning of the period 78, ,734 +/ Change due to currency translation = Cash funds after currency translation 78, ,498 Cash funds at the end of the period Cash on hand and balances with banks 67,992 88,965 Bank liabilities from overdrafts 322 2,019 = Cash and cash equivalents at the end of the period 67,670 86,946 Change in cash and cash equivalents during the period (=Total cash flows) 10,602 21,552 Net cash flow from operating activities 9,062 28,516 + Cash flow from investing activities 1, Cash flow from financing activities 342 7,164 = Total cash flow 10,602 21,551

22 GRENKE GROUP 21 STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY Capital Capital Retained Reserve for Hedging actuarial profits Currency Total EURk stock reserve earnings reserve and losses translation equity Equity as per Jan. 1, ,491 60, ,941 1, , ,773 Total comprehensive income 8, ,180 Dividend in 2011 for Equity as per March 31, ,491 60, , , ,953 Equity as per Jan. 1, ,491 60, ,315 2, , ,884 Total comprehensive income 5, ,267 7,415 Dividend in 2010 for Equity as per March 31, ,491 60, ,091 2, ,299

23 GRENKE GROUP 22 SEGMENT INFORMATION FOR THE PERIOD JANUARY 1 TO MARCH 31, 2011 The Group structures its activities in the segments of Leasing Business, Banking Business and Factoring Business. The Leasing Business segment accounts for all activities performed by GRENKELEASING AG and its subsidiaries until the acquisition of GRENKE BANK AG and GRENKEFACTORING GmbH. In managing the Leasing Business, the Group essentially focuses on the individual regions and countries. Thus, the Leasing Business segment is a combination of several operative segments defined by countries or groups of countries which together define the reportable Leasing Business segment. The Banking Business segment comprises the activities of GRENKE BANK AG, which has mainly focused on its internet presence and the associated sales activities since its acquisition by GRENKELEASING AG. The bank s business focuses mainly on German customers. The Factoring segment includes the activities of GRENKEFACTORING GmbH, which performs traditional factoring services in Germany and is a financial services provider. Total segments Consolidation Group Leasing Business segment Banking Business segment Factoring Business segment Switzer- As per March 31, 2011 (EURk) Germany region France region land region Italy region Other regions Total Operating segment income 10,661 5,333 1,523 3,704 5,895 27, , ,356 Segment result 1,452 3, ,255 2,520 10, , ,252 Reconciliation to consolidated financial statements Operating result 11,252 Other financial income 60 Taxes 2,806 Net profit for the period according to consolidated income statement 8,386 Segment assets 633, ,890 45, , ,499 1,664, ,923 7,665 1,858, ,925 1,698,452 Reconciliation to consolidated financial statements Unallocated items 20,445 Total assets according to consolidated balance sheet 1,718,897

24 GRENKE GROUP 23 SEGMENT INFORMATION FOR THE PERIOD JANUARY 1 TO MARCH 31, 2010 Total segments Consolidation Group Leasing Business segment Banking Business segment Factoring Business segment Switzer- As per March 31, 2010 (EURk) Germany region France region land region Italy region Other regions Total Operating segment income 9,093 4,336 1,006 2,808 3,768 21, , ,635 Segment result 2,514 2, ,829 1,281 8, , ,937 Reconciliation to consolidated financial statements Operating result 7,937 Other financial income 117 Taxes 2,278 Net profit for the period according to consolidated income statement 5,776 Segment assets 696, ,380 41,528 20, ,249 1,420, ,044 2,732 1,593, ,394 1,476,350 Reconciliation to consolidated financial statements Unallocated items 16,754 Total assets 1,493,104

25 GRENKE GROUP 24 SELECTED EXPLANATORY NOTES ACCOUNTING POLICY The interim reporting of GRENKELEASING AG (hereafter referred to as "Company") as at March 31, 2011 meets the requirements of the International Financial Reporting Standards (IFRSs) published by the International Accounting Standards Board (IASB) and assumed by the EU, as did the consolidated financial statements of December 31, The regulations of IAS 34 on interim reporting were applied accordingly. All interim financial statements of the companies included in GRENKELEASING AG s consolidated financial statements have been prepared using uniform accounting policies. Because interim reporting is based on the consolidated financial statements, information on this can be found in the accounting and consolidation policies as described in detail in the notes to the consolidated financial statements of December 31, The accounting policies used are the same as those used in the previous year, with the exception of the new standards that have become mandatory, which are presented briefly below. MANDATORY NEW ACCOUNTING STANDARDS The first-time application of the standards adjusted as part of the Annual Improvement Project 2010 ( AIP 2010 ) and of IAS 24 Related Party Disclosures, IAS 32 Financial Instruments: Presentation (February 10, 2010), IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction and IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (July 1, 2010) did not result in any material changes in recognition and measurement in Group reporting. USE OF ASSUMPTIONS AND ESTIMATES The main estimating uncertainties and the associated disclosure requirements are in the following areas: Measurement of non-performing lease receivables 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. 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 lists the processing categories:

26 GRENKE GROUP 25 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/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) 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 percent and 100 percent. Estimated residual values are used to determine the present value of lease receivables. Non-guaranteed residual values are used to calculate lease receivables in accordance with the definition in IAS 17. Estimated residual values comprise anticipated sales proceeds and any revenues generated in a renewal period. They are determined on the basis of past experience and statistical methods. Based on experience, residual values of additions until end-2006 range between 11 percent and 15 percent of historical cost, depending on the term of the lease. In fiscal year 2007, this allocation was broken down further into more detailed maturity groups on account of the increase in forecastability in the statistical population. For additions from 2007 to 2008, the residual values range between 7.7 percent and 28.4 percent of historical cost depending on the term of the lease. Residual values of between 6.5 percent and 28.4 percent were used for additions from 2009 onwards. Proceeds are a best estimate based on statistical analyses. If the post-transaction recoverable amount is lower than expected (from sale and subsequent lease), the lease receivables are written down. However, an increase in recoverable amount is not recognised. 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 acquisition cost. Lease assets for sale are measured at historical residual values, taking into account their actual saleability. As of the balance sheet date, the residual values used amounted to between 3.0 percent and 17.8 percent of the historical cost (previous year: between 4.6 percent and 19.5 percent). If a sale is considered unlikely due to the condition of the asset, the asset is written off and recognised as an expense. EURk March 31, 2011 March 31, 2010 Changes in performing lease receivables Balance at beginning of period 1,241,374 1,048,550 + Change during the period 46,804 33,886 Lease receivables (current + non-current) from current contracts at end of period 1,288,178 1,082,436

27 GRENKE GROUP 26 EURk March 31, 2011 March 31, 2010 Changes in non-performing lease receivables Gross receivables at beginning of period 170, ,389 Accumulated valuation allowances at beginning of period 83,496 83,060 = Non-performing lease receivables at beginning of period 86,850 86,329 + Additions to gross receivables during the period 9,226 9,994 Disposals of gross receivables during the period 5,897 6,911 + Disposal of accumulated valuation allowances during the period 6,073 3,152 Addition of accumulated valuation allowances during the period 6,828 3,724 Non-performing lease receivables at end of period 89,424 88,840 Lease receivables (carrying amounts of current and non-current receivables) at beginning of 1,328,224 1,134,879 Lease receivables (carrying amounts of current and non-current receivables) at end of period 1,377,602 1,171,276 FINANCIAL LIABILITIES GRENKELEASING s financial liabilities comprise liabilities from the refinancing of the leasing business, bank liabilities and liabilities from deposit business. EURk March 31, 2011 March 31, 2010 Financial liabilities Current financial liabilities Liabilities from the refinancing of the leasing business 255, ,582 ABS/ABCP related liabilities 88,085 70,362 Bonds, revolving facilities, debentures and private placements 139, ,635 Committed development loans Sales of receivables agreements 28,467 30,398 Current liabilities from deposit business 91,013 87,624 Current portion of bank liabilities thereof current account liabilities Total current financial liabilities 347, ,890 Non-current financial liabilities Liabilities from the refinancing of the leasing business 884, ,961 ABS/ABCP related liabilities 228, ,602 Bonds, debentures and private placements 613, ,689 Committed development loans 15,210 15,000 Sales of receivables agreements 26,690 28,670 Non-current liabilities from deposit business 42,898 34,615 Non-current bank liabilities 2,750 3,094 Total non-current financial liabilities 929, ,670 Total financial liabilities 1,277,601 1,233,560