Grenke : Q1 2024 Quarterly and Half-Year Reports

QUARTERLY STATEMENT

FOR THE 1ST QUARTER

G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C A L E N D A R O F E V E N T S &
F I G U R E S		M A N A G E M E N T R E P O R T		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

Group key figures

	UNIT	Q1 2024	Q1 2023	Change (%)
NEW BUSINESS LEASING	EURK	669'815	610'154	9.8
DACH	EURk	138'636	143'051	- 3.1
Western Europe (without DACH)	EURk	187'409	161'836	15.8
Southern Europe	EURk	167'329	150'357	11.3
Northern/Eastern Europe	EURk	134'953	123'434	9.3
Other regions	EURk	41'489	31'476	31.8
CONTRIBUTIONS MARGIN 2 (CM2) ON NEW BUSINESS LEASING	EURK	112'660	102'015	10.4
DACH	EURk	18'776	17'879	5.0
Western Europe (without DACH)	EURk	33'057	28'739	15.0
Southern Europe	EURk	27'335	26'406	3.5
Northern/Eastern Europe	EURk	24'443	22'417	9.0
Other regions	EURk	9'049	6'574	37.6
FURTHER INFORMATION LEASING
Number of new contracts	units	72'476	69'476	4.3
Mean acquisition value	EUR	9'242	8'782	5.2
Mean term of contract per end of period	months	50	49	1.1
Volume of leased assets per end of period	EURk	9'503'500	9'113'392	4.3
Number of current contracts per end of period	units	1'054'336	1'022'843	3.1
NEW BUSINESS FACTORING	EURK	212'941	191'994	10.9
DACH	EURk	72'649	73'165	- 0.7
Southern Europe	EURk	48'490	36'953	31.2
Northern/Eastern Europe	EURk	91'802	81'875	12.1
GRENKE BANK
New business SME lending business incl. microcredit business	EURk	8'729	12'822	- 31.9
Regions Leasing:	Regions Factoring:
DACH: Germany, Austria, Switzerland	DACH: Germany, Switzerland
Western Europe (without DACH): Belgium, France, Luxembourg, the Netherlands	Southern Europe: Italy, Portugal
Southern Europe: Croatia, Italy, Malta, Portugal, Slovenia, Spain	Northern/Eastern Europe: Hungary, Ireland, Poland, UK
Northern/Eastern Europe: Denmark, Finland, Ireland, Latvia, Norway, Sweden, UK | Czechia, Hungary, Poland, Romania,
Slovakia	Consolidated franchise companies:
Other regions: Australia, Brazil, Canada, Chile, Singapore, Turkey, UAE, USA	Leasing: Canada (3x), Chile, Latvia

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C A L E N D A R O F E V E N T S &
F I G U R E S		M A N A G E M E N T R E P O R T		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

		Q1	Q1
	UNIT	2024	2023	Change (%)
INCOME STATEMENT
Interest and similar income from financing business	EURk	132'138	108'501	21.8
Expenses from interest on refinancing and deposit business	EURk	46'060	24'499	88.0
Settlement of claims and risk provision	EURk	26'742	26'440	1.1
Total operating expenses	EURk	77'190	72'017	7.2
Operating result	EURk	24'898	23'826	4.5
Group Earnings before Taxes	EURk	24'916	20'471	21.7
GROUP EARNINGS	EURK	19'807	15'859	24.9
NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS	EURK	10'422	9'018	15.6
NET PROFIT ATTRIBUTABLE TO HYBRID CAPITAL HOLDERS	EURK	10'498	9'068	15.8
NET PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS	EURK	- 1'113	- 2'227	50.0
Earnings per share (basic and diluted)	EUR	0.22	0.19	15.8
Cost Income Ratio	percent	58.1	57.1	1.0 pp
Staff costs	EURk	46'796	41'289	13.3
of which total remuneration	EURk	37'935	33'651	12.7
of which fixed remuneration	EURk	33'241	29'376	13.2
of which variable remuneration	EURk	4'694	4'275	9.8
Average number of employees in full-time equivalent (FTE)	employees	2'156	1'996	8.0
	UNIT	Mar. 31, 2024	Dec. 31, 2023	Change (%)
STATEMENT OF FINANCIAL POSITION
Total assets	EURm	7'181	7'100	1.1
Lease receivables	EURm	5'802	5'700	1.8
Deposit volume GRENKE Bank	EURm	1'688	1'617	4.4
Equity persuant to statement of financial position*	EURm	1'353	1'355	- 0.1
Equity persuant to CRR	EURm	1'164	1'182	- 1.5
Equity ratio	percent	18.8	19.1	-0.3 pp
Embedded value, leasing contract portfolio (excl. equity before taxes)	EURm	492	484	1.7
Embedded value, leasing contract portfolio (incl. equity after taxes)	EURm	1'693	1'689	0.2

• Including AT1 bonds (hybrid capital), which are reported as equity under IFRS.

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M
F I G U R E S		M A N A G E M E N T R E P O R T		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S

KEY FIGURES Q1 2024:

	GROUP EARNINGS				EARNINGS PER SHARE		EQUITY RATIO
	19.8 EUR million		0.22 EUR		18.8 percent
REFINANCING BASE:
31
	THREE PILLARS: GRENKE GROUP REFINANCING
								GRENKE Bank: 31
	%							Asset-based: 20
	March 31, 2024	2049Q+
				Senior unsecured: 49

O T H E R

I N F O R M AT I O N

C A L E N D A R O F E V E N T S & C O N TA C T

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C A L E N D A R O F E V E N T S &
F I G U R E S		M A N A G E M E N T R E P O R T		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

SHAREHOLDER STRUCTURE:

Free float

R T H E 1 S T Q U A RT E R O F 2 0 2 4

Grenke Beteiligung GmbH & Co. KG*

36.71

	46.08
	Investmentaktiengesellschaft für
%	langfristige Investoren TGV
3.24
GRENKE-Stiftung Verwaltungs GmbH
7.16
March 31, 2024	ACATIS Investment Kapital-
	verwaltungsgesellschaft mbH
	5.02
	Universal Investment Gesellschaft mbH
	5.03

G R E N K E G R O U P   / / Q U A RT E R LY S TAT E M E N T F O

• General partner: Grenke Vermögensverwaltung GmbH.
  Limited partners: Grenke Family (Wolfgang, Anneliese, Moritz, Roland, Oliver Grenke).

In addition to Grenke Beteiligung GmbH & Co. KG, the chart shows other shareholders who held a share of more than 3 percent on the publication date stated in the respective voting rights notification and who are classified as part of the free float according to Deutsche Börse's definition.

Free float according to Section 2.3 of the current "Guide to the Equity Indices of Deutsche Börse".

The above information is not guaranteed and based on the voting rights notifications received by the Company pursuant to the German Securities Trading Act (WpHG).

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C A L E N D A R O F E V E N T S &
F I G U R E S		M A N A G E M E N T R E P O R T		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

Contents

Group key figures……………………………………………………… 2

Contents……………………………………………………………… 6

Interim Group Management Report… ……………………………… 7

1. Consolidated Group principles… …………………………… 7
2. Economic report… …………………………………………… 9
3. Related party disclosures… ……………………………… 25
4. Report on risks, opportunities and forecasts… ………… 26

Condensed interim consolidated financial statements … ……… 30

Consolidated income statement… …………………………… 30

Consolidated statement of comprehensive income… ……… 31

Consolidated statement of financial position………………… 32

Consolidated statement of cash flows… …………………… 34

Consolidated statement of changes in equity… …………… 36

Notes to the condensed interim consolidated

financial statements… ………………………………………… 37

1. General information ……………………………………… 37
2. Accounting policies… ……………………………………… 37
3. Use of assumptions and estimates… …………………… 38

1. Lease receivables… ……………………………………… 44
2. Financial liabilities… ……………………………………… 48
3. Equity… …………………………………………………… 50
4. Disclosures on financial instruments… ………………… 51
5. Revenue from contracts with customers………………… 55
6. Income and other revenue………………………………… 56
7. Income taxes… …………………………………………… 56
8. Group segment reporting… ……………………………… 57
9. Changes in the scope of consolidation
   in the 2024 financial year… ……………………………… 60
10. Payments to hybrid capital holders… …………………… 60
11. Related party disclosures… ……………………………… 60
12. Contingent liabilities… …………………………………… 61
13. Employees… ……………………………………………… 61
14. Subsequent events………………………………………… 61 Review Report ……………………………………………………… 62 Calendar of events … ……………………………………………… 63 Imprint … ………………………………………………………… 64

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C O R P O R AT E C A L E N D A R &
F I G U R E S		M A N A G E M E N T R E P O RT		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

Interim Group Management Report

A RT E R O F 2 0 2 4

1. Consolidated Group principles 1.1 GRENKE overview

We are a global financing partner for small and medium -sized enterprises (SMEs). Our offers give companies the financial freedom to realise investments. SMEs that lease through us are thereby able to protect their liquidity. We are guided by our values: simple, fast, personal and entrepreneurial. Founded in Baden- Baden in 1978, we operate worldwide with over 2,200 employees in more than 30 countries.

1.2 Business model

In our leasing business, we focus mainly on small tick- ets, defined as contracts for financed objects with an acquisition value of less than EUR 50k. In the first quarter of 2024 this category accounted for over 95 percent of all of our lease contracts. The average volume of the contracts concluded with us in the first quarter of 2024 was around EUR 9.2k.

Our leasing portfolio focuses largely on IT and office communication products. In recent years, we have further expanded our business model to include other product groups, such as small machinery and sys- tems, medical and security devices, and green economy objects, such as wallboxes, photovoltaic systems and eBikes.

As of March 31, 2024, we were operating a total of 131 locations in 33 countries worldwide. In the first quarter of 2024, we generated 93.8 percent of our new leasing business in Europe, where we operate in almost every country. Our core markets are Germany, France and Italy. In addition, we are continuously expanding our footprint outside of Europe through our entry in the Australian and North and South American markets.

We can manage our business with agility in phases of economic volatility by adjusting our acceptance strategy for lease applications. By strictly focusing on low-risk new business and foregoing business with higher-risk industries and customer segments, we can influence the quality and quantity of our new business in a targeted manner. We also have the flexibility to align our terms and conditions to the respective market and macroeconomic conditions, as we did during the very dynamic interest rate environment in 2023. As a result, our business model is proving resilient to market fluctuations. This has enabled us to achieve risk-adequate margins and operate profitably on a sustainable basis, even during the financial market crisis of 2009 and the corona pandemic in 2020 and 2021.

1.3 Segments

We offer financial services for SMEs in the segments Leasing, Factoring and Banking. For a description of our business activities and development of the segments during the reporting period, please refer to the comments in Chapter 2.4.2 "Segment development" and the explanations in Chapter 11 "Group segment reporting" contained in the notes to the condensed interim consolidated financial statements. Due to the intended sale of the factoring companies, we are reviewing the composition of the segments.

1.4 Shareholder structure

As a medium-sized family business, our major shareholder is Grenke Beteiligung GmbH & Co. KG, which is owned by Anneliese Grenke, the Company founder Wolfgang Grenke, and their three adult sons. As of March 31, 2024, Grenke Beteiligung GmbH & Co. KG held 36.71 percent of the Company's shares. The GRENKE Foundation held 7.16 percent. As of the publication date of this report and as stated in the respective voting rights notification, the following shareholders owned a share in excess of 3 percent: ACATIS Investment Kapitaverwaltungsgesellschaft mbH (5.02 percent), Investmentaktiengesellschaft für langfristige Investoren TGV (3.24 percent), and Universal Investment Gesellschaft mbH (5.03 percent).

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C O R P O R AT E C A L E N D A R &
F I G U R E S		M A N A G E M E N T R E P O RT		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

The free float, consisting of shareholders who own less than 5 percent in accordance with the definition of the Deutsche Börse, amounted to 46.08 percent. The proportion of shares held by the Board of Directors and Supervisory Board as of the reporting date was around 0.1 percent.

1.5 Targets and strategy

As a leading partner for small and medium-sized en- terprises, we want our service to be a major contributor to the realisation of important investments through us with leasing. We focus on low investment amounts of mainly EUR 50k and below and intend to become a global leader in this market segment. Based on our growth strategy and the current economic forecasts, new leasing business of at least EUR 3.0 billion should be achieved in the 2024 financial year. Achieving this would mark the first time in GRENKE AG's history that new leasing business of this magnitude would be real- ised and would set the stage for further growth.

As previously communicated in August 2023, this forecast is based on the assumption that new leasing business will reach a volume of EUR 3.0 billion to EUR 3.2 billion.

The Board of Directors also expects Group earnings for 2024 in the range of EUR 95 million to EUR 115 million. Taking into account the planned share buy- back programme, the equity ratio at the end of the 2024 financial year is expected to exceed the 16 percent target.

To achieve our growth targets, we are focusing on the core areas of "customer and market-oriented ac- tivities", "operational excellence and cost discipline", "digital excellence and automation", and "sustainabili- ty" through the appropriate strategic measures.

Liquidity and refinancing play a fundamental role in our business model and are managed strategically. We have a wide range of instruments at our disposal that we utilise in line with the market conditions as part of our overall strategy. Our debt-based financing is essentially based on the following three pillars:

• Senior unsecured instruments largely based on our investment grade rating, including bonds - and currently a green bond - commercial paper, and debentures, in addition to credit relationships with international banks and syndicated credit lines

• Receivables-basedfinancing, including the use of ABCP programmes
• GRENKE BANK's deposit business

Financing on this basis enables us to avoid maturity transformation, thereby eliminating potential risks related to changes in interest rates and follow-up financing at the portfolio level. We have an investment grade rating from the rating agencies Standard & Poor's and Fitch Ratings.

Further details on this can be found in Chapter 1.2 "Targets and strategy" of our recently published Annual Report 2023.

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C O R P O R AT E C A L E N D A R &
F I G U R E S		M A N A G E M E N T R E P O RT		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

2. Economic report

• New leasing business grows by 9.8 percent to EUR 669.8 million in the first quarter of 2024
• Contribution margin 2 rises to EUR 112.7 million
• CM2 margin reaches 16.8 percent
• Group earnings equals EUR 19.8 million
• Loss rate is stable at 1.1 percent
• Cost-incomeratio amounts to 58.1 percent
• Equity ratio, at 18.8 percent, continues to surpass the self-set target of 16 percent

2.1 Significant events and transactions

On January 31, 2024, we announced that the Supervisory Board of GRENKE AG had approved the Board of Directors' decision to focus in the future on the leasing business with small and medium-sized enterprises and to initiate the sale of all factoring companies. The synergies with the core principal business of leasing that were expected when entering the factoring business had not materialised. In addition, an in-depth analysis showed that the existing factoring business could only be made profitable in the long term with additional investments and a significant multi-fold increase in the business volume (the assets from the factoring business equalled less than 2 percent of the consolidated balance sheet in 2022). Instead of implementing a factoring strategy separate from the leasing business, GRENKE intends to fully focus its

resources and investment power going forward on its progressive digitalisation and further growth in leasing. GRENKE BANK AG continues to play an important role here, especially with its contribution to the refi- nancing of leasing via traditional deposit business.

On February 6, 2024, we announced that, with the approval of the Supervisory Board, the Board of Directors of GRENKE AG had decided to carry out a share buyback programme. The German Federal Financial Supervisory Authority (BaFin) had previously approved the programme (see ad hoc disclosure dated Novem- ber 21, 2023). As part of the programme, a maximum of 2,317,695 shares valued at up to EUR 70 million (excluding ancillary costs) are to be acquired via the stock exchange. This amount corresponds to 5 percent of the Company's existing share capital at the time of the authorisation resolution of the Annual General Meeting on August 6, 2020. The share buyback programme was launched on February 12, 2024.

On March 5, 2024, we announced that the Supervisory Board of GRENKE AG had appointed Dr Martin Paal as Chief Financial Officer as of July 1, 2024. Dr Martin Paal, born in 1979, is a proven finance and banking expert. After holding several positions at renowned international consulting firms and DZ Bank, Dr Martin Paal joined GRENKE AG as Vice President Controlling in June 2022. In March 2023, he was appointed Chief

Representative and Senior Vice President and Head of the Finance Division. As the designated CFO, he is responsible for the Accounting & Tax, Controlling and M&A, Treasury, and Reporting departments.

On March 15, 2024, we announced that Dr Konstantin Mettenheimer, a member of the Supervisory Board of GRENKE AG since July 2021 and its Deputy Chairman since May 2023, would not stand for re-election to the Supervisory Board at the Annual General Meeting on April 30, 2024.

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G R O U P K E Y		I N T E R I M G R O U P		C O N D E N S E D I N T E R I M C O N S O L I D AT E D		N O T E S T O T H E C O N D E N S E D I N T E R I M		O T H E R		C O R P O R AT E C A L E N D A R &
F I G U R E S		M A N A G E M E N T R E P O RT		F I N A N C I A L S TAT E M E N T		C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S		I N F O R M AT I O N		C O N TA C T

2.2 Macroeconomic environment

The first quarter of 2024 was characterised by declining inflationary pressure and moderate economic development in the eurozone. Key interest rates remained unchanged in the quarter under review. The European Central Bank (ECB) last raised its key interest rate in September 2023; since that time, the main refinancing rate has been 4.5 percent and the deposit rate for banks, which sets the trend for the financial markets, has been 4.0 percent. With a marked decline to 2.4 percent in March 2024 (March 2023: 6.9 per- cent), the rate of inflation has been trending towards the target level of 2 percent, prompting the financial markets to expect the ECB to start easing its monetary policy in the foreseeable future.

According to the preliminary flash estimate published by Eurostat, gross domestic product (GDP) in the eu- rozone grew 0.4 percent year-on-year in the first quarter of 2024. In the first quarter of 2023, GDP growth was still at 1.3 percent compared to the first quarter of 2022. At the same time, the development in the first quarter of 2024 signified a slight recovery versus the immediately preceding two quarters, each of which recorded year-on-year economic growth of 0.1 percent.

The eurozone's Manufacturing Purchasing Managers' Index stood at 46.1 points in March 2024. In March 2023, it was 47.3 points and gradually declined until the autumn of 2023. The index has been recovering since October 2023 but has still not quite reached the prior year's level. The index is derived from a monthly survey of purchasing managers in the manufacturing industry concerning incoming orders, production, em- ployment, deliveries received and stock levels. The trend in the index is related to a repeated decline in production in the manufacturing industry.

The ifo Business Climate Index for Germany summarises companies' assessment of their current business situation and the expected development over the next six months. The index stood at 87.8 points in March 2024 after a level of 92.7 points in March 2023 and a continuous deterioration in sentiment until the end of 2023. The downtrend ceased in the first quarter of 2024, and the index has improved slightly again since the start of the year (January 2024: 85.2 points). According to the ifo Institute, the expectations of survey participants that the ECB would cut the key interest rate and that domestic demand would remain stable are likely to have contributed to the index's improvement over the previous month (February 2024: 85.7 points).

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