Grenke Finance Plc - 2023-240306-FINAL

GRENKE FINANCE PLC

Grenke Finance Plc Report and consolidated financial statements for the year ended 31 December 2023

GRENKE FINANCE PLC

DIRECTORS REPORT AND FINANCIAL STATEMENTS

for the year ended 31 December 2023

TABLE OF CONTENTSPAGE

COMPANY INFORMATION1

DIRECTORS’ REPORT2

INDEPENDENT AUDITOR'S REPORT11

CONSOLIDATED STATEMENT OF PROFIT OR LOSS22

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME23

CONSOLIDATED STATEMENT OF FINANCIAL POSITION24

COMPANY STATEMENT OF FINANCIAL POSITION26

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY28

COMPANY STATEMENT OF CHANGES IN EQUITY29

CONSOLIDATED STATEMENT OF CASH FLOWS30

NOTES TO THE FINANCIAL STATEMENTS32

GRENKE FINANCE PLC

1

COMPANY INFORMATION

DIRECTORS

Patrick Spain

Stephan Denig

John McQuillan

Angelika Wiedemann

SECRETARY

Patrick Spain

REGISTERED OFFICE

Suite 306, Q House,

Furze Road,

Sandyford,

Dublin 18

D18 H330

REGISTERED NUMBER OF INCORPORATION

375995

SOLICITORS

Gordon Judge and Company,

123 Baggot Street Lower,

Dublin 2

D02 YK29

AUDITORS

Grant Thornton

Chartered Accountants & Statutory Audit Firm

13-18 City Quay

Dublin 2

D02 ED70

BANKERS

Grenke Bank AG

Neuer Markt 2

76532 Baden-Baden

Germany

GRENKE FINANCE PLC

2

DIRECTORS’ REPORT

for the year ended 31 December 2023

The Directors present their Directors’ Report for the financial year ended 31 December 2023.

GRENKE Finance PLC was incorporated in the Republic of Ireland on 22 September 2003. The GRENKE Finance PLC Group is defined as GRENKE Finance PLC (“Company”) an Irish registered company and three French fonds cummun de titrisation FCT “GK”-Compartment “G2” (FCT GK2), FCT “GK”-Compartment “G4” (FCT GK4), FCT “GK”-Compartment “G5” (FCT GK5) and an Irish limited liability company Elektra Purchase No. 25 Designated Activity Company, (together the “Group”).

PRINCIPAL BUSINESS ACTIVITIES

GRENKE Finance PLC is a wholly owned subsidiary of GRENKE AG which is the ultimate parent.

GRENKE AG is a financial services group with its headquarters in Baden Baden, Germany. It is a public company with a listing on the Frankfurt Stock Exchange. The GRENKE AG Group acts as a global financing partner for small and medium sized enterprises. The GRENKE AG Group operates in 33 countries located in Europe, North and South America, Asia and Australia. Further information about the Grenke AG Group can be accessed at www.grenke.de.

The Company provides finance to the GRENKE AG Group, GRENKE AG Group Companies and to franchisees of the GRENKE AG Group to enable those companies to carry on leasing and factoring activities. This business is known as the treasury business.

The Group and Company carries on its own leasing activities through commission agents, who are GRENKE AG Group companies in various European countries. This business is known as the leasing business.

The Group and Company finances these activities through issuing Bonds on the Luxembourg Stock Exchange, issuing Promissory notes, issuing Commercial papers, obtaining bank loans, selling selected French lease receivables to three asset backed commercial paper programmes and selling selected lease receivables to GRENKE Bank AG.

RESULTS AND DIVIDENDS

The Group and Company profit for the financial year is €46,483,957 (2022: €59,665,506). The Group and Company paid an interim dividend of €110,000,000 (2022: €90,000,000) on the 28th of December 2023.

BUSINESS REVIEW

The profit for the year end 31 December 2023 has decreased by €13m from €59m to €46m.

GRENKE FINANCE PLC

3

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

BUSINESS REVIEW (Continued)

The Group and Company’s key financial and other performance indicators during the year were as follows:

2023

2022

Change

€ 000

%

Lease income

135,921

116,990

16%

Expected credit loss allowance on finance

lease receivables

52,850

39,785

33%

Income from protecting lease equipment

39,295

43,180

-9%

Interest income and similar income

91,495

53,721

70%

Interest expense and other charges

123,419

73,675

68%

Profit before tax

52,855

66,918

-21%

Increase in amounts due from related

parties

11,754

23,047

-49%

Acquisition of new lease equipment

974,474

851,565

14%

Expected credit loss charge to the statement

of profit or loss on non performing finance

lease receivables as a % of the average net present

value (NPV) of performing finance lease receivables

2.23%

1.54%

45%

Expected credit loss allowance at year end on

performing finance lease receivables as a %

of NPV of performing finance lease receivables

at year end

2.58%

2.50%

3%

Interest and other charges on debt securities in issue as a % of the average of debt securities in issue

2.93%

1.69%

73%

Lease income increased by €19m (16%) due to 14% growth in the acquisition of new lease equipment in 2023 and 36% growth in the acquisition of new lease equipment in 2022 together with the opportunity to earn higher returns on leases in the current high interest rate environment. The expected credit loss allowance on finance lease receivables increased by €13m to €53m in 2023. The expected credit loss charge to the statement of profit or loss in respect of non performing leases increased from 1.54% of the average net present value of performing leases to 2.23%.

Income from protecting lease equipment was down €4m to €39m due to the Group and Company no longer providing the service of protecting lease equipment in the French market in respect of new business in that market.

Interest income and similar income increased by €38m to €91m due to the higher interest rate environment currently prevailing in the European economy.

GRENKE FINANCE PLC

4

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

BUSINESS REVIEW (Continued)

The high interest rate environment currently prevailing in the European economy also resulted in the interest expense and other charges increasing by €50m to €123m. The interest and other charges on debt securities in issue as a % of the average debt securities in issue increased from 1.69% to 2.93%.

Other income is down €7m to €2m due to other income in the previous year including €8m of interest payable by the Italian tax authority in respect of a VAT refund of €35m which had been outstanding since 2011.

The Group and Company had a cash inflow of €187m (2022: outflow €101m).

The Group and Company has a cash outflow from operating activities of €83m due to the growth in the Group and Companies leasing business which resulted in an outflow of Cash of €286m. The Group and Company also had an outflow of Cash of €19m in respect of deferred risk premiums paid to the Grenke Bank for increased financing provided by the Grenke Bank. These outflows from operating activities were offset by inflows from operating activities of €106m from the profit for the business after being adjusted for the non cash expected credit loss allowances, depreciation and currency translation differences. Additional cash was also generated by the amounts due to and from related parties decreasing by €84m. Overseas VAT receivable also declined from €125m to €99m generating €26m cash.

There was a cash inflow from financing activities of €187m. There was an increase in financial liabilities of €140m and amounts owed to the Grenke Bank of €156m which have been offset by a dividend paid of €110m.

PRINCIPAL RISKS UNCERTAINTIES AND MITIGATIONS

The range of uncertainty over a number of economic factors, including inflation, has increased. This may increase the degree of judgement required by management in determining inputs to the financial statements, and require disclosure of sensitivities to wider range of reasonably possible outcomes. In the current environment, there are many economic, political, and other uncertainties that can effect financial reporting. Potential examples include the Russia-Ukraine conflict, other conflicts, rising inflation and interest rates, natural disasters, and any other major global events that could occur. The Group and Company have carried out a thorough risk assessment and have concluded that the principal risks faced by the Group and Company are credit risk, liquidity and refinancing risk, market risk, and contractual risks. Details of the risks and strategies to deal with these risks are included in note 43 of the financial statements.

The risk management process at GRENKE Finance PLC has the function of systematically

identifying, assessing, documenting and disclosing risks to the Group and Company. It is designed to enable employees and management to address risks responsibly and make the most of the opportunities that present themselves.

GRENKE FINANCE PLC

5

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

PRINCIPAL RISKS UNCERTAINTIES AND MITIGATIONS (Continued)

The function of the risk management process and the result of the measures adopted by the Group’s management to monitor and manage are reviewed by the internal audit department of the GRENKE AG Group. The internal audit department reports directly to the Board of Directors of the Company’s ultimate parent GRENKE AG. All internal audit reports on the Group and Company are provided to the Directors of the Group and Company.

CORPORATE GOVERNANCE STATEMENT

Introduction

The Company is subject to and complies with the rules and regulations of the Luxembourg Stock Exchange. The Group and Company are not subject to any specific corporate governance code and has not voluntarily decided to apply a particular code.

Internal control and risk management framework

The internal control and risk management system (ICS) contains all principles, procedures and measures introduced to the Company by its management that are geared towards the implementation of management decisions in the organisation and ensures:

•the effectiveness and efficiency of business activities, including the protection of assets and the prevention and detection of losses to assets;

•the correctness and reliability of internal and external accounting; and

•compliance with the legal provisions relevant to the Company.

The Board of Directors bears overall responsibility for the accounting process at the Company. The posting of transactions is recorded and processed by the responsible administrators in accordance with mandatory schedules for generating qualitative and quantitative information. The four-eye principle is applied. The principles, structures, process organisation and accounting methods used by the ICS are documented in writing and updated at regular intervals.

The electronic systems and the necessary IT infrastructure used for the accounting process are regularly reviewed by the Internal Audit department of the GRENKE AG Group for their compliance with safety requirements. The same applies to the further development of the

systems and processes of the Company’s accounting process and ensuring their effectiveness, especially in terms of new products, issues and changes in the legal regulations. The Group and Company also use external consultants if necessary. The employees involved are trained regularly to guarantee the quality of the Company’s accounting.

The Group and Company consider features of the ICS to be significant for accounting processes if they can materially influence the accounting and the overall view presented in the financial statements, including the Directors’ report. This relates to the following elements in particular:

•Identification of significant risk and control areas relevant to the accounting process

•Controls to monitor the accounting process and its results at the levels of the Board of Directors and the Company included in the financial statements

GRENKE FINANCE PLC

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DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

CORPORATE GOVERNANCE STATEMENT (Continued)

Internal control and risk management framework (Continued)

•Preventative control measures in the finance and accounting systems as well as in the operative, performance-oriented Group and Company processes that generate material information for the preparation of the financial statements, including the

Directors’ report, and a separation of functions and pre-defined approval processes in relevant areas

•Measures that safeguard the orderly IT-based processing of accounting issues and data

•The establishment of an internal audit system to monitor accounting-related ICS

The risk management procedures established for the accounting processes of the Company ensures the preparation of accurate and reliable information for the public.

Diversity

The Company does not apply a diversity policy because it is a one hundred per cent subsidiary of GRENKE AG. The diversity policy of the GRENKE AG Group is set out in its Corporate Governance Statement, which can be viewed at www.GRENKE.de/GRENKE-group/investor-

relations/corporate-governance/management. The Company believes you need to consider

the diversity policy of corporate entities on a group basis. It does not believe it is practical to have separate diversity policies for each of the boards of the forty plus entities in the GRENKE AG Group which are usually made up of two to three people. It is not possible to have a diversity policy when the Company Board of Directors has only four people. The Company is of the opinion that the knowledge, skill and experience required for the respective division or area of responsibility should, in fact, be the decisive factor when selecting suitable candidates for the Company.

FUTURE DEVELOPMENTS

The Directors are expecting good growth in its own leasing activities and there is good growth expected in the GRENKE AG Group leasing activity which will result in growth in the Group and Company treasury business.

The expected growth will result in good growth in the value of its gross assets, gross liabilities and its profit excluding expected credit loss allowance on other financial assets.

Commentary on the outlook for the GRENKE AG Group is included in the Annual Report of the GRENKE AG Group for the year end 31 December 2023, which will be publicly available on www.GRENKE.de from 7 March 2024.

POLITICAL AND CHARITABLE DONATIONS

The Group and Company made no political and charitable donations (2022: Nil) during the financial year.

GRENKE FINANCE PLC

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DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

RESEARCH AND DEVELOPMENT

The Group and Company did not incur any expenditure in research and development during the year (2022: Nil).

BRANCHES

The Group and Company has no branches outside the Republic of Ireland.

DIRECTORS

The Directors of the Company are Patrick Spain (Irish), Angelika Wiedemann (German), Stephan Denig (German) non executive director and John McQuillan (Irish) independent non executive director. No other persons were director of the Company in 2023.

DIRECTORS’ AND SECRETARY’S INTERESTS

The Directors and secretary, who held office during the year 31 December 2023, and their

families, had no direct or beneficial interest in the shares, share options, deferred shares,

debentures or loan stock of the Group and Company at any time during the financial years ended 31 December 2022 and 31 December 2023 requiring disclosure in the Directors’ Report pursuant to Section 329 of the Companies Act 2014.

SUBSEQUENT EVENTS

No events have occurred since the Statement of Financial Position date outside the normal course of the Group and Company’s business.

ACCOUNTING RECORDS

The Directors are responsible for ensuring that adequate accounting records, as outlined in Sections 281-285 of the Companies Act 2014, are kept by the Group and Company. To achieve this, the Directors have employed professionally qualified accounting personnel with appropriate expertise and have provided adequate resources to the finance function who ensure that the requirements of Sections 281-285 of the Companies Act 2014 are complied with. The books and records are maintained at the registered office.

DIRECTORS' RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Directors’ Report and financial statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, they have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the Company financial statements in accordance with FRS 101 Reduced Disclosure Framework and applicable law.

The Transparency (Directive 2004/109/EC) Regulations 2007 require the Directors to include a fair review of the business as well as the principal risks and uncertainties faced by the Company. The Directors confirm that, to the best of their knowledge, they have complied with

GRENKE FINANCE PLC

8

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

DIRECTORS' RESPONSIBILITIES STATEMENT (Continued)

these requirements in preparing the financial statements, including preparation of these financial statements in accordance with International Financial Reporting Standards as adopted by the EU and Company financial statements in accordance with Financial Reporting

Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards, to give a true and fair view of the assets, liabilities and financial position

of the Group and Company as at 31 December 2023 and of the profit of the Group for the year then ended. They also confirm that the Directors’ Report includes a fair review of the development and performance of the business and position of the Group and Company,

together with a description of the principal risks and uncertainties that it faces.

Under Company law the Directors must not approve the Group and Company financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit or loss for that year.

In preparing each of the Group and Company financial statements, the Directors are required to:

•select suitable accounting policies and then apply them consistently;

•make judgments and estimates that are reasonable and prudent;

•state that the Group financial statements have been prepared in accordance with IFRS as adopted by the EU and Company financial statements have been prepared in accordance with FRS 101 Reduced Disclosure Framework; and

•prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Group and Company and which enable them to ensure that the financial statements of the Group and Company are prepared in accordance with the applicable accounting framework and comply with the provisions of the Companies Act 2014. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and and Company and to prevent and detect fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements of the Companies Act 2014.

GOING CONCERN

In order to continue as a going concern for the 12 months following the signing of these financial statements the Group and Company must be able to meet its obligations to repay Debt Securities in issue and bank loans when repayment falls due. There must also be no significant diminution in the lease receivables of the GRENKE AG group because a significant diminution in the GRENKE AG Group’s lease receivables would make it difficult for the Group and Company to recover amounts due from GRENKE AG Group companies and to use such funds collected to service the Group and Company’s debt obligations.

The Directors have made enquiries from its parent GRENKE AG as to the collectability of lease receivables due to the GRENKE AG Group companies and GRENKE AG Group

GRENKE FINANCE PLC

9

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

GOING CONCERN (Continued)

franchisees with loans due to the Group and Company. The Directors of the Group and Company continually review the collectability of the Group and Company lease receivables.

The Directors have carried out a review of the cash flows from the lease receivables and the cash flows from amounts due from Group Companies and Franchisees over the next twelve months together with their immediately liquid assets. The Directors have also looked at their

obligations to repay debt securities in issue and bank loans together with interest due on the Group and Company’s debt obligations. The review of cash flows shows that it is reasonable

for the Directors to conclude that the Group and Company will be able to meet their obligations to repay Debt securities in issue, bank loans and financing costs when they fall due.

The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the next twelve months. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

DIRECTORS’ COMPLIANCE STATEMENT

The Directors, in accordance with Section 225(2) (a) of the Companies Act 2014 (the “Act”), acknowledge that they are responsible for securing the Group and Company’s compliance with its “relevant obligations.” “Relevant obligations”, in the context of the Group and Company, are the Group and Company’s obligations under:

a)the Act, where a breach of the obligations would be a category 1 or category 2 offence;

b)the Act, where a breach of the obligations would be a serious Market Abuse or Prospectus offence under

•Market Abuse (Directive 2003/6/EC) Regulations 2005

•Prospectus (Directive 2003/71/EC) Regulations 2005

•EU Transparency Directive (“Transparency Law” in Luxembourg) and Luxembourg Stock Exchange listing and reporting requirements

c)tax law

d)Criminal Justice (Corruption Offenses) Act 2018

e)Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (Updated 2021)

f)General Data Protection Regulation (GDPR) along with further national rules set out in the Irish Data Protection Act 2018

g)Safety, Health and Welfare at Work Act 2005.

Pursuant to Section 225 (2) (b) of the Companies Act 2014, the Directors confirm that:

i.a compliance policy statement has been drawn up by the Group and Company in accordance with Section 225 (3) (a) of the Act setting out the Group and Company’s policies (that, in the Directors’ opinion, are appropriate to the Group and Company) respecting compliance by the Group and Company with its relevant obligations;

ii.appropriate arrangements and structures have been put in place that are, in the directors’ opinion, designed to secure material compliance with the company’s relevant obligations; and

iii.a review has been conducted, during the financial year, of the arrangements and structures referred to in paragraph (ii).

GRENKE FINANCE PLC

10

DIRECTORS’ REPORT

for the year ended 31 December 2023 (Continued)

RELEVANT AUDIT INFORMATION

The Directors believe that they have taken all steps necessary to make themselves aware of any relevant audit information and have established that the Group and Company’s statutory auditors are aware of that information. In so far as they are aware, there is no relevant audit information of which the Group and Company’s statutory auditors are unaware.

AUDIT COMMITTEE

The Directors of the Company have decided not to establish an audit committee as permitted

under S167 (2) (b) of the Companies Act 2014 because the Company’s parent, Grenke AG has an established audit committee.

AUDITORS

The auditors, Grant Thornton, have indicated their willingness to continue in office in accordance with Section 383 (2) of the Companies Act 2014.

On behalf of the Directors

Patrick Spain Angelika Wiedemann

Director Director

Date: 7 March 2024

Independent auditor’s report to the members of Grenke Finance Plc

11

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Grenke Finance Plc (the “Company”) and its subsidiaries (‘the “Group’’), contained within the reporting package 635400ILKD2MBMANBG03-2023-12-31-en.zip, which comprise the Consolidated Statement of Profit and Loss, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity and Consolidated Statement of Cash Flows for the financial year ended 31 December 2023, and the related notes to the financial statements, including the summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is Irish law, including the Commission Delegated Regulation 2018/815 regarding the single electronic reporting format (ESEF), and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, Irish Law and accounting standards issued by the Financial Reporting Council including FRS 101 “Reduced Disclosure Framework” (Generally Accepted Accounting Practice in Ireland).

In our opinion,

•the consolidated financial statements give a true and fair view in accordance with IFRS as adopted by the European Union, of the assets, liabilities and financial position of the Group at 31 December 2023 and of the Group’s financial performance and cash flows for the financial year then ended;

•the Company’s statement of financial position gives a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland, of the assets, liabilities and financial position of the Company as at 31 December 2023; and

•the financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the consolidated financial statements, Article 4 of the IAS Regulation.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs (Ireland)) and applicable law. Our responsibilities under those standards are further described in the ‘Responsibilities of the auditor for the audit of the financial statements’ section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, including the Ethical Standard for Auditors (Ireland) issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the Group and Company. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independent auditor’s report to the members of Grenke Finance Plc

12

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director’s use of going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company ability to continue as a going concern basis of accounting included:

•Discussing the use of going concern basis of accounting with management;

•Obtaining and evaluating management’s going concern assessment, including assumptions and the cash flow forecasts for the going concern period which covers a period of at least twelve months from the date of approval of the financial statements, and the process by which it was prepared;

•Considering the appropriateness of the assumptions used in the directors’ going concern assessment in the context of the applicable financial reporting framework and whether these assumptions were consistent with the business activities of the Group and Company;

•Reviewing the financial position of the Group and Company for solvency from a funding and liquidity perspective, obtaining an understanding of contractual arrangements and reviewing agreements in relation to related party funding arrangements;

•Considering solvency and going concern assessment of the ultimate parent entity;

•Making enquiries with management and reviewing board minutes and other available written communication to understand the future plans and to identify potential contradictory information;

•Reviewing subsequent events that may warrant a significant uncertainty regarding the going concern assumption; and

•Assessing the adequacy of the disclosures made in the financial statements with respect to the going concern assertion.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and Company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current financial year and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and the directing of efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on these matters.

Overall audit strategy

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions, such as Expected Credit Loss (ECL) provisioning, and considering future events that are inherently uncertain.

Independent auditor’s report to the members of Grenke Finance Plc

13

Key audit matters (continued)

Overall audit strategy (continued)

We also addressed the risk of management override of internal controls, including evaluating whether there was any evidence of potential bias that could result in a risk of material misstatement due to fraud.

Based on our considerations as set out below, our areas of focus included:

•Valuation of finance lease receivables and completeness and accuracy of the related Expected Credit Loss (ECL) provision; and

•Existence of finance lease receivables and occurrence and accuracy of related lease income and expenditure.

How we tailored the audit scope

The Group and Company provides finance to GRENKE AG Group (‘the ultimate parent’), GRENKE AG Group Companies and to franchisees of the GRENKE AG Group to enable those companies to carry on leasing and factoring activities. There are a number of critical functions that are outsourced to the ultimate parent, including IT infrastructure, credit modelling and Internal Audit support.

Our audit was scoped by obtaining an understanding of the Group and Company and its environment, including testing of internal controls, and assessing the risks of material misstatement to be able to give an opinion on the consolidated and company financial statements as a whole, taking into account the operational structure of the Group and Company, the accounting processes and controls, the involvement of third parties and the industry in which the Group and Company operates. Audit work on the Group and Company was performed by the same audit team. We also placed reliance on the results of certain centralised audit procedures performed by the GRENKE AG Group auditor in relation to functions outsourced to the ultimate parent entity.

In establishing the overall approach to our audit we assessed the risk of material misstatement taking into account the nature, likelihood and potential magnitude of any misstatement. As part of our risk assessment, we assessed the overall control environment within the Company and Group.

Materiality and audit approach

The scope of our audit is influenced by our application of materiality.

We set certain quantitative thresholds for materiality. These, together with qualitative considerations, such as our understanding of the entity and its environment, history of misstatements, the complexity of the Group and Company and the reliability of the control environment, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures as well as to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the Group and Company based on a metric of 5% of profit before tax for the financial year ended 31 December 2023. We have applied this benchmark as the Group and Company are profit oriented and profit before tax is one of the key metrics used by members to assess their performance.

Independent auditor’s report to the members of Grenke Finance Plc

14

Key audit matters (continued)

Materiality and audit approach (continued)

We have set performance materiality at 60% of our materiality, having considered our prior year experience of the risk of misstatements, business risks and fraud risks associated with the Group and Company and its control environment, our expectations about misstatements and our understanding of the business and processes at the Group and Company. This is to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole.

The reporting threshold is set as the amount below which identified misstatements are considered as being clearly trivial. We agreed with the Board and the Grenke AG Audit Committee that we would report to them misstatements identified during our audit of amounts greater than 5% of materiality as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Significant matters identified

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as significant matters together with an explanation of how we tailored our audit to address these specific areas in order to provide an opinion on the financial statements as a whole. This is not a complete list of all risks identified by our audit.

Key audit matter

Our audit response

Valuation of finance lease receivables and completeness and accuracy of the related Expected Credit Loss (ECL) provision

Note 25 to the Financial Statements reflects gross lease receivables of €2,381m (2022: €2,116m) of which impaired leases are €206m (2022: €175m) and the related ECL provision for performing leases is €55m (2022: €48m) and for impaired leases is €158m (2022: €135m).

At each reporting period, the Group and Company determines the impairment on finance lease receivables based on a model of expected credit losses in accordance with the requirements of IFRS 9. The assessment of ECL provisions involves the use of complex models and a high degree of estimation uncertainty due to the significant

The following audit work has been performed to address the risks:

•Obtained an understanding of the process in place including evaluation of the design and implementation of controls relevant to the valuation of lease receivables and related impairment provisions. These relate to relevant IT applications, the estimation of provision rates and IFRS 9 models to calculate resulting ECL provisions on the Group and Company credit exposures.

•With the assistance from our internal IT specialist, we reviewed and assessed the work performed by the GRENKE AG Group Auditor in relation to the design, implementation and operating effectiveness of IT general controls for all relevant in scope applications.

•With the assistance from our internal modelling specialist, we reviewed and assessed the work performed by GRENKE AG Group Auditor around data,

Independent auditor’s report to the members of Grenke Finance Plc

15

judgments inherent in the IFRS 9 methodology.

The impairment model for non-performing leases derives the percentage provision rates to be applied to categories of leases depending on their processing status, that are grouped together (BA-class 0-9). Provisional rates are derived from the historical empirical data and forward looking information. There is an inherent risk in determining the impairment rates applied due to a high level of estimation uncertainty. The risk is further increased due to the uncertainty introduced by recent macroeconomic developments, and potential impacts from geopolitical events as the historical information may no longer be relevant and it is difficult to predict the shape of future economic recovery. In addition, there is a risk of material misstatement in relation to completeness and accuracy of ECL provision due to incorrect assignment of the processing status.

Due to the material nature of the leases and judgements involved in assessing for impairment and calculating provisions, this was deemed a key audit matter and significant auditor’s attention was deemed appropriate.

Refer to accounting policies on impairment of financial assets in Note 4 to the Financial Statements, pages 42 to 45.

assumptions and models relating to ECL calculation on finance lease receivables, and assessed its relevance for the purposes of Group and Company statutory audit.

The procedures included:

oAssessment of changes to GRENKE AG’s impairment policy and conceptual framework and listing of judgements and assumptions applied to determine ECL and components of ECL calculation (PD, lifetime PD, LGD, EAD, SICR, scenarios);

oAssessment of which models are used to determine PDs (stage 1 and 2), EADs, LGDs and SICR and model review regarding IFRS 9 compliance;

oVerification of the implementation and appropriateness of forward-looking information and input parameters for PD and LGD estimation, as well as the data generation process and the implementation of macro-economic information;

oAssessment of SICR and staging using analytical procedures;

oAssessment of the completeness and the correct modelling of EAD-relevant components;

oTesting of mathematical accuracy of ECL components;

oReperformance of source codes for the performing model components, including derivation of macroeconomic shift factors.

oAssessment of internal validation concepts and model validation results, including backtesting; and

oRecomputing ECL in the course of individual file review as well as on portfolio basis;

•We performed substantive procedures that are specifically responsive to the identified risk relating to incorrect assignment of the BA-class driven by the lease processing status. We have:

Independent auditor’s report to the members of Grenke Finance Plc

16

oAssessed the accuracy of the categorisation (or bucketing) in BA-classes (0-9) for a statistical sample of leases in line with the policy;

oChecked the bucket class in the non-performing contract listing as at 31 December 2023 to the status code on the lease system;

oReviewed logbook and other evidence on file, which contained internal discussions and information outlining the reasons for a contract being in particular bucket class; and

oConcluded on the appropriateness of the bucket class considering all the relevant evidence obtained over the characteristics of a given lease contract.

•We reconciled the ECL balances and movements from the underlying credit data to the general ledger and performed overall analytical review over credit risk exposures and related provision coverages, in order to assess the overall reasonableness; and

•Reviewed and assessed the adequacy of related disclosures in the financial statements in accordance with the requirements of IFRS 7.

Our planned audit procedures were completed without material exception.

Existence of finance lease receivables and occurrence and accuracy of related lease income and expenditure

The consolidated financial statements reflect net finance lease receivables amounting to €2,168m (2022: €1,934m). The consolidated statement of profit or loss reflects net lease income of €136m (2022: €117m).

The Group and Company carries on its own leasing activities through commission agents, who are GRENKE AG Group companies in various European countries. These agents write leases on behalf of the Group and

The following audit work has been performed to address the risks:

•Performed an understanding of lease origination and commission model business processes and performed test of design, implementation and operating effectiveness of relevant controls at Group and Company level.

•Obtained and inspected signed lease contracts and other supporting documents, in order to confirm existence for a statistical sample of leases.

•Reconciled the balances from transfer sheet to the general ledger and agreed to the respective invoices and bank statements for a sample of months/agents.

Independent auditor’s report to the members of Grenke Finance Plc

17

Company and are paid commission fees. The agents acquire all equipment to be leased on behalf of Group and Company and also collect all income from leases. All income and expenditure associated with leases is passed onto Group and Company, as the legal and beneficiary lease owner.

Due to the material nature of the leases and related income and expenditure, this was deemed a key audit matter, having the greatest effect on the allocation of resources and where the audit team’s efforts were directed.

Refer to accounting policies on finance lease receivables and lease income in Note 4 to the Financial Statements, pages 36 to 37 and 47 and 48, respectively.

•Agreed key lease terms to signed lease contracts and ensured these are captured correctly in the system.

•For a statistical sample of leases, obtained amortisation schedules, recalculated present values based on the lease terms and agreed amounts to ledger. Capitalised initial direct costs and other lease income were tested concurrently with this procedure.

•Performed test of detail using the statistical sampling methodology on lease interest income, secondary lease income and loss on termination earned during the year by recalculating the interest and other income earned from the lease contracts using the signed lease contracts and other evidence to verify the calculation inputs.

•Performed test of detail using the statistical sampling methodology to test accuracy of commission fees and other lease related expenses with reference to cooperation agreements and relevant lease contracts, and traced to invoices;

•Assessed the consistency of accounting treatment for finance lease receivables and related income and expenditure with reference to relevant IFRS guidance (i.e. IFRS 9, 15, 16).

Our planned audit procedures were completed without material exception.

Other information

Other information comprises information included in the annual report, other than the financial statements and the auditor’s report thereon, including the Director’s Report. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies in the financial statements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Independent auditor’s report to the members of Grenke Finance Plc

18

Matters on which we are required to report by the Companies Act 2014

•We have obtained all the information and explanations which we consider necessary for the purposes of our audit.

•In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited.

•The financial statements are in agreement with the accounting records.

•In our opinion the information given in the Directors’ report is consistent with the financial statements. Based solely on the work undertaken in the course of our audit, in our opinion, the Directors’ report has been prepared in accordance with the requirements of the Companies Act 2014.

Matters on which we are required to report by exception

Based on our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ report.

Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by sections 305 to 312 of the Act have not been made. We have no exceptions to report arising from this responsibility.

Corporate governance statement

In our opinion, based on the work undertaken in the course of our audit of the financial statements, the description of the main features of the internal control and risk management systems in relation to the financial reporting process, specified for our consideration and included in the Corporate Governance Statement, is consistent with the financial statements and has been prepared in accordance with section 1373(2)(c) of the Companies Act 2014.

Based on our knowledge and understanding of the Company and its environment obtained in the course of our audit of the financial statements, we have not identified material misstatements in the description of the main features of the internal control and risk management systems in relation to the financial reporting process included in the Corporate Governance Statement.

Responsibilities of management and those charged with governance for the financial statements

As explained more fully in the Directors’ responsibilities statement, management are responsible for the preparation of the consolidated financial statements which give a true and fair view in accordance with IFRS as adopted by the European Union, and as regards the Company financial statements, in accordance with Generally Accepted Accounting Practice in Ireland, including FRS 101, and for such internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group and Company’s financial reporting process.

Independent auditor’s report to the members of Grenke Finance Plc

19

Responsibilities of the auditor for the audit of the financial statements

The auditor’s objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Irish Auditing and Accounting Supervisory Authority’s website at: http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-

a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf. This description forms

part of our auditor’s report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (Ireland).

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the Group and Company, and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to compliance with EU Transparency Directive (“Transparency Law” in Luxembourg) and Luxembourg Stock Exchange listing and reporting requirements; Market Abuse (Directive 2003/6/EC) Regulations 2005; Prospectus (Directive 2003/71/EC) Regulations 2005; Criminal Justice (Corruption Offenses) Act 2018; Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (Updated 2021); General Data Protection Regulation (GDPR) along with further national rules set out in the Irish Data Protection Act 2018; Safety, Health and Welfare at Work Act 2005, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as Irish tax laws, the Companies Act 2014, and the reporting requirements of the European Single Electronic Format (ESEF). We evaluated managements incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial performance and management bias through judgements and assumptions in significant accounting estimates.

Independent auditor’s report to the members of Grenke Finance Plc

20

Responsibilities of the auditor for the audit of the financial statements (Continued)

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud (continued)

We apply professional scepticism through the audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in the financial statement.

In response to these principal risks, our audit procedures included but not limited to:

•enquiries of management on the policies and procedures in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non- compliance and whether they have knowledge of any actual, suspected or alleged fraud;

•inspection of the Group and Company’s regulatory and legal correspondence and review of minutes during the year to corroborate inquiries made;

•gaining an understanding of the Group and Company’s current activities, the scope of authorisation and the effectiveness of its internal control environment established to mitigate risk related to fraud;

•discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud, and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements throughout the audit;

•identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;

•designing audit procedures to incorporate unpredictability around the nature, timing and extent of our testing;

•challenging assumptions and judgements made by management in their significant accounting estimates, including determination of impairment of finance lease receivables;

•evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view; and

•assessment of the appropriateness of the collective competence and capabilities of the engagement team to identify or recognise non-compliance with the laws and regulations included audit partners’ consideration of the engagement team's:

ounderstanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation;

oinvolvement of internal IT, modelling and tax specialists;

oknowledge of the finance leasing industry in which the client operates; and

ounderstanding of the legal and regulatory requirements specific to the Group and Company including:

▪the provisions of the applicable legislation;

▪the regulators rules and related guidance, including guidance issued by relevant authorities that interprets those rules; and

▪the applicable statutory provisions.

The primary responsibility for the prevention and detection of irregularities rests with those charged with governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or override of internal controls.

Independent auditor’s report to the members of Grenke Finance Plc

21

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Report on other legal and regulatory requirements

We were appointed by the Board of Directors on the 10th December 2021 to audit the financial statements for the year ended 31 December 2021, and subsequent years subject to re-appointment. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is three years.

The non-audit services prohibited by the IAASA’s Ethical Standard were not provided to the Group and Company and we remain independent of the Group and Company in conducting our audit.

The audit opinion is consistent with the additional report to the board of directors and Grenke AG audit committee.

COLIN FEELY

For and on behalf of

Grant Thornton

Chartered Accountants & Statutory Audit Firm

13-18 City Quay

Dublin 2

D02 ED70

Ireland

Date: 7 March 2024

GRENKE FINANCE PLC

22

CONSOLIDATED STATEMENT OF PROFIT AND LOSS

for the financial year ended 31 December 2023

Continuing Operations		2023	2022
	Note	€	€
Lease income	7	135,920,859	116,990,054
Income from protecting lease equipment	8	39,294,558	43,180,186
Interest income and similar income	9	91,495,187	53,720,849
Total operating income		266,710,604	213,891,089
Movement in expected credit loss allowance on finance lease receivables	10	(52,849,687)	(39,785,499)
Movement in expected credit loss allowance on other financial assets	11	5,930,735	(3,555,453)
Interest expense and other charges	12	(123,418,952)	(73,675,469)
Foreign exchange (loss)/gain	13	(11,966,729)	10,314,618
Net gain/(loss) on financial instruments at fair value through profit or loss	14	3,806,103	(15,327,958)
Other income	15	2,322,702	9,594,377
Other operating expenses	16	(37,680,232)	(34,537,861)
Profit before tax		52,854,544	66,917,844
Taxation	18	(6,370,587)	(7,252,338)
Profit for the year		46,483,957	59,665,506

The accompanying notes form an integral part of these consolidated financial statements.

GRENKE FINANCE PLC

23

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the financial year ended 31 December 2023

	Note	2023	2022
		€	€
Profit for the year		46,483,957	59,665,506
Other Comprehensive Income
Items that may be reclassified to profit or loss in
subsequent years
Gains/(losses) relating to cash flow hedges	27	(6,387,884)	14,373,920
Tax relating to cash flow hedges	28	798,485	(1,796,741)
Other comprehensive income net of tax		(5,589,399)	12,577,179
Total comprehensive income for the year		40,894,558	72,242,685

The accompanying notes form an integral part of these financial statements.

GRENKE FINANCE PLC

24

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2023

	Note	2023	2022
NON−CURRENT ASSETS		€	€
Property, plant & equipment	19	1,047,225	374,838
Subordinated loans and reserve accounts	21	53,243,803	46,730,526
Amounts due from related parties	22	688,903,597	640,930,341
Finance lease receivables	25	1,407,820,688	1,229,700,967
Trade and other receivables	26	42,371,289	33,553,753
Derivative financial instruments	27	5,846,454	14,441,960
Corporation tax receivable	29	3,882,462	3,882,462
		2,203,115,518	1,969,614,847
CURRENT ASSETS
Subordinated loans and reserve accounts	21	30,284,456	25,261,871
Leased assets held for sale	24	943,461	1,048,553
Finance lease receivables	25	759,890,804	703,941,988
Amounts due from related parties	22	1,132,024,567	1,162,313,292
Trade and other receivables	26	132,938,774	151,953,627
Derivative financial instruments	27	6,001,648	8,169,853
Corporation tax receivable	29	-	324,759
Cash and cash equivalents	30	143,284,978	38,969,272
		2,205,368,688	2,091,983,215
TOTAL ASSETS		4,408,484,206	4,061,598,062

The accompanying notes form an integral part of these financial statements.

GRENKE FINANCE PLC

25

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2023 (Continued)

31 December

31 Dcecember

		2023	2022
NON CURRENT LIABILITIES		€	€
Financial liabilities	31	2,221,927,003	1,869,790,843
Amounts due to related parties	33	633,767,332	502,085,002
Deferred income	36	-	169
Derivative financial instruments	27	14,746,375	3,180,624
Lease liabilities	35	1,083,367	-
Deferred tax liability	28	956,386	1,770,438
		2,872,480,463	2,376,827,076
CURRENT LIABILITIES
Financial liabilities	31	762,214,695	971,564,013
Amounts due to related parties	33	591,848,419	465,457,102
Lease liabilities	35	-	339,631
Derivative financial instruments	27	5,127,670	2,788,184
Deferred income	36	170	3,006
Trade and other payables	37	47,507,870	46,972,017
Corporation tax payable	29	763,328	-
		1,407,462,152	1,487,123,953
TOTAL LIABILITIES		4,279,942,615	3,863,951,029
CAPITAL AND RESERVES
Share capital	38	50,000	50,000
Capital contribution	38	67,000,000	67,000,000
Retained earnings		54,546,951	118,062,994
Cash flow hedge reserve	39	6,944,640	12,534,039
TOTAL EQUITY		128,541,591	197,647,033
TOTAL EQUITY AND LIABILITIES		4,408,484,206	4,061,598,062

Approved and authorised by the Board of Directors and signed on its behalf:

Patrick Spain	Angelika Wiedemann
Director	Director

7 March 2024

The accompanying notes form an integral part of these financial statements.

GRENKE FINANCE PLC

26

COMPANY STATEMENT OF FINANCIAL POSITION

as at 31 December 2023

Note

2023

2022

NON−CURRENT ASSETS

€

Property, plant & equipment

19

1,047,225

374,838

Investments in controlled undertakings

20

450

Subordinated loans and reserve accounts

21

53,243,803

46,730,526

Amounts due from related parties

23

711,863,662

675,151,904

Finance lease receivables

25

1,407,820,688

1,229,700,967

Trade and other receivables

26

42,371,289

33,553,753

Derivative financial instruments

27

5,846,454

14,441,960

Corporation tax receivable

29

3,882,462

2,226,076,033

2,003,836,860

CURRENT ASSETS

Subordinated loans and reserve accounts

21

30,284,456

25,261,871

Leased assets held for sale

24

943,461

1,048,553

Finance lease receivables

25

759,890,804

703,941,988

Amounts due from related parties

23

1,143,066,712

1,175,251,209

Trade and other receivables

26

132,938,774

151,953,627

Derivative financial instruments

27

6,001,648

8,169,853

Corporation tax receivable

29

-

324,759

Cash and cash equivalents

30

143,284,978

38,969,272

2,216,410,833

2,104,921,132

TOTAL ASSETS

4,442,486,866

4,108,757,992

The accompanying notes form an integral part of these financial statements.

GRENKE FINANCE PLC

27

COMPANY STATEMENT OF FINANCIAL POSITION

as at 31 December 2023 (Continued)

2023

2022

NON CURRENT LIABILITIES

€

Financial liabilities

32

1,920,415,028

1,605,264,170

Amounts due to related parties

34

958,239,822

800,833,688

Lease liabilities

35

1,083,367

-

Deferred income

36

-

169

Derivative financial instruments

27

14,746,375

3,180,624

Deferred tax liability

28

956,386

1,770,438

2,895,440,978

2,411,049,089

CURRENT LIABILITIES

Financial liabilities

32

592,023,798

805,279,977

Amounts due to related parties

34

773,081,461

644,679,055

Lease liabilities

35

-

339,631

Derivative financial instruments

27

5,127,670

2,788,184

Deferred income

36

170

3,006

Trade and other payables

37

47,507,870

46,972,017

Corporation tax payable

29

763,328

0

1,418,504,297

1,500,061,870

TOTAL LIABILITIES

4,313,945,275

3,911,110,959

CAPITAL AND RESERVES

Share capital

38

50,000

Capital contribution

38

67,000,000

Retained earnings

54,546,951

118,062,994

Cash flow hedge reserve

39

6,944,640

12,534,039

TOTAL EQUITY

128,541,591

197,647,033

TOTAL EQUITY AND LIABILITIES

4,442,486,866

4,108,757,992

Approved and authorised by the Board of Directors and signed on its behalf:

Patrick Spain	Angelika Wiedemann
Director	Director

7 March 2024

The accompanying notes form an integral part of these financial statements.

GRENKE FINANCE PLC

28

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the financial year ended 31 December 2023

Issued capital

Capital

Retained

Cash flow

Total equity

contribution

earnings

hedge reserve

€

As at 1 January 2023

50,000

67,000,000

118,062,994

12,534,039

197,647,033

Profit for the year

-

46,483,957

-

46,483,957

Other comprehensive income

-

(5,589,399)

Total comprehensive income

-

46,483,957

(5,589,399)

40,894,558

Transactions with owners of

the company contributions

and distributions (Note 40)

-

(110,000,000)

-

(110,000,000)

At 31 December 2023

50,000

67,000,000

54,546,951

6,944,640

128,541,591

Issued capital

Capital

Retained

Cash flow

Total equity

contribution

earnings

hedge reserve

€

As at 1 January 2022

50,000

67,000,000

148,397,488

(43,140)

215,404,348

Profit for the year

-

59,665,506

-

59,665,506

Other comprehensive income

-

12,577,179

Total comprehensive income

-

59,665,506

12,577,179

72,242,685

Transactions with owners of

the company contributions

and distributions (Note 40)

-

(90,000,000)

-

(90,000,000)

At 31 December 2022

50,000

67,000,000

118,062,994

12,534,039

197,647,033

GRENKE FINANCE PLC

29

COMPANY STATEMENT OF CHANGES IN EQUITY

for the financial year ended 31 December 2023

Issued capital

Capital

Retained

Cash flow

Total equity

contribution

earnings

hedge reserve

€

As at 1 January 2023

50,000

67,000,000

118,062,994

12,534,039

197,647,033

Profit for the year

-

46,483,957

-

46,483,957

Other comprehensive income

-

(5,589,399)

Total comprehensive income

-

46,483,957

(5,589,399)

40,894,558

Transactions with owners of

the company contributions

and distributions (Note 40)

-

(110,000,000)

-

(110,000,000)

At 31 December 2023

50,000

67,000,000

54,546,951

6,944,640

128,541,591

	Issued capital	Capital	Retained	Cash flow	Total equity
		contribution	earnings	hedge reserve
	€	€	€	€	€
As at 1 January 2022	50,000	67,000,000	148,397,488	(43,140)	215,404,348
Profit for the year	-	-	59,665,506	-	59,665,506
Other comprehensive income	-	-	-	12,577,179	12,577,179
Total comprehensive income	-	-	59,665,506	12,577,179	72,242,685
Transactions with owners of
the company contributions
and distributions (Note 40)	-	-	(90,000,000)	-	(90,000,000)
At 31 December 2022	50,000	67,000,000	118,062,994	12,534,039	197,647,033

GRENKE FINANCE PLC

30

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

		2023	2022
CASH INFLOWS FROM OPERATING ACTIVITIES	Note	€	€
Profit for the year	SOPL	46,483,957	59,665,506
Adjustments for non-cash items:
Taxation	18	6,370,587	7,252,338
Interest expense	5	119,630,404	70,123,230
Interest income	9	(91,495,187)	(53,720,849)
Depreciation	19	405,696	444,446
Expected credit loss allowance on finance lease receivables	10	52,849,687	39,785,499
Expected credit loss reversal/(allowance) on financial assets	5	(5,202,105)	4,241,868
Currency translation differences		11,867,592	(10,329,951)
Fair value measurement of subordinated loans		(281,178)	616,323
Foreign exchange translation adjustment to cash		59	(2)
Other non-cash income/expenses	5	(153,850)	(134,397)
Increase in subordinated loans and reserveaccounts	5	(11,254,684)	(32,878,569)
Decrease/(increase) in leased assets held for resale	5	105,092	(152,558)
Increase in lease receivables	5	(286,389,154)	(161,686,819)
Change in amounts due from/to related parties	5	84,841,660	38,874,008
Decrease/(Increase) in trade and other receivables	5	22,062,040	(45,568,315)
Change in the fair value of derivative financial instrumentsnot designated as hedges	5	2,042,966	(322,832)
(Decrease)/increase in other current liabilities	5	(14,666,863)	19,585,845
Interest paid	5	(86,980,458)	(60,675,578)
Interest received	9	91,495,187	53,681,199
Payments to Grenke Bank AG in respect of deferred riskpremium	5	(19,110,745)	(13,879,206)
Payments to lessors classified as interest under IFRS 16	12	(19,837)	(4,566)
Tax paid	5	(5,300,000)	(8,497,049)
Net cash outflow from operating activities		(82,699,134)	(93,580,429)

GRENKE FINANCE PLC

31

		2023	2022
CASH OUTFLOWS FROM INVESTING ACTIVITIES	Note	€	€
Payments for the acquisition of property, plant and equipment	19	(7,176)	(13,077)
Cash outflow from investing activities		(7,176)	(13,077)
CASH INLFOWS/(OUTFLOWS) FROM FINANCINGACTIVITIES
Proceeds from financial liabilities	41	1,755,026,745	1,247,938,310
Repayment of financial liabities	41	(1,614,644,527)	(1,177,170,944)
Proceeds from amounts owed to GRENKE AG Bank	41	607,258,253	431,765,071
Repayment of amounts owed to GRENKE AG Bank	41	(450,438,722)	(419,180,895)
Payment to lessors for right of use assets	41	(174,393)	(318,398)
Dividend paid	40	(110,000,000)	(90,000,000)
Cash inflow/(outflow) from financing activities		187,027,356	(6,966,856)
Cash and cash equivalents at the beginning of the year	30	38,969,272	139,524,351
Bank overdraft at the beginning of the year	41	(5,281)	-
Foreign exchange translation adjustment		59	(2)
Cash and cash equivalents at the end of the year	30	143,284,978	38,969,272
Bank overdraft at the end of the year	41	-	(5,281)
Change in cash and cash equivalents during the period		104,321,046	(100,560,362)
Net cash outflow from operating activities		(82,699,134)	(93,580,429)
Cash outflow from investing activities		(7,176)	(13,077)
Cash inflow/(outflow) from financing activities		187,027,356	(6,966,856)
Total cash inflow/(outflow)		104,321,046	(100,560,362)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 (continued)

GRENKE FINANCE PLC

32

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

1. GENERAL INFORMATION, STATEMENT OF COMPLIANCE AND GOING CONCERN ASSUMPTION

GRENKE Finance PLC is incorporated and domiciled in the Republic of Ireland. Grenke Finance is a public limited company.

The Company issues debt securities listed on the main market of the Luxembourg Stock Exchange.

The Company financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with the Companies Act 2014.

The Group consolidated financial statements were prepared in accordance with IFRS as adopted by the EU and in accordance with the Companies Act 2014.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

•No statement of cash flows for the Company has been included

•The requirements of IFRS 7 Financial Instruments: Disclosures have not been followed by the Company when the equivalent disclosures are included in these financial statements in respect of the Group.

The accounting policies applied in the preparation of the Group and Company financial statements for the year ended 31 December 2023 are set out below in note 4 and have been applied consistently by all of the Group’s subsidiaries and have been consistently applied to all years presented, unless otherwise stated.

IFRS, as adopted, by the EU and applied by the Group and the FRS 101 Reduced Disclosure Framework in the preparation of these financial statements are those that were effective for the accounting period ending 31 December 2023.

The Group and Company’s management has made an assessment of the Group and Company’s ability to continue as a going concern and is satisfied that the Group and Company have the resources to continue for the foreseeable future. The Group and Company has recognised a net profit after tax of €46,483,957 for the year ended 31 December 2023 and, as

at that date, the total assets exceed total liabilities by €128,541,591.

The Directors are not aware of any material uncertainties which may cast significant doubt upon the Group and Company’s ability to continue as a going concern, and the Directors have a reasonable expectation that the Group and Company will continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual financial statements.

2. GRENKE AG GROUP

The Group and Company is wholly owned by GRENKE AG, a Company incorporated in Germany. References to the GRENKE AG Group in the Directors’ Report, financial statements and notes to the financial statements refers to the group of companies consisting of GRENKE AG and all of the companies it controls. References to the GRENKE AG Group financial

GRENKE FINANCE PLC

33

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

2. GRENKE AG GROUP (Continued)

statements refer to the consolidated financial statements of the GRENKE AG group. References to the Group and Company’s parent refer to GRENKE AG. Details of the GRENKE

AG Group are included in the GRENKE AG Group financial statements, the 2023 financial statements are expected to be publicly available at www.GRENKE.de on 7 March 2024.

3. CHANGES IN ACCOUNTING POLICIES

(a) Accounting standards implemented in 2023

The following amendments to standards whose application was mandatory as of fiscal year 2023 had no or only an immaterial effect on the Group and Company financial statements:

•IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"

•Amendments to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors"

•Amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice Statement 2 "Making Materiality Judgements"

•Amendments to IAS 12 "Income Taxes" on the recognition of deferred taxes from a single transaction

•Amendments to IAS 12 "Income Taxes" on International Tax Reform - Pillar 2 modelling rules

IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"

The new accounting standard IFRS 17 "Insurance Contracts" replaces the existing IFRS 4 "Insurance Contracts" and determines the recognition, measurement, presentation and disclosures in the notes to insurance contracts. The amendments from June 2020 include a deferral of the first-time application of IFRS 17 from 1 January 2021 by two years to 1 January 2023.

With the amendments to IFRS 17 on the first-time application of IFRS 17 and IFRS 9 - Comparative Information, a transitional provision was established that optionally allows a different classification in accordance with IFRS 9 for the comparative periods in the year of first-time application of both standards. In this case, for each financial asset for which the comparative period has not been adjusted to IFRS 9, the classification that would be used on the basis of the information available at the time of transition may be applied.

The first-time application of IFRS 17 and the subsequent amendments to IFRS 17 had no impact on the consolidated financial statements of the Group and Company, as the Consolidated Group does not have any insurance contracts as defined by IFRS 17.

Amendment to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors"

The amendments to IAS 8 clarify the distinction between changes in accounting policies and changes in accounting estimates. It is defined that an accounting estimate always relates to a measurement uncertainty of a financial variable in the financial statements. This distinction is important as changes in estimates are applied prospectively to transactions and other events from the date of the change in estimate, whereas changes in accounting policies are generally also applied retrospectively to past transactions and other past events.

GRENKE FINANCE PLC

34

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

3. CHANGES IN ACCOUNTING POLICIES

(a) Accounting standards implemented in 2023 (Continued)

Amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice Statement 2 "Making Materiality Judgements"

The amendments to IAS 1 stipulate that companies only have to present their "material" accounting policies in the notes (instead of previously: the "significant" accounting policies). To be material, the accounting policy must be related to significant transactions or other events and be event-driven (e.g. change in policy). The amendments are intended to help improve disclosures on accounting policies. In addition, the guidance in IFRS Practice Statement 2 has been amended accordingly. The amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice Statement 2 "Making Materiality Judgements" had an immaterial effect on the consolidated financial statements of the Group and Company.

Amendments to IAS 12 "Income Taxes" on the recognition of deferred taxes from a single transaction

The amendments address existing uncertainties in the recognition of deferred taxes in connection with leases and disposal or restoration obligations.

If assets and liabilities are recognised for the first time, the so-called "initial recognition exemption" already applied under certain conditions. In these cases, deferred taxes are not recognised as an exception. In practice, there was uncertainty as to whether this exemption also applied to leases and disposal or restoration obligations. A narrow-scope amendment to IAS 12 has now been made to ensure uniform application of the standard.

As a result of this amendment, the initial recognition exemption no longer applies to transactions in which both deductible and taxable temporary differences of the same amount arise on initial recognition, even if the other previously applicable conditions are met. This is therefore a back exemption from the "initial recognition exemption" for narrowly defined cases. The amendments mean that deferred taxes must be recognised, for example, on leases recognised by the lessee and on disposal or restoration obligations.

The amendment to IAS 12 had no effect on the consolidated financial statements of the Group and Company as the previous accounting practice already complied with the amended regulations.

Amendments to IAS 12 "Income Taxes" on International Tax Reform - Pillar 2 modelling rules

With the amendments to IAS 12 published on 23 May 2023, the IASB is responding to stakeholder concerns about the potential impact of the Pillar 2 model rules published by the OECD on the accounting for deferred taxes. The amendments to IAS 12 introduce a temporary exemption for the recognition of deferred taxes resulting from the introduction of global minimum taxation and targeted disclosures in the notes for affected entities. The exemption is to be applied immediately after publication of the amendments to IAS 12.

GRENKE FINANCE PLC

35

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

3. CHANGES IN ACCOUNTING POLICIES (Continued)

(a) Accounting standards implemented in 2023 (Continued)

Amendments to IAS 12 "Income Taxes" on International Tax Reform - Pillar 2 modelling rules (Continued)

Ireland introduced EU’s directive on Pillar II Global minimum tax guidelines transformation under the Finance (No. 2) Bill 2023, which is now formally adapted in the Tax Consolidation Act, 1997. These regulations are set to be applicable to qualifying businesses from accounting periods starting on or after 31 December 2023. Pillar Two aims to ensure that in-scope entities i.e. those with consolidated group revenues of €750m or more in at least two of the four preceding fiscal years pay at least a 15% effective tax rate on their profits in each jurisdiction they operate in. This legislation does not apply to the Grenke AG Group as the consolidated revenue is lower than €750m in at least two of the last four preceding fiscal years.

(b) Accounting standards and interpretations already published – not yet implemented

The IASB has published further amended standards or interpretations which are set out below, the application of which will only become mandatory at a later date. Several of these standards have already been endorsed by the EU. Voluntary early application is expressly permitted by these standards. The Group and Company does not make use of this option. These standards will be implemented in the consolidated financial statements at the time of mandatory

application. The effects on the Group and Company consolidated financial statements are being examined. These amendments are not expected to have a material impact on the reporting in the Group and Company consolidated financial statements.

Accounting standard or interpretation

Description

Publication by IASB

Start of Application

IFRS 16

Amendments to IFRS 16 "Leases" on the subsequent measurement of a lease liability in the event of a sale and leaseback transaction

22.09.2022

01.01.2024

IAS 7, IFRS 7

Amendments to IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments: Disclosures" (Supplier Financing Arrangements)

25.05.2023

01.01.2024

IAS 21

Amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates" (lack of exchangeability)

15.08.2023

01.01.2025

Amendments to IAS 1 "Presentation of Financial Statements": (Classification of liabilities as current and non current)

31.10.2022

01.01.2024

IAS 1

GRENKE FINANCE PLC

36

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES

(a) Basis of preparation

The Group financial statements have been prepared in accordance with IFRS as adopted by the EU and the Company financial statement in accordance with FRS 101 under the historical cost convention, except where assets and liabilities are stated at fair value in accordance with relevant accounting policies. The figures have been rounded to the nearest Euro. The material accounting policies applied in the preparation of these financial statements are set out below in paragraphs 4 (b) to 4 (i).

The preparation of the Group and Company financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

at 31 December 2023 and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best estimate of the amount,

event or actions, actual results ultimately may differ from those estimates, as outlined in note 4 (j) & (k).

The profit attributable to equity shareholders disclosed in the financial statements of the Company was €46m (2022: €60m). In accordance with Section 304 of the Companies Act 2014, GRENKE Finance PLC (the ‘Company’) is availing of the exemption from presenting its

individual Statement of Profit or Loss, which forms part of the approved Financial Statements, to the Annual General Meeting and from filing it with the Registrar of Companies.

Basis of consolidation

The Group Financial Statements comprise the Financial Statements of the Company

undertaking and five structured entities, FCT “GK”-Compartment “G2” (FCT GK 2), FCT “GK”-Compartment “G4” (FCT GK 4), FCT “GK”-Compartment “G5” (FCT GK 5) and Elektra Purchase No. 25 Designated Activity Company.

The basis for consolidating the four entities is set out in note 4 (j).

(b) Leases

The Company and Group as lessor

Leases are defined as agreements in which the lessor transfers the right to the lessee to use an identifiable asset for an agreed time period in exchange for the payment of consideration for an agreed time period.

Whether an agreement can be considered as a lease or containing a lease, depends on the economic substance of the agreement at the beginning of the agreement. For the lessor, leases are to be classified as either operating leases or finance leases.

FINANCE LEASES

Under a finance lease, all of the significant risks and rewards of legal ownership are transferred from the lessor to the lessee.

Finance leases are initially recognised in the statement of financial position as per the date they are available for use (upon the issue of the lessee’s letter of acceptance) as lease

GRENKE FINANCE PLC

37

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(b) Leases (Continued)

The Company and Group as lessor (Continued)

FINANCE LEASES (Continued)

receivables at an amount equal to the net investment, which represents the sum of outstanding lease payments and non-guaranteed residual values of the underlying assets, discounted at

the interest rate underlying the lease. Lease payments as per the date of the lease object’s availability for use are divided into interest payments and principal payments in such a manner

that they reflect a periodic rate of return for the receivable. Initial direct costs incurred in connection with the conclusion of the contract, e.g. agents and reseller commissions, are taken into consideration when calculating the net investment value.

(c) Foreign currency

The financial statements are prepared in Euro (‘€’). The functional currency of the Company is the Euro (‘€’) the currency of the primary economic environment that all five entities in the Group operate in. The presentational currency in the financial statements is Euro (‘€’).

Transactions in a currency that differs from the functional currency are first translated into the functional currency at the prevailing spot rate on the day of the transaction. Monetary assets and liabilities denominated in a foreign currency are translated into the functional currency

using the closing rate on each reporting date. The translation differences that result are recognised through Profit or Loss. If the monetary asset or liability denominated in a foreign currency is hedged and the conditions of cash flow hedge accounting are met translation differences that result are then recycled through other comprehensive income.

(d) Measurement of fair values

The Group and Company measures derivative financial instruments at their fair value through the statement of profit or loss and where cash flow hedge accounting is adopted through other

comprehensive income. The Group and Company measure subordinated loans, provided to Coral Purchasing (Ireland) 2 DAC, Opusalpha Purchaser II Limited and Kebnekaise Funding Limited, which provide credit enhancement to the senior investors in the Grenke AG SPVs at

fair value through the statement of profit or loss. The fair value of financial instruments measured at amortised cost are presented in note 42.

The Group and Company uses observable market data, as far as possible, for determining the fair value of an asset or a liability. The fair values are assigned to different levels in the fair value hierarchy based on the input parameters used in the valuation methods:

•Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;

•Level 2: Measurement procedures in which all input factors having a significant effect on the recognition of fair value are directly or indirectly observable; and

•Level 3: Measurement procedures which use input factors that have a significant effect on the fair value recognised and are not based on observable market data.

GRENKE FINANCE PLC

38

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(d) Measurement of fair values (Continued)

If the input factors used to determine the fair value of an asset or a liability may be assigned to different levels in the fair value hierarchy, then the measurement at fair value is completely

assigned to that level in the fair value hierarchy, which corresponds to the lowest input factor that is material for the overall measurement.

The Group and Company recognises reclassifications between the different levels of the fair value hierarchy at the end of the reporting period in which the change has occurred. In the reporting year, there were no reclassifications between the three levels of the measurement hierarchy.

(e) Financial Instruments

Categories of financial instruments

Financial instruments within the scope of IFRS 9 “Financial Instruments” are divided into the following classes:

FINANCIAL ASSETS

Finance lease receivables are recognised in accordance with IFRS 16 (see Note 4 (b)) Finance lease receivables, however, are subject to the provisions of IFRS 9 for derecognition and impairment.

Measured at amortised cost

•Cash and cash equivalents, reserve accounts, amounts due from group undertakings, amounts due from franchisees, subordinated loans where the underlying lease

receivables are Group and Company lease receivables, credit support accounts, trade and other receivables and amounts due from subsidiaries.

At fair value through profit or loss

•Derivative financial instruments measured at fair value without hedging relationship.

•Subordinated loans, provided to Coral Purchasing (Ireland) 2 DAC, Opusalpha Purchaser II Limited and Kebnekaise Funding Limited, which provide credit enhancement to the senior investors in the Grenke AG SPVs. (subordinated loans to Grenke AG SPVs)

At fair value through other comprehensive income

•Derivative financial instruments measured at fair value designated under cash flow hedging relationship, to the extent of the effective portion in the change in fair value.

FINANCIAL LIABILITIES

Measured at amortised cost

GRENKE FINANCE PLC

39

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Categories of financial instruments (Continued)

FINANCIAL LIABILITIES (Continued)

•Debt securities in issue, amounts owed to GRENKE AG Group undertakings, asset based liabilities, bank loans, accruals and deferred income.

At fair value through profit or loss

•Derivative financial instruments measured at fair value without hedging relationship.

At fair value through other comprehensive income

•Derivative financial instruments measured at fair value designated under cash flow hedging relationship, to the extent of the effective portion in the change in fair value.

Measurement of financial instruments

FINANCIAL ASSETS

IFRS 9 provides for three types of subsequent measurement of financial assets:

Measurement at amortised cost (AC)

Measurement at fair value through OCI (FVOCI)

Measurement at fair value through P&L (FVPL)

Financial assets are allocated to the measurement categories upon initial recognition. Reclassifications are only permissible in the event of a change in the business model that results in a significant impact on the business processes. Where appropriate, reclassifications are made prospectively as per the first day of the first reporting period following the change in the business model. No reclassifications took place during the reporting periods.

Financial assets at amortised cost

Debt instruments are accounted for at amortised cost when the contractually agreed payment characteristics consist solely of principal and interest payments ("SPPI criterion") on the

outstanding principal and are held within the scope of a business model whose objective is to hold financial assets in order to collect the contractual cash flows of the financial asset.

The initial measurement in the measurement category is at fair value plus any additional and individually allocable transaction costs which, in the case of financial assets, increase the fair value. This, however, excludes trade receivables with no significant financing components, which are measured at their transaction price. After their initial recognition, financial assets in the category "financial assets at amortised cost" are measured at amortised cost using the

effective interest method less any impairment. Amortised cost includes all discounts and premiums paid upon acquisition and includes all fees that are an integral part of the effective

GRENKE FINANCE PLC

40

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

FINANCIAL ASSETS (Continued)

interest rate, including transaction costs. Impairment is tested based on the expected credit loss model under IFRS 9, which stipulates the recognition of impairment through profit or loss

based on expected future credit losses. Please refer to impairment of financial assets in this note. Financial assets measured at amortised cost are recognised as per the settlement date.

The item cash and cash equivalents and reserve accounts in the consolidated and company statements of financial position comprises cash on hand and balances at banks and central banks with a maturity of less than three months. Bank overdrafts are deducted from cash and cash equivalents in the statement of cash flows.

Financial assets at fair value through profit or loss (FVPL)

The measurement at fair value with changes recognised in profit or loss is compulsory if either the financial instrument has not been allocated to a portfolio of the other aforementioned business models (AC or FVOCI) or if its cash flows do not meet the SPPI criterion.

The subsequent measurement at amortised cost is not possible for derivatives since they do not regularly meet the SPPI criterion. Derivatives are always to be measured at fair value through profit or loss provided they are not in a hedging relationship (hedge accounting). The Group and Company does not hold any financial assets at fair value through profit or loss as per the reporting date except for non subsidiary subordinated loans to Grenke AG SPVs and derivatives. Derivative financial instruments held by the Group and Company that are not in a hedging relationship are solely used to hedge currency risk. Changes in the fair value of these derivatives are recorded under "Net (loss)/gain on financial instruments at fair value through profit or loss”. Changes in the fair value of subordinated loans to Grenke AG SPVs are recorded as “Fair value adjustment for subordinated loans” on the Statement of profit or loss.

FINANCIAL LIABILITIES

Financial liabilities at amortised cost

Financial liabilities are initially recognised at fair value, net of transaction costs. In subsequent periods, they are recognised at amortised cost. The deducted transaction costs and any debt discounts are amortised over the lease term in profit or loss using the effective interest method.

Refinancing liabilities, which result from the sale of the lease receivables to the respective refinancing party but where the lease receivables remain as an asset because the Group and Company has retained substantially all of the risks and rewards of the asset ownership and also retains control of the transferred asset, are recognised at the present value of the payments yet to be made to the refinancing party. The originally agreed interest rate is used

GRENKE FINANCE PLC

41

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

FINANCIAL LIABILITIES (Continued)

Financial liabilities at amortised cost (Continued)

as the discount rate for fixed interest loans. Upon repayment, regular payments are split into an interest portion and a principal component. The interest portion is recognised as an expense from interest on refinancing.

Financial liabilities are measured at amortised cost using the effective interest method under IFRS 9, except when they are financial liabilities measured at fair value.

Interest expense on financial liabilities are recognised using the effective interest rate method.

Financial liabilities at fair value

The Group and Company did not hold any financial liabilities at fair value through profit or loss as per the reporting date except for derivatives. Derivative Financial Instruments held by the Group and Company are solely used to hedge interest rate and currency risk. Changes in the fair value of derivatives are recorded under “Net (loss)/gain on financial instruments at fair value through profit or loss” or if hedge accounting has been applied to the derivative financial instrument the effective part of the change in fair value will be recorded under other comprehensive income.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING PRACTICES

In order to manage interest rate and foreign currency risks the Group and Company employs derivative financial instruments (principally interest rate swaps, cross-currency swaps and forward foreign exchange contracts). Derivative financial instruments are recognised initially at fair value on the date on which a derivative contract is entered into and are subsequently

remeasured at fair value. The carrying value of derivatives is fair value based on discounted future cash flows and adjusted for counterparty risk. Future floating rate cash flows are estimated based on future interest rates (from observable yield curves at the end of the

reporting period). Fixed and floating rate cash flows are discounted at future interest rates and translated at period-end foreign exchange rates. Forward foreign exchange contracts are used to hedge the spot price risk on currency exposures. The forward price elements of the forward exchange contract is included in a cost of hedging reserve in other comprehensive income if the forward exchange contract meets the criteria for hedge accounting and is amortized to profit and loss over the life of the forward exchange contract.

At the inception of a derivative transaction, the Group and Company documents the relationship between the hedged item and the hedging instrument together with its risk management objective and the strategy underlying the proposed transaction. The Group and Company also documents its assessment, both at the inception of the hedging relationship and subsequently on an ongoing basis, of the effectiveness of the hedging instrument in offsetting movements in

GRENKE FINANCE PLC

42

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING PRACTICES (Continued)

the cash flows of the hedged items. Where derivatives do not fulfil the criteria for hedge accounting, changes in fair values are reported in the Statement of profit or loss and Statement of financial position.

The Group and Company uses cash flow hedges in its treasury activities. For the purposes of hedge accounting, hedges are classified as cash flow hedges (which hedge exposure to fluctuations in future cash flows derived from a particular risk associated with a recognised asset or liability, or a highly probable forecast transaction that could affect profit or loss). Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a

recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective part of any gain or loss on the derivative financial instrument is recognised as other comprehensive income, net of the income tax effect, with the ineffective portion being reported in the Statement of profit or loss in the line “Net (loss)/gain on financial instruments at

fair value through profit or loss”. The associated gains or losses that had previously been recognised as other comprehensive income are transferred to the Statement of profit or loss contemporaneously with the materialisation of the hedged transaction. Any gain or loss arising

in respect of changes in the time value of the derivative financial instrument is excluded from the measurement of hedge effectiveness and is recognised immediately in the Statement of profit or loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. If a hedged transaction is no longer

anticipated to occur, the net cumulative gain or loss previously recognised as other comprehensive income is transferred to the Statement of profit or loss in the period.

IMPAIRMENT OF FINANCIAL ASSETS

At each year end date, the Group and Company determines the impairment on financial assets based on a model of expected credit losses in accordance with the requirements of IFRS 9.

The grouping of performing and non-performing lease receivables is based on processing categories see note 4 (n) Determination of impairment of lease receivables and amounts due from group companies and amounts due from franchisees. Determination is based on the expectations prevailing at that time. The performing and non-performing lease receivables are not grouped for the purpose of measuring expected credit losses on a collective basis.

The impairment allowances under IFRS 9 are applied to amounts due from Grenke AG Group undertakings measured at amortised costs, amounts due from Grenke AG Group franchisees measured at amortised cost, trade debtors and finance lease receivables under IFRS 16 "Leases".

GRENKE FINANCE PLC

43

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

IMPAIRMENT OF FINANCIAL ASSETS (Continued)

The impairment allowances under IFRS 9 are not applied to cash and cash equivalents because any allowances required would be immaterial.

Stage assignment

The standard provides for a determination of expected credit losses based on a three-step approach. Under the general approach, the loss from expected loss events during the next year (12M ECL) is recognised as a risk provision at the next reporting period end date (Stage 1). If there has been a significant deterioration in the credit risk since the first-time recognition but no credit impairment, the risk provision is recognised at the Stage of the expected credit losses over the entire remaining contractual life (Lifetime Expected Loss – LT ECL) (Stage 2). If there is credit impairment, the risk provisioning must also be set in the amount of the losses expected over the remainder of the entire contract period on the basis of the estimated, expected future cash flows of the asset (LT ECL) (Stage 3). The financial assets remain at

Stage 2 or 3 as long as the conditions for these Stages are met; otherwise they will be reassigned to an appropriate lower Stage.

Financial assets are generally recognised in Stage 1 upon initial recognition. In addition, Stage 1 includes all transactions that have a low credit default risk. Low credit default risk exists in cases where the external credit rating is in the range of investment grade.

In addition to the general approach (three-stage model), IFRS 9 provides for a simplified procedure for trade receivables and contract assets as well as for lease receivables falling

within the scope of IFRS 16. Under the simplified procedure, it is not necessary to track the change in credit risk. Instead, expected losses are to be recognised as a risk provision in the amount of the expected losses over the entire term (LT ECL) – both upon initial recognition and at each subsequent reporting date. An option exists to apply this simplified procedure to those trade receivables and contract assets that contain a material financing component, as well as for lease receivables. The Group and Company uses the simplified procedure for trade receivables. The exercise of the option was waived for determining risk provisions for lease receivables. Therefore, the general approach and classification of lease receivables in three stages applies. The financial assets remain at Stage 1 as long as the conditions for this Stage are met, otherwise they will be reassigned to an appropriate higher Stage.

For Stage 1 and Stage 2 financial assets, the Group and Company calculates interest income using the effective interest method on the gross carrying amount (i.e. without deduction of expected credit losses).

Significant increase in credit risk and credit impairment

Determining a significant increase in credit risk is necessary to establish the timing of the transition between Stage 1 and Stage 2 as defined above. Defining credit impairment is relevant to the timing of the transition to Stage 3. The Group and Company assesses a

GRENKE FINANCE PLC

44

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

IMPAIRMENT OF FINANCIAL ASSETS (Continued)

Significant increase in credit risk and credit impairment (Continued)

significant increase in credit risk since initial recognition and defines credit impairment on the basis of appropriate and comprehensible information. The information used is adapted to the circumstances of the respective portfolio and is explained below:

•Lease receivables: The Group and Company expects a significant deterioration in the credit quality of lease receivables when contractually agreed payments are more than 30 days past due or when the estimated probability of loss has deteriorated in a comparable manner as was observed in past 30-day-overdue cases. This is the case when the estimated probability of loss for the remaining term has doubled compared to the estimated probability of loss for the same period based on the information available when the contract

was signed. Creditworthiness is impaired if contractually agreed payments are more than 90 days overdue, the contract has been terminated by the Company, or at least one of the two conditions was not met at the measurement date but was met within the three proceeding months. The Group and Company usually terminates a lease contract as soon as the second lease instalment lapses. Once a contract has been terminated due to the lessee not paying lease instalments when due the full amount payable in the event of

default under the terms of the contract is recognised as a non performing lease receivable. The net present value of the lease receivable at the date of termination is excluded from performing finance lease receivables.

A lease is written off when there is no reasonable expectation of recovering the non performing lease receivable for example due to exhausting all possible court proceedings, notification from a liquidator that a liquidation has been concluded and there is no further funds available for distribution or all reasonable efforts have failed to locate a delinquent lessee.

•Amounts due from related parties The Group and Company expects a significant deterioration in the credit quality of non-current receivables from group undertakings and franchisees when a payment is overdue for more than 30 days or after the second reminder. Receivables that are overdue for more than 90 days are said to be credit-impaired.

GRENKE FINANCE PLC

45

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

IMPAIRMENT OF FINANCIAL ASSETS (Continued)

Significant increase in credit risk and credit impairment (Continued)

•Trade debtors: The Group and Company applies this simplified impairment model to these receivables. As a result, outstanding receivables are included in Stage 3 as long as they are classified as credit-impaired. Credit is impaired when receivables are more than 180 days past due or there is an objective indication of credit impairment. An objective indication, for example, could be the default or delinquency of a debtor, indications of bankruptcy and other features that indicate a reduction in the expected payments of the debtor.

•Cash and cash equivalents and credit support accounts: The assessment of whether credit risk has significantly deteriorated and the determination of credit impairment for these receivables is based on credit ratings, which are determined by observing published external credit ratings.

DERECOGNITION OF FINANCIAL ASSETS

A financial asset (or a part of a financial asset or a part of a group of similar financial assets) is derecognised along with the related impairment when the requirements have been met. The Group and Company derecognises financial assets when its contractual rights to cash flows have expired or the risks and rewards associated with the contractual rights are transferred to a buyer. When the Group and Company transfers its contractual rights to receive the cash

flows of an asset, but the rewards and risks are not transferred to the buyer, then the receivable is not derecognised and a financial liability is recognised in the same amount.

Writing off an asset also represents a derecognition. This is usually the case at the Group and Company when, after reasonable assessment, it can no longer be assumed that the contractual cash flows of a financial asset can be realised in whole or in part. This is the case,

for example, if legal proceedings are terminated or, in the case of lease transactions, the asset is disposed.

DERECOGNITION OF FINANCIAL LIABILITIES

Financial liabilities are derecognised if the contractual obligation underlying the liability is discharged or definitively expires. If an existing financial liability is exchanged for another financial liability of the same lender with substantially different terms, or if the terms of an

existing liability are changed substantially, then such an exchange or change is treated as a derecognition of the original liability and recognition of a new liability. A criterion that leads to a

GRENKE FINANCE PLC

46

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(e) Financial Instruments (Continued)

Measurement of financial instruments (Continued)

DERECOGNITION OF FINANCIAL LIABILITIES (Continued)

material change in the contract is when the discounted present value of the cash flows of the new contract conditions deviates by at least 10% from the discounted present value of the

remaining cash flows of the original debt instrument. The difference between the corresponding carrying amounts is recognised in profit or loss.

(f) Leased assets for resale

The value of leased assets for resale are recognised in the statement of financial position on the basis of historical selling prices for similar assets. Appropriate measurement is ensured through the use of maturity bands. The sale proceeds calculated using this approach are netted

against the expenses that are still incurred until the sale in order to correspond to the net realisable value.

(g) Grenke Bank AG Deferred Risk Premiums

The Group and Company borrows money from GRENKE Bank AG, details of which are provided in note 33 of the financial statements. GRENKE Bank AG forgives part of the amount owing if the underlying lease securitising that borrowing is terminated due to non payment of lease instalments. GRENKE Bank AG charges a risk premium for this arrangement on the date the loans are provided. The risk premium fees are amortised through profit or loss over the life of the lease instalments which securitise the borrowing and are classified in interest expense and other charges as amortisation of GRENKE Bank AG risk premium. The amount of the loan forgiven is offset against the deferred risk premiums amortised to profit and loss.

(h) Taxes

Tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The calculation of the amount is based on the tax rates and tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities and deferred tax assets

Deferred tax is recognised using the liability method on temporary differences arising at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the Company and Consolidated Financial Statements. Deferred tax assets are recognised for unused tax loss carryforwards to the extent that it is probable that future taxable profit will be available against which the unused tax loss carryforwards can be utilised. Deferred tax assets and liabilities are recognised using the tax rates expected to apply in the period in which the temporary differences are expected to reverse. The tax rates used are those that are enacted or substantively enacted by the year end date.

GRENKE FINANCE PLC

47

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(h) Taxes (Continued)

Deferred tax liabilities and deferred tax assets (Continued)

Where items are accounted for outside of the statement of profit or loss, the related deferred tax is recognised either in other comprehensive income or directly in equity as appropriate. The measurement of deferred tax liabilities and deferred tax assets must take into account the tax consequences of the manner in which an entity expects to recover the carrying amount of its assets or settle its liabilities at the year end date. Deferred tax assets and liabilities are not discounted.

Value-Added Tax (VAT)

Revenue, expenses, assets and liabilities are recognised net of VAT, with the following exceptions:

a.The VAT incurred on a purchase of assets or services is not recoverable from the tax authorities, in which case the VAT is recognised as part of the acquisition costs of the asset or as part of the expense item; and

b.Stated receivables and liabilities include VAT.

(i) Revenue recognition

The Group and Company acts as a principal and recognises income when it fulfils a performance obligation by transferring a promised good or service to a customer. The transfer is deemed to have occurred when the customer has obtained control over this asset.

Lease Income

The Lease income recognised as revenue in the statement of profit or loss is made up of the following:

•Lease interest income and secondary lease income recognised using the effective interest rate method.

•Income from document fees, interim lease rental fees, advance payments made by lessees in respect of leases which have been invoiced in the current year.

•Commissions payable by the Group and Company to agents and dealers invoiced in the current year.

•Capitalised initial direct costs consist of commissions payable by the Group and Company to agents and dealers less document fees and advance payments made by lessees which can be directly attributed to a lease which are excluded from lease income and the net amount is added to the cost of the equipment acquired to lease.

•Losses on termination of leases are made up of the amounts invoiced to lessees in respect of leases which have been terminated together with any amounts invoiced for

GRENKE FINANCE PLC

48

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(i) Revenue recognition (Continued)

the lease object less the net present value of the lease on the date of termination and the net present value off the lease object sold.

Income from protecting lease equipment

Revenue from service and protection business are reported under income from protecting lease equipment. The lease assets must be included under the Group and Company insurance

policy of the Group unless the lessees themselves insure the lease asset. For this service, the lessee will be charged fees on an annual basis that are recognised as revenue. The lessee’s payments are made in advance at the beginning of the respective calendar year or, in the case of newly concluded contracts, at the beginning of the lease term during the year. Deferred income from contracts with customers in the service and protection business is presented as contractual liabilities under the item deferred income from protecting lease equipment. When recognising the revenue from service and protection business, the

performance obligation over a certain period of time can be said to be fulfilled, meaning the income must also be realised over this period. Income is realised by means of output-based methods, under which revenue is determined on a straight-line basis over time.

(j) Accounting judgements

In applying the accounting policies, the senior management has made the following judgements that substantially influence the recognition and amounts in the financial statements. This does not include those decisions involving estimates.

Consolidation of structured companies

For refinancing, the Company uses various structured entities in the form of asset-backed commercial paper programmes ("ABCP programmes").

A significant activity over the term of these programmes is the selection of the receivables to be transferred. Furthermore, the initial selection of the receivables for each structured entity is defined according to specific selection criteria. In the event of a default of receivables, the settlement is managed by the Company. The rewards and risks of the receivables of the structured entity remain with the Company.

At FCT GK2, FCT GK4 and FCT GK5, 50% of the shares of the funds are held by the Company and are included in consolidation. The shares that are directly held by the Company are an indication for the inclusion in the scope of consolidation, but not the decisive criteria since all assumptions contained in IFRS 10 “Consolidated Financial Statements” must be met for

consolidation. FCT GK2, FCT GK4 and FCT GK5 are included in the scope of consolidation since all control factors are met, and the Company controls the entities by having the power to direct the relevant activities, having the right of variable returns, and also having the power to affect the amount of the returns.

Similarly with Elektra Purchase No. 25 Designated Activity Company, the Company has no participating interests but the Company controls the entity by having the power to direct the

relevant activities, having the right of variable returns, and also having the power to affect the amount of the returns.

GRENKE FINANCE PLC

49

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(j) Accounting judgements (Continued)

Leases-The Group and Company as Lessor

All leases are accounted for as finance leases because:

•Based on an analysis of its contractual conditions, the Group and Company, as lessor, has concluded that during the basic lease term all relevant opportunities and risks related to the ownership of the lease assets are transferred to the lessee in almost all leases.

•Over 99% of the lease contracts have total lease instalments due at the commencement of the initial lease term, which cannot be terminated without payment of all outstanding lease instalments, which are greater than the cost of the equipment which has been acquired by the Group and Company for that specific lease.

Determining the duration of a lease is a discretionary matter. The term of a lease comprises a non-terminable basic term during which a lessee is entitled to use an underlying asset. Extension periods are also included when the exercise of the underlying extension option by

the lessee can be deemed sufficiently certain.

The contract terms of the Group and Company do not provide early termination options for the lessee until the end of the agreed basic term, under which the lessee could unilaterally terminate the contract without the Group and Company’s consent. Early termination is only allowed by mutual agreement with a corresponding indemnification of damages made to the

Group and Company. Both the lessee and the Group and Company are entitled to terminate the contract at the end of the agreed basic term.

It is possible, however, that after the end of the set basic term, by not giving notice at the end of the basic term, the lessee may obtain an extension of the period of use of the lease object, if the Group and Company does not give notice of termination by the end of the basic term itself, e.g. in case of an attractive disposal opportunity. Experience has shown, however, that at the beginning of the contract it is impossible to judge with sufficient certainty whether the lease will continue to exist beyond the basic term. The initial term of the lease therefore

corresponds to the basic term of the agreement. In assessing the existence of sufficient certainty, the Group and Company takes into account all of the facts and circumstances that give the lessee an economic incentive to exercise or not exercise the extension option.

Leases-The Group and Company as Lessee

The Group and Company in its role as lessee makes assessments affecting the amount of lease liabilities and rights-of-use recognised in the statement of financial position under IFRS

16. Such assessments concern, for example, the determination of appropriate incremental borrowing rates for discounting the expected cash flows and the determination of the lease term.

The determination of the lease's term is subject to discretion, as the property agreements concluded regularly include extension and termination options for flexibility purposes that are to be included in the determination of the lease's term when there is sufficient certainty that

GRENKE FINANCE PLC

50

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(j) Accounting judgements (Continued)

Leases-The Group and Company as Lessee (Continued)

these options will be exercised. In assessing the existence of sufficient certainty, the Group and Company takes into account all of the facts and circumstances that give it an economic incentive in its role as lessee to exercise or not exercise the extension or termination option.

Corporation tax receivable

The Group and Company statement of financial position includes a corporation tax asset of €3.9m details of which are disclosed in note 29. This relates to a tax deduction which has been claimed in respect of licence fees and guarantee fees of €31m which were charged by Grenke AG to the Group and Company in 2017 and relate to the periods 2010 to 2016. These charges arose as a consequence of a tax audit of Grenke AG carried out by the German tax authorities. A correlative relief claim was submitted to the Irish Tax Authorities on 8 February 2021 for a

tax deduction of the full amount charged of €31m and a corporation tax asset of €3.9m which is equivalent to 12.5% of the expense was recognised in the 2017 accounts. This tax asset continues to be recognised. The claim was made within the required time limits and has been acknowledged by the Irish tax authorities. However, at the date of signing these accounts the Irish tax authorities have made factual enquiries with regard to the claim but have not entered into any discussions about the claim. It is expected that the Irish Tax authorities will consider the claim in 2024. The Group and Company has received professional advice with regard to the correlative relief claim. The Group and Company have considered this advice and are

aware that there is uncertainty as to whether the Irish Tax authorities will confirm that the full amount is tax deductible. However, the Group and Company have made the judgement that

in estimating of the value of the corporation tax asset, it is correct to assume that the Irish tax authorities will accept that the full amount of €31m is tax deductible, and therefore it is correct to accrue a corporation tax asset of €3.9m.

(k) Use of assumptions and estimates

In preparing the Group and Company financial statements, assumptions and estimates have been made that have affected the recognition and carrying amounts of assets, liabilities, income, expenses, and contingent liabilities.

Assumptions and estimates generally relate to the Group and Company uniform determination of the useful lives of assets; the measurement of provisions; the impairment of finance lease receivables and financial instruments; the recognition of unguaranteed residual values of lease

assets. In individual cases, the actual amounts may differ from the assumptions and estimates. Any changes will be recognised, when better information is available in the statement of

financial position and in the statement of profit or loss or if required by accounting standards in the statement of profit or loss over the appropriate period of time.

The key uncertainties in relation to estimates and the associated disclosure requirements are in the following areas:

GRENKE FINANCE PLC

51

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(k) Use of assumptions and estimates (Continued)

Determination of impairment of finance lease receivables

Performing lease receivables are generally to be recognised in accordance with the provisions of IFRS 16. Additionally, appropriate risk provisions as defined by IFRS 9 must be taken into account. The Group and Company uses the Expected Credit Loss (ECL) model to determine the expected loss and thus the impairment loss provisions. The ECL is calculated as a multiplication of the three parameters: Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EaD). This standard formula for determining the expected loss takes into account the probability of failure (PD), the maximum possible loss on failure (EaD), and ultimately the actual loss (LGD). Depending on whether the twelve-month period or the total residual term is considered, different models are used to estimate the parameters taking into account the period under consideration.

In the following, we describe the individual parameters.

•PD: The default probability model is determined using a recognised mathematical-statistical method. The model weighs input variables and, based on this weighting, calculates an estimated probability of default. Variables from three areas are included in our PD models. These are customer-specific variables, contract-specific variables and variables that reflect the observed payment behaviour of the lessee. Macroeconomic variables are included in our models in the form of country-specific

parameters that are based on the respective country risk. Countries for which there is insufficient data to calculate a separate PD are summarised. In addition, various

scenarios for the development of macroeconomic variables are considered. The aim here is to obtain forward-looking information on gross domestic product and the unemployment rate in the individual countries. The probabilities of the possible developments of macroeconomic variables are taken from a survey of professional forecasters published by the ECB. The final impact on the PD, and thus the risk provisioning within the individual scenarios, is determined using internal data. The final weighting of the PD derived from the internal data within the individual macroeconomic scenarios with their probability of occurrence according to the ECB expert survey results in the final PD that is decisive for risk provisioning.

•EaD: We calculate the EaD for lease receivables as the sum of the outstanding instalments and the IFRS residual value at the date of the loss. Since the time at which the loss event occurs is unknown at the reporting date, an estimate is made about the distribution of loss events during the observation period based on past experience and considered in our EaD model. Discounting takes place at the internal interest rate of the lease contract concerned.

•LGD: The LGD models reflect the past loss experience and determine how high the

level of losses will be as a quota of estimated EaD. For countries with insufficient data for the determination of LGDs, average values of the GRENKE Group are used.

The ECL model, including the input parameters and sub models, is validated at least once a year and updated if necessary.

GRENKE FINANCE PLC

52

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(k) Use of assumptions and estimates (Continued)

Determination of impairment of finance lease receivables (Continued)

Terminated lease contracts or contracts in arrears (so called “non-performing lease receivables”) are also to be measured in accordance with the provisions of IFRS 16, taking the appropriate impairment pursuant to IFRS 9 into consideration. The amount of impairment is determined using percentages and processing categories. Percentages are calculated using statistical methods, which include both payments as well as expected payments. They are reviewed once a year for validity. Processing statuses are grouped together in processing categories that are set up with respect to risk.

Expected credit allowance on non performing finance lease receivables

The following table lists the processing categories in the leasing business:

The processing categories 2 to 7 are allocated to Stage 3 (see note 4 (f) for an explanation of Stage 3) because the contracts have been terminated due to defaults in payment and are thus

credit-impaired. The impairment rates range between 30% and 100%.

The processing categories 0 and 1 are lease receivables which are classified as performing lease receivables and are allocated to stage 3 if the contractually lease payments are more than 90 days overdue at the reporting date or if the contractual lease payments were more than 90 days overdue in the proceeding three months or if the contract was terminated but reinstated due to arrears being repaid in the proceeding three months .

Determination of loss allowances on unsecured amounts due from related parties

The company since incorporation in 2003 has had approximately €1m of losses on loans provided to related parties.

The Group and Company makes enquiries about the underlying lease receivables and factoring receivables in the related party it has provided funds to with the objective of determining whether it is likely that the related party will have difficulty in repaying amounts due. There is €1.8bn (2022: €1.8bn) of the amount due from related parties being used by the related parties to finance a highly diversified portfolio of low value finance leases to a highly diversified customer base. The balance of €56m (2022: €46m) of the amounts due from related

GRENKE FINANCE PLC

53

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(k) Use of assumptions and estimates (Continued)

Determination of loss allowances on unsecured amounts due related parties (Continued)

parties is used to finance the purchase of low value invoices in Germany, Switzerland, Poland, United Kingdom and Ireland.

GRENKE AG, the Company’s ultimate parent has also provided a guarantee in respect of €1.1bn (2022: €1.2bn) of the amounts due from related parties at 31 December 2023. There is a clause in each framework agreement in respect of the provision of loans to each related party which states that there is a guarantee from Grenke AG in respect of the loans provided. Grenke AG provides a guarantee in respect of each loan which specifically refers to that framework agreement.

The Company and Group believe it is unlikely that there will be future expected losses on loans to related parties due to the underlying assets in the related parties.

The Group and Company also believe it is unlikely that there will be future expected losses on loans to related parties due to the guarantee from its parent GRENKE AG.

The Group and Company also believe it is unlikely that there will be a default in any amounts due because apart from a loss of approximately €1m there has not been a default since the Company was incorporated in 2003.

The Group and Company may have difficulty in repaying amounts due on Debt Securities, ABCP programs and to the Grenke bank if it was not repaid amounts due which may have an impact on the credit rating of the Grenke AG Group. The Group and Company believe that Grenke AG would provide support to a related party who was having difficulty in repaying amounts due because any default by the related party may have an impact on the credit rating of the Grenke AG Group. The Grenke AG Group have stated in their 2022 annual report, which is available at www.grenke.de, on page 298 that the primary goal of the Grenke AG Group’s capital management is to ensure that its credit rating is maintained in order to support its operations and safeguard liquidity. The Group and Company believe there will only be a default on amounts due from related parties if the Grenke AG Group as a whole was to have financial difficulties and therefore they believe they should look at what the markets view is of the Grenke AG Group defaulting on its financial obligations. The Company and Group have therefore concluded that the most appropriate measurement for future ECL is to use the GRENKE AG Group 1 Year risk of default as determined by Bloomberg because the Board of Directors of the Company believe there will only be a default on amounts due from related parties if the GRENKE AG Group is in default in respect of its financing obligations.

The Grenke AG Group 1 Year risk of default as determined by Bloomberg at 31 December 2023 was 0.12% (2022: 0.483%). If the risk of default decreased to 0% the expected credit loss would decline by €2.1m and if the risk of default increased by 1% to 1.12% the expected credit loss would increase by €17.7m.

GRENKE FINANCE PLC

54

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(k) Use of assumptions and estimates (Continued)

Consideration of calculated residual values at the end of the contract term in determining the present value of lease receivables

Non-guaranteed (calculated) residual values are taken into account when determining the present value of the lease receivables in accordance with the definition in IFRS 16. The residual values calculated at the end of the contract period are determined according to the term of the respective lease contract and include the expected subsequent-business and the expected proceeds from disposals at the end of the term, based on historical experience. The average residual value was 8.28% of the cost of the lease object for all leases which were in the primary period at 31 December 2023.

The calculated residual values are determined on the basis of statistical analyses. In the event of a decrease in the estimated residual value (made up of the estimated sales proceeds from the lease object and the estimated subsequent lease rentals after the expiry of the primary

lease period), the net present value of the existing lease receivables is reduced to take into account the reduced residual value. In the event of an increase in the estimated residual value no adjustment is made to the net present value of the existing lease receivables.

The non-guaranteed residual values are reviewed on a regular basis.

Consideration of calculated residual values when the contract is in the secondary lease period

The Group and Company estimates the net present value of leases which are in the secondary period and the net present value of leases in respect of which secondary lease payments will be received because the lessee has not given notice to terminate the lease under the terms of the lease separately from the net present value of leases which are in the primary period. The estimate of the net present value takes into account all secondary lease rentals which the lessee is legally bound to pay under the terms of the lease contract and adjusts the residual value of the lease object to reflect that the lease object will be utilised for an increased period of time before it is available for sale.

Fair value of financial instruments

The fair values of financial assets and financial liabilities, not derived from information on active markets, are determined using a valuation model. The input parameters of these models are based on observable market data, if possible. If this is not possible, determining the fair values

requires a certain degree of judgement. This judgement relates to input parameters such as liquidity risk, credit risk, and volatility. Changes regarding the assumptions of these input parameters may have an effect on the recognised fair value of financial instruments. If observable prices and parameters are available, they are used to determine the fair value that in turn avoids the large-scale use of estimates.

Recognition and measurement of actual tax refund claims and tax liabilities

Due to the complexity of tax legislation, taxpayers and local tax authorities may have varying constructions and interpretations of the tax laws. This can lead to subsequent tax payments for prior fiscal years. Tax provisions are recognised in the event that the amounts stated in the tax

GRENKE FINANCE PLC

55

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

4. ACCOUNTING POLICIES (Continued)

(k) Use of assumptions and estimates (Continued)

Fair value of financial instruments (Continued)

declarations are not likely to be realised (uncertain tax items). The amount is determined from the best estimate of the anticipated tax payment. Tax receivables from uncertain tax items are

recognised when it is probable and adequately ensured that they can be realised. The assumptions are based on the management’s assessment of the amount of uncertain tax items.

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE NOTES TO THE ACCOUNTS

The information below cross references amounts in the consolidated cash flow to the related information in the notes to the accounts.

	Year	Note	€
Interest and other charges on debt securities in issue	2023	12	67,319,142
Interest on bank loans	2023	12	2,650,580
Interest expense on amounts owed to
Grenke AG Group undertakings	2023	12	2,656,016
Refinancing interest and expenses	2023	12	13,973,794
Interest payable to Grenke Bank	2023	12	25,639,478
Amortisation of Grenke Bank AG guarantee	2023	12	6,511,758
Amortisation of guarantee paid to franchisees	2023	12	5,634
Bank overdraft interest	2023	12	854,165
Interest on lease liabilities	2023	12	19,837
Interest expense add back in Cash Flow			119,630,404

	Year	Note
Expected credit loss allowance on other
financial assets	2023	11	(5,930,735)
Expected credit loss allowance trade debtors	2023	16	728,630
Expected credit loss reversal on financial assets			(5,202,105)

GRENKE FINANCE PLC

56

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE NOTES TO THE ACCOUNTS (Continued)

	Year	Note	€
Deferred income on financial guarantee
due after one year	2022	36	(169)
Deferred income on financial guarantee
due within one year	2022	36	(3,006)
Deferred income on financial guarantee
due within one year	2023	36	170
Tax on health insurance premiums			1,933
Write back of rent accrual			(152,778)
Other non-cash income/expenses			(153,850)
	Year	Note	€
Subordinated loans at fair value non current	2022	21	21,327,733
Subordinated loans at amortised cost non current	2022	21	25,402,793
Reserve accounts held with SPVs
Subordinated loans at fair value current	2022	21	13,693,951
Subordinated loans at amortised cost current	2022	21	11,567,910
Reserve accounts held with SPVs
and banks current	2022	21	10
Subordinated loans at fair value non current	2023	21	(22,345,538)
Subordinated loans at amortised cost non current	2023	21	(30,898,265)
Subordinated loans at fair value current	2023	21	(15,225,092)
Subordinated loans at amortised cost current	2023	21	(15,059,364)
Fair value adjustment for subordinated loans	2023	SOPL	281,178
Increase in subordinated loans and reserve accounts			(11,254,684)

Year

Note

€

Leased assets held for resale

2022

24

1,048,553

Leased assets held for resale

2023

24

(943,461)

Decrease in leased assets held for resale

105,092

GRENKE FINANCE PLC

57

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE

NOTES TO THE ACCOUNTS (Continued)

Year

Note

€

Finance lease receivables due after one year

2022

25

1,260,512,606

Finance lease receivables due within one year

2022

25

667,491,679

Finance lease receivables past due

not credit impaired

2022

25

13,697,468

Non performing finance lease receivables

2022

25

174,792,034

Finance lease receivables due after one year

2023

25

(1,444,380,395)

Finance lease receivables due within one year

2023

25

(705,035,509)

Finance lease receivables past due

not credit impaired

2023

25

(25,188,627)

Non performing finance lease receivables

2023

25

(206,139,512)

Currency translation differences

on lease receivables

529,070

Write off of lease receivables

2023

25

(22,667,968)

Increase in lease receivables

(286,389,154)

GRENKE FINANCE PLC

58

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE

NOTES TO THE ACCOUNTS (Continued)

25

644,018,647

Year

Note

€

Secured amounts due from GRENKE AG Group

undertakings due in greater than one year

2022

22

28,941,049

Unsecured amounts due from GRENKE AG Group

undertakings due in greater than one year

2022

22

616,002,590

Secured amounts due from GRENKE AG Group

undertakings due in less than one year

2022

22

23,176,213

Unsecured amounts due from GRENKE AG Group

undertakings due in less than one year

2022

22

975,866,948

Secured amounts due from GRENKE AG Group

franchisees due in less than one year

2022

22

74,321,217

Unsecured amounts due from GRENKE AG Group

franchisees

2022

22

95,312,927

Secured amounts due from GRENKE AG Group

undertakings due in greater than one year

2023

22

(34,106,780)

Unsecured amounts due from GRENKE AG Group

undertakings due in greater than one year

2023

22

(656,148,585)

Secured amounts due from GRENKE AG Group

undertakings due in less than one year

2023

22

(119,729,300)

Unsecured amounts due from GRENKE AG Group

undertakings due in less than one year

2023

22

(909,930,308)

Unsecured amounts due from GRENKE AG Group

franchisees

2023

22

(105,459,767)

Amount due on current account

2022

33

(82,582,895)

Amount due on cash pool accounts

2022

33

(76,116,080)

Amount due on current account

2023

33

101,561,690

Amount due on cash pool accounts

2023

33

158,391,401

Currency translation differences on amounts

due from Grenke AG Group undertakings

(4,658,660)

Change in amounts due/to related parties

84,841,660

GRENKE FINANCE PLC

59

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE NOTES TO THE ACCOUNTS (Continued)

Year

Note

€

Deferred financing costs non current asset

2023

26

(826,391)

Overseas VAT current asset

2022

26

125,127,196

Irish VAT current asset

2022

26

27,999

Deferred financing costs current asset

2022

26

334,577

Other assets current asset

2022

26

347,894

Trade debtors current asset

2022

26

2,927,035

Interest on tax repaid late current asset

2022

26

7,711,664

Overseas VAT current asset

2023

26

(99,608,928)

Irish VAT

2023

26

(45,132)

Deferred financing costs current asset

2023

26

(594,696)

Other assets current asset

2023

26

(338,325)

Trade debtors current asset

2023

26

(2,644,225)

Credit support accounts current asset

2023

26

(10,050,000)

Write off of dealers bad debts

2023

(306,628)

Decrease in trade and other receivables

22,062,040

Year

Note

€

Net liability arising on

derivative financial instruments

not designated as hedges

2022

27

(907,110)

Net liability arising on

derivative financial instruments

not designated as hedges

2023

27

1,421,902

Amortisation costs of hedging

2023

14

1,691,496

Movement in part of fair value

attributable to derivative financial instruments

designated as hedges in respect of period

prior to 30 September 2020 when

hedge accounting was first carried out

2023

(163,322)

Change in the fair value of derivative financial

instruments not designated as hedges

2,042,966

GRENKE FINANCE PLC

60

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE NOTES TO THE ACCOUNTS (Continued)

	Year	Note	€
Other accrued expenses	2022	37	(1,935,627)
Trade creditors	2022	37	(8,533,438)
Social welfare tax payable	2022	37	(49,912)
Other accrued expenses	2023	37	2,132,458
Trade creditors	2023	37	9,957,851
Social welfare tax payable	2023	37	51,805
Credit support accounts	2023	37	(16,290,000)
Decrease in other current liabilities			(14,666,863)
	Year	Note	€
Interest and other charges on debt securities in issue	2023	12	(67,319,142)
Interest on bank loans	2023	12	(2,650,580)
Interest expense on amounts owed to
Grenke AG Group undertakings	2023	12	(2,656,016)
Refinancing interest and expenses	2023	12	(13,973,794)
Interest paid to Grenke Bank AG	2023	12	(25,639,478)
Bank overdraft interest	2023	12	(854,165)
Accrued interest	2022	37	(20,163,040)
Accrued interest	2023	37	35,365,756
Amortisation of Debt Securities excluded	2023		10,731,441
Amortisation of Deferred costs excluded	2023		178,560
Interest paid			(86,980,458)

In the prior year statement of cash flows, the following lines were grouped differently, hence were excluded from interest expense add back in the cash flow from operating activities and interest paid in the cash flow from operating activities. The net effect of this change in presentation on the cash flow from operating activities is zero.

	2022
	€
Interest on bank loans	974,528
Bank overdraft interest	346,886

The prior year comparative for interest expenses and interest paid have been grouped from the previous years to properly reflect the merger of debt securities in issue, asset based financial liabilities and bank loans and cash held on trust to financial liabilities.

GRENKE FINANCE PLC

61

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

5. RECONCILIATION OF CERTAIN AMOUNTS IN THE CONSOLIDATED CASH FLOW TO THE NOTES TO THE ACCOUNTS (Continued)

Year

Note

€

Amortisation of Grenke Bank AG risk premium

2023

12

(6,511,758)

Deferred risk premium paid to Grenke Bank AG

non current asset

2022

26

28,668,828

Deferred risk premium paid to Grenke Bank AG

current asset

2022

26

17,472,420

Deferred risk premium paid to Grenke Bank AG

non current asset

2023

26

(36,659,973)

Deferred risk premium paid to Grenke Bank AG

current asset

2023

26

(22,080,262)

GRENKE Bank AG deferred risk premium paid

(19,110,745)

Year

Note

€

Tax charge in the accounts

2023

18

(6,386,154)

Corporation tax receivable within one year

2022

29

324,759

Tax on health insurance premiums

(1,933)

Corporation tax payable within one year

2023

29

763,328

Tax paid

(5,300,000)

GRENKE FINANCE PLC

62

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING

The chief operating decision makers (CODM) are the board of directors of the Group and Company.

The Group and Company has two distinct businesses, leasing and treasury. The leasing business is small ticket business to business leasing of principally office equipment, which is carried out in twelve European Countries. The treasury business provides long term and short term loans to GRENKE AG Group companies and franchisees who utilise the funds to carry out small ticket business to business leasing of principally office equipment and small ticket factoring of debt. The figures below provide details of the revenue generated for the year to 31 December 2023 and the operating assets of the two businesses at year end. The operating liabilities of the business have not been disclosed separately because the Directors do not separate the liabilities of the Group and Company between leasing and treasury when reviewing the business or making decisions with regard to the business. No company accounted for revenue greater than 10% of Group and Company revenue in 2023. The Group

and Company for segmental reporting purposes looks at the Leasing and related income business based on the eleven countries it currently carries out leasing in and Italy where it carried out leasing in the past. The Group and Company for segmental reporting purposes looks at the treasury business based on what countries it lends money to.

GRENKE FINANCE PLC

63

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Lease income

Total operating income

Other income

Expected credit loss allowance on finance lease receivables

Expected credit loss allownace on other financial assets

Interest expense and other charges

Foreign exchange (loss)/gain

2023

€ 000

France

85,163

-

(29,487)

-

(38,280)

-

Spain

15,113

-

(13,552)

-

(7,703)

-

Netherlands

11,943

-

(3,246)

-

(5,194)

-

Portugal

7,181

-

(2,861)

36

(4,970)

-

Romania

7,400

-

(1,672)

-

(4,896)

-

Finland

5,361

-

(1,414)

16

(2,121)

-

Slovenia

1,454

-

(203)

1

(844)

-

Hungary

942

-

(51)

(0)

(291)

641

Malta

716

-

(760)

1

(538)

-

Luxembourg

473

-

157

0

(284)

-

Italy

374

206

-

(647)

-

Germany

(199)

-

304

-

(124)

-

Lease income

135,921

206

(52,784)

54

(65,894)

641

GRENKE FINANCE PLC

64

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Lease income (continued)

	Net gain/(loss) on financial instruments at fair value through profit or loss	Other operating expenses	Profit before tax	Tax	Profit after Tax
	2023	2023	2023	2023	2023
	€ 000	€ 000	€ 000	€ 000	€ 000
France	-	(9,559)	7,837	(945)	6,892
Spain	-	(4,301)	(10,443)	1,259	(9,184)
Netherlands	-	(1,151)	2,352	(283)	2,068
Portugal	-	(1,084)	(1,698)	205	(1,493)
Romania	-	(1,375)	(543)	65	(477)
Finland	-	(435)	1,407	(170)	1,238
Slovenia	-	(164)	244	(29)	214
Hungary	(1,019)	(98)	123	(15)	108
Malta	-	(230)	(812)	98	(714)
Luxembourg	-	(176)	170	(21)	150
Germany	-	(125)	(193)	23	(170)
Italy	-	(25)	(44)	5	(39)
Lease income	(1,019)	(18,724)	(1,600)	193	(1,407)

GRENKE FINANCE PLC

65

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Income from protecting lease equipment

Total operating income

Other operating expenses

Profit before tax

Tax

Profit after Tax

2023

€ 000

France

22,187

(8,098)

14,089

(1,698)

12,391

Spain

4,522

(1,654)

2,868

(346)

2,522

Portugal

3,465

(1,383)

2,081

(251)

1,830

Netherlands

3,169

(1,163)

2,006

(242)

1,764

Finland

2,372

(921)

1,450

(175)

1,275

Romania

2,037

(729)

1,308

(158)

1,150

Slovenia

748

(275)

473

(57)

416

Luxembourg

463

(168)

294

(35)

259

Hungary

212

(80)

132

(16)

116

Malta

119

(45)

74

(9)

66

Germany

1

(5)

(4)

1

(4)

Income from protecting lease equipment

39,295

(14,523)

24,772

(2,986)

21,786

GRENKE FINANCE PLC

66

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Treasury income and other income

	Total operating income	Other income	Expected credit loss allowance on finance lease receivables	Expected credit loss allownace on other financial assets	Interest expense and other charges
	2023	2023	2023	2023	2023
Treasury Income	€ 000	€ 000	€ 000	€ 000	€ 000
Italy	24,397	-	-	2,372	(17,527)
Germany	25,791	3	-	1,726	(18,882)
Australia	6,059	-	-	243	(2,573)
Canada	5,235	-	-	207	(2,014)
Sweden	5,050	-	-	345	(3,102)
Denmark	3,624	-	-	272	(2,666)
Spain	3,371	-	-	275	(2,528)
Poland	2,869	-	-	78	(929)
Belgium	2,027	-	-	483	(2,454)
United Arab Emirates	2,539	-	-	(426)	(1,109)
United Kingdom	2,465	-	-	105	(966)
Chile	2,864	-	-	10	(651)
Singapore	1,594	-	-	111	(401)
Czech Republic	782	32	(126)	13	(312)
Switzerland	590	-	-	49	(298)
Ireland	597	-	-	19	(233)
Slovakia	450	-	-	(30)	(280)
Hungary	500	-	-	(11)	(143)
United States of America	326	-	-	9	(131)
Malta	170	-	-	6	(65)
Romania	135	-	-	8	(77)
Luxembourg	32	-	-	3	(13)
Netherlands	29	-	-	14	(118)
Finland	-	-	-	(4)	(53)
Total treasury income	91,495	35	(126)	5,877	(57,525)
Other Income	-	2,082	60	-	-
Total Group and Company income	266,711	2,323	(52,850)	5,931	(123,419)

GRENKE FINANCE PLC

67

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Treasury income and other income (continued)

	Foreign exchange (loss)/gain	Net gain/(loss) on financial instruments at fair value through profit or loss	Other operating expenses	Profit before tax	Tax	Profit after Tax
	2023	2023	2023	2023	2023	2023
Treasury Income	€ 000	€ 000	€ 000	€ 000	€ 000	€ 000
Italy	-	-	(763)	8,480	(1,022)	7,458
Germany	-	(468)	(822)	7,349	(886)	6,463
Australia	(4,240)	3,408	(718)	2,180	(263)	1,917
Canada	(3,938)	2,802	(88)	2,205	(266)	1,939
Sweden	(4,256)	3,381	(135)	1,283	(155)	1,128
Denmark	(21)	60	(116)	1,152	(139)	1,013
Spain	-	-	(110)	1,007	(121)	886
Poland	1,184	(2,556)	(327)	319	(38)	280
Belgium	-	-	(107)	(51)	6	(45)
United Arab Emirates	(1,482)	811	(48)	286	(34)	251
United Kingdom	399	(829)	(42)	1,132	(136)	996
Chile	81	(1,339)	(315)	650	(78)	571
Singapore	(477)	116	(97)	845	(102)	743
Czech Republic	(305)	(182)	(14)	(111)	13	(97)
Switzerland	611	(275)	(13)	664	(80)	584
Ireland	-	-	(10)	372	(45)	327
Slovakia	-	-	(12)	127	(15)	112
Hungary	-	(151)	(6)	187	(23)	165
United States of America	(112)	48	(6)	135	(16)	119
Malta	-	-	(3)	108	(13)	95
Romania	(53)	1	(3)	10	(1)	9
Luxembourg	-	-	(1)	22	(3)	19
Netherlands	-	-	(5)	(80)	10	(70)
Finland	-	-	(2)	(59)	7	(52)
Total treasury income	(12,607)	4,825	(3,763)	28,212	(3,400)	24,811
Other Income	-	-	(671)	1,470	(177)	1,293
Total Group and Company income	(11,967)	3,806	(37,680)	52,855	(6,371)	46,484

GRENKE FINANCE PLC

68

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (Continued)

Lease income

	Total operating income	Other income	Expected credit loss allowance on finance lease receivables	Expected credit loss allownace on other financial assets	Interest expense and other charges	Foreign exchange (loss)/gain
	2022	2022	2022	2022	2022	2022
	€ 000	€ 000	€ 000	€ 000	€ 000	€ 000
France	75,810	-	(20,270)	-	(22,442)	-
Spain	12,383	-	(10,970)	-	(4,471)	-
Netherlands	10,371	-	(2,356)	-	(2,956)	-
Portugal	5,996	-	(1,462)	-	(2,662)	-
Romania	3,702	-	(460)	(11)	(1,104)	-
Finland	5,263	-	(2,259)	(17)	(2,357)	-
Slovenia	1,269	-	(371)	(1)	(475)	-
Hungary	1,086	-	(77)	-	(223)	(916)
Malta	406	-	(155)	1	(196)	-
Luxembourg	686	-	(816)	(1)	(300)	-
Germany	(368)	-	(408)	-	(142)	-
Italy	385	7,709	-	-	(742)	-
Lease income	116,989	7,709	(39,604)	(29)	(38,070)	(916)

GRENKE FINANCE PLC

69

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Lease income (continued)

	Net gain/(loss) on financial instruments at fair value through profit or loss	Other operating expenses	Profit before tax	Tax	Profit after Tax
	2022	2022	2022	2022	2022
	€ 000	€ 000	€ 000	€ 000	€ 000
France	-	(8,753)	24,345	(2,982)	21,363
Spain	-	(3,011)	(6,069)	743	(5,326)
Netherlands	-	(1,070)	3,989	(489)	3,500
Portugal	-	(1,149)	723	(89)	634
Romania	-	(354)	1,773	(217)	1,556
Finland	-	(774)	(144)	17	(127)
Slovenia	-	(155)	267	(33)	234
Hungary	444	(146)	168	(21)	147
Malta	-	(54)	2	-	2
Luxembourg	-	(115)	(546)	67	(479)
Germany	-	(69)	(987)	121	(866)
Italy	-	(385)	6,967	91	7,058
Lease income	444	(16,035)	30,488	(2,792)	27,696

GRENKE FINANCE PLC

70

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Income from protecting lease equipment

	Total operating income	Other operating expenses	Profit before tax	Tax	Profit after Tax
	2022	2022	2022	2022	2022
	€ 000	€ 000	€ 000	€ 000	€ 000
France	28,393	(10,244)	18,149	(2,223)	15,926
Portugal	3,071	(1,180)	1,891	(232)	1,659
Spain	3,777	(1,412)	2,365	(290)	2,075
Netherlands	2,555	(910)	1,645	(201)	1,444
Finland	2,046	(763)	1,283	(157)	1,126
Romania	1,991	(661)	1,330	(163)	1,167
Slovenia	594	(222)	372	(46)	326
Luxembourg	413	(154)	259	(32)	227
Hungary	252	(92)	160	(20)	140
Malta	87	(19)	68	(8)	60
Germany	1	(3)	(2)	-	(2)
Income from protecting lease equipment	43,180	(15,660)	27,520	(3,372)	24,148

GRENKE FINANCE PLC

71

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Treasury income and other income

	Total operating income	Other income	Expected credit loss allowance on finance lease receivables	Expected credit loss allownace on other financial assets	Interest expense and other charges
	2022	2022	2022	2022	2022
Treasury Income	€ 000	€ 000	€ 000	€ 000	€ 000
Italy	16,626	-	-	(948)	(13,051)
Germany	12,307	84	-	(1,196)	(10,455)
Sweden	3,298	-	-	(208)	(1,843)
Belgium	2,949	-	-	(257)	(2,048)
United Arab Emirates	1,918	-	-	144	(608)
Canada	3,064	-	-	(133)	(1,131)
United Kingdom	682	-	-	(98)	(451)
Australia	3,039	-	-	(196)	(1,264)
Denmark	2,067	-	-	(182)	(1,469)
Spain	2,210	-	-	(190)	(1,406)
Czech Republic	650	12	(306)	47	(216)
Singapore	1,023	-	-	(53)	(433)
Switzerland	261	-	-	(40)	(177)
Slovakia	314	-	-	(62)	(166)
Ireland	470	-	-	27	(258)
Romania	92	-	-	(9)	(45)
Chile	752	-	-	(36)	(141)
Malta	130	-	-	(6)	(30)
Luxembourg	62	-	-	(1)	(16)
Poland	1,660	-	-	(97)	(325)
United States of America	94	-	-	(14)	(36)
Latvia	-	-	-	-	-
Netherlands	53	-	-	(19)	(37)
Total treasury income	53,721	96	(306)	(3,527)	(35,606)
Other Income	-	1,790	123	-	-
Total Group and Company income	213,890	9,595	(39,787)	(3,556)	(73,676)

GRENKE FINANCE PLC

72

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Treasury income and other income (continued)

Foreign exchange (loss)/gain

Net gain/(loss) on financial instruments at fair value through profit or loss

Other operating expenses

Profit before tax

Tax

Profit after Tax

2022

Treasury Income

€ 000

Italy

-

(824)

1,803

(221)

1,582

Germany

-

1,278

(660)

1,358

(166)

1,192

Sweden

140

(385)

(116)

886

(108)

778

Belgium

-

(129)

515

(63)

452

United Arab Emirates

1,301

(2,493)

(38)

224

(27)

197

Canada

3,577

(4,545)

(71)

761

(93)

668

United Kingdom

504

(708)

(28)

(99)

12

(87)

Australia

1,805

(2,797)

(384)

203

(25)

178

Denmark

26

(34)

(93)

315

(39)

276

Spain

-

(89)

525

(64)

461

Czech Republic

426

(1,080)

(177)

(644)

79

(565)

Singapore

2,642

(3,002)

(27)

150

(18)

132

Switzerland

1,043

(419)

(11)

657

(81)

576

Slovakia

-

(10)

76

(9)

67

Ireland

-

(91)

148

(18)

130

Romania

(1)

(13)

(3)

21

(3)

18

Chile

(79)

(475)

(9)

12

(1)

11

Malta

-

(2)

92

(11)

81

Luxembourg

-

(1)

44

(5)

39

Poland

(179)

(1,049)

(72)

(62)

8

(54)

United States of America

25

(51)

(2)

16

(2)

14

Latvia

-

Netherlands

-

(2)

(5)

1

(4)

Total treasury income

11,230

(15,773)

(2,839)

6,996

(854)

6,142

Other Income

-

1,913

(234)

1,679

Total Group and Company income

10,314

(15,329)

(34,534)

66,917

(7,252)

59,665

GRENKE FINANCE PLC

73

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Leasing operating assets

2023

2022

€

France

1,317,169,099

1,214,027,289

Spain

265,295,339

244,053,656

Netherlands

184,341,001

159,130,263

Finland

183,521,685

145,135,874

Portugal

178,228,434

145,523,928

Romania

77,718,775

62,521,800

Slovenia

29,153,279

26,660,422

Luxembourg

19,159,432

16,428,344

Malta

9,890,347

8,895,477

Hungary

7,326,185

11,948,304

Germany

2,959,696

5,253,228

Italy

-

42,810,256

Leasing operating assets

2,274,763,272

2,082,388,841

GRENKE FINANCE PLC

74

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

6. SEGMENTAL REPORTING (continued)

Treasury operating assets

	2023	2022
	€	€
Germany	671,453,177	577,062,886
Italy	535,070,354	623,846,226
Sweden	107,349,368	97,745,295
Denmark	96,319,723	79,979,330
Australia	96,125,090	73,981,500
Spain	88,589,023	78,600,976
Canada	72,504,464	60,637,235
Belgium	50,278,885	111,971,647
France	45,996,996	36,980,327
United Arab Emirates	39,927,632	33,395,989
Poland	36,323,201	25,135,230
United Kingdom	33,861,930	30,020,514
Chile	32,918,661	10,126,754
Czech	10,091,095	10,516,437
Hungary	9,484,722	-
Slovakia	9,412,588	9,096,925
Ireland	9,218,279	6,216,554
Switzerland	7,730,340	11,996,287
USA	5,445,842	3,204,405
Netherlands	3,947,656	3,852,637
Finland	3,484,623	-
Singapore	3,006,631	23,525,321
Romania	2,555,602	2,539,232
Malta	2,403,906	1,921,178
Luxembourg	158,379	693,192
Unallocated cash	143,284,978	38,969,272
Treasury operating assets	2,116,943,145	1,952,015,349
Non-operating assets	16,777,789	27,193,872
Total assets	4,408,484,206	4,061,598,062

Property, plant & equipment, corporation tax, derivative financial instruments and deferred tax which are disclosed have been classified as non-operating assets for segmental reporting purposes.

GRENKE FINANCE PLC

75

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

7. LEASE INCOME

	2023	2022
	€	€
Lease interest income	154,867,140	129,554,749
Capitalised initial direct costs	71,680,832	46,229,921
Secondary lease income	60,510,889	57,495,554
Other lease income	11,347,065	9,149,743
Loss on termination of leases	(50,061,232)	(35,222,957)
Commissions payable to agents and dealers	(112,405,835)	(90,200,456)
Asset storage	(18,000)	(16,500)
	135,920,859	116,990,054

Lease interest income and secondary lease income is the only part of lease income which is calculated using the effective interest rate method.

The loss on termination of leases is calculated by taking any proceeds from the termination of leases and deducting the net present value of the lease receivable at the date of termination.

8. INCOME FROM PROTECTING LEASE EQUIPMENT

	2023	2022
	€	€
Income from lessees for protecting lease equipment	40,642,352	44,543,286
Cost of equipment replaced	(1,323,836)	(1,208,929)
Adjustments to insurance claims made to insurer	(23,958)	(154,171)
	39,294,558	43,180,186

Some lessees pay fees to the Group and Company to avail of insurance on the leased equipment. It should be noted that the Group and Company do not directly insure the equipment and only includes the lessees under their insurance policy, which is availed of from a third party insurer. When this fee has been paid the Group and Company, through the insurance policy, will replace damaged or stolen lease equipment without charging the lessee for this loss.

GRENKE FINANCE PLC

76

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

9. INTEREST INCOME AND SIMILAR INCOME

2023

2022

€

Interest income from GRENKE AG group loans

76,226,318

44,702,770

Interest income from subordinated loans

2,590,492

503,373

Interest income from franchise loans

8,117,791

8,514,706

Interest income from banks

4,560,586

-

91,495,187

53,720,849

Interest income from GRENKE AG group companies relates to interest on loans provided to GRENKE AG group companies and interest on overnight cash provided to GRENKE AG group companies.

10. MOVEMENT IN EXPECTED CREDIT LOSS ALLOWANCE ON FINANCE LEASE

RECEIVABLES

2023

2022

€

Movement in expected credit loss allowance on:

non performing finance lease receivables (stage 3)

45,561,347

28,764,889

performing finance lease receivables (stage 1/2)

7,222,243

10,834,465

non performing finance lease receivables acquired

under guarantee (stage 3)

(59,578)

(40,174)

non performing finance lease receivables acquired

relating to loans to Grenke AG group companies

(stage 3)

125,675

226,319

52,849,687

39,785,499

Details of how the expected credit loss on non performing leases and the expected credit loss allowances are calculated together with an explanation of the different Stages are provided in the accounting policy notes 4 (e) & (k).

Non performing leases are leases in processing category 2-7 which are described in note 4 (k).

GRENKE FINANCE PLC

77

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

11. MOVEMENT IN EXPECTED CREDIT LOSS ALLOWANCE ON OTHER

FINANCIAL ASSETS

The GRENKE AG 1-Year risk of default per Bloomberg, which is used to calculate expected credit loss reversal/(allowances) decreased in 2023 to 0.1203% from 0.483% at 31 December 2022. In year end 31 December 2022 it increased from 0.277% at 31 December 2021 to 0.483% at 31 December 2022.

2023

2022

€

Movement in expected credit loss allowance on

amounts due from related parties

5,930,735

(3,555,453)

Accounting policy note 4 (k) explain why the Group and Company uses the Grenke AG 1-Year risk of default for calculating expected credit loss allowances on amounts due from Grenke AG Group undertakings and franchisees.

12. INTEREST EXPENSE AND OTHER CHARGES

	2023	2022
	€	€
Interest and other charges on debt securities in issue	67,319,142	40,342,471
Interest on bank loans	2,650,580	974,528
Interest expense on amounts owed to Grenke AG Group undertakings	2,656,016	763,119
Refinancing interest and expenses	13,973,794	4,575,854
Interest payable to Grenke Bank	25,639,478	12,472,251
Amortisation of Grenke Bank AG risk premium	6,511,758	10,630,655
Guarantee fee payable to Grenke AG	2,784,188	2,886,340
Amortisation of guarantee paid to franchisees	5,634	12,900
Bank overdraft interest and other charges	854,165	346,886
Bank charges	1,004,360	665,899
Interest on lease liabilities	19,837	4,566
	123,418,952	73,675,469

The guarantee fee is for the provision by GRENKE AG of guarantees, personal sureties and letters of comfort in respect of the Group and Company external liabilities and in respect of amounts due from GRENKE AG Group undertakings and GRENKE AG Group franchisees.

GRENKE FINANCE PLC

78

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

13. FOREIGN EXCHANGE (LOSS)/GAIN

2023

2022

€

Foreign exchange gain/(loss)

4,271,369

(7,907,945)

Reclassified from other comprehensive income

- forward exchange contracts

(7,738,003)

15,773,902

- cross currency swaps

(8,500,095)

2,448,661

(11,966,729)

10,314,618

The net foreign exchange (loss)/gain is as a result of transactions during the year in other currencies which were translated at the rate of exchange ruling at the date of the transaction and monetary assets and liabilities in other currencies were translated to Euro at the rates of exchange ruling at the reporting date. The net foreign exchange loss after taking account of the foreign exchange gain, recycling of gains from other comprehensive income and the fair value movement on forward exchange contracts, amortisation of the cost of hedging and also the realised loss on forward exchange contracts disclosed in note 14 was €7,692,458 (2022: €6,292,090).

14. NET GAIN/(LOSS) ON FINANCIAL INSTRUMENTS

AT FAIR VALUE THROUGH PROFIT OR LOSS

	2023	2022
	€	€
Fair value adjustment for subordinated loans	281,178	616,323
Fair value movement on interest rate swaps
not designated in hedge relationships	(749,346)	662,427
Fair value movement on forward exchange
contracts not designated in hedge relationships	397,878	(46,311)
Amortisation of cost of hedging	(1,691,496)	(293,283)
Realised loss on forward exchange contracts	5,567,889	(16,267,114)
	3,806,103	(15,327,958)

GRENKE FINANCE PLC

79

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

15. OTHER INCOME

	2023	2022
	€	€
Accounting services	1,812,800	1,679,661
Commission financial guarantee (note 46)	3,005	83,664
Interest income from tax repaid late	205,779	7,708,543
Rental Income	269,071	110,405
Income from security on securitised loans	32,047	12,104
	2,322,702	9,594,377

The Group and Company provides accounting services to other companies in the GRENKE AG Group and to franchise companies of the GRENKE AG Group.

16. OTHER OPERATING EXPENSES

2023

2022

€

Commissions paid to agents for

sale of lease equipment protection

14,221,999

15,560,253

Insurance

302,843

103,282

Licence fee

8,809,295

8,042,657

Fees in respect of recovering debts

6,273,710

4,633,822

Expected credit loss

allowance trade debtors (stage 3)

728,630

686,415

Wages and salaries

1,821,735

1,690,988

Professional fees

3,046,501

2,242,457

Overseas tax

1,258,894

593,856

Management charges

277,843

223,699

Non recoverable VAT

289,789

168,458

Property costs

93,622

23,025

Depreciation on right of use assets

324,571

346,649

Depreciation

81,125

97,797

Other

65,630

50,299

Information technology costs

39,795

40,641

Recruitment

23,300

25,200

Training

20,950

8,363

37,680,232

34,537,861

GRENKE FINANCE PLC

80

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

16. OTHER OPERATING EXPENSES (Continued)

The licence fee expenses relates to the provision by GRENKE AG of the use of an intangible asset in the form of a uniform business model that is based on its expertise and comprises in particular the business idea, methods for assessing risk and using the group’s uniform software

in the course of its operating business. The licence fee is also for the right to use the GRENKE brand.

The fees in respect of recovering debts relates to fees payable to debt collection agents and lawyers when they have been instructed to assist in recovering amounts due in respect of impaired leases.

Included in trade and other receivables is trade debtors of €2.6m (2022: €2.9m) in respect of amounts due from dealers. These balances are primarily due in respect of lease objects which have been sold to the dealers when a lease has been terminated. The Group and Company has made a 100% expected credit loss allowance of €2.4m (2022: €2m) in respect of all amounts which are overdue by 180 days.

17. PROFIT BEFORE TAXATION

2023

2022

The profit before tax is stated after charging:

€

Staff costs

1,821,735

1,690,988

Depreciation

81,125

97,797

Depreciation on right of use assets

324,571

346,649

Net foreign exchange gain/(loss)

on foreign currency

(7,692,458)

(6,292,090)

2023

2022

Fees payable to Grant Thornton:

€

Statutory audit

220,500

210,000

Comfort letter in respect of financial information in debt issuance programme prospectus

22,050

20,000

242,550

230,000

GRENKE FINANCE PLC

81

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

17. PROFIT BEFORE TAXATION (Continued)

	2023	2022
The staff cost comprises:	€	€
Salaries	1,488,839	1,387,758
Benefit in kind	25,082	22,250
Contributions to defined contribution plans	142,587	131,374
Social welfare costs	165,227	149,606
	1,821,735	1,690,988

There is €11,456 (2022: €2,924) payable in respect of pensions as at 31 December 2023. The Group and Company contributes to defined contribution funds on behalf of employees and Directors. These pension funds are wholly independent of the Group and Company and the Group and Company has no liability to the pension funds other than the monthly contributions it makes on behalf of employees as part of their remuneration package.

The average number of people employed by the
Group and Company during the period was as	2023	2022
follows:	Number	Number
Administration	21	19

Included in staff cost above is directors'	2023	2022
remuneration of:	€	€
Salaries	360,675	335,499
Benefit in kind	4,107	4,432
Contributions to defined contribution plans	83,036	75,344
Social welfare costs	39,314	36,567
	487,132	451,842

Three of the directors received remuneration and all of the remuneration they received is included in the disclosure above.

The key management of the Company are the three directors who receive remuneration. The payments to its directors set out above represent key management compensation.

One director is employed by the Group and Company’s parent Grenke AG and he did not receive any remuneration from the Group and Company. Part of the salary €9,000 (2022: €9,000) paid to the director by Grenke AG was allocated for his services to the Group and Company.

The Company’s subsidiaries did not have any employees during the year (2022: None).

GRENKE FINANCE PLC

82

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

18. TAXATION

2023

2022

€

Current year tax charge

6,419,318

7,263,768

Prior year tax adjustment

(33,164)

(1,697)

6,386,154

7,262,071

Deferred tax

(15,567)

(9,733)

Taxation

6,370,587

7,252,338

Reconciliation of the expected tax charge at the standard tax rate to the actual tax charge at the effective rate

The tax assessed for the year is less than the standard rate of corporation tax in the Republic of Ireland (12.5%) (2022: 12.5%). The differences are explained below:

2023

2022

€

Profit before tax

52,854,544

66,917,844

Profit multiplied by standard rate of corporation tax in the Republic of Ireland of 12.5% (2022: 12.5%)

6,606,818

8,364,731

Effects of:

Adjustment to prior year corporation tax

(33,164)

(1,697)

Foreign tax adjustments

(184,858)

(146,101)

Other adjustments

(18,209)

(964,595)

Current year tax charge

6,370,587

7,252,338

Foreign tax adjustments relate to Irish tax credits and Irish tax deductions in respect of foreign withholding tax on interest and lease payments in arriving at the Irish corporation tax charge.

GRENKE FINANCE PLC

83

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

19. PROPERTY, PLANT & EQUIPMENT CONSOLIDATED AND COMPANY

Right of

Leasehold

Fixtures and

use assets

improvements

fittings

Total

€

Cost

At 31 December 2022

1,832,734

320,482

469,685

2,622,901

Additions

1,070,907

-

7,176

1,078,083

Disposals

(1,832,734)

-

(1,832,734)

At 31 December 2023

1,070,907

320,482

476,861

1,868,250

Accumulated Depreciation

At 31 December 2022

1,543,859

278,273

425,931

2,248,063

Charge for the year

324,571

33,837

47,288

405,696

Disposals

(1,832,734)

-

(1,832,734)

At 31 December 2023

35,696

312,110

473,219

821,025

Net book amounts

At 31 December 2023

1,035,211

8,372

3,642

1,047,225

At 31 December 2022

288,875

42,209

43,754

374,838

The Group and Company has only four leases. The leases are in respect of Units 209/210, Unit 310, Unit 306/307 and Unit 410/411, Q House, Furze Road, Sandyford Industrial Estate, Dublin 18. The leases on these units were terminated as permitted by the terms of the lease on 6 November 2023. The Group and Company then entered into new leases in respect of those units.

The new leases commenced on 7 November 2023. The lease term is from 7 November 2023 to 6 November 2033 with an option to break on 6 November 2028. The annual rent is €308,671 and the first year is rent-free. The addition to the right of use assets is based on the assumption that the Group and Company will exercise the option to break the lease on 6 November 2028. The total rent payable for the period 7 November 2023 to 6 November 2028 is €1,234,682. If the Group and Company decides not to exercise the option to break the lease the rent will be adjusted to whatever the market rent is on 7 November 2028.

GRENKE FINANCE PLC

84

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

19. PROPERTY, PLANT & EQUIPMENT CONSOLIDATED AND COMPANY (Continued)

Right of

Leasehold

Fixtures and

use assets

improvements

fittings

Total

€

Cost

At 31 December 2021

1,832,734

320,482

456,608

2,609,824

Additions

-

13,077

At 31 December 2022

1,832,734

320,482

469,685

2,622,901

Accumulated Depreciation

At 31 December 2021

1,197,210

230,850

375,557

1,803,617

Charge for the year

346,649

47,423

50,374

444,446

At 31 December 2022

1,543,859

278,273

425,931

2,248,063

Net book amounts

At 31 December 2022

288,875

42,209

43,754

374,838

At 31 December 2021

635,524

89,632

81,051

806,207

20. INVESTMENTS IN CONTROLLED UNDERTAKINGS

2023

2022

€

Investment in equity

Investment in FCT “GK” COMPARTMENT “G2”

150

Investment in FCT “GK4” COMPARTMENT “G4”

150

Investment in FCT “GK5” COMPARTMENT “G5”

150

450

The Company holds a 50% interest in FCT “GK”COMPARTMENT “G2”, (FCT GK 2), a 50% interest in FCT “GK”COMPARTMENT “G4”, (FCT GK 4) and a 50% interest in FCT “GK”COMPARTMENT “G5”, (FCT GK 5). The investments in FCT GK 2 of €150 (2022: €150), FCT GK 4 of €150 (2022: €150) and FCT GK 5 of €150 are shown at cost less impairment. FCT GK 2 is a French securitisation vehicle which was set up in 2012, FCT GK 4 is a French

GRENKE FINANCE PLC

85

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

20. FINANCIAL INVESTMENTS COMPANY (Continued)

securitisation vehicle set up in 2019 and FCT GK 5 is a French securitisation vehicle set up in 2023. FCT GK 2 is financed through the issue of FCT notes, which are exclusively subscribed by Special Purpose Vehicle Elektra Purchase No. 25 Designated Activity Company. FCT GK 4 is financed through the issue of FCT notes, which are exclusively subscribed by Special Purpose Vehicle Opusalpha Purchaser II Limited. FCT GK 5 is financed through the issue of FCT notes, which are exclusively subscribed by Special Purpose Vehicle Coral Purchasing Ireland 2 DAC. The Company does not make a gain or a loss on the sale of the French lease receivable contracts because the leases remain on the Statement of Financial Position of the Company and the contractual cashflow payments due to FCT GK 2, FCT GK 4 and FCT GK 5 are shown as financial liabilities.

The maximum exposure to credit loss is the carrying amount of the investment held.

21. SUBORDINATED LOANS AND RESERVE ACCOUNTS CONSOLIDATED AND

COMPANY

	2023	2022
Non − Current	€	€
Unlisted:
Subordinated loans at fair value	22,345,538	21,327,733
Subordinated loans at amortised cost	30,898,265	25,402,793
Financial assets classified as non current	53,243,803	46,730,526
Current
Unlisted:
Subordinated loans at fair value	15,225,092	13,693,951
Subordinated loans at amortised cost	15,059,364	11,567,910
Reserve accounts held with SPVs and banks	-	10
Financial assets classified as current	30,284,456	25,261,871

	2023	2022
Reconciliation of Financial Assets:	€	€
At beginning of year	71,992,397	39,730,151
Payment out on subordinated loans and on reserve
accounts	42,632,293	53,361,568
Repayment of subordinated loans and reserve
accounts	(31,377,609)	(21,715,645)
Movement in fair value	281,178	616,323
Closing balance	83,528,259	71,992,397

The Group and Company enters into subordinated loan agreements with special purpose vehicles (SPVs) as part of the asset backed conduit transactions that are jointly entered into

GRENKE FINANCE PLC

86

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

21. SUBORDINATED LOANS AND RESERVE ACCOUNTS CONSOLIDATED AND

COMPANY (Continued)

with the GRENKE AG Group. In order for the SPVs to obtain third party finance to acquire the lease receivables from GRENKE AG Group subsidiaries and the Company, the agreement

requires the Company to provide a subordinated loan equal to certain percentages of the sold receivables.

The subordinated loans which provide credit enhancement to the senior investors in the special purpose vehicles Coral Purchasing (Ireland) 2 DAC, Kebnekaise Funding Limited and

Opusalpha Purchaser II Limited are mandatorily measured at fair value because they fail the solely payments of principal and interest criterion which would allow the subordinated loans to be measured at amortised cost under IFRS 9. The Group and Company has provided three subordinated loans to Opusalpha Purchaser II Limited and only the loan which provides credit

enhancement to the senior investors in respect of the lease receivables bought from Grenke AG is measured at fair value. The Group and Company has provided three subordinated loans to Coral Purchasing (Ireland) 2 DAC and only the loan which provides credit enhancement to the senior investors in respect of the lease receivables bought from Grenke AG is measured at fair value.

The fair value of the subordinated loans is measured by applying Euro cost of borrowing plus the Grenke AG risk of default to the projected future cash flows from the subordinated loans.

The two subordinated loans provided to Opusalpha Purchaser II Limited which provide credit enhancement to senior investors in FCT GK 4 are measured at amortised cost. In the event of loss on these two subordinated loans there will be an equal and offsetting gain on asset based financial liabilities due to the loss resulting from the Group and Company’s failure to make the payments due in respect of its asset based financial liabilities. Details of the asset based financial liabilities are set out in note 31.

The two subordinated loans provided to Coral Purchasing (Ireland) 2 DAC which provide credit enhancement to senior investors in FCT GK 5 are measured at amortised cost. In the event of loss on these two subordinated loans there will be an equal and offsetting gain on asset based financial liabilities due to the loss resulting from the Group and Company’s failure to make the payments due in respect of its asset based financial liabilities. Details of the asset based financial liabilities are set out in note 36.

Details of the Group and Company subordinated loans to the Grenke AG SPVs which are measured at fair value on 31 December are set out below:

The Group and Company is required under the terms of the subordinated loan agreements to provide credit enhancement loans equal to a % of the net present value of the lease receivables

GRENKE FINANCE PLC

87

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

21. SUBORDINATED LOANS AND RESERVE ACCOUNTS CONSOLIDATED AND

COMPANY (Continued)

held by the SPV at a point in time each month, the collection payment date. The required % is set out in the table above under the column “% of NPV of lease receivables”. The collection payment date for the SPV Coral Purchasing (Ireland) 2 DAC is the 20th of the month, Opusalpha Purchaser II Limited is the 4th of the month and for Kebnekaise Funding Limited is the 18th of the month.

The table below sets out the nominal value of the subordinated loans to the Grenke AG SPVs measured at fair value in 2023.

Details of the Group and Company subordinated loans to the SPVs on 31 December which are measured at amortised cost are set out below:

The Group and Company is required under the terms of a loan agreements to provide two credit enhancement loans to Opusalpha Purchaser II Limited equal to a % of the net present value of the lease receivables held by the SPV, FCT GK4 on the 4th of each month. The Group and Company is required under the terms of a loan agreements to provide two credit enhancement loans to Coral Purchasing (Ireland) 2 DAC equal to a % of the net present value of the lease receivables held by the SPV, FCT GK5 on the 15th of each month. The required % is set out in the table above under the column “% of NPV of lease receivables”.

The Group has concluded that the SPVs in whom the Company invests by way of subordinated loans, but that it does not consolidate, meet the definition of structured entities because:

-The voting rights in the SPVs are not dominant rights in deciding who exercises control due to the debt financing nature of securitisation and net assets are virtually nil; and

-Each SPVs activities are restricted by the terms of the prospectus;

GRENKE FINANCE PLC

88

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

21. SUBORDINATED LOANS AND RESERVE ACCOUNTS CONSOLIDATED AND

COMPANY (Continued)

At 31 December 2023

Total asset value of the SPVs

Group and Company Investment in the SPVs

€

Coral Purchasing (Ireland) 2 DAC

125,317,425

12,782,376

Opusalpha Purchaser II Limited

149,999,998

13,500,000

Kebnekaise Funding Ltd

127,845,338

10,227,627

The Group and Company has also provided subordinated loans of €21,368,783 to Opusalpha Purchaser II Limited in respect of FCT GK 4. The total amount owing to the investors in FCT GK 4 is shown as an asset based financial liability in the consolidated Statement of Financial Position in note 31. The amount owing to FCT GK4 investors would be reduced by any amount not recovered on the Opusalpha Purchaser II Limited subordinated loans relating to FCT GK 4 and therefore these loans have not been included in the table above because there is no exposure to credit loss on these subordinated loans. There is no exposure to credit loss on the Opusalpha Purchaser II Limited subordinated loans relating to FCT GK 4 because the FCT GK 4 asset based financial liability would be reduced by the amount of the loss on the subordinated loan and therefore the net impact on the statement of profit or loss would be zero.

The Group and Company has also provided subordinated loans of €24,988,846 to Coral Purchasing (Ireland) 2 DAC in respect of FCT GK 5. The total amount owing to the investors in FCT GK 5 is shown as an asset based financial liability in the consolidated Statement of Financial Position in note 31. The amount owing to FCT GK5 investors would be reduced by any amount not recovered on the Coral Purchasing (Ireland) 2 DAC subordinated loans relating to FCT GK 5 and therefore these loans have not been included in the table above because there is no exposure to credit loss on these subordinated loans. There is no exposure to credit loss on the Coral Purchasing (Ireland) 2 DAC subordinated loans relating to FCT GK 5 because the FCT GK 5 asset based financial liability would be reduced by the amount of the loss on the subordinated loan and therefore the net impact on the statement of profit or loss would be zero.

The table below describes the types of structured entities that the Company does not consolidate but in which it holds an interest.

Type of structured entity	Nature and purpose	Interest held by the Group and Company
Special purpose vehicle	To manage a portfolio of assets in order to generate returns for noteholders.The vehicles are funded through raising debt finance from the Company and other investors.	Subordinated loan

GRENKE FINANCE PLC

89

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

21. SUBORDINATED LOANS AND RESERVE ACCOUNTS CONSOLIDATED AND

COMPANY (Continued)

The subordinated loans have recourse only to the returns from the assets purchased by the SPVs, in the event that the lease receivables purchased by the SPVs do not create sufficient

cash flow to meet the principal and interest repayment on the debt in the SPV, repayments will be made under the terms of the priorities of payment of the SPV. The subordinated loan is the junior creditor. The subordinated loans are not guaranteed by the GRENKE AG Group. The

Company has not suffered historic losses on the subordinated loans because Grenke AG has always bought back non performing leases from Coral Purchasing (Ireland) 2 DAC,

Opusalpha Purchaser II Limited, Kebnekaise Funding Limited and the Company has always bought back non performing leases from FCT GK 4 and FCT GK 5.

22. AMOUNTS DUE FROM RELATED PARTIES CONSOLIDATED

	2023	2022
	€	€
Amount due in greater than one year
Secured amounts due from GRENKE AG Group
undertakings	34,106,780	28,941,049
Unsecured amounts due from GRENKE AG Group
undertakings	656,148,585	616,002,590
Expected credit loss allowance	(1,351,768)	(4,013,298)
	688,903,597	640,930,341
Amount due in less than one year
Secured amounts due from GRENKE AG Group
undertakings	119,729,300	23,176,213
Unsecured amounts due from GRENKE AG Group
undertakings	909,930,308	975,866,948
Secured amounts due from GRENKE AG Group
franchisees	-	74,321,217
Unsecured amounts due from GRENKE AG Group
franchisees	105,459,767	95,312,927
Expected credit loss allowance	(3,094,808)	(6,364,013)
	1,132,024,567	1,162,313,292

Secured amounts of €59m (2022: €52m) are in respect of payments made to purchase lease instalments from GRENKE AG Group companies. The lease instalments purchased from the GRENKE AG Group companies remain as an asset in the GRENKE AG Group companies’ financial statements because the GRENKE AG Group companies have retained substantially all of the risks and rewards of the asset ownership and also retains control of the transferred asset. The net present value of the securitised lease receivables is in excess of the securitised amount. The balance of the secured amounts €94m (2022: €74m) are in respect of loans to GC Melbourne Pty Limited and GC Sydney Pty Limited which are secured on the lease receivables held by those two companies.

GRENKE FINANCE PLC

90

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

22. AMOUNTS DUE FROM RELATED PARTIES CONSOLIDATED (Continued)

The unsecured amounts due from GRENKE AG Group undertakings are monies loaned to group undertakings to finance their leasing activities and amounts due from Grenke AG Group

undertakings on clearing accounts. Unsecured amounts are usually loaned for periods of three years with the full principal being repayable at the end of the three year period, or if loaned for

a different term at the end of that term. Interest is charged on the principal at Euribor plus a spread, which reflects the risk premium on the lending, and, if loaned in currencies other than Euro, the currency risk.

From the amounts due from related parties 67% (2022: 73%) have a fixed interest rate and 33% (2022: 27%) have a variable interest rate. The weighted average maturity period and

the weighted average effective interest rate of the amounts due from Group companies during the financial year are:

	2023	2022
Weighted average maturity period in years	1.10	1.00
Weighted average effective interest rate (in %)	5.63%	2.82%

The following table shows the maturity structure of the amounts due from group companies without any adjustment for extra credit loss allowances.

	2023	2022
	€	€
Due within one year	1,135,119,375	1,168,677,305
Due between one and five years	690,201,441	644,898,372
More than five years	53,924	45,267
	1,825,374,740	1,813,620,944

The following overview shows the amount due from group companies broken down into the default rating class. The Company and Group have concluded that the most appropriate measurement for future expected credit losses in respect of balances €1.8bn (2022: €1.8bn) of the amounts due to group companies is to use the GRENKE AG 1-Year Default Risk from Bloomberg. An explanation of why we use the Bloomberg GRENKE AG 1-Year default is set out in accounting policy note 4 (k). The amounts referred to here are all classified in Stage one. The Expected credit loss allowances in respect of these amounts are €2.1m (2022: €8.5m).

There are additional loans of €59.4m (2022: €52.1m) due from Grenke AG group companies

in Slovakia, Czech Republic, Romania and United Arab Emirates. They relate to payments

made to purchase lease instalments. The Group and Company under the terms of the financing agreement have the risk of impairment and therefore the Group and Company has provided

for expected losses on the underlying lease receivables. As at 31 December 2023 the Grenke AG group companies in Slovakia, Romania and United Arab Emirates have always bought

GRENKE FINANCE PLC

91

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

22. AMOUNTS DUE FROM RELATED PARTIES CONSOLIDATED (Continued)

back the non performing leases at the net present value of the amount due to the Company in order to avoid increased financing charges under the terms of the financing agreement and

consequently the Group and Company has not incurred losses on these loans. The relevant amounts due from these three sister companies was €50m in 2023 and €42m in 2022. All of

the balances in the tables below at Stage 2 and Stage 3 relate to amounts due under the financing arrangement where the Group and Company secure the lending by purchasing the underlying lease instalments. There is also expected credit loss allowances of €1.7m (2022: €1.3m) in respect of the financing arrangement where the Group and Company secure the lending by purchasing the underlying lease instalments in Stage One.

	2023	2023	2023	2023
	Stage 1	Stage 2	Stage 3	Total
	€	€	€	€
Low risk	1,781,409,280	17,291	-	1,781,426,571
Higher risk	39,853,459	2,142,792	-	41,996,251
Doubtful receivables	-	-	1,951,918	1,951,918
Total gross receivables	1,821,262,739	2,160,083	1,951,918	1,825,374,740
Expected credit loss allowance	(3,817,630)	(180,033)	(448,913)	(4,446,576)
Carrying amounts	1,817,445,109	1,980,050	1,503,005	1,820,928,164

	2022	2022	2022	2022
	Stage 1	Stage 2	Stage 3	Total
	€	€	€	€
Low risk	1,809,003,732	2,642,226	-	1,811,645,958
Higher risk	19,564	423,482	-	443,046
Doubtful receivables	-	-	1,531,940	1,531,940
Total gross receivables	1,809,023,296	3,065,708	1,531,940	1,813,620,944
Expected credit loss allowance	(9,800,058)	(200,526)	(376,727)	(10,377,311)
Carrying amounts	1,799,223,238	2,865,182	1,155,213	1,803,243,633

GRENKE FINANCE PLC

92

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

22. AMOUNTS DUE FROM RELATED PARTIES CONSOLIDATED (Continued)

The following tables show changes in the expected credit loss in the years beginning 1 January 2023 and 1 January 2022:

	Stage 1	Stage 2	Stage 3	Total
	€	€	€	€
Expected credit loss allowance
as per January 1, 2023	9,800,058	200,526	376,727	10,377,311
Newly extended or acquired
financial assets	881,093	30,175	86,504	997,772
Reclassifications				-
to Stage 1	82,518	(49,939)	(32,579)	-
to Stage 2	(122,161)	138,629	(16,468)	-
to Stage 3	(79,060)	(9,790)	88,850	-
Change in credit loss allowance
due to change in stage	(62,963)	(37,874)	194,566	93,729
Mutually agreed termination of
contracts or payment for
financial assets (without
derecognition)	(672,909)	(123,941)	(101,861)	(898,711)
Change in credit loss allowance
due to change in processing
category (processing categories
explained in note 4 (o))	-	-	(1,897)	(1,897)
Change in models/risk
parameters used in extra credit
loss allowance calculation	(6,126,673)	19,455	(142,228)	(6,249,446)
Derecognition of financial assets	(116)	-	-	(116)
Currency translation and other
differences	(51,758)	(4,174)	(10,214)	(66,146)
Accrued interest	169,601	16,966	7,513	194,080
Expected credit loss allowance
as per 31 December, 2023	3,817,630	180,033	448,913	4,446,576

GRENKE FINANCE PLC

93

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

22. AMOUNTS DUE FROM RELATED PARTIES CONSOLIDATED (Continued)

Stage 1

Stage 2

Stage 3

Total

€

Expected credit loss allowance

as per January 1, 2022

6,015,922

269,466

536,469

6,821,857

Newly extended or acquired

financial assets

661,794

54,570

55,500

771,864

Reclassifications

-

to Stage 1

184,022

(79,178)

(104,844)

-

to Stage 2

(58,916)

111,966

(53,050)

-

to Stage 3

(29,847)

(12,891)

42,738

-

Change in credit loss allowance

due to change in stage

(144,941)

(29,851)

69,625

(105,167)

Mutually agreed termination of

contracts or payment for

financial assets (without

derecognition)

(657,708)

(146,308)

(173,357)

(977,373)

Change in credit loss allowance

due to change in processing

category (processing categories

explained in note 4 (o))

-

(21,203)

Change in models/risk

parameters used in extra credit

loss allowance calculation

3,616,122

-

3,616,122

Derecognition of financial assets

(2,277)

(66)

(10,589)

(12,932)

Currency translation and other

differences

76,558

7,882

7,749

92,189

Accrued interest

139,329

24,936

27,689

191,954

Expected credit loss allowance

as per 31 December, 2022

9,800,058

200,526

376,727

10,377,311

GRENKE FINANCE PLC

94

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

23. AMOUNTS DUE FROM RELATED PARTIES COMPANY

	2023	2022
	€	€
Amount due in greater than one year
Secured amounts due from GRENKE AG Group
undertakings	34,106,780	28,941,049
Unsecured amounts due from GRENKE AG Group
undertakings	656,148,585	616,002,590
Expected credit loss allowance	(1,351,768)	(4,013,298)
Subordinated loans to subusidiary SPVs	10,082,672	15,201,212
Reserve accounts held with subsidiary SPVs	12,877,393	19,020,351
	711,863,662	675,151,904
Amount due in less than one year
Secured amounts due from GRENKE AG Group
undertakings	119,729,300	23,176,213
Unsecured amounts due from GRENKE AG Group
undertakings	909,930,308	975,866,948
Secured amounts due from GRENKE AG Group
franchisees	-	74,321,217
Unsecured amounts due from GRENKE AG Group
franchisees	105,459,767	95,312,927
Expected credit loss allowance	(3,094,808)	(6,364,013)
Subordinated loans to subusidiary SPVs	9,935,405	12,763,585
Reserve accounts held with subsidiary SPVs	1,106,740	174,332
	1,143,066,712	1,175,251,209

The subsidiary SPVs referred to in the narrative below are FCT GK 2.

Details of the Company subordinated loans as at 31 December are set out below:

GRENKE FINANCE PLC

95

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

23. AMOUNTS DUE FROM RELATED PARTIES COMPANY (Continued)

The Company is required under the terms of a loan agreements to provide two credit enhancement loans to Electra Purchase No. 25 Designated Activity Company equal to a % of the net present value of the lease receivables held by the SPV, FCT GK2 on the 15th of each month. The required % is set out in the table above under the column “% of NPV of lease receivables”.

The subordinated loans to subsidiary SPVs have recourse only to the returns from the assets purchased by the subsidiary SPVs, in the event that the lease receivables purchased by the subsidiary SPVs do not create sufficient cash flow to meet the principal and interest repayment on the debt in the subsidiary SPV, repayments will be made under the terms of the priorities of payment of the subsidiary SPV. The subordinated loan is the junior creditor. The Company has not suffered historic losses on the subordinated loans to subsidiary SPVs because the Company has always bought back non performing leases from FCT GK 2.

The reserve accounts cover liabilities which FCT GK 2, FCT GK 4 and FCT G5 may have under interest rate swaps they have in place to hedge the interest rate risk. These reserves are collateral to the subsidiary SPVs, which will be used to pay the subsidiary SPV in the event of the Company being unable to fulfil its obligations under interest rate swap agreements.

Any loss on subordinated loans to subsidiary SPVs providing credit enhancement to the Company’s ABCP programmes will be offset by an equivalent reduction in the amount owed to the subsidiary SPV it is providing credit enhancement in respect of and therefore there will be net loss of zero.

24. LEASED ASSETS HELD FOR RESALE CONSOLIDATED AND COMPANY

2023

2022

€

Leased assets held for resale

943,461

1,048,553

The value of leased assets for resale are recognised in the statement of financial position on the basis of historical selling prices for similar assets.

GRENKE FINANCE PLC

96

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY

	2023	2022
	€	€
Finance lease receivables due after one year	1,444,380,395	1,260,512,606
Expected credit loss allowance on performing
finance lease receivables	(36,559,707)	(30,811,639)
	1,407,820,688	1,229,700,967
Finance lease receivables due within one year	705,035,509	667,491,679
Finance lease receivables past due not credit
impaired	25,188,627	13,697,468
Non performing finance lease receivables	206,139,512	174,792,034
Expected credit loss allowance on non performing
finance lease receivables	(157,594,690)	(134,635,213)
Expected credit loss allowance on performing
finance lease receivables	(18,878,154)	(17,403,980)
	759,890,804	703,941,988

The cost of assets acquired for the purpose of leasing under finance leases during the period

was €974 m (2022: €852m). During 2023, the Group and Company made a net investment in new finance leases of €1,046m (2022: €898m). In addition to the cost of the assets, the net investment includes commissions paid to the agents and dealers less any upfront payments and document fees paid by the lessee.

€510m (2022: €478m) of the finance lease receivables provide security in the event of the Group and Company defaulting on its obligations in respect of asset based financial liabilities details of which are provided in note 31.

€1,015m (2022: €852m) of the finance lease receivables provide security in the event of the Group and Company defaulting on its obligations in respect of amounts due to Grenke Bank AG details of which are provided in note 33.

GRENKE FINANCE PLC

97

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY (Continued)

A reconciliation of the gross investment in finance lease receivables to the net investment is set out below together with the maturity of the lease payments.

	2023	2022
	€	€
Outstanding minimum lease payments	2,454,314,648	2,134,822,310
Guaranteed residual values	489,603	526,695
Outstanding minimum lease payments	2,454,804,251	2,135,349,005
Non-guaranteed residual values	279,474,306	250,187,158
Gross investment	2,734,278,557	2,385,536,163
Present value of unguaranteed residual values	(225,706,590)	(209,111,238)
Unrealised finance income	(353,534,514)	(269,042,376)
Present value of minimum lease payments	2,155,037,453	1,907,382,549
Present value of unguaranteed residual values	225,706,590	209,111,238
Expected credit loss allowance	(213,032,551)	(182,850,832)
Net investment	2,167,711,492	1,933,642,955

	2023	2022
	€	€
Due within one year	1,036,684,305	928,101,443
Due between one and two years	592,629,638	532,209,376
Due between two and three years	428,230,754	353,950,942
Due between three and four years	266,690,305	213,666,017
Due between four and five years	115,955,764	95,748,583
Due in greater than five years	14,123,882	11,145,949
Outstanding minimum lease payments	2,454,314,648	2,134,822,310

Due to effective risk management and a granular contract and lessee portfolio, the leasing receivables have a pronounced diversified risk structure with regard to credit risk quality. In all cases, the Company and Group remains the legal owner of the leased assets by which the leasing receivables are secured.

The following overview shows the gross receivables broken down into the default risk rating class of the leasing receivables defined in the Company and Group and the expected credit loss allowance on the leasing receivables in 2023 and 2022. The impairment loss and the definition of the default risk rating class are determined by the procedure described in the

accounting policy note 4(k) “Use of assumptions and estimates” under the heading “Determination of impairment of finance lease receivables.”

GRENKE FINANCE PLC

98

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY (Continued)

2023

Stage 1

Stage 2

Stage 3

Total

€

Low risk

1,549,444,014

1,914,298

-

1,551,358,312

Higher risk

414,113,414

150,965,613

-

565,079,027

Doubtful receivables

-

264,306,704

Total gross receivables

1,963,557,428

152,879,911

264,306,704

2,380,744,043

Expected credit loss allowance

(23,974,893)

(17,257,155)

(171,800,503)

(213,032,551)

Carrying amounts

1,939,582,535

135,622,756

92,506,201

2,167,711,492

2022

Stage 1

Stage 2

Stage 3

Total

€

Low risk

1,759,678,760

113,304,640

-

1,872,983,400

Higher risk

371,798

22,569,549

-

22,941,347

Doubtful receivables

-

220,569,040

Total gross receivables

1,760,050,558

135,874,189

220,569,040

2,116,493,787

Expected credit loss allowance

(22,899,882)

(15,822,615)

(144,128,335)

(182,850,832)

Carrying amounts

1,737,150,676

120,051,574

76,440,705

1,933,642,955

GRENKE FINANCE PLC

99

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY (Continued)

The following tables show changes in expected credit loss allowance for finance lease receivables in the years beginning 1 January 2023 and 1 January 2022:

Stage 1

Stage 2

Stage 3

Total

€

Expected credit loss allowance

as per January 1, 2023

22,899,882

15,822,615

144,128,335

182,850,832

Newly extended or acquired

financial assets*

10,923,516

5,807,410

12,766,075

29,497,001

to Stage 1

1,631,489

(1,127,106)

(504,383)

-

to Stage 2

(1,231,339)

3,405,669

(2,174,330)

-

to Stage 3

(1,115,191)

(4,397,252)

5,512,443

-

Change in credit loss allowance

due to change in stage

(1,389,839)

1,333,656

30,286,584

30,230,401

Mutually agreed termination of

contracts or payment for

financial assets (without

derecognition)

(9,444,938)

(5,355,764)

(8,816,907)

(23,617,609)

Change in credit loss allowance

due to change in processing

category (processing categories

explained in note 4 (p))

-

8,985,721

Change in models/risk

parameters used in extra credit

loss allowance calculation

115,580

743,463

(1,012,934)

(153,891)

Derecognition of financial assets

(15,336)

(56,966)

(18,136,793)

(18,209,095)

Currency translation and other

differences

2,917

3,909

17,199

24,025

Accrued interest

1,598,152

1,077,521

749,493

3,425,166

Expected credit loss allowance

as per 31 December, 2023

23,974,893

17,257,155

171,800,503

213,032,551

*The values stated in Stages 2 and 3 relate to lease receivables newly extended in the fiscal year that were allocated at their time of acquisition into Stage 1 but were reallocated to another Stage during the fiscal year.

GRENKE FINANCE PLC

100

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY (Continued)

*The values stated in Stages 2 and 3 relate to lease receivables newly extended in the fiscal year that were allocated at their time of acquisition into Stage 1 but were reallocated to another Stage during the fiscal year.

Stage 1

Stage 2

Stage 3

Total

€

Expected credit loss allowance

as per January 1, 2022

15,951,590

14,040,914

131,815,941

161,808,445

Newly extended or acquired

financial assets*

10,178,157

4,708,136

8,791,039

23,677,332

Reclassifications:

to Stage 1

1,198,237

(722,929)

(475,308)

-

to Stage 2

(900,089)

3,160,025

(2,259,936)

-

to Stage 3

(719,651)

(2,618,845)

3,338,496

-

Change in credit loss allowance

due to change in stage

(994,136)

1,692,227

22,014,757

22,712,848

Mutually agreed termination of

contracts or payment for

financial assets (without

derecognition)

(5,250,961)

(3,710,462)

(10,162,412)

(19,123,835)

Change in credit loss allowance

due to change in processing

category (processing categories

explained in note 4 (o))

-

7,538,704

Change in models/risk

parameters used in extra credit

loss allowance calculation

2,306,855

(1,505,065)

(1,480,690)

(678,900)

Derecognition of financial assets

(5,408)

(24,526)

(15,534,711)

(15,564,645)

Currency translation and other

differences

(9,970)

(8,884)

(27,632)

(46,486)

Accrued interest

1,145,258

812,024

570,087

2,527,369

Expected credit loss allowance

as per 31 December, 2022

22,899,882

15,822,615

144,128,335

182,850,832

GRENKE FINANCE PLC

101

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

25. FINANCE LEASE RECEIVABLES CONSOLIDATED AND COMPANY (Continued)

The following table reconciles the expected credit loss allowance on finance lease receivables to the charge in the statement of profit or loss:

2023

2022

€

Expected credit loss allowance at 1 January

182,850,832

161,808,445

Expected credit loss allowance on finance

lease receivables charged to the statement of profit

or loss

52,849,687

39,785,499

Exclude write off of lease receivables

(22,667,968)

(18,743,112)

Expected credit allowance at 31 December

213,032,551

182,850,832

A sensitivity analysis on the possible expected credit loss allowances due to changes in the credit performance of the Group and Company lessees is set out in note 43.

26. TRADE AND OTHER RECEIVABLES CONSOLIDATED AND COMPANY

	2023	2022
	€	€
Non current assets
Overseas withholding tax	4,884,925	4,884,925
Deferred risk premium paid to Grenke Bank AG	36,659,973	28,668,828
Deferred financing costs	826,391	-
	42,371,289	33,553,753
Current assets
Overseas VAT	99,608,928	125,127,196
Irish VAT	45,132	27,999
Deferred risk premium paid to Grenke Bank AG	22,080,262	17,472,420
Deferred risk premium paid to Grenke AG Group
companies	-	5,635
Deferred financing costs	594,696	334,577
Other assets	338,325	347,894
Trade debtors	2,644,225	2,927,035
Expected credit loss allowance	(2,422,794)	(2,000,793)
Interest on tax repaid late	-	7,711,664
Credit support accounts	10,050,000	-
	132,938,774	151,953,627

GRENKE FINANCE PLC

102

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

The Group and Company has been charged a risk premium in respect of lease instalments sold to GRENKE Bank AG as part of a financing arrangement described in note 45, the Group and Company writes this premium off over the life of the underlying lease instalments sold to GRENKE Bank AG.

Trade Debtors are amounts due from dealers in respect of termination of leases. All of the trade debtors which are over 180 days overdue are included in Stage 3. A 100% expected credit allowance of €2.4m (2022 €2m) has been made for all amounts 180 days overdue because all amounts due from dealers in respect of termination of leases is payable on presentation of the invoice. It is therefore unlikely than any amount which is 180 days overdue will be recovered.

The Group and Company has credit support annex agreements with Deutsche Bank, HSBC, SEB, DZ Bank, Bayerische Landesbank, and Landesbank Hessen-Thüringen, which are dependent on the value of derivative financial instruments the Group and Company has with the respective counterparty. The Group and Company places money on deposit with the respective counterparty if the value of the derivative financial instrument is in favour of the counterparty. If the value is in favour of the Group and Company, the counterparty places money on deposit with the Group and Company. Details of the derivative financial instruments are included in note 27.

GRENKE FINANCE PLC

103

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:

	Cash flow hedges	Not designated as hedges	Total
	€	€	€
At 31 December 2023
Derivative assets
Within one year - current assets	5,102,306	899,342	6,001,648
Between one and five years	179,337	604,155	783,492
After five years	5,062,962	-	5,062,962
Non current assets	5,242,299	604,155	5,846,454
Total derivative assets	10,344,605	1,503,497	11,848,102
Derivative liabilities
Within one year - current liabilities	3,582,810	1,544,860	5,127,670
Between one and five years	4,592,992	1,380,539	5,973,531
After five years	8,772,844	-	8,772,844
Non-current liabilities	13,365,836	1,380,539	14,746,375
Total derivative liabilities	16,948,646	2,925,399	19,874,045
Net asset/(liability) arising on derivative financial instruments	(6,604,041)	(1,421,902)	(8,025,943)

GRENKE FINANCE PLC

104

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

The equivalent disclosure for the prior year is as follows:

Cash flow hedges

Not designated as hedges

Total

€

At 31 DECEMBER 2022

Derivative assets

Within one year - current assets

7,333,378

836,475

8,169,853

Between one and five years

4,755,384

1,284,218

6,039,602

After five years

8,402,358

-

8,402,358

Non current assets

13,157,742

1,284,218

14,441,960

Total derivative assets

20,491,120

2,120,693

22,611,813

Derivative liabilities

Within one year - current liabilities

1,104,476

1,683,708

2,788,184

Between one and five years

579,083

1,344,095

1,923,178

After five years

1,257,446

-

1,257,446

Non-current liabilities

1,836,529

1,344,095

3,180,624

Total derivative liabilities

2,941,005

3,027,803

5,968,808

Net asset/(liability) arising on derivative financial instruments

17,550,115

(907,110)

16,643,005

GRENKE FINANCE PLC

105

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

The Euro amounts that will be received in respect of the euro leg of forward exchange contracts which have been accounted for as cash flow hedges are set out below. The foreign currency leg of the relevant forward exchange contract will be satisfied by utilising foreign currency loan repayments from Grenke AG Group undertakings and franchisees which are highly probable.

The Euro amounts that will be paid by the Group and Company to satisfy the Euro leg of foreign currency swaps are also included in the table below. The foreign currency received in respect of the foreign currency leg of the cross currency swap will be utilised to make fixed interest and capital repayments on foreign currency bonds.

Hedge Effectiveness

IFRS accounting requires documentation and a risk analysis when derivative financial instruments are employed. The relationship between the critical terms of the underlying

transaction and the hedging instrument determines the effectiveness of a hedging relationship. By employing derivatives for foreign currency hedging on foreign currency bonds and loans to

Group and Franchise Companies and interest rate swaps on variable interest rate payable on asset based liabilities, the Group and Company applies hedge accounting in accordance with IFRS 9. Hedge effectiveness, as required by IFRSs, is in line with Group and Company’s intention of using derivatives only to hedge risks from the designated underlying transaction and to never enter into derivatives for speculative reasons.

To date, the hedging relationships between the cross-currency swaps and the foreign currency bonds has proven to be highly effective. The critical terms of the hedging instrument and the hedged item match. The hedging relationships between the foreign currency loans to group companies and franchise companies and the forward exchange contracts when there has been a hedging relationship designated has proven to be highly effective. The hedging relationships between the interest rate swaps and the asset based liabilities when there has been a hedging relationship designated has proven to be highly effective.

One to Three months

Three to twelve months

One to five years

Five to ten years

Total

At 31 December 2023

Foreign exchange contracts (highly

probable loan repayments)

Notional amounts (in € 000)

4,253

Average forward rate (Eur/AED)

4.04

Notional amounts (in € 000)

33,675

59,100

92,775

Average forward rate (Eur/AUD)

1.65

1.66

Notional amounts (in € 000)

41,072

28,821

69,894

Average forward rate (Eur/CAD)

1.48

1.50

Notional amounts (in € 000)

13,395

Average forward rate (Eur/CHF)

0.95

GRENKE FINANCE PLC

106

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

Hedge Effectiveness (Continued)

One to Three months

Three to twelve months

One to five years

Five to ten years

Total

At 31 December 2023

Notional amounts (in € 000)

6,635

26,774

33,409

Average forward rate (Eur/CLP)

979.68

921.32

Notional amounts (in € 000)

7,317

22,020

66,132

95,469

Average forward rate (Eur/DKK)

7.45

7.42

Notional amounts (in € 000)

30,871

Average forward rate (Eur/GBP)

0.86

Notional amounts (in € 000)

24,729

2,299

5,527

32,555

Average forward rate (Eur/PLN)

4.39

5.22

5.61

Notional amounts (in € 000)

10,651

33,009

61,831

105,490

Average forward rate (Eur/SEK)

10.33

10.72

11.48

Notional amounts (in € 000)

2,666

Average forward rate (Eur/SGD)

1.447

Notional amounts (in € 000)

461

2,923

1,344

4,728

Average forward rate (Eur/USD)

1.08

1.11

1.12

Notional amounts (in € 000)

737

2,471

3,208

Average forward rate (Eur/HUF)

415.92

432.92

Cross currency swaps (certain

foreign currency bond interest

and bond repayments)

Notional amounts (in € 000)

480

3,838

58,516

63,313

Average hedged rate (Eur/JPY)

116.86

Notional amounts (in € 000)

336

562

3,602

94,221

98,720

Average hedged rate (Eur/HKD)

9.50

Interest rate swaps variable

interest rate payments on asset

based liabilities

Notional amounts (in € 000)

290,000

247,778

25,104

562,882

Average interest rate

3.02%

3.45%

3.60%

GRENKE FINANCE PLC

107

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

Hedge Effectiveness (Continued)

One to Three months

Three to twelve months

One to five years

Five to ten years

Total

At 31 December 2022

Foreign exchange contracts (highly

probable loan repayments)

Notional amounts (in € 000)

4,705

Average forward rate (Eur/AED)

3.89

Notional amounts (in € 000)

73,595

Average forward rate (Eur/AUD)

1.56

Notional amounts (in € 000)

61,672

Average forward rate (Eur/CAD)

1.40

Notional amounts (in € 000)

11,802

Average forward rate (Eur/CHF)

0.98

Notional amounts (in € 000)

8,800

Average forward rate (Eur/CLP)

1,022.74

Notional amounts (in € 000)

7,528

21,379

50,733

79,639

Average forward rate (Eur/DKK)

7.44

Notional amounts (in € 000)

30,705

Average forward rate (Eur/GBP)

0.87

Notional amounts (in € 000)

14,462

614

7,826

22,901

Average forward rate (Eur/PLN)

4.77

4.89

5.49

Notional amounts (in € 000)

8,372

31,738

61,350

101,460

Average forward rate (Eur/SEK)

10.75

10.46

10.74

Notional amounts (in € 000)

23,195

Average forward rate (Eur/SGD)

1.44

Notional amounts (in € 000)

2,550

Average forward rate (Eur/USD)

1.08

Cross currency swaps (certain

foreign currency bond interest

and bond repayments)

Notional amounts (in € 000)

480

3,838

59,475

64,273

Average hedged rate (Eur/JPY)

116.15

Notional amounts (in € 000)

340

562

3,598

95,122

99,622

Average hedged rate (Eur/HKD)

9.63

GRENKE FINANCE PLC

108

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

Hedge Effectiveness (Continued)

One to Three months

Three to twelve months

One to five years

Five to ten years

Total

At 31 December 2022

Interest rate swaps variable

interest rate payments on asset

based liabilities

Notional amounts (in € 000)

212,833

158,945

12,868

384,647

Average interest rate

0.97%

1.10%

1.96%

The nominal values and fair values of derivative financial instruments are shown in the following analysis. In accordance with internal guidelines, the nominal amounts of the derivative financial instruments correspond to the volume of exposures being covered with derivatives.

GRENKE FINANCE PLC

109

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

Nominal

Fair

Nominal

Fair

Value

2023

2022

€

Assets

Cash flow hedges

Interest Rate Swaps

150,000,000

900,997

265,000,000

4,099,049

Cross Currency Swaps

98,720,454

5,062,962

99,622,315

8,402,358

Forward Exchange Contracts

171,414,737

4,380,645

276,698,257

7,989,713

420,135,191

10,344,604

641,320,572

20,491,120

Not designated as hedges

Interest Rate Swaps

125,000,000

323,297

170,000,000

662,427

Forward Exchange Contracts

38,416,503

1,180,201

27,950,804

1,458,266

163,416,503

1,503,498

197,950,804

2,120,693

583,551,694

11,848,102

839,271,377

22,611,813

Liabilities

Cash flow hedges

Interest Rate Swaps

295,000,000

1,174,029

-

Cross Currency Swaps

63,313,106

8,772,844

64,272,570

1,257,446

Forward Exchange Contracts

335,363,128

7,001,773

144,326,325

1,683,559

693,676,235

16,948,646

208,598,895

2,941,005

Not designated as hedges

Interest Rate Swaps

45,000,000

410,216

-

Forward Exchange Contracts

45,918,777

2,515,183

41,785,378

3,027,803

90,918,777

2,925,399

41,785,378

3,027,803

739,595,012

19,874,045

250,384,273

5,968,808

GRENKE FINANCE PLC

110

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

At 31 December 2023 and 2022, the Group and Company had no master netting or similar arrangements, or enforceable right of set-off agreements with any of its derivative counterparts.

Cash flow hedges consist of forward exchange contracts, cross-currency swaps and interest rate swaps. These instruments hedge risks arising to future cash flows from movements in foreign exchange rates and interest rates. Cash flow hedges are expected to affect profit or loss over the period to maturity.

The profit/(loss) arising on cash flow hedges and related hedged items reflected in the Statement of other comprehensive income is shown below:

Components of other comprehensive income -cash flow hedges20232022Gains/(losses) arising during the year€€- cross currency swaps(10,854,793)14,280,449 - forward exchange contracts(9,090,605)13,923,703 - interest rate swaps(4,372,079) 4,099,048 Reclassified into the statement of profit and loss- cross currency swaps8,500,095 (2,448,661)- forward exchange contracts9,429,498 (15,480,619)(6,387,884)14,373,920

Fair value hierarchy	2023	2022
Assets measured at fair value	Level 2	Level 2
Cash flows hedges	€	€
Interest rate swaps	900,997	4,099,049
Cross currency swaps	5,062,962	8,402,358
Forward exchange contracts	4,380,645	7,989,713
Not designated as hedges
Interest rate swaps	323,297	662,427
Forward exchange contracts	1,180,201	1,458,266
	11,848,102	22,611,813

GRENKE FINANCE PLC

111

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

27. DERIVATIVE FINANCIAL INSTRUMENTS CONSOLIDATED AND COMPANY

(Continued)

Fair value hierarchy

2023

2022

Liabilities measured at fair value

Level 2

Cash flows hedges

€

Interest Rate Swaps

1,174,029

-

Cross currency swaps

8,772,844

1,257,446

Forward exchange contracts

7,001,773

1,683,559

Not designated as hedges

Interest Rate Swaps

410,216

-

Forward exchange contracts

2,515,183

3,027,803

19,874,045

5,968,808

At 31 December 2023 and 2022 there were no derivatives valued using Level 1 or Level 3 fair value techniques.

The inputs to level 2 valuations are set out in note 42.

28. DEFERRED TAX CONSOLIDATED AND COMPANY

2023

2022

€

Deferred tax liability

956,386

1,770,438

2023

2022

Deferred tax asset/(liability) is comprised of:

€

Taxable temporary differences attributable to

accelerated tax depreciation

9,743

6,942

Leased right of use assets

25,117

12,960

Other deductible temporary differences

845

238

Tax relating to cash flow hedges

(992,091)

(1,790,578)

(956,386)

(1,770,438)

GRENKE FINANCE PLC

112

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

28. DEFERRED TAX CONSOLIDATED AND COMPANY (Continued)

2023

2022

€

Opening balance at start of year

(1,770,438)

16,569

Taxable temporary differences attributable to

accelerated tax depreciation

2,801

6,569

Leased right of use assets

12,158

3,530

Other deductible temporary differences

608

(365)

Tax relating to cash flow hedges

798,485

(1,796,741)

(956,386)

(1,770,438)

Components of other comprehensive income -

2023

2022

Tax relating to cash flow hedges

€

Gains/(losses) arising during the year

- cross currency swaps

1,356,849

(1,785,056)

- forward exchange contracts

1,136,326

(1,740,463)

- interest rate swaps

546,510

(512,381)

Reclassified into the statement of profit and loss

- cross currency swaps

(1,062,512)

306,083

- forward exchange contracts

(1,178,688)

1,935,076

798,485

(1,796,741)

GRENKE FINANCE PLC

113

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

29. CORPORATION TAX

2023

2022

Corporation tax asset

Amounts due in greater than one year

€

Corporation tax receivable

3,882,462

Amounts due within one year

Corporation tax receivable

-

324,759

Corporation tax liability

Amounts due within one year

Corporation tax payable

763,328

-

Net asset

3,119,134

4,207,221

The Corporation Tax asset greater than one year relates an asset, which relates to a deduction, which has been claimed in respect of licence fees and guarantee fees of €31m, which were charged by GRENKE AG in respect of the years 2010 to 2016. A correlative relief claim was submitted to the Irish Tax Authorities on 8 February 2021 in respect of this amount. The Irish Tax Authorities have requested clarification with regard to some of the information provided in the claim but have not expressed any views on the claim.

30. CASH AND CASH EQUIVALENTS

2023

2022

€

Cash at bank

143,284,978

38,969,272

143,284,978

38,969,272

GRENKE FINANCE PLC

114

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

31. FINANCIAL LIABILITIES CONSOLIDATED

2023

2022

€

Repayable in more than one year but less

than five years

Debt securities in issue

1,742,250,000

1,409,500,000

Asset based financial liabilities

301,448,663

264,560,831

Unamortised discount on bonds and notes in issue

(5,194,645)

(2,387,237)

Deferred set up costs

(696,612)

(305,117)

Repayable in more than five years

Debt securities in issue

183,961,922

198,462,018

Asset based financial liabilities

171,269

-

Unamortised discount on bonds and notes in issue

(6,452)

(20,870)

Deferred set up costs

(7,142)

(18,782)

Total non current financial liabilities

2,221,927,003

1,869,790,843

Current liabilities

Debt securities in issue

434,673,000

629,000,000

Asset based financial liabilities

170,356,706

166,428,704

Unamortised discount on bonds and notes in issue

(12,196,449)

(3,467,770)

Deferred set up costs

(618,562)

(402,202)

Bank loans

170,000,000

180,005,281

Total current financial liabilities

762,214,695

971,564,013

Total financial liabilities

2,984,141,698

2,841,354,856

The bonds in issue at 31 December 2023 under the debt issuance programme comprise:

Interest

Currency

Issue volume

Weighted average

in millions

maturity period

effective interest rate

(in years)

(in %)

Fixed

Eur

2,083

1.80

3.91

Variable

Eur

10

2.15

3m Euribor + 2.92

Fixed

JPY

7,000

5.51

0.95

Fixed

HKD

800

5.89

2.72

GRENKE FINANCE PLC

115

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

31. FINANCIAL LIABILITIES CONSOLIDATED (Continued)

The bonds in issue at 31 December 2022 under the debt issuance programme comprise:

Interest	Currency	Issue volume	Weighted average	Weighted average
		in millions	maturity period	effective interest rate
			(in years)	(in %)
Fixed	Eur	2,006	1.70	1.92
Fixed	JPY	7,000	6.51	0.95
Fixed	HKD	800	6.89	2.72

The bonds issued carry an unconditional and irrevocable guarantee for the proper and punctual payment of principal, interest and other amounts due on the debenture from the ultimate parent GRENKE AG.

The Debt Issuance Programme (DIP) provides a standardised framework for future borrowings. The DIP allows the Company to have in issue bonds with nominal value of €5bn at any time. These bonds are listed on the Luxembourg Stock Exchange. The programme was updated

with effect as of 23 March 2023. The programme was approved by the Finance Sector Supervisory Committee (“Commission de Surveillance du Secteur Financier”: CSSF).

Three (2022: Two) euro bonds were issued in the current year under the Debt Issuance Programme with a nominal value of €600m (2022: €170m). An addition of €50m (2022: €50m) was added to a €350m 0.625% bond already issued. An addition of €124.25m was added to a €325m 3.95% bond already issued.

Bonds with a nominal amount of €954.38m (2022: €520m) were repaid in 2023.

Under the terms of cross-currency swaps put in place when the foreign currency bonds were issued, €151m (2022: €151m) will be repayable when the bonds mature. Under the terms of the foreign currency swaps the following amounts will be payable annually to pay interest, foreign currency swap fees and bond fees on the foreign currency bonds. The € amounts payable will not change over the life of the foreign currency bonds under the terms of foreign currency swaps.

Foreign currency	Euro amount	Annual	Effective
bond	Repayable	Payment	Interest Rate	Final Payment
¥7,000,000,000	€57,556,323	€959,464	1.67%	02/07/2029
HK$500,000,000	€57,745,589	€561,691	0.97%	13/09/2029
HK$300,000,000	€35,238,565	€338,290	0.96%	11/03/2030

The promissory loan notes in issue at 31 December 2023 comprise:

Interest

Currency

Issue volume

Weighted average

in millions

maturity period

effective interest

(in years)

rate (in %)

Fixed

Eur

81

5.28

2.57

GRENKE FINANCE PLC

116

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

31. FINANCIAL LIABILITIES CONSOLIDATED (Continued)

The promissory loan notes in issue at 31 December 2022 comprise:

Interest	Currency	Issue volume	Weighted average	Weighted average
		in millions	maturity period	effective interest
			(in years)	rate (in %)
Fixed	Eur	60	1.81	1.84

All promissory notes are bullet debt securities and are subject to constant rating. A promissory notes with a par value of €57.5m (2022: €10m) were issued in the current year. Promissory notes with a par value of €37m (2022: €20m) were repaid in the current year. If the Standard & Poor’s rating for the GRENKE AG Group were to be downgraded below BBB− there is a step up clause in the Group and Company’s promissory note agreements. If that happens, the noteholder can cancel the contract and seek immediate repayment or the noteholder will be entitled to a step up on the interest rate of 0.75% on top of the initially agreed interest rate. GRENKE AG’s Group rating is currently BBB+ by Standard & Poor.

The commercial paper in issue at 31 December 2023 comprise:

Interest

Currency

Issue volume

Weighted average

in millions

maturity period

effective interest rate

(in years)

(in %)

Fixed

Eur

50

0.13

4.46

The commercial paper in issue at 31 December 2022 comprise:

Interest	Currency	Issue volume	Weighted average	Weighted average
		in millions	maturity period	effective interest rate
			(in years)	(in %)
Fixed	Eur	25	0.14	2.49

Commercial paper with a nominal value of €185m (2022: €95m) was issued in 2023 and €160m (2022: €70m) was repaid in 2023.

The discounts and premiums on debt securities in issue are released to the Statement of Profit and Loss over the term of the debt securities.

Asset based financial liabilities are liabilities in connection with the ABCP programmes.

The following consolidated special purpose vehicles were in place at the year end date FCT "GK"-COMPARTMENT "G 2" and Elektra Purchase No. 25 Designated Activity Company (UniCredit is the sponsoring bank) (FCT GK 2), FCT "GK"-COMPARTMENT "G 4" (Landesbank Hessen-Thuringern Girozenrale (HeLeBa) is the sponsoring bank) (FCT GK 4), FCT "GK"-COMPARTMENT "G 5" (DZ Bank is the sponsoring bank) (FCT GK 5) and “Kebnekaise Funding Limited” (sponosor: SEB AB) (Kebnekaise Funding limited).

GRENKE FINANCE PLC

117

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

31. FINANCIAL LIABILITIES CONSOLIDATED (Continued)

The ABCP programmes grant the Group and Company the right to refinance or to sell receivables to the respective programmes for a certain period of time. The cap on the purchase

volume is determined by the volume of the programme, which is normally backed by the organising bank in the form of a liquidity commitment in the corresponding amount. The carrying amount is calculated using the effective interest method, whereby incurred transaction costs are amortised over the term of the underlying refinancing package.

The structured entities are refinanced by issuing commercial papers, usually with a term of one month, on a revolving basis. The interest on the commercial papers is based on one-month Euribor. This is a floating interest rate.

There is no currency risk in ABCP refinancing as only euro transactions and euro-based leases are involved.

The asset based liabilities in connection with each ABCP programme and the net present value of the lease receivables which have been sold to the SPV to securitise that liability are set out below:

	Asset Based	NPV of lease	Asset Based	NPV of lease
	liability	receivables	liability	receivables
		sold to SPV		sold to SPV
	2023	2023	2022	2022
SPV	€	€	€	€

FCT GK2	(116,551,993)	140,334,353	(162,926,177)	197,910,807
FCT GK4	(179,214,848)	184,999,998	(124,884,186)	131,349,336
FCT GK5	(151,293,219)	155,728,369	(143,179,172)	148,889,322
Kebnekaise Funding Limited	(24,916,578)	29,313,621	-	-
	(471,976,638)	510,376,341	(430,989,535)	478,149,465

The net present value of the lease receivables sold to the SPV remain on the statement of financial position because the Company has retained substantially all of the risks and rewards of the asset ownership and also retains control of the transferred asset. The amounts due to SPV are a refinancing liability and the sale of the lease receivables is to securitise that refinancing liability.

Professional fees of €299,194 were incurred in setting up FCT GK 4. These fees have been classified as deferred set up costs and will be amortised to the statement of profit or loss from

the date that the first lease receivables were sold to FCT GK4, which was 6 August 2019, and the earliest date that the programme may be terminated which is 5 August 2022.

GRENKE FINANCE PLC

118

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

31. FINANCIAL LIABILITIES CONSOLIDATED (Continued)

Professional fees of €289,336 were incurred in setting up FCT GK 5. These fees have been classified as deferred set up costs and will be amortised to the statement of profit or loss from

the date that the first lease receivables were sold to FCT GK5, which was 19 April 2022, and the initial latest date, 31 March 2024, that lease receivables could be sold to FCT GK5 without a formal extension of the program.

Professional fees of €256,500 were incurred in setting up Kebnekaise funding limited. These fees have been classified as deferred set up costs and will be amortised to the statement of profit or loss from the date that the first lease receivables were sold to Kebnekaise funding limited, which was 5 October 2023 and the initial latest date, 8 October 2025, that lease receivables could be sold to FCT GK5 without a formal extension of the program .

If no options are taken to terminate the ABCP programmes at an earlier date the latest date currently the company can sell leasing receivables to FCT GK 2 is April 2025 subject to UniCredit’s consent, December 2025 for FCT GK 4 and December 2025 for FCT GK 5.

If no options are taken to terminate the ABCP programmes at an earlier date the latest date currently the company can sell leasing receivables to Kebnekaise Funding Limited is October 2025.

Details of the bank loans are set out below:

2023

2022

€

European investment bank loan

-

10,000,000

Syndicated loan facility

150,000,000

130,000,000

Money market lines

20,000,000

40,000,000

Bank Overdraft

-

5,281

170,000,000

180,005,281

The Group and Company had one loan of €10m provided by the European Investment Bank (EIB) at an interest rate of 0% which was repaid on 18 March 2023.

The Group and Company’s parent Grenke AG signed a syndicated revolving loan facility with seven banks for an initial period of two years on 30 June 2021. This agreement was renewed on 26 May 2023. The seven banks will provide short term revolving loans of up to €370m in total under the facility. Under the terms of the facility the Group and Company may draw down funds of up to €370m for short term periods. The Group and Company sister companies in Switzerland, the United Kingdom and in Canada are also permitted to utilise the facility up to €130m each.

At 31 December 2023 the Group and Company had seven outstanding loans under the facility totalling €150m (2022: €130m) which had an average maturity 38 days (2022: 69 days) and an average effective interest rate of 5.07% (2022: 2.773%).

GRENKE FINANCE PLC

119

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

32. FINANCIAL LIABILITIES COMPANY

The Group and Company has one money market loans of €20m which is repayable on 3 January 2024. The effective interest rate on these loans is 4.62%.

	2023	2022
Non current liabilities
Debt securities in issue	1,920,415,028	1,605,264,170
Current liabilities
Debt securities in issue	422,023,798	625,274,696
Bank loans	170,000,000	180,000,000
Bank overdraft	-	5,281
Total current financial liabilities	592,023,798	805,279,977
Total financial liabilities	2,512,438,826	2,410,544,147

33. AMOUNT DUE TO RELATED PARTIES CONSOLIDATED

2023

2022

€

Non current liabilities

Amount owed to GRENKE Bank AG

633,767,332

502,085,002

Current liabilities

Amount owed to GRENKE Bank AG

331,895,328

306,758,127

Amount due on current account

101,561,690

82,582,895

Amount due on cash pool accounts

158,391,401

76,116,080

591,848,419

465,457,102

The amounts due to GRENKE Bank AG are in respect of proceeds received for the sale of lease instalments. Interest was payable on the balances due to GRENKE Bank AG at an average rate of interest of 2.8% (2022: 1.62%).

The lease instalments sold to Grenke Bank AG remain on the statement of financial position because the Company has retained substantially all of the risks and rewards of the asset ownership and also retains control of the transferred asset. The amounts due to Grenke Bank AG are a refinancing liability and the sale of the lease instalments is to securitise that refinancing liability.

The tables below show the amounts due to GRENKE Bank AG and the net present value of the lease receivables in respect of which the lease instalments due for the balance of the primary period have been sold to GRENKE Bank AG.

GRENKE FINANCE PLC

120

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

33. AMOUNT DUE TO RELATED PARTIES CONSOLIDATED (Continued)

	2023	2022
	€	€
Amount due to GRENKE Bank AG	965,662,660	808,843,129
Net present value of lease receivables sold to GRENKE Bank AG recognised
Bank AG recognised as an asset	1,015,362,813	851,552,565
Net difference	(49,700,153)	(42,709,436)

The amounts due on current account are the intergroup account balances with GRENKE AG Group companies. The balances on the intergroup accounts are non interest bearing and they are not secured.

The cash pool amounts due are surplus cash from GRENKE AG Group companies placed on overnight deposit with the Group and Company. The cash pool balances are interest bearing and they are not secured.

34. AMOUNT DUE TO RELATED PARTIES COMPANY

The amounts owed to the SPVs in the Company balance sheet are equal to the net present value of the lease receivables sold to the SPVs, FCT GK 2, FCT GK 4, FCT GK 5 and Kebnekaise Funding Limited to securitise the funding provided by the SPV to the Company. Details of ABCP programmes are provided in note 31.

The Company has provided subordinated loans of €66m details of which are in note 21 and note 23. The subordinated loans provide additional security in respect of the amounts owed to the SPVs.

2023

2022

Non current liabilities

Amount owed to GRENKE Bank AG

633,767,332

502,085,002

Amount owed to special purpose vehicles

324,472,490

298,748,686

958,239,822

800,833,688

Current liabilities

Amount owed to GRENKE Bank AG

331,895,328

306,758,127

Amount owed to special purpose vehicles

181,233,042

179,221,953

Amount due on current account

101,561,690

82,582,895

Amount due on cash pool accounts

158,391,401

76,116,080

773,081,461

644,679,055

GRENKE FINANCE PLC

121

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

35. LEASE LIABILITIES CONSOLIDATED AND COMPANY

	2023	2022
	€	€
Lease liabilities due in greater than one year	1,083,367	-
Lease liabilities due within one year	-	339,631

The Group and Company has only four leases. The leases are in respect of Units 209/210, Unit 310, Unit 306/307 and Unit 410/411, Q House, Furze Road, Sandyford Industrial Estate, Dublin 18. The Group and Company entered into the four leases on 14 November 2023. The leases are for ten years from 6 November 2023. The Group and Company has an option to terminate the leases on 5 November 2028. Should the Group and Company decide not to terminate the leases on 5 November 2028 the rent on the leases will be adjusted to the market rent as of 5 November 2028.

These lease liabilities are accounted for in accordance with IFRS 16. Details of the right of use assets related to these lease liabilities are included in note 19. It has been assumed for

accounting under IFRS 16 that the Group and Company will exercise its right to terminate the lease on 5 November 2028.

The lease liabilities at the time of first application were discounted using individual marginal borrowing rates as of 6 November, 2023. The weighted average marginal borrowing rate as of November 6, 2023 was 6.92% per annum.

An interest charge of €12,459 has been added to the liability to arrive at the lease liability as of 31 December 2023 of €1,083,367.

The Group and Company is currently availing of a rent free period from the commencement of

the leases on 6 November 2023 to 5 November 2024. The Group and Company will then pay

annual rent of €309k for the period 6 November 2024 to 5 November 2028.

GRENKE FINANCE PLC

122

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

36. DEFERRED INCOME CONSOLIDATED AND COMPANY

	2023	2022
	€	€
Amounts due after one year
Deferred income on financial guarantee	-	169

	2023	2022
Amounts due within one year	€	€
Deferred income on financial guarantee	170	3,006
	170	3,006

The deferred income on financial guarantee is explained in note 46 to the financial statements.

37. TRADE AND OTHER PAYABLES CONSOLIDATED AND COMPANY

2023

2022

€

Other accrued expenses

2,132,458

1,935,627

Trade creditors

9,957,851

8,533,438

Social welfare tax payable

51,805

49,912

Accrued interest

35,365,756

20,163,040

Cash support accounts

-

16,290,000

47,507,870

46,972,017

38. CALLED UP SHARE CAPITAL, CAPITAL CONTRIBUTION CONSOLIDATED AND COMPANY

2023

2022

€

Authorised

Ordinary shares of €1 each

50,000

Allotted, called up and fully paid

Ordinary shares of €1 each

50,000

2023

2022

€

Capital contribution

67,000,000

The Group and Company’s parent Grenke AG made a capital contribution of €67m. €22m was

GRENKE FINANCE PLC

123

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

38. CALLED UP SHARE CAPITAL, CAPITAL CONTRIBUTION CONSOLIDATED AND COMPANY (Continued)

contributed in 2015 and €45m was contributed in 2016 in order to enhance the value of their investment in the Group and Company.

39. CASH FLOW HEDGE RESERVE

The following table shows the reconciliation of the cash flow hedge reserve

2023

2022

€

Balance at 1 January

12,534,039

(43,140)

Gains/(losses) arising during the year

- cross currency swaps

(10,854,793)

14,280,449

- forward exchange contracts

(9,090,605)

13,923,703

- interest rate swaps

(4,372,079)

4,099,048

Reclassified into the statement of profit and loss

- cross currency swaps

8,500,095

(2,448,661)

- forward exchange contracts

9,429,498

(15,480,619)

Taxes on unrealised gains/losses and on reclassifications

798,485

(1,796,741)

Balance at 31 December

6,944,640

12,534,039

40. TRANSACTIONS WITH OWNERS OF THE COMPANY CONTRIBUTIONS AND DISTRIBUTION

	2023	2022
	€	€
Distribution	110,000,000	90,000,000

The Group and Company paid a dividend of €2,200 (2022: €1,800) per share to its parent company Grenke AG on 28 December 2023 (2022: 29 December 2022). There have been no dividends paid, proposed or declared since 31 December 2023.

GRENKE FINANCE PLC

124

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

41. RECONCILIATION OF LIABILITIES FROM FINANCING ACTIVITIES TO THE

CONSOLIDATED STATEMENT OF CASH FLOWS

Financial liabilities

Amount due to Grenke Bank AG

Lease liabilities

Year

2023

Accounting Note

31

33

35

€

Non-current

1,869,790,843

502,085,002

-

Current

971,564,013

306,758,127

339,631

Opening Balance

2,841,354,856

808,843,129

339,631

Cash outflows

(1,614,649,808)

(450,438,722)

(194,230)

Cash inflows

1,755,026,745

607,258,253

-

Non cash movements

Amortisation of discounts

10,381,069

-

Amortisation of deferred

professional fees

350,371

-

Deferral of transaction costs

178,560

-

Foreign exchange

(8,500,095)

-

Recognition of lease liability

1,070,907

Interest on lease

-

19,837

Prepayment correction

(152,778)

Closing Balance

2,984,141,698

965,662,660

1,083,367

GRENKE FINANCE PLC

125

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

41. RECONCILIATION OF LIABILITIES FROM FINANCING ACTIVITIES TO THE

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

Financial liabilties

Amount due to Grenke Bank AG

Lease liabilites

Year

2022

Accounting Note

31

33

35

€

Non-current

2,062,781,543

484,724,617

332,023

Current

704,852,177

311,534,336

378,939

Opening Balance

2,767,633,720

796,258,953

710,962

Cash outflows

(1,177,170,944)

(419,180,895)

(322,964)

Cash inflows

1,247,938,310

431,765,071

-

Non cash movements

Amortisation of discounts

507,184

-

Amortisation of deferred

professional fees

120,461

-

Deferral of transaction costs

(122,536)

-

Foreign exchange

2,448,661

-

Interest on lease

-

4,566

Prepayment correction

(52,933)

Closing Balance

2,841,354,856

808,843,129

339,631

GRENKE FINANCE PLC

126

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

42. FAIR VALUE OF FINANCIAL INSTRUMENTS CONSOLIDATED

Measurement Methods and Input Parameters Used

The following table presents the measurement methods used to determine the fair values and the applied input parameters and assumptions:

Type and level

Measurement method

Input parameters

FAIR VALUE HIERARCHY LEVEL 1

Exchange-listed bonds

n/a

Quoted market price as per the reporting date

FAIR VALUE HIERARCHY LEVEL 2

Forward exchange contracts

Market-to-market

discounted present value of estimated future cash flows

Available interest rates at the end of the term in the traded currencies using the own counterparty risk (Debt Value Adjustment [DVA]) or the counterparty's credit risk (CVA [Credit Value Adjustment]) derived from available credit default swap (CDS) quotes

Cross-currency swaps

Market-to-market

discounted present value of estimated future cash flows

Available interest rates at comparable terms and residual maturities using own counterparty risk DVA or counterparty risk CVA used from available CDS quotations

Interest rate swaps

Market-to-market

discounted present value of estimated future cash flows

Available interest rates at comparable terms and residual maturities using own counterparty risk DVA or counterparty risk CVA used from available CDS quotations

Subordinated loans

Discounted present value of estimated

future cash flows

Available interest rates at comparable conditions and residual terms using the counterparty’s credit risk.

Other financial assets

Discounted present value of estimated

future cash flows

Available interest rates at comparable conditions and residual terms using the counterparty’s credit risk.

Financial liabilities (liabilities from the refinancing of the leasing business, promissory notes, bank liabilities)

Discounted present value of estimated

future cash flows

Available interest rates at comparable conditions and residual terms using the own credit risk DVA

Fair Values of Subordinated Loans and Derivative Financial Instruments

At the end of the reporting period, all derivative financial instruments and subordinated loans to special purpose vehicles which provide credit enhancement to senior investors in special purpose vehicles which buy lease receivables from the Group’s parent Grenke AG are recognised at fair value by the Group. All subordinated loans and derivative financial instruments are assigned to level 2 of the fair value hierarchy.

The fair value of subordinated loans and derivative financial instruments are set out below:

GRENKE FINANCE PLC

127

NOTES TO THE46 FINANCIAL STATEMENTS

AT 31 December 2023

42. FAIR VALUE OF FINANCIAL INSTRUMENTS CONSOLIDATED (Continued)

Fair Values of Subordinated Loans and Derivative Financial Instruments (Continued)

Fair Value

and carrying

amount

31-Dec-23

31-Dec-22

€

Financial assets

Subordinated loans

37,570,630

35,021,684

Interest rate swaps

with hedging relationship

900,997

4,099,049

Cross currency swaps

with hedging relationship

5,062,962

8,402,358

Forward exchange contracts

with hedging relationship

4,380,645

7,989,713

Interest rate swaps

not designated as hedges

323,297

662,427

Forward exchange contracts

not designated as hedges

1,180,201

1,458,266

Total

49,418,732

57,633,497

GRENKE FINANCE PLC

128

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

42. FAIR VALUE OF FINANCIAL INSTRUMENTS CONSOLIDATED (Continued)

Fair Values of Subordinated Loans and Derivative Financial Instruments (Continued)

Fair Value

and carrying

amount

31-Dec-23

31-Dec-22

€

Financial liabilities

Interest rate swaps

with hedging relationship

1,174,029

-

Cross currency swaps

with hedging relationship

8,772,844

1,257,446

Forward exchange contracts

with hedging relationship

7,001,773

1,683,559

Interest rate swaps

not designated as hedges

410,216

-

Forward exchange contracts

not designated as hedges

2,515,183

3,027,803

Total

19,874,045

5,968,808

The fair value of the subordinated loans is measured by applying Euro cost of borrowing plus the Grenke AG risk of default to the projected future cash flows from the subordinated loans.

The projected future cash flows were discounted at 31 December 2023 and at 31 December 2022 on the basis of the following interest rates:

2023

2022

%

Interest rate for 3 months

3.910%

2.146%

Interest rate for 6 months

3.874%

2.804%

Interest rate for 9 months

3.705%

3.250%

Interest rate for 1 year

3.575%

3.750%

Interest rate for 2 years

3.582%

4.746%

Interest rate for 3 years

3.972%

5.337%

Interest rate for 4 years

4.369%

5.820%

Interest rate for 5 years

4.779%

6.261%

Interest rate for 6 years

4.780%

6.227%

Interest rate for 10 years

4.841%

6.227%

GRENKE FINANCE PLC

129

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

42. FAIR VALUE OF FINANCIAL INSTRUMENTS CONSOLIDATED (Continued)

Fair Values of Subordinated Loans and Derivative Financial Instruments (Continued)

Fair values of forward exchange contracts and cross-currency swaps are determined based on valuation models, which include observable input parameters.

The Group and Company uses the so-called OTC derivatives ("over the counter"). These are directly concluded with counterparties having at least an investment grade status. Thus, there are no quoted market prices available.

Forward exchange contracts, interest rate swaps and cross-currency swaps are measured on the basis of a market-to-market valuation model. The input parameters applied in the valuation models are derived from market quotes.

Interest rates with matching maturities in the traded currencies are used for forward exchange contracts and cross-currency contracts. In order to obtain the fair value of such OTC derivatives, the determined amounts are multiplied with the counterparty's credit default swaps (CDS) with matching maturities which are observable on the market or their own credit risk using a so-called "add-on method", including the coupons.

In order to obtain the fair value of interest rate swaps interest rates at comparable terms and residual maturities are used taking into account own counterparty risk DVA (debt value adjustment) or counterparty risk CVA (credit value adjustment) from available credit default swap (CDS) quotations.

Fair Value of Primary Financial Instruments

The following table presents the carrying amounts and fair values of financial assets and financial liabilities of the Group and Company by category of financial instruments, which are not measured at fair value. The table does not contain information on the fair value of financial assets and financial liabilities if the carrying amount represents an appropriate approximation to the fair value. This includes the following line items of the Group and Company Statement

of Financial Position: financial investments, leased assets held for sale, non performing lease receivables, trade receivables, credit support accounts, cash and cash equivalents, and trade payables. All primary financial instruments are assigned to level 2 of the fair value hierarchy except for exchange-listed bonds, which are included in debt securities in issue and which are assigned to level 1 of the fair value hierarchy. As per the reporting date, the carrying amount of exchange-listed bonds was €2,230,384,922 (2022: €2,151,962,018) and their fair value amounted to €2,431,361,587 (2022: €1,975,233,292). For all other financial instruments the discounted cash flow method was used, taking account of the Grenke AG Group’s credit risk. These fair values are allocated as Level 2.

GRENKE FINANCE PLC

130

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

42. FAIR VALUE OF FINANCIAL INSTRUMENTS CONSOLIDATED (Continued)

	Fair Value	Carrying Amount	Fair Value	Carrying Amount
	31-Dec-23	31-Dec-23	31-Dec-22	31-Dec-22
	€	€	€	€
Financial assets
Lease receivables (performing)	2,233,055,712	2,093,978,043	2,000,984,414	1,879,788,666
Amount due from related parties	1,857,999,303	1,820,928,164	1,800,229,542	1,803,243,633
Subordinated loans	45,149,565	45,957,629	35,420,836	36,970,713
Financial liabilities
Financial liabilities	3,218,160,949	3,002,861,560	2,671,938,188	2,847,956,834
Amounts due to related parties	1,239,594,341	1,225,615,751	960,542,225	967,542,104

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY

The exposure of the Company can be broken down into two main categories: financial and non-financial risks.

Risk Management Framework

The board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The formal procedures and policies operated by the Group and Company to cover leasing, banking, foreign exchange and other treasury matters

are consistent with objectives and policies for financial risk management within the GRENKE AG Group. As the Group and Company is dependent on the cash inflow from leases to third parties and loans to Group companies and Franchisees the principal financial risk facing the

Company is the inability to service its payment obligations due to the inability of counterparties to service their leases or their loans from the Group and Company. This note presents

information about the Group and Company’s exposure to each of the risks identified by the board and the Company’s management of these risks.

Solvency

Given its objectives and strategy, the Company is economically interrelated with the parent company, GRENKE AG. In assessing the general risk profile of the Company, the solvency of the Grenke AG Group as a whole, headed by GRENKE AG, needs to be considered. Solvency is assured by managing and monitoring the liquidity situation based on a rolling cash flow forecast. The resulting funding requirements are secured by a variety of instruments placed on the financial markets. The objective is to minimize solvency risk by matching maturities for the Grenke AG Group’s financing requirements within the framework of the target debt ratio. The Grenke AG Group has good access to capital markets as a result of its solid financial position and a diversified refinancing strategy.

GRENKE FINANCE PLC

131

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Solvency (Continued)

This is underpinned by the long-term ratings (Standard & Poor’s as of March 2023 BBB stable outlook and Fitch as of November 2023 BBB stable outlook) and short term ratings (Standard & Poor’s as of March 2023 A-2 stable outlook and Fitch as of November 2023 F2 stable outlook). The debt securities are guaranteed by Grenke AG.

At present, no risks have been identified which could threaten the going concern status of the Company or which could have a materially adverse impact on the net assets, financial position or results of operations of the Company.

Credit Risk

The amount recognised in the Statement of Financial Position is the maximum credit risk in the case that counterparties are unable to fulfil their contractual obligations. In the case of derivative financial instruments, the Company is also exposed to credit risk, which results from the non-performance of contractual agreement on the part of the counterparty.

The maximum exposure to credit risk at the reporting date was:

	2023	2022
	€	€
Subordinated loans and reserve accounts	83,528,259	71,992,397
Finance lease receivables	2,167,711,492	1,933,642,955
Amount due from related parties	1,820,928,164	1,803,243,633
Trade debtors	221,428	926,242
Credit support accounts	10,050,000	-
Cash and cash equivalents	143,284,978	38,969,272
Derivative financial instruments	11,848,102	22,611,813
Guarantees to Grenke AG and Grenke Limited	2,103	112,402
Gross Exposure	4,237,574,526	3,871,498,714
Guaranteed by GRENKE AG	1,121,847,928	1,234,325,564
Subordinated Loans (netting with asset based liabilities)	45,957,629	36,970,702
Credit support accounts (netting with liability derivative positions)	10,050,000	-
Residual maximum exposure	3,059,718,969	2,600,202,448

GRENKE FINANCE PLC

132

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing

Credit risk management is focused on ensuring that prior to entering into new leases the credit risk is minimised. Strategies to minimise risk include

•entering into a high volume of low value leases

•entering into leases for a short duration

•direct debit payment of lease instalments

•no concentration of industrial sectors

•no concentration of sellers of equipment to be leased

•no geographic concentration

There is an effective credit approval system which means that leases of a relatively small amount have to be approved by the credit centre and ultimately by the Grenke AG board. The total exposure of a lessee to the Grenke AG Group is always taken into consideration as part

of the approval process. There is also an annual review carried out of lessees with a modest overall credit exposure.

The Group and Company also seeks to minimise losses on leases in existence by terminating leases once two instalments have not been paid with the objective of recovering immediately all unpaid instalments including lease instalments due after the termination date.

The following sets out the credit profile of new business entered into the new year.

The Group and Company determines the creditworthiness of clients by calculating expected values for losses. In doing so lessees are assigned a decision value based on a creditworthiness rating of 1 to 6. Category 1 corresponds to the best possible creditworthiness and Category 6 is equivalent to the worst. As per December 31, 2023, the average decision value on new business was 2.79 after 2.52 in the previous year.

New business according to risk category

2023

2022

Percent

%

Class 1

34.11%

31.91%

Class 2

25.80%

25.62%

Class 3

16.76%

17.50%

Class 4

12.27%

12.82%

Class 5

7.00%

7.46%

Class 6

4.07%

4.70%

GRENKE FINANCE PLC

133

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (continued)

The distribution of the Group and Company new business according to size can be found in the following table:

New business by size
(based on net acquisition values)	2023	2022
Percent	%	%
< €2.5k	29.95%	30.02%
€2.5k - €5k	29.97%	29.19%
€5k - €12.5k	25.03%	26.00%
€12.5k - €25k	8.94%	9.04%
€25k - €50k	4.02%	3.81%
€50k - €100k	1.53%	1.40%
€100k - €250k	0.50%	0.48%
> €250k	0.07%	0.05%

The average term of the new business contracted in the reporting period was 50 months (2022: 50 months).

New business by term category	2023	2022
Percent	%	%
< 36 Months	30.01%	29.70%
37 - 48 Months	15.75%	16.39%
49 - 60 Months	30.16%	30.53%
> 60 Months	24.08%	23.39%

The Group and Company consider the credit risk of its lessees to be a significant business risk.

This risk is evaluated and controlled using statistical models. The Group and Company credit centre is an additional tool to limit risk. The statistical models utilised by the Group and Company lead to an expected value of future credit losses, which are taken into account as an imputed cost of risk in the contribution margin calculation.

A review of credit risk is performed regularly and at least once per quarter on the basis of actual loss figures using database reports containing both publicly available data and internally gen- erated historical data. This system is continually enhanced by the Group and Company.

Target / actual comparisons are carried out continually for all portfolios, in which the initially expected credit losses are compared with the updated loss expectancy. Findings from this comparison flow into statistical models, thereby forming a loop system. The plan ensures that

GRENKE FINANCE PLC

134

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (continued)

the ongoing costs of operations can still be generated even when the actual losses significantly exceed the expected losses.

When contracting lease agreements attention is given to achieve the broadest diversified port- folio possible based on the following:

•Lessees: Diversified portfolio of lessees consisting of business and corporate clients (B2B). Leases were contracted with 89,114 (2022: 81,408) different lessees of which the top 10 accounted for 1.66% (2022: 1.55%) of new business and the top 100 accounted for 5.79% (2022: 5.76%) of new business and the average value of new business contracted with each lessee was €11,793 (2022: €10,501).

•Resellers / manufacturers: No individual dependencies

•Leased assets: No significant outstanding residual values (full cost recovery); maintenance and warranty risks are always borne by suppliers / manufacturers; leased assets are seen as part of the customer’s value chain

•Categories of lease items: IT products, small machinery and systems and medical devices

•Lease agreements: A large number of new contracts with an average contract term of roughly four years and a focus on small tickets below EUR 25k each (94 percent of all new lease contracts)

•Sales channels: Our agents have a variety of sales channels with an extensive network of resellers, direct business and brokers

•Geographic presence: The Group and Company is represented in eleven European economies

The majority of finance leases concluded provide for full economic cost recovery. This means that payments made by the lessee during the basic lease period, including the guaranteed residual values, exceed the acquisition and contract costs. Accordingly, there are no material residual value risks in the Group and Company leasing business model. In accordance with IFRS 16, residual values are calculated for the recognition of lease receivables on a portfolio basis. Therefore, over the total period, gains / losses from disposals do not contribute a material amount to earnings.

The revenue that is generated from rentals in the secondary lease period together with proceeds from the sale of the lease is expected to result in a break-even result from disposals.

The high degree of portfolio diversification is demonstrated by the comparatively low mean acquisition value per leasing contract of the Group and Company. The mean acquisition value of all leases that were active in 2023 was €8,314. A concentration of risk is largely avoided through the Group and Company’s focus on small-ticket leasing. Within Group and Company, the total exposure to any single lessee did not exceed 6.6 percent of the Group and Company’s equity. At the end of the 2023 fiscal year there were 11 borrowers in the leasing business whose exposure exceeded the limit of EUR 1.5 million. Together they amounted to less than 1.51 per- cent of the total performing lease receivables. Commitments above a size of EUR 750k are monitored closely, as are cluster risks of our sales partners with regard to individual

GRENKE FINANCE PLC

135

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (continued)

resellers or agents.

To determine risk provisions for lease receivables pursuant to IFRS 9, the receivables are divided into three Stages depending on their respective credit risk. Impairment losses for Stage 1 leases correspond to the expected loss for a twelve-month period. For lease receivables in Stage 2, impairment losses are recognised in the amount of the expected loss for the entire remaining contract period. For Stage 3 lease receivables, expected losses are recognised as impairment. As per December 31, 2023, 89.48 percent of the net receivables of the Leasing

segment were allocated to Stage 1. The expected credit loss allowance charge to the statement of profit or loss on finance lease receivables was €52.8 (2022: €39.8m).

Country risk at the end of the 2023 fiscal year was concentrated in France which accounted for 59 percent of the total performing finance lease receivables volume of the leasing business. The respective Allianz Trade Country Risk Rating for France is “AA1 Low Risk”. Of the countries in which the Group and Company carries out leasing 88% of the performing lease receivables are located in countries with Allianz Trade risk rating of “A1 Low Risk” or a better risk rating. The Group and Company has performing finance lease receivables in Slovenia of €29m (1.33% of total performing finance lease receivables) which is given a A2 risk rating by Allianz Trade, in Portugal €154m (7.15% of total performing finance lease receivables) which is given a BB1 low risk rating by Allianz Trade,. There are performing finance lease receivables of €78m (3.64% of total performing finance lease receivables) from Hungary and Romania which have an Allianz trade risk rating of B3 sensitive risk.

The split of performing finance lease receivables by where the lease is located in the Allianz Trade risk ratings is set out below:

Allianz Trade Risk Rating	2023	2022
AA1 (Low)	76%	76%
A1 (Low)	12%	12%
A2 (Medium)	1%	-
BB1 (Low)	7%	7%
BB2 (Medium)	-	1%
B3 (Sensitive)	4%	3%

GRENKE FINANCE PLC

136

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (Continued)

Sensitivity Analysis – Leasing

The calculation of impairment losses on financial assets is based on assumptions and estimates regarding the risk of default and the expected loss rates. The Group and Company exercises judgement in determining these assumptions and in selecting the input factors for the calculation of impairment. The most important assumptions and input factors used are set out in the accounting policies note 4.

To determine the risk provision in accordance with IFRS 9, expected credit defaults of various macroeconomic scenarios are weighted. GRENKE calculates a negative, a positive and a base scenario for this purpose.

The assumed development of gross domestic product for each scenario is shown in the following table:

Gross domestic product (in % compared to GDP at year end 31.12.2023	01.01.2024 – 31.12.2024			01.01.2025 – 31.12.2025			01.01.2026 – 31.12.2026
	negative	Base	positive	negative	Base	positive	negative	Base	positive
Euro area	– 6,3%	0,9%	2,1%	0,9%	1,5%	2,1%	1,5%	1,4%	2,1%
France	– 7,7%	1,3%	2,3%	1,3%	1,8%	2,3%	1,8%	1,7%	2,3%
Spain	– 11,2%	1,7%	3,5%	1,7%	2,1%	3,5%	2,1%	1,8%	3,5%

The amount of risk provisioning of current lease receivables per scenario is shown in the following table:

In the base scenario, recurring but not permanent shortages of Russian gas supplies are assumed. The Russia-Ukraine war continues. Inflation remains unchanged at an elevated level (well above 2%). As a result of second- and third-round effects, increased credit losses occur globally. The increase in default rates is about a quarter of the increase at the beginning of the Covid 19 pandemic. The magnitude of the increase is derived from historical default rates in the wake of the recent financial and sovereign debt crisis.

	Scenarios
	negative	Base	positive
Risk provisioning	54,688,710	46,642,422	39,551,264

GRENKE FINANCE PLC

137

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (Continued)

Sensitivity Analysis – Leasing

The negative scenario assumes further significant shortages in the economies heavily dependent on Russian gas and the continuation of the Russian war of aggression against

Ukraine. This leads to a further increase in the price of imported energy raw materials. At the same time, the central banks continue to tighten monetary policy in order to combat the ever rising inflation rates. This leads to a sharp drop in the willingness to undertake industrial investment as well as to a considerable loss of purchasing power among private households. Second- and third-round effects are assumed to result in substantially increased credit losses globally. The increase in default rates roughly corresponds to that at the beginning of the Covid 19 pandemic.

In the positive scenario, the Russia-Ukraine war is assumed to continue. However, the lack of Russian gas supplies can be compensated for by energy-saving measures and the import of liquefied natural gas. Inflation is assumed to decrease moderately. Political measures support the loss of purchasing power in private households and prevent a strong cooling of the willingness to invest in industry. Accordingly, default rates return to pre-Covid 19 levels.

Various minimum default rates (floors) are taken into account in all scenarios. Significantly declining default rates can currently be observed in the Group and Company leasing portfolio, especially compared to the pre-Covid 19 level. Notwithstanding this, the increase in default rates to the default rate before the Covid19 pandemic is applied in all secnarios. The effect of the current significant decline in default rates is therefore not taken into account.

The probabilities of occurrence of the macro scenarios are determined on a country-specific basis in order to take into account the different economic and political circumstances of the respective countries. These scenario weightings are derived from public data published by the ECB. By means of a survey among various analysts, the ECB establishes a probability distribution for the GDP of the years 2023 to 2025. Probabilities of occurrence for individual scenarios can be calculated from these probability distributions. The publicly available GDP expectations as well as the historical GDP observations of the IMF are also used for the country-specific determination of the probabilities of occurrence.

As at 31 December 2023, the scenarios in the core markets of the Group and Company are weighted as follows:

Scenario weighting

01.01.2024 – 31.12.2024

01.01.2025 – 31.12.2025

01.01.2026 – 31.12.2026

negative

Base

positive

negative

Base

positive

negative

Base

positive

France

10,0 %

81,0 %

9,0 %

6,0 %

74,0 %

20,0 %

6,0 %

76,0 %

18,0 %

Spain

6,0 %

92,0 %

2,0 %

4,0 %

92,0 %

4,0 %

5,0 %

92,0 %

3,0 %

GRENKE FINANCE PLC

138

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Leasing (Continued)

Sensitivity Analysis – Leasing

Due to the increased economic uncertainty, various sensitivity analyses were also carried out. In these sensitivity analyses, the effects on risk provisioning are analysed by shifting various input parameters. Specifically, the probability of default (PD) was shifted up or down by 15 per

cent, and the positive macro scenario was shifted up by 20 per cent and the negative macro scenario was shifted down by 20 per cent. An average reduction of the PD by 15 per cent and a shift of the positive scenario by 20 per cent would result in a € 5,945,096 lower risk provision

as at the reporting date. An increase in the average PD by 15 per cent and a shift in the negative scenario would result in a higher risk provision of EUR 5,842,112. The post-model adjustments made take into account the increased economic uncertainties on the basis of these sensitivity analyses.

Credit Risk - Amounts due from related parties

The counterparty for the Group and Company amounts due from related parties is the specific group or franchise company. The specific related party will be able to repay the loan provided by the Group and Company if it does not have a major default in its portfolio of lease receivables or invoices purchased. Therefore, the main risk to the Group and Company is the collectability of lease receivables and invoices purchased by the related party.

The Group and Company has lent €1.8bn (2022: €1.8bn) to related parties who are carrying out leasing activities. The collectability of these loans is dependent on the performance of the underlying lease receivables in those Group companies. The Group portfolio of lease receivables has a similar profile to that which has been presented above in respect of the Group and Company lease receivables. All that has been set out above with regard to the Group and Company lease receivables can be applied to the underlying lease receivables in the GRENKE AG Group companies to which the Group and Company lends money.

The Group and Company also lends money to related parties that carry out factoring business, €56m at 31 December 2023. If these related parties had difficulties in collecting amounts due to them it would result in the Group and Company having difficulties in collecting the amounts due from the related party carrying out factoring. The GRENKE AG Group’s factoring business is also focused on the small-ticket segment. The GRENKE AG factoring entities located in Germany, Switzerland, Ireland and Poland mainly offer so-called "notification factoring". The advantage for the Group and Company and for the factoring customers is that the invoice recipient (debtor) is notified of the assignment of existing receivables, which provides an opportunity to address the recipient directly in the event of default. This leads to relief for the factoring customers and also provides transparency with regard to the monitoring of the outstanding receivables. Under certain conditions, the GRENKE AG Group also offer non-notification factoring contracts. As opposed to notification factoring, the debtor is not notified of their outstanding receivables being assigned to the factoring company.

GRENKE FINANCE PLC

139

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk - Amounts due from related parties (Continued)

The main criteria for selection include creditworthiness, average annual revenues, industry affiliation, and the accounts receivables ledger of the factoring clients. The ongoing monitoring of factoring customers allows for risk-adjusted pricing. Under the loan decision, a credit check

of the accounts receivable of the factoring clients on the basis of data from external credit reporting agencies is performed, which is evaluated by GRENKE AG's credit support centre.

For the most part, contracts with domestic debtors are processed since the verifiability of foreign debtors is associated with significant risks. An ongoing review and evaluation of the customer is made within the contract period on the basis of payment history. With only a few

exceptions, the factoring Group and Company is exposed to counterparty default risk solely with respect to the debtor.

GRENKE FINANCE PLC

140

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk - Amounts due from related parties (Continued)

The amounts due from Grenke AG Group Companies and Franchisees by geographical region is set out below:

Amounts due from related parties	2023	2022
	€	€
Germany	565,197,578	498,155,848
Italy	532,421,231	623,801,681
Sweden	107,386,679	98,194,133
Denmark	96,353,201	80,346,588
Australia	96,158,500	74,321,217
Spain	88,619,814	78,961,905
Canada	72,529,665	60,915,676
Belgium	50,296,360	112,485,812
United Arab Emirates	41,872,248	34,939,935
Poland	36,335,826	25,250,649
United Kingdom	33,873,699	30,158,365
Chile	32,930,103	10,173,256
Czech	9,831,426	10,203,486
Slovakia	9,565,133	9,224,695
Hungary	9,512,085	-
Ireland	9,202,754	6,194,347
Switzerland	7,733,027	12,051,373
Romania	5,586,943	6,577,064
USA	5,447,735	3,219,119
Finland	4,387,157	7,752,467
Netherlands	3,949,028	3,870,328
Singapore	3,007,676	23,633,347
Malta	2,404,741	1,992,162
Luxembourg	772,131	1,000,429
Slovenia	-	197,062
	1,825,374,740	1,813,620,944

GRENKE FINANCE PLC

141

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk - Amounts due from Group Companies and Franchisees (Continued)

The table below sets out how the amounts due from related parties are split in terms of the Allianz Trade risk rating of the country where the loan is located:

Allianz Trade Risk Rating	2023	2022
AA1 (Low)	56%	54%
AA2 (Medium)	2%	2%
A1 (Low)	6%	5%
A2 (Medium)	29%	34%
BB 2(Medium)	7%	4%
B3 (Sensitive)	1%	-

Credit Risk – Cash and Derivative Financial Instruments

The credit risk for treasury activities is mitigated by entering into such contracts only with parties of first-class credit standing. Cash is on deposit with the following banks:

2023

2022

Bank

Credit Rating

€

Dresdner Bank

A-2 S&P

60,000,000

-

SEB

A-1 S&P

50,920,238

3,467,389

Deutsche Bank

A-1 S&P

34,283,034

18,946,221

HSBC

A-2 S&P

4,489,911

51,673

DZ Bank

A-1 S&P

2,062,277

35,391

Heleba

P-1 Moody's

1,279,571

-

Nord LB

P-2 Moody's

155,345

8,652

Grenke Bank

A-2 S&P

140,860

16,455,664

Bayern LB

P-1 Moody's

3,723

4,278

Credit Lyonais

A-1 S&P

19

4

153,334,978

38,969,272

Shown on the statement of financial positions as follows:

Note

Credit support accounts

26

10,050,000

-

Cash and cash equivalents

30

143,284,978

38,969,272

153,334,978

38,969,272

GRENKE FINANCE PLC

142

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Credit Risk – Cash and Derivative Financial Instruments (Continued)

The counterparty bank for the derivative financial instruments shown as assets in the Statement of Financial Position are as follows:

2023

2022

Bank

Credit Rating

€

HSBC

A-2 S&P

7,219,130

10,666,019

SEB

A-1 S&P

1,801,763

3,071,601

Deutsche Bank

A-1 S&P

1,507,925

3,805,262

DZ Bank

A-1 S&P

1,152,122

3,842,238

Nord LB

P-2 Moody's

118,074

-

Bayern LB

P-1 Moody's

39,367

286,833

Heleba

P-1 Moody's

9,721

939,860

11,848,102

22,611,813

Liquidity and refinancing risk

The Group and Company refinances itself independently of individual banking institutions and has direct access to the capital markets. The Group and Company also ensures that its liabilities are well diversified and work together with several partner banks.

The Group and Company’s refinancing instruments range from traditional bank financing to revolving loan facilities and ABCP programs. This financing is fixed with agreed terms and maturities so that there are no risks relating to their availability within the agreed framework. In addition, the Group and Company has direct access to the capital markets because of the Group and Company’s debt issuance program. Using these instruments the Group and Company can make use of the most attractive financing channels offered at any time on the capital markets.

The ABCP programmes are financing loans based on defined underlying assets, i.e. lease receivables. Other refinancing instruments described are not asset−oriented, making them

appropriate for use in line with the business performance as the Group and Company deems necessary.

The management of liquidity risk ensures that the Group and Company is always able to meet its payment obligations on time.

The table below shows the cash that the Group and Company expects to generate from its assets held at 31 December 2023 inclusive of future income not credited to the statement of profit or loss at 31 December 2023. The overseas withholding tax of €5m (Note 26) and corporation tax receivable of €4m (Note 29) have not been included in the table below because of the difficulty of projecting the precise time that the claims will be agreed with the relevant tax authority. The table also includes details of the Group and Company financial obligations in

GRENKE FINANCE PLC

143

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Liquidity and refinancing risk (Continued)

respect of its liabilities at 31 December 2023 inclusive of future financial expenses not charged to the statement of profit or loss at 31 December 2023.

On Demand

Up to 3 Months

4 to 12 Months

1 to 5 Years

5 to 10 Years

Total

Carrying value

Expected cash from financial assets

€ 000

Subordinated loan and reserve accounts

-

9,907

22,247

55,177

129

87,460

83,528

Lease Receivables

-

224,814

763,328

1,575,392

25,566

2,589,099

2,167,711

Amounts due from related parties

634,937

229,981

293,029

766,009

108

1,924,064

1,820,928

Trade and other receivables

-

100,387

-

9,539

-

109,925

Leased assets held for sale

-

943

-

943

Cash and cash equivalents

143,285

-

143,285

Receivable on forward exchange contracts net of spot rate at 31 December 2023

-

1,364

3,207

565

-

5,136

5,561

Total expected cash inflows

778,222

567,397

1,081,810

2,406,681

25,803

4,859,913

4,331,883

GRENKE FINANCE PLC

144

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Liquidity and refinancing risk (Continued)

On Demand

Up to 3 Months

4 to 12 Months

1 to 5 Years

5 to 10 Years

Total

Carrying value

Financial obligations

€ 000

Financial liabilities

-

300,629

578,433

2,217,189

200,281

3,296,532

2,984,142

Amount due to related parties

259,953

100,284

267,716

673,584

6,727

1,308,265

1,225,616

Lease liabilities

-

33

839

-

872

1,083

Accruals

-

13,235

-

13,235

Corporation tax

-

763

-

763

Payable on forward exchange contracts net of spot rate at 31 December 2023

-

5,876

3,875

1,916

-

11,667

9,517

Total financial obligations

259,953

420,024

850,820

2,893,529

207,008

4,631,334

4,234,356

Expected surplus cash inflows/(outflows) after meeting financial obligations

518,269

147,373

230,990

(486,848)

(181,205)

228,579

97,527

GRENKE FINANCE PLC

145

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Short term liquidity

Liquidity risk management comprises of the day to day management of incoming and outgoing payments. A “liquidity overview” for the GRENKE AG Group is prepared for short term reporting on a weekly basis, i.e. on the first working day of each calendar week. It includes all relevant information on short−term cash developments in the coming weeks. The weekly liquidity overview provides the current liquidity status of the GRENKE AG Group and the Group and Company. It focuses on cash flows from the leasing business.

Reporting distinguishes between four liquidity levels:

•Cash liquidity: credit on all bank accounts plus overdrafts and all “immediate” (one week) cash flows

•Liquidity 1: cash liquidity plus cash flows due or received within one month. This also includes tied−up assets that can be monetised within this period

•Liquidity 2: liquidity 1 plus cash flows due or received within three months. This also includes tied up assets that can be monetised within this period.

•Liquidity 3: liquidity 2 plus cash flows due or received in more than three months. This also includes tied-up assets that can only be monetised in a period of more than three months.

Medium and long term liquidity

Monthly static liquidity planning is carried out in addition to short- term liquidity management and weekly reporting. The basic assumption of this planning is the liquidation of the existing

leasing and lending portfolio in accordance with the contractual agreements so that the proceeds from the assets flow in due time. The liabilities are also repaid on time on the basis

of contractual agreements. As the duration of the liabilities side approximates that of the asset portfolio, financing largely matching maturities is ensured.

In addition, dynamic liquidity planning is carried out at least once every quarter with the aim of replicating the liquidity status for the next periods, which serves to manage the liquidity of the Group and Company.

Grenke AG unconditionally and irrevocably guarantees all debt securities of the Group and Company.

Market Risk

Market risk is defined as potential losses that may result from uncertainty about future development (amount and volatility) of market prices. Financial market price fluctuations can have a significant effect on the Group and Company cash flow and profit after tax. Of particular importance are changes in interest rate markets and certain currencies. Market risks at the Group and Company are considered material.

The Group and Company strategic approach is to enter into market risk exclusively in conjunction with the operating business and reduce these risks to the greatest extent possible. As part of the risk management and ongoing monitoring of interest and currency positions, the

Group and Company actively manages its positions and risk (for example, by hedging open currency positions) in the course of ordinary business.

GRENKE FINANCE PLC

146

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

In addition to risk-prone, market-sensitive positions such as floating-rate notes or receivables in foreign currencies, we also consider the sensitivity and elasticity of the respective market prices to be important factors when dealing with interest and currency risks. The goal of the Group and Company is to limit the effect of market price volatility on the Group and Company’s net profit. This means striving to ensure the highest possible independence of net profit to interest rate and currency market developments while maintaining a proper balance between the costs and benefits of hedge relationships. The parameters used for conducting risk analysis by means of a sensitivity analysis are:

•a concurrent parallel increase or decrease of 10 percent in the value of the euro compared with all major foreign currencies and

•a parallel shift of 100 basis points (one percentage point) in the term structure of interest rates.

The potential economic effects identified in the analyses are estimates based on fictitiously assumed changes in market prices and that all other conditions will remain unchanged. This is the reason that the shift in the term structure of interest rates is viewed independently of any related effects on other interest rate-induced market developments. The actual impact on the consolidated income statement can differ significantly from this as a result of the actual developments.

The predominant market risks and the outstanding interest rate and currency risk positions are discussed at least once monthly with the responsible member of the Board of Directors in the

Market Risk Task Force and on the basis of ongoing analyses. The Group and Company is not exposed to the risk of changes in equity prices or raw material prices.

The Group and Company uses derivative financial instruments specifically when ordinary business activities involve risks that can be minimised or eliminated through the appropriate derivatives. The sole instruments used are interest rate and currency swaps and forward exchange contracts. Each derivative contract relates to an underlying economic transaction with a corresponding opposing risk position. The contract partners are only those banks with predominantly good or very good credit ratings with an S&P rating of BBB+ or higher.

Interest rate risk for the Group and Company arises from the effects of changes in the market interest level on the positions of the interest book (interest-bearing asset and liability items) and the corresponding impact on net interest income. The Group and Company has very few financial instruments which are exposed to variable rates of interest. The Group and Company has due to the increasing interest rate environment put in place interest rate swaps which hedge €435m of its asset based liabilities which are exposed to variable rates of interest.

GRENKE FINANCE PLC

147

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

Most of the Group and Company’s financial instruments have fixed rates of interest. The following instruments that result to net exposure to interest rate risk are as follows:

2023

2022

€

Credit support accounts

10,050,000

(16,290,000)

Amount owed by Grenke AG

100

80,000,000

Interest bearing cash accounts

117,615,914

-

Cash pool balances

449,608,066

335,225,151

Bonds

(10,000,000)

-

Subordinated loans and reserve accounts

116,469,842

111,353,301

Asset Based Liabilities

(505,979,298)

(478,149,465)

Interest rate swaps hedged amount

385,000,000

265,000,000

Net Exposure to interest rate risk

562,764,624

297,138,987

The potential impact on profit before tax of a change in interest rates of plus or minus 100 basis points as per the reporting date is shown below.

Company and consolidated

2023

2022

+100 bp

-100 bp

+100 bp

-100 bp

€

Potential (decrease)/increase in profit

5,627,646

(5,627,646)

2,971,389

(2,971,389)

Open interest rate positions are assessed monthly according to the internal definition and the required action is initiated. Refinancing is then completed by the team using the hedging transactions decided by the Board of Directors.

Due to the international nature of its business, the Group and Company has unsettled foreign currency positions, thereby exposing the Group and Company to currency risk. Hedging strategies defined internally are applied in an effort to limit or eliminate these risks. The

GRENKE FINANCE PLC

148

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

derivatives used are recognised on the statement of financial position at their fair values under the line items financial assets or financial liabilities.

Currency risks mainly relate to the financing of Group companies and franchisees operating outside the euro-zone. The hedging of unsettled foreign currency cash flows takes place on

the basis of internally defined hedging limits that take effect when the holding at the day’s exchange rate amounts to €500k per currency. The exchange rate is fixed by means of contracts and is therefore well known for the entire internal financing of the operational business in Australia, Canada, Switzerland, Denmark, Great Britain, Sweden, Chile, Poland, USA and Singapore. The exchange rate is also fixed for a majority of the financing in the United

Arab Emirates, the Czech Republic and Hungary. As a result, the only risk that remains is the risk on the respective open tranches where the hedging limit of €500k continues to apply.

In general, risks arise from currency fluctuations which relate to financial assets and financial liabilities. The use of derivatives (forward exchange contracts and currency swaps are used for currency risk) lessens the market sensitivity of the underlying transaction, i.e. cash flows from financial assets and financial liabilities. Ideally, the instruments are offset almost entirely.

GRENKE FINANCE PLC

149

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

The Group and Company’s currency risk is generally hedged. The unhedged foreign currency balances of the Group and Company converted at the spot rate for the Euro at 31 December are set out below:

Year End 31 December 2023

Foreign currency

Nominal value of foreign currency balances in foreign currency

Nominal Value of Forwards Exchange Contracts in foreign currency

Unhedged amount in foreign currency

Unhedged amount in €

€

AED

170,146,817

184,748,566

(14,601,749)

(3,593,481)

AUD

156,291,608

159,499,000

(3,207,392)

(1,972,202)

CAD

106,143,572

108,617,000

(2,473,428)

(1,689,269)

CHF

12,862,011

12,700,000

162,011

174,958

CLP

32,099,934,850

32,882,835,000

(782,900,150)

(803,147)

CZK

192,608,493

270,704,000

(78,095,507)

(3,158,692)

DKK

717,853,728

778,836,000

(60,982,272)

(8,182,355)

GBP

27,269,280

27,090,000

179,280

206,294

HUF

4,204,134,009

3,067,726,400

1,136,407,609

2,968,672

PLN

154,601,680

159,400,000

(4,798,320)

(1,105,731)

RON

27,916,833

-

27,916,833

5,610,747

SEK

1,191,563,727

1,284,171,000

(92,607,273)

(8,346,005)

SGD

30,532,028

30,088,000

444,028

304,316

USD

5,361,804

5,250,000

111,804

101,180

JPY

33,250,000,000

-

TRY

1,592

-

1,592

49

NOK

1,379

-

1,379

123

Total exposure in €

(19,484,544)

GRENKE FINANCE PLC

150

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

Year End 31 December 2022

Foreign currency

Nominal value of foreign currency balances in foreign currency

Nominal Value of Forwards Exchange Contracts in foreign currency

Unhedged amount in foreign currency

Unhedged amount in €

€

AED

137,020,276

145,002,566

(7,982,290)

(2,035,520)

AUD

116,556,886

119,773,000

(3,216,114)

(2,049,394)

CAD

87,963,286

91,450,000

(3,486,714)

(2,414,622)

CHF

11,690,666

11,600,000

90,666

92,075

CLP

9,251,151,794

9,728,818,000

(477,666,206)

(525,277)

CZK

253,544,888

266,822,000

(13,277,112)

(550,552)

DKK

597,236,229

628,975,000

(31,738,771)

(4,267,972)

GBP

27,001,149

27,084,000

(82,851)

(93,413)

HRK

-

HUF

4,657,735,019

2,833,434,400

1,824,300,619

4,550,853

PLN

116,481,296

129,704,000

(13,222,704)

(2,824,881)

RON

40,623,457

-

40,623,457

8,207,588

SEK

1,092,097,841

1,155,542,000

(63,444,159)

(5,704,487)

SGD

33,797,186

34,405,060

(607,874)

(425,087)

USD

2,783,938

2,750,000

33,938

31,819

JPY

33,250,000,000

-

TRY

1,592

-

1,592

80

NOK

1,364

-

1,364

130

Total exposure in €

(8,008,660)

GRENKE FINANCE PLC

151

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

43. RISK MANAGEMENT OBJECTIVES AND POLICIES OF THE GROUP AND

COMPANY (Continued)

Market Risk (Continued)

The following table shows the Group and Company’s sensitivity to a 10 percent appreciation or depreciation in the Euro against the respective other currencies as per 31 December 2023 and 31 December 2022 their impact on the profit before tax.

Foreign	2023	2023	2022	2022
currency	10%	-10%	10%	-10%
	Depreciation	Appreciation	Depreciation	Appreciation
	€	€	€	€
AED	(399,276)	326,680	(226,169)	185,047
AUD	(219,134)	179,291	(227,710)	186,309
CAD	(187,697)	153,570	(268,291)	219,511
CHF	19,440	(15,905)	10,231	(8,370)
CLP	(89,239)	73,013	(58,364)	47,752
CZK	(350,966)	287,154	(61,172)	50,050
DKK	(909,151)	743,850	(474,219)	387,997
GBP	22,922	(18,754)	(10,379)	8,492
HUF	329,852	(269,879)	505,650	(413,714)
PLN	(122,859)	100,521	(313,876)	256,807
RON	623,416	(510,068)	911,954	(746,144)
SEK	(927,334)	758,728	(633,832)	518,590
SGD	33,813	(27,665)	(47,232)	38,644
USD	11,242	(9,198)	3,535	(2,893)
TRY	5	(4)	9	(7)
NOK	14	(11)	14	(12)

Contractual Risk

Contractual risk relates to risks to net assets and earnings as a result of unguaranteed residual values. Contractual risk is limited by generally concluding full pay out leases and never entering into maintenance or warranty risks.

44. ULTIMATE PARENT UNDERTAKING GROUP AND COMPANY

The parent undertaking of the smallest and largest group of undertaking for which group financial statements are drawn up, and of which the Group and Company is a member and is consolidated, is GRENKE AG, a company incorporated in Germany. Copies of its GRENKE AG Group financial statements are available at Neuer Markt 2, 76532 Baden−Baden, Germany and also at www.GRENKE.de. GRENKE AG is the immediate and ultimate parent undertaking

and controlling party.

GRENKE FINANCE PLC

152

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

45. RELATED PARTY TRANSACTION CONSOLIDATED AND COMPANY

2023

2022

€

GRENKE AG transactions

Management charges from Grenke AG

277,843

223,699

Licence fee charge from Grenke AG

8,809,295

8,042,657

Guarantee fee charge from Grenke AG

2,784,188

2,886,340

GRENKE Bank AG transactions

Interest paid to GRENKE Bank AG

25,639,478

12,472,251

Amounts due to GRENKE Bank AG

965,662,660

808,843,129

Risk premium fees paid to GRENKE Bank AG

39,352,222

26,718,960

Debt forgiven by Grenke Bank AG under the risk

premium agreement

20,241,477

12,839,754

Other transactions with GRENKE AG Group companies

Accountancy fees charged to GRENKE AG

group companies

1,635,609

1,454,827

Accountancy fees charged to GRENKE AG

group franchisees

177,192

224,835

Office rents paid by GRENKE AG Group companies

companies

269,071

110,405

Lease commissions paid to GRENKE AG Group

companies

74,342,167

57,370,769

Commissions for fees to protect lease equipment

paid to GRENKE AG Group companies

14,221,999

15,560,253

Interest received from GRENKE AG Group

companies

76,226,318

44,702,770

Interest received from GRENKE AG Group

franchisees

8,117,791

8,514,706

Interest paid to GRENKE AG Group companies

2,656,016

763,119

Secured amounts owed by GRENKE AG Group

companies

153,836,080

52,117,262

Unsecured amounts owed by GRENKE AG Group

companies

1,566,078,893

1,591,869,538

Secured amounts owed by GRENKE AG Group

franchisees

-

74,321,217

GRENKE FINANCE PLC

153

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

45. RELATED PARTY TRANSACTION CONSOLIDATED AND COMPANY (Continued)

	2023	2022
	€	€
Unsecured amounts owed by GRENKE AG Group
franchisees	105,459,767	95,312,927
Unsecured amounts owed to GRENKE AG Group
companies	101,561,690	82,582,895
Cash pool amounts owed to GRENKE AG Group
companies	158,391,401	76,116,080
Related party disclosures Company
Transactions with SPVs
Interest received from Kebnekaise Funding Limited	512,628	136,400
Interest received from Opusalpha Purchaser II
Limited	988,860	199,979
Interest received from Elektra Purchase No. 25
Limited	861,711	460,431
Interest received from Coral Purchasing (Ireland)
2 DAC	596,175	158,219
Amount due from Kebnekaise Funding Limited	10,227,627	10,142,304
Amount due from Coral Purchasing (Ireland)
2 DAC	37,571,222	32,583,948
Amount due from Opusalpha Purchaser II Limited	34,668,783	28,486,686
Amount due from Elektra Purchase No. 25 Limited	20,018,077	27,964,797
Amount due from FCT "GK" Compartment G2	3,764,133	7,262,750
Amount due from FCT "GK4" Compartment GK4	5,785,000	6,465,000
Amount due from FCT "GK5" Compartment GK5	4,435,000	5,710,000
Interest and expenses paid to FCT "GK"
Compartment G2	6,181,286	1,807,242
Interest and expenses paid to FCT "GK4"
Compartment GK4	5,782,379	1,546,028
Interest and expenses paid to FCT "GK5"
Compartment GK5	6,123,581	1,008,304
Amount owed to FCT "GK" Compartment G2	140,334,353	197,910,807
Amount owed to FCT "GK4" Compartment GK4	184,999,998	131,349,336
Amount owed to FCT "GK5" Compartment GK5	155,728,369	148,889,322
Amount owed to Kebnekaise Funding Limited	24,916,578	-

GRENKE FINANCE PLC

154

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

45. RELATED PARTY TRANSACTION CONSOLIDATED AND COMPANY (Continued)

	2023	2022
Amount paid to directors	€	€
Amounts paid to Directors	447,818	415,275

All of the above entities are related parties because they are members of the Grenke AG Group

which owns 100% of the share capital of the Company.

The management charges from GRENKE AG are for IT services and for administrative services from GRENKE AG Group.

The licence fee charge from Grenke AG is for the use of the Grenke brand, business model and proprietary systems.

The guarantee fee charge from Grenke AG is for the provision of guarantees and other means of explicit support by Grenke AG to the Company for the purposes of its financing activities.

The transactions on which interest is paid to GRENKE Bank AG and the amounts due to GRENKE Bank AG are explained in note 33.

The transactions on which guarantee fees are paid to GRENKE Bank AG and which payments from GRENKE Bank AG are received are explained in note 12 and note 33.

The transactions on which guarantee fees are received from GRENKE Bank AG and which payments are made to GRENKE Bank AG are explained in note 46.

The accountancy fees charged to GRENKE AG Group companies and Grenke AG Group franchisees are explained in note 15.

Grenke Limited currently occupies unit 306 and unit 307 Q House, Sandyford Industrial Estate, Dublin 18 from the Group and Company in respect of which it will commence to pay the Group and Company €109,614 p.a. from 6 November 2024 until 5 November 2028 which is an amount equal to the rent which will be payable by the Group and Company to the landlord for unit 306 and unit 307. Grenke Limited also co shares the meeting rooms at Unit 310 Q House in respect of which it will pay the Group and Company an amount equal to 50% of the cost of the rent of €30,040 p.a. from 6 November 2024 until 5 November 2028 for Unit 310 in Q House. There is no lease agreement between Grenke Limited and the Group and Company. The Group and Company can request that Grenke Limited vacate the units at any time if it requires the units for its own business activities. Details of the rental income are included in note 15.

GRENKE AG Group Companies in France, Spain, Portugal, Netherlands, Luxembourg, Hungary, Slovenia, Finland, Romania, Malta, Germany and Italy act as agents for the Group and Company. The agents write leases on behalf of the Group and Company, collect lease instalments on behalf of the Group and Company sell leased equipment on behalf of the Group and Company and secure fees for protecting the Group and Company leased equipment in return for which they are paid commissions.

GRENKE FINANCE PLC

155

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

45. RELATED PARTY TRANSACTION CONSOLIDATED AND COMPANY (Continued)

Interest received from GRENKE AG Group companies, secured amounts owed by GRENKE AG Group companies, unsecured amounts owed by GRENKE AG Group companies is explained in note 22.

Interest received from GRENKE AG Group franchisees, secured amounts owed by GRENKE AG Group franchisees, unsecured amounts owed by GRENKE AG Group franchisees is explained in note 22.

Interest paid to GRENKE AG Group companies and cash pool amounts owed to GRENKE AG Group companies is explained in note 12.

Unsecured amounts owed to Grenke AG Group companies and Cash pool amounts owed to Grenke AG companies is explained in note 33.

Interest income from SPV Investments and subordinated loans provided to group SPVs is explained in note 21.

Company interest and expenses paid to SPVs is explained in note 34.

Company amount owed to SPVs is explained in note 34.

Details of the directors remuneration is set out in note 17. Three of the directors receive remuneration from Grenke Finance plc. The Company does not have other key management personal apart from the directors who receive remuneration. Therefore, the details regarding the compensation of key management personnel is described in note 17.

All related party transactions were made at arm’s length.

In its responsibility to assist the financing of business activities conducted by companies of the Grenke AG Group, Grenke Finance plc applies transfer prices for financial instruments in conformity with external market levels and in accordance with national and international tax requirements.

46. GUARANTEES

The Company had entered into an agreement with GRENKE Bank AG, a member of the GRENKE AG Group, where the Company provides guarantees to GRENKE Bank AG over

lease receivables that GRENKE Bank AG purchases from other companies in the GRENKE AG Group. The balance of lease receivables guaranteed under this agreement was €2,103 (2022: €112,402) at the Statement of Financial Position date. The balance of the lease receivables guaranteed is the maximum credit exposure remaining under this agreement at the reporting date. These guarantees remain in place for the life of the lease receivable contracts that GRENKE Bank AG has purchased. This agreement ceased during the year ended 31 December 2018 and once the leases guaranteed prior to the agreement ceasing mature the Company will no longer have any obligations under this agreement.

If a lease which has been guaranteed by the Company becomes non performing the Company pays GRENKE Bank AG the net present value of the outstanding lease receivables at the date

GRENKE FINANCE PLC

156

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

46. GUARANTEES (Continued)

the lease became non performing. The Company then recognises the lease as a non performing lease and includes the lease in its lease receivables in the Statement of Financial Position. Note 11 of the financial statements provides details of the amount charged through the Statement of Profit or Loss in respect of these non performing leases.

The Group and Company has assessed the lease receivables for impairment at the Statement of Financial Position date and consider the fair value of the guarantee negligible. Premiums

received of €170 (2022: €3,175) have been deferred and excluded from income. The premiums deferred are included in deferred income on the Statement of Financial Position and are disclosed in note 36.

The premiums deferred will be released to the Group and Company Statement of Profit or Loss over the life of the underlying lease receivables guaranteed. The expected maturity of the underlying lease receivables is as follows:

As per Dec, 31 2023
	Up to 3 months	4 to 12 months	1 to 5 years	Total
Type of liability	€	€	€	€
Net Present Value of Lease Receivables Guaranteed	753	1,350	-	2,103

As per Dec, 31 2022
	Up to 3 months	4 to 12 months	1 to 5 years	Total
Type of liability	€	€	€	€
Net Present Value of Lease Receivables Guaranteed	72,743	37,556	2,103	112,402

€3k (2022: €84k) was released to the Group Statement of Profit or Loss in the current year and is included in other income in the Group Statement of Profit or Loss. The premiums are released to Group Statement of Profit or Loss over the period of the lease receivables, which

are being guaranteed. If a lease which is being guaranteed is terminated the whole unreleased deferred premium is released to Group Statement of Profit or Loss.

GRENKE FINANCE PLC

157

NOTES TO THE FINANCIAL STATEMENTS

AT 31 December 2023

47. CAPITAL MANAGEMENT GROUP AND COMPANY

For the purpose of the Group and Company’s capital management, capital includes share capital and capital reserve and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Group and Company’s capital management is to maximise the shareholder value.

The Group and Company manages its capital structure and makes adjustments in light of changes in economic conditions and the business and liquidity requirements of its parent GRENKE AG. To maintain or adjust the capital structure, the Group and Company may adjust the dividend payment to its parent, return capital to its parent, issue new shares or obtain capital contributions. The Group and Company has no externally imposed capital requirements.

48. IMPORTANT EVENTS SINCE THE YEAR END GROUP AND COMPANY

No events have occurred since the Statement of Financial Position date outside the normal course of the Group and Company’s business.

49. APPROVAL OF THE FINANCIAL STATEMENTS CONSOLIDATED AND COMPANY

The Group and Company financial statements of GRENKE Finance PLC were approved and authorised for issue by the Directors on 7 March 2024.