Grenke AG — Earnings Release 2007

Oct 25, 2007

News Details

Ad-hoc | 25 October 2007 07:51

GRENKELEASING AG: Quarterly Financial Report as per September 30, 2007

GRENKELEASING AG / Quarter Results/Quarter Results

Release of an Ad hoc announcement according to § 15 WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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-Earnings after taxes at EUR 24.9 million increased by 7 % by one-off tax
effects
-Increase in new business of the GRENKE Group by 12.5 %

Baden-Baden, 25/10/2007: Consolidated earnings after taxes of GRENKELEASING
AG increased by 7 % to EUR 24.9 million in the first nine months 2007
(9-month period 2006: EUR 23.3 million) benefiting from one-off tax
effects.

Consolidated earnings before interest and taxes (EBIT) amounted to EUR 34.3
million in the first nine months 2007 (9-month period 2006: EUR 36.7
million). Earnings per share at 1.82 EUR in the first nine months 2007
corresponding an increase of 7 %.

Consolidated earnings before tax, both for the reporting quarter and for
the nine-month period, are thus still below the comparable prior-year
result. As already mentioned, this does not affect the forecast for the
year. A reduced tax rate applied in the context of one-off tax effects,
relating mainly to the corporation tax reform, leads to a rise in the
profit for the period both in the reporting quarter and in the nine-month
period. Thus net profit for 2007 including tax effects is expected to rise
to around EUR 32 million.

Net interest income from the leasing business continued to develop
according to plan in the third quarter and the nine-month period of 2007
and rose despite an above-average increase in refinancing costs brought on
by overall higher interest.

In the third quarter, expenses from the settlement of claims developed
positively, declining in comparison with the second quarter. As expected,
the rise in these expenses is nonetheless still on a relative increase for
the nine-month period, with the result that, after the settlement of
claims, net interest income for the quarter is higher than in the prior
year, but below the figure for the nine-month period. The increase in the
number of claims is, as expected, a direct result of our expansion into new
markets. It is nonetheless well below our internal threshold, meaning that
our risk management system has again proven its reliability during the
current expansion phase.

The above-average increases in profit from insurance business and the
lively new business in the reporting quarter and in the nine-month period
more than compensate the decline in profit from disposals. Profit from
disposals arises when lease agreements expire. These fluctuations are
therefore a reflection of past new business cycles and are thus not an
indication of our current performance. Foreign operations also have an
effect on this item as their contribution to the disposal business are as a
rule lower than that of established markets in the early years of market
penetration.

On the cost side, our vigorous expansion abroad is thus, as predicted,
leading to start-up costs in this fiscal year which will be recouped by
additional earnings in the future. Consulting and audit fees especially,
but also operating and administration costs are major factors. Furthermore,
consulting and audit fees increased in the current year due to a tax audit
at a foreign subsidiary and additional advice regarding the effects of the
German corporation tax reform. As planned, we have seen above-average
increases in these expense items whereas the remaining expense items
generally developed in line with the normal course of business.

In addition to operating activities, our financing strategy has borne fruit
in the face of the American sub-prime market crisis. Firstly, we utilized
the preceding market exaggerations to refinance ourselves at exceptionally
low interest spreads. Secondly, we tested the market in this difficult
phase with the aid of two small tranches which were placed quickly and at
attractive conditions. So the market considers our business model to be
sound and of high quality.

Overall, we expect that market conditions will not take a turn for the
worse for us as a result of the sub-prime market crisis. This leads us to
believe that our competitors will likewise increasingly act with
risk-adequate margins in future and that consequently, competition for new
business will be reduced. As a result, we expect to be able to pass on the
normalized interest spreads on refinancing. We are confident that this will
provide additional growth opportunities for GRENKELEASING, which we will
exploit diligently.

As already reported the GRENKE Group’s (incl. franchise partners) volume of
new business - i.e. the sum total of acquisition costs of newly purchased
leasing assets and factoring volume – rose by 12.5 % to EUR 374,3 million
in the first nine months of 2007 (9-month period 2006: EUR 332.7 million).
The level of 12.5 % growth in new business achieved by the GRENKE Group
including franchise partners was the result of a very substantial growth
rate of 18.8 % in the third quarter of 2007 (compared with 12.5 % in the
second quarter and 7 % in the first) and reflects an ongoing increasing
momentum of our new business. For fiscal 2007 as a whole, we therefore
anticipate growth of new business to exceed 10 %.

Our main performance indicator of leasing operations, contribution margin
2, developed positively. The corresponding contribution margin CM2 amounts
to EUR 47.7 million, up by 7.9 % year-on-year. It is encouraging to note
that in the third quarter, contribution margin 2 was also up again in
Germany (by +6.4 %), even though it was not possible to quite fully offset
the decline recorded in the first half of the year.

The result was generated by 414 employees, compared with 381 in the first
nine months of 2006 (full-time equivalents excluding directors). 99
employees are active in franchise operations (9-month period 2006: 60).

The full Quarterly Financial Report as per September 30, 2007 is available
on the internet under www.grenkeleasing.de Investor Relations – Financial
Data.

The Executive Board

Should you have any queries, please contact:

Renate Hauss
Tel.: 0049 -7221/5007-204
Fax: 0049-7221/5007-112
E-mail: investor@grenkeleasing.de
Internet: http://www.grenkeleasing.de

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Information and Explaination of the Issuer to this News:

'Both new business and profitability of the GRENKE Group and its
franchisees made satisfactory progress in the third quarter. Following the
German corporation tax reform, business increased as expected. Based on the
interim figures published for the third quarter and the first nine months
of 2007, we have upped our growth forecast for the current fiscal year. Up
until now we had forecast new business growth for the GRENKE group and its
franchise partners of around 10 percent in 2007. We now expect growth of
over 10 percent. 'said Dr. Uwe Hack, CFO of GRENKELEASING AG, in explaining
the results.

'The development of the GRENKELEASING AG Group’s operations means that we
still anticipate a net profit for 2007 on a similar level to the prior
year. We also expect to reap a one-off positive tax effect of around EUR
1.5 million as a result of the changes ensuing from the corporation tax
reform. Consequently, net profit for 2007 including tax effects is expected
to rise to around EUR 32 million.'

The GRENKE Group (incl. franchise partners) now operates in seventeen
European countries.

The GRENKELEASING AG Group (excluding franchise partners) is represented in
20 German cities. In addition to seven branches in France, three in
Switzerland and two in Italy, the enterprise operates with subsidiaries in
Austria, Czechia, Spain, the Netherlands, Denmark, Sweden, Ireland and
Belgium.

In the United Kingdom, Poland, Norway, Hungary, Romania, Spain (Madrid) as
well as in Germany in the field of car leasing and factoring, GRENKELEASING
has a franchise system in place.

GRENKELEASING offers contracts predominantly in the field of small-ticket
IT leasing for such products as PCs, notebooks, copiers, printers or
software of a relatively low asset value.

GRENKELEASING AG shares are listed at Frankfurt Stock Exchange (SDAX) with
the code GLJ, ISIN DE0005865901.
25.10.2007 Financial News transmitted by DGAP

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Language: English
Issuer: GRENKELEASING AG
Neuer Markt 2
76532 Baden-Baden
Deutschland
Phone: +49 (0)7221 50 07-204
Fax: +49 (0)7221 50 07-112
E-mail: investor@grenkeleasing.de
Internet: www.grenkeleasing.de
ISIN: DE0005865901
WKN: 586590
Indices: SDAX
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Stuttgart, München, Düsseldorf, Hamburg

End of News DGAP News-Service

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