Grenke AG — Earnings Release 2008

Jul 2, 2008

News Details

Corporate | 2 July 2008 07:57

GRENKELEASING AG: New Business in first half 2008

GRENKELEASING AG / Miscellaneous/Miscellaneous

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• Increase in new business of the GRENKE Group by 13.2 %
• Contribution Margin 2 of new business of the GRENKE Group reaches EUR
  39.3 million (up 19.8 % yoy)

Baden-Baden, 02 July 2008: In the first half of 2008 GRENKE Group (incl.
franchise partners) generated a volume of new business – i.e. the sum total
of acquisition costs of newly purchased leasing assets and factoring volume
– amounting to EUR 284.1 million (HY1-2007: EUR 251 million).

Growth in new business acquired for the first half of 2008, at 13.2 %, is
in line with our expectations. This result was achieved owing to 19 %
growth in the second quarter of 2008 and 7.2 % in the first quarter of 2008
(year-on-year in each case). Due to the lower number of workdays, we
registered less dynamic growth in the first quarter; this shift in the
Easter holidays was offset again in the second quarter. Accordingly, we
affirm our annual forecast to reach more than 10% growth for new business
written in the GRENKE Group including our franchise partners for fiscal
2008 as a whole.

Moreover, with a growth rate of 35.1 % the foreign markets remain the
primary growth drivers behind the Group’s new business.

New business volumes in EUR million

                                       HY1-2008   HY2-2007   % change

GRENKE Group including franchise partners 284.1 251.0 13.2
- of which: Germany 149.0 150.9 -1.3
- of which: International 135.1 100.0 35.1
GRENKE Group leasing business* 259.7 229.6 13.1
Franchise partners** 39.0 46.0 -15.3
- of which Factoring business (Germany) 24.4 21.4 14.2

* excl. factoring

** The new business acquired in the United Kingdom and Poland will not be
included in the volume of the franchise partners from 2008 since we took
over the franchise partners in the UK and Poland in January 2008.

As in the past, both new business growth recorded by the GRENKE Group
abroad, at 35.1 % compared with the previous year and contribution margin 2
(CM2) with an increase of 43 %, reflect a highly dynamic trend. The
international segment contributed a share of 47.6 % (HY1-2007: 39.9 %) to
the new business of the GRENKE Group.

France remains the key growth market in the first half of 2008, reporting
an increase of 24.4 %. In Switzerland, where the positive trend continued,
we succeeded in recording 18.7 % growth.

The dynamic level of growth in Italy is continuing; compared with the
previous year, we managed to expand our new business by 92.4 %. In the UK
we recorded highly robust new business growth of 55.2 % in the first half
of the year. In Poland, the volume of new business expanded again in the
second quarter, and in the first half of 2008 we managed to record 5.7 %
growth.

In Spain, our franchise partner in Madrid made a substantial contribution
to our growth, with Barcelona also increasing its new business. In the
first half of the year, new business growth in Spain came to 39.4 %.

By entering into a franchise agreement in Finland, we managed to extend our
operations into a further market.

New business from leasing by foreign markets in EUR million

                                  HY1-2008     HY1-2007       % change

France 64.0 51.4 24.4
Switzerland 8.5 7.2 18.7
Italy 15.1 7.9 92.4
Spain (incl. franchise Madrid) 8.9 6.4 39.4
United Kingdom 8.8 5.7 55.2
Poland 6.6 6.2 5.7

The CM1 margin of the GRENKE Group’s leasing operations (contribution
margin 1 at acquisition values), at 10.8 % in the first half of 2008,
exceeded our target margin of 10%, reaching a value of EUR 28 million (HY1
2007: EUR 22.9 million – comparative figure for leasing operations). Both
the CM1 margin achieved and the level of growth year-on-year reflect quite
a positive trend against the background of a sharp rise in interest rates
in the second quarter, even though the CM1 margin declined in comparison
with the previous quarter on account of higher interest rates.

The corresponding CM2 amounts to EUR 39.3 million, likewise up by a
gratifying 19.8 % year-on-year (HY1 2007: EUR 32.8 million). This is where
our focus on contribution margin growth is clearly obvious, along with our
management of new business in line with profitability aspects.

Development of contribution margin 2 (CM2) in EUR million

                                       HY1-2008   HY1-2007   % change

GRENKE Group including franchise partners 39.3 32.8 19.8
- of which: Germany 18.1 18.0 0.7
- of which: International 21.2 14.8 43.0
GRENKE Group leasing business* 39.0 32.4 20.3
Franchise business** 2.5 3.0 -15.3
France 9.7 7.7 26.6
Switzerland 1.8 1.5 16.5
Italy 2.1 1.2 79.6
Spain (incl. franchise Madrid) 1.4 0.7 92.4
United Kingdom 1.3 0.8 72.5
Poland 0.7 0.7 12.8

* exkl. Factoring

** Contribution margin 2 of the United Kingdom and Poland will no longer be
included in CM2 of the franchise partners from 2008 since we took over the
franchise partners in the UK and Poland in January 2008.

The profit margin in relation to the factoring volume of EUR 24.4 million
amounted to 2.2 % (HY1-2007: 2.3 %). This margin relates to the average
period of a factoring transaction, amounting to approx. 35 days (HY1-2007:
approx 40 days).

In the first half of 2008 GRENKE Group recorded a total of 70,589 leasing
inquiries (ex Germany 38,420) and of which 34,217 new leasing contracts (ex
Germany 18,277) were generated. The average value per contract concluded
came to approx. EUR 7,590 and is nearly unchanged compared to the previous
year (HY1-2007: EUR 7,613 – comparative figure adjusted accordingly).

'With 13.2 % growth of new business being recorded in the first half of
2008, we are well on our way to achieving our targeted growth rate for new
business in the GRENKE Group of more than 10% growth for fiscal 2008 as a
whole. A growth rate of 35 % in our foreign markets confirms our strategy
of concentrating on further extending our presence in our international
markets.', says Dr. Uwe Hack, Deputy Chairman of the Executive Board of
GRENKELEASING AG, in commenting on the results.

He added: 'In spite of substantially higher interest rates in the second
quarter, the contribution margins saw a gratifying rise; this substantial
increase in the profitability of our new business – also in view of the
uncertain overall economic trend – confirms our strategy of clearly
focussing on boosting our earnings capacity and, therefore, growth in our
contribution margin, for the rest of the year. The banks’ more restrictive
lending policy will ease competition and we consistently plan to take
advantage of these opportunities. The measurement of risks – and taking
these adequately into account in our pricing – is part of our core
competence and will stand us in good stead. In the capital market
environment, overshadowed by uncertainties our strong balance sheet and
prudent funding strategy are a strong base to secure the funding needed for
our growing volume of new business.'

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

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

In the Norway, Hungary, Romania, Spain (Madrid), Portugal, Slovakia and
Finland 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.

Information on the company and its products is available on the Internet
under www.grenke.de.

The company will publish its detailed six months’ report for 2008 on July
28, 2008.

Should you have any queries, please contact:

Renate Hauss
Tel.: 0049-7221/5007-204
Fax: 0049-7221/5007-112
Email: investor@grenke.de
Internet: www.grenke.de

02.07.2008 Financial News transmitted by DGAP

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@grenke.de
Internet: www.grenke.de
ISIN: DE0005865901
WKN: 586590
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Stuttgart, München, Düsseldorf, Hamburg

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