Grenke AG — Earnings Release 2010

Jul 29, 2010

News Details

Corporate | 29 July 2010 07:19

GRENKELEASING AG: Group set for growth over rest of year – Quarterly Financial Report as per June 30, 2010

GRENKELEASING AG / Quarter Results

29.07.2010 07:19

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GRENKE Group set for growth over rest of year
* Net interest income up 10 percent year-on-year to EUR 19.5 million
in second quarter of 2010 (EUR 17.7 million)
* Net interest income rises steadily over three quarters
* Consolidated profit after taxes of EUR 6.5 million in second quarter
after EUR 5.9 million in previous year
* Equity ratio still highly comfortable at 17.2 percent

Baden-Baden, July 29, 2010: We significantly increased our net interest
income by 10 percent to EUR 19.5 million in the second quarter of 2010
(Q2-2009: EUR 17.7 million). This success was the result of several
positive developments. In 2009, we significantly increased our contribution
margin 2 on new business, increasing the relevant income items even though
we had actively and significantly scaled back new business on account of
risk considerations. In 2010, we have again greatly increased new business
in the wake of the further improvement in economic prospects and a more
relaxed risk situation overall without making significant margins
concessions. We are also currently benefiting from our competitive
refinancing conditions.

In addition, we maintained our very good funding base and our investment
grade rating, even in the worst financial crisis in post-War history. Thus,
we preserved all our good refinancing options on the capital market and
were able to emerge early on the market as an issuer. A comparison of the
first quarter of 2010 and the fourth quarter of 2009 impressively shows
this development. Net interest income has risen continuously over the three
quarters by almost 5 percent each time.

The settlement of claims as a result of the recession year of 2009 in
particular should have reached its highest point in the first quarter of
2010 at EUR 9.5 million. Claims amounted to EUR 7.7 million in the second
quarter 2010. While the loss rate is still above average, it has decreased
tangibly as against the first quarter. The positive development in losses
in the second quarter has confirmed our expectation that we are past the
worst. However, the positive trend of the second quarter is not yet a firm
trend that can be extrapolated to the future. Volatilities in loss
development from quarter to quarter are normal for our business and it is
still difficult to forecast such trends down the line.

Personnel, selling and administrative expenses all rose year-on-year in
both the second quarter and the first six months. This is on the one hand
due to the fact that we have advanced our growth significantly and
successfully in the current year and on the other hand resulting from the
first-time consolidation of GRENKEFACTORING. We further expanded our
international business in the first half of 2010 - it contributed a share
of 59.4 percent to the GRENKE Group's new business (previous year: 46.8
percent). Our new branch in Bristol commenced operations in July and we
have therefore established our third location in the UK. Cost increases
resulting from the relocation of GRENKE BANK from Hamburg to Baden-Baden
are of a one-off nature.

The higher other operating expenses are essentially due to currency
volatilities not covered by hedge accounting, particularly as a result of
the appreciation of pound sterling and the Swiss franc as against the euro.
These volatilities are predominantly accounting effects and may well
develop in the other direction again as the year progresses.

Operating income increased by 9.1 percent in the second quarter of 2010 to
EUR 23.3 million after EUR 21.4 million in the previous year. The profit
from disposal stagnated at a persistently low level. All income items
increased year-on-year in the first six months. Operating income in the
first half of the current fiscal year was EUR 44.9 million after EUR 44.1
million in the first half of 2009.

After taxes, consolidated net profit climbed to EUR 6.5 million in the
second quarter after EUR 5.9 million in the previous year. Net profit for
the first six months declined to EUR 12.2 million after EUR 13.1 million.
The growth trend in income will continue further in the second half of 2010
in spite of the non-recurring costs caused by the relocation of the bank
and the volatility in selected currencies, which we do not consider to have
a lasting effect. This is due partly to the high volume growth in new
business, the consistently strong contribution margin 2 in the first half
of this year and, in particular, from the excellent margins on new business
in 2009.

The basis for our significant new business growth is formed by our high
equity ratio and our excellent reputation on the debt markets. In the first
half of 2010, our equity ratio was at a very comfortable 17.2 percent.

These results were generated by 526 employees, as compared with 503 in the
first half of 2009 (full-time employees not including the Board of
Directors).

'The already excellent new business of the GRENKE Group in the first
quarter of 2010 was increased again in the second. In total, we grew by
respectable 42.5 percent in the first half of the year. Thus, we are one of
the few companies to grow not just compared to the weak basis of the crisis
year of 2009, but already to outperform significantly its business volumes
from the pre-crisis year of 2008. And our margins are also still above
earlier levels, even though we - as previously announced - have scaled back
the high margin requirements for our sales in order to leverage fully the
opportunities afforded by the market. Our early and rapid expansion in
Europe is now fully paying off. We can grow where there are the best market
prospects for volumes and margins and are becoming ever more independent of
our domestic market of Germany. We are anticipating further strong new
business in the second half of the year and have therefore raised our
forecast for fiscal 2010 with the publication of our new business figures.
Overall, we are now forecasting growth in new business in the GRENKE Group
including franchise partners for 2010 of significantly more than 20
percent,' explained Dr. Uwe Hack, Deputy Chairman of the Board of Directors
of GRENKELEASING AG.

He added: 'The Group's earnings will already benefit somewhat from the high
volume of new business, the consistently strong contribution margin 2 in
the first half of this year and, in particular, from the excellent margins
on new business in 2009, which will affect the full reporting period of the
current year. Basically, the Group receives income from new business
continuously over the entire term of a financing agreement, i.e. there is a
timing delay between concluding the leasing contract and the realisation of
earnings during the lease period. We intend to compensate for the costs as
a result of our international expansion and the broadening of our product
portfolio with the forecast growth in income. We are remaining cautious in
our earnings outlook as further developments in claims are still uncertain.
We are therefore confirming our forecast for a consolidated profit in the
region of EUR 25 million to EUR 28 million for fiscal 2010. With earnings
of EUR 6.5 million in the second quarter and EUR 12.2 million in the first
half of 2010, this forecast is already on a solid footing.'

The full Quarterly Financial Report as per June 30, 2010 can be accessed on
the Internet at www.grenke.de INVESTOR RELATIONS - Reports - Figures 2010.

The GRENKE Group

The GRENKE Group is a broadly diversified provider of financial services
for small to medium-sized enterprises and for private retail clients.

The GRENKE Group comprises companies which operate in fourteen European
countries, all being part of the consolidated GRENKELEASING corporate
group. In addition the GRENKE Group is represented in seven further
countries in Europe by way of a franchise system. Including its franchise
partners, the GRENKE Group is represented at 20 locations in Germany and a
total of 39 locations internationally.

The range of services offered by the GRENKELEASING Group (not including
franchise partners) covers small-ticket IT leasing and factoring and -
through GRENKE BANK AG - classic online banking services.

GRENKE BANK AG has been part of the GRENKELEASING Group since the beginning
of 2009.

The bank- and vendor-independent GRENKE Group holds a leading market
position in Europe in the field of small-ticket IT leasing for products
such as PCs, notebooks, copiers, printers or software of relatively low
asset value. Its range is rounded off by Car Leasing from one of its
franchise partners.

GRENKELEASING AG is listed on the Prime Standard of the Frankfurt
Securities Exchange and is part of the SDAX.

The shares of GRENKELEASING AG are listed on the SDAX of the Frankfurt
Securities Exchange under the identification code GLJ, ISIN DE0005865901.

Information on the GRENKE Group and its products is available for download
on the Internet, at http://www.grenke.de, http://www.grenkebank.de,
http://www.grenkefactoring.de.

Should you have any queries, please contact:

Renate Hauss
Phone: +49 7221 5007-204
Fax: +49 7221 5007-112
E-mail: investor@grenke.de
Internet http://www.grenke.de; http://www.grenkebank.de,
http://www.grenkefactoring.de

29.07.2010 Ad hoc announcement, Financial News and Press Release distributed by DGAP.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: 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, München, Düsseldorf, Stuttgart, Hamburg

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