Grenke AG — Earnings Release 2014

Feb 10, 2015

News Details

Corporate | 10 February 2015 06:59

GRENKELEASING AG: Consolidated Group net profit grows 38% to EUR 65.0 million – exceeds profit forecast of EUR 62 to 64 million

GRENKELEASING AG / Key word(s): Final Results

2015-02-10 / 06:59

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Consolidated Group net profit grows 38% to EUR 65.0 million – exceeds profit forecast of EUR 62 to 64 million

– Consolidated Group net profit in 2014 amounts to EUR 65.0 million – corresponds to growth of 38.3% after EUR 47.0 million in the previous year

– Net interest income increases 20.7% to EUR 157.5 million

– The economic result of EUR 150.2 million represents a growth rate of 40.2% over the previous year’s level of EUR 107.3 million

– Outlook 2015: New business growth of 11-15% targeted in the leasing business and 20-24% in the factoring business; Consolidated Group net profit expected in the range of EUR 71 to 75 million

Baden-Baden, February 10, 2015: In fiscal year 2014, the GRENKE Consolidated Group continued successfully to generate the profitable growth seen in recent years. The GRENKE Consolidated Group achieved net profit of EUR 65.0 million, corresponding to a robust 38.3 percent rise compared to the prior year (2013: EUR 47.0 million). We even exceeded our forecast of EUR 62 to 64 million that was raised with the publication of the third quarter report.

This performance was largely supported by the large amount of high-margin new business attained in recent years and by the income that accrues as the leases progress. Interest income rose 12.1% to EUR 211.6 million (2013: EUR 188.8 million). Due to an environment of persistently low interest rates, expenses from interest on refinancing declined to EUR 54.1 million (2013: EUR 58.3 million). This, in turn, led to a pleasing 20.7% rise in net interest income to EUR 157.5 million (2013: EUR 130.5 million).

Expenses for the settlement of claims and risk provision only managed a below-average increase of 7.9% to EUR 53.7 million (2013: EUR 49.8 million). This led to a sharp rise of 28.6% in the net interest income after settlement of claims and risk provision to EUR 103.8 million (2013: EUR 80.7 million). Because of the active and risk-oriented management of our margins in our new business, the rise in losses declined for the second consecutive year (2012: 26%; 2013: 15%) and the loss rate fell by 0.2 percentage points.

The profit from insurance business grew 17.4% to EUR 42.1 million (2013: EUR 35.8 million). The profit from new business recorded an increase of 3.5% to EUR 45.5 million (2013: EUR 43.9 million) due to lower capitalised costs. The typically volatile gains from disposals improved to EUR 1.6 million from EUR 0.7 million in the prior year.

The total income from operating business grew 19.7% to EUR 192.9 million (2013: EUR 161.2 million).

In the course of our strategic expansion and the opening up of new locations, our employee numbers rose 6.7% year-over-year. Accordingly, total remuneration, i.e., the sum of fixed and variable remuneration, increased 5.4% to EUR 45.0 million (2013: EUR 42.7 million).

We also recorded a 15.1% increase in selling and administrative expenses that climbed to EUR 44.4 million (2013: EUR 38.5 million). This was mostly due to a 147.7% jump in IT project costs to EUR 2.4 million (2013: EUR 1.0 million). This rise can be attributed to the development and optimisation of our systems and higher spending on marketing and sales that mainly resulted from our entry into new countries.

Compared to our development of income, total expenses experienced a below-average increase resulting in a higher operating result. Earnings before taxes rose by 35.3% year-on-year to EUR 86.9 million (2013: EUR 64.3 million) and earnings per share amounted to EUR 4.41 (2013: EUR 3.23).

Consolidated Group net profit was EUR 65.0 million in 2014 or 38.3% higher than the previous year (EUR 47.0 million).

The significant growth in earnings helped strengthen our equity base: the Consolidated Group’s equity increased by 12.2%. At 16.9%, our equity ratio once again exceeded our long-term target of a minimum of 16%.

In light of the positive developments during the reporting year and the encouraging prospects for the future, the Supervisory Board and the Board of Directors plan to propose a dividend of EUR 1.10 per share for fiscal year 2014 to the Annual General Meeting of GRENKELEASING AG on May 12, 2015. The previous year’s dividend was EUR 1.00 per share.

Key Figures GRENKE	2014	2013
New business GRENKE Group Leasing + Factoring + Business start-up financing incl. franchise partners in EURm	1,353	1,188
Contribution margin 2 (CM2) on new business GRENKE Group Leasing in %	19.3	19.0
Net profit GRENKE Consolidated Group in EURm	65	47
Economic result* in EURm	150	107
Cost / income ratio in %	55.7	60.8
Equity ratio in %	16.9	16.8
Number of current leasing contracts in units	427,212	369,591

* Net profit + change in embedded value after tax

“We are confident with regard to the upcoming new business growth given our competitive strength and our excellent positioning. In our leasing business (GRENKE Group Leasing), we expect new business to grow in the range of 11 to 15 percent in 2015 and, in the factoring business (GRENKE Group Factoring) between 20 and 24 percent. We also continue to adhere firmly to our high DB2 target that is based on our recent margins. In addition to cell divisions in existing countries such as Germany, France, Great Britain and Sweden, we are also planning to enter the markets in Ireland (factoring) and Singapore (leasing).

We expect earnings to continue increasing during the 2015 fiscal year based on the strong momentum of our new business in leasing seen over the last few years, which will result in higher interest income. Not only will there be a contribution from the current high-margin new business, but also from the deposit business at GRENKE Bank and the rapidly growing factoring business. The GRENKE Consolidated Group’s profit is expected to reach a range of EUR 71 to 75 million”, commented Wolfgang Grenke, Chairman of the Board of Directors of GRENKELEASING AG, on the results and the prospects for the future.

“The funding of our expansion remains well secured. Our broad range of refinancing instruments provides us with an outstanding position on the capital markets.

Our relatively new offers for business start-up financing and development loans performed extremely well. We were able to expand our cooperation with development banks of the Federal Government and individual federal states by adding a new partnership. As part of these collaborations, 12,924 leases have been signed to date. GRENKE Bank’s deposit volume has also grown sharply and climbed 18 percent in 2014. We are using these activities to position ourselves as a financial partner for small- and mid-sized enterprises.

Going forward, we will start to report a new indicator, the “economic result,” to give the capital markets even more confidence in our value-based corporate strategy. The economic result of any given fiscal year adds the change in embedded value after tax to the net profit. The embedded value represents the present value of all outstanding lease instalments after costs and risk provisions. If the difference in embedded value from the beginning to the end of the fiscal year is positive, then the Company’s enterprise value has increased. In 2014, the economic result amounted to EUR 150 million after EUR 107 million in the previous year and represented an increase of 40 percent. We will present our active, growth-oriented value management in this manner in the future”, explained Jörg Eicker, Chief Financial Officer (CFO) of GRENKELEASING AG.

The average number of employees within the Consolidated Group in 2014 was 874, compared to 819 in 2013 (full-time equivalents; not including the Board of Directors).

The GRENKELEASING AG Group’s financial report for 2014 can be viewed online at www.grenke.de – INVESTOR RELATIONS – Financial Reports – Financial Reports 2014.

For further information please contact:

Renate Hauss

Phone: +49 7221 5007-204

Fax: +49 7221 5007-4218

E-mail: investor@grenke.de

The GRENKE Group

The GRENKE Group is a broadly diversified provider of IT-based services in Small-Ticket-IT-Leasing, Factoring and Banking for small and medium-sized companies. In addition, the GRENKE Bank offers its classic online services also to private customers.

The GRENKE Group is independent of vendors and banks and 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. The GRENKE Group operates in 29 countries and employs more than 900 staff.

GRENKELEASING AG is listed in the Prime Standard of the Frankfurt Stock Exchange and is included in the SDAX. GRENKELEASING AG shares are listed in the SDAX on the Frankfurt Stock Exchange with the code GLJ, ISIN DE0005865901.

Information on the GRENKE Group and its products is available at http://www.grenke.de

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Language:	English
Company:	GRENKELEASING AG
	Neuer Markt 2
	76532 Baden-Baden
	Germany
Phone:	+49 (0)7221 50 07-204
Fax:	+49 (0)7221 50 07-4218
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, Düsseldorf, Hamburg, München, Stuttgart

End of News	DGAP News-Service

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