GFKL Announces Growth in Revenues and Profit in Collection Unit

The turnover of the GFKL group increased by 16% to 807.6 million Euro in the first three quarters of the current financial year compared to the previous year (695.3 million Euro in the previous year). Because of one-off effects in the first-half year the Earnings before tax of the entire GFKL group fell by 28% to 15.8 million Euro (22.1 million Euro in the previous year). These effects essentially resulted from restructuring. In future GFKL will be focussing on the core business segments of Receivables Management (Collection/Factoring) and Software.

More than 1,300 employees are currently involved in these two segments. Servicing receivables worth over 20 billion Euro, GFKL is already one of Germany’s leading collection service providers ("German Collection Giant Created in Acquisition ," Dec. 20, 2006).

Turnover in the Collection segment increased in the first three quarters by 29% to 101.9 million Euro (79.2 million Euro in the previous year). Earnings before tax in this segment increased by 24% from 17.4 million Euro in the previous year to 21.6 million Euro. Current shifts in the financial markets simultaneously offer specialists such as GFKL particular growth opportunities in receivables management for banks and insurance companies, GFKL’s key client base.

In the Software segment turnover increased from 20.4 million Euro to 27.5 million Euro. Earnings before tax increased by 20% to 5.5 million Euro. In this sector GFKL offers modern software solutions for the full spectrum of the credit processes used by banks, as well insurance value chain software solutions, complemented by solutions for automated action for defaults by industrial concerns and the public sector.

On 30 September 2008, the GFKL group showed total assets of 1,341,539 million Euro (1,187,528 million Euro in the previous year). With an equity of 133.6 million Euro for the group (160.7 million Euro in the previous year), this has resulted in an equity ratio of 10% (13.5% in the previous year).

Within the framework of its strategic new market position, GFKL is planning a step by step separation of its Credit business segment and the sale of its Systems parts. The situation regarding refinancing has deteriorated to such an extent that the viability of GFKL’s leasing business, as well as the security for its refinancing, is being adversely affected on the long term. Furthermore, leasing has become a liability because of the high strain placed on it because of the need for results regarding the group’s equity capital.

The previously announced sale of the loss-generating leasing business in Spain has already been concluded. GFKL’s Spanish subsidiary, Universal Lease Iberia with 100 employees on location in Seville and with a fleet of around 15,000 vehicles was sold to ING Car Lease Spain.

The leasing portfolio of the German subsidiary Universal Leasing GmbH will be scaled down in the next few years. GFKL will not generate new origination of leasing business. One section of the leasing activities (Southern Region) is being discussed with a potential interested party. The leasing activities in the Northern and Eastern Regions have already been suspended. These will be suspended in the Western Region by the end of the year. The action GFKL is taking is in response to the decline in refinancing opportunities on the capital markets.

GFKL Financial Services AG, Chief Executive Officer, Dr. Peter Jänsch’s comments in response to the divestment in the Systems business already announced at the end of the first half year: "With ADA we substantiated the acquisition thereof for GFKL in that we want to provide big companies with one-stop solutions in the area of IT hardware. In the current capital market situation, large contracts in the areas of leasing, service and recovery value guarantee shares can no longer be adequately refinanced."

The Executive Board has decided that necessary corrections with regard to restructuring should be executed this year to avoid burdening success of the business over a longer period. After the successful separation from the leasing sector, GFKL expects to halve its total assets and achieve an equity ratio of more than 20%.

From a present day perspective, a precise prediction for the group’s annual results is not possible. For 2008 as a whole, GFKL is expected to have an extremely positive operational result in the Receivables Management and Software core business segments.

About GFKL Financial Services AG
GFKL is a modern financial service provider with the divisions Receivables Management and Software. In the Receivables Management division GFKL offers collection and factoring services. The Collection expertise ranges from the trust management of commercial and credit receivables through to evaluating, taking over and handling personal loans and mortgages. Servicing receivables worth over 20 billion euro, GFKL is one of Germany’s leading collection service providers. In the area of technology, GFKL offers modern software solutions for the entire bank lending process and all links of the insurance value chain, rounded out with solutions for automated collection procedures for industry and the public sector.