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GRENKE's growth continues in the first quarter and increases net profit

DGAP-News: GRENKE AG / Key word(s): Quarterly / Interim Statement

27.04.2018 / 07:10
The issuer is solely responsible for the content of this announcement.


GRENKE's growth continues in the first quarter and increases net profit

- Net profit in the quarter increases 20.6% to EUR 30.2 million (3M-2017: EUR 25.1 million)

- Overall profitability unaffected by first-time application of new IFRS 9 accounting standard

- Solid base set for achieving annual targets

Baden-Baden, April 27, 2018: The GRENKE Consolidated Group is off to a good start in its anniversary year. In the first three months of the current fiscal year, net profit increased by 20.6% from EUR 25.1 million in the previous year to EUR 30.2 million, creating a solid basis for achieving the financial targets for the 2018 fiscal year. The Board of Directors continues to expect net profit in the range of EUR 123 million and EUR 131 million.

Antje Leminsky, Chair of the Board of Directors of GRENKE AG, is satisfied with the Company's performance in the first three months: "Profitable growth is an essential part of our tried and true business model. We demonstrated this again in the first quarter, which gives us confidence in the performance for the remainder of the year."

Our income continues to reflect the strong level of new business we have recently achieved. We also continue to be in a position to actively steer our contribution margins in the financing business in accordance with our risk and to utilise our excellent capital market reputation for our refinancing. Overall, interest and similar income from financing business increased by 13.8%, whereas interest expenses on refinancing increased by only 9.3%. This led to an increase in net interest income of 14.5% from EUR 59.1 million in the first quarter of the previous year to EUR 67.7 million in the reporting quarter. Including the item settlement of claims and risk provision, which since the beginning of 2018 not only includes impairment already incurred but also expected impairment, net interest income recorded a rise of 16.5% to EUR 47.0 million compared to EUR 40.3 million in the same quarter of the prior year. The Consolidated Group's loss rate, based on overall risk provision in accordance with IFRS 9, fell to 1.4% compared to 1.5% in the previous year.

"The application of the new IFRS 9 standard has brought about a number of changes, which are now reflected for the first time in the Consolidated Group figures. Overall, they have no impact on contribution margins or embedded value, so the overall profitability of the Group remains unaffected. To provide a transparent presentation and better comparability, we present the effects of the adjustments resulting from the application of IFRS 9 separately and adjust the previous year's figures accordingly. The embedded value before taxes and excluding equity, with an increase of 17.8%, clearly shows the strength of our portfolio's potential," says Sebastian Hirsch, member of the Board of Directors of GRENKE AG, in his comments on the application of the new standard.

Profit from service business and new business increased a significant 20.9% and 23.3%, respectively. The Consolidated Group's income from operating business increased by 21.3% from EUR 68.7 million in the previous year to EUR 83.3 million in the reporting quarter.

Taking into account the latest cell divisions and acquisitions, the average number of employees at the GRENKE Consolidated Group increased by 20.1% year-on-year to 1,361 employees. Staff costs saw a corresponding year-on-year increase of 23.5%. The Consolidated Group's second major expense item, selling and administrative expenses, recorded a growth-related increase of 15.0% from intensified sales and marketing activities.

The first quarter's operating result exceeded the previous year's figure of EUR 31.8 million by 15.7% and reached EUR 36.8 million. As mentioned above, first quarter net profit rose 20.6%, from EUR 25.1 million in the previous year to EUR 30.2 million and resulted in earnings per share of EUR 0.65 compared to EUR 0.55 in the previous year.

The Consolidated Group's balance sheet structure as per March 31 was also solid. Although the equity ratio fell from 16.7% at the end of 2017 to 15.8%, it was only marginally below our long-term benchmark of 16%. The lower equity ratio was primarily attributable to a reporting date-related effect from the bond issued at the end of March 2018 and the related high level of liquidity. Excluding this extraordinary item, the equity ratio would have remained above 16%.

GRENKE is also well positioned with regard to its refinancing. In addition to the issue of various small-volume instruments, the Consolidated Group issued an additional EUR 200 million bond in the first quarter, which was oversubscribed in just a short period of time. "We are pleased with the excellent reputation we enjoy on the capital market. This is reason enough to continue giving our utmost attention to cultivating this reputation in the future and to remain a reliable component in the portfolios of our equity and debt holders. The conclusion of the global loan agreement with the European Investment Bank shortly after the end of the quarter opens up additional opportunities," continued Sebastian Hirsch.

After the end of the first quarter, GRENKE entered into its first cooperation agreement with the European Investment Bank, which includes a long-term, low-interest loan of EUR 100 million, from which small and medium-sized enterprises across Europe can now benefit in the form of attractive leasing conditions. In Germany, some 39,000 sponsored lease contracts have already been concluded through collaborations with development banks.

The quarterly statement for the first quarter is available online at www.grenke.en/financialreports.

Overview of key figures (in EUR millions)

  3M-2018 3M-2017 Change in %
New business GRENKE Group Leasing 549.2 445.6 23.3
New business GRENKE Group Factoring 116.8 97.7 19.6
New business SME lending business
(incl. business start-up financing)
9.0 6.6 36.4
CM2 margin on new business Leasing in % 17.7 18.1 -2.2
Net profit GRENKE Consolidated Group* 30.2 25.1 20.6
Cost / income ratio in %* 57.0 56.3 1.2
Equity ratio in %* 15.8 16.3 -3.1
Consolidated Group's average number of employees 1,361 1,133 20.1
 

* Previous year's figures adjusted in accordance with IFRS 9.
Please note: Rounding may result in differences in individual values compared to the values actually achieved in EUR.

For further information, please contact:
GRENKE AG
Investor Relations
Renate Hauss
Neuer Markt 2
76532 Baden-Baden
Phone: +49 7221 5007-204
Email: investor@grenke.de
Internet: http://www.grenke.de

About GRENKE

The GRENKE Group (GRENKE) is a global financing partner for small and medium-sized companies. As a one-stop shop for customers, GRENKE's products range from flexible small-ticket leasing and demand-driven bank products to convenient factoring. Fast and easy processing and personal contact with customers and partners are at the centre of GRENKE's activities.

Founded in 1978 in Baden-Baden, the Company operates in 31 countries and employs more than 1,300 staff worldwide. GRENKE shares are listed in the SDAX on the Frankfurt Stock Exchange (ISIN DE000A161N30).

Further information about GRENKE and its products is available at http://www.grenke.de.



27.04.2018 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Language: English
Company: GRENKE 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: DE000A161N30
WKN: A161N3
Indices: SDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange


 
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