GEFA EXPLOITS ECONOMIC GROWTH IN 2006

27.06.2007

The Wuppertal-based GEFA Group, which offers equipment and vendor finance under the SG Equipment Finance brand, benefited from the strong German economy in 2006. Its new business reached a record level of € 3.012 billion, a year-on-year increase of 11.5 per cent (2005: € 2.702 billion). Most of this growth stemmed from its financing activities, with lending and hire purchase generating new business of € 2.048 billion, a year-on-year rise of 17.6 per cent. Lease originations grew slightly year on year to € 964 million.

This success is largely attributable to the systematic expansion of existing core businesses and the development of new market segments. GEFA generated above-average growth in aircraft finance and equipment leasing. It also achieved encouraging success in new areas of financing such as renewable energy, ships and port equipment.

Despite the benign investment climate, 2006 was characterised by sustained pressure on margins and, consequently, on the profitability of new business. "GEFA has managed to successfully meet the particular challenge of generating double-digit growth while at the same time ensuring that its profitability remains intact", stressed Jochen Jehmlich, Spokesman for GEFA's Management.

As in previous years, the Transport segment accounted for the largest share of new business (€ 1.697 billion, an increase of 11.1 per cent), despite the fact that the volume of freight transported by land in Germany rose by only 6.6 per cent. This enabled GEFA to consolidate its position as the leading financing partner to the transport sector. It generated particularly encouraging growth in turnover in agricultural equipment, semi-trailer tractors and trailers. It even managed to almost double its volume of new business in aircraft finance.In the Industrial Equipment segment, the strong German economy helped GEFA to expand its new business in construction and production equipment by 12.1 per cent to € 1.011 billion. The key growth drivers in this business were machine tools and printing machinery, which grew by 40 per cent and 23 per cent respectively on 2005.

The High-Tech business, which collaborates with leading vendors to finance information technology, medical equipment and office equipment, also performed well, raising its volume of new business by over 11 per cent to € 304 million.

In 2007 GEFA has managed to build on the strong performance it delivered last year. Its new business after the first four months is on schedule to meet its targets, and it is therefore confident that it will be able to deliver another good result. The company's turnover is likely to benefit from a prospering capital-equipment sector and the expansion of alliances with vendors throughout Europe. GEFA is able to support international clients of this kind because it can draw on the SG Equipment Finance network of equipment and vendor finance capabilities provided by Société Générale, its parent company.

The SG Equipment Finance Group, Europe's market leader in equipment and vendor finance, is now represented in 19 European countries, including Russia since the end of 2006. Outside Europe, SG Equipment Finance is active in Australia and the rapidly growing Chinese market. Operating in a stable economic environment, SG Equipment Finance also generated a record volume of new business of € 9.2 billion. GEFA - the Group's representative in Germany - accounted for over 30 per cent of this total.

The Wuppertal-based GEFA Group, which offers equipment and vendor finance under the SG Equipment Finance brand, continued on its path of expansion in 2005. Its new business reached a record level of €2,702 million, a year-on-year increase of 10.8% (2004: €2,439 million). This growth, which outperformed the broad economy and capital spending in Germany, came from both financing and leasing: new lending and hire-purchase business totalled €1,742 million (up 12.7% on 2004), while lease originations grew by 7.4% to €960 million.

Pre-tax operating profit rose by over 5% from €134 million to €141 million. Excluding one-off items from 2004, operating profit rose by 20%.

"2005 was a highly successful year for GEFA", stressed Jochen Jehmlich, Spokesman for the Management. "We met all our operating targets and objectives on the back of double-digit growth in new business, a further improvement in our earnings power and an increase in operating profit."

This success was mainly attributable to our focus on customer relationship management, intensified marketing activities and systematic acquisition of new clients by our expanded sales team. Of the 23,000 or so clients with whom agreements were concluded in 2005, more than 10,000 were first-time customers. GEFA maintains relationships with some 53,000 corporates, most of which are small or medium-sized firms. The profile of its customers - which primarily come from the transport, services, construction and manufacturing sectors - remained virtually unchanged.

As in previous years, the Transport segment generated the most new business (€1,527 million, a year-on-year increase of 15.6%) despite a slight decrease in the volume of freight transported in Germany. Growth mainly came from Agricultural Equipment (up 44%), Aviation (up 29%) and Commercial Vehicles (up 10.4%). GEFA strengthened its leading position as a financing partner to the transport sector by acquiring a 60% stake in TRUCKPORT GmbH, which specialises in the valuation, remarketing and repossession of commercial vehicles.

In the Industrial Equipment segment, GEFA increased its new business in construction equipment, machine tools, plastics-processing equipment and printing machinery by 3.7% to €902 million. With growth of 6.8% in construction equipment, GEFA consolidated its position as one of the leading financing partners to this sector.

The High Tech business, which collaborates with leading vendors to finance information technology, medical equipment and office equipment, performed well despite difficult market conditions. New business rose to €273 million (2004: €249 million).

In 2006 GEFA has managed to build on the strong performance it delivered last year. New business in the first quarter came to €677 million, an 11% increase on the same period of 2005, and holds out the realistic prospect of further double-digit growth for the year as a whole. The company's turnover is likely to benefit from the improved business sentiment among small and medium-sized firms in Germany and the expansion of alliances with vendors throughout Europe. GEFA is able to support international clients of this kind because it can draw on the SG Equipment Finance network of equipment and vendor finance capabilities provided by Société Générale, its parent company.

SG Equipment Finance, Europe's market leader in equipment and vendor finance, is now represented in 18 European countries, including Ukraine since the beginning of this year. Outside Europe, SG Equipment Finance has a presence in Australia and, since the end of last year, in the growing Chinese market, which is increasingly opening up to leasing finance. In 2005 the SG Equipment Finance Group raised its new business by 23% to €8.3 billion in what was a more benign economic environment. Its managed assets had grown to €17.6 billion by the end of the year.