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Letter to shareholders for the 1st quarter of 2006

Essen, 23. June 2006

Dear Partners, dear Sir/Madam,

With this report on the first three months of the business year, we are pleased to present you the first financial statement using our Group’s new segmentation into the following divisions: Credit, Collection, Software and Systems. First, I would like to give you a brief overview of the individual segments.

The Credit segment covers the financing of movable investment goods as well as the securitization of receivables portfolios on the capital and money market. Our activities in the Collection segment range from real estate workout via the collection of trade receivables for medium-sized companies to the industrialized handling of bulk business. In the Software segment, we offer complete software solutions for the credit and receivables management of banks and insurance companies. In the Systems segment, we supply one-stop solutions in the IT sector for banks and insurance companies. These include the sale, financing, installation and maintenance of IT systems as well as the optimized marketing of used systems.

Positive start into the business year

In view of the expenses we expected to incur while integrating ADA-HAS, my letter to shareholders for the business year 2005 gave a rather cautious forecast of the development of earnings in 2006. Even now, we still cannot rule out the possibility that earnings may fall below the previous year’s figure, but we are pleased to say that the good first quarter has given us rather more momentum than expected.

In Q1, GFKL was able to increase earnings considerably up on the previous year, even though we had no extraordinary income worth mentioning, and ADA – not unexpectedly – generated a loss amounting to 0.5 million EUR. All three “old” business sectors contributed to this excellent result.

Earnings before taxes in each sector:

 

Plenty of cash for further growth

As a shareholder in GFKL, you know that our Group has an excellent refinancing basis and a comfortable reserve of available liquid funds. In the second quarter, the issue of an unsecured promissory note bond with a volume of 100 million EUR opened up additional scope for financing our growth. The emission was quickly placed with 21 national and international banks – a clear vote of confidence in our corporate strategy and the potential of our Group.With the good results from the established sectors and the vote of confidence from the capital markets, we have also proved that in the medium term, GFKL is an attractive candidate for a stock market listing. However, here too it is important not to raise hopes too high, as GFKL is not a short-term candidate for the stock market. At present, the application for the approvals needed for a stock market flotation at the annual shareholders meeting on June 21 is more optional in character; we do not expect to be listed on the stock market within the next twelve months.The funds which have flowed to our company from the placement of the promissory note bond are earmarked for the further expansion of our Group. We are specifically planning the purchase of companies active in the leasing and collection sectors as well as the acquisition of non-performing loans. The first major transaction has been already carried out in May: the takeover of the majority of CajaSur Renting S.A. based in Seville. As a full-service vehicles leaser, this company is one of the ten most important providers in the Spanish fleet segment, and has a portfolio of approximately 14.000 vehicles with a portfolio value of approximately 170 million EUR. By entering the Spanish leasing and rental market, GFKL is continuing the expansion of its European business. In accordance with our market strategy, we renamed the company Universal Lease Iberia S.A.The positive development of business in the first quarter opens up new perspectives for the course of 2006, and is also an additional motivation for employees and management to maintain their commitment to the success of the GFKL Group.Yours faithfully,Dr. Peter JänschGFKL Financial Services AG



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