Letter to shareholders for the first quarter of 2007

Essen, June 26, 2007

Dear Shareholders, dear Sir/Madam,

The business year 2007 got off to a successful start for GFKL – based on the excellent starting position which we have created through the consistent development of the GFKL Group.

The background of our strategy is the consideration that specialization not only creates competitive advantages but also entails concentration risks. GFKL enjoys the advantages of specialization without putting all its eggs into one basket: One the one hand, in our core business areas we are a highly specialized niche provider with market shares of up to 70%; on the other hand, the spread of our services protects us from excessive concentration risks. If a tightly focused company falsely assesses future developments, usually only little substance remains for implementing countermeasures..

No-one can predict the future with certainty. Therefore, we will continue focusing on our core business areas while safeguarding ourselves by combining them. Here profound marketing and operational synergies will support the sustained success of our business model.

Without a doubt, the most important keystone for our two main business areas -  leasing and collection -  is capital-market oriented refinancing. Through our securitization expertise and the strong balance of our leasing activities, we have been able to purchase extensive receivables and companies in the collection sector, thus becoming one of the most important German collection companies over the last three years. As our refinancing basis exceeds national boundaries, we will now repeat this success in other European countries and make GFKL one of the leading European leasing and collection companies.

The cross-company and cross-border standardization of databases and workflows in all individual entities of the Group is a prerequisite for successful asset-backed securities transactions. This brings us to the second keystone of GFKL’s business model, information technology. The backbone of GFKL has been, still is, and always will be electronic data processing.

Today, GFKL is a leasing company which markets the financing and IT services developed from its credit business successfully and profitably to third parties on a large scale. Thus, we generate sustainable earnings in all four business areas. Building on these strengths, we also achieved excellent business figures during the first quarter of the new business year.

Group sales were up 33 percent on the previous year, rising from EUR 192.1 million to EUR 255.5 million. At EUR 7.2 million (EUR 5.2 million), earnings before taxes increased by 39 percent. After taxes, the Group generated earnings of EUR 4.3 million (EUR 3.3 million), 31 percent more than in the previous year.

This consistent upwards trend is reflected in all segments:

• In the leasing segment, new business rose by 34 percent to EUR 178.2 million (EUR 132.5 million).
• In the collection segment, there was a significant increase in sales from EUR 9.1 million to EUR 23.1 million, only a quarter of which was due to acquisitions. This means that we booked approximately 40 percent of last year’s collection revenues in the first quarter alone.
• In the software business, a balance sheet related special effect has to be considered when comparing the quarters, as this led to an adjustment increasing the previous year’s sales to EUR 6.4 million. Adjusted by this effect, software sales rose by 9 percent from EUR 4.4 million to EUR 4.8 million.
• During the first quarter, the systems business rose by a gratifying 43 percent, with sales amounting to EUR 33.4 million.

Due to this very good first quarter, the GFKL Group has already exceeded the original, by all means demanding expectations for the entire year. On presenting our annual financial statement in 2006 for 2007, we forecast an increase in our earnings before taxes of 20 percent. We could not possibly improve on the momentum built up for the following three quarters, which will allow us to keep on writing GFKL’s success story.

Yours sincerely,

Dr. Peter Jänsch
GFKL Financial Services AG


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