| Asset
Finance & Leasing News |
Leasing News |
![]() |
||
|
Introduction Vendor Finance Operating Lease HP, Lease Rental and Cash Questions or Enquiries Asset Finance Services Public Sector Finance Leasing News |
A
Coup for HP Financial Services: In April a major public sector framework
agreement for operating leasing was awarded to HP Financial Services (HPFS).
The scope covers all UK Local Authorities schools (Community schools) and many
Foundation, Academy and Independent schools. EU procurement rules are complex. To handle
them in a correct and compliant way requires time and experience that schools
are seldom resourced to match. Many Local Authorities also see the cost savings
in utilising contracts that have been pre procured. While this award does not
preclude other participants from the education market it does offer HPFS the
easiest to use and compliant procurement methodology. While this type of exclusivity brings
significant advantage to HP Financial Services a single provider framework
agreement is unlikely to be the best option nationwide. Other Local Authorities
may well address this by procuring similar arrangements and the driver for this
must be HPFS’s competitors. Hopefully the process will show to the
education sector that operating leases do offer value for money and the best
way of achieving this is through regular fair, open and transparent tendering. To fully exploit the market operating lease
financiers are going to have to understand the public sector procurement
environment a subject that HPSF seem well versed in. WWW.ASSETFINANCEUK.COM 1/5/2010 A
Drip Drip of Bad News While
CEOs may be making positive noises about signs of an upturn a sample of the
press releases published by Leasing Life in the opening months reflects the
more somber results from 2009 Barclays leasing
connected to parent’s drop in assets A downturn during
2009 at Barclays Asset & Sales Finance has had a major knock-on effect on
its parent’s commercial division. A 10 percent fall in
total assets in the bank’s commercial arm has been driven “by
reduced overdraft borrowings and lower volumes in Barclays Asset and Sales
Finance business”. The announcement,
reported last month in Barclays financial statement for year end 2009, also
stated that “the number of customers [of the corporate arm] fell 6
percent primarily as a result of reductions in exposures to high risk sectors
within Barclays Asset and Sales Finance”. A Barclays spokesperson
commented that Barclays Asset Finance had “experienced a fall in both
customer numbers and volumes in 2009”. He linked this fall
to “reduced customer demand during the deteriorating economic
conditions” and that the “fall in Barclays Asset Finance numbers is
broadly consistent with that experienced right across the UK Asset Finance
Market in 2009”. He added:
“During recessions, many businesses choose to conserve cash and cut back
on business investment.” Total assets at
Barclays Commercial Bank dropped by £8.5 billion to £75.5 billion.
A fall in the division’s pre-tax profits of 41 percent to £749
million was driven “by significantly higher impairment”. Close Asset Finance
reports £13m profit Close Asset Finance (CAF) posted
a profit of £13.3 million for the year leading to 31 July 2009, down 12.6
percent down on the previous year's total of £15.2 million. CAF said that it had achieved
"satisfactory" results for the year, adding: "The company's
financial position at the year end (in both net assets and cash terms) remains
strong, in particular when considering the current economic climate, and is
consistent with the prior year." General Capital
collapses into administration General Capital
Venture Finance Ltd and General Capital Finance Ltd have entered administration
after spending the last 15 months winding down their portfolios. Tarun Mistry, the head of leasing and advisory services at Grant
Thornton, confirmed that he had taken over as the administrator of the troubled
companies that specialised in asset finance, venture
finance and property finance. Steve Hartley,
General Capital’s chief executive, who described the move into
administration as “inevitable”, said the “credit crunch had
kicked the previous management of the business”. He added that since
the company was effectively “insolvent” when he took it over in
March 2008, he had therefore spent the last 15 months “carrying out the
process of collecting its book”. A statement issued
around the time of Hartley’s arrival showed that the company’s
pre-tax profits for the year to December 2007 totalled
£4.1 million. However, it was
subsequently announced that these preliminary results were wildly overstated,
and that the real figures for 2007 revealed losses of £1.9 million. This news caused the
company’s shares to enter freefall and the resignation of Mark Edworthy, its MD, and Jonathan Hill, its CEO. ING Lease and Aldermore sign deal with Syscap Syscap Holdings
Limited has negotiated a series of new debt packages in the wake of continuing
recessionary- related difficulties at the IT lessor. Last month, Syscap agreed with Royal Bank of As well as having
received confirmation of continued financial support from the directors of AnaCap, a private equity fund which owns major stake in Syscap, the lessor has also in
recent weeks negotiated fresh wholesale finance facilities with ING Lease UK
and Aldermore Bank. Syscap, which saw
its staff headcount tumble from 116 in 2008 to 71 at the end of its last
financial year, suffered an £8.2 million pre-tax loss during its
financial year to March 2009 and a 20 percent decline in new business between
March and December of last year. A reduction in
operating expenses, however, following a restructuring of the company last year
meant that during the last nine months of 2009 Syscap’s
EBITDA improved YoY by 30 percent. Mark Gidge, its chief sales officer, is understood to have left
the company in recent weeks. LeasePlan posts lower profit, sees
recovery LeasePlan recorded a
net profit of €165 million in 2009 (down from €202 million in
2008), but started to see recovery in the second half of the year. The Dutch lessor said that the profit drop derived from reduced
prices for end of contract cars, which led to a loss of €97 million, and
larger-than-usual impairment for receivables of €56 million. The company said
that overall exposure to credit risk remained “modest, as witnessed by an
average impairment for receivables of 20 bp of
average risk weighted assets over the past 4 years”. The total value of LeaePlan’s lease portfolio had a 4 percent decrease
to €13.6 billion. LeasePlan CEO Vahid Daemi said: “I am
very pleased with our positive performance in 2009 and particularly with the
improvement in the 2nd half of 2009. “Although the
global economic crisis persisted during a large part of the year, we were able
to maintain our market leading business franchise and achieve positive
results.” The company has
also completed the change in shareholding, with investment company Fleet
Investments B.V. taking a 50 percent stake in the lessor.
Volkswagen will continue to maintain the remaining 50 percent. Published Leasing
Life FEB 2010 CIT rejects loan and loses vendor
finance deal. Microsoft has terminated its vendor-financing deal with CIT
Group, Stacie Sloane, director of marketing for Microsoft’s worldwide
licensing and pricing group, confirmed. CIT, which secured emergency financing from private investors
earlier this week, has been desperately trying not to enter bankruptcy
protection in the Confirming the termination of the vendor finance deal –
which will be a major setback for the troubled lessor
– Microsoft added that a plan was in place for new customers to receive
financing through other vendors. “We will ensure any credit-approved customer financing
commitments are honoured,” Sloane said. “Microsoft works with a number of financial institutions,
including CIT, that provide vendor services and we continue to offer financing
to qualified customers as a way to pay for software and services. Microsoft
Financing has contingency plans in place to protect our customers’ and
partners’ needs.” Separately, according to media reports, CIT has rejected an
offer from GE Capital for $2 billion (€1.4 billion) in senior secured
loans backed by aircraft. It has been reported that CIT rejected the loans from GE Capital
in favour of $3 billion in loans from a group of
bondholders, from which it has already received $2 billion in cash. Bloomberg reported that the troubled lessor rejected the deal, which would have been less costly
and required fewer assets as collateral, because the cash would not have been
provided until the end of July, due to a delay in structuring the deal.
CHG-MERIDIAN take over Wyse
Leasing World 06/07/2009
NHS PASA To Close NHS PASA, the health service’s purchasing and supply agency is to be
closed within the next 12 months. In a move that will have major ramifications
for healthcare recruiters, it is to be replaced by a more commercially focused
regime. PASA’s functions will be taken
on by Buying Solutions, and a series of regional support units owned by the
NHS. These units will provide a single point of contact to suppliers in each
region. www.recruiter.co.uk 29/5/09 Budget 09 Today’s
Budget recognises that incentives for business and
personal investment can help lift the
Accounts proposals threaten leasing shake-up
Companies that rely on leasing could see their balance sheets balloon
under proposed accounting changes as industry experts warn the new rules could
result in a direct hit to profits and make accounts harder to understand. The comments come after a joint proposal last week by the
International Accounting Standards Board and its Commonly leased objects range from aircraft to car fleets
to photocopiers. Current rules divide such contracts into either operating or
finance leases. Only finance leases – a small minority of the contracts
– are reported on a company’s books. Most agreements are classified
as operating leases and do not appear. Accounting rulemakers want to
end the distinction
between the two classes, claiming that the current rules allow two very
similar contracts to be treated very differently which makes it hard for
investors to compare companies. They also worry that many leases are
deliberately structured to meet the criteria that allow them to remain off the
books, in a form of off-balance sheet financing. But leasing organisations have
warned that the effects of the rule changes would be felt disproportionately by
smaller companies who are more likely to use leases as a form of financing. Kenneth Bentsen, president of the US Equipment Leasing
and Finance Association, said: “If the proposed changes do not reflect an
appropriate balancing of costs and benefits, they could result in an
unwarranted increase in cost of capital.” Larger balance sheets resulting from the reporting of
more leases could also affect existing agreements such as banks loans and bond
financing, depending on the covenants attached to the loans. Changes in the
value of leases might also be reported through the income statement, under the
proposals, potentially affecting profits. Airlines, which usually lease at least part of their
fleet, are the most often cited example of leasing and analysts who have had to
trawl through the footnotes to find the details of airlines’ operating
leases have been arguing for the rule change. But leasing industry experts point out that the focus on
the airlines industry distorts the effect the new standard could have.
According to Mark Venus, chairman of the accounting committee at Leaseurope, the global airplane fleet consists of some
19,000 jets, only a portion of which are leased. At the same time, the top 100
leasing companies in Copyright The
Financial Times Limited 2009 By Jennifer Hughes in Published:
March 22 2009 22:42 | Last updated: March 22 2009 22:42 Downturn takes toll on PFI deals
Fewer deals were signed under the private finance initiative last year
than at any point since the PFI took off a decade ago, according to an
authoritative database. The credit crunch contributed heavily to just
34 PFI deals being signed last year, after at least 60 deals were signed every
year over the past decade, according to Public Private Finance magazine.
Hospital deals fell to just seven last year, against 20 in 2007, while just
three waste management deals were signed. The economic conditions also mean big deals
such as the £4.5bn M25 widening, the M80 in Scotland and Britain’s
biggest waste management project in Greater Manchester are still struggling to
raise the money needed, with some practitioners arguing that further government
guarantees, or public sector funding, will be necessary. Analysis of last year’s deals comes as
the National Audit Office warned on Tuesday that both central and local
government faced potentially massive European Union fines for failing to reduce
landfill if a string of PFI waste management schemes were not signed soon. Fines “could run into several hundred
millions of pounds”, the NAO said. Projects currently in procurement
“face difficulties in obtaining private finance”, it said, adding
some schemes will have to be financed more conventionally. The Greater Manchester Waste Disposal
Authority has already had to agree to find an additional £70m from its
own borrowing in order to ensure its £600m waste scheme is fully funded.
There are concerns that additional public sector cash may also be needed to finalise the M25 deal. One leading practitioner said that raising
private finance remained “a nightmare” with banks still reluctant
to lend. By contrast, Tim Byles,
chief executive of Partnerships for Schools, said half a dozen or so banks were
returning to the big schools market, where the projects were smaller, although
they were limiting the amount each would lend on any given project. Deals were still being done, he said. But the
Building Schools for the Future project was still “not out of the woods
yet” despite an agreement from the European Investment Bank to put
£300m into the scheme, and the insurer Norwich Union entering the schools
market for the first time. David Metter, chairman of the PPP Forum, the
trade body for the industry, said some additional Treasury guarantee might be
needed to get funds flowing into infrastructure projects that the government
wanted to see built to combat the downturn. “The risk to the government
of doing that would be small,” he said. “In effect, it would be
guaranteeing its own payments for the service charges, or unitary payments that
it makes on projects.” The Treasury declined to discuss the idea of
further public sector support, arguing it would take time for the measures it
had already taken to take effect. But it added that it “will do what it
takes” to ensure that projects late in procurement did reach financial
close. Copyright The Financial Times Limited 2009 By Nicholas Timmins, Public Policy Editor Published: January 13 2009 22:43 | Winners and losers: The two of the major news distributors for leasing news have published contrasting experiences of the current difficulties. (See below)
Leasing World http://www.leasingworld.co.uk
It’s
not all Doom and Gloom in the Leasing Market Source Leasing Life: ·
De Lage Landen continues to be solid earner for its Dutch parent Rabobank despite the lessor
having decided this year to focus on developing margins rather than its portfolio.Compared with some parts of the bank De lage Landen has performed
reasonably with year-on-year profits for the first half of 2008 up 3 percent, a
total of €112 million. In contrast net profits Rabobank’s
real estate arm declined 16 per cent during this period, and 88 per cent in its
wholesale and international retail banking arm.Its
lease portfolio has grown 4 per cent since June 2007 to reach €21.6
billion, down on the 10 per cent upturn it saw during H1 2006 and H1 2007. De Lage Landen attributed this
slowdown to the fact “growth was restricted by the decline in value of
the US dollar”. ·
HP Financial Services, a subsidiary of Hewlett Packard, saw earnings grow
year-on-year in its third quarter by 30.7 per cent to reach
£27.4m.Earnings grew at almost twice the rate of revenues, which were up
year-on-year by 17 per cent to reach £314.3m.Its Q3 figures also reported
that financing volumes rose by 15 per cent and net portfolio assets increased
by 13 per cent. Operating margins climbed to 7.5 per cent, compared to 6.7 per
cent this time last year. Hewlett Packard’s third quarter net revenue is
up 10 per cent, or £1.5bn, and GAAP operating profits up by 20 per cent
to £1.3bn ·
Societe Generale’s
financial services division has posted Q2 net banking income
results of €824m compared with €688m for the same quarter last
year, a rise of nearly 20 per cent. The division - which includes equipment
finance, operational vehicle leasing and fleet management and IT leasing and
management - is a core activity alongside retail banking arm, and generates a
significant proportion of revenue, around 66 per cent in H1 08 and 61 per cent
for the same period last year. ·
Hitachi Capital Vehicle Solutions has announced a 16 per cent increase in profit,
reporting an operating profit of £10.8m (2007: £9.3m) during the 12
months to 31 March 2008 across its car and commercial divisions. ·
Under fire UK bank HBOS' H1 results show a slight increase
in its operating lease rental income to £659m from £646m in
the same period in 2007, while operating lease depreciation stood at
£505m, up from £493m. ·
Alliance & Leicester commercial banking recorded a core
operating profit increase of £11m to £89m for the first half of
2008. The division’s total revenues reached £265m, which comprised
46 per cent of the group’s revenue total. The division’s net
corporate lending was £438m and corporate lending balances were
£8.2bn for the end of June 2008. The growth in balances reflects both new
lending and a lower level of redemptions, as corporate customers decrease their
levels of refinancing due to market difficulties, the interim statement said. ·
German
IT equipment lessor, Grenkeleasing
AG, recorded a
net profit of €16.3m for the first half of 2008, up five per cent on the
same period in 2007. Earnings per share jumped to €1.19 from €1.14
over the same period and earnings before interest and tax increased by a
marginal €0.3m from H1 2007 to €23.1m for H1 2008. ·
Caterpillar Financial Services, which is part of Caterpillar’s global
Caterpillar Financial Products’ division, recorded strong new business
and profit growth of six per cent for Q2 2008. Its profit after tax
reached U$4130m for Q2 2008, up from US$123m for Q2 2007 and its revenue also
saw an increase of five per cent to US$785m for Q2 2008. ·
Despite market
turmoil, Daimler
Financial Services has reported
modest growth. It increased its total contract volume by four per cent to
€60.4bn in the second quarter of 2008 and new business reached
€7.8bn, up six per cent on Q2 in 2007. |
|||||||||||||||||||||||||
|
|
![]() |
News |
(c) Copyright 2009 Digital Networks Limited