Five Arrows Leasing Group
Limited
Seeing profit fall significantly in
the 12 months to 31 March 2009, Five Arrows Leasing Group Limited’s
(FALG) directors called the results “acceptable in difficult
circumstances”.
The group reported a pre-tax profit of £6.6
million (€7.6 million) for the year, down by 34 percent
year-on-year. Turnover, too, was down, by 17 percent to £20.5
million.
Although return on equity was also down – by 7
percentage points year-on-year – it was still a very acceptable 15
percent.
“FALG has performed well in what can only be
described as unique circumstances,” the directors said. “The niche
markets the group operates in are arguably too small to attract the
major finance companies. One of the benefits of a recession is that
competition becomes less active and this has been the case over the
last year.”
The NM Rothschild Group-owned financier holds
subsidiaries including Five Arrows Leasing, the technology lessor;
Fineline Media Finance, its broadcast finance division; State
Securities, the subprime machinery and vehicle finance provider;
and Specialist Fleet Services, the public sector fleet
provider.
While Five Arrows Leasing “continued to make
good progress” (see p18), Specialist Fleet Services – which
reported pre-tax profit of £2.6 million, compared with £3 million
the previous year – was hit by “disappointing” new business
volumes; and State Securities was “severely impacted” by the
recession, reporting profits of £3.5 million, down by 54 percent
year-on-year.
However, the directors added that prospects
for both companies were “encouraging”, and new business volumes
should pick up this year, even though the risk of bad debt would
continue.
“The performance of the group’s book in a deep
recession is a key risk,” they warned. “In particular, State
Securities is exposed almost entirely to the SME sector, as is
Fineline. We expect the current year to be challenging, with
impairments forecast to increase.”
The directors remained confident, however,
that because of the niche sectors in which the businesses operate,
their cautious approach would pay off.
They said: “Despite the difficult times ahead,
we are underpinned by a strategy of focusing on niche businesses
where barriers to entry are comparatively high, and management is
strong. This philosophy will continue over the coming year.”
Five Arrows Leasing
Limited
FALG’s largest subsidiary, Five Arrows Leasing
Limited reported stronger results than its parent.
While turnover declined 23 percent to £2.6
million, pre-tax profit only fell by 7 percent to £1 million, and
ROE was stable at 10 percent.
“The company reported a good performance
despite the difficult economic climate,” the subsidiary’s directors
said, adding that they too had benefited from operating in a niche
market.
However, they also warned that as margins are
starting to increase, there are signs of increased activity from
their competitors.
“We continue to take a cautious approach to
the current year as the UK economy continues to weaken and
availability of debt remains in short supply.
“Our portfolio has reduced in the year, but we
are hopeful that demand will increase in line with confidence both
from the business and consumer sectors.”
CNH Capital UK Limited
Meanwhile, at captive finance
company CNH Capital UK Limited, the directors said results for the
year ending 31 December 2008 were “satisfactory” and “in line with
expectations”.
CNH Capital UK, owned by Fiat Group, only
started trading in June, with aim of providing hire purchase,
leasing and other financial products to customers of Case-New
Holland’s UK dealers.
For the seven months it was trading, the
company reported a pre-tax profit of £439,490 on a turnover of
£863,794. At the end of the year, the balance sheet showed total
assets of £22.9 million.
“We continue to operate in a difficult
environment, and this trend is expected to continue this year,” the
directors said.
“But the UK is an important strategic market
for the retail finance business, and is important in enabling CNH
UK Ltd to market its products to retail customers.
“Our parent company is therefore committed to
providing liquidity to fund the anticipated future business
volumes.”
Econocom UK Limited
ICT equipment dealer and financier
Econocom UK Limited saw its results boom in the year ending 31
December 2008.
While turnover grew by 43 percent, from £4.5
million to £6.4 million, pre-tax profit jumped to £1 million, a 230
percent jump on the previous year’s £307,768.
“The launch of new products which started at
the end of 2006 continued through 2008, demonstrating the
capability of Econocom UK to support the complex products now
offered by the group,” the directors said.
The company’s balance sheet showed that
creditors were owed £2.3 million, however, up from £469,322 at the
end of 2007.
In a solvency statement, published last month,
the directors noted that “there are no grounds on which the company
could be found to be unable to pay its debts”, though, including
debts falling due in 2010.
Jason T Hesse
UK lessors – P&L account
| |
2009 (£m)
|
2008 (£m)
|
Change (%)
|
|
Five Arrows Leasing Group Limited
|
|
Turnover
|
20.5
|
24.5
|
(17)
|
|
Operating (loss)/profit
|
24
|
25.8
|
(7)
|
|
Pre-tax (loss)/profit
|
6.6
|
10
|
(34)
|
|
After-tax (loss)/profit
|
4.6
|
8.6
|
(47)
|
|
Five Arrows Leasing Limited
|
| |
2009 (£m)
|
2008 (£m)
|
Change (%)
|
|
Turnover
|
2.6
|
3.4
|
(23)
|
|
Operating (loss)/profit
|
2.7
|
2.9
|
(5)
|
|
Pre-tax (loss)/profit
|
1
|
1.1
|
(7)
|
|
After-tax (loss)/profit
|
0.7
|
2.6
|
(73)
|
|
CNH Capital UK Limited
|
| |
2008 (£m)
|
2007 (£m)
|
Change (%)
|
|
Turnover
|
0.9
|
n/a
|
n/a
|
|
Operating (loss)/profit
|
0.9
|
n/a
|
n/a
|
|
Pre-tax (loss)/profit
|
0.4
|
n/a
|
n/a
|
|
After-tax (loss)/profit
|
0.3
|
n/a
|
n/a
|
|
Econocom UK Limited
|
| |
2008 (£m)
|
2008 (£m)
|
Change (%)
|
|
Turnover
|
6.4
|
4.5
|
43
|
|
Operating (loss)/profit
|
0.9
|
0.2
|
402
|
|
Pre-tax (loss)/profit
|
1
|
0.3
|
229
|
|
After-tax (loss)/profit
|
1
|
0.3
|
229
|
|
Source: Leasing Life
|