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July 1, 2010updated 12 Apr 2017 4:22pm

LVM reports upsurge in post-tax profits

Broker Tower Leasing saw its turnover reduced by more than a quarter in 2009, but its operating profit rise from £231,000 (276,752) to £292,000 over the year.

By Claire Hack

A&L leasing subsidiary sees major jump in after-tax profits.

 

Tower Leasing

Broker Tower Leasing saw its turnover reduced by more than a quarter in 2009, but its operating profit rise from £231,000 (€276,752) to £292,000 over the year.

According to the company’s directors’ report, Tower “has taken steps to ensure that it is in a good position to take advantage of any upturn in the economy while operating profitably in the current conditions”.

It adds that the directors are “confident” of Tower’s prospects for the future, as well as the profitability of the business.

The company remains among the larger players in the UK broker market and the sales-aid specialist was recently reported to be “in hiring mode” (see Leasing Life, May 2010).

 

Lombard Vehicle Management

The RBS subsidiary shifted confidently back into profitability in the year to 30 September 2009, according to its most recently published financial statements.

While the company suffered a post tax loss of more than £17m (€20m) in 2008, the company returned to form in 2009 with after-tax profits of £15.6m.

Turnover, however, dropped by 5.4% to £75.1m during this latest period.

Operating profit also rose significantly, up from a loss of more than £9m to a profit of £35.7m.

The return to profitability, the report states, took place in the light of the UK government taking control of the Royal Bank of Scotland Group in December 2008.

The following year saw the company cut all its broker ties, although deals were signed with a number of companies, including the Automobile Association (AA) for the supply of 167 recovery vehicles.

By early 2010, the company had signed a deal for the supply of 800 vans to Green Thumb, a UK lawn treatment business, and seemed to be showing signs that recovery had firmly taken root.

By May 2010, it had also secured a deal to become a vendor under an expanded UK commercial auction programme at Manheim Auctions.

The company also had transactions with the government on an arm’s-length basis and at 30 September 2009, balances with government and affiliated bodies totalled more than £1m.

 

Alliance and Leicester Commercial Finance Plc

Banco Santander leasing and general finance subsidiary Alliance and Leicester Commercial Finance Plc performed significantly better in 2009 than in 2008, according to its end-of-year report.

The report, covering the year to 31 December 2009, shows a small increase in turnover but a major jump in after-tax profit, from a loss of more than £45m (€54m) to a profit of nearly £22m.

Operating profits at the company, a subsidiary of Alliance and Leicester Commercial Finance (Holdings), itself part of Santander’s corporate banking division, also rose from £103.8m to £127.2m.

According to the company, this was owed to factors including an increase in rental income and a decrease in finance cost and administrative expenses.

Nevertheless, the tone of the report is somewhat circumspect, stating that there is a “reasonable” expectation that the company will carry on in operational existence.

Furthermore, the report states there is “uncertainty” over future funding as much of its finance comes from loans from intermediate parent Abbey National with no fixed repayment date, meaning that the loans are repayable on demand.

However, the risk is mitigated, according to the report, by the fact that the company’s funding from Santander has also been secured for the foreseeable future after the board of Santander UK confirmed it is a going concern.

The value of repossessed stock – including buses, coaches and commercial stock – in 2009 was just under a third of that in 2008, dropping from £3.9m to £1.2m.

The year also saw a number of resignations and appointments, with two directors leaving their posts and another three brought in.

At the beginning of 2009, the entire share capital of Alliance and Leicester Plc was transferred from Santander to Abbey National, also a subsidiary of Santander.

Abbey National is currently an intermediate parent to Alliance and Leicester.

 

GE Capital Ltd

GE Capital’s London-based outfit showed signs of continuing to be affected by the impact of the global financial crisis as sales fell 23%, due to “a reduction in activity for corporate and project finance work”.

Turnover also dropped from £12.8m (€15.3m) in 2008 to £9.87m in 2009, according to its non-consolidated financial statements.

The company’s principal activities are in “general corporate and project finance work”, of which leasing is a small part.

And although its pre-tax profit climbed almost 80% from £553,000 in 2008 to £994,000 in 2009, its after-tax profit fell more than 50% to £337,000.

Nevertheless, the report for the year ending 31 December 2009 states that “the directors are satisfied with performance of the company”.

It adds that “while market conditions in 2009 were challenging, resulting in reduced levels of business and cost reductions being made, expectations are that the business shall continue its regular operating activities in 2010.”

Among the principal risks and uncertainties for the year was an exposure to credit risk following the economic downturn, as well as “risks arising from non-compliance with FSA regulations”.

This risk, the report states, is managed through the company’s “procedures and policies”, as well as regular training for staff on compliance and a dedicated compliance officer.

Its parent company, General Electric Company, was recently downgraded to an AA risk rating, but GE Capital “has secured its planned long-term funding needs to cover its business activities in 2010” according to the report.

Things are also in place (see Leasing Life, May 2010) for ‘double-digit growth’ in GE Capital’s European leasing and vendor finance businesses, while new hires could also be on the cards.

Proposed growth will have a strong focus on the industrial segment, according to chief commercial officer Isabel Fernandez.

 

Company results

Alliance & Leicester Commercial Finance Plc

 

2009 (£000)

2008 (£000)

Change (%)

Turnover

145,936

142,925

2.11

Gross profit

142,744

141,982

0.54

Operating (loss)/profit

127,229

103,830

22.5

Pre-tax (loss)/profit

25,683

(60,956)

N/A

After-tax (loss)/profit

21,533

(45,212)

N/A

GE Capital Ltd

 

2009 (£000)

2008 (£000)

Change (%)

Turnover

9,865

12,838

-23.2

Operating (loss)/profit

877

990

-11.4

Pre-tax (loss)/profit

994

553

79.7

After-tax (loss)/profit

337

738

-54.3

Lombard Vehicle Management

 

2009 (£000)

2008 (£000)

Change (%)

Turnover

75,084

79,398

-5.43

Operating (loss)/profit

35,691

(9,064)

N/A

Pre-tax (loss)/profit

22,408

(23,640)

N/A

After-tax (loss)/profit

15,625

(17,220)

N/A

Tower Leasing

 

2009 (£000)

2008 (£000)

Change (%)

Turnover

2,502

3,375

-25.9

Operating (loss)/profit

292

231

26.4

Pre-tax (loss)/profit

281

217

29.5

After-tax (loss)/profit

199

152

30.9

Source: Leasing Life

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