· Lease portfolio stable compared to year-end 2008 at approx. EUR 14 billion;
· Results substantially negatively affected by reduced prices for end of contract vehicles;
· Margins on new contracts maintained;
· Increased capitalisation ratios with BIS ratio at 13.6% and Tier 1 at 11.6%;
· Newly raised long term debt in 1H09 of EUR 4.9 billion used to fund new lease contracts;
· Savings bank initiative in the Netherlands on track.
LeasePlan key figures (amounts in EUR million)
Jun 09 Dec 08
Lease portfolio 14,147 14,204
BIS ratio 13.6% 13.2%
Tier 1 ratio 11.6% 9.8%
Number of vehicles (in 000)
1,368 1,391
1H09 1H08
Profit for the period 61 112
The CEO of LeasePlan, Vahid Daemi, commented on the results: “I am pleased with our positive performance in the first half of 2009. Although the global economic crisis has deepened and given that we focus on maintaining our margins instead of growth, we managed to maintain the value of our lease portfolio in a contracting market, reconfirming and reinforcing our global leadership position. The quality of our portfolio is also evidenced by the strong partnership with our clients to jointly get through this crisis. Our clients show great understanding of the impact of the economic turmoil and we are offering increased contract flexibility and robust savings on their total cost of ownership. As anticipated, our results have been negatively affected by the current economic conditions that led to unprecedented losses in the remarketing of end of contract vehicles across the world. Yet more than ever, we benefit from the investments made in our high quality risk-management processes and our global presence, which enabled us to better control the risks related to reduced residual values. In view of these circumstances, our solid profit in the first half of 2009 marks a good performance and indicates the structural health of our business model and strength of our company.”
Solid results in difficult circumstances
Whereas most economies reported negative growth and companies are downsizing, LeasePlan maintained the total value of the lease contracts at approximately EUR 14 billion. Adjusted for currency differences, the portfolio value decreased by 2.7% compared to the end of December 2008. The number of vehicles also slightly decreased, reflecting initiatives of clients downscaling their company car fleets.
Net profit for the first half of 2009 is EUR 61 million, down from EUR 112 million in the same period last year. This reduction is predominantly attributable to the reduced prices for used cars following the severe downturn in that market. The realised negative sales result from returned cars in the first half year amounted to EUR 66 million (versus a gain of EUR 12 million in 1H08). Additionally, LeasePlan has taken a charge of EUR 36 million in 1H09 relating to expected non-realised negative results on vehicles returning in the future. Following the sharp decline in vehicle prices particularly during the last quarter of 2008, on average we have seen a marked recovery across countries since then.
Results were also negatively impacted by a larger than usual impairment for receivables of EUR 24 million, compared to EUR 9 million in 1H08.
Net profit in 1H09 was positively affected by an incidental after tax profit in our Treasury operations of EUR 33 million, which comprises a positive result due to the repurchase of liabilities and a de-designation of interest rate contracts that have become ineffective under IAS 39.
Funding activities of LeasePlan
LeasePlan adheres to a matched financing principle in order to eliminate (re)financing risk, meaning that the existing lease vehicles are always financed for the term of their contract. As a consequence new funding is required on a regular basis as a reflection of new contracts generated to provide clients with new vehicles.
For approximately two years now, LeasePlan and other financial institutions have been affected by malfunctioning capital markets. LeasePlan has availed of the possibility to issue debt under the Dutch State Guarantee Scheme. This enabled us to continue to provide financing to our clients by means of operational leasing. Spread over five issues since December 2008, LeasePlan has raised EUR 6.3 billion in total. The Dutch State charges a fee associated with the issuing of debt under the Guarantee Scheme. For the current guaranteed issues for LeasePlan this fee equals approximately EUR 60 million annually.
LeasePlan is continuing to pursue a further diversification of its funding. In addition to the current sources of funding, such as public capital and money markets, private placements and securitisation, LeasePlan is on track in developing a savings bank for the Dutch market.
Currently LeasePlan's debt is rated by Standard & Poor's, Moody's and Fitch, all at the A-/A3 level.
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