Smartfundit misses out on higher turnover by not
consolidating earlier
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JCB Finance Limited
It has been another successful
year for JCB Finance Limited, which reported a pre-tax profit of
more than £5.1 million (€5.7 million) in the year ending 30
September 2008, according to figures just released. Although a 12
percent dip on 2007’s pre-tax profit of £5.8 million, it was still
a solid result.
The captive, which finances JCB
excavators and tractors and is owned by Royal Bank of Scotland
Group (RBS), financed agreements worth £557.1 million, also
slightly down on 2007’s £565.4 million.
Revenue, however, was up 16 percent,
reaching just over £47 million. Of that amount, £27.2 million was
attributed to hire purchase agreements, £18.2 million to operating
leases and £1.6 million to finance leases.
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By GlobalDataThis increased revenue was matched by
higher finance costs, though, which rose from £19.4 million to
£23.1 million in 2008.
“Considering the current market
situation, we are satisfied with the company’s performance for the
year, and do not expect any material change in the activities of
the company in any future developments,” said JCB Finance’s
directors.
The directors also stated that there
was no significant reduction in revenue forecast for the next 12
months.
“We will be guided by our parent
company in seeking further opportunities for growth,” they
added.
CIT Vendor Finance (UK)
Limited
Reporting last month its results
for the year ending 31 December 2007, CIT Vendor Finance (UK)
Limited (CIT VF) said it had made a pre-tax loss of £61 million, a
marked decline on the previous year’s loss of £1.4 million. After
tax, this loss increased to £79.5 million.
The lessor attributed the increased
losses firstly to a downgrade of future income projections, which
was caused by a write-down of a premium that it had paid for an
acquisition from Barclays worth some £50 million and deferred tax
assets of £18 million; secondly, to the increase of credit losses
reserve of £7.9 million; and thirdly to cost inefficiency,
accounting for the remaining £3.6 million.
Turnover at CIT VF reached £86.3
million in 2007, an impressive 127 percent rise on the previous
year’s £38.1 million.
At the same time, cost of sales grew
fourfold, from £10.1 million to £46.7 million, leading to concern
about the business’s spiralling operating expenses.
The company’s directors have therefore
launched a review of operating expenses aimed at enhancing
profitability.
With a business model based on vendor
partnerships, the lessor counts, among others, partnerships with
Avaya, Kodak and Microsoft. These partnerships can be quite
lucrative – for example, its partnership with Microsoft generated
new volumes of managed assets worth £46.7 million in 2007, although
this also led to it owing an origination fee of £1 million to
Microsoft.
Smartfundit.com
Limited
Following a much-publicised £3.5
million venture capital injection into the business,
Smartfundit.com Limited was acquired by Corporate Computer Lease
Limited (CCL) in December 2008.
CCL, a technology lessor jointly owned
by Smartfundit.com’s founders, Suki Gallagher and Justin Floyd,
made a pre-tax profit of £34,799 in the year ending 31 December
2008, which included one month’s trading results for
Smartfundit.com in the company’s profit and loss account.
At Smartfundit.com, however, a pre-tax
loss of £349,878 was recorded in the 10 months ending in December,
up from the previous full year’s pre-tax loss of £1 million.
The online portal saw turnover nearly
double, from £2.4 million to £4.4 million, in 2008.
At CCL, turnover totalled £5.8 million
in 2008, a fall of some 30 percent on the previous year’s £8.1
million.
However, the company’s directors said
that if the two companies, CCL and Smartfundit.com, had been
consolidated for the whole of 2007 and 2008, turnover would have
grown by 16 percent.
“[We] are satisfied with the trading
results for the period under review as there was continued growth
in demand,” they said.
Indeed, gross profit margin improved
by 6 percentage points, from 20 percent to 26 percent.
“[We] believe that the group will
continue to achieve turnover in line with our business plan as we
are seeing strong demand for our services and have a wide spread of
financial partners with whom we work,” the directors added.
St Helen’s Finance
plc
Asset finance provider St Helen’s
Finance plc also recorded a loss in 2008. For the year ending
31 December 2008, St Helen’s made a pre-tax loss of £217,194,
improving on 2007’s loss of £312,391.
The company’s turnover grew by an
impressive 75 percent year-on-year, however, to £1.3 million, and
was profitable on a month-by-month basis until the end of the first
half of the year.
Turnover was mainly achieved through
finance lease interest income, which brought in some £884,572,
followed by fees and sundry income of £188,106, loan interest of
£187,633 and hire purchase interest income of £68,325.
“We largely achieved expectations in
terms of turnover, however,” St Helen’s directors said.
“With the unprecedented downturn of
the economy and general tightening of the availability of credit
facilities, the company has been squeezed, with the result that our
underlying customers have suffered.”
As a result, the directors have taken
steps to improve the business it writes, including a reduction in
the number of approved brokers, more stringent credit criteria for
its customers and a decrease in the average exposure of each
transaction.
In addition, the business has opened
up a new direct sales initiative aimed at boosting its fee income
earning opportunities.
Looking forward, however, the
business’s main risk is its ability to raise additional funds to
drive growth and profitability, the directors said.
“Like most other companies, we have
experienced a mixed year,” said Rick Abbott, the company’s
chairman.
“However, we continue to concentrate
on tight credit control and collection and are confident that our
management platform is well equipped to see us through these
turbulent and uncertain times.”
Jason T Hesse
