Ann: Trading Update, Merger Update and Transformation Plan, page-60

incorrect in the case of ECX. The operating lease portfolio of motor vehicles and transport equipment far exceeds the exposure to Novated leasing.

MMS is the reverse with a far greater novated book.

To confuse the issue further every year leasing companies should review their op lease book and if it is out of shape potentially I.e consists of assets that will likely not realise their residual
exposure a provision should be made. This is a very subjective measure

originally Righttodrive was a convenient way of corralling out of shape assets, continuing their life span and depreciating accordingly with an assumption that eventually you can dispose without loss. Unfortunately if you don’t price your extended assets correctly the gap between book value and residual value doesn’t improve. If you get it right it is a great way to build equity.

To add additional complexity to the equation the majority of the book is fully maintained. This is also priced on a risk and reward basis. Fact is longer you run an asset the greater the maintenance risk. This is an equation that was poorly understood or alternatively strategically overlooked by those responsible.

There is no easy win here. One day if you have cocked it up you have to pay the piper. In most cases in the leasing industry the perpetrators usually retire to a bar somewhere and recite how good they were. They then pop up at another unsuspecting organisation and push the repeat button.

As a company with an appalling staff engagement in years past the good people continually left. They don’t want to play in a team that’s destined to come last. You are then left with the also rans that struggle to find alternate employment. Welcome to today.