Ambitions and outlook for 2005
Financial results
-
45 Rabobank Group Annual Report 2004
Core activities
European lease portfolio remains stable
In Europe, the lease portfolio remained stable at EUR 7.0 billion during
2004. Adjusted for the acquisition of Telia Finans and the transfer of the
real estate financing activities to FGH Bank, growth amounted to 11%.
In 2004, De Lage Landen, which already has a prominent position in
lease activities in the American healthcare sector, launched similar
activities in Europe. The number of international vendor programmes
grew further. For example, new programmes were rolled out for
McCormick and Cisco in Europe. The number of global programmes
also increased, with Steelcase, IBM and Microsoft, among others.
In the Netherlands, collaboration with other Rabobank Group entities
is very important. In 2004, De Lage Landen, together with the local
Rabobanks, introduced the Consumer Finance product. This is a form
of leasing that can be purchased via the local Rabobanks and that
businesses can offer to consumers buying consumer durables, such as
stairlifts, security installations and wheelchairs. In addition, the first steps
were made in the field of remarketing. Under this new form of servicing
to the local Rabobanks, objects that become available from financing
are appraised and if possible resold, with De Lage Landen acting as an
intermediary. The collaboration with the local banks was excellent in
2004. New contracts for a record total amount of EUR 600 million were
concluded via the local Rabobanks.
American activities expanded
The activities in America were expanded significantly last year. The lease
portfolio grew by more than 13% to EUR 5.9 billion despite the weaker
US dollar. The Flealthcare and Office Equipment business units welcomed
high-profile clients like Bayer Flealthcare and Carl Zeiss. In Brazil, where
De Lage Landen is active in the food agri sector, leasing business grew
stronger than expected. Leasing business in Canada remained at a simi
lar level as last year.
Operating expenses increased by 17% in the year under review to
EUR 358 (305) million, largely as a result of a 20% increase in staff costs.
The number of FTEs grew by 13% to 2,749. The item value adjustments to
receivables, which provides an insight into risk-related costs, decreased
by EUR 4 million to EUR 71 (75) million, corresponding to 56 basis points
of the average lease portfolio.
Limited impact of IFRS
The introduction of the new IFRS accounting standards is expected to
have only a limited impact on De Lage Landen's financial reporting.
De Lage Landen believes it will be able to turn in a good financial and
commercial performance again in 2005. If the dollar remains stable, a
further improvement in result of 10 to 15% is anticipated.
De Lage Landen aims at further expansion of its international network.
It is expected that an office in Japan will be opened in 2005 and perhaps
in China as well. In addition, De Lage Landen is investigating the
feasibility of expanding its country network to Central and Eastern
Europe. De Lage Landen operates a selective acquisition policy.
Acquisitions are made only if they add value for the long term.
www.delagelanden.com
New offices in Asia
Activities in Southeast Asia, Australia and New Zealand are still relatively
limited. De Lage Landen opened offices in South Korea and Singapore
in 2004 in order to be able to serve international clients worldwide.
The office in Singapore serves as head office for the entire region.
De Lage Landen already had an office in Australia, which services New
Zealand as well.
Operating profit up 12%
With operating profit before taxation up 12% to EUR 212 (189) million,
De Lage Landen produced a handsome result improvement in 2004.
Income rose by EUR 72 million to EUR 641 (569) million, a rise of 13%.
Interest income, which represents more than 80% of total income, was
6% higher at EUR 520 (491) million.
Results (in EUR millions)
2004
2003
change
Interest
520
491
6%
Commission
36
34
6%
Other income
85
44
93%
Total income
641
569
13%
Staff costs
212
176
20%
Other operating expenses
146
129
13%
Total expenses
358
305
17%
Gross profit
283
264
7%
Value adjustments to receivables
71
75
-5%
Operating profit before taxation
212
189
12%
Loans portfolio (in EUR billions)
13.0
12.3
6%
Europe
7.0
7.0
0%
USA
5.9
5.2
13%
Rest of the world
0.1
0.1
Risk-related costs (in basis points)
56
64
-12%
FTEs
2,749 2,424 13%
