Lincoln Financing Holdings Pte. Limited Q4 results 23 March 2017 This report provides the unaudited combined accounts for Lincoln Financing Holdings Pte. Limited (the Company ), its finance subsidiary Lincoln Finance Limited (the Issuer ) and its holding subsidiary LP Group B.V. ( LP Group ), and also incorporates the accounts for LeasePlan Corporation N.V. ( LeasePlan ) for the period ending 31 December. The Company is incorporated in Singapore and operates as a holding company for the investment in LeasePlan by a consortium of long-term responsible investors including leading Dutch pension fund service provider PGGM, Denmark s largest pension fund ATP, GIC, Luxinva S.A., a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and investment funds managed by TDR Capital LLP (the Consortium ). The Issuer is a wholly owned subsidiary of the Company, incorporated in Jersey for the purposes of raising acquisition finance. LP Group is a wholly owned subsidiary of the Company incorporated in the Netherlands for the purposes of directly holding the investment in LeasePlan. The acquisition of LeasePlan by the Consortium was completed on 21 March. The Issuer issued 1,250 million 6.875% Senior Secured Notes due 2021 and $400 million 7.375% Senior Secured Notes due 2021 (collectively, the senior secured notes ) on 16 March to finance a portion of the purchase price for the acquisition of LeasePlan. The Company and the Issuer were each incorporated in March 2015, and LP Group was incorporated in February 2015, but each had no material trading, assets or liabilities prior to the issuance of the senior secured notes and the completion of the acquisition and therefore no prior year comparison figures are included in this report. These accounts provide combined financial information of the Company, the Issuer and LP Group and provide a consolidated position including LeasePlan. For detailed information on LeasePlan reference is also made to its published Q4 report on https://www.leaseplan.com/
Given the completion of the acquisition on 21 March, the consolidation of LeasePlan, and particularly of its results, takes effect as of 31 March. The 31 March balance sheet of LeasePlan is considered the opening balance sheet for the Company and LP Group in their consolidation. The investment in LeasePlan is valued by LP Group and the Company on their balance sheet at the level of the net equity value, including appropriation of net result. In accordance with IFRS requirements, a purchase price allocation process has been completed for LP Group in. This purchase price allocation could be subject to reassessment in 2017. This purchase price allocation process has identified intangibles and any remaining goodwill representing the difference between the 3,531.5 million purchase price, the receivable on LeasePlan that LP Group obtained for the 2015 dividend of 265.5 million and the net equity value of LeasePlan as per the opening balance sheet date of 31 March. With regard to the latter, reference is made to LeasePlan's accounts for the quarter ended 31 March, which show equity of 2,901.4 million after deduction of the 2015 dividend of 265.5 million. With respect to the income statement, these combined results show the increase in net equity value of LeasePlan over the last nine months of, being the reporting period since the effective date of consolidation of 31 March. The income statement also shows the accrued interest expense on the senior secured notes and certain expenses incurred in relation to the acquisition and the financing thereof. The latter expenses are partly depreciation of capitalized expenses that are depreciated over the life time of the senior secured notes, and partly expenses of a one-off nature. Therefore the results of Q4 are impacted negatively by the expensed acquisition related costs, and hence the results shown here will not be directly comparable to expected future results, in which substantially less expenses will be incurred. The consolidated accounts do not provide information on the operational performance of LeasePlan, the single (indirect) investment made by the Company. For information on the operational performance of LeasePlan, please refer to its published results for Q4, which are available at: https://www.leaseplan.com/ In Q3, LeasePlan declared an interim dividend of 143.3 million, which has been paid on 3 October. Note: Defined terms used but not defined in this report have the meaning given to them in the offering memorandum for the senior secured notes issued by the Issuer.
Net debt position The debt of the Issuer, which is consolidated by the Company in addition to the debt of LeasePlan, amounts to 1,544 million, representing the net value of the 1,250 million bonds and the $400 million bonds issued to finance the acquisition of LeasePlan. The net value reflects the nominal value of the notes at current USD/EUR rate, and a deduction for capitalised fees in relation to the issuance of the senior secured notes. The Company, the Issuer and LP Group have a total cash balance of 591 million. This includes 279 million in the Interest Reserve Account ( IRA ), and 194 million in the Interest Coverage Account ( ICA ). This provides a combined IRA and ICA balance of 473 million, which represents 4.4x the annual interest expense of the senior secured notes. In addition to the balances of the ICA and IRA, the Company, the Issuer and LP Group have further cash balances of 118 million.
Financial statements Income Statement Notes LeasePlan Corporation N.V. Company Issuer & Group (delta) Company Consolidated Consolidated Profit & Loss 01.04-31.12 01.01-31.12 01.01-31.12 In thousands of euros EUR 000 EUR 000 EUR 000 Revenues 6.319.589-6.319.589 Cost of sales (5.510.232) - (5.510.232) Gross margin 809.357-809.357 Director Fees - (44) (44) Staff expenses (503.481) - (503.481) General and administrative expenses 9 (244.852) (4.283) (249.135) Acquisition related expenses 9 - (53.430) (53.430) Depreciation and amortisation 2 (42.857) (11.200) (54.057) Impairment charges on loans and receivables (16.404) - (16.404) Total operating expenses (807.594) (68.956) (876.550) 39.068 16 39.084 Other operating incomes 39.068 16 39.084 Operating result 40.831 (68.941) (28.110) Share of profit of investments accounted for using the equity method 3.207-3.207 Interest and similar income 578.983-578.983 Interest expenses and similar charges 10 (244.139) (99.443) (343.582) Net income from other financial instruments at FVTPL 6-16.328 16.328 Unrealised gains/(losses) on financial instruments 12 9.418 (21.666) (12.248) Financial result 347.469 (104.782) 242.687 Result of ordinary activities before taxation 388.300 (173.723) 214.577 Income tax 11 (80.267) 10.046 (70.221) Result of ordinary activities after taxation 308.033 (163.677) 144.356 Profit from discontinued operations net of tax - - - Consolidated Profit for the period 308.033 (163.677) 144.356 Attributable to: - Owners of the parent 308.033 (163.677) 144.356 - Non-controlling interests - - - Total Consolidated Profit for the period 308.033 (163.677) 144.356 Consolidated statement of comprehensive income Items that will not be reclassified to profit or loss Remeasurement of post-employment benefit reserve, before tax 3.717 (3.717) - Income tax on post-employment benefit reserve (1.156) 1.156 - Subtotal changes post-employment benefit reserve, net of income tax 2.561 (2.561) - Items that may be subsequently reclassified to profit or loss Changes in cash flow hedges, before tax 11.234 (11.234) - Cash flow hedges recycled from equity to profit and loss, before tax (5.237) 5.237 - Income tax on cash flow hedges (1.499) 1.499 - Subtotal changes in cash flow hedges, net of income tax 4.498 (4.498) - Exchange rate differences 2.503 (2.503) - Other comprehensive income, net of income tax 9.562 (9.562) - Changes in post-employment plans in associates 398 (398) - Total comprehensive income for the period 317.993 (173.637) 144.356 *Not Quarter 4 of LeasePlan but reflects period since effective consolidation date of 31 March. **For comparison reason, note that some reclassifications and or adjustments were made in Q4 vs. Q3: - In Q4, the Purchase Price Allocation including the additional Goodwill of 57 M, which equal the Deferred Tax Liability, has been reflected at Company consolidated level. - In Q4, the VAT and CIT position have been reflected at Company consolidated level, with VAT receivable of 1.7 M and CIT receivable of 10 M. - In Q4, 4 M were reclassified from Acquisition related fees to G&A expenses. - In Q4, the other intangible assets have been amortized for 11.2 M.
Balance Sheet Notes LeasePlan Corporation N.V. Company Issuer & Group (delta) Company Consolidated Consolidated Assets as at 31.12. 31-12- 31-12- 31-12- In thousands of euros EUR 000 EUR 000 EUR 000 Non-current assets Property and equipment under operating lease and rental fleet 15.919.429-15.919.429 Other property and equipment 91.806-91.806 Goodwill 2 98.604 177.744 276.348 Other intangible assets 2 75.575 216.812 292.387 Investments accounted for using the equity method 2 27.394 15.840 43.234 Deferred tax asset 118.178-118.178 Other financial assets 125.275-125.275 Total non-current assets 16.456.261 410.396 16.866.657 Current assets Inventories 280.519-280.519 Amount due from parent companies - 4.027 4.027 Receivables from financial institutions 490.448-490.448 Receivables from clients 3.425.539-3.425.539 Other receivables and prepayments 980.292 1.778 982.070 Corporate income tax receivable 11 57.906 10.046 67.952 Derivative financial instruments 6 224.898 16.328 241.226 Cash 3 1.857.144 591.194 2.448.338 7.316.746 623.372 7.940.118 Assets classified as held-for-sale 13.763-13.763 13.763-13.763 Total current assets 7.330.509 623.372 7.953.881 Total assets 23.786.770 1.033.768 24.820.538 Notes LeasePlan Corporation N.V. Company Issuer & Group (delta) Company Consolidated Consolidated Equity and liabilities as at 31.12. 31-12- 31-12- 31-12- In thousands of euros EUR 000 EUR 000 EUR 000 Capital and reserves Issued share capital 71.586 2.257.388 2.328.974 Share premium 506.398 (506.398) - Other reserves (9.725) 19.287 9.562 Retained earnings 2.189.450 (2.189.498) (48) Result of the year attributable to the Owners of the Parent 317.993 (173.637) 144.356 Total equity 4 3.075.702 (592.858) 2.482.844 Non-current liabilities Debt securities issued 5 8.805.351 1.544.310 10.349.661 Borrowings from financial institutions 3.259.384-3.259.384 Funds entrusted 5.480.777-5.480.777 Provision 454.507-454.507 Deferred tax liabilities 7 272.723 57.003 329.726 Total non-current liabilities 18.272.742 1.601.313 19.874.055 Current liabilities Amounts due to parent companies - 854 854 Trade and other payables and deferred income 2.320.288 725 2.321.013 Derivative financial instruments 77.584-77.584 Other Financial liabilities 8-23.734 23.734 Corporate income tax payable 40.454-40.454 Total current liabilities 2.438.326 25.314 2.463.640 Total liabilities 20.711.068 1.626.627 22.337.695 Total equity and liabilities 23.786.770 1.033.768 24.820.538
Cash Flows Statement LeasePlan Corporation N.V. Company Issuer & Group (delta) Company Consolidated Consolidated statement of cash flows 01.04-31.12 01.01-31.12 01.01-31.12 In thousands of euros EUR 000 EUR 000 EUR 000 Operating activities Profit for the period 308.033 (163.677) 144.356 Adjustments Interest income (578.983) - (578.983) Interest expense 244.139 86.702 330.841 Impairment on receivables 16.404-16.404 Depreciation operating lease portfolio and rental fleet 2.351.884-2.351.884 Depreciation other property and equipment 20.548-20.548 Amortisation and impairment intangible assets 22.309 11.200 33.509 Capitalised fees related to issuance of debt securities - (97.902) (97.902) Amortisation capitalised fees related to issuance of debt securities 12.741 12.741 Share of profit of investments accounted for using the equity method (3.207) - (3.207) Financial instruments at fair value through profit and loss (9.418) 23.384 13.966 Income tax expense 80.267-80.267 Changes in Provisions 70.380-70.380 Derivative financial instruments (59.347) (16.328) (75.675) Trade and other payables and other receivables (49.098) (14.797) (63.895) Inventories (1.936) - (1.936) Amounts received for disposal of subsidiaries (40.650) - (40.650) Amounts received for disposal of objects under operating lease 1.822.648-1.822.648 Amounts paid for acquisition of objects under operating lease (5.831.751) - (5.831.751) Acquired new finance leases and other increases of receivables from clients (1.013.249) - (1.013.249) Repayment finance leases 929.540-929.540 Cash generated from operating activities (1.721.487) (158.677) (1.880.164) Interest paid (228.521) (62.958) (291.479) Interest received 578.880-578.880 Income taxes paid (104.359) - (104.359) Income taxes received 20.255-20.255 Net cash flows from operating activities (1.455.232) (221.634) (1.676.866) Investing activities Acquisition of subsidiary, net of cash acquired - (3.531.500) (3.531.500) Proceeds from sale of other property and equipment 11.810-11.810 Purchases of other property and equipment (32.537) - (32.537) Purchases of intangible assets (30.673) - (30.673) Divestments of intangible assets 668-668 Loans provided to investments accounted for using the equity method (54.450) - (54.450) Redemption on loans to investments accounted for using the equity method 39.500-39.500 Dividend received from investments accounted for using the equity method - 408.800 408.800 Movement in held-for-sale investments 7.961-7.961 Proceeds from sale of subsidiaries 40.650-40.650 Net cash flows from investing activities (17.071) (3.122.700) (3.139.771) Financing activities Proceeds from issue of share capital - 2.328.966 2.328.966 Receipt of receivables from financial institutions 2.360.703-2.360.703 Balances deposited to financial institutions (2.395.414) - (2.395.414) Receipt of borrowings from financial institutions 2.732.656-2.732.656 Repayment of borrowings from financial institutions (1.673.685) - (1.673.685) Receipt of funds entrusted 1.535.583-1.535.583 Repayment of funds entrusted (1.285.186) - (1.285.186) Receipt of debt securities 2.671.565 1.606.761 4.278.326 Repayment of debt securities (1.959.992) - (1.959.992) Dividends paid to Company's shareholders (408.800) - (408.800) Net cash flows from financing activities 1.577.430 3.935.727 5.513.157 Cash and balances with banks at January, 1st 1.583.373 2 1.583.375 Net movement in cash and balances with banks Q1 50.176-50.176 Net movement in cash and balances with banks 105.127 591.193 696.320 Exchange gains/(losses) on cash and balances with banks Q1 1.034-1.034 Exchange gains/(losses) on cash and balances with banks (644) - (644) Cash and balances with banks as at closing 1.739.066 591.194 2.330.260 Cash and balances at central bank 1.857.144 591.194 2.448.338 Call money, cash at banks 66.998-66.998 Call money and bank overdrafts (185.076) - (185.076) Balance as at December, 31st for the purpose of the statement of cash flows 1.739.066 591.194 2.330.260
Notes on the Company issuer and Group All amounts are in thousands of euros, unless stated otherwise NOTE 1 - GENERAL The Company s financial statements are prepared pursuant to the accounting policies used in the consolidated financial statements of LeasePlan Corporation N.V. under IFRS. Full set of consolidated financial statements are prepared and audited at the level of LeasePlan Corporation N.V. A reasonably detailed description of the material differences between the consolidated financial statements of LeasePlan Corporation N.V. and the Company have been included in the notes. NOTE 2 Purchase price allocation LP Group B.V. has acquired 100% of the shares in LeasePlan Corporation N.V. (hereafter LPC ) as at March 21,. Following the acquisition of LPC, LP Group B.V. has been required to perform a purchase price allocation in accordance with IFRS 3. The purpose of the PPA is to allocate the consideration transferred to all assets and liabilities of LPC at the date of transaction, consequently the identified assets and liabilities of LPC are reflected at fair value. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participation at the measurement date. The allocation is as follow: Initial purchase price 3.531.500 Dividend received - 265.500 Adjusted purchase price 3.266.000 Shareholder's equity - 2.901.407 Previously recognised goodwill 98.604 Excess purchase price 463.197 Brand name 14.266 Customer contracts 22.291 Customer relationships 191.455 Other Intangible Assets Fair value step-up 228.012 Investment under equity step-up 15.840 Goodwill 219.345 Excess purchase price 463.197 Opening Balance Other Intangible Assets 228.012 Amortisation of the period - 11.200 Closing Balance Other Intangible Assets 216.812 Goodwill 219.345 Increase of goodwill due to deferred tax liabilities 57.003 Previously recognised goodwill - 98.604 Goodwill Delta 177.744
NOTE 3 Cash Cash held at LP Group B.V. 107.644 Cash held at Lincoln Finance Ltd. (Jersey) 2 Cash held at Lincoln Financing Holdings Pte Ltd. 483.548 Cash 591.194 The Company, the Issuer and LP Group have a total cash balance of 591 million. This includes 279 million in the Interest Reserve Account ( IRA ), and 194 million in the Interest Coverage Account ( ICA ). This provides a combined IRA and ICA balance of 473 million, which represents 4.4x the annual interest expense of the senior secured notes. In addition to the balances of the ICA and IRA, the Company, the Issuer and LP Group have further cash balances of 118 million. NOTE 4 Equity Issued share Share Other Retained Result of capital premium reserves earnings the year LeasePlan Corporation N.V. Consolidated 71.586 506.398 (9.725) 2.189.848 317.595 3.075.702 IFRS 3 - adjustment on previously recognised - - - (98.604) - goodwill (98.604) IFRS 3 Purchase price allocation effect - - - 463.197-463.197 LP Group B.V. sub-consolidation 100.000 3.431.500 9.562-264.491 3.805.553 IFRS 10 - Equity and investment elimination (71.586) (506.398) 9.725 (2.554.441) (317.595) of subsidiaries (3.440.295) LP Group B.V. Consolidated 100.000 3.431.500 9.562-264.491 3.805.553 Lincoln Finance Ltd. (Jersey) 3 - - (16) 16 2 Lincoln Financing Holdings PTE Ltd. 2.328.974 - - (32) (120.151) 2.208.791 IFRS 10 - Equity and investment elimination (100.003) (3.431.500) - - - (3.531.503) of subsidiaries Company Issuer & Group (delta) 2.257.388 (506.398) 19.287 (2.189.896) (173.239) (592.858) Company Consolidated 2.328.974-9.562 (48) 144.356 2.482.844 NOTE 5 Debt securities issued EUR Senior secured note principal amount 1.250.000 Capitalised financing fees - 92.210 Amortisation of capitalised financing fees 11.998 Net book value 1.169.788 USD Senior secured note principal amount 379.471 Capitalised financing fees - 5.692 Amortisation of capitalised financing fees 743 Net book value 374.522 Total Net Book value 1.544.310 NOTE 6 Derivative Financial Instruments In the framework of Hedge instruments, the Company has purchased a derivative instrument ( Currency Swap ). The amount recognized at fair value amounts to 16.328 as at 31 December.
NOTE 7 Deferred tax liabilities A deferred tax liability amounting to 57.003 (at an effective income tax rate in The Netherlands of 25%) has been recognized on the amount of fair value adjustment of 228.012 (referring to Note 2), impacting the liabilities of the Company. NOTE 8 Other financial liabilities Accrued interest on EUR Senior secured note principal amount 67.795 Accrued interest on USD Senior secured note principal amount 20.992 Interest paid on EUR Senior secured note principal amount - 49.891 Interest paid on USD Senior secured note principal amount - 11.472 Currency exchange gain - 3.823 Unrealised loss 134 Other Financial liabilities 23.734 NOTE 9 General and administrative expenses Acquisition related expenses Professional fees 4.133 Other general expenses 36 Banking costs 114 General and administrative expenses 4.283 Acquisition related expenses 53.430 NOTE 10 Interest expenses and similar charges Interest expenses on EUR Senior secured note 67.795 Interest expenses USD Senior secured note 20.992 Amortisation of capitalised financing fees 12.741 Interest expenses related to cash position 1.594 Currency exchange gain - 3.878 Currency exchange loss 200 Interest expenses and similar charges 99.443 NOTE 11 Income tax LP Group B.V. forms a fiscal unity with LPC in the Netherlands regarding the corporate income tax and VAT. Management has made an assessment of which acquisition related expenses being tax deductible. As a result, the Company has provisioned an income tax receivable/income at the level of LP Group B.V for an amount of 10.046.
NOTE 12 Unrealized gain/loss on financial instrument This amount relates to unrealized losses recognized on USD400 million Senior secured note (refer to Note 5) amounting to 21 million. For further information: About LeasePlan LeasePlan is a global fleet management and driver mobility company of Dutch origin. Our full service offering consists of financing and operational fleet management services to meet the needs of a diverse client base. Established in 1963, we have grown to become the world s leading global fleet management and driver mobility company with more than 85% of our 7,400 strong workforce now operating outside the Netherlands. Our global franchise manages over 1.6 million multi-brand vehicles and provides global fleet management and driver mobility services in 32 countries. We have a proven track record in enhancing our presence in traditional mature fleet markets, as well as expanding into new markets and growing our business to market leading positions. We are able to capitalize on our global presence and international network by providing innovative products and high quality service to meet the needs of our clients globally. We aim to do this by using our expertise to make running a fleet easier for our clients. This is reflected in our universal promise to all our clients: It s easier to leaseplan.for more information, please refer to https://www.leaseplan.com/. Disclaimer This information is based on internal information used by the management of the Company. We caution that the foregoing information has not been and will not be audited or reviewed by our independent auditors. Financial and other information in this document may contain certain forward-looking statements (all statements other than those made solely with respect to historical facts) based upon beliefs and data currently available to management. These statements are based on a variety of assumptions that may not be realized and are subject to significant business, economic, legal and competitive risks and uncertainties. Our actual operations, financial conditions, cash flows and operating results may differ materially from those expressed or implied by any such forward-looking statements.