Leaseurope’s View Leaseurope’s View

Jacqueline MillsJacqueline MillsAdviser, LeaseuropeAdviser, Leaseurope

Brussels, 5 November 2007Brussels, 5 November 2007

World Markets in 2006World Markets in 2006

US

ELFA

175.2 bio€

Europe

Leaseurope

297.5 bio€

of which:

Equipment Leasing

250.7 bio€

Japan

JLA

53.5 bio€

Australia

AELA

17.2 bio€

New leasing volumes; source: Leaseurope 2006 Annual Survey and local leasing associations

Brazil

ABEL

7.2 bio€

Canada

CFLA

18.5 bio€

New Leasing Volumes in EuropeNew Leasing Volumes in Europe

UK UK 55.0 bio€ 55.0 bio€

Germany Germany 50.4bio€ 50.4bio€

Italy Italy 48.1 bio€ 48.1 bio€

France France 36.1 bio€ 36.1 bio€

CEE CEE 33.4 bio€ 33.4 bio€

Benelux, CH, AT Benelux, CH, AT 28.8 bio€ 28.8 bio€

Med Med 27.5 bio€ 27.5 bio€

Nordic Nordic 18.1 bio€ 18.1 bio€

New Leasing Volumes per Cluster in 2006

European Leasing PenetrationEuropean Leasing Penetration

11.89% 12.50% 13.02%

14.83% 15.08%

17.25%

19.02%

4%

9%

14%

19%

24%

29%

2000 2001 2002 2003 2004 2005 2006

Total PR

Average Leasing Penetration

Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006

11.89% 12.50% 13.02%

14.83% 15.08%

17.25%

19.02%

16.06%17.67% 17.35%

20.23%21.64%

24.30%

28.43%

4%

9%

14%

19%

24%

29%

2000 2001 2002 2003 2004 2005 2006

Total PR Equip

European Leasing PenetrationEuropean Leasing Penetration

Average Leasing Penetration

Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006

11.89% 12.50% 13.02%

14.83% 15.08%

17.25%

19.02%

16.06%

17.67% 17.35%

20.23%21.64%

24.30%

28.43%

4.75% 4.87%5.62% 5.51% 4.97%

6.32% 6.14%

4%

9%

14%

19%

24%

29%

2000 2001 2002 2003 2004 2005 2006

Total PR Equip RE

European Leasing PenetrationEuropean Leasing Penetration

Average Leasing Penetration

Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006

Leaseurope’s Preliminary ViewsLeaseurope’s Preliminary Views

Existing standard does have flaws…Existing standard does have flaws…

Does not recognise A&L as they are defined under Does not recognise A&L as they are defined under concept frameworkconcept framework

Allows for structuring possibilitiesAllows for structuring possibilities

Some users make adjustmentsSome users make adjustments

& flaws from the industry’s point of view & flaws from the industry’s point of view

… … but it also has meritsbut it also has merits

Internationally acceptedInternationally accepted

Recognises the difference between various kinds of Recognises the difference between various kinds of leasesleases

Once classification is performed, rules are clearOnce classification is performed, rules are clear

IAS 17

Leaseurope’s Preliminary ViewsLeaseurope’s Preliminary Views

Changes should lead to a practicable Changes should lead to a practicable and proportionate standardand proportionate standard

ProportionateProportionateThe businesses we represent deal in large part The businesses we represent deal in large part

with vanilla small and medium ticket leasingwith vanilla small and medium ticket leasing

PracticablePracticableLessees in EU just coming to terms with IAS17Lessees in EU just coming to terms with IAS17Burden on lessees should not be too great, it’s not Burden on lessees should not be too great, it’s not

just a question of booking a right of use, just a question of booking a right of use, subsequent measurement is important toosubsequent measurement is important too

Types of Asset on LeaseTypes of Asset on Lease

Source: Leaseurope 2006 Annual Survey. Includes data for Leaseurope’s new automotive long term rental members (when available)

New Leasing Volume Share per Asset Category (2006)

Total: 297.5 bil€Total: 297.5 bil€

AutomotiveAutomotive

EquipmentEquipment

Ships, Planes, Ships, Planes, RailRail

Real EstateReal Estate50%

29%

5%

16%

Contract MaturityContract Maturity

50% 50%

9.97%

73.05%

12.45%

4.52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0 - 2 years 2 - 5 years 5 - 10 years 10 years & above

For all assets excluding real estate. Source: Leaseurope 2006 Annual Survey. Includes data for Leaseurope’s new automotive long term rental members (when available)

New Leases Granted in 2006 According to Original Contract Term

Typical Contract SizesTypical Contract Sizes

For all assets excluding real estate. Source: Leaseurope Member Associations

Average Contract Size in € (2006)

29,846

56,525

23,723

0

10,000

20,000

30,000

40,000

50,000

60,000

DE IT FR

Eu

ros

• In the UK, 84% of business asset finance is small to medium ticket

• In Italy, 70% of machinery and industrial equipment contracts are made for a value of less than €50k

Additional Facts

A Flavour of Our ConcernsA Flavour of Our Concerns

Simple lease example compared to Simple lease example compared to real lifereal life leases leases

Decision to leave Decision to leave scopescope until the end may lead to until the end may lead to difficultiesdifficulties

StructuringStructuring opportunities or their necessity may even be opportunities or their necessity may even be enhancedenhanced

Accounts under a RoU approach must be Accounts under a RoU approach must be understandableunderstandable and and comparablecomparable

Lessor’s Lessor’s ownershipownership of the asset must somehow be of the asset must somehow be reflectedreflected

Lessee accountingLessee accounting according to the nature of the leased according to the nature of the leased may pose practical difficultiesmay pose practical difficulties

Lessor accountingLessor accounting is obviously crucial for the industry is obviously crucial for the industry

Going ForwardGoing Forward

Standard setters should not get tied into a one Standard setters should not get tied into a one size fits all approach but consider: size fits all approach but consider: materiality materiality a modular approacha modular approachincreased use of the notesincreased use of the notesthe impact on low transaction value/high volume part of the impact on low transaction value/high volume part of

the industrythe industry““full service” leasesfull service” leases

IASB/FASBIASB/FASB should make the most of the Leases WG should make the most of the Leases WG and feel free to turn to industry for informationand feel free to turn to industry for information

LeaseuropeLeaseurope intends to maintain contacts with the intends to maintain contacts with the IASB, int’l leasing organisations and the European IASB, int’l leasing organisations and the European industryindustry

Contact LeaseuropeContact Leaseurope

www.leaseurope.orgwww.leaseurope.org

j.mills@leaseurope.orgj.mills@leaseurope.org