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Asset Finance for Schools 11 th June 2009

Asset Finance for Schools 11 th June 2009. Darrell Slevin Associate Director. Structure of presentation. Sector Treasury – Who are we? Current Regulations and Financing Options Assets Leased by Schools / Current Position Proposed Solution Sector’s Lease Expiry Support.

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Asset Finance for Schools 11 th June 2009

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  1. Asset Finance for Schools 11th June 2009 Darrell Slevin Associate Director

  2. Structure of presentation • Sector Treasury – Who are we? • Current Regulations and Financing Options • Assets Leased by Schools / Current Position • Proposed Solution • Sector’s Lease Expiry Support

  3. Sector Treasury……Who Are We? • Highly experienced team • A leading Public Sector leasing advisor • Arranged leasing facilities in the last three financial years for over 150 clients for assets with a value in excess of £250m • Luton’s Appointed Advisor

  4. Current Regulatory Framework • The Schools Standards and Framework Act 1998 • The Education Act 2002 • The School Finance (England) Regulations 2006 • Prudential Code • SSAP 21 / FRS 5 • IAS 17 – April 2010

  5. OPTIONS Purchase Grants Internal Loan Leasing

  6. Assets Leased by Schools - Computer Hardware and Software - Photocopiers and Printers - Telephone Systems and Fax Machines - Furniture and Lockers - Laboratory and Workshop Equipment - Catering Equipment - Sports and Gymnasium Equipment - Musical Instruments - Coaches and Minibuses - Security Systems

  7. Background - IT/Equipment Leasing • Supplier introduced leases - Beware • On assets which depreciate fast and are difficult to return, a form of finance lease is likely to be the finance option utilised by suppliers. This is non-compliant (ultra vires). • Concerns - Uncompetitive rates - Agreements are usually finance leases - Onerous documentation - Finance linked to supply – forced refresh - Termination and roll up leases “blend & extend” - Equipment specific • Always look to break down • Supply costs • Finance costs • Maintenance / Service costs • Operating Leases can be arranged for most assets

  8. Lease Roll-ups – Caution! “Easy upgrades” Technology Refresh BNP Paribas, Canon, Capgemini, Dell, HP, IBM, Ikon, Konica Minolta, Pitney Bowes, RM, Sun Microsystems, Syscap & Xerox

  9. Proposed Solution: The Call-Off Facility Competitive Rates Save money Reputable Lessor Reduce problems Wide Asset Coverage Easy to arrange Real Return Option WEEE savings Standard Terms Minimise problems Reporting Mechanism Reduces problems SSAP21 Compliant Real Operating Lease Schools Deal Direct Reduces LA involvement

  10. Sector’s Lease Expiry Support • Database of contracts • Early reminder of contract expiry to LA • Evaluation of options • Help negotiate lease extension terms • Third party sales to the School • Negotiate return condition charges

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