Asset Finance for Schools 11th June 2009

Darrell Slevin Associate Director

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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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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

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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

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OPTIONS

PurchasePurchase

GrantsGrants Internal LoanInternal Loan LeasingLeasing

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- 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

Assets Leased by Schools

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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

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Lease Roll-ups – Caution!

“Easy upgrades”

TechnologyRefresh

BNP Paribas, Canon, Capgemini, Dell, HP,

IBM, Ikon, Konica Minolta, Pitney Bowes, RM,

Sun Microsystems, Syscap & Xerox

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Proposed Solution: The Call-Off Facility

Competitive Rates

Save moneyWide Asset Coverage

Easy to arrangeStandard Terms

Minimise problemsSSAP21 Compliant

Real Operating Lease

Reputable Lessor

Reduce problemsReal Return Option

WEEE savingsReporting Mechanism

Reduces problemsSchools Deal Direct

Reduces LA involvement

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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