2010 annual report - touax group

Assets managed in the framework of securitization only represent
3% of the assets managed for third-parties as of
December 31, 2010, 5% of the assets managed for third-parties
as of December 31, 2009 and 9% of the assets managed for
third-parties as of December 31, 2008.
Operating leases are recognized in managed assets, while
financial leases were recognized in Group-owned assets. The
details of leases without recourse are specified in note 28.1
page 90 of the appendix to the consolidated financial statements,
section 20.1.
6. Business overview
6.1. Core businesses
6.1.1. Types of operations and core businesses
The TOUAX Group is an operational leasing expert for mobile
and standardized equipment: shipping containers, modular
buildings, freight railcars and river barges. The Group manages
its own equipment as well as equipment for third-party investors.
The breakdown in managed assets is detailed in section
5.2.4 page 26.
The businesses and markets for each one of these business
activities are described in more detail on pages 4 to 11; further
information is available in the annual management report on
page 104.
When the Group manages its own equipment, it purchases or
manufactures the equipment (depending on the business), then
leases or manages it (including maintenance and repairs) and
then sells or destroys it at the end of its life cycle.
The Group also has the cross-functional business of third-party
asset management for all of its business activities except river
barges. This management activity begins with the Group buying
or manufacturing equipment, building up a lease equipment
portfolio and subsequently selling that equipment to investors
(syndication), and finally managing that portfolio on behalf of
investors.
In each step of this cycle, the Group makes a profit: a profit on
leasing (owned equipment), syndication (equipment purchase
and sale to investors), management (equipment and management)
and trade (equipment purchase and sale to final
customers).
The accounting treatment of this profit is the following:
• Leasing profit is included in the leasing revenue, which
concerns all the equipment managed by the Group, owned or
managed equipment. The Group acts as a principal and not
as an agent. Similarly, the recognized operating expenses
correspond to all equipment managed.
• The third-party management profit margin is included in the
leasing revenues from managed equipment less the associated
operating expenses and less the revenues distributed to
investors. This third-party management margin is equivalent
to the Group’s management commission.
• The syndication margin is recorded in sales profits (sales less
the cost of sales). The syndication portfolio is made up of
third-party investors in the Shipping Containers, Freight Railcars
and Modular Buildings businesses.
• Syndication margins are recognized as sales / cost of sales.
Concerning the Modular Building business, The Group produces
and sells modular buildings to its customers and
records them as part of the syndication margins. Similarly,
the Freight Railcars business is recorded under syndication
margins.
• Capital gains on the residual values of the Group’s assets are
also recognized as sales margins.
The breakdown in revenues for each core business and geographic
area is described in the appendix to the consolidated
financial statements in section 20.1 page 43. A presentation of
the outlook made during the Financial Analyst Meeting on
March 29, 2011 is provided in section 28.6 page 133.
➜ In the Shipping Containers business,
the Group mainly manages equipment on behalf of third-parties.
Therefore, 93% of the shipping containers fleet belongs to
third-parties, and the rest belong to the Group. It should be
noted that nearly 56% of the equipment held by the Group is
earmarked for sale to third-parties in the near future (in less
than one year).
The syndication cycle is relatively short and can vary from between
6 months to one year. It comes down to the purchase of
equipment, leasing of this equipment and its sale to investors.
The Shipping Containers business is essentially an international
business with the Group working worldwide. In order to
limit risks and improve its transparency, the Group prefers to
sign long-term leases, which vary from 3 to 5 years and can
reach 7 years.
Increased international trade has raised the global number of
containers from 15.5 million to 27.5 million TEUs in 10 years.
The shipping containers market has undergone structural growth in response to the increasingly globalized marketplace:
Annual growth rate 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012*
Containerized trade 10% 12% 13% 10% 11% 12% 4% -9% 12% 10% 9%
Navires porte-conteneurs 8% 8% 8% 11% 14% 12% 11% 5% 8% 7% 7%
Flotte conteneurs 7% 9% 10% 7% 9% 12% 7% -4% 2% 7% 9%
Source: Clarkson Research Studies - January 2011 & Containerisation International 2010 * Estimates
Business overview
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