Our business model allows us to offer our customers maximum support with their greatest challenges – Digital transformation, sustainable business practices, employer branding. This keeps us on course for growth and cushions us to a large extend from economic fluctuations.
In an interview, Rony Timmermans, Vice President Finance Benelux and France, looks back on 2019. It was a successful year for the CHG-MERIDIAN Group and for Belgium, the Netherlands, and Luxembourg despite difficult economic conditions.
Timmermans: We are seeing the effects of the cooling economy in some of the industries in which we operate. Nevertheless, we not only maintained the growth trajectory of previous years at CHG-MERIDIAN, we surpassed ourselves yet again. Our lease origination volume was up by 32 percent year on year. This shows us that we are on exactly the right track with our business model.
Timmermans: Belgium is known for its complex political environment. We have not had a government since the elections in May 2019, and unfortunately this also means that there are no long-term strategies for social and economic issues. By contrast, political stability in the Netherlands is visibly benefiting economic growth. Belgium, Luxembourg, and the Netherlands contributed to the Group result with lease origination of some €115 million. €75 million of this is attributable to Belgium and Luxembourg, and just over €40 million to the Netherlands. The Belgian market is not especially large. However, our market share there is very high and still growing, with new customers accounting for 30 percent of our business last year. In the Netherlands, the business is not quite as advanced as this yet, and we expect strong growth in the coming years, as the market potential is there.
Timmermans: In 2019, the total funding volume of our customers’ technology investments across the whole Group was €1.88 billion, a very positive year-on-year increase of 29 percent. Non-recourse funding transactions continue to play a key role in our financing strategy. Two-thirds of the total funding volume was on a non-recourse basis in 2019. This is very encouraging. Our funding base is very broad and international, and reflects the great confidence placed in us. We work with a total of 168 financial institutions in more than 20 countries. They include 105 investors with ongoing exposure in our bonded loans and syndicated loans, and 77 funding partners that directly fund our lease origination.
Timmermans: The markets in Europe are facing severe challenges. The impact of coronavirus is the biggest challenge, but we are also facing a possible trade war between the USA and China and the consequences of Brexit – all of which mean that little or no growth can be expected in Europe in the current year. Nevertheless, we must take a nuanced view. The coronavirus crisis will accelerate the progress of digitalization in all sectors of the economy. As experts in this field, we are on hand to support businesses. So far, despite close trade relations with the UK in the Benelux countries, we have not experienced any adverse effects as a result of Brexit. Some major financial institutions are retreating to the mainland, which could open up new opportunities for us. So the overall economic situation does not necessarily always provide the blueprint for our business. On the contrary, I would even say that the slowdown in economic growth could accommodate our business model.
Timmermans: Our comprehensive technology management, and our enterprise, mobility, and employer benefit solutions provide customers with a wide range of value-added solutions in addition to financing. This applies equally to issues such as sustainability and efficiency enhancement – and to the growing recognition in companies that creating modern, digital workplaces can be critical to their future viability and a valuable trump card. This combination of technological and financial expertise gives us a head start even when the economy is slowing. It is already the case in Belgium that only some 10 percent of customers come to us exclusively for finance. The vast majority trust in our expertise along the entire value chain.
Timmermans: Belgium was one of the first countries in the CHG-MERIDIAN Group to focus strongly on the circular economy, and we are seeing there that this new awareness is opening doors for us. Sustainability in the management of resources is becoming increasingly important, and there is active demand for solutions in this area. Our approach of resource-efficient technology management, which covers the entire lifecycle from equipment procurement to remarketing, is tapping into the current mood. Our unique selling proposition is that we can promise sustainability in a credible manner. Circular economy is not only a principle that we have embraced as part of our daily practice. In contrast to our competitors, our technology centers also provide us with the necessary infrastructure to recycle our assets for secondary use, for example.
Timmermans: Our goal is to further increase the Benelux countries’ share of the Group’s overall earnings. We got off to an extremely good start in the first quarter of 2020 and, without daring to risk an exact forecast, I am very optimistic about the near future. We can rely on the strength of our business model, but we cannot be complacent in this respect. We have to look closely at the transformations we need to carry out and the areas we should be consolidating in order to be prepared for the future. Potential customers need to understand what our strengths are and how we differ from new competitors such as fintechs. Financial engineering has many facets and for us is much more than just financing technology. In 2020 we are not going to see the growth rates we have seen in recent years, but I am confident that we will continue our organic growth.
Rony Timmermans has been at CHG-MERIDIAN since 2011. As Vice President Finance he his responsible for Belgium, the Netherlands and Luxembourg. Since 2020, France has been added to his area of responsibility.
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