Embedded risk and financing know-how
Our longstanding expertise through industry cycles and focus on diversification helps us manage our financial and other risk exposures.
As one of the largest buyer and sellers of LCVs in UK and Spain, we have unrivalled visibility and experience in the financial management of vehicle assets, throughout their lifecycle.
Relationships
We mitigate concentration risk across our businesses through broad diversification of vehicle profiles and rental counterparts, and targeting the most attractive end markets.
This is complemented by expert claims management, maximising recovery rates.
Expertise
Managing risks and financing both at a divisional and group level, we target meaningful returns on capital invested in vehicle assets, enhanced by value-added mobility and repair services and solutions.
This supports a financing profile which is very attractive to a broad range of lending partners.
Case studies: our integrated mobility in action
For a business involved in the rental of high value assets, disciplined counterparty risk management and diversification our key aspects of our overall risk management actions.
In both the UK&I and Spain we pay very close attention to our risk profiles both at customer and industry sector levels.
Conducting full financial appraisals on prospective customers is an important aspect when assessing our potential ROI for a rental. These are primarily managed using third-party credit systems such as Experian and using the Delphi scoring criteria, together with account manager discussions. We reflect different risk categories with appropriate and disciplined risk management approaches, including cash collection timeframes, deposits and vehicle addition limits.
Diversification by industry and counterparty are carefully managed and we look to identify both high potential sectors and also those which on a short or long term view might be viewed as becoming higher risk, with exposures managed down accordingly. We set out our diversification profile each accounting period in the analyst presentation appendices. No sector comprises more than 15% of our rental VoH, and most are between 2-8%.
When entering a new sector, or one with an increasing risk profile, we use a trial approach with a small number of customers before scaling if we successful and ensure we understand the key characteristics of the sector and its requirements. With over 110,000 vehicles in our LCV fleets, we are able to flex our exposure through natural liquidity of vehicles coming on/off rent, while ensuring we continue to support our key customer needs With bad debts consistently under 1.5% in the UK and under 1% in Spain, we believe we have a strong track record in risk management through industry and economic cycles, through a disciplined approach and careful end market diversification.
The benefits to insurance partners of claims protocol.
Hear how we have helped streamline credit hire claims processing, building trust and efficiencies across our partners and counterparties.
Our Group fleet NBV has grown over 60% over the last 5 years as we support the strong demand for our rental products and other integrated mobility solutions.
We have grown the number of vehicles we have on fleet as well as progressing our fleet replacement programme, purchasing newer vehicles as post-COVID fleet supply constraints eased.
We typically own over 90% of our rental fleet with the remainder being contract hired. Our fleet is recognised on the balance sheet within ‘property, plant and equipment’ and had a NBV of £1.51bn at the end of FY2025.
The NBV reflects the purchase price of the vehicle less depreciation which is set at the time of the purchase, and assumes a useful life appropriate for the particular cohort of vehicle. Depreciation for LCVs is on a straight line basis; management continually assess depreciation rates applied to new fleet to ensure the valuation best reflects management’s estimates of future residual values. Our track record of disposal profits indicates that the balance sheet holding value is prudent, as we seek to have a valuation cushion to minimise the likelihood of losses on disposal.
Our business model is centred around providing integrated mobility solutions and achieving sustainable returns well above our cost of capital. This fleet generates significant ROCE, not only from rental but a broad range of other value-added services. It is relevant to note that the NBV of fleet is c90% of the capital employed in the Group and underpins the TNAV of 381p and NAV of 473p. The growth and strength of our fleet, when compared to the Group’s net debt position allows the Group to remain comfortably within the covenants in the Group’s facilities. In addition to this, with our well-established internal route to market via our Van Monster and Ocasion businesses, we have direct control across the vehicle lifecycle, including fleet disposal.
Our banking covenant relating to the balance sheet, being our ‘loan to value’ was measured at 43% at year-end and can be seen on page 47 of the annual report. At the end of FY2025 we had significant headroom on all of our covenants. The liquidity of our asset base and the protection this offers, alongside our investment grade rating, makes ZIGUP an attractive investment for our lenders. Our ability to access capital, demonstrated by our refinancing activity in the year, provides the Group with the flexibility required to execute our strategic objectives and seize growth opportunities as they arise.
Working with OEMs to manage Spain’s large scale fleet purchasing.
Hear how our Spanish fleet team manage their relationships with OEMs and the importance of after sales service across the vehicle lifecycle.
Review of our financing strategy and FY2025 actions.
Hear from our Group Treasurer on our financing strategy, how lenders view ZIGUP and the refinancing actions.
