Novuna investment in cutting edge tech helps UK businesses to forge ahead
Novuna Business Finance and Novuna Business Cash Flow, the business divisions of Mitsubishi HC Capital UK PLC focused on providing bespoke funding support across UK commercial sectors, collectively reported annual pre-tax profits of £26.7m in the latest financial year, contributing to record profits of £130.0m for the Group, marking a hugely successful period for one of the UK’s leading financial providers.
Novuna Business Finance, which specialises in providing asset finance solutions with an emphasis on sustainability, grew pre-tax profits to £25m in 2021/22, a 24% increase on the previous year, while Novuna Business Cash Flow, which provides a broader range of invoice finance and discounting solutions to UK SMEs and larger corporate customers, posted a pre-tax profit of £1.7m, bouncing back from the previous loss-making year.
The contribution of both business divisions to record Group profits were driven by healthy new business volumes, part of a concerted Group effort to ramp up support for SMEs and larger corporate customers in the wake of the pandemic. Novuna Business Finance recorded £820m in new business activity, an 8% annual increase, while Novuna Business Cash Flow generated £106m over the financial year. This success is thanks primarily to a diversification of the division’s client base, growth into new markets, development of differentiated corporate funding lines, and enhanced lead generation.
In February, both business divisions underwent a strategic rebrand with Hitachi Capital Business Finance becoming Novuna Business Finance and Hitachi Capital Invoice Finance becoming Novuna Business Cash Flow. This follows the merger in 2021 of both divisions’ parent company, making them part of Mitsubishi HC Capital Inc., one of the world’s largest and most diversified financial groups.
Novuna Business Finance:
Novuna Business Finance’s pre-tax profits of £25m were underpinned by a tech transformation and a healthy demand for sustainable finance. The results allowed Novuna Business Finance to grow its market share by 0.4% from pre-pandemic levels to 2.4%. This has in turn helped the business maintain its position as the UK’s fifth largest asset finance provider, cementing itself as part of a £100bn market serving the UK’s 5.5 billion SMEs.
The business’s provision of sustainable finance is spearheaded by its innovative partnership with Gridserve. Over £76m in funding providing clean renewable energy to power electric vehicles (EV) has now been provided, as well as assisting in the construction of the world’s first EV forecourt last year. The business has also formed a sustainable energy team, focused on proven core technologies in power generation such as solar panels, battery storage, and EV charging.
Meanwhile, significant investments in the division’s operating systems have resulted in three interconnected projects aimed at futureproofing the business. The firm’s new Alfa operating system has been fully integrated with the firm’s Mercury portal, smoothing the onboarding process for brokers, while a state-of-the-art automation project is using advanced data for credit decisions and underwriting.
Geoff Maleham, managing director at Novuna Business Finance, said: “Despite another challenging twelve months for the industry, our business has successfully overcome the economic headwinds to achieve record levels of profit. Our strategy, and our delivery of it, has helped to consolidate our position as a trusted partner and provider of bespoke asset finance solutions to SMEs across a range of sectors, gain market share, and ultimately entrench our position as the fifth largest provider of asset finance in the UK.”
“The results leave us in good stead to press on with our long-term strategy of building a sustainable business through sustainable lending. Whilst continuing to serve our broker market, we will also continue to diversify our portfolio by capitalising on broader market opportunities in manufacturer and dealer finance, as well as developing new products to grow our share of the block discounting market.”
Novuna Business Cash Flow:
Novuna Business Cash Flow marked its return to profitability with an increase of 86% in the average current account per client, while annual gross earnings jumped by £7m to record levels.
A key pillar of the division’s successful income diversification strategy was the decision to pivot towards working with larger SMEs and corporate clients, which resulted in the onboarding of Novuna’s largest ever deal, a £10m funding line to a major corporate entity.
The division’s investment in its digital infrastructure, is reaping rewards. With many competitors still using traditional paper-based processes for onboarding clients, Novuna Business Cash Flow has boosted its proposition by leveraging its digital offering, which in turn is unlocking the cashflow for UK businesses in record time.
The strong performance has helped the business successfully enhance its market reputation, evidenced by awards at the 2021 Credit Today Awards for SME Lender of the Year, Best Invoice Finance Provider at the 2021 Lending Awards, and the Business Moneyfacts Best Service from an Invoice Finance provider in 2021 and 2022.
Andy Dodd, managing director at Novuna Business Cash Flow, said: “In what has been another challenging twelve months for SMEs and the lending market, today’s results reflect the strength of our reputation in the market, and our ability to bounce back resoundingly from forces outside of our control. Together with our concerted new business drive, the rebrand and merger have been integral to our success, and we are well set to continue growing the business thanks to the operational and strategic benefits the restructuring has provided.
“Businesses are more determined than ever to transition from survival mode to fully fledged growth. We will be supporting new and existing clients by expanding our digitally led funding capabilities, which differentiate us from the competition, ensuring we are providing the bespoke support to help SMEs map their own paths to growth.”
Record Group profits for Mitsubishi HC Capital UK PLC
At Group level, Mitsubishi HC Capital UK PLC recorded a pre-tax profit of £130.0m for the financial year, a 25% increase from £104m the previous year.
The results cap off an extraordinary year for the Group, which completed a successful merger of Mitsubishi UFJ Lease and Finance Company Limited and Hitachi Capital Corporation in 2021, and subsequent rebrand of the respective divisions in February 2022, all while contending with major economic and logistical headwinds.
The Group’s new business volume over the period also rose to record highs, with total volumes of £4.1bn, a 21.6% annual increase from £3.3bn the previous financial year. This uptick helped to boost net earning assets to £6.5bn, up from £5.9bn in 2020/21.
Mitsubishi HC Capital UK PLC’s full annual report for FY21/22 can be found at: https://www.mitsubishihccapital.co.uk/media/p5clxgq4/annual-report-and-financial-statements-year-ended-31-march-2022.pdf