Novuna’s focus on green investments and lending to larger corporate entities delivers growth
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 £69.1m in the latest financial year, contributing to record profits of £160.8m for the Group, marking a hugely successful period for one of the UK’s leading financial providers.
Novuna Business Finance
Strong new business volumes and a one-off gain from the revaluation of the Group’s investment in green energy provider GRIDSERVE resulted in record pre-tax profits for Novuna Business Finance. The company, which specialises in providing asset finance solutions for SMEs and larger corporations across the UK, achieved pre-tax profits of £66.2m in FY22/23, up 165% from the previous year.
Leveraging its well-established routes to market, including broker, direct and manufacturer and dealer relationships, Novuna Business Finance achieved a 22% increase in new business, totalling £999.3m and benefitted from a one-off gain of £44.1m following the revaluation of a strategic investment in GRIDSERVE’S electric vehicle charging infrastructure to deliver a record performance.
Novuna Business Finance, which provides hire purchase, finance lease solutions, stocking finance and block discounting solutions for businesses, achieved an 8% increase in net earning assets, totalling £1.7bn this year which propelled its standing to become the third largest asset finance provider in the UK.
Despite the challenges posed by rising funding costs and an unfavourable economic climate, the company remained committed to its growth objectives by investing in diversified funding provisions, which accounted for 20% of new business volume.
Novuna Business Finance’s expanding Project Finance proposition, forged partnerships with SMEs, Community Energy Groups, and Fund Managers to drive revenue growth for the Group leveraging wider market opportunities in the sustainability sector.
The business continued to enhance its support for customers, making significant investments in cutting edge technology, accelerating digital onboarding and enabling instant funding decisions. The introduction of a revolutionary workflow automation tool for manufacturers and dealers resulted in over £4m in additional revenue.
Geoff Maleham, managing director at Novuna Business Finance, said: ” Against a backdrop of rising cost of funds and a challenging economic climate, our business has achieved remarkable success, driven by unprecedented levels of new business and our focus on sustainable lending through our emerging direct channel.
“Despite the challenges, we continued to explore new revenue opportunities whilst remaining committed to delivering exceptional service across all established routes to market, reinforcing our position as the third largest asset finance provider in the UK.
“I am confident that with a clear vision for the future and a strong foundation, we are well placed to sustain our growth and expand the business further over the next 12-18months.”
Novuna Business Cash Flow
Novuna Business Cash Flow, which provides cashflow finance solutions to SMEs and larger corporate entities across a wide range of sectors in the UK, has achieved pre-tax profits of £2.9m up 71% from £1.7m the previous year, highlighting its commitment to strategic initiatives and market share expansion to grow the business. Notably, the company increased its lending to larger businesses during FY22/23, which now represents 42% of its funding portfolio.
Despite supressed demand for lending from SMEs impacted by government intervention schemes, Novuna Business Cash Flow maintained a constant presence in market through its invoice factoring, invoice discounting, and payroll finance for SMEs, which constitutes the lower end of its book. Amidst a prevailing environment of soaring inflation, Novuna Business Cash Flow saw funding lines grow 20% and margins remained stable despite increasing borrowing costs, supporting the growth and profitability of the business.
A strategic focus on driving third-party revenue has yielded impressive outcomes for the business in FY22/23 as the number of deals paid out by third parties increased by 24% compared to the previous year as the division’s successful income diversification strategy resulted in a record-breaking year. Overall, the business increased its total current account by 1%, valued at a record high by year end of nearly £125m.
Andy Dodd, managing director at Novuna Business Cash Flow, said: “Despite the market for cash flow finance remaining below previous industry highs, today’s results reflect our unwavering commitment to helping an even wider spectrum of businesses maintain liquidity and support their growth ambitions.
“Our strategic focus to extend our lending provision to larger corporate clients coupled with our established reputation in market for providing innovative underwriting solutions and cutting-edge digital processes to new and existing clients has delivered a strong performance for the business.
“As a trusted provider of cash flow solutions, the business is primed to deliver our long-term growth strategy through our diversified product offerings and commitment to client retention.”
Record Group profits for Mitsubishi HC Capital UK PLC
At Group level, Mitsubishi HC Capital UK PLC reported a record high pre-tax profit of £160.8m for the financial year, a 24% increase from £130m the previous year.
The Group’s new business volume over the period also rose to record highs, with total volumes of £4.5bn, a 10.4% annual increase from £4.1bn the previous financial year. This uptick helped to boost neat earning assets to £7.6bn, up from £6.5bn in 2021/22.
Robert Gordon, CEO of Mitsubishi HC Capital UK PLC, said: Despite the unprecedented pressure on our margins due to rising cost of funds and continued economic uncertainty, we remained firmly committed to supporting our customers. We maintained a constant presence in market across all the sectors in which we operate and focussed on improving the experience for our customers. As a result, we delivered record results.
“By outperforming competitors in key industry sectors, and delivering exceptional service through our range of products, we’ve not only gained market share but also improved the quality of our portfolio.
“We continued to expand our workforce and invest in technological improvements to drive operational efficiencies across the Group which provides us with a strong platform for further growth in the UK and Europe in the years ahead.”
Mitsubishi HC Capital UK PLC’s full annual report for FY22/23 can be found at: https://www.mitsubishihccapital.co.uk/media/hnknlffd/mitsubishi-hc-capital-uk-plc-annual-report-and-financial-statements-year-ended-31-march-2023.pdf