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27Off-balance sheet lease Pogosyan T. (Russian Federation) Забалансовый лизинг Погосян T.C. (Российская Федерация)
Погосян Татев Самвеловна / Pogosyan Tatev Samvelovna - студент, кафедра КПМГ, международный финансовый факультет, Финансовый университет при Правительстве Российской Федерации, г. Москва
Аннотация: в статье рассматриваются вопросы, затрагивающие специфику лизинговых сделок, их основные виды и ключевые преимущества в сравнении с обычным кредитованием. В статье также описываются основные тенденции развития российского лизингового рынка, а также текущее состояние рынка лизинговых операций в развитых странах. Наконец, статья ознакомляет с концепцией забалансового финансирования, которое сегодня набирает все большую популярность. Abstract: the paper deals with the specifics of leasing transactions, its main types and principal advantages in comparison to conventional lending. It also aims to describe the main trends in the development of the Russian lease market and compare it with the current state of lease market in developed countries. Finally, it provides an overview for the off-balance sheet financing, which becomes increasingly popular nowadays.
Ключевые слова: лизинг, финансовый лизинг, операционный лизинг, российский лизинговый рынок, забалансовое финансирование.
Keywords: leasing, finance leasing, operating leasing, Russian lease market, off-balance sheet financing.
The concept of lease.
Leasing has become one of the major sources of capital formation in the economy of Russian Federation in recent years. It is a complex decision of a company to decide rather lease or buy equipment. It includes several key components such as tax regulation structure, ways of financing, creditability, accounting principles and other important factors.
Leasing is an investment tool that allows the enterprise to carry out the modernization of fixed assets and get new equipment or other non-consumable goods without involving its own resources [1].
Nowadays we can distinguish two main types of lease:
1. Finance leasing.
It is a long-term lease, usually more than three years. The lessor transfers substantially all the risks and rewards related to the asset to the lessee. The lessee does not own the equipment, he is responsible for maintaining and insuring it. Generally, the ownership is transferred to the lessee at the end of the economic life of the asset. In accounting, you must show the leased asset on your balance sheet as a capital item, or an item that has been bought by the company.
2. Operating leasing
An operating lease is particularly attractive to companies that continually update or replace equipment and want to use equipment without ownership, but also want to return equipment at lease-end and avoid technological obsolescence. An operating lease usually results in the lowest payment of any financing alternative and is an excellent strategy for bypassing capital budgeting restraints. It typically qualifies for off-balance sheet treatment [2].
There are several advantages of leasing:
First using lease deals allows to have some tax preferences and the accelerated depreciation opportunity. Secondly, to get a loan for buying an equipment will take more time, bureaucracy and red tape. It means that getting the necessary equipment to leasing is easier than getting a credit for buying it. These benefits have become a major factor for the development of leasing.
Russian lease market.
The government of the Russian Federation adopted a few resolutions for improving leasing sector due to realizing the potential of leasing and its advantages for the economic development of the country.
Although the Russian lease market was in the fourth place among European countries in terms of market capacity, the gap between French market (which occupies the third place in the ranking) and Russian market is still very significant in terms of leasing transactions. The difference between lease market structures of Russia and Western countries should also be taken into account. 25 % of Russian leasing market consists of the railroad equipment in comparison to 8 % in European countries where lease market is more diversified. Western companies more prefer operating lease, while Russian commonly use financial lease (Table 1).
Table 1: Leasing market capacity, 2013 [3]
Rating Country Leasing market capacity, mill EUR
1 Germany 45 005,0
2 UK 44 739,6
3 France 39 010,0
4 RF 19 630,8
5 Italy 18 533,0
Considering the trends in the development of the Russian leasing market since the crises period we may observe
a quite stable recovery. The most rapid growth in terms of the volume of lease payments was in 2011, which totaled almost 45 %. Consequently, the largest share in the Russian leasing portfolio is stored within railroad equipment, truck transport, air transport, construction machinery, power equipment, road construction machinery, equipment for oil extraction and processing, agricultural technology, engineering and metalworking equipment (Table 2).
Table 2: Indicators of leasing market's development in Russian Federation in 2008-2012 [4]
Indicators 2008 2009 2010 2011 2013
The volume of lease 320. 350.
402.8 540.0 560.0
payments in billion of rubles 0 0
The rate of growth, % 37.0 -20.6 9.4 54.3 3.7
The total leasing portfolio 1 390 960. 1 18 1 860 2 530.
in billion of rubles .0 0 0.0 .0 0
The rate of growth , % 15.6 -30.9 22.9 57.6 36.0
The proportion of leasing in nominal GDP, %
1.7 0.8 1.6 2.3 2.1
The concentration of new
deals in the top 10 32.7 50.0 62.4 66.5 63.0
companies,%
Off-balance sheet financing.
Off- balance sheet financing is a form of financing in which large capital expenditures are kept off of a company's balance sheet through various classification methods. Companies use off-balance-sheet financing for two primary reasons:
- to keep their debt to-equity (D/E) and leverage ratios low making their balance sheets more attractive to creditors;
- to reduce taxes. Because tax treatment often mirrors accounting treatment, certain offbalance-sheet transactions may result in lower taxes [5].
We can also distinguish three main forms of off-balance-sheet financing:
- joint ventures;
- research and development partnerships;
- operating leases, in which a company rents, rather than buys, a capital asset. In an operating lease, the company must record only the rental payments, and not the whole cost of the asset.
Advantages of off - balance sheet operating lease:
- Operating leases provide much-needed flexibility to companies that frequently update or replace their equipment.
- The lessee is protected from the risk of obsolescence.
- Accounting is simpler: the asset does not have to be included in the balance sheet. The corresponding debt liability does not have to be calculated or included either.
- Lease payments are operational expenses, so they are fully tax deductible.
- It provides improved Return On Asset (ROA) without capital budgeting restraints. While the main disadvantage is connected with the investment decision. Investors need
to read the full financial statements and look for key words that may signal the use of OBS financing. Analyzing these documents is important, because accounting standards require some disclosures such as operating leases in the footnotes. Investors should always contact company management to clarify if OBS financing agreements are being used and the extent to which they affect a company's true liabilities. Knowing the true debt of a business may change their mind about making an investment into a company.
The global popularity of leasing is reflective of its diverse benefits. Leases offer operating and financial flexibility for companies to manage such risks as business cycles and technological obsolescence. It also represents an alternative form of financing [6, p. 41-47].
References
1. What is the leasing? / E-portal «All-Leasing.ru». [Электронный ресурс]. Режим доступа: URL: http://www.all-leasing.ru/info.
2. Common Lease Types / Enterprise financial solutions. [Электронный ресурс]. Режим доступа: URL: http://www.efsolutionsinc.com/common_lease_types.htm.
3. Leaseurope / European Federation of Leasing Company Associations. [Электронный ресурс]. Режим доступа: URL: http://www.leaseurope.org.
4. Indicators of leasing market's development in Russia in 2008-2012 / Expert RA. [Электронный ресурс]. Режим доступа: URL: http://raexpert.ru.
5. What Is Off Balance Sheet Financing? / Small business by demand media. [Электронный ресурс]. Режим доступа: URL: http://smallbusiness.chron.com/off-balance-sheet-financing-59576.html.
6. Kositsyna, F. P. 2013. Synthesize the achievements of economic science on the basis of its different directions - means to increase the social wealth of Mankind. Humanity & Social Sciences Journal, 8 (1): 41-47.
