Image of the Zenith office building.

Annual Review

Zenith Automotive Holdings Limited Year ended 31 March 2020

The directors present their Annual Review for the Group, also referred to as ‘Zenith’, for the year ended 31 March 2020.

Zenith is the UK’s only scaled, regulated, multi-asset, multi-channel auto business. We are also the largest independent (not bank or manufacturer owned) vehicle leasing, fleet management, short-term hire and business process outsourcing company in the UK. Zenith has leasing capabilities across corporate and consumer sectors and from motorbikes to small city cars to heavy goods vehicles ranging from one day to eight years and beyond in duration. Originally established in 1989 as a specialist provider of bespoke fleet solutions for mid to large corporates, our customer base ranges from household brands and some of the biggest organisations in the UK to individual customers on our consumer products.


We deliver innovative and intelligent vehicle solutions to a variety of different customers whether that’s funding company cars, light or heavy commercial vehicles, providing flexible benefit schemes, funding cars for private individuals or delivering fully outsourced fleet management services. We have been successful across many years in delivering a high-quality and innovative service to our customers.

We have chosen not to disclose certain non-financial KPIs which we believe are commercially sensitive. In all other aspects the Directors consider the annual report and financial statements comply with the Guidelines for Disclosure and Transparency in Private Equity.


The company structure is set out below. Each company in the structure is 100% owned.

In the consolidated Group Accounts Bifurcate Funding Limited and Vehicle Titleco Limited are also consolidated into the Group. These two companies form part of the legal structure under the securitisation facilities used to provide vehicle funding to the Group but are not owned by the Group.

Zenith Automotive Holdings Limited is owned 25% by management and 75% by BEV Nominees Limited, a Bridgepoint company. BEV Nominees Limited is owned by a number of limited partnerships comprising the Bridgepoint Europe V Fund.

Bridgepoint is an international fund management group focusing on private equity. Their aim is to deliver attractive returns to investors by investing responsibly in companies and building stronger, broader-based businesses with greatly enhanced long-term growth potential. As a long-established, experienced and responsible private equity investor they help companies and management teams by investing in expansion, operational transformation or via consolidating acquisitions. Bridgepoint invests in well-managed companies, typically taking controlling or large minority stakes. They are attracted by opportunities in sectors and niches with strong underlying growth and global competitive advantage or in cash generative businesses with high visibility of earnings.

Business model and activities

Zenith is a Mobility as a Service (MAAS) provider. The market continues to move towards our model of providing lease vehicles as a service. We have capabilities across all vehicle asset types, supporting everything from business-critical fleets to consumer cars and from the largest heavy goods vehicles, through to light commercial vehicles and down to the smallest city car.

Zenith manages a fleet of over 143,000 vehicles and focuses on:

  • Serving blue chip clients with fleets of usually over 100 vehicles, across business fleets and salary sacrifice schemes principally on a fully outsourced and sole supply basis.
  • Serving clients with business-critical HGV and specialist vehicle fleets, and
  • Serving personal consumers through the ZenAuto and ElectricAuto brands providing personal contract hire (PCH) vehicles.

Key elements of our business model which we use to deliver success in our market are:

  • Zenith is the leading scaled multi-asset funder and manager in the UK providing MAAS in increments from one day to eight+ years.
  • Zenith has over 30 years of experience and over 750 employees. Vehicles and drivers are kept legally compliant and mobile 24 hours a day, 365 days a year.
  • Zenith’s consumer brand, ZenAuto, has continued to grow during the year and along with the launch of our new brand ElectricAuto, delivers PCH direct to the consumer market.
  • Zenith is a member of the BVRLA industry body & EV100 climate group and aims to lead the transition of fossil fuels to electric.
  • The Group’s independent ownership enables it to be agnostic to vehicle makers or funders.
  • With over 40 million vehicles in the UK this gives Zenith significant market opportunity to grow in its home markets.
  • Zenith’s Alliance Partner Network enables us to provide our customers with visibility of their fleet in 14 European countries.

Headquartered in Leeds, Zenith is the largest independent (not bank or manufacturer owned) vehicle leasing, fleet management, short-term hire and business process outsourcing company in the UK.

Services include provision of vehicle funding, vehicle maintenance, fleet management, accident management, business process outsourcing, short-term hire, fleet consultancy and provision of fleet data with bespoke packages tailored to corporate customer requirements.

Vision and strategy

Our corporate vision is to be the benchmark by which quality service is measured within our industry. Our Group vision is to transition the funded fleet to carbon neutral by 2025 by owning the new and used consumer personal contract hire, company car, salary sacrifice, HGV and fleet management spaces, whilst being a Top 100 company to work for. In order to achieve this our strategy has been set to deliver the following:

  1. To achieve organic growth in our core markets by
    • Becoming the best-in-class corporate and consumer brand renowned for being the number one service provider of cars, vans and heavy commercial vehicles
    • Growing the fleet through the organic acquisition of new customers and cross-selling of new products to the existing portfolio, with little or no customer attrition
    • Evolving our European footprint to support existing and win new corporate customers.
  2. To enter adjacent and new markets
    • Increase our revenue streams by growing the consumer car leasing fleet and expanding business process outsourcing with new partners.
  3. To use technology to drive deeper automation and service improvement
    • Continuously refine the target operating model. Adopting process automation and digital to improve operational processing, supply chain quality, right first time delivery and improved cost to income ratios
    • Continuously focus on the evolution of funding facilities.
  4. To employ the best people
    • Have the best, most flexible, agile, diverse working environment attracting the highest quality talent, nurturing our people, reducing employee churn and offering equal opportunities
    • Engage our people to let them innovate, improve and grow the company
  5. Develop the Zenith Mobility as a Service (MAAS) eco system
    • Design and develop Zenith’s long-term mobility strategy
    • Use technology to continuously refine our business proposition.
  6. Acquisition of value accretive businesses
    • Acquire companies that complement existing channels, create scale, create synergies or provide incremental income opportunities.

We are committed to developing and retaining our employees; Zenith has been listed in the 75 best companies to work for (Yorkshire & Humber) in the Sunday Times Best Companies to Work For list 2020, an outstanding result. The Group has a very active employee engagement programme, and we are immensely proud of this achievement.

Zenith’s Academy provides learning and development opportunities to all our people. Zenith provides access to the Zenith Academy for all employees and has provided a broad range of training from finance and marketing to MBA, leadership and coaching courses.

We support our employees through all aspects of their journey with us from our award-winning induction programme to BVRLA industry courses and coffee mornings for new and expectant parents to name a few.

Zenith is committed to developing future talent through apprenticeships, as shown through the continued expansion and success of our apprenticeship programme. Through the year, we have won several awards for apprenticeship programme including the Princess Royal Training Awards, LPI Apprenticeship Programme of the Year Bronze award, as well as Yorkshire and Humber Large Employer of the Year in the National Apprenticeship Awards.

We have continued to run our Women in Leadership programmes this year which we are proud to be supporting.

Our employees’ health could not be more important to us. We have an in-house GP and have a number of employees across all levels of the organisation who are trained mental health first aiders.

We recognise that a diverse and inclusive workforce means a wealth of experience, skills and ideas are brought to the company. We know that an inclusive environment is a place where team work and co-operation thrive and therefore we have a more productive workforce. We are committed to promoting inclusivity, equality and diversity in everything that we do, be that procedures, policies or practice. At the end of last year we created a Diversity and Inclusion Committee made up of employees from across the business, at all levels, who have a genuine passion to ensure that inclusion and diversity are at the forefront of minds. One of the first tasks was to go out to the business and begin capturing diversity information from our colleagues. Having this data means that we can track changes and measure the impact of our initiatives over the coming years (we acknowledge that changes won’t happen overnight). The committee have been working hard on creating a D&I policy, which will be published in August and then plan to roll out unconscious bias training right across the company.

Environment and Corporate Social Responsibility (CSR)

Zenith is committed to ensuring that its business practices have positive impacts on the community and the environment. Since our formation in 1989, we have been committed to maintaining high ethical and moral standards and to ensuring that we act in accordance with responsible social behaviour.

The three core objectives of our Environmental and CSR policy are:

  • To sustain the environment
  • To conduct our business in an ethical and responsible manner
  • To support the community, both local and industry sector.

At Zenith we regularly hold events to raise money for charity. Annually, we hold a Zenith ‘annual challenge’ which is our main fundraising event of the year.


Operating in the vehicle leasing industry, Zenith’s primary environmental objective is to provide advice and technical information to encourage our customers to promote and incorporate the most environmentally friendly vehicles and practice within their core fleet policies.

The EV100 initiative, by The Climate Group, brings together forward-looking companies to drive the electric transport transition, reduce air pollution and climate change. Zenith plans to switch its own fleet to 100% EV by 2025, five years ahead of the target date required by EV100. Electric transport offers a major solution in cutting millions of tonnes of greenhouse gas emissions per year, as well as curbing transport related air and noise pollution.


Actions that our consultancy team complete on behalf of our customers:

  • Introducing customer plans to transition to cleaner fuel types by assessing daily travel requirements compared with the electric vehicle range of available and planned future car and van releases
  • Helping customers develop a driver policy on the usage of electric vehicles to include eligibility and in-use responsibilities such as charging provisions
  • Making it easy for drivers and consumers to move to electric vehicles by offering support with installing a charge point through the utilisation of partnerships
  • Evolving and developing proposition to remove the barriers for electric cars such as unrestricted trade-ups.

For consumers we have launched a new website solely related to electric vehicles, ElectricAuto.

Both the Kirkstall Forge and Solihull offices are part of multi-tenanted buildings. In the last year. Over 80% of waste was recycled at both sites.

The table below includes our mandatory reporting of greenhouse gas emissions based on the new energy and carbon reporting framework. This is based on the Group’s greenhouse gas emissions for the year 1 April 2019 to 31 March 2020, covering both our office sites (in Leeds and Solihull) and business mileage travelled by our employees.

Greenhouse gas emissions data 1 April 2019 to 31 March 2020
Tonnes CO2e
Scope 1: Emissions from combustion of gas
Scope 1: Emissions from combustion of fuel for transport purposes
Scope 2: Emissions from purchased electricity
Scope 3: Emissions from business travel
Total Gross CO2e
Intensity Ratio: Tonnes CO2e emissions divided by total £1m revenue
Energy consumption kWh

Our methodology used to calculate our emissions is based on the ‘Environmental Reporting Guidelines: including mandatory greenhouse gas emissions reporting guidance’ (March 2019) issued by the Department for Business, Energy & Industrial Strategy (BEIS).

Emissions from purchased electricity includes emissions from business mileage travelled in electric vehicles.


As a business Zenith is aware of its wider impact on the environment. We aim to ensure that we support our local community and integrate our business values and operations to meet the expectations of our customers and the wider public. We understand that we have impacts on the communities in which we operate, and employees are encouraged to assist the local community. We have established a CSR focus group to develop and promote our CSR policy.

Zenith is working with Leeds Ahead to take part in voluntary community focused projects, to assist with the social and economic regeneration of Leeds, including the opportunity to support students in a local school.

This has taken the form of mentoring over the academic year, providing interview practice, taking over a GCSE business lesson and welcoming students to Zenith for a workplace visit. Every year we have more volunteers for mentoring than needed.

Each year our employees select a ‘charity of the year’ which our fundraising efforts through the year support. In this financial year it was Plastic Oceans.



We also encourage employees in their charitable endeavours such as supporting fund-raising events for colleagues and individuals.

We are delighted by the effort our people put into this and are encouraged by the feedback we receive from them in terms of the benefits they derive personally from being involved in these programmes.


Zenith believes strongly in the need for ethics in business and to have ethical practices and transparency in all its activities as well as those of its suppliers. These principles strongly reflect the values of the Company.

Zenith believes we have a responsibility in the market with key issues such as:

  • To treat our customers with respect and fairness and act true to our values
  • To treat our partners and suppliers fairly and to establish long-term relationships that deliver value and high service levels to our end customers
  • Not to enter into pricing comparisons with our competitors that may lead to any form of non-competitive activity
  • To promote within the market the need for awareness of our industry’s environmental impact with regard to carbon emissions and to work closely with specialists to ensure that we are promoting carbon reduction strategies
  • To work closely with government and HMRC to ensure that consistency and clarity is provided to avoid confusion and additional administrative costs for our customers
  • To deliver our services through professional and trained personnel whose mandate is to exceed the clients expected level of service delivery. Our values are built around openness, integrity, service excellence, innovation and loyalty.
Tax and HMRC

At Zenith we are proud of our service and ethics. Honesty is one of our core values and we apply this to our tax affairs and our dealings with tax authorities and tax advisors, in the same way we apply it to all our business activities.

We are committed to paying all the taxes that we owe, in accordance with the tax laws that apply to our operations. We report our tax affairs in ways that reflect the economic reality of the transactions we actually undertake in the course of our trade. Ultimately, we seek to pay the appropriate tax, at the right rate and the right time. We believe that paying our taxes in this way is the clearest indication we can give of us being responsible participants in society.

We have built long-term relationships with our tax advisors and discuss with them new products and services to ensure the correct tax treatment is adopted. Our advisors also keep us updated on tax law as it evolves.

We respond to requests and enquiries from HMRC in a friendly, timely and professional manner. Where the tax treatment or reporting requirements of specific items are unclear we always seek professional advice. The senior accounting officer and chief financial officer are involved in all these discussions


The Company is committed to promoting equality of opportunity. This means it is the Group’s policy that there should be no discrimination, harassment or victimisation of any employee, job applicant, customer, provider of services or member of the public because of one of the following protected characteristics: age, disability, gender reassignment, marital or civil partnership status, pregnancy and maternity, race, religion or belief, sex or sexual orientation.

The Company has three main objectives:

  • To encourage its employees to take an active role in combating all forms of unlawful discrimination, harassment and victimisation
  • To deter employees from participating in any such unlawful behaviour, and
  • To demonstrate to all employees that they can rely upon the Company’s support in cases of unlawful discrimination, harassment or victimisation at work.

The Group is fully committed to providing, so far as is practicable, a good and harmonious working environment that offers equal treatment and opportunities for all its employees and where every employee is treated with appropriate respect and dignity.

Human rights and Modern Slavery

Zenith recognises the right of every individual to liberty, freedom of association and personal safety and observes internationally recognised standards set out in the UN Universal Declaration of Human Rights and the International Labour Organisation (ILO) Conventions.

Zenith has a long-standing commitment to conducting business ethically and the prevention of slavery and human trafficking is an important part of that commitment. We take steps to ensure slavery and human trafficking are not taking place either in our organisation or our supply chain, with our policy being underpinned and supported by the following:

  • A collaborative approach with our supply chain, which encourages transparency. We will provide appropriate support, guidance and monitoring to tackle any reported issue. Serious or repeated violations may result in a termination of supply, reduced volume of business or non-inclusion in future tenders
  • Annual training for key stakeholders within Zenith
  • A supplier lifecycle and procurement policy incorporating pre-contractual supplier due diligence, comprehensive contractual agreements and periodic review
  • Supplier Code of Conduct
  • Annual risk assessment of the supply chain
  • Whistleblowing procedures within Zenith and the introduction of a contractual requirement for direct suppliers to our operational business to monitor compliance and report any matters of concern
  • A third-party governance, risk and compliance (GRC) software system.
Gender Pay

Click here for Zenith’s Gender Pay Gap report.

Stakeholder engagement

The Directors are well aware of their duty under s.172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard (amongst other matters) to:

  • the likely consequences of any decision in the long term;
  • the interests of the Company’s employees;
  • the need to foster the Company’s business relationships with suppliers, customers and others;
  • the impact of the Company’s operations on the community and the environment;
  • the desirability of the Company maintaining a reputation for high standards of business conduct; and
  • the need to act fairly as between members of the Company.

The below section acts as our Section 172(1) statement. It lists our key stakeholder groups, their priorities, how we engage with them and actions the Board has taken following feedback, to promote the success of the Company for the benefit of its members as a whole.


Our customers – as a service-centric business our customers are at the centre of our decisions. Our customers expect a best-in-class service from us, which we aim to deliver. With dedicated contacts for our commercial fleets and a business structured around our services we can meet our customer needs, be that at a fleet manager level or an individual driver. As one of our non-financial KPIs, as described on page 23, customer satisfaction is reviewed by the Board monthly. Linking this measure into our employee bonus payment ensures customer satisfaction is considered in our employee’s actions and is at the top of decisions made in the business. This focus on our customers has led us to win the FN50 Customer Service Individual award and be highly commended in the Great British Fleet Awards for our Innovation in Customer Service.

Our employees – to deliver our excellent service levels, the company relies on its dedicated team of employees. Our colleagues value roles in which they can learn and develop, a competitive benefits package, as well as a diverse, inclusive and safe environment in which to work. We engage with our employees across a number of platforms, be that directly with their managers and/or HR or via annual pulse checks with our employee survey. We run different programmes to support our colleagues across the organisation including our apprenticeship programme and graduate scheme. We offer courses which encourage diversity including our women in leadership course and offer various wellbeing tools. More information on how we support our employees can be found within the Employee and Gender pay sections of the Strategic Report on pages 7 to 14.

Our suppliers – a high-quality product is desired from our suppliers to match our service. Our key suppliers range across car dealerships, vehicle and parts manufacturers, short-term rental providers, garages and vehicle recovery providers. By working closely with our suppliers, with direct engagement through our specialist relationship teams, we ensure our high service levels are maintained whilst charging a fair price to our customers, working together with our suppliers as trusted partners to achieve mutual success.

Our community and environment – working in the fleet industry we aim to keep our communities mobile and safe. A decision was made by the Board to set a new target to transition 100% of our own fleet to electric vehicles by 2025. Further information on our interactions in our communities and environment can be found within the Corporate Social Responsibility section of the Strategic Report on pages 8 to 11.

Our funding providers – our funders are updated on our financial performance through weekly and monthly reports. When making credit risk decisions in the business, both at the approval stage of a contract and during the life we take a composed approach balancing the risk with the requirements of the customer.

Our owners – our owners are highly supportive of well-considered investment decisions which will help us achieve desired growth in our business and ultimately enable returns on their investment. Employee engagement in the performance of the business is encouraged through the employee share scheme. Both the management team and Bridgepoint have representation on the Board so are involved in decisions being made. Our vision and strategic priorities are set to enable us to achieve our growth requirements whilst balancing this with the requirements of our other key stakeholders.

Business review

In the year to 31 March 2020 Zenith Automotive Holdings Limited consolidated accounts reported an EBITDA* of £56.1m.

We are pleased to report that excluding ZenAuto, the core group has returned to year on year growth in profits, from EBITDA of £58.2m to £58.3m. This is particularly pleasing given the challenging environment in the year, including Brexit, changes to emission standards (WLTP) and more recently COVID-19 which adversely impacted the final weeks of trading. This is testament to the underlying strength of our business model and dedication of our team.

ZenAuto, our direct to consumer brand, has continued to grow across the year. With continued investment in our people, IT and marketing within this new business area, ZenAuto contributed a loss of £2.2m to EBITDA (£2.1m previous year), which was broadly in line with our expectations as we invest in the early stages of materially scaling this business.

The Group balance sheet shows total assets of £1,545m including cash balances of £74m. The previous year Group balance sheet total assets were £1,467m including cash balances of £21m. The main reason for the increase in total assets and cash is due to a draw down on the revolving credit facility (RCF) of £60m and roll over of senior debt interest into the capital balance at the end of the financial year. Both of these were performed to strengthen our liquidity position in response to COVID-19. The RCF was not used and on the 30 June 2020 £40m of this facility, has been repaid.

Despite the £56.1m EBITDA, the Group made a loss after tax for the period of £102m. However, this was as a result of deducting non-cash items of £49m for amortisation of goodwill and intangibles, and preference share and loan note interest of £58m. The preference shares and loan notes are owned by the shareholders and not paid in cash. The non-cash amortisation and interest will continue in future years. The Group is cash generative and is forecast to continue to be so for the foreseeable future.

We have a large and diversified pool of asset finance facilities available to us, to finance our leasing operations, which includes a significant element of committed facilities, and we have plenty of headroom with which to fund our ambitious growth plans. Our securitisation facilities provide us with extremely competitively priced capital with which to develop our business, covering our corporate, HGV and consumer businesses.

There were, however, a number of headwinds outside the control of Zenith which impacted the business in the year:

  • The new CO2 emissions testing regime (Worldwide Harmonized Light Vehicle Testing Procedure or ’WLTP‘) has continued to affect car policy making and quoting through the year. This reduced both order take and delivery of new vehicles
  • A knock-on impact of this uncertainty was that a significant number of leases, which ended their primary term in the period, were extended. This meant that the number of end-of-lease vehicles which we sold were reduced and profits from their sale were pushed into later periods
  • Political and economic uncertainty, from Brexit, and later in the year COVID-19, caused an increased level of caution in our customer base when placing orders. With the latter also causing disruption to deliveries and collections, whilst we were in the period of lockdown.

The business has continued to enhance its reputation as a high-quality service provider which meets, in an innovative and imaginative way, the requirements of the market and its customers in particular. We have been focused on enhancing this during the difficult trading period.

  • This financial year was a year of significant progress and achievement across all areas of new business
  • The total funded and managed fleet size has increased from 138,000 to 143,000 vehicles
  • ZenAuto has continued to grow rapidly across the year, as we have continued to expand our distribution with existing and new partners
  • Our outsourced business services operations have continued to grow profitably
  • The short-term rental division has also continued to add additional profits to the Group
  • We have continued to invest in our HGV leasing and management business, from both a people and system perspective, and we are confident that we have an excellent platform for growth
  • We started to see the benefit of our group proposition, through which we serve all of our customers’ HGV, van and car requirements under one roof, from one day rentals through to eight year+ leasing and management
  • We have seen cost savings in the year due to initiatives which were implemented in the previous year
  • Our customer retention statistics continue to be exceptionally good
  • Electric vehicles (EVs) have been very positive for salary sacrifice schemes and we are starting to see the early signs of cash takers re-joining company car schemes for EVs.

We are increasingly able to differentiate our service proposition helping us secure prominent new business and the Directors are confident that the Group can continue this going forward.

Our headquarters at Kirkstall Forge, Leeds and the continued adoption of flexible and agile working practices, assist in our ability to attract the highest quality talent to our business and retain the best people.

This coming year is possibly the most challenging environment we have operated in, but we are confident that our services and vehicle mobility will be centric to everybody’s lives going forward, with expected reductions in flight and travel on public transport.

Our view is the fundamental growth drivers of the market remain highly positive, being:

i. increasing outsourcing of the management of corporate fleets, and
ii. increasing leasing, as opposed to buying, of vehicles by consumers, whether directly or via salary sacrifice schemes.

We are a stable and well organised to capture market share across both corporate and consumer markets. We have some of the best connected technology available and a highly experienced, agile, engaged team that is committed to continuing Zenith’s future success and will allow us to adopt our services to fit the ‘new post COVID-19 norm’.

* EBITDA is defined as operating profit before amortisation of goodwill, depreciation of tangible & intangible assets and exceptional items

Net debt and covenants

On 31 March 2020, the Group was funded by the following facilities:

  • External bank debt of £434m. This is repayable in one instalment on 31 March 2024
  • External Loan Notes of £252m (held in Zeus Finco Limited) and Preference Shares of £272m (held in Zenith Automotive Holdings Limited). These are both owned by the shareholders of Zenith Automotive Holdings Limited. Interest is calculated monthly and annually rolled and added onto the balance rather than being settled. These will be settled in the event of a sale of the Group or after a 20-year period ending 31 March 2037
  • Cash and cash equivalents of £74m
  • The Group also has a Revolving Credit Facility (RCF) of £60m available until 31 March 2023 and repayable on 31 March 2024. At 31 March 2020 the full £60m was drawn on this facility. There is a leverage covenant which is measured once the RCF is more than 35% drawn and we must ensure that when tested the Consolidated Super Senior Secured Leverage Ratio* does not exceed 1.65:1. This condition was met on 31 March 2020 and throughout the year.

On the basis of the above the Group has net debt of £944m. Excluding balances owed to shareholders the net debt was £420m.

*Consolidated Super Senior Secured Leverage Ratio is defined as RCF divided by EBITDA.

Capital structure

As discussed, the Group has £494m of external debt. The loan notes and preference shares total £524m and are held by the equity shareholders. The Group has a wide share ownership by employees and issued shares in the Group to employees during the year. Annually eligible employees are invited to buy shares in the business.

This type of capital structure, with a mix of external and shareholder debt and wide employee share ownership, has been successful in supporting the growth of the business through six private equity transactions and ensuring high levels of employee engagement in the business.

Principal risks and uncertainties

The following are the principal risk areas in the business, specific risks associated with COVID-19 are covered within the COVID-19 section later in this report:

Interest rate risk
Interest on Senior debt is calculated on a floating rate and paid quarterly.
Our senior debt currently stands at £434m and interest rate exposure is 65% hedged until June 2022. Management review the level of debt hedged, at inception of the hedge and are comfortable with the current level of variable exposure.
Managing interest risk on vehicle funding is key. We provide vehicle finance to customers on a fixed interest rate basis on all contracts. Vehicles funded through securitisation are on a variable rate.
100% of agency and back-to-back funded deals are secured with fixed rate funding from banks. 100% of deals funded through securitisation are hedged by swapping floating rate costs for fixed rate across the term of the lease. Management have effectively removed interest rate risk as a result and will consistently apply this policy.
Residual value risk

When pricing a lease, we need to estimate what the vehicle will be worth at the end of the lease. This is called the ‘residual value’. If we over estimate this value and ultimately sell the vehicle for less than its residual value, we will lose money. This is called the ‘residual value risk’.

Sophisticated external tools are used analysing CAP Gold Book, CAP Black Book, Autofutura Recalc-IT and internal intelligence based on historic data are used to set residual values.
Fleets are categorised into volume tiers with high volume vehicles reviewed every three months, giving approximately 85% coverage and all vehicles covered at least annually.
A Residual Value committee meets every three months to provide oversight, review the output of the above and challenge residual value positions.
Maintenance risk

77% of our contracted units have fixed price maintenance contracts. The customer pays us (usually) monthly in fixed instalments over the life of the lease to maintain the vehicle. If the cost of maintaining the vehicle is higher than the total rentals we collect from the customer over the life of the lease we will lose money.

We use data from industry benchmarks in conjunction with our own data to model the costs.
There is a rolling review programme to ensure all vehicles are reviewed at least once per year. High volume vehicles have the most detailed review.
Management monitor maintenance provisions quarterly using formulae from historic data to give an early indication of potential issues. Any change in profitability would be picked up by this review and actions taken.
Credit risk

Zenith takes credit risk on customers to the extent it funds vehicles on either back-to-back or securitisation funding.

We employ two credit analysts to monitor and review credit risk reporting directly to the CFO. Every customer is reviewed at least annually.
A detailed assessment of customers due for review is presented to the Credit committee which meets monthly. The credit analysts present to the CEO, CFO and finance director. Based on the review, individual credit limits are agreed and funding strategies decided which manage the level of risk that Zenith are prepared to take. All new business opportunities are reviewed by one of the credit analysts prior to tendering.
Key performance indicators

The directors use a series of financial and non-financial Key Performance Indicators (KPIs) to monitor the performance of the business.

Creating value for shareholders is linked to growth in earnings before interest, tax, depreciation and amortisation (EBITDA or operating profit). All employees participate in an annual bonus scheme which is linked to the Group’s EBITDA performance against budget.
Monthly management accounts report EBITDA measured on a consistent basis to Operating profit before depreciation of tangible fixed assets, amortisation of goodwill, intangible assets and exceptional items reported in the consolidated profit and loss account.
Fleet size
The main way to grow operating profit is to grow the fleet size and therefore measuring the movement in the fleet is key to the success of the business.
We have sophisticated, award-winning, business intelligence reporting solutions which report fleet sizes in real-time across our products.
Customer satisfaction
One of the key strengths of the Group is the high levels of customer retention. One of our most important KPIs is our measurement of customer satisfaction. This is also a key element of the annual bonus payment to employees.
The Group uses state-of-the art, award-winning software to critically assess customer satisfaction indices.
Employee engagement
We are a service business and our employees are core to our success. Engagement scores are a key indicator of how we are performing. As a business we analyse in detail the results and identify opportunities to improve.
To objectively measure this, we take part annually in the Sunday Times Best 100 Companies to work for survey.

On 23 March 2020 a lockdown was imposed in the UK, banning all non-essential travel and closing all but non-essential businesses, including the closure of car showrooms and auction houses due to the COVID-19 pandemic.

The professional and diligent approach of our managers across a period of years has resulted in excellent and robust Business Continuity Plans. This has helped us to enable our workforce to work efficiently from home during this period, keeping our employees safe whilst also providing a seamlessly high level of service to our customers. Whilst the country was in lockdown we experienced a decrease in our call volumes and resultant work load, post year end this meant that we utilised the government’s furlough scheme to claim back support for employees we did not require during this period. We continued to pay all our employees 100% of their salary during this time.

The Supplier, Governance and Risk Committee have conducted a review of the supply chain with specific reference to the COVID crisis, this included a review of increased credit risk, risk of failure and risk of data protection issues, as well as a review of operational rigor. No undue risks were discovered during this review.

Due to the nature of our business model, which is predominately long-term leases of between three to five years to large corporate customers, the degree of visibility over our future earnings and profitability is high. As a result, Zenith is well positioned to navigate this intense period of disruption caused by the COVID-19 pandemic.

As a result of the lockdown, there has been a limited number of vehicle sales at the end of lease terms and only essential deliveries in the last couple of weeks of our financial year, with a number of leases being extended. Our strong, long-term relationships with our funders has given us flexibility within our funding schemes, for example providing funding for vehicles we are unable to sell due to the lockdown. This has greatly assisted us in maintaining a healthy cash balance during this current environment.

To monitor residual value risk we have implemented daily updates on vehicle remarketing activity to monitor price and conversion information.

The impact on our credit risk has resulted in a small number of our customers requesting payment holidays. These requests have been reviewed thoroughly by our credit risk analysts and CFO. Regular weekly credit reporting on our customers has also been shared with key employees within our organisation, including the CEO, CFO and FD. This has had a minimal impact on our cash flows.

The financial modelling we have performed, looking at a range of lockdown scenarios, shows that we continue to trade cash positive as a result of our business model, long-term contracted income streams and additional procedures we have put in place. We have continued to keep our scenario model refreshed, as well as monitoring our results closely which show that our experience of payment holidays, vehicle sale volumes and profits continue to perform within our expected range.

Going concern

The Company makes use of bank facilities agreed on a Zenith Automotive Holdings Limited Group wide basis.

The Group has considerable financial resources to manage its operations, we have headroom on our RCF facilities and are compliant with our covenants (as noted in the net debt and covenants section above) with bank facilities being repayable in March 2024.

The Directors note that the Group is cash generative and have reviewed the forecasts which cover a period exceeding 12 months from the date of signature of the financial statements. This includes the updated forecasts and scenarios modelled as outlined in the COVID-19 statement above.

The statement above also sets out the impact COVID-19 has had on the Group, around which we have put protective measures in place. The scale of the Group means it can withstand these short-term challenges, particularly our wide HGV to car and corporate to consumer propositions enabling us to be agile, spot changes in the market and adapt our strategy if required.

We continue to closely monitor Brexit and COVID-19 developments and have not identified any material adjustments to balances included in these financial statements.

On this basis, the Directors have a reasonable expectation that the Group and the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual financial statements.

Future developments

Over the last three decades, the Zenith Group has grown to become the UK’s largest independent vehicle asset manager, with over 143,000 vehicles across all asset types including HGVs, vans and cars. Whilst the 143,000 fleet is significant, it is small in the context of the 40 million vehicles on the UK’s road today, the majority of which are driven by consumers.

Historically the Group has focused on the fleet sector, but during the last three years, significant investment has been made into Personal Contract Hire (PCH) in the consumer market. Currently Zenith is the only UK operator to go direct to consumer with a full digital PCH solution, all significant competitors go via intermediaries from car dealerships to brokers. This positioning opens up a huge opportunity for Zenith as it owns the customer channel, has the best low cost to serve technology, vehicle funding and RV risk capacity, material scale and three decades of auto experience.


With the emergence of new electric vehicles against a strong backdrop of climate change, there is opportunity for new subscription models and a faster replacement cycle of the UK vehicle parc. Zenith, with corporate to consumer capabilities, has a strong base on which to grow in this new world and to play a key role in reducing carbon emissions and other pollution, helping to reduce the impacts of Climate Change.

In this new decade we will continue to develop and grow, as we look to cement our positioning as a key player in the UK motor fleet and consumer auto eco system.

Mark Phillips signature
M T Phillips
Chief Financial Officer
30 July 2020


For further information, view the Zenith Automotive Holdings Limited accounts on Companies House, or click here.