3 Step IT Annual Report 2018 - Page 28



RISK AND RISK MANAGEMENT
The company carries a residual value risk for
leased assets. At the end of the fiscal year, the
total exposure was EUR 79,642,370. The Group’s
management team controls residual value risk
by monitoring the development of the market
price of used IT assets compared with anticipated
residual values. End-of-lease revenues
developed as planned during the financial period.
General business risks for 2019 relate to the
general economic outlook, and forecasts are
for generally similar rates of growth to continue
(with the exception that sentiment in the UK will
be affected by whatever emerges from Brexit
negotiations).
97 per cent of IT devices returned to 3 Step IT
after the leasing period are remarketed for
reuse. We have started to perform a range of
economically justified minor repairs of returned
devices, for example replacing cracked screens,
and reprinting keyboards. These repairs will
help protect this remarkable 97 per cent reuse
success rate that has been stable for 3 years. The
remaining 3 per cent consists of faulty, damaged
or obsolete hardware, that is recycled in an ecofriendly manner following 3 Step IT’s ISO 14001
certified environmental system.
The forecast for IT devices overall, in a globally
mature market, is generally flat, with detailed
variations by country. Within the total number of
IT devices, there is a change in the device mix,
mostly from notebooks to basic and premium
ultramobile devices, a switch that should not
affect our business.
Device manufacturers have started to offer
various types of rental services that compete
with our lifecycle model. While this is clearly
a competitive risk, it supports the ‘access vs.
ownership’ megatrend that has been part of
our strategic planning for some time. Provided
we continue to compete vigorously and develop
our service, broader participation in a rental
approach to technology could be an advantage if
it helps the technology rental market to develop.
There have been no significant changes in
business activities after the end of the financial
period.
27
OUTLOOK
Although the forecast for total business
investment in IT devices is flat overall, our plans
support a positive outlook for our business.
The key strategies, tactics and investments that
justify this positive view are:
• Entry into new countries as the BNP Paribas
alliance, announced in February 2019, begins
to deliver incremental margin in France,
Germany & Italy.
• Exploitation of our refreshed asset
management service during the second half
of 2019.
• Increased focus on buying used IT devices to
recondition and resell.
With these programmes in place, 3 Step IT Group
revenue and profit should continue to grow in
2019.
28

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