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Annual Report
2014
SG Fleet Group Limited
ABN 40 167 554 574
Contents
About SG Fleet
Chairman’s Report
Chief Executive Officer’s Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Report
Shareholder Information
Corporate Directory
1
6
7
12
27
28
39
78
80
About SG Fleet
SG Fleet Group Limited is one of Australia’s leading
specialist providers of fleet management, vehicle
leasing and salary packaging solutions. SG Fleet has
a presence across Australia, New Zealand and the
United Kingdom. The company employs over 400
staff and has approximately 84,000 vehicles under
management. SG Fleet listed on the Australian
Securities Exchange in March 2014.
The company has a unique position in the marketplace,
built on the experience, product expertise and
commitment of its team. SG Fleet prides itself on the
strength of its relationships with blue chip corporate and
government customers. These relationships are based on
a customer-centric approach to service delivery and the
development of bespoke yet scalable solutions to meet
the needs of individual customers.
SG Fleet offers an extensive range of fleet management,
leasing and salary packaging solutions to corporate and
government customers, as well as heavy commercial
fleet management and leasing services. Salary packaging
solutions provided by the company include novated
leases and associated vehicle management services for
customers’ employees.
Constant innovation allows SG Fleet to provide
its customers with an industry-leading proprietary
technology platform that enables highly advanced
fleet management capabilities. The company strives
to continually upgrade its solutions and introduce
additional products and services to its range.
Annual Report 2014
1
End-to-end Fleet Management
Vehicle price quoting,
sourcing and delivery
Our buying power and supplier
relationships ensure our customers
receive the right vehicle at the right
time and at the right price.
Best in market
People – Skills – Knowledge – Technology: SG Fleet’s
unique ability to provide integrated fleet management
services is built on the quality of its team and the
company’s culture of continuous innovation. We are
able to offer best in market services at every step
of the vehicle life cycle, from sourcing to disposal,
through maintenance and administration management.
Vehicle disposal
Our in-house vehicle disposal team ensures
we can determine the best method for
disposal, using our own vehicle centres and
wholesale relationships.
Contract close-down
We proactively manage the contract
life cycle by facilitating vehicle returns,
end of lease settlements and vehicle
replacement planning.
Reporting and invoicing
A market-leading suite of vehicle
management and utilisation reporting
options provides our customers with
on-demand analysis and review tools.
2
SG Fleet Group Limited
Funding
We provide a range of fully approved
operating and finance lease funding
options for our customers.
Maintenance management
By utilising our access to a national network
of maintenance suppliers, we ensure vehicles
are operated safely and maintenance costs
are appropriately managed.
Fuel and toll management
We tailor fuel management programs
to our customers’ specific requirements
and offer a convenient toll usage
reporting framework.
Registration and infringement
management
We arrange vehicle registrations and
renewals and offer various levels of
infringement management services,
including driver identification and
utilisation reporting.
Roadside assistance and accident
management
Arrangements with outsourced providers
allow us to ensure roadside services are on
call 24/7 and vehicles are repaired and back
on the road without delay.
Contract revisions
As part of our active fleet management
approach, we revise contracts to help
our customers manage fleet costs by
optimising actual vehicle utilisation.
Annual Report 2014
3
Vehicle Leasing
SG Fleet offers a number of vehicle leasing solutions as part of its
corporate fleet management services, as well as salary-packaged
novated leases for employees of a range of corporate and
government customers. These arrangements can be financed through
an operating or a finance lease and are tailored to suit various needs.
They ensure customers and drivers can enjoy the benefits of a leased
vehicle at an optimal cost, managed by a leading specialist provider
they can rely on throughout the life of the lease.
4
SG Fleet Group Limited
Car #6542
Fuel Usage: 12L/100km
Average Speed: 65km/h
Service Due: 25-9-14
Car #6542
Fuel Usage: 14L/100km
Average Speed: 48km/h
Service Due: 24-2-15
Car #23567
Fuel Usage: 16L/100km
Average Speed: 50km/h
Service Due: 12-01-15
Car #6542
Fuel Usage: 12L/100km
Average Speed: 60km/h
Service Due: 25-11-14
Fleet Optimisation
SG Fleet offers a range of sophisticated proprietary technology platforms
and service packages that provide customers with the ability to analyse vehicle
utilisation data, guide driver behaviour and optimise the use of their fleets.
Fleetintelligence
Driversafety Intelligence
This state-of-the-art technology product is
used by internal and external fleet managers,
customers and drivers to access key fleet
information. Fleetintelligence allows users
to undertake on-line vehicle management
transactions and provides a large suite of
reporting options.
Individual risk assessments, based on driver
experience and business travel requirements,
are utilised to develop individual, relevant and
focused on-line training, addressing a range
of vehicle, environmental and driving risks.
This yields both employee safety and vehicle
utilisation benefits.
Bookingintelligence
In-Vehicle Asset Management
Administration and management of resources is
facilitated by this web-based solution. Users can
book resources, such as vehicles, for temporary
use and administrators can allocate these
resources in an efficient manner to optimise
asset utilisation.
Telematic tools allow fleet managers to monitor,
maintain and communicate with their vehicle
fleet via a desktop application. A complete
reporting suite creates a real-time integrated
fleet management functionality.
Annual Report 2014
5
Chairman’s Report
Dear Shareholder
I am delighted to present the SG Fleet Group Limited
Annual Report to you for the period ended 30 June 2014,
our first as a listed entity.
This report will provide you with information about our
financial performance for the four-month period from
6 March 2014, the date on which SG Fleet Group Limited
commenced trading, until 30 June 2014. During this
period, we have met and in fact exceeded our Prospectus
net profit forecast in what has been a challenging
operating environment. It is pleasing that your Board has
confirmed a fully franked dividend of 4 cents per share,
as foreshadowed in the Prospectus.
Looking ahead, the positive structural trends that
underpin demand for our products and services in the
longer term continue unimpeded. While the fleet leasing
market has grown over time, Australia is still materially
lagging more mature markets such as the UK and
the US in terms of penetration of outsourced fleet
management services.
We continue to see more and more first time outsourcers
coming to the market as they recognise that fleet
management is not one of their core competencies.
They increasingly appreciate the benefits that our
exceptional asset management expertise can bring
to their organisations.
Increasingly, corporates and employers tap into our vehicle
leasing expertise to structure arrangements that suit their
fleet and salary packaging needs. Continuous innovation
is one of our key differentiators and we have again led
from the front with the launch of new products and
technology that help optimise our customers’ fleets from
a cost and utilisation perspective.
We have a strong market position across both the
corporate and the salary packaging space and this
diversified business model creates multiple revenue and
growth opportunities. It also helps us manage risk, such
as the disruptions in the novated business last year. Our
growth is built on a high quality, diverse customer base
across governments and corporates. In many cases,
customers have been with us for more than a decade
and the strength of our government relationships is
exceptional.
6
SG Fleet Group Limited
The Board has declared a FY2014 final dividend
of 4 cents per share, fully franked, in respect
of the reported period. This dividend will
be paid on 29 October 2014 to shareholders
entitled to receive dividends and registered
on the record date of 8 October 2014.
These competitive advantages are also applied by our
businesses in the United Kingdom and New Zealand.
In the UK, the general business climate has been more
positive than at any other time post-GFC. The fleet
leasing industry is growing again, particularly in the salary
sacrifice segment, where we are now offering a unique
and attractive proposition built around our Australian
expertise in this area. In New Zealand, the market is stable
to positive and we intend to take full advantage of our
relationships with major financial institutions to generate
attractive business leads.
In summary, our performance relative to our Prospectus
forecast confirms the appeal of the industry in which we
operate, the strengths of your Company and our potential
for further success in coming years.
We have an experienced Board in place and the collective
expertise of our Directors will be a great asset on our
journey. I would also like to acknowledge the support
of Super Group, our majority shareholder.
I encourage you to read the Chief Executive Officer’s Report
in this document, which provides an overview of business
developments as well as detailed financial information.
I would like to take this opportunity to thank you, our
shareholders, for your support in what has been an
exciting year for your Company, one in which we have
made the transformation into a listed entity and taken
the first steps towards further growth. I also welcome our
Directors and thank the leadership team and our staff for
their efforts throughout the period.
Andrew Reitzer
Chairman
Chief Executive Officer’s Report
Dear Shareholder
It gives me pleasure to report on SG Fleet Group Limited’s
maiden financial performance for the period ended
30 June 2014.
My commentary applies to our performance during the
period from 6 March 2014, when we started trading as
SG Fleet Group Limited, to 30 June 2014. Throughout
my report, I will compare our reported results with the
pro forma financial figures that have been prepared as if we
had traded as SG Fleet Group Limited for the full financial
year, so that I am consistent with the pro forma statement
contained in our Initial Public Offering Prospectus. You will
find both statutory and pro forma figures summarised in
the tables contained in this document.
Group result
Your Company has continued to trade well through the
final months of the reported period. We are pleased to
have been admitted to the Australian Securities Exchange
on 4 March 2014, a very significant event in our evolution.
For the period, we reported total revenue of
$156.5 million, less than 1% below our Prospectus
forecast. As a result of lower than forecast expenses
(at $105.7 million vs. $107.3 million forecast), we
achieved a better than forecast profit before tax of
$50.8 million (vs. $50.2 million forecast). The lower
than expected expenses were primarily due to lower
fleet running costs. At the net profit after tax level,
we exceeded our forecast by 1.4% to record a
$35.4 million profit.
Relative to the 2013 financial year, the 0.3% decline in
revenue and 5.9% decline in net profit after tax are due
to the temporary disruption in the novated segment as
a result of the Labor Government’s Fringe Benefits Tax
(‘FBT’) proposal in July 2013.
Total revenue reflects growth that has resulted from
the roll-on of a number of fleet management contracts
that were won over the last few years. It is usual for
vehicles to roll on to our fleet over a period of time after
contract wins.
New deliveries of vehicles during the period have been
somewhat slower than budgeted internally as a result
of a higher volume of extensions, where - rather than
replacing vehicles - customers opt to retain vehicles
already in their fleet for a period beyond the initial term
of the lease. The Federal Budget in May also impacted
delivery volumes as certain customers delayed activity until
the Budget’s announcement. Activity has now returned to
normal levels, however tenders are taking longer to come
to a conclusion.
Management and maintenance income of $59.8 million
for the period is 1.4% higher than forecast. This was
primarily driven by a higher than forecast average
maintenance income per unit.
Insurance income contributed towards revenue from
additional products and services exceeding the Prospectus
forecast by 2.7%, at $41.7 million.
Funding commissions revenue was lower than forecast,
at $23.6 million, as a result of the lower than forecast
deliveries referred to above.
End of lease income, at $12.7 million, was 1.6% higher
than forecast. This was despite an increase in formal
contract extensions resulting in a smaller number of
vehicles being returned, again partially because of the
slowdown pre-Budget and a relatively uncertain economic
climate. While overall residual values have continued
to come off as previously foreshadowed, average gross
profit achieved per vehicle was higher than forecast,
compensating for the lower number of vehicles returned.
Lower than forecast rental income (at $12.2 million vs.
$13.1 million forecast) is predominantly the consequence
of fewer vehicles going into inertia, which generates
rental income, because their contracts are instead being
formally extended.
At $6.5 million, other income was 13.3% below forecast.
This was driven by lower Early-Termination fee income,
which is linked to the higher level of extensions, lower
interest income on cash balances, as well as lower fleet
projects income.
Annual Report 2014
7
Chief Executive Officer’s Report
Business development
The contract tender pipeline remains very full, with a
number of large and exciting opportunities currently in
the market. The Company’s tender win percentages were
well in excess of its estimated market share during the
reported period and we remain confident of continuing
this trend with the same differentiated offering that
has delivered success in the past. However, we remain
selective and will only tender for contracts where we
see a clear business benefit.
In addition, we continue to focus on converting new
entrants to our outsourced model. We are also making
progress in converting fleet management customers
to full leasing services. Key to this is developing our
understanding of customers’ needs and our ability
to respond to those needs. For that purpose, we are
investigating the introduction of a new service quality
measurement model.
Major progress has also been made with government
contracts in the past period and our government clients
remain highly satisfied with our offering. In our view, the
recent Budget has confirmed that the Federal Government
is increasingly focusing on a more efficient management
of its assets, and we are seeing a similar pattern at State
level. We feel the Company can assist governments with
their cost control agenda by providing more efficient fleet
management.
We are looking at a number of options to deepen
our relationships with government clients and see
opportunities for our novated lease business emerging on
the back of these relationships.
Increased penetration of existing customers is a constant
in all of our marketing efforts, and we are taking full
advantage of the duration and strength of customer
relationships to introduce a suite of after-market products
to the corporate market.
8
SG Fleet Group Limited
United Kingdom and New Zealand
Last year, the UK business was re-shaped to focus
on winning and managing customers on a direct
basis. We have completed our move out of the broker
market in the corporate segment, which has seen a
significant improvement in the profitability and risk
profile of the business.
We remain focussed on further developing our burgeoning
salary sacrifice and tool-of-trade client bases by offering
differentiated products and services. Our salary sacrifice
product is unique in the UK market place and has led to a
number of wins in the corporate and public sector markets.
The market for salary sacrificed vehicles is growing strongly
and we have a healthy pipeline of opportunities.
Our tool-of-trade product in the UK is being well
accepted with a number of promising wins in the mid-tier
corporate market.
Looking ahead, the key to further progress in the UK
is execution of our strategic focus and the building of
further critical mass.
The New Zealand opportunities pipeline has
seen unprecedented growth and we are confident
of maintaining a healthy conversion rate. In
particular, our good relationship with major financial
institutions is providing the Company with sizeable,
attractive opportunities.
Innovation
In all our businesses and geographies, technology
and continued innovation allow us to create a strong
differentiator for our customer proposition. Our aim
is to improve the quality and width of our offering to
customers. In doing so, we strengthen our relationships by
penetrating the customer further with new products. We
also create additional income streams.
Examples of this include our In-Vehicle Asset Management
capability, as well as a number of Work Health and Safety
applications, which continue to be upgraded on a regular
basis. These products have already been introduced to
major customers and the response has been very positive.
Regulatory environment
Prior to the Federal election, the Coalition Opposition took
a strong stance against the Labor Government’s proposal
to change FBT legislation as it relates to motor vehicles.
The new Government has since reiterated its support for
our industry, as demonstrated by the absence of any related
measures in the Federal Budget. Novated volumes have now
recovered and we do not expect any further measures that
will impact our 2015 financial year forecasts.
The industry is also monitoring developments regarding
new and second hand vehicle import tariffs. In our view,
the abolishment of such tariffs is unlikely to cause a
material decline in new vehicle prices or lead to mass
imports that could materially impact the residual value of
used vehicles. As such, we see little effect on our business.
“ We have a strong market presence across
the corporate and salary packaging segments
and we have core expertise in all the areas
we choose to operate in. We lead the way in
products and services innovation, and we have
built a high quality, diverse customer base
across both governments and corporates. “
Outlook
We are pleased to have exceeded our profit forecasts and
we believe further success will be achieved by taking full
advantage of our unique customer proposition.
We have a strong market presence across the corporate
and salary packaging segments and we have core
expertise in all the areas we choose to operate in. We lead
the way in products and services innovation, and we have
built a high quality, diverse customer base across both
governments and corporates.
In terms of our financial health, our financial position is
strong, with zero net gearing.
In the context of an underpenetrated market, scope for
further improvement of customer service and internal
processes, as well as a strong opportunity conversion rate
and highly visible fee-based revenue streams, we remain
confident of achieving the 2015 financial year forecasts as
disclosed in our Prospectus.
I would like to thank my executive as well as all members
of our team for their contributions to our success this
year. It has been an important year in the life of SG Fleet.
We have welcomed our shareholders and we are now
fully focused on retaining your support by growing our
business and providing attractive returns.
Robbie Blau
Chief Executive Officer
Annual Report 2014
9
Chief Executive Officer’s Report
Pro forma adjustments to the statutory income statement
Table 1 below sets out the adjustment to the Statutory Results for 2013 and 2014 to primarily reflect the
acquisitions that SG Fleet Group Limited has made since 1 July 2013 as if they had occurred as at 1 July 2013
and the full year impact of the operating and capital structure that is in place following completion of the Initial
Public Offering (’IPO’) as if it was in place as at 1 July 2013. In addition, certain other adjustments to eliminate
non‑recurring items have been made. These adjustments are summarised below:
Table 1 – Pro forma adjustments to the consolidated income statements for the financial year ended
30 June 2013 and 30 June 2014
Statutory revenue
Interest income
Exit fees
Pro forma revenue
Statutory NPAT
RPS interest
Management fees
Listed public company costs
Interest income
Exit fees
Bonus shares and bonus payment
Transaction costs
Income tax effect
Pro forma NPAT
Consolidated
30 Jun 2014
$m
30 Jun 2013
$m
165.7
(1.1)
(8.1)
156.5
34.9*
2.5
0.6
(1.1)
(1.1)
(8.1)
4.7
0.5
2.5
35.4
157.0
‑
‑
157.0
33.5
4.9
0.6
(1.81)
‑
‑
‑
‑
0.4
37.6
* The statutory NPAT of $34.9 million comprised the statutory NPAT of SG Fleet Holdings Pty Limited and its
subsidiaries for the period 1 July 2013 to 5 March 2014 of $19.3 million aggregated with the statutory NPAT
of SG Fleet Group Limited and its subsidiaries for the period 6 March 2014 to 30 June 2014 of $15.6 million.
10
SG Fleet Group Limited
Pro forma consolidated income statements: Financial year ended 30 June 2014
compared to financial year ended 30 June 2013
The pro forma consolidated income statement for the financial year ended 30 June 2014 has been prepared
on the same basis as the pro forma consolidated financial income statement for the year ended 30 June 2013
published in the SG Fleet Group IPO prospectus issued in February 2014.
Table 2 below sets out the pro forma consolidated income statement for the financial year ended 30 June 2014
compared to the pro forma consolidated income statement for the financial year ended 30 June 2013.
Table 2 – Pro forma consolidated income statements: financial year ended 30 June 2014 compared
to financial year ended 30 June 2013
Revenue
‑ Management and maintenance income
‑ Additional products and services
‑ Funding commissions
‑ End of lease income
‑ Rental income
‑ Other income
Total revenue
Fleet management costs
Employee benefits expense
Occupancy costs
Technology costs
Other expenses
Depreciation and amortisation
Finance costs
Profit before tax
Income tax expense
NPAT
Consolidated
30 Jun 2014
$m
30 Jun 2013
$m
Change
%
Prospectus
forecast
30 Jun 2014
$m
59.8
41.7
23.6
12.7
12.2
6.5
156.5
(38.6)
(42.7)
(4.1)
(2.9)
(6.4)
(6.8)
(4.2)
50.8
(15.4)
35.4
55.9
41.9
21.2
14.9
12.3
10.8
157.0
(36.7)
(41.3)
(3.5)
(2.9)
(6.4)
(7.8)
(4.5)
53.9
(16.3)
37.6
7.0
(0.5)
11.3
(14.8)
(0.8)
(39.8)
(0.3)
(5.2)
(3.4)
(17.1)
‑
‑
12.8
6.7
(5.8)
5.5
(5.9)
59.0
40.6
24.8
12.5
13.1
7.5
157.5
(39.5)
(42.7)
(4.1)
(2.9)
(6.6)
(7.4)
(4.1)
50.2
(15.3)
34.9
Summary key operating metrics
Table 3 – Summary key operating metrics: financial year ended 30 June 2014 compared to
financial year ended 30 June 2013
Fleet size (end of period)
83,837
80,757
3.8%
84,773
Consolidated
30 Jun 2014
30 Jun 2013
Change
Prospectus
forecast
30 Jun 2014
Key financial metrics
‑ NPAT growth
‑ NPAT margin
(5.9)%
22.6%
59.3%
23.9%
(7.2)%
22.2%
Annual Report 2014
11
Significant changes in the state of affairs
The Company was incorporated on 15 January 2014
and listed on the Australian Securities Exchange (‘ASX’)
on 4 March 2014, with the code SGF.
On 6 March 2014, the Company raised $188,595,000
by issuing 101,943,359 ordinary shares in an Initial
Public Offering (‘IPO’). Effective 6 March 2014 (the
acquisition date) the Company acquired 100% of the
issued capital of SG Fleet Holdings Pty Limited and
its subsidiaries.
There were no other significant changes in the state
of affairs of the Group during the financial period.
Matters subsequent to the end of the
financial period
Apart from the dividend declared as discussed above, no
other matter or circumstance has arisen since 30 June
2014 that has significantly affected, or may significantly
affect the Group’s operations, the results of those
operations, or the Group’s state of affairs in future
financial years.
Likely developments and expected results
of operations
Likely developments in the operations of the Group
and the expected results of those operations are
contained in the Chairman’s Report and Chief Executive
Officer’s Report.
Environmental regulation
The Group is not subject to any significant
environmental regulation under Australian
Commonwealth or State law.
Directors’ Report
The Directors present their report, together with the
financial statements, on the consolidated entity (referred
to hereafter as the ‘Group’) consisting of SG Fleet Group
Limited (referred to hereafter as the ‘Company’ or
‘parent entity’) and the entities it controlled at the end
of, or during, the period ended 30 June 2014.
Directors
The names and particulars of the Directors of the
Company during or since the end of the period are:
Andrew Reitzer (Chairman)
(appointed 12 February 2014)
Robbie Blau (appointed 15 January 2014)
Cheryl Bart AO (appointed 15 January 2014)
Graham Maloney (appointed 15 January 2014)
Peter Mountford (appointed 12 February 2014)
Kevin Wundram (alternate for Robbie Blau)
(appointed 24 June 2014)
Colin Brown (alternate for Peter Mountford)
(appointed 27 February 2014)
Details of the Directors are set out in the section
‘Information on Directors’ below.
Principal activities
During the financial period the principal activities of the
Group consisted of motor vehicle fleet management and
salary packaging services.
Dividends
On 18 August 2014, the Directors declared a fully‑
franked dividend of four cents per ordinary share.
The final dividend will be paid on 29 October 2014 to
shareholders registered on 8 October 2014. The financial
effect of dividends declared after the reporting date are
not reflected in the 30 June 2014 financial statements
and will be recognised in subsequent financial reports.
Review of operations
The profit for the Group after providing for income tax
amounted to $15,620,000.
The Company was incorporated on 15 January 2014
and commenced trading on 6 March 2014. Therefore
the Group’s trading results are for the four month period
from 6 March 2014 to 30 June 2014.
Refer to Chairman’s Report and Chief Executive Officer’s
Report for further commentary on the review of
operations.
12
SG Fleet Group Limited
Information on Directors
Andrew Reitzer
(appointed 12 February 2014)
Independent Non‑Executive Director and Chairman
Qualifications:
Bachelor of Commerce and a Master of Business
Leadership from the University of South Africa
Experience and expertise:
Andrew has over 35 years of global experience in the
retailing and wholesaling industry. He has served as
the Chief Executive Officer (‘CEO’) of Metcash Limited
between 1998 and 2013, and continues as a consultant.
Prior to his appointment as CEO of Metcash, Andrew
held various management roles at Metro Cash & Carry
Limited and was appointed to lead the establishment of
Metro’s operations in Israel and Russia and served as the
Group Operations Director.
Other current directorships:
None
Former directorships (last 3 years):
Metcash Limited (ASX: MTS) (resigned 30 June 2013)
Special responsibilities:
Chairman of the Nomination and Remuneration
Committee
Interests in shares:
81,081 ordinary shares in the Company
Robert (Robbie) Blau
(appointed 15 January 2014)
Chief Executive Officer (‘CEO’)
Qualifications:
Bachelor of Commerce (Accounting and Law),
Bachelor of Laws (Cum Laude) from the University of
the Witwatersrand, Higher Diploma in Tax Law from
Johannesburg University
Experience and expertise:
Robbie was appointed CEO of SG Fleet in July 2006 and
has over 10 years of experience in the fleet management
and leasing industry. Robbie has overall responsibility for
the strategic development of the Group and manages its
relationships with financial services partners. Previously,
Robbie was Managing Director of Nucleus Corporate
Finance in South Africa, which he founded in 1999.
During his time at Nucleus Corporate Finance, Robbie
advised South African listed entity Super Group Limited
on corporate advisory and strategic projects. He also
spent a year working with the Operations Director
of South African Breweries Limited and practised as
a commercial attorney for five years at Werksmans
Attorneys in South Africa.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
6,756,425 ordinary shares in the Company
Cheryl Bart AO
(appointed 15 January 2014)
Independent Non‑Executive Director
Qualifications:
Bachelor of Commerce and Bachelor of Laws from the
University of New South Wales, Fellow of the Australian
Institute of Company Directors
Experience and expertise:
Cheryl is a qualified lawyer and company director with
experience across industries including financial services,
utilities, energy, television and film. She was awarded
the Order of Australia in the Australia Day Honours in
January 2009. Cheryl previously worked as a lawyer
specialising in Banking and Finance at Mallesons
Stephen Jaques (now King & Wood Mallesons). Cheryl
is immediate past Chairman of ANZ Trustees Ltd, the
Environment Protection Authority of South Australia,
the South Australian Film Corporation, Adelaide Film
Festival and the Foundation for Alcohol Research and
Education (FARE). She is the 31st person in the world to
complete The Explorer’s Grand Slam, and is a Patron of
SportsConnect.
Other current directorships:
Australian Broadcasting Corporation (ABC), Spark
Infrastructure Ltd, South Australian Power Networks,
Audio Pixels Holdings Limited (ASX: AKP), Football
Federation of Australia (FFA), Local Organising
Committee 2015 Australia Asian Cup and the Australian
Himalayan Foundation.
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
and member of the Nomination and Remuneration
Committee
Interests in shares:
27,027 ordinary shares in the Company
Annual Report 2014
13
Other current directorships:
Super Group Limited (JSE: SPG)
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
and member of the Nomination and Remuneration
Committee
Interests in shares:
540,540 ordinary shares in the Company
Kevin Wundram
(appointed Alternate Director on 24 June 2014)
Alternate Director for Robbie Blau and Chief Financial
Officer (‘CFO’)
Qualifications:
Bachelor of Commerce from the University of the
Witwatersrand, Honours Bachelor of Accounting Science
degree from the University of South Africa, Chartered
Accountant
Experience and expertise:
Kevin has been CFO of SG Fleet Group since July 2006
and has 10 years of experience in the fleet management
and leasing industry. He is responsible for the effective
management of the finance, treasury and corporate
governance functions across the Group. Prior to joining
the Group, Kevin was responsible for special projects
at Super Group Limited, including the execution of
acquisitions, disposals and due diligence. Kevin was
also a member of the management committees of the
Automotive Parts, Commercial Dealerships and Supply
Chain Divisions. Prior to joining Super Group, Kevin
worked in the audit and corporate finance divisions
of KPMG South Africa for six years.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
1,863,840 ordinary shares in the Company
Directors’ Report
Graham Maloney
(appointed 15 January 2014)
Independent Non‑Executive Director
Qualifications:
Bachelor of Arts from the University of Sydney, Associate
of the Institute of Actuaries of Australia, Fellow of the
Australian Institute of Company Directors
Experience and expertise:
Graham has over 40 years of experience in financial
services, including superannuation, life insurance,
commercial banking, investment banking and stock
broking. He is the CEO of Stratagm, which he
established in 2009 to provide strategic and financial
advisory services to both businesses and individuals.
Graham’s experience includes roles as Division Director
at Macquarie Capital and as Group Treasurer at National
Australia Bank.
Other current directorships:
Director of SFG Australia (ASX: SFW), Chair,
Connective Group
Former directorships (last 3 years):
None
Special responsibilities:
Chairman of the Audit, Risk and Compliance Committee
Interests in shares:
27,027 ordinary shares in the Company
Peter Mountford
(appointed 12 February 2014)
Non‑Executive Director
Qualifications:
Bachelor of Commerce and Bachelor of Accountancy
from the University of the Witwatersrand, Chartered
Accountant, Higher Diploma in Taxation from the
University of Witwatersrand and MBA (With Distinction)
from Warwick University
Experience and expertise:
Peter is the nominee for Super Group Limited, has over
20 years of senior management experience and currently
serves as the CEO of Super Group Limited since 2009.
Prior to becoming the CEO of Super Group, he served
as the Managing Director of Super Group’s Logistics and
Transport division and later its Supply Chain division.
Peter’s experience also includes six years as the CEO
of Imperial Holdings’ Consumer Logistics division and
as Managing Director of South African Breweries
Diversified Beverages. He is currently a Director of The
Road Freight Association in South Africa.
14
SG Fleet Group Limited
Colin Brown
(appointed Alternate Director on 27 February 2014)
Alternate Director for Peter Mountford
Qualifications:
Bachelor of Accounting Science degree from the
University of South Africa (‘UNISA’), Honours Bachelor
of Accounting Science degree from UNISA, Certificate
in the Theory of Accounting from UNISA, Chartered
Accountant (South Africa), Master in Business Leadership
degree from the UNISA School of Business Leadership
Experience and expertise:
Colin provided support services to Super Group Limited’s
treasury activities in Johannesburg from June 2009 to
February 2010, and was appointed to the Super Group
Limited’s board as CFO in February 2010. Prior to that,
Colin was CFO and a member of the board of Celcom
Group Limited, a business in the mobile phone industry
and previously listed on the Alternative Exchange (‘AltX’)
of the Johannesburg Stock Exchange (‘JSE’). Colin has
also held the Financial Director position at Electronic
Data Systems (‘EDS’) Africa Limited and Fujitsu Services
South Africa, both multi‑national companies in the
information technology services industry.
Other current directorships:
Super Group Limited (JSE: SPG), Bluefin Investments
Limited (Mauritius)
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
108,108 ordinary shares in the Company
‘Other current directorships’ set out above are current
directorships for listed entities only and excludes
directorships of all other types of entities, unless
otherwise stated.
‘Former directorships (last 3 years)’ quoted above are
directorships held in the last 3 years for listed entities
only and excludes directorships of all other types of
entities, unless otherwise stated.
Company secretary
Julianne Lyall‑Anderson LLB (Hons), Grad Dip Legal
Practice, has 18 years’ experience as a Company
Secretary. Prior to joining the Group, Julianne was
Group Company Secretary at McWilliam’s Wines Group
Limited, Wattyl Limited and Dyno Nobel Limited.
Julianne was appointed Group Company Secretary on
24 June 2014.
Kevin Wundram was appointed as Company Secretary
on 15 January 2014 and resigned on 24 June 2014.
Refer to ‘Information on Directors’ above for details of
Kevin’s experience and expertise.
Meetings of Directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held
during the period ended 30 June 2014, and the number of meetings attended by each Director were:
Board of Directors
Audit, Risk and
Compliance Committee
Nomination and Remuneration
Committee
Attended
Held
Attended
Held
Attended
Held
Andrew Reitzer
Robbie Blau
Cheryl Bart AO
Graham Maloney
Peter Mountford
5
5
5
5
5
5
5
5
5
5
–
–
1
1
1
–
–
1
1
1
2
–
2
–
2
2
–
2
–
2
Held: represents the number of meetings held during the time the Director held office or was a member of the
relevant committee.
Kevin Wundram and Colin Brown did not attend any meetings in their capacity as an Alternate Director during
the financial period.
Annual Report 2014
15
Directors’ Report
Remuneration report (audited)
The remuneration report, which has been audited,
details the Key Management Personnel (‘KMP’)
remuneration arrangements for the Group, in
accordance with the requirements of the Corporations
Act 2001 and its Regulations.
The remuneration report is set out under the following
main headings:
• Principles used to determine the nature and
amount of remuneration
• Details of remuneration
• Service agreements
• Share‑based compensation
• Additional information
• Additional disclosures relating to key
management personnel
Principles used to determine the nature and
amount of remuneration
The objective of the Group’s executive reward
framework is to ensure reward for performance is
competitive and appropriate for the results delivered.
The framework aligns executive reward with the
achievement of strategic objectives and the creation of
value for shareholders, and conforms to market best
practice for delivery of reward. The Board ensures that
executive reward satisfies the following key criteria for
good reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage / alignment of executive
compensation; and
• transparency.
The main role of the Nomination and Remuneration
Committee is to assist the Board in fulfilling its corporate
governance responsibilities and to review and make
recommendations in relation to the remuneration
arrangements for its Directors and executives. The
Nomination and Remuneration Committee comprises
two independent Non‑Executive Directors and one
Non‑Executive Director and meets regularly throughout
the financial period. The CEO and CFO attend
certain committee meetings by invitation, where
management input is required. The CEO and CFO are
not present during any discussions related to their own
remuneration arrangements.
16
SG Fleet Group Limited
The performance of the Group depends on the quality
of its Directors and executives. The remuneration
philosophy is to attract, motivate and retain high
performing, quality executives.
In consultation with external remuneration consultants
(refer to the section ‘Use of remuneration consultants’
below), the Nomination and Remuneration Committee
has structured an executive remuneration framework
that is market competitive and complementary to the
reward strategy of the Group.
Alignment to shareholders’ interests:
• has economic profit as a core component of
plan design;
• focuses on sustained growth in shareholder wealth,
consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as
well as focusing the executive on key non‑financial
drivers of value; and
• attracts and retains high calibre executives.
Alignment to executives’ interests:
• rewards capability and experience;
• reflects competitive reward for contribution to growth
in shareholder wealth; and
• provides a clear structure for earning rewards.
In accordance with best practice corporate governance,
the structure of Non‑Executive Directors and executive
remunerations are separate.
Non-Executive Directors’ remuneration
Fees and payments to Non‑Executive Directors reflect
the demands that are made on, and the responsibilities
of these Directors. Non‑Executive Directors’ fees and
payments are reviewed annually by the Nomination
and Remuneration Committee. The Nomination
and Remuneration Committee may, from time to
time, receive advice from independent remuneration
consultants to ensure Non‑Executive Directors’ fees and
payments are appropriate and in line with the market.
The Chairman’s fees are determined independently
to the fees of other Non‑Executive Directors based
on comparative roles in the external market. The
Chairman is not present at any discussions relating to
determination of his own remuneration. Non‑Executive
Directors do not receive retirement benefits, share
options or other cash incentives.
The remuneration of Non‑Executive Directors consists
of Directors’ fees and committee fees. The Chairman of
the Board attends all committee meetings but does not
receive committee fees in respect of his role as Chairman
or member of any committee.
Non‑Executive Director fees (Directors’ fees and committee fees) (inclusive of superannuation) proposed for the year
ending 30 June 2015, amounting to $445,000 is summarised as follows:
FY 2015 Fees
$165,000
$92,500
$95,000
$92,500
Long‑term incentives (‘LTI’) are set annually for KMP
(‘Participants’) in order to align remuneration with the
creation of shareholder value over the long term. LTI
include long service leave and share‑based payments.
LTI to Participants are made under the Equity Incentive
Plan (‘EIP’) and are currently delivered in the form of
share options. The number of options granted will be
based on a fixed percentage of the relevant Participant’s
TFR and will be issued to the Participant at no cost.
For the period ended 30 June 2014, KMP were granted
options to the value of their maximum LTI opportunity.
Each option was granted with an exercise price of $1.85
(the IPO Offer Price for the shares).
Options granted to the CEO and other KMP vest
subject to the satisfaction of performance conditions.
The performance conditions will be tested over a
performance period of at least 3 years, with no
opportunity for re‑test. The performance conditions
must be satisfied in order for the options to vest and
become exercisable.
For the 2014 LTI offer, the relevant performance
period commences at the date of the Group’s listing
on 4 March 2014 and concludes on 30 June 2017, a
period of 39 months (‘the Performance Period’). The
performance conditions for the 2014 LTI offer will be
based on the compound annual growth rate (‘CAGR’) of
the Group’s earnings per share (‘EPS’). The performance
period and applicable performance conditions for any
future LTI opportunities will be determined by the Board
and specified in the relevant offer document.
Name – Position
Andrew Reitzer – Independent Non‑Executive Chairman
Cheryl Bart AO – Independent Non‑Executive Director
Graham Maloney – Independent Non‑Executive Director
Peter Mountford – Non‑Executive Director
The total aggregate Non‑Executive Directors fees have
been fixed at $1,000,000 per annum.
Executive remuneration
The Group aims to reward executives with a level
and mix of remuneration based on their position
and responsibility, which has both fixed and variable
components.
The executive remuneration and reward framework
has four components:
• base salary and non‑monetary benefits;
• short‑term performance incentives;
• share‑based payments; and
• other remuneration, such as superannuation and
long service leave.
The combination of these comprises the executive’s
total remuneration.
Total Fixed Remuneration (‘TFR’) consisting of base
salary, superannuation and non‑monetary benefits, are
reviewed annually by the Nomination and Remuneration
Committee, based on individual and business unit
performance, the overall performance of the Group and
comparable market remunerations.
Executives may receive their fixed remuneration in the
form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional
costs to the Group and provides additional value to
the executive.
The short‑term incentives (‘STI’) program is designed to
align the targets of the business units with the targets
of those executives responsible for meeting those
targets. STI payments are granted to executives based on
specific annual targets. A performance modifier applies
in relation to award of the short‑term incentive. For an
executive to receive payment under the STI program, their
performance has to be regarded as entirely satisfactory.
Where an executive is regarded as below competent,
the award under the STI program will be adjusted by the
Nomination and Remuneration Committee.
Annual Report 2014
17
Directors’ Report
The percentage of options that vest and become exercisable, if any, will be determined by reference to the vesting
schedule, summarised as follows:
CAGR of EPS over the Performance Period
% of options that become exercisable
Less than 5%
5% (Threshold performance)
Between 5% and 15%
Nil
30%
Straight‑line pro‑rata vesting between 30% and 100%
15% or above (Stretch performance)
100%
Group performance and link to remuneration
The financial performance measure driving STI payment
outcomes for the period ended 30 June 2014 was
net profit after tax (‘NPAT’). Based on the Group’s
FY 2014 NPAT performance meeting the threshold
FY 2014 pro forma forecast NPAT as disclosed in the
IPO prospectus, KMP will receive the threshold STI
percentage as set out in the service agreement section
below. The proportion of the maximum STI awarded to
the KMP is at the discretion of the Board.
STI for KMP for the years ending 30 June 2015 and
thereafter will be determined on a straight‑line basis,
based on the Group achieving EPS growth of between
5.0% and 15.0% over the previous financial year. No
award will be made if the Group’s EPS growth is less
than 5.0% over the previous financial year.
The performance measure that drives LTI vesting is the
CAGR of the Group’s EPS over the relevant performance
period. The Group’s EPS for the period 6 March 2014 to
30 June 2014 was 9.13 cents per share.
Use of remuneration consultants
During the financial period ended 30 June 2014,
the Group engaged Egan Associates (‘Remuneration
Consultant’), to review its existing remuneration policies
and provide recommendations to improve the STI and
LTI programs. The Remuneration Consultant was paid
$58,905 for these services. Additional services provided
by the Remuneration Consultant included other advisory
services and the fees for all other services were $12,000.
The Remuneration Consultant has confirmed that the
remuneration recommendations were made free from
undue influence by the Group’s KMP.
The Board is satisfied that these protocols were followed
and as such there was no undue influence.
Any options that remain unvested at the end of
the Performance Period will lapse immediately. The
Participant must exercise any vested options within 12
months of vesting. After 12 months, any unexercised
options will lapse. The Participant will be entitled to
receive one share for each option that vests and is
exercised. The Board may make an equivalent cash
payment in lieu of providing shares to the participant.
Any cash payment is at the Group’s discretion only.
The options do not carry dividends or voting rights prior
to vesting and exercise. Participants must not sell, transfer,
encumber, hedge or otherwise deal with the options.
The EIP provides the Board with broad ‘clawback’
powers if, amongst other things, the Participant has
acted fraudulently or dishonestly, engaged in gross
misconduct or has acted in a manner that has brought
the Group into disrepute, or there is a material financial
misstatement, or the Group is required or entitled under
law or company policy to reclaim remuneration from
the Participant, or the Participant’s entitlements vest as
a result of fraud, dishonesty or breach of obligations of
any other person and the Board is of the opinion that
the incentives would not have otherwise vested.
If the Participant ceases employment for cause, the
unvested options will automatically lapse unless the
Board determines otherwise. In other circumstances, the
options will remain on foot with a broad discretion for
the Board to vest or lapse some or all of the options, the
latter of which the Board will ordinarily exercise in the
case of resignation.
Where there may be a change of control event, the
Board has the discretion to accelerate vesting of
some or all of the options and the Board will notify
the Participant of the date on which any vested but
unexercised options will expire. Where only some of the
options are vested on a change of control event, the
remainder of the options will immediately lapse.
The EIP also provides flexibility for the Group to grant,
subject to the terms of individual offers, performance
rights and restricted shares.
18
SG Fleet Group Limited
Details of remuneration
Amounts of remuneration
Details of the remuneration of the KMP of the Group are set out in the following tables.
The KMP of the Group consisted of the Directors of SG Fleet Group Limited and the following persons:
• Andy Mulcaster – Managing Director, Australia
• David Fernandes – Managing Director, United Kingdom
• Geoff Tipene – Managing Director, New Zealand
• Annie Margossian‑Kenny – General Manager, Business Quality
Period ended 30 Jun 2014
Non-Executive Directors:
Andrew Reitzer (Chairman)
Cheryl Bart AO
Graham Maloney
Peter Mountford
Cash
salary
and fees
$
50,329
28,215
31,667
30,833
Colin Brown (Alternate Director)
–
Executive Directors:
Robbie Blau (CEO)
Kevin Wundram (CFO and
Alternate Director)
Other Key Management Personnel:
Andy Mulcaster
David Fernandes
Geoff Tipene
205,745
432,000
110,013
192,500
122,863
158,802
107,900
125,812 5,734
57,183
127,329 8,252
Annie Margossian‑Kenny
86,044
112,702
–
Short‑term
benefits
Post‑
employment
benefits
Non‑
monetary
$
Bonus
$
Super‑
annuation
$
Long‑
term
benefits
Long
service
leave
$
Share‑
based
payments
Equity‑
settled
$
Total
$
–
–
–
–
–
–
–
–
–
–
–
–
–
4,671
2,619
–
–
–
–
–
–
–
–
–
–
–
55,000
30,834
31,667
1,000,000
1,030,833
200,000
200,000
1,475
39,491
59,077
737,788
761
10,596
24,230
338,100
756
522
2,093
1,688
1,879
17,677
301,977
93
–
13,125
253,186
103,483
298,340
1,334
10,454
212,222
830,792 1,149,145 13,986
14,585
53,393
1,428,046
3,489,947
Remuneration above is from 6 March 2014, when SG Fleet Holdings Pty Limited and its subsidiaries were acquired,
to 30 June 2014.
The Non‑Executive Directors were also paid the following amounts for services rendered prior to the Initial
Public Offering:
Name
Andrew Reitzer
Cheryl Bart AO
Graham Maloney
Peter Mountford
Amount
Fees $18,879 plus superannuation $1,746
Fees $10,584 plus superannuation $979
Fees $11,875 plus superannuation $nil
Fees $11,562 plus superannuation $nil
Annual Report 2014
19
Directors’ Report
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Andrew Reitzer
Cheryl Bart AO
Graham Maloney
Peter Mountford
Colin Brown – Alternate Director
Executive Directors:
Robbie Blau – CEO
Kevin Wundram – CFO and Alternate Director
Other Key Management Personnel:
Andy Mulcaster
David Fernandes
Geoff Tipene
Annie Margossian‑Kenny
Fixed remuneration
Period ended
30 Jun 2014
At risk – STI
Period ended
30 Jun 2014
At risk – LTI
Period ended
30 Jun 2014
100%
100%
100%
100%
100%
33%
36%
41%
45%
55%
42%
–%
–%
–%
–%
–%
59%
57%
53%
50%
43%
53%
–%
–%
–%
–%
–%
8%
7%
6%
5%
2%
5%
100% of cash bonus was paid/payable. No cash bonus was forfeited.
Service agreements
Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these
agreements are as follows:
Robbie Blau – CEO
• Agreement term: Ongoing from 1 July 2006
• TFR: $640,000 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 60% and 75% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 22.5% and 75.0% of TFR, on a straight‑line basis based on EPS
growth targets. The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015
and thereafter 50%
• LTI Opportunity: 120% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy: 4 weeks’ notice by the Company, 1 year’s TFR
material change: 4 weeks’ notice by the executive, 1 year’s TFR
without cause: 4 weeks’ notice by the Company, 1 year’s TFR
resignation: 3 months’ notice by the executive
illness/mental disability: 26 weeks’ base salary
20
SG Fleet Group Limited
Kevin Wundram – CFO
• Agreement term: Ongoing from 1 June 2006
• TFR: $350,000 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 50% and 60% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 18% and 60% of TFR, on a straight‑line basis based on EPS growth targets.
The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015 and thereafter 50%
• LTI Opportunity: 90% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy: 4 weeks’ notice by the Company, 48 weeks’ TFR
material change: 4 weeks’ notice by the executive, 48 weeks’ TFR
without cause: 4 weeks’ notice by the Company, 48 weeks’ TFR
resignation: 3 months’ notice by the executive
illness/mental disability: 26 weeks’ base salary
Andy Mulcaster – Managing Director, Australia
• Agreement term: Ongoing from 1 August 2006
• TFR: $373,652 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 35% and 50% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 15% and 50% of TFR, on a straight‑line basis based on EPS growth targets.
The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015 and thereafter 50%
• LTI Opportunity: 60% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy: 4 weeks’ notice by the Company, 48 weeks’ TFR
material change: 4 weeks’ notice by the executive, 48 weeks’ TFR
without cause: 4 weeks’ notice by the Company, 48 weeks’ TFR
resignation: 3 months’ notice by the executive
illness/mental disability: 26 weeks’ base salary
David Fernandes – Managing Director, United Kingdom
• Agreement term: Ongoing from 9 October 2006
• TFR: $313,231 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 35% and 50% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 15% and 50% of TFR, on a straight‑line basis based on EPS growth targets.
The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015 and thereafter 50%
• LTI Opportunity: 60% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy: 4 weeks’ notice by the Company, 48 weeks’ TFR
material change: 4 weeks’ notice by the executive, 48 weeks’ TFR
without cause: 4 weeks’ notice by the Company, 48 weeks’ TFR
resignation: 3 months’ notice by the executive
illness/mental disability: 26 weeks’ base salary
Annual Report 2014
21
Directors’ Report
Geoff Tipene – Managing Director, New Zealand
• Agreement term: Ongoing from 1 February 2011
• TFR: $214,031 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 35% and 50% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 15% and 50% of TFR, on a straight‑line basis based on EPS growth targets.
The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015 and thereafter 50%
• LTI Opportunity: 60% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy notice: 4 weeks’ notice by the Company
redundancy severance <1 year Nil; 1‑2 years 5 weeks; 2‑3 years 8.75 weeks; 3‑4 years 12.5 weeks, 4‑5 years
15 weeks; 5‑6 years 17.5 weeks and >6 years 20 weeks
without cause: 4 months’ notice by the Company
resignation: 3 months’ notice by the executive
Annie Margossian-Kenny – General Manager, Business Quality
• Agreement term: Ongoing from 5 February 2007
• TFR: $265,180 per annum, which includes base salary, statutory superannuation contributions and any salary
sacrifice arrangements
• STI: FY 2014 at the discretion of Board between 35% and 50% of TFR based on exceeding profit targets;
FY 2015 onward, award of between 15% and 50% of TFR, on a straight‑line basis based on EPS growth targets.
The STI is subject to a 12 month payment deferral of nil for FY 2014, 25% for FY 2015 and thereafter 50%
• LTI Opportunity: 50% of TFR
• Termination arrangements:
for cause: immediate termination
for poor performance: 4 weeks’ notice by the Company after procedural fairness has been afforded
redundancy: 4 weeks’ notice by the Company, 48 weeks’ TFR
material change: 4 weeks’ notice by the executive, 48 weeks’ TFR
without cause: 4 weeks’ notice by the Company, 48 weeks’ TFR
resignation: 3 months’ notice by the executive
illness/mental disability: 26 weeks’ base salary
Share-based compensation
Bonus IPO share and cash offers
Details of shares issued to Directors and other KMP as part of the Bonus IPO Share Offer during the period ended
30 June 2014 are set out below:
Name
Date
Shares
Issue price
$
Peter Mountford
Colin Brown
Geoff Tipene
4 March 2014
4 March 2014
4 March 2014
540,540
108,108
52,000
$1.85
$1.85
$1.85
1,000,000
200,000
96,200
22
SG Fleet Group Limited
For the period ended 30 June 2014, the Board made a once‑off offer of bonus shares and a cash bonus payment
worth a total of $4,650,000 under the EIP (’Bonus Offer’) in relation to the initial listing of the Group. The cash
component will be used to meet employees’ taxation obligations in respect of the award of bonus shares. Bonus
shares are granted as restricted shares under the EIP at no cost to the Participants.
The offer was made to a number of employees of the Group who are employed in executive level roles in order to
reward, retain and incentivise them for the future. Participants in the bonus offer are set out in the table above.
The bonus shares are placed in escrow and will be released to the Participants in two equal tranches, the first
tranche of shares will be held in escrow until the date on which the audited financial accounts of the Group for the
financial year ending 30 June 2015 have been released to the ASX and the second tranche will be held in escrow
until 28 February 2017. In order to effect the escrow arrangement, the bonus shares are held on trust for the
Participant by an equity plan trustee until they vest or are otherwise forfeited.
Bonus Offer Participants are able to direct the trustee how to vote the bonus shares and are entitled to receive
dividends earned during the escrow period. Participants must not sell, transfer, encumber, hedge or otherwise deal
with bonus shares during the escrow period.
Upon cessation of employment, a Participant’s bonus shares will continue to be held on trust until the end of the
relevant escrow period. In a situation where there may be a change of control, the Board has the discretion to
release some or all of the bonus shares from escrow.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and
other KMP in this financial period or future reporting years are as follows:
Grant date
4 March 2014
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value
per option
at grant date
30 June 2017 30 June 2018
$1.85
$0.252
Options granted carry no dividend or voting rights and can be exercised only once the vesting conditions have been
met until their expiry date.
The number of options over ordinary shares granted to and vested by Directors and other KMP as part of
compensation during the period ended 30 June 2014 are set out below:
Name
Robbie Blau
Kevin Wundram
Andy Mulcaster
David Fernandes
Geoff Tipene
Annie Margossian‑Kenny
Number of
options granted
during the period
Number of
options vested
during the period
Period ended
30 Jun 2014
Period ended
30 Jun 2014
3,047,619
1,250,000
911,890
677,063
375,695
539,305
–
–
–
–
–
–
Annual Report 2014
23
Directors’ Report
Values of options over ordinary shares granted, exercised and lapsed for Directors and other KMP as part of
compensation during the period ended 30 June 2014 are set out below:
Name
Robbie Blau
Kevin Wundram
Andy Mulcaster
David Fernandes
Geoff Tipene
Annie Margossian‑Kenny
Value of options
granted during
the period
$
Value of options
exercised during
the period
$
Value of options
lapsed during
the period
$
Remuneration
consisting of
options for
the period
%
768,000
315,000
229,796
170,620
94,675
135,905
–
–
–
–
–
–
–
–
–
–
–
–
Additional information
The earnings of the Group since listing are summarised below:
Revenue
Profit after income tax
8%
7%
6%
5%
4%
5%
2014
$’000
64,083
15,620
Additional disclosures relating to key management personnel
In accordance with Class Order 14/632, issued by the Australian Securities and Investments Commission, relating
to ‘Key management personnel equity instrument disclosures’, the following disclosures relate only to equity
instruments in the Company or its subsidiaries.
Shareholding
The number of shares in the Company held during the financial period by each Director and other members of
key management personnel of the Group, including their personally related parties, is set out below:
Balance at the start
of the period
Received as part
of remuneration
Additions
Disposals/other
Balance at the
end of the period
Ordinary shares
Andrew Reitzer
Robbie Blau
Cheryl Bart AO
Graham Maloney
Peter Mountford
Kevin Wundram
Colin Brown
Andy Mulcaster
David Fernandes
Geoff Tipene
–
7,250,000
–
–
–
2,000,000
–
1,750,000
1,750,000
–
–
–
–
–
–
–
–
–
–
52,000
Annie Margossian‑Kenny
1,250,000
–
81,081
–
81,081
–
(493,575)
6,756,425
27,027
27,027
540,540
–
–
–
27,027
27,027
540,540
–
(136,160)
1,863,840
108,108
–
108,108
–
–
–
–
(119,140)
1,630,860
(119,140)
1,630,860
–
52,000
(85,100)
1,164,900
14,000,000
52,000
783,783
(953,115)
13,882,668
24
SG Fleet Group Limited
Option holding
The number of options over ordinary shares in the Company held during the financial period by each Director and
other members of key management personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of
the period
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
Options over ordinary shares
Robbie Blau
Kevin Wundram
Andy Mulcaster
David Fernandes
Geoff Tipene
Annie Margossian‑Kenny
–
–
–
–
–
–
–
3,047,619
1,250,000
911,890
677,063
375,695
539,305
6,801,572
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,047,619
1,250,000
911,890
677,063
375,695
539,305
6,801,572
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of SG Fleet Group Limited under option at the date of this report are as follows:
Grant date
4 March 2014
Expiry date
30 June 2018
Exercise
price
Number
under option
$1.85
8,086,046
Shares issued on the exercise of options
There were no ordinary shares of SG Fleet Group Limited issued on the exercise of options during the period ended
30 June 2014 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the Directors, executives and employees of the Company for costs incurred, in their
capacity as a director, executive or employee, for which they may be held personally liable, except where there is a
lack of good faith.
During the financial period, the Company’s subsidiary, SG Fleet Australia Pty Limited on behalf of the Company paid
a premium in respect of a contract to insure the Directors and executives of the Company and of any related bodies
corporates defined in the insurance policy, against a liability to the extent permitted by the Corporations Act 2001.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial period, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial period, the Company has not paid a premium in respect of a contract to insure the auditor of
the Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
Annual Report 2014
25
Directors’ Report
Non-audit services
Details of the amounts paid or payable to the auditor for non‑audit services provided during the financial period by
the auditor are outlined in note 29 to the financial statements.
The Directors are satisfied that the provision of non‑audit services during the financial period, by the auditor (or
by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 29 to the financial statements do
not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the
following reasons:
• all non‑audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision‑making capacity for
the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to ‘rounding‑off’. Amounts in this report have been rounded off in accordance with that Class
Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out on the following page.
Auditor
KPMG were appointed during the financial period and continue in office in accordance with section 327 of the
Corporations Act 2001.
There are no officers of the Company who are former audit partners of KPMG.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the Directors
Andrew Reitzer
Chairman
Robbie Blau
Chief Executive Officer
18 August 2014
Sydney
26
SG Fleet Group Limited
ABCD
Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of SG Fleet Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
period ended 30 June 2014 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Peter Russell
Partner
Sydney
18 August 2014
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
Annual Report 2014
27
Corporate Governance Statement
The Board of Directors (the ‘Board’) of SG Fleet Group Limited (the ‘Company’) is responsible for the corporate
governance of the Group. The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders, by whom they are elected and to whom they are accountable.
This statement outlines the main corporate governance practices in place, which comply with the ASX Corporate
Governance Council’s Principles and Recommendations with 2010 Amendments (2nd Edition) in accordance with
ASX Listing Rule 4.10.3, unless otherwise stated.
Principles and Recommendations
Response
Compliance
Principle 1 – Lay solid foundations for management and oversight
1.1
Establish the functions reserved
to the board and those delegated
to senior executives and disclose
those functions.
1.2
Disclose the process for
evaluating the performance of
senior executives.
1.3
Provide the information indicated
in the Guide to reporting on
Principle 1.
The Board is responsible for the overall
corporate governance of the Company.
The Board has adopted a Board
Charter, which formalises its roles and
responsibilities and defines the matters
that are reserved for the Board and
specific matters that are delegated to
senior executives.
The Board has adopted a Delegation
of Duties and Powers that sets limits of
authority for senior executives.
The Company has a process in place to
evaluate performance at all levels of the
business. The performance measures are
aligned to strategic objectives by way of
a ‘Performance Scorecard’ and ‘Quality
Gates’, which evaluate ‘People’ and
‘Business Management’ drivers.
The Board Charter is summarised in this
Corporate Governance Statement and is
disclosed in full on the Company’s website.
The Board did not conduct a performance
evaluation for senior executives in
accordance with this Principle in the
financial period ended 30 June 2014 as
the Company only listed on the ASX in
March 2014.
Complies.
Complies.
Does not currently comply.
A detailed performance
evaluation process is not currently
included in the Board Charter.
However, the Board will include
details of this process in an
updated Board Charter during the
current financial period.
The Board will undertake a
performance evaluation of the
Company’s senior executives
during the financial year ending
30 June 2015 and thereafter on
an annual basis.
28
SG Fleet Group Limited
Principles and Recommendations
Response
Compliance
Principle 2 – Structure the Board to add value
2.1
A majority of the board should be
independent directors.
Complies.
The Board consists of five Directors,
including the Chairman.
The majority (three) of the Board’s Directors
are independent.
Andrew Reitzer is an independent Non‑
Executive Chairman.
Graham Maloney is an independent Non‑
Executive Director.
Cheryl Bart AO is an independent Non‑
Executive Director.
Peter Mountford is a Non‑Executive Director
but is not independent as he is a nominee
of the Company’s majority shareholder,
Super Group.
Robbie Blau is a Director and Chief
Executive Officer, and is as such not
independent.
2.2
2.3
2.4
The chair should be an
independent director.
Andrew Reitzer is the Chairman and is an
independent Non‑Executive Director.
Complies.
The roles of chair and chief
executive officer should not be
exercised by the same individual.
The board should establish a
nomination committee.
Andrew Reitzer is the Chairman and Robbie
Blau is the Chief Executive Officer.
Complies.
Complies.
The Company has established a Nomination
and Remuneration Committee.
The Board has undertaken a review of the
mix of skills and experience on the Board in
light of the Company’s principal activities
and direction, and has considered diversity
in succession planning.
The Board considers the current mix of skills
and experience of members of the Board
and its senior executives is sufficient to
meet the requirements of the Company.
The Board supports the nomination and re‑
election of the Directors at the Company’s
forthcoming Annual General Meeting.
Annual Report 2014
29
Corporate Governance Statement
Principles and Recommendations
Response
Compliance
Does not currently comply.
A process for evaluating
individual directors is not
currently included in the Board
Charter as the Company only
listed on the ASX in March 2014.
However, the Board will include
details of this process in an
updated Board Charter during
the current financial period.
Complies.
Principle 2 – Structure the Board to add value continued
2.5
Disclose the process for
evaluating the performance
of the board, its committees
and individual directors.
The Board Charter discloses the process for
evaluating the performance of the Board
and its committees, but has not disclosed
the process for evaluating individual
directors to‑date.
2.6
Provide the information indicated
in the Guide to reporting on
Principle 2.
The information is disclosed, where
applicable, in the Directors’ Report
issued in conjunction with the Corporate
Governance Statement.
Andrew Reitzer, Graham Maloney, and
Cheryl Bart AO are independent Non‑
Executive Directors.
A director is considered independent when
that director substantially satisfies the test
for independence as set out in the ASX
Corporate Governance Recommendations.
Members of the Board are able to take
independent professional advice at the
expense of the Company.
Members of the Board, their position,
appointment date, and further details
can be found in the Directors’ Report
issued in conjunction with the Corporate
Governance Statement.
Other disclosure material on the structure
of the Board is available on the Company’s
website.
Principle 3 – Promote ethical and responsible decision-making
3.1
Establish a code of conduct and
disclose the code or a summary
of the code as to:
• the practices necessary to
maintain confidence in the
company’s integrity;
• the practices necessary to
take into account their legal
obligations and the reasonable
expectations of their
stakeholders; and
• the responsibility and
accountability of individuals
for reporting and investigating
reports of unethical practices.
Complies.
The Board has adopted a Code of Conduct,
which expresses the core values that drive
the Company’s behaviour and aspirations.
These are: to focus on delivering excellence
to the Company’s clients; to always act
in a trustworthy manner, affirming the
Company’s integrity; to reward initiative,
leadership and innovation; to encourage
mutual respect, collaboration and
knowledge sharing; to foster a culture of
ownership and accountability and recognise
the contribution and importance of each
person; and to provide a positive and
dynamic workplace environment, placing
importance on the achievement of work/life
balance.
The Board of Directors and all employees
are expected to adhere to the values and
standards in the Code of Conduct.
The Code of Conduct is summarised in this
Corporate Governance Statement and is
disclosed in full on the Company’s website.
30
SG Fleet Group Limited
Principles and Recommendations
Response
Compliance
Principle 3 – Promote ethical and responsible decision-making continued
3.2
Establish a policy concerning
diversity and disclose the policy
or a summary of that policy.
The policy should include
requirements for the board to
establish measurable objectives
for achieving gender diversity
and for the board to assess
annually both the objectives and
progress in achieving them.
The Board has formally approved a
Diversity Policy in order to ensure a work
environment where people are treated
fairly and with respect notwithstanding
their gender, ethnicity, disability, age or
educational experience.
Diversity has been identified as a key area
of focus for the Company. Accordingly, the
primary focus of this Policy is achieving, over
a reasonable transition period, an adequate
representation of diversity throughout the
workforce, in senior management positions
and on the Board.
It is the Board’s stated intent to set
measurable objectives with a view to
progressing diversity in the Company, as
well as provide a summary of progress
towards these objectives in the Annual
Report, as per Item 4 of the Company’s
Diversity Policy.
The Diversity Policy is summarised in this
Corporate Governance Statement and is
disclosed in full on the Company’s website.
3.3
3.4
Disclose in each annual report
the measurable objectives for
achieving gender diversity set
by the board in accordance with
the diversity policy and progress
towards achieving them.
The Board values diversity in all areas and is
currently developing measurable objectives
for achieving diversity (including gender
representation), in line with its stated intent
as per Item 4 of the Company’s Diversity
Policy.
Disclose in each annual report
the proportion of women
employees in the whole
organisation, women in senior
executive positions and women
on the board.
The proportion of women employees in the
Group as at 30 June 2014 are as follows:
Women on the Board
Women in senior executive
positions
Women in the organisation
17%
49%
20%
3.5
Provide the information indicated
in the Guide to reporting on
Principle 3.
The Code of Conduct and Diversity
Policy are summarised in this Corporate
Governance Statement and are disclosed
in full on the Company’s website.
The proportion of women in the
Company is disclosed in this Corporate
Governance Statement.
Does not currently comply.
A Diversity Policy has been
established. However, for the
financial period ended 30 June
2014 measurable objectives
in line with ASX Corporate
Governance Council Principle
3.2 have not yet been set as the
Company only listed on the ASX
in March 2014.
The Board will set measurable
objectives during the financial
year ending 30 June 2015, and
in the Annual Report for that
financial year provide a summary
of progress towards these
objectives as well as details of
the measurable objectives for the
subsequent financial year.
Does not currently comply.
The Board will set such objectives
during the financial year ending
30 June 2015, and in the Annual
Report for that financial year
provide a summary of progress
towards these objectives as well
as details of the measurable
objectives for the subsequent
financial year.
Complies.
Does not currently comply.
Measureable objectives for
achieving gender diversity and
progress towards achieving them
are not currently contained in this
Corporate Governance Statement.
The Board will set such objectives
during the financial year ending
30 June 2015, and in the Annual
Report for that financial year
provide a summary of progress
towards these objectives as well as
details of the measurable objectives
for the subsequent financial year.
Annual Report 2014
31
Corporate Governance Statement
Principles and Recommendations
Response
Compliance
Principle 4 – Safeguard integrity in financial reporting
4.1
The board should establish an
audit committee.
4.2
The audit committee should be
structured so that it:
• consists only of non‑executive
directors;
• consists of a majority of
independent directors;
• is chaired by an independent
chair, who is not chair of the
Board; and
• has at least three members.
Complies.
Complies.
The Board has established an Audit,
Risk and Compliance Committee, which
operates under an Audit, Risk and
Compliance Committee Charter to:
oversee the Company’s relationship with
the external auditor and the external audit
function generally; oversee the Company’s
relationship with the internal auditor
and the internal audit function generally;
oversee the preparation of the financial
statements and reports; oversee the
Company’s financial controls and systems;
and manage the process of identification
and management of financial risk.
The members of the Audit, Risk and
Compliance Committee are: Graham
Maloney (Chairman), Peter Mountford and
Cheryl Bart AO.
The Audit, Risk and Compliance Committee
consisted of three Non‑Executive Directors,
a majority of independent Directors (two),
and is chaired by an independent Director,
who is not chair of the Company’s Board.
4.3
4.4
The audit committee should have
a formal charter.
The Board has adopted an Audit, Risk and
Compliance Committee Charter.
Complies.
Provide the information
indicated in the Guide to
reporting on Principle 4.
Complies.
This information is disclosed in the
Directors’ Report issued in conjunction
with the Corporate Governance Statement
and is summarised in this Corporate
Governance Statement.
The members of the Audit, Risk and
Compliance Committee are appointed by
the Board and recommendations from the
committee are presented to the Board for
further discussion and resolution.
The number of meetings held by the
Audit, Risk and Compliance Committee is
disclosed in the Directors’ Report.
The Audit, Risk and Compliance Committee
Charter is summarised in this Corporate
Governance Statement and is disclosed in
full on the Company’s website.
32
SG Fleet Group Limited
Principles and Recommendations
Response
Compliance
Principle 5 – Make timely and balanced disclosure
5.1
Establish written policies
designed to ensure compliance
with ASX Listing Rules
disclosure requirements and
to ensure accountability at
a senior executive level for
that compliance and disclose
those policies or a summary of
those policies.
The Company has adopted a Continuous
Disclosure Policy to ensure that it complies
with the continuous disclosure regime
under the ASX Listing Rules and the
Corporations Act 2001.
The Company’s Continuous Disclosure
Policy is summarised in this Corporate
Governance Statement and is disclosed
in full on the Company’s website.
Complies.
5.2
Provide the information indicated
in the Guide to reporting on
Principle 5.
The Company’s Continuous Disclosure
Policy is summarised in this Corporate
Governance Statement and is disclosed
in full on the Company’s website.
Complies.
Principle 6 – Respect the rights of shareholders
6.1
Design a communications
policy for promoting effective
communication with
shareholders and encouraging
their participation at general
meetings and disclose that policy
or a summary of that policy.
6.2
Provide the information indicated
in the Guide to reporting on
Principle 6.
The Company has adopted a shareholder
communications policy (titled
‘Communications Strategy’). The Company
uses its website (www.sgfleet.com),
annual and interim reports, market
announcements, and presentations to
communicate with its shareholders,
as well as encourages participation at
general meetings.
This policy (titled ‘Communications
Strategy’) is summarised in this Corporate
Governance Statement and is disclosed in
full on the Company’s website.
The Company’s shareholder
communications policy (titled
‘Communications Strategy’) is
summarised in this Corporate
Governance Statement and is disclosed
in full on the Company’s website.
Complies.
Complies.
Annual Report 2014
33
Corporate Governance Statement
Principles and Recommendations
Response
Compliance
Principle 7 – Recognise and manage risk
The Company has adopted a risk
management statement within the Audit,
Risk and Compliance Committee Charter.
The Audit, Risk and Compliance Committee
is responsible for managing risk. However,
ultimate responsibility for risk oversight and
risk management rests with the Board.
The Audit, Risk and Compliance Committee
Charter is summarised in this Corporate
Governance Statement and is disclosed in
full on the Company’s website.
The Company has identified key risks
within the business. In the ordinary course
of business, management monitors and
manages these risks.
Key operational and financial risks are
presented to and reviewed by the Board.
Complies.
Complies.
The Board has received a statement from
the Chief Executive Officer and Chief
Financial Officer that the declaration
provided in accordance with section 295A
of the Corporations Act 2001 is founded
on a sound system of risk management
and internal control and that the system
is operating efficiently and effectively
in all material respects in relation to the
financial reporting risks.
Complies.
The Chief Executive Officer and
Chief Financial Officer provided
the Board with this statement
with respect to the financial
period ended 30 June 2014.
Complies.
The Board has adopted an Audit, Risk and
Compliance Committee Charter, which
includes a statement of the Company’s risk
policies.
This Charter is summarised in this
Corporate Governance Statement and is
disclosed in full on the Company’s website.
The Company has identified key risks within
the business.
The certificate provided under principle
7.3 by the Chief Executive Officer and
the Chief Financial Officer has been
received by the Board.
7.1
Establish policies for the
oversight and management of
material risks and disclose a
summary of those policies.
7.2
7.3
The board should require
management to design and
implement the risk management
and internal control system to
manage the company’s material
risks and report to it on whether
those risks are being managed
effectively. The board should
disclose that management
has reported to it as to the
effectiveness of the company’s
management of its material risks.
The board should disclose
whether it has received assurance
from the chief executive officer
(or equivalent) and chief
financial officer (or equivalent)
that the declaration provided in
accordance with section 295A of
the Corporations Act is founded
on a sound system of risk
management and internal control
and that the system is operating
efficiently and effectively in all
material respects in relation to
financial reporting risks.
7.4
Provide the information indicated
in the Guide to reporting on
Principle 7.
34
SG Fleet Group Limited
Principles and Recommendations
Response
Compliance
Principle 8 – Remunerate fairly and responsibly
8.1
The board should establish a
remuneration committee.
8.2
8.3
The remuneration committee
should be structured so that it:
• consists of a majority of
independent directors;
• is chaired by an independent
chair; and
• has at least three members.
Clearly distinguish the structure
of non‑executive directors’
remuneration from that of
executive directors and senior
executives.
8.4
Provide the information indicated
in the Guide to reporting on
Principle 8.
Complies.
Complies.
Complies.
Complies.
The Board has established a Nomination
and Remuneration Committee and has
adopted a Nomination and Remuneration
Committee Charter.
The members of the Nomination and
Remuneration Committee are: Andrew
Reitzer (Chairman), Peter Mountford and
Cheryl Bart AO.
The majority of members (two) of the
Nomination and Remuneration Committee
are independent.
The Chair of the Nomination and
Remuneration Committee is independent.
The Company complies with the guidelines
for executive remuneration packages and
non‑executive director remuneration. The
remuneration structure is disclosed in the
Directors’ Report issued in conjunction with
the Corporate Governance Statement.
No senior executive is involved directly in
deciding their own remuneration.
The Board has adopted a Nomination and
Remuneration Committee Charter.
This Charter is summarised in this
Corporate Governance Statement and is
disclosed in full on the Company’s website.
No senior executive is involved directly in
deciding their own remuneration.
The Company’s corporate governance practices were in
place from the Company’s listing on the ASX on 4 March
2014 to the end of the 2014 financial period (30 June
2014), and to the date of signing the Directors’ Report.
The Company’s corporate governance practices
are summarised below. For the full text of the
corporate governance policies and charters adopted
by the Company, refer to the Company’s website at
www.sgfleet.com.
Board
Composition and size
• The Board is appointed by the shareholders.
Non‑Executive Directors are initially engaged
through a letter of appointment.
• The Board, together with the Nomination and
Remuneration Committee, determines the size and
composition of the Board, subject to the terms
of the Company’s Constitution.
• It is intended that the Board should comprise a
majority of independent Non‑Executive Directors
and comprise Directors with a broad range of skills,
expertise and experience from a diverse range of
backgrounds.
• The Board, together with the Nomination and
Remuneration Committee, will review the skills
represented by Directors on the Board and determine
whether the composition and mix of those skills
remain appropriate for the Company’s strategy, subject
to limits imposed by the Constitution and the terms
served by existing Non‑Executive Directors.
Further details on each Director can be found in
the Directors’ Report issued in conjunction with this
Corporate Governance Statement.
Annual Report 2014
35
Corporate Governance Statement
Director independence and tenure
• The Board regularly reviews the independence of each
Non‑Executive Director in light of information relevant
to this assessment as disclosed by each Non‑Executive
Director to the Board.
• The Board only considers Directors to be independent
where they are independent of management and
free of any business or other relationship that could
materially interfere with, or could reasonably be
perceived to interfere with, the exercise of their
unfettered and independent judgment. The Board
has adopted a definition of independence that is
based on that set out in Box 2.1 of the ASX Corporate
Governance Principles and Recommendations
(2nd edition).
• The Board does not believe that it should establish an
arbitrary limit on tenure. While tenure limits can help
to ensure that there are fresh ideas and viewpoints
available to the Board, they hold the disadvantage of
losing the contribution of Directors who have been
able to develop, over a period of time, increasing
insight in the Company and its operation and,
therefore, an increasing contribution to the Board
as a whole. Accordingly, tenure is just one of the
many factors that the Board takes into account when
assessing the independence and ongoing contribution
of a Director in the context of the overall board
process.
Role and responsibilities
The Board’s role is to:
• represent and serve the interests of shareholders by
overseeing and appraising the Company’s strategies,
policies and performance, including overseeing
the financial and human resources the Company
has in place to meet its objectives, and reviewing
management performance;
• protect and optimise Company performance and build
sustainable value for shareholders in accordance with
any duties and obligations imposed on the Board
by law and the Company’s Constitution and within
a framework of prudent and effective controls that
enable risk to be assessed and managed;
• set, review and ensure compliance with the Company’s
values and governance framework (including
establishing and observing high ethical standards); and
• ensure shareholders are kept informed of the
Company’s performance and major developments
affecting its state of affairs.
The Board may delegate any of its powers to one
director, a committee of the Board, or any person
or persons to be exercised in accordance with any
directions of the Board.
36
SG Fleet Group Limited
Directors’ independent advice
The Board collectively, and each director individually,
has the right to seek independent professional advice,
subject to the approval of the Board.
To facilitate the execution of its responsibilities, the
Board has established Committees to oversee and
report to the Board on particular areas of responsibility.
All Directors receive all Committee papers and minutes
and are entitled to attend any Committee meeting.
Each Committee reports to the next Board meeting.
The Board has established the following Committees:
The Board Charter is available on the Company’s website.
Audit, Risk and Compliance Committee
Audit
The Committee’s primary audit roles are:
• to assist the Board in relation to the reporting of
financial information;
• the appropriate application and amendment of
accounting policies;
• the appointment, independence and remuneration of
the external auditor; and
• to provide a link between the external auditors, the
Board and the management of the Company.
Risk and compliance
The Committee’s specific function with respect to risk
management is to review and report to the Board that:
• the Company’s ongoing risk management program
effectively identifies all areas of potential risk;
• adequate policies and procedures have been designed
and implemented to manage identified risks;
• a regular program of audits is undertaken to test the
adequacy of and compliance with prescribed policies;
and
• proper remedial action is undertaken to redress areas
of weakness.
The Audit, Risk and Compliance Committee Charter is
available on the Company’s website.
Nomination and Remuneration Committee
Nomination
The primary nomination responsibilities of the
Committee are to:
• advise and assist the Board on size, composition,
membership, induction, evaluation and training of the
Board; and
• review the effectiveness and outcomes of the
Company’s Diversity Policy.
The Company aims to achieve the objectives of this
Policy by:
• setting measurable objectives relating to diversity
(including gender representation) in the workforce and
at all senior management and leadership levels;
• broadening the field of potential candidates for
positions within the Company and for senior
management and Board appointments;
• increasing the transparency of the senior management
and board appointment process; and
• embedding the extent to which the Board has
achieved the objective of this Policy in the evaluation
criteria for the annual board performance evaluation.
The Diversity Policy is available on the
Company’s website.
Continuous Disclosure
The Company has significant obligations under the
Corporations Act 2001 and the ASX Listing Rules to
keep the market fully informed of information that
may have a material effect on the price or value of the
Company’s securities.
The Company’s policy is to ensure compliance with
these requirements, and the Company discharges its
obligations by releasing information to the ASX in the
form of an ASX release or, where appropriate, through
disclosure of other relevant documents (e.g. the
annual report, results announcements etc.) and, where
appropriate, by requesting a trading halt.
The Continuous Disclosure Policy is available on the
Company’s website.
Dealing in Securities Policy
Under the Company’s Dealing in Securities Policy,
Directors, officers and employees of the Company
should not trade in the Company’s securities where
they are in possession of price sensitive or ‘inside’
information; or where the Company is in possession of
price sensitive or ‘inside’ information and has notified
Directors and officers, all direct reports to the CEO,
all employees, and connected persons of employees
(‘Relevant Persons’) that they must not deal in securities
(either for a specified period, or until the Company gives
further notice).
Remuneration
The primary remuneration responsibilities of the
Committee are to:
• review and recommend arrangements for the
Executive Directors (including the CEO) and the
executives reporting to the CEO;
• review the senior management performance
assessment processes and results;
• review and approve the short‑term incentive strategy,
performance targets, bonus payments, and employee
equity incentive plans; and
• review and recommend to the Board the remuneration
arrangements for the Chairman and the Non‑Executive
Directors of the Board.
The Nomination and Remuneration Committee Charter
is available on the Company’s website.
Code of Conduct
The Company is committed to a high level of integrity
and ethical standards in all business practices. Employees
must conduct themselves in a manner consistent with
current community and Company standards and in
compliance with all relevant legislation.
The Code of Conduct outlines how the Company
expects its representatives to behave and conduct
business in the workplace on a range of issues. It
includes legal compliance and guidelines on appropriate
ethical standards.
The objective of the Code of Conduct is to:
• provide a benchmark for professional behaviour
throughout the Company;
• support the Company’s business reputation and
corporate image within the community; and
• make Directors and employees aware of the
consequences if they breach the policy.
The Code of Conduct is available on the
Company’s website.
Diversity Policy
The Board has formally adopted the Company’s
Diversity Policy.
The Company’s vision for diversity incorporates a
number of different factors, including gender, ethnicity,
disability, age and educational experience. At a Board
and senior management level, diversity has been
identified as a key area of focus for the Company.
Accordingly, the primary focus of this Policy is achieving,
over a reasonable transition period, an adequate
representation of diversity throughout the workforce,
in senior management positions and on the Board.
Annual Report 2014
37
Corporate Social Responsibility
The Company aspires to be regarded as a good
corporate citizen, with a strong awareness of the impact
it has on our world. It has a desire to influence things for
the better and minimise any adverse effects it may have
on the environment.
Integrity and honesty are the Company’s core corporate
values and the cornerstones of its business. Its culture is
based on total openness and mutual respect in dealings
with clients, employees and service providers.
The Company is committed to achieve environmental
and social sustainability, and aid in the preservation of
natural resources. The Company seeks to continually
improve its environmental and social sustainability
performance. It monitors emissions and benchmarks
data on a year‑by‑year basis, and targets a 5% reduction
in CO2 emissions by 2020.
The Company assists the community by supporting
numerous charities to help those in need around the
world. These include:
• The St George Foundation
• Kidney Health Australia
• Molly Olly’s Wishes
• Auckland Rescue Helicopter Trust
• World Vision
• Trek4Kids
• Jeans for Genes
• Barnardo’s
• The Friendship Circle
More information on the Company’s Corporate
Social Responsibility approach is available on the
Company’s website.
Corporate Governance Statement
In addition, Relevant Persons must not deal in the
Company’s securities during any of the following
blackout periods:
• the period from the close of trading on the ASX on
30 June each year, or if that date is not a trading
day, the last trading day before that day, until five
days following the announcement to ASX of the
preliminary final statement or full year results;
• the period from the close of trading on 31 December
each year, or if that date is not a trading day, the last
trading day before that day, until five days following
the announcement of the half yearly results; and
• any other period that the Board specifies from
time to time.
Relevant Persons must also not deal in the Company’s
securities on a short‑term trading basis. Short‑term
trading includes buying and selling securities on market
within a three‑month period, and entering into other
short‑term dealings (for example, forward contracts).
As required by the ASX Listing Rules, the Company
notifies the ASX of any transaction conducted by
Directors in the securities of the Company within five
days of the transaction taking place.
The Dealing in Securities Policy is available on the
Company’s website.
Communications Strategy
The Company aims to ensure that shareholders are kept
informed of all major developments affecting the state
of affairs of the Company. Additionally, the Company
recognises that potential investors and other interested
stakeholders may wish to obtain information about the
Company from time to time.
To achieve this, the Company communicates information
regularly to shareholders and other stakeholders
through a range of forums and publications. One of
the Company’s key communication tools is its website
located at www.sgfleet.com.
The website also contains a facility for shareholders to
direct inquiries to the Company. If shareholders wish
to elect to receive communications from the Company
via email (or elect to discontinue receiving email
communications from the Company), they may contact
the Company’s share registry.
The Communications Strategy is available on the
Company’s website.
38
SG Fleet Group Limited
Financial Report
30 June 2014
Contents
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
40
41
42
43
44
75
76
Annual Report 2014
39
Statement of profit or loss and other comprehensive income
For the period ended 30 June 2014
Revenue
Expenses
Fleet management costs
Employee benefits expense
Occupancy costs
Depreciation, amortisation and impairment
Technology costs
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Consolidated
Period ended
30 Jun 2014
$'000
64,083
Note
5
(13,971)
(18,737)
(1,360)
(1,757)
(899)
(2,542)
(1,088)
23,729
(8,109)
6
6
7
Profit after income tax expense for the period attributable to the owners of SG
Fleet Group Limited
24
15,620
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference for foreign operations
Other comprehensive income for the period, net of tax
Total comprehensive income for the period attributable to the owners of SG
Fleet Group Limited
Basic earnings per share
Diluted earnings per share
(336)
(336)
15,284
Cents
9.13
8.83
38
38
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
40
SG Fleet Group Limited
Statement of financial position
As at 30 June 2014
Assets
Cash and cash equivalents
Finance, trade and other receivables
Inventories
Leased motor vehicle assets
Deferred tax
Property, plant and equipment
Intangibles
Total assets
Liabilities
Trade and other payables
Income tax
Employee benefits
Residual risk provision
Borrowings
Vehicle maintenance funds
Deferred income
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Consolidated
30 Jun 2014
$'000
Note
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
57,906
41,741
4,643
15,688
15,032
1,199
141,365
277,574
43,981
2,460
4,588
15,949
43,516
14,947
23,117
148,558
129,016
232,768
(119,372)
15,620
129,016
The above statement of financial position should be read in conjunction with the accompanying notes
Annual Report 2014
41
Statement of changes in equity
For the period ended 30 June 2014
Consolidated
Balance at 15 January 2014
Profit after income tax expense for the period
Other comprehensive income for the period,
net of tax
Total comprehensive income for the period
Transactions with owners in their
capacity as owners:
Contributions of equity, net of transaction
costs (note 22)
Share‑based payments (note 39)
Group reorganisation (note 23)
Balance at 30 June 2014
Issued
capital
$’000
Reserves
$’000
Retained
profits
$’000
Total
equity
$’000
–
–
–
–
–
–
(336)
(336)
–
–
15,620
15,620
–
15,620
(336)
15,284
232,768
–
–
–
122
(119,158)
–
–
–
232,768
122
(119,158)
232,768
(119,372)
15,620
129,016
The above statement of changes in equity should be read in conjunction with the accompanying notes
42
SG Fleet Group Limited
Statement of cash flows
For the period ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of lease portfolio assets
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of lease portfolio assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Share issue transaction costs
Net cash received on acquisition of SG Fleet Holdings Pty Limited
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Consolidated
Period ended
30 Jun 2014
$'000
Note
37
11
13
14
65,860
(35,174)
495
(1,518)
(4,892)
24,771
(8,060)
(334)
(379)
5,851
(2,922)
1,604
992
(5,824)
39,285
36,057
57,906
–
Cash and cash equivalents at the end of the financial period
8
57,906
The above statement of cash flows should be read in conjunction with the accompanying notes
Annual Report 2014
43
Note 1. General information
The financial statements cover SG Fleet Group Limited
as a Group consisting of SG Fleet Group Limited (the
‘Company’ or ‘parent entity’ and its subsidiaries (the
‘Group’). The financial statements are presented in
Australian Dollars, which is SG Fleet Group Limited’s
functional and presentation currency.
SG Fleet Group Limited is a listed public company limited
by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Level 2, Building 3
20 Bridge Street
Pymble NSW 2073
A description of the nature of the Group’s operations
and its principal activities are included in the Directors’
Report, which is not part of the financial statements.
The financial statements were authorised for issue, in
accordance with a resolution of Directors, on 18 August
2014. The Directors have the power to amend and
reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the
preparation of the financial statements are set
out below.
New, revised or amending Accounting Standards
and Interpretations adopted
The Group has adopted all of the new, revised or
amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards
Board (‘AASB’) that are mandatory for the current
reporting period.
Any new, revised or amending Accounting Standards
or Interpretations that are not yet mandatory have not
been early adopted.
Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for‑profit
oriented entities. These financial statements also
comply with International Financial Reporting Standards
as issued by the International Accounting Standards
Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the
historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires
the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the
process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed
in note 3.
Accounting period
The Company was incorporated on 15 January 2014
and commenced trading on 6 March 2014, when
it acquired SG Fleet Holdings Pty Limited and its
subsidiaries. Therefore, the Group’s results are for the
four month period from 6 March 2014 to 30 June 2014.
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group
only. Supplementary information about the parent entity
is disclosed in note 34.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of SG Fleet
Group Limited as at 30 June 2014 and the results of all
subsidiaries for the period then ended.
Subsidiaries are all those entities over which the Group
has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability
to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the
Group. They are deconsolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
44
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 2. Significant accounting policies continued
The acquisition of common control subsidiaries is
accounted for using the common control method.
The acquisition of other subsidiaries is accounted for
using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the
difference between the consideration transferred and
the book value of the share of the non‑controlling
interest acquired is recognised directly in equity
attributable to the parent.
Operating segments
Operating segments are presented using the
‘management approach’, where the information
presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers
(‘CODM’). The CODM is responsible for the allocation
of resources to operating segments and assessing their
performance.
Foreign currency translation
The financial statements are presented in Australian
Dollars, which is SG Fleet Group Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into
Australian Dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at financial period‑
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are
translated into Australian Dollars using the exchange
rates at the reporting date. The revenues and expenses
of foreign operations are translated into Australian
Dollars using the average exchange rates, which
approximate the rate at the date of the transaction, for
the period. All resulting foreign exchange differences are
recognised in other comprehensive income through the
foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or
loss when the foreign operation or net investment is
disposed of.
Revenue recognition
Revenue is recognised when it is probable that the
economic benefit will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable.
Management and maintenance income
Fleet management income and management fees are
brought to account on a straight line basis over the term
of the lease.
Maintenance income is recognised on a stage of
completion basis in order that profit is recognised
when the services are provided. Maintenance costs are
expensed as and when incurred.
Additional products and services
Revenue from the sale of additional products and
services is recognised when it is received or when the
right to receive payment is established.
Funding commissions
Introductory commissions earned are recognised in
profit or loss in full in the month in which the finance is
introduced to the relevant financier. Trailing commissions
earned from financiers are recognised over the life of
the lease.
End of lease income
Income earned after the expiry of the lease is recognised
when it is received or when the right to receive payment
is established.
Rental income
Rental income from operating leases is recognised in
profit or loss on a straight line basis over the lease term.
Other income
Other income is recognised when it is received or when
the right to receive payment is established.
Interest
Interest revenue is recognised as interest accrues using
the effective interest method. This is a method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net
carrying amount of the financial asset.
Annual Report 2014
45
Note 2. Significant accounting policies continued
Income tax
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
• when the deferred income tax asset or liability arises
from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
• when the taxable temporary difference is associated
with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be
controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the
extent that it is no longer probable that future taxable
profits will be available for the carrying amount to be
recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there
are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax
assets against deferred tax liabilities, and they relate to
the same taxable authority on either the same taxable
entity or different taxable entities which intend to settle
simultaneously.
SG Fleet Group Limited (the ‘head entity’) and its wholly‑
owned Australian subsidiaries have formed an income
tax consolidated group under the tax consolidation
regime, from 6 March 2014. The head entity and each
subsidiary in the tax consolidated group continue to
account for their own current and deferred tax amounts.
The tax consolidated group has applied the ‘separate
taxpayer within group’ approach in determining the
appropriate amount of taxes to allocate to members of
the tax consolidated group.
In addition to its own current and deferred tax amounts,
the head entity also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from
unused tax losses and unused tax credits assumed from
each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities
in the tax consolidated group. The tax funding
arrangement ensures that the intercompany charge
equals the current tax liability or benefit of each tax
consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor
a distribution by the subsidiaries to the head entity.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short‑term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Finance, trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any provision
for impairment.
For finance lease and contract purchase agreements see
‘Leases – Group as lessor’ accounting policy.
Other receivables are recognised at amortised cost, less
any provision for impairment.
46
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 2. Significant accounting policies continued
Inventories
End‑of‑term operating lease assets are stated at the
lower of cost and net realisable value. Cost comprises
purchase and delivery costs, net of rebates and discounts
received or receivable.
Net realisable value is the lower of (i) estimated
selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs
necessary to make the sale and (ii) cost less residual
value provision.
Property, plant and equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to
the acquisition of the items.
Depreciation is calculated on a straight‑line basis to
write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Leasehold improvements
Fixtures and fittings
Motor vehicles
five years
three to eight years
four years
The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate,
at each reporting date.
Leases
Group as lessee
The determination of whether an arrangement is
or contains a lease is based on the substance of the
arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A distinction is made between finance leases, which
effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to
ownership of leased assets, and operating leases, under
which the lessor effectively retains substantially all such
risks and benefits.
Finance leases are capitalised. A lease asset and liability
are established at the fair value of the leased assets, or
if lower, the present value of minimum lease payments.
Lease payments are allocated between the principal
component of the lease liability and the finance costs,
so as to achieve a constant rate of interest on the
remaining balance of the liability.
Leased assets acquired under a finance lease are
depreciated over the asset’s useful life or over the
shorter of the asset’s useful life and the lease term if
there is no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Leasehold improvements are depreciated over the
unexpired period of the lease or the estimated useful life
of the assets, whichever is shorter.
Operating lease payments, net of any incentives received
from the lessor, are charged to profit or loss on a
straight‑line basis over the term of the lease.
An item of property, plant and equipment is
derecognised upon disposal or when there is no future
economic benefit to the Group. Gains and losses
between the carrying amount and the disposal proceeds
are taken to profit or loss.
For leased motor vehicles see ‘Leases – Group as lessor –
leased motor vehicles assets’ accounting policy.
Group as lessor
Amounts due from customers under finance leases
and contract purchase agreements are recorded as
receivables. Finance and contract purchase receivables
are initially recognised at an amount equal to the
present value of the minimum instalment payment
receivable plus the present value of any unguaranteed
residual value expected to accrue at the end of the
contract term. Interest income is allocated to accounting
periods so as to reflect a constant periodic rate of return
on the Group’s net investment outstanding in respect of
the contracts.
Annual Report 2014
47
Customer contracts
Customer contracts are assessed as having either an
indefinite or finite life. Indefinite life customer contracts
are not amortised. Instead they are tested annually for
impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired,
and are carried at cost less accumulated impairment
losses. Finite life customer contracts are amortised on
a straight‑line basis over the period of their expected
benefit, being their finite useful life of five years.
Software
Significant costs associated with software are deferred
and amortised on a straight‑line basis over the period of
their expected benefit, being their finite useful lives of
between two and eight years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an
indefinite useful life are not subject to amortisation and
are tested annually for impairment, or more frequently
if events or changes in circumstances indicate that
they might be impaired. Other non‑financial assets are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s fair value
less costs of disposal and value‑in‑use. The value‑in‑
use is the present value of the estimated future cash
flows relating to the asset using a pre‑tax discount
rate specific to the asset or cash‑generating unit to
which the asset belongs. Assets that do not have
independent cash flows are grouped together to form
a cash‑generating unit.
Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of the
financial period and which are unpaid. Due to their
short‑term nature they are measured at amortised cost
and are not discounted. The amounts are unsecured and
are usually paid within 30 days of recognition.
Note 2. Significant accounting policies continued
Group as lessor – leased motor vehicles assets
Full maintenance lease assets are stated at historical cost
less accumulated depreciation.
The cost of full maintenance lease assets includes the
purchase cost including non‑refundable purchase taxes
and other expenditure that is directly attributable to the
acquisition of the assets to bring the assets held‑for‑use
in the lease asset portfolio to working condition for the
intended use.
The depreciable amount of the asset is depreciated
over its estimated useful life of seven years on a
straight‑line basis.
Lease rentals receivable and payable on operating leases
are recognised in profit or loss in periodic amounts over
the effective lease term on a straight line basis.
Intangible assets
Intangible assets acquired as part of a business
combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition.
Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are
not amortised and are subsequently measured at cost
less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and
any impairment. The gains or losses recognised in profit
or loss arising from the derecognition of intangible
assets are measured as the difference between net
disposal proceeds and the carrying amount of the
intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful
life are accounted for prospectively by changing the
amortisation method or period.
Goodwill
Where an entity or operation is acquired in a business
combination, that is not a common control transaction,
the identifiable net assets acquired are measured at
fair value. The excess of the fair value of the cost of
the acquisition over the fair value of the identifiable
net assets acquired is brought to account as goodwill.
Goodwill is not amortised. Instead, goodwill is
tested annually for impairment, or more frequently
if events or changes in circumstances indicate that
it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses
on goodwill are taken to profit or loss and are not
subsequently reversed.
48
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non‑
monetary benefits, annual leave and long service
leave expected to be settled within 12 months of the
reporting date are measured at the amounts expected to
be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave
not expected to be settled within 12 months of the
reporting date is measured as the present value of
expected future payments to be made in respect of
services provided by employees up to the reporting date
using the projected unit credit method. Consideration
is given to expected future wage and salary levels,
experience of employee departures and periods of
service. Expected future payments are discounted
using market yields at the reporting date on national
government bonds with terms to maturity and currency
that match, as closely as possible, the estimated future
cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation
plans are expensed in the period in which they
are incurred.
Share-based payments
Equity‑settled share‑based compensation benefits
are provided to employees.
Equity‑settled transactions are awards of shares, or
options over shares, that are provided to employees
in exchange for the rendering of services.
The cost of equity‑settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black‑Scholes
option pricing model that takes into account the
exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the
option, together with non‑vesting conditions that do not
determine whether the Group receives the services that
entitle the employees to receive payment. No account is
taken of any other vesting conditions.
Note 2. Significant accounting policies continued
Borrowings
Loans and borrowings are initially recognised at the fair
value of the consideration received, net of transaction
costs. They are subsequently measured at amortised
cost using the effective interest method.
Maintenance deferred income liability
Income is measured by reference to the stage
of completion based on the proportion that the
maintenance costs incurred to date bear to the
estimated costs of completion of the contract lease.
Deferred income is recognised based on the differences
in maintenance fee derived in accordance with the
contract billing cycle and income based on stage of
completion by reference to costs incurred.
Finance costs
Finance costs attributable to qualifying assets are
capitalised as part of the asset. All other finance
costs are expensed in the period in which they are
incurred, including:
• ●Interest on short‑term and long‑term borrowings
Provisions
Provisions are recognised when the Group has a present
(legal or constructive) obligation as a result of a past
event, it is probable the Group will be required to settle
the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised
as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting
date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money
is material, provisions are discounted using a current
pre‑tax rate specific to the liability. The increase in
the provision resulting from the passage of time is
recognised as a finance cost.
Residual values
The Group has entered into various agreements with
its financiers that govern the transfer of the residual
value risk inherent in operating lease assets from the
financier to the Group at the end of the underlying
lease agreement. These agreements include put/call
options, sale direction deeds and guaranteed buyback
arrangements. The residual value provision is created
on an onerous pool basis to cover future shortfalls on
the disposal of these vehicles. Assets are grouped into
homogenous groups which are then analysed further
into maturity pools. A provision is raised for a maturity
pool if the forecast loss on disposal of the assets in the
pool exceeds the future fee income that the pool will
generate between the reporting date and the maturity
date. Maturity pools in a net profit position are not
offset against maturity pools in a net loss position.
Annual Report 2014
49
Note 2. Significant accounting policies continued
The cost of equity‑settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or
loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards
that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in
previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective of
whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity‑settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share‑based
compensation benefit as at the date of modification.
If the non‑vesting condition is within the control of the
Group or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within
the control of the Group or employee and is not satisfied
during the vesting period, any remaining expense for the
award is recognised over the remaining vesting period,
unless the award is forfeited.
If equity‑settled awards are cancelled, it is treated as
if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled
award, the cancelled and new award are treated as
if they were a modification.
Fair value measurement
When an asset or liability, financial or non‑financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would
be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants
at the measurement date; and assumes that the
transaction will take place either: in the principal market;
or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their economic
best interest. For non‑financial assets, the fair value
measurement is based on its highest and best use.
Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available
to measure fair value, are used, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are
classified, into three levels, using a fair value hierarchy
that reflects the significance of the inputs used in
making the measurements. Classifications are reviewed
each reporting date and transfers between levels are
determined based on a reassessment of the lowest level
input that is significant to the fair value measurement.
For recurring and non‑recurring fair value measurements,
external valuers may be used when internal expertise
is either not available or when the valuation is deemed
to be significant. External valuers are selected based on
market knowledge and reputation. Where there is a
significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which
includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable,
with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during
the financial period and no longer at the discretion
of the Company.
50
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 2. Significant accounting policies continued
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to the owners of SG Fleet Group
Limited, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial
period, adjusted for bonus elements in ordinary shares
issued during the financial period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Rounding of amounts
The Company is of a kind referred to in Class Order
98/100, issued by the Australian Securities and
Investments Commission, relating to ‘rounding‑
off’. Amounts in this report have been rounded off
in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that
have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group
for the annual reporting period ended 30 June 2014.
The Group’s assessment of the impact of these new or
amended Accounting Standards and Interpretations,
most relevant to the Group, are set out below.
AASB 9 Financial Instruments and its
consequential amendments
This standard and its consequential amendments are
applicable to annual reporting periods beginning on
or after 1 January 2018 and completes phases I and
III of the IASB’s project to replace IAS 39 (AASB 139)
‘Financial Instruments: Recognition and Measurement’.
The Group will adopt this standard and the amendments
from 1 July 2018 but the impact of its adoption is yet to
be assessed by the Group.
Annual Improvements to IFRSs 2010-2012 Cycle
and IFRSs 2011-2013 Cycle
These annual improvements are applicable to either
annual reporting periods beginning on or after 1 July
2014 or on or after 1 January 2015. The adoption of
these improvements will not have a material impact
on the Group.
IFRS 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods
on or after 1 January 2017 and provides a single
standard for revenue recognition. The Group will adopt
this standard from 1 July 2017, but the impact of its
adoption is yet to be assessed by the Group.
Note 3. Critical accounting judgements,
estimates and assumptions
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management
bases its judgements, estimates and assumptions on
historical experience and on other various factors,
including expectations of future events, management
believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities (refer to the respective notes) within
the next financial year are discussed below.
Revenue from maintenance income
As discussed in note 2, the Group estimates the
maintenance income on a stage of completion
approach. These calculations require the use of
assumptions, including an estimation of the stage of
completion and the profit margin to be achieved over
the life of the contract.
Annual Report 2014
51
Note 3. Critical accounting judgements,
estimates and assumptions continued
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events
or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible
assets have suffered any impairment, in accordance with
the accounting policy stated in note 2. The recoverable
amounts of cash‑generating units, to which these
assets belong, have been determined based on value‑
in‑use calculations. These calculations require the use of
assumptions, including estimated discount rates based
on the current cost of capital and growth rates of the
estimated future cash flows.
Residual values
As discussed in note 2, the Group has entered into
various agreements with its financiers relating to residual
value risk inherent in operating lease assets being
transferred to the Group at the end of the underlying
lease agreement. A provision is raised where the forecast
loss on disposal of the assets in the pool exceeds the
expected future fee income that the pool will generate.
The expected future income is estimated based on past
experience and likely market conditions at the time of
disposal of the assets.
52
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into geographic operating segments: Australia, New Zealand, United Kingdom and
Corporate. These operating segments are based on the internal reports that are reviewed and used by the Board
of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in
determining the allocation of resources. There is no aggregation of operating segments.
The CODM reviews segment results based on Profit Before Tax (‘PBT’). The accounting policies adopted for internal
reporting to the CODM are consistent with those adopted in the financial statements.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans
payable that earn or incur non‑market interest are not adjusted to fair value based on market interest rates.
Intersegment loans are eliminated on consolidation.
Major customers
There are no major customers that contributed more than 10% of revenue to the Group.
Operating segment information
Australia
$’000
New Zealand
$’000
United
Kingdom
$’000
Corporate
$’000
Intersegment
eliminations/
unallocated
$’000
Total
$’000
Consolidated – Period ended 30 Jun 2014
Revenue
Sales to external customers
Other revenue
Total revenue
Segment results
Profit before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
52,961
480
53,441
17,259
746
12
758
(101)
1,838
8,043
3
1,841
(199)
–
8,043
6,770
168,154
4,510
14,426
90,484
107,751
987
6,279
33,541
–
–
–
–
–
–
63,588
495
64,083
23,729
23,729
(8,109)
15,620
277,574
277,574
148,558
148,558
Annual Report 2014
53
Note 5. Revenue
Sales revenue
Management and maintenance income
Additional products and services
Funding commissions
End of lease income
Rental income
Other income
Initial public offering – exit fee
Other revenue
Interest
Revenue
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Fixtures and fittings
Motor vehicles
Leased motor vehicle assets
Total depreciation
Amortisation
Software
Total depreciation and amortisation
Finance costs
External borrowing costs for corporate debt
External borrowing costs for lease portfolio
Net foreign exchange losses
Total finance costs
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
54
SG Fleet Group Limited
Consolidated
Period ended
30 Jun 2014
$’000
20,156
16,938
8,556
4,285
3,489
2,024
8,140
63,588
495
64,083
Consolidated
Period ended
30 Jun 2014
$’000
3
149
19
1,407
1,578
179
1,757
637
262
189
1,088
1,526
982
Notes to the financial statements30 June 2014 Note 7. Income tax expense
Income tax expense
Current tax
Deferred tax – origination and reversal of temporary differences
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets (note 12)
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non‑deductible expenses
Assessed loss
Preference share dividends
Bonus shares
Difference in overseas tax rates
Income tax expense
Amounts credited directly to equity
Deferred tax assets (note 12)
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at the statutory tax rate of 30%
Consolidated
Period ended
30 Jun 2014
$’000
7,032
1,077
8,109
1,077
23,729
7,119
11
84
(129)
1,019
8,104
5
8,109
(2,417)
9,603
2,881
The above potential tax benefit for tax losses, relating to United Kingdom and New Zealand, has not been
recognised in the statement of financial position.
Annual Report 2014
55
Consolidated
30 Jun 2014
$’000
45,352
12,554
57,906
57,906
Consolidated
30 Jun 2014
$’000
34,776
(56)
34,720
6,866
155
41,741
41,711
30
41,741
Consolidated
30 Jun 2014
$’000
74
(18)
56
Note 8. Cash and cash equivalents
Cash at bank
Secured deposits
Amount expected to be recovered within 12 months
The secured deposits secure the Group’s obligations under its lease portfolio facilities.
Note 9. Finance, trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Prepayments
Finance lease receivables
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
Impairment of receivables
The ageing of the impaired receivables provided for above are within one year overdue.
Movements in the provision for impairment of receivables are as follows:
Additions through group reorganisation
Unused amounts reversed
Closing balance
Impairment of receivables are charged (or credited) to other expenses in profit or loss.
Past due but not impaired
The ageing of the past due but not impaired receivables are within one year overdue.
56
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 9. Finance, trade and other receivables continued
Finance lessor commitments
Committed at the reporting date and recognised as assets, receivable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as assets
Note 10. Inventories
End‑of‑term operating lease assets held for disposal
Amount expected to be recovered within 12 months
Note 11. Leased motor vehicle assets
Lease portfolio assets – at cost
Less: Accumulated depreciation
Less: Impairment
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
Consolidated
30 Jun 2014
$’000
130
31
161
(6)
155
Consolidated
30 Jun 2014
$’000
4,643
4,643
Consolidated
30 Jun 2014
$’000
25,974
(9,814)
(472)
15,688
8,465
7,223
15,688
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Consolidated
Balance at 15 January 2014
Additions
Additions through group reorganisation
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2014
Leased
assets
$’000
–
8,060
15,102
(5,851)
(216)
(1,407)
15,688
Total
$’000
–
8,060
15,102
(5,851)
(216)
(1,407)
15,688
Annual Report 2014
57
Note 12. Deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment
Employee benefits
Deferred expenses
Provisions
Doubtful debts
Deferred income
Prepayments
Accrued expenses
Amounts recognised in equity:
Transaction costs on share issue
Deferred tax asset
Amount expected to be recovered after more than 12 months
Movements:
Charged to profit or loss (note 7)
Credited to equity (note 7)
Additions through group reorganisation
Closing balance
Note 13. Property, plant and equipment
Leasehold improvements – at cost
Less: Accumulated depreciation
Fixtures and fittings – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Amount expected to be recovered after more than 12 months
58
SG Fleet Group Limited
Consolidated
30 Jun 2014
$’000
405
1,348
(154)
4,816
235
5,417
(1,793)
2,341
12,615
2,417
15,032
15,032
(1,077)
2,417
13,692
15,032
Consolidated
30 Jun 2014
$’000
679
(653)
26
2,535
(1,519)
1,016
233
(76)
157
1,199
1,199
Notes to the financial statements30 June 2014 Note 13. Property, plant and equipment continued
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Leasehold
improvements
$’000
Fixtures
and fittings
$’000
Motor
vehicles
$’000
–
–
29
–
(3)
26
–
334
831
–
(149)
1,016
–
–
178
(2)
(19)
157
Consolidated
Balance at 15 January 2014
Additions
Additions through group reorganisation
Exchange differences
Depreciation expense
Balance at 30 June 2014
Note 14. Intangibles
Goodwill – at cost
Customer contracts – at cost
Software – at cost
Less: Accumulated amortisation
Amount expected to be recovered after more than 12 months
Total
$’000
–
334
1,038
(2)
(171)
1,199
Consolidated
30 Jun 2014
$’000
136,460
706
4,725
(526)
4,199
141,365
141,365
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial period are set out below:
Consolidated
Balance at 15 January 2014
Additions
Additions through group reorganisation
Amortisation expense
Balance at 30 June 2014
Goodwill
$’000
–
–
136,460
–
136,460
Customer
contracts
$’000
Software
$’000
Total
$’000
–
–
706
–
706
–
379
3,999
(179)
4,199
–
379
141,165
(179)
141,365
Annual Report 2014
59
Note 14. Intangibles continued
Impairment testing for goodwill
The impairment test was based on a value‑in‑use approach. The recoverable amount was determined to be higher
than the carrying amount and therefore no impairment loss was recognised.
Value‑in‑use was determined by discounting the future cash flows generated from the continuing use of the
business and was based on the following key assumptions:
• cash flows were projected based on actual operating results and the four‑year business plan. Cash flow beyond
Year 4 was projected at a growth rate of 0%;
• 7.6% p.a. projected revenue growth rate;
• direct costs were forecast based on the margins historically achieved by the business;
• overheads were forecast based on current levels adjusted for inflationary increases; and
• the Company’s pre‑tax weighted average cost of capital was applied in determining the recoverable amount. The
discount rate was estimated using the Capital Asset Pricing model.
The values assigned to the key assumptions represent management’s assessment of future trends in the industry and
are based on both external and internal data sources.
Sensitivity analysis
Management estimates that any reasonable changes in the key assumptions would not have a significant impact on
the value‑in‑use of intangible assets and goodwill that would require the assets to be impaired.
Note 15. Trade and other payables
Trade payables
Accrued expenses
Residual values payable to financiers
Amount expected to be settled within 12 months
Consolidated
30 Jun 2014
$’000
33,812
6,628
3,541
43,981
43,981
Refer to note 26 for further information on financial instruments.
The residual values payable to financiers are secured by the underlying operating lease asset as well as by bank
guarantees and a cash lock‑up of $8,554,000.
Note 16. Income tax
Provision for income tax
Amount expected to be settled within 12 months
Consolidated
30 Jun 2014
$’000
2,460
2,460
60
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 17. Employee benefits
Annual leave
Long service leave
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Note 18. Residual risk provision
Residual risk
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Consolidated
30 Jun 2014
$’000
2,453
2,135
4,588
2,453
2,135
4,588
Consolidated
30 Jun 2014
$’000
15,949
3,555
12,394
15,949
Residual risk provision
The provision is to recognise the future liability relating to residual value exposures as described in notes 2 and 3.
Movements in provisions
Movements in the provision during the current financial period is set out below:
Consolidated – 30 Jun 2014
Carrying amount at the start of the period
Additions through group reorganisation
Amounts used
Carrying amount at the end of the period
Residual
risk
$’000
–
17,080
(1,131)
15,949
Annual Report 2014
61
Note 19. Borrowings
Bank loans
Lease portfolio liabilities
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Refer to note 26 for further information on financial instruments.
Total secured liabilities
The total secured liabilities are as follows:
Bank loans
Lease portfolio liabilities
Assets pledged as security
Assets pledged as security for borrowings are:
Consolidated
30 Jun 2014
$’000
32,250
11,266
43,516
7,877
35,639
43,516
Consolidated
30 Jun 2014
$’000
32,250
11,266
43,516
Banking facilities
The banking facility is secured by guarantees and indemnities as well as fixed and floating charges or composite
guarantees and debentures issued by the Company and its subsidiaries. The facility is repayable by way of a bullet
payment of $32,250,000 in March 2016.
Lease portfolio liabilities
The lease portfolio liabilities are secured by the underlying funded assets and sub‑hire agreements, together with
irrevocable letter of credit, cash lock‑ups and guarantees. These facilities are interest bearing and are repaid on a
transactional basis as and when the underlying assets are disposed of.
Residual values payable to financiers
Refer to note 15 for security to financiers of residual value payables.
62
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 19. Borrowings continued
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Banking facilities
Lease portfolio facilities
Used at the reporting date
Banking facilities
Lease portfolio facilities
Unused at the reporting date
Banking facilities
Lease portfolio facilities
Note 20. Vehicle maintenance funds
Vehicle maintenance funds
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Note 21. Deferred income
Deferred income
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Consolidated
30 Jun 2014
$’000
40,314
33,561
73,875
34,061
11,266
45,327
6,253
22,295
28,548
Consolidated
30 Jun 2014
$’000
14,947
5,015
9,932
14,947
Consolidated
30 Jun 2014
$’000
23,117
3,504
19,613
23,117
Annual Report 2014
63
Note 22. Equity – issued capital
Ordinary shares – fully paid
Movements in ordinary share capital
Details
Balance
Shares issued on acquisition of
SG Fleet Holdings Pty Limited
Consolidated
30 Jun 2014
Shares
30 Jun 2014
$’000
242,691,826
232,768
$’000
–
46,951
188,595
3,046
(5,824)
232,768
$0.34
$1.85
$1.85
$0.00
Date
Shares
Issue price
15 January 2014
2
6 March 2014
139,102,135
Issue of shares on Initial Public Offering
6 March 2014
101,943,359
Bonus shares issued to employees
6 March 2014
1,646,330
Transaction costs
Balance
30 June 2014
242,691,826
–
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Share buy-back
There is no current on‑market share buy‑back.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital. The policy is also to maintain a strong capital base.
The Group is subject to certain financing arrangements covenants and meeting these are given priority in all capital
risk management decisions. There have been no events of default on the financing arrangements during the
financial period.
Note 23. Equity – reserves
Foreign currency reserve
Share‑based payments reserve
Capital reserve
64
SG Fleet Group Limited
Consolidated
30 Jun 2014
$’000
(336)
122
(119,158)
(119,372)
Notes to the financial statements30 June 2014 Note 23. Equity – reserves continued
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian Dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their
remuneration, and other parties as part of their compensation for services.
Capital reserve
The reserve is used to recognise contributions from or to SG Fleet Group Limited and its controlled subsidiaries
by shareholders.
Group reorganisation – SG Fleet Group Limited and SG Fleet Holdings Pty Limited
When SG Fleet Solutions Pty Limited, a subsidiary of SG Fleet Group Limited (the legal parent and legal acquirer),
acquired SG Fleet Holdings Pty Limited and its subsidiaries (the legal subsidiary), the acquisition did not meet the
definition of a business combination in accordance with AASB 3 ‘Business Combinations’. Instead, the combination
has been treated as a group reorganisation, through an accounting policy choice using the common control
method, as follows:
• The assets and liabilities of the combining entities are reflected at their carrying amounts. No adjustments have
been made to reflect fair values, or recognise any new assets or liabilities, that would otherwise be required
under AASB 3;
• No ‘new’ goodwill has been recognised as a result of the combination. The only goodwill that has been
recognised is the existing goodwill of SG Holdings Pty Limited. The difference between the consideration paid
of $232,768,000 and the equity ‘acquired’ of $113,610,000 is reflected in equity as a ‘capital reserve’ of
$119,158,000; and
• The statement of profit or loss and other comprehensive income reflects the results of the combined entities
from 6 March 2014.
Movements in reserves
Movements in each class of reserve during the current financial period are set out below:
Consolidated
Balance at 15 January 2014
Foreign currency translation
Share‑based payments
Group reorganisation
Balance at 30 June 2014
Note 24. Equity – retained profits
Retained profits at the beginning of the financial period
Profit after income tax expense for the period
Retained profits at the end of the financial period
Foreign
currency
$’000
Share‑based
payments
$’000
–
(336)
–
–
(336)
–
–
122
–
122
Capital
$’000
–
–
–
Total
$’000
–
(336)
122
(119,158)
(119,158)
(119,158)
(119,372)
Consolidated
30 Jun 2014
$’000
–
15,620
15,620
Annual Report 2014
65
Note 25. Equity – dividends
Dividends
On 18 August 2014, the Directors declared a fully‑franked dividend of four cents per ordinary share. The final
dividend will be paid on 29 October 2014 to shareholders registered on 8 October 2014. The financial effect of
dividends declared after the reporting date are not reflected in the 30 June 2014 financial statements and will be
recognised in subsequent financial reports.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
30 Jun 2014
$’000
13,622
The above amounts represent the balance of the franking account as at the end of the financial period,
adjusted for:
• franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
The franking credits above excludes exempting credits.
Note 26. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and foreign currency
risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
The Board has overall responsibility for the establishment and oversight of the risk management framework.
The Board has established an Audit, Risk and Compliance Committee, which is responsible for managing risk.
The Committee reports to the Board on its activities.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group through its training
and management standards and procedures, aims to develop a disciplined and constructive control environment in
which all employees understand their roles and obligations.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations. Exchange rate exposures are managed within approved policy parameters.
The carrying amount of the Group’s foreign currency denominated financial assets and financial liabilities at the
reporting date was as follows:
Consolidated
Pound Sterling
New Zealand Dollars
66
SG Fleet Group Limited
Assets
30 Jun 2014
$’000
Liabilities
30 Jun 2014
$’000
14,426
4,510
18,936
6,279
987
7,266
Notes to the financial statements30 June 2014 Note 26. Financial instruments continued
The Group had net assets denominated in foreign currencies of $11,670,000 (assets $18,936,000 less liabilities
$7,266,000) as at 30 June 2014. Based on this exposure, had the Australian Dollar weakened by 10% / strengthened
by 10% against these foreign currencies with all other variables held constant, the Group’s profit before tax for the
financial period would have been $1,167,000 higher / lower and equity would have been $1,167,000 higher / lower.
The percentage change is the expected overall volatility of the significant currencies, which is based on management’s
assessment of reasonable possible fluctuations taking into consideration movements.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group’s main interest rate risk arises from its borrowings and cash at bank. Borrowings and cash at bank
issued at variable rates expose the Group to interest rate risk. Borrowings issued at fixed rates expose the Group
to fair value risk. The policy is to ensure that at least 60% of its exposure to changes in interest rates on general
borrowings, other than lease portfolio borrowings, is on a fixed rate basis. Lease portfolio borrowings are entered
into on a fixed interest rate basis, except for lease portfolio borrowings utilised to fund lease portfolio assets in
inertia which are entered into on a variable rate basis.
As at the reporting date, the Group had the following variable rate bank accounts and other facilities:
Consolidated
Lease portfolio facilities
Residual value payables to financiers
Cash at bank
Secured deposits
Net exposure to cash flow interest rate risk
30 Jun 2014
Weighted average
interest rate
%
6.21%
3.99%
2.96%
3.70%
Balance
$’000
(6,558)
(3,541)
45,352
12,554
47,807
An official increase / decrease in interest rates of 50 basis points would have a favourable / adverse effect on profit
before tax and equity of $239,000 per annum. The percentage change is based on the expected volatility of interest
rates using market data and analysts’ forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming
references and setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to
recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed
in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
Typically the Group ensures that it has sufficient cash or facilities on demand to meet expected operational expenses
for a period of 90 days, including the servicing of financial obligations. This excludes the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets
and liabilities.
Annual Report 2014
67
Note 26. Financial instruments continued
Financing arrangements
Unused borrowing facilities at the reporting date:
Banking facilities
Lease portfolio facilities
Consolidated
30 Jun 2014
$’000
6,253
22,295
28,548
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables include both interest and principal cash
flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount
in the statement of financial position.
Weighted
average
interest rate
%
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
Remaining
contractual
maturities
$’000
Consolidated – 30 Jun 2014
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing – variable
Lease portfolio liabilities
Residual value payable to financiers
Interest-bearing – fixed rate
Bank loans
Lease portfolio facilities
Total non‑derivatives
–%
33,812
–
6.21%
3.99%
6,626
3,565
144
–
9.06%
4.81%
2,922
1,650
33,711
1,905
48,575
35,760
–
–
–
–
1,492
1,492
–
–
–
–
–
–
33,812
6,770
3,565
36,633
5,047
85,827
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
68
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 27. Fair value measurement
There were no assets or liabilities either measured or disclosed at fair value at the reporting date.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts
of trade receivables and trade payables are assumed to approximate their fair values due to their short‑term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial instruments.
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is
set out below:
Short‑term employee benefits
Post‑employment benefits
Long‑term benefits
Share‑based payments
Consolidated
Period ended
30 Jun 2014
$
1,993,923
14,585
53,393
1,428,046
3,489,947
In addition, fees paid to Non‑Executive Directors prior to the IPO amounted to $52,900 plus superannuation of $2,725.
Note 29. Remuneration of auditors
During the financial period the following fees were paid or payable for services provided by KPMG, the auditor of
the Company:
Audit services – KPMG
Audit or review of the financial statements
Other services – KPMG
Corporate advisory including IPO
Consolidated
Period ended
30 Jun 2014
$
390,066
905,095
1,295,161
Annual Report 2014
69
Note 30. Commitments – operating lease receivable
Committed at the reporting date, receivable:
Within one year
One to five years
Consolidated
Period ended
30 Jun 2014
$’000
4,004
2,394
6,398
Future minimum rentals receivable includes contracted amounts for motor vehicles under non‑cancellable operating
leases between one and five years.
Note 31. Contingent liabilities
The Group has entered into agreements under which the residual risk inherent in operating leases is transferred
from the funder of the asset to the Group. Under these agreements, the Group is obliged to pay the guaranteed
residual value amount at the end of their contractual lease term and sell the vehicle. Bank guarantees and letters
of credit have been issued as security for these obligations.
The Group has executed certain guarantees and indemnities, as well as fixed and floating charges over the assets
of the Group in favour of funders as security for banking and lease portfolio facilities provided to the Group.
Note 32. Commitments for expenditure
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities:
Within one year
One to five years
Capital commitments
Committed at the reporting date but not recognised as liabilities:
Intangible assets
Consolidated
Period ended
30 Jun 2014
$’000
2,657
4,266
6,923
4,383
Operating lease commitments includes contracted amounts for office accommodation and office equipment under
non‑cancellable operating leases expiring within one to five years with, in some cases, options to extend. The leases
do not have escalation clauses. On renewal, the terms of the leases are renegotiated.
Capital commitments includes contracted amounts for the acquisition and development of Enterprise Resource
Planning (‘ERP’) systems.
70
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 33. Related party transactions
Parent entities
SG Fleet Group Limited is the parent entity. The ultimate parent entity is Super Group Limited, incorporated in South
Africa and listed on the Johannesburg Stock Exchange.
Subsidiaries
Interests in subsidiaries are set out in note 35.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report in the
Directors’ report.
Transactions with related parties
There were no transactions with related parties during the financial period.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the reporting date.
Loans to / from related parties
There were no loans to or from related parties at the reporting date.
Note 34. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Total equity
Consolidated
Period ended
30 Jun 2014
$’000
(517)
(517)
Parent
30 Jun 2014
$’000
–
448,580
5,621
5,941
443,156
(517)
442,639
Annual Report 2014
71
Note 34. Parent entity information continued
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has not guaranteed the debts of its subsidiaries as at 30 June 2014.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2014.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except
for the following:
• investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity; and
• dividends received from subsidiaries are recognised as other income by the parent entity.
Note 35. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
SG Fleet Solutions Pty Limited
SG Fleet Holdings Pty Limited
SG Fleet Finance Pty Limited
SG Fleet Investments Pty Ltd
SG Fleet Management Pty Limited
SG Fleet Australia Pty Limited
SG Fleet NZ Limited
SG Fleet UK Limited
Fleet Care Services Pty Limited
SG Fleet Salary Packaging Pty Limited
Beta Dimensions Pty Limited
SMB Car Sales Pty Limited
Principal place of business /
Country of incorporation
Ownership interest
30 Jun 2014
%
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
United Kingdom
Australia
Australia
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Note 36. Events after the reporting period
Apart from the dividend declared as disclosed in note 25, no other matter or circumstance has arisen since 30
June 2014 that has significantly affected, or may significantly affect the Group’s operations, the results of those
operations, or the Group’s state of affairs in future financial years.
72
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Note 37. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the period
Adjustments for:
Depreciation and amortisation
Finance costs – non‑cash
Share‑based payments
Bonus share issue
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in inventories
Decrease in deferred tax assets
Decrease in other operating assets
Increase in trade and other payables
Increase in provision for income tax
Increase in employee benefits
Decrease in other provisions
Increase in deferred income
Net cash from operating activities
Note 38. Earnings per share
Profit after income tax attributable to the owners of SG Fleet Group Limited
Consolidated
Period ended
30 Jun 2014
$’000
15,620
1,757
(430)
122
3,046
(5,044)
1,091
1,076
192
5,070
2,141
471
(1,131)
790
24,771
Consolidated
Period ended
30 Jun 2014
$’000
15,620
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
171,053,878
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
5,796,623
176,850,501
Cents
9.13
8.83
Annual Report 2014
73
Note 39. Share-based payments
A share option plan has been established by the Group in order to incentivise certain employees and Key
Management Personnel. On 4 March 2014 8,086,046 options were issued. The total expense for the period
was $122,000.
Set out below are summaries of options granted under the plan:
30 Jun 2014
Grant date
Expiry date
Exercise
price
Balance at
the start of
the period
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
04/03/2014
30/06/2018
$1.85
–
–
8,086,046
8,086,046
–
–
–
–
8,086,046
8,086,046
The weighted average remaining contractual life of options outstanding at the end of the financial period was
four years.
For the options granted during the current financial period, the Black‑Scholes valuation model inputs used to
determine the fair value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk‑free
interest rate
Fair value
at grant date
04/03/2014
30/06/2018
$1.61
$1.85
35.00%
5.70%
3.13%
$0.252
74
SG Fleet Group Limited
Notes to the financial statements30 June 2014 Directors’ declaration
In the Directors’ opinion:
• the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes thereto comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in note 2 to the financial statements;
• the attached financial statements and notes thereto give a true and fair view of the Group’s financial position as
at 30 June 2014 and of its performance for the financial period ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the
Chief Executive Officer and Chief Financial Officer.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the Directors
Andrew Reitzer
Chairman
Robbie Blau
Chief Executive Officer
18 August 2014
Sydney
Annual Report 2014
75
ABCD
ABCD
Independent auditor’s report
Independent auditor’s report to the members of SG Fleet Group Limited
Report on the financial report
We have audited the accompanying financial report of SG Fleet Group Limited (the Company),
Independent auditor’s report to the members of SG Fleet Group Limited
which comprises the consolidated statement of financial position as at 30 June 2014, and
Report on the financial report
consolidated statement of profit and loss and comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the period ended on that date,
We have audited the accompanying financial report of SG Fleet Group Limited (the Company),
notes 1 to 39 comprising a summary of significant accounting policies and other explanatory
which comprises the consolidated statement of financial position as at 30 June 2014, and
information and the directors’ declaration of the Group comprising the company and the entities
consolidated statement of profit and loss and comprehensive income, consolidated statement of
it controlled at the period’s end or from time to time during the financial period.
changes in equity and consolidated statement of cash flows for the period ended on that date,
notes 1 to 39 comprising a summary of significant accounting policies and other explanatory
Directors’ responsibility for the financial report
information and the directors’ declaration of the Group comprising the company and the entities
The directors of the Company are responsible for the preparation of the financial report that
it controlled at the period’s end or from time to time during the financial period.
gives a true and fair view in accordance with Australian Accounting Standards and the
Directors’ responsibility for the financial report
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material misstatement whether
The directors of the Company are responsible for the preparation of the financial report that
due to fraud or error. In note 2, the directors also state, in accordance with Australian
gives a true and fair view in accordance with Australian Accounting Standards and the
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
Corporations Act 2001 and for such internal control as the directors determine is necessary to
statements of the Group comply with International Financial Reporting Standards.
enable the preparation of the financial report that is free from material misstatement whether
due to fraud or error. In note 2, the directors also state, in accordance with Australian
Auditor’s responsibility
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
Our responsibility is to express an opinion on the financial report based on our audit. We
statements of the Group comply with International Financial Reporting Standards.
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Auditor’s responsibility
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
Our responsibility is to express an opinion on the financial report based on our audit. We
financial report is free from material misstatement.
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
An audit involves performing procedures to obtain audit evidence about the amounts and
engagements and plan and perform the audit to obtain reasonable assurance whether the
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
financial report is free from material misstatement.
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
An audit involves performing procedures to obtain audit evidence about the amounts and
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
including the assessment of the risks of material misstatement of the financial report, whether
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
due to fraud or error. In making those risk assessments, the auditor considers internal control
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
estimates made by the directors, as well as evaluating the overall presentation of the financial
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
report.
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
We performed the procedures to assess whether in all material respects the financial report
estimates made by the directors, as well as evaluating the overall presentation of the financial
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
report.
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
Standards, a true and fair view which is consistent with our understanding of the Group’s
basis for our audit opinion.
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
SG Fleet Group Limited
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
76
Liability limited by a scheme
approved under Professional
Standards Legislation.
ABCD
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as
at 30 June 2014 and of its performance for the period ended on that date; and
complying with Australian Accounting Standards and the Corporations
(ii)
Regulations 2001.
(b)
the financial report also complies with International Financial Reporting Standards as
disclosed in note 2.
Report on the remuneration report
We have audited the Remuneration Report included in pages 16 to 25 of the directors’ report for
the period ended 30 June 2014. The directors of the company are responsible for the preparation
and presentation of the remuneration report in accordance with Section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of SG Fleet Group Limited for the period ended 30 June
2014, complies with Section 300A of the Corporations Act 2001.
KPMG
Peter Russell
Partner
Sydney
18 August 2014
Annual Report 2014
77
Shareholder Information
The shareholder information set out below was applicable as at 31 July 2014.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Number of
holders of
ordinary shares
Number of
holders of
options over
ordinary shares
23
108
242
650
79
1,102
3
–
–
–
–
9
9
–
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Bluefin Investments Limited
Citicorp Nominees Pty Ltd
National Nominees Limited
BNP Paribas Noms Pty Ltd (DRP)
RBC Investor Services Australia Nominees Pty Limited (PI Pooled A/C)
Robert Pinkas Blau
J P Morgan Nominees Australia Limited
Bluefin Investments Limited
HSBC Custody Nominees (Australia) Limited
UBS Nominees Pty Ltd
Brispot Nominees Pty Ltd (House Head Nominee NO 1 A/C)
Kevin Victor Wundram
Pacific Custodians Pty Limited (Equity Plans Tst A/C)
Mr David John Fernandes
Invia Custodian Pty Limited (Best Superannuation P/L A/C)
Yogan Nagaratnam + Sheila Shanthy Nagaratnam (Cobragem Superfund A/C)
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
HSBC Custody Nominees (Australia) Limited – A/C 2
Andrew Brian Mulcaster + Helen Jane Mulcaster (Mulcaster Superfund A/C)
Ron Polkinghorne Super Fund Pty Ltd (Ron Polkinghorne S/Fund A/C)
78
SG Fleet Group Limited
Number held
Ordinary shares
% of total
shares issued
122,793,532
50.60
14,942,292
11,923,259
11,011,991
8,061,355
6,756,425
5,097,954
4,706,468
4,238,159
3,301,807
2,520,165
1,863,840
1,646,330
1,630,860
1,200,000
1,197,925
1,099,136
1,089,781
1,006,255
931,920
6.16
4.91
4.54
3.32
2.78
2.10
1.94
1.75
1.36
1.04
0.77
0.68
0.67
0.49
0.49
0.45
0.45
0.41
0.38
207,019,454
85.29
Unquoted equity securities
Options over ordinary shares issued
Substantial holders
Substantial holders in the Company are set out below:
Bluefin Investments Limited
Perpetual Limited
Number
on issue
Number
of holders
8,086,046
9
Number held
126,200,000
12,387,925
Ordinary shares
% of total
shares issued
52.00
5.10
The above table is based on the most recent forms lodged by Bluefin Investments Limited on 25 June 2014 and
Perpetual Limited on 11 March 2014.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy, attorney or corporate representative
shall have one vote and upon a poll each share shall have one vote.
There are no other classes of equity securities.
Restricted securities
Class
Expiry date
Fully Paid Ordinary Shares
Earlier of the date on which the audited financial statements of the
Company for the financial year ending 30 June 2015 are released and
the date on which the escrowed shareholder ceases to be an employee
of the Company or its subsidiaries if his/her employment is terminated
under specified conditions
Fully Paid Ordinary Shares
Date on which the audited financial statements of the Company for the
financial year ending 30 June 2015 are released
Fully Paid Ordinary Shares
28 February 2017
Number
of shares
16,308,605
823,165
823,165
17,954,935
Annual Report 2014
79
Auditor
KPMG
10 Shelley Street
Sydney NSW 2000
Stock exchange listing
SG Fleet Group Limited shares are listed on the
Australian Securities Exchange (ASX code: SGF).
Website
www.sgfleet.com
Enquiries
investorenquiries@sgfleet.com
Business objectives and cash use
SG Fleet Group Limited has used cash and cash
equivalents held at the timing of listing, in a way
consistent with its stated business objectives.
Corporate Directory
Directors
Andrew Reitzer – Independent Non‑Executive Chairman
Robbie Blau – Chief Executive Officer
Cheryl Bart AO – Independent Non‑Executive Director
Graham Maloney – Independent Non‑Executive Director
Peter Mountford – Non‑Executive Director
Kevin Wundram – Alternate Director for Robbie Blau
and Chief Financial Officer
Colin Brown – Alternate Director for Peter Mountford
Company secretary
Julianne Lyall‑Anderson
Notice of annual general meeting
The details of the annual general meeting of SG Fleet
Group Limited are:
Hobart Room, Lobby Level
The Sofitel Sydney Wentworth
61‑101 Phillip Street
Sydney NSW 2000
On 20 November 2014 commencing at 2:00 pm
Registered office
Level 2, Building 3
20 Bridge Street
Pymble NSW 2073
Telephone: +61 2 9494 1000
Facsimile: +61 2 9899 9233
Principal place of business
Level 2, Building 3
20 Bridge Street
Pymble NSW 2073
Telephone: +61 2 9494 1000
Facsimile: +61 2 9899 9233
E‑mail: globalenquiries@sgfleet.com
Share register
The Registrar
Computershare Investor Services Pty Ltd
GPO Box 2975, Melbourne Victoria 3001
Telephone: +61 3 9415 4000 or 1300 850 505
Facsimile: +61 3 9473 2500 or 1800 783 447
E‑mail: web.queries@computershare.com.au
Website: www.investorcentre.com
80
SG Fleet Group Limited