2019
Annual Report
SG Fleet Group Limited
ABN 40 167 554 574
SG Fleet Group Limited is a
leading provider of integrated
mobility solutions, including fleet
management, vehicle leasing and
salary packaging services.
3.5 million
toll transactions
140,000
vehicles under
management
SG Fleet has a presence across Australia,
New Zealand and the United Kingdom.
The company employs approximately
700 staff and has approximately 140,000
vehicles under management. SG Fleet listed
on the Australian Securities Exchange in
March 2014.
Contents
About SG Fleet Group
Chairman’s report
Chief Executive Officer’s report
Director’s report
Auditor’s independence
declaration
Financial report
Shareholder information
Corporate directory
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7
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30
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The company has a unique
position in the marketplace,
built on the experience and
product expertise of its team.
SG Fleet prides itself on the
strength of its relationships
with customers, including blue
chip corporate and government
organisations. These long-term
relationships have been built
around a customer-centric
approach to service delivery and
the development of bespoke but
scalable solutions to meet the
needs of each customer.
320,000
maintenance
authorisations
An innovative mindset is core
to everything SG Fleet does.
The company actively contributes to
the global discussion about the future
of transport and is shaping the new
mobility landscape in cooperation with
all levels of government, as well as
leading corporates.
SG Fleet continuously evolves its
highly advanced fleet management
capabilities and flexible mobility
solutions, consistently exceeding
its customers’ expectations.
132 million
litres of fuel processed
280,000
bookingintelligence
system transactions
Annual Report 2019
1
Forward thinking
Innovation has always been at the heart of
SG Fleet’s culture. As our industry continues
to evolve, we are building our leadership in
the new integrated mobility environment.
We created an innovation hub to develop
our next generation of products and services.
Forward thinking about the future of mobility
is an attitude we actively promote amongst all
of our staff.
A dedicated team
Our Innovation Team consists of a dedicated
group of individuals who understand how new
technology will influence our industry. The team
focuses on identifying potential applications for
disruptive technologies.
We source and evaluate new ideas and provide a
high level analysis of opportunities and challenges.
The team then builds, tests, and deploys
ground‑breaking new products and services.
Innovation process
IDEA
GENERATION
CONCEPT
DEVELOPMENT
BUILD / TEST / DEPLOY
IDEA
SELECTION
CONCEPT
TEST
REVIEW AND
LEARN
2
SG Fleet Group
The Hub in action
SG Fleet innovates through
incremental improvements to its
existing offering as well as through
the introduction of products
and services that are completely
new and truly ground-breaking.
In this year’s report, we highlight the
eStart zero emission vehicle transition
solution and the Inspect365 Chain of
Responsibility offering.
New Vehicle Technology
More efficient usage of assets
Multiple opportunities for data
capture and analysis
Connected car
In‑vehicle management
Innovation focus areas
Trip Management
Shared Economy –
Ride Share and Car Share
Multi and micro‑model
transport solutions
Capture and analysis
of transportation costs
Novated/Retail Market
End‑to‑end digital experience
Vehicle services solutions
Enhanced Fleet Management
Providing a better fleet
management experience
for our customers
Annual Report 2019
3
Preparing your fleet
for the future
SG Fleet’s eStart Zero Emission Vehicle (ZEV)
Transition Plan helps organisations plan and
budget for the introduction of battery and fuel
cell (hydrogen) electric vehicles.
Our forward thinking capability allows us
to determine what is required for our customers
to add ZEVs or hybrids to their current fleets
in order to reduce operating costs, as well as
lower CO2 emissions.
eStart is an
end-to-end
planning solution
It includes assessment of
an organisation’s goals,
vehicle‑by‑vehicle analysis of ZEV
alternatives, site inspections,
selection and installation of support
infrastructure, transition process
planning, and funding support for
required investment.
CUSTOMER
GOALS
VEHICLE
MIX
SITE
SELECTION
SITE
CAPABILITY
TRANSITION
PLAN
FUNDING
SUPPORT
Benefits
• Future strategic and
operational needs budgeting
• Alternative power supplies
• Fuel and maintenance costs reduction
• Environmental and sustainability
objectives support
• Analysis of site enablement
requirements and challenges
• Smooth transition to ZEV
4
SG Fleet Group Closing the loop
SG Fleet developed the Inspect365
inspection management service as a
simple and effective solution to help
customers improve safety and manage
fleet compliance with the Chain of
Responsibility stipulations of the new
Heavy Vehicle National Laws (HVNL),
which came into effect in October 2018.
Inspect365 not only allows users to
manage their safety inspections but,
through integration with our supplier
network, also permits the reporting
of progress on identified action items
and repairs completed by service
providers. This is essential for companies
to demonstrate their HVNL compliance.
Inspect365 comprehensively closes
the loop on defects.
HVNL 2018
Under the new Heavy Vehicle
National Laws, Chain of Responsibility
now extends to vehicle standards
and maintenance.
Everyone in the supply chain who has
control or influence over elements
in the heavy vehicle road transport
process will be held responsible
for non‑compliance. Penalties are
significant and include grounding of
fleets, as will as fines and prison terms
for directors and senior executives.
Benefits
• Standardised inspections
• Task and responsibility clarity
• Online access to inspection data
• Full repairer integration
• Record of actions and repairs
• Improved safety and quality
standards
DEFECT RESOLVED
LOOP CLOSED
1
PRE-OPS
CHECK
DAILY
PRE-OPS CHECK
6
RESOLVE
ASSESS
2
VEHICLE
REPAIRED
5
SERVICE
SUPPLIER
ACCEPTS OR
REJECTS REPAIR
ASSESS
VEHICLE
DEFECTS
LOG DEFECT
3
TASK
LOGGED
DEFECT
RAISED TO
SUPPLIERS
SCHEDULE
4
DEFECT ESCALATED
DEPENDING ON
SEVERITY
Annual Report 2019
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Chairman’s report
Dear Shareholder
I have the pleasure of presenting you with the SG Fleet Group
Limited Annual Report for the year ended 30 June 2019.
During the 2019 financial year, some of the businesses within
the SG Fleet Group negotiated a range of external challenges,
and it is fair to say that our overall operational environment
was mixed at best. While the Australian Corporate business
made further progress and the UK and New Zealand
operations successfully negotiated unhelpful economic
conditions, our Consumer business in Australia was inevitably
impacted by worsening consumer sentiment, which saw
demand for novated leases decline as spending on large ticket
items such as cars shrunk markedly.
Once again, we delivered a healthy profit for your Company,
but one that did not improve on the previous corresponding
period’s result. We have been proactive in addressing the
challenges we faced, accelerating our efficiency drive and
initiating a review of some of our products to improve
customer value and penetration. This helped your Company
improve its performance in the second half. It also means we
are now in a better position for the longer term.
We have been proactive in addressing
the challenges we faced, accelerating our
efficiency drive and initiating a review of some
of our products to improve customer value
and penetration.
Your Board has declared a fully franked final dividend of
9.52 cents per share, bringing the total dividend for the 2019
financial year to 17.689 cents per share, against 18.738 cents
per share in the previous financial year.
Good companies take advantage of challenging environments
to improve their future position and it is our firm intention
to build a stronger business. Our objectives are to improve
the quality and resilience of our income streams, protect
your Company from external factors that are not under our
control, and improve the value we deliver to our customers by
evolving our products and services offering. While the 2019
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SG Fleet Group
financial year has been a challenging one from an operational
perspective, we have made significant progress with these
strategic objectives.
We previously announced the creation of a dedicated
innovation hub. I am happy to report that during the year, we
successfully launched a number of new products that have
received a very positive response. In addition to strengthening
our connections with existing customers, products such as
our Inspect365 chain‑of‑responsibility solution and our eStart
electric vehicle transition planning service are opening up
doors with significant new prospects.
During the year, we successfully launched a
number of new products that have received a
very positive response.
Greater penetration of these products is allowing us to create
growth in a stable fleet environment. They are also evidence
of a pattern we flagged some time ago, namely that value‑add
to the fleet is steadily increasing, in turn reflecting the greater
sophistication of our industry’s offering.
To create a more stable and lower risk revenue profile, we
will also grow the proportion of annuity income, generated
over the life of a lease or a customer relationship, rather than
upfront. The diversification of our funding model to include
more on‑balance sheet financing has a number of strategic
advantages, including the creation of such annuity income
streams. Similarly, the new, high value‑add products we are
bringing to market predominantly generate annuity‑type
revenue. They will of course also help us embed ourselves
more strongly with our customers and gain market share.
We believe the greater revenue stability achieved through
these initiatives will create a better platform on which to grow
your Company and expand our offering in a rapidly changing
environment in which we are generating an increasing range
of opportunities.
I would like to take this opportunity to thank the Directors
of the Company’s Board for their contribution during
this challenging year. My thanks also go to our majority
shareholder, Super Group, for their active endorsement of
our strategic growth objectives. Finally and most importantly,
I thank you, our Shareholders, for your continued support as
we build a stronger business.
Andrew Reitzer
Chairman
21 August 2019
Sydney
Chief Executive Officer’s report
Dear Shareholder
I am pleased to report on the financial performance of
SG Fleet Group Limited for the year ended 30 June 2019.
My review of this financial year will refer for comparison to
the actual or restated financial figures for the year ended
30 June 2018. Detailed financial data can be found in the full
annual report.
Improvement through the year in
challenging conditions
During the 2019 financial year, our Corporate business and
our offshore operations again performed well, helping to
contain the impact of a challenging environment in our
Consumer business. The operating conditions we saw during
the period in the consumer environment, and in particular
the auto space, were some of the worst the Company has
encountered for a decade or so. We proactively dealt with
these challenges whilst stepping up our efficiency and
innovation programs. We also further expanded our customer
book and increased penetration of additional products and
services. I am happy to report that as a result, we produced
a better financial performance in the second half. However,
despite this progress we were unable to grow total profits
relative to the 2018 financial year.
During the 2019 financial year, our Corporate
business and our offshore operations again
performed well, helping to contain the
impact of a challenging environment in our
Consumer business.
Total revenue for the full financial year was $509.7 million,
1.1% lower than in the previous year. Revenue was kept
relatively stable despite the continuation of challenging
conditions throughout the year, helped by improved product
and services penetration. Net profit after tax for the reported
period was $60.5 million. Underlying net profit after tax,
which excludes a non‑cash impairment related to the move to
a single brand in our Consumer business, was $64.5 million.
This compares to reported and underlying net profit after tax
of $67.5 million in the 2018 financial year. Reported earnings
per share was 23.20 cents, compared to 26.30 cents in the
previous corresponding period.
Soft new vehicle sales in Australia had an impact on our
novated sales, resulting in a 3% reduction in new novated
deliveries, and a 7.6% decline in funding commission income
to $50.6 million. However, our total fleet size, at 139,945 units,
remained relatively constant during the year and we were
able to grow our management and maintenance income by
1.2% to $94.5 million. Lower new vehicle volumes also did not
hamper our ability to achieve higher additional products and
services revenues (up 3.0% to $107.1 million) as penetration
of accessory sales improved further. Net End of lease income
was again strong in the 2019 financial year, at $17.6 million
(up 0.2%), as market conditions for second hand vehicles
remained supportive. Net rental income declined by 10.9% to
$10.6 million as a result of a shift away from the on‑balance
sheet lease portfolio in the UK business. Promisingly, we saw
further improvement in the split in net revenue, with less
income being generated up‑front and more generated on an
annuity basis.
We saw further improvement in the split
in net revenue, with less income being
generated up-front and more generated on
an annuity basis.
Economic environment and structural demand
trends stable
In terms of the general economic environment In Australia,
we saw little improvement during the year. In fact, despite
a temporary bounce in business sentiment in the aftermath
of the election and the first interest rate cut, conditions
remained largely unchanged. In parallel, consumer sentiment
failed to build on some brief positives such as the apparent
stabilisation of the property market, and spending on large
ticket items, such as auto, remained anaemic.
In our industry, the environment generally remained very
competitive. We made some progress with our lenders to
improve credit approval processes in our Consumer business,
which became onerous as an indirect consequence of the
Financial Services Royal Commission announcements.
However, there is no doubt this is still somewhat impeding our
ability to close deals.
Our Corporate business maintained its good performance
throughout the year and the Consumer business made
clear progress on the first half despite these challenges.
This demonstrates the continued presence of the longer‑term
structural trends supporting demand for our services. It is
also evidence of our ability to generate healthy profits even in
tough conditions.
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Annual Report 2019 Chief Executive Officer’s report continued
New products help customer acquisition and
retention in Corporate business
During the 2019 financial year, the Corporate business again
won some attractive new contracts across a variety of sectors,
including local government, to support ongoing growth.
The Direct Business in particular is showing good progress.
Importantly, we continued to solidify our relationship with
existing customers. We had a number of significant long‑term
contract extensions in both the government and the private
sector. New opportunities continue to emerge, but decision
processes remain slow, often delaying tender outcomes.
On the product front, we saw an acceleration of the
penetration trends reported in previous periods and
accessories income again grew strongly, as mentioned earlier.
We are now generating considerably more revenue per vehicle
and customers become more ‘sticky’ as we grow the range of
products we provide to them.
During the year, we successfully launched our Inspect365
chain‑of‑responsibility product, with very positive feedback
from existing and new customers. This product has gone from
strength to strength and is effectively opening doors for us
with a new range of customers. Our car sharing product is also
increasingly getting traction with corporate and government
customers and it is gradually becoming a must‑have option in
most fleet policies.
Other products that are seeing a promising growth curve
in terms of sign‑ups include our driver safety and license
checking solutions. Telematics and Bookingintelligence are
already established products, with growth coming both from
new customers and a widening of the range of applications
they are used for.
Finally, we are increasingly monetising our mobility and
electric vehicle expertise through consultancy engagements.
The latter was packaged and launched as the eStart product
during the year, and, as with other new product launches such
as the DingGo repairer portal, is proving to be a very useful
tool to introduce ourselves to prospective customers.
Consumer business addressing multiple
external impacts
As noted earlier, it has been a challenging year for our
Consumer business, which was impacted by a cyclical
downturn in car demand combined with the indirect
consequences of the financial services reviews. While we
continued to win new accounts, drivers often delayed
purchase decisions, not only because of poor sentiment
but also because the changed credit process environment.
Extension levels, another indicator of indecisiveness, also
remained elevated. Profitability was impacted further by the
lowering of commissions on extended warranty products,
as flagged in the previous financial year, and competitive
pressure on financing margins.
In this context, we were buoyed by the Consumer business’
ability to navigate what remained very tough conditions
and turn in an improved performance in the second half.
8
While overall private new car sales declined sharply again in
the January to June period, by over 9% relative to the second
half of the 2018 financial year, the decline in our own new
novated sales during the same period was limited to 2%.
Offsetting this somewhat was our ability to grow the revenue
we made from add‑on products and services as we further
expanded our product suite. It was also promising to see
that we successfully grew the pool of employees eligible for
novated leases. While the subdued environment has stopped
this from translating into meaningful new sales growth, it does
mean we have enlarged the number of potential customers for
future years.
Further headway in UK despite environment
The UK economy has very much been in a state of flux during
the year as Brexit uncertainty continues. Our Australian base
has been a competitive advantage for us as customers are
less concerned about our exposure to any Brexit fall‑out.
Having said that, business confidence generally remained
poor. In terms of vehicle registrations, the picture was mixed,
with consumers hesitant but businesses relatively steady, as
evidenced by the resilience of fleet registrations overall, and
vans in particular.
Our UK business has remained very busy, both with on‑
boarding wins and the successful pursuit of additional
opportunities in the tool‑of‑trade, short‑term rental and
personal contract hire segments. Personal contract hire
schemes were promoted via affinity arrangements with
sports clubs and other organisations and, while small, they
have been a success and we are looking to roll out the model
more widely. Just as is the case in Australia, we are looking
to further build our consulting capacity in the alternative
fuel space and, on the back of tax changes incentivising low
emission vehicle use, interest in EVs continues to grow rapidly
in this market.
Our UK business has remained very busy, both
with on-boarding wins and the successful
pursuit of additional opportunities in the tool-
of-trade, short-term rental and personal contract
hire segments.
In terms of customers, the UK business is making good
progress with efforts to diversify its customer book, for
example with some appointments to supplier panels in the
public sector. Its geographic footprint also continues to widen.
We are now a larger player in the UK, promoting a single brand
to the market place.
All of this helped our UK operations deliver a significant
profit increase in the first half, and further progress in the
second. This business is becoming an increasingly important
contributor to the overall profitability of the Group.
NZ shakes off slowing economy to improve
performance
Not entirely surprising given the heights scaled over the last
few years, the New Zealand economy slowed down somewhat
SG Fleet Group during the year, with business confidence weakening in
tandem. Pleasingly, demand for our industry’s services and
tender activity held up well, particularly in the private sector.
However, we did see increased price sensitivity as companies
became more cost conscious.
Our New Zealand business continued to do well despite this
less supportive environment. As I have observed in the past,
we are very much seen as a high value‑add provider and
this helped us open more doors. Opportunities continued
to arise for us across a range of industries and we were
successful in converting fleet managed customers to funded
as well as winning additional managed business. We were
also able to convert a number of panel structures into sole
supply arrangements. The strength of our relationship with
government was again exemplified by a number of lengthy
contract extensions and further government departments
were added to our customer book there.
In terms of product offering, we continue to see a trend
similar to that in Australia, with increased demand for higher
end services such as telematics, driver safety and alternative
fuel consulting.
Building a stronger business
As mentioned earlier, we are proactively addressing the
challenges encountered by our Consumer business during
the year. In addition, we accelerated a number of ongoing
programs that touch on a wide range of operational aspects
across the Group. These programs are focused on operational
excellence in all our geographies, as well as our efficiency
drive and our innovation agenda. Automation and digitisation
projects continued during the year, with advances made
across the vehicle life‑cycle management process. This drive
will continue and broaden as we identify further opportunities
to improve our efficiency.
Automation and digitisation projects continued
during the year, with advances made across the
vehicle life-cycle management process.
Building a better business also relies on us strengthening our
income streams and improving our position to compete. I have
spoken before of the Company’s intent to diversify its funding
methods and introduce a greater degree of on‑balance sheet
funding and we have now started designing and building the
necessary processes to achieve this. In addition, we have
reviewed a number of our products to be able to deliver
greater value to our customers, achieve better penetration
and further build our market share.
In terms of our revenue profile, these initiatives will lead to a
spreading out, over the life of a typical lease, what previously
would have been upfront income reflected entirely in the
year of origination. It is important to note that the spreading
of income over the life of a secured lease is not a loss of
income but a beneficial conversion to annuity revenue and a
stabilisation of revenue streams. Of course, we target a good
level of organic growth on an ongoing basis. The objective of
these initiatives is to augment that organic growth further by
improving the positioning of our products.
Innovation in an evolving environment
Whilst the 2019 financial year presented a number of external
challenges for the Company, the progress we made in the
second half demonstrated that we are able to deliver healthy
profits even in difficult conditions.
The Corporate business continued its good performance and
took full advantage of our widening products and services
offering to open new doors. Importantly, our Consumer
business was able to offset to some extent the external factors
that remain in play, delivering an improved performance
for the second half. Overseas, the UK and New Zealand
businesses increased their contribution to Group profits
despite the lacklustre economic environment in which these
businesses operate. Group profits despite the lacklustre
economic environment in which these businesses operate.
As I mentioned earlier, we are taking advantage of the current
environment to build a stronger business by improving the
resilience of our income streams and by targeting further
market share gains with some of our redesigned products.
Our Innovation team continues to generate new revenue
earners as the transport and mobility space evolves. This will
put us in a much more competitive position for the longer
term. Of course, we continue to monitor inorganic growth
opportunities, but we will retain our prudent approach in
their pursuit.
We believe we are entering an exciting stage in our evolution:
an increased rate of innovation and successful product
launches, a strengthening of our position as an industry leader
with a clear strategic vision in a rapidly evolving environment,
and a further improvement in the quality, resilience and
visibility of our revenue streams.
We are entering an exciting stage in our
evolution: an increased rate of innovation and
successful product launches, a strengthening of
our position as an industry leader with a clear
strategic vision in a rapidly evolving environment,
and a further improvement in the quality,
resilience and visibility of our revenue streams.
My sincere thanks and appreciation go to my Executive team
and my colleagues across the Group. They have stood up to
the challenges we faced and I firmly believe the Company
is stronger as a consequence. With the support of you,
our Shareholders, we look forward to further building our
leadership in our industry and growing the value we create for
our customers and for our shareholders.
Robbie Blau
Chief Executive Officer
21 August 2019
Sydney
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Annual Report 2019 Contents
Directors’ report
Auditor’s independence declaration
Statement of profit or loss
Statement of 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 to the
members of SG Fleet Group Limited
Shareholder information
Corporate directory
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11
29
30
31
32
33
34
35
80
81
87
89
10
SG Fleet Group Directors’ report
30 June 2019
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 year ended 30 June 2019.
Directors
The following persons were Directors of the Company during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Andrew Reitzer (Chairman)
Robert (Robbie) Blau
Cheryl Bart AO
Graham Maloney
Peter Mountford
Edwin Jankelowitz
Kevin Wundram
Colin Brown (alternate for Peter Mountford)
Details of the Directors are set out in the section ‘Information on Directors’ below.
Principal activities
During the financial year the principal continuing activities of the Group consisted of motor vehicle fleet management, vehicle
leasing, short term hire, consumer vehicle finance and salary packaging services.
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2018 of 9.958 cents per
ordinary share paid on 16 October 2018 (2018: 9.265 cents)
Interim dividend for the year ended 30 June 2019 of 8.169 cents per
share paid on 18 April 2019 (2018: 8.78 cents)
Consolidated
2019
$’000
2018
$’000
25,640
23,844
21,395
47,035
22,596
46,440
On 21 August 2019, the Directors declared a fully franked final dividend for the year ended 30 June 2019 of 9.52 cents per
ordinary shares, to be paid on 10 October 2019 to eligible shareholders on the register as at 19 September 2019. This equates to
a total estimated distribution of $24,932,000, based on the number of ordinary shares on issue as at 30 June 2019. The financial
effect of dividends declared after the reporting date are not reflected in the 30 June 2019 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 $60,462,000 (30 June 2018: $67,455,000).
During the year the Board resolved to integrate the Group’s two retail brands into a single retail brand and accordingly resolved to
impair the nlc brand name at a post-tax cost of $4,050,000.
The fleet size of the Group as at 30 June 2019 was 139,945 after the loss of 7,153 vehicles managed on behalf of the Western
Australian Government with effect from 1 July 2018 (30 June 2018: 147,703).
Refer to Chairman’s report and Chief Executive Officer’s report for further commentary on the review of operations.
11
Annual Report 2019 Robert (Robbie) Blau
Executive Director and 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
significant 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:
Member of the Innovation and Technology Committee
Interests in shares:
6,892,245 ordinary shares in the Company
Interests in options:
512,931 options over ordinary shares in the Company
Interests in rights:
45,910 performance rights over ordinary shares in the Company
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the
Group during the financial year.
Matters subsequent to the end of the financial year
Apart from the dividend declared as discussed above, no other
matter or circumstance has arisen since 30 June 2019 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.
Information on Directors
Andrew Reitzer
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 40 years of global experience in both the
retail and wholesale industry. He has served as the Chief
Executive Officer ('CEO') of Metcash Limited between 1998
and 2013. 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:
Non-executive Chairman of Amaysim Australia Limited
(ASX: AYS) and Non-executive Chairman of ARQ Group Limited
(ASX: ARQ).
Former directorships (last 3 years):
None
Special responsibilities:
Chairman of the Nomination and Remuneration Committee
and Chairman of the Innovation and Technology Committee
Interests in shares:
83,269 ordinary shares in the Company
12
SG Fleet GroupDirectors’ report30 June 2019 Cheryl Bart AO
Independent Non-Executive Director
Graham Maloney
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
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.
He is also the Chair of Connective Group, a leading mortgage
aggregation business. Graham’s experience includes roles as
Division Director at Macquarie Capital and as Group Treasurer
at National Australia Bank.
Other current directorships:
Chair, Connective Group Australia.
Former directorships (last 3 years):
Spitfire Corporation Limited and Circus Australia Ltd
Special responsibilities:
Chairman of the Audit, Risk and Compliance Committee
Interests in shares:
27,756 ordinary shares in the Company
Experience and expertise:
Cheryl is a qualified lawyer and company director with
experience across industries including financial services,
utilities, energy, television and film. 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:
Audio Pixels Holdings Limited (ASX: AKP), ME Bank,
TEDxSydney, Invictus Games Sydney 2018 and the Chairman
of Powering Australian Renewables Fund (PARF).
Former directorships (last 3 years):
South Australian Power Networks, Australian Broadcasting
Corporation (‘ABC’), Spark Infrastructure Ltd, Football
Federation Australia (FFA), The Prince’s Trust Australia,
Local Organising Committee 2015 Australia Asian Cup and
Australian Himalayan Foundation.
Special responsibilities:
Member of the Audit, Risk and Compliance Committee,
member of the Nomination and Remuneration Committee and
member of the Innovation and Technology Committee
Interests in shares:
27,032 ordinary shares in the Company
13
Annual Report 2019 Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
Interests in shares:
20,000 ordinary shares in the Company
Kevin Wundram
Executive Director 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
significant experience in the fleet management and leasing
industry. He is responsible for the effective management
of the finance, treasury risk 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:
Member of the Innovation and Technology Committee
Interests in shares:
687,347 ordinary shares in the Company
Interests in options:
183,190 options over ordinary shares in the Company
Interests in rights:
16,397 performance rights over ordinary shares in the
Company
Peter Mountford
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 25
years of senior management experience and since 2009 has
served as the CEO of Super Group Limited. Prior to becoming
the CEO of Super Group Limited, 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 Limited’s Consumer
Logistics division and as Managing Director of South African
Breweries Limited’s Diversified Beverages. He is currently a
Director of The Road Freight Association in South Africa.
Other current directorships:
Super Group Limited (JSE: SPG), Bluefin Investments Limited
(Mauritius – Unlisted)
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
Edwin Jankelowitz
Non-Executive Director
Qualifications:
Chartered Accountant from South Africa
Experience and expertise:
Edwin has spent over 40 years in corporate offices and has
been Chairman of a number of listed companies. He was a
member of the Income Tax Special Court in South Africa for 20
years. Prior to joining the Group, Edwin was Finance Director of
Metcash Trading Limited and Metcash Limited from May 1998
to January 2011, and a Non-Executive Director of the company
until August 2015. Edwin held the positions of Finance Director,
Managing Director and then Chairman at Caxton Limited from
1983 to 1997. Edwin was a consultant in business management
and tax between 1980 and 1983. Edwin was with Adcock
Ingram Ltd from 1967 to 1979 in the Head Office and was
promoted over time to Group Company Secretary and then
Finance Director.
14
SG Fleet GroupDirectors’ report30 June 2019 Colin Brown
Alternate Director for Peter Mountford
Former directorships (last 3 years):
None
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 – Unlisted)
Special responsibilities:
Alternative director and member of the Audit, Risk and
Compliance Committee for Peter Mountford
Interests in shares:
108,108 ordinary shares in the Company‘Other current
directorships’ set out above are current directorships for listed
entities only and exclude 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 exclude directorships of all other types of entities, unless
otherwise stated.
Company secretary
Edelvine Rigato (B.A., Grad Dip ACG, FGIA, FCIS, MAICD)
was appointed company secretary on 11 September 2017.
Edelvine has over 10 years’ experience in company secretarial
practice with publicly listed and private companies. Prior to
joining SG Fleet Group, Edelvine was the company secretary of
Melbourne IT Group (now ARQ Group Limited) and assistant
company secretary at Ardent Leisure Group.
Meetings of Directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year
ended 30 June 2019, 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
Edwin Jankelowitz
Kevin Wundram
8
8
8
8
8
7
8
8
8
8
8
8
8
8
–
–
4
–
4
3
–
–
–
4
–
4
4
–
4
–
4
–
4
–
–
4
–
4
–
4
–
–
15
Annual Report 2019 Andrew Reitzer
Robbie Blau
Cheryl Bart AO
Kevin Wundram
Innovations and
Technology Committee
Attended
Held
1
1
1
1
1
1
1
1
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee.
Colin Brown did not attend any meetings in his capacity as an Alternate Director during the financial year.
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.
KMP are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group,
directly or indirectly, including all directors.
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 (‘NRC’) 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 NRC
comprises two independent Non-Executive Directors and one
Non-Executive Director and meets regularly throughout the
financial year. 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.
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.
The remuneration framework has been structured to be
market competitive and complementary to the reward
strategy of the Group.
The reward framework is designed to align executive reward to
shareholders’ interests. The Board has considered that it should
seek to enhance shareholders’ interests by:
• having economic profit as a key component of plan design;
• focusing 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
• attracting and retaining high calibre executives.
Additionally, the reward framework should seek to enhance
executives’ interests by:
• rewarding capability and experience;
• reflecting competitive reward for the achievement
of strategic objectives and contribution to growth
in shareholder wealth; and
• providing a clear structure for earning rewards.
16
SG Fleet GroupDirectors’ report30 June 2019 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 NRC. The NRC 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) are summarised as follows:
Name – Position
Fees per annum
Andrew Reitzer
– Independent Non-Executive Chairman
Cheryl Bart AO
– Independent Non-Executive Director
Graham Maloney
– Independent Non-Executive Director
Peter Mountford
– Non-Executive Director
Edwin Jankelowitz
– Independent Non-Executive Director
$200,004
$117,502
$120,000
$117,502
$110,002
ASX listing rules require the aggregate Non-Executive Directors
remuneration be determined periodically by a general meeting.
The most recent determination was at the Annual General
Meeting held on 12 February 2014, where the shareholders
approved the aggregate remuneration be fixed at a maximum
of $1,000,000 per annum.
Executive remuneration
The Group aims to reward executives based on their position
and responsibility, with a level and mix of remuneration 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 comprise the executive’s total
remuneration.
Total Fixed Remuneration (‘TFR’) consisting of base salary,
annual leave, superannuation and non-monetary benefits,
is reviewed annually by the NRC, based on individual
performance 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.
Short-term incentives
The short-term incentives (‘STI’) program is designed to align
the targets of the business units with the performance hurdles
of executives. The STI program has a non-financial component
and a financial component.
Non-financial component of STI
The non-financial component currently comprises 10% of the
STI and the financial component 90%.
An individual performance gateway applies in relation to the
award of the STI. For an executive to receive payment under
the STI program, their performance must be assessed as being
fully satisfactory. This includes their individual contribution
to the Group’s organisational culture and demonstrating and
upholding the shared values that underpin the Group purpose
and ambition.
Upon successfully passing through the performance gateway,
in order to earn the non-financial component of their STI, the
Executive is appraised according to the achievement of key
performance indicators (KPI’s) as well as the achievement of
key strategic initiatives. KPI’s include productivity and product
profitability measures. Key Strategic Initiatives are defined
annually as part of the Group’s strategic planning and each
year an assessment is made of the achievements against the
initiatives set twelve months before. Strategic Initiatives include
for example, new product development, significant technology
and business systems development, innovation, customer wins
and internal efficiency initiatives.
17
Annual Report 2019 Financial component of STI
At the beginning of each year the NRC sets the growth target
for the business units and for the Group as a whole for the
purpose of the STI. A minimum profit growth gateway of 60%
of the target growth rate applies in order for an executive to be
entitled to the financial component of the STI.
The performance condition for the financial component of the
STI is based on the compound annual growth rate (‘CAGR’)
of the Group’s earnings per share (‘EPS’). EPS is determined
by dividing the Company’s NPAT (‘net profit after tax’) by the
weighted average number of ordinary shares on issue during
the financial year. The growth achieved for the year, and the
achievement against the performance conditions for the
purpose of the STI is determined by the Board in its absolute
discretion, having regard to any matters that it considers
relevant. To determine EPS for the purposes of the STI, the
Board typically exercises its discretion to adjust the NPAT for
the impact of non-recurring or significant transactions.
The STI is subject to a 12 month payment deferral in equity in
respect of 25% of amount determined as payable.
Long-term incentives
Long-term incentives (‘LTI’) are set periodically 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 awards to Participants are made under the Equity
Incentive Plan (‘EIP’) and are currently delivered in the form
of share options and performance rights (‘LTI Instruments’).
The number of LTI Instruments granted is based on a fixed
percentage of the relevant Participant’s TFR and is issued
to the Participant at no cost.
LTI Instruments currently granted to KMP vest over two and
three year periods (the ‘Performance Period’), subject to the
satisfaction of performance conditions.
The LTI Instruments currently on issue to KMP have been split
into two Tranches:
• 1/3 of the Instruments have been allocated to Tranche
1 which will be assessed over the two year Performance
Period of 1 July 2017 to 30 June 2019. Vesting occurs in
August 2019; and
• 2/3 of the Instruments have been allocated to Tranche 2
which will be assessed over the three year Performance
Period of 1 July 2017 to 30 June 2020. Vesting occurs in
August 2020.
The performance conditions for the LTI Instruments are based
on the compound annual growth rate (‘CAGR’) of the Group’s
earnings per share (‘EPS’). EPS was selected as the performance
condition for the LTI since it is a measure of economic profit
and is a key driver of the share price which is a key component
in delivering sustained growth in shareholder wealth.
EPS is determined by dividing the Company’s NPAT (‘net
profit after tax’) by the weighted average number of ordinary
shares on issue during the financial year. The CAGR, and the
achievement against the performance conditions for the
purpose of the LTI is determined by the Board in its absolute
discretion, having regard to any matters that it considers
relevant. To determine the EPS CAGR for the purposes of the
LTI, the Board typically exercises its discretion to adjust the
NPAT for the impact of non-recurring or significant transactions
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.
For the current LTI offer, the percentage of options that vest
and become exercisable, if any, is determined by reference to
the vesting schedule, summarised as follows:
CAGR of EPS over the Performance Period
% of options that become exercisable
Less than 6%
6% (Threshold performance)
Between 6% and 14%
Nil
60%
Straight-line pro-rata vesting between 60% and 100%
14% or above (Stretch performance)
100%
18
SG Fleet GroupDirectors’ report30 June 2019 Any LTI Instruments that remain unvested at the end of the
Performance Period will lapse immediately. The Participant
is entitled to receive one share for each right that vests. The
Participant is entitled to receive one share for each option that
vests and is exercised. The Participant must exercise any vested
options within 3 years of vesting. After 3 years, any unexercised
options will lapse. 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 Board may
determine to implement a cashless exercise arrangement
under which, in lieu of paying cash, the Board may permit
a participant to pay the exercise price by forfeiting some of
the vested options or forgoing some of the shares that would
otherwise be allocated to the participant on exercise.
The LTI Instruments 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 LTI Instruments automatically lapse unless the
Board determines otherwise. In other circumstances, the LTI
Instruments will remain on issue with a broad discretion for
the Board to vest or lapse some or all of the LTI Instruments.
The Board will ordinarily lapse LTI Instruments 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 LTI
Instruments and the Board will notify the Participant of the
date on which any vested but unexercised options will expire.
Where only some of the LTI Instruments are vested on a change
of control event, the remainder of the LTI Instruments will
immediately lapse.
The EIP also provides flexibility for the Group to grant, subject
to the terms of individual offers, restricted shares.
Group performance and link to remuneration
The financial performance measure driving the financial
component of the STI payment outcomes for Executive
Directors for the year ended 30 June 2019 is determined on a
straight-line basis, based on the Group achieving EPS growth
of between 3.4% and 7.9% over the previous financial year.
In terms of the minimum profit growth gateway, no award of
the financial component of the STI is made if the Group’s EPS
growth is less than 3.4% over the previous financial year. STI
payments granted to other KMP are based on a combination of
the Group EPS Targets as set out above, and specific divisional
growth targets. The proportion of the maximum STI awarded to
the KMP is at the discretion of the Board.
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 year ended 30 June 2019 was 23.20
cents per share. Since the performance condition for the
performance period 1 July 2017 to 30 June 2019 was not met,
these LTI instruments will not vest.
Voting and comments made at the Company’s 2018
Annual General Meeting (‘AGM’)
At the 2018 AGM, the shareholders voted to approve the
adoption of the remuneration report for the year ended 30
June 2018. The feedback the Company received in the lead
up to the AGM regarding its remuneration practices has been
reflected in this remuneration report.
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
• Geoff Tipene – Managing Director, New Zealand
• Graham Hale – Managing Director, United Kingdom
(resigned as KMP on 7 December 2018)
• Peter Davenport – Managing Director, United Kingdom
(appointed as KMP on 7 December 2018)
19
Annual Report 2019 Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
2019
Non-Executive Directors:
Andrew Reitzer (Chairman)
Cheryl Bart AO
Graham Maloney
Peter Mountford
Edwin Jankelowitz
Executive Directors:
Robbie Blau (CEO)
Deferred
bonus from
previous
year
$
Cash salary
and fees
$
Current
year
bonus
$
182,652
107,308
120,000
117,502
100,459
–
–
–
–
–
–
–
–
–
–
1,019,869
68,750
206,250
Kevin Wundram (CFO)
499,669
37,500
112,500
Other Key Management Personnel:
Andy Mulcaster
Geoff Tipene
Graham Hale*
Peter Davenport* **
390,968
248,686
119,362
156,158
33,770
25,677
–
95,250
53,235
–
22,660
79,766
Non-
monetary
$
Super-
annuation
$
Leave
benefits
$
Equity-
settled
$
Total
$
–
–
–
–
–
–
–
–
17,352
10,194
–
–
9,543
20,531
20,531
–
–
–
–
–
–
–
–
–
–
200,004
117,502
120,000
117,502
110,002
45,674
101,501 1,462,575
20,877
36,250
727,327
20,531
13,577
22,940
577,036
25,211
–
–
7,461
1,581
6,042
–
–
13,337
373,607
–
120,943
9,742
32,809
307,177
3,062,633
188,357
547,001
25,211
113,766
89,870
206,837 4,233,675
* Total remuneration in local currency paid to Geoff Tipene amounts to NZ$398,237. Total remuneration in local currency paid to Peter Davenport amounts to
£169,789. Total remuneration in local currency paid to Graham Hale was £66,850 for the period 1 July 2018 until 7 December 2018 when he ceased to be a KMP.
** Represents remuneration from date of appointment as KMP for Peter Davenport on 7 December 2018.
Colin Brown (Alternate Director) received no remuneration during the year ended 30 June 2019.
20
SG Fleet GroupDirectors’ report30 June 2019 Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Non-
monetary
$
Super-
annuation
$
Leave
benefits
$
Equity-
settled
$
Total
$
2018
Non-Executive Directors:
Andrew Reitzer (Chairman)
Cheryl Bart AO
Graham Maloney
Peter Mountford
Edwin Jankelowitz
Executive Directors:
Robbie Blau (CEO)
Deferred
bonus from
previous
year
$
Cash salary
and fees
$
Current
year
bonus
$
182,652
107,308
120,000
117,502
100,458
–
–
–
–
–
–
–
–
–
–
999,951
375,000
206,250
Kevin Wundram (CFO)
489,951
150,000
112,500
Other Key Management Personnel:
Andy Mulcaster
Geoff Tipene*
Graham Hale* **
David Fernandes*
Matthew Reinehr***
383,381
98,880
101,311
231,342
162,607
61,589
91,515
56,135
–
–
–
75,928
81,461
24,945
13,357
–
–
–
–
–
–
–
–
–
–
–
–
17,352
10,194
–
–
9,544
20,049
20,049
19,785
6,940
13,009
8,772
9,986
–
–
–
–
–
–
–
–
–
–
200,004
117,502
120,000
117,502
110,002
18,854
263,879 1,883,983
9,286
94,242
876,028
10,141
59,640
673,138
–
–
8,411
–
34,674
429,964
59,201
329,635
–
–
78,772
101,501
3,048,256
680,015
577,450
38,302
135,680
46,692
511,636
5,038,031
* Total remuneration in local currency paid to Geoff Tipene amounts to NZ$464,976. Total remuneration in local currency paid to Graham Hale amounts to £189,205.
Total remuneration in local currency paid to David Fernandes was £45,214 for the period 1 July 2017 until 31 October 2017 when he ceased to be a KMP.
** Represents remuneration from date of appointment as KMP for Graham Hale on 1 November 2017.
*** Represents remuneration until the date the executive ceased to be a KMP on 30 November 2017.
Colin Brown (Alternate Director) received no remuneration during the year ended 30 June 2018.
Non-Executive Directors’ salaries are 100% fixed. The fixed proportion and the proportion of remuneration linked to performance
of Executive Directors and KMP are as follows:
Name
2019
2018
2019
2018
2019
2018
Fixed remuneration
At risk – STI
At risk – LTI
Executive Directors:
Robbie Blau
Kevin Wundram
Other Key Management Personnel:
Andy Mulcaster
Geoff Tipene
Graham Hale
Peter Davenport
David Fernandes
Matthew Reinehr
74%
74%
74%
75%
100%
56%
–
–
55%
59%
61%
61%
57%
–
100%
100%
19%
21%
22%
21%
–
33%
–
–
31%
30%
30%
31%
25%
–
–
–
7%
5%
4%
4%
–
11%
–
–
14%
11%
9%
8%
18%
–
–
–
21
Annual Report 2019 The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Robbie Blau
Kevin Wundram
Other Key Management Personnel:
Andy Mulcaster
Geoff Tipene
Graham Hale
Peter Davenport
David Fernandes
Cash bonus paid/payable
Cash bonus forfeited
2019
2018
2019
2018
27%
41%
56%
55%
–
58%
–
52%
63%
75%
82%
68%
–
80%
73%
59%
44%
45%
–
42%
–
48%
37%
25%
18%
32%
–
20%
Service agreements
KMPs are employed under individual employment agreements.
The agreements are continuous (i.e. not of a fixed duration)
unless otherwise stated. These agreements provide for a
total compensation including a base salary, superannuation
contribution and incentive arrangements; variable notice and
termination provisions; provisions for redundancy.
Details of these agreements are provided below:
Robbie Blau – CEO
• Total fixed remuneration (‘TFR’) of $1,040,400 per annum,
which includes base salary, statutory superannuation
contributions and any salary sacrifice arrangements
• Participate in the STI with a maximum STI opportunity of
98% of TFR
• Participate in the LTI with a maximum LTI opportunity of
87.5% of TFR
Kevin Wundram – CFO
• TFR of $520,200 per annum, which includes base salary,
statutory superannuation contributions and any salary
sacrifice arrangements
• Participate in the STI with a maximum STI opportunity of
70% of TFR
• Participate in the LTI with a maximum LTI opportunity of
62.5% of TFR
Other KMP
Other KMP have employment agreements setting out the
terms and conditions of their employment. The agreements are
not of a fixed duration.
Total compensation inclusive of a base salary and statutory
superannuation contributions and any salary sacrifice
arrangements
Eligibility to participate in the STI with a maximum STI
Opportunity of 56% of TFR
Eligibility to participate in the LTI with a maximum LTI
Opportunity of 50% of TFR
Terms of STI payments:
STI payments are granted to Executive Directors based on
specific financial targets and an appraisal of the executive’s
performance and KPI’s. The financial performance measure
driving the financial component of the STI payment outcomes
for Executive Directors for the year ended 30 June 2019 is
determined on a straight-line basis, based on the Group
achieving EPS growth of between 3.4% and 7.9% over the
previous financial year. STI payments granted to other KMP are
based on a combination of the Group EPS growth targets as set
out above, and specific divisional growth targets.
The growth achieved for the year, and the achievement
against the performance conditions for the purpose of the STI
is determined by the Board in its absolute discretion, having
regard to any matters that it considers relevant. To determine
EPS for the purposes of the STI, the Board typically exercises its
discretion to adjust the NPAT for the impact of non-recurring or
significant transactions.
The STI determined annually for each of the above KMP is
subject to a 12 month payment deferral in equity in respect of
25% of the amount determined as payable.
Terms of termination:
In general the contract is terminated by providing 4 weeks’
notice by the Company and 3 months’ notice by the KMP. The
KMP have no entitlement to termination payments in the event
of removal for misconduct.
22
SG Fleet GroupDirectors’ report30 June 2019 Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel during the year ended 30 June 2019 as a result of
the exercise of options as part of compensation (2018: 3,427,250).
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other KMP in this
financial year or future reporting years are as follows:
Grant date
25 October 2017
25 October 2017
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value
per option
at grant date
22 August 2019
21 August 2022
18 August 2020
17 August 2023
$3.66
$3.66
$1.050
$1.080
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 share option plan is subject to a service condition and a performance condition. The performance condition is based on the
compound annual growth rate (‘CAGR’) of the Group’s earnings per share.
The number of options over ordinary shares granted to and vested in Directors and other KMP as part of compensation during the
financial year ended 30 June 2019 is set out below:
Name
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
David Fernandes
Number of
options
granted
during the
year
2019
–
–
–
–
–
Number of
options
granted
during the
year
2018
781,756
279,199
176,686
102,724
123,725
Number of
options
vested
during the
year
2019
–
–
–
–
–
Number of
options
vested
during the
year
2018
3,047,619
1,250,000
911,890
375,695
677,063
On 21 August 2019, the Board resolved to lapse Tranche 1 (1/3rd) of the share options granted to the Participants during the year
ended 30 June 2018 as a result of vesting conditions not being met.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and other
key management personnel in this financial year or future reporting years are as follows:
Grant date
25 October 2017
25 October 2017
30 August 2018
Vesting date
22 August 2019
18 August 2020
01 July 2019
Fair value
per right
at grant date
$3.880
$3.700
$3.500
23
Annual Report 2019 Performance rights granted carry no dividend or voting rights and will vest when the performance conditions have been met.
The performance rights are subject to a service condition and a performance condition. The performance condition is based on
the compound annual growth rate of the Group’s earnings per share.
The number of performance rights over ordinary shares granted to and vested in Directors and other key management personnel
as part of compensation during the year ended 30 June 2019 are set out below:
Name
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Graham Hale
David Fernandes
Number of
rights
granted
during the
year
2019
17,939
9,785
8,812
6,943
7,350
–
Number of
rights
granted
during the
year
2018
67,980
24,279
15,364
8,933
–
10,759
Number of
rights
vested
during the
year
2019
Number of
rights
vested
during the
year
2018
–
–
–
–
–
–
–
–
–
–
–
–
The Rights granted during the year ended 30 June 2019 related to the deferred component of the STI for the year ended
30 June 2018.
On 21 August 2019, the Board resolved to lapse Tranche 1 (1/3rd) of the performance rights granted to the Participants during the
year ended 30 June 2018 as a result of the vesting conditions not being met.
Additional information
The earnings of the Group for the five years to 30 June 2019 are summarised below:
Revenue
Profit after income tax
Dividends paid
2019
$’000
509,722
60,462
47,035
2018*
$’000
515,207
67,455
46,440
2017
$’000
293,225
59,592
38,338
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
2019
2.95
23.20
2018*
3.70
26.30
2017
3.80
23.58
* 2018 information restated due to the adoption of AASB 15, refer to note 4 of the financial report for further information.
2016
$’000
211,971
46,977
27,997
2016
3.64
18.94
2015
$’000
171,377
40,482
21,175
2015
2.47
16.68
24
SG Fleet GroupDirectors’ report30 June 2019 Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year 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 year
Received
as part of
remuneration
Additions
Disposals/
other
Ordinary shares
Andrew Reitzer
Cheryl Bart AO
Graham Maloney
Peter Mountford
Edwin Jankelowitz
Colin Brown
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Graham Hale**
Peter Davenport*
81,081
27,032
27,027
540,540
20,000
108,108
6,892,245
687,347
526,034
26,000
219,097
332,718
9,487,229
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at
the end of
the year
83,269
27,032
27,756
540,540
20,000
108,108
6,892,245
687,347
526,034
26,701
–
2,188
–
729
–
–
–
–
–
–
701
–
–
–
–
–
–
–
–
–
–
13,660
(232,757)
–
–
332,718
17,278
(232,757)
9,271,750
* Balance at the start of the year represents shares held by Peter Davenport on the date of appointment as KMP.
** Disposal/others represents shares held by Graham Hale when he ceased to be a KMP.
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other members
of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Balance at
the start of
the year
781,756
279,199
176,686
102,724
1,340,365
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
781,756
279,199
176,686
102,724
1,340,365
25
Annual Report 2019 Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each Director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Performance rights over ordinary shares
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Graham Hale**
Peter Davenport*
Balance at
the start of
the year
67,980
24,279
15,364
8,933
43,002
28,708
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
17,939
9,785
8,812
6,943
7,350
–
–
–
–
–
–
–
–
–
–
–
–
(50,352)
85,919
34,064
24,176
15,876
–
–
28,708
(50,352)
188,743
188,266
50,829
* Balance at the start of the year represents shares held by Peter Davenport on the date of appointment as KMP.
** Disposal/others represents performance rights held by Graham Hale when he ceased to be a KMP.
Use of remuneration consultants
During the financial year ended 30 June 2019, the NRC engaged Egan Associates Pty Ltd (‘Remuneration Consultants’) to
benchmark the remuneration of the Executive Directors and other KMP as well as review and recommend improvements to the
Group’s STI and LTI. The recommendations of the remuneration consultants will be implemented in the financial year ending
30 June 2020. The Remuneration Consultant was paid $28,875 for these services.
The scope of the Remuneration Consultant’s engagement was defined by the Chairman of the NRC and the Board. The Chairman
of the NRC reviewed and provided feedback on the draft reports from the Remuneration Consultant. The Board was able to
make enquiries regarding the engagement process and the final report. As a result, the Board is satisfied that the remuneration
recommendations were free from undue influence from key management personnel.
This concludes the remuneration report, which has been audited.
26
SG Fleet GroupDirectors’ report30 June 2019 Shares under option
Unissued ordinary shares of SG Fleet Group Limited under option at the date of this report are as follows:
Grant date
25/10/2017
Expiry date
Exercise
price
Number
under option
17/08/2023
$3.66
1,138,772
On 21 August 2019, the Board resolved to Lapse 596,826 Tranche 1 share options granted to the Participants on 25 October 2017
as a result of the vesting conditions not being met.
Shares under performance rights
Unissued ordinary shares of SG Fleet Group Limited under performance rights at the date of this report are as follows:
Grant date
25/10/2017
30/08/2018
Vesting date
18/08/2020
01/07/2019
Number
under rights
101,927
27,724
129,651
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any
share issue of the Company or of any other body corporate.
On 21 August 2019, the Board resolved to Lapse 278,483 Tranche 1 performance rights as a result of the vesting conditions not
being met.
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 year ended 30 June 2019
and up to the date of this report.
Shares issued on the exercise of performance rights
The following ordinary shares of SG Fleet Group Limited were issued during the year ended 30 June 2019 and up to the date of
this report on the exercise of performance rights granted:
Date performance rights granted Exercise date
20/03/2017 14/08/2018
30/08/2018 01/07/2019
Exercise
price
Number of
shares issued
$0.00
$0.00
128,235
132,323
260,558
27
Annual Report 2019
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.
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 year,
indemnified or agreed to indemnify the auditor of the Company
or any related entity against a liability incurred by the auditor. 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.
Non-audit services
Details of the amounts paid or payable to the auditor for non-
audit services provided during the financial year by the auditor
are outlined in note 33 to the financial statements.
Officers of the Company who are former partners
of KPMG
There are no officers of the Company who are former partners
of KPMG.
Rounding of amounts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-off’. Amounts
in this report have been rounded off in accordance with that
Corporations Instrument 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
immediately follows this Directors’ report.
Auditor
KPMG continues in office in accordance with section 327
of the Corporations Act 2001.
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
The Directors are satisfied that the provision of non-audit
services during the financial year, 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.
Andrew Reitzer
Chairman
21 August 2019
Sydney
Robbie Blau
Chief Executive Officer
The Directors are of the opinion that the services as disclosed
in note 33 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.
28
SG Fleet GroupDirectors’ report30 June 2019
Auditor’s independence declaration
30 June 2019
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Lead Auditor’s Independence Declaration under
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
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 of SG Fleet Group Limited
for the financial year ended 30 June 2019 there have been:
To the Directors of SG Fleet Group Limited
To the Directors of SG Fleet Group Limited
i.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
I declare that, to the best of my knowledge and belief, in relation to the audit of SG Fleet Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of SG Fleet Group Limited
for the financial year ended 30 June 2019 there have been:
for the financial year ended 30 June 2019 there have been:
no contraventions of any applicable code of professional conduct in relation to the audit.
ii.
i.
i.
no contraventions of the auditor independence requirements as set out in the
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
Corporations Act 2001 in relation to the audit; and
ii.
ii.
KPM_INI_01
no contraventions of any applicable code of professional conduct in relation to the audit.
no contraventions of any applicable code of professional conduct in relation to the audit.
PAR_SIG_01
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John Wigglesworth
Partner
Sydney
John Wigglesworth
John Wigglesworth
21 August 2019
Partner
Partner
Sydney
Sydney
21 August 2019
21 August 2019
25
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.
25
25
29
KPMG, an Australian partnership and a member firm of the KPMG
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Liability limited by a scheme approved under
Professional Standards Legislation.
Professional Standards Legislation.
Annual Report 2019
Statement of profit or loss
For the year ended 30 June 2019
Revenue
Interest revenue calculated using the effective interest method
Total revenue
Expenses
Fleet management costs
End of lease cost of sale
Employee benefits expense
Occupancy costs
Depreciation and amortisation
Impairment of intangible assets
Technology costs
Other expenses
Finance costs
Total expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of SG Fleet Group Limited
Basic earnings per share
Diluted earnings per share
Note
2019
$’000
Consolidated
2018
$’000
(Restated)*
6
508,089
513,898
1,633
1,309
509,722
515,207
(86,637)
(84,112)
(195,770)
(199,055)
(75,106)
(2,593)
(31,593)
(5,785)
(7,872)
(9,010)
(9,571)
(75,724)
(6,129)
(28,631)
–
(7,102)
(8,951)
(9,537)
(423,937)
(419,241)
85,785
(25,323)
60,462
Cents
23.20
23.16
95,966
(28,511)
67,455
Cents
26.30
26.26
7
7
7
8
42
42
* The Group has initially adopted AASB 9, AASB 15 and AASB 16 at 1 July 2018. Under the transition method chosen, comparative information has been restated
for implementation of AASB 15. Refer to note 4 for detailed information.
The above statement of profit or loss should be read in conjunction with the accompanying notes
30
SG Fleet Group Statement of other comprehensive income
For the year ended 30 June 2019
Consolidated
2019
$’000
2018
$’000
(Restated)*
Profit after income tax expense for the year attributable to the owners of SG Fleet Group Limited
60,462
67,455
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference for foreign operations
Effective portion of changes in fair value of cash flow hedges, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of SG Fleet Group Limited
713
(2,040)
(1,327)
59,135
1,563
476
2,039
69,494
* The Group has initially adopted AASB 9, AASB 15 and AASB 16 at 1 July 2018. Under the transition method chosen, comparative information has been restated
for implementation of AASB 15. Refer to note 4 for detailed information.
The above statement of other comprehensive income should be read in conjunction with the accompanying notes
31
Annual Report 2019 Statement of financial position
As at 30 June 2019
Assets
Cash and cash equivalents
Finance, trade and other receivables
Inventories
Prepayments
Other financial assets
Leased motor vehicle assets
Property, plant and equipment
Intangibles
Right-of-use assets
Total assets
Liabilities
Trade and other payables
Derivative financial instruments
Income tax
Deferred tax
Employee benefits
Residual risk provision
Lease portfolio borrowings
Borrowings
Lease liabilities – right-of-use assets
Vehicle maintenance funds
Contract liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Note
2019
$’000
Consolidated
2018
$’000
(Restated)*
2017
$’000
(Restated)*
9
10
11
12
13
14
15
16
17
18
19
8
8
20
21
22
23
24
25
26
27
28
100,492
72,945
10,120
9,918
240
57,258
4,092
412,242
13,586
680,893
103,275
76,675
9,413
9,698
–
63,861
3,970
83,923
67,594
11,272
10,659
–
64,818
4,231
420,816
420,492
–
–
687,708
662,989
108,656
139,155
103,099
3,157
5,659
1,645
8,768
10,528
46,178
1,419
2,674
4,814
8,058
10,510
55,289
2,464
5,698
2,586
8,018
11,595
55,328
125,320
134,329
158,119
13,931
42,273
35,608
401,723
279,170
–
44,716
36,276
437,240
250,468
–
54,524
35,353
436,784
226,205
290,592
273,999
272,008
(120,296)
(119,125)
(120,382)
108,874
279,170
95,594
74,579
250,468
226,205
* The Group has initially adopted AASB 9, AASB 15 and AASB 16 at 1 July 2018. Under the transition method chosen, comparative information has been restated
for implementation of AASB 15. Refer to note 4 for detailed information.
The above statement of financial position should be read in conjunction with the accompanying notes
32
SG Fleet Group Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Balance at 1 July 2017
Issued
capital
$’000
Reserves
$’000
272,008
(120,382)
Adjustment for restatement of comparatives for AASB 15 (note 4)
–
–
Balance at 1 July 2017 – restated
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 27)
Share-based payments (note 43)
Dividends paid (note 29)
Balance at 30 June 2018
Refer to note 4 for detailed information on Restatement of comparatives.
Consolidated
Balance at 1 July 2018
Adjustment for adoption of AASB 9 and AASB 16 (note 2)
Balance at 1 July 2018 – restated
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 27)
Share-based payments (note 43)
Transfer on exercise of performance rights
Dividends paid (note 29)
Balance at 30 June 2019
Retained
profits
$’000
75,161
(582)
74,579
67,455
–
67,455
Total equity
$’000
226,787
(582)
226,205
67,455
2,039
69,494
–
–
–
1,209
272,008
(120,382)
–
–
–
1,991
–
–
–
2,039
2,039
(1,991)
1,209
–
(46,440)
(46,440)
273,999
(119,125)
95,594
250,468
Issued
capital
$’000
Reserves
$’000
Retained
profits
$’000
Total equity
$’000
273,999
(119,125)
95,594
250,468
–
–
273,999
(119,125)
–
–
–
16,273
–
320
–
–
(1,327)
(1,327)
–
476
(320)
–
(194)
95,400
60,462
–
60,462
–
47
–
(194)
250,274
60,462
(1,327)
59,135
16,273
523
–
(47,035)
(47,035)
290,592
(120,296)
108,874
279,170
The above statement of changes in equity should be read in conjunction with the accompanying notes
33
Annual Report 2019
Statement of cash flows
For the year ended 30 June 2019
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
Payment for investments
Proceeds from disposal of lease portfolio assets
Acquisition of lease portfolio assets
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities – right-of-use assets
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Note
2019
$’000
Consolidated
2018
$’000
(Restated)*
41
13
14
14
15
16
29
573,068
(472,298)
1,633
(10,699)
(24,658)
67,046
(240)
27,935
(35,139)
(2,181)
(5,704)
163
563,580
(410,351)
1,309
(9,896)
(29,679)
114,963
–
21,278
(35,798)
(1,445)
(6,190)
51
(15,166)
(22,104)
175,370
(194,906)
(4,558)
(30,762)
(54,856)
(2,976)
103,275
193
62,862
(90,141)
–
(46,440)
(73,719)
19,140
83,923
212
Cash and cash equivalents at the end of the financial year
9
100,492
103,275
* The Group has initially adopted AASB 9, AASB 15 and AASB 16 at 1 July 2018. Under the transition method chosen, comparative information has been restated
for implementation of AASB 15. Refer to note 4 for detailed information.
The above statement of profit or loss should be read in conjunction with the accompanying notes
34
SG Fleet Group Notes to the financial statements
30 June 2019
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 the subsidiaries it controlled at the end
of, or during, the year (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
During the financial year the principal continuing activities
of the Group consisted of motor vehicle fleet management,
vehicle leasing, short term hire, consumer vehicle finance and
salary packaging services.
The financial statements were authorised for issue, in
accordance with a resolution of Directors, on 21 August 2019.
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
ofthe financial statements are set out below. These policies
have been consistently applied to all the periods presented,
unless otherwise stated.
New or amended Accounting Standards and
Interpretations adopted
The Group has adopted all of the new or amended Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for
the current reporting period. The Group has early adopted
AASB 16 ‘Leases’ with effect from 1 July 2018.
The following Accounting Standards and Interpretations
adopted during the year are most relevant to the Group:
AASB 15 Revenue from Contracts with Customers
(full retrospective approach)
The Group has adopted AASB 15 retrospectively from 1 July
2017. Accordingly, the information presented for 2018 has
been restated. Additionally, the disclosure requirements
in AASB 15 have generally been applied to comparative
information. The standard provides a single comprehensive
model for revenue recognition. The core principle of the
standard is that an entity shall recognise revenue to depict
the transfer of promised goods or services to customers at
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
The standard introduced a new contract-based revenue
recognition model with a measurement approach that is based
on an allocation of the transaction price.
Contracts with customers are presented in an entity’s
statement of financial position as a contract liability, a contract
asset, or a receivable, depending on the relationship between
the entity’s performance and the customer’s payment.
Customer acquisition costs and costs to fulfil a contract can,
subject to certain criteria, be capitalised as an asset and
amortised over the contract period. At this point no acquisition
costs have been capitalised. The significant impact for the
Group is the requirement to gross up the end of lease income
as revenue and show the corresponding expense as end of
lease cost of sale.
Impact of adoption: Refer note 4 for impact of full retrospective
adoption of AASB 15.
AASB 9 Financial Instruments (applying transitional rules)
The Group has adopted AASB 9 from 1 July 2018. The standard
introduced new classification and measurement models
for financial assets. A financial asset shall be measured at
amortised cost if it is held within a business model whose
objective is to hold assets in order to collect contractual
cash flows which arise on specified dates and that are solely
principal and interest. A debt investment shall be measured
at fair value through other comprehensive income if it is
held within a business model whose objective is to both hold
assets in order to collect contractual cash flows which arise on
specified dates that are solely principal and interest as well as
selling the asset on the basis of its fair value. All other financial
assets are classified and measured at fair value through profit
or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments
(that are not held-for-trading or contingent consideration
recognised in a business combination) in other comprehensive
income (‘OCI’). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value
through profit or loss to reduce the effect of, or eliminate,
an accounting mismatch. For financial liabilities designated
at fair value through profit or loss, the standard requires the
portion of the change in fair value that relates to the entity’s
own credit risk to be presented in OCI (unless it would create
an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity.
New impairment requirements use an ‘expected credit
loss’ (‘ECL’) model to recognise an allowance. Impairment is
measured using a 12-month ECL method unless the credit risk
on a financial instrument has increased significantly since initial
recognition in which case the lifetime ECL method is adopted.
As permitted by AASB 9, the Group has applied the simplified
approach to measuring expected credit losses using a lifetime
expected loss allowance for receivables.
35
Annual Report 2019 Note 2. Significant accounting policies continued
Impact of adoption: Using the transitional rules available, the
initial application of AASB 9 resulted in an increase in allowance
of expected credit losses by $247,000, increase in deferred
tax asset by $53,000 with a net impact on opening retained
earnings of $194,000.
AASB 16 Leases (early adopted using the transitional rules
under modified retrospective method)
The Group has early adopted AASB 16 from 1 July 2018. The
standard replaced AASB 117 ‘Leases’ and for lessees has
eliminated the classifications of operating leases and finance
leases. Subject to certain exceptions, a ‘right-of-use’ asset is
capitalised in the statement of financial position, measured at
the present value of the unavoidable future lease payments to
be made over the lease term. The exceptions relate to short-
term leases of 12 months or less and leases of low-value assets
less than $5,000 (such as personal computers and small office
furniture) where an accounting policy choice exists whereby
either a ‘right-of-use’ asset is recognised or lease payments are
expensed to profit or loss as incurred. A liability corresponding
to the capitalised lease is also recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs
incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense
recognition has been replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest
expense on the recognised lease liability (included in finance
costs). For classification within the statement of cash flows, the
lease payments are separated into both a principal (financing
activities) and interest (either operating or financing activities)
component. For lessor accounting, the standard has not
substantially changed how a lessor accounts for leases.
Impact of adoption: On initial application of AASB 16, using
the transitional rules available, the Group elected to record
right-of-use assets based on the corresponding lease liability
determined as at 1 July 2018 adjusted by the amount of
any prepaid or accrued lease payments relating to the lease
recognised in the statement of financial position before the
date of initial application. Right-of-use assets of $11,078,000
and lease obligations of $11,217,000 were recorded as of 1 July
2018. The Group de-recognised the opening balance of accrued
lease provisions amounting to $139,000 which was provided
under the previous accounting standards. As a result, there
was no net impact on retained earnings. When measuring
lease liabilities, the Group discounted lease payments using its
incremental borrowing rate at 1 July 2018, being the weighted-
average rate of 4.52% being applied across the Group.
The Group applied the expedient to leases of low value assets
and expensed lease payments to profit or loss as incurred.
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, except for certain financial
instruments measured at fair value.
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.
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 38.
Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of SG Fleet Group Limited as
at 30 June 2019 and the results of all subsidiaries for the year
then ended.
Subsidiaries are all those entities over which the Group has
control at the end of, or during the year. 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.
36
SG Fleet GroupNotes to the financial statements30 June 2019 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.
Where the Group loses control over a subsidiary, it
derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received
and the fair value of any investment retained together with any
gain or loss in profit or loss.
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.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the Group is expected to be entitled
in exchange for transferring goods or services to a customer.
For each contract with a customer, the Group: identifies
the contract with a customer; identifies the performance
obligations in the contract; determines the transaction
price which takes into account estimates of variable
consideration and the time value of money; allocates the
transaction price to the separate performance obligations
on the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises
revenue when or as each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the
goods or services promised.
Variable consideration within the transaction price, if
any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses
receivable from the customer and any other contingent events.
Such estimates are determined using either the ‘expected
value’ or ‘most likely amount’ method. The measurement of
variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent
that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining
principle are initially recognised as a contract liability.
Management and maintenance income
Fleet management income and management fees are brought
to account over time on a straight-line basis over the term of
the lease, due to the continuous service received by customers
over the term of lease.
Maintenance income is recognised for each performance
obligation at a point in time when the service is provided and
obligation fulfilled. Maintenance costs are expensed as and
when incurred.
37
Annual Report 2019 Note 2. Significant accounting policies continued
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 and the performance obligation has
been satisfied. Specifically, upfront establishment fees levied
to customer to establish the contract for the services to be
provided for the term of the contract, are recognised over the
term of the contract. Revenue related to the waiver of the
lessee’s wear and tear obligations is recognised at the point in
time, being at the end of the lease term.
Funding commissions
Introductory commissions earned are recognised in profit
or loss in full at a point in time, being in the month in which
the finance is introduced to the relevant financier. Trailing
commissions earned for the collection and distribution of
ongoing customer rentals to the financier are recognised
over time.
End of lease income
Income earned after the expiry of the lease is recognised when
it is received or when the performance obligation, being the
sale of vehicle, transferring the risk and reward to the end
buyer, has been satisfied and the right to receive payment is
established. The gross selling price of the vehicle is recognised
as End of Lease income and the value of the vehicle at the end
of the lease period payable to the financier, is recognised as
End of Lease cost of sale.
Rental income
Rental income from operating leases is recognised in profit or
loss over time, 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.
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
the 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 be applied 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 at 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. 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.
38
SG Fleet GroupNotes to the financial statements30 June 2019 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 (from 1 July 2018)
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses.
Trade receivables are generally due for settlement within 30 days.
The Group has applied the simplified approach to measuring
expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue.
For finance lease and contract purchase agreements see the
‘Leases – Group as lessor’ accounting policy.
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
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.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The
accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged.
At inception of the hedge relationship, the Group documents
the economic relationship between hedging instruments and
hedged items including whether changes in the cash flows
of the hedging instruments are expected to offset changes in
the cash flows of hedged items. The Group documents its risk
management objective and strategy for undertaking its hedge
transactions.
The Group has elected to adopt the new general hedge
accounting model in AASB 9. This requires the Group to ensure
that hedge accounting relationships are aligned with its risk
management objectives and strategy and to apply a more
qualitative and forward-looking approach to assessing hedge
effectiveness. Where derivative instruments do not qualify
for hedge accounting, changes in the fair value are recognised
immediately in profit or loss.
Cash flow hedges
Cash flow hedges are used to cover the Group’s exposure
to variability in cash flows that is attributable to particular
risks associated with a recognised asset or liability or a firm
commitment which could affect profit or loss. The effective
portion of the gain or loss on the hedging instrument is
recognised in other comprehensive income through the
hedging reserve in equity, whilst the ineffective portion is
recognised in profit or loss. Amounts taken to equity are
transferred out of equity and included in the measurement of
the hedged transaction when the forecast transaction occurs.
When a hedging instrument expires, or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative deferred gain or loss in equity
at that time remains in equity until the forecast transaction
occurs. When the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred costs of hedging
that were classified in equity are immediately reclassified to
profit or loss.
Property, plant and equipment
Plant and equipment are 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
Computer hardware and
office equipment
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.
Leasehold improvements are depreciated over the unexpired
period of the lease or the estimated useful life of the assets,
whichever is shorter.
39
Annual Report 2019
Lease liabilities – right-of-use assets
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate.
Lease payments comprise fixed lease payments less
incentives receivable, variable lease payments, residual
value guarantees payable, exercise price of purchase options
where exercise is reasonably certain, and any anticipated
termination penalties made over the expected term of the
lease which includes optional periods where option exercise
is considered reasonably certain. Variable lease payments
include those dependent upon an index, interest rate or
market but are included only using the index or rate existing
at commencement date.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an
index or rate, if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value
guarantee, or there is a change in lease term such as if the
Group changes its assessment of whether it will exercise a
purchase, extension or termination option. When the lease
liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset, or to
the profit or loss to the extent that the carrying amount has
been reduced to zero. Interest on the lease liability and variable
lease payments not included in the measurement of the lease
liability are recognised in profit or loss.
The Group has elected to apply the practical expedient not to
recognise right-of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less and leases
of low-value assets. The lease payments associated with these
leases are recognised as an expense on a straight-line basis
over the lease term.
Group as lessor
A lease is classified as a finance lease if it transfers all the
risks and rewards incidental to ownership of the assets.
A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership
of underlying assets.
Note 2. Significant accounting policies continued
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 the ‘Leases – Group as lessor –
leased motor vehicles assets’ accounting policy.
Leases (fr om 1 July 2018)
Group as lessee
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease based on whether the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration, and the
Group obtains substantially all the economic benefits of the
use of the assets.
The Group has elected to apply the practical expedient
to account for each lease component and any non-lease
components as a single lease component.
Right-of-use assets
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is
initially measured at cost which comprises the initial amount
of the lease liability, adjusted for, as applicable, any lease
payments made at or before the commencement date net of
lease incentives received, any initial direct costs incurred, and
an estimate of costs required for dismantling and removing
the underlying asset, site restoral and asset restoral. Right-of-
use assets are subsequently measured applying a cost model
such that the asset is depreciated and impaired as required or
adjusted for any remeasurement of the lease liability.
Where the lease transfers ownership of the asset to the lessee
by the end of the lease term, or if the cost of the asset reflects
that the lessee will exercise a purchase option, the lessee
shall depreciate the right-of-use asset to the end of the asset’s
useful life, otherwise, the assets are depreciated to the earlier
of the end of their useful lives or the lease term using the
straight-line method as this most closely reflects the expected
pattern of consumption of the future economic benefits.
The lease term represents the non-cancellable period of the
lease and includes periods covered by an option to extend if
the Group is reasonably certain to exercise that option. Lease
terms shall only be revised if there is a change in the non-
cancellable period or there is a reassessment upon a significant
event or a change in circumstances that is both within the
control of the lessee and affects whether or not the lessee is
reasonably certain to exercise an option. Lease terms range
from 1 to 15 years. In addition, the right-of-use assets are
periodically reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.
40
SG Fleet GroupNotes to the financial statements30 June 2019 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
payments 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.
Group as lessor – leased motor vehicle 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 two to five 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 of amortisation and the 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.
Customer contracts
The customer contracts acquired in a business combination
are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful lives of 10 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.
Brand name
The brand name acquired in a business combination is
amortised on a straight-line basis over the period of its
expected benefit, being a finite useful life of 10 years. As a
result of management review, brand name has been fully
impaired during the current financial year.
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 year
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.
Contract liabilities (from 1 July 2017)
Contract liabilities represent the Group’s obligation to transfer
goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises
a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the
goods or services to the customer.
41
Annual Report 2019 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
Maintenance income is recognised for each performance
obligation at the point in time when the service is provided and
the obligation is completed. Maintenance costs are expensed
when incurred.
Other long-term employee benefits
The liability for employee benefits 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 based on high quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the
estimated future cash outflows.
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.
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.
Employee benefits
Short-term employee benefits
Employee benefits 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.
42
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 is 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.
The cost of equity-settled transactions is 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.
SG Fleet GroupNotes to the financial statements30 June 2019 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 at 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.
Vehicle maintenance funds
Vehicle maintenance funds represents amounts collected
from customers for vehicles under management, with such
amounts subsequently used for payments for ongoing vehicle
maintenance expenses such as fuel, service cost, registration
and other charges. Any unused amounts at the end of the lease
period are refunded to the customers.
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
year and are no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date
fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the
acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or
at the proportionate share of the acquiree’s identifiable
net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the Group assesses the
financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the
contractual terms, economic conditions, the Group’s operating
or accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages, the
Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration
classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity.
43
Annual Report 2019 Rounding of amounts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-off’. Amounts
in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet
mandatory or early adopted
Except for the adoption of AASB 16, 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 2019. 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.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has
been issued by the AASB and is applicable for annual reporting
periods beginning on or after 1 January 2020. This release
impacts for-profit private sector entities that have public
accountability that are required by legislation to comply with
Australian Accounting Standards and other for-profit entities
that voluntarily elect to apply the Conceptual Framework.
Phase 2 of the framework is yet to be released which will
impact for-profit private sector entities. The application of new
definition and recognition criteria as well as new guidance
on measurement will result in amendments to several
accounting standards. The issue of AASB 2019-1 Amendments
to Australian Accounting Standards – References to the
Conceptual Framework, also applicable from 1 January 2020,
includes such amendments. Where the Group has relied on the
conceptual framework in determining its accounting policies
for transactions, events or conditions that are not otherwise
dealt with under Australian Accounting Standards, the Group
may need to revisit such policies. The Group will apply the
revised conceptual framework from 1 July 2020 and is yet to
assess its impact.
Note 2. Significant accounting policies continued
Business combinations
The difference between the acquisition-date fair value of assets
acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquiree
is recognised as goodwill. If the consideration transferred
and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to
the acquirer, the difference is recognised as a gain directly in
profit or loss by the acquirer on the acquisition-date, but only
after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the
acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional
assets or liabilities during the measurement period, based on
new information obtained about the facts and circumstances
that existed at the acquisition-date. The measurement period
ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
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 year, adjusted for bonus elements in
ordinary shares issued during the financial year.
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.
Comparative figures
Comparatives in the financial report have been realigned to
the current period presentation. Except for restatement of
comparatives disclosed in note 4, there has been no effect on
the comparative year profit, net assets or equity. For clearer
presentation the Group has changed the disclosure of an
expense of $1,469,000 within other expenses and realigned it
to technology costs within the statement of profit or loss.
44
SG Fleet GroupNotes to the financial statements30 June 2019 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 to be recognised for each performance obligation
according to a point in time when the service is provided
and obligation fulfilled. These calculations require the
use of assumptions, including an estimation of the profit
margin to be achieved over the life of the contract for each
performance obligation.
Goodwill
The Group tests annually, or more frequently if events or
changes in circumstances indicate impairment, whether
goodwill has 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.
Income tax
The Group is subject to income taxes in the jurisdictions
in which it operates. Significant judgement is required in
determining the provision for income tax. There are many
transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination
is uncertain. The Group recognises liabilities for anticipated
tax audit issues based on the Group’s current understanding
of the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period in
which such determination is made.
Note 4. Restatement of comparatives
Change in accounting policy
AASB 15 ‘Revenue from Contracts with Customers
As detailed in note 2, the Group has adopted AASB 15 by
applying the full retrospective approach with effect from 1 July
2017. Accordingly, the information presented for 30 June 2018
has been restated.
The impact of adoption of AASB 15 on various revenue streams
is as follows:
• Management and maintenance income: No significant
impact;
• Additional products and services: There is no significant
impact on the majority of this revenue stream. However: (i)
upfront establishment fees previously recognised as revenue
when lease contracts were executed, is now recognised over
the term of the entire contract; and (ii) revenue related to
the waiver of the lessee’s wear and tear obligations which
was previously recognised over the term of the contract is
now recognised at the end of the lease term.
The impact of these policy changes is as follows:
– The opening retained earnings as at 1 July 2018 decreased
by $582,000 as a result of the recognition of contract
liabilities representing deferral of previously recognised
revenue amounting to $832,000 with a corresponding
decrease in deferred tax liabilities of $250,000; and
– The net operating profit for the year ended 30 June 2018
reduced by $220,000 due to the deferral of previously
recognised revenue of $314,000 and a corresponding
decrease in income tax expenses of $94,000.
• Funding commissions: No significant impact;
• End of lease income: The Group is required to gross up the
end of lease income as revenue and show the corresponding
expense for the related end of lease cost of sale. There is
no overall impact on profit or loss nor retained earnings.
However, the end of lease income for the year ended
30 June 2018 has increased by $199,055,000 with a
corresponding increase in end of lease cost of sale;
• Rental income: No significant impact; and
• Other income: No significant impact.
In addition to the above, interest revenue of $1,309,000 for the
year ended 30 June 2018 is now shown separately on the face
of the statement of profit or loss.
45
Annual Report 2019 Note 4. Restatement of comparatives continued
Reclassification
30 June 2018 comparatives in the statement of financial position have been realigned to the current period presentation. As a
result, prepayments have reduced by $2,400,000 with a corresponding impact on contract liabilities.
The impact of adoption of AASB 15 is summarised below:
Statement of profit or loss and other comprehensive income
Extract
Revenue
Interest revenue calculated using the effective interest method
Expenses
End of lease cost of sale
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners
of SG Fleet Group Limited
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners
of SG Fleet Group Limited
Basic earnings per share
Diluted earnings per share
2018
$’000
Reported
316,466
–
–
96,280
(28,605)
67,675
2,039
Consolidated
$’000
Adjustment
197,432
1,309
2018
$’000
Restated
513,898
1,309
(199,055)
(199,055)
(314)
94
(220)
–
95,966
(28,511)
67,455
2,039
69,714
(220)
69,494
Cents
Reported
Cents
Adjustment
26.38
26.34
(0.08)
(0.08)
Cents
Restated
26.30
26.26
46
SG Fleet GroupNotes to the financial statements30 June 2019 Statement of financial position at the beginning of the earliest comparative period
Extract
Assets
Prepayments
Total assets
Liabilities
Deferred tax
Contract liabilities
Total liabilities
Net assets
Equity
Retained profits
Total equity
Statement of financial position at the end of the earliest comparative period
Extract
Assets
Prepayments
Total assets
Liabilities
Deferred tax
Contract liabilities
Total liabilities
Net assets
Equity
Retained profits
Total equity
Consolidated
1 July 2017
$’000
Reported
$’000
Adjustment
1 July 2017
$’000
Restated
13,162
665,492
2,836
37,024
438,705
226,787
75,161
226,787
2018
$’000
Reported
12,098
690,108
5,158
37,530
438,838
251,270
96,396
251,270
(2,503)
(2,503)
10,659
662,989
(250)
(1,671)
(1,921)
(582)
2,586
35,353
436,784
226,205
(582)
(582)
74,579
226,205
Consolidated
$’000
Adjustment
2018
$’000
Restated
(2,400)
(2,400)
9,698
687,708
(344)
(1,254)
(1,598)
(802)
4,814
36,276
437,240
250,468
(802)
(802)
95,594
250,468
Statement of cash flows:
In accordance with the above, comparatives in the statement of cash flows have been restated to reflect changes to ‘End of lease
revenue’ and ‘End of lease costs’. Accordingly, receipts from customers have increased by $218,961,000 with corresponding
increase in payments to suppliers and employees. There is no change to net cash from operating activities.
47
Annual Report 2019 Note 5. 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 underlying EBITDA (earnings before interest, tax, depreciation, amortisation, impairment and other
non-recurring or significant transactions). 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
Consolidated – 2019
Revenue
Revenue from contracts with customers
Rental income
Total sales revenue
Interest
Total revenue
Underlying EBITDA*
Depreciation and amortisation
Impairment of assets
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Australia
$’000
New Zealand
$’000
United
Kingdom
$’000
75,491
29,277
104,768
10
12,105
3,914
16,019
8
16,027
104,778
4,684
(3,191)
–
(564)
929
20,634
(13,424)
–
(2,443)
4,767
380,039
7,263
387,302
1,615
388,917
108,537
(14,978)
(5,785)
(6,564)
81,210
537,564
18,355
124,974
301,658
14,110
85,955
Corporate
$’000
Total
$’000
–
–
–
–
–
(1,121)
–
–
–
(1,121)
–
–
467,635
40,454
508,089
1,633
509,722
132,734
(31,593)
(5,785)
(9,571)
85,785
(25,323)
60,462
680,893
680,893
401,723
401,723
* In the current year, Underlying EBITDA is disclosed to align with the revised internal reports the CODM uses to review the Group’s operations. There was no
impact on the comparative year segment information.
48
SG Fleet GroupNotes to the financial statements30 June 2019 Consolidated – 2018
Revenue
Revenue from contracts with customers
Rental income
Total sales revenue
Interest
Total revenue
Adjusted EBITDA
Depreciation and amortisation
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Australia
$’000
New Zealand
$’000
United
Kingdom
$’000
Corporate
$’000
Total
$’000
(Restated)
390,413
8,058
398,471
1,294
399,765
109,710
(10,776)
(6,590)
92,344
8,918
3,330
72,131
31,048
12,248
103,179
5
10
12,253
103,189
3,787
(2,625)
(404)
758
21,761
(15,230)
(2,543)
3,988
536,012
19,782
131,914
325,605
15,949
95,686
–
–
–
–
–
471,462
42,436
513,898
1,309
515,207
(1,124)
134,134
–
–
(1,124)
–
–
(28,631)
(9,537)
95,966
(28,511)
67,455
687,708
687,708
437,240
437,240
49
Annual Report 2019 Note 6. Revenue
Revenue from contracts with customers
Management and maintenance income
Additional products and services
Funding commissions
End of lease income
Other income
Other revenue
Rental income
Revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Timing of revenue recognition
Revenue transferred at a point in time – upfront
Revenue transferred over time
Revenue transferred at a point in time – end of life
Revenue from external customers by geographic regions is set out in note 5 operating segments.
Consolidated
2019
$’000
94,487
107,119
50,633
213,364
2,032
2018
$’000
(Restated)
93,340
104,036
54,805
216,611
2,670
467,635
471,462
40,454
42,436
508,089
513,898
Consolidated
2019
$’000
100,063
148,107
219,465
467,635
2018
$’000
(Restated)
101,253
146,179
224,030
471,462
50
SG Fleet GroupNotes to the financial statements30 June 2019 Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Computer hardware and office equipment
Motor vehicles
Leased motor vehicle assets
Right-of-use assets
Total depreciation
Amortisation
Brand name
Customer contracts
Software
Total amortisation
Total depreciation and amortisation
Impairment
Intangibles – brand name
Finance costs
External borrowing costs for corporate debt
External borrowing costs for lease portfolio
Net foreign exchange losses (gains)
Net movement in fair value of derivatives
Interest on lease liabilities – right-of-use assets
Total finance costs
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Consolidated
2019
$’000
2018
$’000
39
1,766
159
15,487
4,741
22,192
–
5,799
3,602
9,401
44
1,504
108
17,895
–
19,551
780
5,746
2,554
9,080
31,593
28,631
5,785
–
7,421
2,795
27
(1,133)
461
9,571
7,372
2,536
(16)
(355)
–
9,537
145
6,342
5,145
5,082
51
Annual Report 2019 Note 8. Income tax
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:
Increase/(decrease) in deferred tax liabilities
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:
Entertainment expenses
Non-deductible expenses
Difference in overseas tax rates
Adjustment recognised for prior periods
Income tax expense
Amounts charged/(credited) directly to equity
Deferred tax liabilities
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
Consolidated
2019
$’000
27,626
(2,303)
25,323
2018
$’000
(Restated)
26,610
1,901
28,511
(2,303)
1,901
85,785
95,966
25,736
28,790
54
156
102
384
25,946
29,276
(543)
(80)
(453)
(312)
25,323
28,511
Consolidated
2019
$’000
2018
$’000
(826)
210
13,682
2,326
14,161
2,407
The above potential tax benefit for tax losses and temporary differences, relating to United Kingdom, has not been recognised
in the statement of financial position.
52
SG Fleet GroupNotes to the financial statements30 June 2019 Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment
Prepayments
Intangibles
Employee benefits
Accrued expenses
Provisions
Allowance for expected credit loss
Contract liabilities
Deferred expenses
Derivative financial instruments
Assessed loss
Deferred tax liability
Amount expected to be settled after more than 12 months
Movements:
Opening balance
Charged/(credited) to profit or loss
Charged/(credited) to equity
Exchange differences
Adjustment to opening retained earnings (on adoption on AASB 9)
Closing balance
Provision for income tax
Provision for income tax
Amount expected to be settled within 12 months
Consolidated
2019
$’000
2018
$’000
(Restated)
1,759
2,037
10,183
(2,627)
(1,397)
(3,001)
(77)
(3,988)
-
(923)
(321)
1,645
1,645
4,814
(2,303)
(826)
13
(53)
1,852
2,067
13,470
(2,415)
(1,785)
(2,996)
(51)
(3,946)
(393)
(402)
(587)
4,814
4,814
2,586
1,901
210
117
–
1,645
4,814
Consolidated
2019
$’000
5,659
5,659
2018
$’000
2,674
2,674
53
Annual Report 2019
Note 9. Cash and cash equivalents
Cash at bank
Secured deposits
Amount expected to be recovered within 12 months
Consolidated
2019
$’000
71,718
28,774
100,492
100,492
2018
$’000
72,475
30,800
103,275
103,275
Secured deposits represent cash held by the Group as required under certain funding and insurance arrangements between the
Group, the financiers under its lease portfolio facilities and its insurance providers. The secured deposits are not available as free
cash for the purpose of operations of the Group.
Note 10. Finance, trade and other receivables
Trade receivables
Less: Allowance for expected credit losses (2018: Provision for impairment of receivables)
Finance lease receivables
Amount expected to be recovered within 12 months
Consolidated
2019
$’000
73,377
(480)
72,897
48
72,945
72,945
2018
$’000
76,856
(244)
76,612
63
76,675
76,675
Allowance for expected credit losses
The Group has recognised a loss of $Nil (2018: $73,000) in profit or loss in respect of the expected credit losses for the year ended
30 June 2019. Under transition method chosen, comparative information has not been restated.
The ageing of the receivables and allowance for expected credit losses using the simplified method is provided for above are
as follows:
Expected credit
loss rate
2019
%
–
–
13.90%
14.60%
12.90%
13.20%
Carrying
amount
2019
$’000
60,101
9,827
1,420
688
129
1,260
73,425
Allowance for
expected
credit losses
2019
$’000
–
–
197
100
17
166
480
Consolidated
Not overdue
0 to 30 days overdue
30 to 60 days overdue
60 to 90 days overdue
90 to 120 days overdue
Over 120 days overdue
54
SG Fleet GroupNotes to the financial statements30 June 2019 Movements in the allowance for expected credit losses (2018: Provision for impairment of receivables) are as follows:
Opening balance
Adjustment to opening retained earnings (on adoption on AASB 9)
Additional provisions recognised
Exchange difference in foreign subsidiary
Receivables written off during the year as uncollectable
Closing balance
Note 11. Inventories
End-of-term operating lease assets held for disposal
Amount expected to be recovered within 12 months
Note 12. Prepayments
Prepayments
Amount expected to be recovered within 12 months
Note 13. Other financial assets
Investment in other companies – at fair value
Amount expected to be recovered after more than 12 months
Consolidated
2019
$’000
244
247
–
1
(12)
480
2018
$’000
213
–
73
3
(45)
244
Consolidated
2019
$’000
10,120
10,120
2018
$’000
9,413
9,413
Consolidated
2019
$’000
9,918
9,918
2018
$’000
(Restated)
9,698
9,698
Consolidated
2019
$’000
240
240
2018
$’000
–
–
55
Annual Report 2019 Note 14. Leased motor vehicle assets
Lease motor vehicle 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
2019
$’000
85,311
(27,879)
(174)
57,258
5,929
51,329
57,258
2018
$’000
94,559
(30,134)
(564)
63,861
4,779
59,082
63,861
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Leased
assets
$’000
64,818
35,798
(21,278)
344
2,074
(17,895)
63,861
35,139
(27,935)
399
1,281
(15,487)
57,258
Consolidated
Balance at 1 July 2017
Additions
Disposals
Revaluation increments
Exchange differences
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Revaluation increments
Exchange differences
Depreciation expense
Balance at 30 June 2019
56
SG Fleet GroupNotes to the financial statements30 June 2019 Note 15. Property, plant and equipment
Leasehold improvements – at cost
Less: Accumulated depreciation
Computer hardware and office equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Amount expected to be recovered after more than 12 months
Consolidated
2019
$’000
933
(619)
314
8,758
(5,411)
3,347
640
(209)
431
4,092
4,092
2018
$’000
621
(578)
43
7,831
(4,194)
3,637
523
(233)
290
3,970
3,970
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Computer
hardware and
office
equipment
$’000
Leasehold
improvements
$’000
84
–
–
3
(44)
43
309
–
1
(39)
314
3,759
1,401
(29)
10
(1,504)
3,637
1,473
–
3
(1,766)
3,347
Motor
vehicles
$’000
388
44
(35)
1
(108)
290
399
(108)
9
(159)
431
Total
$’000
4,231
1,445
(64)
14
(1,656)
3,970
2,181
(108)
13
(1,964)
4,092
57
Annual Report 2019 Note 16. Intangibles
Goodwill – at cost
Brand name – at cost
Less: Accumulated amortisation
Less: Impairment
Customer contracts – at cost
Less: Accumulated amortisation
Software – at cost
Less: Accumulated amortisation
Amount expected to be recovered after more than 12 months
Consolidated
2019
$’000
2018
$’000
356,829
356,096
7,800
(2,015)
(5,785)
–
59,716
(20,754)
38,962
26,735
(10,284)
16,451
412,242
412,242
7,800
(2,015)
–
5,785
59,509
(14,919)
44,590
21,517
(7,172)
14,345
420,816
420,816
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2018
Additions
Exchange differences
Impairment of assets
Amortisation expense
Balance at 30 June 2019
Goodwill
$’000
353,528
–
2,568
–
356,096
–
733
–
–
356,829
Brand
name
$’000
6,565
–
–
(780)
5,785
–
–
(5,785)
–
–
Customer
contracts
$’000
49,700
–
636
(5,746)
44,590
–
171
–
(5,799)
38,962
Software
$’000
10,699
6,190
10
(2,554)
14,345
5,704
4
–
(3,602)
16,451
Total
$’000
420,492
6,190
3,214
(9,080)
420,816
5,704
908
(5,785)
(9,401)
412,242
During the year the Board resolved to integrate the Group’s two retail brands into a single retail brand and accordingly resolved to
impair the nlc brand within the Australia segment at a pre-tax cost of $5,785,000.
Goodwill acquired through business combinations have been allocated to the following cash-generating units (‘CGUs’):
Australian CGU
United Kingdom CGU
Total
58
Consolidated
2019
$’000
305,771
51,058
356,829
2018
$’000
305,771
50,325
356,096
SG Fleet GroupNotes to the financial statements30 June 2019 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 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 5 was
projected at a growth rate of 0% (2018: 0%) for both CGUs;
• Revenue growth was projected at 3.9% (2018: 5.4%) per annum for the Australian CGU and 7.4% (2018: 4.8%) per annum for
the United Kingdom CGU;
• 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
of 9.93% (2018: 9.93%) was used for the Australian CGU and 7.12% (2018: 6.83%) for the United Kingdom CGU.
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 17. Right-of-use assets
Right-of-use assets – at cost
Less: Accumulated depreciation
Amount expected to be recovered after more than 12 months
Consolidated
2019
$’000
18,196
(4,610)
13,586
13,586
2018
$’000
–
–
–
–
Reconciliation
Reconciliation of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
Adoption of AASB 16 on 1 July 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Office
premises
Motor
vehicles
Others
Total
9,928
6,411
(83)
1
(3,855)
12,402
771
920
(19)
–
(743)
929
379
19
–
–
(143)
255
11,078
7,350
(102)
1
(4,741)
13,586
59
Annual Report 2019 Note 18. Trade and other payables
Trade payables
Accrued expenses
Amount expected to be settled within 12 months
Refer to note 30 for further information on financial instruments.
Consolidated
2019
$’000
100,090
8,566
108,656
108,656
2018
$’000
129,079
10,076
139,155
139,155
Trade payables include residual values payable to financiers, which are secured by the underlying operating lease asset, cash lock-
up of $28,866,000 (2018: $25,317,000) and bank guarantees.
Note 19. Derivative financial instruments
Consolidated
2019
$’000
3,157
3,157
2018
$’000
1,419
1,419
Consolidated
2019
$’000
4,044
4,724
8,768
7,918
850
8,768
2018
$’000
3,698
4,360
8,058
7,286
772
8,058
Interest rate swap contracts
Amount expected to be settled after more than 12 months
Refer to note 30 for further information on financial instruments.
Refer to note 31 for further information on fair value measurement.
Note 20. 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
60
SG Fleet GroupNotes to the financial statements30 June 2019 Note 21. Residual risk provision
Consolidated
Residual risk
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
2019
$’000
10,528
5,488
5,040
10,528
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 – 2019
Carrying amount at the start of the year
Additional provisions recognised
Provision utilised
Exchange differences
Carrying amount at the end of the year
Note 22. Lease portfolio borrowings
Lease portfolio borrowings
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
2018
$’000
10,510
5,156
5,354
10,510
Residual
risk
$’000
10,510
26
(21)
13
10,528
Consolidated
2019
$’000
46,178
27,902
18,276
46,178
2018
$’000
55,289
28,914
26,375
55,289
Refer to note 30 for further information on financial instruments.
The lease portfolio borrowings are secured by the underlying funded assets and lease agreements, together with an irrevocable
letter of credit, cash lock-ups and guarantees. These facilities are interest bearing and are repaid monthly in accordance with the
amortisation schedule of the underlying assets.
61
Annual Report 2019 Note 23. Borrowings
Bank loans
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Refer to note 30 for further information on financial instruments.
Total secured liabilities
The total secured liabilities are as follows:
Bank loans
Lease portfolio borrowings (note 22)
Assets pledged as security
Assets pledged as security for borrowings are:
Consolidated
2019
$’000
2018
$’000
125,320
134,329
–
125,320
125,320
26,992
107,337
134,329
Consolidated
2019
$’000
125,320
46,178
171,498
2018
$’000
134,329
55,289
189,618
Corporate borrowings
The Group repaid its corporate borrowings and entered into a new syndicated debt facility in December 2018. The corporate borrowings
comprise of bank loans and ancillary facilities which are secured by guarantees and indemnities as well as fixed and floating charges
or composite guarantees issued by the Group. The facilities are repayable in full on the maturity date being 14 December 2022.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Corporate borrowings
Lease portfolio borrowings (note 22)
Used at the reporting date
Corporate borrowings
Lease portfolio borrowings (note 22)
Unused at the reporting date
Corporate borrowings
Lease portfolio borrowings (note 22)
62
Consolidated
2019
$’000
2018
$’000
180,497
87,438
267,935
138,674
46,178
184,852
41,823
41,260
83,083
181,582
120,960
302,542
151,867
55,289
207,156
29,715
65,671
95,386
SG Fleet GroupNotes to the financial statements30 June 2019 Lease liabilities – right-of-use assets
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Reconciliation:
Reconciliation of lease liabilities at the beginning and end of financial year are set out below:
Adoption of AASB 16 on 1 July 2018
Additions
Disposals
Interest and other adjustments
Repayment of lease liabilities
Exchange differences
Balance at 30 June 2019
Note 25. Vehicle maintenance funds
Vehicle maintenance funds
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Consolidated
2019
$’000
13,931
4,869
9,062
13,931
2018
$’000
–
–
–
–
Consolidated
2019
$’000
11,217
7,350
(102)
461
(5,019)
24
13,931
Consolidated
2019
$’000
2018
$’000
42,273
44,716
15,146
27,127
42,273
14,909
29,807
44,716
63
Annual Report 2019 Note 26. Contract liabilities
Contract liabilities
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Reconciliation
Reconciliation at the beginning and end of the current and previous financial year are set out below:
Opening balance
Transfer to revenue – included in the opening balance
Increase in cash received excluding amounts recognised as revenue during the year
Closing balance
Note 27. Issued capital
Consolidated
2019
$’000
2018
$’000
(Restated)
35,608
36,276
21,454
14,154
35,608
22,691
13,585
36,276
36,276
(18,022)
17,354
35,608
35,353
(18,110)
19,033
36,276
Ordinary shares – fully paid
261,896,269
257,358,146
290,592
273,999
Consolidated
2019
Shares
2018
Shares
2019
$’000
2018
$’000
Date
Shares
Issue price
$’000
Movements in ordinary share capital
Details
Balance
Shares issued on exercise of options
Shares issued on exercise of options
Transfer from share based payment reserve on exercise
of options
Balance
Shares issued on vesting of performance rights
1 July 2017
253,030,869
22 August 2017
190,352
11 September 2017
4,136,925
–
30 June 2018
257,358,146
30 August 2018
128,235
Shares issued under dividend reinvestment plan
16 October 2018
4,409,888
Transfer from share based payment reserve on exercise
of performance rights
–
$0.00
Balance
30 June 2019
261,896,269
64
$0.00
$0.00
$0.00
$0.00
$3.69
272,008
–
–
1,991
273,999
–
16,273
320
290,592
SG Fleet GroupNotes to the financial statements30 June 2019 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 Group monitors capital on the basis of its gearing ratio. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to
reduce debts.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as
total borrowings less cash and cash equivalents.
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 year.
The capital risk management policy remains unchanged from the 30 June 2018 Annual Report.
Note 28. Reserves
Foreign currency reserve
Hedging reserve – cash flow hedges
Share-based payments reserve
Capital reserve
Consolidated
2019
$’000
(588)
(2,118)
1,568
2018
$’000
(1,301)
(78)
1,412
(119,158)
(119,158)
(120,296)
(119,125)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to
Australian Dollars.
Hedging reserve – cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be
an effective hedge.
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.
65
Annual Report 2019 Note 28. Reserves continued
Movements in each class of reserve during the current and previous financial year are set out below:
Cash flow
hedge
$’000
Share-based
payments
$’000
Capital
$’000
Total
$’000
(554)
2,194
(119,158)
(120,382)
Consolidated
Balance at 1 July 2017
Foreign currency translation
Share-based payments
Movement in hedges – gross
Deferred tax
Transfer to share capital
Balance at 30 June 2018
Foreign currency translation
Share-based payments
Movement in hedges – gross
Deferred tax
Transfer to share capital
Balance at 30 June 2019
Foreign
currency
$’000
(2,864)
1,563
–
–
–
–
(1,301)
713
–
–
–
–
–
–
686
(210)
–
(78)
–
–
(2,866)
826
–
(588)
(2,118)
Note 29. Dividends
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2018 of 9.958 cents per ordinary share paid
on 16 October 2018 (2018: 9.265 cents)
Interim dividend for the year ended 30 June 2019 of 8.169 cents per share paid
on 18 April 2019 (2018: 8.78 cents)
–
1,209
–
–
(1,991)
–
–
–
–
–
1,563
1,209
686
(210)
(1,991)
1,412
(119,158)
(119,125)
–
476
–
–
(320)
1,568
–
–
–
–
–
713
476
(2,866)
826
(320)
(119,158)
(120,296)
Consolidated
2019
$’000
2018
$’000
25,640
23,844
21,395
47,035
22,596
46,440
On 21 August 2019, the Directors declared a fully franked final dividend for the year ended 30 June 2019 of 9.52 cents per
ordinary shares, to be paid on 10 October 2019 to eligible shareholders on the register as at 19 September 2019. This equates to
a total estimated distribution of $24,932,000, based on the number of ordinary shares on issue as at 30 June 2019. The financial
effect of dividends declared after the reporting date are not reflected in the 30 June 2019 financial statements and will be
recognised in subsequent financial reports.
Franking credits
Consolidated
2019
$’000
2018
$’000
(Restated)
Franking credits available for subsequent financial years based on a tax rate of 30%
50,275
48,040
66
SG Fleet GroupNotes to the financial statements30 June 2019 The above amounts represent the balance of the franking account as at the end of the financial year, 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.
30 June 2018 franking credit balance has been restated to include $2,441,000 of franking credits arising from the payment of the
amount of provision of income tax at the reporting date.
Note 30. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate 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 Audit, Risk and
Compliance Committee, a sub-committee of the Board, has responsibility 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 is not exposed to any significant foreign currency risk, except for translation of financial assets and liabilities of foreign
subsidiaries into presentation currency.
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, unless approved by the Board, 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 after impact of hedging instruments:
Consolidated
Bank loans
Lease portfolio facilities
Cash at bank
Secured deposits
Net exposure to cash flow interest rate risk
2019
Balance
$’000
(25,064)
(6,939)
71,718
28,774
68,489
2018
Balance
$’000
(55,767)
(5,705)
72,475
30,800
41,803
67
Annual Report 2019 Note 30. Financial instruments continued
An official increase/decrease in interest rates of 50 (2018: 50) basis points would have a favourable/adverse effect on profit before
tax and equity of $342,000 (2018: $209,000) per annum. The percentage change is based on the expected volatility of interest
rates using market data and analyst’s forecasts.
Derivatives interest rate swap
The Group has entered into interest rate swap contracts with notional/principal value as at 30 June 2019 of $109,703,000 (2018:
$88,407,000). The interest rate swap contract hedges the Group’s risk against an increase in variable interest rate. However, hedge
accounting is not applied. The contracts mature in 2019-2020 financial year. Weighted average fixed rate is 1.99% (2018: 3.19%).
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.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across
all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that
is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a
period greater than 1 year.
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.
Financing arrangements
Unused borrowing facilities at the reporting date:
Corporate borrowings
Lease portfolio borrowings (note 22)
Consolidated
2019
$’000
41,823
41,260
83,083
2018
$’000
29,715
65,671
95,386
68
SG Fleet GroupNotes to the financial statements30 June 2019 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.
Consolidated – 2019
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing – variable
Bank loans
Lease portfolio liabilities
Interest-bearing – fixed rate
Bank loans
Lease portfolio facilities
Lease liabilities – right-of-use assets
Total non-derivatives
Derivatives
Interest rate swaps inflow
Total derivatives
Consolidated – 2018
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing – variable
Bank loans
Lease portfolio liabilities
Interest-bearing – fixed rate
Bank loans
Lease portfolio facilities
Total non-derivatives
Derivatives
Interest rate swaps inflow
Total derivatives
1 year or less
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5 years
$’000
100,090
704
7,081
3,605
21,661
4,560
137,701
–
704
–
3,605
12,305
3,624
20,238
–
26,119
–
105,664
6,578
2,723
141,084
–
–
–
–
3,517
3,517
–
–
–
–
–
2,418
2,418
–
–
1 year or less
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5 years
$’000
129,079
–
17,324
5,827
15,220
24,508
40,673
–
69,164
18,454
191,958
128,291
–
–
1,419
1,419
–
–
–
–
9,110
9,110
–
–
–
–
–
–
–
–
–
–
Remaining
contractual
maturities
$’000
100,090
27,527
7,081
112,874
40,544
13,325
301,441
3,517
3,517
Remaining
contractual
maturities
$’000
129,079
57,997
5,827
84,384
52,072
329,359
1,419
1,419
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
69
Annual Report 2019 Note 31. Fair value measurement
Fair value hierarchy
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Consolidated – 2019
Assets
Investment in other companies
Total assets
Liabilities
Derivative financial instruments – Interest rate swap contracts
Total liabilities
Consolidated – 2018
Liabilities
Derivative financial instruments – Interest rate swap contracts
Total liabilities
There were no transfers between levels during the financial year.
Level 1
$’000
Level 2
$’000
Level 3
$’000
–
–
–
–
Level 1
$’000
–
–
–
–
3,157
3,157
Level 2
$’000
1,419
1,419
240
240
–
–
Level 3
$’000
–
–
Total
$’000
240
240
3,157
3,157
Total
$’000
1,419
1,419
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade
receivables and trade payables 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.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Derivative financial instruments have been valued using observable market rates. This valuation technique maximises the use of
observable market data where it is available and relies as little as possible on entity specific estimates.
70
SG Fleet GroupNotes to the financial statements30 June 2019 Note 32. 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
2019
$
2018
$
3,823,202
4,344,023
113,766
89,870
206,837
135,680
46,692
511,636
4,233,675
5,038,031
Note 33. Remuneration of auditors
During the financial year 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
Tax services
Corporate advisory
Note 34. Commitments – operating lease receivable
Committed at the reporting date, receivable:
Within one year
One to five years
Consolidated
2019
$
2018
$
576,141
499,408
98,253
25,850
124,103
700,244
118,419
29,064
147,483
646,891
Consolidated
2019
$’000
2018
$’000
11,859
9,363
21,222
20,931
18,840
39,771
Future minimum rentals receivable includes contracted amounts for motor vehicles under non-cancellable operating leases
between one and five years.
71
Annual Report 2019 Note 35. Contingent liabilities
The Group has entered into agreements with its lease portfolio financiers under which the residual value risk inherent in
operating leases is transferred from the financier of the asset to the Group at the end of the lease. Under these agreements, at
the end of the contractual lease term for each vehicle, the Group is obliged to pay the guaranteed residual value amount to the
financier. The Group then sells the vehicles and realises a profit or loss on sale. Bank guarantees and letters of credit have been
issued to lease portfolio financiers as security for these obligations.
An amount of $10,528,000 (2018: $10,510,000) has been recognised as a residual value provision and an amount of $174,000
(2018: $564,000) has been recognised as an impairment provision respectively, calculated on an onerous pool basis, to cover
potential shortfalls on the disposal of these vehicles.
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 36. Commitments for expenditure
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities:
Within one year
One to five years
More than five years
Consolidated
2019
$’000
2018
$’000
–
–
–
–
4,576
6,622
841
12,039
Operating lease commitments includes contracted amounts for office accommodation and office equipment under non-
cancellable operating leases expiring within one to ten years with, in some cases, options to extend. The leases do not have
escalation clauses. On renewal, the terms of the leases are renegotiated.
At 30 June 2019, operating lease commitments are disclosed as $nil due to the adoption of AASB 16 ‘leases’. Refer note 2 for
further details.
Note 37. 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 39.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the
Directors’ report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
72
SG Fleet GroupNotes to the financial statements30 June 2019 Note 38. 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
Parent
Parent
2019
$’000
(786)
(786)
2019
$’000
–
2018
$’000
(787)
(787)
2018
$’000
–
523,091
506,334
4,388
1,441
213,112
165,127
500,980
(191,001)
484,387
(143,180)
309,979
341,207
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and its subsidiaries are party to a deed of cross guarantee under which each company guarantees the debts of
the others. No deficiencies of assets exist in any of these subsidiaries. Refer to note 40 for further details.
The parent entity has also provided guarantees and indemnities for bank facilities. Refer to note 23 for further details.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
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.
There was no impact on the parent entity on the adoption of AASB 9, AASB 15 and AASB 16.
73
Annual Report 2019
Note 39. 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:
Ownership interest
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
2019
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2018
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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
Fleet Care Services Pty Limited
SG Fleet Salary Packaging Pty Limited
Beta Dimensions Pty Limited
SMB Car Sales Pty Limited
NLC Pty Limited
NLC Finance Pty Ltd
NLC Insurance Pty Ltd
Vehicle Insurance Underwriters Pty Ltd
NLC Administration Pty Limited
Kerr Reinehr Group Pty Limited
NLC Services Pty Limited
SG Fleet NZ Limited
SG Fleet UK Limited
SG Fleet UK Holdings Limited
Fleet Hire Holdings Limited
SG Fleet Solutions UK Limited
Fleet Hire Limited
Car Salary Exchange Limited
Motiva Group Limited
Motiva Vehicle Contracts Limited
Mway Vehicle Rentals Limited
Motiva Direct Limited
Motrak Limited
74
SG Fleet GroupNotes to the financial statements30 June 2019 Note 40. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
SG Fleet Group Limited (holding entity)
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 *
Fleet Care Services Pty Limited *
SG Fleet Salary Packaging Pty Limited *
Beta Dimensions Pty Limited *
SMB Car Sales Pty Limited *
NLC Pty Limited*
NLC Finance Pty Ltd
NLC Insurance Pty Ltd
Vehicle Insurance Underwriters Pty Ltd
NLC Administration Pty Limited*
Kerr Reinehr Group Pty Limited*
NLC Services Pty Limited*
SG Fleet NZ Limited
SG Fleet UK Limited
SG Fleet UK Holdings Limited
Fleet Hire Holdings Limited
SG Fleet Solutions UK Limited
Fleet Hire Limited
Car Salary Exchange Limited
Motiva Group Limited
Motiva Vehicle Contracts Limited
Mway Vehicle Rentals Limited
Motiva Direct Limited
Motrak Limited
By entering into the deed, the entities (denoted above by an asterisk (*)) have opted to obtain relief from the requirement to
prepare financial statements and Directors’ report under Corporations Instrument 2016/785 issued by the Australian Securities
and Investments Commission (‘ASIC’).
The above companies represent a ‘Closed Group’ for the purposes of the Corporations Instrument, and as there are
no other parties to the deed of cross guarantee that are controlled by SG Fleet Group Limited, they also represent the
‘Extended Closed Group’.
The statement of profit or loss, statement of other comprehensive income and statement of financial position for the Closed
Group are the same as the Group and therefore have not been separately disclosed.
75
Annual Report 2019 Consolidated
2019
$’000
2018
$’000
(Restated)
60,462
67,455
31,593
5,785
(55)
523
(399)
(1,128)
3,483
(707)
(220)
(33,046)
(668)
2,985
(2,290)
710
18
28,631
–
13
1,209
(344)
(359)
(9,081)
1,859
961
25,747
923
(3,024)
2,018
40
(1,085)
67,046
114,963
Consolidated
2019
$’000
320
16,273
5,859
22,452
2018
$’000
1,991
–
–
1,991
Note 41. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
Net loss/(gain) on sale of non-current assets
Share-based payments
Leased motor vehicles – fair value increments
Net movement in fair value of derivatives
Change in operating assets and liabilities:
Decrease/(increase) in finance, trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in provision for income tax
Increase/(decrease) in deferred tax liabilities
Increase in employee benefits
Increase/(decrease) in other provisions
Net cash from operating activities
Non-cash investing and financing activities
Shares issued under employee share plan
Shares issued under dividend reinvestment plan
Additions and disposals of right-of-use assets
76
SG Fleet GroupNotes to the financial statements30 June 2019
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2017
Net cash used in financing activities
Exchange differences
Balance at 30 June 2018
Net cash used in financing activities
Recognised on adoption of AASB 16
Non-cash additions and disposals
Exchange differences
Balance at 30 June 2019
Note 42. Earnings per share
Lease portfolio
borrowings
$’000
Lease liabilities
– right-of-use
assets
$’000
Bank
loans
$’000
55,328
(1,974)
1,935
55,289
(10,129)
–
–
1,018
46,178
158,119
(25,305)
1,515
134,329
(9,407)
–
–
398
–
–
–
–
(4,558)
11,217
7,248
24
Total
$’000
213,447
(27,279)
3,450
189,618
(24,094)
11,217
7,248
1,440
125,320
13,931
185,429
Consolidated
2019
$’000
2018
$’000
(Restated)
Profit after income tax attributable to the owners of SG Fleet Group Limited
60,462
67,455
Weighted average number of ordinary shares used in calculating basic earnings per share
260,582,428
256,514,976
Number
Number
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Performance rights over ordinary shares
–
535,838
97,235
285,756
Weighted average number of ordinary shares used in calculating diluted earnings per share
261,118,266
256,897,967
Basic earnings per share
Diluted earnings per share
Cents
23.20
23.16
Cents
26.30
26.26
77
Annual Report 2019 Note 43. Share-based payments
The Group has a share option plan and performance rights to incentivise certain employees and Key Management Personnel.
The share-based payment expense for the year was $476,000 (2018: $1,209,000).
Share option plan
The share option plan is subject to a service condition and a performance condition. The performance condition is based on the
compound annual growth rate (‘CAGR’) of the Group’s earnings per share.
Set out below are summaries of options granted under the plan:
2019
Grant date
04/03/2014
25/10/2017
25/10/2017
2018
Grant date
04/03/2014
25/10/2017
25/10/2017
Expiry date
13/08/2018
21/08/2022
17/08/2023
Expiry date
13/08/2018
21/08/2022
17/08/2023
Exercise
price
$1.85
$3.66
$3.66
Exercise
price
$1.85
$3.66
$3.66
Balance at
the start of
the year
187,005
638,913
1,219,077
2,044,995
Balance at
the start of
the year
Granted
Exercised
–
–
–
–
–
–
–
–
Granted
Exercised
8,086,046
–
(7,899,041)
–
–
638,913
1,219,077
–
–
8,086,046
1,857,990
(7,899,041)
Expired/
forfeited/
other
(187,005)
(42,087)
(80,305)
Balance at
the end of
the year
–
596,826
1,138,772
(309,397)
1,735,598
Expired/
forfeited/
other
–
–
–
–
Balance at
the end of
the year
187,005
638,913
1,219,077
2,044,995
Outstanding options exercisable as at 30 June 2019 was Nil (2018: 187,005). The weighted average remaining contractual life of
options outstanding at the end of the financial period was 2.5 years (2018:2.25 years).
Performance rights
The performance rights are subject to a service condition and a performance condition. The performance condition is based on
the compound annual growth rate of the Group’s earnings per share. Rights do not carry a right to receive any dividends. If rights
vest and are exercised to receive shares, these shares will be eligible to receive dividends.
78
SG Fleet GroupNotes to the financial statements30 June 2019 Set out below are summaries of performance rights granted under the plan:
2019
Grant date
20/03/2017
20/03/2017
25/10/2017
25/10/2017
30/08/2018
2018
Grant date
20/03/2017
20/03/2017
25/10/2017
25/10/2017
Vesting date
14/08/2018
22/08/2019
22/08/2019
18/08/2020
01/07/2019
Vesting date
14/08/2018
22/08/2019
22/08/2019
18/08/2020
Balance at
the start of
the year
142,967
285,993
52,453
109,115
–
590,528
Balance at
the start of
the year
142,967
285,993
–
–
428,960
Granted
Exercised
–
–
–
–
172,258
172,258
(128,235)
–
–
–
–
(128,235)
Granted
Exercised
–
–
52,453
109,115
161,568
–
–
–
–
–
Expired/
forfeited/
other
(14,732)
(56,508)
(3,455)
(7,188)
(12,211)
(94,094)
Expired/
forfeited/
other
–
–
–
–
–
Balance at
the end of
the year
–
229,485
48,998
101,927
160,047
540,457
Balance at
the end of
the year
142,967
285,993
52,453
109,115
590,528
Performance rights exercisable as at 30 June 2019 was Nil (2018: Nil). The weighted average remaining contractual life of
performance rights outstanding at the end of the financial period was 17 months (2018: 15 months).
For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair value
at the grant date, are as follows:
Grant date
30/08/2018
Vesting date
Share price
at grant date
Exercise
price
Dividend
yield
Fair value
at grant date
01/07/2019
$4.01
$0.00
5.18%
$3.500
Note 44. Events after the reporting period
Apart from the dividend declared as disclosed in note 29, no other matter or circumstance has arisen since 30 June 2019 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.
79
Annual Report 2019 Directors’ declaration
30 June 2019
In the Directors’ opinion:
• the attached financial statements and notes 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 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 give a true and fair view of the Group’s financial position as at 30 June 2019 and
of its performance for the financial year ended on that date;
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
• at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
described in note 40 to the financial statements.
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
21 August 2019
Sydney
Robbie Blau
Chief Executive Officer
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Independent Auditor’s Report
To the shareholders of SG Fleet Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
SG Fleet Group Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
giving a true and fair view of the
Group’s financial position as at 30
June 2019 and of its financial
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
consolidated statement of financial position as at 30
June 2019;
consolidated statement of profit or loss,
consolidated statement of other comprehensive
income, consolidated statement of changes in
equity, and consolidated statement of cash flows for
the year then ended;
notes including a summary of significant accounting
policies; and
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Company in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
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Annual Report 2019
Independent auditor’s report
to the members of SG Fleet Group Limited
Key Audit Matters
The Key Audit Matters we identified are:
valuation of goodwill;
recognition of residual risk provision;
and
measurement of deferred
maintenance income.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Valuation of goodwill (AUD $356.8m)
Refer to Note 16 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of goodwill is a Key Audit Matter due
to:
the size of the balance (being 52% of total
assets); and
the high level of judgement involved by us
in assessing the inputs to the Group's
annual assessment of impairment model.
We focused on the significant forward-looking
assumptions the Group applied in its value in
use model, including:
forecast cash flows, including underlying
growth rates, which can vary based on a
number of factors such as the number and
fleet size of new customer wins, residual
values, industry growth projections and
inflation expectations. The Group operates
across different geographies with varying
market pressures, which increases the risk
of inaccurate forecasts; and
the discount rates, which are complicated
in nature and may vary according to the
conditions and environment the specific
cash generating units (CGUs) are subject to
from time to time.
We involved corporate finance specialists to
supplement our senior audit team members in
assessing this key audit matter.
Our procedures included:
assessing the appropriateness of the
value in use method applied by the Group
to perform the annual test of goodwill for
impairment against the requirements of
the accounting standards;
assessing the integrity of the value in use
model, including the accuracy of the
underlying calculation formulas;
assessing the accuracy of previous Group
forecasts to inform our evaluation of
forecasts incorporated in the model. We
considered factors such as the number
and fleet size of new customer wins,
residual values, industry growth, inflation
experienced and historical trends where
varying market pressures existed across
different geographies and how they
impacted the business, for use in further
testing;
working with our corporate finance
specialists in assessing the Group's
discount rates against publicly available
data for a group of comparable entities
and independently developing a discount
rate range considered comparable using
this data. We adjusted this range by risk
factors specific to the Group and the
industry it operates in;
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challenging the Group's cash flow
forecast and growth assumptions,
including those related to fleet size and
growth assumptions across different
geographies, using our knowledge of the
Group and its industry. This included
comparing the Group's growth
assumptions to external data, such as
industry growth projections and inflation
expectations across different geographies;
considering the sensitivity of the model by
varying key assumptions, such as
discount rates and forecast growth rates,
within a reasonably possible range. This
allowed us to identify assumptions with a
higher risk of bias or inconsistency in
application, and to assess the presence of
indicators of impairment;
assessing the disclosures in the Financial
Report using our understanding obtained
from our testing and against the
requirements of the accounting standards.
Recognition of residual risk provision (AUD $10.5m)
Refer to Note 21 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The recognition of the residual risk provision is
considered to be a Key Audit Matter. This is
owing to the significant audit effort required and
the high degree of judgment applied by us in
assessing the Group’s residual risk provision.
We focused on gathering evidence on the
completeness of the residual value calculation
and other key inputs used by the Group to
determine the residual risk provision.
The Group has entered into agreements with
financiers which requires the transfer of the
asset ownership and the associated residual
risk inherent in operating lease assets from the
financier to the Group at the end of the
operating leases.
The determination of the probable residual risk
provision is based on the Group’s judgment in
Our procedures included:
assessing the accounting treatment of the
Group’s residual risk provision methodology to
the relevant accounting standards;
testing the key control for the Group's residual
risk provision process being the quarterly
evaluation and authorisation of the residual
value calculation by senior management;
comparing the market conditions and
macroeconomic factors underpinning the
Group's determination of the probable residual
values against published market reports and
statistical economic information (i.e. ABS-
published data), a key determinant in the
residual risk provision, for use in further
testing;
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Annual Report 2019
Independent auditor’s report
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assessing the Group's ability to accurately
estimate residual values at the end of the
lease term. This is performed by comparing
the historical residual valuation of a sample of
vehicles to the actual sale proceeds received
from previous disposals from comparable
vehicle classes; and
comparing a sample of the current residual
valuation of the motor vehicles against the
current market value of these motor
vehicles using recent external auction prices
achieved for comparable assets.
determining shortfalls on the disposal of these
assets once ownership is transferred to the
Group. It also takes into account market
conditions and macroeconomic factors, such as
inherent volatility of the asset’s disposal value
due to changes in market conditions between
the balance date and future date at which the
assets will be disposed.
It is the Group’s policy to recognise a provision
if the forecast sale proceeds of the asset is less
than the residual value payable to the financier.
This requires us to use our judgment when
considering the Group’s assessment, as the
ultimate sale proceeds are subject to the
condition of the asset and market conditions at
the end of the lease. Residual value estimates
are also a key input into the Group’s
depreciation and impairment calculations for
motor vehicles.
Measurement of deferred maintenance income (AUD $35.6m)
Refer to Note 26 to the Financial Report
The key audit matter
How the matter was addressed in our audit
It is the Group’s policy that periodic payments
received from customers for maintenance
services are initially recognised on the balance
sheet as deferred maintenance income.
Revenue is subsequently recognised when
maintenance work is completed and supplier
costs incurred. The amount released from
deferred maintenance income and recognised
as revenue is determined based on the stand-
alone selling price of the maintenance service
provided.
The measurement of deferred maintenance
income is a Key Audit Matter. This is due to the
audit effort and judgment involved in assessing
the Group's estimations, which includes
consideration of key inputs to the Group’s
internal pricing cost and margin calculations,
and supplier costs.
Our procedures included:
assessing the Group's revenue recognition
policy against AASB 15 requirements;
assessing the historical accuracy of the
Group's estimates of life of contract costs by
comparing past estimates to actual costs
incurred;
analysing vehicle maintenance costs and
developing expectations of maintenance
expense which is a key input to the stand
alone selling price of maintenance services.
We used our knowledge of the Group, the
composition of the Group’s fleet (e.g. vehicle
makes, types and condition), and other key
metrics such as number of vehicles in the
fleet. We compared this to the maintenance
expenses recorded by the Group;
Developing expectations of the deferred
maintenance income per vehicle against actual
experience as obtained from our testing
above. We compared this to the deferred
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maintenance income recorded by the Group;
and
assessing the additions to deferred
maintenance income by comparing a sample
of entries to the underlying maintenance
services billed to customers and against the
amount specified in the lease.
Other Information
Other Information is financial and non-financial information in SG Fleet Group Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001;
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error; and
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
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Annual Report 2019
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Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s
Report.
Report.
Report on the Remuneration Report
Report on the Remuneration Report
Opinion
Opinion
Directors’ responsibilities
Directors’ responsibilities
In our opinion, the Remuneration Report
In our opinion, the Remuneration Report
of SG Fleet Group Limited for the year
of SG Fleet Group Limited for the year
ended 30 June 2019, complies with
ended 30 June 2019, complies with
Section 300A of the Corporations Act
Section 300A of the Corporations Act
2001.
2001.
The Directors of the Company are responsible for the
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Report in accordance with Section 300A of the
Corporations Act 2001.
Corporations Act 2001.
Our responsibilities
Our responsibilities
We have audited the Remuneration Report included in
We have audited the Remuneration Report included in
pages 11 to 22 of the Directors’ report for the year
pages 11 to 22 of the Directors’ report for the year
ended 30 June 2019.
ended 30 June 2019.
Our responsibility is to express an opinion on the
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
accordance with Australian Auditing Standards.
PA S
PA S
KPMG
KPMG
John Wigglesworth
John Wigglesworth
Partner
Partner
Sydney
Sydney
21 August 2019
21 August 2019
86
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SG Fleet Group
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Shareholder information
The shareholder information set out below was applicable as at 31 July 2019.
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
Number of
holders of
ordinary
shares
Number of
holders of
options over
ordinary shares
Number of
holders of
performance
rights over
ordinary shares
359
578
312
368
39
1,656
113
–
–
–
–
7
7
–
1
30
10
11
–
52
–
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Bluefin Investments Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
BNP Paribas Noms Pty Ltd (DRP)
National Nominees Limited
Robert Pinkas Blau
Netwealth Investments Limited (Wrap Services A/C)
Misamada Nominees Pty Limited (Misamada A/C)
MDJZ Fernandes Pty Ltd (MDJZ Fernandes A/C)
Australian Executor Trustees Limited (No 1 Account)
Shevin Pty Limited (The Shevin A/C)
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
BNP Paribas Nominees Pty Ltd (IOOF Invmt Mngt Ltd DRP)
Peter Mountford
Mulcaster Super Fund Pty Ltd (Mulcaster Super Fund A/C)
Macdonald Gilbert Bell
Aust Executor Trustees Ltd (GFFD)
Enerview Pty Ltd
Insync Investments Pty Ltd (Weekley Super Fund No 1 A/C)
Ordinary shares
Number held
% of total shares
issued
155,039,989
59.17
24,152,587
13,450,412
13,291,185
13,266,059
7,246,347
5,216,425
4,884,573
1,675,820
1,173,162
835,110
687,347
654,798
575,000
540,540
500,000
465,960
436,170
405,405
400,000
9.22
5.13
5.07
5.06
2.77
1.99
1.86
0.64
0.45
0.32
0.26
0.25
0.22
0.21
0.19
0.18
0.17
0.15
0.15
244,896,889
93.46
87
Annual Report 2019 Shareholder information
Unquoted equity securities
Options over ordinary shares
Performance rights over ordinary shares
Substantial holders
Substantial holders in the Company are set out below:
Bluefin Investments Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Number
on issue
Number
of holders
1,735,598
408,134
7
52
Ordinary shares
Number held
% of total
shares issued
155,039,989
59.17
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.
Restricted securities
As at 30 June 2019, there are no restricted securities.
Share buy-back
There is no current on-market share buy-back.
88
SG Fleet Group Auditor
KPMG
International Tower 3
300 Barangaroo Avenue
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
Corporate Governance Statement
Corporate Governance Statement which is approved
at the same time as the Annual Report can be found at
http://investors.sgfleet.com/Investors/?page=Corporate-
Governance-Statement
Enquiries
investorenquiries@sgfleet.com
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 – Chief Financial Officer
Edwin Jankelowitz – Independent Non-Executive Director
Colin Brown – Alternate Director for Peter Mountford
Company secretary
Edelvine Rigato
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
3:00 PM on Thursday the 17 October 2019
Registered office and Principal place of business
Level 2, Building 3
20 Bridge Street
Pymble NSW 2073
Telephone: +61 2 9494 1000 Facsimile: +61 2 9391 5656
E-mail: globalenquiries@sgfleet.com
Share register
The Registrar
Boardroom Pty Ltd
Level 12, 225 George Street, Sydney, NSW 2000
Telephone: 1300 737 760
E-mail: enquiries@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
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Annual Report 2019 www.sgfleet.com