Annual Report 2023
Onward
CONTENTS
About SG Fleet
Sustainability statement
Chairman’s report
CEO’s report
Directors’ report
Auditor’s independence declaration
Financial report
Shareholder information
Corporate directory
IFC
4
18
19
23
43
44
98
100
About SG Fleet Group Limited
SG Fleet Group Limited is a leading provider
of integrated mobility solutions, including
fleet management, vehicle leasing, and salary
packaging services. We deliver highly efficient
products and services to meet our customers’
needs in a socially, environmentally, and ethically
responsible manner.
The company operates in Australia, New Zealand,
and the United Kingdom and has over 270,000
vehicles under management worldwide. SG Fleet
listed on the Australian Securities Exchange
in March 2014.
The company has a unique position in the
marketplace, built on the experience and product
expertise of its team, its innovation capability, and
a customer-centric approach to service delivery.
We actively contribute to the global discussion
about the future of transport and shape 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, and selectively invests in
new technologies and business models that are
changing the way we move.
SG Fleet’s expertise in low and zero-emission
vehicles and the introduction of a number of
measures to promote Electric Vehicle (EV)
take-up in Australia resulted in significantly
increased demand for the company’s services
during the 2023 financial year. We were able to
deploy the EV know-how already accumulated in
the United Kingdom in support of our customers’
sustainable transport objectives. During the
year, SG Fleet also continued to progress the
integration of the Australian and New Zealand
businesses of LeasePlan Corporation, acquired
in the previous financial period. Ongoing in-house
innovation activity again brought additional
products and services to market, including the
DingGo digital accident management platform,
charging activity management capabilities for the
eStart service, and a refresh of the Inspect365
safety inspection application.
A Year in Numbers
Financial
NET REVENUE
$350.3m
11.9%
$313.0m
$198.2m
$172.3m
2023
2022
2021
2020
NPAT
$75.2m
23.9%
$60.7m
$43.7m
$36.4m
2023
2022
2021
2020
EPS
22.00cps
2023
2022
2021
2020
21.2%
18.16cps
16.22 cps
13.88 cps
DIVIDEND
16.18cps
2023
2022
2021
2020
6.9%
15.13 cps
12.50 cps
10.00 cps
SG FLEET GROUP LIMITED
ABN 40 167 554 574
2023 Annual Report
1
OPERATIONAL
VEHICLES UNDER MANAGEMENT1
270,000+
INCREASE IN NUMBER OF ZERO
EMISSION VEHICLES MANAGED2
446%
KILOMETRES TRAVELLED BY
MANAGED FLEET2
3.8 billion+
REPAIRS MANAGED1
510,000+
FUEL AND TOLL
TRANSACTIONS PROCESSED2
18 million+
Our Ambition
To be a trusted partner
in shaping the future of
sustainable mobility
Our Purpose
To solve our customers’
mobility needs
and aspirations
1. Group.
2. AU.
2
Electric Vehicles –
Driving a better mobility future
SG Fleet has been a leader in the battery
and fuel cell electric vehicle segments from
the very early days of these technologies.
Since the appearance of the first EVs in our
managed fleet over ten years ago, we have
developed our know-how and helped our
customers embark on their journey towards
more sustainable mobility solutions.
In 2019, we launched the eStart zero emission vehicle transition
planning service. eStart wraps up the entire EV universe for our
customers, from development of the transition process to the
implementation of their EV strategy. Helped by our exceptional
access to available vehicle stock and our purchasing power,
we take advantage of our unique scale to make this transition
efficient and effective.
As is the case with any new technology, there are often
challenges, concerns, and misconceptions regarding EVs. As
a leader in the field, we see it as our responsibility to inform,
educate, and help overcome every one of our customers’
challenges. In the 2023 financial year, SG Fleet’s EV Drive Days
have again been the go-to event for organisations and individuals
to get hands-on experience with the newest advances in EV
technology and the ever-widening range of models available.
SG Fleet is a driving force in the EV world today and will continue
to shape the future of low emission transport. We help set the
direction through our representation on the Board of the Electric
Vehicle Council in Australia, our membership of Drive Electric
in New Zealand, and our recognised position as an EV expert in
the UK market, where we won the 2022 Business Car Best Eco
Initiative Award for eStart. SG Fleet will also continue to support
and participate in ground-breaking new research such as the
REVS EV-to-Grid Services project.
SG Fleet continues to
innovate and disrupt
the mobility market
Australia
A number of developments in Australia led to a dramatic
increase in interest in low emission vehicles, particularly in the
second half of the 2023 financial year. In November 2022, the
Federal Government introduced legislation providing a Fringe
Benefits Tax exemption for novated zero- or light-emission
vehicles under the Luxury Car Tax threshold. Various States
and Territories have added further financial incentives. Since
then, SG Fleet’s Australian business has seen a dramatic uptick
in novated customer enquiries for eligible vehicles, accounting
for approximately 40% of all enquiries in the third quarter of the
reported period.
There is no doubt this burgeoning interest is more than an
incentive-driven, temporary phenomenon. We are witnessing a
significant shift in our customers’ mindset and buying behaviour,
with the importance of adopting cleaner and greener means of
transportation increasingly front of mind, both for consumers
and organisations. The April 2023 release of Australia’s first-ever
Electric Vehicle Strategy, which seeks to increase the supply
of EVs and establish the required infrastructure to facilitate EV
uptake, is likely to increase this momentum further.
While just three years ago, battery electric vehicles accounted
for only 1% of new vehicle sales in Australia, that percentage is
now approaching double digits. As one of the country’s largest
vehicle purchasers, SG Fleet is playing a key role in bringing EVs
to local drivers, accounting for a significant proportion of new EV
registrations nationally.
While interest in low-emission hybrid vehicles had been on the
rise for a number of years now, growing by almost 50% as a
proportion of SG Fleet’s managed Australian fleet since the end
of the 2021 calendar year, the sudden acceleration in demand
for zero-emission vehicles has been exceptional. The number
of EVs in our fleet doubled in the 12 months to December 2022,
and then more than tripled in the six months since, buoyed by the
Government’s incentives. The increase is even more noticeable
in the Novated channel, where the number of EVs increased
almost five-fold during that period.
SG Fleet Group Limited 3
New Zealand
United Kingdom
While the gap is narrowing, New Zealand’s early adopter
approach has resulted in a higher uptake of EVs compared
to Australia. The NZ Government introduced the Clean Car
Discount for consumers in 2021 and the Clean Car Standard,
which incentivises the importation of low emission vehicles, in
early 2023.
SG Fleet New Zealand informs and educates local organisations
about EVs via its Drive Days and its involvement in the yearly
NZ Electro Mobility Summit, which showcases electric vehicles,
micro-mobility, and charging infrastructure solutions. In addition
to its Drive Electric membership, SG Fleet New Zealand also
participated in the Sustainable Business Council’s Clean Car
Accelerator program.
The UK Government put in place a comprehensive approach
for transport electrification several years ago, establishing
the Office for Zero Emission Vehicles (OZEV) and outlining
its ‘Road to Zero’ strategy. EV-related incentives include car
grants, tax benefits, congestion charge exemptions, and
parking benefits, as well home and workplace charger grants.
Companies and consumers have responded positively to these
initiatives and EV take-up in the UK is significantly ahead of that
in the Australasian region.
SG Fleet UK has established itself as an EV specialist in the
local market, getting industry recognition for its know-how and
sharing its insights across the entire SG Fleet organisation. This
provides us with unique expertise across the full EV lifecycle,
an important asset in markets that are still in the early stages of
adoption, such as Australia and New Zealand.
The number of EVs in our New Zealand fleet has grown steadily,
doubling over the last 18 months. Interest in low-emission hybrids
increased by a similar proportion during that period.
At the end of the 2023 financial year, EVs accounted for close to
22% of SG Fleet UK’s fleet, and with about 37% of new orders
during the period going to EVs, this percentage will continue
to increase. A feature of the UK market is the high uptake of
light commercial EVs, which account for one third of our UK EV
fleet. With light commercial EVs largely unavailable in Australia
and New Zealand at the moment, our UK experience in this
vehicle class again gives us a head start when helping corporate
customers with the electrification of their commercial fleets.
2023 Annual Report 4
Sustainability Statement
SG Fleet’s approach to long-term value
creation for all of its stakeholders is driven
by the principle that industry-leading
environmental, social, and governance (‘ESG’)
behaviours should be integrated into daily
business practices. The company established
a Sustainability Committee, governed by a
Charter, in 2019. In 2021, SG Fleet issued its
first Sustainability Statement. The Group’s
ESG Strategy was launched in 2022, followed
by a revised Environmental Policy in 2023.
The 2023 Sustainability Statement outlines
the relevant actions taken by the company
during the 2023 financial year with respect to
the risks identified as material in the Group’s
ESG Strategy.
ESG Action Plan Development
The first yearly ESG Action Plan, which spanned the second
half of the 2023 financial year, was developed in cooperation
with internal and external stakeholders in late 2022. New Action
Plans will be developed in June of every calendar year and apply
to the subsequent financial year period.
The Action Plan consists of a list of initiatives grouped under
the Environment, Social, or Governance headings and linked to
specific key ESG risks. These initiatives are earmarked to be
executed during the period or assessed for potential execution in
future periods. Consideration is also given to the relevance of the
initiatives for the Group as a whole or for specific jurisdictions.
Future Focus
In the 2024 financial year, we will focus on aligning our ESG
values across the organisation to take full advantage of the
strong commitment of our people to sound ethical behaviours.
Part of this will be the organisation of ESG-themed staff events
covering environmental, physical and mental health, and
diversity topics.
Environmental,
Social &
Governance
Strategy
ESG Strategy Launch
In August 2022, SG Fleet Group Limited’s Board
approved the company’s first comprehensive ESG
Strategy, which was launched for internal and
external stakeholders the following month.
The ESG Strategy further optimises how we
determine our key ESG risks and how we
approach the management of these risks, outlining
both current practices and future focus areas.
The determination process takes into account
the nature of our business operations, which are
predominantly the provision of services in an
office-based environment.
The ESG Strategy, which will be reviewed on a three-yearly basis,
can be found on the Corporate Social Responsibility page of the
www.sgfleet.com website.
ESG Committee
Charter
January 2023
Document Classification: Confidential
Governance Structure Enhanced
In December 2022, the company introduced
a new ESG governance structure, replacing
the Sustainability Committee founded in 2019.
The structure reflects the broader scope of our
approach under the new ESG Strategy. The
ESG Committee’s Charter was established in
January 2023 and the first quarterly meeting took
place in March 2023.
The ESG Committee’s primary roles include monitoring the
company’s adherence to the ESG Strategy, the development of
the yearly Action Plans and the verification of their execution,
the centralised management of all ESG-related statements, and
any reporting to the Board and Executive Committee. The ESG
Committee is composed of senior executives responsible for the
business areas related to the company’s key ESG risks.
SG Fleet Group Limited
5
Key Highlights
Environmental
Policy sets emission
reduction target
Group ESG Strategy,
Committee, and
Action Plan launch
UK operations
achieve carbon
neutral certification
2023 Annual Report 6
Environment
SG Fleet ensures its day-to-day operations minimise resource
consumption, waste, and emissions. In addition, we work with our
customers, business partners, and suppliers to assist them with
their environmental impact reduction initiatives.
To achieve the above objectives, SG Fleet operates an
environmental management system (‘EMS’), which is based on
global and local standards, including ISO 14001:2018, and all
applicable regulations and laws. Several company executives
attended training relating to the ISO 14001:2018 standard during
the reported period and the company aims to obtain group-wide
certification for the standard during the 2024 financial year.
The EMS is comprised of the Environmental Policy, the
environmental component of the ESG Action Plan, the ESG
Committee governance structure, and all associated monitoring,
measurement, management, and reporting activities.
The environmental component of the ESG Action Plan, referred
to as the Emissions Reduction Action Plan, or E-RAP, lists
environmental initiatives earmarked for execution or assessment
during the period. The initiatives are grouped by the relevant
risk, the corresponding emissions-producing activity, as well
the scope under which these emissions fall. E-RAP focuses in
particular on the areas identified as the main contributors to the
company’s emissions total. As these areas are an integral part
of the company’s day-to-day operations, the execution of the
Environmental Policy and E-RAP, as well as the operation of the
EMS, involve the implementation of adjustments to a range of
ongoing business practices.
Supporting Eco-diversity
We were thrilled to see the official opening of the Wildbark
Visitor Centre in Throsby in November 2022. SG Fleet has
been a proud sponsor of the Woodlands and Wetlands Trust
in the Australian Capital Territory for some years, offering
our support as it continues to provide rich and diverse
environments for current and future generations.
SG Fleet’s ESG Materiality Assessment identified the
following environmental risks as material to the company:
– Levels of emission impacting the environment
Risks that are perceived as relevant to the wider
community, even if not directly material to SG Fleet due
to the nature of its business, are:
– Other environmental risks, such as energy consumption
levels and waste
Group Environmental Policy
In April 2023, SG Fleet Group Limited’s
Board approved the company’s new
harmonised Environmental Policy,
which superseded its Environmental
Impact and Performance Policy, the
corresponding policy of the acquired
LeasePlan businesses, and the UK
Environmental Policy.
Environmental Policy
SG Fleet Group Limited
ABN 40 167 554 574
26 April 2023
The Policy outlines the company’s approach to
achieve the following objectives: (a) continually
improve its overall environmental performance
and management, (b) reduce the Scope 1, 2,
and 3 emissions that fall within the boundaries
of its environmental impact assessment, and (c)
fulfill any compliance obligations.
With regard to the emission reduction objective, SG Fleet aims
to reduce emission intensity, measured as tCO2-e per Full-time
Equivalent to take into account growth in the business, by 33%
by the end of the 2030 financial year, with the 2023 financial
period as the base year.
The execution of the Policy is independent of the company’s
carbon neutrality status in its various geographies and the
company will continuously explore options to further cut
emissions and progressively reduce its reliance on carbon
offsets to achieve carbon neutrality.
SG Fleet Group Limited
7
Educating and Supporting Our People,
Our Customers, and the Community
We believe that we can create a positive
environmental impact not only by reducing
the company’s own footprint, but also by
shaping and supporting behaviours with
our various stakeholders. In addition to
instilling environmentally sound practices
in the workplace, we aim to provide
our people with information on how to
contribute to a more sustainable future in
every walk of life. The same objective is also
the foundation of the work we do with our
customers to support their organisational
sustainability objectives.
SG Fleet’s core expertise is mobility and during the 2023
financial year, we stepped up the way in which we share
our know-how and our operational scale by introducing our
customers to the latest advances in electric vehicles and
micro-mobility. EV Drive Days proved particularly successful,
with multiple sessions organised in Australia and New Zealand
during the year. The Drive Days provided our customers with
an opportunity to get behind the wheel of a range of electric
and hybrid cars and trucks for a test drive, talk to experts about
everything organisations need to know about operating and
driving an EV, and plan for a new business mobility future with
SG Fleet. This initiative, combined with several government
incentives, undoubtedly contributed to the five-fold increase in
EVs in the company’s Australian customer fleet.
The future is multi-modal, and our solutions are not limited to
traditional vehicle types. The functionality of alternative modes of
transport is increasingly recognised in the personal and delivery
transport space, with consumers and companies exploring
micro-mobility as an environmentally friendly, viable alternative.
SG Fleet’s cooperation with eMobility provider Zoomo offers
customers additional options to improve the efficiency of their
fleets, both in terms of flexibility and sustainability.
In the 2023 financial year, SG Fleet’s expertise in sustainable
mobility was again recognised by the industry and its peers, with
the company’s UK operations winning the coveted Business Car
Best Eco Initiative Award for the eStart EV transition solution.
SG Fleet’s contribution to a better transport future isn’t limited
to its day-to-day services. We also actively collaborate with
industry bodies and organisations across all of our geographies
to inform, foster debate, and break down barriers. In Australia,
the company is represented on the Board of the Electric Vehicle
Council and an active member of the Australian Hydrogen
Council. In New Zealand, we have joined Drive Electric NZ and
the Sustainable Business Council. In the UK, we work with the
British Vehicle Rental and Leasing Association (BVRLA) to
assist with the Government’s Road to Zero strategy, sharing
our know-how on an industry panel investigating ‘second life’
EVs and supporting the BVRLA’s response to the Financial
Conduct Authority’s consultation on finance for positive
sustainable change.
Future Focus
In future periods, in addition to continuing to make a difference
by supporting our stakeholders’ environmental objectives, we
will widen the scope of our focus. This includes exploring the
environmental performance of our premises with landlords,
reciprocal participation in our customers’ sustainability efforts,
and the introduction of specific environmental training modules
for our people.
2023 Annual Report 8
Environment
Emissions
SG Fleet measures its emissions footprint
both as direct CO2 emissions and as the
emissions equivalents associated with a
range of business or support activities.
As an office-based services company,
SG Fleet does not directly produce
meaningful levels of CO2 in its day-to-day
business operations. We only operate a
small internal fleet of vehicles, and the
provision of our services does not generally
require significant travel or transport.
The main contributors to our emissions equivalent total are
IT equipment and services, electricity consumption, staff
commuting, and to a lesser extent, waste, direct emissions from
our own fleet, and air travel. We continuously explore options to
further cut emissions across Scope 1 and 2 and, where under
the company’s control, Scope 3, with a particular focus on these
main contributors
Where possible, we move IT-related equipment and services off
premises towards more sustainable solutions to reduce their
emissions equivalent impact. Where possible, we also source
equipment that includes offsets as part of the purchasing or
leasing contract.
During the year, the company has stepped up its efforts to
facilitate staff commuting by offering arrangements and
facilities that will reduce fuel consumption overall. This includes
carpooling clubs, the availability of eBikes, and the installation of
bicycle storage shed at our offices.
The rate of transition of SG Fleet’s own fleet to low and
zero-emission vehicles accelerated during the period, increasing
from 10% at the end of the 2022 financial year to 35% at the end
of the 2023 financial year. Use of our on-premises EV chargers
increased significantly, in line with the higher proportion of EVs in
our own fleet and amongst our staff.
The Australian operations of SG Fleet obtained ClimateActive
certification as a carbon neutral organisation during the 2022
financial year. SG Fleet’s UK operations achieved carbon
neutrality early in the 2023 financial year.
Future Focus
SG Fleet aims to accelerate its progress in reducing direct
and equivalent emissions by targeting sources within its
control, including the sourcing of lower emissions equivalent IT
equipment and services.
We will explore new areas to minimise commute-related
emissions by introducing shuttle buses where practical,
supporting staff EV penetration by upgrading our charging
infrastructure, and by offering further incentives to boost the use
of eBikes. A new travel policy will also be introduced to ensure
air travel is undertaken only when necessary.
The company is also targeting group-wide carbon neutrality
status by completing the New Zealand certification
currently underway.
Energy Consumption
Future Focus
SG Fleet aims to lower its energy intensity ratio by putting in
place additional initiatives to reduce overall energy consumption,
including the adoption of ‘smart working’ set-ups and sensor/
timed lighting and air conditioning systems. Where possible,
the company continues to explore further opportunities with its
landlords to improve the sustainability of its office locations.
SG Fleet’s energy consumption is largely
limited to the operation of its office and
warehouse locations, including lighting,
power sources, and heating. As the
integration of premises acquired as part of
the LeasePlan businesses continued, we
transitioned additional office operations
to more energy-efficient solutions and to
renewable green energy sources.
At the end of the period, LED lighting and Green Energy
arrangements were in place for all offices that will remain part of
our network and where we have direct control over lighting and
energy set-ups.
SG Fleet Group Limited 9
Waste
SG Fleet does not produce meaningful
quantities of waste for packaging or other
purposes, but our aim is to further minimise
waste generation in the conduct of our
business. Where waste is generated,
for example in the operation of offices
or disposal of hardware, we explore
opportunities to divert waste via the process
of recycling triage.
IT assets, including desk and data centre hardware, are recycled
wherever possible after extracting optimal, life-time use of the
equipment. Company-issued mobile phones are offered for sale
to the user, or if unsold, go into our external disposal process,
with a third-party provider recycling, refurbishing, re-selling,
or securely destroying these and other end-of-life IT assets.
In selecting the third-party provider, we assess the company’s
disposal process and environmental commitments.
While SG Fleet does not dispose of vehicle tyres itself,
the company is a member of Tyre Stewardship Australia,
whose stated mission is to create productive outcomes for
end-of-life tyres and increase the use of locally tyre-derived
products. We actively encourage our customers to join this
worthwhile scheme.
During the 2023 financial year, recycling facilities were boosted
across our offices, including in our Pymble (NSW) Head Office,
where the office refurbishment included the installation of
additional, designated disposal receptacles.
We also increasingly source eco-friendly, lower-waste
alternatives for merchandise and other small items,
including bamboo or ‘seeded’ name badges used for events
and conferences.
Future Focus
We continue to look at opportunities to further reduce the
production of waste and optimise its disposal. In our offices,
plastic water bottles will progressively be phased out in favour
of reusable containers, and we are exploring targeted recycling
of items such as disposable cups and cutlery. Alternative
disposal solutions for IT and telephony hardware are also under
investigation. Internal items such as business cards and various
certificates will be replaced by digital alternatives, as will be
various items provided to customers, such as in-car documents
and fuel cards, where practicable.
Other Environmental Aspects
While due to the nature of its business,
SG Fleet does not utilise a meaningful
amount of packaging or other materials
such as paper, or consume and discharge
significant amounts of water, we do
approach the management of any materials
and water consumption as an integral part
of our overall environmental approach.
Accordingly, we continue our efforts to
minimise associated impacts.
Since the 2021 financial year, we have reduced paper use across
the Group by 38%, despite the business growing substantially
as a consequence of the acquisition of LeasePlan ANZ during
that period. This was helped further by the introduction of a
‘paperless & clean desk’ policy in our newly refurbished Pymble
head office in the 2023 financial year.
SG Fleet conducts yearly audits on the outsourced wash
facilities used for the cleaning of end-of-lease vehicles,
monitoring detergent use and water disposal processes.
As an office-based business located in urban areas, SG Fleet’s
activities have a negligible direct impact on natural habitats.
2023 Annual Report 10
Social
SG Fleet respects and seeks to further the interests of its
customers, its employees, and the wider communities in which we
operate. Our culture is one of trust, respect, care, and responsibility,
and we aim to apply this in all our interactions with every individual,
as well as with community groups.
SG Fleet’s ESG Materiality Assessment identified the
following social risks as material to the company:
– Working conditions (employment) and training
– Occupational health & safety
– Diversity, non-discrimination, and equal opportunity
– Customer privacy and data security
Risks that are perceived as relevant to the wider
community, even if not directly material to SG Fleet
due to the nature of its business, are:
– Support of indigenous communities
– Human rights, including forced, compulsory, or
child labour in the company and its supply chain
(Modern Slavery)
Working Conditions
SG Fleet’s success as a business and its
ability to deliver excellence in services
and products to its customers relies on a
motivated workforce. Providing a positive
environment and optimal work conditions
is an essential component of our efforts to
support our employees.
During the 2023 financial year, we introduced a number of
initiatives to provide a better and more flexible workplace, and
increased employment benefits. Our efforts included a
state-of-the-art refurbishment of our head office, with social,
relaxation, and privacy spaces, additional disabled accessibility
and facilities, as well as a greening of the workspace.
As part of SG Fleet’s recruitment process, vacancies are
evaluated for their suitability for flexible work arrangements
and for arrangements other than full time. Eligible employees
are able to participate in a ‘Purchase Annual Leave’ program
to assist with balancing family commitments. We also offer
employer-funded parental leave, a sick-leave donation program,
social activities, and Wellness Days in addition to annual leave
entitlements.
Future Focus
SG Fleet will continue to implement strategies that support
role and work flexibility, including the adoption of workplace
arrangements and approaches that reflect a greater awareness
of the social impacts of working conditions.
SG Fleet Group Limited 11
Training
SG Fleet is committed to supporting the
continued growth of its people. We have a
reputation within the industry of developing
the best available talent and expertise. We
provide formal and informal advancement
and learning opportunities that recognise
and grow the ability, capacity, and
leadership skills of our people.
In the 2023 financial year, SG Fleet significantly stepped up
its training and development activities. In addition to multiple
e-learning modules and the various external courses and
webinars offered, we launched a General Education Budget,
providing financial support to staff wanting to develop their
knowledge in areas relevant to their roles. This initiative forms
part of a broader Learning Development Policy introduced in the
second half of the year.
A strong emphasis was also put on the way we welcome
new staff to the workplace. Staff orientation sessions were
re-designed, and the improved workplace introduction process
was duly recognised with the Brandon Hall Group Gold Medal
Award for best new hire onboarding program at the 2023 HCM
Excellence Conference.
At various levels of the organisation, we introduced additional
development programs, such as the Gear Up manager
development modules, and the executive and general manager
talent pool frameworks.
Future Focus
SG Fleet will continue to investigate opportunities to extend
the range of its current training structures, both in terms
of training topics and the ability of staff to access training.
We will also implement initiatives to optimise the continued
education process.
In line with our strong commitment to provide further e-learning
opportunities for employees at SG Fleet, we will be providing all
of our people with access to the LinkedIn Learning facility, which
contains a digital library of over 20,000 courses covering a wide
range of technical, business, software, and creative topics.
2023 Annual Report 12
Social
Occupational Health and Safety
To champion our people, we place their
well-being as our top priority, and foster a
cooperative and supportive environment
where our teams can thrive. Following
several years of significant socio-economic
changes and the resulting impact on
individuals’ lives and workplaces, SG Fleet
increased its efforts during the 2023
financial year to ensure it supported the
health and mental wellbeing of its people.
In addition to providing our staff with a healthy work environment,
we conduct regular e-training on a range of topics that
can impact their wellbeing. These modules include sexual
harassment prevention, work health and safety awareness, and
workplace bullying and occupational violence. In addition to risk
mitigation education, we encourage our staff to proactively look
after their physical and mental wellbeing. We provide access
to a range of staff wellness benefits and activities, such as
subsidised gym memberships and on-site classes.
SG Fleet also actively supports others in the community to
raise awareness of the importance of good physical and mental
health. We are a sponsor of the Men’s Health Awareness Ball
and the Workplace Wellness Festival.
Safety in the workplace is a core element of our efforts
to support the wellbeing of our people and staff regularly
participate in relevant e-learning modules. During the year,
additional training was provided to first aiders, as well as to
those tasked with addressing mental health challenges.
SG Fleet holds ISO45001 OH&S Management certification for
parts of its business.
Future Focus
We intend to investigate other occupational health and safety
aspects within the workplace and in support of our employees
outside the workplace and at home. In addition to expanding
the mental health training program, we will be offering additional
wellbeing benefits and introducing regular delivery of free
healthy food options.
Diversity, Equal Opportunity,
and Non-discrimination
SG Fleet’s business success is built on the
expertise of its people. We recognise the
importance of being an inclusive employer
and have a strong commitment to equal
opportunity and diversity. This drives the
company’s ability to attract, retain, and
develop the best talent, create an engaged
workforce, deliver the highest quality
of service to customers, and achieve
sustainable growth.
SG Fleet complies fully with the Workplace Gender Equality
Act (2012) and is a complying employer with the Workplace
Gender Equality Agency. We conduct regular e-training on equal
employment opportunity. As at 30 June 2023, the company’s
workforce was made up of 46% women and 54% men.
In the 2023 financial year, we launched SG Fleet’s Women’s
Network in New Zealand and the United Kingdom, followed by
the launch of the Australian Chapter shortly after the end of the
year. In March, we held our International Women’s Day events,
with staff attending Australian HR Institute lunches across various
locations to celebrate woman’s achievements, raise awareness
about discrimination, acknowledge gender inequality, and increase
efforts to address it.
We also celebrate the diverse range of cultural backgrounds and
experiences of our employees and provide a welcoming work
environment that is free from discrimination. During the year, we
introduced designated locations for prayer, reflection, and general
wellness activities. The company’s new intranet also provides a
calendar of activities celebrating culturally significant events such
as Pride Month, Harmony Week, World Food Day, and others.
SG Fleet’s Code of Conduct stipulates compliance
with the letter and spirit of a full range of
anti-discrimination laws to establish a workplace
free from any kind of discrimination. The company
conducts regular e-training on discrimination to
reinforce awareness and correct behaviours
Code of Conduct
SG Fleet Group Limited
ABN 40 167 554 574
Adopted by the Board on 28 November 2022
Document Classification: Confidential
Future Focus
SG Fleet continues to work towards a diverse workforce,
including balanced gender representation at Board and Senior
Management level. The company intends to widen its diversity
focus to other areas, in addition to gender, and ensure that a more
diverse representation also translates into actual inclusion of
more diverse opinions. We will also investigate further initiatives,
including e-learning, that will help break down perceptions that
foster discrimination.
SG Fleet Group Limited
13
Indigenous Communities
SG Fleet is committed to furthering
wherever possible the cause of Aboriginal
and Torres Strait Islander, Māori, and other
indigenous communities in the geographies
in which it operates. In addition to offering
employment opportunities, the company
actively supports indigenous business
ventures. We are a proud member of
Supply Nation, which aims to promote
and support procurement through
indigenous organisations and create a more
inclusive economy.
As part of the tender process, our procurement staff check
the Supply Nation Membership list for any relevant suppliers.
Indigenous businesses are then invited to tender and evaluated
amongst other bidders. We currently source a number of goods
from these businesses.
Future Focus
SG Fleet is aiming to build the right perspective amongst its
leadership and its people to work towards an effective and
impactful Reconciliation Action Plan in the future. We will also
continue to put a greater emphasis on supporting indigenous
businesses and employment where practical and viable.
We intend to build on the Acknowledgement of Country Guide
made available to our people in the 2023 financial year by
introducing relevant information on our digital platforms. Similar
initiatives will also be rolled out for our New Zealand operations
to recognise the Māori heritage. Various events related to
indigenous communities in both Australia and New Zealand are
now included in our cultural activities calendar.
2023 Annual Report 14
Social
Human Rights, and Forced, Compulsory,
or Child Labour
As an office-based services company,
SG Fleet’s direct exposure to the risk
of human rights infringement is limited.
The company does however expect
partners in its supply chain that are more
likely to encounter human rights issues
to take necessary measures to mitigate
against this risk. Our Supplier Code of
Conduct stipulates our expectations with
regard to the conduct of suppliers in terms
of modern slavery risks, the treatment of
labour, and human rights generally.
Customer Privacy
To be able to create value for its customers
and conduct its business in an efficient
manner, SG Fleet needs to collect and
process certain personal and business
information. The way we collect, use, and
retain this information is governed by strict
protocols and detailed processes. SG Fleet
complies with all applicable privacy laws
in each jurisdiction in which we operate
and processes customer information
in accordance with its privacy policies.
Our Personal Data Protection Policy sets out
how we protect the personal data we collect.
Supplier Code of Conduct
SG Fleet Group Limited
ABN 40 167 554 574
22 May 2022
Modern Slavery Statement
(Australia)
SG Fleet Group Limited
ABN 40 167 554 574
December 2022
Document Classification: Confidential
Modern Slavery Policy
SG Fleet Group Limited
ABN 40 167 554 574
24 May 2021
Document Classification: Confidential
SG Fleet’s approach to ensure responsible
internal conduct with respect to human rights
centres on the training of staff on related topics,
such as modern slavery, non-discrimination, and
diversity and equal opportunity.
The awareness of the importance of customer privacy and the
need for secure handling of data is reinforced at the individual
employee level through regular staff updates and continuous
training via our e-learning portal. The SG Fleet Group has
ISO27001 Information Security Management certification.
During the 2023 financial year, the company continued to
enhance its relevant security set-up and maintain a robust data
and privacy protection standard, including through regular
penetration testing and crisis simulations.
Future Focus
Further enhancements of SG Fleet’s relevant processes will
be introduced as the cyber security environment continues
to evolve. The company will also enhance staff data security
awareness by providing regular bulletins on how to identify
potential threats.
We do not tolerate any form of enslavement or
exploitation and we are committed to ensuring
measures are in place to minimise the risk of
modern slavery in our business and in our supply
chain. The company has voluntarily put in place a
Modern Slavery Policy, which outlines our overall
approach to combatting modern slavery. During
the 2023 financial year, we embarked on a review
of our supplier modern slavery survey approach,
with the aim of broadening the assessment
to a wider range of environmental, social, and
governance (ESG) criteria.
SG Fleet issues Modern Slavery Statements
overviewing its initiatives during the respective
reporting periods in Australia (pursuant to the
Modern Slavery Act 2018 (Cth)) and the United
Kingdom (pursuant to the Modern Slavery
Act 2015 (UK)).
Future Focus
SG Fleet intends to roll out a more robust supplier assessment
methodology, based on the survey review currently underway,
to optimise the process by which it identifies modern slavery
and other ESG risks, as well as how any identified risks
are investigated and addressed. We also intend to introduce
selection criteria that take into account human rights
management and behaviours of potential suppliers and work
with our existing suppliers to achieve better outcomes across
a range of related aspects.
SG Fleet Group Limited
15
Other Social Aspects
National Road Safety Week (Australia)
As a longstanding supporter, SG Fleet attended the launch of the
National Road Safety Week in Perth in May. Many national icons
around the country lit up in NRSW’s yellow colours to remind
people to ‘Pledge To Drive So Others Survive’.
Pink Shirt Day (New Zealand)
The SG Fleet team in New Zealand took a stand against
bullying In May, donning their colourful shirts in support of this
worthwhile cause. Pink Shirt Day seeks to encourage inclusion
and celebrate our unique differences, emphasising bullying
is never OK.
SG Fleet interacts with local communities
in Australia, New Zealand, and the UK as a
significant employer and as a purchaser of
goods and services. We firmly believe that
we have a responsibility to the communities
in which we operate, as well as people
elsewhere, to give back and make a positive
contribution in other areas wherever we can.
SG Fleet supports a number of initiatives across a wide range
of areas. As a company, our community contribution comes
in the form of financial support, and the provision of goods or
vehicles. Our people also contribute generously by collecting
donations or by volunteering in their own communities or for
charitable activities of their choice. For that purpose, we offer
staff the opportunity to take two volunteer leave days each year.
Wherever possible, we look to deploy our mobility expertise to
the advantage of organisations or individuals who have limited
access to transport or to support road safety initiatives.
As in previous periods, we supported a wide range of initiatives
in the countries in which we operate during the 2023 financial
year. These included National Road Safety Week, the Santos
Wheelchair Rugby National Championship, Friendship Circle, the
Aboriginal and Torres Strait Islander Community Health Service,
the Cancer Council’s Biggest Morning Tea, Kmart Wishing Tree
Appeal, and Redkite in Australia, Northland Emergency Services
Trust, Auckland Rescue Helicopter Trust, Special Children’s
Christmas, Road Safety Week, and Pink Shirt Day in New
Zealand, as well as support for Cancer Research UK (CRUK),
the Motor Neuron Disease Association, and Guide Dogs for the
Blind in the UK.
Medical Research Support (United Kingdom)
In the UK, our people raised money for both Cancer
Research UK (CRUK) and motor neuron disease research via
‘Stand Up to Cancer’ and a range of other activities.
2023 Annual Report 16
Governance
Across our organisation, we ensure we adopt responsible business practices
and policies in all aspects of our operations. As a listed entity, SG Fleet
Group Limited also reports against the ASX Corporate Governance Council’s
Principles and Recommendations (4th Edition) via its Corporate Governance
Statement. This statement describes the rules, systems and processes we have
in place to manage our company and our operations in a responsible manner.
In addition to the requirements set out by the ASX Corporate
Governance Council, we have a number of policies in place to
instil and promote ethical behaviour across the organisation, as
well as our supply chain. SG Fleet also ensures its people are
aware and observant of these policies by conducting regular
e-learning sessions.
Business Ethics and Conduct
Our people are expected to conduct themselves in a manner
consistent with the company’s standards and in compliance
with all relevant legislation. SG Fleet’s Code of Conduct outlines
how we expect our representatives to behave and conduct
business in the workplace on a range of issues. It includes legal
compliance and guidelines on appropriate ethical standards.
SG Fleet’s ESG Materiality Assessment identified the
following governance risks as material to the company:
Future Focus
– Business ethics and conduct
– (Presence of) whistle-blower policy
– Supply chain management
– Anti-corruption and bribery
– Anti-competitive behaviour
– Risk and crisis management
SG Fleet’s governance standards were
again recognised in the 2023 financial
year, with its Company Secretary
Tawanda Mutengwa named as a finalist in
the Governance Top 100 Awards.
The Governance Top 100 organisation
emphasises the value and benefit that
robust governance frameworks, and the
individuals that are responsible for driving
these initiatives, bring to an organisation.
SG Fleet will continue to review its Code of Conduct as required,
further improve the processes in place to ensure adherence
to the Code, including training, and optimise how it addresses
any breaches.
Whistle-blower Policy
SG Fleet is committed to ensuring that serious misconduct or
malpractice is identified and addressed appropriately. We believe
that the ability to raise related concerns is an important
mechanism to ensure that the company functions efficiently and
in accordance with its own principles of conduct.
SG Fleet has adopted a Whistle-blower Policy in accordance
with the Corporations Act. The Whistle-blower Policy
encourages whistle-blowers to raise concerns and reportable
conduct, where there are reasonable grounds to support
such action and to ensure that serious misconduct or
malpractice is identified and addressed appropriately.
Future Focus
SG Fleet’s Audit, Risk and Compliance Committee reviews
its Whistle-blower Policy annually, and we will further
improve employee awareness of and access to the
whistle-blower process.
SG Fleet Group Limited Supply Chain Management
We view it as our responsibility to promote ethical behaviour not just
within our business operations, but also at supplier level. SG Fleet
takes great care in selecting suppliers of goods and services and
we expect our suppliers to operate to recognised national and
international standards, and appropriate codes of practice.
In order to do so, we have put in place a Supplier Code of Conduct
and a Procurement Policy. These policies set out the requirements
we expect from our suppliers in the areas of ethical business
practice, anti-competitive conduct, labour and human rights, work
health and safety, environment, and confidentiality of information.
Future Focus
SG Fleet continuously explores opportunities to optimise
its supply chain management process, including in terms
of the expected qualifications and behaviours of suppliers.
The company started a review of its supplier ESG assessment
process during the 2023 financial year and intends to roll out an
optimised approach in future periods.
Anti-corruption and Bribery
SG Fleet prohibits bribery and corruption in any form, whether
direct or indirect, and in any country in which it operates. We
have adopted an Anti-bribery and Corruption Policy, detailing our
commitment to conducting business activities with integrity and
ensuring measures are in place to prevent bribery and corruption.
The company expects its employees to demonstrate honesty,
integrity, and fairness in all aspects of their business dealings and
exercise a high standard of professionalism and ethical conduct in
all their activities.
We promote employee awareness of and compliance
with our policies against bribery and corruption through
appropriate dissemination of our own procedures, policies, and
training programmes.
Future Focus
SG Fleet will continue to review its Anti-bribery and Corruption
Policy as required, further improve the processes in place to
ensure adherence to the Policy, including training, and optimise
how it addresses any breaches.
Anti-competitive Behaviour
The company aims to maintain its reputation of having a
high standard of ethical behaviour in conducting business
and to behave with integrity in all dealings with competitors
and customers.
SG Fleet’s Code of Conduct stipulates the behaviours required
to meet its standards in terms of responsible business practices.
We actively monitor for any breaches of the Code. In the
reported period, no actions or issues occurred in respect of
anti-competitive behaviour.
Future Focus
SG Fleet will continue to review its Code of Conduct as required,
further improve the processes in place to ensure adherence
to the Code, including training, and optimise how it addresses
any breaches.
17
Risk and Crisis Management
The presence of effective risk management structures and
processes is essential for the continued conduct of SG Fleet’s
business operations. SG Fleet has a strong risk management
culture and a robust operating model, imbedding governance
and risk responsibilities across multiple lines of defence.
We maintain a combined Audit, Risk and Compliance Committee
as a subcommittee of the company’s Board, as well as a
dedicated internal audit function. The Committee reviews the
company’s risk management framework and internal control
framework, while the internal audit function provides the Board
and management with independent and objective assurance on
the effectiveness of governance, risk management, and internal
control processes.
Future Focus
SG Fleet will continue to review its risk management approach
and processes, in line with the evolving nature of its business
and its operational environment.
Other Governance Aspects
Visit the Governance section of our Investor Centre to read our
Corporate Governance Statement, which covers a number of
additional governance aspects.
Corporate Governance Statement
https://investors.sgfleet.com/Investors/?page=corporate-
governance-statement
UN Global Compact
During the 2021 financial year, SG Fleet became a signatory
to UN Global Compact (UNGC), committing to its corporate
responsibility initiative and its principles in the areas of human
rights, labour, the environment, and anti-corruption.
In the 2023 financial year, the company joined UNGC’s Early
Adopter Programme to lodge its second Communication on
Progress, assisting the organisation with the development of its
digital reporting platform.
2023 Annual Report 18
Chairman’s report
“ Our people have again demonstrated their
exceptional commitment to the continued
growth of your company.”
Dear Shareholder
I have the pleasure of presenting you with the SG Fleet Group
Limited Annual Report for the year ended 30 June 2023.
In the 2023 financial year, your company has continued the
momentum built up over the past few years. Our people have again
demonstrated their exceptional commitment to the continued
growth of your company. Helped by the seamless bringing
together of the teams across SG Fleet and the acquired LeasePlan
businesses, we have strengthened our leadership position in the
industry, extended our products and services range, and enhanced
the way we serve our customers.
These efforts have allowed SG Fleet to register a third year of
continued progress across all key financial measures. For you,
our shareholders, the outcome has been a further increase in
dividends, and I’m delighted to announce that your Board has
declared a combined 2023 financial year dividend of 16.18 cents
per share, an increase of 7% on the prior year.
This year has again been a period during which the service focus
of SG Fleet’s employees has allowed us to navigate the uncertain
operational environment. Rising interest rates impacted economic
activity and consumer sentiment, and in our industry, logistical
disruptions and parts shortages resulted in limited vehicle supply.
This meant that a significant proportion of the strong order growth
achieved during the financial year will only result in deliveries in
future periods.
We have continued our concerted effort to provide our employees
with the best possible work environment and support their
contribution to the success of your company. During the 2023
financial year, we introduced a number of additional benefits
for our people, creating a welcoming and flexible environment
that supports strong productivity as well as physical and mental
wellbeing. Undoubtedly, these initiatives have greatly supported
our ability to deliver excellence in service to customers.
Your company has a reputation for fostering the best talent
and expertise in the industry. We offer a range of training and
learning opportunities to support the continued development of
our employees. During the year, we launched our new Learning
Development Policy, which includes financial support for those
wishing to develop their knowledge on topics that will further
improve their career opportunities within SG Fleet.
Our culture of learning and education is also reflected in our
customer service approach. Sustainable mobility is at the core of
what we do as a business, and we take an active role in providing
our customers with the latest know-how in this field.
A feature of the year has been the rapid increase in uptake of
electric vehicles, or EVs, and your company continues to play a key
role in educating organisations and drivers about the benefits and
the challenges associated with the adoption of this new technology.
SG Fleet’s EV Drive Days have been in high demand with our
customers, leading to increased interest in our fleet EV transition
services as organisations contemplate the future shape of their
fleets. The invaluable insights we provide were duly recognised
by the Business Car Best Eco Initiative Award we received for our
eStart solution in the UK. Our work with our customers, as well
as with industry bodies in Australia, New Zealand, and the UK, to
facilitate a more sustainable transport future continues unabated.
The concept of sustainability in the way we operate and govern
your company is also reflected in our overall approach to our
Environmental, Social and Governance, or ESG, performance. In the
first half of the 2023 financial year, we launched our ESG Strategy
and Action Plan, which will further enhance the way we approach
the management of any ESG risks, as well as how we can contribute
positively to the objectives of our stakeholders and the wellbeing
of the communities in which we operate. In addition to achieving
Carbon Neutral status for our Australian and UK operations during
the year, we introduced our new harmonised Environmental Policy.
This policy sets a target for the continued reduction in emission
intensity, to be achieved in the 2030 financial year.
In keeping with its strong culture of continuous development, your
company will maintain its approach to innovate, not only in terms of
the products and services it offers, but also in the way we manage
our business, to achieve growth in a sustainable and responsible
manner and reward you, our shareholders, for your support.
The developments of this year have again confirmed that our
strategy and our innovation have put us on the right path to achieve
this objective.
I would like to give my thanks to everyone at SG Fleet for their
efforts during the year. The contributions of the Directors of the
Board, our management team, and our people have allowed your
company to again make progress on past periods. I thank you,
our Shareholders, for your continued encouragement of all those
that have again contributed to making SG Fleet a company with a
promising future.
Andrew Reitzer
CHAIRMAN
22 August 2023
Sydney
SG Fleet Group Limited 19
CEO’s report
“Whilst the macro environment remained
challenging, we again demonstrated the strength
of our competitive position and our ability to
translate this into positive business outcomes.”
Dear Shareholder
I am pleased to report on the financial performance of SG Fleet
Group Limited for the year ended 30 June 2023. My review of this
financial year will refer for comparison to the financial figures for
the year ended 30 June 2022. Detailed financial data can be found
in the full annual report.
Further progress across key
financial metrics
The patterns seen in the 2022 financial year largely remained
in place at the start of the reported period. While continued
strong order growth was a feature throughout the 2023 financial
year, towards period end, we did see an improvement in several
areas, including better supply levels and a stabilisation in the
labour environment.
Opportunities continued to arise at a steady pace, and we were
able to translate these into customer wins and orders across
all of our businesses. The Novated channel in particular saw a
surge in interest for its products during the period. This trend
was accelerated by the EV initiatives announced by the Federal
Government, which dramatically increased interest in EVs amongst
novated drivers.
Unfortunately, while supply of some models improved somewhat
late in the financial year, the mainstream vehicles our tool-of-trade
drivers require remained in scarce supply. As a result, our order
pipeline grew further as strong new business growth outpaced the
pick-up in deliveries.
During the year, the LeasePlan integration continued, and we
were able to extract a number of benefits in terms of scale,
product range and penetration, and operational processes.
Following the end of the reported period, we also successfully
completed the refinancing of the LeasePlan warehouse facility
without any meaningful change in cost of funds and on improved
general terms.
Whilst the macro environment remained challenging, we again
demonstrated the strength of our competitive position and our
ability to translate this into positive business outcomes. This meant
we were able to maintain our excellent record of making consistent
period-on-period progress across all key financial metrics.
Total net revenue for the full financial year was $350.4 million, up
11.9% on the previous year. Net profit after tax for the reported
period was up 23.9% on the previous year, to $75.2 million.
Reported earnings per share amounted to 22.00 cents, up 21.2%
on the previous corresponding period. This consistent progress
was achieved despite supply challenges continuing to delay
deliveries and associated revenue.
Net rental and finance income grew by 18% to $52.6 million,
driven by an increase in the on-balance sheet funded fleet
and further growth in the number of vehicles in inertia, a
consequence of the lack of new vehicle stock. The Company’s
net mobility services revenue increased by 2% to $91.3 million,
while net additional products and services revenue grew by 3.3%
to $49.0 million, primarily as a result of the growth in funded
deliveries. Finance commission reduced by 2.6% on the previous
corresponding period, in line with the greater proportion of
on-balance sheet funded deliveries, as well as extensions.
Finance commission per unit benefited from higher average
funded capital as a result of new car inflation and the greater
uptake of electric vehicles, which generally carry a higher
price tag. End-of-life net vehicle risk income achieved growth
of 21%, to $112.1 million on the back of the higher number of
operating lease disposals in the 2023 financial year. As was the
case in previous periods, end of lease income benefitted from
used vehicle pricing, which remained relatively stable at high
levels throughout the period. Operating expenses increased to
$196.9 million, largely as a consequence of higher technology
costs associated with investment in our infrastructure and
cyber-security measures, as well as continued material wage
cost pressure.
Delivery numbers pick up in
Corporate channel
The business environment in the Australian Corporate channel
remained stable throughout the reported period. Tenders
continued to come to market on a regular basis and competition
was largely rational. As in previous years, many of our customers
simply renewed or extended existing contracts.
Our win rates remained very healthy, both with existing full-service
accounts and with organisations that moved from managed-only
to financed or were new to outsourcing. Sale and leasebacks were
a particular focus for the Company. These deliver growth in the
fleet despite supply issues. Translating our wins and growing order
book into deliveries remained the key challenge. Promisingly, in
the second half of the financial year, supply improvements in some
areas meant that we were able to increase deliveries noticeably
and in the fourth quarter, the Corporate channel achieved its best
delivery numbers since about two years ago.
In terms of customer penetration, we saw continued growth for a
number of our products, such as the Inspect365 safety inspection
tool, telematics, the DingGo accident and repair management
platform portal, and the upgraded bookingintelligence asset
management solution. Legacy LeasePlan customers in particular
were keen adapters of this technology platform. Not surprisingly
given the introduction of measures to promote EV take-up,
demand for our eStart EV transition solution also grew further.
2023 Annual Report 20
CEO’s report
EV boom supports exceptional Novated
activity levels
Largely mirroring the fortunes of the Corporate channel,
Novated again made good progress during the reported period,
winning new accounts and attracting additional driver interest.
We reached new highs in terms of novated leads in the first half
and this trend just accelerated in the second half, helped by EV
interest and a significant step-up in our marketing presence. This
in turn led to enquiry levels setting new records throughout the
period and quotes doubling from the first to the second half.
The Government announcement of an FBT exemption for
novated leasing of low emission vehicles in late 2022 led to a
dramatic increase in demand for EVs and customer requests for
quotes on these vehicles rose sharply. This allowed us to achieve
industry-leading numbers in terms of EV penetration and at the
end of the reported period, we had nine times more EVs in the
Novated fleet than in the 2022 financial year.
Thankfully, we were able to deliver on this demand more easily
as the period progressed, with fourth quarter Novated delivery
numbers exceeding the previous high set in the first quarter of
the 2022 financial year. Nevertheless, strong business growth
meant that the order pipeline grew again on the previous period.
“The 2023 financial year was a
period during which our UK business
significantly raised its profile and
received recognition for the unique
expertise it offers to customers.”
Sustainability agenda drives New Zealand
demand for efficient mobility expertise
While the New Zealand business environment showed some
encouraging signs early in the 2023 financial year, the impact
of natural disasters muted the local economy later in the period.
Despite this, vehicle registration numbers remained strong.
The natural disasters also led to sustained high used vehicle
values as supply of new vehicles remained tight.
Tender activity in both the private and public sector remained
very healthy. We were disciplined in the pursuit of new business
in the context of at times irrational pricing, but retention of
existing customers continued successfully. At the same time,
we remained focused on expanding the services we provide to
existing customers.
As in previous periods, customers approached their fleet
management in the context of a broader sustainability or
corporate responsibility agenda, and this continued to drive
interest in our mobility and EV products. As was the case
in Australia, the roll-out of this and other SG Fleet products
to legacy LeasePlan customers continued to receive a very
positive response.
UK business receives industry acclaim
In the UK, some of the concerns about interest rates started
to abate as the year passed. In due course, this led to a
steady improvement in corporate sentiment and the business
opportunities pipeline grew.
As more opportunities emerged, our business was able to step
up its win activity. This came in the shape of the continued
conversion of panel arrangements to sole supply, the addition of
vehicle units to existing customer fleets, and noticeably, another
period of significant success for our Novalease consumer
product. There is no doubt that the upward pressure on prices
is driving consumers to look for a more efficient way to access
vehicles, leading them to consider our salary sacrifice offering,
particularly where there is an added tax incentive as is the case
with EVs.
The 2023 financial year was a period during which our UK
business significantly raised its profile and received recognition
for the unique expertise it offers to customers. Following the
Business Car Best Eco Initiative Award we received for the
eStart solution in the first half, we won the FleetNews Leasing
Company of the Year award in the sub-20,000 vehicle category
later in the year.
LeasePlan integration progresses
During the reported period, the various project streams within
the LeasePlan integration progressed well. Our focus remained
on extracting the benefits we get as we continued to bring two
great businesses together. These benefits are being realised
predominantly in the areas of product, process, and supply. In
addition to the harmonisation of our dealer network and process,
we obtained improved supply arrangements for fuel, tyres,
accident management and roadside assistance.
Our planning and work towards the full integration continues and
we are constantly reviewing processes and products, and their
impact on customers and service. The changes we are making
are positive from a products, risk, and customer point of view,
but change always comes with some temporary disruption.
After the end of the reported period, we took the decision to
improve the customer experience during the system migration
phase of the integration by making several planned products and
services changes in the LeasePlan system and under the old
brand first. Completing the pre-migration product harmonisation
in the LeasePlan system first will ensure a smoother transition
for customers when they do migrate to the SG Fleet system.
As a consequence of the re-prioritisation of the migration
process, the final stages of the Australian system migration
will now be completed towards the end of the 2025 financial
year, at which stage we will start benefiting from the remaining
acquisition synergies in the 2026 financial year. This change has
no impact on the current financial year and the minor synergies
we flagged for this period are expected to remain. We will also
continue to extract synergy benefits throughout the 2025
financial year. We reconfirm our acquisition synergy targets and
we are looking at opportunities to extract additional benefits.
SG Fleet Group Limited 21
Innovation focus on digitisation and
electric vehicles
It is SG Fleet’s stated aim to build out its products and services
range and provide a truly integrated mobility solution for our
customers. Digitisation is a core enabler of that. During the
reported period, we transitioned our traditional accident
management services to a digitised approach under the DingGo
banner, a first in the industry. The service integrates claims,
replacement vehicles and other accident-related needs into a
customisable process management and reporting portal.
Another mobility solution we invested in, Carly, went from strength
to strength, turning in its best quarterly results ever in the first half
of the financial year. Conversations with customers in Australia
and the UK continued about the introduction of Zoomo e-bikes
into their fleets. DingGo, Carly and Zoomo are great examples of
our strategy to make selective and targeted investments and then
leverage the new products set into our customer base.
eStart continues to evolve and we added a capability to manage
and process charging activity and charge cards called eManage
to this solution. As EV drivers have multiple options to charge their
vehicles, a standardised approach to reporting and invoicing is a
key requirement for organisations running EV fleets.
Of course, the 2023 financial period was the year Australia fully
embraced EVs on the back of the government’s initiatives to
promote take-up. There is no doubt this burgeoning interest is
more than an incentive-driven, temporary phenomenon. We are
witnessing a significant shift in our customers’ mindset and buying
behaviour, with the importance of adopting cleaner and greener
means of transportation increasingly front of mind, both for
consumers and organisations.
Helped by the experience and expertise we have already
accumulated in the higher EV-penetration UK market, we
capitalised on this emerging demand during the financial year.
As one of Australia’s largest vehicle purchasers, we played a key
role in bringing EVs to local drivers, accounting for a significant
proportion of new EV registrations nationally.
The number of EVs in our Australian fleet doubled in the 12 months
to December 2022, and then more than tripled in the six months
since. In New Zealand, the EV fleet has been growing steadily for a
longer period now, but still doubled over the last 18 months. At the
end of the 2023 financial year, EVs accounted for close to 22% of
SG Fleet UK’s fleet. SG Fleet UK has clearly established itself as
an EV specialist in the local market, getting industry recognition
for its know-how and sharing its insights across the entire
SG Fleet organisation.
Over the years, we have set a benchmark in terms of innovating,
adding value, and building flexible solutions for our customers,
and not just for EVs. Our ultimate objective is to be our customers’
integrated one-stop shop for all things mobility, and during
the 2023 financial year, we accelerated our progress towards
that goal.
“Our innovation strategy aims to build
out our products and services range
to provide a truly integrated mobility
solution for our customers, with
digitisation as a core enabler.”
Favourable demand and delivery trends
provide added momentum
In the 2023 financial year, we have been able to navigate an
ever-changing macro environment, continue a transformational
integration, and maintain good business growth. Improved
supply levels allowed us to achieve our best delivery quarter for
some time at the end of the reported period and the strong order
book we secured during the 2023 financial year will ensure that
this trend will flow into the 2024 financial period.
All of our businesses have shown good progress during the
year. Momentum in the Australian Corporate business was
maintained, and the Novated channel saw unprecedented
activity levels across enquiries, quotes, orders, and deliveries
during the period. The focus on sustainable mobility continued
in New Zealand, playing into our recognised expertise in this
area. In the UK, improving business sentiment translated into
an acceleration in business activity towards the end of the
financial year.
Our innovation strategy aims to build out our products and
services range to provide a truly integrated mobility solution for
our customers, with digitisation as a core enabler. The unique EV
expertise we have built up across the organisation puts us in an
ideal position to facilitate the introduction of more sustainable
forms of transport. The positive impact of the EV boom on
Novated orders will continue to play out over future periods
and the EV transition will eventually also manifest itself in the
Corporate channel.
I would like to give my sincere thanks to our Board, my
Executive team and each of my colleagues across the Group.
In an environment where our unique expertise and innovation
capability is in increasing demand, SG Fleet’s future is promising.
I would like to thank you, our shareholders, for supporting us
as we continue to strengthen our position as a leader in our
industry, grow the value we add for our customers, and achieve
higher returns for the Company.
Robbie Blau
CEO
22 August 2023
Sydney
2023 Annual Report 22
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
23
43
44
45
46
47
48
49
92
93
98
100
SG Fleet Group Limited Directors’ report
30 June 2023
23
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 2023.
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
Peter Mountford
Edwin Jankelowitz
Kevin Wundram
Tex Gunning
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 2022 of 6.811 cents per ordinary share paid on
8 September 2022 (2022: Final dividend for the year ended 30 June 2021 of 5.393 cents)
Interim dividend for the year ended 30 June 2023 of 8.913 cents per share paid on 9 March 2023
(2022: Interim dividend for the year ended 30 June 2022 of 8.318 cents)
CONSOLIDATED
2023
$’000
23,293
30,481
53,774
2022
$’000
16,039
28,446
44,485
On 22 August 2023, the Directors declared a fully franked final dividend for the year ended 30 June 2023 of 7.271 cents per ordinary share,
to be paid on 15 September 2023 to eligible shareholders on the register on 1 September 2023. This equates to a total estimated distribution
of $24,866,000, based on the number of ordinary shares on issue as at 30 June 2023. The financial effect of dividends declared after the
reporting date are not reflected in the 30 June 2023 financial statements and will be recognised in subsequent financial reports.
2023 Annual Report 2424
Review of operations
The profit for the Group after providing for income tax amounted to $75,248,000 (30 June 2022: $60,732,000).
The fleet under management at 30 June 2023 consisted of 121,045 funded vehicles (30 June 2022: 122,516) and Lite Fleet of 149,597
(30 June 2022:145,351).
Refer to Chairman’s report and Chief Executive Officer’s report for further commentary on the review of operations.
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
Subsequent to the year end, the Group has extended the Autonomy 2021-1 Warehouse facility of $1,050 million and Autonomy NZ 2021-2
Warehouse facility of $240 million with the availability periods extended to June 2025.
Apart from the dividend declared and events as discussed above, no other matter or circumstance has arisen since 30 June 2023 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
Name:
Title:
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. Andrew is
currently Chairman of IPIC Pty Ltd.
Other current directorships:
None
Former directorships (last 3 years):
Special responsibilities:
Non-executive Chairman of Webcentral Group Limited (ASX: WCG) – resigned on
10 November 2020 and Non-executive Chairman of Amaysim Australia Limited (ASX: AYS)
– delisted on 6 April 2021.
Chairman of the Nomination and Remuneration Committee and Chairman of the Innovation
and Technology Committee
Interests in shares:
94,461 ordinary shares in the Company
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 2525
Name:
Title:
Qualifications:
Experience and expertise:
Robert (Robbie) Blau
Executive Director and Chief Executive Officer (‘CEO’)
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
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:
Carly Holdings Limited (ASX: CL8)
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Innovation and Technology Committee
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
8,050,288 ordinary shares in the Company
4,244,276 options over ordinary shares in the Company
158,535 performance rights over ordinary shares in the Company
Cheryl Bart AO
Independent Non-Executive Director
Bachelor of Commerce and Bachelor of Laws from the University of New South Wales, Fellow
of the Australian Institute of Company Directors
Cheryl is a qualified lawyer and company director with experience across industries including
financial services, utilities, energy, renewable 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 currently a director of Shaw Australia Pty Ltd, Chairman
of Endeavour Energy, Tilt Renewables and TEDxSydney. Cheryl is 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. Cheryl has also previously been a director of Football Federation
Australia, ME Bank, The Prince’s Trust Australia, Australian Himalayan Foundation and Invictus
Games Sydney 2018.
Other current directorships:
Audio Pixels Holdings Limited (ASX: AKP)
Former directorships (last 3 years):
None
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:
30,665 ordinary shares in the Company
2023 Annual Report2023 Annual Report 2626
Name:
Title:
Qualifications:
Experience and expertise:
Peter Mountford
Non-Executive Director
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
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 and vice Chairman of The Road Freight Association in South Africa and
Bluefin Investments Limited (Mauritius).
Other current directorships:
Super Group Limited (JSE: SPG)
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee and member of the Nomination and
Remuneration Committee
Interests in shares:
580,000 ordinary shares in the Company
Name:
Title:
Qualifications:
Experience and expertise:
Edwin Jankelowitz
Non-Executive Director
Bachelor of Commerce from the University of the Witwatersrand, Chartered Accountant
(South Africa)
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.
Other current directorships:
Former directorships (last 3 years):
None
None
Special responsibilities:
Chairman of the Audit, Risk and Compliance Committee
Interests in shares:
23,000 ordinary shares in the Company
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 2727
Name:
Title:
Qualifications:
Experience and expertise:
Kevin Wundram
Executive Director, Chief Financial Officer (‘CFO’) and Head of Risk
Bachelor of Commerce from the University of the Witwatersrand, Honours Bachelor of
Accounting Science degree from the University of South Africa, Chartered Accountant
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:
Alternate Director for Robbie Blau at Carly Holdings Limited (ASX: CL8)
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Innovation and Technology Committee
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
872,661 ordinary shares in the Company
1,601,305 options over ordinary shares in the Company
60,506 performance rights over ordinary shares in the Company
Tex Gunning
Non-Executive Director
Qualifications:
Economics graduate of Erasmus University
Experience and expertise:
Tex previously served as the Chief Executive Officer and Chairman of the Managing Board of
LeasePlan. He has also served on the supervisory board of TNT express from 2011–2013 to
subsequently become the CEO of TNT Express between 2013 and 2016 which was later sold
to Fedex in 2016. Tex has also served as CEO of Vedior between 2007 and 2008 after which
the company was sold to Randstad. Subsequently he led for 5 years the merger of the ICI paint
division with Akzo paint, restructuring and selling the US business to PPG. Tex has 25 years of
experience with Unilever, of which 7 years as President East Asia Pacific. Tex currently serves
as a supervisory board member of various entities including Erasmus University Trustfonds,
The Nexus Institute and World Life Fund Netherlands. He is also chairman of the Board of
The Amsterdam Canal festival and the World Economic Forum Climate Sector Leader Auto.
Other current directorships:
None
Former directorships (last 3 years):
LeasePlan Corporation N.V
Special responsibilities:
Interests in shares:
None
None
2023 Annual Report2023 Annual Report 2828
Name:
Title:
Qualifications:
Experience and expertise:
Colin Brown
Alternate Director for Peter Mountford
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
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 and Bluefin Investments Limited (Mauritius).
Other current directorships:
Super Group Limited (JSE: SPG)
Former directorships (last 3 years):
None
Special responsibilities:
Alternative director and member of the Audit, Risk and Compliance Committee for
Peter Mountford
Interests in shares:
122,639 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
Tawanda Mutengwa (Bachelor of Laws (with distinction), University of Witwatersrand, Master of Laws, UNSW, AGIA) has held the role
of company secretary since 10 December 2019. Tawanda first practised law at Bowman Gilfillan in South Africa before taking on legal,
governance and secretariat roles at Macquarie Bank, Chubb Insurance, Elanor Investors and at PwC Australia.
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 2023, 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
Peter Mountford
Edwin Jankelowitz
Kevin Wundram
Tex Gunning
9
8
7
9
9
8
8
9
9
9
9
9
9
9
–
–
4
4
4
–
–
–
–
4
4
4
–
–
5
–
5
5
–
–
–
5
–
5
5
–
–
–
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 2929
INNOVATIONS AND
TECHNOLOGY COMMITTEE
Attended
Held
2
2
2
2
2
2
2
2
Andrew Reitzer
Robbie Blau
Cheryl Bart AO
Kevin Wundram
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 KMP
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.
2023 Annual Report2023 Annual Report 3030
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.
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.
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.
Non-Executive Director fees (Directors’ fees and committee fees) (inclusive of superannuation) are summarised as follows:
Name – Position
Andrew Reitzer – Independent Non-Executive Chairman
Cheryl Bart AO – Independent Non-Executive Director
Peter Mountford – Non-Executive Director
Edwin Jankelowitz – Independent Non-Executive Director
Tex Gunning – Non-Executive Director
Executive remuneration
Fees per annum
$211,958
$124,525
$123,375
$139,256
$100,000
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;
– long-term performance incentives; 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 an Individual Performance component and a financial component.
Non-financial component of STI
The Individual Performance component comprises 20% of the STI and the financial component 80%.
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 3131
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’s 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.
Group performance and link to remuneration – 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 annual growth rate 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 EPS 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 the amount determined as payable and requires continual
service over the deferred period.
Long-term incentives
Long-term incentives (‘LTI’) are typically granted annually to 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 typically vest over a three year period although from time to time the Board may approve
a two year vesting period when deemed appropriate (the ‘Performance Period’).
The 2021 LTI offer will be assessed over a Performance Period of 1 July 2020 to 30 June 2023 with vesting to occur in August 2023
if the performance conditions are met.
The 2022 LTI offer will be assessed over a Performance Period of 1 July 2021 to 30 June 2024 with vesting to occur in August 2024
if the performance conditions are met.
The 2023 LTI offer will be assessed over a Performance Period of 1 July 2022 to 30 June 2025 with vesting to occur in August 2025
if the performance conditions are met.
The 2023 LTI to the Executive Directors were approved by the shareholders at the Annual General Meeting held on 25 October 2022.
The 2021 LTI and 2022 LTI were granted to the Executive Directors on 28 October 2020 and 26 October 2021 respectively.
Group performance and link to remuneration – LTI
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.
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 EPS 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.
2023 Annual Report2023 Annual Report 3232
For the current LTI offers, 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 for 2020 and 2021 LTI
% of options that become exercisable
Less than 3%
3% (Threshold performance)
Between 3% and 7%
Nil
42.9%
Straight-line pro-rata vesting between 42.9% and 100%
7% or above (Stretch performance)
100%
CAGR of EPS over the Performance Period for 2022 LTI
% of options that become exercisable
Less than 4.8%
4.8% (Threshold performance)
Between 4.8% and 11.2%
Nil
42.9%
Straight-line pro-rata vesting between 42.9% and 100%
11.2% or above (Stretch performance)
100%
CAGR of EPS over the Performance Period for 2023 LTI
% of options that become exercisable
Less than 3%
3% (Threshold performance)
Between 3% and 7%
Nil
42.9%
Straight-line pro-rata vesting between 42.9% and 100%
7% or above (Stretch performance)
100%
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.
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 3333
Use of remuneration consultants
During the financial year 30 June 2023, the Group engaged PricewaterhouseCoopers to review and recommend changes to its STI
and LTI plans. These recommended changes, to the extent that they are adopted, will be implemented in future STI and LTI plans.
PricewaterhouseCoopers was paid $80,000 for the services.
An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free from undue influence
from KMP. These protocols included the selection of the preferred remuneration consultant being determined by the Nomination
and Remuneration Committee, the appointed consultant being briefed by the Nomination and Remuneration Committee, without
any KMP’s present and the Remuneration Consultant reporting their recommendations directly to the Chairman of the Nomination
and Remuneration Committee.
Voting and comments made at the Company’s 2022 Annual General Meeting (‘AGM’)
At the 2022 AGM, the shareholders voted to approve the adoption of the remuneration report for the year ended 30 June 2022. The Company
did not receive any specific feedback at the AGM regarding its remuneration practices.
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
– Peter Davenport – Managing Director, United Kingdom
SHORT-TERM BENEFITS
POST-
EMPLOY-
MENT
BENEFITS
LONG-
TERM
BENEFITS
Cash
salary
and fees
$
Current
year
bonus
$
Non-
monetary
$
Super-
annuation
$
Leave
benefits
$
2023
Non-Executive Directors:
Andrew Reitzer
Cheryl Bart AO
Peter Mountford
Edwin Jankelowitz
Tex Gunning
Executive Directors:
191,781
112,671
123,375
126,000
100,000
–
–
–
–
–
Robbie Blau
1,155,356
934,756
Kevin Wundram
582,586
336,678
Other KMP:
Andy Mulcaster
518,418
239,676
Geoff Tipene*
Peter Davenport*
296,660
339,221
127,840
137,263
3,546,068
1,776,213
21,702
2,639
24,341
–
–
–
–
–
–
–
–
20,177
11,854
–
13,256
–
25,292
25,292
25,292
13,626
–
–
–
–
–
–
25,319
12,778
11,113
–
732
SHARE-BASED
PAYMENTS
Deferred
bonus
equity
settled
$
Other
equity
settled
$
–
–
–
–
–
–
–
–
–
–
Total
$
211,958
124,525
123,375
139,256
100,000
267,009
788,625
3,196,357
97,295
298,277
1,352,906
69,834
35,673
41,175
154,169
1,018,502
91,556
96,212
587,057
617,242
*
Total remuneration in local currency paid to Geoff Tipene amounts to NZ$639,598. Total remuneration in local currency paid to Peter Davenport amounts
to £343,976.
134,789
49,942
510,986
1,428,839
7,471,178
2023 Annual Report2023 Annual Report 3434
2022
Non-Executive Directors:
Andrew Reitzer
Cheryl Bart AO
Graham Maloney*
Peter Mountford
Edwin Jankelowitz
Tex Gunning**
Executive Directors:
SHORT-TERM BENEFITS
POST-
EMPLOY-
MENT
BENEFITS
LONG-
TERM
BENEFITS
Cash
salary
and fees
$
Current
year
bonus
$
Non-
monetary
$
Super-
annuation
$
Leave
benefits
$
SHARE-BASED
PAYMENTS
Deferred
bonus
equity
settled
$
Other
equity
settled
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
207,610
121,971
97,500
121,417
119,823
83,333
188,738
110,884
97,500
121,417
108,935
83,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,872
11,087
–
–
10,888
–
23,568
23,568
23,568
8,654
–
Robbie Blau
1,098,791
863,255
Kevin Wundram
546,315
317,059
Other KMP:
Andy Mulcaster
473,677
226,800
Geoff Tipene***
Peter Davenport***
287,419
342,654
126,965
145,608
3,459,663
1,679,687
22,429
2,315
24,744
74,951
41,137
348,619
836,300
3,245,484
136,872
313,612
1,378,563
36,868
102,213
165,388
1,028,514
–
1,861
57,814
22,877
101,497
108,186
604,778
623,501
120,205
154,817
668,395
1,524,983
7,632,494
* Represents remuneration paid until resignation on 6 April 2022.
** Represents remuneration paid from appointment on 1 September 2021.
*** Total remuneration in local currency paid to Geoff Tipene amounts to NZ$644,118. Total remuneration in local currency paid to Peter Davenport amounts
to £339,591.
Colin Brown (Alternate Director) received no remuneration during the year ended 30 June 2023 and 30 June 2022.
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
Executive Directors:
Robbie Blau
Kevin Wundram
Other KMP:
Andy Mulcaster
Geoff Tipene
Peter Davenport
FIXED REMUNERATION
AT RISK – STI
AT RISK – LTI
2023
2022
2023
2022
2023
2022
37%
46%
55%
56%
55%
37%
44%
52%
52%
56%
38%
32%
30%
28%
29%
37%
33%
32%
31%
27%
25%
22%
15%
16%
16%
26%
23%
16%
17%
17%
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 3535
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Robbie Blau
Kevin Wundram
Other KMP:
Andy Mulcaster
Geoff Tipene
Peter Davenport
Service agreements
CASH BONUS
PAID/PAYABLE
CASH BONUS
FORFEITED
2023
2022
2023
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
–
–
–
–
–
–
KMP 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 $1,176,221 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 60% of TFR
Kevin Wundram – CFO
– TFR of $605,646 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 45% 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 30% 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 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 EPS 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 and requirement of service.
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.
2023 Annual Report2023 Annual Report 3636
Share-based compensation
Issue of shares
There were no shares issued to Directors and other KMP during the year ended 30 June 2023 as a result of the exercise of options as part
of compensation (2022: Nil).
Option holding
The number of options over ordinary shares in the Company held during the financial year and at the date of this report by each Director,
members of the KMP and other employees of the Group, including their personally related parties, is set out below:
Options over
ordinary shares
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Expired/
forfeited
after
30/06/2023
Exercised
after
30/06/2023
Balance
at the
Directors’
report date
(148,585)
2,001,328
(218,750)
(148,585)
9,726,084
(218,750)
Balance at
the end of
the year
4,244,276
1,601,305
840,854
504,358
533,963
7,724,756
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Robbie Blau
3,376,571
867,705
Kevin Wundram
1,266,214
335,091
Andy Mulcaster
Geoff Tipene
Peter Davenport
Total Directors
and other KMP
641,038
393,723
418,790
199,816
110,635
115,173
6,096,336
1,628,420
Non-KMP
1,689,323
460,590
Total options
7,785,659
2,089,010
Options:
–
–
–
–
–
–
–
–
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors, KMP and other employees in
this financial year or future reporting years are as follows:
Expired/
forfeited
after
30/06/2023
Exercised
after
30/06/2023
Balance
at the
Directors’
report date
Balance at
the start of
the year
960,980
1,823,951
3,235,700
1,765,028
Granted
Exercised
–
–
–
–
–
–
–
–
–
–
–
2,089,010
7,785,659
2,089,010
Expired/
forfeited/
other
Balance at
the end of
the year
(148,585)
812,395
1,823,951
3,235,700
(218,750)
1,765,028
2,089,010
–
–
(148,585)
9,726,084
(218,750)
Vesting date and
exercisable date
15/08/2022
15/08/2022
22/08/2023
12/08/2024
21/08/2025
Expiry date
14/08/2025
14/08/2025
21/08/2026
11/08/2027
20/08/2028
Exercise price
$2.35
$1.68
$1.68
$2.93
$2.17
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.
Grant date
25/11/2019 (a)
28/10/2020 (b)
28/10/2020 (c)
26/10/2021 (d)
03/11/2022 (e)
Grant date of options
25/11/2019 (a)
28/10/2020 (b)
28/10/2020 (c)
26/10/2021 (d)
03/11/2022 (e)
–
–
–
–
–
–
–
–
4,244,276
1,601,305
840,854
504,358
533,963
7,724,756
1,782,578
9,507,334
–
–
–
–
–
–
812,395
1,823,951
3,016,950
1,765,028
2,089,010
9,507,334
Fair value
per option
at grant date
$0.70
$0.45
$0.46
$0.60
$0.60
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 3737
Performance rights holding:
The number of performance rights over ordinary shares in the Company held during the financial year and at the date of this report by each
Director, members of the KMP and other employees of the Group, including their personally related parties, is set out below:
Performance rights
over ordinary
shares (LTI)
Balance at
the start of
the year
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Peter Davenport
Total Directors and
other KMP
287,090
107,659
55,422
34,041
36,198
Granted
Vested
94,349
36,436
21,727
12,030
12,523
(107,555)
(40,333)
(15,995)
(9,795)
(10,605)
520,410
177,065
(184,283)
Expired/
forfeited/
other
Balance at
the end of
the year
Expired/
forfeited
after
30/06/2023
Vesting
after
30/06/2023
Balance
at the
Directors’
report date
–
–
–
–
–
–
273,884
103,762
61,154
36,276
38,116
513,192
–
–
–
–
–
–
(115,349)
158,535
(43,256)
(24,457)
(15,091)
(15,971)
60,506
36,697
21,185
22,145
(214,124)
299,068
Non-KMP
2,083,378
1,080,206
(501,167)
(53,354)
2,609,063
(115,743)
(800,327)
1,692,993
Total rights (LTI)
2,603,788
1,257,271
(685,450)
(53,354)
3,122,255
(115,743)
(1,014,451)
1,992,061
Performance rights
over ordinary
shares (STI)
Balance at
the start of
the year
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Peter Davenport
Total Directors and
other KMP
80,145
28,615
19,414
12,753
14,335
Granted
110,765
40,682
29,101
15,693
17,969
Vested
(80,145)
(28,615)
(19,414)
(12,753)
(14,335)
155,262
214,210
(155,262)
Expired/
forfeited/
other
Balance at
the end of
the year
Expired/
forfeited
after
30/06/2023
Vesting
after
30/06/2023
Balance
at the
Directors’
report date
–
–
–
–
–
–
110,765
40,682
29,101
15,693
17,969
214,210
–
–
–
–
–
–
(110,765)
(40,682)
(29,101)
(15,693)
(17,969)
(214,210)
Non-KMP
247,207
362,834
(221,183)
(26,024)
362,834
(11,521)
(351,313)
Total rights (STI)
402,469
577,044
(376,445)
(26,024)
577,044
(11,521)
(565,523)
–
–
–
–
–
–
–
–
2023 Annual Report2023 Annual Report 3838
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors, KMP and other
employees in this financial year or future reporting years are as follows:
Balance at
the start of
the year
590,916
147,888
1,130,194
734,790
Grant date
LTI
25/11/2019 (f)
28/10/2020 (g)
28/10/2020 (h)
26/10/2021 (i)
03/11/2022 (j)
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
Expired/
forfeited
after
30/06/2023
Vesting
after
30/06/2023
Balance
at the
Directors’
report date
–
–
–
–
(537,562)
(53,354)
(147,888)
–
–
–
–
–
–
–
–
–
–
–
–
–
1,130,194
(115,743)
(1,014,451)
–
–
–
734,790
1,257,271
–
–
–
–
734,790
1,257,271
–
1,257,271
Total rights (LTI)
2,603,788
1,257,271
(685,450)
(53,354)
3,122,255
(115,743)
(1,014,451)
1,992,061
STI
08/09/2021 (k)
09/09/2022 (l)
402,469
–
(376,445)
(26,024)
–
–
–
–
577,044
–
–
577,044
(11,521)
(565,523)
Total rights (STI)
402,469
577,044
(376,445)
(26,024)
577,044
(11,521)
(565,523)
Grant date of rights
25/11/2019 (f)
28/10/2020 (g)
28/10/2020 (h)
26/10/2021 (i)
03/11/2022 (j)
08/09/2021 (k)
09/09/2022 (l)
Vesting date
15/08/2022
15/08/2022
22/08/2023
12/08/2024
21/08/2025
01/07/2022
01/07/2023
–
–
–
Fair value
per right
at grant date
$2.46
$1.55
$1.47
$2.33
$1.74
$2.95
$1.74
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.
Additional information
The earnings of the Group for the five years to 30 June 2023 are summarised below:
Revenue
Profit after income tax
Dividends paid
2023
$’000
1,044,897
75,248
53,774
2022
$’000
907,559
60,732
44,485
2021
$’000
2020
$’000
482,080
452,896
43,705
26,859
36,381
43,159
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
2023
2.30
22.00
2022
2.15
18.16
2021
3.00
16.22
2020
1.60
13.88
2019
$’000
509,722
60,462
47,035
2019
2.95
23.20
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 3939
Additional disclosures relating to KMP
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of KMP of the Group,
including their personally related parties, is set out below:
Ordinary shares
Andrew Reitzer
Cheryl Bart AO
Peter Mountford
Edwin Jankelowitz
Tex Gunning
Colin Brown
Robbie Blau
Kevin Wundram
Andy Mulcaster
Geoff Tipene
Peter Davenport
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Other
94,461
30,665
580,000
23,000
–
122,639
7,862,588
803,713
617,618
6,525
360,074
10,501,283
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
187,700
68,948
35,409
22,548
24,940
339,545
–
–
–
–
–
–
–
–
–
–
–
–
Balance at
the end of
the year
94,461
30,665
580,000
23,000
–
122,639
8,050,288
872,661
653,027
29,073
385,014
10,840,828
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of SG Fleet Group Limited under option at the date of this report are as follows:
Grant date
25/11/2019
28/10/2020
28/10/2020
26/10/2021
03/11/2022
Expiry date
14/08/2025
14/08/2025
21/08/2026
11/08/2027
20/08/2028
Exercise
price
Number
under option
$2.35
$1.68
$1.68
$2.93
$2.17
812,395
1,823,951
3,016,950
1,765,028
2,089,010
9,507,334
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
26/10/2021
03/11/2022
Vesting date
Number
under rights
12/08/2024
734,790
21/08/2025
1,257,271
1,992,061
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 2023 and up to
the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of SG Fleet Group Limited issued on the vesting of performance rights during the year ended 30 June 2023
and up to the date of this report.
2023 Annual Report2023 Annual Report 4040
Material business risks
The Board approves the Group’s Risk Management Policy and Risk Appetite. This provides a strong foundation from which the Group
can successfully deliver on its strategic priorities. The Group’s Risk Management Policy and Risk Appetite Statement guide management
to proactively identify, monitor and manage the existing and emerging material risks that could impact the Group. Risk-aware decision
making is embedded within the Group's key processes.
The following table sets out the material business risks, in no particular order and excluding generic risks, that could adversely affect the
Group’s future business, operations and financial prospects.
Risk description
Risk Mitigation
Vehicle residual values
The Group may inaccurately predict future market movements in
used vehicle values. Used vehicle values are currently materially
inflated due to disruptions in new vehicle supply. The Group
expects used vehicle values to normalise at some point, which
will cause a reduction in vehicle risk income. The timing of this
normalisation is uncertain.
New vehicle supply
The Group is dependent on a predictable and reliable new vehicle
supply chain in order to deliver vehicles and originate leases
within a reasonable timeframe from the date the customer places
an order. The current disruption to new vehicle supply limits
the Group's ability to do so, which adversely impacts customer
satisfaction and revenue generation. In a time of rising interest
rates, extended delays in new vehicle deliveries can adversely
impact the profitability of some of the Group’s products.
People
The Group’s performance is largely dependent on its ability to
attract and retain talent. Loss of key personnel could adversely
affect financial performance and business growth. The current
tight labour market conditions make recruitment and retention
more difficult than is ordinarily the case. In addition, remuneration
costs are increasing materially.
Economic conditions
In the current inflationary environment, the Group is exposed to
the risk that it is unable to pass cost increases on to customers
thereby adversely impacting profitability. The rising interest rate
environment may adversely impact consumer sentiment and the
demand for leasing.
– The Group uses advanced statistical modelling underpinned by
extensive data and overlaid with deep industry expertise to set
vehicle residual values.
– Multiple residual value risk mitigation strategies are employed
during the life of the lease, including lease restructures
and extensions.
– Contractual incentives are in place with customers to align interests
in optimising residual value performance.
– The Group's disposal model assists in achieving above-market
end-of-lease disposal results.
– When new vehicle supply is restored, income on new vehicle
deliveries will increase, which will to some extent offset the decline
in vehicle risk income.
– New vehicle order lead-times have been adjusted to account for the
supply chain disruptions.
– The Group frequently engages with manufacturers and dealers on
the status of production lines and shipping.
– Additional resources and technology have been deployed to
keep customers informed at regular intervals of the status of
their deliveries.
– Competitive remuneration structures to attract, motivate and
retain talent.
– Succession planning to develop or attract talent for
sustainable growth.
– Employee engagement surveys to identify areas for improvement
and support retention.
– Performance management processes to help identify, develop and
grow talent in line with the Group's values.
– The development of a comprehensive employee value proposition.
– Increased focus on individual, manager and leadership development.
– Robust controls are in place to manage headcount growth and
remuneration adjustments.
– Pricing is reviewed periodically.
– A deal committee structure is in place to set pricing for new
customer opportunities.
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 4141
Risk description
Risk Mitigation
Credit
Historically, the majority of the Group’s funding for its lease
portfolio was provided under principal & agency funding
arrangements in terms of which credit risk is borne by the
underlying financier rather than the Group. The introduction
of securitisation funding, combined with the acquisition of the
LeasePlan ANZ business, means that the Group now has a
material credit risk exposure in its own right.
Funding
The Group’s operations are dependent on having access to
competitively priced funding for lease portfolio assets. This
funding is secured using two primary funding models, principal
& agency and securitisation warehouses. A loss of access to
funding or a material change to the terms of funding could
adversely affect the Group’s ability to attract or retain customers.
The Group’s securitisation warehouses typically have two-year
terms. At the expiration date, the Group is exposed to the risk
that financiers may not have the appetite to extend the facility.
If this occurs, the facility will enter an orderly amortisation phase,
but no new business could be originated under the relevant
facility. The Group is also exposed to the risk that the funding
cost of the securitisation warehouses increases at the point of
facility extension. An increase in funding costs would impact the
profitability of the back-book as well as the ability to originate new
leases at competitive pricing.
Integration project execution
The Group is undertaking a large-scale, multi-year, integration of
the LeasePlan acquisition. This project includes an organisational
restructure and multiple system migrations. Delays or failures in
the execution of this project could adversely impact the Group’s
operations and the achievement of synergy targets.
Regulatory
Demand for novated leases is driven by the tax concessions
available to lessees under existing fringe benefits tax ('FBT')
legislation. Changes to the FBT legislation may adversely impact
the attractiveness of novated leasing, which would impact the
profitability of the Group’s novated leasing channel.
Cyber security/data privacy
A successful cyber-attack could compromise the technology
platforms used by the Group and could result in the exfiltration
and loss of information or breach of data privacy laws and/or
customer agreements.
– The Group has an experienced credit team that operates within a
robust credit policy and delegated lending authority framework.
– The credit policy, and any changes thereto, are approved by the
panel of financiers.
– Appropriate segregation of duties is in place, both within the
business and on the credit committee.
– Annual reviews are performed on corporate customers.
– Robust credit decisioning systems are in place.
– Comprehensive portfolio parameter limits are in place together with
monthly monitoring and reporting.
– The Group has a diversified funding structure, with multiple
funding partners.
– Interest rate risk is hedged in accordance with the contractual
maturity of the underlying leases.
– The Group is consolidating its operations onto a single ERP system,
which will allow originations to be funded using a variety of funding
models and financiers.
– The integration project is overseen by a Steering Committee that
meets fortnightly. The Steering Committee monitors progress and
makes key decisions in relation to the integration.
– Sub-committees are in place to manage each detailed
integration stream.
– Robust project management processes are in place for all system
migration processes.
– Appropriate budgets are in place to adequately resource each project.
– The Group has diversified its lease portfolio to reduce the
proportion of novated leases.
– The Group invests in product development to increase the leasing
value proposition beyond the tax concessions.
– The company is a member of the National Automotive Leasing and
Salary Packaging Association (NALSPA), which is a body formed to
communicate the economic benefits of existing FBT policy settings.
– A security operations centre is in place that actively monitors the
Group’s logical environment for malicious activity 24/7/365.
– Robust Infosec and data privacy policies and processes are in
place in line with international cybersecurity standards.
– Regular penetration testing, vulnerability management controls and
patching of all critical IT assets are in place.
– Training in data privacy and security is conducted on a recurring basis.
2023 Annual Report2023 Annual Report 4242
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
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young Australia, as part of the terms
of its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young Australia during or since
the financial year.
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 36 to the financial statements.
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.
The Directors are of the opinion that the services as disclosed in
note 36 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 undermines the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants (including
Independence Standards) 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 an advocate for the Company or jointly sharing
economic risks and rewards.
Officers of the Company who are
former partners of Ernst & Young
There are no officers of the Company who are former partners
of Ernst & Young.
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.
This report is made in accordance with a resolution of Directors,
pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Andrew Reitzer
Chairman
22 August 2023
Sydney
Robbie Blau
Chief Executive Officer
Directors’ report30 June 2023SG Fleet Group LimitedSG Fleet Group Limited
Auditor’s independence declaration
4343
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s independence declaration to the Directors of SG Fleet Group
Limited
As lead auditor for the audit of the financial report of SG Fleet Group Limited for the financial year
ended 30 June 2023, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of SG Fleet Group Limited and the entities it controlled during the
financial year.
Ernst & Young
Glenn Maris
Partner
22 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
27
2023 Annual Report2023 Annual Report
4444
Statement of profit or loss
For the year ended 30 June 2023
Revenue
Interest revenue calculated using the effective interest method
Share of loss of associates accounted for using the equity method
Notes
6
15
Expenses
Mobility services cost of sale
Vehicle risk cost of sale
Additional product and services cost of sale
Rental and finance cost of sale
Other direct costs
Depreciation and amortisation
Impairment of intangible assets
Finance costs
Employee benefits expense
Occupancy costs
Technology and communication costs
Other expenses
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
Refer to note 4 for detailed information on Restatement of comparatives.
7
7
7
8
44
44
CONSOLIDATED
2023
$’000
2022
$’000
(Restated)
1,044,897
907,559
8,595
(474)
(73,870)
(288,706)
(46,335)
(7,627)
(19,606)
650
–
(63,896)
(261,029)
(35,635)
(11,545)
(12,675)
(241,942)
(202,611)
–
(71,915)
(151,729)
(4,018)
(26,624)
(14,143)
(946,515)
106,503
(31,255)
75,248
Cents
22.00
21.88
(55)
(52,410)
(136,442)
(3,515)
(22,318)
(16,946)
(819,077)
89,132
(28,400)
60,732
Cents
18.16
17.99
The above statement of profit or loss should be read in conjunction with the accompanying notes.
SG Fleet Group LimitedSG Fleet Group Limited Statement of other comprehensive income
For the year ended 30 June 2023
4545
CONSOLIDATED
2023
$’000
2022
$’000
Profit after income tax expense for the year attributable to the owners of SG Fleet Group Limited
75,248
60,732
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
5,646
(2,057)
3,589
78,837
(8,816)
32,193
23,377
84,109
The above statement of other comprehensive income should be read in conjunction with the accompanying notes.
2023 Annual Report2023 Annual Report 4646
Statement of financial position
As at 30 June 2023
Assets
Cash and cash equivalents
Restricted cash
Finance lease, trade and other receivables
Inventories
Derivative financial instruments
Prepayments
Income tax refund due
Investments – equity accounted
Investments – fair valued
Leased motor vehicle assets
Property, plant and equipment
Intangibles
Right-of-use assets
Deferred tax
Total assets
Liabilities
Trade and other payables
Derivative financial instruments
Employee benefits
Provisions
Lease portfolio borrowings
Borrowings
Lease liabilities – right-of-use assets
Vehicle maintenance funds
Contract liabilities
Income tax
Deferred tax
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Notes
9
10
11
12
13
14
8
15
16
17
18
19
20
8
21
22
23
24
25
26
27
28
29
8
8
30
31
CONSOLIDATED
2022
$’000
(Restated)
2021
$’000
(Restated)
61,613
168,820
627,041
47,160
44,094
20,982
5,675
–
6,556
967,019
8,443
630,965
27,846
–
201,605
29,512
66,886
10,136
–
7,522
–
–
2,627
94,176
5,461
401,006
8,690
6,235
2023
$’000
92,848
167,566
801,560
29,583
40,687
21,164
4,723
1,637
6,438
1,010,814
11,346
623,130
25,715
–
2,837,211
2,616,214
833,856
275,803
235,047
100,793
26
23,976
31,860
688
22,809
29,782
1,296,404
1,199,266
300,814
25,956
140,509
72,642
–
292,392
27,319
157,838
62,341
–
95,353
42,790
2,263,343
2,070,272
573,868
545,942
505,968
(83,661)
151,561
573,868
505,968
(90,113)
130,087
545,942
1,877
10,967
20,055
65,041
124,519
9,015
82,542
40,617
4,701
–
460,127
373,729
376,661
(116,772)
113,840
373,729
Refer to note 4 for detailed information on Restatement of comparatives.
The above statement of financial position should be read in conjunction with the accompanying notes.
SG Fleet Group LimitedSG Fleet Group Limited Statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Adjustment for correction of error (note 4)
Balance at 1 July 2021 – 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:
Share-based payments (note 31)
Dividends paid (note 32)
Balance at 30 June 2022 – restated
Refer to note 4 for detailed information on Restatement of comparatives.
Consolidated
Balance at 1 July 2022 – 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:
Share-based payments (note 31)
Dividends paid (note 32)
Balance at 30 June 2023
Issued
capital
$’000
Reserves
$’000
376,661
(116,772)
–
–
376,661
(116,772)
–
–
–
–
–
–
23,377
23,377
–
3,282
–
505,968
(90,113)
Issued
capital
$’000
Reserves
$’000
505,968
(90,113)
–
–
–
–
–
–
3,589
3,589
2,863
–
505,968
(83,661)
Contributions of equity, net of transaction costs (note 30)
129,307
4747
Retained
profits
$’000
118,297
(4,457)
113,840
60,732
–
60,732
–
–
(44,485)
130,087
Retained
profits
$’000
130,087
75,248
–
75,248
–
(53,774)
151,561
Total equity
$’000
378,186
(4,457)
373,729
60,732
23,377
84,109
129,307
3,282
(44,485)
545,942
Total equity
$’000
545,942
75,248
3,589
78,837
2,863
(53,774)
573,868
The above statement of changes in equity should be read in conjunction with the accompanying notes.
2023 Annual Report2023 Annual Report 4848
Statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Cash generated from operations before investment in lease portfolio
Acquisition of operating and finance lease assets
Proceeds from disposal of operating lease assets (excluding vehicle risk income)
Capital receipts from finance lease assets
Interest received
Interest and other finance costs paid
Income taxes refunded
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of subsidiary, net of cash acquired
Payment for investments
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Payments for intangibles
Payments for investments in associates
Net cash used in investing activities
Cash flows from financing activities
Share awards settled through direct market acquisition
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities – right-of-use assets
Borrowing costs paid
Dividends paid
Net cash from financing activities
Net increase 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
CONSOLIDATED
Notes
2023
$’000
2022
$’000
(Restated)*
1,137,646
(704,355)
433,291
(698,175)
119,590
196,362
8,595
(64,796)
23,038
–
17,905
996,276
(677,560)
318,716
(530,169)
198,628
157,383
650
(46,981)
–
(52,106)
46,121
–
(455,812)
(1,243)
(7,126)
405
(5,533)
(782)
(4,863)
(4,015)
616
(4,244)
–
(14,279)
(468,318)
(1,759)
–
145,045
1,837,871
(57,280)
(1,352,077)
(6,935)
(636)
(53,774)
24,661
28,287
230,433
1,694
(6,546)
(11,444)
(44,485)
423,319
1,122
231,117
(1,806)
43
18
19
15
31
43
43
43
32
Cash and cash equivalents and restricted cash at the end of the financial year
9,10
260,414
230,433
* Restatement and realignment of comparatives:
30 June 2022 statement of cash flows has been restated/realigned to the current period presentation. Acquisition and disposal of lease portfolio assets
are included within the operating activities above compared to investing activities disclosed in the prior year. As a result, 30 June 2022 net cash flow
from operating activities is lower by $183,905,000 from $230,026,000 to $46,121,000. 30 June 2022 net cash used in investing activities improved by
$183,905,000 from an outflow of $652,223,000 to $468,318,000. Receipts from customers and Payments to suppliers have been grossed by $23,220,000
inclusive of GST. There has been no impact on the net increase in cash and cash equivalents of $1,122,000 as at 30 June 2022.
The above statement of cash flows should be read in conjunction with the accompanying notes.
SG Fleet Group LimitedSG Fleet Group Limited
Notes to the financial statements
30 June 2023
4949
Note 1. General information
Critical accounting estimates
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 22 August 2023. The Directors
have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been consistently applied to all the years 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 adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial
performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that
are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board (‘AASB’) and the Corporations Act 2001, as appropriate for
for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the
historical cost convention, except for certain financial
instruments measured at fair value.
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 40.
Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of SG Fleet Group Limited
as at 30 June 2023 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.
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.
2023 Annual Report2023 Annual Report 5050
Note 2. Significant accounting policies
continued
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 are 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 the entity’s
functional currency 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 year-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 or where the Group combines two or more contracts
entered into in a ‘linked arrangement’ and accounts for the contract
as a single contract, 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.
The Group combines two or more contracts in a linked
arrangement when contracts are entered into at or near the
same time, contracts are negotiated as a package with a single
commercial objective or there is price dependency between the
contracts. Where these elements are satisfied, the Group will
account for these combined agreements as one contract.
Mobility services income
Mobility services revenue includes the products and services
required to keep a vehicle on the road in a safe and compliant
manner. This revenue category includes income from registering
and insuring the vehicle, providing assistance in the event of a
break-down or accident, telematics and safety inspections. It
also includes income from car-share bookings. This is an annuity
income stream which is primarily driven by the funded fleet size
and brought to account over time due to continuous performance
obligations received by customers over the term of the lease.
Additional products and services
Additional products and services revenue is generated by
products that are not typically related to keeping the vehicle on
the road and mobile. This revenue category includes products
such as accessories, redundancy protection, Trade Advantage
and rebates. This income stream is largely transactional in nature
and the key driver is the volume of funded deliveries coupled with
penetration rates. 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 the 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.
Finance commission
Finance commission is the income earned on leased vehicles
funded off balance sheet. This income stream is largely
transactional in nature, has no direct costs and the key driver is
the volume of funded deliveries. 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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 5151
Vehicle risk income
Vehicle Risk Income (‘VRI’) is the income earned as a result
of underwriting a long-term risk position on a vehicle at lease
commencement, the ultimate financial outcome of which will
depend on circumstances and market conditions that occur over
the life of each vehicle. VRI consists of an end of lease component
(revenues earned on the sale of vehicles from underwriting
residual value risk) and in-life component (profits earned from
underwriting maintenance and other running costs). VRI end of
lease is largely transactional in nature and its primary driver is the
volume of operating lease disposals. VRI in-life is a combination
of annuity and transactional income and is driven by the number
of open-contract vehicles and vehicles with underwritten
maintenance risk positions.
Rental and finance income
Rental and finance income is the income earned on leased
vehicles funded on the balance sheet. Rental income is generated
by operating lease vehicles, short-term rental vehicles as well
as subscription vehicles. Rental income on operating leases is
recognised in profit or loss in periodic amounts over the lease term
on a straight-line basis. Where variable lease payments are offered
which are not linked to an index or rate they are recognised within
rental income in the statement of profit and loss in the period
which they arise.
Finance Income is generated by finance lease vehicles. The cost of
sale related to this income stream is operating lease depreciation,
direct interest and short-term hire costs. This is an annuity income
stream, and the key driver of this income stream is the size of
the on balance sheet funded fleet. Rental and finance income is
recognised overtime 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.
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.
2023 Annual Report2023 Annual Report 5252
Note 2. Significant accounting policies
continued
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Finance, trade and other receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any 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, finance, trade
and other 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.
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 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.
Associates
Associates are entities over which the Group has significant
influence but not control or joint control. Investments in associates
are accounted for using the equity method. Under the equity
method, the share of the profits or losses of the associate is
recognised in profit or loss and the share of the movements in
equity is recognised in other comprehensive income. Investments
in associates are carried in the statement of financial position
at cost adjusted by cumulative post-acquisition changes in
the Group’s share of the net assets of the associate, less any
impairment in the value of individual investments. If impaired, the
carrying value of the Group’s share of the underlying assets of
associates is written down to its estimated recoverable amount.
Dividends received or receivable from associates reduce the
carrying amount of the investment.
When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, including any unsecured
long-term receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments on
behalf of the associate.
The Group discontinues the use of the equity method upon the
loss of significant influence over the associate and recognises any
retained investment at its fair value. Any difference between the
associate’s carrying amount, fair value of the retained investment
and proceeds from disposal is recognised in 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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 5353
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
five years
Computer hardware and office equipment
three to eight years
Motor vehicles
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.
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
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
14 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.
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.
2023 Annual Report2023 Annual Report 5454
Note 2. Significant accounting policies
continued
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
Operating lease assets are stated at historical cost less
accumulated depreciation. The cost of operating 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 rental income on operating leases is recognised in the
statement of profit or loss in periodic amounts over the lease
term on a straight line basis. Where variable lease payments
are offered which are not linked to an index or rate they are
recognised within rental income in the statement of profit or loss
in the period which they arise.
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 ten years.
Software
Significant costs associated with software are deferred and
amortised on a straight-line basis over the period of their
expected benefit, being their finite useful lives of between
two and eight years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other
non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs
of disposal and value-in-use. The value-in-use is the present value
of the estimated future cash flows relating to the asset using a
pre-tax discount rate specific to the asset or cash-generating unit
to which the asset belongs. Assets that do not have independent
cash flows are grouped together to form a cash-generating unit.
Trade and other payables
Trade and other payables 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
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.
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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 5555
Finance costs
Share-based payments
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 an onerous contract
provision and is created to cover estimated future shortfalls on the
disposal of these vehicles.
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.
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. 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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are
expensed in the period in which they are incurred.
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.
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.
2023 Annual Report2023 Annual Report 5656
Note 2. Significant accounting policies
continued
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.
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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 5757
Comparatives
Comparatives in the financial report have been realigned to the
current period presentation. There has been no effect on the
comparative period profit.
Significant judgement is applied to the Group consideration
of each of its performance obligations as a principal or agent
within an individual contract. The determination of principal or
agent impacts the presentation of each individual item within the
statement of profit or loss as gross revenues or net revenues.
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
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 2023. The adoption of these Accounting
Standards and Interpretations is not expected to have any
significant impact on the Group’s financial statements.
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 vehicle risk Income
As discussed in note 2, the Group estimates the vehicle risk
income-in life to be recognised for each performance obligation
at a point in time when the service is provided and the 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.
Principal and Agent considerations
In revenue from contracts with customers, the Group provides a
range of goods and services whereby it is required to determine
whether the nature of its promise to its customers is a performance
obligation to provide the specified goods or services itself (that is, the
Group entity is a principal) or to arrange for those goods or services
to be provided by another party (that is, the Group is an agent).
Linked arrangement considerations
As discussed in note 2, the Group combines two or more contracts
in a linked arrangement when contracts are entered into at or
near the same time, contracts are negotiated as a package with a
single commercial objective or there is price dependency between
the contracts. Where these elements are satisfied, the Group will
account for these combined agreements as one contract.
The consideration and judgement regarding the linking of
contracts is complex and dependent on several factors, with
significant judgement required to consider associated price
dependency within each of the linked arrangements. Where
relevant, considering contracts as linked arrangements results in
the inclusion of the variable cost of vehicle acquisition in the cost
of inventories at the end of an arrangement.
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 goodwill belongs, 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. Refer to note 19 for further information.
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
to cover the future shortfall on the disposal of these vehicles.
Significant judgment is required in estimating the market value of
the vehicle in its expected future condition.
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.
2023 Annual Report2023 Annual Report 5858
Note 4. Restatement of comparatives
Correction of error
Previously the Group’s residual value provision was estimated on a pooled asset basis. This has been changed to reflect the required
provision at an asset level. The impact of the retrospective change on the comparative period financial position and results is provided below.
Variable consideration payments to customers have been reclassified from Vehicle Risk Cost of Sale to Rental and Finance Income.
Mobility services income and expenses have been stated on a gross basis to reflect the nature of the contracts where the Group acts as
principal and not the agent for services provided. As a result, comparative period revenue increased by $21,438,000 with a corresponding
increase in the comparative period cost of sales.
Statement of profit or loss
When there is a restatement of comparatives, it is mandatory to provide a statement of profit or loss and other comprehensive income
for the year ended 30 June 2022. However, since the above change to the residual risk provision did not impact the comparative year
statement of profit or loss, the Group has elected not to show the statement of profit or loss amounts.
Statement of financial position at the beginning of the earliest comparative period
Extract
Assets
Deferred tax
Total assets
Liabilities
Provisions
Total liabilities
Net assets
Equity
Retained profits
Total equity
CONSOLIDATED
2021
$’000
Reported
$’000
Adjustment
2021
$’000
Restated
4,328
831,949
13,691
453,763
378,186
118,297
378,186
1,907
1,907
6,364
6,364
(4,457)
(4,457)
(4,457)
6,235
833,856
20,055
460,127
373,729
113,840
373,729
2022
$’000
Restated
29,782
42,790
2,070,272
545,942
130,087
545,942
Statement of financial position at the end of the earliest comparative period
Extract
Liabilities
Provisions
Deferred tax
Total liabilities
Net assets
Equity
Retained profits
Total equity
Statement of cash flows:
Refer to the statement of cash flows for details on restatement.
CONSOLIDATED
$’000
Adjustment
6,364
(1,907)
4,457
(4,457)
(4,457)
(4,457)
2022
$’000
Reported
23,418
44,697
2,065,815
550,399
134,544
550,399
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 5959
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 EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal
reporting to the CODM are consistent with those adopted in the financial statements.
The information regarding products and services are detailed in note 6.
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 – 2023
Revenue
Revenue from contracts with customers
Rental and finance income
Total sales revenue
Interest income
Total revenue
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
577,419
227,796
805,215
6,774
811,989
314,114
(171,310)
(55,933)
86,871
80,155
62,066
142,221
1,523
143,744
75,973
(49,663)
(12,003)
14,307
United
Kingdom
$’000
60,075
37,386
97,461
298
97,759
31,211
(20,969)
(3,979)
6,263
2,269,228
359,707
208,276
1,855,236
253,805
154,302
Corporate
$’000
Total
$’000
–
–
–
–
–
(938)
–
–
(938)
–
–
717,649
327,248
1,044,897
8,595
1,053,492
420,360
(241,942)
(71,915)
106,503
(31,255)
75,248
2,837,211
2,837,211
2,263,343
2,263,343
2023 Annual Report2023 Annual Report 6060
Note 5. Operating segments continued
Consolidated – 2022 (Restated)
Revenue
Revenue from contracts with customers
Rental and finance income
Total sales revenue
Interest income
Total revenue
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
Note 6. Revenue
Revenue from contracts with customers
Mobility services income
Additional products and services
Finance commission
Vehicle risk income
Other income
Other revenue
Finance lease income
Operating lease income
Revenue
Australia
$’000
New Zealand
$’000
United
Kingdom
$’000
Corporate
$’000
Total
$’000
517,565
174,646
692,211
333
692,544
251,401
(139,713)
(55)
(39,235)
72,398
68,816
55,746
124,562
291
124,853
67,678
(45,841)
–
(10,084)
11,753
54,586
36,200
90,786
26
90,812
30,723
(17,057)
–
(3,091)
10,575
2,083,931
355,476
176,807
1,680,359
261,172
128,741
–
–
–
–
–
(5,594)
–
–
–
(5,594)
–
–
640,967
266,592
907,559
650
908,209
344,208
(202,611)
(55)
(52,410)
89,132
(28,400)
60,732
2,616,214
2,616,214
2,070,272
2,070,272
CONSOLIDATED
2023
$’000
165,132
95,404
30,992
416,986
9,135
717,649
27,068
300,180
327,248
1,044,897
2022
$’000
(Restated)
153,383
83,124
31,832
368,048
4,580
640,967
16,444
250,148
266,592
907,559
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 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.
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
Customer contracts
Software
Total amortisation
Total depreciation and amortisation
Impairment
Intangibles – customer contracts
Finance costs
External borrowing costs for corporate debt
External borrowing costs for lease portfolio
Net interest (receivable)/payable on interest rate swap contracts
Cash flow hedge ineffectiveness
Net foreign exchange losses/(gains)
Interest on lease liabilities – right-of-use assets
Interest on lease make good
Total finance costs
Net fair value loss
Net fair value loss on investments
Superannuation expense
Defined contribution superannuation expense
6161
CONSOLIDATED
2023
$’000
59,137
250,890
407,622
717,649
2022
$’000
(Restated)
58,715
229,025
353,227
640,967
CONSOLIDATED
2023
$’000
2022
$’000
377
2,870
821
211,779
7,680
223,527
13,911
4,504
18,415
112
1,950
624
175,515
7,697
185,898
12,616
4,097
16,713
241,942
202,611
–
55
18,386
68,609
(16,522)
(121)
577
858
128
12,243
37,456
2,362
(288)
(162)
711
88
71,915
52,410
32
934
10,730
10,138
2023 Annual Report2023 Annual Report 6262
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:
Decrease/(increase) in deferred tax assets
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
Assessed loss
Income tax expense
Amounts charged/(credited) directly to equity
Deferred tax assets
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
CONSOLIDATED
2023
$’000
(21,912)
53,167
31,255
2022
$’000
32,825
(4,425)
28,400
53,167
(4,425)
106,503
31,951
73
1,409
33,433
(881)
(1,297)
–
89,132
26,740
53
2,493
29,286
(1,398)
734
(222)
31,255
28,400
CONSOLIDATED
2023
$’000
2022
$’000
(1,037)
13,084
12,384
3,095
11,483
2,871
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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 6363
CONSOLIDATED
2023
$’000
2022
$’000
(Restated)
622
7,433
7,174
5,329
7,147
(84,231)
(5,515)
(24,085)
(86,126)
(9,227)
(95,353)
(95,353)
(42,790)
–
(53,167)
1,037
–
(433)
(95,353)
480
7,315
6,825
4,677
7,628
(26,210)
(5,536)
(27,942)
(32,763)
(10,027)
(42,790)
(42,790)
4,328
1,907
4,425
(13,084)
(41,203)
837
(42,790)
CONSOLIDATED
2023
$’000
4,723
4,723
2022
$’000
5,675
5,675
Deferred tax asset/(liability)
Deferred tax asset/(liability) comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Allowance for expected credit losses
Contract liabilities
Employee benefits
Accrued expenses
Provisions (restated)
Property, plant and equipment
Prepayments
Intangibles
Amounts recognised in equity:
Derivative financial instruments
Deferred tax liability
Amount expected to be settled after more than 12 months
Movements:
Opening balance
Adjustment due to correction of error (note 4)
Credited/(charged) to profit or loss
Credited/(charged) to equity
Additions through business combinations
Exchange differences
Closing balance
Income tax refund due
Income tax refund due
Amount expected to be recovered within 12 months
During the current financial year, the Group exercised the ‘Temporary full expensing allowance’ provided by the Australian Taxation Office
(‘ATO’) which enables the Group to claim an immediate deduction for the cost of an asset in the year it is first used or installed ready for
use for a taxable purpose. The Group retrospectively claimed this tax benefit resulting in a higher income tax receivable balance compared
to the previous year. As a result, the Group has recognised a corresponding deferred tax liability on the temporary differences arising due
to the tax deduction. The net deferred tax liability as at 30 June 2023 increased to $95,353,000 (30 June 2022: $42,790,000).
2023 Annual Report2023 Annual Report
6464
Note 9. Cash and cash equivalents
Cash at bank
Amount expected to be recovered within 12 months
Note 10. Restricted cash
Secured deposits
Securitisation collection and capital accounts
Securitisation reserves
Amount expected to be recovered within 12 months
CONSOLIDATED
2023
$’000
92,848
92,848
2022
$’000
61,613
61,613
CONSOLIDATED
2023
$’000
26,605
27,589
113,372
167,566
167,566
2022
$’000
27,388
11,185
130,247
168,820
168,820
Secured deposits represent bank account balances held as security as required under certain lease portfolio funding and insurance
agreements. Cash held in bank accounts within the securitisation warehouses can only be used to service the obligations of the
warehouse in accordance with the transaction agreements. These restricted balances are not available as free cash for the purpose
of other operations of the Group.
Note 11. Finance lease, trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Finance lease receivables
Less: Allowance for expected credit losses
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
CONSOLIDATED
2023
$’000
215,756
(1,898)
213,858
590,195
(2,493)
587,702
801,560
409,172
392,388
801,560
2022
$’000
177,492
(1,218)
176,274
451,938
(1,171)
450,767
627,041
344,082
282,959
627,041
Allowance for expected credit losses
The Group has recognised a loss of $1,975,000 (2022: $1,626,000) in profit or loss in respect of the expected credit losses for the year
ended 30 June 2023.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 6565
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
30 to 60 days overdue
60 to 90 days overdue
90 to 120 days overdue
Over 120 days overdue
EXPECTED CREDIT
LOSS RATE
CARRYING AMOUNT
ALLOWANCE FOR EXPECTED
CREDIT LOSSES
2023
%
0.31%
22.09%
19.27%
21.42%
20.97%
2022
%
0.19%
38.30%
36.20%
49.10%
26.50%
2023
$’000
796,973
2,989
1,546
1,784
2,659
2022
$’000
626,076
2,028
644
143
539
2023
$’000
2,493
660
298
382
558
2022
$’000
1,166
777
233
70
143
805,951
629,430
4,391
2,389
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Exchange differences
Closing balance
Lease receivables – finance lease
Committed at the reporting date, receivable:
1 year or less
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Over 5 years
Total commitment
Less: Future finance charges
Net commitment recognised as assets
CONSOLIDATED
2023
$’000
2,389
1,975
27
4,391
CONSOLIDATED
2023
$’000
2022
$’000
783
1,626
(20)
2,389
2022
$’000
220,733
175,232
148,118
82,482
37,095
23,291
686,951
(96,756)
590,195
186,898
124,277
96,082
53,317
27,206
3,510
491,290
(39,352)
451,938
2023 Annual Report2023 Annual Report 6666
Note 12. Inventories
End-of-term operating lease assets held for disposal
Less: Provision for impairment
Amount expected to be recovered within 12 months
Note 13. Derivative financial instruments
Interest rate swap contracts – cash flow hedges
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
Refer to note 34 for further information on fair value measurement.
Note 14. Prepayments
Prepayments
Amount expected to be recovered within 12 months
CONSOLIDATED
2023
$’000
29,798
(215)
29,583
29,583
2022
$’000
47,175
(15)
47,160
47,160
CONSOLIDATED
2023
$’000
40,687
16,197
24,490
40,687
2022
$’000
44,094
16,439
27,655
44,094
CONSOLIDATED
2023
$’000
21,164
21,164
2022
$’000
20,982
20,982
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 6767
Note 15. Investments – equity accounted
Investment in DingGo AU Pty Ltd (‘DingGo’)
During the current financial year, the Group gained significant influence on the investments in DingGo AU Pty Ltd. As detailed in note 2,
investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of
net assets of the associate.
Investment in DingGo AU Pty Ltd
Amount expected to be recovered after more than 12 months
Reconciliation
Reconciliation of the carrying amounts at the beginning and end of the current and previous financial
year are set out below:
Opening carrying amount
Transfer from investments – fair valued on gaining significant influence
Additions during the year
Share of loss after income tax
Closing carrying amount
Interests in associates
CONSOLIDATED
2023
$’000
1,637
1,637
–
1,329
782
(474)
1,637
2022
$’000
–
–
–
–
–
–
–
Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to the
Group are set out below:
Name
DingGo AU Pty Ltd
Note 16. Investments – fair valued
Investments in listed equity securities
Investments in other companies
Amount expected to be recovered after more than 12 months
Refer to note 34 for further information on fair value measurement.
Principal place of business/
Country of incorporation
Australia
Ownership
interest
2023
%
19.96%
CONSOLIDATED
2023
$’000
1,011
5,427
6,438
6,438
2022
$’000
648
5,908
6,556
6,556
2023 Annual Report2023 Annual Report 6868
Note 17. Leased motor vehicle assets
Lease portfolio assets – at cost
Less: Accumulated depreciation
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
CONSOLIDATED
2023
$’000
2022
$’000
1,143,418
1,033,285
(132,604)
1,010,814
282,705
728,109
1,010,814
(66,266)
967,019
387,386
579,633
967,019
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 2021
Additions
Additions through business combinations
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2023
Leased
assets
$’000
94,176
483,512
883,626
(299,607)
(19,173)
(175,515)
967,019
363,733
(119,590)
11,431
(211,779)
1,010,814
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited Note 18. 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
Reconciliations
CONSOLIDATED
2023
$’000
5,397
(1,076)
4,321
9,756
(6,312)
3,444
4,536
(955)
3,581
11,346
11,346
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 2021
Additions
Additions through business combinations
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2023
Leasehold
improvements
$’000
Computer
hardware
and office
equipment
$’000
397
299
5
–
(16)
(112)
573
4,101
–
24
(377)
4,321
3,149
2,120
1,135
(181)
(22)
(1,950)
4,251
2,037
–
26
(2,870)
3,444
Motor
vehicles
$’000
1,915
1,596
1,299
(435)
(132)
(624)
3,619
988
(386)
181
(821)
3,581
6969
2022
$’000
1,564
(991)
573
11,266
(7,015)
4,251
4,023
(404)
3,619
8,443
8,443
Total
$’000
5,461
4,015
2,439
(616)
(170)
(2,686)
8,443
7,126
(386)
231
(4,068)
11,346
2023 Annual Report2023 Annual Report 7070
Note 19. Intangibles
Goodwill – at cost
Customer contracts – at cost
Less: Accumulated amortisation
Less: Accumulated impairment
Software – at cost
Less: Accumulated amortisation
Amount expected to be recovered after more than 12 months
Reconciliations
CONSOLIDATED
2023
$’000
523,980
141,766
(59,368)
(125)
82,273
34,641
(17,764)
16,877
623,130
623,130
2022
$’000
519,547
140,424
(44,708)
(125)
95,591
29,070
(13,243)
15,827
630,965
630,965
Total
$’000
401,006
4,244
247,631
(12)
(5,136)
(55)
(16,713)
630,965
5,533
5,047
(18,415)
623,130
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 2021
Additions
Additions through business combinations
Disposals
Exchange differences
Impairment of assets
Amortisation expense
Balance at 30 June 2022
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2023
Goodwill
$’000
357,880
–
165,732
–
(4,065)
–
–
519,547
–
4,433
–
523,980
Customer
contracts
$’000
27,449
–
81,878
–
(1,065)
(55)
(12,616)
95,591
–
593
(13,911)
82,273
Software
$’000
15,677
4,244
21
(12)
(6)
–
(4,097)
15,827
5,533
21
(4,504)
16,877
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited
7171
Goodwill acquired through business combinations have been allocated to the following cash-generating units (‘CGUs’):
Australian CGU
United Kingdom CGU
New Zealand CGU
Total
Impairment testing for goodwill
CONSOLIDATED
2023
$’000
441,493
53,760
28,727
523,980
2022
$’000
441,493
49,852
28,202
519,547
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 4 was projected
at a growth rate of 0% (2022: 0%) for the three CGUs;
– Revenue growth was projected at 4.8% (2022: 7.1%) per annum for the Australian CGU, 15.2% (2022: 8.3%) per annum for the United
Kingdom CGU and 4.4% (2022: 8.1%) per annum for the New Zealand 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
11.77% (2022: 9.29%) was used for the Australian CGU, 9.43% (2022: 7.29%) for the United Kingdom CGU and 10.5% (2022: 9.01%)
for the New Zealand 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.
2023 Annual Report2023 Annual Report 7272
Note 20. Right-of-use assets
Right-of-use assets – at cost
Less: Accumulated depreciation
Amount expected to be recovered after more than 12 months
CONSOLIDATED
2023
$’000
55,162
(29,447)
25,715
25,715
2022
$’000
49,589
(21,743)
27,846
27,846
The Group leases office premises under agreements of between 3 to 10 years with, in some cases, options to extend. The leases have
various escalation clauses. On renewal, the terms of the leases are renegotiated. The Group also leases motor vehicles and equipment
under agreements of between 1 to 5 years.
Reconciliation
Reconciliation of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
Balance at 1 July 2021
Additions
Additions through business combinations
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Lease modification and termination
Exchange differences
Depreciation expense
Balance at 30 June 2023
Office
premises
$’000
Motor
vehicles
$’000
Others
$’000
8,113
13,511
12,920
(176)
(7,234)
27,134
4,699
(63)
260
(7,225)
24,805
534
256
–
(1)
(393)
396
653
–
–
(359)
690
43
305
38
–
(70)
316
–
–
–
(96)
220
Total
$’000
8,690
14,072
12,958
(177)
(7,697)
27,846
5,352
(63)
260
(7,680)
25,715
For other AASB 16 lease-related disclosures refer to the following:
– note 7 for details of interest on lease liabilities and other lease expenses;
– note 27 and note 43 for details of lease liabilities at the beginning and end of the reporting period;
– note 33 for the maturity analysis of lease liabilities; and
– consolidated statement of cash flows for repayment of lease liabilities.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 7373
CONSOLIDATED
2023
$’000
252,957
22,846
275,803
275,803
2022
$’000
214,409
20,638
235,047
235,047
Note 21. Trade and other payables
Trade payables
Accrued expenses
Amount expected to be settled within 12 months
Refer to note 33 for further information on financial instruments.
Trade payables include residual values payable to financiers, which are secured by the underlying operating lease asset and security
deposits of $26,605,000 (2022: $27,632,000).
Note 22. Derivative financial instruments
Interest rate swap contracts – cash flow hedges
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
CONSOLIDATED
2023
$’000
26
11
15
26
2022
$’000
688
256
432
688
Refer to note 33 for further information on financial instruments. Refer to note 34 for further information on fair value measurement.
Note 23. 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
CONSOLIDATED
2023
$’000
12,478
11,498
23,976
22,424
1,552
23,976
2022
$’000
11,606
11,203
22,809
21,472
1,337
22,809
2023 Annual Report2023 Annual Report 7474
Note 24. Provisions
Lease make good
Residual value risk
Other provisions
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
CONSOLIDATED
2023
$’000
4,733
18,339
8,788
31,860
11,676
20,184
31,860
2022
$’000
(Restated)
4,785
17,856
7,141
29,782
11,177
18,605
29,782
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the end of the
respective lease terms.
Residual value risk provision
The provision is to recognise the future liability relating to residual value exposures as described in note 2 and note 3. 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. Secured deposits have been issued to lease portfolio financiers as security for these obligations.
An amount of $18,339,000 (2022: $17,856,000) has been recognised as a residual value provision to cover potential shortfalls on the
disposal of these vehicles.
Other provisions
The provision represents the potential loss arising from overdrawn vehicle running cost accounts in relation to novated leases.
Movements in provisions
Movements in the provision during the current financial period is set out below:
Consolidated – 2023
Carrying amount at the start of the year
Additional provisions recognised
Exchange differences
Unused amounts reversed
Carrying amount at the end of the year
Lease
make
good
$’000
4,785
128
36
(216)
4,733
Residual
value risk
(restated)
$’000
17,856
–
483
–
18,339
Other
provision
$’000
7,141
2,341
24
(718)
8,788
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 7575
CONSOLIDATED
2023
$’000
75,830
2022
$’000
65,193
1,220,574
1,134,073
1,296,404
1,199,266
514,290
782,114
443,495
755,771
1,296,404
1,199,266
Note 25. Lease portfolio borrowings
Lease portfolio borrowings – non-securitised
Lease portfolio borrowings – securitised
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Refer to note 33 for further information on financial instruments.
Lease portfolio borrowings – non-securitised
The lease portfolio borrowings are secured by the underlying funded assets and lease agreements, together with secured deposits. These
facilities are interest-bearing and are repaid monthly in accordance with the contractual amortisation schedule of the underlying assets.
Lease portfolio borrowings – securitised
The Group has established limited recourse securitisation warehouse trusts with total commitments from external financiers of
$1,369 million (2022: $1,361 million). All amounts owing to parties to the warehouse are secured by fixed and floating charges over all
assets of the warehouse, including cash balances, lease receivables and related leased motor vehicles. The financiers to the warehouse
have no recourse to the Group, other than in relation to their responsibilities as originator and servicer of assets to the warehouse.
As at 30 June 2023, the Group had utilised $1,221 million (2022: $1,134 million) of securitised lease portfolio borrowings.
Note 26. Borrowings
Bank loans
Capitalised borrowing costs
Amount expected to be settled after more than 12 months
Refer to note 33 for further information on financial instruments.
The total secured liabilities are as follows:
Bank loans
Lease portfolio borrowings – non-securitised (note 25)
Lease portfolio borrowings – securitised (note 25)
CONSOLIDATED
2023
$’000
301,662
(848)
300,814
300,814
2022
$’000
299,723
(7,331)
292,392
292,392
CONSOLIDATED
2023
$’000
301,662
75,830
2022
$’000
299,723
65,193
1,220,574
1,134,073
1,598,066
1,498,989
Corporate borrowings
Corporate borrowings comprise of bank loans and ancillary facility with a facility limit of $423 million as at 30 June 2023. The facility
is secured by fixed and floating charges over the assets of the Group as well as composite guarantees and indemnities issued by
the Group and certain subsidiaries of the Group. The interest comprises a base rate plus a variable margin and all loans are repayable in
full on the maturity date being 31 August 2024.
2023 Annual Report2023 Annual Report 7676
Note 26. Borrowings continued
Financing arrangements
The Group has access to the following lines of credit:
Total facilities
Corporate borrowings (bank loans)
Corporate Borrowings (ancillary facilities)
Lease portfolio borrowings – non-securitised
Lease portfolio borrowings – securitised
Used at the reporting date
Corporate borrowings (bank loans)
Corporate Borrowings (ancillary facilities)
Lease portfolio borrowings – non-securitised
Lease portfolio borrowings – securitised
Unused at the reporting date
Corporate borrowings (bank loans)
Corporate Borrowings (ancillary facilities)
Lease portfolio borrowings – non-securitised
Lease portfolio borrowings – securitised
Note 27. Lease liabilities – right-of-use assets
Lease liabilities – right-of-use assets
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
CONSOLIDATED
2023
$’000
2022
$’000
301,662
121,529
152,110
299,723
56,998
197,838
1,369,186
1,360,552
1,944,487
1,915,111
301,662
299,723
15,631
75,830
13,519
65,193
1,220,574
1,134,073
1,613,697
1,512,508
–
105,898
76,280
148,612
330,790
–
43,479
132,645
226,479
402,603
CONSOLIDATED
2023
$’000
25,956
6,209
19,747
25,956
2022
$’000
27,319
7,134
20,185
27,319
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited
Note 28. Vehicle maintenance funds
Vehicle maintenance funds
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Note 29. 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
Additions through business combinations
Transfer to revenue – included in the opening balance
Increase in cash received excluding amounts recognised as revenue during the year
Closing balance
7777
CONSOLIDATED
2023
$’000
140,509
49,787
90,722
140,509
2022
$’000
(Restated)
157,838
56,205
101,633
157,838
CONSOLIDATED
2023
$’000
72,642
57,039
15,603
72,642
62,341
–
(43,283)
53,584
72,642
2022
$’000
62,341
45,793
16,548
62,341
40,617
43,320
(56,639)
35,043
62,341
2023 Annual Report2023 Annual Report 7878
Note 30. Issued capital
CONSOLIDATED
2023
Shares
2022
Shares
2023
$’000
2022
$’000
Ordinary shares – fully paid
341,984,920
341,984,920
505,968
505,968
Movements in ordinary share capital
Details
Balance
Date
Shares
Issue price
1 July 2021
297,396,370
Shares issued on acquisition of LeasePlan ANZ
1 September 2021
44,588,550
$2.90
Balance
Balance
Ordinary shares
30 June 2022
341,984,920
30 June 2023
341,984,920
$’000
376,661
129,307
505,968
505,968
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the
Company be wound up, in proportions that consider both the number of shares held and the extent to which those shares are paid up.
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 30 June 2022.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 7979
CONSOLIDATED
2023
$’000
(2,908)
29,640
8,765
(119,158)
(83,661)
2022
$’000
(8,554)
31,697
5,902
(119,158)
(90,113)
Note 31. Reserves
Foreign currency reserve
Hedging reserve – cash flow hedges
Share-based payments reserve
Capital reserve
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 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.
Movements in reserves
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
Consolidated
Balance at 1 July 2021
Foreign currency translation
Share-based payments
Movement in hedges – gross
Deferred tax
Balance at 30 June 2022
Foreign currency translation
Share-based payments
Share awards settled through direct market
acquisition
Movement in hedges – gross
Deferred tax
Balance at 30 June 2023
Foreign
currency
$’000
262
(8,816)
–
–
–
(8,554)
5,646
–
–
–
–
(2,908)
(496)
–
–
45,277
(13,084)
31,697
–
–
–
(3,094)
1,037
29,640
Capital
$’000
Total
$’000
(119,158)
(116,772)
–
–
–
–
(119,158)
–
–
–
–
–
(8,816)
3,282
45,277
(13,084)
(90,113)
5,646
4,622
(1,759)
(3,094)
1,037
2,620
–
3,282
–
–
5,902
–
4,622
(1,759)
–
–
8,765
(119,158)
(83,661)
2023 Annual Report2023 Annual Report 8080
Note 32. Dividends
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2022 of 6.811 cents per ordinary share paid on
8 September 2022 (2022: Final dividend for the year ended 30 June 2021 of 5.393 cents)
Interim dividend for the year ended 30 June 2023 of 8.913 cents per share paid on 9 March 2023
(2022: Interim dividend for the year ended 30 June 2022 of 8.318 cents)
CONSOLIDATED
2023
$’000
23,293
2022
$’000
16,039
30,481
28,446
53,774
44,485
On 22 August 2023, the Directors declared a fully franked final dividend for the year ended 30 June 2023 of 7.271 cents per ordinary share,
to be paid on 15 September 2023 to eligible shareholders on the register on 1 September 2023. This equates to a total estimated distribution
of $24,866,000, based on the number of ordinary shares on issue as at 30 June 2023. The financial effect of dividends declared after the
reporting date are not reflected in the 30 June 2023 financial statements and will be recognised in subsequent financial reports.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
CONSOLIDATED
2023
$’000
20,327
2022
$’000
80,312
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.
Note 33. 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 the presentation currency.
Price risk
The Group is exposed to market price risk on the investments it holds at fair value.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 8181
Interest rate risk
The Group’s main interest rate risk arises from its borrowings and cash at the bank, both of which carry variable rates of interest. The Group
policy is to ensure that at least 60% of Group corporate borrowings are hedged into a fixed rate for the term of the borrowing (unless
approved by the Board). Non-securitised lease portfolio borrowings (other than where used to fund leases in inertia or informal extension)
are required to be hedged using an amortising swap profile that reflects the expected repayment profile of the borrowings. Securitisation
borrowings are similarly required to be hedged using an amortising swap profile that reflects the expected repayment profile of the
borrowings, in compliance with parameters agreed with the financiers to the securitisation.
As at the reporting date, the Group had the following variable rate bank accounts and other facilities after impact of hedging instruments:
Consolidated
Cash at bank
Securitisation accounts
Secured deposits
Bank loans (unhedged)
Net exposure to cash flow interest rate risk
2023
Balance
$’000
92,848
140,961
26,605
(55,000)
205,414
2022
Balance
$’000
61,613
141,432
27,388
(55,000)
175,433
An official increase/decrease in interest rates of 100 (2022: 100) basis points would have a favourable/adverse effect on profit before tax
and equity of $2,054,000 (2022: $1,754,000) 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 the following notional/principal values as at 30 June 2023:
– $246,660,000 (2022: $244,722,000) of bullet swaps maturing in September 2024 with a weighted average fixed rate of 0.65%
(2022: 1.07%) in respect of corporate debt borrowings; and
– $1,328,158,000 (2022: $1,174,357,000) of amortising swaps with tenors of up to 5 years and a weighted average fixed rate of 3.00%
(2022: 1.31%), in relation to securitisation trusts.
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 finance, trade and other 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
Refer to note 26 for details of unused borrowing facilities at the reporting date.
2023 Annual Report2023 Annual Report 8282
Note 33. Financial instruments continued
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 – 2023
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing – variable
Corporate borrowings (bank loans)
Lease portfolio liabilities – non-securitised
Lease portfolio facilities – securitised
Interest-bearing – fixed rate
Lease liabilities – right-of-use assets
Total non-derivatives
Derivatives
Interest rate swaps net settled
Total derivatives
Consolidated – 2022
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing – variable
Corporate borrowings (bank loans)
Lease portfolio liabilities – non-securitised
Lease portfolio facilities – securitised
Interest-bearing – fixed rate
Lease liabilities – right-of-use assets
Total non-derivatives
Derivatives
Interest rate swaps net settled
Total derivatives
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
Remaining
contractual
maturities
$’000
252,957
–
18,962
28,978
547,018
7,114
855,029
11
11
311,142
24,712
339,379
6,963
682,196
15
15
–
–
25,093
453,967
13,026
492,086
–
–
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
214,409
–
–
4,537
22,771
442,918
7,810
692,445
256
256
4,537
20,491
291,194
6,369
322,591
432
432
301,990
26,181
434,713
14,153
777,037
–
–
–
–
–
252,957
330,104
78,783
8,457
1,348,821
1,350
9,807
28,453
2,039,118
–
–
26
26
Over
5 years
$’000
Remaining
contractual
maturities
$’000
–
–
–
214,409
311,064
69,443
9,748
1,178,573
1,446
11,194
29,778
1,803,267
–
–
688
688
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 8383
Note 34. 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 – 2023
Assets
Investments in listed equity securities
Investment in other companies
Derivative financial instruments – Interest rate swap contracts
Total assets
Liabilities
Derivative financial instruments – Interest rate swap contracts
Total liabilities
Consolidated – 2022
Assets
Investments in listed equity securities
Investment in other companies
Derivative financial instruments – Interest rate swap contracts
Total assets
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
1,011
–
–
1,011
–
–
Level 1
$’000
648
–
–
648
–
–
–
–
40,687
40,687
26
26
Level 2
$’000
–
–
44,094
44,094
688
688
–
5,427
–
5,427
–
–
Level 3
$’000
–
5,908
–
5,908
–
–
Total
$’000
1,011
5,427
40,687
47,125
26
26
Total
$’000
648
5,908
44,094
50,650
688
688
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
Unquoted investments have been valued using a discounted cash flow model.
Derivative financial instruments have been valued using observable market rates including relevant bank bill swap rates (BBSW). This valuation
technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates.
2023 Annual Report2023 Annual Report 8484
Note 34. Fair value measurement continued
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2021
Additions
Balance at 30 June 2022
Additions
Transfer to ‘Investments accounted for using the equity method’ on gaining significant influence
Balance at 30 June 2023
Other
investments
$’000
1,330
4,578
5,908
848
(1,329)
5,427
Note 35. 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
2023
$’000
2022
$’000
5,346,622
5,164,094
134,789
49,942
120,205
154,817
1,939,825
2,193,378
7,471,178
7,632,494
Note 36. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the Company:
Audit services – Ernst & Young (2022: KPMG)
Audit or review of the financial statements
Other services – Ernst & Young (2022: KPMG)
Tax services
Corporate advisory
CONSOLIDATED
2023
$
2022
$
1,026,050
1,345,382
–
–
–
102,300
136,071
238,371
1,026,050
1,583,753
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited Note 37. Maturity analysis – operating lease receivable
Committed at the reporting date, receivable:
Within one year
One to two years
Two to three years
Three to four years
Four to five years
8585
CONSOLIDATED
2023
$’000
2022
$’000
271,050
154,923
114,306
63,920
25,276
267,631
163,498
116,518
67,856
27,440
629,475
642,943
Future minimum rentals receivable includes contracted amounts for motor vehicles under non-cancellable operating leases between one
and five years.
Note 38. Contingent liabilities and contractual commitments
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. The aggregate value of these commitments amounts
to $713,858,000 (2022: $702,488,000). 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, letters of credit and cash lock-ups have been issued to lease portfolio financiers as security for these obligations.
An amount of $18,339,000 (30 June 2022 restated: $17,856,000) has been recognised as a residual value provision 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 39. 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 41.
Associates
Interests in associates are set out in note 15.
Key management personnel
Disclosures relating to key management personnel are set out in note 35 and the remuneration report included in the Directors’ report.
Transactions with related parties
During the year, DingGo Pty Ltd (Associate entity) provided accident management services to the Group’s customers resulting in a
related party expense within Mobility Services cost of sales of $797,000. DingGo Pty Ltd has one operating lease managed by the Group.
As at 30 June 2023 there were no amounts payable or receivable from DingGo Pty Ltd.
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.
2023 Annual Report2023 Annual Report 8686
Note 40. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Retained profits
Total equity
PARENT
2023
$’000
59,343
59,343
2022
$’000
344,738
344,738
PARENT
2023
$’000
149
2022
$’000
8,592
1,087,433
1,044,773
–
–
332,823
295,732
716,356
38,254
754,610
716,356
32,685
749,041
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 42 for further details.
The parent entity has also provided guarantees and indemnities for bank facilities. Refer to note 26 for further details.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited
8787
Note 41. 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
Name
SG Fleet Solutions Pty Limited
SG Fleet Holdings Pty Limited
SG Fleet Investments Pty Ltd
SG Fleet Management Pty Limited
SG Fleet Australia Pty Limited
SG Fleet Salary Packaging Pty Limited
NLC Pty Limited
NLC Finance Pty Ltd
NLC Insurance Pty Ltd
Vehicle Insurance Underwriters Pty Ltd
LeasePlan Australia Limited
SG Fleet NZ Limited
LeasePlan New Zealand Limited
SG Fleet UK Limited
SG Fleet UK Holdings Limited
Fleet Hire Holdings Limited
SG Fleet Solutions UK Limited
Principal place of business/
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
United Kingdom
United Kingdom
United Kingdom
United Kingdom
2023
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
2022
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note 42. 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)
NLC Insurance Pty Ltd
SG Fleet Solutions Pty Limited*
SG Fleet Holdings Pty Limited*
SG Fleet Investments Pty Ltd*
Vehicle Insurance Underwriters Pty Ltd
LeasePlan Australia Limited*
SG Fleet NZ Limited
SG Fleet Management Pty Limited*
LeasePlan New Zealand Limited**
SG Fleet Australia Pty Limited*
SG Fleet UK Limited
SG Fleet Salary Packaging Pty Limited*
SG Fleet UK Holdings Limited
NLC Pty Limited*
NLC Finance Pty Ltd*
Fleet Hire Holdings Limited
SG Fleet Solutions UK 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.
** In accordance with section 255 of the New Zealand Companies Act 1993, LeasePlan New Zealand Limited amalgamated to become
SG Fleet NZ Limited on 1 November 2022. In accordance with the New Zealand Companies Act, LeasePlan New Zealand Limited
ceased to exist as a separate entity, and all of its rights and obligations, became rights and obligations of SG Fleet NZ Limited.
2023 Annual Report2023 Annual Report 8888
Note 43. 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 disposal of property, plant and equipment
Net fair value loss on investments
Share of loss – associates
Finance costs – non-cash
Share-based payments
Net movement in fair value of derivatives
Change in operating assets and liabilities:
Decrease/(increase) in finance lease, trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in income tax refund due
Decrease in deferred tax assets
Increase in prepayments
Increase in lease portfolio assets and finance lease receivables
Increase in trade and other payables
Increase/(decrease) in contract liabilities
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
Additions and modifications to the right-of-use assets
Leasehold improvements (lease make good) within right-of-use assets
Shares issued in relation to business combinations
CONSOLIDATED
2023
$’000
75,248
2022
$’000
(Restated)
60,732
241,942
202,611
–
(19)
32
474
7,119
4,622
(349)
(38,923)
17,577
952
–
(182)
(381,997)
24,263
10,301
–
53,600
1,167
2,078
17,905
55
12
934
–
5,435
3,282
(6)
2,516
(29,766)
(5,675)
4,328
(13,460)
(173,497)
31,726
(21,596)
(13,606)
(9,590)
2,113
(427)
46,121
CONSOLIDATED
2023
$’000
5,289
–
–
5,289
2022
$’000
12,066
2,006
129,307
143,379
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash (used in)/from financing activities
Non-cash additions
Changes through business combinations
Exchange differences
Balance at 30 June 2022
Net cash (used in)/from financing activities
Non-cash additions/changes
Exchange differences
Balance at 30 June 2023
Note 44. Earnings per share
Lease portfolio
borrowings
$’000
65,041
310,794
–
837,540
(14,109)
Bank loans
$’000
125,841
175,000
–
–
(1,118)
1,199,266
299,723
87,765
–
9,373
1,296,404
–
–
1,939
301,662
Profit after income tax attributable to the owners of SG Fleet Group Limited
8989
Lease liabilities –
right-of-use
assets
$’000
9,015
(6,546)
12,066
12,958
(174)
27,319
(6,935)
5,289
283
Total
$’000
199,897
479,248
12,066
850,498
(15,401)
1,526,308
80,830
5,289
11,595
25,956
1,624,022
CONSOLIDATED
2023
$’000
75,248
2022
$’000
60,732
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
341,984,920
334,410,975
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Performance rights over ordinary shares
736,857
1,190,233
1,519,527
1,574,641
Weighted average number of ordinary shares used in calculating diluted earnings per share
343,912,010
337,505,143
Basic earnings per share
Diluted earnings per share
Cents
22.00
21.88
Cents
18.16
17.99
2023 Annual Report2023 Annual Report 9090
Note 45. 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 $4,622,000 (2022: $3,282,000).
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:
2023
Grant date
Expiry date
25/11/2019
14/08/2025
28/10/2020
14/08/2025
28/10/2020
21/08/2026
26/10/2021
11/08/2027
03/11/2022
20/08/2028
Exercise
price
$2.35
$1.68
$1.68
$2.93
$2.17
Balance at
the start of
the year
960,980
1,823,951
3,235,700
1,765,028
–
2,089,010
7,785,659
2,089,010
Granted
Exercised
Weighted average exercise price
$2.05
$2.17
$0.00
$2.35
$2.07
–
–
–
–
–
–
–
Expired/
forfeited/
other
Balance at
the end of
the year
(148,585)
812,395
–
–
–
–
1,823,951
3,235,700
1,765,028
2,089,010
(148,585)
9,726,084
Expired/
forfeited/
other
–
–
–
–
–
Balance at
the end of
the year
960,980
1,823,951
3,235,700
1,765,028
7,785,659
–
–
–
–
–
–
–
–
–
–
–
2022
Grant date
Expiry date
25/11/2019
28/10/2020
28/10/2020
26/10/2021
14/08/2025
14/08/2025
21/08/2026
11/08/2027
Exercise
price
$2.35
$1.68
$1.68
$2.93
Balance at
the start of
the year
960,980
1,823,951
3,235,700
–
1,765,028
6,020,631
1,765,028
Granted
Exercised
Weighted average exercise price
$1.79
$2.93
$0.00
$0.00
$2.05
The weighted average share price during the financial year was $1.98 (2022: $2.55) per ordinary share.
Outstanding options exercisable as at 30 June 2023 was 2,636,346 (2022: nil). The weighted average remaining contractual life of options
outstanding at the end of the financial year was 2.8 years (2022: 1 year).
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.
Notes to the financial statements30 June 2023SG Fleet Group LimitedSG Fleet Group Limited 9191
Balance at
the end of
the year
–
–
1,130,194
–
734,790
577,044
1,257,271
Set out below are summaries of performance rights granted under the plan:
2023
Grant date
25/11/2019
28/10/2020
28/10/2020
08/09/2021
26/10/2021
09/09/2022
03/11/2022
2022
Grant date
25/11/2019
28/10/2020
28/10/2020
08/09/2021
26/10/2021
Vesting date
15/08/2022
15/08/2022
22/08/2023
01/07/2022
12/08/2024
01/07/2023
21/08/2025
Vesting date
15/08/2022
15/08/2022
22/08/2023
01/07/2022
12/08/2024
Balance at
the start of
the year
590,916
147,888
1,130,194
402,469
734,790
Balance at
the start of
the year
590,916
147,888
1,130,194
Granted
Exercised
Expired/
forfeited/
other
(53,354)
–
–
(537,562)
(147,888)
–
(376,445)
(26,024)
–
–
–
–
–
–
–
–
577,044
1,257,271
3,006,257
1,834,315
(1,061,895)
(79,378)
3,699,299
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
–
–
402,469
734,790
1,868,998
1,137,259
–
–
–
–
–
–
–
–
–
–
–
–
590,916
147,888
1,130,194
402,469
734,790
3,006,257
–
–
–
–
–
–
–
–
Performance rights exercisable as at 30 June 2023 was nil (2022: nil). The weighted average remaining contractual life of performance
rights outstanding at the end of the financial year was 37 months (2022: 31 months).
For the options granted during the current financial year the Black-Scholes valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Vesting date
Share price
at grant date
Exercise
price
Estimated
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
03/11/2022
21/08/2025
$2.04
$2.17
52.00%
6.00%
3.60%
$0.600
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
Vesting date
09/09/2022
01/07/2023
03/11/2022
21/08/2025
Share price
at grant date
$2.60
$2.04
Exercise
price
$0.00
$0.00
Dividend
yield
Fair value
at grant date
6.05%
6.00%
$1.740
$1.740
Note 46. Events after the reporting period
Subsequent to the year end, the Group has extended the Autonomy 2021-1 Warehouse facility of $1,050 million and Autonomy NZ 2021-2
Warehouse facility of $240 million with the availability periods extended to June 2025.
Apart from the dividend declared as disclosed in note 32, and the events above, no other matter or circumstance has arisen since 30 June
2023 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.
2023 Annual Report2023 Annual Report 9292
Directors’ declaration
30 June 2023
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 2023 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 42 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
22 August 2023
Sydney
Robbie Blau
Chief Executive Officer
SG Fleet Group LimitedSG Fleet Group Limited
Independent auditor’s report
to the members of SG Fleet Group Limited
9393
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor’s report to the members 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) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2023, the consolidated statement of profit and loss, the consolidated statement of other
comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, notes to the financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 Group in accordance with the auditor
independence requirements of 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 (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
81
2023 Annual Report2023 Annual Report
9494
Independent auditor’s report
to the members of SG Fleet Group Limited
Revenue Recognition
Why significant
The Group provides a range of services to customers for
mobility services, additional products and services, financing
commissions and vehicle risk income relating to sale of
rental vehicles. In addition, the Group records income in
relation to rental and finance income on a straight-line basis
for amounts earned on leased motor vehicles where the
Group is a lessor to the arrangement.
Revenue recognition was considered a key audit matter due
to the significance of this account to the financial
statements and due to the judgements it required the Group
to make, including:
•
•
•
Assessment of the Group’s role in a contract with a
customer as either principal or agent.
Assessment of certain revenue arrangements as
linked contracts, which impact the timing and
extent of revenue recognised in the period.
Estimation of the stand-alone selling price and total
margin earned in a contract, in order to recognise
revenue on maintenance services, and associated
assessment of deferred revenue balances within
deferred maintenance income (contract liabilities).
The Group’s revenue recognition accounting policies are set
out in Note 2. Note 3 discloses the critical accounting
judgements, estimates and assumptions that have been
applied by the Group when determining revenue.
How our audit addressed the key audit matter
Our audit procedures included the following:
•
•
•
Assessment of whether the Group’s revenue
recognition accounting policies complied with the
requirements of Australian Accounting Standards.
For a sample of customer contracts we assessed
the Group’s determination as to whether it was
acting as Principal or Agent in each contract and
whether revenue recognised reflected the
underlying contractual arrangement.
For a sample of linked customer contracts we
assessed the underlying contractual arrangements
in order to determine whether they met the criteria
of accounting for linked contracts under Australian
Accounting Standards.
• We assessed the appropriateness of the calculation
of the stand-alone selling price for revenue on
maintenance services by considering the expected
cost to provide these services plus a margin.
• We assessed deferred maintenance income by
selecting a sample of transactions and agreed
amounts recognised to maintenance services billed
to customers, to amounts specified in the
underlying lease agreements and amounts recorded
on bank statements.
• We agreed a sample of costs incurred in providing
maintenance services to external maintenance
supplier invoices.
• We assessed the historical accuracy of the Group’s
estimate of total contract costs by comparing
estimates from prior periods to actual costs
incurred in the current period.
• We assessed the expected future margin on
maintenance expenses, based on actual historical
costs incurred and forecast costs to incur.
Residual Value Risk Provision
Why significant
How our audit addressed the key audit matter
The Group has entered into agreements with financiers
which require the transfer of the ownership of the
underlying motor vehicle asset and the associated residual
value risk to the Group at the end of applicable leases.
It is the Group’s policy to recognise a provision if the
forecast sale proceeds of the asset are expected to be less
than the guaranteed residual value payable to the financier.
Our audit procedures included the following:
•
•
Assessed whether the accounting treatment of both
the Group’s historical and revised residual value risk
provision was in accordance with Australian
Accounting Standards.
Assessed the effectiveness of controls surrounding
the Group's residual value risk provision
determination process.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
82
SG Fleet Group LimitedSG Fleet Group Limited
9595
Why significant
How our audit addressed the key audit matter
At 30 June 2023 a provision of $18.3m has been recorded
as disclosed in Note 24.
During the year the Group corrected a prior period error and
has restated comparative balances as disclosed in Note 4.
The provision considers current and expected market
conditions and in particular factors, such as inherent
volatility of the asset’s disposal value due to changes in
market conditions between balance date and the future
dates at which the assets will be disposed.
This was considered a key audit matter given the significant
judgment involved in estimating the provision as well as the
requirement in the current year to address the prior period
error and restate comparative information.
•
•
•
Considered the market conditions and economic
factors assumed in the Group's determination of
the probable residual values against external
benchmark data.
For a sample of motor vehicles included in the
provision calculation, compared current residual
valuations of comparable motor vehicles against
the current market value of these motor vehicles
using recent external auction prices achieved or
other available market data for comparable
vehicles.
Assessed the calculation of the restatement
required to prior period comparatives and adequacy
of the associated financial report disclosure.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2023 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report, Chairman’s report and Chief Executive
Officer’s report that are to be included in the Annual Report, prior to the date of this auditor’s report,
and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s
report.
Our opinion on the financial report does not cover the other information and we do not and will not
express 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
and, in doing so, 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.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
83
2023 Annual Report2023 Annual Report
9696
Independent auditor’s report
to the members of SG Fleet Group Limited
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 84 Auditor’s responsibilities for the audit of the financial report Our objectives are 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. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. ► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ► Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. SG Fleet Group LimitedSG Fleet Group Limited 9797
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 85 We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 11 to 22 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of SG Fleet Group Limited for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Glenn Maris Partner Sydney 22 August 2023 2023 Annual Report2023 Annual Report 9898
Shareholder information
30 June 2023
The shareholder information set out below was applicable as at 31 July 2023.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Bluefin Investments Limited
Leaseplan Corporation NV
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd (DRP)
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) 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)
Shevin Pty Limited (The Shevin A/C)
Insync Investments Pty Ltd (Weekley Super Fund No 1 A/C)
Peter Mountford
Mulcaster Super Fund Pty Ltd (Mulcaster Super Fund A/C)
HSBC Custody Nominees (Australia) Limited – A/C 2
Macdonald Gilbert Bell
NCH Pty Ltd
Tark Family Holdings Pty Limited (Tark Family A/C)
Scotch Investments Pty Ltd (Scotch Investments A/C)
ORDINARY SHARES
Number
of holders
% of total
shares
issued
592
759
416
645
50
2,462
366
0.07
0.65
0.95
4.81
93.52
100.00
ORDINARY SHARES
Number held
182,028,160
44,588,550
29,483,887
12,806,409
9,439,238
7,986,350
7,874,539
6,149,223
6,144,842
1,901,065
1,330,845
779,732
595,565
580,000
567,204
538,964
465,960
445,017
441,253
400,000
% of total
shares
issued
53.23
13.04
8.62
3.74
2.76
2.34
2.30
1.80
1.80
0.56
0.39
0.23
0.17
0.17
0.17
0.16
0.14
0.13
0.13
0.12
314,546,803
92.00
SG Fleet Group LimitedSG Fleet Group Limited Unquoted equity securities
Options over ordinary shares
Performance rights over ordinary shares
9999
Number
on issue
9,726,084
1,992,061
Number
of holders
10
98
The following person holds 20% or more of unquoted equity securities:
Name
Robbie Blau
Class
Options over ordinary shares
Number held
4,244,276
Substantial holders
Substantial holders in the Company are set out below:
Bluefin Investments Limited
Leaseplan Corporation NV
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
ORDINARY SHARES
Number held
182,028,160
44,588,550
% of total
shares
issued
53.23
13.04
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
Class
Expiry date
Fully paid shares held by LeasePlan Corporation NV
Escrowed to 1 September 2023
Number
of shares
22,294,275
Share buy-back
There is no current on-market share buy-back.
2023 Annual Report2023 Annual Report 100
Corporate directory
Directors
Andrew Reitzer – Independent Non-Executive Chairman
Robbie Blau – Chief Executive Officer
Cheryl Bart AO – Independent Non-Executive Director
Peter Mountford – Non-Executive Director
Edwin Jankelowitz – Independent Non-Executive Director
Kevin Wundram – Chief Financial Officer
Tex Gunning – Independent Non-Executive Director
Colin Brown – Alternate Director for Peter Mountford
Company secretary
Tawanda Mutengwa
Notice of annual general meeting
The annual general meeting of SG Fleet Group Limited will be held virtually at 3:00pm on
Tuesday, 17 October 2023. Further details will be provided in the Notice of Meeting.
Registered office and
Principal place of business
Level 2, Building 3
20 Bridge Street
Pymble NSW 2073
Share register
Auditor
Telephone: +61 2 9494 1000
Facsimile: +61 2 9391 5656
E-mail: globalenquiries@sgfleet.com
The Registrar
Boardroom Pty Ltd
Level 8, 210 George Street, Sydney, NSW 2000
Telephone: +61 2 9290 9600
E-mail: enquiries@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
Ernst & Young
200 George Street
Sydney NSW 2000
Stock exchange listing
SG Fleet Group Limited shares are listed on the Australian Securities Exchange (ASX code: SGF)
Website
www.sgfleet.com
Corporate Governance Statement
The Directors and management are committed to conducting the business of SG Fleet Group
Limited in an ethical manner and in accordance with the highest standards of corporate
governance. SG Fleet Group Limited has adopted and has substantially complied with the ASX
Corporate Governance Principles and Recommendations (Fourth Edition) (‘Recommendations’)
to the extent appropriate to the size and nature of its operations.
The Group’s Corporate Governance Statement, which sets out the corporate governance practices
that were in operation during the financial year and identifies and explains any Recommendations
that have not been followed and ASX Appendix 4G are released to the ASX on the same day the
Annual Report is released. The Corporate Governance Statement can be found on the company’s
website at http://investors.sgfleet.com/Investors/?page=Corporate-Governance-Statement.
Enquiries
investorenquiries@sgfleet.com
SG Fleet Group Limited