FleetPartners Group Limited

Thank you for standing by and welcome to the Fleet Partners Group Limited 2026 Harpy results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Damien Burrell, Chief Executive Officer, to begin the conference. Damien.

Thank you and good morning. It's great to be with you today to present Fleet Heart's FY26 first half results. I'm joined today by our Chief Financial Officer, James Owens. Before we begin, I would like to acknowledge the traditional custodians of the lands and waterways across Australia and pay my respects to Elders past and present. 1H26 saw a positive start to the year for the group. We delivered NHA growth and our seventh consecutive month of two-month growth. Momentum in new business varieties is building on the back of a clear strategy and disciplined execution. Strong cash generation continues, enabling a fully franked interim dividend at a gross staff yield of 13%. And finally, The business's proven resilience positions us well to navigate ongoing macroeconomic and geopolitical uncertainty. Let me shortly point in more detail, starting on slide 6, with our first half 26 financial performance highlights. There are two key messages that stand out from today's financial results. First, Fleet Partners continues to present a defensive investment, underpinned by consistent performance. Despite flat new business writings, we again grew room off and core income and delivered a return to MPAD A growth in 1H26. Second, our operating model continues to generate substantial positive cash flow, which supports disciplined capital management and strong shareholder returns. New business writings were $357 million down 1%, or broadly flat on a constant currency basis. Boomlock reached $2.4 billion and grew 6%, while funded boomlock grew 3%. Court income was $85 million, up 4%. This tracked average boomlock growth, which meant core margins remained stable through the period. NHA free EOL was $19 million, up 7%, a strong outcome driven by higher court income and prudent expense management. End of lead income was $29 million, with an increase in vehicles sold off-step by profit per unit down to $5,840. A critical point to highlight is that at the current profit per unit levels, our portfolio has an illustrative embedded end of lead income of approximately $240 million. Most importantly, MHA returned to growth up 2%. Earnings per share rose 9% to 18.5 cents. And in a clear demonstration of the board's confidence in the group's balance sheet strength and future cash generation, two recent capital management return announcements have been made. In March, the board announced an on-market share buyback of up to $20 million. And today, the board announced a 40-franc dividend of $26 million. marking the group's return to frame dividends for the first time in seven and a half years, and another important milestone in today's results. This dividend equates to 11.9 cents per share and represents a gross start yield of approximately 13%. Let's turn to slide 7 on our earnings trajectory. The group had saluted constant EPS growth at a 6% CAGAS in February 23, despite declining end-of-life income over the same period. In January 26, this was driven by a 7% growth in MLA pre-EOL, outpacing the normalisation of elevated end-of-life income, which was down 3% for the period. A key focus for the business has been to grow through lot and therefore empathise through EOL at a rate that outpaces the headwind from the anticipated decline in EOL. Achieving that objective in today's result is encouraging and reinforces our confidence in the strategy that we have in place. I'll now turn to slide 8, which explains how we're deploying capital to generate returns for shareholders. Fleet Partners has announced $356 million of capital returns to shareholders since FY21. To emphasise the significance of this, it equates to more than 50% of our current market capitalisation. This represents a strong record of both the quality of our earnings and our disciplined approach to capital management. Over the last 12 months alone, we have supplied $109 million of capital to drive returns. That includes dividends, our high-back program, debt management and the remunerator acquisition, all funded from strong cash flows this business generates. Taking a look at the workforce, you can see the breadth of our capital deployment. We paid $29 million as a final dividend for Headway 25 and a further $26 million to our high-back program. both delivered in line with our 60% to 70% M&A payout ratio. The board has declared a $26 million fully frank interest-insurance dividend for FY26, and as I have highlighted on an annualised basis, our gross start yield sits at approximately 13%. This underscores the board's confidence in the balance sheet's strength and the future cash generation of this business. The message here is clear. We are generating strong, sustainable cash flows and we are committed to deploying capital to maximise returns for shareholders. Let's turn to slide 9. Fleet Partner Strategies is focused on three significant, under-penetrated and high-returning segments. Large fleets, small fleets and innovators, presenting clear growth opportunities. Our three segments are strategically aligned, enabling the group to leverage share capabilities at scale. We are investing across each segment, and as the next slide demonstrates, this is translating into momentum. Our path to further penetrate these markets is centered around four strategic pillars. Attract, retain, grow, and profit. Attract new customers through established, fit-for-purpose solutions and leading capability across the full vehicle ownership lifecycle. Retain existing customers through genuine customer value creation and market-leading service proposition. Grow share of loss through add-on product penetration that creates incremental value for our customers and incremental income for fleet partners. And finally, optimise profit to enhance process efficiency and strong financial discipline. Our strategy is delivering clear and measurable progress across the businesses, which you'll see reflected in the segment updates that follow, starting with large fleets on slide 10. Strategic action is driving momentum in large fleets. Our value proposition is resonating with customers and we are investing in digital, data and efficiency to strengthen our proposition further. Our confidence in the continued growth in this segment is supported by several positive lead indicators. First, we have approximately $25 million of family leaseback opportunities in the second half of FY26. Our business development team is performing ahead of expectations, validating our competitive positioning and service offering in the market. And third, our new business release pipeline is growing. April is now tracking 15% above the average for 1H26, which gives us confidence in the trajectory of heading into the second half. Turning to slide 11. In small fleets, our omni-channel strategy is producing double-digit growth in both Australia and New Zealand, which is a great result and confirms the approach we have been taking. Our direct channel is seeing the strongest results. Our expectation is that over time, the success we're building in direct will enable us to unlock larger-scale distribution opportunities. So it is delivering growth today while also building the platform for future distribution scale. In terms of where we're investing, our focus is centred on three areas. Accelerating growth through digital optimisation, advancing automation across our credit capabilities to eliminate friction, and expanding our partnerships over new channels and accessing new customers. Let's turn to the final segment, which is Nevada on the next slide. In Nevada, We are benefiting from investment and deliberate cash flow actions that are supporting lead generation along with higher market demand for electric vehicles. At the end of April, our New Business Rides pipeline excluding Renumerator was 90% above the average for 1H26. In the same period, the Renumerator integration made good progress and performed in line with expectations. Our immediate focus for the second half of the year is centred on leveraging the current strong EV demand, driving MTS growth, optimising lead generation, increasing conversion and retention rates, and expanding our eligible employee base through new client wings. Beyond this, we are invested in digital capability and operational improvement to deepen our value proposition. All of this to support what is a significant long-term growth opportunity in the Nevada segment. Let's turn them by 13 on the 1H26 Strategy Outcomes. This half, we've made strong progress delivering several outcomes aligned to our strategic framework. Under Attract, we deliver new life growth and a seeing momentum return for new business writing. We continued to execute against a strong pipeline of high-condition tender opportunities and completed the acquisition of Reumerator. Under Retain, we delivered several operational improvements supporting strong customer MTS and saw strong customer retention, including the key contracts on Reumerator as part of their integration. Under Grow, we focused our efforts on introducing new and enhanced products across large fleets and they're vated and uplifted our capabilities in heavy commercial vehicles. Finally, under Profit Optimization, we are in a state of continuous improvement. This half, we continue deploying targeted AI initiatives to enhance the customer experience, productivity and growth, including AI-enabled telephony system optimisation, AI-supported legal documentation capability, and AI-generated content integration. Looking forward to 2H26 and beyond, we are confident in our strategy and how our pipeline of initiatives will drive these priorities forward. And turn to slide 14. Fleet partners remain deeply committed to our energy responsibilities, evidenced by our progress across the three pillars you see on this slide. On the environment front, we continue to support our customers' transition to cleaner fleets. We offer an end-to-end fleet electrification solution, TRM, our proprietary in-house emissions modelling, our whole-of-life costs and emissions optimisation, and our policy-embedded EV charging solutions. Our expertise in this area has never been more important than it is in the current environment. In terms of managing our own environmental footprint, we are proud to have achieved TOITU net carbon zero certification for the fifth consecutive year across our New Zealand operations, a milestone that underscores the consistency of our commitment to sustainability. Turning to our people and communities, We received two important recognitions in the first half. Work 180 named Fleet Partners as one of the top 101 workplaces for women in Australia for the third consecutive year. And we were re-accredited as an employer of choice for gender equality by Goodyear. These recognitions reflect our ongoing focus on building a diverse and inclusive workplace. And while there is always more work to do, we are making meaningful progress. I'll now pass to James for the financial results.

Thank you, Damian, and good morning, everyone. Starting first, the new business writing from slide 16. During the first half, new business writing was flat on PCP, excluding FX, a significant improvement on the 13% decline you saw in the first quarter. Leap Australia delivered new business writing's grade for 6%, supported by increased customer ordering activity through the second quarter. In contrast, ClickDV installed new business writing to climb 8%, excluding FX. Across both segments, the macroeconomic environment continues to be challenging, with delayed customer decision-making resulting in higher extensions and inertia, which continue to weigh on new business writings. Involuntarily, though, this dynamic supports earning stability and cash generation. In Feet in Australia specifically, Momentum is benefiting from new customer wins flowing into the order pipeline, a double-digit growth in small feets. Novacid did business writings with 2% below PCP, a substantial improvement on the 17% decline in the first quarter. There were a number of contributing factors, but encouragingly February and March were the strongest new business writings months at the heart for Novacid, and in March we saw outperformance at all vehicle types. momentum is clearly building as we move into the second half, with the outlook for the full year being marginal growth in new business writings. Turning to UMOC on slide 17. Closing UMOC was up 6% on VCP, with average UMOC up 4%, reflecting the 7th consecutive half of UMOC raise for the group. Our sheep-funded leaf is represented 78% of UMOF, consistent with March last year, with the modest reduction compared to September, reflecting the fact that Remunerator is 100% PLA-funded. Excluding Remunerator, and on a constant currency basis, UMOF grew 2% organically, underscoring that earnings and portfolio growth can be delivered even during periods where new business writing is subdued, reflecting the defensive and resilience nature of the business model. Turning to the income statement, NPAT Aid 3DML and NPAT Aid grew 7% and 2% respectively, driven by a 4% increase in average earn loss and core income. End and base income declined 3%, driven by a 4% lower EOL per unit, partially offset by a 1% increase in units sold. Provisionals reduced following elevated fleet provisioning in the prior period, relating to the subset of electric vehicles. Off-rating expenses were $48 million, in line with expectations, reflecting cost discipline, the inclusion of remunerator from December, and the reclassification of a portion of remuneration costs from share-based payments for off-rating expenses. The 1H26 result, together with the buyback, drove a 9% increase in cash ECS. Moving to end of lease income. EOL income per unit remained broadly stable at $5,840 for the half, around 4% lower than VCP, but slightly higher than the second half of FY25. Unit sold increased 1%, broadly consistent with complete New Business Hygiene activity. Damien will speak to the broader macroeconomic outlook and its impact on the used car market shortly. Importantly, I want to note that while more recently we saw some softening in demand for ICE vehicles, our average daily prices in April remain consistent with 1S26 levels. Turning to credit quality on SPY20. The underlying portfolio is performing strongly. However, we note 90-plus day arrears were temporarily elevated due to year-end seasonal effects compounded by resourcing changes. but remain low in absolute terms at 85 basis points. There are no indications of structural deterioration in the online portfolio, and progress has already been made in bringing arrears back towards longer-term averages, with a reduction in arrears during April. Further supporting the strength of the portfolio, we note all financing exposures are secured against vehicles. Exposure to higher-risk sectors remains limited, and 72% of exposure to our top 20 customers is investment grade. Overall, we remain very comfortable with the credit quality of the portfolio. Moving to funding and balance sheet strengths on slide 21. We remain well-positioned with diversified funding structures that support growth while limiting interest rate exposure. As of March, we had $343 million of undrawn warehouse capacity. warehouse margins are set through to September, and base rates are hedged at least in section, insulating the portfolio from rate volatility. The group typically holds $250 to $300 million of cash, generating interest income for offset movements in corporate debt costs. Illustratively, a $25 basic point increase in cash rates would result in half a million dollar increase to annualized profit before tax. At direct end, we had net cash of $4.5 million, no corporate debt maturities until October 28, and ample liquidity to fund growth and capital management. Turning to cash on slide 22. The business generated $46.8 million of organic cash flow in the half, with cash conversion of 113%. This reflects strong operating cash flows and the benefit of tax timing associated with temporary fund expenses. We returned $30.2 million to shareholders during the half through the buyback and final FY25 dividend. As Australian cash tax payments recommence in the second half, cash conversion will moderate and is expected to be below 100% for the full year. Importantly, this is not expected to impact our target dividend payout range of 60% to 70%. Finally, capital allocation. Our framework remains unchanged. Fund new business writing to grow sufficiently, invest organically in returns above the cost of capital, preserve balance sheet strength, and return excess capital to shareholders. Since FY21, we've returned $356 million to shareholders. through dividends and buybacks, while continuing to invest for growth and completing the remunerator acquisition. The Board has declared a fully frank interim dividend of $25.7 million, and previously announced a buyback of up to $20 million, reflecting confidence in the balance sheet and future cash generation. With Australian cash tax payments recommencing in the second half, we remain disciplined and flexible, but fully committed to delivering consistent, sustainable shareholder returns within our target dividend payout ratio range of 50% to 70% of MPA. In summary, the first half demonstrates the resilience of the three-part business model. We're seeing growing momentum in pipelines and new business writings, and continued oomph growth, which is translating into core income growth and strong cash generation, all supported by a very solid balance sheet. That conditions as well as continuing investing for growth while maintaining consistent cash flow returns to shareholders. I'll now hand back to Damien to step through the investment case and outlook.