SG Fleet : Reclassification of P&L and Additional Fleet Disclosures

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ASX Announcement

SG Fleet Reclassifies Profit & Loss Statement and Provides Additional Fleet Disclosures

4 February 2022

SG Fleet Group Limited ('SG Fleet' / 'the Company' / ASX: SGF) is introducing a number of changes to the disclosure of its profit & loss statement, as well additional information regarding the composition of its fleet.

The changes are aimed at providing investors with additional insight into the performance of the Company in the context of the continued evolution of its products and services offering, the more balanced nature of its funding approach, and the acquisition during the first half of the 2022 financial year of LeasePlan ANZ.

SG Fleet will adopt the new disclosure methodology when reporting results for the first half of this financial year, on 16 February 2022.

A detailed overview of the changes is contained in the presentation attached to this announcement.

This announcement was approved for release by Tawanda Mutengwa, Company Secretary of SG Fleet.

For further information, please contact:

Yves Noldus

Corporate Services & Investor Relations Executive

SG Fleet Group Limited

Tel: [phone]

Reclassification of P&L and Additional Fleet Disclosures

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ersonal use only

Reclassification of

P&L and

Additional Fleet

Disclosures

Value every journey

4 February 2022

Reclassification of P&L and Additional Fleet Disclosures

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Introduction

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• As a result of the acquisition of LeasePlan ANZ, SG Fleet ("The Company") has reviewed and reclassified its Statement of Profit or Loss ("P&L") and fleet-related disclosures. The 1H22 Financial Results will be presented in the new format and with the additional disclosures. This document restates the FY19 to FY21 P&L in the new format and includes the additional disclosures for this period.
• The reclassification addresses the fact that certain of the LeasePlan revenue streams could not be directly mapped to SG Fleet's historic revenue classifications.
• In determining the new categories, SG Fleet endeavoured, as far as possible, to group revenue streams that are driven by the same primary driver. The Company has also endeavoured, as far as possible, to separate recurring income streams from transactional income streams.
• The new revenue categories are explained in detail on the following slide.
• Historically, in calculating Net Profit before Amortisation of Intangible Assets ("NPATA"), SG Fleet added back the amortisation of all intangible assets. Going forward, NPATA will be adjusted for the amortisation of intangibles arising from acquisitions only. Comparatives will be adjusted accordingly.
• The additional fleet-related disclosures are being provided in order to provide greater transparency on the key drivers of the financial performance.
• Historically, SG Fleet maintained a category of fleet vehicles called "Ancillary Fleet", which related to vehicles on which a reduced suite of products and services are provided. Ancillary Fleet data was not previously disclosed. Over time and with the acquisition of LeasePlan, the line between Unfunded Fleet and Ancillary Fleet has become blurred. As such, going forward, SG Fleet will combine the Unfunded Fleet units with the Ancillary Fleet units and disclose the combined balance as "Lite Fleet".

Reclassification of P&L and Additional Fleet Disclosures

New Revenue Categories

SG Fleet's new Revenue categories are as follows:

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Rental & Finance Income is primarily earned in respect of on balance sheet funded operating and finance leases. It also includes income generated by short-term rental vehicles, subscription vehicles and certain principal & agency ("P&A") funded vehicles in inertia. The costs of sale related to this income stream are operating lease depreciation, direct interest and short-term hire costs. This is an annuity income stream and its primary driver is the size of the on balance sheet lease portfolio assets.

Mobility Services Income 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 driven by the total fleet size and utilisation.

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 its key driver is the volume of new funded deliveries, coupled with penetration rates.

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 primary driver is the volume of P&A-funded deliveries.

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 is made up of an End of Lease Component (profits earned from underwriting Residual Value risk) and an 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.

Reclassification of P&L and Additional Fleet Disclosures

Comparison of Old and New P&L Format - FY2021

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Old Format

onlyManagement and Maintenance Income Additional Products and Services Finance Commission

End Of Lease Income Rental Income Other Income

Total Revenue

Fleet Management Costs Short Term Hire Costs

useCost of End of Lease Income Operating Lease Depreciation Direct Interest

Total Direct Expenses

Net Revenue

Employee Benefits Expense

Occupancy Costs ersonalIT and Communication Costs

Other Expenses

Total Operating Expenses

Operating EBITDA

Depreciation and amortisation expense

Operating Income

Interest on Corporate Debt

Underlying Net Profit Before Income Tax

$m		New Format
82.5		Rental & Finance Income
99.3		Mobility Services Income
36.1		Additional Product and Services
217.6		Finance Commission
46.0		Vehicle Risk Income
0.6		Other income
482.1		Total Revenue
(80.4)		Rental & Finance Cost of Sale
(11.1)		Mobility Services Cost of Sale
(173.7)		Additional Products Cost of Sale
(16.3)		Vehicle Risk Cost of Sale
(2.4)		Other Direct Costs
(283.9)		Total Direct Expenses
198.2		Net Revenue
(80.9)		Employee Benefits Expense
(2.4)		Occupancy Costs
(10.8)		Technology and Communication Costs
(9.4)		Other Expenses
(103.5)		Total Operating Expenses
94.7		Operating EBITDA
(16.6)		Depreciation and amortisation expense
78.1		Operating Income
(5.5)		Interest on Corporate Debt
72.5		Underlying Net Profit Before Income Tax

$m

46.0

84.4

60.0

36.1

255.0

0.6

482.1

(29.8)

(17.3)

(27.0)

(199.3)

(10.5)

(283.9)

198.2

(80.9)

(2.4)

(10.8)

(9.4)

(103.5)

94.7

(16.6)

78.1

(5.5)

72.5