SG Fleet Group Limited reported a 9.8% drop in half-year profit to $41.1 million, while announcing a $3.50 per share acquisition scheme by Pacific Equity Partners' vehicle Westmann Bidco.
- Profit after tax down 9.8% to $41.1 million for H1 FY2025
- Revenue increased by 9.8% to $648.6 million
- Final dividend of 9.332 cents and special dividend of 15 cents declared
- Scheme Implementation Deed signed for acquisition at $3.50 per share
- Acquisition subject to shareholder and regulatory approvals, expected completion April 2025
Financial Performance Highlights
SG Fleet Group Limited has released its half-year results for the period ending 31 December 2024, revealing a mixed financial picture. The company reported a 9.8% decline in profit after tax, down to $41.1 million from $45.5 million in the previous corresponding period. Despite this, revenue grew by 9.8% to $648.6 million, reflecting ongoing demand across its motor vehicle fleet management, leasing, and related services.
The decline in profitability comes amid rising costs, including increased depreciation and finance expenses, which weighed on the bottom line. Basic earnings per share fell to 12.02 cents from 13.31 cents a year earlier, signaling margin pressures despite top-line growth.
Dividend Policy and Shareholder Returns
SG Fleet declared a final dividend of 9.332 cents per share and a special dividend of 15 cents per share, both fully franked and paid in September 2024. These dividends represent a significant return to shareholders, with the special dividend marking an unusual boost reflecting the company’s strong cash position and confidence in its capital management strategy.
Acquisition Scheme Announcement
In a major development, SG Fleet entered into a Scheme Implementation Deed on 4 December 2024 with Westmann Bidco Pty Limited, an entity controlled by funds managed by Pacific Equity Partners (PEP). The proposed acquisition values SG Fleet shares at $3.50 each, representing a premium to recent trading levels. The scheme remains subject to customary conditions, including regulatory approvals, shareholder endorsement at a meeting expected in March 2025, and court approval.
If approved, the transaction is anticipated to complete in April 2025, potentially marking a significant shift in SG Fleet’s ownership and strategic direction. The deal underscores private equity’s interest in fleet management and mobility services, sectors undergoing transformation amid evolving transport and financing trends.
Operational and Segment Insights
SG Fleet’s operations span Australia, New Zealand, and the United Kingdom, with Australia remaining the largest contributor to revenue and EBITDA. The company’s diversified service offerings include vehicle leasing, short-term hire, consumer finance, and salary packaging, which collectively support its revenue growth despite margin pressures.
Notably, the company’s net tangible assets per share declined to negative 21.54 cents, reflecting the capital-intensive nature of its leased vehicle portfolio and associated liabilities. The balance sheet remains robust, supported by securitised lease portfolio borrowings and corporate bank facilities, with total assets rising to $3.45 billion.
Looking Ahead
SG Fleet’s half-year results and acquisition announcement position the company at a crossroads. While the profit dip and asset-heavy balance sheet pose challenges, the acquisition offer at a premium price signals confidence in the company’s underlying value and growth prospects. Investors will be watching closely as the scheme progresses through approvals, with potential implications for shareholder returns and strategic priorities.
Bottom Line?
SG Fleet’s upcoming acquisition could redefine its future, making the next few months critical for shareholders and the fleet management sector.
Questions in the middle?
- Will the acquisition scheme secure shareholder and regulatory approval as expected?
- How will the new ownership impact SG Fleet’s strategic direction and operational focus?
- What are the risks to profitability amid rising costs and a capital-intensive business model?