I'd now like to hand the conference over to Mr. Damien Berrill, CEO. Please go ahead.
Thank you, Operator. Good morning, and thank you for joining FleetPartners' 2024 full-year results presentation. I'm joined here this morning by James Owens, our CFO. Before we commence this morning, it is my absolute pleasure to acknowledge the traditional custodians of the land and waterways throughout Australia and pay my respects to elders past and present. I'll start with the performance highlights on slide six. In short, the group's performance has been very strong. First, Strategic Pathways delivered record growth. Secondly, we continue to successfully create a portfolio characterized almost exclusively by recurring annuity-like revenue. And thirdly, the group continues to deliver very attractive shareholder returns. Surpassing our own expectations, new business writings grew at 21%. This annual growth rate is superior to anything we have seen in recent times. It is indicative of the unwavering focus on delivering the Strategic Pathways program.
As expected, the pipeline unwound during the year as new vehicle supply returned to normal levels for all intents and purposes. Our AUMOF balance is the foundation on which the business delivers consistent, recurring annuity-like revenue. We are very pleased to have delivered AUMOF growth of 11% this year. We have added to the group's embedded future revenue for years to come. Furthermore, an important point I would like to emphasize: even if we simply maintain the current level of new business writings, AUMOF is expected to continue growing next year and beyond. In turn, higher AUMOF levels will deliver higher levels of recurring revenue. James will go into more detail about this important point on slide 16. NOI pre-EOL and Provisions was AUD 159 million. Income growth accelerated in 2024 in line with the strong AUMOF growth I just spoke about.
As I also just mentioned, a strength of our business model and a real point of differentiation is the prominent level of its recurring annuity-like income. Nothing demonstrates this better than the KPI showing 95% of NOI pre-EOL and Provisions in FY 2024 was recurring in nature. This recurring revenue is embedded in every single lease on book. Revenue we are contracted to receive each and every month during the term of those leases, which typically run for 3.9 years. NPATA was AUD 88 million and flat for last year. It is a result that we are proud to have delivered given the material headwind created by the expected decline in used car prices during the last 12 months. This is a headwind we expect to be facing for at least another year.
Solid revenue growth, disciplined cost management, and selling more vehicles along with maximizing the proceeds of those vehicles all contributed to this strong NPATA result. Cash conversion was 128%. This is the fifth year in a row that cash conversion has been above 100%. This allowed the board to announce a AUD 30 million share buyback for 1H 2025, which is at the top end of the group's capital payout range of 55%-65% of NPATA. The FleetPartners business model is clearly performing well in the current economic and operating environment. The company's growth is underpinned by robust customer demand, leading to strong AUMOF growth. In turn, this is fueling a sustainable recurring annuity-like revenue. Our EPS strategy underpins these results, so let's look at that on slide seven. We are executing a clear, well-defined EPS growth strategy across three distinct growth drivers that you see on this slide.
EPS for the year was AUD 0.365 or AUD 0.244 after normalizing for elevated end-of-lease income. This represents 13% growth on last year's EPS and a strong result. Let's turn to slide eight and look at the first driver, Strategic Pathways, in more detail. Strategic Pathways is our go-to-market strategy. It is designed to drive growth in three under-penetrated, high-returning target markets of Corporate, Small Fleets, and Novated. Our corporate business produced a strong performance this year, delivering 20% new business writings growth. We saw a healthy level of tender activity and were successful in securing several new fleets across a variety of sectors, from insurance, manufacturing, to healthcare. The business continued to position itself as a thought leader in sustainable fleet transition by collaborating with our customers on this growing trend.
Finally, our commitment to having an industry-leading customer service offering was recognized in New Zealand by winning an award for the best support services for the second year in a row. It is this customer-centric mindset that maintains our high customer retention rate. Equally pleasing was the performance of Small Fleets. New business writings grew 41% in Australia for this segment. We added 150 new customers during the year. We also extended our long-standing white-label arrangement with a leading OEM. This is validation of the small fleet's product and FleetPartners' capability in this space. The novated business set another record for new business writings during the year of AUD 331 million. That's 36% growth compared to PCP. The Novated business is successfully executing a plan which capitalizes on strong demand for EVs and the profile of our customer base, which is weighted towards white-collar corporate employees.
EVs as a percentage of total novated leases averaged 53% for the year. Novated expanded its total addressable market by winning new customers across the technology and professional services sector. It is also looking to expand its distribution channels through white-label pilot programs with several OEMs. In summary, the performance of Strategic Pathways for 2024 has been pleasing, highlighted by record new business writings growth across several segments. Strategic Pathways continues to create a platform for AUMOF growth, recurring revenue, and ultimately higher EPS. Let's turn to slide nine and the second EPS growth driver, the Accelerate program. Accelerate is a business transformation program that consolidates the group's brands, systems, and processes. In doing so, Accelerate will allow FleetPartners to maximize the profitability of growth.
The project has three key deliverables. Number one, a simplified technology stack. Deploying a modern operating system will facilitate faster digital innovation at a lower cost. It will also reduce ongoing technology maintenance spend and provide better insights for our customers and data-driven decisioning. Number two, standardized operating processes. Standardized processes allow for greater economies of scale, a superior customer service experience, higher team engagement, and reduced operational risk. And number three, one brand. Consolidating the group's brands to FleetPartners allows for clearer brand messaging and higher return on the group's marketing spend.
We have made solid progress over the last two years. While we plan to launch the ERP during the first week of 1H 2025, we have instead decided to delay the date to the back end of 1H 2025 to ensure a seamless customer experience. Notwithstanding this delay, the expected benefits remain unchanged at AUD 6 million, which will be realized in 2H 2025.
Our latest projected spend is AUD 30 million, up by AUD 5 million from what we originally planned over two years ago in 2022. Turning to slide 10 and the third and final EPS growth driver, our ongoing share buyback program. The further AUD 30 million share buyback announced this morning represents the upper end of our capital payout range of 55% to 65% of NPATA. In view of the current absence of franking credits, we have been really pleased with our buyback program as a mechanism to return capital to shareholders. From the program's inception in May 2021 and including today's announcement, we will have bought back AUD 255 million of shares or approximately 32% of shares on issue. Before I hand over to James to cover our group's financial performance, I would like to highlight some of our ESG achievements during the year.
While our ESG initiatives are led by several ESG working groups, the entire team at FleetPartners is driving our ESG agenda, and we have achieved a lot in 2024. FleetPartners continues to proudly support the local communities where our customers and team members live and work. We maintain an industry leadership position with our carbon neutral and net carbon zero certifications in Australia and New Zealand. The company was also endorsed by Work180 as one of the top five employers for paid time off, with our paid annual leave days at 27. Finally, FleetPartners is determined to eliminate the gender pay gap, and we made solid progress this year towards that goal. I'll now pass across to James to walk through the financial results.
Thank you, Damien, and good morning, everyone. Looking at slide 13, new business writings grew 21% in FY 2024, reaching a record level of AUD 924 million.
Novated achieved a very strong result, growing new business writings by 36%. Demand for EVs continued to provide a strong tailwind for Novated due to the benefits of the Electric Car Discount, and as a greater variety of EVs entered the market, including a number of plug-in hybrid models which have proved to be a popular solution for range anxiety. Fleet new business writings grew 14%. This was driven by growth in Australia of 28%, including 41% growth in Small Fleets. This significant new business writings growth across the business saw a drawdown in the pipeline, which reduced to 1.9x pre-COVID levels at September 2024, compared to three times a year earlier. Moving to AUMOF on slide 14. As a result of the strong new business writings performance, AUMOF grew by 11%. This double-digit growth meant AUMOF reached a record high at the end of FY 2024.
In line with our strategy, more new business writings have been directed into the warehouse and away from P&A. Balance sheet funded AUMOF is up 20%. This means we'll earn lower funding commissions from P&A financiers, but in time, this will be more than replaced with net interest margin on balance sheet funded leases, which earn a higher yield. Balance sheet funded AUMOF reached AUD 1.7 billion at September 24. That's up from AUD 1.4 billion a year ago, and we expect this trend to continue over the coming years. Let's take a look at NOI pre-EOL and Provisions margin on slide 15. As we've highlighted in previous presentations, margins have been higher than normal due to the benefits of a number of COVID tailwinds that we expected to dissipate over time.
Furthermore, with the shift in funding mix towards more balance sheet funding, there is a temporary impact associated with the reduction in upfront funding commissions, which will in time be replaced with higher NIM. In addition to these expected impacts, the record level of new business writings that has been delivered in FY 2024 has had two further impacts on margins. The first of these is a result of the mix shift towards Novated, which generates lower margins than the fleet businesses, but clearly represents a significant growth opportunity in dollar terms. As shown in the bottom chart, Novated has increased from 24% of AUMOF at September 2022 to 28% at September 2024. The second impact relates to the timing of profit recognition on operating leases. Profitability of operating leases increases through the contracted term.
When the seasoning of the operating lease portfolio reduces, such as in periods of significant portfolio growth or replacement cycles, both of which were seen in FY 2024, this acts as a drag on margins. As a result, NOI pre-EOL and Provisions margin for FY 2024 was 7.41%. Looking forward, management fees will continue to normalize as the replacement cycle continues. This will be supported by improved supply of new vehicles. As noted earlier, the continuing mix shift to Novated will dilute margins on a blended basis in the shorter term. However, Novated margins should then improve as the funding transition progresses and NIM builds. Moving to slide 16, let's take a look at how new business writings build into AUMOF.
As shown in the top left chart, successive years of new business writings build up until AUMOF reaches a steady state level at approximately 2.7 times the annual amount of new business writings. This occurs at approximately 46 months, which is the average term of new leases written. Therefore, the strong growth in new business writings experienced in FY 2024 hasn't yet been fully reflected in AUMOF. Illustratively, if new business writings continues at FY 2024 levels, pro forma AUMOF would grow to around AUD 2.5 billion. Importantly, new business writings doesn't need to grow for AUMOF to continue growing. Using the FY 2024 margin of 7.41%, this AUMOF gives an illustrative NOI pre-EOL and Provisions of AUD 185 million. That compares to the AUD 159 million delivered in FY 2024.
Moving to our income statement on slide 17. As highlighted earlier, the FY 2024 results reflect the unwinding of a number of COVID-related tailwinds.
While average AUMOF grew by 10%, this was partially offset by the expected normalization of lease yields and the impact of delivering record new business writings, which I talked about a moment ago. As a result, NOI pre-EOL and Provisions was AUD 158.7 million, up 5%. EOL remained strong at AUD 70.6 million. Profit per unit was AUD 6,141, 19% down on PCP as elevated used car pricing reduced in line with expectations. However, growth in the number of vehicles disposed offset this as more vehicles were replaced. Provisions increased primarily due to the growth in balance sheet funded novated leases, though overall NOI was AUD 226.5 million, slightly higher than PCP. OPEX was AUD 89.2 million, up 6%, driven by cost inflation and increased business activity to support the growth in new business writings and AUMOF, particularly Novated.
Putting all those components together, EBITDA was AUD 137.3 million, down 1%, and NPATA was AUD 87.7 million, also down 1%. However, with the reduction in shares on issue due to the buyback, cash EPS was up 9%. Turning to slide 18 and end-of-lease performance. Used car pricing remains above pre-COVID levels but is gradually reducing, though trends vary considerably by vehicle segment. For example, passenger vehicle pricing continues to perform strongly, which could be due to buyers substituting purchases of new vehicles with used vehicles due to cost of living pressures. Conversely, used light commercial vehicle prices are back to pre-COVID levels. EOL per unit remained elevated in FY 2024 at AUD 6,141, though 19% lower than PCP as used vehicle pricing reduced overall.
The reduction in EOL per unit was offset by an increase in the number of units sold and ongoing optimization of end-of-lease outcomes, such as through our channel allocation strategy. As used car pricing continues to reduce, we expect EOL per unit to return to around AUD 2,200-AUD 2,500 over the longer term. Now let's take a look at portfolio credit quality on page 19. We provide business-critical revenue-generating assets for our corporate customers. For our novated customers, lease payments are made directly by the employer. This drives strong credit performance even through tougher economic cycles. The portfolio continues to perform strongly with 90-day arrears of 44 basis points. That's again below the longer-term average for Aussie Prime Mortgages of 48 basis points. Our portfolio composition remains robust, with 81% of the exposure to our top 20 customers being investment grade.
Our exposure to industries such as building, construction, food services, and retail remains limited. Putting all these factors together, we remain pleased with the composition of the portfolio and its continuing strong performance. Moving to funding and liquidity on slide 20. I'd like to highlight three key points on this slide. First, our funding margins are set until September 25. This means no interest rate exposure on our lease portfolio until then. Secondly, we successfully executed two ABS deals during 2024, delivering benefits to our cost of funds, and we have sufficient capacity under our existing facilities to meet our funding requirements. And thirdly, we remain in a net cash position with undrawn corporate debt facilities providing standby liquidity and balance sheet flexibility. By stepping into the detail, our long-standing and diversified funding platform remains a key differentiator.
It provides access to private warehouses, public ABS markets, and P&A funding. Exposure to interest rate movements for our portfolio is limited. For P&A funded leases, there is no interest rate exposure. For warehouse and ABS funded leases, base rates are hedged at lease inception. For ABS, funding margins are locked in for the life of the deal, whereas for our warehouses, funding margins are reset annually. Following the warehouse extension in September 2024, funding margins are now set until the next extension in September 2025. As a result, changes in interest rates don't impact the backbook. A new business is priced to reflect prevailing interest rates and funding margins. In terms of other interest rate exposures, AUD 30 million of our corporate debt is exposed to variable rates, but our typical cash balance of around AUD 230 million-AUD 250 million also earns interest at a variable rate.
In terms of liquidity, we successfully executed a AUD 400 million Australian ABS deal in May 2024 and a AUD 300 million New Zealand ABS deal in November 2024. These ABS deals provide a benefit to our cost of funds compared to warehouse rates. As a result, we have sufficient capacity to meet our funding needs. Together with our net cash position of AUD 31.3 million and undrawn AUD 89 million revolver, our balance sheet is in a very strong position. We have sufficient headroom on existing facilities to refinance the corporate debt maturing in July 2025.
Now let's take a look at cash generation on slide 21. The net cash flow for the year was AUD 27.8 million, including items such as CAPEX for the Accelerate program, repayment of corporate debt, and the buyback. After adjusting for these items, organic cash generated by the business increases to AUD 116.3 million.
Comparing that against an adjusted NPATA of AUD 91 million, the cash conversion for the year was 128%. The main driver for cash conversion being higher than 100% is the tax benefit driven by temporary full expensing of lease assets. While this ceased from July 2023, the carried forward tax losses continue to be utilized. This is expected to provide a cash flow benefit to the business until those tax losses are exhausted, with tax payments in Australia likely to resume in FY 2026, so wrapping up the financials, FleetPartners have achieved a strong set of underlying results in FY 2024, and the business is very well positioned for the future. Moving to the operating segments now, I'll briefly take you through what we're seeing in terms of new business writings, our order pipeline, and asset growth. Turning to slide 23, we'll start with Fleet Australia.
The delays we've seen in new vehicle supply have reduced significantly throughout FY 2024, with supply now essentially normalized. As a result, new business writings grew 28%. This growth was supported by a drawdown of our order pipeline, which reduced to 1.7 times compared to 2.6 times a year earlier. The pipeline isn't expected to decrease significantly from these levels, given supply is now largely back to normal. AUMOF increased 8%. However, balance sheet funded AUMOF increased 16%, as new customers are typically balance sheet funded. Turning to slide 24, Fleet New Zealand new business writings reduced by 8% in FY 2024. However, it's important to understand that this was in the context of a reduction in new vehicle registrations in New Zealand of 16% over the same period. The reduction year on year was partially due to strong new business writings in 2023, as you can see in the left-hand chart.
This was due to pull forward of demand ahead of changes to the Clean Car Discount in July 2023. The FY 2024 new business writings result was supported by a drawdown of our order pipeline as order activity softened. Key factors driving the slowdown included uncertainty regarding the New Zealand election early in the financial year, repeal of the Clean Car Discount from January 2024, and the deterioration of the economic landscape, particularly for our small business customers. As a result, the order pipeline reduced to 2.4 times compared to 3.7 times a year earlier, as order intake didn't keep pace with new business writings. In more recent months, we've seen signs of green shoots in order activity. However, 1H 2025 is expected to continue to be subdued.
Fleet New Zealand AUMOF was up 5%, and balance sheet funded AUMOF was up 7%, a strong result for the business given the context I've just outlined. Turning to slide 25, as you have seen today, Novated has had a standout year with new business writings reaching a record of AUD 331 million, up 36% on FY 2023. Growth has been supported by the Electric Car Discount legislation, which was passed in December 2022 and has stimulated strong demand for EVs under novated leases. We're seeing a wider range of EVs entering the market and therefore greater mix in our EV leases, with significant growth in demand for plug-in hybrids. EVs represented 53% of new business writings in FY 2024. As a result of record new business writings and good availability of vehicles, the order pipeline decreased from 4.6 times at September 2023 to 2.6 times at September 2024.
AUMOF increased 25%, and balance sheet funded AUMOF increased 44%. And as we have highlighted this morning, the mix of AUMOF will continue to shift towards balance sheet funding. So in summary, we've seen exceptional growth across a number of key business metrics during the year, including record new business writings and AUMOF levels. With supply improvements during the year and the reduction in our pipelines, order activity is expected to translate more closely to new business writings going forward. I'll now hand back to Damien to take you through the outlook.
Thanks, James. To wrap up today's presentation before taking your questions, I would like to look at our expectations for FY 2025 and provide an update on the trading environment and strategic priorities. Let's start on slide 27 with the FY 2025 expectations. As always, we do not provide specific guidance for NOI.
As James covered on slide 16, we expect average AUMOF to continue to grow and for NOI pre-EOL and Provisions to grow in line with it. As we saw in FY 2024, but to a lesser extent in FY 2025, this growth will be partially offset by the normalization of management fees and the impact on funding commissions from directing more funding to our balance sheet. End-of-lease income per vehicle is expected to remain elevated, albeit continuing to normalize down from the peak in 2022. The number of vehicles sold is expected to remain strong, driven by the improved supply of new cars. As I mentioned earlier, whilst used car prices will undoubtedly continue to decline next year, our institutional knowledge and decades of experience in selling cars will ensure we continue to maximize the end-of-lease income for every vehicle we sell.
Provisions are expected to increase from last year as the balance sheet funded portfolio also increases. With respect to operating expenses, we expect to achieve the Accelerate-related cost savings during the year on a run rate basis, offsetting most of the increase in FY 2025 driven by growth and inflation. In recent years, the group has proven its disciplined approach to cost management, and this will continue. Share-based payments in FY 2025 will return to our expected run rate. FY 2024 was below this due to the one-off reversal relating to the FY 2023 LTI program. Expectations relating to all other remaining items are in line with FY 2024. Turning to Slide 28, the operating environment remains positive, led by robust demand in Fleet Australia. The FY 2024 exit run rate for new orders in Fleet Australia was strong, which gives us this confidence.
The same can be said for New Zealand in terms of the exit run rate for new orders. No doubt, FY 2024 was a challenging year for New Zealand. However, green shoots are emerging in that market. We are encouraged by the fact that 5 of the last 7 months witnessed year-on-year growth for new orders. We expect the first half of the next year to continue to be subdued, with customers delaying the decisions to replace vehicles and instead holding on to their existing leases a little bit longer. Finally, Novated has found its new level, which is materially higher than what we were achieving two years ago. We see no change to the long-term tailwind thematic for the decarbonization of fleets in our markets. For corporates, we are only at the start of this transition. New car supply is back to normal.
This is contributing to the ongoing decline in end-of-lease income from its elevated levels in prior years. With that said, end-of-lease income still has a way to go before it starts to plateau. In the meantime, we intend to prolong this normalization for as long as possible by continuing to optimize the disposal channels through which we sell our vehicles. When it comes to strategic priorities, Strategic Pathways is a well-defined strategy for growth, and we have a driven focus on delivering it. The Accelerate program has made solid progress, and we will go live with a new ERP this half. On the other side of this project, the business will have a simplified technology stack, enabling greater operating leverage. The share buyback is continuing. 29% of shares on issue have been bought back to date, with approximately another 3% to come during the first half.
At FleetPartners, how we do things is just as important as what we do. Accordingly, ESG will continue to play a central role in our strategy and core values. To close, I'd like to emphasize there is a lot to be excited about when it comes to FleetPartners today. The company has a clearly defined and well-established EPS growth strategy, which is working. We have a differentiated business model of predictable, recurring, annuity-like income with high cash generation. The portfolio enjoys a high credit quality, and the balance sheet is strong. We have a proven track record in cost management and a proven funding model. Finally, we have a team of 500 talented, passionate, and experienced people who are delivering. Today's result demonstrates this, and we will continue to deliver for our shareholders into the future.
With that, I would now like to hand back to the operator to open the line for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Jack Dunn with Citi. Please go ahead. Jack Dunn, your line is now live. Please proceed with your question. Apologies. Your next question comes from Tim Lawson with Macquarie. Please go ahead.
Hey, guys. Thanks for taking my questions. Just a couple. Can you just talk a little bit more about the normalization of yields from the extended leases that are rolling off and the mix? I appreciate you've given us a bit of sensitivity there, but can you sort of maybe talk specifically to what the impact's been this year?
Hey, Tim, thanks for questions. So yeah, look, I think from a normalization of yields perspective, as we've talked about in the FY 2024 result, a lot of that came through the management fees there as the level of extensions has reduced, particularly for Fleet Australia. There's still a bit more of that to go to get back to a kind of pre-COVID level of management fees per unit. So we expect that's probably kind of another sort of 15 basis points probably into next year's margin.
Okay. That's really clear. And then just also with the impact of the funding mix, I appreciate you've been very transparent about pushing towards the balance sheet funding. Can you talk about the sort of the effectively headwinds that that's creating before the sort of tailwinds come through on the NIM?
Yeah, no problem. So as you'd be aware, so we've really cycled that funding transition just for the Novated portfolio for the Fleet Choice book that's moved over. So in the FY 2024 period, we saw funding commissions come down by AUD 2.4 million compared to FY 2023, and there's only AUD 0.8 million funding commissions left in the FY 2024 period for Novated. So we're pretty well progressed with the Novated funding transition. The remainder there is contingent on Accelerate going live, at which point virtually 100% of Novated would be balance sheet funded. So assuming we get kind of part year effect of that, probably around about AUD 0.5 million of funding commissions to come out in 2025 for Novated.
Obviously, in the background, we've got the NIM starting to build there, which will offset that. Then on the fleet side, there was AUD 4.4 million of funding commissions in FY 2024. Again, assuming that we're going live with Accelerate at the end of FY 2025, as we've said, we're going to have about a half- year of more balance sheet funding in that side of the business. We will still retain some P&A funding in the fleet side, as we talked about previously, to manage concentration in the warehouse or just where customers can get a more favorable rate from a relationship bank under P&A.
So there's probably about half of that funding commission comes out as a result of the mix of balance sheet funding, but we only have a half- year impact of that, so probably around about AUD 1 million or so headwind into 2025 for the fleet side, and then probably about the same again into the following year. Hopefully, that's clear.
Yeah, that's great. And then just one other thing for me. Just on the managed vehicle numbers, it seems, I mean, you've talked about that not being a high priority for a number of years, but that seems to have dropped about 4,000 units. Is there anything particular to call out there?
Yeah, nothing in particular, Tim. It's just part of Australia, as we've spoken about in the past. So it's not a segment that we go after. We don't actively tender on managed only units.
And then the fleets that we do look after, we have pushed through some price increases on those, and that also led to some of that attrition that you see there.
Yeah, that's great. Right. Very clear. Thank you, guys.
Thanks, Tim.
Your next question comes from Phil Chippendale with Ord Minnett. Please go ahead.
Just following up on some of Tim's questions. When would you expect those margins to sort of bottom? You spoke about a sort of 15 basis points headwind, I think, into FY 2025. Would we expect a further decrease into FY 2026, perhaps?
Thanks, Phil. I think from a management fee normalization perspective, with supply having come back on and essentially being back to normal, we do see that being done in 2025. I don't think there's going to be any hangover from that phenomenon into 2026 based on what we're seeing currently.
The funding transition, obviously, will take a little bit longer to play through. On Novated, it worked quite quickly because of the earnings profile of a Novated lease. You earn more in the early years than the later years versus an OP lease, which flips the other way. So you earn more in the later years than the early years. So the Novated transition should really be pretty well done by the end of 2025, whereas the OP lease transition will take a couple of years to play through.
Understood. Maybe you could just make a comment on performance of the business so far in the first sort of 6 weeks of the year. Particularly interesting sort of new business writings and how that's comparing to the PCP.
Yeah, so I guess in the last sort of 6 weeks, if I just look at our orders, Phil, so we've seen the same sort of run rate or a strong exit run rate in corporate Australia, also in Novated. And also, as we sort of spoke about before during the presentation, in New Zealand, we are seeing the green shoots of recovery there. So we are seeing orders up year on year for the last couple of months. But with that, we still expect new business writings to be subdued in New Zealand for the first half. So I think going into next year from a new business writings perspective, I think if we can sort of hold our new business writings flat, that'd be a pretty strong outcome.
Okay, thanks. Just lastly, just on new capital management, just in terms of expectations of paying cash tax, I think you were saying in FY 2026, is that correct? And then the consideration for a franked dividend would not be until FY 2027. Have I got that timing right?
Yeah, that's right, Phil. Yeah. So at the moment, our current forecast is to start paying taxes again in 2026. And so it would be an option for the board in FY 2027 to pay a franked dividend if that's what they choose to do.
Okay. Thanks, guys. I'll jump back in and queue.
Thanks, Phil.
Your next question comes from Chenny Wang with MS. Please go ahead.
Hey, morning, guys. Thanks for taking my questions. First one, just maybe in terms of the NOI pre-EOL margins again. Historically, you guys have talked to that 7.5%-7.75% as, I guess, a normalized range. Is that still the right way to think about the business, I guess, over the medium term? And if not, what's changed there?
Yeah, thanks, Chenny. Yeah, look, that range was really kind of set up about two years ago and didn't contemplate the significant growth that we've seen in Novated, so that mixed impact that we've been talking about. We haven't updated that range in terms of guiding on where we expect that normalized range to sit, principally because it's not certain exactly where the mix in Novated is going to settle.
But I guess just by way of reference, if you look at the mix of Novated as a percentage of overall AUMOF at September 2022 versus where it was at September 2024, and you look at the margins achieved in 2024 for the Novated business versus the fleet business, running that sensitivity shows that the mix shift has had about a 25 basis point impact. So I guess if you were to think about that range and you think about where the current mix of AUMOF's sitting, essentially, you'd need to move the range down by that 25 basis points. But as I said, we're not really issuing updated guidance on that range, just given obviously the Novated mix will continue to shift.
Got it. No, that's helpful. And then maybe just switching tacks a little bit. I think I heard you on the call talk about the pipeline and the fact that it won't, I guess, decrease significantly from these levels. Maybe a two-parter. Firstly, where do you kind of think that stabilizes at? And does that also imply that orders are structurally higher going forward?
Yeah, so I think, Chenny, we feel like the current levels is probably where it's going to sort of settle at. So what we've seen, particularly in the second half of the year, is that we didn't see a big emptying of the pipeline. And so we sort of feel like the current levels are probably where they're going to sort of sit for next year. And so the reason why they're elevated versus pre-COVID levels is two reasons.
One of them is just the inflation coming through the recommended retail price of the vehicles. The second one is customers just ordering a little bit further in advance. Those two factors are contributing to having the pipeline above where it was before COVID.
Got it. Then just last one quickly. On that FY 2025 OPEX guide, I guess how much of that AUD 6 million Accelerate is included in there?
Yeah, that's right. That OPEX expectation factors in a half- year of those AUD 6 million benefits. Effectively, AUD 3 million is factored into that expectation.
Got it. Thanks, guys. I'll jump back in the queue.
Thanks, Chenny.
Your next question comes from Scott Hudson with MST Financial. Please go ahead.
Yeah, morning, gentlemen. Just referencing slide 16, in terms of the timeframe to get to that, I guess, implied AUD 2.5 billion, is that 48 months from now? Is that kind of what you're trying to point to?
Yeah, look, I guess just to contextualize that slide, this isn't a forecast or setting expectations. It's really just to illustrate how new business writings does translate into AUMOF and that lag. In that example that we've given at the top there, effectively, if you've done a year of new business writings at a level, you'd be at month 12, and you then need to do another kind of nearly three years from there to get to that steady state.
Yeah, understood. Thanks. Can I just understand you're obviously getting growth in AUMOF, AUMOF, but your vehicles under management is sort of down relatively sharply from what I could tell, understanding that some of that is managed units. But is there anything else that's sort of driving that reduction in the AUMOF balance?
Yeah, no, it's what I spoke about before, Scott, just with a purposeful sort of run-off of those managed only units. Outside of that, obviously, when we put on new lease, it's at the recommended retail price, and it's replacing a vehicle that's been depreciated. So you're able to get that AUMOF growth just by sort of relatively holding the AUMOF numbers flat as we see.
That's all I had for now. Thank you.
Sorry, sorry. Sorry.
Your next question comes from Richard Amland with CLSA. Please go ahead.
Hi, good morning, guys. Just on slide 18, we've got the history of end-of-lease income and the units sold. We've spoken about sort of numbers normalizing in sales. What is the normalized run rate, I guess, in terms of units sold? Because it moves around a bit, and we're talking right now, it's pretty accelerated. What is the normal number now, please?
Thanks, Richard. So look, I guess we look back to those FY 2019, FY 2020 levels of around about 13,000 as being indicative of a normal level. So obviously, we saw a big increase in the year, but we're still only at 11,500. So we'll probably see that edging up to 12,000-12,500 over the coming year, I expect.
Okay, that's great. And just in terms of EV and Novated, so just sort of trying to juggle around thematics there. So I think you said 53% of Novated was EV. What are you guys seeing in terms of trends in that market? I mean, Tesla seems that the Tesla number seemed to have declined significantly. What does that mean for average pricing and how many Novated leases you guys have to write to sort of cover for that? Just, can you give us a bit of color on what's going on there broadly?
Yeah, yeah. Yeah, no problems, Richard. We've got a slide in there on slide 31 to sort of show a little bit more detail around the EVs across our three segments. And so the first chart there is specific to Novated. So what we saw in the last six months is a bit of a shift away from BEV and towards plug-in hybrids, which you can sort of see in there. But with that said, I guess if it's collectively the EV segment, it's held pretty stable. In terms of the average lease values, that's also been really stable. So you can see at the end of the year, it's AUD 61,200 on average.
And so what we're seeing with our customer base is that even though we're seeing EV prices reduce over the last sort of 12 to 6 months, our customers are maximizing the lease amount they can afford when they ask for quotes from us.
And I mean, are Tesla and BYD still the dominant manufacturers going through there, or has that really widened out?
Yeah, so they're certainly giving up ground. So in the Novated space for us, it's Tesla, BYD, and then Mitsubishi. Mitsubishi with the plug-ins, so they're the top three. But the other players are certainly starting to take off market share from them, whether it's MG or Volvo. And then on the corporate side, the most popular one is Mitsubishi, again, because of the plug-in hybrids, followed by Hyundai.
Okay, thanks, gents. That's from me. Thank you.
Thanks, Richard.
Your next question comes from Jack Dunn with Citi. Please go ahead.
Morning, guys. Sorry about the fault. A couple of technical issues there. Just one question from me. Just on the new business writings in that second half of FY 2024, how much of that would be from the order bank unwind versus normal business activity? Just mentioned that you said you didn't see a large unwind in that second half.
Hi, Jack. Thanks for the question. I don't have the numbers to hand in terms of what the second half impact is, but the analysis that we have looked at shows that about 16% of the new business writings for FY 2024 came out of the pipeline in terms of from prior periods.
So I'll sort of break it up on my end here, but was that 60 or 16?
16, one six.
One six. Perfect. Thank you. And then the last one I'm trying to understand is just that fourth quarter, the profit per vehicle seemed to drop away a little bit there. Was there any seasonality that's come back into the secondhand market that could attribute to this, or is there anything else that you saw in that fourth quarter?
No, no, nothing specific, Jack. We've seen the used car prices consistently come down, which you can see on that chart on the right-hand side on slide 18. If it's come up a little bit in the fourth quarter, it's probably largely just driven by a bit of mix shift, I'd say, across the type of vehicle that's being sold.
Perfect. Thanks for taking my question.
No problem. Thanks, Jack.
Your next question comes from Andrew Martin with Peak Investment Partners. Please go ahead.
Good morning. I just got a quick one. Looking at the growth in plug-in hybrids, it seems to be accelerating, and I was just wondering what your thinking is post the termination of the tax benefits that happened in a little over four months. Is that going to knock that part of the business around at all?
Yeah, thanks, Andrew. Yeah, so as I sort of called out slide 31, you can see the popularity of plug-in hybrids sort of coming through in Novated, but also the corporate businesses as well. We did see that sort of start to increase around June this year when there was a lot of media articles around what used car prices are doing in the battery electric space, so we think some of this could be just a shift in demand towards the plug-ins because they're going to hold up value a bit stronger.
In terms of what we think is going to happen when the benefits expire in April next year, it's hard to tell. So it's hard to tell whether or not we just, particularly in the Novated space, we see people switching back to battery electric in order to still get those benefits, or whether or not it'll be a reduction in demand there. That's in Novated. I think in corporate, we haven't really seen a huge impact from the FBT benefits in corporate in terms of take-up. So our expectation on the corporate side will be that it continues to trend in the same direction.
Okay, thanks.
Thanks, Andrew.
Your next question comes from Paul Buys with Canaccord Genuity. Please go ahead.
Morning, guys. Just one quick one from me, more point of clarification. Damien, did you say holding flat new business writings for next year would be a strong outcome? Just to clarify, was that group or NZ?
That's group, Paul. Yeah, just based on what James sort of mentioned before, that in 2024, we did get that 16% lift from the pipeline unwinding, and we don't expect to see it to the same extent in 2025. I think if we can hold new business writings flat next year, that will be a good outcome for us.
Okay. Thanks, guys. That's great. That's the only one I had.
No problem. Thanks, Paul.
Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Chenny Wang with Morgan Stanley. Please go ahead.
Yeah, hey, guys. Sorry, just one follow-up. I think earlier on the call, you talked about the pipeline fleet, calling it kind of healthy, and I guess the dynamic we've kind of seen over the past two, three years has been one of healthy, strong intake activity levels. Obviously, yeah, that's been kind of going on for a number of years now. Maybe you can just kind of unpack what you're seeing on that pipeline front and also any other context you can provide in terms of why that's being, I guess, elevated for so long.
Yeah, so in terms of the demand, Chenny, in terms of new orders, particularly in corporate, it's just a legacy of the fact that during COVID, there was a shortage of supply, and so when we look at our customers' fleets, they have aged older than what they typically like.
In more recent times, they've just been on a program of replenishing those fleets. And so that's what's driving the orders there. And then on the Novated side, the market itself has certainly grown off the back of these FBT benefits. So overall, there's new employers coming to the market who want to offer Novated as a product. And then the employee base themselves, more of them are taking up Novated as a way to finance their vehicles.
Got it. Sorry, I may have actually misheard earlier on. When you were talking about the healthy pipeline in fleet, I may have misheard that to mean new customers outsourcing in a fleet space. Was there any color on that front in terms of, I guess, outsource penetration and how that kind of trend has gone?
Yeah, nothing noticeable yet, Chenny. But we do expect it to accelerate in line with the adoption of electric vehicles. So EVs are a new technology. How you manage those fleets and charge those fleets is new to everyone. So where we've got companies that have an in-house fleet management team, we expect to see the adoption of EVs as a catalyst to more outsourcing, where there's a lot of discussions and a lot of conversations. But I wouldn't say that we're seeing a noticeable change of that at this stage.
Got it. Thanks, guys.
Thanks, Chenny.
There are no further questions at this time. And I'll hand back to Mr. Berrell for closing remarks.
Thanks, Ashley. And thanks for everyone for joining our update this morning. James, I look forward to catching up with all of you over the coming days. And we hope you enjoy the rest of your day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.