Good morning, everybody, and welcome to the. I am John Prendiville, Chair of the Smartgroup board. I would like to acknowledge the traditional owners connection to the land, waters, and culture, and pay my respects to the elders, past and present. Secretary that a quorum is present. I am pleased to declare the meeting open. This year's for the meetings, remotely. I warmly welcome those shareholders who are joining us online. Back at last year's AGM. However, given limited shareholder demand and the additional cost involved by our registry is common practice across companies of our size. The notice of meeting was mailed as read. Joining me here in Sydney today are the Director and Chair of the IT and Innovation Committee. Deborah Homewood, non-executive director and chair of the Social and Governance Committee. Mark Rigotti, non-executive director.
Paul Rogan, Executive, Legal, Risk and Corporate Affairs, and Joint Company Secretary. Questions from shareholders at the appropriate time in the meeting. I will now make some brief comments. I remind shareholders that our 2025 annual report is available from the investor section of our website. Amid evolving market dynamics, the group delivered strong financial performance, deepened customer relationships while retaining all major contracts up for renewal. Our focus remains clear: to build and deliver sustainable value for our shareholders. In March 2026, we welcomed Paul Rogan to the board. IDP Education and Raiz Invest. He has been a valued addition to the board, bringing deep experience and governance.
The board will continue to review its skills mix and composition. We will likely add a further director to the board this year, which should position us well. Succession planning is a topic the board is well across, not only as it relates to the executives, but also the board itself. Successful and seamless transition from Michael Carapiet as he retired in early 2024. In three years' time. I'm very confident that when it comes time to transition to a new chair, we will position. Turning to the highlights of the last financial year, progress against our strategic priorities and continue to build momentum across the business. Financial results reflect this momentum. Revenue grew to AUD 329.3 million for the client growth.
EBITDA increased to AUD 135.3 million, up 41% platform and disciplined cost management. Net profit after tax and amortization Smartgroup's capital light business model continues to underpin strong cash while consistently delivering significant fully franked dividends to the shareholders. Packaging customers, novated lease volumes and fleet vehicles under management all reaching record levels. Our sectors in which we operate. Novated leases under management reached 85,300. Increased to 491,000, driven by new client wins and deeper engagement with existing clients. Together, these results reflect the strength of our proposition and the growing relevance of our services. Catalyst for change in Australia's automotive market. Introduced in July 2022. In just three years, electric vehicles have grown from representing less than 2% of new vehicle. Broader range of models, improving vehicle availability and increasingly affordable price points. Accessible through novated leasing.
Our market-leading proposition and digital platform. To better understand the benefits of EV leasing. In doing so, we have helped ensure that the government has now completed its statutory review of the Electric Car Discount. The review confirmed that the policy is working as intended, supporting more affordable access to electric. Independence. Importantly, the government has reaffirmed its commitment to the policy by maintaining the current for households and industry while supporting a sustainable transition as the electric vehicle market continues to mature. This has provided additional momentum for Australians to reassess the total cost of owning a car. It is an increasingly attractive option to help manage day-to-day living expenses. Against this backdrop. We are continuing to play a constructive role in Australia's transition to a cleaner, more affordable transport future. During the year, we published our new sustainability strategy detailing our vision to 2028.
To make more sustainable choices and build a more resilient business for the years ahead. The new sustainability materiality assessment, which helped us narrow our focus to those areas which best align to our corporate strategy. We continue to invest in creating positive social impact, including through our Smartgroup Foundation. To community groups delivering tangible outcomes to promote more inclusive communities, enhanced financial. Almost AUD 1.2 million in sponsorships for community-focused initiatives and events in the education. From the Diversity Council Australia for the 6th year. We concluded our two-year of a number of First Nations businesses within our supply chain. We are now working towards publishing a second. It's the second full year delivering our strategic priorities, and we have made strong progress. We strive to deliver smart.
We enabled our clients to attract and retain great teams, add real value to the lives of their employees. About our strategic priorities in his presentation. Consistent. Strong and consistent returns for shareholders through. AUD 80.2 million to shareholders in fully franked dividends, while our market capitalization has grown from approximately AUD 160 million. This slide highlights the long-term shareholder value created by Smartgroup since listing. Allocation, which is to ensure that we deliver long-term sustainable growth and maximize shareholder value. To ensure we make the most of these opportunities, we continue to invest in core and digital technologies. To ensure we can execute well. Consistent with this capital allocation The board declared a fully frank final ordinary dividend of AUD 0.215 per share. The board cents per share interim ordinary dividend declared in August 2025. This brings fully frank dividends better.
In addition, Smartgroup has recently reached agreement on the sale of our self-funded fleet portfolio to Volkswagen Financial Services Australia. This expands the strength of our fleet funding panel to further enhance funding support. Relationship with funding providers, we are pursuing this growth in a capital-light manner consistent with our overall an on-market share buyback of up to AUD 20 million over the coming 12 recent announcements. Finally, as evidence of our disciplined approach to for our shareholders, which is currently sitting at about 30% after tax. A topic I haven't touched on previously, other than what's covered in the annual report. Enforce our pay-for-performance framework. Remuneration outcomes were direct indicative remuneration structured to be at risk, equity-based, and delivered over the long term. The remuneration framework implemented for 2026 has been structured consistently, maintaining the long-term value creation.
Our thinking and approach to remuneration has been pretty consistent over the years. Meeting, including the rem report. In closing, the operating environment continues. While inflation and higher interest rates have weighed on consumer sentiment, demand for value-led solutions remains resilient wellbeing, and attract talent, creating a supportive backdrop for our offerings. For their dedication and hard work throughout 2025. I also extend my thanks to our local executive directors for their ongoing contribution, experience, and insight in guiding Smartgroup's strategy.
Thank you, John, and good morning, everyone. This morning, I will begin with an overview our strategic priorities and the progress we have made to date. I will finish by recap of 2026. We believe our investment proposition remains ability to deliver strong growth and sustainable returns over the long term. With a client base that employs around 2.5 million Australians. 2025, we provided services to around 584,000 leasing and fleet. We are the largest salary packaging provider in Australia investing in superior customer experience and in the systems and protections consistently demonstrated improvements in operating efficiency. In 2025, the Smartgroup's operating platform continues to demonstrate strong capabilityComplex employer clients. Our scalable technology foundations, sector clients. The group has significant recurring revenues and long-term education and not-for-profit. Our offerings are even more relevant of their take-home salaries.
We have a track record of revenue growth, low conversion. Smartgroup's investment proposition to shareholders is under relatively low levels of vehicle residual value and credit risk, combined with our evidence to shareholders at the same time as we are investing for growth. Profitable growth into the future. We are focused on our customers and in digital and technology, accelerating growth and delivering scale efficiencies, areas as communicated to the market in February 2024. Smarter tomorrow through disciplined execution of these strategic priorities. Smartgroup has delivered strong and consistent financial performance, over driven by continued investment in digital capabilities to enhance our customer proposition. Over the same period, EBITDA increased by 35%, demonstrating our ability to deliver profitable growth while continuing to. Execution is translating into sustained customer growth and continued momentum.
We are growing from a position of scale. We are continuing to build that lead while comp Our proposition and our execution. This slide outlines. We have deliberately phased execution. The first phase focused on growth. We also invested in our front-end digital assets to enhance customer experience and sustain in 2025 is focused on building a scalable business platform. Missions, modernizing our technology and automating processes. Client needs. We have made good progress. For example, we expand Qantas and broadened our employee benefits proposition by adding Intellihub, Count, and Fin- Volkswagen Financial Services Australia. As a result, as mentioned, these during 2027. Beyond 2027, with sustained inv By business performance. We will continue to develop our product offering to meet. A key focus of phase one of our roadmap is digital transformation. I wanted to prov Improved customer experience and expanded our digital reach.
As I mentioned, smart.com.au, our new customer digital home. Novated Leasing needs how they want and when they wanta significant milestone in our platform modernization. This digital asset Feedback has been positive from clients. Importantly, over the last year, we have improved our digital product and technology capabilities. These will ensure that our products remain market-leading and continue to meet customer needs into the in phase II of our strategic roadmap. A central objective of print from eight to four. Early in 2024 we divested non-core our marketing investment, better leverage our ongoing investment in product technology. We're also simplifying the way we serve customers. We've already reduced our contact center operation. We've also made significant progress in enhancing our inherited through acquisitions, including duplicate product platforms. compute now running in the cloud.
By 2028 we will reach 100% modernization, the delivery of new digital experiences and enables future automation. In recent years we have stepped up significantly, introducing, for example, an internal AI processes such as customer claims. We will continue to expand automation and. As a result, we are already seeing tangible efficiency improvements, including. As these initiatives come together, brand consolidation, contact center benefits will continue to grow. The third phase of our strategic roadmap is about and introducing new products into our operating platform that create even more value across our core through scale and disciplined investment and execution. As we continue to that benefits clients, partners, and shareholders. This reflects the scale. These outcomes demonstrate that the delivery of the strategic priorities, scale, and financial performance.
Our approach to value creation: leverage the existing scale of our platform and our relationship management teams that already serve customer base to record numbers. For example, we were successful in winning Monash Health. We welcomed many new clients across all segments while retaining clients. We've grown our eligible employee customer base by over 300,000 to 2.5 and 2025. Secondly, we are focused on the organic opportunity to leverage the great work of the operations teams that are already in place to support our client priorities, active customer uptake has had a relative improvement of 9%. Organic growth. Finally, we are focused on expanding our products and services. This will increase customer lifetime value.
We are making strong progress on each front, and these improvements will drive improved financial returns. We again delivered strong financial results and solid operating momentum through disciplined execution. These results reflect a business that is performing very well across all ma. Through the delivery of our strategic priorities, momentum is carrying through into the first quarter of 2026. In Q1 2026, new, used, and refinanced vehicles were up 7% year-on-year. Approximately AUD 16.8 million at the end of March 2. Up from AUD 9 million. Average vehicle order-to-delivery timeframe for Smartgroup's top 30 makes and models reduced to 24 days in Q1. In Q1, yield was lower, reflecting targeted promotional activity and also Volume growth with yield management.
I wanna highlight a couple of operational milestones. In the quarter has been the launch of our new Smart app. The app is designed for customers to manage their benefits in the way that suits them. Which is focused on improving responsiveness for customers and improving productivity. Reduce call volumes through AI-enabled chat, and we are also rolling out an internal AI efficiency and customer experience. We're also using AI to analyze to better understand customer needs, sentiment, and areas where we can continue for future growth. Demand for our products and services is robust. Many of our customers are nurses, teachers, and not-for-profit workers. Policy certainty is important to maintaining strong EV uptake and gives cleaner, more affordable transport. Our distribution partnerships have received channels for scalable expansion.
Recently, we signed new partnerships. Broader economic environment, including potential impacts from inflation, interest rates, and. Notwithstanding this, our business model and strategic investments provide resilience and flexibility. Technology investment and change delivery. We are targeting EBITDA margin to be in the mid-forties during 2027. Our goal is to further elevate business performance beyond 2027. Enhancing value for our shareholders. In closing, I would like to thank our chair, directors. 2025. To our clients, customers, and of course our shareholders, we would like to express our gratitude.
I will start by explaining the arrangements for asking questions and voting on the formal. Blue non-voting cards will be entitled to ask questions. Visitors holding red visitor cards. When I call on you to ask your question, please identify yourself, and if you are a proxy or a. I ask all shareholders to keep your questions short and to the point so that as many shareholders as possible have the if possible. We reserve the right to rule out questions that do not relate to the business of the meeting. Otherwise, we will endeavor to answer as many of the questions as we can. I also note that I understand from our company secretary that no questions were lodged online before this meeting. Notice of meeting.
As chairman, I have determined that voting on each of the resolutions will be conducted by a poll. To exercise a direct vote before the start of this meeting by lodging the voting form that accompanied the notice of meeting. As set out in this notice of meeting, I will vote all directed proxies in accordance with the directions provided. Shareholders and proxy holders who are attending the meeting in person today and who have not. If you did not receive a yellow voting card, please see the representatives of MUFG. Shareholders and proxy holders holding yellow voting cards will be invited to cast their votes on all resolutions by circulate the voting boxes after all resolutions have been discussed and before the poll closes. The poll for each resolution is now open and will close five minutes after the end of the meeting.
Made available on the company's website as soon as possible after the close of the meeting. Receive and consider the company's financial statements and reports for the financial year ended December 31, 2025. Holders to vote on a resolution or to formally adopt the report. Shareholders or their proxies may comment. Shareholders may also ask questions of the company's auditor, KPMG, in relation to the conduct of the audit. Independence of the auditor in carrying out the audit. I will now address any questions rela. Please. Can you just identify yourself?
My name's Ray Pedley.
Ray.
I live in the out of west. Anxious to find out a bit more about is the sale. I assume from what has been said. You. Does this mean that you're no longer in that? Shares is the price to earnings ratio. You guys what that was, but you know how much. Yeah.
I'm conscious of the fact that you haven't had an opportunity to see of our on-balance-sheet fleet funded, cars. You remember in fleet cars on our balance sheet, and that had run up over time.
That's like rail-
Basically, we had a portfolio of cars on balance sheet, the market works. Our fleet operation, our traditional fleet operation has been carrying on regardless. We sold a component of the existing fleet book that we were holding on balance sheet, a third-party fleet funding provider to enable us to write fleet deals off balance sheet. Be a reasonable portion of a portfolio on balance sheet, so funded by the company itself. Party funder release that capital back to the company.
Okay.
And so-
So did you get a good deal? That's what I wanna.
Yeah.
On the slides.
Yeah.
I think it was 2028. I'd rather, you know, think things sort of happen and it looks like in twen-
What Scott has done is obviously go through what was our strategic plan, some, I think we're achieving wonderful results on that plan. I think the results that are sort of coming through So I guess that you can sort of take the market at least is reasonably happy with what we're doing. I think we will continue to do so. We have a conservative balance sheet, which is from that sale of book. We are definitely always looking.
As I'm sure everyone in this room is aware, we wanna make sure that if we do something that we Longer-term strategic direction, so that we can continue to sort of develop and build on our. We will continue to grow. Other questions? Please.
Okay. There are a number of comments about the increase in EVs, point of view. I'm just wondering whether that impact the balance between EVs profitability.
I might actually that we deal with. We sort of break it down into sort of, you know, what is an our EV and possibly hybrid sort of, in that camp as well. We're finding, very the nature of what we do sort of gives us a reasonably consistent return. Cheaper the or the lower the, you know, the return that we can expect in relation to a transaction on that car. I think that'd probably be the drivers, I think.
Yeah.
I might pass to you if there's any other.
Engine vehicles remain a very important part of our overall business. Many of our customers between 2023 and 2025, the actual number of combustion engine novated lease obviously been accelerating in growth as well. Good news. We've had growth in combustion engine and growth in EV. Overall, do we see any changes between EV and combustion engine on yield? From our perspective is volume. More cars through, whether they be combustion engine or EV. Our customers to look at other items that might be relevant for them. With our customers around what I refer to as the EV lifestyle. One of our. Give them an EV now. We can also help them get set up with home battery and solar.
Business, the expansion of EVs opening up new opportunities for us as well.
Chair re-introducing Mr. Pedley.
Ray Pedley. On a basis is look at how the share price goes up and down. You know, obviously. I've noticed lately that the share price has. I'm wondering, has someone got ear to what's going on this morning? Based on that 2028 chart I saw, seems to me that there's less things that you need to concentrate on, the management team.
Okay. I might touch on that. If I could go that in reverse. Board.
Oh.
Yeah, on the board. again, just adding someone to have succession discussions as well.
Just staying the same in number.
Over the next couple of years to work out, you know, how we wanna handle things. I think that'll work really well. As well as that reference to share price obviously having gone up, and whether somebody was privy to recently, as in very recently. I don't think it's of a nature that would have a AUD 20 million buyback. It, you know, it is of interest, but I don't think the cause of movement in the share price, I sus over the last two or three months. That's been reported by other companies that are in the space that government coming out with their views in relation to the EV rebate, market probably analysts and institutional investors probably took a view that a period of un question.
Any other questions? Oh, yep.
Howard Coleman of Teaminvest.
Um-
Get you to speak into it.
Thanks for taking the question, and more Teaminvest members always love it when a company is, A, capital light and doing something to a third party and releasing funds. My concern, though, with the buyback is particularly high looking at the last 10 years. While it's been the work done by Scott and his team, you and the board, in making this such a successful buying back lots of shares while the PE is high, we would be happier if you were buying back shares when we also thought they were good value and were buying them rather than because when the share price was well under 10, lots of Teaminvest members were buying. Today, they'd be waiting for a lower price.
With experience on the board, I'm sure you won't make that mistake.
Further?
Yes, please.
Yeah, sure. I guess I'd say a couple of things. One would like to think that in the years ahead, we will produce a better outcome than we are at the cost of capital. We had a number of choices in front of us. We could have repaid debt. What we were hoping to do was really to sort of send a signal that the capital. It's not just purely a fully franked dividend return to shareholders. If it was AUD 200 million that we were going to do a buyback, I'd say, okay, that's, you know, a good discussion to have. At AUD 20 million, I think that we put in place. What I would say about the opportunity we put in place is that the buyback is over 12 months.
We can turn it off if something better comes along. We can reduce whatever we share price, it's around 1 million shares. So I wanna put it in context in terms of size and It's more a reflection of how we wanted to telegraph that we are capable of actually managing different capital management over the course of 12 months as we seek to execute. Again, if anything better comes up, price and everything else. I'm sure we've got a lot of funding capacity. I've got no doubts about that. We can amend. Sure.
Seen as there have been a few things rather suddenly run through.
I understand. Yeah.
I've got comments on the remuneration report on that.
Yeah, can we leave that to I guess we will now move to the next item of business, the rem report. We now move to resolution five. The remuneration report is set out on the pages 50- 66 of the 2025 annual report. I now move that the remuneration report of the company for the year ended December 31, 2025 be adopted. Please.
Thanks, Chair. Comment again.
Yeah.
That's the case with pretty much all Teaminvest members. There is one thing, though, that we're not Relative TSR. I think that's a little bit like asking Scott and his team lessons ended, and then they say, "Where did we come?" That's what relative other companies are going to be doing is completely outside the control of management. How to incentivize it obviously does. I would strongly suggest that we look for our or replacing it with a measure that's more in the control of management so that when driving home from work, I'll qualify for a bigger bonus. I just don't see how any management possibly be motivated about something that they can't see how they're doing.
Good question. Can I answer that? I think that in the last month, I've gone around to institutional investors to have the one-on-one. They're always, you know, positive sort of meetings. We do talk about, you know, the 75 actually would like it to sort of come the other way and be more like 50/50.
I can give comments on that later.
Sure, sure. expert analysis of this at the end of last year. We had, I think it was Korn Ferry really give you a definitive response as to, you know, where the market is. They were sort of saying, "Listen, it can be there's not a clear and definitive sort of outcome here. I've got institutions on one side, not quite as definitive as we might have anticipated. I will say that outcome that was triggered was not the EPS, but management wouldn't have got anything but for the TSR. Whilst I sort of think, you know, we would be open to the notion of talking about 50/50, I think there is still a desire to sort of want to have management sort of linked to an outperformance measure.
I don't know if that's a muddled sort of answer. We've had a long and exhaustive sort of discussion about whether we sort of turn that to an EPS outcome. In some years gone by, the EPS outcome was a no.
Measure. In terms of the TSR, why the remuneration them? You know, as Charlie Munger said, "Show me the complexity as possible, and preferably the kind of complexity that the board themselves could." I see we have everything from a fellow astrophysicist to accounting and consultants is the more complex they make it, the more likely you are to hire them and pay for their services. looking at, what's in it for them. As I say, we're not gonna vote if you can find another measure that Scott and his team can be rather than relative TSR, we'd be much happier.
Okay. Thanks, Howard. I'll take that on note. As there are no further slides. Director. Paul was appointed by the board as a non-executive director effective second of March 2026. Information relevant to Paul's proposed election is set out in the notice of meeting. I note that each of the
Thank you, John, good morning, everybody. It's a privilege for me this morning. Haven't yet had the pleasure of meeting. I bring over 25 years' experience as a senior executive and board. Smartgroup's really impressed me as an organization with significant growth potential, as Scott has outlined. An ambition that resonates with me, being smarter benefits for a smarter tomorrow, a large addressable market that we have. I see enormous opportunity to leverage our strengths. you that we. The experience that we offer to our clients, their employees, and our shareholders. At HUB24, and as the chairman . I also chair a non-bank reverse mortgage provider called Household Capital. I understand that, given my current portfolio, some shareholders or their proxy about my responsibilities at Smartgroup.
Consistent with my commitment to the board at the time of my announcements on that in coming months. My commitment to you, though, as shareholders, is to provide ability. I'm very much looking forward to deepening my knowledge of the business and the markets with and his talented executive team as we guide Smartgroup through its next chapter. Thank you for integrity and a clear focus on shareholder value creation. Thank you.
Thank you, Paul. Under Article 10.7A of the company's constitution, and being eligible, offers business. Are there any questions? The rec votes and proxy votes received for this resolution are shown on this slide. We'll now move to Resolution three, as this resolution concerns my own re-election.
With the company's constitution, and being eligible, offers himself for re-election, meeting, and I note that each of the other directors supports John's re-election.
Good morning, ladies and gentlemen. I joined the board of Smartgroup in 2014, just prior to the listing on the stock exchange. My background in finance, strategy, and management. Prior to joining Smartgroup, I spent nearly 20 years at Macquarie Bank. I recently retired as a Non-Executive Director from the board of The University of Notre Dame Australia, and from the following its merger with Canaccord Genuity Australia. in March 2022 of that organization. I'm also on the boards and various sub-committees for a range of private companies. In addition, as a corporate finance specialist and the various other roles listed earlier have been invaluable to me in my position in my role here at Smartgroup. While this will be my last nomination for the board role.
Thanks, John. I now have pleasure in moving that Mr. John Prendiville, who retires offers himself for re-election, be re-elected as a director of the company. Are there any questions? Votes and proxy votes received for this resolution are shown on the slide. Back to John.
We'll now move to Resolution four, which is for the re-election of Miss Deborah Homewood as a director. herself for re-election. Information relevant to Deborah's proposed re-election is set out in the notice of meeting. re-election. Deborah will now say a few words.
Thank you, John. Good morning, standing for re-election. I have a health, strategy, and management background, with over 25 years in the employer-led network in Australia focused on the inclusion of people with a disability. Prior to that appointment, I was the health training and human services company that provides services on behalf of federal and state governments, including welfare to work- particularly focused on health outcomes for their employees. and audit and risk committees. I'm a member of Chief Executive Women, and have previously at the invitation of the Department of the Prime Minister and Cabinet in 2022 for a 12-month period. risk of inherited cancers. In my work at Smartgroup, I have drawn on much of my previous and leadership. It is both a privilege and a responsibility to serve you as a director of Smartgroup.
in accordance with Article 10.3A of the company's constitution, and being eligible. Of business. Are there any questions? The direct votes and proxy votes received for this resolution are shown on this slide. five, which is for the approval to issue shares under the company's loan funded share plan to Mr. Scott Wharton, the company's Managing Director. Loan funded share plan is set out in the explanatory notes to the notice of meeting as required by the ASX. Scott 753,086 ordinary shares, which will vest at the end of a three-year completion of the performance hurdles and other vesting conditions described in the explanatory notes to the notice of meeting. Over the three-year vesting period, with the vesting of 75% of the shares tested against the earnings per share hurdle.
That did not vest at the end of the period, at the end of the vesting period will be forfeited. Of all the shares to be issued to him, with the issue price taken to be the 20-day VWAP. Scott cannot sell any shares at vest at the end of the vesting period. We align Scott's ability to derive any value from the shares with the company's financial performance and the interest of our. As set out in the notice of meeting. I will now address any questions relating to this item of business. Are there any questions? As there are no questions, I will now put the resolution to the meeting.
The direct votes and proxy votes received. We will now move to resolution six, which is for the approval to issue 45,000 Incentive plan to Mr. Scott Wharton, the company's Managing Director and CEO. Plan as set out in the explanatory notes to the notice of meeting as required by the ASX listing rules. Rights having a value of AUD 381,000, comprising 50% of Scott's maximum. Of course, subject to Scott meeting KPIs set by the board. Assessed achievement of each of them will then be reported in the company's remuneration report. Address any questions relating to this item of business. Are there any questions? I put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide.
That ends the formal part of the annual general meeting, and I now declare the meeting closed. All shareholders and proxy holders present, please now complete your yellow voting cards and place them in the voting boxes. Results of the meeting will be announced on the ASX company announcements platform and will be available on the company's website. The board and management look forward to your continuing support in the coming year.