Q: How is the funding mix transition impacting the business before the net interest margin (NIM) benefits come through? A: Damien Berrell, CEO: The transition to balance sheet funding for novated leases reduced funding commissions by $2.4 million in FY24. We expect a further $0.5 million reduction in FY25 as the transition completes. For fleet funding, a $1 million headwind is anticipated in FY25 due to partial balance sheet funding.
Q: What is causing the drop in managed vehicle numbers? A: Damien Berrell, CEO: The decline is part of our strategy to not actively pursue managed-only units. Price increases on existing managed fleets also contributed to some attrition.
Q: When do you expect margins to stabilize, and will there be further decreases into FY26? A: Damien Berrell, CEO: We anticipate management fee normalization to complete in FY25 with no carryover into FY26. The funding transition will take longer, with novated leases completing by FY25 and fleet leases taking a couple more years.
Q: How has the business performed in the first six weeks of the year, particularly in new business writings? A: Damien Berrell, CEO: We've maintained a strong order run rate in corporate Australia and novated segments. New Zealand is showing signs of recovery, but we expect subdued new business writings in the first half.
Q: What are the expectations for cash tax payments and franked dividends? A: Damien Berrell, CEO: We expect to resume paying cash taxes in FY26, with the possibility of a franked dividend in FY27, depending on the Board's decision.
Q: Is the 7.5% to 7.75% NOI pre EOL margin range still applicable? A: Damien Berrell, CEO: The range needs adjustment due to the significant growth in novated leases, which has impacted margins by about 25 basis points. We are not issuing updated guidance yet due to ongoing shifts in novated mix.
Q: How is the pipeline for fleet orders, and what are the expectations for order levels? A: Damien Berrell, CEO: We expect the pipeline to stabilize at current levels, elevated due to inflation and customers ordering in advance. This suggests structurally higher order levels going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.