Key Highlights

  • Revenue increased 13% to $179.5 million, with Operating EBITDA up 16% to $73.8 million and EBITDA Margin expanding to 41%.
  • NPATA rose 11% to $42.4 million, matching statutory NPAT, which also increased 11%.
  • Battery Electric Vehicle new-vehicle orders increased 162% and accounted for 68% of all new novated leasing orders during the half.
  • An interim fully Franked Dividend of 21.5 cents per share was declared, up 10% on the prior corresponding period.

Smartgroup Corporation Ltd (ASX:SIQ), a provider of employee services and fleet solutions, reported record results for the six months ended 30 June 2026 (H1 2026). Revenue increased 13% to $179.5 million, while operating expenses rose 12% to $100.6 million. Operating EBITDA increased 16% to $73.8 million, with EBITDA margin expanding by 1 percentage point to 41%.

NPATA, which adjusts for non-cash tax-effected Amortisation of intangibles and significant non-operating items, was $42.4 million, up 11% on the prior corresponding period, matching statutory NPAT growth of 11%. Managing Director and CEO Scott Wharton said the result was supported by continued growth across novated leasing and salary packaging, disciplined execution and the enhanced capability of the company's platform, with favourable market conditions including strong consumer Demand for electric vehicles.

Electric Vehicle Demand Drives Leasing Growth

Novated leasing settlements increased 17% during the half, with new Lease vehicle orders up 34%. Battery Electric Vehicle (BEV) new-vehicle orders increased 162% and accounted for 68% of all new novated leasing orders during the period, compared with 5% for plug-in hybrid vehicles and 27% for internal combustion engine vehicles. The company noted that some international factors likely accelerated purchasing decisions and contributed to elevated activity levels during the half.

At 30 June 2026, Smartgroup had 518,000 active packaging customers, an increase of 34,000, and had provided salary packaging services to 609,000 customers over the preceding 12 months. Novated leasing customers reached 91,600, an increase of 11,600. In fleet, the company reached 36,200 managed vehicles, an increase of 12%, supported by its Partnership with Volkswagen Financial Services.

Balance Sheet Strength and Capital Returns

Smartgroup reported Operating Cash Flow of $50.8 million, representing 120% of NPATA. The Group maintained a flexible Balance Sheet with a low net Debt level of $35.4 million at 30 June 2026, equivalent to 0.2 times EBITDA. Return on Equity remained at 31% after tax, stable on the prior period.

Reflecting this cash flow conversion and low net debt position, the Board declared an interim fully franked dividend of 21.5 cents per share, an increase of 10% on the prior corresponding period, representing a Payout Ratio of 70% of NPATA. The company said it remains committed to paying fully franked dividends in line with its target payout ratio of 60% to 70% of NPATA. Capital Expenditure for calendar year 2026 is expected to be between $13 million and $15 million.

Strategic Priorities and Outlook

During the half, Smartgroup expanded its distribution network through partnerships with dealer groups and manufacturers, extending its novated leasing solutions across dealership networks and creating additional customer Acquisition opportunities. The company also delivered a 19% improvement in customers per operations FTE, launched a new mobile app for self-service, and continued enhancements to its Car Leasing Portal to lift digital conversion.

Looking ahead, Mr Wharton said demand trends have moderated from the exceptional levels experienced during the first half but remain robust, with continued opportunities to increase participation in salary packaging, expand novated leasing penetration and grow the fleet business. The company said it continues to target EBITDA margins in the mid-40s range during 2027, supported by its capital-light model, cash generation and disciplined Investment in digital and data capability.

Conclusion

Smartgroup's H1 2026 results reflect a period of record revenue and Earnings growth, underpinned by rising novated leasing volumes and a pronounced shift toward battery electric vehicles among new lease orders. With a low net debt position, strong cash flow conversion and an increased interim dividend, the company enters the second half of 2026 with a stated focus on deepening client relationships and expanding its fleet business, while noting that demand trends have moderated somewhat from the exceptional levels seen earlier in the year.