COG Financial Services Novated Leasing Engine Drives Conviction After EV Tax Clarity

With a larger government employee base and policy certainty, fund managers see salary packaging becoming the core of COG's earnings.

30 Sep 2026 · 5 min read

Fund managers backing COG Financial Services now see a business increasingly defined by salary packaging and novated leasing. LSN Capital Partners' September 2026 Monthly Report said the Salary Packaging and Novated Leasing segment now accounts for ~60% of group EBITDA, after delivering 88% EBITDA growth in FY26, including 32% organic growth. Salary packaging customers increased 31% and novated settlements rose 66%.

LSN said new government contracts expanded the eligible employee base from ~300,000 to more than 500,000 during FY26, which it described as a substantial growth opportunity as participation builds over the next 12 to 18 months. "Increased scale strengthens COG's ability to compete for major tenders, supporting conservative guidance for >10% EBITDA growth in FY27," LSN said.

Increased scale strengthens COG's ability to compete for major tenders, supporting conservative guidance for >10% EBITDA growth in FY27

— LSN Capital Partners, Monthly Report, September 2026

1851 Capital, which holds COG as its largest position, said in a September 2026 article that government EV policy is driving explosive growth in salary packaging and novated leasing, and that it expects the division to grow from roughly half of earnings today to 70-80% within two years. LSN, which also holds COG as its largest position, said in a September 2026 article that lower EV prices are expanding the addressable customer base for novated leasing, with strong organic growth and a fortress balance sheet leaving room for further acquisitions.

Sandon Capital's September 2026 Monthly Report noted that COG rose 22% in the month despite no new announcements, and attributed the move to investors digesting the August result alongside management briefings. "We expect that quiet contemplation of the full year results announced in August has combined with management briefings to increase confidence in the company's outlook," Sandon said.

Policy clarity removed the biggest overhang

That confidence follows a year in which policy uncertainty weighed on sentiment. Glennon Small Companies' June 2026 Monthly Report said COG faced uncertainty over proposed changes to the Electric Car Discount legislation, which had the potential to affect demand in salary packaging and novated leasing, alongside softer sentiment toward domestically exposed financial companies in a restrictive interest-rate environment. Glennon said the ultimate financial impact would depend on the final form and timing of any changes. "We continue to monitor COG's integration of its salary-packaging operations and its ability to deliver earnings growth across its finance-broking, aggregation and novated-leasing businesses," Glennon said.

Sandon Capital's May 2026 Monthly Report said COG received "much awaited certainty" for its salary packaging business when the government announced phased changes to the fringe benefits tax exemption for eligible electric vehicles. The full exemption continues until 31 March 2027. From 1 April 2027 to 1 April 2029, the full exemption applies only to eligible EVs valued under $75,000, with vehicles above that threshold receiving a 25% FBT discount, and from 1 April 2029 all eligible EVs receive a 25% discount. Sandon's August 2026 Annual Report described the clarity on EV fringe benefits tax as a positive for the Novated Leasing business.

Sandon attributed the roughly 14% share price decline over its financial year to profit-taking, macro concerns and a non-promotional management style, rather than any deterioration in the business. Glennon Small Companies had earlier linked weakness in early 2026 to more cautious sentiment toward asset-finance and SME lending exposures, while noting in February that COG continued to execute on its strategy of building a diversified finance platform.

A follow-management story built on acquisitions

Behind the growth is a management team with a consolidation track record. Wilson Asset Management described COG in a November 2025 article as "a follow management story," noting that the team from PSC Insurance had joined the board after growing that business up to its sale to Ardonagh. "We think there are really strong opportunities for this business to continue to grow its earnings at high single-digit to low double-digit, and then just continue to layer in acquisitions within that fleet management space where there's still a long tail of the market to be consolidated," Wilson Asset Management said.

We think there are really strong opportunities for this business to continue to grow its earnings at high single-digit to low double-digit, and then just continue to layer in acquisitions within that fleet management space

— Wilson Asset Management, Article, November 2025

Sandon Capital's October 2025 Monthly Report said COG acquired an additional 14.1% of Fleet Network for $23.9 million, an FY25 multiple of ~6.1x, taking its ownership to 92.4%, alongside a $20 million placement at $2 per share. Sandon described the deal as "a sensible, low risk way for COG to grow its business inorganically." Its August 2026 Annual Report added that the EasiFleet acquisition broadened COG's government contract exposure ahead of major NSW and Victorian tenders, and said it continued to view management, strategy and growth prospects favourably.

COG's broader platform also spans finance broking and aggregation as well as lending and funds management. Naos Asset Management's November 2025 Monthly Report said COG held approximately 25% of the Australian asset finance broking market at the end of FY25, serving the financial needs of SMEs nationwide across its three divisions.

The FY26 result put numbers to the strategy. LSN Capital Partners' August 2026 Monthly Report said COG delivered 28% EBITDA growth and 27% EPS growth, while conservatively guiding to a further 10% increase in EBITDA in FY27, led by Novated Leasing and Salary Packaging.

What managers are watching next

Managers are now watching how quickly the enlarged government employee base converts into novated lease settlements. LSN Capital Partners expects participation to build over the next 12 to 18 months and sees around $50m of acquisition capacity as further upside, noting that COG trades on ~11x PE. 1851 Capital is tracking whether salary packaging and novated leasing reach 70-80% of earnings within two years.

Sandon Capital points to the NSW and Victorian government tenders as the next test of COG's enlarged scale, while Glennon Small Companies is monitoring integration and earnings delivery across the group's businesses. The phased EV fringe benefits tax changes from April 2027 remain the policy backdrop for all of them.