Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Shareholder Meeting (September 2019)
48 slides from Turners Automotive's shareholder meeting presentation, Sep 18, 2019
Slide 1: Turners Automotive Group 2019 Annual Meeting
For personal use only TURNERS AUTOMOTIVE GROUP 2019 ANNUAL MEETING 1 • 2019 ANNUAL MEETING 18 September 2019
Slide 2: Board of Directors
Board of Directors For personal use only Grant Baker Paul Byrnes Matthew Harrison Non-executive Chairman Non-executive Dep Chairman Non-executive Director Alistair Petrie John Roberts Antony Vriens Martin Berry Non-executive Director Independent Director Independent Director Independent Director 2 •
Slide 3: Meeting Agenda
Meeting Agenda For personal use only Presentations • Address from the Chair, Grant Baker • Address from the CEO, Todd Hunter • Address from Director, Martin Berry Shareholder Discussion Resolutions are per Notice of Meeting • Auditors’ Remuneration • Re-election of Grant Baker and Alistair Petrie •
Slide 4: Chairman's Presentation
For personal use only Chairman’s Presentation Grant Baker 4 • 2019 ANNUAL MEETING
Slide 5: Ten Years of Transformation
Ten Years of Transformation For personal use only Acquisition of bolt on insurance and finance businesses Investment in MTF Acquisition of EC Acquisition of Acquisition Buy Acquisition of Credit Control Oxford Finance Right Cars Autosure FY09- FY14 FY13 FY14 FY15 FY16 FY17 FY18 FY19 • Business Baker
Slide 6: Track record of building value through acquisition growth
Track record of building value through acquisition growth For personal use only Acquisition NPBT at time of NPBT for FY19 Company Date % Change Price ($m) Acquisition ($m) ($m) EC Credit Control 2012 17.8 3.6 6.3 +75% Oxford & Southern 2014 12 2.9 11.1 +283% Finance Turners Auctions 2014 76 6.8 19.2
Slide 7: A Transformed Business
A Transformed Business For personal use only As at March YE 2009 2014 2019 Shareholder Equity ($m) 16 74 226 Total Assets ($m) 149 127 654 NPBT ($m) (18.3) 4.9 29.0 Dividend per Share (cps) - 5.0 17.0 Market Capitalisation ($m) 1.8 111 197 Numbers adjusted for 1-10 share swap in 2016 7 • 2019 ANNUAL
Slide 8: Strong Dividend Yield
Strong Dividend Yield For personal use only Earnings and Dividend per Share (Cents) 35.0 33.0 Dividends fully imputed from FY17 on • Dividend Policy Change: Increase in pay 30.0 out ratio to 60% to 70% of NPAT 29.3 • Turners pays quarterly dividends 25.0 26.3 25.5 24.7 • Gross dividend yield of 9.9%
Slide 9: Turners Today
Turners Today For personal use only #1 9%+ 33 NZ’s largest buyer and Gross dividend yield within the Locations in NZ from seller of vehicles top 10 yielding stocks on NZX Whangarei to Invercargill 6 mins 40 We write over 40 consumer and Turners sell 1 car every 6 commercial loans per day in minutes,
Slide 10: Board Report For FY19
Board Report For FY19 For personal use only • Continued progress on simplifying the business is delivering benefits “This Board has had to deal • FY19 underlying performance flat on prior year as market headwinds in with fundamental and used import vehicle sector and impairments on MTF non-recourse
Slide 11: Market Dynamics and Trends
Market Dynamics and Trends For personal use only • CUSTOMER-CENTRIC: Focus on customer needs is essential • DATA AND TECHNOLOGY: Big data and technology are changing how and where we do business. • REGULATION AND COMPLIANCE across all our businesses is increasing. • ONLINE EXPERIENCE: More of the cu
Slide 12: Our Future Opportunity
Our Future Opportunity For personal use only • Our strength is in retail and we are the largest and most trusted brand in the industry • Large retail market with sizeable forward demand due to NZ’s ageing fleet • Simplification of our business will enable greater efficiencies, de-risk our business a
Slide 13: Our Strategy
Our Strategy For personal use only We are moving forward with a capital efficient growth strategy, with an increased focus on Turners’ core auto retail business. OUR STRATEGY IS TO…. THIS WILL ENABLE US TO… FOR OUR KEY STAKEHOLDERS THIS MEANS… • Simplify the business • Significantly increase • Sharp
Slide 14: CEO's Presentation
For personal use only CEO’s Presentation Todd Hunter 14 • 2019 ANNUAL MEETING
Slide 15: The Kiwi Car Economy
The Kiwi Car Economy For personal use only 3.85m Light vehicles in the New Zealand vehicle fleet 953,000 Cars in the light vehicle fleet that are 20 years or older 1.12m Used cars were traded in FY19 (down 1% YoY) 18.5 years Average age light vehicles were scrapped in FY19 (19.5 years for imports, 1
Slide 16: NZ Used Car Market Still At Strong Historic Levels
NZ Used Car Market Still At Strong Historic Levels For personal use only • After a period of growth used car sales have plateaued. Annual changes in used vehicle ownerships • Underlying demand still strong with 1,200,000 more cars exiting the fleet (cost of 1,000,000 800,000 repairs increasing, stri
Slide 17: FY19 Year At A Glance
FY19 Year At A Glance For personal use only EXPANSION OF NATIONAL INCREASED REFERRER IMPROVED INSURANCE LOSS RETAIL NETWORK NETWORK RATIOS INTEGRATION OF TURNERS MANAGED HEADWINDS IN NEW BOND ISSUE TO FINANCE INTO OXFORD IMPORT MARKET SUPPORT GROWTH FUNDING FINANCE REBRANDING OF BUY RIGHT COMMENCED
Slide 18: FY19 Results Snapshot
FY19 Results Snapshot For personal use only Revenue (NZ$m) REVENUE ADJUSTED NPBT 400 (excluding BRC brand write down) $336.6m +2% Record $33.6m 300 200 2H 1H 100 NET PROFIT BEFORE TAX SHAREHOLDERS’ EQUITY 0 $29.0m -7% $226.4m as at 31 Mar 19 FY15 FY16 FY17 FY18 FY19 FINAL DIVIDEND 5.0 cps Net Profit
Slide 19: FY19 Sector Results
FY19 Sector Results For personal use only $M FY19 REVENUE SECTOR REVENUE 400 Debt Management 300 200 Finance & Insurance Auto 100 Retail 0 FY15 FY16 FY17 FY18 FY19 Automotive Retail Finance and Insurance Debt Management FY19 OP PROFIT $M SECTOR OPERATING PROFIT Debt Management 50 40 Auto 30 Retail F
Slide 20: Board and Management Collaboration
Board and Management Collaboration For personal use only • EC Credit Control rebrand • Sub-committee attendance for Bond Program • Oxford Finance rebrand • Full board review of Oxford strategic review • Assistance and advice in area of comprehensive documents credit reporting • Significant contribut
Slide 21: Strategy Update
For personal use only Strategy Update 21 • 2019 ANNUAL MEETING
Slide 22: Primary Drivers Behind Our Strategy
Primary Drivers Behind Our Strategy For personal use only STRENGTH OF COMPLEXITY OF GROWTH OF NZ’S DEMAND FOR TURNERS BRAND EXISTING AGEING VEHICLE DIGITISATION BUSINESS FLEET 22 • 2019 ANNUAL MEETING
Slide 23: Strategic Pathways
Strategic Pathways For personal use only Simplify the Business De-Risk the Business Grow the Business • Single brand strategy for Auto • Continue strategy of • Expand auto retail footprint Retail writing higher quality • Shift marketing investment loans into digital platforms • Single brand and syst
Slide 24: Simplify: Consolidating To One Brand In Auto Retail
Simplify: Consolidating To One Brand In Auto Retail For personal use only 24 • 2019 ANNUAL MEETING
Slide 25: Simplify: Strategic Review Of Business Units
Simplify: Strategic Review Of Business Units For personal use only Undertaking a review of non-core businesses with lower synergies to the core auto business. SHORT TERM REVIEW MEDIUM TERM REVIEW • Capital intensive growth model • High return capital business • Profits from captive business are defe
Slide 26: Grow: Improve The Customer Experience
Grow: Improve The Customer Experience For personal use only EXPAND RETAIL FOOTPRINT • Continue to expand our footprint in high potential locations across the country. • A proportion of reserves from Turners’ Insurance business has been allocated to support the retail expansion and assist in better u
Slide 27: Growth In Footprint To ~220,000m2 Through Nine New Sites
Growth In Footprint From ~147,000m2 To ~220,000m2 In Next For personal use only Two Years Through Opening Nine New Sites North Shore - AKL Re-opening of Turners’ Auto-Retail flagship store July 2019 8,524m2 Committed branches Dunedin Re-opening of Turners’ Auto-Retail flagship store Dec 2019 9,025m2
Slide 28: Branch Re-location – Whangarei (Owned Site)
Branch Re-location – Whangarei (Owned Site) For personal use only • Purchased old Placemakers site • Increased footprint from 6,500m2 to 8000m2 • High profile corner site • Higher % of retail sales at new site, more finance deals, higher margins on owned inventory • 3 months to June 85% increase in
Slide 29: New Site Whangarei
For personal use only NEW SITE WHANGAREI
Slide 30: New Branch – New Plymouth
New Branch – New Plymouth For personal use only • Leased site • High profile corner site on busy arterial of 4,600m2 • 180+ car site • First presence in New Plymouth • Captured 15% of the local market inside 6 months • Strengthened our conviction around organic growth and demonstrates the value of t
Slide 31: New Plymouth
For personal use only NEW PLYMOUTH
Slide 32: Relocation – North Shore (Owned Site)
Relocation – North Shore (Owned Site) For personal use only • Owned and developed site in car precinct of Wairau Valley • High profile site on Archers Road 8,500m2 • 300+ car site • High yard to building ratio • Opened late July 32 • 2019 ANNUAL MEETING
Slide 33: Digital, Data And Disruption
For personal use only Digital, Data And Disruption Martin Berry 33 • 2019 ANNUAL MEETING
Slide 34: The Past, Present and Future of Automotive Sales
Context: The Past, Present and Future of Automotive Sales For personal use only HISTORICALLY THE PAST RECENT PAST THE PRESENT THE FUTURE Physical store E-research Multichannel Omnichannel Ecosystem “Consumers will “Online browse” “Many consumers shop Relevant products and “A market tailored ecosyste
Slide 35: Digital The Key To The Customer Purchase Journey
Digital The Key To The Customer Purchase Journey For personal use only Customer Used Car Purchase Journey AWARENESS SEARCH RESEARCH PURCHASE ADVOCACY Dominant Channel Digital Digital Digital Physical Digital *Facebook (2018), Google (2018) 95% 70% 66% 78% 44% Of vehicle buyers use Of people use Are
Slide 36: Building An Omnichannel Experience Fuelled By Digital
Building An Omnichannel Experience Fuelled By Digital For personal use only • Reviewing CRM capability • Hired a leading digital to support seamless agency, firing up Turners customer experience on social channels and offline • Shifting majority of offline • Reviewing sales training marketing spend
Slide 37: Powered by Insight Through Big Data & Analytics
And Powered by Insight Through Big Data & Analytics For personal use only Web data Searches (20m), page views (29m), saved searches (6k), watchlists(180k) Auction data Listings (67k), Bidders (120k bidders) Vehicle data Test drives (38k), sales prices, valuation requests (47k) Autosure data Claims d
Slide 38: Illustrative Example Of Key Insights Generated
Illustrative Example Of Key Insights Generated For personal use only DATA ANALYTICS INSIGHT RESULT Mazda 3 / Axela - 2015 MY Key Benefits: - 20,000 km’s - Better margins - White color - Faster Inventory turn - 2.0 litre engine - Happy customers - Retail: $15,000 - Days on book Forecast can sell 50 u
Slide 39: Strengthening The Turners Ecosystem Via Innovation
Disrupt: Strengthening The Turner’s Ecosystem Via Innovation For personal use only TURNER’S ECOSYSTEM Criteria for Investment/ Partnership • Must fit within our automotive ecosystem • Turners brand is logical and can be leveraged BUY SELL SUBSCRIBE RENT • Strong interest in ‘capital lite’ platform/
Slide 40: Recent Investment In Collaborate (CL8.ASX)
Example: Recent Investment In Collaborate (Cl8.ASX) For personal use only OWNERSHIP MODELS Subscription Based Services Are Growing: • AirBnB, Netflix, etc have help to disrupt traditional ownership models with subscription-based services now accounting for 10% of monthly household expenditure BUY LE
Slide 41: Outlook and Focus
For personal use only Outlook and Focus
Slide 42: FY20 Focus
FY20 Focus For personal use only Auto retail Insurance Finance Credit Adjacent opportunities • Expand footprint • Focus on auto- • Short term strategic • Medium term • Launch vehicle • Invest in digital retail insurance review strategic review subscription in NZ and social • Look for • Continue to f
Slide 43: FY20 Outlook
FY20 Outlook For personal use only • Main focus on organic growth • Expecting industry to consolidate further over 2019/2020 • Impact of ESC change will impact smaller dealers and very low priced vehicles • Confidence in strategy and long terms prospects for the business • Oxford sale process tracki
Slide 44: Shareholder Discussion
For personal use only Shareholder Discussion 44 • 2019 ANNUAL MEETING
Slide 45: Resolutions
Resolutions For personal use only ORDINARY RESOLUTIONS: • RESOLUTION 1: That Staples Rodway be reappointed as auditors of the Company and that the Directors be authorised to fix the auditors’ remuneration. • RESOLUTION 2: That Grant Baker, who retires by rotation and has offered himself for re- elec
Slide 46: Voting
Voting For personal use only Resolution: Proxies FOR AGAINST PROXY DISCRETION Auditor’s remuneration 20,721,340 25,500 1,610,256 Re-election of Grant Baker 20,356,427 395,281 1,619,520 Re-election of Alistair Petrie 20,117,268 335,128 1,918,877 Amendment of Constitution 20,328,208 88,297 1,944,302 T
Slide 47: Other Business / Close Of Meeting
For personal use only Other Business Close Of Meeting CONTACT Todd Hunter CEO Turners Limited T: 64 21 722 818 E: todd.hunter@turners.co.nz 47 • 2019 ANNUAL MEETING
Slide 48: Disclaimer
Disclaimer For personal use only Turners Automotive Group the (company) is solely responsible for the content of this document. This document is not an investment statement or prospectus and does not constitute an offer of securities. This document or any other written or oral statements made by, or
Turners Automotive Group — Shareholder Meeting (September 2019) on 6ix