Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Non-Deal Roadshow (July 2019)
47 slides from Turners Automotive's roadshow presentation, Jul 30, 2019
Slide 1: Turners FY20 Investor Roadshow
For personal use only Turners FY20 Investor Roadshow July & August 2019
Slide 2: Agenda and introductions
For personal use only Agenda and introductions • Market Update • Highlights and Divisional Review • Strategy • Focus Areas and Outlook Todd Hunter CEO Aaron Saunders CFO 2 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 3: Market Update
For personal use only Market Update 3 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 4: NZ used car market still at strong historic levels
For personal use only NZ used car market still at strong historic levels Annual changes in used vehicle ownerships 1,200,000 • After a period of growth used car change of 1,000,000 ownership numbers have plateaued. 800,000 600,000 • Underlying demand still strong with more cars 400,000 exiting fleet
Slide 5: The Kiwi car economy
For personal use only The Kiwi car economy 3.85m 953,000 Light vehicles in the The number of cars in the light vehicle 1.13 m New Zealand vehicle fleet that are 20 years or older used cars were traded to the year fleet ended 31 March 2019 down 1% on year ended Mar 18 13,000 EVs The number of EVs reg
Slide 6: Our industry dynamics are changing
For personal use only Our industry dynamics are changing The used-car industry is at the cusp of some significant changes, creating both opportunities and threats. Customer expectations Aggregator & comparison sites Customer experience is vital Transparency and a higher value offering Digital disrup
Slide 7: Highlights & Divisional Review
For personal use only Highlights & Divisional Review 7 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 8: A quick look back in time…
A quick look back in time… For personal use only As at March YE 2012 2013 2014 2015 2016 2017 2018 2019 Shareholder Funds ($m) 24 33 74 121 130 169 214 226 Total Assets ($m) 74 104 127 329 367 557 652 654 NPBT ($m) -1.5 -0.1 4.9 19.0 21.6 24.6 31.0 29.0 EPS (cents) (9.1) 9.0 20.4 32.8 24.7 25.5 29.3
Slide 9: FY19 results snapshot
For personal use only FY19 results snapshot Revenue (millions) Revenue Shareholders’ Equity 400 350 $336.6m +2% $226.4m as at 31 Mar 19 300 250 2H 200 150 1H Net Profit Before Tax Final Dividend 5.0 cps 100 50 $29.0m -7% Total FY Dividend 17.0cps 0 FY15 FY16 FY17 FY18 FY19 ($33.6m excl BRC brand wri
Slide 10: Dividends
For personal use only Dividends • Dividend Policy Change: Increase in pay out ratio Dividend per Share (Cents) to 60% to 70% of NPAT Note – Dividends fully 18.0 imputed from FY17 on • Reminder we pay quarterly dividend 16.0 17.0 15.5 14.0 14.5 • FY19 full year dividend of 17.0 cents per share 12.0 1
Slide 11: Balance sheet
For personal use only Balance sheet $000s FY19 FY18 • Reduction in cash balances due to Cash and cash equivalents 15,866 25,145 investment of insurance reserves into Financial assets at fair value 66,252 53,378 longer dated term deposits Finance Receivables 290,017 289,799 Inventory 38,859 38,596 •
Slide 12: Automotive retail
For personal use only Automotive retail Revenue 225.7m +1.1%, Segment Profit $18.3m +10.2% Buy Right Cars - Revenue $63.4m, up 7%. Segment profit $(0.9m) loss, down 136% Turners Group - Revenue $162.3m, down 1%. Segment profit $19.1m, up 35.7% • Profit includes $3.4m of one off gains. • Continuing i
Slide 13: Finance
Finance For personal use only Revenue $44.2m +11%, Segment Profit $11.1m -5% Improving Customer Credit Scores • Directing Turners Cars lending into Oxford milestone Average customer VEDA credit score achievement in FY19, new lending from Turners at 600 $28M. 550 500 • MTF non-recourse book in run ou
Slide 14: Insurance
For personal use only Insurance Revenue $48.5m +3%, Segment Profit $8.2m +126% • Improvements in loss ratios across all insurance Net Earned Premium FY18 to FY19 ($000) products. Combined loss ratio 62% (FY18: 68%), MBI loss ratio at 72% (FY18 at 78%). • New retail selling system completed • Continu
Slide 15: Credit management
For personal use only Credit management Revenue $18.2m –3% Segment Profit $6.3m +4% • 28% more outbound debtor actions taken in FY19 Debt Collected FY18 to FY19 ($m) 2.1m (FY18 1.64m) • Total debt load up 15% to $237m, commission earned from debt collected up 2% to $9.0m. • Product sales to SMEs up
Slide 16: Strategic Review
For personal use only Review Strategic
Slide 17: Summary of our plan…
For personal use only Summary of our plan… Our strategy is to… • Simplify the business • Accelerate growth in a capital efficient way A capital efficient • De-risk by focusing on our core business and strengths growth strategy This will enable us to… for Turners Group, • Significantly increase marke
Slide 18: Primary drivers
For personal use only Primary drivers Strength of Complexity of Growth of NZ’s Demand for Turners brand existing business ageing vehicle fleet digitisation 18 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 19: Industry-leading brand
For personal use only Industry-leading brand With over 50 years in the market, we are the largest and most-trusted brand in the industry. 90% Brand awareness in the New Zealand 45% View Turners as the most trustworthy used car dealer in market New Zealand Turners 90% Turners 45% 2 Cheap 60% Other 21
Slide 20: Complexity of existing business
For personal use only Complexity of existing business • Our business model has the perception of being complicated, compounded by multi- brands and some low synergy businesses. • Turners business model and operating performance can be difficult to understand and compare. • Disproportionate resources
Slide 21: NZ's ageing and growing vehicle fleet
For personal use only NZ’s ageing and growing vehicle fleet A large proportion of cars in New Zealand are at the end of their economic life. 14 years 17.5 – 19.5 years Average age of light Average age of exit fleet in New Zealand (NZ new – used) 14yrs Average light vehicle scrappage age 11yrs 10yrs
Slide 22: Increased digitisation
For personal use only Increased digitisation Of all internet users in NZ 86% are using YouTube and 85% are using Facebook Source: Global WebIndex, 2018 The average car buyer used Before Now to visit five dealerships. Personal contact with dealers, Digital natives are becoming Now, with online resear
Slide 23: Strategic initiatives
For personal use only Strategic initiatives Simplify De-Risk Grow • Single brand strategy • Continue strategy of • Expand auto retail footprint in Auto Retail writing higher quality • Shift marketing investment • Single brand and system loans into digital platforms strategy in finance and • Early ad
Slide 24: Focus on a single brand strategy
For personal use only Focus on a single brand strategy Leverage our strong brands, remove complexity and play to strength in auto retail. Consumer brands Wholesale/B2B brands 24 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 25: Buy Right Cars brand change out completed in May
For personal use only Buy Right Cars brand change out completed in May 25 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 26: Strategic review of business units
For personal use only Strategic review of business units We are undertaking a Short term review Medium term review review of non-core businesses with lower synergies to the core auto business. • Capital intensive • High return capital growth model business • Profits from captive • Non-auto therefore
Slide 27: Improve the customer experience
Improve the customer experience For personal use only Turners Auto Group Owned Properties Expand our retail footprint Whangarei (8,000m2) Turners Cars Continue to expand our footprint in high potential locations Mt Richmond Auckland (10,500m2) Turners Cars across the country. Roscommon Road Auckland
Slide 28: Growth in footprint through opening 9 new sites
Growth in footprint from ~147,000m2 to ~220,000m2 in For personal use only next 2 years through opening 9 new sites Committed branches North Shore - AKL Re-opening of Turners’ Auto-Retail flagship store July 2019 8,524m2 Dunedin Re-opening of Turners’ Auto-Retail flagship store Dec 2019 9,025m2 West
Slide 29: Branch Re-location – Whangarei
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 30: For personal use only
For personal use only
Slide 31: 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 • High yard to building ratio 31 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 32: For personal use only
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Slide 33: New Branch – Wellington City
New Branch – Wellington City For personal use only • Leased site • Pop up store concept • High profile corner site on busy arterial of 1,200m2 • Branding and lead generation for larger Porirua site 33 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 34: For personal use only
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Slide 35: Relocation – North Shore
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 • Opens late July 35 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 36: For personal use only
For personal use only 36 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 37: New Branch – Hamilton
New Branch – Hamilton For personal use only • High profile corner site across from The Base • 5,000m2 • 200+ car site • Opens in August • Turners Cars branded site • Utilises stacked containers for brand statement 37 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 38: For personal use only
For personal use only
Slide 39: Proposed New Branch – Westgate Auckland
Proposed New Branch – Westgate Auckland For personal use only X • Leased site in Westgate Auckland • High profile corner site of 8,500m2 • 300+ car site • High yard to building ratio 39 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 40: New branch example – Westgate Auckland
New branch example – Westgate Auckland For personal use only 40 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 41: Adjacent opportunities
For personal use only Adjacent opportunities Turners has a strong balance sheet, large customer base and rich data Turners Group assets which put it in a unique position to partner and invest to Leverage scale, brand, harness the changing market data assets and network dynamic. Provide capital Partn
Slide 42: Innovation - Investment in Collaborate
Innovation - Investment in Collaborate (CL8.ASX) For personal use only Overseas • Invested AUD$1 million for 12.13% stake in Collaborate Corp (CL8.ASX) • Turners appoint a director to the Collaborate board. • Want to understand alternative ownership models • Collaborate’s core business centres aroun
Slide 43: Focus & Outlook
For personal use only Focus & Outlook 43 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 44: Focus and Outlook
Focus and Outlook For personal use only Auto retail Insurance Finance Credit Adjacent opportunities • Expand • Focus on auto- • Short term strategic • Medium term • Launch vehicle footprint retail insurance review strategic subscription in NZ • Invest in digital • Look for • Continue to focus on rev
Slide 45: Questions
For personal use only Questions 45 • FY20 INVESTOR ROADSHOW PRESENTATION FY20 INVESTOR ROADSHOW PRESENTATION
Slide 46: Contact
For personal use only Contact Todd Hunter - CEO T: 64 21 722 818 E: todd.hunter@turners.co.nz Aaron Saunders - CFO T: 64 274938794 aaron.saunders@turners.co.nz 46 • FY20 INVESTOR ROADSHOW PRESENTATION
Slide 47: Disclaimer
For personal use only Disclaimer 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 — Non-Deal Roadshow (July 2019) on 6ix