Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — FY2018 Earnings Presentation
30 slides from Turners Automotive's earnings presentation, May 29, 2018
Slide 1: FY18 Full Year Results Presentation
FY18 Full Year Results Presentation For 12 months ending 31 March 2018
Slide 2: Turners: An Integrated Automotive Group
TURNERS’ AN INTEGRATED AUTOMOTIVE GROUP Turners Automotive Group - the biggest seller of cars, trucks and machinery in NZ. We finance them and insure them for mechanical breakdown, accident and loan repayments with the best range of products in the market. CREDIT AUTOMOTIVE FINANCE AND MANAGEMENT RE
Slide 3: The Kiwi Car Economy
THE KIWI CAR ECONOMY 164,000 153,000 3.85m Light vehicles in the NZ vehicle fleet 7,232 EVs used cars were imported into NZ in year ended Mar 18 New passenger and light commercial vehicles sold into NZ in year ended Mar 18 7,232 as at the end of March 2018, more than double its size in March 2017. 1
Slide 4: FY18 Operating Environment
FY18 OPERATING ENVIRONMENT • Used vehicle market continuing to grow: Total Used Vehicle Sales o Used cars in line with previous year Financial Year o Used trucks up 5% YOY 1,600,000 o Damaged and end of life up 11% YOY 1,400,000 1,200,000 • New car registrations (passenger and light 1,000,000 commer
Slide 5: FY18 Financial Results
FY18 Financial Results FY18 Full Year Results Presentation
Slide 6: FY18 Financial Highlights
FY18 FINANCIAL HIGHLIGHTS Continuing growth in revenue and profit REVENUE Revenue $330.5m, +32% 350.0 300.0 Net Profit Before Tax $31.1m, +26% 250.0 (Guidance NPBT $29m to $31m) Millions 200.0 150.0 Net Profit After Tax $23.4m, +33% 100.0 50.0 NPATA $24.9m, +42% 0.0 FY14 FY15 FY16 FY17 FY18 Sharehol
Slide 7: FY17: FY18 Revenue Bridge
FY17: FY18 REVENUE BRIDGE $330.5m • Continued improvement in retail “end- user” sales in Turners Cars driving growth in add-on finance and insurance $251.0m sales • Full year impact of BRC trading • Finance reflects growth in receivables ledger over the last 18 months • Insurance has a step change i
Slide 8: FY17: FY18 Profit Bridge
FY17: FY18 PROFIT BRIDGE $31.1m • Turners Group shows incremental improvement across all divisions • BRC impacted by margin compression and dealing with aged stock issue • Finance result improvement due to increase in ledger up 39% $24.6m • Insurance showing step change in profits from Autosure • EC
Slide 9: Earnings Per Share and Dividend
EARNINGS PER SHARE AND DIVIDEND EARNINGS PER SHARE Dividend Policy Change: Increase in pay out ratio of 35 50% to 60% of NPAT 29.3 cps • FY18 fully imputed quarterly dividends and fully 30 imputed 25 • Q1 @ 3.0c per share • Q2 @ 3.0c per share Cents per share 20 • Q3 @ 4.5c per share 15 • Q4 @ 5.0c
Slide 10: Balance Sheet
BALANCE SHEET $m FY18 FY17 Cash and cash equivalents 25 69 Other Financial Assets 53 10 • Cash change due to investment of $42m into Finance Receivables 290 207 term deposit for insurance reserves. Explains Inventory 39 45 increase in Other Financial Assets Property, Plant and Equipment 36 19 • Grow
Slide 11: Funding Mix
FUNDING MIX FY18 $m % of Total FY17 $m % of Total • $30M capital raise in Oct 17 TOTAL ASSETS 652 557 • Convertible Bonds of $26M Equity 214 33% 172 31% mature Sept 2018. Convertible bonds 26 4% 26 5% • Growth in Securitisation 133 20% 69 12% Warehouse reflects growth in Securitisation Funding (BNZ)
Slide 12: Sector Performance
Sector Performance
Slide 13: FY18 Sector Results
FY18 SECTOR RESULTS $M SECTOR REVENUE DebtFY18 REVENUE Manageme 350 nt 300 Automotive Retail the largest 250 contributor: 68% revenue and 200 41% Operating Profit Finance & Insurance 150 Auto Retail 100 Annual trends reflect 50 acquisition and organic growth 0 FY15 FY16 FY17 FY18 Step up in FY18 in
Slide 14: Automotive Retail
AUTOMOTIVE RETAIL Revenue $223.2m +16%, Op Profit $16.6m +8% Sales by Customer Type for Turners Cars 100% • Turners Group strong result with operating profit up 15% off 90% revenue growth of 10%. • Continuing increase in fixed price sales (cf auction or tender) - 80% up 17% YoY with sales to end use
Slide 15: Auto Retail: Buy Right Cars
AUTO RETAIL: BUY RIGHT CARS • Revenue growth of 34% reflecting full year of operation, operating profit down 21%. • Financial performance has disappointed as new management team deals with legacy issues • New management team in place since Customer view of Buy Right Car and Turners November 2017 TRA
Slide 16: Auto Retail: Property Opportunity
AUTO RETAIL: PROPERTY OPPORTUNITY • Property reconfiguration to drive improved retail experience for further growth • Used vehicle business creates opportunity to be innovative in location and configuration eg container offices • Purchasing either brown fields or bare land with Concept design for Ca
Slide 17: Finance
FINANCE Revenue $39.7m +48%, Op Profit $11.7m +16% FY18 LOAN BOOK GROWTH 310 Millions 10 290 290 24 270 48 250 • Finance receivables growth has continued, up 40% to $290m 230 from March 2017 207 210 • Continued enhancements of online loan approval platform AutoApp (insurance integration key delivera
Slide 18: Finance Drill Down
FINANCE DRILL DOWN FY18 TOTAL LENDING BY ASSET CLASS Consumer Instalment Arrears by Finance Book 5% 2.50% 2.4% 2.1% 9% Motor Vehicle 2.00% 1.7% Other 1.50% Commercial Vehicle 1.00% 86% 0.50% 0.1% 0.2% 0.1% Net Interest Margin 0.00% OFL TF MTF-NR 11.0% FY17 FY18 10.0% 9.2% 9.4% 9.0% • Total instalmen
Slide 19: Insurance
INSURANCE Revenue $46.9m +283%, Op Profit $5.7m, +518% Policy and Gross Written Premium Growth in Insurance • Autosure acquisition creates step change in scale of 45 100000 insurance business in FY18 90000 40 • Consolidation of insurance brands into single entity 80000 35 • Use of data analytics to
Slide 20: Credit Management
CREDIT MANAGEMENT Revenue $18.7m, Op Profit $6.1m – in line with FY17 • Solid and consistent performer, delivering good cashflow and profitable returns • Continue to increase debt load from key NZ corporate accounts at expense of competitors • Still big opportunity in Australian corporate market (un
Slide 21: Opportunities and Strategic Focus
Opportunities and Strategic Focus FY18 Full Year Results Presentation
Slide 22: Strategic Imperatives
STRATEGIC IMPERATIVES CUSTOMER FIRST: • Keep developing ‘Customer First’ culture across all businesses • Improve the quality of customer experience – both in-person and online QUALITY LENDING: • Continue transition to higher quality, more profitable lending UTILISE WEALTH OF DATA: • Access and drive
Slide 23: Key Focus for FY19
KEY FOCUS FOR FY19 • AUTO RETAIL – Customer experience (people and property), redirect Finance into OFL, leverage trucks and machinery network • FINANCE – redirect finance from Turners into OFL, Customer experience quicker and easier through smart data analytics, re-position to higher quality lendin
Slide 24: Outlook: FY19 NPBT guidance $34 million to $36 million
OUTLOOK • Used car market is resilient, less discretionary than new • A large aging vehicle fleet that needs to be replaced • 80% of people purchasing vehicles under $20k • High trust position in the “Turners” brand FY19 NPBT guidance $34 million to $36 million FY18 Full Year Results Presentation 24
Slide 25: Questions
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Slide 26: Contact: Todd Hunter, CEO
Contact: Todd Hunter CEO Turners Limited T: 64 21 722 818 E: todd.hunter@turners.co.nz FY18 Full Year Results Presentation 26
Slide 27: Appendix
Appendix FY18 Full Year Results Presentation
Slide 28: Examples of Turners Ecosystem
EXAMPLES OF TURNERS ECOSYSTEM Research Purchase Disposal Finance Insurance Service & End of Life Nina is looking Maintenance to upgrade her current 7 year old car, finds a Trademe.co.nz late model ex- Turners.co.nz rental at Buy Buyrightcars.co.nz Right Cars Research Purchase Disposal Finance Insura
Slide 29: Examples of Turners Ecosystem
EXAMPLES OF TURNERS ECOSYSTEM Research Purchase Disposal Finance Insurance Service & End of Life Tim is looking Maintenance for a used import on TradeMe and Trademe.co.nz Buys from Trades in old Takes out finance and insurance finds the perfect dealer in car through at time of purchase car through a
Slide 30: Disclaimer
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 on behalf of, the com
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