Slide 1: AP Eagers FY2019 Result
For personal use only AP Eagers FY2019 Result Martin Ward | Chief Executive Officer Sophie Moore | Chief Financial Officer Thursday 27 February 2020
Slide 2: Financial highlights
Financial highlights Resilient performance despite challenging market conditions For personal use only FY19 a transformative year: ▶ four months of AHG contribution $100.4m $244.9m ▶ transaction costs Underlying Operating Profit Impairment of assets from ▶ restructure activities Before Tax from cont
Slide 3: Strategic highlights
Strategic highlights Year of significant investment and change For personal use only AHG acquisition Divestment & Completed transformative merger to rationalisation create a national dealership network Completed divestment of Klosters and capable of leading through structural associated property. in
Slide 4: Agenda
Agenda For personal use only 1 Market context 2 Operational performance IMAGE 3 Financial results 4 Strategic priorities 5 Q&A 4
Slide 5: Agenda: Market context
Agenda For personal use only 1 Market context IMAGE 5
Slide 6: Market context
Market context AP Eagers has a track record of resilience through challenging external conditions For personal use only Domestic • Economy static / retail under pressure Macro • Tighter credit availability (cyclical) environment • Consumer confidence low • Overall market for new vehicle sales has de
Slide 7: Environment a catalyst for industry transition
Environment a catalyst for industry transition AP Eagers positioned to benefit from industry changes in the medium to long term For personal use only • Departure of loss-making brands (i.e. General Motors) Transition • Rationalisation of dealer locations and owners accelerating • Consolidation of ow
Slide 8: Holden exits Australia
Holden exits Australia Withdrawal of iconic brand symptomatic of industry’s rapid transition For personal use only AP EAGERS IMPACT • 90+ year relationship • 19 Holden dealerships nationally QLD: 9 / NSW: 4 / TAS: 4 / WA: 1 / NZ: 1 • Parts & Service outlets to continue to support customers for next
Slide 9: Agenda: Operational performance
Agenda For personal use only Operational IMAGE 2 performance 9
Slide 10: MergeCo share of new vehicle market
MergeCo share of new vehicle market MergeCo leads market with 11.2% of the national new vehicle sales -7.8% For personal use only 1,153.1 1,062.8 -7.1% 129.8 120.5 -7.7% 78.4 ('000s) 72.4 (’000s) -6.1% 51.3 48.2 2018 2019 Merge Co (excl. MergeCo 1 NZ) APE (excl. APE2KLOS) AHG (excl. AHG3 NZ) VFACTS
Slide 11: MergeCo market share by region
MergeCo market share by region National footprint, leading market position with significant room to grow For personal use only MergeCo Market Share Market Market State State Share Share QLD 14.4% NT 26.4% WA 22.7% NSW 10.0% SA 14.8% VIC 5.9% NT & WA market size: 9.5% of national market TAS 18.4% ACT
Slide 12: Agenda: Financial results
Agenda For personal use only IMAGE 3 Financial results 12
Slide 13: MergeCo Summary P&L
MergeCo Summary P&L Includes four months of consolidated AHG contribution For personal use only FY18 Movement $ Million FY19 (Restated) (%) Revenue from continuing operations1 5,478.4 3,689.3 48.5% Underlying operating EBITDA from continuing operations1 163.2 141.2 15.6% Underlying 1 Underlying oper
Slide 14: MergeCo Summary P&L: APE and AHG contribution
MergeCo Summary P&L AP Eagers & AHG contribution to MergeCo result For personal use only APE AHG MERGECO FY18 Sep-Dec FY18 $ Million FY19 Change FY19 Change Restated 2019 Restated Revenue from continuing operations1 3,611 3,689 ▼ (2.1%) 1,867 5,478 3,689 ▲ 48.5% Underlying operating EBITDA1 121.7 14
Slide 15: Segment results – MergeCo
Segment results – MergeCo Full year to 31 December 2019 – Continuing operations Car retailing Underlying Operating Contribution1 For personal use only TAS and NZ performed well. Challenging market (excl. AASB 16) conditions impacted QLD, NSW, VIC, WA and SA 103.4 results. Parts and service businesse
Slide 16: Balance sheet
Balance sheet Strong balance sheet provides flexibility to pursue growth For personal use only • IFRS 16 significant impact on balance sheet FY19 and key ratios (slide 17), amplified by AHG ($M) leased property portfolio CA – CL (excludes assets held for sale & current 29.5 lease liabilities) • New
Slide 17: Non-Cash Impairment - Goodwill
Non-Cash Impairment - Goodwill $209.2m non-cash impairment to goodwill recorded in 2019 For personal use only Accounting technicality 758.7 (non-cash) 671.7 296.3 147.8 (209.2) 462.4 245.6 278.3 AHG Goodwill at Share Price Mvmt Net Assets AHG Goodwill on Acq1 Goodwill Impairment Closing AHG APE Exis
Slide 18: New lease standard impact
New lease standard impact No impact on underlying shareholder value, cash flows or Group’s covenants For personal use only • AP Eagers adopted the full retrospective method 1 Jan 2019 • AHG’s impact is significant given size and tenor of leases, accounted from Aug 2019 Lease liability $1,192.6m • Op
Slide 19: New lease standard impact
New lease standard impact No impact on underlying shareholder value, cash flows or Group’s covenants For personal use only MERGECO APE AHG Lease Liability $1,192.6m $270.5m $922.1m Right of use asset $1,013.1m $193.2m $819.9m Deferred tax asset $54.0 $23.3m $30.7m EBITDA up $83.8m $44.1m $39.7m EBIT
Slide 20: Agenda: Strategic priorities
Agenda For personal use only IMAGE 4 Strategic priorities 20
Slide 21: AHG acquisition provides competitive advantage
AHG acquisition provides competitive advantage Stronger foundations to respond to the rapidly evolving automotive retail environment For personal use only geography portfolio More than 200 new car dealerships across Australian and New Zealand. Exposure to motor vehicle retailing Extensive portfolio
Slide 22: Synergies update
Synergies update Ahead of initial synergies target with additional savings identified For personal use only 30.0 5.8 5.8 • Significant FTE synergies through organisational rationalisations 19% of 12 month 4.1 target 4.1 • 2019 non-FTE synergies predominantly driven by ASX listing fees and wholesale
Slide 23: Next100 strategy
Next100 strategy providing integrated mobility solutions for the next 100 years For personal use only OPTIMISE DEVELOP GROW Engage our customers, Deliver optimised Redefine our workforce Support innovation Reinvest with discipline everywhere vehicle finance solutions Online. At the airport. In Our w
Slide 24: What our strategy must deliver
What our strategy must deliver An enhanced customer experience on a substantially reduced cost base For personal use only 24
Slide 25: What our strategy must deliver
What our strategy must deliver An enhanced customer experience on a substantially reduced cost base For personal use only Future-proofing AP Eagers with customers at the centre 25
Slide 26: BNE Auto Mall: A Destination
BNE Auto Mall A Destination For personal use only 26
Slide 27: Scalable 'fixed price' used car model
Scalable 'fixed price’ used car model National footprint with significant opportunity to grow For personal use only VOLUME GROWTH ACCELERATING USED VEHICLE SALES Combined 12 month volume to 30 June 2019 8,340 Combined last 3 months volume (annualised) 13,256 3MMA growth annualised +59% National: big
Slide 28: US market landscape signals potential
US market landscape signals potential A window to the future of AP Eagers’ globally unique combination For personal use only NEW CAR INDUSTRY LEADERS COMPANY MARKET POSITION1 TURNOVER2 MARKET CAP2 AutoNation Largest new car retailer $21.2 billion $4.7 billion Penske Second largest new car retailer $
Slide 29: Deliver the best solutions in vehicle financing
Deliver the best solutions in vehicle financing Ultra-competitive, tailored financial services and platforms driving customer centricity For personal use only New financing model producing good outcomes and expected to incrementally lift penetration rates F&I penetration • Current credit environment
Slide 30: Financial Services platforms
Financial Services platforms Mission: All licensed & ancillary entities acting in support of AP Eagers’ integrated mobility Driving customer centricity solutions across all segments solutions vision For personal use only Evolution in Finance • Significant industry change and transformation of financ
Slide 31: Outlook
Outlook Emerging stronger from the current market conditions For personal use only • Scale and competitive advantage to withstand the challenging market conditions and benefit from the accelerating industry transition • MergeCo's underlying core automotive result for January 2020 demonstrated strong
Slide 32: Agenda: Q&A
For personal use only Agenda 5 Q&A IMAGE 32
Slide 33: Disclaimer
Disclaimer The information in this document (information) does not contain all information necessary for investment decisions, is not intended to be an offer, invitation or recommendation with respect to shares, is not financial product advice, and is intended to be general background For personal u
Slide 34: Appendix
For personal use only Appendix 34
Slide 35: MergeCo Summary P&L 2019
MergeCo Summary P&L 2019 Includes four months of AHG contribution and four months equity accounted Depn & Interest Tax $ Million EBITDA PBT NPAT For personal use only Amort Expense Expense Underlying Continuing Operating1 163,220 (26,639) (36,192) 100,389 (31,121) 69,268 Impairment (244,925) (244,92
Slide 36: AP Eagers Summary P&L 2018
AP Eagers Summary P&L 2018 Includes dividends received from AHG during the period Depn & Interest Tax $ Million EBITDA PBT NPAT For personal use only Amort Expense Expense Underlying Continuing Operating1 141,189 (14,671) (23,031) 103,487 (32,081) 71,406 Impairment - - Gain on consolidation of AHG -
Slide 37: Net assets on acquisition
Net assets on acquisition $280.5m total non-cash asset impairment recorded in 2019, including impairment from discontinued operations For personal use only 840.6 Goodwill: $662.3m Other Intangibles: $9.4m 635.5 625.0 (10.4) 496.1 (280.5) Accounting technicality 344.5 (non-cash) 671.7 185.5 (221.7) (
Slide 38: BNE Auto Mall: An Integrated Design
BNE Auto Mall An Integrated Design For personal use only 38
Slide 39: The Hub Precinct - Engaging
The Hub Precinct - Engaging For personal use only 39
Slide 40: Integrated Sales and Service Destination Link Bridge
Integrated Sales and Service Destination Link Bridge For personal use only 40
Slide 41: BNE Auto Mall
For personal use only BNE Auto Mall 41
Slide 42: BNE Auto Mall
For personal use only BNE Auto Mall 42
Slide 43: Auto Mall – Shopping Centre Express Service (Roof Top)
Auto Mall – Shopping Centre Express Service (Roof Top) For personal use only 43
Slide 44: Auto Mall – Shopping Centre Express Service (Roof Top)
Auto Mall – Shopping Centre Express Service (Roof Top) For personal use only 44
Slide 45: Auto Mall – Shopping Centre Express Service (Roof Top)
Auto Mall – Shopping Centre Express Service (Roof Top) For personal use only 45
Slide 46: Expenses are linked: People Costs must be solved
Expenses are linked But People Costs must be solved For personal use only People Costs Rent Costs Inventory Costs Marketing 49.4% 9.4% 2.6% 3.8% Expenses demonstrated as a percentage of Gross for AP Eagers on a standalone basis for the year ended 31 December 2019 46
Slide 47: Definitions Non-IFRS Financial Information
Definitions Non-IFRS Financial Information APE is defined as AP Eagers Ltd For personal use only AHG is defined as Automotive Holdings Group Limited EBIT is defined as earnings before net finance costs EBITDA is defined as earnings before net finance costs and losses on de-recognition of financial a