Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Shareholder Meeting (September 2020)
50 slides from Turners Automotive's shareholder meeting presentation, Sep 23, 2020
Slide 1: Turners Automotive Group 2020 Annual Meeting
For personal use only TURNERS AUTOMOTIVE GROUP 2020 ANNUAL MEETING 23 September 2020 1 • 2020 ANNUAL MEETING
Slide 2: Online Attendees – Question Process
ONLINE ATTENDEES – QUESTION PROCESS For personal use only • When the Question function is available, the Q&A icon will appear at the top of the app. • To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow • Your question will be sent immedia
Slide 3: Online Attendees – Voting Process
ONLINE ATTENDEES – VOTING PROCESS For personal use only • When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen • To vote simply select the option you wish to send, the selected option will change colour 3 • 2020 ANNUAL MEETING
Slide 4: Board of Directors
Board of Directors For personal use only Antony Vriens Grant Baker Alistair Petrie John Roberts Matthew Harrison Paul Byrnes Martin Berry Independent Director Non-executive Non-executive Director Independent Director Non-executive Director Independent Dep Independent Director Chairman Chairman 4 • 2
Slide 5: Meeting Agenda
Meeting Agenda For personal use only Presentations • Chairman’s Address (Grant Baker) • CEO Update (Todd Hunter) Shareholder Discussion Resolutions per Notice of Meeting General Business 5 • 2020 ANNUAL MEETING
Slide 6: Chairman's Address
For personal use only Chairman’s Address Grant Baker 6 • 2020 ANNUAL MEETING
Slide 7: Building quality …
For personal use only Building quality … 7 • 2020 ANNUAL MEETING
Slide 8: A Transformed Business
A Transformed Business For personal use only As at March YE FY10 FY15 FY20 Shareholder Equity ($m) (3) 121 223 Total Assets ($m) 109 329 708 NPBT ($m) (18) 19 29 Dividend per Share (cps) - 10.0 14.0 Market Capitalisation ($m) 4 202 118 Note - $118m valuation as at 31 March 2020 Numbers adjusted for
Slide 9: Robust improvement in earnings and dividends
Robust improvement in earnings and dividends For personal use only TRA has the third highest dividend yield on the NZX1 1 Source: NZX. Based on rolling 12 month gross div (net div + imps) divided by share price at 14 September 2020. Excludes three NZX-listed higher yields (LIC (because co-op); NWF (
Slide 10: For personal use only
For personal use only 10 • 2020 ANNUAL MEETING
Slide 11: The rationale for the group's structure now proven
For personal use only The rationale for the group’s structure now proven The Strategic Reviews for Oxford and EC Credit determined that the group was most valuable in its current structure. Consumer brands Wholesale/B2B brands 11 • 2020 ANNUAL MEETING
Slide 12: Benefit of Auto retail business became clearer in COVID
For personal use only Benefit of Auto retail business became clearer in COVID Business unit What we liked pre-COVID? What we like post COVID? • Used cars is a large resilient market • Used cars have demonstrated • Leading “trust” brand resilience Auto retail • Diversified sources of supply • Geograp
Slide 13: Benefit of Finance business became clearer in COVID
For personal use only Benefit of Finance business became clearer in COVID Business unit What we liked pre-COVID? What we like post COVID? • Challenger brand • Annuity earnings helpful in lockdown Finance • Promising signs from de-risk strategy • Arrears proven to be robust • Pricing risk differently
Slide 14: Benefit of Insurance business became clearer in COVID
For personal use only Benefit of Insurance business became clearer in COVID Business unit What we liked pre-COVID? What we like post COVID? • #1 brand in niche insurance • Annuity earnings helpful in lockdown • Promising signs from de-risk strategy • Premium taken up front • Improvements in distribu
Slide 15: Benefit of Credit business became clearer in COVID
For personal use only Benefit of Credit business became clearer in COVID Business unit What we liked pre-COVID? What we like post COVID? • Strong cash flows • Payment bank stickier than expected Credit Management • Capital light business • Counter-cyclical, defensive • Data and web opportunity • Str
Slide 16: Resilient and well placed for an uncertain environment
For personal use only Resilient and well placed for an uncertain environment COVID was a stress-test, but we exceeded expectations 1. Used car market is resilient 2. Diversified business 3. High “trust” brands 4. Digital is a competitive advantage 5. Strong and sustainable yield 6. Experienced manag
Slide 17: Market - The used car market is resilient and robust
1. Market - The used car market is resilient and robust For personal use only • COVID had a temporary impact, before a strong rebound in June and July • August impacted by second lockdown, AKL sales dropped most (c.1/3 of population) • Net migration has added to post lockdown demand • Underlying dem
Slide 18: Geographic diversification
2a. Geographic diversification For personal use only Our 37 sites nationwide offer a unique advantage • Geographical diversification allows the business to redeploy inventory • Advantage if there are any localised lockdowns or regional demand differences • Online sales / click n collect at any branc
Slide 19: Business diversification
For personal use only 2b. Business diversification Turners Group is a purposefully diversified business Each business has different business cycles: • Stable annuity revenue (finance + insurance) helps offset short-term drop in activity-based revenue (auto retail + credit). • Credit management is co
Slide 20: Brand - leverage the high trust Turners brand
For personal use only 3. Brand - leverage the high trust Turners brand Trust is even more important in a time of uncertainty • Most trusted brand: Turners is consistently 2020 Readers Digest Trusted Brand Award: NZ’s leading used auto retail brand NZ’s most trusted used car dealer. (independent mark
Slide 21: Digital advantage
For personal use only 4. Digital advantage Continue to invest in this crucial competitive advantage • Maintained headcount of Technology team: 26 FTE (Applications 15,Infrastructure/Operations11) • Major investment and resource commitment in high redundancy data centre spread between 2 sites (AKL +
Slide 22: Attractive + defensive dividend yield
5. Attractive + defensive dividend yield For personal use only TRA has the third highest dividend yield on the NZX1 Dividend per share (cents)2 0.18 0.170 • Q3 dividend (payable April-20) was deferred as a 0.16 0.145 0.155 precaution due to uncertainty of L4 lockdown 0.140 0.14 0.130 • Final FY20 6.
Slide 23: "Through the cycle" experience
6. “Through the cycle” experience For personal use only Team has alignment with shareholders, and plenty of experience, including the GFC • Board and management control just under 30% of shares in the company…high degree of alignment with shareholder interests • All the businesses have key executive
Slide 24: Building a quality business
Building a quality business For personal use only • Quality of our trusted brands • Purposefully diversified business model • Risk optimisation • Extending our competitive advantage for digital 24 • 2020 ANNUAL MEETING
Slide 25: CEO's Update
For personal use only CEO’s Update Todd Hunter 25 • ANNUAL 25 • 2020 2020 ANNUAL MEETING MEETING
Slide 26: FY20 Results snapshot
For personal use only FY20 Results snapshot Revenue 400 Revenue Shareholders’ Equity 300 2H Millions $332.7m -1% YoY $223m as at 31 March 20 200 1H 100 Underlying Net Profit Before Tax Final FY20 Dividend 6.0 cps 0 $28.8m +11% YoY FY Div 14.0 cps FY15 FY16 FY17 FY18 FY19 FY20 Net profit after tax Ne
Slide 27: FY20 Results Overview
For personal use only FY20 Results Overview FY20 Financials FY20 Review by business Key Learnings from FY20 • NPBT $29.1M in line with FY19 • Auto Retail: Retail optimisation • “Trust” equity in the Turners brand is and guidance ($28m – $30m) continues, both sites + digital mktg very strong • Underl
Slide 28: Our approach to lockdown…
For personal use only Our approach to lockdown… React Rethink Rebuild Ensure survival of business Customer experience “Eyes on the prize” and “cash is king” approach and cost base prepare for opportunities Thank You to Our Team, Landlords and Business Partners 28 • 2020 ANNUAL MEETING
Slide 29: FY21 YTD Update
For personal use only FY21 YTD Update Strong recovery in business levels since April lockdown Group Profit Before Tax1 ($m) $4.0m • Brand: Continuing marketing spend focusing on Turners “trusted brand” $3.5m $3.0m • Auto: Car margins on “owned” fleet has bounced back strongly due to supply constrain
Slide 30: Auto Retail
Auto Retail For personal use only YTD operating profit flat on Aug 19 YTD • Strong recovery in metrics since April low point • Car margins on “owned” fleet has bounced back strongly due to supply constraints • Diversified sources of supply a real strength • Inventory levels down 30% from peak at beg
Slide 31: We continue to optimise our network
We continue to optimise our network For personal use only Our focus this year is on continued retail optimisation Continue to optimise retail network Transition from wholesale to retail eg. exit Penrose, open Mt Richmond and Westgate New Dunedin operation opened May 2020 Rationalise sub-scale si
Slide 32: Finance
For personal use only Finance YTD operating profit significantly ahead of Aug 19 YTD • Post lockdown lending very strong. • Improving credit quality via data-driven risk pricing. Early adopter of comprehensive credit reporting • Premium Tier business now accounts for over 50% of our new business per
Slide 33: Credit scores improving; arrears declining
Credit scores improving; arrears declining For personal use only 10.0% Improving Customer Credit Scores 650 9.0% 600 Avergae consumer VEDA 8.0% 550 credit score 500 7.0% 450 6.0% 400 5.0% 350 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 Oxford Finance Total Arrears % 3 per. Mov. Avg. (Total Arrears
Slide 34: Insurance
For personal use only Insurance YTD operating profit significantly ahead of Aug 19 YTD • Policy sales rebounded strongly, in-line with used car market • Claims loss ratios continue to improve (due to better underwriting, less movement in lockdown) • Focus is on digital distribution eg. Marac Finance
Slide 35: Credit management
For personal use only Credit management YTD operating profit down on Aug 19 YTD; but poised for acceleration • Lockdown has been a good reminder of the strong “payment bank” annuity component to this business which has held up very well. • Due to the cautious approach by large banks and government a
Slide 36: Our focus for FY21
For personal use only Our focus for FY21 Auto Retail • Cost discipline – property and people • Continue to invest in promoting the Turners brand - build market share • Retail optimisation – Exit Penrose and launch Westgate, Mt Richmond Finance • Keep improving credit quality through data driven risk
Slide 37: Digital and Data
For personal use only Digital and Data 37 • ANNUAL 37 • 2020 2020 ANNUAL MEETING MEETING
Slide 38: Example #1 Digital - Rapid deployment of BuySafe
Example #1 Digital - Rapid deployment of BuySafe For personal use only • Contactless 100% online buying process initiated in 1st week of lockdown April - 20 • 5 day money back guarantee developed in consultation with vendors…now applies to all retail vehicles sold to consumers • Consultants trained
Slide 39: Example #2 Data - Fleet profitability tool
Example #2 Data - Fleet profitability tool For personal use only Big data enables higher margins by optimising pricing Vehicle: Current Offer: Projected Offers: $19,000 $19,000 $18,500 $18,000 This Red score is based on… $17,500 Maximum risk offer $17,250 + Premium features - - - Past Sales Recent r
Slide 40: Example #3 Digital - Customer data platform - Business case
Example #3 Digital - Customer data platform - Business case For personal use only ”Low hanging fruit” opportunity to improve lead conversion Improve conversion metrics: • 100,000 unique users visit turners.co.nz each month • Most were anonymous, only ~10% are returning customers • Now communicating
Slide 41: Example #4 Digital - 100% online loan sign up process
Example #4 Digital - 100% online loan sign up process For personal use only • Deployed 100% online sign up process in July Obtaining customer signatures in order to close a deal can prove challenging. The • 25% of loans in July used “secured signing”, traditional paper process is often time rising t
Slide 42: Launched 21-09-20
For personal use only Launched 21-09-20 42 • 2020 ANNUAL MEETING
Slide 43: Outlook
For personal use only Outlook
Slide 44: FY21 outlook
FY21 outlook For personal use only • Business has rebounded strongly since lockdown and demonstrated resilience, and business has momentum and providing some optimism about H2 • We are targeting FY21 NPBT to be in the range of $28m to $31m. This is conditional upon no further substantive lockdowns o
Slide 45: Shareholder Discussion
For personal use only Shareholder Discussion 45 • 2020 ANNUAL MEETING
Slide 46: Online Attendees – Voting Process
ONLINE ATTENDEES – VOTING PROCESS For personal use only • When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen • To vote simply select the option you wish to send, the selected option will change colour 46 • 2020 ANNUAL MEETING
Slide 47: Resolutions
Resolutions For personal use only ORDINARY RESOLUTIONS: • RESOLUTION 1: That Baker Tilly Staples Rodway be reappointed as auditors of the Company and that the Directors be authorised to fix the auditors’ remuneration. • RESOLUTION 2: That John Roberts, who retires by rotation and has offered himself
Slide 48: Voting
Voting For personal use only Resolution: Proxies FOR AGAINST PROXY DISCRETION Auditor’s remuneration 30,593,721 76,302 1,821,186 Re-election of John Roberts 30,574,083 41,000 1,874,853 Re-election of Matthew Harrison 29,795,792 339,044 1,589,337 Total proxies received in respect of 32,491,209 shares
Slide 49: 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 49 • 2020 ANNUAL MEETING
Slide 50: 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
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