Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — HY20 Earnings Presentation
36 slides from Turners Automotive's earnings presentation, Nov 27, 2019
Slide 1: HY20 Results Presentation
HY20 For personal use only Results Presentation For the six months ending 30 September 2019 1 ••HY20 RESULTS PRESENTATION
Slide 2: Agenda
Agenda For personal use only 1. Results summary 2. Business update 3. Financial results 4. Segment results 5. Summary and Q&A 2 • HY20 RESULTS PRESENTATION
Slide 3: Results Summary
For personal use only Results Summary 3 • HY20 RESULTS PRESENTATION
Slide 4: HY20 Results overview
HY20 Results overview For personal use only Financials Operations Growth • Focus on organic growth in underlying • Auto retail: Improving retail sales • Continued retail optimization of Auto earnings leading to market share increase Retail footprint into new markets + • Underlying NPBT+11% to $14. 8
Slide 5: HY19: HY20 Revenue bridge
HY19: HY20 Revenue bridge For personal use only Revenue increased from $168m to $171m • Auto Retail increase from higher unit sales of “owned” stock (up 6% YoY) • Finance revenues have grown as a result of directing Turners origination into Oxford • Insurance reflects property gain in HY19 of $3.0m,
Slide 6: HY19: HY20 Net profit before tax (NPBT) bridge
HY19: HY20 Net profit before tax (NPBT) bridge For personal use only NPBT decreased from $16.8m to $14.8m • Auto Retail result affected by fewer consignment vehicles sold in HY20, and drop in used import margins. • Finance driven by writing higher quality new business and the resulting improved arre
Slide 7: Reconciliation: NPBT to underlying NPBT
Reconciliation: NPBT to underlying NPBT For personal use only $Millions HY20 HY19 Var Profit before tax actual 14.8 16.8 (12%) • Plan for FY20 has been on growing earnings organically Oxford strategic review costs (0.2) - • Property gain on sale of $3.5m in FY19 relates to the sale of 133 Roscommon
Slide 8: HY19: HY20 Underlying NPBT bridge
HY19: HY20 Underlying NPBT bridge For personal use only Underlying PBT increased from $13.3m to $14.8m Underlying Profit Before Tax • Auto Retail reduction in import margins and lease consignment units in context of a softer market • Finance improvement in arrears from growth in higher quality lendi
Slide 9: Business Update
For personal use only Business Update 9 • HY20 RESULTS PRESENTATION
Slide 10: Key themes
Key themes For personal use only #1 Continue to grow market share Growth plans combined with used car market consolidation will see continued market share growth Used car markets have shown resilience through down cycles #2 Underlying used car market still and long term low interest rate environment
Slide 11: #1 Continue to grow used car market share
#1- Continue to grow used car market share For personal use only Turners Retail Market Share (3 Month Rolling Average) • Continue to optimise existing branch network for 7.00% retail customers eg. Whangarei re-location, North Shore in wind Dunedin Mar-20 6.50% down mode • Still significant opportuni
Slide 12: #2 Underlying used car market still robust
#2 - Underlying used car market still robust For personal use only • Overall NZ used car market down 2.5% and sales Figure 2.10a : Light fleet age structure 4,000,000 of used imports down 6% as at Sept 19 3,500,000 • ESC feature mandatory on all new and used 3,000,000 imported cars coming into NZ fr
Slide 13: #3 Oxford: successful de-risking
#3 - Oxford: successful de-risking For personal use only Focus on better quality borrowers leading to improvement in arrears and performance Comparison of new consumer lending HY19 v HY20 Improving Customer Credit Scores Consumer Lending ($ Millions) HY20 HY19 Var Average Equifax Credit Score for Ne
Slide 14: #4 Investing in property
#4 - Investing in property For personal use only Focus on growing footprint into new markets and optimizing existing sites for better customer experience. Committed branches North Shore - AKL Opened August 2019 August 2019 8,524m2 Dunedin Re-opening larger format of Turners’ Auto-Retail flagship sto
Slide 15: #5 Investing in technology
#5 - Investing in technology For personal use only • Committed to create competitive advantage from technology investments • Technology team 29 FTE (Applications 16, Infrastructure / Group IT Spend ($Millions) Operations 13) 6.0 • Early adopters of Agile, DevOps methodologies implemented FY19 5.0 (i
Slide 16: Summary of our strategic plan (May 2019)
Summary of our strategic plan (May 2019) For personal use only Our strategy is to… • Simplify the business • Accelerate growth in a capital efficient way • De-risk by focusing on our core business and strengths This will enable us to… • Significantly increase market share in the core business of Aut
Slide 17: Progress on Strategic plan
Progress on Strategic plan For personal use only Auto retail Insurance Finance Credit Adjacent opportunities • North Shore • Build distribution • Oxford strategic • Integration to • Launch plans under development through review completed SME accounting development for complete partnerships and platf
Slide 18: Financial Results
For personal use only Financial Results 18 • HY20 RESULTS PRESENTATION
Slide 19: HY20 Results snapshot
HY20 Results snapshot Revenue For personal use only 400 Revenue Shareholders’ Equity 300 Millions 2H $170.7m +1% $220m as at Sept 19 200 1H 100 Underlying Net Profit Before Tax Q2 Dividend 4.0 cps 0 $14.8m +11% Projected FY Div 17.0cps FY15 FY16 FY17 FY18 FY19 FY20 Net profit after tax Net Profit Be
Slide 20: Capital Management and Dividends
Capital Management and Dividends For personal use only Earnings and Dividend per Share (Cents) Dividends fully imputed from FY17 on • Dividend Policy Change in May 2019: Increase in pay out ratio to 60% to 70% of NPAT 18.0 16.0 • 4.0m shares purchased during Share Buy Back programme (Dec 18 to Sept
Slide 21: Balance sheet
Balance sheet For personal use only $Millions HY20 HY19 • Reduction in cash balances due to investment Cash and cash equivalents 14.6 24.1 of insurance reserves into longer dated term deposits Financial assets at fair value 63.4 55.3 Inventory 36.4 42.9 • Inventory value managed down in Auto retail
Slide 22: Funding mix
Funding mix For personal use only Borrowings Borrowings by Utilisation ($Millions) As at 30 Sept 2019 $Millions Limit Drawn Undrawn Receivables – Securitisation (BNZ) 184 166 18 Receivables – Banking Syndicate 11 (ASB/BNZ) 60 37 23 Receivables – MTF Inventory 23 23 - 83 Corporate & Property [incl Bo
Slide 23: Segment Results
For personal use only Segment Results 23 • HY20 RESULTS PRESENTATION
Slide 24: HY20 by segment
HY20 by segment For personal use only $Millions Automotive Retail Finance Insurance Credit Revenue 115.9 4% 22.8 6% 22.2 (13%) 9.9 7% Profit 7.3 (8%) 6.5 20% 2.6 (51%) 3.6 17% Underlying profit 7.1 (5%) 6.4 19% 2.6 14% 3.6 17% 24 • HY20 RESULTS PRESENTATION
Slide 25: HY20 by segment
HY20 by segment For personal use only Auto Retail • Growing retail market share • Business becoming more inventory efficient • Continued optimisation for retail Finance • Finance continued focus on targeting high quality borrowers • Continue to make investments in digital and system integration Insu
Slide 26: Automotive retail
Automotive retail For personal use only Revenue 115.9m +4%, Segment Profit $7.3m -8% Underlying Segment Profit $7.1m -5% • BuyNow (retail sales) up 1% YoY from new branches (New Plymouth and Whangarei offset by temporary closure of North Shore) Auto Retail Breakdown HY19 to HY20 ($Millions) • Invent
Slide 27: Finance
Finance Revenue $22.8m +6%, Segment Profit $6.5m +20% For personal use only Underlying Segment Profit $6.4m +19% HY19 to HY20 Receivables Bridge • Improvement in quality of new business written continues • 3 – tier risk pricing model working well with 25% of new business at premium tier, better risk
Slide 28: Insurance
Insurance For personal use only Revenue $22.2m -13%, Segment Profit $2.6m -51% Underlying Segment Profit $2.6m +14% • Combined loss ratio 60% (H1 FY19: 63%), MBI loss ratio at 68% (H1 FY19 at 72%). • All dealers transitioned to new retail policy generation system which has provided further opportuni
Slide 29: Credit management
Credit management For personal use only Revenue $9.9m +7% Segment Profit $3.6m +17% Underlying Segment Profit $3.6m +17% Debt Collected HY19 to HY20 ($Millions) • Total debt load up 17% to $133m, NZ corporate debt load up 22% to $105m • Commission earned from debt collected up 21% to $4.5m. • Xero a
Slide 30: Key focus for 2H20
Key focus for 2H20 For personal use only Auto Retail Continue to optimise footprint for retail, deliver better digital and mobile customer experience, building data tools to understand demand, develop new sourcing opportunities. Finance Continue pricing for risk, extend distribution through use of A
Slide 31: Summary & Q&A
For personal use only Summary & Q&A 31 • HY20 RESULTS PRESENTATION
Slide 32: HY20 Results overview
HY20 Results overview For personal use only Financials Operations Growth • Focus on organic growth in underlying • Auto retail: Improving retail sales • Continued retail optimization of Auto earnings leading to market share increase Retail footprint into new markets + • Underlying NPBT+11% to $14. 8
Slide 33: Outlook
Outlook For personal use only • Continued focus on organic growth and growing auto retail market share • Expecting used car industry to consolidate further over 2019/2020 • Impact of Electronic Stability Control as a mandatory feature for all imported vehicles from March 2020 will impact smaller dea
Slide 34: Questions
For personal use only Question s • HY20 • HY20 3434 RESULTS RESULTS PRESENTATION PRESENTATION
Slide 35: 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
Slide 36: Contact
Contact For personal use only Todd Hunter CEO Turners Limited T: 64 21 722 818 E: todd.hunter@turners.co.nz 36 • HY20 RESULTS PRESENTATION
Turners Automotive Group — HY20 Earnings Presentation on 6ix