Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Shareholder Meeting (August 2022)
44 slides from Turners Automotive's shareholder meeting presentation, Aug 17, 2022
Slide 1: 2022 Annual Meeting Presentation
2022 Annual For personal use only Meeting Presentation 17th August 2022 1 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 2: We love cars
For personal use only We love cars 2 • ASM 2 • 2022 2022PRESENTATION ASM PRESENTATION TURNERS TURNERS AUTO AUTO GROUPGROUP
Slide 3: Board of Directors
Board of Directors For personal use only Grant Baker Matthew Harrison Antony Vriens Non-executive Chairman Non-executive Director Independent Director Alistair Petrie John Roberts Martin Berry Lauren Quaintance Non-executive Director Independent Director Independent Director Emerging Director 3 • 20
Slide 4: Meeting Agenda
Meeting Agenda For personal use only Presentations • Address from the Chair, Grant Baker • Address from the CEO, Todd Hunter • Address from Directors up for re-election Shareholder Discussion Resolutions are per Notice of Meeting • Auditors’ Remuneration • Re-election of Grant Baker and Alistair Pet
Slide 5: Chairman's Address
For personal use only Chairman’s Address Grant Baker 5 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 6: Turners continues to build a strong and sustainable business
Turners continues to build a strong and sustainable business with a proven track record… For personal use only Total NPBT/NPAT over 3 year period ($m) Aggregate dividends paid over 3 year period (cps)* 120.0 0.6 0.57 109.6 100.0 0.5 0.47 84.7 79.2 80.0 63.7 0.4 60.0 45.5 41.9 0.3 40.0 0.23 20.0 15.1
Slide 7: Great progress in our operating KPIs in the last 3 years
We have made great progress in our operating KPIs in the last 3 years… For personal use only KPI FY19 FY22 Progress No. of owned cars sold 16,179 22,170 + Auto retail market share 4.85% 6.55% + Avg GP per owned unit $470 $818 + Average monthly premium lending $2m $14m + Consumer arrears 10.6% 2% + A
Slide 8: FY22 was another excellent year
FY22 was another excellent year… For personal use only 1. We achieved 15% growth in PBT in FY22…another record year for the business, and 48% growth in profits since FY19 2. Full year dividend at 23.0 cps versus guidance of 22.0 cps. Based on current share price this is a gross yield of over 8.0% pa
Slide 9: We operate to a simple formula
For personal use only We operate to a simple formula 9 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 10: Quality environment, customer experiences, outcomes for shareholders
For personal use only Quality Quality Quality environment + customer = outcomes for our for our experiences shareholders people 10 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 11: Quality Environment – team engagement scores at all time high
Quality Environment – our team engagement scores at all time For personal use only high Peakon Employee Engagement Scores • Having a strong culture and an How likely is it that you would recommend Turners Automotive Group as a place to work? engaged team is very important to us, particularly at a ti
Slide 12: Our customer experience is market leading, but still work to do
Our customer experience is market leading, but still work to do… For personal use only 12 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 13: Delivering strong returns for shareholders despite the challenges
We are delivering strong returns for shareholders despite the challenges… For personal use only Dividend per Share ($) 0.25 COVID impacted 0.23 year 0.20 • Proven track record of delivering strong, sustainable and 0.20 0.17 growing dividends in the business 0.155 0.145 0.14 0.15 0.13 • Directors dec
Slide 14: Property investment is strategic and delivers value for shareholders
Property investment is strategic and delivers value for shareholders For personal use only • Property ownership is strategic where it protects a 7 properties on 7 properties @ 31 location, we also leverage surplus capital in insurance balance sheet at cost March 2022 valuation business to purchase p
Slide 15: Some challenges but we are in a strong position
There are some challenges but we are in a strong position… For personal use only Challenges Competitive advantages… • Economic situation • High trust brands in our stable… • Rapidly increasing interest rate environment • Biggest buyer and seller of cars in NZ • Supply chain • Unmatched national foot
Slide 16: We are ready for what's next: $50M PBT by FY25
We are ready for what’s next … $50M PBT by FY25 The broader economic environment has moderated our growth expectations For personal use only Underlying Net Profit Before Tax ($M) 1 55 • Set our first 3 year target in FY21 of $45m, essentially 50 achieved in FY22. 50 45 44 45 • Updated 3 year target
Slide 17: CEO's Update
For personal use only CEO’s Update Todd Hunter 17 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 18: FY22 Results snapshot
FY22 Results snapshot Revenue For personal use only 400 Revenue Shareholders’ Equity 300 $344.5m +14% $252m as at 31 March 22 Millions 2H 200 1H Underlying Net Profit Before Tax Final Dividend 7.0 cps 100 $44.1m +29% FY Div 23.0 cps +15% 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Net Profit Before Tax Net
Slide 19: NZ used car market transactions down in FY23
NZ used car market transactions down in FY23… For personal use only NZ Used Car Change of Ownerships (Source Waka Kotahi) 120,000 Impact of Govt Feebate Scheme • Overall transaction levels in late 2021 and early 2022 100,000 tracking behind pre-Covid levels. 80,000 • The exception was March 2022 whe
Slide 20: Dealers are leaving the NZ market
Dealers are leaving the NZ market…the opportunity is for the strong to get stronger For personal use only Registered Dealer Numbers NZ (source MBIE) 3600 3500 • Harder for under capitalised operators to survive 3400 • Registered dealer numbers at lowest 3300 point in the last 5 years (3k), down 14%
Slide 21: Business divisions
For personal use only Business divisions 21 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 22: Automotive retail
Automotive retail For personal use only Turners Retail Market Share (3 Month Rolling Average) • Selling more locally owned vehicles, buying less used imports 12.00% Online sales during which enables quicker turnaround in processing lockdown in 2020 11.00% Jul-22 market share at 8.9% • Improving our
Slide 23: Rotorua – on track for completion of development by end of Q2
Rotorua – on track for completion of development by end of Q2 For personal use only • Sold over 500 cars in first 6 months of operation • Operating from half a site and during building development • On track to deliver $1m+ operating profit contribution to group 23 • 2022 ASM PRESENTATION TURNERS AU
Slide 24: For personal use only
For personal use only 24 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 25: Nelson operational months ahead of schedule
Nelson operational 2 months ahead of schedule… For personal use only 25 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 26: For personal use only
For personal use only 26 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 27: For personal use only
For personal use only 27 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 28: Finance
Finance The finance book is in excellent shape but there are some short term pricing challenges For personal use only Total Receivables (ex impairments) • Key focus areas are… 450 • Continued highly efficient credit decisioning process • Pricing management critical in a rapidly increasing Millions i
Slide 29: The quality of the finance book continues to improve
The quality of the finance book continues to improve… For personal use only Total New Lending with Premium Tier Risk Average Credit Score Split 200 720 180 700 160 680 Avergae consumer CENTRIX 140 120 660 credit score 100 640 80 620 60 600 40 20 580 - 560 H1FY20 H2FY20 H1FY21 H2FY21 H1FY22 H2FY22 Pr
Slide 30: Insurance returns improving
Insurance returns improving through less consumers driving less and higher investment returns For personal use only Mechanical Breakdown Insurance Loss Ratio Performance (claims expense over premium) • Strategic initiatives - Benefits of our risk pricing 75% analysis flowing through into improved lo
Slide 31: Credit management performance expected to improve
Credit management performance expected to improve For personal use only Total Debt Loaded ($000s) • Business recovering from historically low consumer arrears 250,000 236,711 225,044 and corporates working back into recovery action 200,000 • In FY22 debt load down 54% on pre-pandemic levels and 150,
Slide 32: Supporting NZ's fleet transition
For personal use only Supporting NZ’s fleet transition 32 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 33: Transitioning to a cleaner NZ vehicle fleet
Transitioning to a cleaner NZ vehicle fleet The NZ vehicle fleet has 830,000 vehicles that are more than 20 years old For personal use only EV/Hybrid sales as % of total sales 5.0% • Fleet still has 830,000 vehicles more than 20 years 4.5% old…vehicles that are above the average scrapping age 4.0% 3
Slide 34: EVs and Turners Subscription
EVs and Turners Subscription For personal use only Turners Vehicle Subscriptions at Month End • Turners Subscription provides a highly flexible way of 175 accessing exclusive use of a vehicles. Rolling 30-day subscription driver pays subscription + fuel. 155 135 • in partnership with EECA we have ex
Slide 35: Looking forward
For personal use only 3. Looking forward … 35 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 36: Resilient and well diversified, poised for further growth ahead
Resilient and well diversified, poised for further growth ahead For personal use only The business benefits from strong geographical and earnings diversification during restrictions. % Change Yr on Yr, New Car vs Used Car Sales 1. Used car market is resilient…proven over time 50% 2. 830,000 cars in
Slide 37: Roadmap to $50M NPBT
Roadmap to $50M NPBT… For personal use only Net Profit Before Tax Bridge ($M) • Auto retail growth continues to come from retail optimisation and branch expansion. We are targeting a 10% market share. • Continued improvement in the way we source should deliver margin expansion • Headwinds in finance
Slide 38: Trading update + outlook
Trading update + outlook For personal use only • Whilst the pandemic uncertainty has decreased, NZ’s economic uncertainty has increased, therefore it is still too early to give guidance. • Auto Retail – car sales strong, margins moderating, demand shifting to the lower price end of the market, furth
Slide 39: Key messages
Key messages … For personal use only 1. Business is in the best shape it has ever been Robust business with a sustainable dividend yield. We achieved 15% growth in PBT in FY22…another record year for the business, and 48% growth in profits since FY19. 2. Used car market is mostly needs based…lots of
Slide 40: Shareholder Discussion
For personal use only Shareholder Discussion • 2022 • 2022 40 40 ASMASM PRESENTATION PRESENTATION TURNERS TURNERS AUTO AUTO GROUP GROUP
Slide 41: Resolutions
For personal use only 3. Resolutions 41 • 2022 ASM PRESENTATION TURNERS AUTO GROUP
Slide 42: 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 auditor’s remuneration. • RESOLUTION 2: That Grant Baker, who retires by rotation and has offered himself
Slide 43: Voting
Voting For personal use only PROXY Resolution: Proxies FOR AGAINST DISCRETION Auditor’s reappointment / remuneration 8,332,474 78,591 2,275,152 Re-election of Grant Baker 8,378,446 317,925 1,992,846 Re-election of Alistair Petrie 8,141,502 316,558 2,229,884 Total proxies received in respect of 10,68
Slide 44: Close of meeting
Close of meeting For personal use only Todd Hunter Group CEO T: 64 21 722 818 E: todd.hunter@turners.co.nz Aaron Saunders Group CFO T: 64 27 493 8794 E: aaron.saunders@turners.co.nz 44 • ASM 44 • 2022 2022PRESENTATION ASM PRESENTATION TURNERS TURNERS AUTO AUTO GROUPGROUP
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