FY18 Full Year Results Presentation For 12 months ending 31 March 2018
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 RETAIL INSURANCE SERVICES Helping businesses of any size in New Controlling the buying and selling of Helping customers with simple and Zealand and Australia with better second hand cars, trucks and attractive finance and insurance management of their credit machinery to earn a transactional products, and building annuity challenges margin and delivering cross-sell revenue streams opportunities for Finance and Turners has a growing presence in the Turners has a portfolio of reputable Insurance credit management sector in both businesses offering finance and New Zealand and Australia through its Turners and Buy Right Cars combined insurance products to customers EC Credit business are the largest second hand vehicle across New Zealand, including retailers in New Zealand personal, motor vehicle loans and insurance FY18 Full Year Results Presentation 2
THE KIWI CAR ECONOMY 164,000 153,000 3.85m used cars were imported New passenger and light into NZ in year ended Mar commercial vehicles sold into NZ 7,232 EVs 18 in year ended Mar 18 Light vehicles in the NZ vehicle fleet 7,232 as at the end of March 2018, more than double its size 158,000 in March 2017. Vehicles de-registered in FY18 14yrs 61% Is the average age of used 21 years vehicle in NZ since 2013 3,500 of people ended up spending The average age light less than $10,000 on their car, vehicles were scrapped 80% were less than $20,000 from fleet was 22 years for Registered dealers an import and 21 years for in NZ NZ new Source: NZTA, Ministry of Transport, MBIE, Turners Market Research Nov 17 Note 1. Dealer-to-public plus ex-overseas sales FY18 Full Year Results Presentation 3
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 • New car registrations (passenger and light 1,200,000 commercial) up 5.4% to 153,000 units registered end- 1,000,000 March 2018. 800,000 • 164,000 used vehicles imported from overseas (53% of 600,000 total new registrations for FY18) 400,000 200,000 • Intense competition for originators 0 F10 F11 F12 F13 F14 F15 F16 F17 F18 • Indications of a tightening credit market Car COO Car Deregs Trucks Used vehicle transactions in NZ (including deregistered vehicles and trucks) FY18 Full Year Results Presentation 4
FY18 Fin inancial Results FY18 Full Year Results Presentation
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 Shareholders’ Equity $214.3m as at 31 Mar 18 NET PROFIT BEFORE TAX 35 Final Quarter Dividend 5.0 cps Total FY Dividend 15.5cps, +7% 30 25 Earnings Per Share 29.3cps, +15% Millions 20 15 FY19 NPBT Guidance $34m to $36m (up 13% on mid) 10 5 NPATA – is net profit after tax and tax adjusted add back of amortised acquisition intangibles IE. Autosure portfolios inforce and customer relationships 0 FY14 FY15 FY16 FY17 FY18 FY18 Full Year Results Presentation 6
FY17: FY18 REVENUE BRIDGE $330.5m • Continued improvement in retail “end - user” sales in Turners Cars driving growth in add-on finance and insurance sales $251.0m • Full year impact of BRC trading • Finance reflects growth in receivables ledger over the last 18 months • Insurance has a step change in revenue as a result of Autosure transaction FY18 Full Year Results Presentation 7
FY17: FY18 PROFIT BRIDGE • Turners Group shows incremental improvement $31.1m 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 Credit Control showing good underlying growth in NZ whilst Australia remains work in progress. • Corporate and Other costs include ASX listing costs, acquisition amortisation and acquisition earnings adjustments. FY18 Full Year Results Presentation 8
EARNINGS PER SHARE AND DIVIDEND Dividend Policy Change: Increase in pay out ratio of EARNINGS PER SHARE 50% to 60% of NPAT 35 • FY18 fully imputed quarterly dividends and fully 29.3 cps 30 imputed • Q1 @ 3.0c per share 25 • Q2 @ 3.0c per share Cents per share • Q3 @ 4.5c per share 20 • Q4 @ 5.0c per share 15 10 • FY18 full year dividend of 15.5 cents per share (FY17: 14.5 cps imputed) 5 0 • Fully imputed dividend yield of 5.3% at current FY14 FY15 FY16 FY17 FY18 price of $2.93 Prior years adjusted for 10:1 share consolidation undertaken in FY16 FY18 Full Year Results Presentation 9
BALANCE SHEET $m FY18 FY17 Cash and cash equivalents 25 69 Other Financial Assets 53 10 • Cash change due to investment of $42m into term deposit for insurance reserves. Explains Finance Receivables 290 207 increase in Other Financial Assets Inventory 39 45 • Growth in Finance Receivables from MTF Property, Plant and Equipment 36 19 Non recourse and OFL Intangible Assets 171 172 • Focus on faster turn in inventory and a Other Assets 38 35 reduction in aged stock has delivered TOTAL ASSETS 652 557 improved working capital efficiency Borrowings 317 266 • $19m was invested in capital projects primarily in updating and repositioning our Other Payables 35 28 branch network Deferred Tax 19 20 Insurance Contract Liabilities 49 43 Other Liabilities 18 28 TOTAL LIABILITIES 438 385 FY18 Full Year Results Presentation 10
FUNDING MIX FY18 $m % of Total FY17 $m % of Total • $30M capital raise in Oct 17 652 557 TOTAL ASSETS • Convertible Bonds of $26M 214 33% 172 31% mature Sept 2018. Equity 26 4% 26 5% • Growth in Securitisation Convertible bonds Warehouse reflects growth in 133 20% 69 12% Securitisation Funding (BNZ) finance book and substitution Bank Funding [Corporate BNZ & 97 15% 122 22% of corporate bank funding ASB] • $140m syndication facility with 59 9% 49 9% MTF Finance Receivables Funding ASB and BNZ completed May 49 8% 43 8% 2018. Insurance Contract Liabilities 7 1% Life Investment Contract Liabilities 13 2% • Growth in MTF funding driven 49 8% 43 8% by growth in Turners Finance. Payables and Deferred Revenue 19 3% 20 4% Deferred tax liability FY18 Full Year Results Presentation 11
Sector Performance
FY18 SECTOR RESULTS $M SECTOR REVENUE Debt FY18 REVENUE 350 Manageme Automotive Retail the largest nt 300 contributor: 68% revenue and 250 41% Operating Profit 200 Finance & 150 Insurance Annual trends reflect Auto Retail 100 acquisition and organic growth 50 0 Step up in FY18 in Auto Retail – FY15 FY16 FY17 FY18 acquisition of Buy Right Cars; Automotive Retail Finance and Insurance Debt Management FY18 OP PROFIT and Insurance – acquisition of $M Debt SECTOR OPERATING PROFIT Autosure Manageme 40 nt Balance between transactional 30 Auto Retail income from Auto Retail and 20 Finance & annuity income from Finance & Insurance Insurance. Consistent returns 10 from Credit Management 0 business FY15 FY16 FY17 FY18 FY18 Full Year Results Presentation 13
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 revenue growth of 10%. 90% • Continuing increase in fixed price sales (cf auction or tender) - 80% up 17% YoY with sales to end users at 70% of all car purchases • Corresponding increase in finance contract sales (16% increase 70% in loans written, 15% increase in MBI policies sold) 60% • Percentage of ‘owned vehicles’ increased to 50% (up from 48%) of transactions – better margins 50% • Expansion of physical footprint with new sites for both Cars and 40% Trucks & Machinery • Recent market research confirms Turners as most trusted used 30% car brand in NZ 20% • Recently inked partnership with Auto Super Shoppes (83 workshops in NZ) for delivery of service and maintenance 10% FY16 FY17 FY18 products % Sales to Wholesale % Sales to End User FY18 Full Year Results Presentation 14
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