Results Presentation For the Financial Year Ending 31 December 2013 - - PowerPoint PPT Presentation

Results Presentation For the Financial Year Ending 31 December 2013

TURNERS AUCTIONS

Established in 1967 Public company listed on NZX in 2002 Market leader in second hand car, truck and machinery market in New Zealand Over 320 full time employees located across New Zealand 10 locations across New Zealand $4.8m in NPAT in FY13 Total dividends declared for FY13 (fully imputed) of 16.0 cents per share

A market leader in the second hand vehicle market with an exciting strategy for growth through a new multi‐channel business model

AGENDA

• Operating Environment
• Management and Board Priorities
• Financial Results and Five Year Performance
• Division Performance
• Business Transformation
• Blueprint for Growth
• Progress and Outlook

FY13 OPERATING ENVIRONMENT

• Recovery in numbers of used cars bought and sold in NZ market (up 5.4% in 2013),

however, still 8% down on peak levels in 2005

• Recovery in sales of used Japanese Imports in NZ (up 26.4% in 2013 to 98,971)
• New car sales in NZ market had a record year up 11.6% to 108,349 (light and

passenger vehicles sold)

• More vehicles being written off as vehicle fleet ages. De‐registered vehicles

written off by insurers up 2% to 22,294

• General demand for vehicles seems to be improving as economy recovers
• Customers continue to research and transact more online, and migrate to mobile

internet platforms

• Still aggressive competition in the market place for consumer finance and vehicle

re‐marketing services

FINANCIAL RESULTS For the Year Ended 31 December 2013

Turners Auctions delivered a strong result for the financial year Revenue up 14% to $89.2 million NPAT up 14% to $4.8 million

• Year on year improvement mostly driven by growing returns from the company’s

Fleet and Finance divisions

• Reflects strategic shift from auction sales to higher margin retail sales, in line

with Turners Auctions’ new multi‐channel business model

• Improved second half trading compared to first half
• Final dividend of 9.0 cps, delivering total FY13 divided of 16.0 cps

12 months to 31 December FY13 FY12 Year on Year % change Revenue ($m) 89.2 78.2 14% NPAT ($m) 4.8 4.2 14% Final Dividend (cents per share) 9.0 8.0 12% Total Dividends (cents pre share) 16.0 15.0 7%

FIVE YEAR FINANCIAL PERFORMANCE

1 2 3 4 5 FY09 FY10 FY11 FY12 FY13

$million NPAT FY09 FY10 FY11 FY12 FY13 Special DPS 0.0 6.0 6.0 0.0 0.0 Ordinary DPS 12.0 11.0 11.0 15.0 16.0 0.0 5.0 10.0 15.0 20.0 Total Dividend (cps) 20 40 60 80 100 FY09 FY10 FY11 FY12 FY13 $million Operating Revenue

FLEET

High margin, trading division Turners purchases vehicles for resale (CashNow) Purchasing used vehicles from Japan and purchasing vehicles domestically

FINANCE

Consumer finance offering to assist retail customers with purchasing vehicles (BuyNow) Motor vehicle insurance and Mechanical breakdown insurance are part of the suite of finance and insurance products offered to customers

AUCTIONS

Logistics and sales business Sell vehicles through Turners Auctions on behalf of vendors Clients include lease companies, rental cars, government, finance companies, dealers, the public, insurance companies, transport companies, finance companies, contracting businesses and receivers and liquidators

DIVISION PERFORMANCE

Turners’ profit is generated from three revenue streams:

FLEET DIVISION Vehicles acquired by Turners for resale

• More aggressive domestic pricing attracting both retail buyers and sellers
• Growing popularity of Turners’ CashNow service with 56% year on year increase in

vehicles sold to Turners (7,444 units)

• Expanded focus to include end of life and damaged vehicles (6% of purchases in

2013)

• Increase in cost of sales as stock levels have grown
• 61% increase in purchases of imported vehicles in 2013 as demand recovers

Revenue $46.9 million, up 30% Operating profit $2.1 million, up 70%

10 20 30 40 50 FY09 FY10 FY11 FY12 FY13

$million

Revenue

1 2 3 FY09 FY10 FY11 FY12 FY13

$million

Operating Profit

FINANCE DIVISION Consumer finance to assist retail buyers

• High margin operating division
• Delivered excellent profit growth
• Retail sales (BuyNow) allowing for increased involvement in the sales process ‐

leading to more opportunities to sell add‐ons such as insurance and finance

• Loan book has grown 20% from 2012 to $25.6m

Revenue $6.0 million, up 10% Operating profit $1.9 million, up 33%

1 2 3 4 5 6 7 FY09 FY10 FY11 FY12 FY13

$million

Revenue

1 2 FY09 FY10 FY11 FY12 FY13

$million

Operating Profit

AUCTIONS DIVISION Sell vehicles at auction on behalf of vendors

• Auctions revenues in line with prior year despite loss of major contract early in

2013 financial year

• Operating profit impacted by significant IT investment costs as part of long term

growth strategy and one‐off restructure costs in FY13

• Growth in Car, Truck and Machinery revenue offset a drop in damaged vehicle

sales

Revenue $36.3 million, down 1% Operating profit $2.9 million, down 11%

10 20 30 40 FY09 FY10 FY11 FY12 FY13

$million

Revenue

1 2 3 FY09 FY10 FY11 FY12 FY13

$million

Operating Profit

BLUEPRINT FOR GROWTH

TURNERS TRADITIONAL BUSINESS MODEL

Very successful, market leader in second hand vehicle auction sales

CHANGING ENVIRONMENT

• Ever increasing use of the internet by retail customers as a research and

transacting tool

• TradeMe dominating the online motor vehicle classifieds market and online

audience

• Continuing adoption of mobile devices for using the internet
• Rising costs of infrastructure
• A vehicle fleet in NZ that continues to age (1/3rd of vehicles in NZ Fleet 16 years
• r older) exacerbated by emissions regulations
• All vendors pushing for higher yields

1,000 1,100 1,200 1,300 2009 2010 2011 2012 2013 Transactions (000s) Year

Total Used Vehicle Transactions in NZ Market (source NZTA)

THE OPPORTUNITY

Approximately 1.3 million used vehicle transactions every year in the NZ market Turners holds less than 10% of this highly fragmented market THE OPPORTUNITY Grow market share by creating more channels to source vehicles and sell vehicles Grow the finance business by selling more vehicles with add‐on finance and insurance products

TRANSACTION TYPE − Public to Dealer − Public to Public − Dealer to Public − Dealer to Dealer − Ex Overseas VEHICLE TYPE − Second hand vehicles − De‐registered vehicles − Trucks and machinery

BLUEPRINT FOR GROWTH

Vendors

Consign product

Buyers

Retail (BuyNow) TradeMe Auction Buy product Auction Events TAL Online Auctions Brokered sales

Fleet

More product, multiple retail channels, more buyers

BLUEPRINT FOR GROWTH

Multiple retail channels Access to more buyers Better prices More vendors wanting to sell through Turners Increase Fleet and Consignment stock More options for buyers More intimate sales process, more finance sales Higher margins

Self‐sustaining growth model

GROWTH STRATEGY: BUY PRODUCT

Grow the Fleet business through CashNow brand, target both ‘running’ and ‘end of life’ vehicles and improve sales conversion

GROWTH STRATEGY: BUY PRODUCT

• Many vehicle sellers want a quick no‐fuss sale for a fair price

with a trusted party

• Turners has a high trust brand, sales history to transparently

value vehicles, and both a physical and online presence to deliver the service

• Extended CashNow service to end of life vehicles
• Strong lead generation through TV and online advertising

supported by close management of the leads

• Domestic purchases through CashNow up 56% year on year to

7,444 units

GROWTH STRATGY: SHIFT SALES

Shift sales into more retail customer channels (BuyNow and TradeMe) which means higher prices, better proposition for vendors

SHIFT SALES: RETAIL

• Retail sale (BuyNow) to customer, with finance option available
• Customer can purchase a selection of vehicles, any time, at a

negotiated sales price. This is a more convenient way to buy and therefore appeals to a far larger pool of potential buyers

• This one on one method of sale increases our opportunity to sell add‐on finance

and insurance products

• 9% of total vehicle sales were through BuyNow in FY13 compared to 5% in FY12
• Purchasing by retail customers for cars increased from 51% to 54% of total sales

SHIFT SALES: TURNERS & TRADEME

Turners trusted brand can command a premium, this is attracting new vendors Turners are regularly selling

• ver 1,000 items per week on

TradeMe across NZ Turners are using TradeMe to market and sell cars, trucks, plant and equipment, general goods Leverage the powerful combination of Turners trusted brand, infrastructure and processes with the online audience reach of TradeMe.

SHIFT SALES: TURNERS.CO.NZ

New web platform launched in April Optimised for smart device use (phone and tablet) Delivering significant growth in user traffic (Unique Browsers up 22% to 1.9m in 2013) Online tender and auction functionality developed and in testing New online platform and website launched in 2013

GROWTH STRATEGY: FINANCE

More intimate sales process in retail customer channels of BuyNow and TradeMe, means more finance and insurance sales

GROWTH STRATEGY: FINANCE

More intimate sales process in “retail” channels of BuyNow and TradeMe, means more finance and insurance sales One on one time with customer allows our Finance specialists time to assess customers needs, tailor offerings and build rapport Our attach rate of finance contracts doubles from physical auction to BuyNow (retail sale) Strong profits have been generated by recourse lending (where Turners take the risk

• n the loan)

Loan book increased by 20% to $25.6m in FY13

5 10 15 20 25 30 FY09 FY10 FY11 FY12 FY13

$million

Total Finance Receivables at Year End

FY14 OUTLOOK

• Markets we operate in continue to grow which is positive, however this does

attract competitors. We expect continued pressure from these organisations throughout FY14

• New consumer legislation becomes effective as of 18 June 2014
• No large IT projects required, however we will continue to enhance evolve and

develop the new systems we have deployed in FY13

• Management focus will be on the continued implementation of strategies to buy

more product, shift sales into retail channels and write more finance.

Contact for Questions: Todd Hunter ‐ CEO (09) 580 9358 todd.hunter@turners.co.nz Aaron Saunders – CFO (09) 580 9361 aaron.saunders@turners.co.nz

DISCLAIMER

The information in this presentation does not contain all in formation necessary to make an investment decision. It is intended to constitute a summary of certain information relating to the performance of Turners Auctions Limited (“Turners”) for the period ended 31 December 2013. Investors must rely on their own examination of Turners. Investors should consult with their own legal, tax, business and/or financial advisors in connection with any acquisition of securities. The information contained in this presentation has been prepared in good faith by Turners. No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation, any

• f which may change without notice. To the maximum extent permitted by law, Turners, its directors, officers, employees and

agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence on the part

• f Turners, its directors, officers, employees and agents) for any direct or indirect loss or damage which may be suffered by any

recipient through use of or reliance on anything contained in, or omitted from, this presentation. This presentation is not a prospectus, investment statement or disclosure document, nor an offer of shares for subscription, or sale, in any jurisdiction.