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

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 $4.8 million Year on year improvement mostly driven by growing returns from the company’s • Fleet and Finance divisions Reflects strategic shift from auction sales to higher margin retail sales, in line • with Turners Auctions’ new multi ‐ channel business model Improved second half trading compared to first half • Final dividend of 9.0 cps, delivering total FY13 divided of 16.0 cps • Year on Year 12 months to 31 December FY13 FY12 % change Revenue ($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 Operating Revenue 100 Total Dividend (cps) 20.0 80 15.0 60 $million 10.0 40 5.0 20 0.0 0 FY09 FY10 FY11 FY12 FY13 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 NPAT 5 4 $million 3 2 1 0 FY09 FY10 FY11 FY12 FY13

DIVISION PERFORMANCE Turners’ profit is generated from three revenue streams: 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

FLEET DIVISION Vehicles acquired by Turners for resale Operating Profit Revenue 50 3 40 2 $million $million 30 20 1 10 0 0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Revenue $46.9 million, up 30% Operating profit $2.1 million, up 70% 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 •

FINANCE DIVISION Consumer finance to assist retail buyers Operating Profit Revenue 7 2 6 5 $million $million 4 1 3 2 1 0 0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Revenue $6.0 million, up 10% Operating profit $1.9 million, up 33% 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 •

AUCTIONS DIVISION Sell vehicles at auction on behalf of vendors Revenue Operating Profit 40 3 30 $million $million 2 20 1 10 0 0 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Revenue $36.3 million, down 1% Operating profit $2.9 million, down 11% 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

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 (1/3 rd of vehicles in NZ Fleet 16 years • or older) exacerbated by emissions regulations All vendors pushing for higher yields •

THE OPPORTUNITY Total Used Vehicle Transactions in Approximately 1.3 million used NZ Market (source NZTA) vehicle transactions every year in the 1,300 NZ market Transactions (000s) 1,200 Turners holds less than 10% of this highly fragmented market 1,100 THE OPPORTUNITY 1,000 2009 2010 2011 2012 2013 Year Grow market share by creating more VEHICLE TYPE channels to source vehicles and sell TRANSACTION TYPE − Second hand vehicles − Public to Dealer vehicles − De ‐ registered vehicles − Public to Public − Trucks and machinery − Dealer to Public − Dealer to Dealer Grow the finance business by selling − Ex Overseas more vehicles with add ‐ on finance and insurance products

BLUEPRINT FOR GROWTH More product, multiple retail channels, more buyers Retail (BuyNow) TradeMe Auction Vendors Consign Buyers product TAL Online Auctions Auction Buy Events product Fleet Brokered sales

BLUEPRINT FOR GROWTH Self ‐ sustaining growth model Multiple retail channels Access to more buyers More intimate sales process, Better prices more finance sales More vendors wanting to sell Higher margins through Turners Increase Fleet and Consignment stock More options for buyers

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 Leverage the powerful combination of Turners trusted brand, infrastructure and processes with the online audience reach of TradeMe. Turners trusted brand can command a premium, this is attracting new vendors Turners are regularly selling over 1,000 items per week on TradeMe across NZ Turners are using TradeMe to market and sell cars, trucks, plant and equipment, general goods

SHIFT SALES: TURNERS.CO.NZ New online platform and website launched in 2013 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

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