1 • 2019 ANNUAL MEETING TURNERS AUTOMOTIVE GROUP 2019 ANNUAL MEETING 18 September 2019
2 • 2019 ANNUAL MEETING Board of Directors Grant Baker Non-executive Chairman Paul Byrnes Non-executive Dep Chairman Matthew Harrison Non-executive Director Alistair Petrie Non-executive Director Antony Vriens Independent Director John Roberts Independent Director Martin Berry Independent Director
3 • 2019 ANNUAL MEETING Meeting Agenda General Business Approval of amended Constitution Re-election of Grant Baker and Alistair Petrie Auditors’ Remuneration Resolutions are per Notice of Meeting Shareholder Discussion Address from Director, Martin Berry Address from the CEO, Todd Hunter Address from the Chair, Grant Baker Presentations Close of Meeting • • • • • •
4 • 2019 ANNUAL MEETING Chairman’s Presentation Grant Baker
Ten Years of Transformation 5 • 2019 ANNUAL MEETING Acquisition of bolt on insurance and finance businesses Investment in MTF Acquisition Buy Acquisition of Acquisition of EC Acquisition of Right Cars Autosure Oxford Finance Credit Control FY09- FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY14 • • Strategic Review Business Bakery acquires 19.47% Acquisition of Acquisition of 100% • • Reducing complexity strategic stake in Grant Baker appointed Chair of of Turners Auctions • Building on Dorchester Pacific Turners Auctions • strengths Capital restructuring • Strategic review and move towards consumer insurance and lending
6 • 2019 ANNUAL MEETING 2016 Turners Auctions 2014 76 6.8 19.2 +182% Buy Right Cars 12 11.1 3.4 -0.9 (126%) Autosure Insurance 2016 34 4.6 8.2 +283% 2.9 Track record of building value through acquisition growth % Change Company Date Acquisition Price ($m) NPBT at time of Acquisition ($m) NPBT for FY19 ($m) EC Credit Control 12 2012 17.8 3.6 6.3 +75% Oxford & Southern Finance 2014 +78%
7 • 2019 ANNUAL MEETING NPBT ($m) 197 111 1.8 Market Capitalisation ($m) 17.0 5.0 - Dividend per Share (cps) 29.0 4.9 (18.3) 654 A Transformed Business 127 149 Total Assets ($m) 226 74 16 Shareholder Equity ($m) 2019 2014 2009 As at March YE Numbers adjusted for 1-10 share swap in 2016
8 • 2019 ANNUAL MEETING • Dividend Policy Change: Increase in pay 35.0 FY15 FY16 FY17 FY18 FY19 out ratio to 60% to 70% of NPAT Strong Dividend Yield • Turners pays quarterly dividends • Gross dividend yield of 9.9% at indicative price of $2.40 (as at 17/09/19) • 4.0m shares purchased during Share Buy Back programme reducing issued shares by 4.5%. 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Earnings and Dividend per Share (Cents) Dividends fully imputed from FY17 on 33.0 29.3 26.3 25.5 24.7 17.0 15.5 14.5 13.0 10.0 Earnings per share [cents] Dividend per Share
9 • 2019 ANNUAL MEETING 200 Collecting over $6m per month of hard $6m debt Oxford Finance commercial loans per day in We write over 40 consumer and 40 across the business We employ over 900 kiwis 900 policies per day We sell over 200 insurance over 100 cars per day Turners Today minutes, which equates to Turners sell 1 car every 6 6 mins top 10 yielding stocks on NZX Gross dividend yield within the 9%+ Whangarei to Invercargill Locations in NZ from 33 seller of vehicles NZ’s largest buyer and #1 to collect debt.
10 • 2019 ANNUAL MEETING Commenced in-depth strategic review and identification of future Jim Quinn ahead from a stronger footing .“ and adapt for the challenges challenge current processes creates the opportunity to shape. That progress also period stronger and in better times and has come out of that challenging issues in recent with fundamental and “ This Board has had to deal Board Report For FY19 Investment in Collaborate Corp (post year end transaction) strategy. (Governance and Advisory Services) used import vehicle sector and impairments on MTF non-recourse Prudent management of shareholders’ funds – new $25m, 3 year Bond Continued progress on simplifying the business is delivering benefits and identifying areas for further improvement Independent external Board review, highlighting strength of the Board FY19 underlying performance flat on prior year as market headwinds in Addition of Martin Berry to the Board in 2019 Programme to support funding for growth Excluding impairments, generated a record NPBT result of $33.6m lending adversely affected result • • • • • • • •
11 • 2019 ANNUAL MEETING ONLINE EXPERIENCE: More of the customer experience is transitioning online particularly for owning one, two or more cars per household, to flexible ownership and subscription models. DISRUPTION FROM ALTERNATIVE OWNERSHIP MODELS which could see people moving away from INDUSTRY CONSOLIDATION is inevitable and we are in the midst of this right now. AGGREGATOR AND COMPARISON SITES are proliferating finance and insurance DATA AND TECHNOLOGY: Big data and technology are changing how and where we do business. REGULATION AND COMPLIANCE across all our businesses is increasing. CUSTOMER-CENTRIC: Focus on customer needs is essential Market Dynamics and Trends • • • • • • •
12 • 2019 ANNUAL MEETING Our Future Opportunity Our strength is in retail and we are the largest and most trusted brand in the industry Large retail market with sizeable forward demand due to NZ’s ageing fleet Simplification of our business will enable greater efficiencies, de-risk our business and offer a higher return on invested funds We are well positioned to benefit from changing market dynamics, including customer demand for digitisation • • • •
13 • 2019 ANNUAL MEETING Increasing the returns we core business and De-risk by focusing on our capital efficient way Accelerate growth in a Simplify the business OUR STRATEGY IS TO…. opportunities innovative auto adjacent Participate in new and business of Auto retail market share in the core Significantly increase We are moving forward with a capital efficient growth strategy, with an increased focus on deliver to our shareholders THIS WILL ENABLE US TO… strengths around credit Turners’ core auto retail business. Our Strategy FOR OUR KEY STAKEHOLDERS THIS MEANS… Sharpen our focus on meeting customers needs Improving the efficiency of our business Reducing cyclical swings in our business, especially • • • • • • • • •
14 • 2019 ANNUAL MEETING CEO’s Presentation Todd Hunter
15 • 2019 ANNUAL MEETING The Kiwi Car Economy 3.85m Light vehicles in the New Zealand vehicle fleet 953,000 Cars in the light vehicle fleet that are 20 years or older 1.12m Used cars were traded in FY19 (down 1% YoY) 18.5 years Average age light vehicles were scrapped in FY19 (19.5 years for imports, 17.5 years for NZ-new) 16,000 EVs registered in New Zealand to August 2019
16 • 2019 ANNUAL MEETING 02 13 14 15 16 17 18 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 01 03 11 04 05 06 07 08 09 10 11 12 13 14 15 16 17 12 10 NZ Used Car Market Still At Strong Historic Levels Annual registrations of used, ex-overseas vehicles have plateaued. • Underlying demand still strong with more cars exiting the fleet (cost of repairs increasing, stricter WoF regime) • Mar 2020, all vehicles imported into the country required to have ESC, impact in sub $8k budget segment. • Margins have recovered from low point Oct/Nov 2018. • Less than 10% of Turners volume comes from used imports Source: NZTA – Used Car Change of Ownership Stats Annual changes in used vehicle ownerships 09 03 08 07 06 05 04 02 0 01 250,000 200,000 150,000 100,000 50,000 18 • After a period of growth used car sales
FY19 Year At A Glance 17 • 2019 ANNUAL MEETING EXPANSION OF NATIONAL INCREASED REFERRER IMPROVED INSURANCE LOSS RETAIL NETWORK NETWORK RATIOS INTEGRATION OF TURNERS MANAGED HEADWINDS IN NEW BOND ISSUE TO FINANCE INTO OXFORD IMPORT MARKET SUPPORT GROWTH FUNDING FINANCE REBRANDING OF BUY RIGHT COMMENCED GROUP HIGHER QUALITY LENDING CARS STRATEGY REVIEW
18 • 2019 ANNUAL MEETING 0 200 300 400 FY15 FY16 FY17 FY18 FY19 Revenue (NZ$m) 2H 1H 5 0 10 15 20 25 FY15 FY16 FY17 FY18 FY19 Net Profit After Tax (NZ$m) 2H 100 26.2cps -10% FY19 Results Snapshot $226.4m as at 31 Mar 19 REVENUE ADJUSTED NPBT (excluding BRC brand write down) Record $33.6m NET PROFIT BEFORE TAX EARNINGS PER SHARE SHAREHOLDERS’ EQUITY NET PROFIT AFTER TAX FINAL DIVIDEND 5.0 cps FY19 Dividends 17.0cps NPATA 1H $336.6m +2% $29.0m -7% $22.7m -3% $24.3m -3% NPATA – is net profit after tax and tax adjusted add back of amortised acquisition intangibles IE. Autosure portfolios inforce and customer relationships.
19 • 2019 ANNUAL MEETING $M 300 400 FY15 FY16 FY17 FY18 FY19 SECTOR REVENUE 100 Automotive Retail Finance and Insurance Debt Management Auto Retail Finance & Insurance Debt Management 200 0 FY19 Sector Results 20 Auto Retail Finance & Insurance Debt Management FY19 REVENUE 0 10 30 SECTOR OPERATING PROFIT 40 50 FY15 FY16 FY17 FY18 FY19 $M FY19 OP PROFIT
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