Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Turners — Shareholder Meeting (September 2016)
41 slides from Turners Automotive's shareholder meeting presentation, Sep 13, 2016
Slide 1: Annual Meeting of Shareholders
Annual Meeting of Shareholders Grant Baker: Chairman Todd Hunter: Chief Executive Officer 2016 Annual Meeting Presentation
Slide 2: Agenda
AGENDA Welcome Chairman’s Address CEO’s Address Discussion Resolutions as per Notice of Meeting Close of Annual Meeting Chairman Grant Baker and CEO Todd Hunter 2016 Annual Meeting Presentation 2
Slide 3: Board of Directors
BOARD OF DIRECTORS Entrepreneurial Board with a range of Grant Baker Non-executive Chairman Appointed September 2009 Represents Business Bakery and other interests: 18.73% skills, expertise and knowledge that are of value to our company Paul Byrnes Deputy Chairman and Executive Director Appointed Fe
Slide 4: Leadership Team
LEADERSHIP TEAM Turners Limited Todd Hunter, Chief Executive Officer Talented, experienced and highly capable leadership team Paul Byrnes, Executive Director CEO Succession: Barbara Badish, Group Financial Controller Todd Hunter, CEO Turners Group, appointed as CEO Turners Sonya Rose, Group Human Re
Slide 5: Chairman's Address
Chairman’s Address Grant Baker 2016 Annual Meeting Presentation 5
Slide 6: An Integrated Automotive Financial Services Group
AN INTEGRATED AUTOMOTIVE FINANCIAL SERVICES GROUP Primarily operating in the automotive sector and providing strength in three key areas: AUTOMOTIVE DEBT FINANCE AND RETAIL MANAGEMENT INSURANCE SERVICES 37% of FY16 41% of FY16 22% of FY16 operating profit1 operating profit operating profit Controlli
Slide 7: Our Strategy Is Focused on Growth
OUR STRATEGY IS FOCUSED ON GROWTH ORGANIC GROWTH: Identify opportunities to grow each business: More customers, more products and services, more channels GROUP INTEGRATION: Cross selling product across the group, ORGANIC GROUP and building a common operating and funding platform for GROWTH INTEGRATI
Slide 8: A Growing National Footprint
A GROWING NATIONAL FOOTPRINT Rapidly Expanding Through Acquisition And Organic Growth Turners operates a national network of 27 branded automotive retail sites as well as a referral network for its Finance and Insurance business of approximately 500 sites across the country. Our Debt Management busi
Slide 9: Growth Strategy Delivering Increasing Results
GROWTH STRATEGY DELIVERING INCREASING RESULTS Sustainable growth strategy delivering increasing shareholder value with track record of improving financial results OPERATING REVENUE $172M NET PROFIT AFTER TAX $15.6M SHAREHOLDERS’ FUNDS $129.8M Up 76% year on year Up 437% in past five years Operating
Slide 10: Earnings Per Share and Dividend
EARNINGS PER SHARE AND DIVIDEND EARNINGS PER SHARE 25 CPS Dividend Policy: Payout of between 50% and 55% of net Reflects reduction in level of tax losses utilised profit after tax Earnings Per Share • FY16 full year dividend of 13 cents per share 0.40 • Move to quarterly dividends from 1 April 2016
Slide 11: Addressing the Value Gap
ADDRESSING THE VALUE GAP Shareholder funds up 291% As at 31 March 2013 2014 2015 2016 Grown from a loss to NPBT of over $20 million Shareholder Funds ($m) $33 $74 $121 $130 Earnings per share up 174% NPBT ($m) $-0.1 $4.9 $19.0 $21.6 Share price has only increased 10% Share Price* $2.80 $2.25 $3.20 $
Slide 12: Funding for Growth
FUNDING FOR GROWTH Turners has a diversified debt and capital funding base: AS AT 31 MARCH 2016 EQUITY New shares can be issued as part payment for acquisitions Shareholders’ Funds: $129.8M Completion of buyback of small shareholding and 1:10 share Equity ratio: 36% consolidation in FY16 DEBT Borrow
Slide 13: Bond Issue
BOND ISSUE 2014 Bond Issue • ($23m) coming to maturity on 30th September • 75% of bond holders have exercised option to convert returns to shares in Turners Limited rather than cash ($17,435,485) • Anticipated conversion price around $2.95, good outcome for existing bond holders (lower of $3 per sha
Slide 14: FY16 Highlight Events
FY16 HIGHLIGHT EVENTS ACQUSITION GROWTH • April 2015: Greenwich Life • August 2015: Southern Finance • Increased investment in Motor Trade Finance to 8% • Post Year-End: Pacific Life and Buy Right Cars GOVERNANCE AND • January 2016: Appointment of Alistair Petrie as a Director LEADERSHIP following t
Slide 15: Strong Platform for Continued Growth
STRONG PLATFORM FOR CONTINUED GROWTH • Portfolio of strong businesses providing sustainable profits and increasing cashflows • Leading market position in automotive retail • Used vehicle sales is a growing industry; fragmented market provides opportunity for consolidation • Significant growth opport
Slide 16: CEO's Address
CEO’s Address Todd Hunter 2016 Annual Meeting Presentation 5
Slide 17: The Turners Business
THE TURNERS BUSINESS Primary focus on the automotive retail, 2016 Operating Revenue 2016 Operating Profit finance and insurance sectors • Automotive Retail provides 68% of [CATEGORY revenue and 37% of operating profit due NAME] [PERCENTAG Debt to lower margin sales sector E] Managemen t Automotive 2
Slide 18: FY16 Results at a Glance
FY16 RESULTS AT A GLANCE $M Operating Revenue $M Net Profit After Tax 200 20,000 180 FY16 Results: Strong Improvement; Above Guidance 160 15,000 140 • Revenue up 76% to $172M FY15 Normalised NPAT 120 100 10,000 80 • Improved trading result from all businesses 60 5,000 40 20 0 • Finance book grew to
Slide 19: Automotive Retail
AUTOMOTIVE RETAIL NZ’s leading second hand car, truck and machinery retailer • Vehicles sold on behalf of owners (60%) and Turners-owned vehicles (40%) with average vehicle held for less than 45 days. (Buy Right Cars has a longer holding period due to its higher margin model) • Provides the wider Tu
Slide 20: Automotive Retail: Customer Origination and Cross-Sell
AUTOMOTIVE RETAIL CUSTOMER ORIGINATION AND CROSS-SELL 1. Originating the transaction 2. Platform for buyers and sellers 3. Finance & Insurance cross-sell 2016 Annual Meeting Presentation 20
Slide 21: Automotive Retail: The Opportunity
AUTOMOTIVE RETAIL THE OPPORTUNITY Used vehicle sales have grown well in recent years Used vehicle sales continue to grow: Used vehicle transactions in NZ (including deregistered vehicles and trucks) • Nearly 1.4M transactions in 2015 1,500 • Highly fragmented market 1,400 • Turners Limited is New Ze
Slide 22: Automotive Retail – Financial Track Record
AUTOMOTIVE RETAIL – FINANCIAL TRACK RECORD FINANCIAL HIGHLIGHTS Revenue Operating profit $M $M 2015 (15 2015 (12 2016 (12 NZ$m Growth months) months) months) 140 12 Total Revenue 131.3 107.8 117.8 9% 120 10 Interest 100 income 7.6 6.3 7.3 16% 8 80 Net profit 6 before tax 8.4 6.9 10.0 45% 60 4 40 2 •
Slide 23: Buy Right Cars: Acquisition
BUY RIGHT CARS: ACQUISITION Buy Right Cars is a leading Auckland based used motor vehicle import and dealership network – The acquisition significantly increases Turners' footprint in the key Auckland market where it was previously underweight relative to its market share in other regions – Compli
Slide 24: Finance and Insurance
FINANCE AND INSURANCE Reputable brands and businesses providing flexible finance and insurance solutions for personal and SME customers as well as to dealers and brokers • Products include range of personal and commercial finance solutions; as well as mechanical breakdown and motor vehicle insurance
Slide 25: Finance and Insurance: The Opportunity
FINANCE AND INSURANCE THE OPPORTUNITY A significant opportunity: Approximately 80% of used vehicles purchased are financed through mortgage extension, car loans personal loans, hire purchase and finance leasing Estimate there are approximately 350,000 transactions per year in vehicle / car finan
Slide 26: Finance and Insurance – Financial Track Record
FINANCE AND INSURANCE – FINANCIAL TRACK RECORD FINANCIAL HIGHLIGHTS Revenue Operating profit $M $M NZ$m 2015 2016 Growth 40 12 Interest income 17.4 22.0 26% 35 10 Other revenue 9.1 13.0 43% 30 8 Net profit before 25 tax 6.8 11.2 65% 20 6 Net interest margin 13.2 17.6 33% 15 4 10 2 • Finance business
Slide 27: Debt Management
DEBT MANAGEMENT EC Credit, a recognised leader in the debt collection and credit management industries • Total debt management and credit control services for NZ and Australia customers • Commercial and consumer debt collection • Recognised as major player for corporate collections in New Zealand; g
Slide 28: Debt Management: The Opportunity
DEBT MANAGEMENT THE OPPORTUNITY Stable industry with potential to grow: • Very competitive environment • Handful of big providers servicing the corporate debt collection market • Biggest challenge in SME market is customer complacency towards credit control services • SMEs looking for a ‘one stop sh
Slide 29: Debt Management – Financial Track Record
DEBT MANAGEMENT – FINANCIAL TRACK RECORD FINANCIAL HIGHLIGHTS Revenue Operating profit NZ$m 2015 2016 Growth $M $M 20 7 Revenue 18.2 18.3 0.5% 18 6 EBIT 4.9 6.2 27% 16 14 5 Net profit before tax 4.9 6.0 22% 12 4 10 3 8 • Record year with increased contingency commission 6 2 revenue from major NZ ban
Slide 30: Growth Opportunities
GROWTH OPPORTUNITIES AUTOMOTIVE RETAIL • Continue to seek organic growth opportunities for Turners Group and acquisitions of quality businesses in retail, servicing, parts • Continue to build on successful Turners Group multi-channel strategy and increasing focus on retail customers • Opportunity in
Slide 31: New Initiatives: Cartopia
NEW INITIATIVES: CARTOPIA Digital disruption - new online-only car store developed by Turners Cars Market leader, first of its kind in NZ market space Delivers a premium e-commerce experience for customers – no-pressure browsing experience for the customer – No haggle (compelling) pricing – high
Slide 32: New Initiatives: Auto App
NEW INITIATIVES: AUTO APP New online loan approval platform developed by Turners Fast turnaround on loan approval Smart device enabled (tablet and smartphone) Initial launch by Dorchester Finance in May 2016 Delivery of internal efficiencies and better customer experience for dealers/brokers
Slide 33: FY17 Outlook
FY17 OUTLOOK Interim Profit – 6 Months to 30 September 2016 • Guidance of $11.6 million profit before tax Interim Profit – 6 Months to 30 September 2016 • Up 14% on last year’s interim profit Guidance of $XX million profit before tax Up XX% on last year’s interim profit Full Year Profit – 12 Months
Slide 34: Questions and Discussion
QUESTIONS AND DISCUSSION 2016 Annual Meeting Presentation 5
Slide 35: Auditors' Remuneration
AUDITORS’ REMUNERATION RESOLUTION 1 That Staples Rodway be reappointed as auditors of the Company and that the directors be authorised to fix the auditors’ remuneration. 2016 Annual Meeting Presentation 35
Slide 36: Director Appointments
DIRECTOR APPOINTMENTS RESOLUTION 2 That Grant Baker, who retires by rotation and has offered himself for re-election, be re-elected as a Director of the Company. RESOLUTION 3 (WITHDRAWN) That John Gosney, who retires by rotation and has offered himself for re-election, be re-elected as a Director of
Slide 37: Issue of Shares Pursuant to Acquisition of Buy Right Cars
ISSUE OF SHARES PURSUANT TO ACQUISITION OF BUY RIGHT CARS RESOLUTION 5 That the issue of 612,000 fully paid shares on 29 July 2016 at an issue price of $3.00 each to the vendors of Buy Right Cars under the sale and purchase agreement is ratified, confirmed and approved for the purposes of NZX Main B
Slide 38: Issue of Bonds
ISSUE OF BONDS RESOLUTION 7 That the issue of 2 year fixed rate secured convertible bonds for a principal amount of $1.00 each to investors (including associated persons of directors), on the further terms and conditions specified in the explanatory notes accompanying the Company’s notice of annual
Slide 39: Poll Instructions
POLL INSTRUCTIONS • Voting on each of the resolutions in the Notice of Meeting will be by way of poll • Staples Rodway, the company’s auditors, will act as scrutineers • Please use the voting paper you received in the mail or were given when you registered for this meeting. If you do not have a voti
Slide 40: General Business
GENERAL BUSINESS CLOSE OF MEETING Presentation and addresses are available at www.turnerslimited.co.nz Contact: Todd Hunter CEO Turners Limited T: 64 21 722 818 E: [email protected] 2016 Annual Meeting Presentation 40
Slide 41: Disclaimer
DISCLAIMER Turners Limited the (company) is solely responsible for the content of this document. This document is not an investment statement or prospectus and does not constitute an offer of securities. This document or any other written or oral statements made by, or on behalf of, the company may