TRA – Retail Investor Roadshow presentation

FY18 Retail Investor Presentation

FY18 Full Year Results Presentation
AGENDA & INTRODUCTIONS
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Aaron Saunders CFO
•Overview
•Customer Journeys
•Market Update
•Highlights and Divisional Review
•Focus areas
•Outlook


Todd Hunter CEO

FY18 Full Year Results Presentation
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
MANAGEMENT
SERVICES
Controlling the buying and selling of
second hand cars, trucks and
machinery to earn a transactional
margin and delivering cross-sell
opportunities for Finance and
Insurance
Helping customers with simple and
attractive finance and insurance
products, and building annuity
revenue streams
Helping businesses of any size in New
Zealand and Australia with better
management of their credit
challenges
FINANCE AND
INSURANCE
AUTOMOTIVE
RETAIL
TURNERS’ AN INTEGRATED AUTOMOTIVE GROUP
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FY18 Full Year Results Presentation
EXAMPLES OF TURNERS ECOSYSTEM
Nina is looking
to upgrade her
current 7 year
old car, finds a
late model ex-
rental at Buy
Right Cars
Purchase
Disposal
Finance
Insurance Service &
Maintenance
Research
Trademe.co.nz
Turners.co.nz
Buyrightcars.co.nz
End of Life
Liz is looking for
a larger car to
run the kids
around
Purchase
Disposal
Finance
Insurance Service &
Maintenance
Research
End of Life
Trademe.co.nz
Turners.co.nz

FY18 Full Year Results Presentation
EXAMPLES OF TURNERS ECOSYSTEM
Purchase
Disposal
Finance
Insurance Service &
Maintenance
Research
Trademe.co.nz
End of Life
Tim is looking
for a used
import on
TradeMe and
finds the perfect
car through a
dealer in
Rotorua
Buys from
dealer in
Rotorua
Trades in old
car through
dealer
Tim’s “trade in” is purchased through Turners wholesale
division and sold to wreckers (it is at the end of its life)
through Turners Damaged and End of Life Division
Takes out finance and insurance
at time of purchase

FY18 Full Year Results Presentation
THE KIWI CAR ECONOMY
61%
of people ended up spending
less than $10,000 on their car,
80% were less than $20,000
3.85m
Light vehicles in the NZ vehicle fleet
3,500
Registered dealers
in NZ
14yrs
Is the average age of used
vehicle in NZ since 2013
7,232 EVs
7,232 as at the end of March
2018, more than double its size
in March 2017.
164,000
used cars were imported
into NZ in year ended Mar
18
21 years
The average age light
vehicles were scrapped
from fleet was 22 years for
an import and 21 years for
NZ new
Source: NZTA, Ministry of Transport, MBIE, Turners Market Research Nov 17
Note 1. Dealer-to-public plus ex-overseas sales
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153,000
New passenger and light
commercial vehicles sold into NZ
in year ended Mar 18
158,000
Vehicles de-registered in FY18

Highlights and
Divisional
Performance

FY18 Full Year Results Presentation
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FY18 FINANCIAL HIGHLIGHTS
Continuing growth in revenue and profit
Revenue $330.5m, +32%
Net Profit Before Tax $31.1m, +26%
(Guidance NPBT $29m to $31m)
Net Profit After Tax $23.4m, +33%
NPATA $24.9m, +42%
Shareholders’ Equity $214.3m as at 31 Mar 18
Final Quarter Dividend 5.0 cps Total FY Dividend 15.5cps, +7%
Earnings Per Share 29.3cps, +15%
FY19 NPBT Guidance $34m to $36m (up 13% on mid)
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Millions

REVENUE
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FY14FY15FY16FY17FY18
Millions

NET PROFIT BEFORE TAX
NPATA – is net profit after tax and tax adjusted add back of amortised acquisition intangibles IE. Autosure portfolios
inforce and customer relationships

FY18 Full Year Results Presentation
FY17: FY18 PROFIT BRIDGE
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•Turners Group shows incremental improvement
across all divisions
•BRC impacted by margin compression and
dealing with aged stock issue
•Finance result improvement due to increase in
ledger up 39%
•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.
$31.1m
$24.6m

FY18 Full Year Results Presentation
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY16FY17FY18
Sales by Customer Type for Turners Cars
% Sales to Wholesale% Sales to End User
AUTOMOTIVE RETAIL
Revenue $223.2m +16%, Op Profit $16.6m +8%
11
•Turners Group strong result with operating profit up 15% off
revenue growth of 10%.
•Continuing increase in fixed price sales (cf auction or tender) -
up 17% YoY with sales to end users at 70% of all car purchases
•Corresponding increase in finance contract sales (16% increase
in loans written, 15% increase in MBI policies sold)
•Percentage of ‘owned vehicles’ increased to 50% (up from 48%)
of transactions – better margins
•Expansion of physical footprint with new sites for both Cars and
Trucks & Machinery
•Recent market research confirms Turners as most trusted used
car brand in NZ
•Recently inked partnership with Auto Super Shoppes (83
workshops in NZ) for delivery of service and maintenance
products

FY18 Full Year Results Presentation
AUTO RETAIL: BUY RIGHT CARS
•Revenue growth of 34% reflecting full year of
operation, operating profit down 21%.
•Financial performance has disappointed as new
management team deals with legacy issues
•New management team in place since
November 2017
•Dealing with aged inventory issue
•Earn-out mechanism working as intended
•Closer association with Turners Auto Group
branding to be implemented
•Grown physical footprint by one branch in FY18
(Penrose). Targeting three new branches over
the next two years
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Turners Buy Right Cars
Satisfaction 87% 88%
Likelihood to
Repurchase
71% 77%
Customer view of Buy Right Car and Turners
TRA Market Research Nov 2017
Recent brand research reflects positively on quality
customer experience that Buy Right Cars provides

FY18 Full Year Results Presentation
AUTO RETAIL: PROPERTY OPPORTUNITY
•Property reconfiguration to drive improved retail
experience for further growth
•Used vehicle business creates opportunity to be
innovative in location and configuration eg container
offices
•Purchasing either brown fields or bare land with
straight forward developments with customised lease
•Sale and lease back provides profit opportunity to
capitalise on “Turners” brand as a tenant
•Five years of property opportunities ahead including
large projects in Auckland and Christchurch
•Completed 2 major projects value $16M during FY18
(Porirua Turners Cars and Wiri Trucks and Machinery)

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Wellington bound container offices in Chinese manufacturer
Concept design for Cambridge Terrace site in Wellington

FY18 Full Year Results Presentation
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NAPIER – RETAIL EXPANSION

FY18 Full Year Results Presentation
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PORIRUA – LAND PURCHASE & DEVELOPMENT

FY18 Full Year Results Presentation
FINANCE
Revenue $39.7m +48%, Op Profit $11.7m +16%
16
•Finance receivables growth has continued, up 40% to $290m
from March 2017
•Continued enhancements of online loan approval platform
AutoApp (insurance integration key deliverable)
•Continue to tighten credit criteria to position the business for
any change in the credit cycle
•Captive channel lending IE Turners Cars and BRC delivers higher
quality loans (more control)
•Total instalment arrears tracking at 2.0% (1.0% at end-March
2017). Arrears deterioration most noticeable in MTF – Non
Recourse (NR) book.
290
207
48
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10
150
170
190
210
230
250
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290
310
FY17MTF
Increase
OFL
Increase
TF IncreaseFY18
Millions

FY18 LOAN BOOK GROWTH
MTF – Motor Trade Finance
OFL – Oxford Finance Limited
TF – Turners Finance

FY18 Full Year Results Presentation
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FY13FY14FY15FY16FY17FY18
Number of New Policies

$Millions Gross Written Premium

Policy and Gross Written Premium Growth in
Insurance
INSURANCE
Revenue $46.9m +283%, Op Profit $5.7m, +518%
17
•Autosure acquisition creates step change in scale of
insurance business in FY18
•Consolidation of insurance brands into single entity
•Use of data analytics to re-price risk
•GEP at 4% above budget for Y18
•15% increase in policies sold through Turners captive
channels to 8,500 policies.
•Loss ratios at 70% tracking 3% above budget, implementing
initiatives to reduce to below 68% for FY19
•Identified opportunity to allocate a proportion of insurance
reserves to support auto retail property expansion

FY18 Full Year Results Presentation
CREDIT MANAGEMENT
Revenue $18.7m, Op Profit $6.1m – in line with FY17
18
•Solid and consistent performer, delivering good cashflow and profitable
returns
•Continue to increase debt load from key NZ corporate accounts at
expense of competitors
•Still big opportunity in Australian corporate market (under penetrated)
•Strong Terms of Trade product sales in NZ up 20% v FY17
•Auto Dialler technology performing well and creating significant lift in
productivity
•Early stages of a strategic partnership established with IODM, an
Australian based online automated accounts receivable solution
provider, 23 clients subscriptions signed up at end of Mar 18
•Result includes $0.4m unredeemed voucher release ($1.1M FY17)

FY18 Full Year Results Presentation
FUNDING MIX
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•$30M capital raise in Oct 17
•Convertible Bonds of $26M
mature Sept 2018.
•Growth in Securitisation
Warehouse reflects growth in
finance book and substitution
of corporate bank funding
• $140m syndication facility with
ASB and BNZ completed May
2018.
•Growth in MTF funding driven
by growth in Turners Finance.
FY18 $m % of Total FY17 $m % of Total
TOTAL ASSETS
652

557

Equity
214 33%
172 31%
Convertible bonds
26 4%
26 5%
Securitisation Funding (BNZ)
133 20%
69 12%
Bank Funding [Corporate BNZ &
ASB]
97 15%
122 22%
MTF Finance Receivables Funding
59 9%
49 9%
Insurance Contract Liabilities
49 8%
43 8%
Life Investment Contract Liabilities
7 1%
13 2%
Payables and Deferred Revenue
49 8%
43 8%
Deferred tax liability
19 3%
20 4%

FY18 Full Year Results Presentation
Opportunities and
Strategic Focus

FY18 Full Year Results Presentation

KEY FOCUS FOR FY19
•AUTO RETAIL – Customer experience (people and
property), redirect Finance into OFL, leverage trucks
and machinery network

•FINANCE – redirect finance from Turners into OFL,
Customer experience quicker and easier through
smart data analytics, re-position to higher quality
lending

•INSURANCE –continue pricing for risk, procurement
/ cost out initiatives, replace dealer retail selling
system

•CREDIT MANAGEMENT - customer acquisition
Australia, implement collections scorecard, target
higher debt load from existing customers
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Ollie - star of the Turners’ TVCs

FY18 Full Year Results Presentation
OUTLOOK
•Used car market is resilient, less discretionary than new
•A large aging vehicle fleet that needs to be replaced
•80% of people purchasing vehicles under $20k
•High trust position in the “Turners” brand
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FY19 NPBT guidance $34 million to $36 million

Questions

FY18 Full Year Results Presentation
Contact:

Todd Hunter
CEO Turners Limited
T: 64 21 722 818
E: todd.hunter@turners.co.nz
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FY18 Full Year Results Presentation
DISCLAIMER
Turners Automotive Group 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 include forward-looking statements that
reflect the company’s current views with respect to future events and financial performance. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other factors
include, but are not limited to:
I.Uncertainties relating to government and regulatory policies;
II.The occurrence of catastrophic events with a frequency or severity exceeding our estimates;
III.The legal environment;
IV.Loss of services of any of the company’s officers;
V.General economic conditions; and
VI.The competitive environment in which the company, its subsidiaries and its customers operate; and other risks inherent in the company’s
industry
The words “believe,” “anticipate,” “investment,” “plan,” “estimate,” “expect,” “intend,” “will likely result,” or “will continue” and other
similar expressions identify forward-looking statements. Recipients of this document are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. The company undertakes no obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise.

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