TRA at the Forsyth Barr Emerging Companies Conference

Company Announcement


14 March 2019

Turners Automotive Group at the Forsyth Barr Emerging Companies Conference
Turners Automotive Group present today at the Forsyth Barr Emerging Companies
Conference.


ENDS

About Turners
Turners Automotive Group Limited is an integrated financial services group, primarily operating in the
automotive sector www.turnersautogroup.co.nz
For further information, please contact:
Todd Hunter, Chief Executive Officer, Turners Automotive Group Limited Mob: 021 722 818

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Todd Hunter: Chief Executive Officer
1
Forsyth Barr Investor Day -March 2019

Forsyth Barr Investor Day March 2019
1967
1984
2014
Turners Automotive Group was formed through the 2014 merger of New Zealand's largest vehicle and machinery retailer, Turners
Auctions, and leading consumer finance and insurance business, Dorchester Pacific.
Turners Auctions was established in 1967 when Turners and Growers Limited began
auctioning cars and trucks alongside its fruit and produce business
Today, Turners is New Zealand's largest retailer of used cars, trucks and machinery
Dorchester was incorporated in 1984 as Venture Pacific Limited. The company became
Dorchester Pacific Limited in 1992
Over the following years, Dorchester developed a core financial services base through the
acquisition of a number of finance companies throughout New Zealand aligned to its
consumer finance and insurance strategy
In 2014, Dorchester launched a successful takeover offer for Turners Auctions and
consolidated its interests into a single entity that carried the Turners name
The decision to continue the Turners brand recognised the rich history and consumer
recognition attached to it
History of Turners Automotive Group
2
2017
In 2017, Turners Limited changed its name to Turners Automotive Group to enable a
Foreign Exempt Listing on the ASX and to reflect the focus of the group on the automotive
sector

Forsyth Barr Investor Day March 2019
Turners Overview
•Turners employs approximately 800 New Zealanders
•Operations from Whangarei down to Invercargill within NZ, and
in Australia
•NZ’s largest seller and buyer of used vehicles
•Importing approximately 6,000 cars from Japan per annum
•Currently lend around $290M to kiwis for buying cars, trucks,
plant and machinery
•Operate in 4 broad segments –auto retail, finance, insurance,
debt management
•NZX & ASX listed business with around 4,000 shareholders
3
“Ollie” star of the Turners TV commercials

Forsyth Barr Investor Day March 2019
Turners: An Integrated
Automotive Group
•Turners is the biggest seller of
used 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.
•We also operate in the Debt
Management sector, leveraging
off our expertise in the finance
market.
I NEED TO FINANCE
AND INSURE MY
VEHICLE
I NEED TO REPAIR
AND SERVICE MY
VEHICLE
I NEED TO
SELL MY
VEHICLE
I NEED TO BUY A
VEHICLE

Forsyth Barr Investor Day March 2019
Key Business Strengths
5
1
Used vehicle sales is a growing industry, and the high level of industry fragmentation
presents an opportunity for Turners to consolidate
Strong capital structure and debt headroom as a result of recent banking syndication and equity raises
Sustainable growth strategy is delivering increasing shareholder value with track record of improving
financial results, increasing dividend pay-out with quarterly dividend payments
Experienced management team with oversight from professional and engaged Board of Directors
Leading market position in core business, automotive retail, provides new business opportunity
across the group for transactional margins and annuity finance and insurance revenues.
Focus on growing organic market share in all operating sectors through improving customer
experience, and integration opportunities through cross-selling of finance and insurance products.
2
3
4
5
6

Forsyth Barr Investor Day March 2019
The Kiwi Used Car Economy is Large
6
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
3,400
Registered dealers
in NZ, down 100 in last 10
months
14yrs
Is the average age of used
vehicle in NZ since 2013,
compared to Australia at 10
years
11,700 EVs
11,700 EVs as at the end of
December 2018
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
20%
Of the vehicle fleet are more
than 20 years old
0.82 cars
owned per capita 4th highest
ownership levels globally
# 1
Kiwi’s are
passionate
about cars

Forsyth Barr Investor Day March 2019
NZ Used Car Market Still at Strong Historic Levels
7
•Car markets have been growing strongly and have
come off their peak
•NZ now ranks 4th globally in the number of cars per
capita 0.82 (Australia 7th 0.62, UK 37th)
•Underlying demand still strong with old cars needing
to be replaced and a stricter WoFregime from NZTA
•Based on historic levels the total number of
transactions still at high levels
•Correction / consolidation occurring in the dealer
markets which is good for Turners med/long term
# 1
Kiwi’s are
passionate
about cars

Forsyth Barr Investor Day March 2019
0
50
100
150
200
250
300
350
FY15FY16FY17FY18FY19
Millions
REVENUE
2H
1H
Turners Group
25 branches in 15 cities and 350 staff
Finance
Three regional business and 55 staff
Insurance
Two offices and 13 staff
Debt Management
Five offices and 145 staff
Buy Right Cars
10 sites in Auckland, 1 in Hamilton
Turners Footprint Continues to Grow Organically and Through Acquisitions
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 New Zealand.
Our Debt Management business has
offices in New Zealand and Australia.
8
# 1
Kiwi’s are
passionate
about cars
0
5
10
15
20
25
FY15FY16FY17FY18FY19
Millions
NET PROFIT AFTER TAX
2H
1H

Forsyth Barr Investor Day March 2019
Automotive Retail Property and Expansion Strategy
•Opened three new sites at end of 1H19 –Hamilton BRC, Wellington City Turners, New Plymouth Turners in start
up phase, Whangarei relocation just completed
•Lease or buy options considered on merit
•Sold 133 Roscommon Road, Wirito Argosy Property for $8.6M to provide funds to complete North Shore and
Whangarei developments
•Developing in-house expertise
•Commitment made to new branch in Westgate (planned for opening Q2 CY20)
9
Wellington City Turners Cars
New Plymouth Turners cars
Whangarei Turners Cars
# 1
Kiwi’s are
passionate
about cars

Forsyth Barr Investor Day March 2019
Automotive Retail
HY19 Revenue 111.8m -1.5%, Op Profit $8.0m -8.6%
FY18 Revenue $223.2m +16%, Op Profit $16.6m +8%
10
TURNERS GROUP
REVENUE $79.6M, DOWN 6%. OP PROFIT $7.5M, UP 1.4%
•Continuing increase in fixed price sales (cfauction or
tender) -up 3% YoY, with sales to end users at 68% of all
car purchases
•Owned fleet reduced to 48% from 50% in H1 FY18 due to
increase in consignment units.
•Damaged vehicle revenue up 9% in 1H19 off the back of
new agreements with insurance businesses to sell write-
off vehicles
•Continued expansion of physical footprint with benefits
to be delivered in second half (New Plymouth and
Wellington City)
•Redirect of Turners Finance into Oxford Finance, piloted
in July with full transition completed in September.
Wellington City Branch
# 1
Kiwi’s are
passionate
about cars

Forsyth Barr Investor Day March 2019
11
Hamilton Buy Right Cars : The first Buy Right Cars site outside
of Auckland
BUY RIGHT CARS
REVENUE $32.2M, UP 11%. OP PROFIT $0.5M, DOWN 63%
•New branch opened in Hamilton in September...performing
above expectation.
•Gross margins per vehicle down 20% to $1,926 per vehicle
due to clearance of old stock and market conditions
•Focus on increasing the proportion of NZ New cars sold vs
imports (higher margin and quicker turn)
•Decrease in Average Days In Inventory to 152 days (1H18:
182 days)
•Finance penetration remains at market leading levels 45%
YTD
•Turn around taking longer than expected due to market
conditions
Automotive Retail
HY19 Revenue 111.8m -1.5%, Op Profit $8.0m -8.6%
FY18 Revenue $223.2m +16%, Op Profit $16.6m +8%
# 1
Kiwi’s are
passionate
about cars

Forsyth Barr Investor Day March 2019
Why the Integrated Model Works
12
•In Turners’ controlled channels, more margin per transaction is earned
•Diversification of earnings
•Capturing both underwriting (finance and insurance) and retail
commissions
•Integrated model provides insulation against market and regulatory
changes
•Annuity revenue from finance and insurance means more predictable
and consistent earnings
•Enabling faster and higher quality development of systems (Turners has
its own test platform internally)
41%
29%
15%
15%
FY 2018 Operating Profit
Automotive RetailFinance
InsuranceCredit Management
# 2
Entrenched used
car ecosystem in
NZ

Forsyth Barr Investor Day March 2019
Vehicle Finance Provision Flows Naturally From Auto Retail
13
86%
9%
5%
FY18 Total Lending by Asset Class
Motor Vehicle
Other
Commercial Vehicle
•80%ofusedcarbuyersrequiresomeformoffinancingto
purchasevehiclesinNZ
•Traditionalbankstendnottooffervehiclefinanceasa
coreproductleadingtohighfragmentationinthevehicle
financemarket.
•Turnersoffersarangeoffinancethroughourowncaptive
retailchannelsandwith3rdpartydealersprovidinga
strongcompetitiveadvantageagainstnon-incumbent
providers
•80%ofTurnersbusinesscomesfromanetworkof
referrers
•Turnersfinancebookincreasedto$290millioninSept
2019providingmorethan14,000loansduringtheyear
9.2%
9.4%
9.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
FY16FY17FY18
Net Interest Margin
# 3
Point of sale
financing
enhances returns

Forsyth Barr Investor Day March 2019
Finance
HY19 Revenue 21.6m +21%, Op Profit $5.4m -2%
FY18 Revenue $39.7m +48%, Op Profit $11.7m +16%
14
•Good progress on repositioning towards lower
risk borrowers through tightening of credit
policy with particular focus on affordability
assessments
•Total instalment arrears tracking at 2.6% (1.0%
at end-Sept 2017)
•Impairments on higher risk lending categories
has been worse than expected.
•Turners Finance loans redirected into Oxford
away from MTF new lending at $7.7m at end of
Sept
•Consumer lending through dealer channels up
23% to $52m.
0.00%
2.00%
4.00%
6.00%
8.00%
Oxford FinanceTurners FinanceMTF NR
Consumer Payment Arrears by Finance Book
Sep-17Sep-18
300
350
400
450
500
1H162H161H172H171H182H181H19
Average Customer VEDA
credit score
Improving Customer Credit Scores
Oxford FinanceMTF
# 3
Point of sale
financing
enhances returns

Forsyth Barr Investor Day March 2019
Vehicle Insurance Provides High Margin Low Capital Intensity Product
Integration at the Point of Transaction
15
•Vehicleinsurancepoliciesarepurchasedby92%oftheNZ
drivingpopulation.
•Turnershavearangeofinsuranceproductsavailableatthe
pointoftransactioncreatingstrongcustomerincumbency
andcanbeextendedtootherdealers.
•In2018,8,500policiesweresoldthroughTurnerscaptive
channels
•Turnershasa10yearpartnershipwithSuncorp/Verotoresell
theirmotorvehicleinsurance.
•TheAutosurebrandfocusesoncoreproductsofMechanical
breakdowninsurance,andLoanrepaymentinsurance
•TurnersLongTermIssuerCreditRatingwasrecently
confirmedBBB-stable
# 4
Insurance
products add
margin

Forsyth Barr Investor Day March 2019
Insurance
HY19 Revenue $25.7m +15%, Op Profit $6.4m +244%
FY18 Revenue $46.9m +283%, FY Op Profit $5.7m, +518%
16
•Autosure acquisition creates step change in scale of
insurance business
•Improvements in loss ratios across all insurance products.
Combined loss ratio 65% (1H18: 69%)
•MBI loss ratio at 76% (1H18 at 78%)
•Re-pricing for risk has been extensively rolled out across the
network
•Investment income up 37% to $1.36m off the back of Turners
property strategy
•Project to rebuild core origination system has started and is
tracking well for delivery Q1 FY20, which will enable more
agile product design and delivery
•Focus on training and development helping to win new
originators
•Result includes gain on sale in property of $3m
Mechanical Breakdown
Insurance
Asset
Protection
Payment
Protection
Extended
Warranty
Life
Net Written Premiums by Policy Type
First Half FY19
# 4
Insurance
products add
margin

Forsyth Barr Investor Day March 2019
Turners is the Market Leader and Most Trusted Used Car Brand
in New Zealand
17
•TheTurnersbrandisculturallysynonymouswiththe
usedcarmarketinNZ,buildingtrackrecordandtrust
forover50years
•IndependentlyconfirmedasNewZealand’smost
trustedusedcardealer
•23%ofNewZealanddriverssaytheyareverylikelyor
extremelylikelytobuyacarinthenext12months.
•Familiarity,scaleandfullserviceofferingsetsTurners
apartfromcompetitorsandnon-dealerchannels
creatingamarketleadingposition
•TheOxfordFinance,AutosureandECCCbrandsare
establishedandwellknowntocustomersproviding
thedesiredspecialistpackagingforafullproduct
offering
# 5
Trusted brand
and market
leader

Forsyth Barr Investor Day March 2019
Digital Strategy is a Core Focus Driving Improved Customer Experiences
and System Control Efficiencies
18
•ConsumerDemands:
oTechsavvyandinformedbuyersandsellersrequireaccurateand
easytoaccessinformation.Ourinpersonapproachandonline
strategyarehighlycomplimentary.
oWebtraffictowww.turners.co.nzup8.5%SeptYTDto1.15
millionusers,NZ’ssecondmostpopularautowebsite.
•WealthofDataCaptured:
oDrivingvaluefromdataknowledgewithinthebusinessto
engagewithcustomersanddeliverbetterservice.
oLifecyclemotorvehicleeventsandcustomerbehaviourarekey
areasoffocusindataintelligence
•QualityandRiskEfficiencies
oAutoAppenhancementswillimprovetheabilityfordealersto
transactinsuranceandfinanceproductsthroughonesystemin
additiontoprovidingcreditscoringandapprovaltools
oSmartdataanalyticsprovidesaccuratepricingdiscoveryand
competitiveadvantagesforTurnersinsuranceoffering
# 6
Customer
focused digital
strategy

Forsyth Barr Investor Day March 2019
0
5
10
15
20
25
30
35
FY14FY15FY16FY17FY18
Cents per share
EARNINGS PER SHARE
Turners is Highly Cash Generative Providing a Strong
Dividend Yield Proven Track Record in Growth
19
•Turnershasconsistentlygeneratedstrongcashflowand
maintaineda50-60%dividendpayoutratio
oCommittedtoaminimum17cpstotalpayoutforFY19
•EarningsperShareisconsistent
•Sharebuybackprogrammeofupto5%announcedafterH1
19InterimsgivenstrengthoftheBalanceSheet
•ThediversificationofTurners’earningstreamprovidesa
smoothingeffecttorevenuegiventhedurationimpactof
lending
•TheECCCbusinessisasolidandconsistentperformer
providingfurthersectorandgeographicdiversificationwith
highmarginlowcapitalrisk
Prior years adjusted for 10:1 share consolidation undertaken in FY16
29.3 cps
15.5 cps
FULL YEAR DIVIDENDS UP 7%
# 7
Increasing
revenue with
high cash
conversion
8 cps
H1 19
H1 19
15.19 cps

Forsyth Barr Investor Day March 2019
Credit Management
HY19 Revenue $9.3m, Op Profit $3.1m
FY18 Revenue $18.7m, FY Op Profit $6.1m
20
•Solidandconsistentperformer,deliveringgoodcashflowand
profitablereturns
•ContinuetoincreasedebtloadfromkeyNZcorporateaccountsat
expenseofcompetitors(debtloadup24%)
•Collectionsscorecarddevelopedandbeingusedwithbanking
customers
•IncreasedlevelofresourceinAustraliatoliftcorporatedebtload
(underpenetrated)
•AutoDiallertechnologyperformingwellandcreatingsignificant
liftinproductivity(seechart)
•Resultincludes$0.1munredeemedvoucherrelease($0.4MFY18),
weexpectthistobetherunratelevelofreleasemovingforward
# 8
Increasing
revenue with
high cash
conversion
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
0
200000
400000
600000
800000
1000000
1200000
1H181H19
Number of Call Connects
Outbound calls
EC Credit Control Call Performance
Outbound CallsDebtor Connects
96% increase in outbound calls, leading
to a 20% increase in customer connects

Forsyth Barr Investor Day March 2019
Turners Balance Sheet is Well Capitalised
21
•TurnersAssetbasehasincreasedduetoadditional
financereceivablesastheloanbookhasgrownand
throughpropertyoptimisation
oFurtherloanbookincreaseswillbedirectedat
improvingcreditprofiles
oFurtherpropertyoptimisationsareplanned
throughfocusedretailsiteallocationsand
leasebackoptions.
•Turnershasadiversifiedfundingbaseutilizinga
combinationofbankandcapitalmarketsources
oFollowingfurtherloanbookgrowth,theflexible
securitizationprogrammewilllikelyoffer
investmentgradescalerefinancingopportunities
incapitalmarkets
oThecurrentbankfundingwasrenewedinMay
2018
oSecuritisationfundinglimitextendedto$200m
inNovember2018
HY19 Assets ($m)HY19
Cash and cash equivalents
24
FinanceReceivables
290
Property, Plant and Equipment
35
Other Assets
40
TOTALASSETS
658
# 9
Diversified and
flexible capital
structure
HY19 Borrowings ($m)LimitDrawnUndrawn
Receivables –Securitisation (BNZ)150 134 16
Receivables -Banking Syndicate
(ASB/BNZ)70 44 26
Receivables –MTF70 55 15
Corporate & Property [inclBond]88 78 10
Inventory (ASB)30 19 11
Totals408 330 78

Forsyth Barr Investor Day March 2019
•AUTORETAIL–liftfinanceattachratethroughtraining
anddevelopment,establishnewbranchesinto
operatingrhythm,managinginventorylevels,complete
propertyprojects,costandsalesvolumefocus.
•FINANCE–implementcomprehensivecreditreporting,
introduceautomatedtoolsforaffordability
assessments,continueshifttowardslowerrisklending
•INSURANCE–continuere-pricingforrisk,replaceretail
policysellingsystem,runclaimsasefficientlyas
possible,continueinvestmentindealerupskilling
•CREDITMANAGEMENT–corporatecustomer
acquisitionAustralia,utilisecollectionsscorecard,
targethigherdebtloadfromexistingSMEcustomers
22
KEY FOCUS FOR 2H19
•AUTORETAIL–developandextendretailfootprint,
deliverbetterdigitalandmobilecustomerexperience,
buildingdatatoolstounderstanddemand,develop
newsourcingopportunities
•FINANCE–ExtenddistributionthroughuseofAPIs
andpartnerships,growdirectlending,further
automatethecreditdecisionprocess
•INSURANCE–increasedistribution,launchnew
productsanddeliveronretailsystemdevelopment,
optimiserepairnetworkpolicyrenewalopportunity
•CREDITMANAGEMENT–Australiancorporate
customeracquisition,MYOB/XEROintegration,
furtherenhancecollectionsscorecard
Turners
Investment Case
Summary
KEY FOCUS FOR FY20
Key Focus

Forsyth Barr Investor Day March 2019
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 thecompany’s
industry
The words “believe,” “anticipate,” “investment,” “plan,” “estimate,” “expect,” “intend,” “will likely result,” or “willcontinue” 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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