Turners delivers profit uplift ahead of latest guidance

Company Announcement
29 May 2019

TURNERS DELIVERS PROFIT UPLIFT AHEAD OF LATEST GUIDANCE AND
PROGRESSES STRATEGIC REVIEW FOR FUTURE GROWTH

TRA Result for the financial year ended 31 March 2019
Key highlights
 Reported FY19 Net Profit Before Tax (NPBT) of $29.0m (FY18: $31.1m)
 Adjusted FY19 NPBT (excluding brand write-off) of $33.6m (FY18: $31.3m), above Q4 guidance of
$32m and up 8% from the previous year.
 FY19 Revenue of $336.6m, up 2% from $330.5m in FY18.
 Continued investment in branch expansion with North Shore branch opening 2Q20 and plans for
seven further branches, with contracts for two already in place.
 Group strategy review is largely complete, with a focus on leveraging strengths and core
capabilities, de-risking and simplifying the business and accelerating growth in a capital efficient
way.
 FNZC have commenced a strategic review of Oxford Finance. Turners will also conduct a strategic
review of EC Credit in the next 12-24 months.
 The Board has declared a final quarter fully imputed dividend of 5.0 cents per share, taking full
year dividends to 17 cents per share, up from 15.5 cents per share in FY18 (a 7% fully imputed
yield based on current share price).
 Following the strategy review, the Directors have enhanced the dividend policy and resolved to
increase the payout ratio to 60-70% of Net Profit After Tax (‘NPAT’) (previously 50-60%).

Financial Performance
Turners Automotive Group Limited (NZX/ASX:TRA) has reported $29.0m in Net Profit Before Tax (NPBT)
for FY19. Excluding a $4.6m one-off, non-cash adjustment related to the rebranding of Buy Right Cars, the
Company delivered FY19 NPBT of $33.6m, above Q4 guidance of $32m and ahead of last year’s result of
$31.1m.
Turners is a major player in the New Zealand automotive sector, providing an integrated set of solutions
across Automotive Retail, Finance and Insurance, as well as Credit Management.
Turners’ Chair, Grant Baker says the focus has been on organic growth and generating synergistic benefits
across the group:
“We are seeing benefits from the Company’s expanding retail network, a focus on better quality loans and
simplification of the business model into core brands,” says Baker.

Company Announcement
29 May 2019

Total FY19 revenue grew to $336.6m, up 2% from $330.5m in FY18, with Automotive Retail contributing
67% of operating revenue.
Operating profit (NPBT) of $29.0m included the Buy Right Cars brand write-off adjustment of ($4.6m), and
was offset by gains on property sales and revaluations of $7.7m. FY19 Net Profit After Tax (NPAT) was
$22.7m, down 3% from $23.4m in FY18.
Turners’ CEO Todd Hunter says that Turners is continuing to invest in expanding and developing its
Automotive Retail network, and currently has 33 sites across New Zealand.
“We are starting to see positive gains from the ongoing optimisation of our retail network, which has
included the relocation of the Whangarei site, and addition of two new sites in Wellington and New
Plymouth that are both performing above expectations,” says Hunter.
A proportion of reserves from Turners’ Insurance business has been allocated to support the retail
expansion and assist in better utilisation of capital in the business. A new North Shore branch is expected
to open towards the end of 2Q20 after the previous site was compulsorily acquired by NZTA, and there
are plans to open a further seven sites, for which two already have contracts already in place.
Market conditions
The New Zealand used car market remains at strong historic levels and underlying medium term demand
is still robust, with over 950,000 cars at 20+ years old. The market headwinds noted in the first half of the
financial year have eased, and an improvement in trading performance and vehicle margins was noted in
Q4 FY19.
Demand in the Auckland market remains soft and pressure on used vehicle import margins. A current
oversupply of import cars is temporarily pushing down pricing and increased compliance costs are also
having an adverse impact. Conversely, local stock is delivering much stronger margins and Turners is
benefitting from its strategy to increase the number of ‘owned’ vehicles it sells, which provide higher
margins.
Funding and Share Buyback
Turners’ funding platform was further strengthened during the year, with the issue of a new $25m, 3-year
Bond programme. Combined with the Securitisation Warehouse and the banking syndication with the ASB
and BNZ, this provides Turners with a diversified funding structure and adequate headroom for forecast
business growth. The previous Convertible Bond matured in August 2018, with 50% conversion into
shares.
Total shareholder equity increased to $226.4m, up 6% from $214.3m in the prior year.
The Board regarded Turners stock as under-valued, and accordingly Turners bought-back 3% of shares on
issue before pausing the Share Buy Back programme ahead of the results period. As the Board continues
to see the stock as under-valued, it will revisit the buy-back programme in the near-term.

Company Announcement
29 May 2019

Divisional Performance
Automotive Retail
Automotive Retail was the largest contributor to the group, generating 67% of operating revenue and 63%
of operating profit. Revenue was slightly up on the prior year to $225.7m, with operating profit increasing
10% to $18.3m.
Turner’s Group is benefitting from its national network and strong online channels, which provide
diversity across regional markets. The business delivered a 13% increase in operating profit, offsetting the
downturn in Buy Right Cars which has been adversely impacted by the soft Auckland market, where all
but one of its sites are located.
Turners’ single brand strategy is now in force, with the rebrand of Buy Right Cars to Turners completed in
May 2019. This provides the opportunity to further leverage the high levels of awareness and the very
strong trust that Kiwis place in the Turners brand and will also enable marketing and other cost synergies
to be achieved.
Approximately 49% of retail sales are cars owned by Turners, which generate better margins and an
increased opportunity to cross sell finance and insurance products. Of the vehicles being sold on
consignment, a higher number of these are ex-lease cars which provide less margin but provide good late
model “NZ new” cars for sale. While import vehicle margins are well down, Turners has implemented a
number of initiatives to improve local stock buying, which delivers higher margins.
Turners has also continued to grow its share of the niche end-of-life market and is increasingly being
recognised by insurance companies as the provider of choice.
Finance
The Finance division delivered an 11% increase in operating revenue to $44.2m, however, operating profit
decreased slightly to $11.1m due to increased impairment from a change in accounting standards and
Motor Trade Finance (MTF) non-recourse offering. Good progress is being made on repositioning the
borrower profile towards high quality and more profitable lending, aided by the introduction of
comprehensive credit scoring in March 2019.
From August 2018, all new loans originated by Turners Cars are being directed into Oxford Finance, and
the Turners Finance loan book with MTF will run down over the next 2 years. New loans originated by
Turners Cars added $28m to the Oxford Finance loan book in FY19.
The number of active dealers selling Turners’ finance offer continues to grow and was up 11% year on
year. One in five loans are now being “auto-approved” through Turners’ Auto App online loan approval
platform, which makes it easier and faster for dealers and customers to gain a response on loan
applications.

Company Announcement
29 May 2019

Insurance
Autosure has around 50% share of the motor vehicle mechanical breakdown insurance market. It is a
lower risk insurance business which provides good returns and offers leverage for the group through the
ability to use insurance reserves to invest in property. Operating revenue for the year was up 3% to
$48.5m, with operating profit of $8.2m up 126%, which included a $3.0m gain on sale of an investment
property.
The number of gross written policies and new policy sales increased, with an 8% increase in policies sold
through Turners’ Automotive Retail business. Loss ratios have improved across all insurance products
through the benefits of risk pricing work and tight cost control in claims management. MBI (Mechanical
Breakdown Insurance) loss ratios were at 72% for the year (FY18: 78%) with a further improvement
targeted.
The final step in the large integration project to combine all Turner’s insurance brands was completed this
year, with the migration to a new front end retail system which was implemented in April 2019.
Credit Management
EC Credit Control continues to deliver consistent results with revenue of $18.2m in line with the prior year
and operating profit up 4% to $6.3m. The unredeemed voucher release was under $0.2m (FY18: $0.4m),
and similar levels are expected to be maintained in FY20.
EC Credit Control’s share of the New Zealand market continues to grow, with increased debt load from
new and existing customers. Australia remains more challenging, and this year’s results were impacted by
the loss of a key Australian corporate client. The business continues to reap benefits from its investment
into Auto-dialler technology which is delivering significant cost efficiencies and an increasing number of
calls and call connects.
Strategic Review
The previously advised comprehensive review of group strategy has largely been completed. The result of
the review is a decision to simplify the business as well as leveraging core capabilities and strengths (such
as the brand strength in Automotive Retail and the Turners brand name) in order to de-risk the group and
accelerate growth in a capital efficient manner.
This new strategy enables the business to target significantly increasing its market share in its core
business of Automotive Retail and participate in adjacent opportunities in the sector.
The Board believes this strategy will sharpen the focus on meeting customer needs; improve the efficiency
of the business; and improve the returns generated for shareholders. There is a strong desire to invest in
the brands and businesses where Turners has already achieved a leading position. The shift to a single
brand strategy in Auto Retail, completed in May 2019, is one of the first projects implemented under the
new strategy.

Company Announcement
29 May 2019

As a next step in Turners actioning this strategy, Grant Baker advises that the Board has appointed FNZC
to conduct a strategic review of Oxford Finance, which has already commenced.
“Whilst Oxford Finance is a well performing and growing business with a strong network of active dealers
across the country, the review of group strategy has highlighted that building a loan book is very capital
intensive and we may be best to use our capital in growing our core business.”
As a part of the review, Turners will consider alternative ownership options for Oxford Finance and assess
these alternatives against the value the ‘one stop shop’ model currently provides Turners.
“Whatever the outcome of the strategic review, Turners will continue to maintain its close relationship
with Oxford Finance through its expanding distribution platform, and Oxford Finance customers and the
existing dealer network will see no change to the leading levels of service and quality they currently
experience,” says Baker.
Turners will also conduct a strategic review of EC Credit in the next 12-24 months.
Outlook
Automotive Retail has been identified as Turner’s core strength. The long-term dynamics of this market
are strong with hundreds of thousands of ageing vehicles needing to be replaced over the next decade.
Turners is well positioned to take advantage of this, as well as the expected consolidation of the dealer
network.
Expansion of the national network will continue as Turners strengthens its omni-channel approach –
ensuring that it has a strong and consistent customer experience in all channels where consumers are
looking to buy or sell cars, including online, through social media or ‘in person’. The company continues
to develop inhouse property expertise, and will continue to leverage reserves within the insurance
business to deliver on the property strategy and continue to enhance capital efficiency.
Management have identified a number of growth opportunities across all businesses, which take
advantage of the changing dynamics of the industry – digital disruption, increased regulation, increasing
shift to online channels, alternative ownership models and industry consolidation. The new strategy will
help position Turners to take advantage of investments in these opportunities as they arise.
“Better access, analysis and insights from the wealth of valuable data within each business is a priority.
We believe this could substantially improve the way consumers buy and sell vehicles, and we will focus on
our data opportunity over the medium term,” says Hunter.

Company Announcement
29 May 2019

Dividend
The Board has declared a final quarter fully imputed dividend of 5.0 cents per share, taking full year
dividends to 17 cents per share, up from 15.5 cents in FY18. Following the strategy work, the Directors
have enhanced the dividend policy, resulting in a new payout ratio of 60-70% of NPAT (up from 50-60%).
The Board believe the change in strategic direction will help reduce the complexity of the current business
structure and enable focus on the core automotive retail business which will generate more capital
efficient growth and value for Turners’ shareholders.
ENDS

Conference call details
Turners will host an investor conference call at 10.30am NZST today, with Turners CEO Todd Hunter and
CFO Aaron Saunders, to review the FY19 results and provide more detail on the group strategy review.
To attend the conference call, participants will need to dial into one of the numbers below at least 5-10
minutes prior to the scheduled call time and identify themselves to the operator.
When prompted, please quote the conference code: 4765730.
Dial toll free from NZ: 0800 423 970
New Zealand local/other international calls:(not toll free) +64 9 9133 622
Dial toll free from Australia: +1 800 573 793
Dial toll free from United States/Canada : 800 458 4121
Dial toll free from UK: 0800 358 6377
The results presentation will be released to the NZX and can also be streamed live during the call by
following this link: https://slideassist.webcasts.com/starthere.jsp?ei=1243855.
An online archive of the event will be available within 24 hours after the call and will be accessible for up
to 90 days after the call by clicking the link above.
If you have any queries regarding the results announcement or the conference call, please contact
Aaron Saunders on +64 9 580 9361.

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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Reporting Period12 months to 31 March 2019
Previous Reporting Period12 months to 31 March 2018
Revenue from ordinary activities2% increase
Expenses from ordinary activities3% increase
Profit before tax-7% decrease
Taxation expense-19% decrease
Net profit attributable to security holders-3% decrease
Final DividendAmount per securityImputed amount per
security
Record Date
Dividend Payment Date
Comments:
(307,530)
TURNERS AUTOMOTIVE GROUP LIMITED
Results for announcement to the market
Amount (NZD000s)Percentage change
336,579
29,049
(6,330)
22,719
$0.0500$0.0194
9 July 2019
18 July 2019
1

TURNERS AUTOMOTIVE GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
20192018
$’000$’000
Revenue from continuing operations
328,358325,047
Other income
8,2215,423
Cost of goods sold(133,126)(137,332)
Interest expense(14,952)(14,344)
Movement in impairment provisions
(7,943)(6,380)
Subcontracted services expense(12,888)(10,777)
Employee benefits (short term)(52,756)(51,911)
Commission(14,581)(12,107)
Advertising expense(3,918)(4,001)
Depreciation and amortisation expense(5,785)(5,627)
Property and related expenses(10,945)(10,644)
Systems maintenance(1,471)(1,822)
Claims(26,804)(32,021)
Life fund movement(718)(82)
Write off of intangible brand asset(4,300)-
Other expenses(17,343)(12,289)
Profit/(loss) before taxation29,04931,133
Taxation (expense)/ benefit(6,330)(7,773)
Profit for the year22,71923,360
Other comprehensive income for the year (which may
subsequently be reclassified to profit/loss), net of tax
Cash flow hedges(364)(170)
Foreign currency translation differences(26)2
Total comprehensive income for the year22,32923,192
Earnings per share (cents per share)
Basic earnings per share 26.329.3
Diluted earnings per share 27.428.9
Included in other income is $0.8m (2018: $1.4m) resulting from unrealised gains on the revaluation of assets.
2

TURNERS AUTOMOTIVE GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2019
ShareShare Translation Cash flow Retained
capital optionsreservereserve earnings Total
$’000$’000$’000$’000$’000 $’000
Balance at 31 March 2017168,809208(23)62,716 171,716
Transactions with shareholders in their capacity as
owners
Capital contributions (net of issue costs)30,339---- 30,339
Fair value options issued-493---493
Dividend paid----(11,417) (11,417)
Total transactions with shareholders30,339493--(11,417) 19,415
Comprehensive income
Profit----23,360 23,360
Other comprehensive income
--2(170)-
(168)
Total comprehensive income for the year, net of tax--2(170)23,360 23,192
Balance at 31 March 2018199,148701(21)(164)14,659 214,323
Change in accounting policy
---
-(2,637) (2,637)
Transactions with shareholders in their capacity as
owners
Capital contributions (net of issue costs)13,388---- 13,388
Capital buy-back(6,141)---- (6,141)
Fair value options issued-326---326
Dividend paid----(15,214) (15,214)
Total transactions with shareholders7,247326--(15,214) (7,641)
Comprehensive income
Profit--
-
-22,719 22,719
Other comprehensive income
--(26)(364)-
(390)
Total comprehensive income for the year, net of tax--(26)(364)22,719 22,329
Balance at 31 March 2019206,3951,027(47)(528)19,527 226,374
3

TURNERS AUTOMOTIVE GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2019
20192018
Note$’000$’000
Assets
Cash and cash equivalents115,86625,145
Financial assets at fair value through profit or loss166,25253,378
Trade receivables12,47111,323
Inventories38,85938,596
Finance receivables290,017289,799
Other receivables, deferred expenses and contract assets10,68511,747
Reverse annuity mortgages8,2949,997
Investment property5,6504,820
Property, plant and equipment39,08435,945
Intangible assets166,734170,982
Total assets653,912651,732
Liabilities
Other payables31,72934,875
Financial liability at fair value through profit or loss116226
Contract liabilities4,5495,506
Tax payables4,5705,029
Derivative financial instruments524111
Deferred tax13,91818,786
Borrowings312,863317,373
Life investment contract liabilities7,4847,127
Insurance contract liabilities51,78548,376
Total liabilities427,538437,409
Shareholders’ equity
Share capital206,395199,148
Other reserves452516
Retained earnings19,52714,659
Total shareholders’ equity226,374214,323
Total shareholders’ equity and liabilities653,912651,732
Total assets per share ($ per share)7.53 7.69
Net tangible asset per share ($ per share)0.850.73
Note 1
The Group's insurance business is required to comply with the solvency standards for licensed insurers issued by the Reserve
Bank of New Zealand. The solvency standards specify the level of assets the insurance business is required to hold in order to
meet solvency requirements, consequently all cash and cash equivalents and term deposits, disclosed in financial assets through
the profit or loss, held in the insurance business may not be a available for use by the wider Group. DPL Insurance's cash and
cash equivalents at 31 March 2019 were $2.2m (2018: $9.2m) and term deposits at 31 March 2019 were $55.0m (2018: $42.5m).
Cash and cash equivalents at 31 March 2019 of $4.6m (2018: $4.9m) belong to the Turners Marque Trust 1 and are not available
to the Group.
4

TURNERS AUTOMOTIVE GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2019
20192018
$’000$’000
Cash flows from operating activities
Interest received
45,02341,925
Receipts from customers
278,645281,031
Interest paid
(12,184)(9,609)
Payment to suppliers and employees
(270,969)(266,124)
Income tax paid(10,752)(5,824)
Net cash inflow from operating activities before changes in
operating assets and liabilities
29,76341,399
Net increase in finance receivables
(34,926)(75,248)
Net decrease in reverse annuity mortgages
2,54566
Net decrease of financial assets at fair value through profit or loss
(12,163)(41,937)
Net (withdrawals)/contributions from life investment contracts
16(5,765)
Changes in operating assets and liabilities arising from cash
flow movements
(44,528)(122,884)
Net cash (outflow)/inflow from operating activities
(14,765)(81,485)
Cash flows from investing activities
Proceeds from sale of property, plant, equipment, intangibles and held for sale assets
9,4524,319
Purchase of property, plant, equipment and intangibles
(12,817)(23,073)
Purchase of subsidiaries and investments
41(3,754)
Net cash inflow/(outflow) from investing activities
(3,324)(22,508)
Cash flows from financing activities
Net bank loan advances/(repayments)20,31439,005
Proceeds from the issue of shares7,10029,656
Proceeds from the issue of bonds(561)-
Other borrowings(2,837)2,837
Dividend paid(15,214)(11,417)
Net cash inflow/(outflow) from financing activities8,80260,081
Net movement in cash and cash equivalents(9,287)(43,912)
Add opening cash and cash equivalents25,14569,069
Cash included with purchase of subsidiaries--
Translation difference8(12)
Closing cash and cash equivalents15,86625,145
Represented By:
Cash at bank15,86625,145
Closing cash and cash equivalents15,86625,145
5

TURNERS AUTOMOTIVE LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT)
For the year ended 31 March 2019
RECONCILIATION OF NET SURPLUS WITH CASH FLOWS FROM OPERATING ACTIVITIES
20192018
$’000$’000
Profit or loss
22,71923,360
Adjustment for non-cash items
Impairment charge on finance receivables, reverse annuity
mortgages and other receivables
7,9436,390
Net (profit)/loss on sale of property, plant and equipment
(3,660)(1,000)
Depreciation and amortisation
5,7855,627
Capitalised reverse annuity mortgage interest
(846)(869)
Contract liabilities
1,066917
Financial assets at fair value through profit and loss
(799)(1,139)
Net annuity and premium change to policyholder accounts
34145
Non-cash long term employee benefits
330516
Non-cash adjustment to finance receivables effective interest rates
(209)109
Deferred expenses
3,109(7,135)
Fair value adjustment on investment property
(830)(820)
Fair value adjustment to contingent consideration
-(2,845)
Write off of intangible brand asset
4,300-
Adjustment for movements in working capital
Net (increase)/decrease in receivables and pre-payments
(414)1,009
Net (increase)/decrease in inventories
(263)5,958
Net increase in current tax payable
(851)1,881
Net increase/(decrease) in payables
(4,393)9,761
Net increase in finance receivables
(34,926)(75,248)
Net decrease in reverse annuity mortgages
2,54566
Net decrease of insurance assets at fair value through profit or loss
(12,163)(41,937)
Net (withdrawals)/contributions from life investment contracts16(5,765)
Net increase in deferred tax
(3,565)(366)
Net cash inflow/(outflow) from operating activities(14,765)(81,485)
6

TURNERS AUTOMOTIVE GROUP LIMITED
SEGMENTAL INFORMATION
For the year ended 31 March 2019
OPERATING SEGMENTS
Revenue
Revenue Revenue
TotalInter-fromTotalInter-from
segmentsegmentexternalsegmentsegmentexternal
revenue
revenue
customersrevenue
revenue
customers
2019
2019
2019201820182018
$’000$’000$’000$’000$’000$’000
Automotive retail228,672(2,963)225,709226,434(3,222)223,212
Finance44,193-44,19339,747-39,747
Credit management18,196-18,19618,677-18,677
Insurance49,206(742)48,46446,923-46,923
Corporate & other17-171,911-1,911
340,284(3,705)336,579333,692(3,222)330,470
Operating profit20192018
$’000$’000
Automotive retail18,27416,550
Finance11,11211,735
Credit management6,3216,069
Insurance8,2273,645
Corporate & other
(14,885)(6,866)
Profit/(loss) before taxation
29,04931,133
Income tax
(6,330)(7,773)
Net profit attributable to shareholders22,71923,360
2019
2018
2019201820192018
$’000$’000$’000$’000$’000$’000
Automotive retail8,3839,311(4,206)(4,767)(2,457)(2,351)
Finance38,54434,432(6,596)(5,829)(413)(348)
Credit management912--(104)(93)
Insurance2,4341,997--(2,746)(2,767)
Corporate & other1722(4,368)(4,438)(65)(68)
49,38745,774(15,170)(15,034)(5,785)(5,627)
Eliminations(218)(690)218690--
49,16945,084(14,952)(14,344)(5,785)(5,627)
Other material non-cash items
2019201820192018
$’000$’000$’000$’000
Automotive retail - impairment provisions--(503)(423)
Finance - impairment provisions--(7,436)(5,929)
Insurance - Reverse annuity mortgage interest846869--
Corporate & other - Write down of brand and collateral--(4,570)-
846869(12,509)(6,352)
Segment assets and liabilities
2019201820192018
$’000$’000$’000$’000
Automotive retail132,839152,00688,065115,071
Finance276,356253,832216,996188,217
Credit management31,68528,7805,6866,937
Insurance135,001124,35873,29369,213
Corporate & other195,673205,35683,03078,356
771,554764,332467,070457,794
Eliminations(117,642)(112,600)(39,532)(20,385)
653,912651,732427,538437,409
Depreciation and
Interest revenueInterest expenseamortisation expense
RevenueExpenses
AssetsLiabilities
7

TURNERS AUTOMOTIVE GROUP LIMITED
SEGMENTAL INFORMATION (CONT)
For the year ended 31 March 2019
Acquisition of property, plant & equipment, intangible assets and other non-current assets
20192018
$’000$’000
Automotive retail11,47821,515
Finance671418
Credit management135140
Insurance14,8848,384
Corporate & Other7410
27,24230,467
Eliminations(14,425)(7,394)
12,81723,073
Automotive retail segment analysis Revenue Revenue
TotalInter-fromTotalInter-from
divisiondivisionexternaldivisiondivisionexternal
revenue
revenue
customersrevenue
revenue
customers
201920192019201820182018
$’000$’000$’000$’000$’000$’000
Auctions46,536(2,805)43,73141,655(472)41,183
Finance17,111-17,11114,711(143)14,568
Fleet101,479-101,479108,047-108,047
Buy Right Cars63,546(158)63,38862,021(2,607)59,414
228,672(2,963)225,709226,434(3,222)223,212
Operating profit20192018
$’000$’000
Auctions5,9753,410
Finance7,9275,724
Fleet5,2434,970
Buy Right Cars(871)2,446
18,27416,550
Division assets and liabilities
2019201820192018
$’000$’000$’000$’000
Auctions45,18244,39517,33024,038
Finance43,87766,29436,32860,133
Fleet17,92514,59511,9238,373
Buy Right Cars27,93728,54923,08423,045
134,921153,83388,665115,589
Eliminations(2,082)(1,827)(600)(518)
132,839152,00688,065115,071
Five reportable segment have been identified as follows:
Finance - provides asset based finance to consumers and SME's.
Insurance - marketing and administration of a range of life and consumer insurance and superannuation products.
Corporate & other - corporate centre.
Note:
To ensure consistency, the prior year comparative segment assets and liabilities for Finance, Corporate and Eliminations have been regrouped to reflect the amalgamations
undertaken in the current financial year.
Automotive retail - remarketing (motor vehicles, trucks, heavy machinery and commercial goods) and purchasing goods for sale (motor vehicles and commercial goods) and
related asset based finance to consumers.
Credit management - collection services, credit management and debt recovery services to the corporate and SME sectors. Geographically the collections services segment
business activities are located in New Zealand and Australia.
AssetsLiabilities
Other
8

9

Change in accounting polices
A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies and make adjustments to
opening retained earnings as a result of adopting the following standards:
• NZ IFRS 9 ‘Financial Instruments’; and
• NZ IFRS 15 ‘Revenue from Contracts with Customers’

The impact of the adoption of these standards and the new accounting policies are disclosed below. The other standards did not have any impact on the Group’s accounting
policies and did not require retrospective adjustment.


NZ IFRS 9 ‘Financial Instruments’
NZ IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in NZ IAS
39, 'Financial Instruments: Recognition and Measurement', that relates to the classification and measurement of financial instruments.
The Group has chosen not to restate comparative information and adjustments required by the application of the new standard have been made to the opening balance of
retained earnings recognised in the Statement of changes in equity for the year ended 31 March 2019.
The Group’s classification measure of financial assets and liabilities under NZ IFRS 9 remains largely the same as it was under NZ IAS 39.

Impairment
The adoption of NZ IFRS 9 has fundamentally changed the Group’s accounting for impairment for financial assets by replacing NZ IAS 39’s incurred loss approach with a
forward-looking expected credit loss (ECL) approach.
NZ IFRS 9 requires the Group to record an allowance for ECLs for all loans and other debt financial assets not held at Fair value in profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The
shortfall is then discounted at an approximation to the asset’s original effective interest rate.
The Group has calculated ECLs on 12 months of expected losses where there has not been a significant increase in credit risk and lifetime expected losses where there
has been a significant increase. The Group has established a provision matrix that is based on the Group’s historical credit loss experience, adjusted for forward- looking
factors specific to the debtors and economic environment.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain circumstances, the Group may also consider a
financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking
into account any credit enhancement held by the Group. The adoption of the ECL requirements of NZ IFRS 9 resulted in increases in impairment allowances for the Group’s
Finance receivables. The increase in allowance resulted in ($2,292,000) adjustment to retained earnings.

NZ IFRS 15 ‘Revenue from Contracts with Customers’
NZ IFRS 15 introduces a five step process for revenue recognition with the core principle being for entities to recognise revenue to depict the transfer of goods or services
to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services.

The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contract
with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling the contract.

The Group elected to apply the retrospective cumulative effect method, with no restatement of comparative period amounts. The cumulative effect of applying the new
standard is included as an adjustment to the opening balance of retained earnings recognised in the Statement of changes in equity for the year ended 31 March 2019.

The Group’s revenue recognition policies remain largely the same with the following exception:


Sales of service- Collection income
The Group has concluded that collection income should be recognised when the service is rendered. The adoption of NZ IFRS 15 has impacted the timing of when some
collection income and the related costs are recognised resulting ($273,000) adjustment to opening retained income.


Motor Vehicle Insurance (MVI) Commission Income
The Group has used the portfolio approach to account for contracts of the same nature. It has been assessed that MVI commission income should be recognised over the
policy term. The adoption of NZ IFRS 15 has impacted the timing of when MVI Commission Income should be recognised resulting in a ($72,000) adjustment to retained
income (net of deferred tax).

10


Summary of NZ IFRS 9 and NX IFRS 15 adjustment to opening retained income:


$’000
Balance at 1 April 2018
14,659
NZ IFRS 9 adjustments:
Change in impairment
(3,184)
Deferred tax
892
NZ IFRS 15 Adjustment
Change in collection income
(617)
Change in collection expenses
349
Change in MVI commission income
(100)
Tax payable
3
Deferred tax
20
Adjusted balance at 1 April 201812,022

---

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumberDate
Nature of event
BonusIf ticked,Rights Issue
Tick as appropriateIssuestate whether:Taxable/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change

whether:
InterimYear

SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FWP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date. In the case
of applications this must be the
last business day of the week.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
Ordinary sharesNZVNLE0001S1
EMAIL: announce@nzx.com
Notice of event affecting securities
1
Turners Automotive Group Limited
Barbara BadishDirectors' resolution
09 308 496709 308 498229052019
Enter N/A if not
applicable
In dollars and cents
Retained earnings
$0.05000
$0.00000
NZD$0.008824
$4,344,403
Date Payable
18 July, 2019
$$0.003472$0.019444
$
9 July, 201918 July, 2019

---

FY19Full Year Results Prese ntation
For twelve months
ending 31 March 2019
1
•
•
FY19 RESULTS & STRATEGY PRESENTATION

NZ used car market still at strong historic levels
•
After a period of growth used car change of
ownership numbers have plateaued.
•
Underlying demand still strong with more cars exiting fleet due to cost of repairs increasing and
a
stricter WoF regime from NZTA.
•
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.
Source: NZTA – Used Car Change of Ownership Stats
Annual registrations of used, ex-overseas vehicles
Annual changes in used vehicle ownerships
2
•
FY19 RESULTS & STRATEGY
PRESENTATION
0
50,000
100,000150,000200,000250,000
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
0
200,000400,000600,000800,000
1,000,0001,200,000
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

The Kiwi car economy
3.85m
Light vehicles in the
New Zealand vehicle
fleet
953,000
The number of cars in the light vehicle
fleet that are 20 years or older
1.13 m
used cars were traded to the year
ended 31 March 2019 down 1%
on year ended Mar 18
13,000 EVs
The number of EVs registered in
New Zealand to end of March 2019
18.5 years
The average age light vehicles
were scrapped from fleet was
19.5 years for an import and 17.5
years for New Zealand new in
2017
140,000 cars
Used cars imported from Japan for
year ended Mar 2019 down 5% on
Mar 18
204,000
Average odo reading for a scrapped
car in the light fleet for 2017
3
•
FY19 RESULTS & STRATEGY
PRESENTATION

FY19 results snapshotNPATA – is net profit after tax and tax adjusted add back of amo
rtised acquisition intangibles IE. Autosure portfolios in
force and customer
relationships.
Revenue
(millions)
Net profit after tax
(millions)
Revenue
$336.6m
+2%
Shareholders’ Equity
$226.4m as at 31 Mar 19
Net Profit Before Tax
$29.0m
-7%
($33.6m excl BRC brand write down)
Final Dividend 5.0 cps
Total FY Dividend 17.0cps
Net Profit After Tax
$22.7m
-3%
Earnings Per Share
26.3cps
(FY18 29.3cps,
-10%
)
NPATA
$24.3m
-3%
4
•
FY19 RESULTS & STRATEGY
PRESENTATION
0
50
100150200250300350400
FY15 FY16 FY17 FY18 FY19
2H1H
05
10152025
FY15 FY16 FY17 FY18 FY19
2H1H

HY18: HY19 profit before tax bridge
•
Turners Group improvement in local margins offset by drop in import margins. Damaged vehicle volumes and revenues positive. Buy Right Cars affected by tough market conditions in Auckland used import market (down 15% YoY)
•
Finance result impacted by impairment in the high risk MTF non-recourse lending (now discontinued) and changes to expected credit loss provisioning. (IFRS9)
•
Insurance result reflects improvements in claims management, and property profits ($3m)
•
EC Credit improved result in NZ collections revenues
•
One off impacts of Buy Right Cars brand write off ($4.3m) and asset sales ($6.8m)
Operating profitNPBT Bridge FY18 to FY19 ($000s)
5
•
FY19 RESULTS & STRATEGY
PRESENTATION

Reconciliation: NBPT to underlying NBPT
•
Property sale and lease back in line with Turners’ property strategy
•
Total “unredeemed voucher liability” for ECCC stands at $1.6m as at 31 Mar 2019
•
Prior year revaluation of shareholding in MTF shares to adjusted market value
•
Prior year reduction in Buy Right Cars and
Autosure earnout consideration and interest
payable based on reduced sales and purchase agreement metrics.
6
•
FY19 RESULTS & STRATEGY
PRESENTATION
$000s
FY19
FY18
Var
Underlying Operating Result
25,775
25,953
-0.7%
Other AdjustmentsEC Vouchers
164
433
Worsley Prestige revalutation
830
820
MTF Share revaluation
0
590
Acquisition adjustments
-4,570
2,664
Sale of Property
3,457
673
Property Settlement Albany site
3,393
Total Adjustments
3,274
5,180
-36.8%
Profit before tax Actual/Forecast
29,049
31,133
-6.7%

Earnings per share anddividendEarnings per share(Cents per share)7
•
FY19 RESULTS & STRATEGY
PRESENTATION
05
101520253035
FY14
FY15
FY16
FY17
FY18
FY19
•
Dividend Policy Change: Increase in pay out ratio t
o 60%
to 70% of NPAT
•
FY19 fully imputed quarterly dividends and fully im
puted
Q1 @ 4.0c per shareQ2 @ 4.0c per shareQ3 @ 4.0c per shareQ4 @ 5.0c per share
•
FY19 full year dividend of 17.0 cents per share (FY18: 15.5 cps imputed)
•
4.6m shares issued to convertible bond holders
•
2.6m shares purchased during Share Buy Back programme reducing issued shares by 3%
•
Cash dividend yield of 6.9% at indicative current p
rice of
$2.46 (excluding imputation credits)

•
Reduction in cash balances due to investment of insurance reserves into longer dated term deposits
•
Change in Finance Receivables reflects growth in Oxford offset by rundown in MTF non-recourse ledger
•
Property, plant and equipment increase due to development of new sites in Whangarei and North Shore
•
Insurance contract liabilities increase reflect growth in Autosure policy sales
$000s
FY19
FY18
Cash and cash equivalents
15,866
25,145
Financial assets at fair value
66,252
53,378
Finance Receivables
290,017
289,799
Inventory
38,859
38,596
Property, Plant and Equipment
39,084
35,945
Other Assets
37,100
37,887
Intangible Assets
166,734
170,982
TOTAL ASSETS
653,912
651,732
Borrowings
312,863
317,373
Other Payables
31,729
34,875
Deferred Tax
13,918
18,786
Insurance Contract Liabilities
51,785
48,376
Other Liabilities
17,243
17,999
TOTAL LIABILITIES
427,538
437,409
Balance sheet8
•
FY19 RESULTS & STRATEGY
PRESENTATION

Funding mix
$Millions
Limit Drawn Undrawn
Receivables – Securitisation (BNZ)
184
155
29
Receivables – Banking Syndicate(ASB/BNZ)
70
29
41
Receivables – MTF
60
37
23
Corporate & Property [incl Bond]
85
75
10
Inventory (ASB)
30
17
13
Totals
429
313
116
Borrowings
Borrowings by utilisation
As at 31 Mar 2019
•
Banking syndicate (BNZ & ASB) established May 2018
•
Securitisation funding facility limit extended to $
200m November
2018
•
New three year bond issued October 2018 to replace
convertible
bond (issued in 2016)
9
•
FY19 RESULTS & STRATEGY
PRESENTATION
Inventory
Securitisation
Banking
Syndication
MTF
Corporate
and
Property
incl Bond

Automotive retailRevenue 225.7m +1.1%, Segment Profit $18.3m +10.2 %Turners GroupRevenue $162.3m, down 1%. Segment profit $19.1m, up 3
5.7%
•
Profit includes $3.4m of one off gains.
•
Continuing increase in BuyNow (retail sales) – up 3%
YoY, with sales to end
users at 67% of all car purchases
•
Owned fleet reduced to 49% from 50% in FY18 due to
increase in
consignment units particularly lease returns which
were up 30% on FY18
levels.
•
Margins on local purchased stock improved 13% on FY
18 to $486 per unit.
Margins on import stock dropped 64% to $393 per uni
t over FY18.
•
Damaged vehicle units up 4% in FY19.
•
New branches in New Plymouth and Wellington City op
en and performing
well. New North Shore branch still on schedule for end of
Q2 FY20.
•
NPS continuing to track up 61% at year end compared
to 49% at half year.
Turners Cars Whangarei
10
•
FY19 RESULTS & STRATEGY
PRESENTATION

New Lynn rebranded with TurnersCars
Automotive retailRevenue 225.7m +1.1%, Segment Profit $18.3m +10.2%Buy Right CarsRevenue $63.4m, up 7%. Segment profit $(0.9m) loss,
down
136%•
Temporary branch opened in Hamilton before larger f
ormat branch
opens in Q2.
•
A number of cost out initiatives in place, includin
g closing down the
under-performing Lambie Drive Branch.
•
Transition to Turners Cars brand has been completed
swiftly and cost
effectively ($250k).
•
Market conditions have been challenging in key mark
et of Auckland
(ex-overseas AKL).
•
Finance attach rate remains at market leading levels
47% for FY19
(45% for FY18).
•
Average margin per unit down 10% cf. FY18.
11
•
FY19 RESULTS & STRATEGY
PRESENTATION

Finance
•
Directing Turners Cars lending into Oxford milesto
ne
achievement in FY19, new lending from Turners at$28M.
•
MTF non-recourse book in run out, Mar 19 net receivables balance at $35m, down 43%.
•
Impairment expense in OFL is up 25% to $7.4m
•
Continued progress on repositioning towards higher quality borrowers through progressive tightening of
credit
policy and introduction of comprehensive credit sco
ring in
Mar 19.
•
Active dealers up 11% to 419 cf FY18.
•
1 in 5 loans auto approved through AutoApp, continu
e to
invest and innovate through this platform.
Revenue $44.2m +11%, Segment Profit $11.1m -5%
Lending by Asset Class
12
•
FY19 RESULTS & STRATEGY
PRESENTATION
MTF – Motor Trade Finance OFL – Oxford Finance Li
mited TF – Turners Finance
87%
9%
4%
Motor Vehicle
Other
Commercial Vehicle

Finance drill downImproving Customer Credit Scores
Average customer VEDA credit score
Consumer Payment Arrears by Channel
Net Interest Margin
•
Credit scoring enhanced by combining negative Veda scores and comprehensive scoring from Centrix.
•
NIM tracking down as expected due to lower risk loans being added to portfolio.
•
Impairments on high risk category loans not improvi
ng...
Total instalment arrears excl MTF non recourse impairments 2.0% (1.6% FY18).
13
•
FY19 RESULTS & STRATEGY
PRESENTATION
300350400450500550600
1H17
2H17
1H18
2H18
1H19
2H19
9.4%
9.4%
8.9%
5.0%6.0%7.0%8.0%9.0%
10.0%11.0%
FY17
FY18
FY19
2.1%
0.2%
2.4%
2.7%
0.1%
14.4%
OFL
TFI
MTF-NR
FY18
FY19

Insurance
•
Improvements in loss ratios across all insurance pr
oducts.
Combined loss ratio 62% (FY18: 68%), MBI loss ratio
at
72% (FY18 at 78%).
•
Replacement of selling system for dealers completed
and
integration into Vero NZ for refreshed suite of ins
urance
products and new mechanical breakdown policy pricin
g and
vehicle category criteria.
•
Continued review of dealers portfolio performance f
or risk
pricing and review of incentives and rebates.
•
Continued investment in training dealer staff to im
prove
sales of PPI, GAP and MVI and support good conduct

practises and adherence to compliance requirements.
•
Result includes gain on sale in investment property
of $3.0m
•
Investment returns improved by 38% over FY18.
CCI Product has discontinuedRevenue $48.5m +3%, Segment Profit $8.2m +126%Net Earned Premium FY18 to FY19 ($000)14
•
FY19 RESULTS & STRATEGY
PRESENTATION

Credit management
•
28% more outbound debtor actions taken in FY19 2.1m

(FY18 1.64m)
•
Total debt load up 15% to $237m, commission earned
from
debt collected up 2% to $9.0m.
•
Product sales to SMEs up 7% to $8.5m.
•
IODM partnership has been unsuccessful.
•
Integration into Xero developed and first debts bei
ng
loaded via the interface.
•
Recruitment and retention in contact centre has bee
n
challenging which has been addressed through improv
ing
remuneration. This has been offset through efficien
cies
created through use of Dialler technology.
•
Debt Collection Scorecard “Focus” continues to be enhanced and refined.
•
Debtor self service portal in development.
Revenue $18.2m –3% Segment Profit $6.3m +4%Debt Collected FY18 to FY19 ($m)15
•
FY19 RESULTS & STRATEGY
PRESENTATION

Key focus for FY20
Auto retailDevelop and extend retail footprint, deliver better
digital and
mobile customer experience, building data tools to
understand
demand, develop new sourcing opportunities.FinanceExtend distribution through use of APIs and partners
hips,
grow direct lending, further automate the credit de
cision process.
InsuranceIncrease distribution, launch new products through d
elivery
of retail system development, optimise repair network
.
Credit Management
Australian corporate customer acquisition, MYOB / X
ERO
integration, further enhance collections scorecard.
16
•
FY19 RESULTS & STRATEGY
PRESENTATION

Strategic
Review
17
•
FY19 RESULTS & STRATEGY
PRESENTATION

Summary of our plan...Our strategy is to...•
Simplify the business
•
Accelerate growth in a capital efficient way
•
De-risk by focusing on our core business and strengt
hs
This will enable us to...•
Significantly increase market share in the core bus
iness of Auto retail and
•
Participate in new and innovative auto adjacent oppo
rtunities
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, especiall
y around credit
•
Increasing the returns we deliver to our shareholder
s
18
•
FY19 RESULTS & STRATEGY
PRESENTATION
A capital efficient
growth strategy for
Turners Group, with
an increased focus
on Turners’core auto
retail business

19
•
FY19 RESULTS & STRATEGY
PRESENTATION
Strategic
drivers

Our industry dynamics are changingThe used-car industry is at the cusp of some significant
changes, creating both opportunities and
threats.
CustomerexpectationsCustomer experience isvital
Aggregator & comparison sitesTransparency and a higher valueoffering
Digital disruptionBig data and technology proliferating the retail landscape
Industry consolidationKey industry dynamics are creatingheadwinds
Increased regulationData privacy, finance services regulation & emissions standards
Alternative ownership modelsRise of subscription style services for car ownership and demand for flexiblesolutions
Move from offline to onlineLess demand for physical visits to dealerships and a move to digital self-service channels
20
•
FY19 RESULTS & STRATEGY
PRESENTATION

Strength of
Turners brand
Complexity of
existing business
Growth of NZ’s
ageing vehicle fleet
Demand for
digitisation
Primary drivers21
•
FY19 RESULTS & STRATEGY
PRESENTATION

Industry-leading brandWith over 50 years in the market, we are the largest a
nd most-trusted brand in the
industry.Brand awareness in the New Zealandmarket
View Turners as the most trustworthy used car dealer in NewZealand
TurnersOtherBuy RightCarsEnterprise Motors2 CheapCars
Turners
90%
45%
2 CheapCars
60%
21%
Enterprise Motors
52%
8%
4%
3%
Buy RightCars
34%
PacificMotorsSource: TRA Qualitative and Quantitative Study,2017.
30%
90%
45%
22
•
FY19 RESULTS & STRATEGY
PRESENTATION

Complexity of existingbusiness
•
Our business model has the perception ofbeing complicated, compounded by multi-brands and some low synergy businesses.
•
Turners business model and operating performance can be difficult to understand andcompare.
•
Disproportionate resources and capital are being used in lower ROE segments of thebusiness.
23
•
FY19 RESULTS & STRATEGY
PRESENTATION

10121416182022
2001 2003 2005 2007 2009 2011 2013 2015 2017
NZ’s ageing and growing vehicle fleet
A large proportion of cars in New Zealand are at the
end of their economic
life.
14 years
Average age of light
fleet in New Zealand
24%
(953,000 cars) are 20+
old
Source: Ministry of Transport, 2018.
AU
US
NZ
NZ new
Used imports
14yrs
11yrs
10yrs
17.5 – 19.5 years
Average age of exit
(NZ new – used)
24
•
FY19 RESULTS & STRATEGY
PRESENTATION
Average light vehicle scrappage age

Increased digitisation
Of all internet users in NZ
86% are using YouTube
and
85% are using
Facebook
Source: Global WebIndex, 2018
The average car buyer used
to visit
five
dealerships.
Now, with online research,
that number has dropped to
two
Source: Google TNS Auto Study, 2016
BeforePersonal contact with dealers, combined with online research and configuration, has beencommon
NowDigital natives are becoming mainstream car buyers who follow omnichannel experiences
25
•
FY19 RESULTS & STRATEGY
PRESENTATION

What is our ambition for Turners?
To be New Zealand’s
best place to buy and
sell vehicles
with
continually
high
customer satisfaction
26
•
FY19 RESULTS & STRATEGY
PRESENTATION

27
•
FY19 RESULTS & STRATEGY
PRESENTATION
Strategic
initiatives

Strategic initiatives
Simplify
De-Risk
Grow
•
Single brand strategy in Auto Retail
•
Single brand and system strategy in finance andinsurance
•
Run down non-core life insurance products
•
Strategic review for business units where we don’t hold dominant market position
•
Continue strategy of writing higher qualityloans
•
Early adoption of comprehensive creditreporting
•
Focus on loan origination rather than underwriting credit risk
•
Active engagement
with regulators
•
Expand auto retail footprint
•
Shift marketing investment into digital platforms
•
Leverage data analytics to buy and sell smarter
•
Evolve the customer experience in person andonline
•
Look for innovation and disruptive opportunities
28
•
FY19 RESULTS & STRATEGY
PRESENTATION

Work has already started...
•
Buy Right cars brand change out completed
•
Finance brands consolidated to Oxford and on one system
•
Auto Insurance brands
consolidated to
Autosure
•
FNZC have ben appointed to conduct strategic review of Oxford Finance
•
Average credit score
continually improving
•
Have adopted Centrix and Equifax comprehensive creditscores
•
Plans to grow retail footprint by 7 new branches by 2022
•
Engaged social media marketing agency and shifting spend out of mainstream media into digital
•
Engaged two leading data analytics organisations
29
•
FY19 RESULTS & STRATEGY
PRESENTATION
Simplify
De-Risk
Grow

Focus on a single brand strategyLeverage our strong brands, remove complexity and play t
o strength in auto
retail.
Consumer brands
Wholesale/B2B brands
SIMPLIFY
30
•
FY19 RESULTS & STRATEGY
PRESENTATION

Buy Right Cars brand change out completed in May31
•
FY19 RESULTS & STRATEGY
PRESENTATION

Strategic review of business units
We are undertaking a review of non-core businesses with lower synergies to the core autobusiness.
•
Capital intensive growth model
•
Profits from captive business are deferred
•
Reduces channel conflict
•
High return capitalbusiness
•
Non-auto therefore lower alignment with auto-centricstrategy
Short term review
Medium term review
32
•
FY19 RESULTS & STRATEGY
PRESENTATION
SIMPLIFY

Improve the customer experience
Turners CarsTurnersCommercia
Turners Cars TurnersCommercialNew Planned Branches
Expand our retail footprintContinue to expand our footprint in high potential locations across the country.Increase our brand reach with digital marketing
We will increase our marketing
investments and shift existing marketing dollars t
o
online channels (especiallysocial) to improve efficiency and reach new custome
r
groups.
Use data to source more effectivelyInvest in extracting insights from our data assets
to help
identify the right cars to buy and the right price
to sell
them at to maximise yield.Bulk buyingLeverage our scale and balance sheet to drive down sourcing costs by buying in bulk (i.e. 100 cars at
a time).
New locations and retail formatsOpening six new retail stores by 2022.Buy Right branch & digital rebrand to Turnerscomplete.
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GROW

Web data
-
Searches (20m), page views (29m),
saved searches (6k), watchlists (180k)
Autosure data
Claims data on vehicle (36k claims lodged in LTM)
Auction dataListings (67k), Bidders (120k bidders)
Finance data
Vehicles that are financed (10k loans for cars LTM)
Vehicle data
- Test drives (38k), sales prices,
valuation requests (47k)
Better utilise existing data assets
•
Leverage Turners leading market position and ability to invest in dataprojects
Predictive analysis for consumer behaviour
•
Partner with third party data specialists
•
Use big data analytics to make better businessdecisions
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Core data
GROW

Adjacent opportunities
Turners has a strong balance sheet, large customer base and rich data assets which put it in a unique position to partner and invest to harness the changing marketdynamic.Criteria for Investment /Partnership
•
Highly adjacent to auto markets
•
Turners brand would make sense
•
Strong interest in platform or aggregator type models
•
Must significantly improve the way customer needs are met
Turners Group
Leverage scale,
brand, data assets
and network
Provide capital
Provide minority
funds, mentoring and
support
Partnerships,
Platforms, Investments,
New models
Improve customer experience
Can help lower costs
Can help with
disruptive forces
GROW
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Adjacent opportunities
Example 1: ‘Netflix for Cars’ – A subscription model
Alternative vehicle access models are on the rise internat
ionally,
offering flexibility, variety, minimal responsibility
and an all-round
simpler solution to vehicle ownership –
PWC, 2018
By 2025–26, vehicle subscription programmes could account f
or
nearly 10% of all new vehicle sales in the US and Euro
pe –
Forbes, 2018
USA:
Europe:
Australia:
Example 2: Aggregator model – A platformapproach
Aggregator and comparison
platforms provide an informative and competitive environment, delivering the customer more transparency and value.
As more of the customer
experience moves onlinethe greater the opportunity for aggregators to dominate and own customer relationships in that industry.
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GROW

Strategic plan
Auto retail
•
Expandfootprint
•
Invest in digital and social marketing channels
•
Leverage data analytics
Insurance
•
Focus on auto-retail insurance
•
Run down non-core life insurance products
Finance
•
Short term strategic review
•
Look for partnership opportunities
Credit
•
Medium term strategicreview
•
Systemintegration to improve debt load process
Adjacent
opportunities
•
Investigate,assess and invest
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What does this mean for ourstakeholders?
Capital efficientStrategic review to consider most efficient capital structure. Optimise dividendshareholder returns.Lower risk
A partnership model significantly lowers
our cyclical credit and funding risk.
Less ComplexityOne core business to focus and manage, reduced complexity of corporate debt and groupconsolidation.
A more efficient, lower risk business model.
Sharpened focusPeople, capital and management focus will all be directed to the most attractive segment where we can win with onebrand.Improved competitivenessWe will be leaner, sharper and by partnering in key areas, much morecompetitive.Future focusedCreate capacity for Board + Exec Co to be more forward looking and to explore opportunities and mitigate potential threats in adjacent segments.
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Questions

ContactTodd HunterCEO Turners LimitedT: 64 21 722 818E: todd.hunter@turners.co.nz40
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FY19 RESULTS & STRATEGY
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DisclaimerTurners 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 m
ade by, or on behalf of, the company may include forw
ard-looking statements that reflect
the company’s current views with respect to future events
and financial performance. These forward-looking stateme
nts are subject to uncertainties
and other factors that could cause actual results to differ
materially from such statements. These uncertainties and o
ther factors include, but are
not limited to:I. Uncertainties relating to government and regulatory
policies;
II. The occurrence of catastrophic events with a frequency o
r severity exceeding our estimates;
III. The legal environment;IV. Loss of services of any of the company’s officers;V. General economic conditions; andVI. The competitive environment in which the company, i
ts subsidiaries and its customers operate; and other risks inh
erent in the company’s
industry.The words “believe,”“anticipate,”“investment,”“plan,”“e
stimate,”“expect,”“intend,”“will likely result,” or “wil
l continue” and other similar expressions
identify forward-looking statements. Recipients of this docu
ment are cautioned not to place undue reliance on these
forward-looking statements,
which speak only as of their dates. The company undertakes n
o obligation to update or revise any forward-looking
statements, whether as a
result of new information, future events or otherwise.
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