Turners NZX Retail Investor Webinar Presentation

TURNERS
AUTOMOTIVE GROUP
NZX Retail Investor
Webinar
12 August 2021

An integrated automotive financial services group
Primarily operating in the automotive sector and providing strength in three key areas:
DEBT
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
Turners is the largest second hand
vehicle retailer in New Zealand
Helping customers with simple and
attractive finance and insurance
products, and building annuity
revenue streams
Turners has a portfolio of reputable
businesses offering finance and
insurance products to customers
across New Zealand, including
personal, motor vehicle loans and
insurance
Helping businesses of any size in New
Zealand and Australia with better
management of their credit
challenges
Turners has a growing presence in the
debt management sector in both New
Zealand and Australia through its EC
Credit business
FINANCE AND
INSURANCE
AUTOMOTIVE
RETAIL
2
2• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

A Transformed Business
As at March YEFY10FY15FY20FY21
ShareholderEquity ($m)
(3)121223234
Total Assets ($m)
109329708718
NPBT ($m)
(18)192937.4
Dividend per Share (cps)
-10.0 14.0 20.0
Market Capitalisation
($m)*
4202118370**
Numbers adjusted for 1-10 share swap in 2016
**Note –as at 6th August 2021
* Market capitalisation as at 31 March each year
Turners Auctions was established in 1967
In 2014, Dorchester launched a
successful takeover offer for Turners
Auctions
In 2017, Turners Limited changed its
name to Turners Automotive Group to
reflect the focus of the group on the
automotive sector
In 2021 the business produced a record
profit year which has reflected a multi-
year work program of integration and
simplification of the business.
3• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

4• FY21 RESULTS PRESENTATION –TURNERS AUTO GROUP
Our vision:
To be NZ’s leading
ecosystem for vehicle
users
4• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Successfully delivered on growth strategy
Earnings and dividends have grown substantially and predictably
We are on track for a step change in profit and dividends over the next 3 year period.
5• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

A record result in FY21 ... despite Covid pandemic
1.We achieved 19% growth in normalised PBT in FY21...a step change in the business performance
2.Full year dividend at 20.0cps versus guidance of 18.0cps. Based on a share price of $4.30 this is a
gross yield of 6.5% pa.
3.Our plan for growth* has been proven up and de-risked over the last three years:
1.Building out an omni-channel experience in Auto Retail
2.Auto Retail optimisation
3.Targeting high quality lending growth in finance
4.FY22 has started well...
5.Our target is for a further 31% increase in Underlying NPBT from FY21 to FY24
* For more details on our Growth Plan, please refer to our recent Investor Presentation(14/4/2021) and FY21 results announcement
6• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Annuity earnings are increasing
Higher levels of annuity earnings are leading to more stable and predictable profits
•Businesses are a mix of activity and
annuity based revenue business
•Annuity profits (Finance and Insurance)
now account for 53% of group profits
•The growth in annuity earnings is providing
more consistency and stability in group
profits
25%
30%
35%
40%
45%
50%
55%
60%
FY16FY17FY18FY19FY20FY21
Annuity businesses
Annuity business profits as a % of total operating profit
7• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Our businesses are well positioned for the “new norm”
AutoRetail
•Used cars have demonstrated resilience
•Geographical diversification
•Diversified sources of supply
•High trust brand for uncertain times
Finance
•Annuity earnings helpful in lockdowns
•Arrears proven to be robust
•De-risking and focus on quality borrowers
working well
Credit/Management
•Payment bank stickier than expected
•Counter-cyclical, defensive
•Strong relationships from debt loaders
Insurance
•Annuity earnings helpful in lockdowns
•Premium taken up front
•Improving technology and distribution
•Using a portion of capital reserves to build
property portfolio used in Auto Retail
8• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

9• FY21 RESULTS PRESENTATION –TURNERS AUTO GROUP

Growth model: FY22 –FY24
The model gives us confidence in higher earnings growth through the cycle...anumber of changes we have
been working on over the last 2-3 years are now delivering both market share growth and margin
expansion as well as de-risking the business.
We have found the right formula, and will optimise further...
1.Retail optimisation
2.Vehicle purchasing decision-making
3.Premium lending
4.Continued investment in digital and omni-channel customer experience
10• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

20
25
30
35
40
45
50
FY18FY19FY20FY21FY24
Performance: Line of sight on where we’re going
Over three years we target 31% growth in Underlying NPBT
1
Underlying Net Profit Before Tax ($M)
1
9.5%
CAGR
Dividends Paid (cps)
7.7%
CAGR
1
Underlying NPBT is a non-GAAP measure
Reported NPBT ($m) for FY18 31.1, FY19 29.0, FY20 29.1, FY21 37.4. Reconciliations for each of the periods can be found in the
respective Annual Results Presentation
This is a target and will depend on various factors outside of our control.
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
FY18FY19FY20FY21FY24
11• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Roadmap to $45m NPBT
The majority of the profit growth with come out of Auto Retail and Finance divisions.
•Business is highly cash generative, leading to growth + yield for
shareholders
•Profit growth largely driven out of Auto Retail and Finance
•Retail optimisation in Auto Retail –growth driven by
combination of new sites and growth in existing sites
•Margin expansion in Auto Retail out of supply side initiatives
•Finance growth driven out of direct lending and improvements
in distribution
•Whilst PE multiples are assumed to expand they remain very
conservative
Net Profit Before Tax Bridge ($M)
12• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Our pathway to future growth
1.A strong focus on organic growth
2.Further optimisation in all businesses with margin expansion and market share gains
3.Focus on sustainable dividend growth -management and board “skin in the game”
4.We will consider and look at opportunistic bolt-on acquisitions
5.Investing further to press home our scale advantages through digital investments
13• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Questions
14• NZX RETAIL WEBINAR –TURNERS AUTO GROUP

Contact
ToddHunter
Group CEO
T: 64 21 722818
E:todd.hunter@turners.co.nz
Aaron Saunders
Group CFO
T: 64 27 4938794
E: aaron.saunders@turners.co.nz
15• NZX RETAIL WEBINAR –TURNERS AUTO GROUP