Turners Annual Meeting 2022

TURNERS ANNUAL MEETING
18 August 2022

1. TITLE SLIDE

2. WE LOVE CARS
[run Tina welcome video]
My name is Grant Baker and I am the chairman of Turners. And at Turners, we love
cars!
Welcome and thanks for joining us at the 2022 annual meeting of shareholders of
Turners Automotive Group. I hope you enjoyed that little intro from Tina...
It’s great to see people in person as it’s been almost 3 years since we ran our last in-
person meeting. So welcome everyone here today!
A few housekeeping matters before we begin...
In the case of a fire, please exit from the doors you came through head into the foyer
and down the escalators and the fire wardens will direct you from there.
Bathrooms are outside the room here on the right.
The Notice of Meeting and 2022 Annual Report and financial statements have been
circulated and made available to shareholders. A quorum is present and therefore I
declare the meeting open.

3. BOARD OF DIRECTORS
Now I’d like to introduce my fellow directors - Matthew Harrison, Alistair Petrie, John
Roberts, Antony Vriens, and Martin Berry who joins us online from Japan, plus our
emerging director Lauren Quaintance.
Also at the table with us are Todd Hunter, our CEO and Aaron Saunders, the
company’s CFO.

There are also a number of our senior managers and staff here today. Welcome to
you all.
Also in attendance today are the company’s auditors, Staples Rodway, legal advisors
Chapman Tripp and other advisors. Thank you to all these firms that provide valuable
services to Turners.

4. MEETING AGENDA
Today you will hear presentations from me and Todd covering our business direction,
the opportunities available to us and the progress we are making.
Following the presentations, there will be an opportunity for discussion and any
questions you may have.
We will answer questions on the resolutions at the time they are proposed, and there
will be a further opportunity at the end of the meeting for you to ask any other general
questions about the company and our operations.

5. CHAIR’S ADDRESS
We are very pleased with the year just completed...another record result for the
business. Our track record is showing how robust our business model is and how
we’re ready for the challenges that lie ahead. I’ll start with looking at how far this
business has progressed over the last decade or so.

6. TURNERS CONTINUE TO BUILD A STRONG TRACK RECORD
I think both these graphs show the progress we have made in periods of three years.
Starting on the left, we grew this business initially by some very strategic acquisitions.
In more recent years, and perhaps the aspect that we don’t get enough credit for is
the organic growth we have achieved.
In the most recent 3 year period we’ve delivered almost $80m of after tax profits.
That’s up 24% over the previous 3 year period, and not a single acquisition involved.

Obviously with this sort of growth we’ve been able to deliver excellent returns to our
shareholders, with 57c per share in fully imputed dividends paid over the most recent
3 year period. As a substantial shareholder myself, I reckon this is a great outcome,
and paints a stark comparison to what the business was in 2009 when I first got
involved.

7. WE HAVE MADE GREAT PROGRESS IN THE LAST 3 YEARS
Narrowing in on the time frame to the last three years, we’ve made excellent progress
in a number of critical areas. Our retail momentum has gained traction, as can be seen
through our auto retail market share.

A higher number of retail transactions enables growth in finance conversions, margins
and units sold that we own, which all leads to improvement in our overall margins.
The improvements in the quality of our loan book are very obvious, as are the changes
we’ve made to our insurance pricing and claims management. The focus on these
metrics is what’s driving the much improved outcomes for shareholders,
demonstrated through the Earnings per Share numbers and Dividends paid.

8. FY22 WAS ANOTHER EXCELLENT YEAR
FY22 was a ripper of a year for Turners. Net Profit before Tax was up 15% in what has
again been a year impacted by Delta lockdowns and Omicron impact.

Used vehicle supply has eased up since FY21 but overall remains below historic supply
levels.

Consumer demand was better than we expected during L3 lockdowns, but worse than
expected in Omicron outbreak. We have continued gains in margin and market share
in Auto, and our geographic and earnings diversification have yet again proven to be
very valuable during pandemic lockdowns.

9. WE OPERATE TO A SIMPLE FORMULA
We do try to operate this business to a simple formula...I have always found simple
concepts work best.

10. FORMULA
If we provide a quality environment and conditions for our people - this will give us
the best chance of providing a quality experience for our customers, and this should
lead to quality outcomes for you - our shareholders.

I wanted to drill into each of these parts of the equation a little further.

11. QUALITY ENVIRONMENT FOR OUR TEAM
We have a really strong positive culture right across the Turners organisation. Our
employee engagement results have been a priority, particularly given the wider
pressure in the economy on retention and recruitment of staff. We continue to invest
in training, remuneration and other benefits. An example of this is we have just
launched an Employee Share Scheme in the last week.
We’re very pleased to see our engagement scores so high, and this is a core strength
within the business.

12. CUSTOMER EXPERIENCE
Being customer driven is one of our core values and the team do an excellent job on
this...we’ve now won the most trusted brand in the used car category for the 3
rd
year
running, however we know there is more work to do.
We have also introduced customer experience measures across all parts of the
business as part of our “good customer outcomes” focus. We’re even quite bravely
measuring customer experience in EC Credit Control where we are collecting money
on long overdue debts, but it is giving us very valuable insights.

13. GREAT RETURNS FOR SHAREHOLDERS
The combination of this highly engaged team plus the great customer experiences
underpins the returns we can deliver to you (and me) as shareholders. We’re very

proud of the improved returns we’ve been able to deliver for shareholders for well
over 8 years, with the most recent year being 23c cents per share representing a gross
yield of over 8%.

14. PROPERTY
Turners continues to build a significant property asset base. With the sites we have
under development plus new sites we have committed to, the portfolio is just under
$100m.
Because these properties are used within the group we carry the assets at their
development cost on our balance sheet. The “unrecognised” gains on this portfolio
now sit at a conservative $19m, adding further value for shareholders. We have a
number of new opportunities in play right now and look forward to updating you on
these when we can.

15. THERE ARE SOME CHALLENGES
Whilst pandemic uncertainty has decreased, NZ’s economic uncertainty has
increased, and there are challenges on the horizon. These challenges centre largely
around the health of the economy, the rapid increase in interest rates and inflation,
supply chain on new cars, recruitment and retention of people, and also the
regulatory environment. We understand these issues, and we’ve already taken
actions and are well placed to minimise their impact.
Our competitive advantages are what gives us confidence about our ability to stand
up to these challenges. We have high trust brands in markets that generally stand for
the opposite of this. We have scale and reach that cannot be matched. We have
unique diversified sources of cars that are very difficult to replicate. Our data and
technology capability has positioned us well, and will continue to do so. And lastly we
have a highly engaged and capable team of people.

16. WE ARE READY FOR WHAT’S NEXT
Last year we announced our first three year target and we are very pleased with the
progress we have made against our $45m target by FY24. If it wasn’t for lockdowns
and Omicron we believe this 3 year goal would have been achieved in one year. Like
many others we are expecting the broader economic environment to moderate the
rate of growth we have experienced over the last 3 years.
So we have updated our 3 year roadmap which now has us targeting to be above
$50m of pre-tax profit in FY25. The main growth engine will be out of Auto Retail with
modest growth from Finance, Insurance and Credit Management.
Auto retail growth continues to come from retail optimisation and branch expansion.
We’re targeting 10% market share.
Headwinds in finance are offset by growth driven out of direct lending and
improvements in distribution.
Insurance growth will come from direct and digital distribution.
Like last year this gives some indication on what the growth pathway looks like, which
we think is useful for shareholders.
Before I hand over to Todd I would like to acknowledge the efforts of our team, from
our Board of Directors and the operational teams who deliver day in day out for our
customers, and for our shareholders. This group of people have been totally
committed, and prepared to go above and beyond. We are very lucky to have such a
talented and hard working group of people in this business.
[HAND OVER TO TODD]

17. CEO’S PRESENTATION
Good morning everyone great to be with you all today in-person! Let me start with a
few comments about FY22 results and what we see happening in the car market.

18. FY22 RESULTS SNAPSHOT
It has been another excellent year for the Turners business. We have achieved
another year of strong growth with 15% growth in Profit before tax in FY22. Our Auto
retail optimisation is working, branch expansion plans are delivering results, our de-
risking by focusing on quality in finance and insurance has positioned us well and our
investments in digital are paying off. I am particularly pleased with the improved
levels of return our loyal shareholders have been rewarded with ... the dividend of 23
cents per share being a record and also the earnings per share at 36.4 cents.

19. NZ USED CAR MARKET
Overall used car transaction levels continue to track well below pre-pandemic levels,
and in more recent months there has been a significant drop in transaction levels. The
causes of this contraction are a combination of the economy, COVID and Government
regulation The impact of each specific one is difficult to know. Our website data is
telling us that demand for used cars is shifting down the price point curve, and this
lines up with the anecdotal feedback from our branch network, in that they could sell
$10,000 cars many times over at the moment, where as higher priced stock over
$20,000 the demand is moderating.

20. DEALER NUMBERS
Registered dealer numbers are at the lowest point in the last 5 years (3k), down 14%
from peak in 2017. There is a close correlation between the fortunes of the used
import market and registered dealer numbers and we expect dealer numbers to track
down further due to challenges in supply and impact of government regulation.

21. BUSINESS DIVISIONS

22. AUTO RETAIL
Our Auto Retail division has continued the momentum they finished the year with.
Market share has continued to improve with sales volumes increasing year on year.
The focus to source a much larger proportion of our vehicles locally has paid off and
we are seeing elevated levels of consignment vehicles particularly from lease
customers. We have seen some softening in margins as demand has dropped away
due to the economy and COVID.
Our focus is very much on a continuation of our wholesale to retail transition. We still
sell around 35% of our units down the auction lane and for every one of these sales
we can move into our retail channel it is worth another $1,000 in transaction margin
to the business.
Our branch expansion plans are going well and I will update you shortly on Rotorua
and Nelson. Our “supermarket” approach to used cars is working really well.

23. ROTORUA
Pleased to report that our Rotorua team moved into our re-developed building last
week, which I think was around 2 weeks later than the planned schedule. So a pretty
good outcome.

24. ROTORUA
We have been operating on half the site and we still have some remedial works to
complete before the site is fully operational. However even off a partial use of the site
we have sold over 500 cars in the first 6 months of operating in Rotorua which gives
us a lot of confidence about our future there.

25. NELSON
Nelson is looking fantastic and pleased to report we were able to open there two
weeks ago. We are about 2 months ahead of when we had budgeted to open and we
are very pleased with our initial results and in particular how the branch and site is
looking. We are very excited about the potential this site has.

26. NELSON

27. NELSON


28. FINANCE
The finance book is in excellent shape. Our risk pricing model and focus on premium
borrowers has been very successful over the last 3 years and I am very pleased with
the structural change in quality we have been able to make in this loan book,
particularly with the economic conditions likely to worsen. Our focus remains on a
highly efficient credit decisioning process and improving our loan application
conversion.
We are continuing to grow the loan book however growth has moderated both as a
result of our pricing strategy and because of a contraction in the wider used car
market.

29. QUALITY OF FINANCE
Premium borrower lending accounts for well over 50% of monthly lending, and
arrears continue to track down at historically low levels. The increasing proportion of
premium borrower business is reflected in our average credit scores.
The business is still retaining a Covid-19 arrears provision buffer to allow for any
unemployment increase in future months.

30. INSURANCE RETURNS IMPROVING
In insurance we are seeing improving returns through less consumers driving and
higher investment returns. Both WFH dynamics and the cost of fuel mean people are
driving their vehicles less which means we are seeing less mechanical repair claims
lodged. Some of this reduction is offset by parts price inflation and labour rate
increases.
Investment returns are improving from the higher interest rates.
Our digital distribution arrangements are working well and there is a very good
pipeline of opportunities filling up.

31. CREDIT MANAGEMENT
The Credit Management business continues to have lower debt load levels due to the
historically low consumer arrears and corporates working back into recovery action
post pandemic. Debt load in FY22 was down 54% on pre-pandemic levels and debt
collected down 35% which was a significant hit to revenues.
As expected with things getting tougher in the economy we are seeing debt loads
increasing. There are also continued positive signs in debt recovery rates due to the
new “resolution” collections strategy and payment arrangement commitments are
being met more often under the new resolution collections strategy. With the
economic environment expected to deteriorate further, we expect debt load levels to
increase as a result.

32. SUPPORTING NZ’S VEHICLE FLEET TRANSITION

33. SUPPORTING NZ’S VEHICLE FLEET TRANSITION
As the largest reseller of both used and end-of-life vehicles in New Zealand, we believe
we have an important role and responsibility to support and accelerate the transition
of the New Zealand light vehicle fleet to a cleaner, lower emission future. This
transition will take place progressively over a period of time and will likely consist of
a number of elements including:
 Accelerated uptake of new and used low emitting vehicles (LEVs) to the Fleet
 Retirement/replacement of older higher emitting vehicles
 Improved availability and adoption of public transport
 Introduction of new technologies
We are seeing hybrid and EV sales increasing particularly as more corporate and
government fleets transition. We have also seeded a number of EVs and Hybrids
into our Turners Subscription fleet.

34. EVS AND TURNERS SUBSCRIPTION
Turners Subscription provides a highly flexible way of accessing exclusive use of a
vehicle on a rolling 30 day cycle. Think of it as a long term rental or a very flexible
lease. The subscriber pays for their subscription and fuel...all the running costs,
insurance, registration, WOF etc are paid for by Turners.
We now have over 160 vehicles out on subscription as of today and there is high
demand for our EV and Hybrid stock. Particularly with the EVs which provide a very
flexible and low cost way of trying before you buy.
We are pleased with the progress and the traction we are getting with this alternative
to outright vehicle ownership and the role it is playing in helping consumers
experience LEVs.

35. LOOKING FORWARD

36. RESILIENT AND WELL DIVERSIFIED
One of the most attractive aspects of the used car market is that it is a needs-based
purchase and therefore more resilient and less affected by changing economic
conditions. There is also a significant cohort of vehicles 20% of the NZ vehicle fleet
that are more than 20 years old essentially at the end of their economic life and
needing to be replaced in the near future.
Our brands, network and diversified business position this company very well and as
we head into an economic environment that will offer up different challenges and
opportunities, the business has already been significantly de-risked. The work we
have done on local sourcing of vehicles, building quality into the finance book, adding
distribution to insurance, means the business is positioned to withstand or potentially
take advantage of some of these changing conditions.

37. ROADMAP TO $50M
As Grant outlined earlier despite the economic headwinds we are still confident of
growth. The main growth engine will be out of Auto Retail with modest growth from
Finance, Insurance and Credit Management.
Auto retail growth continues to come from retail optimisation and branch expansion
and we have a 10% market share goal in our sights. Our expanding auto retail business
has an obvious positive halo effect in Insurance and Finance.
Headwinds in finance are offset by growth driven out of direct lending and
improvements in distribution.
Insurance growth will come from direct and digital distribution.
Like last year this gives some indication on what the growth pathway looks like which
we think is useful for shareholders.

38. TRADING UPDATE AND OUTLOOK
A few comments about how the business has been trading in the first part of the year.
In Auto Retail car sales have been strong, margins have moderated and we are seeing
demand shifting to the lower price end of the market. We expect further upside from
Rotorua and Nelson coming on stream.
In finance we are seeing lower lending volumes as interest rates rises take effect and
lending market contracts, arrears are holding and our net interest margin has
compressed as expected.
The benevolent claims environment in Insurance is persisting and combined with
payback from strategic initiatives returns are improving.
In Credit the debt load and associated commissions are expected to increase through
the year.
Despite the challenges Omicron has caused amongst our team and our customer base
we are pleased to report that FY23 Q1 underlying profit performance is in-line with
last year.

39. KEY MESSAGES
Business is in the best shape it has ever been...we have a very robust business with a
sustainable dividend yield.
The used car market is mostly needs based...lots of market resilience in this segment
and 20% of NZ vehicle fleet is 20 years or older...this is over 830,000 cars that are at
the end of their life.
Our business model is based on vehicle churn...we are neutral on what powers the
vehicle. However Turners do have a role to play in helping the vehicle fleet transition
to different types of Low Emission Vehicles.
We are very conscious of the clear NZ and global economic challenges over the next
12-24 months
We are aware of the challenges and have plans to mitigate these but believe these
are still opportunities for the strong to get stronger.
Our FY25 updated target is $50m in Underlying NPBT and this projection would have
been higher, however given economic situation we have been more conservative in
our outlook.
I will now hand back to Grant for discussion in relation to the annual report or today’s
presentations.
[HAND BACK TO GRANT]

40. SHAREHOLDER DISCUSSION
Are the any questions on the presentation or results?
There will be an opportunity to ask questions about each resolution as they are put
to shareholders to vote.
If you have a question please feel free to direct it to any one of the panel up here.
Could you clearly state your name if you are a shareholder, or, if you are a proxy
holder or corporate representative, please state the interest you represent.

41. RESOLUTIONS
I would now like to move to the resolutions before the meeting. These were notified
in the Notice of Meeting and explanatory notes have been provided.
Voting on each of the resolutions in the Notice of meeting will be by way of poll.
Staples Rodway, the company’s auditors, will act as scrutineers.
Please use the voting paper you used in the mail or were given when you registered
for this meeting,
If you do not have a voting paper, you will be able to request one from scrutineers
when the voting takes place.
Only shareholders, proxy holders or corporate representatives of a shareholder may
vote on today’s resolutions.

42. RESOLUTIONS
Resolution 1
The first resolution is to record the re-appointment of Staples Rodway as auditors of
the Company and authorise the directors to fix the auditor’s remuneration.
Are there any matters for discussion or questions from the floor?
I would like to move this motion. Do I have a seconder? Thank you.

Resolutions 2 and 3: Re-election of Directors
The next two resolutions are in regards to director re-elections. We believe that
having Directors with relevant industry, commercial and governance skills is essential
for the continuing success of the Turners’ group. Diversity of thought in particular
and broader commercial acumen, are also taken into consideration by the Board
when reviewing Board positions.
We currently have Directors with hands on experience in the finance, insurance and
debt management sectors as well as Directors with expertise in governance and very
diverse experience and entrepreneurial skills in sales, marketing and business growth.
Resolution 2 is for my re-election. You’ve already heard from me quite a bit today and
about my passion for the business. I’m pleased to put myself forward for re-election
as a Director. I’ll ask John Roberts to chair the meeting for this resolution.
[John to stand]
Thank you.
Grant Baker has been a director and chairman of Turners Automotive Group Limited
since September 2009. As businessmen go, Grant Baker is probably at the more
unconventional end of the spectrum. The co-founder of The Business Bakery has a
number of successes under his belt, including the 42 Below vodka venture and Trilogy
International, which recently sold to Chinese Citic Group, amongst a number of other
ventures he has been involved in. With a 7.45% shareholding, Grant is long term
committed investor in Turners Automotive Group. As an avid collector of specialist
vehicles and motor racing enthusiast, both as a competitor and as a backer of young
up and coming drivers, he is passionate about the strong Turners brand and its focus
on cars. He has wide experience at a senior level in both public and private New
Zealand companies and has been Chairman of Turners Automotive Group since
September 2009. In terms of the Listing Rules, the Board considers that Grant Baker
is a non-executive Director but is not independent.
Are there any questions?
I would like to move this motion. Do I have a seconder? Thank you.
I will now pass back to Grant.

[Grant to stand]
The next resolution is in relation to the re-election of Alistair Petrie who retires by
rotation and has offered himself for re-election.
Alistair has been a director of Turners since February 2016 and has over 15 years of
senior management experience in both private and listed companies in the
agribusiness sector. He has extensive knowledge in sales and marketing in both
international and domestic environments, which is particularly useful for some of the
challenges and opportunities Turners has in importing vehicles from Japan.
Alistair has a number of directorships with companies that have a focus on growth
and innovation, and he represents the interests of Bartel Holdings, which has a
11.48% shareholding in Turners Automotive Group.
He worked for many years at Turners & Growers, the original parent company of
Turners Auctions, which provides a nice connection at Board level back to those
foundational brand values of “trust and integrity”. The Board considers that Alistair
Petrie is a non-executive Director but is not independent.
I will now ask Alistair to say a few words in support of his re-election.
[Address from Alistair]
Are there any questions?
I would like to move this motion. Do I have a seconder? Thank you.

43. VOTING
Many shareholders, who are not attending this meeting have voted by proxy.
I wish to advise that proxies have been received for 10,686,217 shares being 12.34%
of total shares on issue.
Please complete your voting paper by ticking “FOR”, “AGAINST” , or “ABSTAIN” in the
appropriate place on the form and ensure you have signed the form. Please do not
tick the “DISCRETION” box.
If you have any difficulty, or do not have a voting paper, please raise your hand and
someone will assist you.
Once everyone has finished voting, scrutineers will collect the voting papers.
[3 minute pause]
Scrutineers will now collect the voting papers. Could shareholders please pass their
voting papers to the scrutineers?
The results of today’s voting will be posted to the NZX as soon as possible.

44. OTHER BUSINESS AND CLOSE OF MEETING
That brings the formal part of the meeting to a close.
Is there any other business shareholders would like to discuss in regards to today’s
presentations or Turners’ progress?
I therefore call the 2022 annual meeting of shareholders closed.
Thank you all for your attendance today.
I would like to invite you to join Board and management for refreshments.