NZAI ASM Presentation

New Zealand Automotive
Investments Limited
102 Mays Road,
Onehunga,
Auckland, 1061

info@nzautomotiveinvestments.co.nz
nzautomotiveinvestments.co.nz




2 September 2022
Market Announcement
NZX:NZA


NZAI ASM SCRIPT

SLIDE – NZAI 2022 ANNUAL SHAREHOLDERS’ MEETING


Gordon Shaw

Good afternoon everyone.

My name is Gordon Shaw and I am a newly appointed director – and Interim CEO – of New Zealand
Automotive Investments Limited.

A warm welcome to our shareholders and guests here at the Hub as well as those who have joined via
webcast. This is your meeting and we appreciate you making the effort to be here.

We are particularly pleased to be able to hold this meeting at the Hub. It’s an impressive facility and it
really is the engine room of NZAI’s operations.

As it’s 3.00pm, I am pleased to declare the 2022 Annual Shareholders’ Meeting of NZ Automotive
Investments open.

On the screen behind me, is Michael Stiassny, the Chair of NZAI. On the stage to my [left] are
executive director David Sena, co-opted independent director Samantha Sharif and CFO, Haydn Marks.
Also here today are our former auditors, Grant Thornton and legal representatives from Lowndes
Jordan.

I’ll now hand over to Michael to address the meeting.

SLIDE – CHAIR’S OPENING REMARKS

Michael Stiassny

Good afternoon everyone. I apologise for not being able to attend this meeting in person today. When I
was appointed to the Board on 21 August, I had already scheduled commitments. Given the possibility
of technical issues, I have asked Gordon to chair this Annual Meeting on my behalf.

At the outset, I’d like to acknowledge the recent turmoil that has overtaken NZAI and the significant
impact that has had on you, our shareholders, as well as our staff and stakeholders. Naturally, you will

have questions about what has gone on and we will respond as openly as we can during this meeting.
However, our focus is – and must be – on the future.

In the simplest terms, your new Board understands that NZAI has underperformed and this must be
remedied for the benefit of all shareholders.

The new Board was constituted less than two weeks ago and we are intent on stabilising the company
as quickly as possible.

Our first step has been to appoint Gordon as Interim CEO as we undertake an executive search for a
new Chief Executive Officer. And, to enable Gordon to step into this role which technically makes him
an executive director, we co-opted Samantha Sharif to the board to meet the NZX rules regarding
independent directors.

We are moving at pace. Gordon’s immediate focus is on ensuring the fundamentals are right: Low costs
and high volumes that generate healthy margins are the drivers that made NZAI a successful business
in the first place.

He will shortly take you through the progress that’s being made, but I would reiterate that given our very
recent appointment, we have yet to fully review strategy, resources and costs. Therefore, there will be
no substantive overview of the future strategy at this time.

However, I can assure you that your new Board is absolutely committed to strong governance, full
transparency and providing timely updates as and when any changes in strategy are forthcoming.

I’ll now hand back to Gordon.

SLIDE – AGENDA

Gordon Shaw

Today’s agenda is on the screen behind me.

Our Chief Financial Officer, Haydn Marks will take you through last year’s operating performance and
the progress that has been made in the year to date.

Following Haydn’s presentation, I will give you a brief update on developments that have occurred since
the new Board was constituted. I will then oversee voting on the resolutions set out in the Notice of
Meeting.

We remind any media present or online that, while you are welcome, this is a meeting for shareholders.
Michael and I will be happy to talk to you after the meeting.

SLIDE 6 – FINANCIAL RESULTS AND OVERVIEW FY22 / YTD23

I’ll now hand over to CFO Haydn Marks to present the full year 2022 results and year to date financial
update.

Haydn Marks

Looking to the highlights from FY22.
SLIDE – OVERVIEW FY22

In February, the business moved to a much larger and better configured Vehicle hub facility, which
considerably expanded its vehicle processing capacity to position the business for stronger sales
growth.
..... For guests here today, you will have seen the impressive scale of the operation.

Demand for electric and hybrid electric cars has continued to grow on the back of the Government’s
Clean Car Discount Scheme and increasing petrol and diesel costs. 2 Cheap Cars anticipated this
demand, increasing its inventory of high quality EV and HEV vehicles and has seen sales in this
segment grow significantly.
The 2 Cheap Cars brand continues to expand across New Zealand. This year, we opened two new
Auckland dealerships in Westgate and an expanded New Lynn site.
This growth in the 2 Cheap Cars physical footprint was complemented by an enhanced digital offering.
We successfully implemented “buy now” on-line capability that has helped mitigate the vehicle sales
decline which occurred during the lockdowns.
Other highlights in the year to 31 March saw the NZ Motor Finance loan book grow by 72% to $6.8m.
And, there was an uplift in customer net promoter score from 4.33 to 4.5 on Buy Score which reflects a
positive experience for customers during the purchase process.
SLIDE – RESULTS FY22

Turning to the FY22 financial results.

The Company had a difficult year, navigating through COVID trading restrictions and dealing with the
impact of changes to lending regulation under the Credit Contracts and Consumer Finance Act, which
I’ll refer to as the CCCFA.

Revenue and Income was slightly down against FY21 at $66m, driven by inflationary factors and lower
sales volumes.
The Company’s statutory NPAT, which included a one off gain on the rearrangement of leases
associated with the move to the new Hub, was $2.6m, down $0.6m on the previous year.
Excluding the gain, the FY22 underlying NPAT was $1.7m, down 55.7% from $3.8m in FY21.
A total dividend of 3.1 cents per share was paid for FY22.

SLIDE – OVERVIEW YTD

Over the first four months of the new financial year, our estimated market share of used vehicle sales
has increased to 7.4%, up from 6.9% against the same period last year.

As a result of the introduction of the Government’s Clean Car Discount scheme and increasing fuel
costs, 40 per cent of all 2 Cheap Cars sales have been EVs and HEVs over the past four months.
The dealerships are 85% full due to the increased output from the vehicle processing hub which is
pleasing.

SLIDE – PERFORMANCE YTD

We move to the year to date performance of the Group .... Please note these figures are unaudited.

The operating environment has been challenging with inflationary pressure, economic uncertainty, and
rising interest rates.
As noted earlier, the business has also been impacted by changes to lending regulation under the
CCCFA, with Finance & Insurance penetration falling by 19% for the period. This is a business area
currently under review.
While revenue and income is up 10% to $27.7m, this is largely on the back of inflationary price
increases on vehicles.
The contribution margin is down $0.5m due to the impact of changes to lending regulation under the
CCCFA and slightly lower vehicle sale volumes.
Underlying operating costs are up $0.2m, mainly due to increased marketing spend.
As a result, the underlying NPAT is $0.8m, a slight improvement on the preceding four months but
down $0.5m on the same period last year.
Lending has been paused on the Finance Company’s loan book, with the value dropping from $6.8m to
$6.3m between March 31 and July 31 2022.
The new Board will make decisions regarding the direction of the Finance Company in the coming
weeks.
SLIDE – BOARD & INTERIM CEO UPDATE

Gordon Shaw

As Michael noted in his introduction, your Board’s focus has been on understanding the challenges
within the business, as well as the external factors that have impacted the Company’s financial
performance.

I took over as Interim CEO several days ago, at 5pm on Friday 26 August. Ensuring we have a strong
team is critical to the future success of NZAI, so is its operational strategy and delivery. So, my
immediate priority has been with our people.

In the past week I have spent time getting to know the Auckland-based NZAI team, making plans to visit
our branches across New Zealand, and focusing on recruitment for key vacancies.

This week David Sena was appointed to the role Chief Operating Officer for a period of six months. His
specific skills and experience are invaluable as we look to ramp up the Hub’s processing capacity and
quality assurance measures. David will be instrumental in reviewing supplier arrangements that are

currently outsourced in order to drive performance, reduce rework and consequent after sale quality
claims.

I’d like to take this opportunity to publicly thank the NZAI team who have welcomed and supported me
as I get my feet under the desk.

SLIDE – IMMEDIATE BOARD PRIORITIES
In many ways, NZAI is a simple business model based on high volumes and low margins. Success
relies on four key factors:
 flexibility - being able to quickly react to changes in the second hand motor industry.
 strict discipline to contain costs;
 ensuring that any investment is subject to robust scrutiny and generating appropriate returns;
and
 improving Finance and Insurance (F&I) penetration rates.
Therefore, we are carefully examining and re-calibrating the core business which in turn will improve
financial performance, and importantly, rebuild shareholder value.

We have already identified measures that we believe will lead to improved cost-efficiencies including:
 reconfiguring the work flow within the Hub;
 further reducing out-sourcing and expanding vehicle preparation activities undertaken at the
Hub to make it a one-stop-shop prior to sale; and
 strengthening our existing key supplier partnerships and expanding our networks.

With regard to improving F&I performance, we recognise that market conditions and access to credit
has tightened. Strengthening partnerships with our F&I providers and ensuring our branch network is
sufficiently trained to maximise sales in this area is a critical first step.

As previously announced, the new Board will continue to review the direction of NZ Motor Finance.

We are also carefully reviewing the Company’s management and organisational structure to ensure it is
appropriate for the size and scale of the business, that it is cost-effective, and that it enables the
Company to operate efficiently.

One of the Company’s key strengths is its Japan-based procurement team, enabling us to hand-pick
the best cars for the New Zealand market. Following the significant disruptions in international travel
caused by the pandemic, I will be joining David Sena in Japan within the next two months to meet our
Japanese team and for key supplier and stakeholder meetings.

This week the Board appointed an executive search firm to work with us to recruit a permanent CEO for
NZAI.

We also had promising preliminary discussions with a potential new auditor and we expect to be able to
update the market later this month.

The directors have also had a constructive meeting with the Company’s bankers. The discussions were
positive and cordial and we will continue to engage with them prior to the current financial facilities
maturing.

Two weeks in, there is a lot still to do but your new Board has the requisite skills and experience and
has hit the ground running. We’re committed to re-positioning the business for sustainable growth and
turning the profitability tide in the shortest time frame possible.

We thank you for your patience and support and as Michael said, we will keep our shareholders well
informed.

SLIDE – QUESTIONS ON PRESENTATIONS, ANNUAL REPORT & FINANCIAL STATEMENTS

I will briefly open the floor to questions specifically regarding Haydn’s and my presentations, the Annual
Report and Financial Statements only. We will take all general questions at the conclusion of the
general business and questions from online participants will also be read and answered at that time.

Thank you. We will now move to voting on the resolutions laid out in the Notice of Meeting.

SLIDE – RESOLUTION 1 – To elect Michael Stiassny as a director

The first two resolutions concern the formal election of directors. Michael Stiassny was appointed as a
director by the Board on 21 August 2022. In accordance with the Company’s constitution, Michael
Stiassny hereby retires and formally offers himself for election. I invite Michael to address this meeting.

[Michael Stiassny address]

[Gordon Shaw]

I now move that resolution 1 is put to shareholders – that Michael Stiassny be elected as a director of
New Zealand Automotive Investments Limited.

Is there any discussion?

SLIDE – RESOLUTION 2 – To elect Gordon Shaw as a director.
As I am standing for election, I invite Michael Stiassny to introduce and oversee the vote on resolution
2.
Michael Stiassny

Gordon was appointed as a director by the Board on 21 August 2022. In accordance with the
Company’s constitution, Gordon hereby retires and formally offers himself for election. I invite Gordon to
address this meeting.

[Gordon Shaw address]

Michael Stiassny

Thank you Gordon. I now move that resolution 2 is put to shareholders – that Gordon Shaw be elected
as a director of New Zealand Automotive Investments Limited.

Is there any discussion?

Before I hand back to Gordon and we move to the third resolution, you will recall that on 22 August
2022, the directors advised the market that we had co-opted onto the Board, experienced independent
director Samantha Sharif. Samantha will sit on the Board until such time as a new CEO is appointed
and Gordon Shaw completes his Interim CEO function and can return to the Board as an independent
director.

As Samantha is a co-opted director, she does not stand for election. However, it is noted that her
appointment has the full support of the majority of shareholders and the New Zealand Shareholders
Association.

Gordon Shaw

SLIDE – RESOLUTION 3 – Auditor’s remuneration

As previously advised, Grant Thornton have resigned as auditors of New Zealand Automotive
Investments Limited.

As I noted earlier, the Board is confident of making an announcement regarding the appointment of new
auditors in the coming weeks.

Section 207(s) of the Companies Act provides that the fees and expenses of the auditors are to be fixed
in such manner as the company determines at the Annual Meeting. The Board proposes that,
consistent with past practice, the auditor’s fees be fixed by the directors.

I therefore move that resolution 3 is put to shareholders – that the directors be authorised to fix the
auditor’s remuneration for the coming year.

Is there any discussion?

So, if you haven’t already done so, webcast viewers please cast your votes. I will also then ask
Computershare to collect the voting papers.
SLIDE – GENERAL BUSINESS & QUESTIONS
Are there any matters of General Business to be tabled or moved?
---
The directors will also be happy to answer questions from shareholders while refreshments are served
at the end of the meeting.

Thank you.

SLIDE – THANK YOU FOR ATTENDING

That brings us to the conclusion of our business today and it remains for me first, to thank you for your
participation, and secondly to invite those of you here to join the Board and Management for
refreshments on the balcony.

I declare the meeting closed. Thank you.

---

1
2022
 
Annual
 
Shareholders’
 
Meeting
2
 
September
 
2022
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation
NZ
 
AUTOMOTIVE
 
INVESTMENTS
1

Important
 
Notice
 
and
 
Disclaimer
This presentation is given on behalf of NZ Automot
ive Investments Limited (NZAI), (NZX:NZA).
Information in this presentation is for general information pur
poses only and is not an offer or invitation for subscription
or purchase of, or a recommendatio
n to invest in NZAI securities.
The presentation should be read in conjunction with, and is subject to, NZAI’s latest set of financial statements for theperiod ended 31 March 2022, and other market rel
eases and information released on the NZX.
The presentation includes forward looking statements about NZAI and the environment that it operates in, which aresubject to uncertainties outside of NZA
I’s control. NZAI’s results or performance may vary from these statements. Also
included are statements relating to past performance, which should not be regarded as a reliable indicator of futureperformance.The presentation may contain information from third parties believed to be reliable, but no representations or warrantiesare made as to the accuracy or completeness of such information.Non-GAAP and non-IFRS measures are used as management and the Board believe they provide useful information forreaders to assist in the understanding of NZAI’s financial performance. Non-GAAP and non-IFRS measures do not havea standardised meaning and should not be viewed in isolation or be considered substitutes for measures reported inaccordance with NZ IFRS. These measures have not been independently audited or reviewed.Numbers related to the FY23 year to 31 July 2022 are unaudited.All currency amounts are presented in NZ
dollars, unless otherwise stated.
Authorised for release by the Board of Directors.
2
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation
3
Welcome
 
to
 
The
 
Hub
102
 
Mays
 
Road
Onehunga
The
 
engine
 
room
 
of
 
NZ
  
Automotive
 
Investments
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Chair’s
 
opening
 
remarks
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation
44
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Agenda
 
5
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation
Financial
 
results
 
and
 
overview
 
FY22
 
&
 
YTD23
Board
 
&
 
Interim
 
CEO
 
update
Ordinary
 
resolutions
 
General
 
business
 
&
 
questions

Financial
 
results
 
and
 
overview
 
FY22
 
&
 
YTD23
 
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation
66
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
FY22
 
ASM
 
Presentation

Overview
 
– FY22
7

Expanded
 
Hub
 
to
 
position
 
business
 
for
 
future
 
growth

EVs
 
and
 
HEVs
 
accounted
 
for
 
over
 
30%
 
of
 
2
 
Cheap
 
Cars
 
sales
 
in
 
Q4

2
 
Cheap
 
Cars
 
footprint
 
expanded
 
with
 
two
 
new
 
dealerships

Navigated
 
through
 
another
 
year
 
of
 
COVID
 
disruptions

New
 
Zealand
 
Motor
 
Finance
 
loan
 
book
 
grew
 
by
 
72%
 
to
 
$6.8m

Enhance
 
digital
 
capability
 
through
 
“buy
 
now’’
 
online
 
option

Net
 
promoter
 
score
 
up
 
from
 
4.33
 
to
 
4.5
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Results
 
–FY22
$
2.6
M
down
 
18.9%
 
($0.6m)
NPAT
$
1.7
M
down
 
55.7%
UNDERLYING NPAT
$
66.0
M
down
0.3%
REVENUE & INCOME
$
0.6
m
down
 
($6.8M)
NET OPERATING CASHFLOW ex
LENDING
3.1
 
CPS
Final
 
gross
 
dividend
 
of
 
0.88
 
cps
 
to
 
be
 
paid
 
in
 
June
 
2022
 
FULL YEAR DIVIDEND
0.6
 
CPS
down
 
51%
EPS
3
*.
 
Underlying
 
NPAT
 
is
 
a
 
non
‐
IFRS
 
measure
 
and
 
excludes
 
the
 
net
 
consideration
 
from
 
rearrangement
 
of
 
leases.
*
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Overview
 
–Year
 
to
 
31
 
July
 
2022

Estimated
 
market
 
share
 
increased
 
to
 
7.4%*
 
up
 
from
 
6.9%
 

2
 
Cheap
 
Cars
 
sales
 
of
 
EV
 
/
 
HEV
 
vehicles
 
increased
 
to
 
over
 
40%
 
up
 
from
 
21%
O
 
Finance
 
&
 
Insurance
 
penetration
 
down
 
from
 
32%
 
to
 
26%
 
due
 
to
 
effects
 
of
 
CCCFA
 
lending
 
regulations

Dispatch
 
of
 
vehicles
 
increased
 
17%
 
due
 
to
 
new
 
Hub
 
efficiencies
 

2
 
Cheap
 
Cars
 
dealerships
 
are
 
85%
 
full
 
as
 
a
 
result
 
of
 
increased
 
Hub
 
output
 

Responding
 
to
 
inflationary
 
headwinds
 
across
 
labour,
 
shipping
 
and
 
compliance
9
*
Source: NZTA; based on 2 Cheap Cars’ vehicle sal
es as a proportion of used cars registered in
New Zealand for the first-time between 1 April 2022 and 31 July 2022.
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation
Compared to the same period last year:

Performance
 
–Year
 
to
 
31
 
July
 
2022
$
5.0
M
down
 
(from
 
$5.6m)
CONTRIBUTION
MARGIN
$
0.8
M
down
 
(from
 
$1.37m)
UNDERLYING NPAT
$
27.7
M
up
 
10%
REVENUE & INCOME
$
3.9
M
up
 
(from
 
$2.3m)
NET OPERATING
CASHFLOW
3,028
down
 
4.3%
VEHICLE SALES
$
6.3
M
down
 
6.9%
LOAN BOOK
3
*.
 
Underlying
 
NPAT
 
is
 
a
 
non
‐
IFRS
 
measure
 
and
 
excludes
 
restructuring
 
costs
 
associated
 
with
 
Board
 
changes
 
and
 
non
 
recurring
 
consultancy
 
fees
 
*
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

11
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation
Board
 
and
 
Interim
 
CEO
 
update

Immediate
 
Board
 
priorities
Rebuilding
 
shareholder
 
value
 
and
 
improving
 
financial
 
performance
 
through:
•
Focusing
 
on
 
core
 
business
 
and
 
rebuilding
 
shareholder
 
value
 
•
Re
‐
calibrating
 
strategy
 
to
 
achieve
 
sustainable
 
growth
 
and
 
improved
 
financial
 
performance
•
Maximising
 
cost
 
efficiencies
 
and
 
in
‐
housing
 
synergies
•
Improving
 
Finance
 
&
 
Insurance
 
(F&I)
 
penetration
•
Reviewing
 
investment
 
in
 
NZ
 
Motor
 
Finance
 
•
Adjusting
 
management
 
structure
 
And
 
also:
•
Appointing
 
new
 
auditors
•
Banking
 
facility
 
resolution
12
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

13
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation
Ordinary
 
resolutions

Election
 
of
 
directors
Resolution
 
1
 
“That
 
Michael
 
Stiassny
 
be
 
elected
 
as
 
a
 
director
 
of
 
the
 
Company”
14
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Election
 
of
 
directors
Resolution
 
2
“That
 
Gordon
 
Shaw
 
be
 
elected
 
as
 
a
 
director
 
of
 
the
 
Company”
15
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Auditor’s
 
remuneration
Resolution
 
3
 
“That
 
the
 
Board
 
be
 
authorised to
 
fix
 
the
 
auditor’s
 
remuneration”
16
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

Proxy
 
voting
 
results
 
Resolutions
%
 
For
%
 
Against
%
 
Abstain
Discretionary
%
 
of
 
Total
 
votes
 
cast
 
Michael
 
Stiassny
 
be
 
elected
 
as
 
a
 
director
99.8%
0.0%
0.0%
0.2%
86.4%
Gordon
 
Shaw
 
be
 
elected
 
as
 
a
 
director
99.8%
0.0%
0.0%
0.2%
86.4%
Auditor’s
 
remuneration
99.8%
0.0%
0.0%
0.2%
86.4%
17
• Provided by Computershare, as of 3:00pm 31 A
ugust 2022, close of proxy voting. There were
also a small number of discretionary proxy
votes which will be included in the final voting.
• Full voting results will be posted to the NZX on 5 September 2022.
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation

18
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
2022
 
ASM
 
Presentation
General
 
business
  
&
 
questions