NZ Automotive interim results for Half Year 2023

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

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




28 November 2022

Market announcement
NZX:NZA

Revenue up in NZAI half year results

Integrated automotive group, NZ Automotive Investments Limited (NZAI) (NZX:NZA) has today reported
revenue and income of $40.2m, an increase of 29 percent, for the half year to 30 September 2022 (HY23).

Summary of key results
(Figures quoted are in NZ dollars. Comparisons are made against HY22.)
 Revenue and income: $40.2m, increased 29%
1
.
 Vehicle sales: Up 11% to 4,281.
 Underlying EBITDA
2
including finance income: $2.9m, down $0.3m.
 Net profit after tax (NPAT): $0.6m, down $0.8m (including $0.7m of restructuring costs)
 Underlying NPAT: $1.0m, a decrease of $0.4m.
 Underlying earnings per share (EPS): 2.3 cents per share (cps) against 3.1cps for HY22.

Against a backdrop of the tightening economic environment, inflationary pressure, and rising interest
rates, the overall New Zealand used car market has dropped 7.5% in the six months to 30 September
2022
3
. NZAI vehicle sales are up 11% when compared with HY22, which was impacted by Covid-19

The Group’s half year revenue and income increase of 29% to $40.2m was driven by a boost in sales
volumes against the same period last year, combined with inflationary uplift in the prices of vehicles sold.

While vehicle margins have remained stable, the business itself has seen some margin erosion due to
lower finance penetration rates since the introduction of CCCFA lending regulations. Overall the
contribution margin is up 7.5% to $7.4m.

Operating costs (excluding non-recurring costs) have risen 9.3% to $4.5m, in large part due to investment
in marketing which had been curtailed during the peak years of the pandemic.

Underlying EBITDA including finance income decreased from $3.2m in HY22 to $2.9m in HY23.
Higher vehicle sales volumes, offset by the reduced performance of the finance and insurance side of the
business and investment in marketing have been primarily responsible for the drop in underlying EBITDA
including finance income.


1
Includes interest income derived from the finance company.
2
Excludes restructuring costs associated with Board changes and other non-recurring consulting costs. Underlying
EBITDA and underlying NPAT are non IFRS measures
.
3
Source – NZ Customs and NZTA data.

The impact of the Covid-19 Omicron outbreak in the first quarter and non-recurring costs of $0.7m
associated with significant changes at board and management level has seen unaudited NPAT fall to
$0.6m from $1.4m in the previous corresponding period.

Underlying NPAT reduced from $1.4m in HY22 to $1.0m in HY23.

Total net operating cash flow has improved to $4.6m, up from $1.2m for the same period last year. This
is largely due to reduced inventory levels (and associated prepaid inventory) as well as a decrease in the
loan book.

As at 30 September 2022, the Company is in compliance with all banking covenants and has cash of
$6.2m, net debt of $4.4m and total equity of $15.4m.

Automotive Retail – 2 Cheap Cars

The Automotive Retail business has sold 4,281 vehicles in HY23 which is an 11% increase on the same
period last year. This increase, together with inflationary factors, has seen unaudited revenue from vehicle
sales increase by 30% to $39.7 million.

The government’s new Clean Car Discount scheme introduced in April has influenced vehicle sales
across the industry. 2 Cheap Cars continues to be well positioned to meet the increasing demand for
electric and hybrid vehicles (EV/HEVs). In HY23, the number of EV/HEVs sold as a proportion of total
vehicle sales increased to 40%, up from 21% in the same period last year.

In another significant movement, online vehicle sales accounted for 23% of total sales, more than
doubling from 9% in HY22.

2 Cheap Cars has an estimated market share for the 6 months of 6.5%
4
, up from 6.4% in the same period
last year, but slightly down from the first quarter as the sales and marketing team was re-established and
enlarged following management changes.

The number of vehicles sold with finance was down 10% to 1,128. This reflects a penetration rate of 26%,
compared to 32% in HY22. Factors impacting this result included the ongoing challenges resulting from
CCCFA changes making it more difficult for some customers to access consumer finance, rising interest
rates in an inflationary environment, and consequent general tightening of household budgets.

2 Cheap Cars has grown its dealership network by renewing the lease on an expanded Wairau Valley
site on Auckland’s North Shore, enabling 25% more vehicles to be accommodated.

Finance Company - NZ Motor Finance

The Board had been considering the NZ Motor Finance’s strategy, and whether that remained the most
appropriate use of capital. As a result, lending was paused in June, with the loan book reducing from
$6.8m at 31 March 2022 to $5.6m at 30 September 2022. The Board is continuing to review options.

Dividend

No interim dividend is to be declared and underlying EPS is 2.3 cents per share.

Focus for FY23

The Board remains focused on stabilising and reinvigorating the retail business through:


4
Source: NZTA - based on 2 Cheap Cars’ vehicle sales as a proportion of used cars registered in New Zealand for
the first-time between 1 April 2022 and 30 September 2022.

 The targeted expansion of the dealership distribution network
 Investing in brand marketing and digital engagement campaigns
 Improving third party finance and insurance penetration rates
 Improving core supply chain capabilities (vehicle purchasing and in-sourcing of services)

And, while the Board has retained the existing strategy for now, it is in the process of reviewing this and
will advise the market in due course.

In January 2023, the Government will introduce a new Clean Car Import Standard scheme to encourage
vehicle importers to target lower emission vehicles. Initial modelling under this credit-based scheme,
indicate that 2 Cheap Cars will be in a credit position for FY23 and FY24. Further opportunities to leverage
this scheme are also anticipated, including through the trade of credits.

Interim CEO, Gordon Shaw said that while it had been a challenging period, more recently steady
progress had been made in stabilising the retail business.

“We have appointed a new General Manager Sales, a Marketing Manager and digital marketing team to
further drive sales. We expect to make an announcement regarding the appointment of a new CEO prior
to Christmas, and are also in the process of appointing a new auditor. Discussions continue with alternate
lenders regarding replacement of our finance facilities,” Shaw said.

The numbers included in this announcement are unaudited.


Ends
 
This announcement has been authorised by NZAI Chair, Michael Stiassny. 
 
For shareholder enquiries, please contact 
Haydn Marks 
CFO 
Mobile: +64 21 221 1040 
Email: haydn.m@nzautomotiveinvestments.co.nz 
 

About NZ Automotive Investments Limited (NZAI)
NZAI is an integrated automotive group operating throughout New Zealand via two subsidiaries:
Automotive Retail and Vehicle Finance. NZAI’s mission is to deliver quality cars and financing solutions
at the most affordable prices to the average New Zealander. Operating under the “2 Cheap Cars”
brand, its Automotive Retail company is one of the largest used vehicle sellers in New Zealand with 12
dealerships across the country. Its Vehicle Finance company operates under the “NZ Motor Finance”
brand. www.nzautomotiveinvestments.co.nz

---

NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated statement of profit or loss and other comprehensive income
For the 6 month period ended 30 September 2022
UnauditedUnaudited
NoteSEP 2022SEP 2021
$'000$'000
Revenue
Revenue and income40,146 30,846
Sundry income23 390
Expenses
Cost of sales(32,760) (23,932)
Administration expenses5(1,821) (1,355)
Advertising expenses(820) (513)
Depreciation expenses(1,021) (931)
Employee benefits5(2,180) (1,873)
Finance expenses(477) (247)
Property expenses(326) (415)
Profit before income tax3764 1,970
Income tax expense(205) (570)
Profit for the period559 1,400
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Translation of foreign operations36 (6)
Total other comprehensive income36 (6)
Total comprehensive income for the period595 1,394
Earnings per share
Basic earnings per share 0.01 0.03
Diluted earnings per share 0.01 0.03
The accompanying notes form part of these interim consolidated financial statements
2

NZ AUTOMOTIVE INVESTMENTS LIMITED
Consolidated statement of changes in equity
For the 6 month period ended 30 September 2022
Share
Capital
Retained
Earnings
Foreign
Currency
Translation
Reserve
Amalgamation
Reserve
Total 
attributable to 
equity holders 
of Parent
Non‐
Controlling 
Interests
Total Equity/
(Accumulated
Losses)
$'000$'000$'000$'000$'000$'000$'000
Balance as at 1 April 202139,344 12,220 5 (35,956) 15,613 - 15,613
Profit for the period- 2,594 - - 2,594 - 2,594
Translation of foreign operations- -(90) (90) - (90)
Total comprehensive income for the period- 2,594 (90) - 2,504 - 2,504
Share options recognised at fair value net of options lapsed21- - - 21- 21
Dividends paid- (3,025) - - (3,025) - (3,025)
Total transactions with owners of the Group21 (3,025) - - (3,004) - (3,004)
Balance as at 31 March 202239,365 11,789 (85) (35,956) 15,113 - 15,113
Balance as at 1 April 202239,365 11,789 (85) (35,956) 15,113 - 15,113
Profit for the period- 559 - - 559 - 559
Translation of foreign operations- -36 - 36 - 36
Total comprehensive income for the period- 559 36 - 595 - 595

Share options recognised at fair value net of options lapsed(21)
(21) (21)
Dividends paid- (287) - - (287) - (287)
Total transactions with owners of the Group(21) (287) - - (308) - (308)
Balance as at 30 September 202239,344 12,060 (49) (35,956) 15,399 - 15,399
The accompanying notes form part of these interim consolidated financial statements
3

NZ AUTOMOTIVE INVESTMENTS LIMITED
Interim consolidated statement of financial position
As at 30 September 2022
UnauditedAudited
SEP 2022MAR 2022
Note$'000$'000
Equity
Share capital39,344 39,365
Amalgamation reserve(35,956) (35,956)
Foreign currency translation reserve(49) (85)
Retained earnings12,060 11,789
Total equity15,399 15,113
Current liabilities
Trade and other payables2,297 1,890
Employee benefit liabilities679 933
Borrowings10,600 11,800
Derivative financial assets34 414
Deferred income105 126
Related party payable10 10
Lease liability1,811 1,484
Other current liabilities- 326
Total current liabilities15,536 16,983
Non-current liabilities
Lease liability5,428 5,833
Total non-current liabilities5,428 5,833
Total equity and liabilities36,363 37,929
Current assets
Cash and cash equivalents6,154 3,790
Trade and other receivables3,077 4,865
Income tax receivable217 288
Loans receivable43,103 2,954
Inventories12,671 13,334
Total current assets25,222 25,230
Non-current assets
Plant, property and equipment1,354
1,335
Intangible assets5 5
Loans receivable 42,513 3,870
Deferred tax asset456 433
Right-of-use assets 6,813 7,056
Total non-current assets11,141 12,699
Total assets 36,363 37,929
Approved on behalf of the Board on 28th November 2022
Director
Date
DirectorDate
The accompanying notes form part of these interim consolidated financial statements
4
28/11/2022
28/11/2022

NZ AUTOMOTIVE INVESTMENTS LIMITED
Interim consolidated statement of cash flows
For the six months ended 30 September 2022
UnauditedUnaudited
SEP 2022SEP 2021
$'000$'000
Cash flows from operating activities
Cash receipts from customers40,331 30,087
Government grants received17 316
Cash paid to suppliers and employees(35,994) (27,684)
Loan receivables advanced(1,362) (2,471)
Proceeds from loan receivables2,451 1,841
Interest received52 8
Interest paid(246) (138)
Non-recurring costs(461) (45)
Tax paid(157) (736)
Net cash inflow from operating activities4,631 1,178
Cash flows from investing activities
Proceeds from sale of property, plant and equipment87 -
Purchase of property, plant and equipment(204) (308)
Net cash outflow from investing activities(117) (308)
Cash flows from financing activities
Dividend paid(287) (2,296)
Repayments from related parties- -
Interest paid(194) (81)
Principal elements of lease payments(406) (800)
Trade finance advance(1,200) 1,030
Net cash outflow from financing activities(2,087) (2,147)
Net increase/(decrease) in cash and cash equivalents2,427 (1,277)
Cash and cash equivalents at beginning of period3,790 8,267
Effect of exchange rate(63) (6)
Cash and cash equivalents at end of period6,154 6,984
The accompanying notes form part of these interim consolidated financial statements
5

Notes to the financial statements
1. Reporting entity
2. Basis of preparation
(a) Statement of compliance
(b) Basis of measurement
• Derivative financial instruments
• Loans receivable (Note 4)
(c) Functional and presentation currency
(d) COVID-19
(e) Going Concern
NZ Automotive Investments Limited (the Company) is a company domiciled in New Zealand.
TheCompany is incorporated in New Zealand, registered under the Companies Act 1993 and is publicly traded on the New Zealand
Stock Exchange.
These interim consolidated financial statements comply with the requirements of the Companies Act 1993 and the Financial Markets
Conduct Act 2013.
These interim consolidated financial statements as at 30 September 2022 comprise the Company and its subsidiaries:
2 Cheap Cars Limited, NZ Motor Finance Limited, 2CC International Limited, 2 Cheap Rental Cars Limited and Car Plus K.K.
(collectively, the Group).
These unaudited interim consolidated financial statements have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (GAAP) and the requirements of the Financial Markets Conduct Act 2013. They have been prepared in
accordance with IAS 34 'Interim financial reporting'. They do not include all of the required information in annual financial statements in
accordance with IFRS and should be read in conjunction with the consolidated financial statements for the year ended 31 March 2022.
The interim consolidated financial statements have been prepared on the historical cost basis except that certain assets and liabilities
are measured at fair value where stated under their specific accounting policies.
These interim consolidated financial statements for the Group are presented in New Zealand dollars ($), which is the Group's functional
and the Group's presentation currency. All financial information presented has been rounded to the nearest thousand dollars.
Specific description of the Company’s current trading during the interim period
The first quarter of the interim period was impacted by the COVID-19 Omicron wave which resulted in fewer active retail custome
rs. In
the second quarter of the interim period demand for used motor vehicles in New Zealand improved. Overall, the used car market in
New Zealand was down an estimated 7.5% to 30 September 2022.
General description of the current environment during the interim period
Globally,the ongoing impacts of COVID-19 and the uncertain geo-political environment in Eastern Europe continue to disrupt markets
and supply chains. At the same time, New Zealand is experiencing growing inflationary pressure, rising costs, and increased interest
t
During the interim period, New Zealand moved from Red to Orange Covid-19 "traffic light" settings in mid-April 2022. The traffic light
system was disestablished in mid-September 2022.
Specific description of the Company’s current loan position
The Company’s Retail Trade Finance Facility ($8.0m) matures on 31 December 2022. As announced on 9 August 2022, the lender is
unable to give any assurances it will extend the facility beyond this date.
Since the announcement, management has been discussing replacement facilities with alternate lenders.
Although economic conditions are likely to remain challenging, demand for used cars in the market segment that 2 Cheap Cars
operates in are expected to remain solid. This is due to the fact that customers who buy a vehicle from 2 Cheap cars, generally do so
out of necessity. The Government's clean car discount scheme, together with the fact that customers are looking to switch to vehicles
with cheaper fuel costs are also expected to retain demand for the type of vehicles that 2 Cheap Cars sells.
As at the date of signing the financial statements, the position of the lender remains unchanged, and the Company has yet to secure a
replacement facility.
pgp
The Directors have assessed the situation regarding the current status of the Retail Trade Finance Facility and have concluded that,
for the 12 months from the date of signing the financial statements the Group will remain in a position to continue operating as a going
concern.
The main drivers of this conclusion are based on the fact that in the event that a replacement facility cannot be secured, and full
repayment of the Retail Trade Finance Facility is required, the Group:
As at 30 September 2022
• Has sufficient cash reserves $6.2m and Inventory that could be liquidated (carrying amount $12.7m) to immediately settle the trade
finance facility.
• Has positive working capital of $9.7m, and a working capital ratio of 1.63x.
•Has YTD operating cash inflows of $4.6m.
• The Company is in compliance with all of its bank covenants.
As at the date of signing the financial statements (28 November 2022)
• Has sufficient cash reserves $3.7m and Inventory that could be liquidated (estimated $10.3m) to immediately settle the trade finance
facility (expected to be $5.0m).
• Has estimated positive working capital of $9.6m, and a working capital ratio of 1.76x.
•
Has estimated YTD operating cash inflows of $6.1m.
• The Company is expected to be in compliance with all bank covenants.
6

(f) Critical accounting estimates and judgements
(g) Changes in accounting policies
There were no accounting policy changes during the period.
3. Segment reporting
Description of segments
Reportable segments have been identified as follows:
Operating Segments
NZ Motor
2 Cheap CarsFinance
As at 30 September 2022LimitedLimitedOthersTotal
$'000$'000$'000$'000$'000
Revenue including interest39,714 594 1,057 (1,219) 40,146
Sundry Income20 - 3 - 23
Cost of sale(33,213) - (601) 1,053 (32,760)
Interest expense - finance- (115) - - (115)
Operating expense(4,032) (349) (1,788) 1 (6,168)
Operating profit2,489 130 (1,329) (165) 1,126
Dividend received- - 287 (287) -
Interest expense - trading(307) (241) - 186 (362)
Net profit before tax2,182 (111) (1,042) (266) 764
NZ Motor
2 Cheap CarsFinance
As at 30 September 2021LimitedLimitedOthersTotal
$'000$'000$'000$'000$'000
Revenue including interest30,467 582 1,083 (1,286) 30,846
Sundry Income350 16 24 - 390
Cost of sale(24,415) - (600) 1,083 (23,932)
Interest expense - finance(37) - (37)
Operating expense(3,459) (306) (1,413) 92 (5,087)
Operating profit2,943 255
(906) (111) 2,180
Dividend received- - 2,296 (2,296) -
Interest expense - trading(182) (236) 208 (210)
Net profit before tax2,761 19 1,390 (2,199) 1,970
Elimination -
Inter-entity
transactions
Elimination -
Inter-entity
transactions
Management has determined the operating segments based on the components of the Group that engage in business activities which
have discrete financial information available and whose operating results are regularly reviewed by the Group's chief operating decision
maker, the Board of Directors. The Board of Directors makes decisions about how resources are allocated to the segments and
assesses their performance. Geographically the Group's business activities are located in New Zealand.
The preparation of the consolidated financial statements, requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods affected.
7

4. Loans Receivable
Determination of fair values
Loans and receivables – At amortised cost book valueBook value
Loans and receivables – At fair value through profit and loss Discounted cash flow
Fair value through
Amortised costprofit and loss Total
Opening balance (1 Apr 2021)
Gross carrying value829 2,998 3,827
Less: Impairment allowance (24) - (24)
Total Loans receivable805 2,998 3,803
Movements during the period
Advances of loans to customers 3,611 2,677 6,288
Repayments of loans by customers(1,273) (2,241) (3,514)
Movement in accrued interest288 - 288
Movement in impairment allowance(49) - (49)
Fair value gain/(loss)- 8 8
Total movements2,577 444 3,021
Gross carrying value3,455 3,442 6,897
Less: Impairment allowance (73) - (73)
Total loans receivable3,382 3,442 6,824
Closing balance (31 Mar 2022)
Current portion1,343 1,684 3,027
Non-current portion2,112 1,758 3,870
Less: Impairment allowance (73) - (73)
Total loans receivable3,382 3,442 6,824
Fair value through
Amortised Costprofit and loss Total
Opening balance (1 Apr 2022)
Gross carrying value3,455 3,442 6,897
Less: Impairment allowance (73) - (73)
Total loans receivable3,382 3,442 6,824
Movements during the period
Advances of loans to customers 567 534 1,101
Repayments of loans by customers(1,228) (1,223) (2,451)
Movement in accrued interest261 - 261
Movement in impairment allowance(10)
(10)
Fair value gain/(loss)- (109) (109)
Total movements(410) (798) (1,208)
Gross carrying value3,055 2,644 5,699
Less: Impairment allowance (83) - (83)
Total loans receivable2,972 2,644 5,616
Closing balance (30 Sep 2022)
Current portion1,739 1,447 3,186
Non-current portion1,316 1,197 2,513
Less: Impairment allowance (83) (83)
Total loans receivable2,972 2,644 5,616
The effective interest rate on Loans receivable at Amortised cost are 9.95% - 17.95%
Loans receivable measured at amortised cost (financial assets which represent solely payments of principal and interest) have been
impaired at 2.7%, using the expected credit loss model.
Loans receivable measured at fair value (financial instruments that include waiver based clauses) are modelled at fair value and
include an effective default risk impairment rate of 2.6% which is factored into the valuation inputs.
The Company acted to temporarily pause further lending in July 2022. The Board of Directors plan to review the strategic direction in
NZMF lending in due course.
8

5. Operating expenses
6. Contingent liabilities
ASB Bank Limited has given a guarantee to the landlord on behalf of the Group to secure premises.
The maximum guarantee is for $1,480,178 (September 2021: $658,055)
7. Subsequent events
2 Cheap Cars has renewed its North Shore lease in Wairau Valley effective 1 October 2022.
No other significant event have occurred subsequent to the balance date.
During the period, the Group had a significant change in the Board of Directors and Management which resulted in restructuring
costs
(including terminal benefits) and other non recuring costs of $654,086 being incurred during the period.
9

NZ AUTOMOTIVE INVESTMENTS LIMITED
Company directory
Nature of business
Used car retail and motor vehicle finance
Registered office
Head office
102 Mays Road
Onehunga
Auckland 1061
Directors
Michael Stiassny
Gordon Shaw
Yusuke (David) Sena
Samantha Sharif
Bankers
ASB Bank
Solicitors
Lowndes Jordan
Independent auditors
TBA
Share register
Computershare
102 Mays Road
Onehunga
Auckland 1061
10

---

Results announcement


Results for announcement to the market
Name of issuer NZ Automotive Investments Limited
Reporting Period 6 months to 30 September 2022
Previous Reporting Period 6 months to 30 September 2021
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$40,146 30%
Total Revenue $40,169 29%
Net profit/(loss) from
continuing operations
$559 -60%
Total net profit/(loss) $595 -57%
Interim Dividend
Amount per Quoted Equity
Security
$0.00000000
Imputed amount per Quoted
Equity Security
$0.00000000
Record Date
Dividend Payment Date
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.33 $0.31
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood

Authority for this announcement
Name of person

authorised
to make this announcement
Gordon Shaw, Interim CEO
Contact person for this
announcement
Haydn Marks, CFO
Contact phone number 0212211040
Contact email address haydnmarks@nzautomotiveinvestments.co.nz
Date of release through MAP

28/11/2022

Unaudited financial statements accompany this announcement.

---

HY23
 
results
PresentationHALF
 
YEAR
 
FINANCIAL
 
RESULTS
 
TO
 
30
 
SEPTEMBER
 
2022
28
 
November
 
2022
NZ AUTOMOTIVE INVESTMENTS
1

IMPORTANT
 
NOTICE
 
&
 
DISCLAIMER
 
This presentation is given on behalf of NZ Automotive Investments Limited (NZAI) (NZX:NZA).Information in this presentation is for general information purposes only and is not an offer or invitation for subscription or purchase of, ora recommendation 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 the period ended 30September 2022, released on the NZX.The presentation includes forward looking statements about NZAI and the environment that it operates in, which are subject touncertainties outside of NZAI’s control. NZAI’s results or performance may vary from these statements. Also included are statementsrelating to past performance, which should not be regarded as a reliable indicator of future performance.The presentation may contain information from third parties believed to be reliable, but no representations or warranties are made as tothe accuracy or completeness of such information.Non-GAAP and non-IFRS measures are used as management and the Board believe they provide useful information for readers toassist in the understanding of NZAI’s financial performance. Non-GAAP and non-IFRS measures do not have a standardised meaningand should not be viewed in isolation or be considered substitutes for measures reported in accordance with NZ IFRS. These measureshave not been independently
audited or reviewed.
All information presented is current at 30 September 2022, unless otherwise stated. All currency amounts are presented in NZ dollars,unless otherwise stated.Authorised for release by the Board of Directors.
2
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Agenda
1. Business overview |
Michael Stiassny, Chair
2. Financial results |
Haydn Marks, CFO
4. Outlook 5. Q+A
3
NZ AUTOMOTIVE INVESTMENTS | HY23 INVESTOR PRESENTATION
3. Business update |
Michael Stiassny

HY23
 
Summary
 
of
 
key
 
results
$
0.6
M
down
60%
($1.4m)
(Includes $0.7m restructuring & non recurring costs)
NPAT
$
1.0
M
down 27%
UNDERLYING NPAT
$
40.2
M
up
29%
REVENUE & INCOME
$
3.5
M
up $
1.7M ($1.7m)
NET OPERATING CASHFLOW ex LENDING
0.0
C
PS
No interim di
vidend will
be paid
this half
INTERIM DIVIDEND
0.2
CPS
down 26%
Underlying EPS
4
*.
Underlying NPAT is a non-IFRS measure. It excludes non-recurring costs including restructuring and consulting expenditure arisi
ng
from significant changes to the Board of Directors and management .
*
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

HY23
 
Business
 
overview
• Vehicle retail business stabilising • Improved sales and marketing capability re-established• Total vehicle sales up 11% compared with HY22• Online sales accounted for 23% of total sales• Sales of EVs and HEVs doubled to 40% of total sales• Finance & Insurance penetration down from 32% to
26% (impact of CCCFA lending regulations and rising
interest rates)
• NZ Motor Finance lending paused under review by the Board
5
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Financial
 
results
6
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

HY23
 
Financial
 
results
7
Compared with HY22:• Revenue and income
up 29%
to
$40.2m
, driven by
increased sales volumes and inflationary impacts.
• Contribution margin up by 7.5% to $7.4m, impacted by
lower F&I income.
• Operating expenses are up by 9.3% to $4.5m due to
investment in marketing.
• Underlying EBITDA including finance income decreased
$0.3m from $3.2m to
$2.9m
as a result of sales volume
increases being off-set by lower F&I income andincreased marketing spending
• Net profit after tax (NPAT) of $0.6 million includes
restructuring and other non-recurring costs of $0.7m.
• Underlying NPAT decreased from $1.4m to
$1.0m
.
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION
NZD $m
HY23
HY22
Change
Revenue and income
40.1

30.8

30.1%
Sundry income
0.0

0.4

(94.1%)
Total revenue and income
40.2

31.2

28.6%
Contribution margin
7.4

6.9

7.5%
Operating expenses
4.5

4.1

9.3%
Underlying EBITDA inc finance income
2.9

3.2

(7.4%)
Underlying EBITDA Margin
7.3%
10.1%
-2.8%
Non-recurring costs
0.7

-

N/A
EBITDA inc finance income
2.3

3.2

(28.2%)
D&A
1.0

0.9

9.7%
EBIT
1.2

2.2

(44.1%)
Interest expense
0.5

0.3

90.4%
NPBT
0.8

2.0

(61.2%)
Tax
0.2

0.6

(64.0%)
NPAT
0.6

1.4

(60.0%)
Tax effect of non-recurring costs
0.2

-

N/A
Underlying NPAT
1.0

1.4

(26.4%)
Underlying NPAT Margin
2.6%
4.5%
(1.9%)
Underlying EPS
0.02

0.03

(26.4%)

HY23
 
Cash
 
flow
Compared with HY22:• Net cash flow (excluding loan book lending) increased
by $1.7m to
$3.5m
on the back of reducing inventory
levels.
• NZMF lent $1.4m to customers and collected $2.5m in
receipts resulting in net loan book lending of ($1.1m).
• The loan book is currently in run down mode while
lending is paused, resulting in a $1.7m increase inoperating cash flow.
• Total net operating cash flow improved by $3.4m to
$4.6m.
8
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION
Cash flow summary (NZD $m)
H1 FY23
H1 FY22
Change
Net cash flow exc loan book lending
3.5

1.8

1.7

Net cash flow loan book lending
1.1

(0.6)
1.7

Net operating cash flow
4.6

1.2

3.4

Investing cash flow
(0.1)
(0.3)
0.2

Financing cash flow
(2.1)
(2.1)
0.1

Net cash flow
2.4

(1.3)
3.7

Cash equivalents
6.2

3.8

2.4

HY23
 
Financial
 
position
 
and
 
funding
Compared with
F
Y22:
• Inventory turnover improved, dropping
from 99 days to 79
days.
• Loan book reduced from $6.8m to
$5.6m
.
• Balance sheet remains solid with $6.2m in cash and net
debt of $4.4m as at 30 September 2022.
• The business is in discussions to replace Retail Trade
Finance Facility.
9
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION
Balance sheet summary (NZD $m)
H1 FY23
FY22
Cash equivalents
6.2

3.8

Inventories
12.7

13.3

Loan receivables
5.6

6.8

Other assets
11.7

14.0

Total assets
36.1

37.9

Borrowings
10.6

11.8

Other liabilities
10.1

11.0

Total liabilities
20.7

22.8

Equity
15.4

15.1

Business
 
update
10
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Our
 
strategy
1.
Expand supply
chain
Expand our HUB car processing to unlock growth.Actively increase supply of affordable EV & HEVS.Leverage our scale to drive efficiencies.
2.
Grow retail
distributionExpansion of national dealership footprint.Upgrade and modernise physical dealerships.Invest in brand / advertising.
3.
Grow finance
loan book (pending review)Increase financial penetration.Implement digital application and fulfilment.
4.
Improve
digital offering
Refine full end-to-end online buying process.Automate internal processes.Execute on customer insights.
5.
Customer
experienceDeepen our connection with our 130,000 followers on social media.Invest in customer care team.Uplift net promoter score from 4.2 to 4.4.Deliver customer value through partnerships.
11








Progress made
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Next Step





Business
 
update
Automotive Retail - 2 CHEAP CARS
VEHICLE SALES AND REVENUE•
Total vehicle sales up 11% (compared with COVID-19 impacted HY22)
•
Revenue up 30% on the prior period
•
Sales of digital origination accounted for 23% of total sales
PROCESSING CAPACITY•
The vehicle processing hub in Onehunga is increasingly a one-stop-shop,
reducing the need for outsourcing.
•
New operational activities at the hub will continue to add value - increasing
production and reducing costs.
CAPABILITY•
Appointed a new General Manager Sales and Marketing Manager
INDUSTRY LEADERSHIP•
Joined leading industry bodies (Drive Electric, VIA and NZJBC)
13
6.5%
23%
Dealerships
Digital sales
Cars sold in HY23Market share
4,281
12
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION
*
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 30 Sep 2022.

13
Dealership
 
footprint
 
expansion
A significantly larger Wairau Valley site accommodates 25% more vehicles
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Growth
 
opportunity
Electric & hybrid electric vehicles (EV/HEVs)NZAI has a focused EV/HEV strategy and is we
ll positioned to meet increasing demand
61,892
Electric vehicles on the road in NZ up 89% pa (Source: Ministry of Transport, 9 Nov 2022).
1,733
Number of EV/HEVs 2 Cheap Cars sold in HY23, an increase
of 122% on
HY22
EV/HEV SALES GROW TO 41% OF TOTAL SALES
14
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Growth
 
opportunity
 
Expected impact from Clean Car Import Standard• Targeted at consumers• Expanded scheme introduced 1 April 2022• Driving demand for Hybrid used cars and cleaner ICE
vehicles
• Rising fuel costs continuing to drive consumers towards
more fuel-efficient vehicles
• Hybrid and EV sales up 124% at 2 Cheap Cars
15
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION
CLEAN CAR IMPORT STANDARD
CLEAN CAR DISCOUNT SCHEME
• Targeted at importers• To be introduced 1 January 2023• Intention to drive change towards importing lower
emission vehicles
• 2 Cheap Cars expects to be
in a credit position in FY23
• Future opportunities to trade credits

Outlook
16
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

OutlookFocus areas for FY23• Targeting expansion of the dealership distribution network• Investing in brand marketing and digital engagement campaigns• Further leveraging EV/HEV opportunities• Improving (third party provider) F&I penetration rates• Improving core supply chain capabilities, including purchasing and reducing outsourcing activity• Actively engaging with industry associations• Securing appropriate finance facilities and appointing a new auditor
17
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Q+A
18
NZ
 
AUTOMOTIVE
 
INVESTMENTS
 
|
 
HY23
 
INVESTOR
 
PRESENTATION

Thank
 
you
102
 
Mays
 
Road,
 
Onehunga,
 
Auckland
 
1061
www.nzautomotiveinvestments.co.nz
 
|
 
Ph:
 
+64
 
9
 
869
 
3330
19