A.P. Eagers 2015 First Half Results August 2015

Transcription

1 A.P. Eagers 2015 First Half Results August 2015

2 2015 Half Year Highlights Record PBT $59.5m up 29.5% Record NPAT $44.1m up 32.2% Record Basic EPS 24.5 cents up 31.0% Record Full Franked interim dividend of 12.0 cents up 33% Strong results from core Car Retailing segment Strong results from car retail acquisitions Property Portfolio Strategy execution will enhance returns Strong balance sheet with stable debt and gearing levels. 2

3 Australian New Vehicle Sales - June YTD 2015 June YTD up 3.3% Correct balance between supply and demand. Retail industry evolving following GFC, manufacturing exits, and retailer consolidation :- creating some risks and many opportunities. Generational change creating an increased number of Dealerships for sale. 578,427 (2014:559,950) Up 3.3% 3

4 Affordability CommSec Report 16 March

5 Exchange Rate Impact 80% of cars sold in Australia are imported from Japan, Thailand, Korea and EU Countries. Manufacturers have long planning horizons and diversified exposures; - Product and production planning based on 3-7 year cycles. - Most manufacturers pursuing global common vehicle platform strategies. - Generally large product runs based on supply of a common product to multiple markets. Manufacturer distribution margins can wear some of the adjustment. Product specification can and does adjust to maintain price point. Australian market relatively accessible and marketing is cost effective, but highly competitive. Vehicle prices remain consistent with recent years. 5

6 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Exchange Rates 8% 12% 5% 17% YTD New vehicle Sales (VFACTS) - 578,427 Country of Origin 7% 22% 29% Japan Thailand EU Countries Korea Australia USA Other AUD/THB Monthly 5 Years AUD/EUR Monthly 5 Years AUD/JPY Monthly 5 Years 0.0 Sep 13 to Feb 14 Avg = ,500 1,000 AUD/KRW Monthly 5 Years

7 % Affordability 90 Day Bank Bill Rate

8 2015 Full Year Highlights - Financial Record statutory basic EPS of 24.5 cents an increase of 31%. Fully franked interim dividend of 12 cents up 33%. EBITDA increased to $77.5m up 24%. Record statutory PBT increased by 29.5% to $59.5m Cash flow from operations of $50.0m. Financial strength and flexibility increased - EBITDA/Interest Cover 6.8 times (HY15) - EBITDA/Interest Cover 6.2 times (2014) 8

9 Financial Summary $ Million 1H H 2014 Change Revenue Up 19% EBITDA Up 24% EBIT Up 25% PBT Up 29% PAT Up 32% Cash from operating activities Up 17% NTA/share Up 10% Net gearing excluding bailment debt 23.2% 25.8% Down 10% 9

10 Balance Sheet - Summary New vehicle inventory and receivables funded by bailment debt. Parts and most used vehicle inventory is balance sheet funded. Available for sale investments of $256.2 million. Substantial property portfolio underwrites the company s financial position. 30/06/15 $m CA-CL (excl. held for sale) Freehold Property (incl. held for sale) Other Non Current Tangible Assets Intangible Assets Non Current Debt (224.0) Other N/C Liabilities (Deferred tax, and provisions) (10.9) Net Assets

11 1H2014 Operational Result AHG Investment (net of interest) MTAI,Other Income, InterestExp. Dilution IH2015 Earnings Per Share EPS 1H2015 Bridge 27.0 C e n t s (0.3) 24.5 p e r S h a r e

12 $ million Financial Trends PBT Underlying Operating Earnings PBT Underlying H H H H H H H H H H H H H H H Operating Earnings is EBITDA Underlying excluding profit/loss on sale of assets and from associates. It includes AHG dividend. PBT Underling excludes business acquisition costs, GST tax refunds, and fair value adjustments relating to freehold property assets, investments and intangible assets. 12

13 Financial Trends Operating Margin 5.0% 4.5% 4.0% Operating Earnings Margin % Linear (Operating Earnings Margin %) 3.9% 4.6% 4.1% 4.0% 4.3% 4.4% 4.6% 4.7% 3.5% 3.4% 3.6% 3.0% 2.5% Includes AHG dividend from H

14 Cents Financial Trends EPS Statutory (Basic) June 1H December 2H GFC/Lehman Bros Gov't stimulus H

15 Cents per share Financial Trends Dividend 30.0 Interim Dividend Final Dividend H

16 Segment Results Car retailing Strong car retailing in Qld & NSW with positive contributions from acquisitions. Strong trading in parts and service businesses. $m Car Retailing Truck retailing Truck Retailing Challenging new and used heavy truck trading conditions. Property H2014 Property Steady income and lower interest costs. Substantial property portfolio underwrites the company s financial position. Investment and All Other Eliminations* Unallocated Corporate H2015 Investment Dividend income and further unrealised gains on revaluation of investments. Net Profit Before Tax Eliminations include inter-segment transactions and asset fair value adjustments

17 Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS) Exceed stakeholder expectations customers, employees, partners (manufacturers), shareholders and community. Growth by selective acquisition Development of enhancements and complimentary services Business Optimisation continuous improvement in processes and systems.. 17

18 Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS) Business Optimisation Short Term 1H Replacement and repair opportunities continue from 60,000 hail damaged vehicles in SEQ. Strong benefits from Ian Boettcher Motors acquisition and integration. Strong Management performance and Vehicle Sales lift NSW Business Optimisation Short Term 2H Strong benefits from Ian Boettcher Motors continues Benefits from Blacks acquisition coming through Continual strong performance in NSW car retailing Business Optimisation Medium Term Benefits from Parts relocation to Eagle Farm Fortitude Valley Land Rover / Jaguar and Volvo relocation to Newstead by end 2016 Complete held for sale property process, exit locations and collect and reinvest cash. 18

19 Previous Parts Warehouse 19

20 New Parts Facility 20

21 New Parts Facility 21

22 New Parts Facility 22

23 New Parts Facility 23

24 New Volkswagen 24

25 Austral Volkswagen, Newstead 25

26 New & Existing Volkswagen 26

27 Existing Land Rover, Jaguar & Volvo 27

28 Existing Land Rover, Jaguar & Volvo 28

29 Jaguar Land Rover, Newstead 29

30 Benefit from Property Sales Financial strength and flexibilty with surplus cash to fund growth via quality acquisitions Delayed property settlement proceeds will deliver significant free cash over next 2 years Stage 1-44 Ipswich Rd/ 33 Jurgens Street, Woolloongabba, QLD Stage 1 99 Breakfast Creek Road, Newstead, QLD 80 McLachlan Street, Fortitude Valley, QLD $22.0m Stage 2-44 Ipswich Rd/ 33 Jurgens Street, Woolloongabba, QLD Stage 1 79 Ipswich Road, Woolloongabba, QLD $15.0m 30

31 Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS) Exceed stakeholder expectations customers, employees, partners (manufacturers), shareholders and community. Growth by selective acquisition Development of enhancements and complimentary services Business Optimisation continuous improvement in processes and systems.. 31

32 Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS) Development of Enhancement & Complimentary Services Medium / Long Term MTAI Insurance (27 yrs. old, APE 21%) Operating company sold to Suncorp (August 2014) (3.5 yrs. old, APE 7.5%) (3.5 yrs. old, APE 100%) Precision Automotive Technology [Paint & Fabric Protection, ERP and Window Tint] (2 yrs. old, APE 100%) New initiatives likely to be completed in 2015/2016 New Brand Coming Soon New Brand Coming Soon 32

33 33

34 Global Trends In Used Cars 34

35 Used Car Market 3 Major Global Trends Stage 1 Disruption: Big Box / Fixed Price Stage 2 Disruption: Tech Fuelled Disruption No Dealership Model 35

36 The big are getting bigger! Source: Carmax Investor Relations Presentation, May

37 And there is a new frontier of competition fuelled by technology. Wall Street Journal, May Fortune.com, July Techcrunch.com, May

38 At the heart of these trends is a serious mandate to deliver compelling branded customer experiences. 38

39 Link: Link: 39

40 Why used cars? 40

41 APE Vehicle Sales 2014 A.P Eagers New Vehicle Sales Total 44, % (4.0% of National Market) A.P. Eagers Used Vehicle Sales Total 25, % (Retail used 19380) 23% 5% 46% Cars - Qld Cars - NT Cars - NSW Cars - SA National Trucks 23% 3% 33% Retail Cars - Qld Retail Cars - NT Retail Cars - NSW Retail Cars - SA Auction - QLD National Trucks 20% 6% 29% 9% 3% 2014 New Vehicles 1 : 0.43 Retail Used Vehicles (Excludes Auctions) 2005 New Vehicles 1 : 0.23 Retail Used Vehicles 41

42 More Used Car Sales leads to more New Car Sales *1 RTA NSW Data. VFACTS NSW Share Assumption 42

43 Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS) Exceed stakeholder expectations customers, employees, partners (manufacturers), shareholders and community. Growth by selective acquisition Development of enhancements and complimentary services Business Optimisation continuous improvement in processes and systems.. 43

44 Growth Timeline Revenue 3,500,000 3,000,000 Revenue Acquisitions, Organic Growth and Disposals Eagers Mitsubishi $ A ' s 2,500,000 2,000,000 1,500,000 1,000, ,000 - Bridge Toyota May 05 Bayside Honda/Kia Feb 06 Brisbane Motor Auctions Mar 06 Austral Audi/ Citroen Dec 06 Hidden Valley Ford/ Subaru Aug 06 Kloster Motor Group Feb 07 Surfers City Holden Aug 07 Bill Buckle Auto Group Mar 08 Bayside Honda/Kia Aug 09 Caloundra City Autos April 10 Adtrans Group Oct 10 Western Star Trucks Sydney Nov 10 Eblen Subaru Mar 11 Daimler Benz Trucks Adelaide Aug11 City Peugeot Oct 11 Bill Buckle Audi April 11 Infiniti Centre Brisbane Feb 212 AHG Initial Strategic Investmen t July 12 Northern Beaches Land Rover Jaguar Mar 13 Main North and Unley Nissan/ Renault Sept 13 Hidden Valley Ford/ Subaru Jun 13 Reynella Subaru May 14 Kedron Subaru July 14 Ian Boettcher Motors July 14 Craig Black Group Oct14 Volvo Sunshine Coast July H12015 HY 15 1H H

45 Growth Timeline PBT underlying PBT Underlying Acquisitions, Organic Growth and Disposals Eblen Subaru Mar 11 Eagers Mitsubishi $ A ' s Bridge Toyota May 05 Bayside Honda/Kia Feb 06 Brisbane Motor Auctions Mar 06 Austral Audi/ Citroen Dec 06 Hidden Valley Ford/ Subaru Aug 06 Kloster Motor Group Feb 07 Surfers City Holden Aug 07 Bill Buckle Auto Group Mar 08 Bayside Honda/Kia Aug 09 Caloundra City Autos April 10 Adtrans Group Oct 10 Western Star Trucks Sydney Nov 10 Daimler Benz Trucks Adelaide Aug11 City Peugeot Oct 11 Bill Buckle Audi April 11 Infiniti Centre Brisbane Feb 212 AHG Initial Strategic Investmen t July 12 Northern Beaches Land Rover Jaguar Mar 13 Main North and Unley Nissan/ Renault Sept 13 Hidden Valley Ford/ Subaru Jun 13 Reynella Subaru May 14 Kedron Subaru July 14 Ian Boettcher Motors July 14 Craig Black Group Oct14 Volvo Sunshine Coast July 14 1H H H

46 AHG Investment 60,904,350 shares 30/06/ % AHG investment valued at 3.99 (30/06/15) No change in shares invested in 2015 AP Eagers average cost per share $ Fully Franked after tax dividends - March $5.48m (2014 $4.47m) - Oct $7.92m (2014 $7.61m) 46

47 The Next Months Complete Land Rover, Jaguar and Volvo move from Fortitude Valley to Newstead Improve truck retailing division Continue Used Car expansion with AP Eagers existing franchised outlets Launch new stand alone Carzoos direct model Launch new branded products to support Carzoos direct model More Used Car Sales leads to more New Car Sales 47

48 Forward-Looking Statements This document may contain forward-looking statements, forecasts and estimates made by the Company (forward-looking statements), including the anticipated future performance of the Company and the market in which it operates. These forward-looking statements are based on certain key expectations and assumptions of known and unknown risks, uncertainties and other factors, which are deemed reasonable when made but may or may not prove correct. Actual events are difficult to predict and may depend upon factors that are beyond the Company s control. Therefore, actual results, may turn out to be materially different from any future results, performance or achievements express or implied by such forward-looking statements. Forward-looking statements only speak as of the date of this document and no representations are made as to the accuracy or fairness of such forwardlooking statements. The Company disclaims any obligation to update any forward-looking statements, to reflect any change in the Company s expectations with regard thereto, or any change in events, conditions or circumstances on which any such statement is based. 48

49 Appendix 49

50 A.P. Eagers COMPANY PROFILE 50

51 AP Eagers Today (June 2015) 102 year old automotive retail group founded in years as a listed public company dividend paid every year A.P. Eagers owns $272m of prime real estate Represents all 12 of the top 12 selling vehicle brands in Australia and 27 car brands in total along with 12 truck / bus brands 3,500 employees 110+ dealership locations in QLD, NT, NSW, VIC and SA 19.9% ownership of Automotive Holdings Group ($243m*) 7.5% ownership of ($2.25m) *30/6/15 51

52 AP Eagers Volume Car Brands Represents 12 of the top 12 selling volume car brands in Australia 52

53 AP Eagers Luxury* Car Brands Represents 8 of the top 9 selling luxury car brands in Australia * Luxury is defined as luxury vehicle selling more than 500 units annually (V Facts) 53

54 AP Eagers Truck and Bus Brands Representing 12 truck and bus brands 54

55 Revenue by State / % of group Revenue (2015 Annual Estimate) AP Eagers $3.4 billion revenue $0.15bn (5%) $1.82bn (44%) $0.0bn $0.63bn (23%) $0.66bn (22%) $0.15 BN (6%) $0.0 BN 55

56 Income Opportunity Franchised Dealership NEW CAR SALES: + Accessories + Finance + Insurance + Car Care + Trade-In USED CAR SALES: + Accessories + Finance + Insurance + Car Care + Trade-In VEHICLE SERVICE: - Value add products i.e. Tyres, wheel alignments, batteries, wiper blades. VEHICLE REPAIR: - Warranty (Manufacturer pays) and Non Warranty (Customer pays) - Internal reconditioning of Used Cars PARTS SALES: - Internal (Service, warranty repair, non-warranty repair, accessories) - External (Retail dealership direct to customer) - External (Wholesale / Trade large distribution centres deliver to customers) - Hard parts (Panel) + Mechanical parts TARGET BASED INCENTIVES: - Volume, Market Share, Franchise Standards, Customer Satisfaction 56