A.P. Eagers For personal use only - ASX2015/08/28 · Australian New Vehicle Sales - June YTD 2015...

© 2015 AP Eagers Limited. All Rights Reserved.

Friday, August 28, 2015

A.P. Eagers

2015 First Half Results

August 2015

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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.

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Australian New Vehicle Sales - June YTD 2015

578,427 (2014:559,950)

Up 3.3%

• 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.

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Affordability

CommSec Report

16 March 2015

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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.

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Exchange Rates

29%

22% 17%

12%

8%

5% 7%

YTD New vehicle Sales (VFACTS) - 578,427 Country of Origin

Japan

Thailand

EU Countries

Korea

Australia

USA

Other

0

500

1,000

1,500

Jun

-10

Sep

-10

De

c-1

0

Mar

-11

Jun

-11

Sep

-11

De

c-1

1

Mar

-12

Jun

-12

Sep

-12

De

c-1

2

Mar

-13

Jun

-13

Sep

-13

De

c-1

3

Mar

-14

Jun

-14

Sep

-14

De

c-1

4

Mar

-15

Jun

-15

AUD/KRW Monthly 5 Years

0

20

40

60

80

100

120

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

AUD/JPY Monthly 5 Years

Sep 13 to Feb 14 Avg = 0.92

0.0

0.5

1.0 AUD/EUR Monthly 5 Years

0

10

20

30

40AUD/THB Monthly 5 Years

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Affordability

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

%

90 Day Bank Bill Rate

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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)

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Financial Summary

$ Million 1H 2015

1H 2014 Change

Revenue 1639.5 1375.8 Up 19%

EBITDA 77.5 62.7 Up 24%

EBIT 70.9 56.9 Up 25%

PBT 59.5 46.0 Up 29%

PAT 44.1 33.3 Up 32%

Cash from operating

activities 50.0 42.8 Up 17%

NTA/share 2.61 2.38 Up 10%

Net gearing excluding

bailment debt 23.2% 25.8% Down 10%

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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) 101.4

Freehold Property (incl. held for sale) 272.4

Other Non Current Tangible

Assets

329.1

Intangible Assets 165.7

Non Current Debt (224.0)

Other N/C Liabilities (Deferred tax,

and provisions)

(10.9)

Net Assets 633.6

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Earnings Per Share

18.7

24.5

5.1

0.6 0.4 (0.3)

15.0

17.0

19.0

21.0

23.0

25.0

27.0

1H

20

14

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alR

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AH

GIn

vest

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et o

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MTA

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ther

Inco

me,

Inte

rest

Exp

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IH20

15

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e

n

t

s

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r

S

h

a

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e

EPS 1H2015 Bridge

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Financial Trends – PBT Underlying

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

20081H

20082H

20091H

20092H

20101H

20102H

20111H

20112H

20121H

20122H

20131H

20132H

20141H

20142H

20151H

32.8

28.3

40.6

35.6 36.4 38.2

44.2

52.1 54.2

59.0 57.8 61.1 61.9

70.1

76.3

16.6

9.6

25.2 24.9 23.5 23.3

27.9

33.8 37.2

41.2 42.0 45.3 46.1

60.1 58.5

$ m

illio

n

Operating Earnings PBT Underlying

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.

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Financial Trends

3.4%

3.9%

3.6%

4.6%

4.1%4.0%

4.3%

4.4%

4.6% 4.7%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 1H2015

Operating Margin

Operating Earnings Margin %

Linear (Operating Earnings Margin %)

Includes AHG dividend from 2012.

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Financial Trends

8.1

11.0 10.612.5

16.318.2 18.7

24.5

1.7

13.4

10.4

13.0

17.7

18.2

24.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2008 2009 2010 2011 2012 2013 2014 1H2015

Ce

nts

EPS Statutory (Basic)

June 1H December 2H

GFC/Lehman Bros

Gov't stimulus

GFC/Lehman Bros

Gov't stimulusGov't stimulus

9.8

24.425.5

21.0

34.0

36.4

43.0

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Financial Trends

2.4 2.6 2.8 3.0 3.4 3.6 3.8 4.4 4.4 4.4 4.6 5.6 7.0 8.0 9.0

12.0

2.4 3.0 3.4 3.6 3.8 4.0 4.8

7.2 4.4

8.0 8.2

10.4

13.0

15.0

18.0

-

5.0

10.0

15.0

20.0

25.0

30.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H2015

Cen

ts p

er s

har

e

Dividend

Interim Dividend Final Dividend

8.8

16.0

12.8 12.4

20.0

23.0

7.2 7.6

8.6

11.6

4.8 5.6

6.2 6.6

27.0

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Segment Results

31.1

3.4

7.5

-4.6

7.8

0.8

46.0

47.7

0.8

7.6

18.9

-14.4

-1.0

59.5

-20.0 0.0 20.0 40.0 60.0 80.0

Car Retailing

Truck Retailing

Property

Investment and All Other

Eliminations*

Unallocated Corporate

Net Profit Before Tax

$m

1H2014

1H2015

Eliminations include inter-segment transactions and asset fair value adjustments

Car retailing

• Strong car retailing in Qld & NSW with positive

contributions from acquisitions. Strong trading

in parts and service businesses.

Truck retailing

• Challenging new and used heavy truck trading

conditions.

Property

• Steady income and lower interest costs.

Substantial property portfolio underwrites the

company’s financial position.

Investment

• Dividend income and further unrealised gains

on revaluation of investments.

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Strategy (FOCUS: GROW EPS & PAY LARGER DIVIDENDS)

Growth by selective acquisition

Development of enhancements and

complimentary services

Business Optimisation – continuous improvement in processes and systems..

Exceed stakeholder expectations

– customers, employees,

partners (manufacturers),

shareholders and community.

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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.

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Previous Parts Warehouse

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New Parts Facility

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New Parts Facility

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New Parts Facility

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New Parts Facility

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New Volkswagen

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Austral Volkswagen, Newstead

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New & Existing Volkswagen

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Existing Land Rover, Jaguar & Volvo

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Existing Land Rover, Jaguar & Volvo

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Jaguar Land Rover, Newstead

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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

2016 2017

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

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Exceed stakeholder expectations

– customers, employees,


shareholders and community.

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Development of Enhancement & Complimentary Services – Medium / Long Term

• MTAI Insurance (27 yrs. old, APE 21%) – Operating company sold to Suncorp (August 2014)

• www.carsguide.com.au (3.5 yrs. old, APE 7.5%)

• www.carzoos.com.au (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

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Global Trends In Used Cars

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Used Car Market – 3 Major Global Trends

Stage 1 Disruption:

Big Box /

Fixed Price

Stage 2 Disruption:

Tech Fuelled Disruption

‘No Dealership’ Model

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The big are getting bigger!

Source: Carmax Investor Relations Presentation, May 2015

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And there is a new frontier of competition fuelled by

technology.

Fortune.com, July 20

2015

Techcrunch.com, May 27 2015

Wall Street Journal, May 31

2015

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At the heart of these trends is a serious mandate to

deliver compelling branded customer experiences.

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Link:

https://www.youtube.com/watch?v=lgS7fT0S-NY

Link:

https://www.youtube.com/watch?v=kwSHSVcfibQ

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Why used cars?

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APE Vehicle Sales 2014

33%

3%

9% 29%

23%

3%

A.P. Eagers Used Vehicle Sales Total 25,447 + 8.8% (Retail used 19380)

Retail Cars - Qld

Retail Cars - NT

Retail Cars - NSW

Retail Cars - SA

Auction - QLD

National Trucks

46%

6%

20%

23%

5%

A.P Eagers New Vehicle Sales Total 44,966 + 5.5% (4.0% of National Market)

Cars - Qld

Cars - NT

Cars - NSW

Cars - SA

National Trucks

2014 New Vehicles 1 : 0.43 Retail Used Vehicles (Excludes Auctions) 2005 New Vehicles 1 : 0.23 Retail Used Vehicles

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*1 RTA NSW Data. VFACTS NSW Share Assumption

More Used Car Sales leads to more New Car Sales

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Exceed stakeholder

expectations –

customers, employees,


shareholders and

community.

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Growth Timeline – Revenue

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

$

A

0

0

0

'

s

Acquisitions, Organic Growth and Disposals

Revenue

Northern Beaches

Land Rover JaguarMar 13

Main North and

Unley Nissan/Renault Sept 13

Hidden Valley Ford/

Subaru Jun 13

Eblen SubaruMar 11

Daimler Benz

Trucks Adelaide

Aug11

City PeugeotOct 11

Bill Buckle Audi April

11

Infiniti Centre

Brisbane Feb 212

AHGInitial

Strategic Investmen

tJuly 12

Eagers Mitsubishi

Reynella SubaruMay 14

KedronSubaruJuly 14

Ian Boettcher

MotorsJuly 14

Craig Black Group Oct14

Volvo Sunshine

CoastJuly 14

Caloundra City Autos

April 10

Adtrans Group Oct 10

Western Star

Trucks SydneyNov 10

Bill Buckle Auto

Group Mar 08

Kloster Motor GroupFeb 07

Surfers City

HoldenAug 07

Bayside Honda/Kia

Feb 06

Brisbane Motor

AuctionsMar 06

Austral Audi/

CitroenDec 06

Hidden Valley Ford/

Subaru Aug 06

Bayside Honda/Kia

Aug 09

Bridge Toyota May 05

HY 15

1H 2015

1H 2014

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Growth Timeline – PBT underlying

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

$

A

0

0

0

'

s

Acquisitions, Organic Growth and Disposals

PBT Underlying

Northern Beaches

Land Rover JaguarMar 13

Main North and

Unley Nissan/Renault Sept 13

Hidden Valley Ford/

Subaru Jun 13

Eblen SubaruMar 11

Daimler Benz

Trucks Adelaide

Aug11

City PeugeotOct 11

Bill Buckle Audi April

11

Infiniti Centre

Brisbane Feb 212

AHGInitial

Strategic Investmen

tJuly 12

Eagers Mitsubishi

Reynella SubaruMay 14

KedronSubaruJuly 14

Ian Boettcher

MotorsJuly 14

Craig Black Group Oct14

Volvo Sunshine

CoastJuly 14

Caloundra City Autos

April 10

Adtrans Group Oct 10

Western Star

Trucks SydneyNov 10

Bill Buckle Auto

Group Mar 08

Kloster Motor GroupFeb 07

Surfers City

HoldenAug 07

Bayside Honda/Kia

Feb 06

Brisbane Motor

AuctionsMar 06

Austral Audi/

CitroenDec 06

Hidden Valley Ford/

Subaru Aug 06

Bayside Honda/Kia

Aug 09

Bridge Toyota May 05

1H 2015

1H 2014

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AHG Investment

• 60,904,350 shares held @ 30/06/2015 19.9%

• AHG investment valued at $243m @ 3.99 (30/06/15)

• No change in shares invested in 2015

• AP Eagers average cost per share $3.05

• 2015 Fully Franked after tax dividends - March $5.48m (2014 $4.47m)

- Oct $7.92m (2014 $7.61m)

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The Next 12-24 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

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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 forward-

looking 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.

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Appendix

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A.P. Eagers

COMPANY PROFILE

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AP Eagers Today (June 2015)

• 102 year old automotive retail group founded in 1913

• 58 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 www.carsguide.com.au ($2.25m)

*30/6/15

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Represents 12 of the top 12 selling volume car brands in Australia

AP Eagers Volume Car Brands

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http://www.cartype.com/images/page/Mazda_3.jpg

http://www.google.com.au/imgres?imgurl=http://www.privatefleet.com.au/images/upload/Image/new-cars/Nissan/Nissan-logo.jpg&imgrefurl=http://www.privatefleet.com.au/buying-a-new-nissan/&h=425&w=500&sz=25&tbnid=HBSntrLHbZRl8M:&tbnh=110&tbnw=130&prev=/images?q=nissan+logo+image&hl=en&usg=__YKax9L7--T8C2M29TJcXVpsiDH4=&ei=AAXdSteUIZL4sgPo-aXjDw&sa=X&oi=image_result&resnum=2&ct=image&ved=0CBAQ9QEwAQ



Represents 8 of the top 9 selling luxury car brands in Australia

AP Eagers Luxury* Car Brands

* Luxury is defined as luxury vehicle selling more than 500 units annually (V Facts)

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http://www.cartype.com/images/page/Audi_2.jpg

http://www.cartype.com/images/page/Jaguar_logo1a.jpg

http://www.volvo.com/



AP Eagers Truck and Bus Brands

Representing 12 truck and bus brands

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Revenue by State / % of group Revenue (2015 Annual Estimate)

$1.82bn (44%)

$0.15bn (5%)

$0.66bn (22%)

$0.15 BN (6%)

$0.0bn $0.63bn (23%)

AP Eagers $3.4 billion revenue

$0.0 BN

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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

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A.P. Eagers For personal use only - ASX2015/08/28 · Australian New Vehicle Sales - June YTD 2015...

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