Tim Tozer - ASE Global

Report
Presentation to:
ASE Financial Conference May 16, 2013
What we needed from our
Finance community to run
car retail in Central Europe
Tim Tozer, CEO
1
16th May 2013
What we “high level” needed from our Finance community

Management information chasing managers – not the other way around.

To see the business in detail through the balance sheet and KPI’s – allowing
management to direct their focus.

A “measure it to move it” mantra.

Finance control fulfilling and interpreting their role to be:
– Guardians of the balance sheet.
– Commercially involved challengers to the operational activities.
– Financial controllers of risk management.
2
16th May 2013
Overview of AutoBinck
 104 year history in the automotive business
 Privately owned - Lauret family 100% shareholder
 Businesses in 7 countries:
– The Netherlands
– Belgium
– Czech Republic
– Slovakia
– Poland
– Hungary
– Slovenia
 € 1.1 billion turnover (60% Benelux, 40% Central Europe)
 1,650 employees
3
16th May 2013
Recent history
Mazda from 1968 - 2008


Distribution in The Netherlands and then Czechoslovakia (1991)
More than 655,000 Mazda’s sold in our 40 year relationship.
Hyundai from 1999 – to date



Distribution in The Netherlands and Czech Republic and Slovakia (2000).
Factory take over of CZ and SK in 2008 (Hyundai factory set up), replaced by Slovenia and
Hungary.
More than 250,000 Hyundai’s sold to date in our 13 year relationship.
Other:





1996: acquisition of Business Lease NL, thereafter entering Czech Republic (1996), Slovakia
(1998), Poland (2001) and Hungary (2003).
2000: acquisition of Brezan NL.
2004: Mitsubishi distribution in Czech Republic and Slovakia.
2005 on: retail growth into multi franchise then restructured in 2010.
2011: Jaguar Land Rover distribution in Hungary.
4
16th May 2013
AutoBinck organisational structure
Car Distribution
Car Retail
Financial Services
Parts & Accessories
28,593 cars in
2012
16,110 cars in
2012
39,600 lease contracts
and 5,400 financed units
€ 96.3 M sales in 2012
130 outlets
Czech Republic
Hungary
Poland
Slovakia
The Netherlands
Belgium
The Netherlands
Czech Republic
Hungary
Slovakia
Slovenia
The Netherlands
Czech Republic
Hungary
Slovakia
Slovenia
The Netherlands
5
16th May 2013
Figures
Balance Sheet (Euro * 1,000,000)
Sales per Division
0.2%
800
Business Lease
600
400
784
765
24.0%
790
19,1%
Brezan Group
9.7%
Car Distribution
Car Retail
200
26.1%
26.9%
27.7%
2009
2010
2011
47.0%
Other
-
Solvency
Total assets
Total Sales 2011: € 1,051 million
Sales per Country
Profit before tax (Euro * 1,000,000)
20,000
5.2%
17.9
15,000
5.1% 1.9%
The Netherlands
5.3%
Belgium
Czech Republic
13.1
10,000
22.1%
5,000
1.0
Slovakia
Slovenia
2009
Hungary
59.5%
2010
0.9%
2011
6
Poland
16th May 2013
The AutoBinck way

Commercial and entrepreneurial local management trusted to act in the
best interest of the business, delivering mission and strategy.

Controlled through central funding and performance management of
balance sheet, kpi’s and P&L.

Long term perspective.

Small HQ listening to the frontline, delivering action and energising the
company.

Synergies between the operating divisions, a family feeling.
7
16th May 2013
AutoBinck: 2012 Distribution and Retail volume
Retail
Distribution
Country
Brand
Netherlands
Hyundai
Czech
Mitsubishi
Czech
Infiniti
Slovakia
Mitsubishi
Slovenia
Country
New cars
Used
cars
Total
983
1,940
2,923
7,241
2,377
9,618
Slovakia
952
421
1,373
0.7%
Slovenia
161
90
251
2,273
4.7%
Hungary
1,677
268
1,945
1,234
2.3%
115
0.2%
Volume *
Market
share
23,540
4.6%
Netherlands
1,015
0.7%
Czech
63
0.07%
416
Hyundai
Hungary
Hyundai
Hungary
Jaguar/LR
Total
28,593
Total
8
16,110
16th May 2013
Central Europe total industry volumes
Country
2007
2012
174,456
173,997
Slovakia
59,700
69,195
Hungary
171,661
53,008
Slovenia
68,719
50,091
474,536
346,291
Czech Republic
Total
9
16th May 2013
Our retail past

Our retail business existed historically to underpin brands we distributed and
was run by wholesalers.

In consequence we built palaces, had no detailed idea how to manage and
control a customer service business, lost significant amounts of money and
destroyed much shareholder value.

The only available, reliable management information was the monthly P&L
and balance sheet (at high level) – all else came ad hoc and heavily filtered
by local management.

If we were to continue with retail we needed a strong financial control based
platform.
10
16th May 2013
An “Auto Palace”
11
16th May 2013
Our future



General pressure upon financeability  choices have to be made.
Resources will be allocated to areas of core competence which can deliver
the highest returns.
“Stick to the knitting”.

Within this context we had to decide if car retail really was a core
competence for us, justifying funding on the basis of attractive ROE’s?

Yes, but only with:
– Retail management competence.
– A very robust strategy and business plan.
– A new risk managed world under control.
12
16th May 2013
Retail Strategy

Decrease dependency upon manufacturers:
– Recognising used cars as a business within a business.
– Improving after sales activity and sale of ancillary products.
– Optimise brand portfolio (one site per brand, unless very “retail”).
 Minimise capital employed.
 Optimise market penetration for brands represented.

Adopt an “AutoBinck Way” for retail:
– Operational consistency across all sites.
– Service first.
– Share best practice - visible through 24 kpi’s.

Deliver 15% ROE on 30% normalised solvency.
13
16th May 2013
Retail strategy - how

Manage each business through the balance sheet and KPI’s into the P&L with daily
operating controls for all activities.

Focus intensively upon used cars ROI - sweat purchasing and sales processes and
stock turn.

Focus intensively on after sales:
– Parts stock turn – make more by losing less
– CRM – customer retention builds after sales
– Service sales advisors (not receptionists)

Sales department process, productivity and team development.

Internal communication - vision and values, results, recognition.
14
16th May 2013
Retail brands represented 2011
Czech Republic
- Prague (4 sites)
- Brno
Slovakia
- Bratislava (2 sites)
Hungary
- Budapest
Slovenia
- Ljubljana
The Netherlands
- Rotterdam
15
16th May 2013
Retail brands represented 2014
Czech Republic
- Prague (3 sites)
2 TBA
- Brno
Slovakia
- Bratislava
Hungary
- Budapest
Slovenia
- Ljubljana
The Netherlands
- Rotterdam
16
16th May 2013
What we needed from our Finance community

Management information chasing managers – not the other way around.

To see the business in detail through the balance sheet and KPI’s – allowing
management to direct their focus.

A “measure it to move it” mantra.

Fulfilling and interpreting their role to be:
– Guardians of the balance sheet.
– Commercially involved challengers to the operational activities.
– Financial controllers of risk management across the complete business.
17
16th May 2013
Retail Finance Director Job Description









Interpret role at high level to be:
– “the guardian of the balance sheet”
– a commercially involved “challenger” to the operational activities
– financial “controller” in the sense of risk management of the complete business.
An active involvement with MD and site managers, pro-actively assisting them in achieving their
goals.
Timely and accurate reporting of DOC’s, KPI’s and management accounts with high level
interpretation to the Board.
Assisting line management with interpreting DOC’s , KPI’s and management accounts, determining
appropriate management follow up and corrective actions.
Focus line management on the balance sheet in order to reduce working capital, acting as the
catalyst for them to take appropriate corrective management action.
Treasury and cash management.
Overseeing and managing all regulatory and statutory obligations.
Adherence to AutoBinck accounting manual.
Resolving any issues within the annual auditors management letter and AutoBinck internal audit.
18
16th May 2013
Example – management reporting Auto Palace Hungary
Our Jaguar Land Rover Budapest flagship retailer
19
16th May 2013
Example – management reporting Auto Palace Hungary
20
16th May 2013
Example – management reporting Auto Palace Hungary
21
16th May 2013
Auto Palace Hungary* - Balance sheet 31-3-2013
31-3-2013 ACTUAL
LAND
BUILDINGS
DEMONSTRATORS
DEMONSTRATORS - UNITS
RENTAL FLEET
RENTAL FLEET - UNITS
BUYBACK CARS
BUYBACK CARS - UNITS
OTHER TANGIBLE FIXED ASSETS
TOTAL FIXED ASSETS
VEHICLE RECEIVABLES
AFTER SALES RECEIVABLES
OVERHEAD RECEIVABLES
26.235
360.474
25
3.216.357
304
278.918
758.775
-2.303
756.473
53
14.273
USED VEHICLE STOCK-VALUE
624.118
INTERCOMPANY RECEIVABLES
TAXES AND SOCIAL SECURITIES
OTHER RECEIVABLES AND PREPAYMENTS
-22.533
USED VEHICLE STOCK-BOOKVALUE
601.585
USED VEHICLE STOCK-UNITS
USED VEHICLE STOCK-AVERAGE BOOKVALUE
TOTAL VEHICLE STOCK
2.569.060
2.151.603
344.665
TOTAL NON TRADE RECEIVALBLES
2.496.268
CASH IN HAND AND AT BANKS
1.326.735
UNDERFUNDING VS 30% SOLVENCY
2.473.716
TOTAL ASSETS
USED VEHICLE STOCK-PROVISION
2.145.649
215.736
248.558
TOTAL TRADE RECEIVABLES
3.881.984
NEW VEHICLE STOCK-VALUE
NEW VEHICLE STOCK-PROVISION
NEW VEHICLE STOCK-BOOKVALUE
NEW VEHICLE STOCK-UNITS
NEW VEHICLE STOCK-AVERAGE BOOKVALUE
31-3-2013 ACTUAL
14.353.235
67
8.979
1.358.058
PARTS STOCK-VALUE
PARTS STOCK-PROVISION
312.851
-65.436
PARTS STOCK-BOOKVALUE
TOTAL PARTS STOCK
247.415
247.415
* 2 sites, 1 legal entity
22
16th May 2013
Auto Palace Hungary - Balance sheet ageing analysis
31-3-2013 ACTUAL
AGEING NEW CAR STOCK
BETWEEN 0 AND 180 DAYS
BETWEEN 180 AND 360 DAYS
OLDER THAN 360 DAYS
TOTAL NEW CAR STOCK
CURRENT PROVISION
Amount
599.884
53.573
105.318
758.775
2.303-
Units
AGEING USED CAR STOCK
BETWEEN 0 AND 60 DAYS
BETWEEN 60 and 90 DAYS
OLDER THAN 90 DAYS
TOTAL USED CARS STOCK
CURRENT PROVISION
Amount
67.745
128.579
427.794
624.118
22.533-
Units
AGEING PARTS STOCK
BETWEEN 0 AND 6 MONTHS
BETWEEN 6 AND 12 MONTHS
BETWEEN 12 AND 24 MONTHS
OLDER THAN 24 MONTHS
TOTAL PARTS STOCK
CURRENT PROVISION
(Stock turn 0-6 months = 41)
AGEING TRADE RECEIVABLES
BETWEEN 0 AND 30 DAYS
BETWEEN 30 AND 60 DAYS
BETWEEN 60 AND 90 DAYS
BETWEEN 120 AND 180 DAYS
BETWEEN 180 AND 360 DAYS
OLDER THAN 360 DAYS
SUBTOTAL TRADE RECEIVABLES
43
3
7
53
Provision policy
USED CARS
ABOVE 60 DAYS - MONTHLY
REVIEW OF TRADE PRICES
(EXTERNAL REFERENCE)
10
14
43
67
PARTS
PROVISION *
167.315
43.940
94.290
7.306
312.851
65.436DIFFERENCE
VEHICLES
2.129.482
13.864
2.303
2.145.649
BETWEEN 6 AND 12 MONTHS
10.98547.1457.30665.436-
25%
BETWEEN 12 AND 24 MONTHS 50%
OLDER THAN 24 MONTHS
100%
0AFTER SALES
OTHER
TOTAL
119.183
58.504
2.307.169
24.242
22.476
46.718
17.890
11.401
12.175
14.194
215.736
11.199
34.528
80.362
26.810
248.558
29.089
59.793
94.839
41.005
2.609.944
PROVISION ON DOUBTFULL RECEIVABLES
BANKRUPT RECEIVABLES
-
2.116-
38.769-
40.884-
PROVISION ON BANKRUPT RECEIVABLES
-
-
-
-
* Provi s i on a ccordi ng group Pol i cy
23
16th May 2013
Budapest Hyundai & Opel - P&L Summary and absorption
x MARCH 2013 YTD ACTUAL
€
%
SALES TURNOVER:
VEHICLE NEW RETAIL
VEHICLE NEW FLEET
VEHICLE EXPORTS
VEHICLE USED RETAIL
CAR RENTAL
SERVICE
BODYSHOP
PARTS
INTERNAL
TOTAL SALES TURNOVER
401.685
647.851
6.763.941
571.068
291.820
59.956
33.394
290.090
4,46%
7,19%
75,03%
6,33%
3,24%
0,67%
0,37%
3,22%
x MARCH 2013 YTD ACTUAL
€
%
DIRECT PROFIT BY DEPARTMENT:
CAR RENTAL
SERVICE
BODYSHOP
PARTS
38.101
1.945
12.052
41.284
13,06%
3,24%
36,09%
14,23%
SUBTOTAL DIRECT PROFIT A/S + RENTAL
93.382
1,04%
(109.462)
1,21%
TOTAL OVERHEADS
OVERHEAD ABSORPTION %
(44.839)
9.014.966
100,00%
VEHICLE NEW RETAIL
VEHICLE NEW FLEET
VEHICLE EXPORTS
VEHICLE USED RETAIL
CAR RENTAL
SERVICE
BODYSHOP
PARTS
31.490
28.228
40.732
34.983
54.523
17.842
24.473
53.016
7,84%
4,36%
0,60%
6,13%
18,68%
29,76%
73,28%
18,28%
TOTAL GROSS PROFIT
285.287
3,16%
GROSS PROFIT:
85,3%
VEHICLE NEW RETAIL (INCL. EXPORTS)
VEHICLE NEW FLEET
VEHICLE USED RETAIL
47.099
12.073
24.558
0,66%
1,86%
4,30%
SUBTOTAL DIRECT PROFIT VEHICLES
83.730
0,75%
PROFIT BEFORE TAX
67.650
0,75%
INTEREST (OVER)/UNDERFUNDING
12.369
PROFIT BEFORE TAX (NORMALISED)
80.018
24
0,89%
16th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
GENERAL
KPI
Profit before tax / total revenue *
Return on equity (normalised) *
Sales department efficiency *
Overhead absorption
Gross Profit / FTE *
Total personnel expenses as % of total gross profit *
TARGET
ACTUAL
2,0%
15,0%
55,0%
100,0%
50.000
40,0%
0,9%
2,3%
38,2%
76,2%
42.265
40,5%
TARGET
ACTUAL
100,0%
160,0
750,0
45,0
80,0%
700,0
77,8%
84,8
152,9
70,1
24,5%
431,9
SALES
KPI
New sales as a % of used sales (excl. export)
Sales per sales person
Average gross profit per new car sold *
Used vehicle stock turn in days
Return on investment used stock
Average gross profit per used car sold
* KPI's heavily dependent upon quarterly manufacturer bonus.
25
16th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
AFTER SALES
KPI
Service efficiency (sold / attended)
Service time utilisation (worked / attended)
Bodyshop efficiency
Gross profit % on service labour sales
Gross profit % on body and paint labour sales
Workshop direct expenses as % of gross profit
Hours per job card (Retail Service)
Hours per job card (Retail Bodyshop)
Retail proportion of labour sold
Retail recovery rate (retail labour sales / retail hours)
Parts & accessories gross profit %
Parts & accessories direct expenses as % gross profit
Parts & accessories stock cover (0-6 months)
26
TARGET
ACTUAL
110,0%
95,0%
130,0%
63,0%
73,0%
50,0%
2,4
8,0
70,0%
40,0
22,0%
30,0%
30,0
86,1%
69,8%
101,3%
54,9%
73,3%
54,7%
1,2
4,1
65,9%
33,3
18,3%
22,1%
41,0
16th May 2013
Waterfall chart – direct profit variances vs MAP
€K Direct profit - March Year-to-date variance versus MAP
70
4
60
50
40
63
30
68
20
10
-10
-14
17
-18
18
-9
8
-5
4
-20
27
16th May 2013
30 Day forecast April 2013
AutoBinck Car Retail interim result 2013
Month:
April
(EUR)
Version 1.6
Auto Palace Hungary - Hyundai & Opel
10th day
Currency rate
YTD
20th day
283,00
30th day
283,00
Full month
Forecast
TO DO
283,00
283,00
283,00
Budget
(MAP)
Actuals +
Forecast
Variance
Budget
(MAP)
Variance
283,00
-4,6%
741
300
1.046
76.994
9.997
86.991
54.922
33.659
88.581
441
22.072
-23.662
-1.590
-15
-2.583
58
94
42.427
-2.583
42.427
46.944
0
46.944
283,00
283,00
46
9.461
296,10
New Cars
1 Hyundai
2
3
4
5
#
#
#
#
#
#
#
#
#
#
#
Units
GM excl bonus
Bonus
GM incl bonus
Opel
Units
GM excl bonus
Bonus
GM incl bonus
TOTAL NEW CARS
Units
Gross Margin
Gross Margin other
Total gross margin
#
Used Cars
#
#
Units
Gross Margin
25
130
128
0
128
82
4.735
0
4.735
24.735
0
24.735
26.237
26.237
0
0
0
26.237
0
26.237
16.776
8.415
25.191
5
9
14
0
14
29
3.570
0
3.570
8.376
0
8.376
11.943
11.943
0
0
0
11.943
0
11.943
14.527
0
14.527
30
139
142
0
142
111
8.305
33.111
38.180
38.180
8.305
33.111
38.180
0
0
0
39.717
3.276
42.993
38.180
31
-1.537
799
394
-4.813
129.418
7.524
136.942
135.525
13.102
148.627
-36
-4.517
-4.517
405
-6.107
-5.578
-11.686
9
9
21
0
21
23
78
5.283
9.519
0
9.519
7.442
-2
2.077
102
5.283
44.081
22.071
24
22.010
0
0
20.091
20.091
20.091
0
73.726
80.365
-6.639
2.468
5.223
11.489
0
11.489
10.472
1.018
28.823
39.070
-10.247
211
1.412
6.908
0
6.908
6.661
246
31.075
27.177
3.898
3.745
7.982
19.089
0
19.089
17.225
1.864
71.260
63.087
8.173
20.011
53.011
85.185
20.091
105.277
104.884
392
385.906
380.398
5.508
#
# Car rent
#
Gross Margin
#
# Service
#
Gross Margin
#
# Body Shop
# Gross Margin
#
# Parts
# Gross Margin
#
# TOTAL
# Gross Margin
#
#
#
28
16th May 2013
Summary



We have the information now to direct management attention.
We have a team of retailers running the businesses to UK criteria.
We have used our financial strength, this management team and the BER
June 1st moment to radically revisit our franchise/site portfolio.
 We now see 2013 as a mid point “year of transition” to 2015 ROE of 10%
minimum, on the platform of a business which:
– Trebles its used car business.
– Puts service first.
– Optimises sales of a more balanced new car franchise portfolio.
– Works from a much smaller balance sheet and one less site (Prague).

Our finance community are at the heart of the business, ensuring standards
of commercial robustness, control and management of risk that we could
only dream of two years ago.
29
16th May 2013

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