1 16th May 2013
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
2 16th May 2013
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.
What we “high level” needed from our Finance community
3 16th May 2013
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
Overview of AutoBinck
4 16th May 2013
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.
Recent history
5 16th May 2013
AutoBinck organisational structure
Car Distribution
28,593 cars in 2012
Czech RepublicHungarySlovakiaSloveniaThe Netherlands
Car Retail
16,110 cars in 2012
Czech RepublicHungarySlovakiaSloveniaThe Netherlands
Financial Services
39,600 lease contracts and 5,400 financed units
Czech RepublicHungaryPolandSlovakiaThe Netherlands
Parts & Accessories
€ 96.3 M sales in 2012130 outlets
BelgiumThe Netherlands
6 16th May 2013
Figures
2009 2010 2011 -
100 200 300 400 500 600 700 800
26.1% 26.9% 27.7%
765 784 790
Solvency Total assets
19,1%
9.7%
47.0%
24.0%
0.2%
Business LeaseBrezan GroupCar DistributionCar RetailOther
2009 2010 2011 -
2,000 4,000 6,000 8,000
10,000 12,000 14,000 16,000 18,000 20,000
1.0
13.1
17.9
Profit before tax (Euro * 1,000,000)
Sales per Division
Sales per Country
59.5%
0.9%
22.1%
5.3%5.2%
5.1%1.9%
The NetherlandsBelgiumCzech RepublicHungarySlovakiaSloveniaPoland
Balance Sheet (Euro * 1,000,000)
Total Sales 2011: € 1,051 million
7 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.
8 16th May 2013
Retail
Country New cars Used cars
Total
Netherlands 983 1,940 2,923
Czech 7,241 2,377 9,618
Slovakia 952 421 1,373
Slovenia 161 90 251
Hungary 1,677 268 1,945
Total 16,110
Distribution
Country Brand Volume * Marketshare
Netherlands Hyundai 23,540 4.6%
Czech Mitsubishi 1,015 0.7%
Czech Infiniti 63 0.07%
Slovakia Mitsubishi 416 0.7%
Slovenia Hyundai 2,273 4.7%
Hungary Hyundai 1,234 2.3%
Hungary Jaguar/LR 115 0.2%
Total 28,593
AutoBinck: 2012 Distribution and Retail volume
9 16th May 2013
Central Europe total industry volumes
Country 2007 2012
Czech Republic 174,456 173,997
Slovakia 59,700 69,195
Hungary 171,661 53,008
Slovenia 68,719 50,091
Total 474,536 346,291
10 16th May 2013
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.
Our retail past
11 16th May 2013
An “Auto Palace”
12 16th May 2013
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.
Our future
13 16th May 2013
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.
Retail Strategy
14 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.
15 16th May 2013
Retail brands represented 2011
Czech Republic- Prague (4 sites)
- Brno
Slovakia- Bratislava (2 sites)
Hungary- Budapest
Slovenia- Ljubljana
The Netherlands- Rotterdam
16 16th May 2013
Retail brands represented 2014
Czech Republic- Prague (3 sites)
- Brno
Slovakia- Bratislava
Hungary- Budapest
Slovenia- Ljubljana
The Netherlands- Rotterdam
2 TBA
17 16th May 2013
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.
What we needed from our Finance community
18 16th May 2013
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.
Retail Finance Director Job Description
19 16th May 2013
Example – management reporting Auto Palace Hungary
Our Jaguar Land Rover Budapest flagship retailer
20 16th May 2013
Example – management reporting Auto Palace Hungary
21 16th May 2013
Example – management reporting Auto Palace Hungary
22 16th May 2013
Auto Palace Hungary* - Balance sheet 31-3-2013
LAND - BUILDINGS 26.235 DEMONSTRATORS 360.474 DEMONSTRATORS - UNITS 25 RENTAL FLEET 3.216.357 RENTAL FLEET - UNITS 304 BUYBACK CARS - BUYBACK CARS - UNITS - OTHER TANGIBLE FIXED ASSETS 278.918 TOTAL FIXED ASSETS 3.881.984
NEW VEHICLE STOCK-VALUE 758.775 NEW VEHICLE STOCK-PROVISION -2.303 NEW VEHICLE STOCK-BOOKVALUE 756.473 NEW VEHICLE STOCK-UNITS 53 NEW VEHICLE STOCK-AVERAGE BOOKVALUE 14.273
USED VEHICLE STOCK-VALUE 624.118
USED VEHICLE STOCK-PROVISION -22.533
USED VEHICLE STOCK-BOOKVALUE 601.585
USED VEHICLE STOCK-UNITS 67 USED VEHICLE STOCK-AVERAGE BOOKVALUE 8.979 TOTAL VEHICLE STOCK 1.358.058
PARTS STOCK-VALUE 312.851 PARTS STOCK-PROVISION -65.436
PARTS STOCK-BOOKVALUE 247.415 TOTAL PARTS STOCK 247.415
31-3-2013 ACTUAL
VEHICLE RECEIVABLES 2.145.649 AFTER SALES RECEIVABLES 215.736 OVERHEAD RECEIVABLES 248.558
TOTAL TRADE RECEIVABLES 2.569.060
INTERCOMPANY RECEIVABLES -
TAXES AND SOCIAL SECURITIES 2.151.603
OTHER RECEIVABLES AND PREPAYMENTS 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 14.353.235
31-3-2013 ACTUAL
* 2 sites, 1 legal entity
23 16th May 2013
Auto Palace Hungary - Balance sheet ageing analysis
AGEING NEW CAR STOCK Amount UnitsBETWEEN 0 AND 180 DAYS 599.884 43 BETWEEN 180 AND 360 DAYS 53.573 3 OLDER THAN 360 DAYS 105.318 7 TOTAL NEW CAR STOCK 758.775 53 CURRENT PROVISION 2.303-
AGEING USED CAR STOCK Amount UnitsBETWEEN 0 AND 60 DAYS 67.745 10 BETWEEN 60 and 90 DAYS 128.579 14 OLDER THAN 90 DAYS 427.794 43 TOTAL USED CARS STOCK 624.118 67 CURRENT PROVISION 22.533-
AGEING PARTS STOCK PROVISION *BETWEEN 0 AND 6 MONTHS 167.315 BETWEEN 6 AND 12 MONTHS 43.940 10.985- BETWEEN 12 AND 24 MONTHS 94.290 47.145- OLDER THAN 24 MONTHS 7.306 7.306- TOTAL PARTS STOCK 312.851 65.436- CURRENT PROVISION 65.436- (Stock turn 0-6 months = 41) DIFFERENCE 0-
AGEING TRADE RECEIVABLES VEHICLES AFTER SALES OTHER TOTAL
BETWEEN 0 AND 30 DAYS 2.129.482 119.183 58.504 2.307.169
BETWEEN 30 AND 60 DAYS - 24.242 22.476 46.718
BETWEEN 60 AND 90 DAYS - 17.890 11.199 29.089 BETWEEN 120 AND 180 DAYS 13.864 11.401 34.528 59.793 BETWEEN 180 AND 360 DAYS 2.303 12.175 80.362 94.839 OLDER THAN 360 DAYS - 14.194 26.810 41.005 SUBTOTAL TRADE RECEIVABLES 2.145.649 215.736 248.558 2.609.944
PROVISION ON DOUBTFULL RECEIVABLES - 2.116- 38.769- 40.884- BANKRUPT RECEIVABLES - - - -
PROVISION ON BANKRUPT RECEIVABLES - - - -
* Provis ion according group Pol icy
31-3-2013 ACTUAL
USED CARSABOVE 60 DAYS - MONTHLY REVIEW OF TRADE PRICES (EXTERNAL REFERENCE)
PARTS
BETWEEN 6 AND 12 MONTHS 25%
BETWEEN 12 AND 24 MONTHS 50%
OLDER THAN 24 MONTHS 100%
Provision policy
24 16th May 2013
Budapest Hyundai & Opel - P&L Summary and absorption
x MARCH 2013 YTD ACTUAL€ %
SALES TURNOVER:
VEHICLE NEW RETAIL 401.685 4,46%VEHICLE NEW FLEET 647.851 7,19%VEHICLE EXPORTS 6.763.941 75,03%VEHICLE USED RETAIL 571.068 6,33%CAR RENTAL 291.820 3,24%SERVICE 59.956 0,67%BODYSHOP 33.394 0,37%PARTS 290.090 3,22%
INTERNAL (44.839)
TOTAL SALES TURNOVER 9.014.966 100,00%
GROSS PROFIT:
VEHICLE NEW RETAIL 31.490 7,84%VEHICLE NEW FLEET 28.228 4,36%VEHICLE EXPORTS 40.732 0,60%VEHICLE USED RETAIL 34.983 6,13%CAR RENTAL 54.523 18,68%SERVICE 17.842 29,76%BODYSHOP 24.473 73,28%PARTS 53.016 18,28%
TOTAL GROSS PROFIT 285.287 3,16%
x MARCH 2013 YTD ACTUAL€ %
DIRECT PROFIT BY DEPARTMENT:
CAR RENTAL 38.101 13,06%SERVICE 1.945 3,24%BODYSHOP 12.052 36,09%PARTS 41.284 14,23%
SUBTOTAL DIRECT PROFIT A/S + RENTAL 93.382 1,04%
TOTAL OVERHEADS (109.462) 1,21%
OVERHEAD ABSORPTION % 85,3%
VEHICLE NEW RETAIL (INCL. EXPORTS) 47.099 0,66%VEHICLE NEW FLEET 12.073 1,86%VEHICLE USED RETAIL 24.558 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 0,89%
25 16th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
GENERAL
KPI TARGET ACTUAL
Profit before tax / total revenue * 2,0% 0,9%Return on equity (normalised) * 15,0% 2,3%Sales department efficiency * 55,0% 38,2%Overhead absorption 100,0% 76,2%Gross Profit / FTE * 50.000 42.265Total personnel expenses as % of total gross profit * 40,0% 40,5%
SALESKPI TARGET ACTUAL
New sales as a % of used sales (excl. export) 100,0% 77,8%Sales per sales person 160,0 84,8Average gross profit per new car sold * 750,0 152,9Used vehicle stock turn in days 45,0 70,1Return on investment used stock 80,0% 24,5%Average gross profit per used car sold 700,0 431,9
* KPI's heavily dependent upon quarterly manufacturer bonus.
26 16th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
AFTER SALESKPI TARGET ACTUAL
Service efficiency (sold / attended) 110,0% 86,1%Service time utilisation (worked / attended) 95,0% 69,8%Bodyshop efficiency 130,0% 101,3%Gross profit % on service labour sales 63,0% 54,9%Gross profit % on body and paint labour sales 73,0% 73,3%Workshop direct expenses as % of gross profit 50,0% 54,7%Hours per job card (Retail Service) 2,4 1,2Hours per job card (Retail Bodyshop) 8,0 4,1Retail proportion of labour sold 70,0% 65,9%Retail recovery rate (retail labour sales / retail hours) 40,0 33,3Parts & accessories gross profit % 22,0% 18,3%Parts & accessories direct expenses as % gross profit 30,0% 22,1%Parts & accessories stock cover (0-6 months) 30,0 41,0
27 16th May 2013
Waterfall chart – direct profit variances vs MAP
€K Direct profit - March Year-to-date variance versus MAP
-14 17 -18 18 -9 4
8 -5
63
4
68
-20
-10
-
10
20
30
40
50
60
70
28 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 YTD
10th day 20th day 30th day TO DO Full month
Forecast Budget (MAP) Variance
Actuals + Forecast
Budget (MAP) Variance
Currency rate 283,00 283,00 283,00 283,00 283,00 283,00 283,00 296,10 283,00 -4,6%New Cars
1 Hyundai2 Units 25 130 128 0 128 82 46 741 300 4413 GM excl bonus 4.735 24.735 26.237 0 26.237 16.776 9.461 76.994 54.922 22.0724 Bonus 0 0 0 0 8.415 9.997 33.659 -23.6625 GM incl bonus 4.735 24.735 26.237 0 26.237 25.191 1.046 86.991 88.581 -1.590# Opel# Units 5 9 14 0 14 29 -15 58 94 -36# GM excl bonus 3.570 8.376 11.943 0 11.943 14.527 -2.583 42.427 46.944 -4.517# Bonus 0 0 0 0 0 0# GM incl bonus 3.570 8.376 11.943 0 11.943 14.527 -2.583 42.427 46.944 -4.517# TOTAL NEW CARS# Units 30 139 142 0 142 111 31 799 394 405# Gross Margin 8.305 33.111 38.180 0 38.180 39.717 -1.537 129.418 135.525 -6.107# Gross Margin other 0 3.276 7.524 13.102 -5.578# Total gross margin 8.305 33.111 38.180 0 38.180 42.993 -4.813 136.942 148.627 -11.686## Used Cars# Units 9 9 21 0 21 23 -2 102 78 24# Gross Margin 5.283 5.283 9.519 0 9.519 7.442 2.077 44.081 22.071 22.010#
# Car rent# Gross Margin 0 0 20.091 20.091 20.091 0 73.726 80.365 -6.639## Service# Gross Margin 2.468 5.223 11.489 0 11.489 10.472 1.018 28.823 39.070 -10.247## Body Shop# Gross Margin 211 1.412 6.908 0 6.908 6.661 246 31.075 27.177 3.898## Parts# Gross Margin 3.745 7.982 19.089 0 19.089 17.225 1.864 71.260 63.087 8.173## TOTAL# Gross Margin 20.011 53.011 85.185 20.091 105.277 104.884 392 385.906 380.398 5.508###
29 16th May 2013
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.
Summary