Automotive Holdings (AHG) 2015 AGM Report

Company/ASX Code : Automotive Holdings Group Limited (AHG)
Venue :
10am Fraser’s Function Centre,
Fraser Ave, Kings Park
Perth, Western Australia
Monitor : Mr John Campbell
AGM Details / NoM : Friday 20th November, 2015
# of Attendees : 78 shareholders and visitors
# Holdings represented by ASA : 74
Value of Proxies : $2.3 million
# Shares Represented by ASA : 545,000
Market Capitalisation : $1.3 billion

Easy as 123 but pedal to the metal

This AGM marked the company’s 10th anniversary of listing.  The Chairman David Griffiths told the meeting that the outlook for the automotive retail segment was strong whilst he was confident that margins and earnings in the refrigerated logistics segment were improving in a challenging market environment.  The CEO, Bronte Howson, told the meeting that there had been a 14.3% improvement in NPAT for the first 4 months of the 2016 financial year.

The financial results for 2015 were strong – AHG was Australia’s largest automotive retailer (6.6% of new car sales and 1.6% of used car sales) and refrigerated logistics operator.  NPAT had improved by 20.8% on 2014 with out-performance by automotive retail and good growth in refrigerated logistics.  New dealership acquisitions in the automotive retail segment were performing well.  The ASA asked if dealership acquisitions were likely to be capped by corporate debt reaching comfort limits – it stood at 27% debt/equity at 30 June 2015.  Mr Griffiths advised that debt was not impeding acquisitions, which were the basis of AHG’s strong performance.  Sources of capital included the sale and leaseback of dealership properties as evidenced by a recent transaction with Charterhall.

Mr Howson said that the board intended to appoint a chief executive for the logistics segment to manage its future growth and improve margins by focusing on cost control.  The smaller other logistics segment had a poor year in 2015 due in part to currency fluctuations affecting the pricing of European motorcycle imports in a competitive marketplace.  It was expected that the sale of the Covs autoparts operation would be completed soon on completion of an ACCC review. 

Mr Howson outlined the steps being taken by the group to stay ahead of the use of technology by customers and suppliers.  The AHG-123 mobile app was being well-received by car buyers.  In logistics, the group was implementing ‘sign-on-glass’ technology for obtaining delivery receipts for shipments as this speeded customer invoice processing.

All resolutions were passed on a show of hands with proxies showing strong support for all except the remuneration report.  The CEO’s performance rights were approved with proxies showing 98.9% approval but the remuneration report received a 16% vote against.  We would have voted on a poll for both remuneration resolutions as we considered the outcomes reasonable in terms of amount and in line with shareholder returns.  However, there are a number of short-comings in remuneration structure which have been drawn to AHG’s attention.