Thank you for standing by, and welcome to the Peter Warren Automotive Holdings Limited H1 Results Conference Call. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by number one on your telephone keypad. I would now like to hand the conference over to Mr. Mark Weaver, CEO. Please go ahead. Thank you, Ashia, and good morning, everyone. Thank you for joining us to discuss Peter Warren Automotive Holdings' H1 2024 financial results. My name is Mark Weaver, your Chief Executive Officer, and joining me today is our Chief Financial Officer, Victor Cuthell, who will assist me in presenting our results. This presentation, along with the financial statements, have been logged with the ASX for your information and can be found on our website at www.pwah.com.au. On slide two of today's pack, you will find our agenda. I will shortly present an overview of our H1 results and our activity during the half before providing a brief snapshot of our expectations of the period ahead. Victor will then provide further detail on our profit and loss performance, our cash flow, and our capital management position. We will then close with a detailed outlook for the remainder of FY2024. We will be delighted to take any questions you may have at the conclusion of our presentation today. Let's move then to the results highlights. On slide four, presented is a summary of our H1 financial highlights. Our total revenue came in at AUD 1.2 billion for the half year. This number represents a strong growth of 20% on the prior period. There were many initiatives behind this number, including successful acquisitions and organic activity, and I will elaborate on these in a few slides. This revenue growth enabled us to deliver underlying EBITDA of AUD 71.3 million, marginally up on the prior year and reflective of the contraction in gross margin, the ongoing impacts of cost inflation, and our efforts, importantly, to manage those costs. Moving along the top row, our PBT was AUD 34.4 million, representing a return on sales of 2.9%. We faced rising interest rates and increasing supply during the period, but were pleased with this overall outcome, which reflects our initiatives to manage our cost base and increase leverage from our scale and growing technology capabilities. Our board have approved the payment of AUD 0.085 per share fully franked dividend for the period. Victor will cover the details of that dividend later in the presentation. Finally, on this page, we show our net debt-to-property ratio of 24%. This provides us with considerable debt capacity to deliver on our acquisition strategy. We are highly focused in this area, and I will stand on that in a few moments. I'll turn now to slide five, which lays out a bridge of our underlying profit before tax. Moving from left to right, you can see in the EBITDA box the positive contribution from the Toyota and Volkswagen acquisitions, which were completed in early July 2023, with these dealerships now fully integrated and performing ahead of our expectations. Next on the chart is the impact of lower gross margin dollars as vehicle supply returned and added competitive pressure to the market. Our GP margins are a focus for us, and we'll talk about that a bit more. Finally, in that EBITDA box, the last bar shows increased operating expenses due to cost inflation. OPEX is another bigger area of focus, and Victor will cover that later in detail. This shows just how strong our revenue growth has been to more than offset these factors to deliver stable EBITDA up north AUD 0.7 million period on period. Moving to the right, the next bar shows increased interest costs of AUD 7.9 million. There are a few factors in here which we will cover off later in the presentation, but it's clear it has had a sizable impact on our PBT and remains a focal point for management going forward. Lastly, on this slide, the depreciation and amortization component includes AUD 1.2 million of AASB 16 impacts and the amortization of intangibles from our recent acquisitions. Overall, despite the contraction, we are pleased with our ability to hold our EBITDA performance and the extent of growth in revenues, cost control initiatives, and cost recovery measures enacted. On slide six, I'll cover the key highlights for the H1 and talk briefly to our outlook. Overall, on the left-hand side, the strong revenue performance was very pleasing and offset some of the margin pressure I mentioned. We have taken a very disciplined and proactive approach to cost management and cost recovery to help combat inflation with an annualized benefit of more than AUD 7 million. This is while maintaining our excellent customer service standards. We've been exceptionally pleased with the performance of the three acquired dealerships, which are tracking ahead of expectations. Our order book remains strong and will continue to underpin revenues for the period ahead. And finally, on the left, we have been proactive in focusing on loan repayments and strong inventory management as the interest rate environment evolved through the period. Moving on to the right with our outlook. We anticipate volumes and revenues to continue to grow, underpinned by our strong order bank. While margins in new cars may further taper, we expect margins to remain stable across our other business lines, and we continue our focus on cost reduction programs and leveraging our costs. Delivering brilliant basics remains a key focus for us, which I will touch on again shortly. And finally, on this side, we remain focused on acquisitions with a strong balance sheet and infrastructure in place to support our active consolidation strategy. Turning to slide seven, let's move now to explore some of the influencing factors in the current environment and the steps we are taking to address or make the most of these. The top chart on slide eight, shows national new car volume data since 2015. The significant declines in volume during the pandemic caused missing vehicle sales, as estimated in the shaded area. 2023 saw a record volume of vehicles delivered, and we expect 2024 to be very high as well, recovering some of these missing sales. Our business achieves its revenue from multiple sources as customers pass through their customer journey, and service is a key element of that. One significant tailwind unfolding in the current period is shown here in the blue box on the top right. The box reflects the 3- 4-year service car park, a period when retail dealers like PWR hold the vast majority of servicing work. As that box moves to the right through time, the lower volume years of 2019 and 2020 are replaced with the higher volume years, including the latest record year. That increases the 3- 4-year car park by several hundred thousand vehicles. This is promising for our service environment, which is a higher margin part of our business and is good for parts as well. The bottom left chart of orders and deliveries shows that supply is normalizing and indicates the shortfall in supply versus orders reverses in the last quarter. We are well placed to benefit from the supply normalization given the diversity of brands in our portfolio, and pleasingly, January was stronger with order write and deliveries just six units apart as demand picked up. On the bottom right, you can see how the order bank is consistent with the prior corresponding period and up slightly from the year-end. The acquisition added considerably to our order bank in July, and those brands experienced significant increases in supply, enabling the benefit of deliveries under our ownership. Overall, the order bank remains strong and will continue to support volumes through 2024. With that backdrop, I will take the next four slides to highlight our key areas of focus. Firstly, we remain laser-sharp on doing the basics extraordinarily well to drive organic growth and better efficiencies. The second is remaining very disciplined in our approach to acquisitions, a fundamental part of our growth strategy and a substantial opportunity for us. And thirdly, as the automotive industry experienced significant change, we have a number of proactive initiatives that allow us to lead our competitors. I'll cover each of these focus areas in more detail over the next few slides. Starting on the core business on slide 10, organic growth is a key focus and an area in which we deliver exceptional performance. Our goal is to provide a consistent customer experience through all of our sales channels: in person, online, self-service, call center, and chat capabilities, all driven by our desire to provide customer choice. Our first-class customer engagement continues to be a differentiator for our business, and after 65 years, we are pleased with our continued growth in this area. Keeping the balance of increasing customer engagement while we adjust to changing costs and industry dynamics is a priority for us. In order to meet the changing needs of customers, we are constantly looking at ways to improve both our physical and digital offering. We continue to invest in technology to provide our customers with 24/7 access to our products and services, which has in turn helped drive our per-order growth, particularly in service. As we scale, we are focused on maximizing our throughput and delivering further cost efficiencies. This scale also gives us more leverage, underpinned by our hub-and-spoke approach through the centralization of our support functions. This has led to a number of benefits, including stronger revenue growth, more effective lead management, and improved transparency for customers, as well as improvements in the customer engagement I mentioned. As we scale, so too does our ability to get better procurement deals in addition to greater leverage in establishing favorable terms. I know you are keen to understand our gross margin experience, so I want to draw your attention to the boxes in the middle of the page. It's worth calling out that many of our revenue streams are not impacted in the same way as the new vehicle supply chain, and we have been disciplined in our approach to identifying substitutional growth opportunities in the face of new car margin contraction. In used cars, for example, we are seeing a steady recovery in gross margins following a restructure of our inventory last year. We've set better processes for pricing strategies and our pipeline, which will allow for growth going forward. The strong growth in our service business has been driven by technology investments, strong cost recovery measures, and improved process flows. Service grew like-for-like 20.2% in the H1, outpacing inflation and delivering strong gross margins. With the likelihood of an increasing car park and the depth of our brand portfolio, it is expected to deliver strong outcomes going forward. Similarly, parts and accessories with growth well ahead of inflation and deeper scale efficiencies achieved. Alongside strong management of GP, inventory management is a key to success in the current climate. Optimal inventory materialises both stable margins and lower interest costs. While we are obligated to some extent by our OEM partners, we have improved the management of stock, utilizing the tools at our disposal to focus on holding costs, days to market, third-party pipeline management, and inventory allocation. At the foot of the page, you can see our diversity of brands across all segments in the market. The mix of geographic locations and blend of revenue streams will continue to support our growth and remain a key differentiator for our business. Slide 11 shows our strong acquisition track record. The features of our approach to acquisitions are listed on the left-hand side and underpin our disciplined approach. We carefully consider these prospects based on EPS accretion, sustainable margins, availability of local market share, and of course, strong operations and teams that fit with the Peter Warren culture and values. The opportunity for synergies is a key element to the success of this strategy, including features such as geographic location and operational alignment. The chart in the center of the slide shows acquisitions have been a key contributor to our growth over the last seven years, including some of the more recent ones highlighted. Our Penfold acquisition in 2021 established our beachhead in Victoria, reflecting our strategy to broaden our footprint across the eastern seaboard. This has provided a strong platform for further growth in the region as we build on this important hub. Another more recent example is the Macarthur dealerships, which we announced earlier this year, subject to OEM approvals and expected to complete in the coming weeks. This is close to our existing hub in Western Sydney and is expected to deliver strong geographical and operational benefits with the addition of key new brands. We have a strong infrastructure in place to support further inorganic opportunities supported by a substantial property portfolio. There is a large cohort of mid-sized dealers that naturally become the likely targets for further growth, and there is lots of opportunity as vendor expectations continue to reduce. We are always looking both proactively and assessing inbound opportunities as the more onerous operating environment puts pressure on subscale businesses. Moving to slide 12, this demonstrates our willingness to be at the forefront of leading industry change. Firstly, down the left-hand side, as I mentioned earlier, our goal is to provide a consistent customer experience through all of our sales channels: in person, online, self-service, call center, and chat, all driven by our desire to provide customer choice. We are leveraging technology to step toward greater consumer transparency, which will yield benefits in reducing the labor intensity of inbound inquiries, driving cost efficiencies, and enabling resources to be directed towards lucrative revenue generation activities. Dealers remain today the key retail point of sale for the vast majority of new vehicles introduced into the car park, and so we are constantly looking at ways to leverage our shop window. For instance, we continue on our work on extending our EV capability at our locations with charging networks established across our sites and opportunities arising from the ecosystem these changes in underlying product create. Finally, on the left-hand side, we expect the existence of various sales models to continue to emerge, with some agency models working alongside franchising. With many of these models now fully operational, Peter Warren is well advanced with our adoption and coexistence of these alternate approaches to market as we look to partner with OEMs to find the best solution for both parties and, importantly, the end user. The center of this page shows how we are well positioned for the ongoing transition to new energy vehicles. Sales of battery electric and plug-in hybrid vehicles continue to increase. The EV market has seen a second wave of activity as more and more NEV models enter the market. A top priority here is providing consumer choice of fuel types and ensuring we have a wide variety of models available. We have a vast range of new energy vehicles with 71 models available in our current lineup, and this number grows month on month. Peter Warren is well positioned in the second wave of EV adoption, and we expect the early market leaders will be naturally diluted as the supply lag continues to improve across a wider group of OEMs. The phase-in period of the recently announced New Vehicle Efficiency Standards provides a significant tailwind given our wide variety of brand representation. Our focus is on supporting our OEM partners as these models are supplied, and I'd like to emphasize the diversity again across the segments with strong representation in each of the volume, prestige, luxury, and super-luxury markets to provide vehicles for all budgets. The transition to EVs presents benefits to our other income streams. We envisage an increasing 3-4-year car park with higher retention as vehicles become more complex and specialist skills and training cannot easily be replicated by the independents. We are positive about the opportunities that lie ahead and are well positioned to capitalize. I might take this opportunity to hand over to Victor, who can talk us through some more detail on our financial summary. Thanks, Victor. Thank you, Mark. Coming to page 14 first, you can see that we have increased our revenue by 20% from AUD 999 million to AUD 1,203 million, which includes both inorganic as well as strong organic growth. That organic growth occurred all across new vehicles, used vehicles, service, parts, and aftermarket products. This reflects our focus on the brilliant basics that Mark has talked about. In addition, we benefited from the industry growth in volume sold and also from the growth in our three-year car park. Looking forward, we expect these trends to continue. We were very pleased to see our EBITDA grow to AUD 71.3 million in the top right chart. This reflects the hard work put into inventory management, gross profit management, and cost reduction. Our results also include our acquisition of the Toyota and VW businesses, which have performed above our expectations. These businesses are now fully integrated, and we look forward to more acquisitions, with the next one expected to be completed in the coming weeks. Our EBITDA did not translate into PBT growth as our increased interest costs were significant, although this was mitigated by our inventory management. We ended the half with a PBT of AUD 34.4 million. Turning to page 15, we have our P&L, which starts with that revenue growth of AUD 204 million. Our gross profit percentage reduced to 17.6% from 19.6% in the prior corresponding period. This reflects the very high margins achieved, especially on new vehicles, in that period. It reflects our acquisition, which was GP percentage diluted. GP percentage is a big factor in our results, and I'll dissect that area on our next slide. Our operating expenses have seen a huge focus, and we are pleased to see that as a percentage of revenue, it has reduced from 12.6% to 11.7%. That reduction reflects both our strong cost control and our leveraging fixed OPEX as we grew volumes and revenues. In a few minutes, I will talk in more detail about our cost control. We have also called out three areas of one-off expense: acquisition expenses, legal costs, and restructure costs. We were pleased to see a small increase of AUD 0.7 million in underlying EBITDA shown at row four. This has been the product of that organic revenue growth, acquisition growth, margin management, and careful cost control. We're not immune, however, to rising interest costs, and our total interest expense rose by AUD 7.9 million. This splits into the three components shown here, and you can see that the rate increase was the largest factor at AUD 3.9 million. Our inventory balance is the most controllable of these areas, and we manage this very carefully. Our bottom-line PBT has reduced from AUD 43.2 million to AUD 34.4 million on an underlying basis. Looking forward, we would expect a continuation of some of the factors here: continued revenue growth in all departments, continued cost control, and continued leveraging of the P&L OPEX. Turning to gross profit margin, slide 16 dissects the movements in our business in recent periods. The top chart shows that our GP percentage has reduced to 17.6% from the peaks achieved when new cars were in very short supply and effectively selling at full RRP. We are in a period of stronger supply, with more competitive activity having an effect on GP percentage. GP percentage is an important area that is heavily managed, and so I have dissected our GP percentage in a waterfall chart at the bottom of the page that shows the movement from H1FY23 to H2FY23 and onto H1FY24. The left-hand side of that chart shows the new car margins were the largest factor from H1FY23 to H2FY23, and that contributed a 1% reduction in our gross margin. The new car margin reduction slowed to a 0.3% reduction over the last six months. The right-hand side of the chart breaks down the last six months. In that period, the acquisition has diluted our gross margin by 0.8%, reflecting the lower margins in that business, which has a high new car sales mix and a strong element of plate sales. The business has overperformed in revenue and PBT terms, but the GP impact is diluted. We also saw a small improvement in used car margins by 0.2% in H1FY24. This reflected our improved process and our management of the used car inventory, which has delivered good results after the market began to change in H2FY23. In other departments - service, parts, aftermarket, finance, insurance - we are seeing steady or improving margins. We expect good margins to continue in all of these areas. Slide 17 shows our OPEX. Our cost base has been a huge focus in the business given the margin pressures that exist. Cost inflation has been significant and included a 5.75% increase in the award wage from 1 July 2023. Our cost reduction program has saved us AUD 7 million per annum and incurred one-off costs of AUD 0.7 million. We also have a cost recovery program, which has seen revenue increases in selected areas. Lastly, we have been highly focused on leveraging our P&L and pushing more volume through our business with minimal increases in headcount and other costs. The end result has seen our OPEX as a percentage of revenue reduced from 12.6% down to 11.7%. Our like-for-like OPEX increased by 5%, which is AUD 6.3 million. We are pleased with this outcome and intend to continue our work in this area using the same three methods: cost out, cost recovery, and P&L leverage. Page 18 shows our operating cash flow after floor plan interest increased by 21% to AUD 44 million. This was after incurring AUD 7 million more in floor plan interest and after a normal seasonal cash outflow on customer deposits. Our favorable cash flows helped us with our acquisitions and helped us invest AUD 5.4 million in dealership CAPEX. That amount included CapEx as part of our EV readiness program, and this positions us well as our EV sales grow. We also took steps to manage our interest costs, and we repaid AUD 16.5 million in borrowings, some of which were short-term and acquisition-related. Turning to slide 19, we show here our corporate debt position and our capacity. Our net debt to property value is currently only 24%, and our net debt to EBITDA after floor plan interest is 0.5x. The property on our balance sheet gives us significant borrowing capacity, and it also offers attractive rates of interest given the security it provides to our lenders. The chart at the bottom shows our capacity remains high even after borrowing for our recent acquisition. This sets us up well for more acquisitions, although we will continue to be disciplined and look for opportunities that represent a good buy. On dividends, the directors have declared an interim dividend of AUD 0.08 per share. This will be fully franked and paid on 27 March 2024. I'll now hand back to Mark to discuss our outlook. Thanks, Victor. To close off then on slide 21. As I've talked to, we expect revenues to continue to grow both organically and through acquisition. Margins in new cars may taper further given the supply increase, but we expect margins to continue to be good in the other key revenue streams. We continue our focus on careful inventory management, which in part supports margin stability and interest expense reduction as well as the continuation of cost reduction programs and cost leverage for the remainder of FY24. Our strong order bank will support volumes during 2024 and underpin revenue. And whilst we expect interest costs to increase, we envisage the increase will be lower than in 2023. And finally, the strong acquisition pipeline should deliver continued disciplined expansion of the Peter Warren portfolio. Our group is well placed to take advantage of this market and continue to act as a consolidator, and we have the capital management capability to execute when required. So that concludes our presentation for today. As a reminder, there is more material in the appendices to this presentation deck, including our balance sheet and a number of P&L reconciliations for your reference. I would like to take this opportunity to thank our team for their ongoing efforts and drive to grow in this changing economic environment. I also wish to expand my thanks to our numerous business partners that support our journey and shared ambitions for the period ahead. Finally, to our investors, thank you for your continued support, and we appreciate your time today. Victor and I would now be delighted to take any questions that you may have. Thank you, Ashia. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset to ask your question. The first question comes from Tom Chapman with Jefferies. Please go ahead. It's actually John Campbell, I think. I'm not sure how that came about, but Tom does work at Jefferies. Anyway, thanks guys for the question, for the opportunity to ask the question. Mark, just in terms of the order book and obviously the order book that you presented at 31 Dec includes the recent acquisitions of Toyota and VW. But what's your sense on the run-off of the order book given that we expect FY or calendar year 2024 to be another good year of deliveries and underlying demand as per what you were saying in terms of underlying demand? So how do you sort of see that order book running off over or at least returning back to a more normalized level? Yeah. Good morning, John. I did wonder why Tom had replaced John for a second, but good to hear your voice. Thank you. Thanks for the question, and you're quite right. When we acquired the Toyota and Volkswagen businesses in very early July, that did indeed increase our order book as part of that acquisition. Just as a side note, Toyota have had a very strong, in fact, Volkswagen as well, but Toyota have had a very strong H2 of calendar year 2023. If I remember right, when I looked at the December VFACTS number, their volumes in the H2 versus the H1 were up around about 33%. So what has that meant? Well, we've enjoyed the benefits of delivering those vehicles, and the consequence of that is obviously we're reducing that order bank that we acquired. Going forward, I'm still firmly of the view that our order bank will play a significant role in underpinning our revenue through the bulk of 2024, and I mean calendar year 2024. We see that in a sort of good to softer month moving by around about sort of 2%-6% in any period. And so if you multiply it up in months, that suggests that we've got somewhere between an 11 and, what, 20, 23 month run-off period here. So it is still got quite a tail. The second part of your question is where do we think it will land? I'm still very much of the opinion that putting an order in for a vehicle and the rational approach to supply chain management will suggest that we're probably in the sort of 8-10-week category as a normal wait time, which suggests that the order book will come back to around two months or thereabout. It is still up closer to four at the moment, and so I think we've still got a long way to go. And certainly, as I said, I see an underpinning of our revenues certainly through to the end of FY24. I would probably predict well into the end of calendar year 2024 and potentially even into a few months around next time. And so hence, obviously, I presume you're fairly confident that gross margins remain somewhere around where they are at the moment for the bulk of calendar 2024? Yeah. It certainly has helped us in the past, John. And of course, remembering, I mean, that order bank is not static yet. It is constantly emptying and refilling again. As Victor demonstrated on his slides there, we saw a fairly big contraction in the H1 of calendar year 2023. That slowed in the H2. I'm hoping that will slow again now, but we are as I've called out previously, we are expecting it to taper again just slightly in this H2 of this financial year. But yes, the order bank will clearly support our gross margins. Yep. Very good. One last question from me, and then I'll pass it back. Obviously, your OPEX management has been very, very strong, and we continue to see that ratio to revenues coming down. I mean, do you see any obvious and I'm sure the answer is no, but any obvious low-hanging fruit to sort of continue to drive that margin down? Because it's at 11.7%. It's a very good level. Yeah. So just whether there's any future initiatives that you can convey to us that might see it go down further. Yes, John. That's an area I get heavily involved in. And I think what we'd say there is that our cost reduction strategies and our programs are not complete. We have a few workstreams in place that delivered for us in the H1 of the year, and we're looking to continue that and see more delivery in the H2 of the year. I'm not sure I'd call it low-hanging fruit. I think in 2024, most businesses are already running pretty efficiently, but we do look to achieve more. Yes. Yeah. Very good. And the recently acquired Toyota and VW businesses, I mean, are they already at the, I guess, at the Peter Warren sort of levels, or do you see that there's more to do there? Those have been fully integrated now, and the synergies have been extracted out of that already. So I wouldn't see that as a particular source of efficiencies. But again, we do look to achieve more efficiencies and cost reductions over the coming year. Excellent. Thanks, Victor. Thanks, guys. I'll pass it back. Thanks, John. The next question comes from Sarah Mann with Moelis Australia. Please go ahead. Morning, guys. First question just on GP margin again. Sorry. So clearly, supply has come back pretty strongly in the back end of calendar 2023 and inventories increased, etc. Just wondering, I guess, how the approach from the OEMs has changed compared to pre-COVID. Do you think there's still being more rational in terms of, I guess, kind of preserving GP margin, or how far back towards kind of the supply push model have we moved with supply coming back? Yeah. Good morning, Sarah, and thanks for the question. It's an interesting one. Look, it is varying brand by brand at the moment. What we're seeing play out in the marketplace right now is a number of brands that have picked up on the supply shortage and probably overcooked it to the extent that they've obtained production slots, got their logistics in order, got cars into Australia, fulfilled the order banks, and then been left with hundreds, if not in cases thousands, of similar modelled cars scattered around dealership yards and, in fact, their own holding yards across Australia. I think those that have gone early with that are probably reflecting on that, saying, well, that has got us back to something of a supply push environment on particular models. There are other brands that are very carefully managing that process and have learned a lot through this COVID period. I think, honestly, it's pretty challenging to answer that question definitively when you've got such a wide portfolio of brands. My sense is those that have gone early and presented the supply push environment are looking very hard to sort of correct that position in this early period. But I would know if I mean, if you look at the size of our order bank and you multiply that by all the dealers in the country, there is still a sizable order bank. It still sits somewhere in the sort of four month typical supply category, I would imagine, nationally. And so there's still quite a lot to do to get cars into the country, but getting that balance right is going to be a bit challenging. So that's why we've got some confidence that GP margins will start to settle. But honestly, I mean, we're still calling out that we think that they may well taper a little further before they find the sweet spot. But I'm still of the view we're not going to end up in that overstocked environment that we found ourselves back in 2016, 2017. Gotcha. Because the other, I guess, piece to it is the Chinese OEMs clearly took a lot of market share while some of the incumbent brands were supply-constrained. And so just interested in terms of what you're seeing around what they're trying to do in the market to kind of retain that market share, or do you think kind of that settled back down to a level below the market share that they were kind of enjoying during the supply-constrained period? Yeah. Again, a pretty challenging question for us. We're just about to endeavor into a number of those Chinese brands, and so are out there doing our homework on those at the moment. I'd probably put it in this form. Those that are slightly more mature and been around a little longer have probably got the confidence to apply stability to the inventory channels and bring cars in to meet the market. Those that are sort of a little bit newer kids on the block are clearly trying to grab market share and trying to time how well their product's going to go. Some are going to get it right. Some are going to get it wrong. I think out of those more mature Chinese brands, I'm not seeing the similar patterns to those long-incumbent brands that we're all used to seeing on our streets. So I don't think it's a one-size-fits-all. But I hope that those sort of more recently introduced challenger brands coming into Australia can get the supply right and not just start writing price points for certain segments and certain models that are going to make it very difficult for others to challenge it. But we shall see, Sarah. That's very crystal ball activity there. Understood. No, thank you. And then just the new vehicle emission standards, if that does come in in a current form, one year, clearly Australians like utes, etc. Are the OEMs doing anything in this kind of 12-month period or 10-month period now before that to try and, I guess, get some incremental sales into Australia ahead of that? Just saying in general. Yeah. So yeah, a very generalistic question. I certainly think they're doing a lot because if you could imagine sourcing the materials to manufacture a car and then getting that through a production cycle and logistically passing that globally around the world into retailers' hands and we take 30, 60 days to find a home, time is ticking if the 1st of January is genuinely the intended first adoption point of those standards. So the OEMs, I'm sure, are out there right at the moment contemplating what all this means for them and their product lineup. In terms of the push that may happen beforehand, I think that's very possible. I kind of like it as to a huge tax change. If there was a big incentive that was about to end, we would no doubt see manufacturers and retailers like us trying to ensure that people got the opportunity to do that. So I think that may well be a natural tailwind for 2024, that volumes would increase, and possibly some of those heavier emitting vehicles may end up on the road before the 1st of January. But it is early days, and that's still going through various submissions from the various parties. Naturally, Peter Warren is a big fan of reducing emissions. We're a little concerned by the timeframes, like many people in our shoes. But we think that will play around a little bit with supply and particularly demand towards the very end of the period if that change is dated to 1st of January. Sure. Okay. Last question from me. Just on the finance, I'm just interested in terms of why the like-for-like F&I growth has come down and why penetration appears to be lagging relative to sales. Yeah. Yeah. I'll start this. Add any comments from Victor as need be. F&I penetration has certainly been under pressure, and we are not running at the penetration rates that we have been in recent years. From my discussions around the industry generally, I still believe that we are at the top end of sort of benchmark levels, and we've got strong performance. We get data there from other dealers and from the financials themselves suggesting we're going okay. Is it where it should be? No, because we know we've been in an economic environment that has provided stronger penetration. We've got plenty of things in the wings, though, and in action at the moment to try and improve on that. But it has been a challenge. The rising interest rate environment has scared some people to do probably crazy things like put their car on a home loan, for example, because the home loan has got a naturally lower interest rate and weekly repayments look considerably lower. I'm not sure they're thinking about five year terms versus 25-year terms, but yeah, that's what happens with irrational thinking sometimes. And so we've, unfortunately, experienced that, and I'm expecting our fellow dealers out there to experience the same thing. I might add there, Mark. I think I see there would be continued opportunity in this area as we go through 2024 and 2025. Thanks, guys. Thanks, Sarah. The next question comes from Ed Woodgate with Jarden. Please go ahead. Hi, Mark. Hey, Victor. Can you hear me okay? Y es, we can. Good morning. Good morning. Great result. Look, if it's not too specific, could you provide some color as to where your new margins are, new car margins in the H1 relative to pre-COVID levels? Just trying to get a sense of they've obviously fallen in the half, and you've had a great performance in the rest of the business and on margin front. But can you just provide some color as to where your new car margins are relative to COVID levels? Yeah. I'll let Victor jump in as well. On page 16 at the side deck, there is a chart there which shows our overall GP margin. There's a few signals in this page here to say that most of the margins in the other revenue streams have been stable or growing. So clearly, a lot of that impact that you see on that gross profit margin chart would be arising from new vehicle margins. Where is that relative? I mean, it is a blended business, and we do earn our revenues from lots of different sources. Equally, we did back in 2016, 2017 as well. So I'm not going to break down individual margins. But as a general rule there, you can see the very high peaks on page 16 that we experienced back in H2FY22 where we're in an environment of very little discounting, full recommended retail pricing, and zero supply. That is about as good as it gets. The position in COVID was down as low as about 16%. So there is still a significant gap between the current performance and the low point, if I can call it that. I don't believe we're going to go there. But yeah, Victor, I don't know if you've got anything else to add on new vehicle margins, but we're not to. I was going to say exactly the same thing, Mark, that we don't expect to go back to the pre-COVID levels because of the circumstances at that time. Okay. Then, I guess, just in relation to cost recovery and pricing, right, how do you it sounds like you're making good strides there, but how do you think the broader market's behaving right now and how rational is the pricing environment? So cost recovery measures, I mean, clearly, one of our biggest expenses we have in our P&L is labor. And labor costs naturally have gone up. We employ a vast majority of our people under award arrangements, and those award arrangements have increased. We set those at the 1st of July, and they do apply for the full financial year. So we don't have step-ups during the middle of a financial trading period. Obviously, where we can, we are particularly in those labor-intensive environments like service. We do lift our labor rates to ensure that we can recover as best as we can those costs. And labor rates mean everything from retail labor on a repair that we're doing through the warranty work, through the fleet servicing, etc. When I say we do our best, there are some cap-priced environments, though, that are set up on us by the OEMs. And so those, unfortunately, don't necessarily increase. So we are wearing some of that. But I think we've done a good job in that area. From what I see, our pricing here is relative to our peers out in the marketplace and consistent with what we see. Victor, have you got anything further you want to add to cost recovery? Yeah. Just in terms of how rational is the market, I would say that the market is rational in this area. Peers are moving prices and charges as well, and customers have some level of understanding that it is an inflationary environment. And of course, we're pushing up these charges in line with our costs, but we're not overpushing them. Yeah. And of course, it's our only competitive environment. You can service your car with us. You can service your car down the road. People will work out what labor rates are and shop you accordingly. So we've got to stay within the competitive set. Again, we're not here to try and gouge anybody. We merely want to if we've got an increase, we're looking to pass some of that on as part of our recovery measures. Yeah, of course. Okay. Well, that's helpful. Then just in relation to the new acquisition, so we understand you've invested a lot in technology that's helped you integrate businesses quite quickly. Can you just give us an update on how the integration of the Macarthur dealership's going and how the tech's helping with that? It's not going yet. It's due to complete shortly and will happen inside the next 4-5 weeks. But we are quite excited around that opportunity. So to give you an example, we're talking about full digital technology plays now. So when a customer rolls into a service laneway, they're met with an iPad, not a piece of paper. We are able to get them to check in like you would an airline before they arrive. They can add comments. They can book a service loan car. They can ask for a lift down to the local shops. And then as we go through the service process, we're applying that digital thinking right the way through. So if we notice your brake pad isn't worn, there's a technician taking a video. Here's what a full brake pad looks like. Here's yours. The micrometer's next to it so you can see the genuine evidence. And it's signed on screen and applied directly to us. So we're reducing the amount of interaction we are physically having with consumers and moving that to a technology-based solution. And on top of that, then you get all the follow-up and pieces that resonate post-event if the consumer doesn't take that up. So we are excited about introducing that into each acquisition that we do. And we've done that successfully with the Toyota and Volkswagen acquisitions in July, and we will look forward to that integration once we get to the finish line on settlement with Macarthur. Great. Thanks. Look, good result. And yeah, we'll speak later. Cheers. Thanks very much. Thank you. Once again, if you have a question, please press star, then one. The next question comes from Kieran Harris with E&P. Please go ahead. Oh, hi, Mark. Hi Victor. Just one question. The rest have been answered. Could we just get a comment on a new vehicle entry? Seems like I've ticked that again in this half just relative to sale. So any color you can provide on potential area oversupply expectations for the H2? Yeah. Forgive me, Kieran. I just missed the first part of that question. I heard the oversupply. There was a first part of that question which was a little hard to hear. I apologize. Just referring to new vehicle inventories that just does look like they're slightly elevated relative to sales just coming off FY23. Just any color you can provide on that and then expectations for the H2. Yeah. Yeah. Certainly can. I think I mentioned earlier, perhaps in John's question, that it has been patchy. It's not been consistent. We've got a vast array of brands that we play in across a very diverse mix of segments. Some brands have been able to secure, for example, production slots on one particular model because there could be 800 backorders on this vehicle. So they've gone and made 1,500. The 800 have come in. The orders are fulfilled, and suddenly there's 700 almost identical models in the marketplace all at the same time. With relatively high interest rates, dealers are looking to move those on as retailers would. There are certainly pockets of that, and that has led to increasing inventory and some pressure on margins. In contrast, [SatRight] Next Door is another brand where we can't get vehicles in. Everything is on an order bank. I've got nothing in the showroom to show people bar a few demonstrators, and we're waiting 5-6 months. So how do I see that playing out? I think those that have brought a lot of stock in have probably realized that they've overcooked it and are slowing down some of that production in order to get through the inventory on ground at the moment. And you've seen from our elevated inventory levels, we're subject to that, obviously. Others continue to try and command production slots in a very busy factory in Japan or in Europe when little old Australia is trying to compete on a global scale. And so I suspect that those that brought some in will take off, and those that are still struggling to supply will lift up. My sense is that this current dynamic will carry on for some time. And certainly, I expect that the current inventory levels to be there or thereabouts through to the end of the financial year. Remembering, of course, we've got an acquisition coming, so our inventory will certainly increase from our current position. Our job, though, is to make sure we're managing pipeline, getting allocations right where we can, trying to readdress a pipeline to a certain customer set. Where we've got four or five dealerships, can we share inventory where possible to fulfill orders where in other places it might be stock? That's the benefit of scale for us. But I suspect the climate we're in at the moment in terms of inventory supply will continue at least for the next six months, Kieran. No, that's great. Thanks for the call. No problem. The next question comes from Sarah Mann at Moelis Australia. Please go ahead. Hey, guys. Just a couple of follow-up questions. So just interested if you could provide some color on, I guess, either the PBT contribution from the Warwick Farm and Bathurst acquisition or at least just some kind of comparable number back to what was provided in the independent expert report where it looks like in F23 you guys did AUD 8-9 million of EBIT for the full year period. Yeah, sure. So that's great. That is what we put in there, was included in the independent expert report that came out. And I think our headline would be that we are overperforming in that business. We're very pleased. It's been a very good buy for us. I won't come back and quote an actual hard PBT for the first six months on that business. But on page five of our presentation, you can see that we quote AUD 8 million of EBITDA. So just to get a sort of order of magnitude, you could probably deduct a little bit off of that for floor plan interest and other things and get down to a PBT out of that eight. So you did almost close to a full year's earnings in the half year? That's an EBITDA number, not a PBT number. Yeah. So PBT, I think, in the independent expert report was getting on for 9.0. EBITDA for six months is 8.0, but you would have to deduct off of that interest amortization, which includes AASB 16 amortization. And so it has not; it's not doubled, no, but it's up tens of percentage points, yes. Got it. Okay. And then in terms of the acquisition environment, clearly, you've flagged that you've got balance sheet capacity and that you've always wanted to acquire. Can you talk a little bit about, I guess, the level of activity that you're seeing at the moment and what kind of vendor expectations have been or how they're moving given that the GP margins, etc., are coming off and it's becoming a bit of a tougher environment? Yeah. Yeah. I certainly can. Certainly, relative to the couple of years, the environment out there is buoyant. There are significantly more opportunities arising in the last few months than we would have seen, say, in the same few months two years ago. I think that's probably quite natural, though, given the COVID example there. Perhaps that period is not the best comparative. There is plenty out there to consider, and we are presented with opportunities as well as the ones that we're pursuing on a regular basis. In terms of expectations, certainly, they've come back. I think the last time we would have spoken, Sarah, I'd probably made the comment that expectations were still quite high and there was a considerable gap between vendor and purchaser. My view now is that those expectations have certainly reduced, and we find ourselves in a situation here where we're even able to apply our own financial consideration set over others. So, for example, our return on sales, if that's the measure you wanted to use, is not where it was during COVID. And so if that's come backwards 25%, we can very easily demonstrate to a vendor that we're naturally expecting theirs to have done the same in the current climate and set an expectation for the future. So certainly, are the questions around, will you pay me eight times my 2021 profits? The answer to that is no. Those conversations aren't happening any longer. It very quickly gets into a, let's talk about sustainability. And of course, we can use ours and other public data to demonstrate that the days of 5% return on sales are not with us in the current climate. Got it. Okay. So in theory, the pace should be able to kind of speed up a little bit given that there's increased volumes and price expectations are a bit more reasonable. Yeah. We're always going to call out that we're going to be very disciplined around things that we buy. And I think the latest announcement on Macarthur is a good example of that. It is in our sweet spot. It's an area we know there are synergies available to us given its geographic proximity. That's a perfect example of ticking nine out of 10 boxes. And the one that isn't ticked, for example, we can overlay ourselves. Not all acquisitions are going to have that sort of profile. And so we'll continue to be very disciplined around that. But yes, there is plenty of opportunity for us and plenty to choose from in the current climate. We just want to make sure we keep delivering on the good ones and keep demonstrating that we can outperform once we have acquired. Gotcha. Okay. Cool. Last question from me, just back on the new vehicle efficiency standards. So if it does come in 1 January 2025, clearly, they're trying to push a lot more EVs into the market. Sounds like you've done the work on the CapEx side of things from your dealership perspective to be able to service that, but just interested in terms of what you're doing to try and transition your workforce as well. So they have the capability to service EVs in that pretty quick timeframe. Yeah. Gladly. I genuinely think we have been leading the way here. I mean, we called this EV transition out three years ago during COVID when we had a little bit less throughput and a little bit more time on our hands. And for example, at that point, every single person that finished an apprenticeship inside our business was offered the auto electrical equivalent to learn more on that side. So this has been a long journey for us, that those people have now come out of that journey and now double-qualified apprenticeships in both the mechanical and the auto electrical side. We continue to invest in the infrastructure on our business. We've carried out audits of our capacity management to enable us to be able to have 20 charges. Is it even possible we can pull that sort of power down from the grid? We've replaced distribution boards and boxes, etc., to enable us to do that, to be ready. In a lot of environments, we've got the charging infrastructure on-site and ready to go, and we've got the teams equipped and trained and ready for what we see is still a significant increase in the number of electric vehicles. So yes, in answer to your question, we are well prepared, well-versed. And with 71 current models available, we feel like we're in a really good position to ensure that consumers don't get one or two choices out there, which has been the pattern for the last couple of years, but they get 70 choices. And we can offer an opportunity at all budgets across lots of different segments and lots of different brands. Great. Thanks so much, Mark. Thanks, Victor. No problem. Thanks, Sarah. There are no further questions at this time. I will now hand the call back over to Mr. Weaver for any closing remarks. Thank you, Ashia And again, to everyone, thanks for taking the time to join us this morning. I hope you enjoyed our presentation, and we certainly appreciate your continued support. Enjoy the rest of your day. Thank you.