Thank you for standing by, and welcome to the Peter Warren Automotive Holdings Limited FY 2024 results conference call. All participants are in a 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 the number one on your telephone keypad. I would now like to hand the conference over to Mr. Paul Warren, Interim CEO. Please go ahead. Good morning, everyone, and thank you for joining us to discuss Peter Warren Automotive Holdings 2024 financial results. My name is Paul Warren, your Interim 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 lodged 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 start with a summary of our results and some views of the period ahead. We will then go into a more detailed review of our key areas of focus during the year and progress against our long-term strategy. Victor will then provide further details on our activities during the year before taking you through our financial performance, including our cash flow, before we conclude with an update on our outlook. We will be delighted to take any questions you may have at the conclusion of our presentation today. Let's move then to the result highlights. On slide four, we start with our total revenue, which came in at a record AUD 2.5 billion for the year. This number equates to a 19.4% growth on the prior period, reflecting the organic growth we drove in most parts of our business. It also includes the added revenues from acquisitions, the Macarthur acquisition in the second half of the year, and the Toyota acquisition at the start of the year. Across the automotive industry, increases in vehicle supply have led to higher inventory holdings and lower new car margins. We strengthened our inventory management program, which we'll talk about later, and succeeded in holding new car stock steady relative to levels at December 31st last year, excluding acquisitions. We also continued our cost control programs and leveraged our fixed cost base as revenues grew. As a result, you can see our profit before tax, or PBT, was AUD 56.8 million. This was within the range of our guidance, which we provided you in May. We continued to see good cash generations this year, with AUD 112.6 million in cash from our operations, reflecting strong cash conversion. The group is in a healthy financial position, with low net debt and strong property assets underpinning our balance sheet. Property holdings on the balance sheet are now valued at AUD 226 million, and our debt LTV is 27%. The board considers that these assets represent significant value and provide good funding optionality for the business. Lastly, the directors have declared a final dividend of AUD 0.06 per share, fully franked. This brings the full-year dividend to AUD 0.145 per share and is in line with our target payout ratio. I'll now turn to slide five, which lays out our bridges for both our revenue and our underlying profit before tax. Firstly, on our revenue growth, moving left to right, you can see the positive contribution from our acquisitions. The AUD 271 million increase includes our Macarthur acquisition in the second half of the year and our Toyota, Toyota and Volkswagen business purchase at the beginning of the FY 2024 financial year. Importantly, we also achieved good organic growth in our existing businesses, with revenue increases in new cars, used cars, service, parts, and aftermarket products. Moving to the PBT bridge, you can see the 16.3 EBITDA increase from those acquisitions. However, we also experienced a gross profit reduction in our existing business. This reduction was largely caused by falling new car margins, where increases in supply and inventory created more competition and discounting by dealers. We will discuss that gross profit reduction in a few minutes. Our OpEx increase was AUD 8.9 million, and we'll talk about our cost control programs later as well. Lastly, you can see the impact of our interest on our business, where rising interest rates and rising inventories have added AUD 10 million to our interest costs. Acquisitions-related interest costs were AUD 5.9 million. Overall, you can see that the gross profit reduction and interest costs have impacted our results. That said, we were very focused on our cost control and our inventory control during the year and are pleased to have achieved a PBT of AUD 56.8 million. On slide six, I'll cover the key highlights for the year and talk briefly to our outlook. Overall, the strong revenue performance was very pleasing and offset some of the major pressures I've mentioned. As the year developed, we really focused on the managing of these three key areas. Firstly, we implemented our margin initiatives to reduce the impact of those new car margin pressures. Secondly, we strengthened our inventory control and held new car inventory steady at December levels, excluding acquisitions. Thirdly, we were very active in making OpEx savings and took AUD 9 million, or 3%, out of our cost base. Between Victor and I, we'll talk a lot more about these three areas, where we have been and where we are focusing our energy on. Our recent acquisitions of our four dealerships in Macarthur, New South Wales, has now been completed and integrated into our business. These Western Suburbs dealerships are highly complementary to our existing footprint and bring a number of opportunities. Moving on to the right-hand side with our outlook. We expect that revenue will continue to grow across a number of our revenue streams. New car margins to be under pressure, but we have good margins in service, parts, aftermarket, and finance, and we expect those to continue. To alleviate the new car margin pressure, we will continue to focus on those three things I mentioned, our inventory management, our margin initiatives, and our cost control. These remain potential for expansion. There is a compelling proposition. This could be greenfield sites at low cost or an acquisition if we see excellent shareholder value. Finally, our new CEO, Andrew Doyle, will commence on the 1st October, and we look forward to welcoming Andrew to our business. Slide seven, let's move now to review the business, and to slide eight, which shows the main areas we'll cover. In this review, in slide eight of our business, we'll take a few minutes to talk about each of the following. One, growing revenues, our back to basics in our operations, our three focus areas of margins, costs, and inventory, the change to electric vehicles in our industry, and finally, our expansion strategy. Firstly, slide nine shows what's happening with revenues. The chart at the top shows national new vehicle deliveries, and you can see that that has increased from very low levels during the pandemic. The shaded areas shows the drop in vehicle sales. The square box shows the vehicles that are one to four years old, that were sold in the period mid-2020 to mid-2023, and we call that our service car park. That is, the vehicles that are most likely to be serviced with us. As you can see, the number of vehicles in the inside that service car park will be increasing for the next three years. This means our service and parts revenue will continue to rise over the next three years. The bottom left chart shows our order rate or order write rate and delivery rate. You can see that our orders used to be above our deliveries, and that is now no longer the case. On the bottom right chart is our order bank, which you can see is reducing. This shows our order bank has reduced by just over a third from previous years. It is still a good size, although I know that the age profile in the order bank is getting shorter. We expect the order bank will continue to reduce in the months ahead and continue to underpin strong revenue in the short term. I'll now hand over to Victor Cuthell, who will talk us through slide 10 and lead us into the financial results. Thanks, Victor. Thanks, Paul, and good morning, everyone. So on page ten, we will talk about building basics in our operations. Starting on our core business, organic growth is a key focus and is an area where we use our size and scale advantage to achieve more for our shareholders and customers. To highlight a few examples, we have national support functions in areas like finance, administration, HR, WHS, where we use our scale to achieve efficiencies. We have the CapEx to improve our business and to roll out website improvements and other items that improve our customer journey. We're large enough to attract and retain senior operational leaders who can see their career grow and who can flourish with us. We can use our buying power to secure favorable supplier terms. We have succeeded in delivering organic growth across most service lines. In new cars, we achieved 6.5% like-for-like growth, and we see good volumes continuing. In used cars, we are getting more trade-ins from our customers, and we are seeing some increasing used car sales as a result. It was great to see 18.9% like-for-like revenue growth in service and 9.8% in parts. This is underpinned by the factors mentioned on the previous slide, and we expect service and parts revenue to continue to grow. This is especially attractive given these are higher margin service lines. Our finance and insurance income has been lower, and I think increasing interest rates have made customers more inclined to shop around and less inclined to buy on the day in the dealership when making their financing decisions. As customers get used to higher interest rates and as delivery lead times are now a lot shorter than they were, we see clear opportunity here. All of this is underpinned by a level of diversity in our income streams and in our business. We operate across three states with more than 30 brands and in all vehicle segments, from the volume segment through to premium, luxury, and super luxury vehicles... Turning to slide 11, I wanted to focus in on the biggest factor currently affecting our industry. Inventory increases have caused overstocking in some brands, leading to dealer discounting and lower margins. This slide talks to the actions we've implemented to tackle this area. Firstly, we enhanced our inventory management program. This involves a lot more tracking, reporting, managing the inflow of vehicles, working with the OEMs in problem areas, moving vehicles between sites, and a whole range of activities. In some cases, we implement hard limits on inventory levels and create a project to address a particular location. We strengthened our inventory management during the second half of the year as our inventory was increasing. We were very pleased with our results and with getting our inventory at the end of the six-month period, back down to the level it was at thirty-one December. Inventory levels have an impact on our margins and on our holding costs, so it's an important area for us to continue in FY 2025. In addition to inventory, we also implemented other margin initiatives. You can see that we had a range of initiatives to drive our margin. Some that I would call out are reviewing our labor productivity, especially in the service area, managing our overtime and our labor costs more generally, revisiting our remuneration schemes to ensure our whole team are focused on margin, implementing cost recovery actions to ensure all of the costs embedded in gross profit are being recovered. Our focus on margin improvement initiatives will also continue into FY 2025. Next year, we'll also see a lot happening in the electric vehicle space. So we'll turn now to slide 12, which talks to that area. Starting on the top left, you can see what is currently happening with sales of new energy vehicles. As you can see, hybrid vehicles have seen their market share grow from 6.6%- 2.9%. This has been caused by a range of factors, including, we suspect, a cohort of customers who would like a lower emission vehicle, but they still have some reservations about full electric vehicles. Those might be concerns about range, or resale value, or infrastructure, or maybe some of the overseas reports. This is being reflected in sales of battery electric vehicles, where their market share has crept up from 7.4% - 7.9%. Looking to the next few years, we will see the Australian Government's New Vehicle Efficiency Standards commence from 1 January 2025, and then take full financial effect from 1 July 2025. Over time, we would expect high emission vehicles to become more expensive and in shorter supply. We suspect there will be strong competition in the new energy vehicle category, but a lot depends on the OEMs and their approach to the New Vehicle Efficiency Standards. We think that will become more clear in the next twelve months. Whilst this is a difficult area to predict, our job is to meet our customer needs and help them choose a vehicle that suits their own particular requirements, whether that is electric, hybrid, plug-in hybrid, or a traditional ICE vehicle. We're ready now. We have a range of models at different budgets. We've trained technicians, on-site charging, and knowledgeable staff. We'll continue to invest and develop in this area in FY 2025 and in later years as well. I'll turn now to our expansion strategy. On slide thirteen, you can see that our business has grown threefold in the last seven years. As you can see from the chart on the left, acquisitions have been a key contributor to our growth, and we have a strong track record. We carefully consider prospects based on EPS accretion, maintainable earnings, brand representation, and of course, strong operations and teams that fit with the Peter Warren culture. The opportunity for synergies is a key element to the success of this strategy, including factors such as geographic location and operational alignment. There is still opportunity for us to expand. We operate in a very fragmented market with all of the infrastructure in our business to add new businesses. We have the expertise, the leadership, the funding, and really all that is required for our expansion strategy. Having said that, the market is changing. Profits are reducing, new entrants are joining the market, regulations are changing, and I'm sure there will be some changes in market share. So as the market changes, we should modify our approach. The case is still there to expand and add businesses over the longer term, but the current conditions mean that we have to be a little more careful in what we buy. We need to make sure that the earnings are maintainable, we need to see excellent value for our shareholders, so we want the purchase to be compelling. So our plans are to continue our expansion strategy, but as the market is changing, we are changing our approach, too. The market currently has businesses for sale, and we continue to appraise each opportunity against our criteria. We've completed a couple of very small acquisitions over the last two months where our criteria were met. That completes our business review, so I will now turn to page 15 and our financial review. You can see here on page 15, that we have consistently achieved strong growth in revenues over the years. Our FY 2024 revenue increased to AUD 2.47 billion and was up 19.4%. That organic growth occurred across all of our new cars, used cars, service, parts, and aftermarket products. Total industry new car volumes grew as vehicle supply increased, and we delivered a record 32,429 new vehicles in FY 2024. However, our underlying PBT reduced to AUD 56.8 million, mainly due to two factors: the new car margins that we talked about earlier and the increasing interest costs. We'll dissect these factors over the next few slides, starting with the P&L on page 16. Starting with revenue growth, our 90% growth splits into two parts. 13.1 percentage points came from our acquisitions, and 6.3 percentage points were driven organically. Our gross profit percentage reduced from 18.9% in FY 2023 to 16.9% in FY 2024. This reflects the reduction in new car margins that the industry has experienced since FY 2022, and I'll talk about this on our next slide in a moment. Our operating expenses have been a very big focus this year, and we are pleased to see that this has reduced from 12.2% of revenue to 11.5% of revenue. This reflects both our strong cost control and our leveraging of fixed costs as we grew volumes and revenues. I'll dig further into our OpEx in a separate slide shortly. We've also called out three areas of one-off expense: acquisition expenses, legal costs, and restructure costs. We're not immune to rising interest rates, and with the higher interest costs of AUD 15.8 million being incurred in comparison to last year. AUD 5.7 million related to higher interest, higher interest rates, and AUD 4.5 million to increased inventory, and AUD 5.9 million from acquisitions. Our inventory balance is the most controllable of those areas, and that's an area we are heavily focused on. Our bottom line, underlying PBT, reduced from AUD 81.9 million - AUD 56.8 million and was within the range of guidance that we provided during May. Looking forward, we expect a continuation of some factors here, continued revenue growth, a lot of cost control, and leveraging of the fixed costs as volumes increase. Turning to slide 17, we'll dissect our gross profit percentage movement on this page. Starting at the top, you can see that our gross margins have reduced since those peaks in FY 2022 of 20%. The reduction in margins follows the increase in vehicle supply, shown in the black dotted line. Global vehicle production has increased post-COVID, and this has fed into higher dealer inventories and increased discounting by dealers. Our gross profit margins have reduced from 18.9% last year to 16.9% this year. The bottom chart breaks down the 2% movement in margin and shows that 1.2 percentage points of that came from new car margins. 0.7 percentage points came from our acquisition of Toyota dealerships, which have a lower GP percentage, but still a very strong PBT percentage. Our margins were stable in most other service lines, parts, service, finance, aftermarket, and used cars. This reduction in margin is significant and is the reason why we have put so much effort into our programs this year: our inventory reduction program, our margin improvement initiatives, and our cost control program. Slide 18 covers our cost control, and we were very pleased to see our OpEx reduce from 12.2% of revenue to 11.5%. Our cost control program saved AUD 9 million per annum, incurring AUD 1.3 million in one-off costs. We took actions on cost recovery, we reviewed our pricing schedules, and the areas where we did not fully recover our costs were also tackled. We also took steps to hold firm on some of our costs as revenues increased. That meant more of the benefits from the increased revenues flowed down to the bottom line. We did have some costs go up during the period. Obviously, our acquisitions added costs, and we also had insurance costs go up by AUD 2.8 million. Once we've taken out a lot of costs, we'll be continuing this program into FY 2025. There are still opportunities around, and I'm shining my spotlight on some of the areas noted here on the page: labor productivity, more supply tenders, changing our processes. There's always opportunity on costs, and we'll continue our focus on this important area. Turning to page 19, we show our cash flow statement with operating cash flow conversion of 85.6%. This is based on operating cash flow as the floor plan interest. The strong cash generation enabled us to invest in dealership CapEx. This included some EV readiness spend, but also the refurbishment of some of our dealerships. We also took steps to manage our interest costs by paying down borrowings and by funding some of our acquisitions from cash. Moving on to slide 20, our last financial slide shows our net debt and property position. The key takeaway here is the low net debt that we have in our business. We have 27% LTV and a net debt to EBITDA ratio of 0.6 x. This creates headroom for acquisitions, but we will, as we say, be very focused on getting excellent shareholder value in making any acquisitions. On dividends, the directors have declared a final dividend of AUD 0.06 per share, fully franked, with the record date for determining the entitlement being 4 September 2024. The dividend will be paid on 2 October 2024. That completes the financial review. I shall now go to page 21 to cover a few points on the outlook for our business. Firstly, we expect our revenues will continue to grow, especially in parts and service. We expect margins to continue to be favorable in service, parts, aftermarket, and finance. However, new car margins continue to be under pressure. As a result, our big three focus areas for FY 2024 will continue into FY 2025: our work on managing our inventory, our margin improvement initiatives, and our cost reduction programs. On the energy transition, our focus will be on providing a range of fuel options to our customers, so they can choose the options that best suit them. We're fully ready now. We have more than 17 new energy models available, and we support the transition to cleaner fuels. Potential expansion remains a key part of our focus, but we'll modify our approach to reflect the changing business environment. We're looking forward to seeing Andrew Doyle on 1 October, when he will join our business as CEO and bring his experience and his talents to our people. That concludes the presentation part of today's call. 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. Both Paul and I would like to take the opportunity to thank the team for their hard work over the year, and we'd also like to thank you, our investors, for your support and your interest in our business, for spending your time with us today. We know there's a lot on this week. Paul and I will be delighted now to take any questions that you have. 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 two. If you are on a speakerphone, please pick up the handset to ask your question. Our first question is from the line of Phil Chippendale with Ord Minnett. Please go ahead. Hi, Paul and Victor. Thanks for your time. First question, just on the inventory management, just on slide 11, you gave eight sort of sub-bullet points there about how you achieved, you know, a really strong outcome in terms of the inventory management over 2024. Can you just talk to, perhaps one or two of the sort of key drivers of that, of that performance? And then secondly, just given the strength of that, achievement in the last six months, does that not make it a little bit harder in the next sort of six to 12 months to maintain a similar sort of level? How about I kick this off, Phil? Obviously, there's a number of measures you can do on inventory control. You can go on manual release, which is holding the stock back from it coming in. You move stock around at dealerships in terms where there's, you know, one product's heavier, you move it to another dealership. You incentivize your DPs and managers. So they're just one of the few that we've implemented to make sure that we put targets on them to get back to the levels in December for them by June. So there's a number of things that we've put in place to make sure that the DP, or the Dealer Principal, and all these managers and sales managers are all aligned to achieving those goals. Victor, is there anything you'd like to add on that? Yeah. I think you just... Phil, you asked about our ability to continue that into the next twelve months. We do expect to continue to achieve results in relation to inventory. Yes, it's always the first couple of runs are always the easiest. But we do see more opportunity in this area, and we are going to be focused on that in the next six months. Okay, thanks. Just touching on the OpEx reduction, and you've reduced that sort of OpEx as a percent of revenue down to 11.5%. You know, you've spoken about your FY 2025 efforts, and you're gonna continue to focus on sort of optimizing there. Do you think that percentage can continue to trend downwards over FY 2025? Or do you feel like you know, a flat performance there would be a pretty reasonable outcome? My experience of this area is there's always more. It's my job to make sure that we continue to go around different parts of the organization and pursue that. I do think that we will continue to achieve a bit more cost reduction, and we would look to see that 11.5% come down. We don't give formal guidance, so I won't say, you know, what we'll get it to. I don't think it'll come down by another 0.7 percentage points, but we do hope to see that number- Yeah. Improve over the next six months. Okay, thanks. Thanks. Just on slide 10, you've made a comment on the finance and insurance sort of performance. And that revenue is sort of, you know, if we look at those comparisons, it has languished a little bit. You've pointed to growth drivers being the shorter delivery lead times. Can you just unpack the dynamic there over the last six months? Obviously, lead times are coming down already. So, I just wonder if there's a little bit of a delay in terms of actually seeing that F&I performance improve. Is that- Well- is that a fair statement? Yeah, Phil, definitely you're seeing improvements because, again, in some lead times, we're out to six and seven months and eight months, right? and people have got more time to shop around, look at alternatives, et cetera, but when now you're sitting there and you say to a customer, "Guess what? You can take the car at the end of the week or four days, five days," that availability of being able to put the customer in the car, get the trade in as quickly as you can, rather than being able to shop around or think about or listening to other people, is definitely an advantage, and we're seeing that helping us, our situation at the moment. Okay, thanks. I'll jump back in the queue. Thanks, Phil. Thank you. The next question is from the line of Elizabeth Miliatis with Jarden. Please go ahead. Morning, Elizabeth. Good morning, and thank you for taking my question. Maybe just briefly on the inventory levels, to go back to the earlier question. You made a comment that you'll be trying to bring down the inventory levels back to sort of the December levels last year. Like, how long do you think it will take for you guys to get back to those levels? No, no, I said in my - sorry, so we said in the statement that basically like for like, we got our June inventory back to the levels we had in the thirty-first, right? So we've achieved that. We achieved that at the end of the June, and I see that being maintained and if not improving, you know, in terms of what we achieved. So our June result, in terms of inventory, like for like, was the same as December 21st, 2023. So I don't know if I put that across clearly, but definitely the June inventory figure was exactly the same as December 31st, when you compare like to like, and I think that that's a good situation to be in and a- Mm-hmm. A good way to move forward as we go into this financial year. Yeah, sure. Sorry, it was probably me. Apologies for that. And then perhaps just on the margin, the gross margin, are you able to give us a bit of a steer in terms of how much sort of margin compression, you know, we should anticipate broadly for the new car, margins coming through? Or, are you not happy to give sort of color on that? Thank you. Elizabeth, I'll just kick it off, but I think you just hit the nail on the head. I think the only thing we should be talking about is if a new car margin compression and talk about that. I think parts service F&I is continuing to remain strong. Used cars, great. So I'll hand it over to Victor to talk about new car margin and where he sees it. I might add a bit in the end as well. Yeah. So I think new car margins will continue to remain under pressure. And so with possibly a further deterioration in new car margins of a little. In terms of the mathematical terms, what do we expect into over the FY 2025 year? Again, we don't give formal guidance, but what I would flag is that, and you would be able to derive from our numbers, that our second half margin for the FY 2024 year was 16.3%. And so that's an indicator of the kind of run rate that we're at. So that's not a. So I don't expect a lot of deterioration from that point. But I think the FY 2025 full year number will obviously be more in line with run rate than with the whole of the FY 2024 year. Elizabeth, if I could just add to that. The other impact is that the last six months of the financial year, we've seen record high inventory levels, not only in our group, but throughout the industry, OEM levels and all that. I expect that pressure to change in terms of everybody having what I call the hitting of heads situation and getting back to sort of managing their stock a whole lot better, which I see personally, that the compression on margins in new cars won't be as significant in terms of that downward spiral as it was in the last six months of the financial year. So summary, I see OEMs and dealership groups going, "Wow, we're up there. We had all this inventory, and we've discounted. I don't see that pressure as much because I think we've got our house in order a whole lot better than where we were. And I think OEMs have sort of said, "Wow, what have we done here? And what, and how is that profitability of it, of our dealerships?" So hopefully that adds a bit as well. Yeah, that's fantastic, and if I can sneak one more in as well. Obviously, given the sort of challenges across the market, you know, from an inventory level or, you know, margin level, perhaps some of the smaller dealers will be under pressure, but yet, it sounds like you're a little hesitant to go make acquisitions. Do you feel like it's a good opportunity to go in and buy a few things that you can then roll up into your group and extract some costs, or you know, you're just being very focused on your business and maybe doing a little less acquisition versus maybe the last few years? Elizabeth, I'll just add a little bit. Victor and I were on an industry conference call the other day with countries around the world, and they talked about M&A at the moment as onesie twosies, right? And I go: What's onesie twosies, right? And they go, "Oh, well, all the bigger groups are sort of probably sitting back a little bit, waiting for that." The onesie twosies, the people with, you know, smaller operations, are putting their hands up and saying, "I've had enough of this, I'm out." So pretty much in line with your comment, I see probably the smaller people thinking about, "Well, do I want to keep going ahead with this, or is my time... You know, it isn't gonna get back to where it was in 2021, so around the world, they're calling it the onesie twosies, where the littler guys are saying, "I've had enough of this, I'm out," and that wouldn't surprise me if that's what happens over the next year or so in Australia. Yeah. So we will make acquisitions if we feel that they're compelling, right fit for us. But we've got to make sure we are building properly and make sure the earnings are maintainable, and we're getting good value for our shareholders. Yeah. Okay, awesome. Thanks so much. Thank you. Thanks, Elizabeth. Thank you. The next question is from the line of Jack Dunn with Citi. Please go ahead. Morning, Jack. Morning, Paul. Morning, Victor. Thanks for taking my questions here. I know it's been done to death a little bit on inventory, but I'm just trying to get an understanding here of when you think sort of the oversupply to Australia could sort of go back to normalized supply levels. And I understand most of this is driven by the OEMs. So is an expectation that they've ordered already, so calendar year 2024, they can't do much about it, but calendar year 2025, they can rightsize it? Yeah. So, I think the color I would provide is that a number of the OEMs who found that their stock levels were getting high took action to address that and communicated that to us a number of months ago. And so, some actually just before the December period, but more in the January, February, March period, saw their inventory levels going up. Well, in our industry, if they're placing production orders during the month of February, it's a few months, at least two months before that vehicle's arriving here, more like three months typically, till it arrives here. And then it takes a little bit of time to get onto the forecourt. So we think that a number of OEMs have already pulled the levers to tackle this area. It's not universal, of course. There's every OEM is different, but we do think that progress is being made in the industry in this space. Jack, I don't want to steal Paul here, I just want to add one thing. The NVES system that comes in effect, it comes in from January one, but really doesn't take effect till from July first. So what we've got to understand is what OEMs stock they're gonna bring in between January and June. And you know, I don't know that, and nobody knows that, but some of them might choose to bring in less, some might even choose to bring in more. Because you know, once it's landed in Australia between January and June, it doesn't apply. It's from July onwards. So at the moment, nobody's declaring that, because it's all product driven and strategy driven. But I think that's something that we as a group have got to really be mindful of and watch who's doing what and how they're doing it and what products. So, hopefully that adds a bit as well. Yeah, no, that's great. Thank you. And just on the... You mentioned a couple have gone, couple of OEMs you've gone with manual release. Yes. Are you looking at removing the manual release anytime soon, or are those OEMs still- In some, I don't want to get specific, Jack. Mm-hmm. Some cases we have removed those, and that's honoring, I guess, the relationships we have with OEM. We don't go onto manual release easily. Mm. We talk to the OEM, talk about what products are coming. We try and move our products around within our group. So they know we try and do that, and as soon as it's right, in terms of getting off the manual release, we do so. As I've said, we've come off a number of them, or a couple of them, and everybody, or all the OEMs know what we're endeavoring to do and where we are on that one. I think it just enhances our relationship with them. Yep. Perfect. Thank you. And, gross margin, I know you talked about this before, but trying to get an understanding of how maybe gross margins on a new car compares to pre-COVID. And if you look at 2019 and 2027 as comparison points, where are you today versus those sort of levels? So again, we don't quote hard numbers, but directionally, our gross margins per vehicle sort of currently higher than they were in the period immediately post-COVID, so immediately prior to COVID- Yeah when there were some circumstances where all parts of the industry and almost all brands were absolutely stuffed full of vehicles, and I think I would describe it as our margins are a bit above- Yeah the those margins. But it varies by brand as well. You know, we're again, getting specific on brands. Some of the brands haven't come back as much, some of them, you know, have come back roughly the same, but it varies by brand. Okay, perfect. I'll just ask one more, and then I'll jump back in the queue. Okay. Just on- Yeah. I'm sorry, Jack, if you could. You know, apologies to interrupt you there. If you could please jump back into the queue. Okay, no dramas. Sorry, Jack. Thank you. Sure. The next question comes from the line of Sarah Mann with MA Moelis Australia. Please go ahead. Morning, Sarah. Morning, guys. Thanks for taking my question. Just a question on, I guess, kind of the order book. So obviously, if you look at that slide that you put, you can see that the order, right, has broadly matched deliveries, yet the order book is down. So just wondering if that implies that you're seeing an increase in cancellation rates, and so maybe where the cancellation rate is sitting versus historical levels and any color around the drivers there. Sarah, just before Victor answers this, I should talk that that relates—the order book relates only to new cars. We're finding new car order book, order rate remaining the same, if not higher. So Victor, I'll leave you to talk about new cars, please. Yeah, great question, Sarah. A couple of clarification points, first of all. So the solid lines on the left-hand side of the graph are like order take, and the order bank on the right, the total for not like to like. And so one of the items to flag is that our acquisitions, which we had one at the start of the year and 1 March, are an area where we have seen our order bank reduced. In particular, we purchased two Toyota businesses at the start of FY 2024, and we made some inroads into the order bank in that brand, and that is a component of the answer, if you like, where the order bank is reducing, but the order take and the deliveries are aligned, and the second thing is exactly as you said, there is a cancellation aspect that we have experienced, and we had back in the heights of COVID, there were some individuals who placed orders with more than one dealer in fact, and so we have experienced a cancellation with order bank that's higher than what would have been the case in normal trading conditions two years ago. And so those two factors combined are the cause of the order bank reducing at a time when like for like orders are close to delivery levels. Sarah, the other thing, just adding to what Victor said, is that the order bank decrease also varies by some brands as well. And so they're repositioning themselves in terms of price points and product, so it does vary by, you know, by OEM brands a little bit as well. Okay? Great, that makes sense. Thank you. And sorry, this is just another question on, I guess, kind of inventory, but you have kind of mentioned that some of your OEMs recognize that stock levels are kind of too high and have been working with you. But we're also moving into a market where there's gonna be increased competition from new entrants, which you guys also flagged. Just interested in, I guess firstly, what some of your OEM partners are doing to try and help incentivize you guys to move the excess stock. And then secondly, how they're thinking about market share moves in light of new competition coming in, potentially at a time when the market demand could weaken. So yeah, first of all, what are OEMs doing to incentivize the reduction of inventories? And I think the single biggest thing they're doing, of course, is getting back on TV and doing more campaigns. And if you just need to switch the TV on the way you go on, to see that there's a return to the levels of... Sorry, not to the full levels of marketing that used to exist, but at least some level of marketing going on. That varies considerably from OEM to OEM. At that stage, that's the largest driver in terms of incentivizing or changing the demand for vehicles. But probably the area where they're most active is in changing the orders that they are placing and the flow of vehicles into Australia, and so we have dealer councils, where we engage with OEMs, and they, we speak to them, you know, one to one or in a group, and they advise us that they have reduced the number of vehicles that they've placed for the forthcoming production orders. Yeah, and Sarah, I just add a couple little things to that as well. I probably have seen more transparency now from OEMs than I've seen before, where they're sitting down with dealers and saying, "Because, you know, we're all high on inventory," and they're taking us through what's gonna hit us in the next few months and helping us plan our inventory a whole lot better. You know, I haven't seen this for a long time, where they've actually sat down in front of us and said, "Okay, this particular model there, this is what's gonna happen over the next three or four months. This is what we're bringing into Australia." And being a whole lot more transparent with us as dealers, so that you can sort of understand what you've got in front of you and how you plan your sales force, how you plan your marketing, you know, a few months out. That didn't use to happen a lot, but they're endeavoring to try and help us manage our inventory, 'cause our problem is their problem as well. The only other thing I would add is that what also has happened is, if you went back some months or six months, you had a problem with our ports, in terms of ships coming in and whatever. The biggest problem in Australia at the moment is where they're storing the vehicles, and the cost. It is a huge problem that the OEMs are the costs that they're incurring, and so it's in their advantage as well, because they, they're finding it hard to you know, to keep cars on, to show, to put cars on land. And it's costing them a whole lot of fortune. So it's... There's a number of areas that are impacting as well. Thank you, guys. Final question from me. So just looking at your portfolio, with the new vehicle efficiency standard commencing from next year, like, how comfortable are you that your existing brand portfolio can supply sufficient vehicles to comply with the standard? And then on top of that, like, are there any other new brands that you'd like to, add to your portfolio that would, I guess, kind of help you make that transition? Okay. So how about if I kick this off? I think, Sarah, you'd acknowledge that we've got a very, what I call breadth of brands, you know, the top right up, super luxury, down to the, you know, down to the lower volume. So we've got a breadth of brands, where we can sort of, as we've indicated earlier, put on the, what I call the, on the shelves, take somebody off there, put that there, in terms of our Auto Mall strategy. So we're very much attuned to that. I think none of us at the moment, in the dealer world, really understand who OEMs, what they're gonna do under the new system by July next year. Remembering that they're out there working out their strategy, what brands, what models they're gonna bring in, at what pricing and whatever, and honestly, at the moment, we don't know as dealers, right? We know that there's some that have an advantage over others, but we're not fully exposed to what their strategy is on models, pricing and whatever. So at the moment, we've got to be. I think we're in a great position with our breadth of brands, with our OEM relationships, but at the moment, it is really fair to say that we don't know who's gonna do what, on exactly what product, and exactly what pricing. We know that the Chinese, there's gonna be more entrants, and I would say, as a group, we're being quite conservative and careful on that.... And I think we should remain careful and conservative of that, and just not take every opportunity, but consider the value equation for the company. Victor, is there anything you want to add to that? No, I agree with all that, Paul. Okay. Great. Thank you very much. Appreciate it. You can take my questions. Thank you. The next question is from the line of Kieran Harris with E&P. Please go ahead. Oh, hi, Paul and Victor. Just in terms of where you came in, relative to guidance, sort of towards the top end there, I mean, it sort of implies that your end of financial year sales were quite, quite strong. So is it fair to assume that they came in a bit ahead of expectations? And could you give a comment perhaps on, you know, how sales momentum has persisted post end of financial year? Sure. So we did come in further up the range. And I think there was a few things going on. We did see OEMs more active with campaigns in the June period, and that helped. And we also had quite a bit of push in our business to make sure that we, having issued guidance, that we got a decent result. In relation to the volume of business, you would have seen on the graph that Sarah mentioned a few moments ago, where we had order takes shown on the left-hand side, and you would have seen on that that there was a bit of an uptake during the month of June. And we don't see that seasonal. We consider that part of the end of financial year thing that's coming back into the Australian automotive space. In the period post 30th June, we've seen our order take-up broadly consistent with what it's been in the period leading up to June, over the last two or three quarters. So we haven't seen... I know there's a lot of retailers reporting at the moment. We would not call out that there has been a step up or a turnaround or a change in the volume of retail business that the Australian customers are putting to retailers at the moment. We would see that order take-up as simply normal seasonality. Sure. We would want to see a number of more data points before we call that the turning point. Great. Thanks for that, and just want to pick up on a comment you made at the May update, where you said that margins and performance are expected to remain above the level seen pre-COVID, so I notice you haven't repeated that particular statement. Could you just confirm whether that's that guidance still kind of stands, and just give a bit of context, whether that's referring to gross or underlying ROS. Yeah. So I think, well, first of all, it was not our, it was not our deliberate intention that we omit that, that statement that we, that we made previously. And we do expect gross margins to remain a bit above what they were in the, in the year prior to, prior to COVID. And in relation, and that flows through to PBT percentages as well. We're, we're a little bit above where, where we were prior to COVID, and we would expect to remain a bit above prior to COVID PBT margins. Great. Thanks for that. And just one last one. You've mentioned again, M&A being a focus. Could you just kind of talk to where you can, I guess, what is realistic with the balance sheet and, you know, the current facility being more or less maxed out at this point? You want to go to that? Yeah. So our view would be that our facilities are quite big, quite substantial, and we... I'm sorry, let me rephrase that. Our funding capacity we consider to be very high. We have a very low LTV, 0.6x. 0.6 x EBITDA. Well, what we've actually got in terms of facilities available to us, and we tend to put facility in place, use it, and then pay it down. And we have the ability with some of our finance partners to go to them and input a new facility in place, and increase it, and have it there within a very short space of time, as a week or two, because some of the OEM financing partnerships we have are extremely strong. So our view isn't really that we're maxed out. Our view is that we have lots of debt capacity on our balance sheet, and if the right acquisitions become available to us and we assess them in the criteria that we talked about, then we would proceed to buy. Wonderful. Thanks a lot. Thank you. Thank you. The next question is from the line of Jack Dunn with Citi. Please go ahead. You're back, Jack. I'm back. I'm back. Can't get rid of me. No, just last question. On the revenue growth you're expecting FY 2025, I'm just interested in what your thoughts are on the new car side of things, and how you're seeing demand for the new car market. I know we're about a 1.26 mark in FY 2025, but what are your thoughts going into FY 2026 on the total cars in Australia? Yeah, that's a great question. So you've seen on our graph that we deliberately called out that we're at a pretty high level of 1,267 in terms of the number of vehicles sold to 30th of June. And so that's a big number, but we do expect volumes to continue to be strong. And I guess the reason for that is that if you look at some of the data that's available, the age of all of the vehicles on the road has been getting higher over the last couple of years. That's because there are many people who have not yet renewed their vehicle.... So, where people have not yet renewed their vehicle, that's total something like 300,000 or 400,000 missing vehicle sales, I think is the phrase the industry uses. And of that 300,000 or 400,000, we've probably only seen maybe 70,000 or 80,000 of those vehicles purchased in the FY 2024 year. There's still missing vehicles, if that makes sense. Yeah. That becomes apparent in the age of the overall Australian car park. That car park age was very, very stable and solid for many years, but has ticked up quite a bit in the last few years. So we think that the people who have the five-year-old car, the 5.5 year-old car, are still gonna be interested in replacing it at some point, and we can see - we would expect that total industry volumes would remain high. I'm not gonna call out 1240, 1260, or 1280, but we don't really see it going to- No. You know, 1,150 or 1,100 or anything like that. Okay, perfect. Thank you. Would any of your thoughts on the new car demand be around current interest rates? If they stay higher for longer, does that change your expectations? No, I think we've got what we've got at the moment. Obviously, the cost of living pressures and, you know, all those sorts of things impact our retail deliveries. Fleets, Jack, fleet's quite strong. We're quite a big fleet player. So fleet and government remain, you know, very buoyant. Our biggest problem is actually getting the equipment to the truck and all that sort of thing out the door. I'd hate to tell you how many, you know, orders we've got sitting there. But so I see fleet and government, which we're quite strong in, remaining very strong. I see used cars remaining strong, obviously parts, service, all that. New cars, we're not seeing a big drop in... We've seen a little drop in orders, order intake, but nothing off the back, you know, falling off a cliff or anything. Perfect. Thank you so much for taking my questions. Appreciate it. Thanks, Jack. Thank you. Ladies and gentlemen, due to time constraint, we conclude the question and answer session. I now hand the conference over to Paul Warren for his closing comments. Paul? Okay. First of all, thank you very much. And again, as Victor said before, thank you very much to our team that, in difficult times, have really put in a fantastic effort. Lots of long-term employees, lots of people that have joined our business recently, but our team is fantastic, and I just wanna say thanks to that. To our investors that keep sort of supporting us and being with us and listening to us, from Victor and I, thank you very much. And again, thank you for in this special, you know, very stressed period of time for you guys, thanks for giving us that hour today. I appreciate it. Thank you. Good morning. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your lines.