Ann: Investor Presentation - Independent pre-owned cars, page-3

Mr Thornton began answering analysts' questions.

COVID-19 has created a headwind with huge competition for used car supply.

Mr Bigley (ex WES OfficeWorks) said the two previous (pre merger) businesses are no longer operating in silos.

The APE brand already sells c.60000 used cars per annum while easyauto123 is selling 12000-15000 pre-owned vehicles per annum.

APE will concentrate on sourcing. As the brand grows with increased credibility, this will happen more.

In easyauto123, the mix of vehicles for resale varies. Fleet management organisations (non owned) cars are 30-40 per cent of its stock, then 20-30 per cent has been traded in or within APE, and rest from auctions.

APE doesn't chase high gross margin cars just because they deliver that: the aim is to grow the business as a whole.

Growth accelerators and enablers include the online experience, this being done in-house, with a high calibre chief information officer. Customers can if they choose do 60 per cent of their experience 'on their home sofa' or even click and collect if they wish.

Nothing have been spent on advertising easyauto123, and nor are there plans to spend huge amounts on marketing. It's all about the online experience (which I assume means 'search engine optimisation').

The analytics are relatively low cost as this includes access to transactional data: quite unique and exceptionally powerful. This supports face-to-face consultants' productivity as they deal with customers.

No plans for roadside car vending machines!

Funding for APE comes from captive financiers keen to fund the easyauto123, so no reason to believe APE will have a capital raising for easyauto123. By (December 2020?) APE may have next to no debt other than mortgages on properties.

50000 units (sales) of used cars per annum for APE's easyauto123 is the aim with seven capital city sites.

There will be a transfer of unprofitable cars from the franchised automotive part to easyauto123 but this is built in to forecasts.

APE owns 100 per cent of easyauto123 brand in Australia and NZ. It had some issue up to June 2020 with another company but that has been finalised. The MD Mr Ward did not want to go into further detail.

APE has learnt during the past five years to not allow consultants with easyauto123 to negotiate: it isn't the business model.

Mr Thornton said that when COVID-19 hit and the Federal Government allowed early access to superannuation, there was a huge immediate pipeline of prospective used car purchasers.

There have also been challenges around financing with responsible lending requirements. APE has access to outsiders (such as Toyota Finance?)

APE is working towards technology that allows it to penetrate the market better, including (see above) online approval of finance.

APE talks to three or four prospective customers for every one of the 100000 new cars it sells per annum. Potentially it can source more used cars, sometimes into the traditional and sometimes into easyauto123 (the latter being the 'fixed price' model). APE target is to get to one new car sold for every one used car sold, irrespective as to which sales channel. Old and new cars are 'linked transactions'.

For each easyauto123 sale, it is grossing $1400 less than it does with a franchised site (i.e. used car) sale per unit. But significant costs have been removed from APE since the two pre-merger main businesses became one.

Overall, the three gents providing the website had excellent knowledge although it was quite technical. I have no knowledge of this industry so didn't instantly understand every point made.