Autosports Group Limited (ASG) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Autosports Group Limited, ASG, H1 2024 FY results. [Operator Instructions] I would now like to hand the conference over to Mr. Nick Pagent, CEO.

Hello, everybody, and good morning, and thank you for dialing in for the investor presentation for the financial results of Autosports Group for the period first half 2024 financial year. My name is Nick Pagent, I'm the CEO of Autosports Group. And joining me today on the call is Aaron Murray, the CFO of Autosports Group. This morning, we'll start with a brief presentation on Autosports Group covering our H1 '24 financial year highlights, our strategic highlights and objectives, our outlook through to the calendar year 2024. I'll summarize our 2024 first half trading results before handing over to Aaron, who will provide a deeper analysis of Autosports Group's financial metrics, including our revenue drivers, our stable gross margin production, stable OpEx ratios, our normalized profit before tax and EBITDA margins, our cash flows and capital management priorities. I'll then give an update on Autosports Group's consistent growth strategy. And following the presentation, Aaron and I will open up the call to any questions that you have. As we move through the presentation lodged this morning on the ASX and Autosports' own investor site, I will, where possible, note the relevant slide number for anybody following the pack. Starting with our 2024 H1 highlights on Slide 3. I'm pleased to report that Autosports Group has delivered a consistent financial result, which reinforces our prestige and luxury brand strategy and gives us confidence that Autosports Group will continue to outperform in today's normalized market conditions. Our growth strategy has continued to drive balanced revenue growth at 26% above the December 2023 outcome and above our forecast at the -- above the forecast from our December '23 AGM. The market for prestige and luxury cars has remained resilient as supply has returned, with orders written in Autosports Group up 11% on a strong prior corresponding period. These orders continue to support our solid order book. Revenue flowed nicely from the gross -- from the revenue line to the gross profit line, which was up 20% to $264.8 million as Autosports continued to deliver consistent gross margins in the normalized supply market. EBITDA was also up 20.1% on PCP to $107.8 million for the period. Net profit before tax and net profit after tax were impacted by higher interest rates and the AASB 16 lease impacts for the period, with our normalized net profit before tax ahead of the range forecast in our December AGM. The combination of our strong operating profit, consistently high cash conversion and positive outlook has allowed Autosports Group to further improve its dividend to shareholders. Today, we're declaring an interim dividend of $0.10 per share fully franked, a rise of 11.1% on the prior corresponding period. If we turn now to Slide 4 to look at the strategic highlights of last period. The consistent delivery of Autosports Group's growth strategy continues to deliver a strong platform for growth. As Autosports has grown, the consistency of this strategy has strengthened the business, broadened our platform for future growth and enhanced our resilience, particularly in today's normalized trading conditions. Indeed, it is in these normalized trading conditions that Autosports tight brand strategy gives us the opportunity to outperform. We are confident that our brands have resilient customer bases. They're future ready with their product portfolios. They're stable with high revenue and high margin potential. They have lower risks of disruption. And of course, they have the opportunity for meaningful segment consolidation. These beliefs have been reinforced by market conditions in the first half of FY '24. During this period, we have seen vehicle supply free up across the industry. New vehicle margins have normalized. The mix of front-end vehicle sales and back-end service and parts gross profit has also normalized. Within this, Autosports Group has seen increasing customer demand with an 11% rise in our order write during the period against a very strong PCP. We've seen stable gross margins, and we've seen tailwinds continuing in our service and parts divisions. Despite inflationary pressures, Autosports' cost base has stayed stable, allowing revenue growth to flow through the P&L. Controllable costs have been well managed during the period. Inflationary pressures are reducing. Interest costs have also impacted and impacted the PBT growth for the period. However, most of the interest rate rises were completed by March 2023. So the H2 '24 increase is not expected to be as significant. Autosports growth continues to be driven by high-quality luxury brands and high-margin acquisitions. In FY '23, we saw just over $280 million in revenue coming from acquisition-led growth. In H1 '24, we saw $153 million in growth coming from the [Audio Gap] annual growth from acquisitions. And we can also report an improved line of sight on our calendar year 2024 and calendar year 2025 acquisition opportunities. Given these opportunities, our capital management priorities remain simple: strong net operating cash flows will be applied to debt repayment, shareholder returns and dealership acquisition opportunities. Which brings us to Slide #5 in our outlook for the next period. New vehicle supply and resilient luxury demand should enable stable like-for-like revenue versus the PCP in H2 '24. Service and parts should continue above-trend growth as tailwinds continue in those areas. Inflationary cost pressures should stabilize during the period. And as I mentioned earlier, we have a clear line of sight on acquisition opportunities and continue to target at $250 million per annum in acquisition-led growth. If we move now to Slide #7 to take a look at the trading highlights of the business. The first thing to point out is that every revenue stream in the business is up. New vehicles are up 25.7% on normalized supply and resilient demand. Our order bank continues to be maintained at strong levels, particularly at the high end of the order bank. Order banks whilst down in volume are up in gross profit by 13% from the PCP. Order write during the 6-month period, as I mentioned earlier, was up 11% during the PCP, giving us confidence in the outlook moving forward for new vehicles. Used vehicles saw revenue grow at 30.7% during the period. As supply normalized, as used car values normalized, the value of the trading opportunities that we offer inside the business improved for customers. Our wholesale hubs are growing strongly as a result of this normalization in the market, and we are well positioned with our wholesale hub strategy and Prestige Auto Traders business in this area. Other revenue, which includes solid growth in finance and insurance and our agency commissions, was up by 15.7%. Service revenue was up 21.9% and parts was up 26%, which reflects the impact of higher vehicle deliveries in FY '22 and FY '23 starting to return for servicing and the impact of higher levels of prepaid service plans, which have been improving our customer retention. Possibly the most pleasing aspect of these numbers was that Autosports Group was able to maintain its gross margins so well during this normalized trading environment. Our gross margins of 19.7% whilst down from the PCP by 1.1% were ahead of the H2 2023 financial year gross margins. It was in the June quarter of FY '23 that we saw supply return, most of the interest rate rises had occurred, and in our view, normalized trading conditions began again. If we look to Slide #8 and look at the H1 FY '24 financial result. Firstly, it's a very clean result. There's only minor normalizations in the pack between the statutory result and the underlying results. And the AASB 16 movement of $3.6 million for the period was significant. There's some acquisition amortization, minor acquisition costs, which are outlined in the table below the statutory results. Revenues in the business grew by $280 million, with organic growth of $114 million, the cycling of acquisitions contributing $153 million and greenfield revenue growth from our new Ringwood BMW site in East Melbourne contributing $13 million in revenue during the period. Again, important to see that we continue to grow organically by acquisition and indeed through greenfield opportunities. Gross profits, as I mentioned earlier, 20% up as margins held in the normalized trading conditions. [Audio Gap] expenses allowed the revenue and gross profit guidance in the business to flow through the P&L. [Audio Gap] the impact of AASB 16 movements and $14 million in additional interest costs. The underlying PBT, which was what we reported at this time last year, was actually up. Interest costs [Audio Gap] were up 110%, but only $6.6 million higher than H2 '23 financial year, primarily on higher inventories to support a higher [Audio Gap] departments. Supply depth has normalized in the business to 70 days stock, and that level is one that we're reasonably happy with. The interim dividend up 11% to $0.10 per share fully franked. I'd now like to pass on to Aaron, so he can share some further detail on our revenue drivers, margin, cost base and cash flows. Aaron?

Thanks, Nick, and good morning to everybody joining us on the call. If you move [Audio Gap] revenue drivers. Historically, ASG has achieved consistent revenue growth through a mix of organic and acquired revenue. In the first half of FY 2024, ASG achieved revenue growth of $280 million on PCP with $114 million coming from organic growth and $166 million coming from acquired and greenfield revenue. The return of new vehicle supply has seen organic growth in new vehicles of $58 million, up 9.2% on PCP. This has also supported organic growth in used vehicles of $37 million, up 14.7% on PCP through increased trading opportunities. The organic growth in new vehicles delivered over the past 2 years has supported organic revenue growth of $18 million in our parts and service departments, up 11% like-for-like on PCP. Pleasingly, the organic increase in new vehicle revenue will continue to assist revenue flow through the high-margin service and parts departments in the years to come as clients return to service their vehicles. ASG's FY 2024 revenue drivers will be supported by consistent OEM supply of luxury vehicles and continued organic growth in the service and parts departments. If you move to Slide 11, unlocking improved operating leverage. Although we have seen the normalization of new vehicle margins back in the June 2023 quarter, ASG's first half FY 2024 gross margin has improved on the second half of FY 2023, moving to 19.7%, up from 19.5%. In this half, the margins have been supported by improved revenue mix coming through the high-margin service and parts departments. Historically, gross margin has been supported by ASG's long-term strategy of investing in assets that presented high-margin opportunities. This strategy has seen ASG's GP margin improve from 16.3% in FY '19 to 19.7% in the first half of FY 2024. The total operating expenses for the first half of FY 2024 were $157 million against a PCP of $130.8 million. Acquired and greenfield expenses make up $15.9 million of this increase. Organic operating expenses increased by $10.3 million, up 8% over PCP. Increases came in the areas of employee costs, which were up 6% on PCP, largely due to staff commissions, which followed the organic gross profit increase of 7%. Other areas of expense growth came through advertising, marketing and our IT spend, where we continue to strengthen our cyber platform. If you move to Slide 12, margin overview. In the first half of FY 2024, EBITDA margin has improved to 8% from 7.8% in the second half of FY 2023. And despite rising interest rates and inflationary pressures, PBT margin has improved to 3.8%, up from 3.7% in the second half of FY '23. Historically, margins have been impacted positively by continued revenue growth, driving operating leverages over the group's fixed expense base. Historical EBITDA and PBT margins have also been impacted by acquisitions that were running with higher OpEx margins than the wider groups'. The OpEx improvements in acquired sites by using our scale to deliver synergies and better procurement outcomes has assisted ASG in maintaining the group's EBITDA and PBT margins. If you move to Slide 14, cash flows. ASG is a capital-light business that generated strong operating cash flows of $51.2 million in the first half of FY 2024. The strength of the cash generation of the business allows ASG to follow its capital management plan by growing through focused dealership acquisitions, investing in facility improvements to capitalize on organic growth, strategic property investments, and ultimately, strong shareholder returns. In the first half of FY 2024, ASG has continued its aggressive debt repayment structure and repaid corporate debt of $14.4 million, reducing the corporate debt level to $208 million, down from $222 million at the June 2023 half. $11.3 million has been invested in dealership expansion and improvements to maximize productivity and customer experience, and ultimately, support organic growth. And lastly, ASG paid a fully franked final dividend of $0.10 per share, equating to $20.1 million in the period. Moving forward, ASG investors can expect to see ASG apply the same capital management strategy. And with that, I will hand back to Nick.

Thanks, Aaron. I just thought before I turn the call over to questions, I might spend a bit of time on the transition to new energy products and the EV market and how Autosports' strategy plays in with that, and a little bit more on our acquisition strategy. So if you move now to Slide #16. Autosports' consistent strategy has been underpinned by very simple concepts. We want the right brands and we want them in the right places. As we move forward to new energy vehicles, this strategy continues to have us well positioned. The traditional luxury brands are also the safest bet in EV transformation. Traditional luxury brands such as Mercedes-Benz, BMW, Audi and Volvo have leading EV technology. They have higher revenue per transaction. They're growing their EV share. They're resilient in service and parts, and have rapid EV product rollouts that are underway. The luxury consumer is resilient, capable of changing to an EV, and indeed, brand loyal. The luxury market and the luxury brands have embraced EV. As you'll see on the slide, as we move -- on the right-hand side, you can see the 2023 sales results, in which 6 of the brands in the top 12 are indeed prestige and luxury brands. And Tesla leads the market with 46,000 cars. The luxury market had 36% penetration in EVs. And in that, the luxury brands of BMW, Mercedes-Benz, Audi have an opportunity in the next 12 months to target the tremendous share that was generated over the last 2 years by Tesla of 46,100 cars. If I move through from Slide #16 to Slide #17, the Autosports Group strategy for acquisition also plays through to the consolidation opportunities that are making themselves available for us. Firstly, again, Autosports Group is focused on the luxury and prestige segments. The luxury and prestige segment is a smaller area of the market. It's more capable of meaningful consolidation, which supports our go-forward margin resilience. Luxury segments also benefit from higher revenue per transaction, resilient customer bases, and as I mentioned just earlier, EV-ready brands. It is the right sector of the market to grow in. Since listing, Autosports Group has been able to add 12 quality dealership acquisitions, all within the luxury and prestige area of the market. This strategy is set to continue through FY '24 and FY '24 (sic) [ FY '25 ] because it works for shareholders. We are targeting $250 million per annum in acquisition-led revenue growth. In 2023, we grew by $280 million in acquired revenue growth. In the first half of the year, as I just mentioned earlier, we grew by $150 million in the cycling of acquisition growth from the previous period. Why? Well, acquisition multiples are attractive, between 4 to 6x the profit before tax plus net assets. Allocating capital in this area delivers shareholder returns. It delivers a strong return on investment, a strong return on capital employed and immediate EPS accretion for our shareholders. Autosports Group's acquisition pipeline is clear and improving with consolidation of the industry accelerating. You can expect through the next -- through H2 '24 and H1 '25 Autosports to bring acquisition opportunities to the market, and you can expect those acquisitions to sit firmly within the prestige and luxury segments. If I now move to Slide #18 to recap before I turn the call over for questions. In the first half of 2024 financial year, revenue for the group was up 26%, gross profit was up 20%, EBITDA was up 20%, dividend was increased by 11%. The outlook for the business remains stable. New vehicle and customer demand -- new vehicle supply and customer demand should see revenue in the new vehicle areas remain stable on the prior corresponding period. Service and parts should continue above-trend revenue growth on improved vehicle deliveries. Inflationary pressures will continue to stabilize through the calendar year '24. There's a clear line of sight on acquisitions, and this growth will -- the acquisition-led growth is likely to continue through '24 and indeed '25. If I now pause to open up the call to any questions that anyone may have.

[Operator Instructions] Our first question comes from James Ferrier with Wilsons Advisory.

Congratulations on the result. Could we talk about gross margins? I'm just keen for a bit more color on your comments that new vehicle margins have normalized, and whether that's sort of a comment reflected in the first half result? Is it looking at the order book, order writes? Or is it more of a forward-looking expectation?

I'll start with this one, James. And Aaron may jump in after I've finished. But firstly, if I look backwards, James, my view is that supply returned to the market in the June '23 quarter. That -- and interest rates have risen sharply just before that period. So what we saw then was supply freed up for most of the brands. We saw trading conditions return to a normal level. We saw stock depth return to a normal level, marketing return to a normal level. So what we saw then was a normal competitive marketplace. It didn't mean that the margins went back to exactly where they were prior to COVID. There's been a lot of moving parts since then with the introduction of agency, the solidification of our diversity across brands and across geographies, of course. So when we say we believe the margins have normalized, we believe trading has normalized. And our margins are in the range of margins we can expect to go forward. And we believe that's been the case now for about 9 months. Aaron, was there anything you want to add?

No.

And then the second question for me is just taking a step back and looking at where the sort of the sales performance is for the luxury and prestige market, because if you look at the total new vehicle sales market, it's sort of on a rolling 12-month basis at all-time highs. And I get that there's an accumulated deficit and there's an argument around that. But if you just look at the last 12 months, it's all-time highs. Categories like 4-wheel drives and new saw all-time highs. But luxury and prestige segment last 12 months vehicle sales are still well off all-time highs. And I'm interested in your thoughts on that, Nick, whether it's a structural shift or whether there's still sort of supply issues that are impeding the performance in that part of the market?

Yes. So the first thing I'd say is most people when they pull the luxury segment pieces don't include Tesla's volume. And I do. The Tesla customer is the type of customer that buys a luxury car. It's not -- I can't go and get myself a Tesla dealership, but I can certainly in the next 2 years compete for the Tesla market share. So in my view, the luxury segment has gone up to about 160,000 cars and it is close to all-time highs. But as you say, it still has a bit of room to grow and a bit of room to come back. That Tesla share is really share that we have a great opportunity to conquest in the next 12 to 24 months, particularly as our brands bring in quality EVs, with lots of those cars coming in below the FBT threshold. BMW has been first off the mark. They've got 6 cars coming in under the FBT thresholds. Most of them have arrived. Mercedes-Benz not too far behind with cars arriving through the first half of this year. And Audi have them arriving in the December quarter of this year. So whilst we think we've got upside in the total luxury market, we also believe that we've got to look at it including that Tesla volume when we're assessing the opportunity that we have.

Your next question comes from Tom Tweedie with MA Moelis Australia.

Just the first one on the finance side. With the higher interest rates, how are you seeing competition there for finance going in that side of it? And yes, what sort of changed during the last sort of 6 months, if anything?

It's always a competitive segment. We did see 1.5 years ago some difficulties there when we had a long lead time before our delivery -- between the order being taken and the delivery going out. Whilst it remains competitive at the moment, what we're seeing is improving finance retention rates. And we're seeing that because of the OEM financiers, which we had 100% of our business with, producing high-quality lead finance rates. Some of them have vented on the way through, but those high-quality lead finance rates have improved our attachment rates. And I think in the area of the market that we operate in, predominantly having all of our business financed by Audi Financial Services, Mercedes-Benz Financial Services and BMW Financial Services, this has been an area of strength for our business in the last 6 months, and we anticipate it will be an area of strength for us in the next 6 months as well, Tom.

Brilliant. And just my second question to your comments around the NEV market. Can you give us a little bit of a flavor of how the consumer is developing there? Just obviously picking up on industry, things around novated leasing taking market share in EVs, resale values. How -- you go after Tesla's market share. How do you see things developing with the consumers there with your brands?

Yes. There's 3 or 4 things to touch on there, Tom, which I think are quite interesting and support our business model. The first thing is we didn't really have too many cars that could compete under that FBT level prior to this year. We now have those cars arriving. So we've got actually the first time an opportunity to go and look at that share that Tesla have got and provide a viable competitive alternative to that car. And that's really interesting. The mix of our cars moving forward with all of our brands having EVs in these segments has us well positioned for any change in legislation here. And thirdly, the absence of CO2 legislation was one of the inhibitors to Australia getting a quality mix of the luxury OEMs' products. They actually put those cars to marketplaces which were difficult for them, which had CO2 targets. If Australia moves in that direction, then that will shorten the lead time that Australia gets in getting those cars, and that will improve our business mix on the way through. To go right back to the start of your question, I believe the pure EV mix of the Australian market is about 2%, 2.5% at the moment. And the Autosports Group order bank is in excess of 15% pure EV.

Your next question comes from Tim Piper with UBS.

First question is on inventory. I think first point, your inventory half-on-half actually hasn't risen as much as a couple of your other competitors that have -- or sector companies that have reported so far. There's no breakdown of new versus used. Can you just give us a sense on when we think about your new car inventory as it stands at December where that is on a normalized turn basis now? Has it fully normalized? Do we expect inventory to continue rising across the next half?

Tim, my view is inventory will only rise if revenue rises in this area. We've got 70 days stock depth at the moment, which is about right. I think the industry KPIs are between 65 to 75 days stock depth. Inside of that, of course, there's some demonstrator holdings that you've got to have. So overall -- if I could be 5 days lighter on stock, that would be absolutely perfect. But we're sitting at 70 days at the moment, and we're comfortable with that. And I think that's consistent with what I've said to you at the full year.

It's very helpful. Second question just on -- your used car part of the business clearly bounced back nicely in the first half assumingly on supply. That growth rate and momentum in used cars, is that sort of a bit of a one-off step up given the new car supply coming back into the market? Or do you think sort of used car growth can sort of be sustained at that double-digit level in the short term?

It's a return of tradings, Tim. That's pretty much what it was. And so it's got a little bit of legs in the second half of the year, but it will normalize back out to sort of that 5% to 10% growth rates long term. Tim, the reason that it's bounced so much during this period is that in the previous period, there was a lot of people who were trying to sell their cars privately. Used car prices were at high residual levels and people were getting good prices for them if they were selling them during the period they were waiting for their car. With the used car market normalizing, that advantage has gone away from the private seller and they're going back to the pure convenience of trading the car in with us. Now that's giving us quicker access to used cars. And you will recall from our strategy the whole way through this -- we want a used car business which is high margin. We want a used car business that is meaningful. And the highest margin opportunities we have when we buy the car directly from the customer, not through a third party. And that is when we trade the car -- when we buy the car by via the trade insource. So that's why it's bounced up during the period. It's got a little bit of legs left in it, but it will normalize through the period, Tim.

Got it. I'm going to try and squeeze one more in, just the half-on-half gross margin from 19.5% to 19.7%. Is used cars in the half generating a higher gross margin percentage than new at the moment and helping that margin rise half-on-half? Or is it more the growth in the back-end revenue versus the new car growth rate half-on-half that sort of ticked up that gross margin?

Yes. It's certainly the second part of that, service and parts which is ticking up the margin. The used car growth, because it's from trade-ins in that segment, is actually dilutive of margin on the way through. It's fast upturn -- it's good return on investment, but it's slightly dilutive of margins on the way through. So it probably means that the growth in margin from H2 '23 to H1 '21 (sic) [ H1 '24 ] is really even better on an underlying basis.

Your next question comes from Sophie McLaughlin with Macquarie.

Congratulations on a great result. Just a few quick ones from me, please. Firstly, on the M&A pipeline. Maybe if you could provide some more color on the pipeline and what you're seeing there to get to that goal of $260 million per annum?

So what we've seen, and you've seen it in the broader part of the market, is supply has normalized. Some businesses have normalized in profit before tax on the way through. So what we're seeing is no real change in acquisition multiples on the way through. But we're seeing acquisition multiples which have declined a bit and -- sorry, acquisition prices which have declined a bit. And as a consequence, when we look at the business and we look at future maintainable earnings, it's much easier for us to make an acquisition if we believe we're buying it in a normalized trading condition environment. So for us, that's meant that we've been a lot closer to acquisitions than we had been previously. We're very, very clear with some of the acquisition opportunities that we have. We're looking forward to, hopefully, bringing one to market before the end of this financial year.

That's great. And the acquisitions that have already completed, is there further synergies to come through there?

Yes, that's -- the acquisitions that we completed last year at -- in New Zealand -- New Zealand has been a really tough market for retailers over the last 12 months, and we've been delighted with the performance that we've been able to generate out of the BMW business. It says that what we bought was a really, really high-quality business and a business that was very resilient. And we said those things when we bought them. It's performing incredibly well. The Motorline business in South Queensland, again, another BMW business. These acquisitions have the impact of both bringing quality businesses with high margin into our organization, but they also had the impact of growing our share with one of our key brands in BMW, MINI and Rolls-Royce. And so the double impact of those have made those acquisitions fantastic. And they're exactly the sort of acquisitions that if you look forward we would like to do more of.

Great. Maybe I'll just squeeze in one final one. Just a bit on the demand profile you're probably saying on luxury continues to hold up, as you've said. Is there anything else we should be aware of?

No. It's very resilient at the moment. We've had our order write -- the customer orders are up around the same level of 11% month-on-month-on-month through the last 7 months. So that's pretty stable. We still have really deep order banks in the higher priced cars. Super-luxury market continues to go incredibly well. So the area of the market that we are in is particularly stable. And I guess if we look forward, of course -- I think in the appendix Aaron has noted that with every quarter, a percent move up or down in interest rates, it's about a $1.3 million impact for us. We do know that if indeed we get to the end of a rate cycle and we start to move down, there's been historically a really strong correlation between growing car market and falling rates. And we know that luxury market responds first in that area.

Your next question comes from James Ferrier with Wilsons Advisory.

Just a couple of follow-ups here. So your comment around the order book, where the volume in the book is down but the gross profit is up, does that mean you're expecting lower revenue but higher gross margins on that revenue? But I guess that does reconcile with your outlook comment on Slide 5, where you're expecting stable like-for-like revenue out of new vehicles. Can you just unpack that?

Yes. It's pretty simple. The cars are more expensive in the order bank. It's actually -- the order bank gross and revenue are both up, but the volume of cars are down. And the reason that is, James, is that we've delivered out most of the order bank on the lower-cost cars as they've come through over the last 12 months. So what we've got is high demand, high-performance cars sitting in our order bank, which have resilient margins, but also much higher revenue per car in the order bank.

Understood. Yes. So that's what drives that outlook comment for stable like-for-like revenue growth in the second half.

That's right.

Okay. Understood. And then the second question -- I didn't see it or haven't yet seen it in the documents, so -- it probably is in there. I've missed it. But historically, you disclosed what the dollar value of the OEM rebates was if one wanted to gross up the revenue line.

Yes, it's a little bit up on prior years. It's not significantly up. But we're now reporting in a stat format. So it's no longer in the financial reporting. It's just lumped in with COGS.

Your next question comes from Jake Dunn with Citi.

Just a quick one on your back-end revenue. Just what are your expectations for the remainder of this year? Is there a potential to increase sort of utilization at some of the recent investments you've made over the last couple of years?

Yes. Just again, 2 things there, Jake, for you. Firstly, there's capacity in the back-end to do exactly that. But what I would say, first of all, is that I think on a like-for-like basis, we can look forward to at least double-digit growth there, maybe a touch higher than that. And then we'll supplement it, hopefully, with some acquisition-led growth.

Your next question comes from [ Miriam Lee ], a private investor.

I'm just an ordinary person, so this will probably be a very inept question. But when I saw the stable revenue for cars, I thought that was a bit concerning because inflation is still high, and that would suggest a lower EBITDA and profit. But is the idea that you're going to make up for that because the parts and service revenue are going up and also from acquisitions. I mean, when one sees acquisitions funded by a lot of debt, it seems a bit concerning. But your results still have been so good that I suppose I shouldn't be concerned. Anyway, could you sort of comment on that sort of detail a little bit?

Absolutely. You've hit on quite a few of the issues there, too. Yes, you're right that if we have a stable period through on new car revenue, that's one of our revenue streams, yes, we'll be getting the growth coming from service and parts. That will mean that the like-for-like business will move forward a bit. We'll supplement that with acquisitions. And the way that we've supplemented acquisitions is that we've done it in a combination of cash and debt. Having said that, we've got a very, very aggressive debt repayment schedule in the business. In the first half of the year, we actually moved our debt down from $222 million in corporate debt down to $208 million in corporate debt because we paid off $14 million. That gives us the balance sheet capacity to go out and borrow a little bit of money to fund these acquisitions without materially changing the overall debt levels. So we'll do a combination of those things. We'll keep a good solid straight business. I won't chase the new car and used car revenue at the risk of reducing my margin. But we'll -- and we'll go and improve the business in the service and parts business and we'll supplement it with acquisitions. Does that make sense?

Yes, yes. Congratulations on a better result than I expected.

[Operator Instructions] There are no further questions at this time. I will now hand back to Mr. Pagent for closing remarks.

Thank you very much, and thank you very much to everybody who's taken the time to dial in today. I'll just take 1 minute just to thank the Autosports Group staff for what has been an outstanding 12 months. They've delivered an extraordinary result. And I thank each one of them for the work they've put in this year. Also I'd like to thank our OEM partners for their support and partnership through the year. Without access to their brands, we can't get the job done that we've done. And I'd like to also thank the shareholders for their support and trust. There's lots of places that you can invest. We respect the way that you invest with us, and we're focused on making sure that you get the right returns. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may now disconnect.