Autosports Group Limited (ASG) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Autosports Group Limited, ASG, FY '24 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Nick Pagent, CEO. Please go ahead.

Thank you, everyone, and good morning. Welcome to the investor presentation for the financial results for Autosports Group for the '24 financial year. My name is, Rachel just mentioned, is Nick Pagent. I'm the CEO of Autosports Group. Joining me on the call today is Aaron Murray, the CFO of Autosports Group. This morning, we'll start with a brief presentation on Autosports Group covering our FY '24 financial highlights, our FY '24 operational highlights, our outlook for FY '25. I'll then summarize our FY '24 trading results before handing over to Aaron, who will provide a deeper analysis of Autosports' 2024 financial metrics, including our revenue drivers, our sustained operating leverage, our normalized EBITDA and PBT margin with you. Our capital management and inventory debt targets for FY '25 and our cash flow analysis. Following this, I'll provide an update on Autosports progress against our consistent luxury growth strategy. And as we move through the presentation, launched this morning with the ASX and on our own Autosports Group investor site, I will, where possible, note the relevant slide numbers. If we start the presentation with Slide #3, the FY '24 financial highlights. The 2024 financial year has given us an opportunity to road test our luxury brand strategy in a more competitive new vehicle market with open supply following the constricted supply environment during and immediately after the COVID-19 restrictions. And I'm pleased to report that we are on the right path. In FY '24, Autosports Group has delivered a consistent financial result that demonstrates the high-quality of our luxury brand strategy. FY '24 gives us confidence that Autosports Group will continue to outperform even in a more competitive consumer market. Revenues for the FY '24 were up 11.6% on the prior corresponding period. More importantly, however, revenues were up in every one of our revenue streams. The revenue mix continued to improve as used cars, service and parts grew strongly, and our revenue growth was achieved with disciplined gross margins. As a consequence, gross profit was also up 8.3% and EBITDA was up 6.5% on FY '23, all record results for Autosports Group. Our net profit before tax and net profit after tax were impacted by higher interest costs, and in FY '24, a $6.5 million variance from the prior corresponding period in the noncash impact of AASB 16 lease calculations. Our normalized net profit before tax for 2024 came in at $93.1 million or pre-AASB 16, $96 million. And our net profit after tax was $61.5 million on a statutory basis, down 7.8%. This solid operating profit, high cash conversion and consistent outlook has allowed Autosports Group to declare a final dividend of $0.08 per share fully franked. This takes our full year dividend to $0.18 per share and is in line with our dividend policy. If we turn to Slide 4 to look at our operational highlights, I'm able to confirm to shareholders that the market for new vehicles has become more competitive in 2024. New vehicle inventory is elevated across the industry as supply returns post COVID. Marketing and price promotions are being utilized to stimulate consumer demand. Within this framework, risk exists for gross margin reductions as businesses [Technical Difficulty] revenue. Autosports Group has maintained margin discipline in FY '24, whilst we have increased revenue, increased marketing and offered appropriate consumer offers, we have maintained a solid gross margin percentage of 19.5%. Autosports Group's discipline and adherence to our strategy extended into our growth by acquisition. We are proud to have negotiated the acquisition of the Stillwell Motor Group. This acquisition is on the strategy with BMW/MINI and Volvo brands. It is meaningful in scale at $350 million in annualized revenue and it operates from blue ribbon locations in Brighton, Doncaster, South Yarra and Mornington. Like our growth strategy, our capital allocation remains consistent and predictable. Strong operating cash is used for repayment of debt of $27 million in FY '24. This repayment is supplied through to net debt and Autosports Group now has the headroom for the acquisition-led growth whilst allowing for appropriate shareholder returns with dividends of $40 million paid in FY '24. If we turn to Slide 5, I can confirm our outlook for FY '25 is consistent. The new vehicle market is expected to remain competitive with consumer incentives and market initiatives -- marketing initiatives in place to maintain new vehicle revenue. Inventory levels will rise on the Stillwell Motor Group acquisition that our stock depth is appropriate -- is expected to improve as Autosports Group works with its OEM partners to optimize stock turns. Used vehicles, servicing, parts and collision repair divisions are expected to continue to grow with stable margin profiles. The acquisition of the Stillwell Motor Group is expected to complete in October, and is expected to contribute approximately $260 million in additional revenue for Autosports Group for the 9 months of the FY '25 financial year. Autosports Group will also continue to assess further luxury branded acquisition opportunities as they arise. If I turn now through to Slide #7 for a summary of our statutory results. As mentioned, the top line result was strong. Revenue was up. Gross profit was up. EBITDA was up and EBIT was up. All of these lines were record results for Autosports Group. Operational expenses were well controlled, 9.5% up against revenue growth, which grew at 11.6%. The combination of a solid gross margin percentage at 19.5% and those well-controlled expenses allowed our operating leverage to be held at acceptable levels through FY '24. Noncash depreciation and the AASB 16 interest calculations impacted PBT, as I mentioned earlier, by $6.5 million versus the prior corresponding period. Overall interest costs in the business impacted the profit before tax and net profit before tax -- net profit after tax lines, and they were 68% up to $56.8 million with 3 primary drivers: the mortgage interest on the Fortitude Valley property that we purchased in late FY '23, which was an excellent acquisition and is driving future returns for the shareholders; our floor plan costs were up on increased inventory during the year. However, that inventory has not increased materially since the end of the half year and AASB 16 interest. Net profit after tax was down 7.8% to $61.5 million. The table underneath the statutory result gives shareholders some additional color. Underlying PBT pre-AASB 16 was at $96 million, normalized, including AASB 16, $93.1 million. There are minor adjustments in the table for acquisition amortization and minor acquisition costs of $700,000. Again, a fully franked dividend of a final dividend of $0.08 declared on these results. If we move to Slide #8 to look at the trading highlights and the different revenue streams inside the business. All revenue streams continue to grow strongly. New cars were up 9.2%. And through the period, our orderwrite continued to be up on the prior corresponding period, and our orderbank is stable through the period. The used car business was up 16.9%, predominantly on improved trade-in ratios and a strong retail performance. The service business was up 10.9% with predictable growth, high-margin outcomes. And it is -- the growth is feeding off 3 years of higher new vehicle volumes. Parts was up 16.5%, tracking the service growth, but also supplemented by growth in our collision repair business. The gross margins across the business are driving a healthy outcome. I'd now like to pass on to Aaron, so that he can share further details on our revenue drivers, margin, capital management and cash flows. Aaron?

Thank you, Nick, and good morning to everybody on the call. If you move to Slide 10, I will talk you through our revenue drivers for FY 2024. Historically, ASG has achieved consistent revenue growth from a mix of organic and acquired revenue. In FY '24, ASG achieved revenue growth of $276 million on PCP with $90 million coming from organic growth and $186 million coming from acquired and greenfield revenue. The return of new vehicle supply has seen organic growth in new vehicles of $17 million, up 1% like-for-like on PCP. This is also being supported -- this has also supported organic growth in used vehicles of $46 million, up 8.5% like-for-like on PCP through increased trading opportunities. The organic growth in new vehicles delivered over the past 2 years to support an organic revenue growth of $24 million in our parts and service departments, up 7% 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 2025 revenue drivers will be supported by the Stillwell Motor Group acquisition, consistent OEM supply of luxury vehicles and continued organic growth in the service and parts departments. If you move to Slide 11, our operating leverage. Despite inflationary pressures in the competitive operating environment, ASG operating leverage remains solid. The return to normalized new vehicle supply and subsequent impact on new vehicle margin has seen ASG's overall gross profit margin declined slightly from the first half of FY 2024 of 19.7% to 19.5%. These margins are holding out due to our luxury portfolio being somewhat resilient to the current economic conditions and the continued growth of revenue coming through the high-margin service and parts department. Historically, gross margin has been supported by ASG's long-term strategy of investing in assets to present high-margin opportunities. This strategy has seen ASG's GP margin improved from 16.3% in FY '19 to 19.5% in FY 2024. The total operating expenses in FY 2024 were $310 million against the PCP of $278 million. Acquired and greenfield expenses make up $18 million of this increase. Organic operating expenses have been well managed with an increase of $14 million, which is up 5% on PCP. The main areas of increase came through other expenses largely relating to advertising and marketing, as well as increases in IT software costs associated with our infrastructure uplift program. If you move to Slide 12, our margin overview. ASG's normalized EBITDA as a compound annual growth rate of 19% of the FY '19 period to the FY '24 period. This is an increase of over $119 million, which has been supported by ASG's organic growth combined with our acquisition strategy, which has also driven increased scale and maturity. Despite inflationary pressures, ASG has maintained an EBITDA margin of 7.8% compared to 8% for the first half of FY '24. The impact of the increased revenue -- increased inventory and high interest rates has resulted in an increase of 87% in corporate and floor plan interest significantly impacting the group's PBT margins. If you move to Slide 13, our capital management and inventory targets for FY '25. ASG's closing FY 2025 corporate debt is expected to be in line with the closing FY '23 level of corporate debt of around $220 million, whilst driving increased revenues. In FY '25, ASG will add $22.5 million in goodwill funding for the acquisition of the Stillwell Motor Group and $9.5 million to fund construction and improvements on showroom and service facilities. As per previous years, ASG will continue with its aggressive corporate debt paydown with a plan to pay down around $30 million in the FY '25 year. Should the right opportunity present itself, this will leave our balance sheet in a position to stay on strategy and continue to add $250 million in acquired revenue per annum. Our major CapEx items for FY '25 will be $17.5 million in showroom constructions and facility upgrades with the showroom construction allowing ASG to move our Mt Gravatt Volkswagen showroom out of a lease site into own property. In relation to our vehicle inventory plan, ASG is currently sitting at 82 days in stock depth, and we have a target of reducing that stock depth to 70 days over the next 6 to 8 months. We believe our stock peaked in April 2024, and we've been actively working with our OEMs to ensure the incoming inventory plan is, not only the right level, but the right mix to ensure we capitalize on where opportunities lie in the market to support new vehicle margins. If you move to Slide 14, I'll talk you through our cash flow for the year. ASG is a capital-light business that generated strong operating cash of $119.5 million in FY '24. The strength of the cash generation in 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 FY '24, ASG has continued its aggressive debt repayment schedule and repaid $27.5 million of corporate debt, reducing the corporate debt level to $206 million, down from $222 million at June 2023. $29.2 million has been invested in dealership expansion and improvements to maximize productivity, customer experience and ultimately, support organic growth. This has been funded by $11.4 million in new borrowings and the balance sheet in cash. And lastly, ASG has paid a fully franked dividend of $41.5 million, including minority interest dividends during the period. And with that, I'd like to hand back to Nick to run through our strategic update.

Thanks, Aaron. I'd just like to spend a few minutes on Autosports Group's strategy. The strategy is simple, and the strategy is consistent. We represent the best Luxury & Prestige brands in the market, and we represent them from the best locations. Our brands are future-ready, and we partner with them long term. Our scale within our segment will deliver synergies, but more importantly, excellent performance for our partners, excellent careers for our staff, and returns for our shareholders. FY '24 reinforced that we're on the right path. Firstly, if we look to Slide 16 and have a look at the new energy vehicle market and specifically, electric vehicles. Within this segment, we remain well positioned. As we expected, the luxury EV market is shifting towards traditional brands as they roll out compelling product portfolios. Tesla's share is being targeted successfully. The table on the right-hand side of this slide shows, in the last 6 months, Tesla's sales falling 10% of 2,460 units, whereas BMW's share has risen 224% by 2,585 units. We've got the right strategy here for profitable growth. The new vehicle efficiency scheme, which has been rolled out at the end of this year, brings back into vogue the potential for plug-in hybrid vehicles and hybrid vehicles as alternatives to EVs. Autosports Group's brands are well positioned here and have, not just pure EVs, but a full mix of product offerings into the market. And it is this full product offering in the market that will ensure the best possible outcome in terms of revenue and net profit generation. If we move to Slide #17 to look at our acquisition strategy, which forms the largest part of our growth strategy. It is another [indiscernible] strategy is clear. It's well defined and it's working. The criteria is simple. We look for businesses anchored by luxury brands. We look for great locations. We look for future-ready product, and we look for meaningful scale within the brand that we represent. We acquired the right assets, but also we acquired them on competitive terms. We look for acquisition multiples between 4 to 6x the net profit before tax, which allows us to deliver strong returns on investment and strong returns on capital employed for our shareholders. In FY '23, we added $272 million by acquisition in revenue. In FY '24, the cycling of the previous year's acquisitions added an additional $171 million in revenue. Our target, of course, as Aaron has mentioned, is set at $250 million per annum in revenue growth via acquisition. If we turn to Slide #18, we can see how we seek to achieve this in the next year. Last -- on Monday, we announced the acquisition of the Stillwell Motor Group. The business represents key luxury brands and key Autosports Group brands, 2 prime BMW locations, MINI, BMW Motoraad, 3 Volvo locations, Ducati and MG as the brands. Blue ribbon locations, Brighton, Doncaster, South Yarra and Mornington Peninsula. The acquisition is of meaningful scale. The business has $345 million in annualized revenues. The business sells 3,800 cars, employs 250 staff. The deal metrics were sensible and will be accretive for Autosports shareholders. The price of approximately $55 million includes the goodwill and the assets of the business that we are acquiring. The business will be funded, as Aaron has noted earlier, in a combination of cash, new and existing debt facilities, and pleasingly, for the management of Autosports Group. The Stillwell family had the option taking 15% of the funds as scrip. And we thank the Stillwell family for their support of the business and the way that they have conducted this negotiation. We also thank BMW Group and Volvo Cars for their support throughout this process. We expect the business to be accretive to shareholders, and we expect the business to settle in October of 2024. We are indeed with the Stillwell Motor Group acquisition humbled by the opportunity to continue the 75-year history of the Stillwell family business. If we move now to Slide 20 to give you just a quick recap before we open up the call for questions. The results were 11% up to $2.6 billion in revenue. Gross profit up 8.3% to $515 million. EBITDA up 6.5% and EBIT up 8.3%, all on a statutory basis. Net profit before -- after tax was down 7.6%. Corporate debt in the business was down by $16 million. Net profit before tax was impacted by an increase in interest costs of 68% and indeed, the negative variance versus PCP of the AASB 16 impact of $6.5 million. Operating cash generated was $119.5 million, which allowed us to pay a fully franked dividend of $0.08 per share and $0.18 for the full year, and we've announced the acquisition of the Stillwell Motor Group with an annualized revenue of $345 million. Strategically, you can expect more of the same from us. Our strategy is to consolidate the fragmented automotive retail market, continue to invest in our organic streams, develop scale-based synergies and deliver consistent shareholder returns. The outlook remains consistent. The new vehicle market is expected to remain competitive with consumer incentives and marketing initiatives in place to maintain like-for-like revenue growth. Used vehicles, servicing, parts, collision repair are all expected to grow on trend with stable margins. Like-for-like vehicle inventory levels are expected to reduce as Autosports works with its OEM partners to improve stock turn. The acquisition of Stillwell Motor Group is expected to complete in October, adding $260 million to the FY '25 revenues from October to June '25. And, of course, we will continue to assess any other further acquisition opportunities. I'd now like to open the line up for any questions that anyone might have.

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

Can I first of all ask you probably a pretty simple one, with the revenue line, if you gross that up the way you used to with OEM rebates, what's the magnitude of the gross up?

The OEM rebates is shown under COGS. You are asking in the gross up in terms of margin?

Yes. I mean, you used to show it in the revenue line. I get now it's been netted off against the COGS within GP. But just what's the quantum if you backed it out and added it back to revenue like you used to report it, what's the quantum of that dollar amount?

It's $114 million in OEM rebate, James.

And then second thing I wanted to ask about was gross profit margins. They increased second half '23 into first half '24. And given the back end revenue growth was pretty strong relative to the front end, We thought they might have been a bit stronger in the second half of FY '24. So I think -- I mean, clearly, the gross profit margin on new vehicle sales has declined. Is that solely from units you're selling from stock? Or is the gross margin also declining on vehicles that are getting delivered out of the order book?

James, it's a simple answer. It's been moving stock and putting some bigger incentives into the market. We probably also -- that small adjustment between 19.7% to 19.5%, probably also speaks to us not chasing revenue. And you mentioned earlier that the revenue was probably a little bit lower than you expected, and that's probably why the revenue was a little bit lower because we didn't chase the -- we didn't chase the rabbit down the rabbit hole a little bit there.

Yes. That's helpful. And probably stay on that topic then, what's the exit run rate for your gross margin given that was the result for the second half? What's the exit run rate going into first half '25?

It's roughly the same. We don't -- we know we've got some risk there. But we think we can control the risk. And if we can control the stock depth, that's the biggest -- that's going to be the biggest driver in maintaining the gross profit margins through the first half of next year, James. So that's why Aaron was calling out, trying to reduce our stock to 70 days in stock depth. If we can do that, then we can control the pressure on margin.

Okay. That's -- yes, it's a good link. Is there a particular brand? Or is it sort of an ICE versus battery EV-type dynamic? Where is the sort of the weakness in growth in terms of needing to move stock with bigger incentives?

There has been a couple of brands that have been probably overstocked during the last 6 months. But what I would say in that respect is, we're very, very happy with the brand profile that we've got. We get on really well with the OEMs. And if we've jointly misordered stock in the first half of the year, we've done jointly together. So the solution will be done jointly as well. So I won't call out any individual brands. I think it's known inside the market, which brands might have been a little bit overstocked. But we're very confident that we're working very well with our brands. And as Aaron said earlier, we peaked in April. We think by about October, we're going to be at ideal stock levels.

Can I just add to that, Nick? The margin pressure is sort of appearing in the lower end of luxury, where some of the discretionary volumes impacted by cost of living and interest rates, it's still okay at the high end.

That's good color. And then last one for me is the Stillwell acquisition on that purchase price of $55 million, where did the multiples sit within that 4 to 6x that you target?

We don't -- we won't disclose it exact because the net profit of that business has moved around quite a bit in the last 1.5 years. However, what I would say on a forward basis is, our expectation is that, in any sort of market, a difficult market or a straightforward market, those brands in those locations with that fixed expenses should generate north of 3% return on sales for that revenue. And that's our expectation moving forward. We probably won't get that the first quarter. But through the second half of FY '25 and beyond, I think that's what you could expect from this business, James.

The next question is from Brendan Carrig from Macquarie.

Nick and Aaron, maybe just picking up on that stock depth control and then thinking that you'll be at those ideal stock levels by October. It's obviously pretty close. So what if -- I guess, what have you already done and what still needs to be done to land at those ideal stock levels? Just trying to think about the other comments you've made in terms of giving up some revenue and not wanting to over discount, but then the risk of obviously having to heavily market and discount stock to be able to clear it to get to those ideal levels by October.

Brendan, if I'm right, we've done all the things that we need to do certainly for the next 6 months. We've [ pared ] back stock coming in for the period May through to October. That should line us up with our ideal stock levels. Now, to do that, we've got to maintain the revenues and the sales volumes. If I looked at our July orderwrite, which was flat on July last year, and our month-to-date orderwrite through August, which is running about 5% ahead of PCP. We're actually selling the cars at exactly the rate that I expect to be selling them. So long as those things continue through the next 1.5 months, we'll be at those ideal stock levels. Our task then becomes to maintain that long term. Of course, as we've disclosed today in -- with the Stillwell acquisition, we're taking on about $65 million worth of stock in the Stillwell Group. I think that stock's [ accurately ] weighted for the stock terms that we're going to achieve there. But the overall business should be back on that 70-day stock term by October.

So like-for-like, it probably means that your sort of bailment cost, given rates have been pretty flat for the last 12 months to give or take your interest expense like-for-like, excluding Stillwell should probably come down from a bailment perspective?

Yes. From a bailment perspective, you're right, and that's what we're trying to go and achieve. It's not so much the bailment expense that we're trying to go and influence here, Brendan, more importantly for us is to right stock depth to achieve the right gross profits on the way through. And if we can do that, we don't need to go and try more deeply than we have to.

Yes. No, that makes sense on the gross margin. Yes. Is there a sort of -- I think we -- last time we spoke to the back in maybe May or June, you were sort of saying that your OEM partners are sort of putting some of the bill in terms of the discounting and sharing in that cost. So is that still happening a little bit? It sounded like it might [Technical Difficulty] from your comments earlier. So just any talk on the dynamics of play there?

Yes, Brendan, quite simply, it's my view, if it's my fault, I pick the bill up. So if my stock is too deep and I have to go and discount my own cars, well, that's my bill. If the OEM is looking to incent cars into the market to sell at a higher rate or to maintain a rate, well, then they put the incentives behind it. So it's my job to run our retail business, and we're experts at that. And we should be able -- you should be able to rely on us to get that right, and that's the balance that we'll have. So, yes, a lot of the programs that you would be advertised on television and in the digital media, OEM-led campaigns.

Okay. And then just a small one, just on the services revenue in the second half, it came off slightly, not a huge drop off, but obviously it's higher margin. Anything to call out from that sort of second half versus first half slowdown?

No, just -- no. We think that it's going to be solid through the second half of the year. The businesses hit all its budgets through the second half of the year in servicing. So nothing to say there, I would think, Brendan.

The next question is from Sarah Mann from Moelis Australia. My apologies. The next question is from [ Howard Dawson ] from Horizon Investment Solutions.

Just building on that last question regarding the service department, given, I guess, the increasing mix of EVs over ICE, do you see any, I guess, margin threat or revenue threat on the basis of the service and parts relative to the number of cars in stock and sold?

Howard, yes, if you looked at just simply the mechanical repairs required for the engine of an EV, it is unlikely that we're going to need to see them as often. However, the practice that we have seen over the last 1.5 years and the practice that we're getting with cars at the moment is that, these cars, whilst more simplistic in terms of engine and drivetrain are much more complex in terms of electrical IT services inside the car, and it is those services which are requiring time in our workshops. So the practice that we're seeing right now is that, the EVs are actually taking more servicing time than internal combustion engine cars, albeit on totally different issues, internal combustion management cars on engines and the EVs on electrics.

Okay. And just staying on that topic for now is that, are you seeing -- and given that the EVs are certainly still trying to push significantly into the market, do you see a margin differential between EVs, ICE and hybrids growing?

No. But we do see a margin differential in the source that you sell it to. And this can sometimes go to EV. If we're selling to fleet markets, the margins are lower. If we're selling to retail markets, they're reasonably similar. However, we also think that as we move into the new energy vehicle standards, which are coming out in January, but we'll actually see a resurgence of plug-in hybrid and hybrid cars into the marketplace, which will cover both EV technology and internal combustion engine technology. And we see the new legislation as driving more sales in those areas.

Okay. And one last one, if I can. And it might be unique to Western Australia, but we're seeing a significant increase in shipping costs in Western Australia containers, for example, have gone up by about 100% over the last 3 months and expect it to probably increase right through to December by approximately another 80% to 90%. Do you see any short-term hit over now and Christmas yourself on getting your stock into Australia, particularly from the China?

Firstly, I think I acknowledge that you are 100% right on the way through here. We don't have -- we've got a little bit of stock that comes in from China via our BMW and our Volvo brands. Having said that, those costs are borne by the OEM, not by the retailer. It may run into price rises, and it has done over the last 1.5 years on inflationary price rises, but it doesn't impact on our margin because we don't carry that cost out.

Okay. That's good news.

The next question is from Sarah Mann from Moelis Australia.

Just wanted to ask whether there are any kind of supply or logistical challenges that impacted the second half results that were worth calling out at all. Just looking at the, I suppose, picking up with the revenue being a little bit softer. Yes, whether there was anything there.

Sarah, if I look at quarter-by-quarter, our results, each quarter was very consistent with the exception of the third quarter, which was about $60 million to $70 million below our PCP. And through that quarter, we had really slow movement through the docks. And we actually had -- as a consequence, that buildup in stock that we're looking to go and reduce in April and beyond. So, the third quarter was the toughest for us. The fourth quarter was the biggest in terms of deliveries and in terms of revenue generation. So, yes, to a little bit -- to a little extent, we probably missed by about $60 million in that third quarter, the March quarter.

Okay. But it was more than caught up in the fourth quarter, by the sound of things.

Yes, that was the quarter that clogged this up.

Got it. Okay, cool. And then just interested on the demand profile. Any color you can give around, I guess, orderwrite on a like-for-like basis relative to last year?

Yes, absolutely. So the full -- the last 6 months -- first 6 months of the year, January to June, we're about 3% up on orderwrite versus PCP. July was absolutely flat versus PCP. There was 3 cars difference between July this year and July last year on orderwrite. August is running about 5% ahead of last year, although we've still got the best part of 10 days to go in the month. So orderwrite is okay. Orderbank is flat during the period.

Great. And then last question, just the used car operations as well, like you had a nice pickup in terms of revenues as you, I guess, traded more cars. Just interested in what you're seeing on the margin profile there as used car prices have come back down a bit?

Margins are almost identical to last year, Sarah.

And is that because you're getting more trading effectively?

Yes. So if you remember, over the last 1.5 years, we've been talking about concentrating mostly in our business on retailing tradings and moving tradings around. We do that because we believe we've got the best cost of acquisition when they're trading from our existing business. We believe that delivers the greatest margin. And the uptick is from the uptick in new car revenue over the period.

The next question is from Jack Dunn from Citi.

First one, on your outlook comments for service, parts, used, the wording changed from above trend to grow on trend. Just wondering if there's anything that you're seeing at least changed that wording.

No. Just that it was -- just that it's been growing so very strongly over the period. I don't want to overpromise, Jack.

Fair enough. And then lastly, just on gross margin, I know you've touched on this already, and I thought you did a great job during the half given the industry pressures. But I was wondering on the new car GPU, do you think there is much weakness ahead here? Or where you are now is probably at the bottom?

I don't -- I can't give you an exact answer there, Jack. It's the most opaque part of the next 6 months. But what I will say is, the most important drivers for me to go and maintain that gross margin is, one, the stock depth, that's why Aaron's called it out and why we're working on it internally. The second is, we're selling these cars, and that's the channel that we go to. If we channel out at retail, we've got the best chance of making sure that our gross margins stay. If we have to go and move further down the channel into fleet and government, we're going to have to go and get more margin on to do that. So keeping our stock mix and keeping our demand running at retail is the best way to go and maintain our gross margins. That's why we're spending a little bit more in marketing on the way to generate that income. That's why we're using that lever. And that's what we would prefer to do back over the next 6 months, maintain the retail mix, and I think our brands lead into a retail mix as well.

Okay. So just one follow-up there then. Would your mix to help what is the skew of mix for retail versus fleet and government in your new target?

We had almost 0 government. And the fleet content we have is less than 10%. And that fleet content is predominantly what we would call user drivers. So they are the users picking which cars that they buy and predominantly buy novated leasing.

Thank you. There are no further questions at this time. I'll now hand back for closing remarks.

Thanks, Rachel. Just in closing, I'd like to take the opportunity to thank the Autosports Group staff for delivering a record revenue, record EBITDA, record growth and record EBIT performance in what has been a more challenging market than last year. I want to also thank our OEMs for the support that they've given us through the year. In this call, I'd like to thank the Stillwell family for the way that they've conducted the negotiations on the new business. I look forward -- we look forward to the settlement there, and we look forward to taking the opportunity to carry on the 75-year history of the Stillwell family business. And I'd also like to thank our shareholders for the support that they've given us through the years. Thank you very much.

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