The pandemic impacted car sales, particularly in April 2020 where ASG said the month showed the sharpest decline in 23 years, down 48.5 per cent on the previous corresponding month.
But ASG said its balance sheet for the 2019-20 year was strengthened by its focus on the luxury and prestige car segments on the east coast of Australia. This segment had a sales fall of 1.1 per cent in the 2020 financial year compared with the previous period, while total new-car sales dropped 13.7 per cent.
While revenue remained strong, ASG has declared an accounting-related impairment charge caused by the pandemic that affects its cashflow forecast. The charge has no effect on cashflow or earnings.
It resulted in a charge of $109.2 million that led to a net loss after tax figure of $102.4 million, down from the $11.2 million profit made in the previous year.
In its statement to the Australian Securities Exchange (ASX), ASG said the impact of the coronavirus pandemic dominated management decision-making “as the company worked quickly to prioritise safety and minimise the impact of business interruption to protect as many jobs as possible for the long term. This will be a continued focus in FY21.”
ASG CEO Nick Pagent said the financial year was “a year of two halves.”
“The year started with the successful completion of a number of strategic acquisitions in line with the group’s focused strategy of luxury and prestige vehicles in east-coast metropolitan areas,” he said.
“In August 2019, the group acquired Sydney City Prestige and Auto Approve. Sydney City Prestige is a luxury used car wholesale business located in Artarmon, Sydney, which was rebranded to Prestige Auto Traders North Sydney.
“This acquisition has increased Prestige Auto Traders’ reach in the Sydney market. Auto Approve is a finance broking business which has leveraged the group’s existing Australian Credit Licence to offer finance and insurance products.
“In September 2019, the group acquired Mercedes-Benz Hornsby in Sydney’s Upper North Shore. This was the group’s first Mercedes-Benz dealership in New South Wales and more importantly, made Autosports Group the first Australian automotive group to hold all three key luxury brands of Audi, BMW and Mercedes-Benz in the same state.
“As part of the Mercedes-Benz Hornsby acquisition, the group purchased the land on which the dealership is located at 120-124 Pacific Highway, Waitara.
“In November 2019, the group announced the acquisition of Trivett at Alexandria (for $5.435 million) welcoming five outstanding new brands to its portfolio including Jaguar, Land Rover, Rolls-Royce, McLaren and Aston Martin.
“In addition, the group added its first Bentley dealership to New South Wales. These dealerships are located in a prominent location on O’Riordan Street in Alexandria, Sydney. These acquisitions are testament to the group’s clear and focused strategy of luxury vehicles in the east-coast metropolitan area.”
ASG paid $790,000 for certain assets and liabilities of Sydney City Prestige and $1.59 million for Mercedes-Benz Hornsby.
Mr Pagent said ASG “acknowledges that the future is uncertain so its focus in FY21 will be to manage the areas within its control in a similar manner to what was achieved in the second half of FY20.”
“This includes preserving cash, reducing expenses and securing the future of its employees.
“More specifically, the group intends to:
- Drive cost reductions at its dealerships to reduce the cost of doing business
- Review the group’s portfolio mix with particular attention to its OEMs’ future product offerings
- Build more flexibility and mobility into its workforce in order to respond to changing business needs
- Look for well-priced strategic acquisitions as the pandemic subsides
- Most importantly, ensure the health and safety of its staff, customers and stakeholders.”
By Neil Dowling
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