AHG to raise $110m, buys more franchises

19/08/2016 - 10:35

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Automotive Holdings Group has announced plans to raise up to $110 million from investors and purchase two car yards on the east coast, on the same day it revealed an increase in full-year profit.

AHG to raise $110m, buys more franchises
Automotive Holdings Group managing director Bronte Howson.

Automotive Holdings Group has announced plans to raise up to $110 million from investors and purchase two car yards on the east coast, on the same day it revealed an increase in full-year profit.

Perth-based AHG has received firm commitments for the placement of 19.9 million shares at $4.52 each to raise $90 million, representing a 6.2 per cent discount to the company’s last trading price.

The placement has been underwritten by UBS.

AHG also plans to raise a further $20 million at the same price as the placement.

The funds raised will be used to complete the purchase of Audi Centre Newcastle and Newcastle Skoda in NSW, to reduce debt taken on from recent acquisitions, and to strengthen its balance sheet.

The Audi car yard purchase is AHG’s first Audi franchise purchase across its network.

The acquisition of the two caryards involves an $8.4 million consideration for goodwill, plus stock and assets at valuation.

AHG also revealed a 2.2 per cent increase in net profit to $90.1 million for the 2016 financial year, with revenue up 7.2 per cent to $5.63 billion.

The company reported a 6.3 per cent increase in earnings before interest, tax, depreciation and amortisation to $217.1 million.

The group also declared a final dividend of 13 cents per share, for a total dividend of 22.5 cents, fully franked.

AHG’s automotive retail division was the strongest performer within the group, with revenue up 10.6 per cent to $4.72 billion and operating profit up 11.3 per cent to $135.7 million.

Its refrigerated logistics division, however, reported a 4.7 per cent decrease in revenue to $580.4 million, with profit down 59.6 per cent to $8.2 million.

“The automotive result is very pleasing considering the challenges of the Western Australian market and is a testament to AHG’s strong operating model and growth strategy,” outgoing managing director Bronte Howson said.

“While new vehicle volumes were down in WA it was pleasing to see growth from our used vehicle division, increasing organic volumes by 9.2 per cent.

“This was mainly attributable to the introduction of the easyauto123 fixed-price warehouse model which will be further rolled out throughout Australia in FY17.

“The refrigerated logistics result is disappointing however we are well advanced with our planned restructuring activities and are determined to deliver shareholder value.”

Looking ahead, Mr Howson said the outlook for the automotive market remained strong.

“AHG is well placed to continue its growth strategy including green field developments, acquisitions, the natural expansion of our used car model and the rollout of easyauto123,” he said.

“The group remains focused on its core strategies, with continued investment in acquisitions in the automotive sector and actively managing our portfolio of assets to drive shareholder value.”

AHG shares were unchanged at $4.82 each at 10:30am.

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