Now I'd like to hand the conference over to Mr. Nick Pagent, CEO. Please go ahead.
Thanks, Tom. Thank you, and good morning. Welcome to the investor presentation for the financial results for Autosports Group for the first half of the 2022 financial year. My name is Nick Pagent, and I am the CEO of Autosports Group. Joining me today on the call is Aaron Murray, the CFO of Autosports Group. This morning, we start with the presentation on Autosports Group. We'll start with the group model and growth strategy for 2022 H1 financial results and the trends that underpin those results. I'll look at the group's focus areas and the outlook for the company through the balance of the 2022 calendar year. Following the presentation, we'll open up the call for any questions that any investors may have.
As we move through the presentation, launched this morning on the ASX and also on Autosports Group's own investor site, I will, where possible, note the relevant slide numbers to anyone who is following the presentation. If we start now at slide three. First, it is pleasing to report to investors that despite the challenges presented by COVID-19 and the new vehicle supply restrictions, the automotive retail industry is performing well. Not only is it performing well today, but these supportive dynamics are providing the basis for an extended period of growth for Autosports Group. Across our business and the industry, the market has been supported by demand exceeding supply, record order banks extending well into the future, and growing margins that also extend well into the future. Autosports Group has used these dynamics well.
Our strong balance sheet has placed us in a stronger position than we have ever been before to unlock our growth strategy. This growth strategy remains clear, to grow by consolidating the highly fragmented, but large, automotive retail industry. To use scale and maturity to further grow our margin profile. In pursuing this simple growth strategy, Autosports Group can also point to clear evidence that we have the capability to execute and that strategy works. We have a proven record of delivering growth in outlets, growth in brand representation, growth in revenue, and importantly for shareholders, growth in earnings per share and dividends per share. Margins have increased and operating leverage has been unlocked. The growing maturity of the business is also unlocking an enhanced platform that delivers more consistent returns.
Our diverse revenue streams across all facets of the automotive ownership cycle give us multiple focus areas that can drive growth, resilience, and profit through the cycle. Expanded brand portfolio, locations, and our property strategy broaden our footprint and accelerate our growth runway. If I move to slide four, before we take on the detail of the first half's trading result, I'd like to focus briefly on Autosports' broader performance since listing. When we listed in 2016 in November, we said there was an opportunity to consolidate a fragmented market. We said that Autosports have the capability to grow in brand and locations. We said that margins would improve with maturity and that scale would deliver operating leverage. Since then, we've almost doubled our brand portfolio. We've grown revenues by over 30% since the 2017 calendar year.
Net profit before tax has grown at 105% during that period. Gross margins have expanded by 16.9%, and as we'll see in a moment, are still expanding. The net profit before tax margins are up 58% during the period. For shareholders, since the 2017 calendar year, earnings per share are up AUD 0.67 , dividends per share are up AUD 0.59 . In Slide five, this growth in shareholder returns has been driven primarily by focused execution of our growth strategy. Since listing, Autosports Group has completed 10 separate acquisitions with our 11th acquisition, the acquisition of the Suttons Subaru and Suttons Kia businesses in Rosebery, due to complete this half. We have also been appointed by our OEM partners to four greenfield sites with a further two greenfield sites due to open within the next 12 months.
The effect of this growth has been to broaden our future growth runway. Today, that runway is deeper and wider with brand relationships. We have access to more locations. We have coverage across almost all of the prestige and luxury brand segments, and we have untapped growth opportunities in quality volume brands. All of these factors support our opportunity for growth. Today, Autosports Group accounts for approximately 2% of the new car market in Australia. It accounts for approximately 14% of the East Coast luxury market. It accounts for 10% of the East Coast prestige market, and the pathway is clear for us to grow. Our checklist for growth is to look for future-ready brands with high gross margin potential, businesses capable of improvement, and businesses that unlock future synergies for us.
All of this flows through to slide six, which is our enhanced platform for growth. The groundwork laid since the listing in 2016 has enhanced the platform. Improved balance sheet is geared to grow. Standard brand and location templates. Deeper revenue streams, margin, and capacity. Importantly though, we've also got an increased depth of senior management. This depth in senior management enhances our capacity to take advantage of the supportive industry dynamics that we're seeing and the volume bounce that is likely to come from a post-COVID trading environment. Which brings me to a summary of the 2022 first half results. If you'd move to slide eight. In the first half of the year, statutory revenue grew to AUD 910 million, up 0.8%.
Normalized net profit before tax grew 35% to AUD 39.2 million. Our new vehicle order bank has grown in the period February 2021 to today over 100%. Like-for-like operating expenses fell by 5%. Our acquisition-led growth continues with the settlements of Alexandria and Manuka during the period, and the agreement to purchase the Suttons Subaru and Suttons Kia businesses in Rosebery in Sydney. The property portfolio continues to grow, and post the settlement of the Alexandria property on O'Riordan Street, the portfolio will grow to AUD 99.3 million. We're pleased today to declare an interim dividend of AUD 0.07 per share. I'll move to slide nine to have a look at the normalized results quickly.
During the first half of the 2022 financial year, the business continued to feel impacts from the COVID-19 pandemic, and New South Wales and Victorian businesses faced 114 days of COVID-19-related restrictions between the months of July and November. Worldwide shortages of semiconductors limited new vehicle production and the speed of customer deliveries. The impact of the semiconductor supply constraints can be seen in our growing order bank and the first half 2022 financial year gap of 22% between customer orders received and customer deliveries. Despite these headwinds, revenue grew at 0.8%. This growth was acquired growth, with the acquisitions of Brighton Jaguar Land Rover and Alexandria Mazda contributing to that growth. Gross margins grew again to 19.2%, which is the highest net gross margins that we have recorded to date.
This gross margin growth has been supported during the period by an 8.9% growth in service revenue and a 12.8% growth in parts revenue. Our OpEx was well controlled, 5% down, AUD 5 million down in like for like, and AUD 7.7 million increase coming from acquired OpEx. Gross profit was up by 15.8% on gross margin growth. The normalized net profit before tax was up, as I've said, 35% on improved operating margins of 4.3% at net profit before tax and 5.3% at EBITDA. To move through to the statutory result. Statutory EBITDA of AUD 66.4 was up 18%.
The impact between the normalized result and the statutory result, as you can see there, was an AUD 19.6 million impact, coming from the AASB 16 recognition, and acquisition expenses for the period at AUD 1.8 million. For the analysts on the call, our IPO acquisition amortization finished in November 2021, leaving the second half of the 2022 financial year acquisition amortization number at approximately AUD 1.2 million. Interest costs fell on lower inventory. The net profit before tax and amortization finished up 22.6% for the period, and AUD 0.07 dividend sits well within our 60%-70% payout ratio of net profit after tax. I'd now like to ask Aaron to share some more detail on our financial trends, expense management, cash, and balance sheet strength. Aaron?
Thanks, Nick.
If we move to slide 12, historical revenue. Historically, ASG has shown consistent revenue growth through a mix of organic and acquired revenue. Over the FY 2016 to FY 2021 period, ASG has achieved a compound annual growth rate of 10%. Pleasingly over the same period, new vehicle revenue had a compound annual growth rate of 12%, which has created a future depth of revenue growth in the high-margin back end service parts and collision repair departments. In the first half of FY 2022, ASG had revenue of AUD 911 million, up by AUD 7 million on PCP. This has been supported by AUD 44 million of additional revenue coming from acquisitions with like-for-like revenue heavily impacted by new vehicle supply constraints and down AUD 36 million on PCP.
ASG's resilient business model and acquisition strategy has allowed revenue growth that has outperformed the market growth. If we move to slide 13, our gross profit margin overview. ASG's gross profit margin continues to improve. Gross margin has been supported by historical acquisitions of assets that presented high margin opportunities, maturing greenfield sites, and favorable new and used market conditions. Margin has improved from FY 2016 of 14.5% to 19.2% in the first half of FY 2022. GP margin continued to improve in every revenue stream through the first half of the 2022 period. The strong depth of our new vehicle order bank will prolong current margin conditions. If we move to slide 14, expense management. Historically, ASG has implemented disciplined expense reduction strategies through focused site-over-site rationalization by property acquisition and dealership consolidation to reduce occupancy costs.
We've employed a significant focus on driving the group's existing scale benefits and synergies through our acquired businesses. ASG's FY 2021 operating expense had a decrease due to the receipt of government-wide support subsidies. ASG's first half FY 2022 like-for-like operating expense has reduced by AUD 5 million on PCP. As a result of the improved operating leverage, these strategies have created ASG's EBITDA margin has improved by 0.6% since June 2021. Management continues to review operating structure to ensure the business is in line with the market. Slide 15, margin overview. Historically, EBITDA and PBT margins have been impacted by acquisitions that were running at higher OpEx margin than the wider groups. The OpEx improvements in acquired sites has benefited the group's EBITDA and GP margins.
In the first half FY 2022, the EBITDA and PBT margins have continued to improve to 5.3% and 4.3% respectively. Margins have been impacted positively by favorable market conditions, improved site utilization, improved property portfolio, lowering occupancy costs, and a strong capital management program reducing interest. Slide 16, cash flows. ASG had normalized operating cash of AUD 18.9 million for the first half of FY 2022. ASG opened FY 2022 with strong cash reserves of AUD 96.8 million. As a result of the strong opening cash position, a decision was taken to reduce interest costs by improving inventory equity. This, along with the repayment of the ATO debt, has had an impact on reducing the operating cash published. During the first half, ASG drew down AUD 21.3 million of debt largely to fund the property acquisitions.
We had an aggressive corporate debt pay down of AUD 11.8 million, completing the expenditure of AUD 29.7 million, of which AUD 19.5 million was real estate. We spent AUD 10.8 million on the acquisition of Alexandria Mazda, and continued strong cash flows allowed a AUD 14.1 million final dividend payment for FY 2021. This left a strong first half FY 2022 closing cash balance of AUD 70.6 million. In the second half of 2022, major capital expenditure is forecast to include AUD 10 million for the acquisitions of Suttons Subaru and Suttons Kia. We've also had the acquisition of the 98 O'Riordan Street property at AUD 23.7 million, which will be debt-funded at around 80%. If we move to slide 17 and 18, liquidity and balance sheet.
A prudently managed balance sheet has resulted in ASG's net liquidity available sitting at just under AUD 330 million. ASG has a strong closing cash position of AUD 70.6 million, an undrawn balance facility of AUD 337 million. ASG's strong cash flows has enabled it to restore its dividend repayments to be in line with the policy published in the prospectus. ASG continues to have supported OEM financiers, with 96% of ASG's corporate debt and 100% of floor plan finance funded by OEM financiers.
ASG's net debt, excluding floor plan, closed at AUD 34.2 million, and a total corporate debt of AUD 104.8 million, with AUD 41.8 million relating to goodwill, PPE, and insurance premium funding, and the remaining AUD 63 million relating to AUD 75 million of real estate. This increase in owned property has resulted in improved profit margins and cash flows. ASG's inventory reduced by AUD 29.2 million on PCP, driving continued reductions in interest and holding costs through the first half of FY 2022. ASG's balance sheet leaves us well-placed to take advantage of any future consolidation opportunities. Thanks. Yeah.
Thanks, Aaron.
The combination of supporting industry dynamics, the business' strong financial position, the enhanced platform for growth, and a strengthened balance sheet leaves the business very well positioned going into the second half of this year. In order to maximize this growth opportunity, we continue to focus on the ways that key revenue drivers pull the business forward. It is these growth focus areas that I'd like to concentrate on before I move to the outlook and open the call for questions. If I move to slide number 20, just to touch on new vehicle growth. Since 2017, our new vehicle revenue growth has been driven primarily by acquisition.
In this year, we've been assisted by the full year cycling of the Brighton Jaguar Land Rover acquisition and the Alexandria Mazda acquisition in July of this year. Those acquisitions will cycle full year and support new car revenue growth during the period. We'll be further supported by the growth that will come from the acquisition of the Suttons Subaru and Suttons Kia business in Rosebery. After that, there is a large amount of organic growth that is coming. The semiconductor supply constraints will unwind, and with it, organic revenue growth should come. Order rate during the period has exceeded supply by 22% during the first half of the 2022 financial year. We think this is a strong indicator of where underlying demand sits.
We now sit with an order bank which is over 100% larger than it was in February last year. We think given the size of that order bank and the size of the underlying demand, it is unlikely these dynamics will unwind within the period of the 2022 financial year. Indeed, we think they'll extend well into the 2023 financial year. If we move to used car growth, the used car business continues to be an opportunity for growth for Autosports Group. The scale of the market is well understood at approximately 3x the size of the new car market. Currently, 20% of Autosports Group's revenue comes from used cars. This revenue stream was impacted during the September quarter when lockdowns affected the New South Wales and Victorian Autosports Group dealerships.
During that period, Autosports Group saw an 11.5% reduction in used car sales versus PCP. The second half, the December quarter post-lockdown saw that grow back to 11.7%, which was consistent with the growth that we saw in the second half of the 2021 financial year, which saw used car revenues grow by 9%. Autosports Group anticipate that the underlying growth in used cars is around 10%. We're also pleased to report that our current footprint can sustain another 30% growth without further investment in facility expansion. The advantages the Autosports Group has largely come from the combination of using the franchised outlets and our Prestige Auto Traders used car hubs.
The Prestige Auto Traders hubs allow us to compete with large, big scale used car outlets run by our listed peers, but also by independents. The franchise hubs give us a unique sourcing opportunity through trade-ins, maturing finance contracts, past new vehicle customers, and of course, the OEM's direct fleet sales to us. This gives us buying advantages, and it gives us a strong multi-channel used car approach. Service and parts on slide 22. Service and parts continues to have strong underlying growth, high margin revenue, and it is an area of the business that will bounce back from lockdowns. Again, we believe this area of the business has approximately 10% natural underlying growth. To further unlock that growth, we are looking to invest in future capacity.
We did that at the start of our listing in 2016, when we expanded service departments in Artarmon, service departments in Parramatta, service departments in Five Dock. We're now looking to expand service. We're currently investing in service facilities in Melbourne CBD, Ringwood, Alexandria, and Canterbury. Local in-service departments will also be supported by higher traffic on the roads post-lockdowns as many people return to work. If I move now to slide 23 to have a quick look at the property portfolio growth. This is a very simple strategy. If we grow our property portfolio, we control the strategically important sites that we have. We improve the capacity to manage our retail locations. We use our OEM finances to preserve capital to build for our dealership acquisition strategy. The property improves our balance sheet. It reduces our OpEx.
Currently, we have AUD 75.8 million in property. Post the settlement of the Eden Street property in Alexandria, we will move to just under AUD 100 million in property. We can expect, as we move forward, to grow this property portfolio within the constraints of our cash flows, but also not at the expense of our dealership acquisition strategy. If I move now to have a look at the results recap and the outlook. To recap the first half of the 2022 financial year results, revenue grew 0.8% to AUD 910 million. Normalized net profit before tax grew to AUD 39.2 million. Our order bank continues to grow and will support revenue and margins into the future. Expenses were well controlled, with like-for-like operating expenses falling 5%.
The acquisition strategy continues with accelerating capacity and accelerating opportunity moving forward. The property portfolio continues to grow and the cash flows are strong, so we're able to declare a dividend of AUD 0.07. If I move to the outlook before opening the call to questions. It's clear that there are still some uncertainties that surround vehicle delivery timings. In the new vehicle area of the business, we do expect underlying demand to continue to exceed supply throughout the course of the whole 2022 calendar year. New vehicle supply is expected to improve as semiconductor-related production constraints unwind during the 2022 calendar year. Our used vehicle service and parts revenue streams should maintain underlying growth rates of between 6%-9% versus the prior corresponding period throughout the 2022 calendar year.
The Autosports Group balance sheet provides for acquisition-led growth during the period should the opportunity arise. I'd like to open the call for any questions that you may have.
The first question comes from James Ferrier with Wilsons. Please go ahead.
Good morning, Nick and Aaron. Congratulations on the result and thanks for your time. First question's around the OpEx benefit. Just to recap therefore, the AUD 5 million reduction on PCP on a like-for-like basis. How much of that benefit came from the acquisition of the freehold properties and the associated rent saving that you book then?
James, I'll answer the question. I'll sort of break that whole piece up into about three chunks for you. The OpEx reduction came about AUD 400,000 from the rent reduction at Bundoora when we settled that property during the period. As you remember, that property did have a lease of about AUD 1.6 million per annum, and we settled that in late August, I believe. The second piece of reductions was we cycled through some leases and that reduced our expenses. I would say of the expenses, AUD 2.5 million of the like-for-like expense reduction you can say are permanent reductions.
About AUD 2.5 million of it probably came during that third quarter when we didn't have quite the revenue that we thought we were gonna have in used cars and service, which were impacted by lockdowns. We think those expenses will come back, and they'll largely come back in the area of individual employee commissions through the second half of the year. We think probably AUD 2.5 million of that reduction is long-term reductions and structural. We think AUD 2.5 million was a result of the lockdowns causing some revenue difficulties.
Thanks, Nick. That AUD 2.5 million of the long term, just to be clear, that's essentially renegotiating like for like leases at lower rates?
No. Cycling out of some leases. It was principally, James, moving out of our Lamborghini lease in Ann Street in Brisbane and merging that site with the Fortitude Valley site that we had. Again, part of the strategy of the business to optimize the footprint whenever we get the opportunity to do that. That's saved us about AUD 600,000 just in that action, and we've cycled out of some other leases that we were excess to requirements.
Got it. Okay. Yeah, that makes sense. Thank you. Second question's around the used car business. You made the point there on slide 21 that the retail capacity of the business is underutilized by about 30%.
Yeah.
Can you achieve that just on your own? Do you need the supply, the trading market to activate strongly for the business to achieve that upside?
Yeah. There's a couple of answers to the question, but I'll give you the answer that underlines how we're gonna grow in the strategy. James, I want to go and have our growth driven by where we're going to get the highest margin opportunity. That is through sourcing them through our own network, through trades, through the maturing finance contracts, through past customers. Simply, we have a lower acquisition cost on our used car there, and we also don't have to pay buyers to go and buy those cars. We get a deeper margin profile there, and we think the underlying growth there allows us to grow that 10% quite on a constrained basis.
We also think that we actually have an excellent used car business in terms of net profit production, in terms of gross profit production. Indeed, when you look across the composites, at 20% of our revenue, we're actually a really good contributor in terms of revenue stream in used cars. Through the six-month period, we were flat in used car revenue, and I think most of the others were down on used car revenue during the period. I think we're pretty happy with how it went, and we think the growth that we're citing today is somewhere between 6%-9%, and it's in high-growth areas.
Yeah. Great. Thank you. Last question on new vehicle sales then. I guess two parts to it. In the result itself for the half, new vehicle sales or new vehicle revenue flat, but OEM rebates up 20%. Can you just shed a bit of color on that? And then as we look forward in terms of the gross margin you're achieving on the new vehicles, do you think it ticks up again with what's in your order book? Or has it reached a level now where it sort of is similar to what was achieved in that first half 2022 result?
Can I just get you to repeat the second part of that question again, James? Because I lost it.
Yeah. Second part's really, obviously, it's very favorable trading conditions with some amount of short supply here, and there's a certain contribution to the gross profit of the group from the new vehicle sales in the period. I'm keen for some color from you as to how that looks relative to where your order book is. Would you expect gross margins on new vehicle sales to expand further in the period ahead? Or would it be more similar to what you've just achieved in this half?
Yeah, the answer to that is not so straightforward, but I'll try and give you the answer the best I can. Our order bank has materially higher margins than we're achieving today. It is because those cars are more sought after, and it is because those cars in our order bank are at a materially higher value than the average cost of sale that we have. Across the range of cars that we have, there are some cars and some brands where you can get supply relatively simply at the moment, and you can go and deliver them quickly.
I think what will happen is that if supply stays flattish compared to last year, and all the industry data shows that, new car supply should increase by around 4% this year. If it stays around that level, we'll maintain our margins, and we'll continue to have long, deep order banks on the way through. If the order banks unwind, and we get a larger proportion of cars on our order bank hitting the revenue streams in the next six, 12 months, well, then our gross profits will go up. It depends on which cars land.
The order bank has a higher gross profit profile, which is why I'm confident when I say the forward-looking position is strong for a prolonged maintenance of the higher margins that we've been enjoying for the last two years.
Thanks, Nick. That's helpful. Sorry, just the first part of that question. OEM rebates up 20% versus new car revenue flat. What was the driver there?
Yeah. James, it's running at just over 5%, which is where it usually runs. It runs somewhere between 4% at worst and I think 7.5% at highest historically. It's a tricky number because it relies on what you deliver and also what stock comes in in the period, and also the mix of what we're selling. The mix of what we're selling now is far larger than what it was when we initially listed, which almost every single model and vehicle line that we had came with a volume bonus. It's difficult to answer, but it's running in the midpoint of where it has run historically.
Yeah, understood. Thanks, Aaron, and thanks, Nick. Thanks for your time.
Sure. Well, thanks.
The next question comes from Brendan Carrig with Macquarie. Please go ahead.
Good morning, Nick and Aaron. Just, actually, no, Nick, I'll just transfer a few questions, so I'll just ask the last couple of questions that I had. The first was just on the services and parts, actually the revenue there seems to be holding up reasonably well despite the lockdowns you saw last half. Basically the revenue is still a bit flat half-on-half. Where could we expect that to sort of rebound to? Or at least do you have an idea for what the impact of the lockdowns in New South Wales and Victoria had on those revenues in the last half?
Yeah. It's an opaque glass to look through, Brendan. I believe the go-forward number is between 6% and 9% organic growth in this area. During the half, of course, we grew at 10% across the service and parts area. However, I would say in the 2021 financial year, first half, we were impacted heavily by a Victorian lockdown that was more severe than the one that came through this year. This year, that was balanced by having lockdowns for 114 days for both our New South Wales business and our Victorian business.
What I think you're actually seeing in the result is the impacts of the New South Wales and Victorian lockdown this year equalizing out the more draconian Victorian lockdown from the year before. What you're seeing is a real underlying growth of about that 10% in the business. However, when you roll through to the 2023 financial year in the first half, hopefully we're not gonna have any lockdowns, and hopefully you'll see the impact of us coming out having no lockdowns and an underlying growth. I'm hoping that the impact of increased service capacity coming through from Melbourne, Ringwood, Alexandria, and Canterbury will also increase our capacity to take on increased demand in the service and parts area. We're pretty positive about this.
We think the second half of the year is gonna be solid. We think the first half of the 2023 financial year might be even better.
Yeah. That's all very clear, Nick. Yeah, maybe looking or asking in a different way then. If I look back at the 2019 calendar year where you had AUD 250 million of revenue, so that's obviously ahead of the two COVID-impacted years that we've just experienced.
Yeah.
You've got more sites and your business has grown sort of today versus where it was in 2019. Is it fair to say that 2019 as a base, plus there would have been some organic and inorganic growth over the last couple of years, and so therefore, you know, in a normal, uninterrupted year, you should be running ahead of where you were back in calendar year 2019?
That's a great way of looking at it.
Okay, excellent. That's all.
That's exactly the way to look at it, I think, Brendan.
Excellent. No, that's really helpful. Just on the brand strategy, actually. Just the more recent acquisitions do seem to be moving a little bit more away from sort of the high-end luxury and prestige and a little bit more towards mass market, so Kia and Subaru, Mazda, as three more recent examples. Can you just sort of elaborate on the strategy and how the brands might start to evolve over time?
Sure. First of all, it's not a move away from luxury brands. We'll continue to go and execute on luxury brand acquisitions when they come through. Only 14% share across the luxury market. We think we've got quite a big runway there. Mazda has always been a brand that we've had. It's been a tightly held brand, though, as well, Brendan. Opportunities have come slowly in that brand for us. We'd like to go and expand with Mazda. It's a great profitable brand, but it sits within that prestige segment that we've always identified.
The Subaru business that we're purchasing in the first half of this year, that is the largest prestige segment brand that we are not operating in, and it is indeed the largest Subaru volume site in New South Wales. We're exceptionally excited about bringing that business on. We are expanding our template a bit when we're looking at that, at the Kia acquisition. I tried to go through our acquisition criteria at the start of the presentation. We really like the Kia brand. What we like about the Kia brand is its premium approach to product, its premium approach to doing business. It's got quality volume aspirations moving forward.
When we see that business, we see a business that sits well with Autosports Group's DNA, and we see a business that can contribute well into the future. We'd like to do that well and have the opportunity in the future with that Kia brand to expand further. We do see some other volume brands as exhibiting those same qualities. As the opportunities come up, we'll look at those individual acquisition targets, and if they work for us and they fit that acquisition criteria, we'll expand further.
Okay, that's helpful. Then the last one just for now. Gross profit. You covered off on or at least the gross profit margins. Then maybe the other factor that is sort of still getting a benefit given the current environment is just the interest cost side of things. It sounds like it's probably gonna stay depressed for at least the next half, potentially a little further. Is that sort of the right way to be thinking about the interest piece? It's sort of at AUD 4.7 million or AUD 7 million that you incurred this half.
Yeah. Yes, it is. I'd actually like that expense to be higher. If that expense was higher, Brendan, that would mean that I was getting quicker stock turn into the business and more stock coming through, and that would mean that my revenue line would be going up. I'm actually. The compressed interest line, while saving me a little bit of money, is actually showing that I was under stocked during the period as well. I'd actually like that line to go up a little bit.
Yeah. No, that's fair. Sorry, just one final question. I think it's toward the end of last year, you mentioned that there was a reasonable size shipment of cars that you had sort of on the way that were expected to arrive sort of around now or maybe into March. Has there been any reason to suggest that is not going to happen, sort of since then to now?
March will be our strongest delivery month in five months.
Okay, excellent. Do you have any other sort of foresight into other months just based off what's sort of on its way on ships at the moment?
Well, yeah, look, on a very quick basis, it starts becoming more opaque after the August summer holidays in Europe, but arrivals in March and April are good. Our arrivals are a little bit weaker in May. Arrivals are good in June, July and August. Then our OEMs expect that post the August holidays they'll be able to ramp up production. So while I don't have a great line of sight post August, up until then, I'm pretty happy with what's coming through. I'd like a little bit more. I'd like them to go and build some of the bigger cars for me on the way through.
What I'm getting is right in line with what I've been expecting for the last 12 months.
Okay, excellent. I'll leave it there. Thanks, guys.
Thank you.
The next question comes from Sarah Mann with Moelis Australia. Please go ahead.
Morning, guys. First question from me is just around the property strategy. Clearly you've been purchasing more and kind of consolidating some of your brands, like the Lamborghini site you mentioned in Brisbane. Can you talk to kind of your long-term strategy around property acquisition, like looking at your portfolio now, what are kind of your aspirations of, you know, the number of sites that you wanna own? Maybe also a bit around, I guess, consolidating brands on some of the sites that you might purchase.
There's a couple of things there, Sarah. I'll start with consolidating brands on the same site. We think there's clearly synergies available if you utilize the same site. We've been growing, and particularly recently, we've been growing our site at Alexandria, which has got Mazda now. It will soon have Subaru and Kia. It's got Land Rover and Jaguar, and it's got the five super luxury brands that we operate in the center of Sydney. There's no doubt that that drives synergies there. However, the type of brands that we operate with and the quality brands that we have, we believe that they should be set up, they should be individually represented. The front of house and the presentation of the brand should be separate.
The people that work in the brand should be separate. It's likely not an open platform, but it is one that drives synergies in the back. In terms of the ownership of the real estate, it makes strategic and financial sense so long as our balance sheet can cope with it, to own as much of the property as we can. There's simply an interest to rent arbitrage there, which makes sense, and it doesn't drive your cash flows away because the cash flows are supported by the rent that you're already paying. We're concentrating through the period on sites that are in our mind, strategically important long-term into the future.
Predominantly, we're looking at retail sites which are brand specific that we think have a long-term footprint. Two or sort of three answers in there, Sarah. We want the strategically important sites because we think it gives us flexibility, it gives us a strong control of the distribution of the brand or a great distribution point. We don't want to go and we want to build the assets behind them in the balance sheet. We want it to be cash flow neutral. We also recognize that we can only grow at a certain pace with the balance sheet. That is accelerating obviously, and we've been growing at about AUD 20 million in property per six months period.
I think that's sort of like, is about right with our current
Excellent. No, that makes a lot of sense. The other question is just around the distribution model. Obviously Benz has gone to agency. I guess other changes, at least maybe from Europe, some of the OEMs are saying, you know, with the EVs, they might go direct. We saw that with, I guess, the Honda model as well. Just interested in how you see the distribution model, I guess, potentially changing in the future and also any color you can give around the Mercedes-Benz transition to agency from an economic standpoint as well would be excellent.
Yeah, I think it's good and proper that everybody looks at different distribution strategies and looks at making sure that they have a distribution strategy which is right for today and limits the opportunity for anyone to disrupt the business model that we all enjoy. I don't have any particular issues with people changing their business models, and I don't have a particular issue with people changing to the agency model. What I do want is to have a strong and sensible compensation package for it and a sensible margin structure on the way through. That is really something that I think is important on the way through for the OEMs to think about and make sure they get right.
We think the property strategy that we were talking about earlier actually dovetails nicely into this because we think that the distribution sites are gonna be very important on the way through. We think that the cost of distribution is gonna be important, and owning your sites reduces the cost of distribution and makes it more likely that that business models will work for us into the long term. If I look at the Mercedes-Benz challenge to agency, I think we won't have a clear idea until the second half of the year on how that is going.
The reason is that, for the last six to 12 months, we've been growing our order bank on the way out, and a large part of the cars that we're delivering today, while the agency model's in place, are vehicles that were sold under the old dealership franchise model. The revenues that we're seeing today probably don't reflect a full-time agency outlook. The supply that we've got on agency at the moment is quite constrained because a lot of the cars are pre-sold. I don't really think we've got a great view of it today, Sarah. I can say the second half of the year, we think maybe the revenue line is impacted by about AUD 70 million-AUD 80 million from our side.
That's just accounting, an accounting treatment. The gross will go into the gross. Our gross will probably hurt a little bit as a consequence in margins, but we'll lose about AUD 70 million-AUD 80 million revenue.
Okay, that's great. The used car component. You mentioned that's the opportunity for growth for you.
Yeah.
There's a bunch of competition in the market or new competition that's come into the market. Just interested-
Mm-hmm.
Yeah. With lots of capital, right? Just interested-
Yeah.
In your comments that you can make around what that increased competition means for your business and I guess how you're gonna differentiate/protect from that competition.
The way I look at it, Sarah, is you wanna go and stick to where you've got a critical advantage. Where we've got a critical advantage is where we're trading the car, where we've got an OEM source of the car, or we've got a contracted source for the car by fleet companies. In those areas, we've got a built-in advantage, coming from a new car, coming from the new car franchise point of view. That gives us a lower acquisition costs, and it gives us. We don't have to go and have buying teams out in the marketplace. When the only barrier to entry is capital, you wanna go and play where you've got advantages.
Autosports Group wants to play where we've got advantages, not where the playing field is dealt with people who have just got more capital than you do. We think that area is a good area for us to grow. We think that growth amount is between about 6%-10% growing. We think that growth is good, solid growth within the business, and that's what we're forecasting to grow that, this used car side of the business in the next couple of years.
Great. Last question from me. The M&A landscape, clearly conditions are buoyant at the moment. Are vendor expectations reasonable? Can you maybe talk to, I guess the quantity of opportunities out there in the market at the moment?
Yeah. Look, I can. I'll continue to say, Sarah, and I've said this probably consistently for the last two to three investor meetings. There's more opportunities around than we can reasonably execute. It is, as I always say, a really, really fragmented market and there's lots of opportunities that come to us, and I'm sure there's lots of opportunities that come to the other listed players in the marketplace. We don't have any particular issues with supply of opportunities coming through to us. In terms of vendor expectations, we think that given that there is a playing field for the next couple of years that we think will be pretty strong. We think that their expectations have up until now been pretty reasonable.
When we look at acquisitions now, we do look at what is the brand, what is the future product line up, and also right at the moment, we're looking at what is the order bank of that dealership because you're at times buying an extremely large order bank with above trend net profit in the new vehicle side of it. So that supports some valuations on the way through. We expect to be able to continue to make acquisitions over the next through the 2022 calendar year, and we expect that those ones will be good for us long term.
Excellent. Thanks very much.
Thanks, Sarah.
The next question is a follow-up from James Ferrier with Wilsons. Please go ahead.
Sarah asked my question, so, thanks.
No worries. Thanks. Thanks, James.
We have no further questions. This concludes our question and answer session. I'll turn the conference back over to Mr. Pagent for closing remarks.
Thank you, Tom. Thank you everyone for dialing into the call. I hope it was of use to you. If anybody has got any further follow-up questions, Aaron and I will be available to take them over the next couple of days. I'd also like to take the opportunity to thank our Autosports staff and customers during the last six months. We've had a great period financially, but also I've gotta acknowledge that during the lockdown, it's been very, very difficult for individual staff members, and we thank them for what they've done during the last six months period. Also I'd like to thank our OEM partners for giving us the opportunity to represent their brands, and we look forward to bringing you a great result in the second half of the year.
Thank you very much for your time.