I would now like to hand the conference over to Mr. Nick Padgett, CEO.
Please go ahead.
Thank you. Thank you and good morning everybody and my apologies for any inconvenience caused by us moving the start time for this to 9:30 from our original note of 10 am. But welcome to the investor presentation for the financial results for Autosports Group for the first half of the 2021 financial year. My name is Nick Paget, and I'm the CEO of Autosports Group. And joining me today, is Arab Murray, the CFO of Autosports Group.
This morning, I'll start with a short presentation on the group's financial and strategic performance of the first half of the twenty twenty one financial year. And following the presentation, I'll open up the line to any questions you may have. For any of you following the slide pack as much as I can, I will note the slides that I'm moving through, and that is the slide pack, which is lodged at the ASX this morning? If we start with Slide 4, it's pleasing, firstly, to report to investors that following a difficult and volatile period, the new vehicle market has returned to growth. The months of November, December January have all seen the new vehicle market grow at a rate of over 10% per month, November at 13.5%, December at 12.7% and January at 11.1% growth.
It's also pleasing to note that despite the significant disruptions over the last 12 months, as we've been grappling with the challenges posed by the COVID-nineteen pandemic, all of auto sports businesses are now fully open and running at full capacity. These factors have provided some of the framework for what is an improved result for Autosports Group in the first half of the twenty twenty financial year. During the period, statutory revenue was up by 7.8 percent to $903,000,000 The statutory net profit after tax was up 132% for the period at $16,000,000 The normalized net profit before tax was up 163 percent to $29,000,000 The normalized EBITDA was up 77.8 percent to $38,000,000 The business continues to deliver strong cash flow production. During the period, cash flow production was 27 $900,000 normalized, of course, for the impact of AASB 16. This strong cash flow has allowed Autosports to continue to grow by our acquisition.
And during the period, we agreed the purchase of the Jaguar Land Rover business in Brighton in Victoria. This business was settled last week and continues Autosports growth within the luxury and prestige segments of the automotive market. We're pleased to announce that the company will be paying a dividend interim dividend to shareholders of $0.02 per share. This dividend has been calculated on a cash basis for the period and factors in the company's desire to maintain an elevated cash balance through what is still an uncertain period. It is the company's intention to revert to its normal dividend policy as the external environment continues to reduce in uncertainty.
If we move to Slide number 5 to look at some of the statutory result highlights. The statutory revenue grew during the period by $65,100,000 to $903,000,000 This result was achieved despite the revenue our revenue contraction of $49,000,000 within our Victorian division. Gross profits grew by $12,100,000 as the group restored operating margins, particularly in the new and used vehicle sections of our business. Statutory operating expenses were down by $6,700,000 for the period, inclusive of the acquisition costs relating to the last three acquisitions that we had of $300,000 costs relating to the closure of Volvo stores in Mt. Cropat and Brighton of $400,000 redundancy costs during the period of $300,000 and JobKeeper wage support during the period of 10 point $6,000,000 Statutory EBITDA was up $18,800,000 on the prior corresponding period or 50.4%, impacted by a $19,000,000 adjustment with the application of AASB 16.
Statutory profit before tax of $23,500,000 was impacted by $4,500,000 in AASB 16 adjustments and benefited from lower interest costs as inventory levels dropped during the period. Strong cash generation and tight capital management saw the business cash balance rise $22,800,000 to $61,000,000 As I mentioned earlier, this has allowed us the scope to return the $0.02 dividend to interim dividend to shareholders whilst retaining an enhanced liquidity position to combat any uncertainty, but also to position the group to take advantage of any growth opportunities. If we move to Slide 6 to have a look at the normalized results. Normalized revenue was up 8.1%, driven almost entirely by growth in new vehicle revenue of 22.3% versus the prior corresponding period. This growth was reflective of increased demand, particularly in December quarter, where the market delivered its double digit growth.
Importantly, the new vehicle revenue growth continues to be limited more by supply constraints than demand. This tightness in supply has supported margins, improved our order banks and reduced our operating costs. It is clear that this tight inventory position will continue through the balance of the 2021 financial year. On the flip side of this, the first half of the twenty twenty one financial year was heavily impacted by the Level 4 lockdown in Victoria. Victorian revenue was down 30% versus the prior corresponding period.
Our back end revenue streams of service, parts and collision repair were particularly affected during the lockdown. Put simply, these divisions could not open at full capacity. As a result, the total service revenue was down 7.1% for the group and parts revenue was down 22% for the group, driven, of course, by a fall of 46% in Victoria across those two divisions. This decline in back end revenues, particularly in Victoria, was not a demand led decline. It was a lockdown led decline.
We've been pleased to note a strong rebound in the back end revenue streams as the months of November, December January. On an operational expenses basis, growing revenues and tight expense management has unlocked operating leverage for the business. Our OpEx ratio dropped from 14% in the first half of twenty twenty to 12.4% in the first half twenty twenty one financial year. Of course, the September quarter saw lower revenues supported by jobskeeper wage support during lockdown. However, the revenue growth post lockdown has seen these improved OpEx ratios remain even with increased raw expenses.
As we move into the second half of twenty twenty one financial year, we can report January and now February are trading in line with our expectations with strong new and used car order banks and improved back end performance. The acquisition of the Jaguar Land Rover business in Brighton has been completed, and this will contribute to the second half earnings. Additionally, the acquisition of underlying real estate in Brighton takes the group's real estate holdings in key sites to $55,000,000 This growth in real estate holdings will assist in underpinning the group's balance sheet with strong tangible assets, but it's being done on a cash neutral basis to maintain capital for growth. I'd now like to ask Aaron to go through the detail of the first half twenty twenty one financial trends, margins, expense management measures, cash flow and balance sheet.
Thanks, Nick, and good morning to everybody on the call. If we move to Slide 8 and normalize the revenue bridge. AHT's first half twenty twenty one revenue has increased $69,000,000 on PCP. Revenue growth of $83,000,000 has come from prior year acquisitions. Like for like revenue growth, excluding our Melbourne business, have increased $35,000,000 on PCP.
Our Melbourne businesses had a decline of $49,000,000 on PCP as a result of the Stage 4 lockdowns that ran from August through to October. If you can move to Slide 9, financial trends. In what was a strong growth period in the New Vehicle market over the FY 2015 to FY 'eighteen period, ASG through a mix of organic and acquired revenue has shown consistent revenue growth. Despite a falling new vehicle market through FY 2018's FY 2020 and continued declines in the first half of twenty twenty one, ASG has maintained its revenue through strategic acquisitions and like for like growth, leaving ASG's current portfolio well positioned to take advantage of any future market growth. Historical EBITDA after FY 2015 to FY 2018 has also experienced strong historical growth in what has been a buoyant new car market.
Over the FY 2018 to FY 2020 period, ASG's EBITDA has been impacted by a combination of a number of one off effects such as WLTP quarantine, COVID-nineteen and the stink bugs. Improved GP margins and reductions in OpEx have driven EBITDA in the first half of twenty twenty one. Slide 10 margin overview. AHT's first half twenty twenty one gross margin of 16.7 percent has seen significant improvement driven by improved new and used vehicle margins as a result of tighter supply lines and higher demand. GP margins for the first half have also been impacted negatively due to forced COVID-nineteen lockdowns limiting the revenue flowing through the higher margin departments of service and parts.
ASP and EBITDA and PBT margin have improved significantly to 4.2% and 3.2%, respectively. The margin upswing is a result of improved GP margin and a $5,800,000 reduction in like for like OpEx. The business expense base has been reset and will continue to drive operating leverage with returned revenue volumes. We move to Slide 11, expense management. Through COVID-nineteen, ASG targeted OpEx reductions resulting in like product OpEx reduction of $5,800,000 on PCB.
Dollars 3,300,000 of the reduction came from employee costs with $3,000,000 from other fixed expense areas and an increase of $800,000 in occupancy costs. Additional OpEx of $12,000,000 from prior year acquisitions will also reduce as further synergies are driven through the acquired businesses. AST plans further fixed cost out in the second half of the year in areas of leasehold costs, employee costs and other semi fixed expense reductions. Slide 12, cash flows. AST had strong normalized operating cash of $27,900,000 and a closing cash balance of $61,600,000 at December 20, which has been driven by strong operating profit, first half ATO deferrals of $13,000,000 bringing the total balance outstanding to $45,000,000 at December 2020.
OE and Financia support with capital repayment holiday of 800 and $28,000 No final dividend for FY 2020 due to COVID-nineteen uncertainty and a decision to hold cash and strengthen liquidity. The company increased borrowings by $7,400,000 which is predominantly insurance premium funding, which has been offset by $10,200,000 of repayments in borrowings. F1 2021 saw $2,200,000 spent on PP and E in pre committed panel shop and workshop expansions. AHT expects cash impacts through the second half of the year of $4,400,000 net of borrowings for the settlement of the Brighton JLR business and underlying property. Dollars 4,000,000 for 20.21 income dividend and repayment of $8,800,000 in APO debt.
Slides 13 14, liquidity and balance sheet. ASG's liquidity has increased by $120,800,000 to $350,100,000 since June 2020, strengthened by an increase in cash available of $22,800,000 Liquidity improvements have also been supported by a significant stock reductions, resulting in an increased unused bailment of $99,000,000 $12,000,000 of bailment facility has been converted to capital finance facilities to cover the Brighton JLR property acquisition and has ASG now has a total of $335,000,000 in unrolled facilities. ASG's net debt of $26,200,000 is down from $49,400,000 at June 20 $75,200,000 at December 2019. ASG's total corporate debt of $87,800,000 includes $27,500,000 of borrowings on profit with a carrying value of $32,000,000 ASG has improved its balance sheet position to ensure it is future ready, whether it be defense of future COVID interruptions or take advantage of consolidation opportunities. I'll hand back to Nick now to take us through our strategic overview.
Thanks, Aaron. I'm starting on Slide 16. And what I'd like to do is just take a couple of minutes to update you on our strategic and operational direction. Firstly, since our inception in 2006, Autosports Group has followed a simple but focused strategy. That strategy is to grow within the prestige and luxury segments of the market and to focus on the East Coast of Australia.
This slide attempts to show why. Since 2006, the luxury market has outperformed the total market. During that time, the luxury market has grown at a compound annual growth rate of 4.5%, while the total market has fallen by 0.3% on a compound growth rate. And of course, that's impacted by the declining market in 2020, but the compound but the growth rate of Luxury has far exceeded the total market. From 2014, when we try forward numbers back for our 2016 prospectus, which is why we picked 2014, Autosports Group's new vehicle compound annual growth rate has been 19.4%.
We've delivered this growth by being in the right segment and being able to grow both organically and by acquisition because of being in that segment. In the first half of the twenty twenty one financial year, Autosports performance versus the market remains competitive. In the first half of twenty twenty one financial year, total new car market fell by 6.7%. The luxury market fell by 6.1%. Autosports Group's new car revenues, as we have seen, grew by 22.9%.
And on a like for like basis, new car revenue grew by 12%. On a geographic measure, the East Coast continues to be the largest market for new and used vehicles. Interestingly, in the 2021 financial year first half, the contribution of our Victorian division to the group's total revenue dropped from 22% to 14% as it battled one off factors. But some of those one off factors are explored in Slide 17. As we've noted, Autosports Group is well positioned for growth.
We've got diverse revenue streams. We've got an improved OpEx and a strengthened balance sheet. All these things help. We've got support of OEM financiers. That helps as well.
And in the first half of the twenty twenty one financial year, we did, however, see some external environment factors, which impacted on the business. They were particularly the impact of the level for lockdown in Victoria, particularly this particularly upset the revenue balance of the business on a temporary basis. Since listing, we've been growing our important back end revenue streams to drive an even gross profit split between the front end, which is the new and used vehicle sale, finance and accessories part of our business and the back end, which is the service parts and collision repair part of our business. In 2019 financial year and the 2020 financial year, we reached a mix of 52% of our gross coming from the front end and 48% coming in the back end, which in our mind is an almost ideal gross profit generation split. In the first half of twenty twenty one financial year, this dropped back to 62% in the front end, which was powered on by strong growth in new vehicles and 38% in the back end impacted by our inability to open in Victoria for an extended period of the half.
The back end impact for the business was clear, and it is temporary. There was a 15% reduction in back end income revenue for the group that was stable in New South Wales and Queensland, which grew at 1.2% during the period with only collision repair volumes impacted, but it was 46% down in Victoria. This temporary imbalance in revenue streams is an H2 2021 financial year focus area for the group, and we're pleased with our progress over the months of January month to date in February. Subject to conditions, we expect these back end headwinds to ease over the course of the next 6 months. Slide 18 provides some additional data on that H1 twenty twenty one headwinds.
Used cars were strong in margin retention, strong in gross profit generation, strong in demand, but supply was constrained. And as a result, our revenue declined in this area by 7%. Service and parts were combined 15% down, as I've said, versus a 2015 to 2020 compound annual growth rate in this area of 20%. As I've said, we're already seeing this headwind debate. Collision repair was down in the first half of the year for the same reasons.
In addition to this, vehicles being off the road during the first half of the year also impacted this area as did some parts supply shortages from our OEMs. We're also seeing a rapid return in collision repair revenues, all of which has Autosports looking at growth opportunities similar to our recent acquisition of Jaguar Land Rover in Brighton. If we move to Slide 19, we recap some our growth record since listing and our opportunity areas. Since listing, Autosports Group has completed 8 acquisitions. These have incorporated the luxury brands of BMW, Mercedes Benz, MINI, Land Rover, Jaguar, Aston Martin, Rolls Royce, Bentley and McLaren.
We've also opened 4 greenfield sites, covering the brands of Volvo, Mini, Maserati and Bentley. In 2021, we'll start construction of an additional greenfield site in Ringwood for BMW. This site will be operational late in 2022 calendar year. We continue to see the franchise automotive space as a highly fragmented market with further opportunity for us to grow. We still only account for 2% of the total market, and we believe conditions still exist for world price and complementary acquisitions.
With lower debt, high liquidity and supportive financiers, we believe we're well positioned for growth. Before I open up for questions, I'd just like to quickly recap on the 2021 financial year first half results. Revenue, EBITDA and net profit after tax were optimized. Strong operating cash flow came through the business, normalized to $27,900,000 Operating expenses dropped off the back of a like for like reduction of $5,800,000 in expenses. December November December trading recovered strongly on the reopening in Victoria.
Our Luxury and Prestige East Coast strategy remains focused and relevant as the luxury market performs well. Our on strategy acquisition of JLR Brighton has settled. And as I've said earlier, we're well positioned for growth. Through the next 6 months, we're going to focus on maintaining these strong new vehicle order banks and the new margin levels that we've achieved in the first half of the year. We'll be helped in that with some new vehicle supply constraints over the period.
We're looking to maintain strong cash preservation and liquidity disciplines from the first half of the twenty twenty one financial year. And we're going to concentrate on the rebound in service and parts in Victoria particularly as the market remains open there. We're going to develop further synergies, as Aaron touched on earlier, and cost out initiatives to drive improvements in our OpEx ratio. And we'll work to integrate our new JLR business in Brighton. Insofar with the outlook, it does remain too uncertain to give firm guidance, but I can say that January has been trading at and above our expectations.
February month to date is trading well. The revenue growth for the period will still be constrained by new vehicle supply. The new and used car vehicle supply constraints will support improved margins that we've been enjoying over the 1st 6 months of the year, and consolidation opportunities remain available for the business, and we look forward to exploring some of those in the second half of the year. Now I'd like to turn over the phone to anybody who has any questions for Aaron or myself.
Thank you. Your first question comes from Tom Godfrey from UBS. Please go ahead.
Good morning, Nick and Aaron. Thanks for taking my questions. Can you hear me okay?
Yes. We've got you clearly, Tom.
Great. Maybe just the first one, just around sort of the demand that you're seeing across your business at the moment. There was a great slide in your last pack that sort of showed us the growth in your order bank. I'm just wondering, obviously, supply constraints continue to impact your revenues. But what sort of growth have you seen across your order bank over the last sort of 3 months?
And then how are you seeing the demand environment as of today?
A couple of things. Firstly, Tom, I did warn you last 6 months ago that I wouldn't put that slide in every time. But the so demand continues to exceed our deliveries. And what we're seeing is about a 10% to 15% delta between our deliveries and our order item. So our order item is continuing to build up a strong order bank.
And we walk into February with the largest order bank that our company has ever had.
Right. So just to be clear, Nick, if we use the Vfax data as sort of a proxy for revenue growth, you can sort of get to an order bank growth rate in sort of mid-20s. Is that fair?
You can get to that number. I won't sit on just yet. And I'm not sure that I think that's a bit high, that number, but we're our right is solidly in excess of our delivery rate at the moment.
Got it. Very clear. Thank you for the color. Second one I just wanted to ask is around the cost out. There's a bullet point on Slide 11 that sort of speaks to further fixed cost out in the second half of fiscal twenty twenty one around leasehold costs, employee costs and other expense lines.
Can you just maybe give us a sense for the materiality or potentially the quantum of what that could be in the second half?
Yes, I can do that. Last 6 months or the 1st 6 months of this year, as we talked about 6 months ago, we targeted around $2,000,000 And I think we achieved $5,800,000 So we overachieved during the period. I think we're targeting about the same sort of cost out on our fixed and semi fixed expenses in the second half of the year.
Got it. Very clear. And then just last one from me, just around cash flows. I'm sort of noting that the ATO debt continued to build in the second half. It's now at $45,000,000 How should we sort of think about that liability unwinding and how that will impact cash flows over the next 6 to 12 months?
Yes. At the moment, the APO, we've entered agreements on all of the debt at the APO to repay it over 36 months. Those repayments started in through September November on most of the businesses. At the moment, there is an interest rate attached to the loan. However, the ATO is still remitting all interest when we call up and ask it to be remitted.
So whilst we've still got interest free loan with the IPO, we'll take the 36 months or make a decision to repay it. When COVID settles down a little bit, we might make a decision to pay it a little bit faster.
Got it. Thanks for taking my questions, guys. Congrats on the results.
Yes. Thanks, Tom.
Thank you. Your next question comes from James Ferrier from Wilfans. Please go ahead.
Hi, Nik and Ann. Congratulations on the results.
Thanks, James.
First question surrounding demand. Just curious what your BP is telling you around the sort of the type of customer you're seeing coming in and writing an order? Is it sort of the regulars that are coming in and now is the time that they're going to upgrade trade in their cars? Or your DP is seeing a lot of new customers different sort of profiles to what they would normally have seen historically?
I'll start with that, James. Firstly, I don't have to ask my DPs that. Our CRM system and our Salesforce system is so solid now. At the moment, I can see exactly where our inquiry is coming from and exactly the sources of the inquiry. So what we've seen during the period is good solid retention of our customer, the customer base, which was your first part of this.
That's been at the same level as it's always been. But the growth that we've seen in demand has come from new customers. A lot of that inquiry is being sourced digitally. And that inquiry is new inquiry to our business. And it's one of the big improvements that we've made in being able to handle our business over the last 6 months.
We're not quite there on being able to effectively sell online. Our products are incredibly complex, big price, lots of different options, but we're getting much better at generating our inquiry in Genrepan, refining our inquiry online. And that's where the growth is coming from in new customers who are dealing with us through the first part of their buying process online and the growth is there, James.
Yes. Okay. That's encouraging. I know in the past you've talked about seeing pretty limited impact across your customer base from the changes that took place with F and I. And it's the nature of your customer base and many of them purchasing with an ABN.
Is that still the case with these new customers that you've managed to acquire into the pipeline? Are they similar customers in nature along those lines?
Yes. They certainly are in new cars where we've had a slight change of mix, James, in our used car business. We're probably retailing more cars than we used to. So the retail wholesale mix has changed a little bit. And so as we go deeper down in price levels of used cars, our penetration and mix of finance drops a little bit.
But over the 1st 6 months of the year, we were up in finance and insurance by nearly 5%, which is pretty solid in terms of income generation during the time from finance and insurance.
Yes. Okay. That's helpful. You talk about new vehicle or vehicle supply constraints in general, I guess, applies to both new and used in this environment. Just I'd like to get a feel, if you can, all things equal, for the perfect environment.
And based on those constraints, what's the sort of maximum life for like sales growth you could actually get in the next 6 months with those constraints?
James, I can't answer it. It's too complex a question, and I'll give you a headache Because I can get enough cars to have good growth, they're just not exactly the cars that the market's demanding. So across different brands, I've got some 1st quarter or March quarter shortages in Land Rover, March quarter shortages in Volkswagen, some March quarter shortages in some super luxury brands like Lamborghini. But I seem to have enough supply in the Q1 in BMW and Mercedes Benz. If we continue with this order right, we might have some supply constraints in the Q2 in BMW.
We may have some supply constraints coming at the end of this period in Volvo. But I mean by that time, we should have decent supply coming through in Land Rover and Volkswagen. So it's all up and down. We're probably short on white commercial vehicles in our Volkswagen, particularly in our Volkswagen brand. I think that's an area that will have strong demand through the next period.
It doesn't impact the outlook as much as some others, but I think the 100% investment write off will continue to have a strong positive impact on white commercial vehicles during the next couple of months. I think there'll be shortages there. So that's a garbled answer. I'm sorry, James, but I just can't give you a perfect one.
Yes. No, that is helpful. That's helpful color. I guess, if I can not put words in your mouth, but maybe if we look at the like for like growth that you achieved, like for like revenue growth you achieved in the first half and putting Victoria to the side, it doesn't sound like the supply constraints are going to put that sort of run rate of like for like growth at risk?
James, without taking the words that you put in my mouth, I'll say that the opportunity exists to go and have that sort of runways running.
Yes. Okay. That's helpful. Last question for me is just around the margins. The PBT margin, if we use that as a reference point going into the second half, I guess it's just too simplistic to strip out job keeper and say, well, that's your run rate of margin going into the second half because you're going to have Victoria, touchwood, stay open for the full 6 months.
So how would you what sort of color can you add to the margin outlook in the second half relative to what you achieved in the first half?
Well, I think the best color I can give you is I think we're going to be 8 ks new and used car margins through the period. Our order bank is pretty solid, and I think the demand will run that through. I think if you have a look to the slide that we presented on the mix between front end and back end, as we get an improved mix in back end, our margin has opportunity for upside. We've got to unlock that. And against that opportunity for upside, we've got no JobKeeper money coming in during this period.
And my expectation is that or my view is that we'd lost I think we've guided twice $7,000,000 in the period that we were locked down in Melbourne. And I've got to say to you, I didn't budget to lose $7,000,000 I actually budgeted to make a profit. So if you combine all those things together, I think we've got chance for actual we've got an opportunity if we execute both Actual Margin Growth at the GP level. And how we maintain our OpEx during the period will determine if that flows down to PBT.
Yes. That's terrific. Thanks for the color. Thanks, guys.
Thanks, James.
Thank you. Your next question comes from Brendan Carrick from Macquarie. Please go ahead.
Good morning, gentlemen. Just a few follow ups, if I may. Maybe just starting on the demand side. So well, pretty well covered there. But just interested in any comments that you can provide around potential risks around your sort of perspective demand and future order book and the potential for substitution into alternatives if the supply environment improves to some of your competitors or for alternative brands?
Can you provide any color as to how you're thinking about that potential?
Yes. 2 or 3 points in that, Brendan, for you. The first thing is, this is why it's great to have the full basket of goods across the luxury segment. We think that people will if they move because of long supply lines, will move amongst the segments that we operate. So that's a great strength that we have.
But secondly, we are conscious of overextending the lights that our customers will accept. And we're conscious that we don't want to run into a period where they decide to roll over and keep their current car because they can't get supply quickly enough. That will impact on us both on a new car basis and also a used car supply basis. So we're watching it closely. We think about 6 months in luxury in terms of order bank and order right is something that we can manage if we communicate well.
We think above that, particularly in the more luxury market. We start to run into certain problems. We're not quite there yet, but we're watching it pretty closely. It does not impact us over a 6 month period, but we're watching it closely, Brendan.
Okay. That's helpful. And then just on the cost out that you mentioned, the sort of $5,000,000 to $6,000,000 that you're still targeting for the next half. How much of that relates to the BMW Melbourne sites? Or is it more broadly across the portfolio of sites?
And is Melbourne more of an FY 'twenty two story?
Yes. Melbourne is more of an FY 'twenty two story. The Melbourne cost out for that should be about $1,000,000 and we've been working on that for a couple of years. But the this is more broadly based. There's some fixed expense cost out in New South Wales, fixed expense cost out in Queensland that we've just negotiated.
So those things will start to appear in this 6 month period. We've also got some semi fixed expenses that relate to those fixed expense costs out, which will apply through. Just to correct an assumption that you made, I said we made 5.8 reductions in the first half on like for like. We're only targeting 2 in the second half. So we're going to say 5 will be beyond where I think they're going to be.
Okay. My apologies. I must have been set. Yes. Thanks
for clarifying.
And then last one for me. Just on the back end revenue growth, you talked about the 20% CAGR. So obviously, this was an interrupted period. But is that 20% representative of where you think the revenue growth profile can return to? And therefore, over time, the mix would continue to increase, I guess, in the back end gross profit contribution?
Or will back end revenue growth be more aligned with front end over the medium term?
So we're targeting about that $0.52 to $0.48 split in gross. One of the things that works counterintuitive to the proposition you put to me is if the new car market grows strongly because that will drag revenue to the front end or growth to the front end. And so long as the new car market, which is growing well, grows, it's hard to get us back to 48% back end. The growth the category that we had at 20% did have strong growth strong growth from strong sales in the previous period, but also had us taking on greenfields panel businesses during the time. We'd still like to do that.
It's not an organic 20% CAGR, but we do have the opportunity to expand our business in panel and in service to go and continue to grow. So it's an acquisition led 20% CAGR opportunity rather than an organic one, if that makes sense to you, Brendan.
Yes. That does okay. I might leave it to Al said in the rest of it later on. Thanks very much.
Thank you.
Thank you. Your question comes from Tom Tweedy from Moelis Australia. Please go ahead.
Good morning, gents. Thanks for the presentation. Just had a question around the acquisition environment and vendor expectations. Obviously, the deployment conditions, how are you guys assessing pricing at the moment?
Pretty simply, Tom, we're looking at the last 3 or 4 years trading, and we're taking a line through that period and doing an average multiple as a starting point for vendors. But really, what I do and what I'm going to continue to do when we make acquisitions is look at what that acquisition looks like within the Autosports template and the Autosports expense base and Autosports margins because we're largely looking to acquire within brands and areas of the market that we have a really good strong feel on the revenue and margins we can generate. And when I when we make acquisitions, we're looking at what our future outcome is going to be as to what we pay for the business rather than what it was historically.
Okay. Brilliant. And the other question I had was just around, obviously, Holden moving. Honda is going to the agency model, and I think there's some rumors that Mercedes Benz are doing the same. How do you guys think the dealer model will change or evolve for the other brands?
Or how do you think they're positioned for that?
Yes. Okay. So it's not a it's no rumor with Mercedes Benz. They're changing on the 1st January 2022, moving to a complete agency model. And we're a Mercedes Benz partner in 3 locations.
And that model is slowly becoming more transparent to us. Obviously, I can't divulge all the details of it at the moment because they're not set. But what like but I think the other brands are all looking at what Mercedes Benz and Honda do, and they're looking at whether it succeeds. I think the broad thesis is that if we run an agency model, they own all the stock, they take the marketing, they take the distribution costs away from us, so our OpEx goes down materially. But our margin reduces through and we're trying to get to a position where those two things square out and the risk gets reduced for us, but the margin does get reduced as well.
Also, sorry, the margin opportunity. It does allow better sharing of stock between businesses. It does allow a whole lot of upside in terms of clarity in pricing. But how it operates, I won't be able to tell you fully until I've been operating in it for some time. So I don't know if that's answered the question.
Mercedes are doing it. And I would say that the rest of the market is looking pretty closely at how they go and whether they succeed.
Yes, perfect. No, thank you. That's it for me. Thanks.
Thank you. Your next question comes from Adam Delivered from Taylor Collison. Please go ahead.
Hey guys, thanks for taking my questions. I can't imagine how hard that's been to run the business over the last 12 months, so well done.
Thank you, Adam. There has been some challenges, and we do like to be in control, and we haven't been all the time.
Look, my questions are more on balance sheet and metal, I guess. What are you seeing coming down the pipeline in both new vehicles but also genuine parts in terms of availability and also price rises?
Yes. So firstly, just normal price rises coming through at the moment. Nothing in short. And we did see some big price rises in some top end products, but I think their market is a touch more elastic than the bottom end of our price range. And secondly, on supply, on heavy collision panel parts, we've been a bit tight.
So that I mentioned that has been one of the headwinds in our collision repair business, and I think that continues through. And I think it's been exacerbated by difficulties on the Australian docks at the moment in getting things through. There's slow movement there at the moment, which is lengthening our pipelines a touch. In terms of vehicles, as I said earlier to James Ferrier, what we're seeing is specific areas which are tight. We're seeing in our both laying business, we've seen delays coming through the important Gulf 8 product, which is about 25% of that brand.
We're seeing similar delays coming from the similar platform Audi A3, which has been slow coming into the country. We're seeing some delays in use, but more that we have under ordered those cars and underestimated the demand there. And I think that's probably the big issue in super luxury. We're having some difficulties in supply out of the U. K.
They've had uncertainty about who's going to turn up to work today, which is a real difficult uncertainty to go and manage. But what I'm seeing in terms of pipeline is that it's the situation, as with everything else, is improving. And I think we're probably at the lowest point of supply arrivals in February March, and it's okay.
And so just to just in terms of like we can see the new car side is super tight. But what about genuine parts? Are they is there any supply gaps meaningful supply gaps in that market?
No. There was some supply gaps in really simple things like oil filters, but they seem to have evaporated now and we're certainly getting good supply through, just heavy collision parts, Adam. So if somebody is looking for waiting for a whole new side of a car after an unfortunate event, That might be delayed a little bit, and we're seeing the repair times drift out in our heavy collision accident repair area.
Yes. That's great. And just finally, given the footprint now or where you want to take it and kind of ignoring agencies, what's a normal inventory footprint for the business assuming no supply issues?
Yes. If I could buy another $100,000,000 worth of stock today, I would. That's about right.
Got it. That's great. Thank you.
Your next question comes from Ana Guan from Goldman Sachs. Please go ahead. Good morning, guys. Thanks for taking my questions. Just a couple of follow ups, if I can, please.
The first one is on GP margin improvement you guys achieved in the first half, especially, I guess, in the context of the sales mix you guys did. Are you guys able to quantify the benefit from front end services as far as there's a bit of headwind in the half from lack of service and all that sort of stuff, if that makes sense?
So not perfectly, Anna, because it's different across different areas of the business. The new cars that we're delivering to customers, I'll talk more in terms of markdown of recommend retail price than full margin because every brand has a slightly different margin setup. So what we're doing is through the 1st 6 months of the year, incorporating our demonstrator mix, we've marked down to the level of about 3.5% the available margin, which is tighter by about 3% in terms of markdown than the previous period. Having said that, Anna, the previous period was an incredibly constrained margin period. You've got to remember that the 20 20 19 financial years were off the back of 30 months of falling market and a situation where we were oversupplied in the market.
So when we say that these margins are significantly better in terms of retained margin, they are and they are maintainable for the certainly for the next 6 months. Whether they're maintainable further on is something that we've got to go and work on. But I don't think they go back to the previous margin structure. The previous margin in the front end was so compressed that we were under huge pressure on the front end of the business.
So is that right if I assume you could get 3.5% markdown in this half? And then I think if I heard it correctly, you said it's minus 3% versus the PCP. Does that mean the PCP was minus 6.5%?
Yes, that's about right.
Okay. And I suppose
in a normal environment, what should we assume
on a normalized what should we assume on a normalized basis, 5% -ish?
Yes. I haven't done the work on an average over the last 10 years, so I won't guess that number, but it's somewhere in between those two numbers.
Okay. And then on the used front?
So used car gross, we're dealing with almost no markdown during the period. And but previously, our grosses had been pretty solid. What the biggest issue in used cars for me is not so much the gross per unit. It's been the changing mix between wholesale and retail. We were retailing about 40% of our cars.
We're probably retailing more like 60% to 70% of our cars at the moment. Now what that's meant is our revenues dropped a little bit 7% as it did in this period. But the gross retention per vehicle and I'll talk this time in dollar terms rather than in percentage terms. At retail, our business average is about $2,500,000 to $3,000 per used car at retail and about $1,000 per car at wholesale. So the change of mix has delivered it more than a change in margin in the used cars.
Yes. That's really helpful. And then my second and last question is around OEM incentives going to the second half. What are your OEMs sort of thinking or targeting going into second half, I suppose, in the context of potential underlying of some supply constraints?
Yes. So the basic margin structure hasn't changed at all, Anna, and the basic volume basic volumes that they're asking us to conduct against our market share opportunity are sensible and good. The one thing that the things that they're not doing is there's no pressure on them at the moment to put discretionary or additional margin on the table to move cars that they've got. So they're not going to do that during the period, and there's no pressure on us as well to take them for that reason. The second point that I'm making, I think it shows through in our first half result is that when you don't buy as many cars from them, the opportunity for them to give you margin is reduced.
So our OEM KPI bonuses that you'll see in the pack have been reduced during the time, and it's almost 100% of that reduction is purchasing. I think it's $141,000,000 less in stock from this period versus the prior corresponding period.
Yes, that's great. Thanks guys.
Thanks Hannah.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Pageant for closing remarks.
Thank you. I think I've used up all the time. I just wanted to close by thanking all the investors for their time this morning and thanking them for supporting us over the last 12 months. Thank our OEMs as well for the great support that they've given us, particularly during the difficult time of COVID and to thank our staff for what has been an extraordinary effort over the last 12 months. Thank you very much and this result is yours.
Thank you all for dialing in.
That does conclude our conference for today. Thank you for participating. You may now disconnect.