Dial one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, David Ahmet, CEO and Managing Director of MotorCycle Holdings. Please go ahead, David. Thank you.
Thank you very much. Good morning, everyone. My name is David Ahmet, and I am the Managing Director of MotorCycle Holdings, and it's my pleasure to bring you the full year investor presentation for MotorCycle Holdings. As expected, 2023 brought its fair share of challenges and generally tougher trading conditions. However, we've taken steps to reduce our exposure to discretionary retail by diversifying into other parts of the motorcycle market. In particular, we've added the importing of new motorcycles to the business with a focus on supplying the agricultural and farming industry. I believe the purchase of Mojo Motorcycles has proven to be a good move strategically in the short term and also promises to be in the long term as well, as it opens the door to other growth opportunities. Firstly, I'd like to run through some of the key financial numbers for the year.
Revenue for the group is up 25%, driven by recent acquisitions. On a like-for-like basis, revenue is down just 1%. Our gross profit rose 17% to AUD 154.6 million, and our underlying EBITDA rose 13% to AUD 55.3 million. NPAT remained steady at AUD 23 million. The net assets rose 27% to AUD 197.6 million. Our board has declared a dividend for the half, for half a year of AUD 0.12 per share, taking the total to AUD 0.20 per share for the full year, which is in line with the previous year. Now, I'd like to talk about some operational highlights for the year, which include a very strong top-line growth of 25%.
We've cemented our position as the market leader and now command a 14.3% of the total market, the new motorcycle market. We achieved these results against the backdrop of rising interest rates and increasing costs, cost of living pressure. The right timing of the strategic acquisition of Mojo Motorcycles, which makes us reliant, less reliant on discretionary spending and gives us more exposure to the agricultural industry. Now, let's have a closer look at the profits. As mentioned, total income was up 25%. The cost of sales was up 29%. We're finding the market more competitive, and a gross profit margin has come back from the highs of 29% to a more sustainable 27%.
Operating expenses are up 19%, which leaves us with an underlying EBITDA of AUD 55.2 million for the year, or a 13% increase. The AASB 16 lease standard results in an increase of thirteen, an increase in expense of AUD 13.8 million, up from AUD 12.1 million the previous year. This creates an underlying EBITDA of AUD 41.4 million dollars, when compared to last year's accounting. The same way as the last year, of last year. Additional expenses for the year include acquisition expenses, expenses of AUD 1.5 million relating to the acquisition of Mojo Motorcycles. Depreciation and amortization of AUD 5.4 million was up 43% on the previous year, and bank interest of AUD 1.9 million was up from AUD 220,000 the previous year.
This gives us a net profit before tax figure of AUD 32.5 million, the same as last year, and a net profit after tax figure of AUD 23 million, also in line with the previous year. If we had a look at the business on a like-for-like basis, excludes the likes of Mojo Motorcycles and several other dealerships, we have a total income of AUD 452 million, down just 1% from 454. Gross profit, AUD 123 million, down 5% from 129. Operational expenses were up 7% for the year. These expenses were up 12% after the first half. So if we look at the second half in isolation, there's been no increase in expenses effectively.
This was due to a focused and disciplined approach to a cost reductions and expected to flow into the new financial year. The underlying EBITDA, like-for-like, is AUD 36 million, down from AUD 48 million. We move on to the balance sheet now. We currently have AUD 25 million in cash and a bank facility of AUD 50 million, so a net debt of about AUD 25 million. Inventory has grown by 45% to AUD 155 million. This is due mainly to the acquisition of Mojo Motorcycles and new motorcycles becoming freely available. New bikes on bailment have increased to AUD 48.5 million, up from AUD 24.9 million, and this reflects the increase in new bike stock and availability. Total assets have grown by 46% to AUD 410 million.
The total liabilities by 70% to AUD 212 million, leaving us with net assets up 27% to AUD 198 million. The market value. As of the 30th of June, the share price was AUD 1.45, down from AUD 2.08 the previous year. As part of the consideration for Mojo Motorcycles, we issued 11.9 million shares to the previous owners, taking our total number of shares on issue to 73.6 million shares. We've maintained our dividend for the year at AUD 0.20 per share. Earnings per share is AUD 0.341, down 9% from a year ago. This being a price to earnings ratio of just 4.2x and a dividend yield of 13.8%, with 100% franking. I'm pleased to see the share price has risen somewhat from June 30....
Revenue growth. So MotorCycle Holdings has a track record of continued growth, and over the past five years, there's a comprehensive growth rate of 14%. It's the same story with our EBITDA, with 2021 and 2022 having had JobKeeper assistance. Our NPAT results have shown consistent growth and is now 3x what it was in 2018. Diversifying our earnings. We've added a new income stream to the business, and that is the wholesale of new motorcycles. Most segments performed well across the group, with used bikes being down the most, 13% decline in gross profit as margins moderated and valuations declined. Used bikes will be the focus in 2024, as we believe it has the potential to grow the most. New bikes retail performed well, given the market was down 17% in unit sales.
Gross profit was actually up 1%. Our service department showed the most growth, with a gross profit increase of 15%, and F&I continues to improve, up 8%. There's been quite an adjustment in new bike sales for the year. Unit sales down 17% for the national market, and we're back to 2019, 2020 levels. However, MotorCycle Holdings held up well and was down just 2% of its record highs the previous year. If we look a bit closer at the result, we can see that the market was down 25% in the first half, while MotorCycle Holdings was only down 8%. And in the second half, the market was down 8%, while MotorCycle Holdings was actually up 5%. So it looks as though the market is actually recovering to some degree.
This positive trend is further reinforced by the exceptionally strong last three months, where we've been up 25% in the last three months on last year. The used market is the opposite. In the first half, our sales were up and the second half came off about 8%. Growth for the year was down 13%, so we've definitely seen a degradation of margins. However, some of that was due to the action taken to reduce aged stock. We've seen used margins recover to some degree in recent months. I believe we can increase our business with used, with greater focus on buying. Overall, despite what is clearly a softer market, our retail segment has stood up reasonably well. Inflationary pressures clearly cost us some profit in the first half. However, the second half was spent reducing those expenses, with the cost reduction program now completed.
We remain ready to make any further changes should the market show any signs of further decline. We completed the acquisition of Mojo Motorcycles on October 31st last year and effectively took over the management the following day. Having said that, the previous owners stayed on and continued in their previous roles. The integration went well, and we immediately set about collaborating together to create more business for the Mojo business. As well as increasing the focus on the Mojo brands in our existing dealerships, we've also established a greenfield dealership with immediate success. We now have Mojo products in seven of the Motorcycle Holdings dealerships. Mojo has continued to benefit from a strong ag market and performed better than expected for the financial year. Scooter sales have also grown strongly, with a flurry of new motorcycles due to be released over the next 12 months.
We remain confident that Mojo can grow further. The Mojo advantage. The acquisition of Mojo creates the opportunity for new avenues of growth. Importation of new bikes not only brings diversification to our business, it also brings scale. It gives us access to a very professional manufacturer from China, which is growing rapidly. We also import motorcycles from France and Taiwan. Mojo is the sole importer and distributor for CFMOTO, Sherco, KYMCO, and Landboss in Australia and New Zealand. Our accessory business in New Zealand is already assisting with logistics in New Zealand and will do further when we open our new distribution facility in Auckland next year. The acquisition of Mojo is opening the door to new opportunities and further expansion. Motorcycle Holdings will help lift the profile of Mojo brands to increase demand. Wholesale accessories.
Now incorporates Cassons, the Cassons business, Forbes and Davies New Zealand, Mojo Parts and Accessories, and what was a business called One Age Wholesale. Supply chain delays have moderated, and inventory restored to normal levels. The strong competition and a weak Australian dollar is putting pressure on our margins. Management has maintained a strict cost control over our expenses. Operational efficiency is expected when new operating system and warehouse management system is introduced in the coming months. Previously, very high freight expenses have normalized for this year. We've added new brands and products in recent months and expect them to provide additional sales for the coming year. A quick update on our finance joint venture. Increased cost of funds has led to our margins being reduced, resulting in a decrease in profit for the year. Profit was down to AUD 900,000.
Overdue accounts and losses are within our KPIs and not a major concern. Looking at the financial year 2024, we expect the higher interest rates and higher inflation to keep a lid on growth. Higher operating expenses will continue to be a challenge going forward. Used bikes are identified as the segment with the most potential for growth. Recent acquisitions, including Mojo, will make full-year contributions. E-commerce is expected to continue to deliver significant growth for retail accessories and new business to business potential for lift in profit by improving operational performance in some locations. More acquisition opportunities becoming available. The vendors' expectations are high, though. However, we are seeing lots of businesses come on the market. So that pretty much wraps up our presentation for MotorCycle Holdings for 2022. Happy to throw it open to any questions now.
Thank you. We will now conduct the question and answer session. As a reminder, to ask a question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Just a moment, please. Our first question is from Jared Gelsomino from Morgans. Please go ahead.
Morning, guys. Great result. Just interested in understanding how the trade ended for the second half of the prior year, specifically in the ex-Mojo business. I know you called out a moderation in demand, but I guess just keen to understand if you're starting to see that core business stabilize.
Yeah, that's a good question. It really was. It changed about May, June, when we really saw an uptick in sales. So the first quarter was quite subdued in sales. April was a very tough month, and May, June was outstanding. So we've got this upward trend happening at the moment from May on.
That's great. And then maybe just on, on the margins, like, great outcome in terms of the cost control on OpEx, half on half. And, and just interested, I know you've given a little color in the, in the used, looking for more positive performance in the year ahead, but just interested to see what sort of incremental GP uplift, GM uplift you could get in that segment going forward.
Yeah, sure. So if we look at used bikes, we identified an aged stock issue growing during the half, which I think I flagged earlier. So I got fairly aggressive with reducing that aged stock, and that did cost us some margin around March, April. However, from May, June, we saw those margins start to recover. And they're not back to where they were at the peak of COVID, but gee, they're only 10% off that, so we've seen a slight increase there towards the end of the year. I'm pretty happy with where the margins are at the moment, so if we can maintain that next year, that'll be good going. So margins are certainly off with used a little. They were down quite a bit, but recovered.
Now, they're down a little bit across the board there. Not significantly, but they're certainly down, maybe 10%. So probably 10% with used as well. So generally speaking, better than pre-COVID, but not as good as the peak of COVID.
Understood. And maybe just a couple more. Just on the Mojo side of things, I think you mentioned seven in seven dealerships now. Just interested in how many incremental ones you could put stock in in the year ahead and I guess how that business is faring, given sort of back to put the current ag sector.
Well, look, I can't put a figure on the number that we could increase it to at this stage. We've only... we've increased it from 2 to 7, so I don't know whether there'll be any more greenfield sites. There could be. We don't have any planned at this stage. We will get the first one certainly operating properly first. Yeah, I would like to put it into more dealerships, particularly in the southern states. So that's a matter of wait and see. We've got considerations on existing dealers, where we have to be careful of their territory. We can't just plop a new dealership in on top of them. So that's a work in progress, that one. I wouldn't commit to a number there. And what was the second half of that question, Jared?
Oh, no, that's probably fine there, Dave. Just, we're probably interested in that demand piece for... Oh, sorry, just interested in how Mojo exited the half, but I think that was enough color. And maybe just one final one in terms of the acquisition. So I think you called out vendors looking to come to market a little bit further there in your opening comments. I guess interested in what the next acquisition would be. Obviously, you've got your hands full, but whether that would be a further distribution agreement similar to the Mojo side of things, or would you go back to looking at dealerships?
Look, if, if you're asking what part of the business had the most growth in the next few years, I would say probably Mojo. The opportunities are coming thick and fast with, new product or additional products for us to distribute in Australia. We've, we've certainly gained a lot of attention globally with, moving into that distribution. So there's opportunities there. I think the brands that we're, representing, represent a lot of opportunity as well. CFMOTO in particular, is a fantastic product out of China. The company is on fire. It's just producing a whole bunch of new models due to be released over the next 12 months. So particularly in the motorcycle part of the business, I see really quite substantial growth over the next five years. So it'll, it'll grow there.
We're moving into a whole range of new products, including electric. So we'll have loads of new product added to that Mojo business, I think over the next, either the next 12 months or longer term. Retail wide, yes, there's more vendors out there, and businesses for sale, all sorts. And I'm very much selective of the ones that we would buy. They'll only be ones that I think have got a really solid performance, a history of performance and have to have some form of management that's committed to staying, so that we can keep continuing on the profit. So we're very selective, but there's some good businesses out there for sale, that's for sure.
That's great. That's all for me. Thanks, Dave. Cheers.
Thanks, Jared.
Thank you. Our next question is from James Ferrier of Wilsons. Please go ahead.
Thanks. Morning, Dave. Thanks for your time.
Hey, James.
Can I start just following on from Jared's question there about Mojo? I assume almost all the revenue is flowing through the wholesale segment, or, or I guess, is there some coming through in retail now, given you've got the product range in seven of the MotorCycle Holdings dealerships?
Yeah, we've only just got to that point. We had three initially before we did the deal with them. We've just opened the greenfield in May, June, I think. So it's only been trading for two months. And the last two, the one in Keilor, been trading for a month or two, and Campbelltown hasn't started trading yet. So from a retail perspective, not much will really come from myself in Mojo at this stage, a little bit, but not much. But establishing the new dealership and focusing on the brand, we certainly have listed our our share of the Mojo business, Motorcycle, and we expect that to continue to grow. We expect to underpin it to some degree going forward.
Got it. Okay. No, that's good. Now, looking forward, what's the impact on Mojo as an importer distributor? What's the impact on margins from a lower Aussie dollar?
Oh, yeah, well, look, it's we buy virtually all of it in U.S. dollars. So, that's what all China seems to want. So any, you know, the U.S. dollar, certainly 0.64 or 0.65 trades, you know, reasonably well. You know, the results that we've achieved mainly based on that 0.65-0.67 bracket. So if it's anywhere around there, we can get a good result. I'd love it to be 0.70, 0.75, wouldn't we all? But, you know, it correlates directly to our profit, obviously, you know. Every cent makes a direct impact on our profit since we buy everything in U.S. dollars.
Yeah. Okay, but I guess the, the outcome of that is, if the dollar's at 64-63, whatever, you don't turn around and, and change the pricing that you're selling at to try and preserve your margins. You just, you basically cop it.
At 63 or 64, we won't. At 60, we will.
Yeah.
You know-
Yeah.
We can, we can, we can handle the current exchange rate without too much trouble. But if it drops another 5% today, I, I think we would pass that on. And we, we've got the delivery capacity to do that, as we sit here.
Yep. Yep. Got it. Just thinking about the product and the demand. So it's obviously a hugely popular product, really well priced, attractively priced. When we look at demand and the outlook for demand, the two things that we're interested to hear your view on is, to what extent the cessation of the ATO's instant asset write-off scheme is having an impact on demand? And Jared sort of touched on it previously, but to what extent lower livestock prices and the impact on farm profitability is impacting demand within Mojo as well?
Sure. Well, we're not seeing an impact demand at this stage, so maybe as it gets drier and drought conditions come in, farmers will spend less, so we're definitely subject to that. You know, drought conditions probably have the biggest influence over that farm spending. I think your question was around the four-wheelers, that change in legislation as to what happened there. Is that right? The four-wheeler-
No, no, it was more about the tax office's Instant Asset Write-Off scheme.
Oh, yes, of course.
Okay.
Yeah, look, it doesn't affect us greatly because that write-off is still eligible for up to AUD 20,000, which virtually all of our products, very little is above AUD 20,000. So that 100% write-off continues for our product going forward. So it does, you know, it's certainly handy for things above AUD 20,000, but it doesn't really affect us that much. We expect that to have no material impact on our business.
Okay. That's, that's very helpful.
90+% would be under AUD 20,000.
Yeah. Yeah, yeah. I know. That's good, good, good clarity. You're the wholesaler there, obviously. What's your observations on inventory levels across the Mojo dealership community? Are they pretty tight, low on stock, or are they pretty well supplied?
Yeah, they have been. You know, for two or three years, they have been, and they've been ordering fairly aggressively. I think they've got more stock now. We've been able to supply stock fairly well. China has been very aggressive in supplying stock as required, better than the other suppliers. However, the other manufacturers have got stock now. We've had sufficient stock to have put product on the floor with most dealers, so they're all carrying stock. They might be backing off a little. Rather than carrying 10 of one model, they might carry three of the model now. But they, they're all—they've all got stock, and we've got stock, so it's kind of business as usual now.
Yeah. Yep, got it. That's very helpful there. On the used bike outlook, what interested us there is just your comments that you cleared some aged inventory, which had a temporary impact on margins through that second half period.
Yeah.
But the used bike sales volumes still declined 5,000 units PCP, down to 4.5. So what's—I get your comment about the margins and the more recent improvement there, but what's your take on the demand outlook for used and the prospects for volumes?
I think the business is still out there. If I look at the total registrations and the transfer of registrations in the transport department, the volume still looks okay to me. I think there's a lot of business that is private to private, so I think there's a lot of potential to take that part of the market back into the dealer market. So overall volumes are holding up okay. You know, they're about level with last year. So I think that decline is probably more operational management related than it was market related in the second half.
Got it. Yeah, okay. Understood.
We reduced our inventory. So I'll just clarify that a bit more. To reduce our age inventory, we stopped purchasing to pull that stock figure down. So the stock inventory came down, and I think that hurt us to some degree as far as volume goes, but we had to clear that age stock. That was important because the values were starting to, you know, deteriorate, come off. So a process we had to go through, but it did cost us without a doubt, last year, and hopefully we'll be in better shape now this year.
A bit of a reset for the business.
Exactly, yeah. So we're taking the medicine, you know, that we had to.
Okay. No, that's great. Thanks for the color. So much appreciated.
Yeah, no worries. Thanks, James.
Thank you. Our next question is from Sarah Mann, from Moelis Australia. Please go ahead.
Morning, guys. Hope you're doing okay.
Yes.
Good. So I just wanted to ask a question on Mojo. Obviously, we've discussed a little bit about the market becoming a little bit more difficult, from the ag, getting a bit more challenging. Are you still taking market share from the other OEMs, or has that thematic kind of plateaued and you're kind of maintaining market share, and growth now will just kind of be in line with the market? Or is there still more market share gains you think you can kind of take there?
No, we're maintaining our market share through 2023, which is a very high level, I might add. But yeah, no, we're maintaining a high level of market share. It's not increasing, it's not decreasing. It's stable. With that, the ag product.
Yeah, got it. So you-
With the-
Prices now got to be in line with the market, and then the upside comes from whatever you can do in the small retail roadside.
In motorcycles. Exactly. It's spot on, yeah. And I think there will be growth in motorcycles due to the high number of new exciting models that are competitive. So no, I think it'll be difficult for us to grow the four-wheeler market much more than the market now. I'm not saying we can't; we certainly can. It's a product that is flavor of the month; there's no doubt about that. And as more dealers, people become aware of the brand, I'm sure we'll be able to sell more. But by and large, that massive growth that we've seen over the last few years has probably, you know, reached a peak to some degree. But still the potential is with motorcycles now, and that's where we kind of come in. That's our forte.
Got it. And I mean, in a weaker market, are you seeing more demand for better-priced motorcycles in the retail space? Like, is that-
Well, yeah, not really. No, I mean, the better-priced ones are the learner approved bikes, and Mojo got some cracker, you know, really good learner approved bikes, and they're really generating some volume at the moment, so that's a good thing. But overall, no, premium bikes are still selling well. We see the likes of BMW, Triumph, and Ducati, they're still selling well. Harley goes well when we've got stock. They've got, still got some problems there. But generally speaking, it's across the board.
Got it. And then just like the comment on trading conditions, it sounds like you exited the period pretty well, right? Like across, major... Just wondering if that trend kind of continued into July and August and any color-
Yeah, it has.
Around that?
Yeah. It's had, it's strange, you know, market was down so much last year, you know, 24% in the first half and really kicked around. And then the start of the second half was down a reasonable amount, and now suddenly we've had this U-turn. And, yeah, that's continued with the strong finish to the year, the beginning of the new year, you know, this really strong uptake that's happening. So very hard to believe. I wouldn't have predicted that, and I don't think many people would have. I thought retail would go in the other direction, but, you know, significant growth in new bike sales in the last few months.
Yeah. Got it. Okay, interesting. And then in terms of, like, the cost out, so you've—sounds like you pulled out costs in the second half.
Yeah.
How long were they in the period for? Like, so is there kind of like an annualization benefit we should be thinking about for the-
Well, I didn't start that till, like, February or March. So the expenses that we did pull out, that it all happened in the last four months, wasn't completed until June 30. So, you know, I think, yeah, there's a reasonable amount of costs have come out of the, the business in that half. So, you know, it will be hard to come back in again, just as quickly, if you're not careful. So it remains to be seen, but we're certainly starting this year with a lower cost base than we did, last year. So, we're in a good position to maximize, you know, because we got caught out a little bit with the, with inflation.
The overheads went up so quickly in the first half last year, you know, they rampaged away before we knew it, so we had to jump in and make adjustments fairly quickly, and we did. So we're well positioned, I think, cost-wise, expense-wise, to tackle this year. I won't put a figure on it, though, because it changes every day.
Sure. No, that makes sense. Okay, and then just in F&I, so the GP was up in the period. Just wondering if you can run through the drivers behind it, because that seems like a solid result.
Yeah, it is. It's better. Yeah. Look, it's better, but it's, I still think there's more there. I don't think... I'm not satisfied with that result with F&I. As you know, we came off a few years ago, and it's been a very slow process of rebuilding the profit per unit there. And that number is increasing each year. Year by year, we are improving that profit per unit. But, you know, it's a slog. It's taking its time. So an 8% increase, yeah, that's okay, but, you know, I'm looking for more than that. I think we need to do better than that.
... Okay, and then just lastly, on used bikes, so just so you clear that excess inventory, you're comfortable now that, I guess market pricing is right for you to buy more inventory and, you know, trying to-
Well, yeah.
Need to come off more before you start buying?
Sure. Certainly, I've introduced a bit more discipline into that process and more—there's more focus on aged stock and turning that stock more quickly. You know, used is always a battle with aged stock. You always have to be managing it. There always will be bikes that we don't sell and become aged, and the name of the game is to realize it and turn them and move on. And I think during COVID, we developed some bad habits. You know, we could get... Margins were so good and stock was so hard to get that we taught the dealers, or the market taught the dealers to hold on to the bike, and you'll get out of it eventually. I mean, that's great, and that's fine, but that was always going to change one day.
The cars probably haven't seen it yet because there's still a strong order tbook for new cars, but there isn't motorcycles. We satisfied that order book back in December of last year. So we've kind of... The used market has come off and is back to some kind of normality now. Values have dropped, and we were always going to get caught at that point in time of when there was a normalization of new bikes and used bikes. So values were going to drop, aged bikes were going to become a bigger problem, and I wanted to react quickly to that. I made that call early, which was early in February, March of this year, and decided to get into it then.
So we took our medicine and, you know, had a couple of ordinary months as far as profit goes for used bikes. And so buying less to focus on the stock that we had. Then we've gone through that now. I'm looking at margins that are increasing again. So it looks like our stock is better. It's younger, it's fresher. We still have problems there. There are still bikes that need to be sold. There's still too many aged bikes, but that's always an issue. That's not a new problem. It's certainly in better shape than it was a few months ago, but I'm encouraged by the fact that our margins are starting to creep up again, and that stock's looking tidier.
So I'm ready now to invest more capital into used bikes, and then I think just run a tidy ship there. I'm a bit closer to the action myself than I was last year, and I'm a bit more disciplined when it comes to how to run these bikes. So, I think we can buy more bikes and sell more bikes there. That's why I've identified these bikes as our growth opportunity. It's the one part of the business where I think we can make a difference.
Well, that makes sense. Thanks so much. That's all for me.
Yeah, thanks, Sarah.
Thank you. Just a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. I see no further... Oh, one question. One minute, please. Our next question comes from James Ferrier from Wilsons. Please go ahead.
Dave, thanks very much. Just a couple of quick follow-ups. In terms of the inventory levels and the bailment drawdown from MotorCycle Holdings, and I guess this is inclusive of Mojo now, do you think you're at target levels now, or do you want, and I guess particularly your comments through this call on used, do you want to have more inventory in the business, as the FY 2024 year unfolds?
Yes to used, no to new. I think we're overstocked with new bikes. Basically, all the manufacturers came good with supply around the same time and flooded us with new bikes. So I think we've got too much inventory with used, with new, and I think we could do with a bit more with used. I think to increase our sales with used, we'll need that inventory, and I'm ready to buy that now. But new, the opposite. I think we have too much supply with demand softening, so we've ended up with an oversupply to some degree of new bikes. So rationalizing that now. And consequently, you can see that in our bailment costs. You'll see that it's AUD 1.8 million for the year, up from AUD 200,000.
So that's a big increase in interest costs for new bikes, and that's because we literally got flooded with new bikes around December, January last year. So that's part of the process of rationalizing the stock. So that that's got to come back down, used has got to go up. But of course, we use our own money for used bikes and it's you know borrowed money essentially for new bikes.
Yeah, I think I was just going to ask that. Yeah, you use your own, your corporate debt facilities, not bailment, for used.
Yeah, that's right. I'm only talking about AUD 2 million, something like that.
Yeah, okay. It's good to know. And then lastly, with the wholesale accessories business, you've got a weaker Aussie dollar, but you've got lower freight costs. What do you think about those two variables? What's the outlook for margins?
Yeah, well, look, the dollar has the biggest impact by far. You know, that's, you know, we trade a heck of a lot better at 70+ cents there. We've got some money hedged, and we've had money hedged the whole time. So, you know, we're, we're getting to the better than 64 cents at the moment, probably closer to 67. That, that's how it is. If it, if it deteriorates much worse, much in the low 64, I think we've got to look at price increases again. We, we've been passing on increases all the way along. The freight costs were, with containers particularly, were very expensive, during COVID. You know, shipping containers could be $10,000-$12,000. We're paying under $1,000 now. It's gone right back down to, below pre-COVID costs.
So surprising, but nonetheless, there's some savings there. But generally, my main concern there is margins, is the margin. Volume's okay. It's competition means that we're having to come up with specials more regularly. The bicycle part of our business has really collapsed compared to how it was during COVID, but, you know, similar to where we were pre-COVID. Smaller part of our business, so not critical, but margin has come off there. Yeah, really, it's a stronger dollar would help us. We've got the new product there, which we've added to the range just in the last month or two, which is some really good brands there, which I think will add volume. So I'm not too concerned about our sales volume. I'm more concerned about how to build that margin up a bit.
Yeah. Okay. Very good. Thanks for your time.
Thanks, James.
Thank you. I see no further questions at this time. Thank you for attending this morning's call. This concludes today's conference call. Thank you all for participating. You may now disconnect.