Ann: Appendix 4E and Annual Report-AMA.AX, page-30

My feeling is there will come a point soon where sizeable acquisitions are no longer available (there are only two other major players in the industry from my readings) and AMA will need to turn more to establishing greenfield centres, in large population areas, in order to grow (mainly through putting other, smaller and 'cottage' type industry players in the vicinity of these new centre, out of business).

After this is done the focus would need to be on extracting cost savings from parts sourcing and extracting benefits from scale to grow EBITDA.

My understanding is Capital S.M.A.R.T. (owned by Suncorp and with $190m in revenue) is looking to source a greater proportion of its parts from non-genuine sources or second hand parts (they have recently acquired several scrap-yards to help with this) in order to bring the cost of repairs down as Australia has some of the most expensive auto repair costs in the OECD.

If extracting opex savings and growing GM% is a focus to growing EBITDA it would be good if AMA actually provided some quantifiable information in their results presentation about how they are achieving similar savings rather than making throw-away statements about organic growth etc. (some of this information is available in the notes to the FY16 accounts). I suspect they might not be doing it at present because it might make acquisition negotiations more difficult if the acquiree can get a better grip on the synergies AMA can extract from acquisitions.