TUA - Turners Auctions. A Case Study.

[Snoopy]

Thanks for all your analysis and comments over the years Snoopy. Since the rise and demise of companies is of interest for me I stepped back in time .....fascinating reading going back to start of thread and seeing who said what etc. Like the "Rise and Fall of Reginald Perrin". I'm sad to see TUA gobbled up but can understand due to its desirable features. As Crosby, Stills, Nash and Young said.."If you cant be with the one you love, love the one you're with". Hope Dorchester works out for takers. I am not one...cash for me... more because I don't like uncertainty and tend to move accordingly. If Dorchester refrain from tinkering with Turners it could all turn out well....here's hoping.

Birmanboy TUA has certainly been a roller coaster ride. Bought my first tranche in the $1.80s IIRC. Then, as funds allowed, I accumulated more and more with my last purchases being at around 80c. Chartists would say I did everything wrong. But if you don't try to trade the business cycles (I don't, because I don't claim to be able to identify them in advance), then purcahse price is everything and 'trends' mean nothing. All my puchases ended up well in the money, while the dividend flow from go to whoa has been almost obscene. In percentage terms, with capital growth and dividends combined, it is probably my most successful NZX investment. Unfortunately those who fretted about 'lack of liquidity' and 'not being able to get out easily' missed out. This is what too much 'watching the market' (thinking Mr Market is always right) instead of 'watching the investment' does to you. When Phaedrus put it up as a case study all those years ago, I'll bet he never foresaw it finishing up like this!

Very disappointed to see TUA delisted so cheaply. Even if you don't like Dorchester and Paul Byrnes, you have to have grudging respect for the way he spotted a bargain that made a good fit with Dorchester, then managed to secure it at a good price (for DPC).

I quite understand your disgruntled resistance Birmanboy. But I've run my ruler over DPC and actually like the businesses in there already. And bank covenants are in place to give bond investors peace of mind that interest will be paid, excepting the most desperate of circumstances. So I was happy to sign over half of my holding for DPC bonds.

Now TUA is being delisted, I have revised my strategy. I have taken a 'token' shareholding in DPC. That way at least I will get an annual report. Secondly it will mean that I can legitimately ask managment questions as a shareholder should the need arise. Yet my holding will be small enough that I can 'get out quickly' should DPC take a change in direction that I don't like. A further advantage of being a sharehodler is that I get a foot in the door for any upcoming cash issues.

I have put my hand out for a few more bonds too. Can't get too many of those! Actually I can because DPC when it all comes down to it is a smallish company which I don't think will join the NZX50 soon, despite its recent growth. So I have taken 'most' of my remaining half payment in cash. I will put that aside for six months to allow my head to cool before committing those funds to new investment pastures.

I hope you put your TUA cash towards something worthwhile Birman boy. Finally I can't sign off on this thread without putting out a big thankyou to the mysterious "All Ears" who appeared back on 'sharechat' forum days without much good to say about the company. It was his derision that really brought the company to my attention and lead to the fantastic result I got out of it.

SNOOPY

[Snoopy]

Very disappointed to see TUA delisted so cheaply. Even if you don't like Dorchester and Paul Byrnes, you have to have grudging respect for the way he spotted a bargain that made a good fit with Dorchester, then managed to secure it at a good price (for DPC).

The new owners of TUA (TNR) reported that for the first five months of trading in the new TNR financial year, the old 'TUA' was the star performer. 'Performance' is up 15% on what seems quite an aggressive budget. This translates to an overall performance improvement of 35% year on year! Shame on those former Turners directors who mounted such a weak defence and allowed our company to be sold out to the then Dorchester (now TNR) so cheaply.

SNOOPY

[Snoopy]

The new owners of TUA (TNR) reported that for the first five months of trading in the new TNR financial year, the old 'TUA' was the star performer. 'Performance' is up 15% on what seems quite an aggressive budget. This translates to an overall performance improvement of 35% year on year! Shame on those former Turners directors who mounted such a weak defence and allowed our company to be sold out to the then Dorchester (now TNR) so cheaply.

The old Turners Auctions has had its first full year (FY2016) under Dorchester, whoops Turners Group, ownership. And the 'selling out cheaply' has been confirmed.

I have managed to disaggregate the results, to find an 1st April to 31st March full year EBIT of $9.392m. This represents the old 'Auctions' and 'Fleet' business units only. The accompanying finance businesses have already been detached for inclusion in other parts of the new Turners Group.

One way of valuing the old TUA now would be to use the same EBIT multiples that 'Grant Samuel' used 'back then' at takeover time. 'Grant Samuel' valued the old TUA at between $3.12 and $3.42. The final sale price was $3.15, including a just declared dividend. By my calculations, using the same valuation multiples, the same business unit is now worth between $4.39 and $4.87 per old TUA share. Even taking a comparison between the bottom of ther range actual share price offered, and the bottom of the new range, it looks like TUA shareholders have handed over:

$4.39 - $3.15 = $1.24

of value per share to Dorchester shareholders. This represents a gain in TUA capital value of 39% to the victorious Dorchester shareholders. In dollar terms, based on the 27.235m of TUA shares that used to exist, the old TUA is now worth $34m more than Dorchester (now TNR) paid for it!

Dorchester, sorry Turners Group, have performed reasonably well since the takeover. The shareprice has risen from the equivalent of $2.50 to $3.06 today, a rise of 22%. Yet it remains very clear based on these figures, that the old TUA shareholders would be far better off today had they not accepted the Dorchester takeover offer for their TUA shares :-(.

SNOOPY

[percy]

Maybe so,but it has turned out a very astute acquisition by DPC.
The latest acquisition of Buy Right Cars looks to be another astute acquisition too.
My divie was in my bank today.

[blackcap]

Another way to look at it Snoopy is to question without the Dorchester stewardship, would the old TUA have made the progress it has?
Either way I am happy as a TNR holder and like Percy says, divvie in the bank today and not a yeild to sneeze at. Acquisitions to date have been astute.

[Snoopy]

Another way to look at it Snoopy is to question without the Dorchester stewardship, would the old TUA have made the progress it has?

The main synergy benefit, as I understood things, Blackcap was that the old Turners Auctions would suddenly have access to a lot more in house finance company capital. Since amalgamation, the old TUA finance division has been absorbed into Dorchester. So it is difficult to know how having a strong finance house partner in house has improved the old TUA finance profits. Nevertheless one area where we can make a comparison is what has happened to the old TUA fleet and auctions businesses, now reported as a single business unit: Fleet & Auctions.

The EBIT that I was referring to was just Fleet & Auctions. I think it is fair to say that Dorchester had no experience at all in this. So I am very confident that the much improved EBIT performance I was referring was all due to measures put in place by the old TUA management and would have flowed through whether or not the Dorchester takeover happened. From an existing shareholder perspective, I think we gave all of these benefits (worth $34m in capitalised market terms) straight to the new owners.

But there are always two sides to any story. As Percy says, it took the astuteness of Paul Byrnes to see the posibilities and no doubt Dorchester shareholders are very happy with what happened!

SNOOPY

[etnom]

Please do share views on "The Existing Bonds (NZX:THRHA) To Convert On 30 September 2016".

[winner69]

The old Turners Auctions has had its first full year (FY2016) under Dorchester, whoops Turners Group, ownership. And the 'selling out cheaply' has been confirmed.

I have managed to disaggregate the results, to find an 1st April to 31st March full year EBIT of $9.392m. This represents the old 'Auctions' and 'Fleet' business units only. The accompanying finance businesses have already been detached for inclusion in other parts of the new Turners Group.

One way of valuing the old TUA now would be to use the same EBIT multiples that 'Grant Samuel' used 'back then' at takeover time. 'Grant Samuel' valued the old TUA at between $3.12 and $3.42. The final sale price was $3.15, including a just declared dividend. By my calculations, using the same valuation multiples, the same business unit is now worth between $4.39 and $4.87 per old TUA share. Even taking a comparison between the bottom of ther range actual share price offered, and the bottom of the new range, it looks like TUA shareholders have handed over:

$4.39 - $3.15 = $1.24

of value per share to Dorchester shareholders. This represents a gain in TUA capital value of 39% to the victorious Dorchester shareholders. In dollar terms, based on the 27.235m of TUA shares that used to exist, the old TUA is now worth $34m more than Dorchester (now TNR) paid for it!

Dorchester, sorry Turners Group, have performed reasonably well since the takeover. The shareprice has risen from the equivalent of $2.50 to $3.06 today, a rise of 22%. Yet it remains very clear based on these figures, that the old TUA shareholders would be far better off today had they not accepted the Dorchester takeover offer for their TUA shares :-(.

SNOOPY

An interesting old post of Snoopy’s

[winner69]

This is an excellent example of the lack of correlation that can exist between company announcements and stock performance.

It shows the boundless optimism that some people can sustain in the face of unpleasant reality.

View it as an object lesson in the folly of buying into a downtrending stock and the inadvisability of "averaging down".

Nothing seems to have changed from 11 years ago

[percy]

FY to 31/12/09 $3.3M up 207% FY DIV 12.0 cps

Turners Auctions today announced its 2009 net profit after tax of $3.3 million, up 207 percent on the same period last year. Despite the continued decline in the used vehicle markets over the year Turners Auctions has grown market share and focused closely on costs to ensure a strong result for shareholders. There has been strong profit growth in all the core areas of the business which is very pleasing given the economic situation the business has operated in throughout 2009.

The New Zealand used vehicle market has declined a further 5% in 2009 off the back of a 9% decline in 2008. However auction revenues have held up well at $36.6 million up slightly over $36.5 million in 2008. There has been continued growth in sales of repossessed vehicles, government fleet vehicles, lease and rental company vehicles.

Operating profits from Turners Fleet have improved significantly by comparison with 2008 as a result of more prudent buying in Japan and tighter control of inventory. Turners Finance profits have increased due to higher interest margins, a growing loan book and improved sales of add-on insurance products such as mechanical warranties.

As indicated at the half year changes in strategy have delivered significant savings in business costs with total expenses for the year down 13.8% to $65.8 million. Turners Fleet cost of sales are down 25% to $24.7 million and the change to an online advertising strategy has reduced advertising costs by 51% to $1.4 million and delivered an extra 9.4% registered bidders over 2008 levels. We have continued to invest in online initiatives throughout the year and this has delivered an increase of 31% in web traffic in 2009 and contributed to an increase in online purchasing.

The strong full year result and Turners’ positive cash position have led the Directors to declare a final dividend of 7.0 cents per share fully imputed at 33%, payable on March 30, 2010. This brings total dividend payments for 2009 to 12.0 cents per share.

Results summary:
- Operating Revenues $70.4 million, down 9.5%
- Group Net Profit after tax $3.3 million, up 207%
- Total Group Assets $44.2 million, up 6%
- Final Dividend payment 7.0 cps payable 30th March 2010

Very interesting posted 19/2/2010.