TRA - Turners Automotive Group [previously TNR - Turners Limited]

[Balance]

Even happier will be the savvy investors who take them off Milford's hands.

Are we talking about the savvy investors who were buying off Milford at above $3.00?

[percy]

Current sp is under $2.30.
Yes perhaps Milford did pay over $3.00.

[percy]

Website says there’s 72 cars at Wellington ...always about 70 odd

Spose clever marketing

You better take your mates down there and count them.

[percy]

49.54% of the 393,274 TRA shares traded yesterday,ie 194,836 were brought back,therefore 198,438 were brought by others..[the savvy investors]
Sellers better hurry up as there are only 1,504,399 more share required.

[Balance]

You better take your mates down there and count them.

You mean TRA's website cannot be trusted to tell the truth vs its PR spin?

That's not good.

[winner69]

49.54% of the 393,274 TRA shares traded yesterday,ie 194,836 were brought back,therefore 198,438 were brought by others..[the savvy investors]

Suppose that amount if buying isn’t ‘distorting’ the price

Turners will adhere to an established set of principles agreed with its broker that seek to ensure that the buyback does not distort the market price for shares.

[winner69]

You mean TRA's website cannot be trusted to tell the truth vs its PR spin?

That's not good.

Balance - You know what used car salesmen are like eh

[Balance]

Balance - You know what used car salesmen are like eh

Surely not!

TRA is a cut above the rest (or so I have been told).

The fact that the company and directors think that the shares are undervalued but one director sold shares (very very reluctantly, of course after much soul searching) only because he needed it for the restaurant, remember? Not because he says one thing and do another. :D

[percy]

Suppose that amount if buying isn’t ‘distorting’ the price

Turners will adhere to an established set of principles agreed with its broker that seek to ensure that the buyback does not distort the market price for shares.

Hello,Just realised you are back.
I know others are still locked out.

[sb9]

Hello,Just realised you are back.
I know others are still locked out.

Thanks for the update from roadshow in Chch.

Without hijacking this thread, wonder why the "other" site is off and active posters from there are back here posting....hmmm.

[winner69]

Turners rave about their 90% Brand Awareness and to some extent that 45% view them as most trusted used car dealer

But market share is only 5%

Very low conversion rate of awareness into sales.

But marketing never has to produce tangible results

[trader_jackson]

you'd think with interest rates marching lower, than someone like TRA with a whopping 7.4% net interest yield (that's 7.4x the OCR today) would be really attractive... but clearly Mr Market not convinced TRA can keep paying such high dividends? Despite what TRA themselves have indicated (that they can continue to - and, probably, increase them)

[winner69]

I love Turners PowerPoint presentations

[sb9]

you'd think with interest rates marching lower, than someone like TRA with a whopping 7.4% net interest yield (that's 7.4x the OCR today) would be really attractive... but clearly Mr Market not convinced TRA can keep paying such high dividends? Despite what TRA themselves have indicated (that they can continue to - and, probably, increase them)

I think market is aware of the Elephant in the room which is Milford and their intentions to offload their stake. Until that time price will stay depressed, unless some other entity of keen to ad to their holdings.

Despite that, the latest OCR cut should find them favourable from yield perspective. There's an awful amount of money waiting to find good return especially from retirees as it earns next to nothing from bank deposits.

[percy]

Turners rave about their 90% Brand Awareness and to some extent that 45% view them as most trusted used car dealer

But market share is only 5%

Very low conversion rate of awareness into sales.

But marketing never has to produce tangible results

New Plymouth site opened with no advertising.NONE.
Going gangbusters.
And that is because of Turners brand awareness.
Each new site ,or relocated site, are turning awareness into sales.
Increased sales increases margin through the addition of insurance and finance.

[BlackPeter]

New Plymouth site opened with no advertising.NONE.
Going gangbusters.
And that is because of Turners brand awareness.
Each new site ,or relocated site, are turning awareness into sales.
Increased sales increases margin through the addition of insurance and finance.

Wait - aren't they trying to flog off finance?

[winner69]

Wait - aren't they trying to flog off finance?

......and insurance has a much lower return on capital than finance so that can't really be helping either

[percy]

......and insurance has a much lower return on capital than finance so that can't really be helping either

Think about that W69.
Why would they want to keep it,and grow it.?
A clue is insurance capital reserve.\
Perhaps you should attend a Turners Roadshow?
I find I learn so much.

[percy]

Wait - aren't they trying to flog off finance?

They are looking for expressions of interest.

[Balance]

They are looking for expressions of interest.

In other words, nobody is interested.

[percy]

In other words, nobody is interested.

Should that be the case or the price is not right, it will not be sold.

[percy]

Dunedin.
Did any one from Dunedin go to the RoadShow this afternoon.?
New Dunedin site should see sales really take off.

[winner69]

Think about that W69.
Why would they want to keep it,and grow it.?
A clue is insurance capital reserve.\
Perhaps you should attend a Turners Roadshow?
I find I learn so much.

Yeah, I know why

But even with those superior returns from developing commercial real estate it’s still their worst performing segment on a return on capital basis .....and don’t they say they need to improve returns on capital

[couta1]

Hi winner nice to see you back.

[winner69]

Hi winner nice to see you back.

You too mate.

[Snoopy]

Went to Turners Roadshow presentation this evening.
Todd Hunter and Aaron Saunders,told us where Turners are,where they want to be,and how they intend to get there.
They are trading well.
Turners are back up to "very strong conviction".


Percy, sorry I couldn't join you this year, although no doubt those that stayed on 'after the show' at least got one warm savoury each as a result ;-)

I am surprised you didn't make comment on the critical issue of Aaron Saunder's beard. Put simply, if he has grown it back, this will signify Turners going 'back to their roots' to maximise the potential of selling cars. If the beard is still absent, then this signifies the trend to 'super slickness', sliding all over the edges of the car marketplace looking for clip ons continues. IOW we shareholders could be in trouble! Forget charts and forget fundamentals. I trust you can fill us in on this critical matter!

SNOOPY

[Joshuatree]

Lol will check when i go next week, tape measure in pocket.
I think percy prob has one too and its stroked alot!. Hey percy how about a pic of your chin to verify;)

[Joshuatree]

Duplicate cant delete , ignore.



Lol will check when i go next week, tape measure in pocket.
I think percy prob has one too and its stroked alot!. Hey percy how about a pic of your chin to verify;)

[percy]

Yeah, I know why

But even with those superior returns from developing commercial real estate it’s still their worst performing segment on a return on capital basis .....and don’t they say they need to improve returns on capital

.
Fine tunning of premiums compared to type of car has steady profitable business improve.Ratios moving in the right direction.
Also understanding who is a fault.A lot of claims that are dealers' responsibility are now being referred back to the dealers.
You will also know premiums are paid in advance.

[percy]

Percy, sorry I couldn't join you this year, although no doubt those that stayed on 'after the show' at least got one warm savoury each as a result ;-)

I am surprised you didn't make comment on the critical issue of Aaron Saunder's beard. Put simply, if he has grown it back, this will signify Turners going 'back to their roots' to maximise the potential of selling cars. If the beard is still absent, then this signifies the trend to 'super slickness', sliding all over the edges of the car marketplace looking for clip ons continues. IOW we shareholders could be in trouble! Forget charts and forget fundamentals. I trust you can fill us in on this critical matter!

SNOOPY

Like the cars Turners sell, both Aaron and Todd were properly groomed.....Read what you like into that statement...lol.
Good turnout.Room was full.Good questions again answered fully.Both Aaron and Todd have worked in the business since 2006.Both are very excited and passionate about Turners future prospects.MTF non-recorse loan book has reduced by another $1mil,so progress there too.Aaron has tightened their lending criteria,and taking more of a bigger picture of their borrowers' capacity to repay loans.This includes the borrowers' bank statements.I looked out for you,noted BlackPeter had sent a couple of guys from Shareholders Assn,and also noted Warren Head from Headliner fame was there.
Pizza and savouries,together with tea/coffee,
Stink Bug.Ships turned around last year etc meant instead of a steady stream of imports coming in they all arrived at one time.Importer/Dealers panicked,and cleared stock at any price,which caused the softness in the market last year.Market has remainded strong through winter this year, which means better margins.With the extra contributions from the relocated and new branches, I think the interim result will be very strong.

[Balance]

https://www.stuff.co.nz/motoring/114822127/new-car-sales-battered-on-both-sides-of-the-ditch

[Baa_Baa]

https://www.stuff.co.nz/motoring/114822127/new-car-sales-battered-on-both-sides-of-the-ditch

Easily rebutted, before percy says, Turners don’t sell new cars. Focus.

[Balance]

Easily rebutted, before percy says, Turners don’t sell new cars. Focus.

Sale of new houses does not impact on existing houses?

Economic naivety in full display.

[percy]

Turners announcement 30th July;Turners FY 20 Investor Roadshow.page 4
[perhaps a kind poster will post a screenshot of page 4]

...............NZ USED CAR MARKET STILL AT STRONG HISTORIC LEVELS............
.......................Underlying demand still strong.
.......................Margins have recovered from low point Oct/Nov 2018..
And from attending the Roadshow I found out Turners are trading well.

[Balance]

Sale of new houses does not impact on existing houses?

Economic naivety in full display.

http://autotalk.co.nz/news/another-slow-month-for-imports

Registrations of used import vehicles were down yet again in July – as the market continues to struggle in what appears to be a declining economic environment.

Registrations of passenger vehicles were down 7.6% for the month to 12,791 – now down 8% for the year to a total of 81,642.

[percy]

http://autotalk.co.nz/news/another-slow-month-for-imports

Registrations of used import vehicles were down yet again in July – as the market continues to struggle in what appears to be a declining economic environment.

Registrations of passenger vehicles were down 7.6% for the month to 12,791 – now down 8% for the year to a total of 81,642.

Read page 4.of The Roadshow.perhaps you can put up a sreen shot of it for us.
Less than 10% of Turners volume comes from used imports.

[Balance]

Read page 4.of The Roadshow.perhaps you can put up a sreen shot of it for us.
Less than 10% of Turners volume comes from used imports.

As in auction volume or sales volume?

Think before you answer.

[winner69]

Percy wants you all to read this Slide from Roadshow

It’s all looking good for Turners ...and I remain a (small) disillusioned shareholder who was sucked in by ST hype along with a delusional Board.a couple more divies and i’ll be OK

[percy]

Percy wants you all to read this Slide from Roadshow

It’s all looking good for Turners ...and I remain a (small) disillusioned shareholder who was sucked in by ST hype along with a delusional Board.a couple more divies and i’ll be OK

Thanks Winner 69.
Yes buying companies that pay good dividends,and who have the capacity to keep paying them,or even increasing them,is worthwhile.

[winner69]

As in auction volume or sales volume?

Think before you answer.

It’s hard ‘to think’ straight when you’ve just been to a revivalist meeting and you are a ‘born again’ Turnerite

[Balance]

It’s hard ‘to think’ straight when you’ve just been to a revivalist meeting and you are a ‘born again’ Turnerite

Dangerous gatherings where the converted gets indoctrinated further?

And deceptively misleading stats and carefully crafted statements are made to steer the flock so that they do not stray from the chosen path?

We shall wait for Percy to find out how many used imports Turners Retail sells vs auction volumes.

[percy]

How about how many used imports TRA actually sells via its retail network vs total auction volume?

Attend a Roadshow and find out for yourself.

[Balance]

Attend a Roadshow and find out for yourself.

I know the answer.

You obviously don't! :p

[percy]

I know the answer.

You obviously don't! :p
I will leave it to you Balance.
You have worn me out.[again].
Neither of us will change our opinions.Pointless.!

[Balance]

I will leave it to you Balance.
You have worn me out.[again].
Neither of us will change our opinions.Pointless.!

Healthy exchange of information and views, Percy!

Don't you find that such exchanges reinforce your view (per your perception that I am wrong) and encourages you to hold and buy more?

[sb9]

TURNERS WINS EARLY BATTLE IN $5.5M LAWSUIT AGAINST BUY RIGHT CARS VENDOR

http://www.sharechat.co.nz/article/18a6fa94/turners-wins-early-battle-in-5-5m-lawsuit-against-buy-right-cars-vendor.html

[Balance]

TURNERS WINS EARLY BATTLE IN $5.5M LAWSUIT AGAINST BUY RIGHT CARS VENDOR

http://www.sharechat.co.nz/article/18a6fa94/turners-wins-early-battle-in-5-5m-lawsuit-against-buy-right-cars-vendor.html

Now that's an interesting story to be told there!

Guess which firm financed a lot of Buy Right crappy used car stock?

[winner69]

Now that's an interesting story to be told there!

Guess which firm financed a lot of Buy Right crappy used car stock?

Is the answer on Slide 4 of the presentation?

[Snow Leopard]

Is the answer on Slide 4 of the presentation?

Yes, on the back :cool:

[Balance]

Is the answer on Slide 4 of the presentation?

TRA must be the only company out there NOT to know that Buy Right was infamous in the industry for stocking and selling crap cars!

[winner69]

I reckon share price will go over 240 this week

[Baa_Baa]

I reckon share price will go over 240 this week

Share buyback kicked off a nice ramp ... lucky it's being done so as not to affect the market price. Err.
10704

[percy]

I note Turners will be presenting Retail Investor Evenings in Auckland 2nd September, and Christchurch on 5th September.
HGH will also be presenting at the Auckland evening.

[sb9]

I note Turners will be presenting Retail Investor Evenings in Auckland 2nd September, and Christchurch on 5th September.
HGH will also be presenting at the Auckland evening.

Looks as though Akl event is sold out.

[percy]

Looks as though Akl event is sold out.

That was quick.
I only received the email from NZX at 11.05 am today.

[Beagle]

http://www.sharechat.co.nz/article/9312fefc/slowing-new-car-market-sees-kiwis-squeezing-more-out-of-ageing-fleet.html?utm_medium=email&utm_campaign=Slowing%20new%20car%20market%20sees%2 0Kiwis%20squeezing%20more%20out%20of%20ageing%20fl eet&utm_content=Slowing%20new%20car%20market%20sees%20 Kiwis%20squeezing%20more%20out%20of%20ageing%20fle et+CID_9d7df503836d73b2b7cacc8e0d05e8b3&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle9312fefcslowin g-new-car-market-sees-kiwis-squeezing-more-out-of-ageing-fleethtml

Most people keep their vehicles longer if times get tough.

[percy]

For a Colonial Motor Co shareholder reading that article spells bad news.
For a Turners shareholder knowing there are 953,000 cars 20years or older on NZ roads it is meaningless.

[winner69]

This year’s AGM a week earlier than last year

Sept 18th it is

[couta1]

http://www.sharechat.co.nz/article/9312fefc/slowing-new-car-market-sees-kiwis-squeezing-more-out-of-ageing-fleet.html?utm_medium=email&utm_campaign=Slowing%20new%20car%20market%20sees%2 0Kiwis%20squeezing%20more%20out%20of%20ageing%20fl eet&utm_content=Slowing%20new%20car%20market%20sees%20 Kiwis%20squeezing%20more%20out%20of%20ageing%20fle et+CID_9d7df503836d73b2b7cacc8e0d05e8b3&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle9312fefcslowin g-new-car-market-sees-kiwis-squeezing-more-out-of-ageing-fleethtml

Most people keep their vehicles longer if times get tough. Some of us even keep them when times are good. Lol

[percy]

This year’s AGM a week earlier than last year

Sept 18th it is

Back to the week they historically have held their agm,as I have pointed out about 15 times,on this forum.

[percy]

Some of us even keep them when times are good. Lol

Good on you....

[Beagle]

Some of us even keep them when times are good. Lol

Wonder what would have happened to your old relic if you'd got hit by a truck like my wife's car 5 star safety rated car was a few weeks ago ?
Do you think the thousands of people who got seriously injured on the roads in the last year or the hundreds of those that died thought it would ever happen to them ?
I can understand that some people can't afford a vehicle with a decent safety rating but those that can very, very easily afford one but are happy to expose themselves and their family and friends to substantial additional risk need to have a look in the mirror and ask themselves, why am I in denial about the extra risk I am exposing my loved one's too ? Am I culpable if one of my family dies or is seriously injured ?

I reckon you can buy a reasonable 5 star safety rated vehicle from Turners for as little as $8K and its great to see that cars without dynamic stability control won't be legally allowed to be imported from next year.

At least the Government has some common sense when some of its wealthiest residents don't !

[couta1]

Wonder what would have happened to your old relic if you'd got hit by a truck like my wife's car 5 star safety rated car was a few weeks ago ? Well who knows probably the same thing as if something happened while driving the big block at 180k for a brief squirt or falling at 80k whilst hurtling down a ski slope. Lol

[Beagle]

I can only speak for myself but I believe it would be very tough to live with yourself if, (with massive amounts of discretionary funds), one choose to put their wife, kids or friends in harms way by choosing a very cheap inferior vehicle when a much better one could have made a big difference. How would you live with yourself if your loved one(s) we killed, injured or maimed for life ?
What good is your money to you then ?

Nobody wants to hear their loved one has been involved in a serious accident. At least when I did a few weeks ago I had the small comfort of knowing she was in a 5 star safety rated vehicle with very high quality tyres and I had done my best to protect her. She's fine, but it could have been very different and a number of people have remarked to me they are surprised at how moderate the damage is to the vehicle in the circumstances.

Choose a strong 5 star safety rated vehicle for yourself and your loved ones..it doesn't cost much extra and turners sell them pretty cheap so there's no excuses !

[couta1]

Wonder what would have happened to your old relic if you'd got hit by a truck like my wife's car 5 star safety rated car was a few weeks ago ?
Do you think the thousands of people who got seriously injured on the roads in the last year or the hundreds of those that died thought it would ever happen to them ?
I can understand that some people can't afford a vehicle with a decent safety rating but those that can very, very easily afford one but are happy to expose themselves and their family and friends to substantial additional risk need to have a look in the mirror and ask themselves, why am I in denial about the extra risk I am exposing my loved one's too ? Am I culpable if one of my family dies or is seriously injured ?

I reckon you can buy a reasonable 5 star safety rated vehicle from Turners for as little as $8K and its great to see that cars without dynamic stability control won't be legally allowed to be imported from next year.

At least the Government has some common sense when some of its wealthiest residents don't ! Ask yourself how much common sense the Govt has is this area when they recently dropped the safety rating rego pricing so now my old Suzuki has the same rego cost as my wife's 5 star rated car, doesnt sound like a lot of common sense does it? PS-Only I drive in the Suzuki and my wife is the speed limiter on the big block but still gotta be happy when your wife doesnt mind the odd burst to around 180k and she even likes the smell of burning rubber.

[peat]

does this PSA actually have anything to do with Turners?

[Snow Leopard]

does this PSA actually have anything to do with Turners?

Presumably Turners sell the odd PSA motor [ https://www.groupe-psa.com/en/ ]

Otherwise NO

[Beagle]

does this PSA actually have anything to do with Turners?

Yes as there is the change I mentioned earlier. All cars imported second hand from next year must have dynamic stability control as standard kit.
No DSC, you can't import them and that's going to change the dynamics of the second hand car industry as it will stop unscrupulous dealers importing very cheap unsafe cars as masquerading them as "quality" fresh imports.
Sometimes nanny state does know best. https://www.ancap.com.au/safety-ratings-explained

Unfortunately some people who simply don't care will rush to buy one of the remaining cheap second hand imports before these regulations come into effect and save themselves a few bucks before prices go up due to the minimum new standard next year.

[peat]

that's going to change the dynamics of the second hand car industry as it will stop unscrupulous dealers importing very cheap unsafe cars as masquerading them as "quality" fresh imports.

so its good for Turners as I assume they are scrupulous.

[Joshuatree]

Most trustworthy used car dealer in New Zealand 45% Other 21% 2 Cheap cars 8% Buy Right cars 4% Enterprise motors 3% etc

[Marilyn Munroe]

discussion by Beagle about new safety import restrictions

The newer the car the safer it is and poeple want the best car they can afford.

Therefore if the Government wants ordinary Kiwi jokers to drive safer cars it should make it as easy as possible to upgrade their old bangers by not introducing regulatory hurdles.

Unfortunately this would mean the tea drinkers and biscuit nibblers who come up with regs in the Ministry of Transport would have nothing to do.

Boop boop de do
Marilyn

[Snoopy]

Finally I refer to the EC Credit unredeemed voucher release to P&L, amounting to $0.7m. Turners mentioned this as a significant abnormal (HYR2019 p22), as it was $700,000 less than the equivalent squaring up of the book over FY2017 - actual value $400,000 for the year (AR2018 p13). If you regard the FY2017 year as 'normal' and the FY2018 as 'abnormal', then my normalised adjustment looks appropriate. But truth be told, I do not really understand what an 'unredeemed voucher release' is. I have figured out it is debt collection industry jargon, and that it contributes to profits at the EC Credit division. But what is it? And why is it different to normal debt collection profits? If anyone can answer that question, once again I am all ears!





Got off my doghouse and went to the EC Credit website:

--------

Easy Debt Collection Process

EC Credit control uses a quick voucher system to lodge a debt that you need to be recovered. It’s a simple process to fill out the voucher and send it in, or you can even do it on-line. EC Credit control has 24×7 access to its lodging system so you can lodge it immediately at a time that’s convenient to you.

Up Front Costs

Loading a voucher will only be a single set fee to start the process. So no matter how often we contact your client you won’t be charged any additional fees. If EC Credit control can’t collect your debt then there will be no commission fee charged.

--------

It looks like these 'vouchers' are one off debts sent in by customers, as opposed to a 'debt collection book' that EC Credit works through. So if:

1/ you want a debt repaid, and send in a voucher to EC Credit to that effect AND
2/ EC Credit collects that debt for you BUT
3/ you forget that you asked EC credit to collect that debt in the first place so the voucher is not redeemed.
4/ Does this mean that EC Credit can simply keep your money as a unredeemed voucher?

It seems hard to believe that EC Credit could be that unethical as to just keep the money of the customer who initiated the request, or that there are enough EC Credit clients about that are so forgetful.

But what other explanation might there be? Are we just talking about a EC Credit "banking that set up fee" without collecting the debt and any associated commission?


I don't think anyone took up this 'baton' of mine from January. So with the ultimate objective of making a better normalised profit result estimate, I will have another go at explaining the situation as I see it.

These 'vouchers', or 'contracts to collect debts', or 'EC Voucher Liabilities' (as described in HYR2019 p22) , are not individually initiated by Turners division 'EC Credit'. They are jobs that are independently tacked onto the EC Credit job sheet by others (third party customers). I am guessing what EC Credit is saying is that they have no control as to how easy these jobs are to collect. If more of these jobs become uncollectable, then this cannot be necessarily seen as a reflection on EC Credit's performance, because they had no say in whether the collection of these debts were even a realistic proposition in the first place.

If this interpretation is right, then 'unredeemed vouchers' mean those 'unable to be processed' one off debt collection jobs independently logged in by EC credit customers. This is a cost to EC Credit in that they have put resources into collecting the debt, but no money (save for the one off debt registration fee) has been recovered. Can these type of jobs, or at least the lack of recoveries from them, really be classified as 'abnormal'? Since 'EC Credit' is in the account collections business, I have my doubts....

SNOOPY

[kiora]

I don't think anyone took up this 'baton' of mine from January. So with the ultimate objective of making a better normalised profit result estimate, I will have another go at explaining it.

These 'vouchers', or contracts to collect debts, are not initiated by 'EC Credit' in the sense they are jobs that are independently tacked onto the EC Credit job sheet by others.. I am guessing what EC Credit is saying is that they have no control as to how easy these jobs are to collect. If more of these jobs become uncollectable, then this cannot be necessarily seen as a reflection on EC Credit's performance, because they had no say in whether the collection of these debts were even a realistic proposition in the first place.

If this interpretation is right, then 'unredeemed vouchers' mean those 'unable to be processed' one off debt collection jobs independently logged in by EC credit customers.

I had some issued.Now unredeemed.
A discount in advance that I had no need for and didn't use?

[Snoopy]

I had some issued.Now unredeemed.
A discount in advance that I had no need for and didn't use?


Can you expand on your answer kiora? Have you used the "EC Credit voucher" service? TIA

SNOOPY

[Snoopy]

Profit FY2018Profit HY2019Annualized Profit FY2019Reference


As declared$23.360m$12.885m


less Retrospective impairment provision adjustment0.72 x ($1.212)m
My post 3980, this thread


less Property sale gain Wiri($3.400)mHYR2019 p22


less earn Out payment for Autosure to P&L($0.800)mHYR2019 p49


less Revaluation Investment Property gain($0.820)mAR2018 p51

]
less Gain on Sale of Property, Plant and Equipment($1.000)mAR2018 p51


less EC Credit unredeemed voucher release to P&L0.72 x ($0.700)mAR2018 p13, HYR2019 p22



less MTF Shareholding revaluation($0.612)mAR2018 p67



less reduction in 'Buy Right Cars' earn out provision to P&L($2.600)mHYR2019 p49



less Insurance and Life Investments Contract Adjustments($2.664)mAR2018 p51 and p76


]
equals$14.287m$8.685m$17.370m





Shares on Issue FY2018Shares on issue HY2019


84,802,81289,480,000


Normalised Annualised Business eps16.9c (FY2018)19.4c (FY2019f)



At the current share price of $2.40, I have] TRA on a forecast normalized PE ratio of 12.4 for FY2019. Underlying eps growth for the year should be 15%.




Profit FY2018Profit FY2019Reference



As declared$23.360m]$22.719m
[/


less Retrospective impairment provision adjustment0.72 x ($1.212)mMy post 3980, this thread



less Revaluation Investment Property gain($0.820)m($0.830)mAR2018 p51, AR2019 p55



less Gain on Sale of Property, Plant and Equipment($1.000)m($3.607)mAR2018 p51, AR2019 p55



less Gain on NZTA acquired leasehold premesis($3.393)mAR2019 p55



less MTF Shareholding revaluation($0.612)m$0mAR2018 p67, AR2019 p71



less reduction in already budgeted 'Buy Right Cars' earn out provision to P&L($2.600)mHYR2019 p49



less Insurance and Life Investments Contract Adjustments($2.664)m($5.804m)AR2018 p51 and p76, AR2019 p86



add Impairment of 'Buy Right Cars' Brand$4.300m AR2019 p31


]
equals$14.791m$13.385m






Shares on Issue FY2018Shares on issue FY2019


84,802,81286,888,064


Normalised Annualised Business eps17.4c (FY2018)15.4c (FY2019)



At the current share price of $2.31, I have TRA on an historical normalized PE ratio of 15.0 for FY2019. So much for the accuracy of my 'forecast' made in January :-(.

Notes

1/ I have changed my mind on normalising for the EC Credit unredeemed vouchers for unexpected change over FY2018. I now think it is just part of the ups and downs of the normal business of doing business. I do reserve my right to my mind back again should any of you shareholders manage to convince me that I am wrong ;-P.

2/ Reading the Half Year 2019 report again p22, I am a little unclear on the effect of the sale of Wiri. In paragraph 1, Turners are booking a

"$3.4 gain on the sale of an Auckland property"

Yet in paragraph 2, Turners say that revenue includes

"$3.4m from the sale of the property in Wiri."

Those two quotes taken together imply that 'Revenue' equals 'Profit' which doesn't seem right. Can anyone confirm exactly what did happen with Wiri ? I think my potential misinterpretation of this may have put my 'forecast' estimate out.

From the subsequent annual result, it looks like $0.830m was made on what was probably the Wiri sale, even though it was not specifically identified as such. I have assumed this figure is the correct one to use in normalising my FY2019 calculation.

3/ Details of the MTF shareholding revaluation through profit and loss are taken from AR2018 p67. If we go to page 52 of the 'MTF Annual Report 2018', 'Turners Finance' held 1,895,891 shares at the MTF 30th September balance date.

The valuations of the Turners MTF holding at TRA balance date imply the following MTF share price(s) at the TRA balance date(s) (31st March):

MTF share price 31-03-2017: $3.008m / 1.896 = $1.59
MTF share price 31-03-2018: $3.620m / 1.896 = $1.91

The change in the valuation of MTF shares held over that year was:

$3.620m - $3.008m = $0.612m

This doesn't quite align with the 'valuation gain on (all) investments' of $0.590m on AR2018 p51. But it is close enough to suggest that the revaluation of those MTF shares is the most important component of that.

Curiously if we look at the equivalent page in AR2019 (p71) the change in the value of the MTF shareholding is not mentioned. Yet it does say that Turners is still a shareholder in MTF. Can anyone explain why the change in the value of the MTF shareholding seems to not be reported on over FY2019?

4/ I leave the most significant part of my 'profit normalisation' until last. Have a look at AR2019, note 34c, part of the insurance activities notes.



FY2019FY2018


Change in Discount rate($0.207m)($0.120m)


Difference between actual and assumed experience$5.745m$2.491m


Life Investments Contracts: Difference between actual and assumed experience$0.266m$0.294m


Total$5.804m$2.664m



Now go to note 7, p55 in AR2019 and you will see that the $2.664m figure is reported as a 'Fair value gain on Contingent Consideration' for FY2018. Yet the equivalent figure for for FY2019 is missing, no doubt subsumed in the new expanded for this year Insurance divisions wider profits. I consider that $5.804m not repeatable and a figure that should be removed from operational profits, just like in FY2018. I don't know why Turners seem to have changed their policy on this but I am calling them out. Take out that $5.804m gain from the Turners Insurance arm operating profit (declared $8.227m for FY2019) and you will find how profitable the underlying insurance division really was in FY2019.

SNOOPY

[winner69]

Snoopy - thats not very good is it

Just as well every body likes those abnormal items

[kiora]

As per today's email from EC Credit
A nice little business

EC Credit Control - App now on the Xero Marketplace
Hi XXXX

We recently let you know that our connection to Xero was live and that you can use it to make loading debts with us as hassle-free as possible.

Today, we wanted to let you know that the app is now listed on the Xero App Marketplace. You can find it here https://apps.xero.com/nz/search/app/ec-credit-control

[Beagle]

Great you finally got your snout around this my furry friend and as suspected the normalised eps is nothing flash. A PE of 15 for a company that's reducing normalised earnings is not good at all. I normally use a PE of 8.5 for a no growth company when the risk free rate is 4% but with the current extremely unusual situation of 10 year N.Z. Govt bonds trading very close to 1% I could stretch this to a no growth PE of 11.5 if I was feeling generous. Still... 11.5 is a long way short of 15 and no growth is putting it mildly, normalised eps is going backwards although I am sure others will have a completely different view and include some of the matters you've excluded from normal earnings and arrive at a different conclusion. I also think Colonial motors is more than a little expensive at this time so its a very good sector to avoid at this point in my opinion.

[Snoopy]

As per today's email from EC Credit
A nice little business

EC Credit Control - App now on the Xero Marketplace
Hi XXXX

We recently let you know that our connection to Xero was live and that you can use it to make loading debts with us as hassle-free as possible.

Today, we wanted to let you know that the app is now listed on the Xero App Marketplace. You can find it here https://apps.xero.com/nz/search/app/ec-credit-control

OK kiora, so you are an EC Credit customer? Would you care to give us a 'consumer review' of how it works for you? TIA

SNOOPY

[kiora]

No I haven't used ECC but their offering seemed good to me
Maybe some else has

[Snoopy]

No I haven't used ECC but their offering seemed good to me
Maybe some else has

I jumped to the conclusion that because EC Credit sent you an e-mail, you might be an EC Credit customer. I got that wrong. This leads me to two other possibilities.

1/ EC Credit has been spamming you (not good).
2/ You are Xero customer, and Xero is actively promoting EC Credit now the app is in place (probably good for Turners shareholders).

Am I on the right track?

SNOOPY

[Snoopy]

Profit FY2018Profit FY2019Reference



As declared$23.360m]$22.719m
[/


less Retrospective impairment provision adjustment0.72 x ($1.212)mMy post 3980, this thread



less Revaluation Investment Property gain($0.820)m($0.830)mAR2018 p51, AR2019 p55



less Gain on Sale of Property, Plant and Equipment($1.000)m($3.607)mAR2018 p51, AR2019 p55



less Gain on NZTA acquired leasehold premesis($3.393)mAR2019 p55



less MTF Shareholding revaluation($0.612)m$0mAR2018 p67, AR2019 p71



less reduction in already budgeted 'Buy Right Cars' earn out provision to P&L($2.600)mHYR2019 p49



less Insurance and Life Investments Contract Adjustments($2.664)m($5.804m)AR2018 p51 and p76, AR2019 p86



add Impairment of 'Buy Right Cars' Brand$4.300m AR2019 p31


]
equals$14.791m$13.385m






Shares on Issue FY2018Shares on issue FY2019


84,802,81286,888,064


Normalised Annualised Business eps17.4c (FY2018)15.4c (FY2019)








Notes

4/ I leave the most significant part of my 'profit normalisation' until last. Have a look at AR2019, note 34c, part of the insurance activities notes.



FY2019FY2018


Change in Discount rate($0.207m)($0.120m)


Difference between actual and assumed experience$5.745m$2.491m


Life Investments Contracts: Difference between actual and assumed experience$0.266m$0.294m


Total$5.804m$2.664m



Now go to note 7, p55 in AR2019 and you will see that the $2.664m figure is reported as a 'Fair value gain on Contingent Consideration' for FY2018. Yet the equivalent figure for for FY2019 is missing, no doubt subsumed in the new expanded for this year Insurance divisions wider profits. I consider that $5.804m not repeatable and a figure that should be removed from operational profits, just like in FY2018. I don't know why Turners seem to have changed their policy on this but I am calling them out. Take out that $5.804m gain from the Turners Insurance arm operating profit (declared $8.227m for FY2019) and you will find how profitable the underlying insurance division really was in FY2019.



Snoopy - thats not very good is it

Just as well every body likes those abnormal items

What on earth is going on? PGW are having all sorts of problems with their retirement plan and have just pumped $10m into it to keep things solvent. Somehow they have kept this cash injection out of the annual profit figures.

Meanwhile in the same macro environment, TRA are booking multi-million dollar gains on their insurance portfolio and it does seem to be flowing through to profit. Quoting from AR2019 p86:

"The disclosure of the components of operating profit after tax expense are required to be separated between policyholder's and shareholder's interests. We have included only one column as policyholder profits arise only in respect of a small number of participating policies, and the profits arising from these policies were effectively zero. Accordingly all of the profits earned during the year are shareholder profits."

So it looks like Turners have invested their insurance float very wisely, earned enough to pay out their policy holders and are pocketing the surplus gain?

TRA are on a mission to simplify their business to make it easier to understand for existing and potential shareholders I must say that their insurance profits are anything but transparent. The AR2019 note 34C reports the insurance activities 'after taxation' of $6.990m. Yet if we go to the 'Segmented Results' on p53 we get 'Operating Profit' (which equates to Earnings Before Tax) of $8.227m. That implies a tax rate on insurance profits of just 15%.

The most significant item in the profit equation comes under the header:

"Insurance Contracts: Difference between actual and assumed experience"

The large positive gains of FY2018 ( $2.491m) and FY2019 ($5.745m) would suggest substantial out performance of pre-assumed earnings assumptions. Yet most of these insurance contracts would be for relatively short term mechanical repair insurance. This would suggest that the insurance float would normally be invested in fixed interest investments. And we all know that yield on fixed interest has been under pressure. Turners are on record as saying that they have boosted their insurance float returns by doing 'in house property development'. Yet if we look at note 7, the break down of 'Profit After Tax' (p55 AR2019) , in particular for the year FY2018, we can see that the property gains are listed as separate to the 'Fair Value Gain on Contingent Consideration' that I have previously linked to Insurance Division profits. This would seem to rule out the 'Difference between actual and assumed experience' incorporated in the $2.664m windfall for FY2018 being from property gains.

So we now have a mystery: If large incremental 'Fair Value Gain on Contingent Consideration' is not from property development and fixed interest returns are under pressure, where have these insurance related windfall gains of FY2018 ( $2.491m - AR2019 p86) and FY2019 ($5.745m- AR2019 p86) come from?

SNOOPY

[percy]

It may help to remember TRA have legacy insurance, which should not get mixed up with their Autosure "insurance" business.
Property.I find it easier to refer to their cash flows from investing activities.page 34 annual report. I compare inflow with outflow ,keeping in mind inflow will include profits, while outflow will be new investments at cost.

[Snoopy]

It may help to remember TRA have legacy insurance, which should not get mixed up with their Autosure "insurance" business.


You are quite correct Percy. 'Autosure' was acquired on 31st March 2017.

The TRA insurance revenue earned over FY2017 (ye 31/03/2017) was $12.255m. With the inclusion of a full year of 'Autosure' , that revenue figure jumped to $46.923m over FY2018. This means that from a revenue perspective, the insurance business at Turners today is at least 73.9% 'Autosure' going forwards. Under note 34C, the surplus legacy life insurance contracts profits are separated out. That makes sense because Life Contracts must be managed from a longer term perspective. But the annual gain from 'Difference between actual and assumed experience" for life contracts was only $0.266m. That is dwarfed by the 'Difference between actual and assumed experience" for (other) Insurance Contracts of $5.745m, and that latter figure must include the 'Autosure' contracts.

What I am saying here is that most of the insurance contracts that Turners write would be 'short term', say from two to five years. That would indicate a bias towards using fixed interest investments to underwrite projected payouts. I don't think the mystery of those windfall insurance out performances that TRA have booked as shareholder profits in the last couple of years has been answered.

SNOOPY

[percy]

Ring Aaron.

[kiora]

I jumped to the conclusion that because EC Credit sent you an e-mail, you might be an EC Credit customer. I got that wrong. This leads me to two other possibilities.

1/ EC Credit has been spamming you (not good).
2/ You are Xero customer, and Xero is actively promoting EC Credit now the app is in place (probably good for Turners shareholders).

Am I on the right track?

SNOOPY
I did inquire about using their services a few years ago.They did seem to have good collection methods from my inquiries.
I didn't follow through as I assessed the debtor to have no money & had moved to Australia.
ECC where good at following up on my inquiry & offed the voucher as an inducement
I think ECC is good fit for their car loans & their business

[Snoopy]

3/ Details of the MTF shareholding revaluation through profit and loss are taken from AR2018 p67. If we go to page 52 of the 'MTF Annual Report 2018', 'Turners Finance' held 1,895,891 shares at the MTF 30th September balance date.

The valuations of the Turners MTF holding at TRA balance date imply the following MTF share price(s) at the TRA balance date(s) (31st March):

MTF share price 31-03-2017: $3.008m / 1.896 = $1.59
MTF share price 31-03-2018: $3.620m / 1.896 = $1.91

The change in the valuation of MTF shares held over that year was:

$3.620m - $3.008m = $0.612m

This doesn't quite align with the 'valuation gain on (all) investments' of $0.590m on AR2018 p51. But it is close enough to suggest that the revaluation of those MTF shares is the most important component of that.

Curiously if we look at the equivalent page in AR2019 (p71) the change in the value of the MTF shareholding is not mentioned. Yet it does say that Turners is still a shareholder in MTF. Can anyone explain why the change in the value of the MTF shareholding seems to not be reported on over FY2019?



I have found a link to the current value of MTF shares

http://www.sharemart.co.nz/Secure/Motor-Trade-Finance-Limited

Last trade was on 5th August 2019 for $2.10. Shares are on offer at $2.05 but there are no buyers. I have been unable to find historical MTF price information. If anyone can find that please post a link! A value of $2.05 isn't so far removed from the $1.91 book value recorded in the Turner's accounts as at 31-03-2018. So maybe the value as at 31-03-2019 was still $1.91? No matter, it is odd that the equity value of this non-controlling interest of MTF of just under 10%, has apparently not been reported on AR2019. Maybe there is an 'out' that you don't have to report, if a change in equity value is below a certain threshold?

SNOOPY

[Snoopy]

Turners Automotive Group (TNR/TRA)FY2015FY2016FY2017
FY2018FY2019


No. Shares on Issue EOFY (TNR/TRA) (*)63.077m63.432m74.524m84.803m86.555m (est)


Normalised Earnings Per Share {A}13.6c24.2c21.8c22.5c20.1c (est)


Actual Dividend Paid (cps) {B} (**)5c + 4c6c + 6c7c + 3c +3c4c + 4.5c +3c +3c
4.5c + 5c +4c +4c


Normalised Earnings Retained {A}-(B) (cps)4.6c12.2c8.8c8.0c2.6c (est)




(*) The number of TNR shares on issue at the end of the financial year has been adjusted retrospectively for the 23rd March 2016 10:1 share consolidation. To see how the number of TRA shares on issue was derived for FY2015, refer to my post 1413 "Buffett Test 2: Increasing 'eps' Trend (FY2016 perspective): Preamble Part 2.

(**) The actual dividends paid by TNR/TRA over FY2015 and FY2016 were unimputed. This was because of prior losses incurred under the DPC/TNR/TRA structure. However, in my modelling the TUA group was already combined with DPC/TNR/TRA. Previous year TUA profits wiped out those previous year equivalent DPC/TNR/TRA losses. Under this modelled scenario, those FY2015 and FY2016 dividends would have been fully imputed. That's because looking at the combined picture, those prior offsetting DPC/TNR/TRA losses never happened.

From the above table the 'five year average' dividend payout was:

(9c + 12c + 13c +14.5c + 17.5c)/ 5 = 13.20c (net)

Average Gross Dividend Yield (based on a 28% tax rate) is therefore:

13.20/(1-0.28) = 18.33c

Using a capitalized value gross interest rate of 7.5% (see thread An Investment Story - Geneva/Turners/Heartland, post 40), this translates to a fair value share price of:

18.33c/ 0.075 = $2.44

Last year, I stated that I no longer believed this valuation method provided a satisfactory technique for valuing Turners Automotive Group. This was because the retained earnings of TRA are employed in growing the business, and this valuation method ignores that contribution.

With the share price today trading some 10% below this equivalent $2.44 valuation figure -a figure based only on historical dividend payments-, one could interpret this to mean that the 'retained earnings' part of the profit generated has been squandered and for share valuation purposes should be considered worthless.

More specifically during FY2018 the setting aside of the last part of the earn out consideration for 'But Right Cars' ($1.9m) has cast some doubt on how successful this acquisition will continue to be. Furthermore the market does not seem convinced that the 'Autosure' insurance acquisition is adding value. Or perhaps these two acquisitions are adding value, but insufficient value to compensate for declines in other established areas of the business? However, you interpret the YOY share price decline, the market doesn't like what it sees. Whether there is any evidence that any profit decline for FY2019 is permanent or even real has not been established. I think given a more medium term outlook the market is wrong. IMO we will be looking at a case of 'sell the rumor', 'buy the fact' when the annual TRA result is released in June.



The below 'declared dividend totals' are different to those that the company discloses.on page 10 of the July/August 2019 Road Show presentation. This is because I sum the dividends actually paid in a particular financial year, whereas Turner's are showing those dividends declared in a particular financial year.




Turners Automotive Group (TNR/TRA)FY2015FY2016FY2017
FY2018FY2019


No. Shares on Issue EOFY (TNR/TRA) (**)63.077m63.432m74.524m84.803m86.888m


Normalised Earnings Per Share {A}13.6c24.2c21.8c17.4c15.4c


Actual Dividend Paid + Retrospective Policy Adjustment(*) (cps) {B} (***)5c + 4c6c + 6c +4c(*)7c + 3c +3c+ 1c(*)4c + 4.5c +3c +3c4.5c + 5c +4c +4c


Normalised Earnings Retained {A}-(B) (cps)4.6c8.2c7.8c2.9c(2.1c)



(*) At annual report time 2019, it was announced that the dividend policy will be changed in the future so that the payout ratio increases from 50-60% of NPAT to 60-70% of NPAT. Where historical dividends have fallen short of this new standard, I have retrospectively increased these dividends to reflect 65% of underlying earnings.

(**) The number of TNR shares on issue at the end of the financial year has been adjusted retrospectively for the 23rd March 2016 10:1 share consolidation. To see how the number of TRA shares on issue was derived for FY2015, refer to my post 1402 "Buffett Test 2: Increasing 'eps' Trend (FY2016 perspective): Preamble Part 2.

(***) The actual dividends paid by TNR/TRA over FY2015 and FY2016 were unimputed. This was because of prior losses incurred under the DPC/TNR/TRA structure. However, in my modelling the TUA group was already combined with DPC/TNR/TRA. Previous year TUA profits wiped out those previous year equivalent DPC/TNR/TRA losses. Under this modelled scenario, those FY2015 and FY2016 dividends would have been fully imputed. That's because looking at the combined picture, those prior offsetting DPC/TNR/TRA losses never happened.

From the above table the 'five year average' dividend payout was:

(9c + 16c + 14c +14.5c + 17.5c)/ 5 = 14.20c (net)

Average Gross Dividend Yield (based on a 28% tax rate) is therefore:

14.20/(1-0.28) = 19.72c

Using a capitalized value gross interest rate of 7.5% (see thread An Investment Story - Geneva/Turners/Heartland, post 40), this translates to a fair value share price of:

19.72c/ 0.075 = $2.63

The FY2019 normalised result shows that dividends exceeded normalised earnings. In effect, the dividend is being propped up by proceeds from non repeatable property sales. While this may continue for the next year or two, it is not sustainable beyond that IMO. Beyond this time-frame, I think it is doubtful that the current dividend levels can be maintained. My modelling takes this into account: Actual dividend 17.5cpc for FY2019 vs Modelled dividend of 14.2cps. I like buying shares below fair value and a discount of around 20% is what I look for. That translates to around $2.10, which sounds like a good share target acquisition price for TRA!

SNOOPY

discl: Shareholder with an average acquisition price of $2.74 :-(. Obviously the assumptions that I was making about the business to justify my past purchases were different to the assumptions I am using today!

[Snoopy]

I'd definitely go to the Ferrari event over any AGM, very unlikely to go to sleep at the former.



Not when you're the Chairman and asking for an exorbitant fee increase. Mate, when you were a young fella didn't your mother tell you work comes before play :p


With the AGM coming up, time to get those votes in (got my voting form in the mail today). I quote the above two posts to remind shareholders what happened last year. For some reason when I opened the mail today I suddenly felt militant :-I

I have decided to vote AGAINST the reappointment of Grant Baker. Ten years at the top (even if the first five of those were when today's Turners was Dorchester) I think is enough. If the ticket clipping experiment isn't working, time to let someone else take the reins and bring together fresh ideas to move the business forward. I think I would have voted for Baker if he had decided to 'officially' stand down as Chair (after he did stand down for the AGM last year). I think anyone who holds 7% of the shares probably deserves a seat at the board table, But as the leader of the board, I say 'time is up'. Skipping the AGM to attend a Ferrari event shows where Baker's real loyalty lies. If you want a good work ethic at the company, and you are at the top, then you have to walk that walk. Driving around in a Ferrari instead of turning up for the most important day of what is on paper just a 13 day work year does not send the right message.

Alister Petrie is the Bartel Holdings director nomination. Bartel Holdings in the largest shareholder, with 10.99% of the shares on issue at EOFY2019, up from 7.95% at EOFY2018. Alister has a long career in marketing which is a skill set the board need. I will be voting FOR him.

Next the vote on the new company rules. I see they are deleting the rights of shareholders to demand a poll. Given the half hearted leadership culture at board level, I think the ability for shareholders to demand a poll is a good thing. Thus I will be voting AGAINST this motion.

Finally (or should that be firstly) I am happy to support the auditors as they are asking the right questions, especially on the valuations of the insurance contract liabilities.

Sadly I won't be able to get to the AGM myself. Any shareholders out there planning to put in a 'militant' appearance?

SNOOPY

[Snoopy]

My standard debt risk measure is something called MDRT or 'Minimum Debt Repayment Time'. This is a figure in years which is the answer to the question:

"If all normalised profits for the year were channelled into repaying 'net company borrowing debt', how many years would that take?"

For FY2016 the answer was as follows:

MDRT Turners Limited FY2016

[(Parent Bank Borrowings) + (MTA Borrowings) + (TNRHB bonds)) - (Cash)] / [(Net Profit) + (Impairment Adjustment)]
= [($109.327m+ $42.300m + $23.189m) - $13.810m] / [ $15.573n + 0.72($1.041m) ] = 9.8 years

At EOFY2017, this figure has somewhat blown out.

MDRT Turners Limited FY2017

[(Parent Bank Borrowings) + (MTA Borrowings) + (TNRHB bonds)) - (Cash)] / [(Net Profit) + (Impairment Adjustment)]
= [($191.565m+ $49.021m + $25.561m) - $69.069m] / [ $16.261 ] = 12.1 years

I don't usually like putting 'fudge factors' into these calculations. But in this instance, with the purchase of 'Autosure' right at the end of the financial year, and no earnings contribution received, I will 'fiddle the result' so you can see what difference it makes.

If we look at 'annualised earnings', including a full year contribution from 'Buy Right cars' and 'Autosure' (my post 1479), then we can argue NPAT should be:

$16.261 + $1.03m +$5.44m = $22.731m

[($191.565m+ $49.021m + $25.561m) - $69.069m] / [ $22.731m ] = 8.7 years

So maybe the debt repayment picture isn't so bad? Even so, I wouldn't call 8.7 years a low figure. The TRA balance sheet is, IMO, being worked pretty hard.


In these days of chasing yield, it becomes more important than ever to think about risk, My standard debt measure is something called MDRT or 'Minimum Debt Repayment Time'. This is a figure in years which is the answer to the question:

"If all normalised profits for the year were channelled into repaying 'net company borrowing debt', how many years would that take?"

For FY2019 the answer was as follows:

MDRT Turners Limited FY2016

[(Parent Bank Borrowings) + (MTA Borrowings) + (TRA100 bonds) - (Cash)] / [(Net Profit) + (Impairment Adjustment)]
= [($251.282m+ $37.055m + $25.000m) - $15.866m] / [ $22.710m + 0.72($7.892m) ] = 10.5 years

My rule of thumb for the MDRT answer in years is:

years < 2: Company has low debt
2< years <5: Company has medium debt
5< years <10: Company has high debt
years >10: Company debt is cause for concern

The board has indicated that asset sales are on the cards. Given the high MDRT figure, this is a good thing. I wouldn't go as far as to say that TRA are in trouble. But take the profits from property development out and suddenly that MDRT figure blows out even more. I think it is a sound idea to scope out asset sales before your bankers suggest you do. Low interest rates should take the pressure off until a capital restructuring solution is found for TRA.

At the right price I still consider TRA an appropriate investment as part of a balanced portfolio. IOW if you 'back up the truck' to buy the 'cheap yield', make sure you have a few other trucks, backed up to other quarries, in your fleet.

SNOOPY

[Beagle]

With the AGM coming up, time to get those votes in (got my voting form in the mail today). I quote the above two posts to remind shareholders what happened last year. For some reason when I opened the mail today I suddenly felt militant :-I

I have decided to vote AGAINST the reappointment of Grant Baker. Ten years at the top (even if the first five of those were when today's Turners was Dorchester) I think is enough. If the ticket clipping experiment isn't working, time to let someone else take the reins and bring together fresh ideas to move the business forward. I think I would have voted for Baker if he had decided to 'officially' stand down as Chair (after he did stand down for the AGM last year). I think anyone who holds 7% of the shares probably deserves a seat at the board table, But as the leader of the board, I say 'time is up'. Skipping the AGM to attend a Ferrari event shows where Baker's real loyalty lies. If you want a good work ethic at the company, and you are at the top, then you have to walk that walk. Driving around in a Ferrari instead of turning up for the most important day of what is on paper just a 13 day work year does not send the right message.

Alister Petrie is the Bartel Holdings director nomination. Bartel Holdings in the largest shareholder, with 10.99% of the shares on issue at EOFY2019, up from 7.95% at EOFY2018. Alister has a long career in marketing which is a skill set the board need. I will be voting FOR him.

Next the vote on the new company rules. I see they are deleting the rights of shareholders to demand a poll. Given the half hearted leadership culture at board level, I think the ability for shareholders to demand a poll is a good thing. Thus I will be voting AGAINST this motion.

Finally (or should that be firstly) I am happy to support the auditors as they are asking the right questions, especially on the valuations of the insurance contract liabilities.

Sadly I won't be able to get to the AGM myself. Any shareholders out there planning to put in a 'militant' appearance?

SNOOPY

Agree 100% mate. I am not planning on attending. Got myself all wound up and chomping on the lead for a full barking session last year and he wasn't there !
Can't be bothered this year...timid shareholders will vote him to stay on.

[winner69]

Originally posted by Snoopy


Next the vote on the new company rules. I see they are deleting the rights of shareholders to demand a poll. Given the half hearted leadership culture at board level, I think the ability for shareholders to demand a poll is a good thing. Thus I will be voting AGAINST this motion.


Snoops me old mate.

Read that bit about polls again ...voting WILL be done by poll... hence no need for shareholders to demand a poll


4. Inserting a requirement that voting at meetings of shareholders will be conducted by poll and deleting clauses which addressed shareholders rights to demand polls

[percy]

Interesting speaking and corresponding with others who attended Turners Roadshow presentation.
Very different view of the company than those who are currently posting.
The agm will be held on the 18th September 10.30 am,back to its usual week,so not long to wait for a trading update,and possibly other exciting news.

ps.Considering the number of shares the board collectively hold, voting is rather academic.

[Ggcc]

Interesting speaking and corresponding with others who attended Turners Roadshow presentation.
Very different view of the company than those who are currently posting.
The agm will be held on the 18th September 10.30 am,back to its usual week,so not long to wait for a trading update,and possibly other exciting news.

ps.Considering the number of shares the board collectively hold, voting is rather academic.
I agree that the people attending these road shows have questions, but generally speak relatively positive about TNR. I was impressed by the operation as a whole and they spoke well of the future. Everyone has their own opinion about investing, otherwise we would all be rich.

[McGinty]

Agree 100% mate. I am not planning on attending. Got myself all wound up and chomping on the lead for a full barking session last year and he wasn't there !
Can't be bothered this year...timid shareholders will vote him to stay on.

Agree with you there Mr Beagle, last year I backed up my own opinion, flew up to the AGM to asked questions to (what came across as) a smug board. In the weeks following that I voted with my feet and now visit the thread only to see if the story has changed - short answer yeah - nah.

This years AGM can will be just a fluffy summary of:

- How the boys club couldn't make the vertical integration (multiple clips of the ticket) work and now they are looking to sell the problem parts.
- Moving into possible new digital distractions (CL8's business model is a lemon and they aren't quick enough to see this yet)
- Over paying for Buyright and the non recourse loans are just a one off (Still)
- The board are worth their fee increase (justified by the total Shareholder return still the last AGM....hmmm no that's still negative)

Just of note, did anyone else notice how Paul Byrnes was paid almost $400k additional to his director fees for his consulting services? The shareholders are certainly getting there $75k worth of value with his board fees?

[winner69]

Agree with you there Mr Beagle, last year I backed up my own opinion, flew up to the AGM to asked questions to (what came across as) a smug board. In the weeks following that I voted with my feet and now visit the thread only to see if the story has changed - short answer yeah - nah.

This years AGM can will be just a fluffy summary of:

- How the boys club couldn't make the vertical integration (multiple clips of the ticket) work and now they are looking to sell the problem parts.
- Moving into possible new digital distractions (CL8's business model is a lemon and they aren't quick enough to see this yet)
- Over paying for Buyright and the non recourse loans are just a one off (Still)
- The board are worth their fee increase (justified by the total Shareholder return still the last AGM....hmmm no that's still negative)

Just of note, did anyone else notice how Paul Byrnes was paid almost $400k additional to his director fees for his consulting services? The shareholders are certainly getting there $75k worth of value with his board fees?

Jeez ...$400k is a lot of consultancy ...wonder what he did to earn that

Equivalent to 0.5 cents per share (I think) ...hope his efforts were eps accretive

Almost as much as the CEO got paid

[Snoopy]

Snoops me old mate.

Read that bit about polls again ...voting WILL be done by poll... hence no need for shareholders to demand a poll

4. Inserting a requirement that voting at meetings of shareholders will be conducted by poll and deleting clauses which addressed shareholders rights to demand polls.


I read it differently Winner. My interpretation of that clause change is that shareholders will be specifically banned from putting resolutions up at the AGM to be voted on.

SNOOPY

[Snoopy]

Jeez ...$400k is a lot of consultancy ...wonder what he did to earn that

Almost as much as the CEO got paid


Paul Byrnes is a clever guy who has learned the Turners modus operandi well.

Maintain seat on board (Ticket clipped). Use that position to recommend the most wonderful consultant (himself) to drive future strategies (Ticket Clipped). And what better place to discuss these forward thinking strategies than at the new Paul Byrnes owned restaurant (Ticket Clipped).

SNOOPY

[percy]

Paul Byrnes is a clever guy who has learned the Turners modus operandi well.

Maintain seat on board (Ticket clipped). Use that position to recommend the most wonderful consultant (himself) to drive future strategies (Ticket Clipped). And what better place to discuss these forward thinking strategies than at the new Paul Byrnes owned restaurant (Ticket Clipped).

SNOOPY

Yes Hugh Green picked him years ago.
Right man then,right man today.
AIR brought in outside consults at a huge cost.
TRA brought in Paul Byrnes.Sensible.Huge savings.
Now were look forward to benefitting from his consultancy.

[winner69]

Paul Byrnes is a clever guy who has learned the Turners modus operandi well.

Maintain seat on board (Ticket clipped). Use that position to recommend the most wonderful consultant (himself) to drive future strategies (Ticket Clipped). And what better place to discuss these forward thinking strategies than at the new Paul Byrnes owned restaurant (Ticket Clipped).

SNOOPY

......and all done at arms length

[winner69]

I read it differently Winner. My interpretation of that clause change is that shareholders will be specifically banned from putting resolutions up at the AGM to be voted on.

SNOOPY


You may be correct ...I don’t really know. Need to see the full constitution y

But if you are right well it sounds rather (what’s the word I need) ...can’t silence shareholders can we.

[biker]

Agree 100% mate. I am not planning on attending. Got myself all wound up and chomping on the lead for a full barking session last year and he wasn't there !
Can't be bothered this year...timid shareholders will vote him to stay on.

Not going this year either.
Went last year.
Found Byrnes bordering on confrontational and definitely defensive.
Baker, the Chairman, was listening in with full audio and the ability to speak but never announced he was there listening and could speak.
Creepy, deceptive and unprofessional.
Went to road show last year also. Share price was all down hill from there.
No longer a shareholder.
NUF said.
Hope it does well but have put my investment elsewhere.

[Snoopy]

4/ I leave the most significant part of my 'profit normalisation' until last. Have a look at AR2019, note 34c, part of the insurance activities notes.



FY2019FY2018


Change in Discount rate($0.207m)($0.120m)


Difference between actual and assumed experience$5.745m$2.491m


Life Investments Contracts: Difference between actual and assumed experience$0.266m$0.294m


Total$5.804m$2.664m



Now go to note 7, p55 in AR2019 and you will see that the $2.664m figure is reported as a 'Fair value gain on Contingent Consideration' for FY2018. Yet the equivalent figure for for FY2019 is missing, no doubt subsumed in the new expanded for this year Insurance divisions wider profits. I consider that $5.804m not repeatable and a figure that should be removed from operational profits, just like in FY2018. I don't know why Turners seem to have changed their policy on this but I am calling them out. Take out that $5.804m gain from the Turners Insurance arm operating profit (declared $8.227m for FY2019) and you will find how profitable the underlying insurance division really was in FY2019.


The following table (from the respective Annual Reports 'Insurance Related Disclosures: Section C 'Surplus after taxation from insurance activities arose from') shows why profits from Turners insurance division, in the past, could largely be ignored in the overall profit picture. Yet over the last couple of years we certainly can't say the same. This is why I see 'insurance' as such an important piece of the profit puzzle to consider going forwards.



FY2019FY2018FY2017
FY2016FY2015


Insurance Contracts: Change in Discount rate($0.207m)
($0.120m)$0.164m
($0.119m)($0.311m)


Insurance Contracts: Difference between actual and assumed experience$5.745m
$2.491m($0.552m)
$0.062m$0.138m


Life Investments Contracts: Difference between actual and assumed experience$0.266m$0.294m$0.420m
$0.599m$0.696m


Total Insurance Profit Contribution (after tax) {A}$5.804m$2.664m
$0.032m
$0.542m$0.523m


Declared Turners NPAT {B}$22.329m$23.192m$17.609m
$15.573m$18.069m


Insurance Adjustment/NPAT {A}/{B}26.0%11.5%0.18%
3.48%2.89%


Insurance Return on Assets (NPAT) above Contract Liailiities$1.022m$0.823m
$0.383m$0.307m$0.243m



There is a reason for this. On 31st March 2017 the 'Autosure' vehicle insurance business was acquired. That means that FY2018 and FY2019 include results from 'Autosure', whereas previous years did not.

I previously wrote:

"I consider that $5.804m (for FY2019) not repeatable and a figure that should be removed from operational profits,"

But I am not sure that my opinion on that score is right.

Particularly interesting, I thought, was that Turners separated out 'Investment returns on assets in excess of insurance contract and investment contract liabilities' (AR2019 p86). I read this to be the insurance profit that can be pocketed by Turners shareholders. Fair enough and this was just over a million dollars, $1.022m, for FY2019 out of a grand total of NPAT attributable to insurance activities of $6.990m: nice.

However, if you then move forwards to 'note I' the 'Disaggregated information' (AR2019 p90), you will see the insurance profit of $6.990m split up into 'Statutory' profit of $2.834m and 'Shareholder' profit of $4.156m. This seems to contradict the information presented in section C. Is the profit we shareholders can book $1.022m or $4.156m? I don't know the answer. But it gets worse.

If you look at the 'Operating Segments' part of the Annual Report (p53, AR2019), you will see total operating profit for insurance is $8.227m. This doesn't quite tie in with the information under the 'Insurance Related Disclosures: Disaggregated Information' section of AR2019' where profit before tax is quoted to be $8.577m (The explanation for the $0.350m difference may be found on p91 of AR2019: The $350k represented a revaluation of an investment property that had already been disclosed under 'Property Plant & Equipment). Of the declared insurance earnings of $8.577m (AR2019 page 90), only $5.099m of 'shareholder earnings' -before tax- occurred over FY2019. So how is it that Turners can claim a larger $8.227m worth of insurance earnings over FY2019 in the 'Operating Segment' earnings on page 53?

The only answer I can come up with is that Turners are claiming profits that actually belong to the likes of life policy holders as their own. I hope someone can tell me that I am reading these figures the wrong way. Because if I am right, then these 'insurance profits' claimed by Turners look very dubious.

SNOOPY

[winner69]

Not going this year either.
Went last year.
Found Byrnes bordering on confrontational and definitely defensive.
Baker, the Chairman, was listening in with full audio and the ability to speak but never announced he was there listening and could speak.
Creepy, deceptive and unprofessional.
Went to road show last year also. Share price was all down hill from there.
No longer a shareholder.
NUF said.
Hope it does well but have put my investment elsewhere.

Boards hate AGMs to start with ....a burden they reluctantly put up with. You can sense many Chairman muttering under their breath ‘bloody shareholders’

But need to appease them ...one day you might want more cash from them.

[percy]

Well I am doing a Grant Baker this year.
Not attending the agm.Was going to watch it live,then our neighbour asked me to collect her from the airport, when she returns from her travels.
You gussed it 11.05 am Wednesday 18th.!!!
Will watch later on Youtube.

[Snoopy]

Well I am doing a Grant Baker this year.
Not attending the agm.Was going to watch it live,then our neighbour asked me to collect her from the airport, when she returns from her travels.
You gussed it 11.05 am Wednesday 18th.!!!
Will watch later on Youtube.


Doing the full Grant Baker eh?
Will your neighbour's suitcases fit into the luggage compartment of your Ferrari Percy? ;-P

SNOOPY

[Snoopy]

I have tabulated below these important debt statistics over the last four years.



Leverage Ratio


Averaged Gross Bank Debt (Estimate)
EBITDA
Gross Bank Debt/EBITDA
Maximum Standard


FY20191/2 x (($251.177m - $163m) + ($230.459m - $133m))
$49.786m
1.86
2.00


FY20181/2 x (($230.459m - $133m) + ($191.708m - $69m))
$51.304m
2.15
2.00


FY20171/2 x (($191.708m - $69m) + ($109.327m - $0m))
$38.844m
2.99
2.00


FY20161/2 x (($109.327m - $0m) + ($95.151m - $0m) )
$35.131m
2.91
2.50



In each year I have subtracted the 'securitized debt' from the 'gross bank debt'.
The above table indicates a 'triple fail', up until FY2019. However there are difficulties for investors in determining what the average gross bank debt is over the year. My 'arithmetic average' using the year start and end figures will overestimate the average debt if more of the incremental debt is acquired over the second half of the year, for example. So in this instance, the trend is of perhaps more interest that the absolute value.

The indicative securitised debt for FY2018 and FY2017 may be found on p15 of AR2018. I am assuming these are representative over the year figures. That is because they do not match up with the end of year securitized debt figures on p57 AR2018.

Unfortunately these indicative securitised debt figures have been dropped from the FY2019 report. However I did note that over FY2019, the end of year securitised loan balance increased from $145m to $175m. I have used this $30m increment to get the indicative securitised debt over FY2019 of:

$133m + $30m = $163m.

I have used this $163m estimate figure in the table above.



Interest Ratio



EBITDA
Total Net Interest
EBITDA/Total Net Interest
Minimum Standard


FY2019
$49.786m
($14.952m-$1.791m)
3.8
3.5


FY2018
$51.304m
($14.344m-$1.343m)
3.9
3.5


FY2017
$38.844m
($11.350m - $0.206m)
3.5
3.5


FY2016
$35.131m
($11.436m - $0.353m)
3.2
3.5



It does seem that the financial position of Turners over the last few years is becoming stronger, not weaker as some may think. However these are all minimum standards. Whether these statistics are strong enough for investors putting their money into Turners today is a matter for each individual investor to decide.

SNOOPY

[percy]

Doing the full Grant Baker eh?
Will your neighbour's suitcases fit into the luggage compartment of your Ferrari Percy? ;-P

SNOOPY

Plenty of room in the Nissan Sylphy's boot...lol.

[BlackPeter]

I have tabulated below these important debt statistics over the last four years.

...

It does seem that the financial position of Turners over the last few years is becoming stronger, not weaker as some may think. However these are all minimum standards. Whether these statistics are strong enough for investors putting their money into Turners today is a matter for each individual investor to decide.

SNOOPY

Just wondering whether the apparent "improvement" of their financial position (measured in in Debt / EBITDA) has anything to do with them peddling back from the finance business? If they do less finance they need less (borrowed) capital ...

Not sure yet whether this is good for shareholders, though ... for a used car sales yard they still have plenty of liabilities on their balance sheet

[percy]

Just wondering whether the apparent "improvement" of their financial position (measured in in Debt / EBITDA) has anything to do with them peddling back from the finance business? If they do less finance they need less (borrowed) capital ...

Not sure yet whether this is good for shareholders, though ... for a used car sales yard they still have plenty of liabilities on their balance sheet

Turners have stated they are looking for expressions of interest for Oxford Finance.Should the price be right they will sell it.Otherwise they will retain it.
However they are still growing the business.In the year ended 31st March 2019 Oxford Finance loan book grew 9% to $254 m.

[winner69]

Turners have stated they are looking for expressions of interest for Oxford Finance.Should the price be right they will sell it.Otherwise they will retain it.
However they are still growing the business.In the year ended 31st March 2019 Oxford Finance loan book grew 9% to $254 m.

And finance segment operating profit less than year before

[Balance]

Turners have stated they are looking for expressions of interest for Oxford Finance.Should the price be right they will sell it.Otherwise they will retain it.
However they are still growing the business.In the year ended 31st March 2019 Oxford Finance loan book grew 9% to $254 m.

Guess who was the biggest lender to Buy Right Cars? :t_down:

[percy]

And finance segment operating less than year before

While the number of active dealers selling Turners' finance offer continues to grow and was up 11% yoy to 419.

[winner69]

While the number of active dealers selling Turners' finance offer continues to grow and was up 11% yoy to 419.


...while share price down 21% yoy

[Balance]

...while share price down 21% yoy

Hard to go against the tide eh, W69?

Guess driving a Ferrari in NZ is a sure recipe for getting frustrated or getting plenty of traffic fines!

[Baa_Baa]

Another A$ 250k into the CL8 black hole. CL8 bit desperate for funding.

[winner69]

Another A$ 250k into the CL8 black hole. CL8 bit desperate for funding.

Pretty pathetic response to that rights issue eh baa_baa

Maybe they’ll do a mock up of how Carly (or whatever it is) is going to operate in NZ at the AGM ...that would get punters salivating.

[Balance]

Pretty pathetic response to that rights issue eh baa_baa

Maybe they’ll do a mock up of how Carly (or whatever it is) is going to operate in NZ at the AGM ...that would get punters salivating.

Darkest before dawn and that jazz?

Or is it Buy Right when it's wrong to sell?

I am getting confused!

[winner69]

Darkest before dawn and that jazz?

Or is it Buy Right when it's wrong to sell?

I am getting confused!

Once volumes pick up on the ASX the share price will get back over 3 bucks

[Baa_Baa]

Pretty pathetic response to that rights issue eh baa_baa

Maybe they’ll do a mock up of how Carly (or whatever it is) is going to operate in NZ at the AGM ...that would get punters salivating.

For sure it was a pathetic uptake from punters and underwriters (https://www.asx.com.au/asxpdf/20190822/pdf/447r54pcf4zkm9.pdf), leaning on the underwriters guarantee and still way short of target, quite concerning actually.

Don't know if a mockup is needed, just go see it here (https://www.carly.co/find-a-car). Easy to add a new 'Select your location', namely Turners locations. Anyway, obviously TRA aren't concerned dropping another 1/4 mill$ into CL8, so soon after the buy in.

[Balance]

For sure it was a pathetic uptake from punters and underwriters (https://www.asx.com.au/asxpdf/20190822/pdf/447r54pcf4zkm9.pdf), leaning on the underwriters guarantee and still way short of target, quite concerning actually.

Don't know if a mockup is needed, just go see it here (https://www.carly.co/find-a-car). Easy to add a new 'Select your location', namely Turners locations. Anyway, obviously TRA aren't concerned dropping another 1/4 mill$ into CL8, so soon after the buy in.

And the company believes the issue received a 'strong' response!

Oh well, always right to buy right when it's wrong to sell. :p

[percy]

Subscription vehicle ownership will either work or not work in NZ.
If it does, Turners will have first mover advantage at very little cost.

[Baa_Baa]

Subscription vehicle ownership will either work or not work in NZ.
If it does, Turners will have first mover advantage at very little cost.

Turners/Carly are far from "first mover" in NZ. Need to do a bit more research there.

You're right though, it will either work or not and a couple of A$mill for Turners is chump change. More worrying is not whether Turners can make a fist of car sharing, but whether Collaborate will survive long enough for them to do it. There is an ugly backdrop to Collaborate, numerous failures to generate any significant growth in any of their products. Carly is just the latest and is very new and unproven. Constantly holding out their hand for new money from investors.

It's not the idea that Turners explore car subscriptions (or rental if they do) that is worrying, even though it was never forecast in strategy except in loose terms like 'digital opportunities', it's more about their choice of platform, country, and the company that owns it.

Basically they're investing their shareholders money in an Oz penny share with a checkered history of non-performance, well ... less than a penny.

[Baa_Baa]

I should be clear, Collaborate have never had a problem obtaining cars on the supply side (rental or lately car subscriptions), punters and car companies have been supportive. Many have come and gone though.

The BIG problem is that they have never found the key to driving the demand side.

No point having a few thousand cars available, Turners will need to teach them how to advertise and drive demand growth. Shareholders should expect significant further costs in delivering a car subscriptions platform and particularly sustained advertising.

[peat]

haha yeh good point Baa Baa , just as with driving a second hand car, its not the cost to buy but the cost to keep running.
So you're are suggesting the CL8 venture will become an unrewarding money soak. hmm sounds familiar lol.

[percy]

I should be clear, Collaborate have never had a problem obtaining cars on the supply side (rental or lately car subscriptions), punters and car companies have been supportive. Many have come and gone though.

The BIG problem is that they have never found the key to driving the demand side.

No point having a few thousand cars available, Turners will need to teach them how to advertise and drive demand growth. Shareholders should expect significant further costs in delivering a car subscriptions platform and particularly sustained advertising.

Turners brand strength was recently shown,when they openned at New Plymouth.Without any advertising their new site went "gangbusters" straight away.
So to make Carly subscription model work you need three things,
1] Customers..............As NZ largest seller of used vehicles Turners have the customers.
2] Vehicles..................Turners have the vehicles.
3]Operation model.......CL8 have this.Turners by taking a shareholding in CL8 Turners will not be held ranson,and will be able to modify the model to suit NZder's requirements.
From the Turners Roadshow we learnt Carly should start operating at the end of the year.I think it is fair to say Turners know their customers,are close to them, and have a record of achieving customer statisfaction.
Will it work?.Don't know.Either will or will not.
That said I think it is well worth Turners trying it. Soak up money.I don't see how,as Turners will be only operating it from Turners sites for Turners customers.

[winner69]

Turners/Carly are far from "first mover" in NZ. Need to do a bit more research there.



https://simplify.co.nz/subscription/?gclid=CjwKCAjwzJjrBRBvEiwA867byhsJBVXn_2OGNH0A0bq owcVoD1H5SPi4Uxk415xuzB9dCEU_vVOKGBoCBIkQAvD_BwE

[Brain]

https://simplify.co.nz/subscription/?gclid=CjwKCAjwzJjrBRBvEiwA867byhsJBVXn_2OGNH0A0bq owcVoD1H5SPi4Uxk415xuzB9dCEU_vVOKGBoCBIkQAvD_BwE

$92/week for a 2005 suzuki swift minimum 3months subscription.

[winner69]

$92/week for a 2005 suzuki swift minimum 3months subscription.


.....meaning?

[Balance]

.....meaning?

Great way of getting rid of old cars - $4784 a year subs for a 2005 Suzuki Swift which can be bought for less than $5k.

So a strategic change of shifting the 'con' from selling 'ex-Buy Right' type bombs to the unwary to selling subs on bombs to the unwary?

[BlackPeter]

Great way of getting rid of old cars - $4784 a year subs for a 2005 Suzuki Swift which can be bought for less than $5k.

So a strategic change of shifting the 'con' from selling 'ex-Buy Right' type bombs to the unwary to selling subs on bombs to the unwary?

Don't forget though that the "sub" does include insurance, licence and car maintenance while a purchase would not. From the FAQ:


The weekly price includes insurance, roadside assist, registration and routine maintenance. That’s pretty much everything, apart from fuel and road user charges of course!

Not clear to me what "non-routine" maintenance would be and who would pay for repairs (cam-belt, engine blow up), but if that's not the risk of the dealer, than the sub is worth nothing at all - i.e. pretty sure that the dealer would need to pay for these as well.

You certainly can't compare the value of an annual sub with the purchase price ...

[Balance]

Don't forget though that the "sub" does include insurance, licence and car maintenance while a purchase would not. From the FAQ:



Not clear to me what "non-routine" maintenance would be and who would pay for repairs (cam-belt, engine blow up), but if that's not the risk of the dealer, than the sub is worth nothing at all - i.e. pretty sure that the dealer would need to pay for these as well.

You certainly can't compare the value of an annual sub with the purchase price ...

The devil will all be in the fine print.

[Beagle]

I don't know for sure but I would has at a guess that the weekly figure quoted is for a 12 month subscription as it stands to reason that 3 months would involve more risk and administration. 2019 Kia Stinger is quoted as "from $483 per week" Lets assume that's a 52 week subscription and I can say that a friend of mine just bought one as a demo for $59,990. $483 x 52 = $25,116 per annum so the sub will eat up 42% of the initial capex in the first year. What a deal ! Sign me up right away LOL
My friend expects to get 10 years use out of his Stinger so over that timeframe would pay $251,116 in rental payments. Hmmmm

[Baa_Baa]

No point guessing, check the t&c’s at www.carly.co

[percy]

https://simplify.co.nz/subscription/?gclid=CjwKCAjwzJjrBRBvEiwA867byhsJBVXn_2OGNH0A0bq owcVoD1H5SPi4Uxk415xuzB9dCEU_vVOKGBoCBIkQAvD_BwE

Thanks for the link.
I had never heard of them.
We live in interesting times.

[Arthur]

For those in their early 20s insurance is expensive. It might actually be relatively cost effective. Could also be useful if you just need a car for a few months, say over the summer holidays.

[Arthur]

You can hire for a month in Australia. You could get a pretty flash car for about $1000 a month or a fairly basic one for $500, might be worth looking into for longer self drive holidays.

[percy]

Would also work well for a number of share traders.
When the market is up,drive a BMW/Merc,when the market is down swap for a Toyota or Nissan.
Wonder whether the Ferrari is avaliable.?

[Snoopy]

I am generally comfortable with a company having lots of intangible assets on the books provided:

1/ The assets were bought at the right price.
2/ The businesses that Turners acquired have continued to grow.

My one cause for concern is 'Buy Right Cars'. Turners management have acknowledged that it has not performed up to expectations and that the management has been replaced. There is over $10m in 'Buy Right' goodwill on the Turners books ($10.860m to be exact AR2018 p60). This is tested annually by the auditors, who check whether such value can be justified. So far all is hunky dory. But I did notice a divergence in the growth assumptions for this acquisition going forwards. See AR2018 p65. I tabulate these results against the equivalent assumptions from last year:



Year 1 Forecast CashflowsYear 2 Forecast CashflowsYear 3 Forecast CashflowsYear 3-4 Forecast Cashflows
Year 4 to 5 Forecast CashflowsTerminal Cashflows


FY2017 Perspective10%7.5%5.0%2.0%


FY2018 Perspective60%8.0%5.0%2.0%



The note starts "The year 1 forecast cashflows were extrapolated". I think 'year 1' means the 'current reporting financial year', but am not 100% sure. If I am right then from an FY2018 perspective 'Year 2' means FY2019 (the current financial year). This model is telling us that Turners are budgeting for an increase in cashflows from Buy Right cars of 60% this financial year. That is an enormous increase, even for a company with the growth ambitions of Turners. It is particularly shocking when you realise that only 12 months previously, Turners were looking for an increase of only 7.5% over the same time period. No doubt part of the reason the 'Buy Right' growth rate is forecast to be so high is because FY2018 so was disastrous. Turners are starting from an unexpectedly low base. But even so I think it is a big ask.

The question is, what happens to the 'Buy Right' goodwill if this 60% growth is not achieved? Possibly nothing. But it is also possible that Turners will be facing a multi-million dollar goodwill write down. If it happens it will be a 'non cash item'. But it was real cash, not that long ago! The company might require some recapitalisation if the write down happens. This is a real 'extra risk' for shareholders going forwards IMO.


The rebranding of 'Buy Right Cars' has lead to the write off of $4.300m in intangible brand value. However, the rest of the intangible assets acquired with the purchase of 'Buy Right Cars' remains on the Turners books.

The amount of 'Buy Right' goodwill on the Turners books is still $10.860m (AR2018 p60). This is tested annually by the auditors, who check whether such value can be justified. But there is a divergence of growth assumptions for this acquisition going forwards. See notes in AR2019 p64 and AR2018 p65. I tabulate these results against the equivalent assumptions from AR2017:



FY2018FY2019
FY2020FY2020-FY2021
FY2021FY2021-FY2022
FY2022FY2023



Year 1 Forecast CashflowsYear 2 Forecast Cashflows
Year 3 Forecast CashflowsYear 3-4 Forecast Cashflows
Year 4 Forecast CashflowsYear 4 to 5 Forecast Cashflows
Year 5 Forecast CashflowsYear 6 Forecast Cashflows
Terminal Cashflows


FY2017 Perspective10%7.5%5.0%


2.0%


FY2018 Perspective60%8.0%5.0%
2.0%


FY2019 Perspective14.6%11.0%9.3%12.8%1.5%



The note(s) start "The year 1 forecast cashflows were extrapolated...". I think 'year 1' means the 'current reporting financial year', but am not 100% sure. If I am right then from an FY2018 perspective 'Year 2' means FY2019 and 'Year 3' means FY2020 (the current financial year). This table is telling us that Turners were budgeting for an increase in cashflows from Buy Right cars of 60% over FY2019. The actual increase in revenue for 'Buy Right Cars' from FY2018 ($62.021m) to FY2019 ($63.546m) was an increase of 2.2%. This 'miss' seems disastrous, yet no effect on the earnings goodwill acquired has been recorded. But could it be that this 'missed FY2019 growth' has been reassigned to other future years?

FY2018 Cashflow Growth Assumptions (Years 2 to 6) : 1.6 x 1.08 x 1.05 x 1.05 x 1.02 = 1.94

FY2019 Cashflow Growth Assumptions (Years 2 to 6): 1.022 x 1.146 x 1.11 x 1.093 x 1.128 = 1.60

Some growth looks to be reassigned. But there does seem to be a lot less cashflow coming when compared to the forecast from FY2018.

Remember that as a brand, 'Buy Right Cars' no longer exists. I think that means that all of that $10.860m in intangible 'on the books assets' from the 'Buy Right' trading operation is now attached to those individual sales sites acquired in Turner's 'Buy Right cars' acquisition. No land was acquired with the 'Buy Right' acquisition (AR2018 p60). Does this mean that the $10.860m of goodwill is, by a process of elimination, attached to the leases on these 'Buy Right' properties? If so, doesn't that make this $10.860m of goodwill extremely vulnerable?

In FY2017 eight 'Buy Right Cars' retail sites were acquired across Auckland. If the $10.860m in goodwill was distributed equally across each site, then that means each site incorporates goodwill totalling:

$10.860m / 8 = $1.358m

Now consider the case of a lease ending or Turners just deciding they want to move to a better site. Would such a move mean that Turners would have to write of $1.358m in goodwill, even though they were ostensibly moving to a site with improved business prospects? I think it does. Turners make much of their ability to develop retail sites and pocket the development margin. Quite rightly so. But I don't recall Turners mentioning anything about the 'million dollar moving loss' that would be incurred when they eventually have to leave those old 'Buy Right' sites.

Under note 32 AR2019, the site lease terms are between five and ten years, with rights of renewal in accordance with market rates.

SNOOPY

[BlackPeter]

Remember that as a brand, 'Buy Right Cars' no longer exists. I think that means that all of that $10.860m in intangible 'on the books assets' from the 'Buy Right' trading operation is now attached to those individual sales sites acquired in Turner's 'Buy Right cars' acquisition. No land was acquired with the 'Buy Right' acquisition (AR2018 p60). Does this mean that the $10.860m of goodwill is, by a process of elimination, attached to the leases on these 'Buy Right' properties? If so, doesn't that make this $10.860m of goodwill extremely vulnerable?

SNOOPY

A very good question. The only intangible value still attached to this purchase is clearly the location of the once "Buy Right" sales outlets.

Though I am sure Turners might argue that "Turners" have a higher brand value than "Buy Right" (otherwise they would not have rebranded) - i.e. the non tangible value of these premises might have even increased miraculously by putting a more respectable brand on it.

Which means the the attached Intangibles might even have increased through the rebranding (assuming a Turners outlet is more worth than a Buy Right outlet). Turners might have found a new method to generate money out of nothing .... buy a crap brand for too much money and re-brand.

Their future opportunities must be endless ... and maybe I should consider a career in creative accounting ;);

[Snoopy]

A very good question. The only intangible value still attached to this purchase is clearly the location of the once "Buy Right" sales outlets.

Though I am sure Turners might argue that "Turners" have a higher brand value than "Buy Right" (otherwise they would not have rebranded) - i.e. the non tangible value of these premises might have even increased miraculously by putting a more respectable brand on it.

Which means the the attached NTA might even have increased through the rebranding (assuming a Turners outlet is more worth than a Buy Right outlet). Turners might have found a new method to generate money out of nothing .... buy a crap brand for too much money and re-brand.

Their future opportunities must be endless ... and maybe I should consider a career in creative accounting ;);


There are a couple of flaws I can see in your creative accounting plan BP.

To realise the higher 'brand value of Turners' and book those 'goodwill profits' from someone else acquiring those ex Buy Right now Turners sites, Turners would actually have to sell them. And since Turners core strategy is to build on their core strength which they see as their 'Turners brand value', selling off their own Turners outlets to others who would retain the Turners branding and compete with them doesn't seem likely.

Secondly, however you slice it, the Turners brand will remain an intangible asset, not a tangible one. So even if Turners sites were able to have their rebranding reflected in company asset vales, it would only improve net assets, not net tangible assets (NTA).

SNOOPY

[BlackPeter]

There are a couple of flaws I can see in your creative accounting plan BP.

To realise the higher 'brand value of Turners' and book those 'goodwill profits' from someone else acquiring those ex Buy Right now Turners sites, Turners would actually have to sell them. And since Turners core strategy is to build on their core strength which they see as their 'Turners brand value', selling off their own Turners outlets to others who would retain the Turners branding and compete with them doesn't seem likely.

Secondly, however you slice it, the Turners brand will remain an intangible asset, not a tangible one. So even if Turners sites were able to have their rebranding reflected in company asset vales, it would only improve net assets, not net tangible assets (NTA).

SNOOPY

Oops - I obviously meant intangibles but wrote NTA. Good beagle for immediately detecting that flaw ;). Probably still too jet-lagged to think straight ...

In that spirit - I better go back to sleep :sleep:;

[Joshuatree]

A friend bought a car at the local branch today; man were they busy, very healthy.

[Baa_Baa]

We haven’t had to think much about car sharing until TRA dropped cool A$1.25 mill into an Oz penny share and announce their launch of the online car subscription service in NZ this year. Far from a prescient decision it seems to have ignored or been ignorant of who is making hay in this emerging sector (hint, it’s not Collaborate)

Look how far advanced this sector actually is and the weight behind it, albeit a new concept for us old buggers who actually own cars, then reflect on the wisdom of TRA to drop into the market they have no understanding of, into a penny dreadful share platform that could go bust anytime.

https://www.dbusiness.com/daily-news/mobiliti-in-rochester-hills-expands-to-australia-through-online-platform/

[percy]

We haven’t had to think much about car sharing until TRA dropped cool A$1.25 mill into an Oz penny share and announce their launch of the online car subscription service in NZ this year. Far from a prescient decision it seems to have ignored or been ignorant of who is making hay in this emerging sector (hint, it’s not Collaborate)

Look how far advanced this sector actually is and the weight behind it, albeit a new concept for us old buggers who actually own cars, then reflect on the wisdom of TRA to drop into the market they have no understanding of, into a penny dreadful share platform that could go bust anytime.

https://www.dbusiness.com/daily-news/mobiliti-in-rochester-hills-expands-to-australia-through-online-platform/

The more you post about car subscription, the more I think Turners are very wise trying it.
Turners have 85,778,678 shares on issue which at $2.32 gives them a market cap of $199,006,533.
They pay 17 cents per share dividend,which amounts to $14,582,375.
"Dropped a cool A $1.25mil"....? Peanuts for what will work or will not work.
I think if they did not try it,we would all be posting they should have.

[winner69]

Don’t forget we are in the digital age - as Turners say of all internet users in NZ 86% use You Tube and 85% use Faceboook. percy uses Facebook?

Turners are in a good place in this space .....like 20 million web searches and 29 million page views a year ....along with zillions of other interactions collecting data.

They have hired social media experts and working with data analytics companies ...wow

This subscription business will take off like a rocket (hope more money in it than buying and selling cars)

The best known and most trusted used car dealer in NZ is indeed well positioned to win in this space.

[winner69]

thl’s venture into digital space hasn’t harmed their share price

[Snoopy]

4/ I leave the most significant part of my 'profit normalisation' until last. Have a look at AR2019, note 34c, part of the insurance activities notes.



FY2019FY2018


Change in Discount rate($0.207m)($0.120m)


Difference between actual and assumed experience$5.745m$2.491m


Life Investments Contracts: Difference between actual and assumed experience$0.266m$0.294m


Total$5.804m$2.664m



Now go to note 7, p55 in AR2019 and you will see that the $2.664m figure is reported as a 'Fair value gain on Contingent Consideration' for FY2018. Yet the equivalent figure for for FY2019 is missing, no doubt subsumed in the new expanded for this year Insurance divisions wider profits. I consider that $5.804m not repeatable and a figure that should be removed from operational profits, just like in FY2018. I don't know why Turners seem to have changed their policy on this but I am calling them out. Take out that $5.804m gain from the Turners Insurance arm operating profit (declared $8.227m for FY2019) and you will find how profitable the underlying insurance division really was in FY2019.


To answer my own question first:

$8.227m - $5.804m = $2.423m (Underlying Insurance Profit for FY2019)

The equivalent figure for the previous year is:

$3.645m - $2.664m = $0.981m (Underlying Insurance Profit for FY2019)

Turners is the first insurance company I have ever invested in. I didn't set out to invest in insurance. I arrived here when my old 'Turners Auctions' shares morphed into 'Turners Automotive Group' with the attached insurance baggage that new company contained and has now expanded with the addition of 'Autosure'. What I have learned is that insurance is complicated.

A key phrase in my 'normalised profit adjustments' is the one I have emboldened above:

'Difference between actual and assumed experience'

This term is further explained in AR2019 p93 under the heading 'sensitivity analysis'. The conceptual problem I have with this phrase is that it seems to encapsulate both things that are part of normal business practice and those that aren't. Specifically with the five sub-categories this phase apparently encapsulates:

1/ Expense Risk: If your costs go up because of inflation more than you plan for then your profits will decrease - Rather obvious I think
2/Interest rate Risk: Investment income will decrease as interest rates on the underlying fixed interest vehicles decrease. However, this can be offset by the capital value of underlying bonds increasing. - Not rocket science here
3/ Mortality rates: Death triggering the cashing out of life insurance policies means lower profits (less premiums being paid) and reduced shareholder equity. - I question this one because, if I interpret this correctly, the shareholder equity paid out in settlement of a life insurance policy was always going to be paid out eventually. Thus calling it 'shareholder equity' smacks of taking someone's life insurance actuarially based entitlements and calling that 'company money'. Can an insurance company really claim a policy holders entitlement as their own?
4/ Discontinuence: This seems to be used in the sense of people stopping payments towards their life insurance policy. Turners say this is generally negative. That makes sense if you consider that as a result of discontinuence Turners loses an income stream to invest. But how can they lose 'shareholder equity' if the money they were holding to support these life insurance policies was never theirs in the first place?
5/ Market Risk: For fixed future payouts that are supported by market investments, if the market goes down then Turners may have to stump up cash to make up the difference. - That is a fair point. But markets tend to go up and down. So should annual investment volatility be included as a profit ingredient when the underlying profits or losses are accumulated and may not be paid out for years or even decades?

In summary, while some 'Difference between actual and assumed experience' risks are immediate and legitimate to feed into annual profits, some are not. In particular the implied 'mixing of customers entitlement' with 'company money' should not in my view be any reflection of the operational performance of the business.

My position on 'Difference between actual and assumed experience' adjustments has thus far has been to ignore them. But by doing so I could be ignoring genuine gains or losses that should accrue to shareholders.

However, if I include them, then it seems I am including gains that will accrue to policyholders for which shareholders will have no ultimate entitlement. Thus no matter which of these two decision paths I choose to take I will end up with the wrong answer. And there is my dilemma.

SNOOPY

[BlackPeter]

Now you managed to surprise me. I thought the only insurance Turners is offering is Autosure - an insurance covering the cost of car repairs. But you seem to talk life insurance - i.e. people dying and Turners paying, do you?

How do they call this product and how can people subscribe to it?

[BlackPeter]

Now you managed to surprise me. I thought the only insurance Turners is offering is Autosure - an insurance covering the cost of car repairs. But you seem to talk life insurance - i.e. people dying and Turners paying, do you?

How do they call this product and how can people subscribe to it?

Oops found it: https://www.turners.co.nz/Finance/General-Insurance/

Question - I never realised (while I was a shareholder) that Turners is offering general insurance. Is this something new? Sounds frightening to me for a company of that size ... but probably underwritten by somebody else?

[Baa_Baa]

The more you post about car subscription, the more I think Turners are very wise trying it.


Perhaps, despite it never having been part of the strategy except in loose terms alluding to digital.

It's not the notion of branching into car subscription per se that is of concern, it is the choice of the company that delivers it. Carly is a brand spanking new service, with zero proven performance in the car subscription market or revenues to speak of. Collaborate itself is performing dismally overall (going backwards) and has all the 'going concern' risks you'd expect of a sub-penny share. One could argue that they are only good at raising funds, but even then the recent raising was a dismal result.

Have a decent read about Turners new 'strategic' partner Collaborate Corp ... https://www.asx.com.au/asxpdf/20190830/pdf/44811bvmjnpk67.pdf . The language itself is interesting because it's why Collaborate think Turners investment is good for them, looking through the eyes of Collaborate. Ask yourself, would you invest in CL8 based on this performance?

[Snoopy]

Oops found it:

https://www.turners.co.nz/Finance/General-Insurance/

Question - I never realised (while I was a shareholder) that Turners is offering general insurance. Is this something new? Sounds frightening to me for a company of that size ... but probably underwritten by somebody else?


It is part of the old Dorchester business BlackPeter. Most of it is what Turners call 'legacy business' which they aren't going all out to promote any more. But some of it, in particular the life insurance bit, may run for decades so they can't really forget about it.

'Autosure' as you say is much more recent and is only part of the FY2018 and FY2019 business results. But because it is part of the 'Insurance Segment', it gets mixed up with all these legacy insurance operations come reporting time.

As for being underwritten by somebody else, I don't think the legacy business is, and neither is Autosure. But Turners do seem to be in the position of having far more cash than is needed to satisfy any likely policy payouts, so I don't think we shareholders should worry.

In the 'Disaggegated Information' summary (AR2019 p90), the insurance business is split into 'Statutory' and 'Shareholder' columns. The asset split is 1:3 in favour of shareholders. If you go back to the first 'Turners Limited' branded report from 2015 the split in favour of shareholders is similar in proportion. But how the accounts got into this position is something I do not understand. I guess it must relate back to the Dorchester days? If someone could fill us in on this history, I would love to know!

SNOOPY

[BlackPeter]

Cheers. Always learning :);

[percy]

Cheers. Always learning :);

They also did Reverse Equity loans.
The 26.8 hectacres residentially zoned land at Sanctury Hill,358 Worsleys Road,Christchurch, value looks a little on the light side at $5.650 mil.
How much were goodwill and intangibles valued at,or were they even included, in Dorchester's balance sheet when they brought Turners Auctions.
Sale of Oxford Finance,should it go ahead, will see their value realised.A nice bonus.
What is Oxford Finance worth $100mil or $200mil.?

[winner69]

Remember it's really Dorchester ,,,,,still have many things ...annuities and even reverse mortgages

[RTM]

Took a look at the TRA Presentation NZX Retail Investor evening document last night.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/340232/306840.pdf

As usual looks OK. So if we assume they are a going concern and continue to be, that they continue to sell cars at more or less the same volume and profitability as they currently do, and they continue to pay a dividend of 17c....then surely the share price must rerate a bit higher ?

17c @ 2.30 7.39%
@ 2.75 6.18%
@ 3.00 5.67%
@ 3.40 5.0%

Maybe it might make $2.75 ?

Disc... Hold...more than ideal

[winner69]

Took a look at the TRA Presentation NZX Retail Investor evening document last night.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/340232/306840.pdf

As usual looks OK. So if we assume they are a going concern and continue to be, that they continue to sell cars at more or less the same volume and profitability as they currently do, and they continue to pay a dividend of 17c....then surely the share price must rerate a bit higher ?

17c @ 2.30 7.39%
@ 2.75 6.18%
@ 3.00 5.67%
@ 3.40 5.0%

Maybe it might make $2.75 ?

Disc... Hold...more than ideal

We all live in hope mate

I like your $3.40 ...5.0% for a risk free investment pretty good eh

[BlackPeter]

We all live in hope mate

I like your $3.40 ...5.0% for a risk free investment pretty good eh

Good point. But - is it a risk free investment?

[percy]

Took a look at the TRA Presentation NZX Retail Investor evening document last night.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/340232/306840.pdf

As usual looks OK. So if we assume they are a going concern and continue to be, that they continue to sell cars at more or less the same volume and profitability as they currently do, and they continue to pay a dividend of 17c....then surely the share price must rerate a bit higher ?

17c @ 2.30 7.39%
@ 2.75 6.18%
@ 3.00 5.67%
@ 3.40 5.0%

Maybe it might make $2.75 ?

Disc... Hold...more than ideal

Fully imputed divies.
So your 7.39% is net, or gross 10.7%.
Paid quarterly too,which could be worked out to be a higher yield.

[RTM]

Good point. But - is it a risk free investment?

What investment is risk-free BP ? I guess the question is where does it fit on the curve ? 7.39% feels to high. Not sure we will get to 5.0% ($3.40) tho.

[percy]

What investment is risk-free BP ? I guess the question is where does it fit on the curve ? 7.39% feels to high. Not sure we will get to 5.0% ($3.40) tho.

One good old trucking firm [risk free.?] is paying a net yield of 1.36%.
5% net at $3.40 would still be a good yield.

[RTM]

Fully imputed divies.
So your 7.39% is net, or gross 10.7%.
Paid quarterly too,which could be worked out to be a higher yield.

Makes it even more compelling for a re-rate.
I wish I could bring myself to buy more at current price.....around $2.30

[BlackPeter]

What investment is risk-free BP ?

NZ government bonds come pretty close.


I guess the question is where does it fit on the curve ? 7.39% feels to high. Not sure we will get to 5.0% ($3.40) tho.

I guess you are saying the market is wrong and undervalues TRA. That's what the TRA board says as well, and so far they have been wrong.

What are the risks? You might lose a lot of your capital chasing these amazing dividends. Ask percy - he knows what I am talking about, and I experienced it as well first hand. Trust me - getting 10 % in dividends and losing in the same timeframe 30% in capital does not feel like a good deal - and this process might continue for some years to come.

Lots of dark clouds at the horizon ... and so far the board was busier increasing their fees than bringing the boat into safe waters.

Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.

[percy]

Those of us who attended Turners' presentations, know there are only "Blue Skies" ahead.

ps I have never lost any money on TRA as I have not sold any shares.

[winner69]

Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.

No worries with TRA ....safe as

Remember in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company.

[Brain]

Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.[/QUOTE]

so who are the wise heads that control the market and most of the time get it right?

Fund Managers ?
Insiders ?
Brokers advising clients.
Individual investors?

Who has the best track record?

All investors in my assessment (limited That may be) seem to wear blinkers at times.

[Balance]

Those of us who attended Turners' presentations, know there are only "Blue Skies" ahead.

ps I have never lost any money on TRA as I have not sold any shares.

On that basis, Nobody have never lost any money on Fonterra as Long as they have not sold any shares?

[percy]

Never had anything to do with Fonterra.
Another one of your's.?

[RTM]

What are the risks? You might lose a lot of your capital chasing these amazing dividends. Ask percy - he knows what I am talking about, and I experienced it as well first hand. Trust me - getting 10 % in dividends and losing in the same timeframe 30% in capital does not feel like a good deal - and this process might continue for some years to come.

Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.

I am with you BP on the capital loss....I don't like it at all either. But that's happened and to date I've decided not to crystalize the paper loss (23.6%) into a physical one. Hence my musing over where the share price might get to should they continue more or less as they are. Clearly 10% dividend is to high....IF the risks are low. And I believe the shareprice should re-rate higher.

It might take a few cycles of decent results for this to happen tho. Alternatively...maybe the market has it right and the price could drop further once it stops being supported by the Company.

RTM
PS....I was underwater for years with Contact Energy....I see they hit $9.00 today. Now my 3rd biggest holding.

[percy]

I am with you BP on the capital loss....I don't like it at all either. But that's happened and to date I've decided not to crystalize the paper loss (23.6%) into a physical one. Hence my musing over where the share price might get to should they continue more or less as they are. Clearly 10% dividend is to high....IF the risks are low. And I believe the shareprice should re-rate higher.

It might take a few cycles of decent results for this to happen tho. Alternatively...maybe the market has it right and the price could drop further once it stops being supported by the Company.

RTM
PS....I was underwater for years with Contact Energy....I see they hit $9.00 today. Now my 3rd biggest holding.

Yes should TRA achieve good results then the share price will recover,and should TRA show they have the capacity to continue paying a high, and possibly increasing dividends then $2.75 to $3.25 will be achievable.
The agm on the 18th will hopefully give both a trading and a strategic review update. I would not be surprised to hear they are trading very well.

[Balance]

Never had anything to do with Fonterra.
Another one of your's.?

Nope - but logic is the same.

https://www.stuff.co.nz/business/industries/115457601/fma-looking-into-fonterras-asset-write-downs-and-financial-performance-following-complaint

10m Fonterra shares but they have not lost 1 cent.

[percy]

Will leave Fonterra to you.

[winner69]

New car dealers lamenting continued slowing down of new vehicle purchases — could be 8% or more down for the year

Good news for the likes of Turners though

[Balance]

New car dealers lamenting continued slowing down of new vehicle purchases — could be 8% or more down for the year

Good news for the likes of Turners though

But of course.

Those who cannot afford to buy new cars will buy a used car instead?

A second hand Ferrari is cheaper than a new BMW SUV.

[winner69]

What investment is risk-free BP ? I guess the question is where does it fit on the curve ? 7.39% feels to high. Not sure we will get to 5.0% ($3.40) tho.

Govt Bonds currently less than 1% .....risk free

Turners Bonds quoted at 4% .....an indication of ‘company risk’. Quite high as a lot of corporate bonds around the 2% mark (+/-0.5%)

Equity Risk Premiums are more subjective but currently many have the ERP in NZ at 3%-4% — which implies a reasonable yield for TRA shares is say 7%-8% ....hmmm

So maybe market is about right (won’t say efficient) at the moment ....but this is all theoretical stuff and doesn’t take into account blue skies and generally the sun shines bright when the sky is blue ......and even the full moon plays its part.

[RTM]

Govt Bonds currently less than 1% .....risk free

Turners Bonds quoted at 4% .....an indication of ‘company risk’. Quite high as a lot of corporate bonds around the 2% mark (+/-0.5%)

Equity Risk Premiums are more subjective but currently many have the ERP in NZ at 3%-4% — which implies a reasonable yield for TRA shares is say 7%-8% ....hmmm

So maybe market is about right (won’t say efficient) at the moment ....but this is all theoretical stuff and doesn’t take into account blue skies and generally the sun shines bright when the sky is blue ......and even the full moon plays its part.

Thanks....good way of considering it.

[Joshuatree]

Int comment on car sales rate in Aus.
"Whilst the market for new cars has been challenging, the
used car market has continued to grow. During the year we recorded growth in used car lead volumes, a decline in average time to sell and excellent growth in traffic to the carsales site."

[sb9]

Int comment on car sales rate in Aus.
"Whilst the market for new cars has been challenging, the
used car market has continued to grow. During the year we recorded growth in used car lead volumes, a decline in average time to sell and excellent growth in traffic to the carsales site."





That's nice. Hopefully there's a nice surprise waiting for us next week at ASM.

Trading depth is looking very encouraging this week.

[percy]

The current share price is $2.38.
It has moved ahead of the 100 day moving average $2.36, and the 200 day moving average $2.35.[yahoo finance chart]
There are 419,142 shares yet to be brought in the current share buy back.
Currently buyers want 11,293 shares at $2.36, while the seller of 5,999 wants $2.38.
The agm is one week away.

[sb9]

The current share price is $2.38.
It has moved ahead of the 100 day moving average $2.36, and the 200 day moving average $2.35.[yahoo finance chart]
There are 419,142 shares yet to be brought in the current share buy back.
Currently buyers want 11,293 shares at $2.36, while the seller of 5,999 wants $2.38.
The agm is one week away.

Into the 2.40s now...

[RTM]

Into the 2.40s now...

Yes.....hopefully it will continue to move in the right direction !

[Baa_Baa]

www.carly.co.nz is now active, though currently it redirects to www.carly.co in Ozzieland. Looks like Turners won't have an 'own brand' online car subscription service and are positioned solely as a supplier and administrator of cars for the Carly service like the current business model in Australia. Makes one wonder how Turners will market this. Still saying launch this year. Should be some financial results due soon from CL8 on how the very new Carly subscription service is performing.

https://www.asx.com.au/asxpdf/20190911/pdf/448flb3sq9xb8g.pdf

[trader_jackson]

I note there hasn't been any daily buying of shares under the buyback since Monday... potentially intriguing reasons why this is the case I reckon.
And despite lack of buyback, the share price still managed to rise from $2.36 [Tuesday open] to $2.40 (well, up to $2.40 - hopefully the share price will stay there this time!... still, at $2.37, it is up a notch and outperformed NZX 50)

[percy]

I note there hasn't been any daily buying of shares under the buyback since Monday... potentially intriguing reasons why this is the case I reckon.
And despite lack of buyback, the share price still managed to rise from $2.36 [Tuesday open] to $2.40 (well, up to $2.40 - hopefully the share price will stay there this time!... still, at $2.37, it is up a notch and outperformed NZX 50)

I was wondering whether it had anything to do with the agm being Wednesday next week.
Thought they may have decided it was too close to the meeting.
Just a guess.
90,165 traded yesterday.

[Joshuatree]

When my friend bought their car from Turners recently they also took out $600 mechanical insurance, great ticket clipping there! They have definitely outgrown the yard in Tauranga but told me they havn't yet found premises in a suitable location,big enough to expand to .A nice problem to have.

[silverblizzard888]

Definitely an undervalued stock, particularly when the market currently values it for little or no growth, yet theres plenty of growth coming. They have 9 new sites opening in the next 2 years.
They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control. Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way. This should be a $4-5 stock on present earnings and potential, so I'd agree with the CEO this stock is terribly undervalued.

[BlackPeter]

Definitely an undervalued stock, particularly when the market currently values it for little or no growth, yet theres plenty of growth coming. They have 9 new sites opening in the next 2 years.
They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control. Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way. This should be a $4-5 stock on present earnings and potential, so I'd agree with the CEO this stock is terribly undervalued.

Did you had a look at their leverage? Not really spoiled with cash ...

[winner69]

Full moon does funny things to people ...clouds their judgement ...and gets some punters over the xcited

Of course TRA is horrendously undervalued

[BlackPeter]

Full moon does funny things to people ...clouds their judgement ...and gets some punters over the xcited

Of course TRA is horrendously undervalued

Sorry - didn't realize it is TRA up-ramping week ... but then, I should have known ... it always is - isn't it?

[winner69]

Sorry - didn't realize it is TRA up-ramping week ... but then, I should have known ... it always is - isn't it?

...and fingers crossed no delays on Bakers flight from Europe ....but then again he maybe flaunting around Pukekohe this weekend.

Do they sponsor any Supercars or just do a lot of corporate eventing.

[couta1]

Definitely an undervalued stock, particularly when the market currently values it for little or no growth, yet theres plenty of growth coming. They have 9 new sites opening in the next 2 years.
They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control. Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way. This should be a $4-5 stock on present earnings and potential, so I'd agree with the CEO this stock is terribly undervalued. Should be $4-5, yeah right and pigs should also fly.

[Snoopy]

Definitely an undervalued stock, particularly when the market currently values it for little or no growth, yet there's plenty of growth coming. They have 9 new sites opening in the next 2 years.


Taking out all the one off property deals and one off insurance windfalls (my post 5575) I am looking at underlying 'eps' earnings of 15.4cps for FY2019. At Fridays closing price of $2.36 this equates to an historical PE of 15. To my way of thinking considerable growth will be required to justify a price of $2.36 as a PE of 15 definitely does not imply 'little or no growth' (for a retailer). There may be nine new sites planned to be opened in the next two years. But not all of these are greenfields expansions. Some are effectively upgrades of existing sites.



They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control.


There is a net $300m of bank borrowings on the balance sheet at EOFY2019. Selling Oxford finance and EC Credit may only reduce debt from 'concerning' to 'high'.



Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way.


If the finance division is sold I would expect dividends to become more irregular. The predictable regular cashflow from all those finance deals would be gone. By my calculation the dividend now exceeds the underlying earnings of the company. I think future property sell downs may allow the dividend to be maintained for a while. But ultimately I think the dividend will have to be reduced.

Another concern I have is that, capital requirements aside, 'car finance' has always been more profitable than selling the cars. And that is adjusting for backing all the residual finance business from Turners into 'Oxford Finance'. But I guess when Turners own the retail company and the finance company it is hard to distinguish between real underlying divisional profit and possible cross subsidisation (transfer pricing) between divisions. Is selling finance equivalent to selling the golden goose? The way the accounts are presented in the segmented breakdown by divisions suggests the answer is 'yes'.

SNOOPY

[winner69]

We should respect silverblizzards view of Turners valuation

After all he/she is in the top 5 in the picking competition ...doing heaps better than most of us

Well done silverblizzard

[couta1]

We should respect silverblizzards view of Turners valuation

After all he/she is in the top 5 in the picking competition ...doing heaps better than most of us

Well done silverblizzard Yes well done however TRA wasn't one of his/her picks.

[percy]

Yes well done however TRA wasn't one of his/her picks.

Perhaps Silverblizzard88 is looking ahead already for next year,getting "well positioned."

[silverblizzard888]

We should respect silverblizzards view of Turners valuation

After all he/she is in the top 5 in the picking competition ...doing heaps better than most of us

Well done silverblizzard

Thanks Winner, just a bit more lucky in this competition than most, but I believe there a lot of good investors that the results in the competition won't reflect. Your efforts and contributions are always very respectable.


Perhaps Silverblizzard88 is looking ahead already for next year,getting "well positioned."

Exactly Percy! Getting 'well positioned' for what I believe is a big capital inflow to the business and what I believe will be a large payout to current shareholders in the next 3-6 months.

I'm expecting Oxford Finance to sell in the region of $60 million with majority returned to shareholders in one form or another, if not a big acquisition would make things interesting too. Oxford generate about 26% of the underlying earnings for Turners, so the impact vs capital returned isn't too bad.


Regarding the debt of the company, there is a borrowings of $312 million (annual report), but you have to consider that Oxford Finance's loans amount to $254 million, and in total consumer and commercial loans amount to $291 million. So once Oxford is sold off, the borrowings don't actually look that bad.

[etnom]

Agree with Snoopy..... why cut the hand that feeds you by selling Oxford finance and EC Credit.

[Snoopy]

We should respect silverblizzards view of Turners valuation

After all he/she is in the top 5 in the picking competition ...doing heaps better than most of us

Well done silverblizzard

No disrespect meant to Silverblizzard Winner, and I sincerely hope none was taken. It is just that when I see a superbullish post, I like to remind investors there is another window through which we can look at TRA. I hope Silverblizzard is right, because I am a TRA shareholder! But I think it was you who pointed out that hope is not an investment strategy.

The quote below is from AR2019 p86.






FY2019


Insurance Contracts: Change in Discount rate($0.207m)


Insurance Contracts: Difference between actual and assumed experience$5.745m


Life Investments Contracts: Difference between actual and assumed experience$0.266m


Total Insurance Profit Contribution (after tax) {A}$5.804m


Declared Turners NPAT {B}$22.329m


Insurance Adjustment/NPAT {A}/{B}26.0%



I previously wrote:

"I consider that $5.804m (for FY2019) not repeatable and a figure that should be removed from operational profits,"

But I am not sure that my opinion on that score is right.


The big issue I have with TRA's 2019 profits is the figure I have emboldened above. What does that mean? A partial explanation contained in the annual report is reported below.



'Difference between actual and assumed experience'

This term is further explained in AR2019 p93 under the heading 'sensitivity analysis'. The conceptual problem I have with this phrase is that it seems to encapsulate both things that are part of normal business practice and those that aren't. Specifically with the five sub-categories this phase apparently encapsulates:

1/ Expense Risk: If your costs go up because of inflation more than you plan for then your profits will decrease - Rather obvious I think
2/Interest rate Risk: Investment income will decrease as interest rates on the underlying fixed interest vehicles decrease. However, this can be offset by the capital value of underlying bonds increasing. - Not rocket science here
3/ Mortality rates: Death triggering the cashing out of life insurance policies means lower profits (less premiums being paid) and reduced shareholder equity. - I question this one because, if I interpret this correctly, the shareholder equity paid out in settlement of a life insurance policy was always going to be paid out eventually. Thus calling it 'shareholder equity' smacks of taking someone's life insurance actuarially based entitlements and calling that 'company money'. Can an insurance company really claim a policy holders entitlement as their own?
4/ Discontinuence: This seems to be used in the sense of people stopping payments towards their life insurance policy. Turners say this is generally negative. That makes sense if you consider that as a result of discontinuence Turners loses an income stream to invest. But how can they lose 'shareholder equity' if the money they were holding to support these life insurance policies was never theirs in the first place?
5/ Market Risk: For fixed future payouts that are supported by market investments, if the market goes down then Turners may have to stump up cash to make up the difference. - That is a fair point. But markets tend to go up and down. So should annual investment volatility be included as a profit ingredient when the underlying profits or losses are accumulated and may not be paid out for years or even decades?

In summary, while some 'Difference between actual and assumed experience' risks are immediate and legitimate to feed into annual profits, some are not. In particular the implied 'mixing of customers entitlement' with 'company money' should not in my view be any reflection of the operational performance of the business.

My position on 'Difference between actual and assumed experience' adjustments has thus far has been to ignore them. But by doing so I could be ignoring genuine gains or losses that should accrue to shareholders.

However, if I include them, then it seems I am including gains that will accrue to policyholders for which shareholders will have no ultimate entitlement. Thus no matter which of these two decision paths I choose to take I will end up with the wrong answer. And there is my dilemma.

I think the $5.745m I am principally concerned about mostly (totally?) relates to 'Autosure'. This is because the equivalent life insurance policy figure is listed separately. I also think that $5.745m is an amount of money that Turners now have 'on paper' over and above what they thought they would have a year previously. But where has this on paper gain come from? And will it ever really be realised as cash?

Because it doesn't relate to life insurance, I think we can ignore 'Difference between actual and assumed experience' points 3 and 4 when discussing 'Autosure'. For the remaining points:

1/ We know that Turners have readjusted their 'Autosure' premiums to charge relatively more for European cars and less for Japanese cars. So could it be that the 'Autosure' insurance payout fund has swelled by $5.745m because Autosure have decreased their payout ratio?

2 and 5/ These are both concerned with how 'changes in markets' affect insurance floats. 'Autosure' is relatively short term product, which means it is unlikely to be supported by equity market investments. That's because Equity Investments are too volatile to fund reliable short term pay outs. But what if TRA had had a really good investment come good over the year? Has putting the insurance float into a company internal property build and lease back deal provide the confidence that such deals can continue to be done into the future, for example? Could the $5.745m gain just be the result from a change in future earnings assumptions?

SNOOPY

[silverblizzard888]

I think the $5.745m I am principally concerned about mostly (totally?) relates to 'Autosure'. This is because the equivalent life insurance policy figure is listed separately. I also think that $5.745m is an amount of money that Turners now have 'on paper' over and above what they thought they would have a year previously. But where has this on paper gain come from? And will it ever really be realised as cash?

Because it doesn't relate to life insurance, I think we can ignore 'Difference between actual and assumed experience' points 3 and 4 when discussing 'Autosure'. For the remaining points:

1/ We know that Turners have readjusted their 'Autosure' premiums to charge relatively more for European cars and less for Japanese cars. So could it be that the 'Autosure' insurance payout fund has swelled by $5.745m because Autosure have decreased their payout ratio?

2 and 5/ These are both concerned with how 'changes in markets' affect insurance floats. 'Autosure' is relatively short term product, which means it is unlikely to be supported by equity market investments. That's because Equity Investments are too volatile to fund reliable short term pay outs.

I think this definition insurance companies use will help:

The Difference Between Actual and Assumed Experience — Experience profits/(losses) are realized where actual experience differs from best estimate assumptions. Instances giving rise to experience profits/(losses) include variations in claims, expenses, mortality, discontinuance and investment returns. For example, an experienced profit will emerge when the expenses of maintaining all in-force business in a year are lower than the best estimate assumption in respect of those expenses"

It more or less recognized premiums that were factored into claims, but not claimed and could be recognized as profits. Seems every insurance company uses this way of reporting both in NZ and internationally.

The company does cite "IMPROVED INSURANCE LOSS RATIOS: Insurance claims loss ratios have improved from 78% to 72%."

(A loss ratio is a ratio of losses to gains, used normally in a financial context. It is the opposite of the gross profit ratio. For insurance, the loss ratio is the ratio of total losses incurred in claims plus adjustment expenses divided by the total premiums earned.)

Less losses more money able to be recognised as profits, seems simple enough.

[Tomtom]

When my friend bought their car from Turners recently they also took out $600 mechanical insurance, great ticket clipping there! On a high end European car (e.g. JLR, BMW or Mercedes) your friend might well end up having the last laugh. Obviously if it's a Toyota Camry Turners have clipped a good one.

As a side note, during the last recession ('09 or '10?), I seem to recall many zero mile late model cars being cleared by auction at reduced prices. There was no "cash for clunkers" in New Zealand to keep inventory moving I suppose.

[percy]

On a high end European car (e.g. JLR, BMW or Mercedes) your friend might well end up having the last laugh. Obviously if it's a Toyota Camry Turners have clipped a good one.

As a side note, during the last recession ('09 or '10?), I seem to recall many zero mile late model cars being cleared by auction at reduced prices. There was no "cash for clunkers" in New Zealand to keep inventory moving I suppose.

Autosure charge lot higher premiums for European cars, which cost between 3 and 6 times the cost of a Japanese car to fix.

[Snoopy]

The company does cite "IMPROVED INSURANCE LOSS RATIOS: Insurance claims loss ratios have improved from 78% to 72%."


Yes I see that in AR2019 p9.



(A loss ratio is a ratio of losses to gains, used normally in a financial context. It is the opposite of the gross profit ratio. For insurance, the loss ratio is the ratio of total losses incurred in claims plus adjustment expenses divided by the total premiums earned.)


Less losses more money able to be recognised as profits, seems simple enough.

Since the rest of the legacy insurance business seems to be winding down, I think it is a fairly accurate guess that all the incremental activity in insurance is due to 'Autosure'. The insurance revenue increase over FY2018 (the period after which 'Autosure was acquired) was (ref AR2018 p48):

$46.923m - $12.255m = $34.668m

This implies a loss in payout from dollar premiums, using the quoted loss ratio of 0.78, of:

0.78 x $34.668m = $27.041m

Accordingly the premium that remains on the books:

$34.668m - $27.041m = $7.627m

might be expected to go towards TRA profits over FY2018.

--------

A further increase in insurance revenue over FY2019 was generated (AR2019 p52).

$49.206m - $46.923m = $2.283m

So total 'Autosure' revenue over FY2019 was probably close to:

$34.668m + $2.283m = $36.951m

This implies a loss in payout from dollar premiums, using the quoted loss ratio of 0.72, of:

0.72 x $36.951m = $26.604m

Accordingly the premium that remains on the books:

$36.951m - $26.604m = $10.347m

Might be expected to go towards TRA profits over FY2019.

--------

Neither of the two contributions towards profits that I have calculated for FY2018 and FY2019 take into account the overheads of the Autosure insurance business. But if the administration costs at Autosure are roughly unchanged year on year, that means that any increase in 'retained premiums' should flow through to incremental profits over FY2019. The increase in 'retained premiums' between FY2019 and FY2018 is as follows:

$10.347m - $7.627m = $2.720m

Now compare that figure against the incremental increase in the 'Difference between Actual and Measured Experience' (AR2019 p86).

$5.745m - $2.491m = $3.254m

Those two increments are not exactly the same. But they close enough to suggest that 'Difference between Actual and Measured Experience' and 'Retained Insurance Profits' could be one and the same thing. The 'plus adjustment expenses' bit that you mentioned Silverblizzard, and is something I am not sure now to measure, could account for the difference? Yet if that were the case why would the change in adjustment expenses not be reflected in the 'Difference between Actual and Measured Experience' as well?

SNOOPY

[Joshuatree]

On a high end European car (e.g. JLR, BMW or Mercedes) your friend might well end up having the last laugh. Obviously if it's a Toyota Camry Turners have clipped a good one.

As a side note, during the last recession ('09 or '10?), I seem to recall many zero mile late model cars being cleared by auction at reduced prices. There was no "cash for clunkers" in New Zealand to keep inventory moving I suppose.

We are not in a recession now Tomtom.Who knows when the next one arrives.
It was Japanese so a good clip alright.

When i asked Todd what he thought the value of Oxford was he said around $100 million.
Topped up last week.

[silverblizzard888]

Its hard to say what the details are for the expenses since the business is overlapping itself on many areas when it comes to overheads Snoppy. At the end of the day if the numbers look close enough, it should be good enough. Theres either trust that management have it right or they don't and if you don't trust management to get it right then it may not be a business you want to invest in.



We are not in a recession now Tomtom.Who knows when the next one arrives.
It was Japanese so a good clip alright.

When i asked Todd what he thought the value of Oxford was he said around $100 million.
Topped up last week.

If it sells at $100 million then thats amazing, much bigger value than I thought. Worth a top up indeed!

[winner69]

Some more touting $150m minimum for their finance arm.

[percy]

Its hard to say what the details are for the expenses since the business is overlapping itself on many areas when it comes to overheads Snoppy. At the end of the day if the numbers look close enough, it should be good enough. Theres either trust that management have it right or they don't and if you don't trust management to get it right then it may not be a business you want to invest in.




If it sells at $100 million then thats amazing, much bigger value than I thought. Worth a top up indeed!

I have not commented as my memory is letting me down.?
Farmers Finance was sold for something like 60% of receivables.
I think FPF was sold to FXL for similar.
According to Turners annual report pages 15 and 16 Finance receivables were $290.017 mil.
So 35% of receivables would be $101.5 mil.60% would be $174 mil.Take your pick.!..I would be happy with either.lol.
The attraction for a buyer would be access to Turners ongoing origination of loans,including the 419 active dealers selling Turners Finance.
At current sp of $2.39 Turners market cap is $204.475mil,so a good price between $100mil and $175mil would make things very interesting and rewarding for shareholders.
As side from a sale it has been interesting noting Turners equity ratio increased from 32.8% in 2018 to 34.6% in 2019.
With Turners turning over stock very quickly,and trading well I expect to see their equity ratio improving further. The only listed in NZ business I know of that enjoys better stock turns is Ebos,with something like 10 stock turns.

[trader_jackson]

I have not commented as my memory is letting me down.?
Farmers Finance was sold for something like 60% of receivables.
I think FPF was sold to FLX for similar.
According to Turners annual report pages 15 and 16 Finance receivables were $290.017 mil.
So 35% of receivables would be $101.5 mil.60% would be $174 mil.I would be happy with either.lol.
The attraction for a buyer would be access to Turners ongoing origination of loans,including the 419 active dealers selling Turners Finance..

All very Interesting... FXL receivables as at FY19 was $2.64 billion... market cap $777m (was alot less this time last month actually, but share price risen dramatically recently from $1.40's to nearly $2)
= 29.4%
So using the FXL ratio, TRA's finance division (with receivables of $290m) would be worth $85.3m - like FXL, I feel this number undervalues TRA's finance division, but, like FXL, maybe this is all the market is willing to pay at this point in time... I suppose $85m is still a good chunk more than $60m, and I think wtih the way TRA is currently being (under)valued, Mr Market isn't even thinking TRA's finance division is worth $60m.

[winner69]

I have not commented as my memory is letting me down.?
Farmers Finance was sold for something like 60% of receivables.
I think FPF was sold to FXL for similar.
According to Turners annual report pages 15 and 16 Finance receivables were $290.017 mil.
So 35% of receivables would be $101.5 mil.60% would be $174 mil.Take your pick.!..I would be happy with either.lol.
The attraction for a buyer would be access to Turners ongoing origination of loans,including the 419 active dealers selling Turners Finance.
At current sp of $2.39 Turners market cap is $204.475mil,so a good price between $100mil and $175mil would make things very interesting and rewarding for shareholders.
As side from a sale it has been interesting noting Turners equity ratio increased from 32.8% in 2018 to 34.6% in 2019.
With Turners turning over stock very quickly,and trading well I expect to see their equity ratio improving further. The only listed in NZ business I know of that enjoys better stock turns is Ebos,with something like 10 stock turns.

You’re onto to it percy re valuation of finance

Book value (net assets)is $60m so bare minimum one would expect on sale is $100m

[percy]

You’re onto to it percy re valuation of finance

Book value (net assets)is $60m so bare minimum one would expect on sale is $100m
W69 my thoughts exactly.!
Turners have asked for expressions of interest.
I am sure Turners board know what price they would accept,and if they do not get that, they will hang onto it..
A sale would mean the Dorchester Pacific/then Turners original [finance business]goodwill [not on balance sheet] would be realised.

PS.Oxford Finance would make a good fit with HGH's Marac.
Taking over Oxford Finance, together with Turners' MTF shares [Turners are MTF largest shareholder] would give HGH the key to MTF's door.MTF originators would be keen on non-recourse lending from HGH,to replace the non recourse lending Turners stopped..So MARAC,Oxford,MTF.all part of HGH, interesting?

[Joshuatree]

Thats what Todd also said (at the Tauranga presentation) the $100 mill figure andno give away price reduction necessary.

[winner69]

W69 my thoughts exactly.!
Turners have asked for expressions of interest.
I am sure Turners board know what price they would accept,and if they do not get that, they will hang onto it..
A sale would mean the Dorchester Pacific/then Turners original [finance business]goodwill [not on balance sheet] would be realised.

The UDC sale that fell through was 1.6 times net assets

Same multiple for Turners Finance would be $100m but then with ultra low interest rates since then multiples have possibly expanded.

All conjecture really as probably no buyers for what Turners think it’s worth ....we know how delusional the board is when it comes to ‘value’

[percy]

The UDC sale that fell through was 1.6 times net assets

Same multiple for Turners Finance would be $100m but then with ultra low interest rates since then multiples have possibly expanded.

All conjecture really as probably no buyers for what Turners think it’s worth ....we know how delusional the board is when it comes to ‘value’

Yes conjecture.
With Oxford worth $100mil plus in "our" opinion it is hard to see how anyone could call the board delusional.
I think "we"agree with them.Well I certainly do.
We must remember too the board have their skin in the game.
Any business I have ever owned I certainly knew its value,something any owner does.

[winner69]

Yes conjecture.
With Oxford worth $100mil plus in "our" opinion it is hard to see how anyone could call the board delusional.
I think "we"agree with them.Well I certainly do.
We must remember too the board have their skin in the game.
Any business I have ever owned I certainly knew its value,something any owner does.

Maybe they couldn’t find a buyer for the whole company (the Baker Exit Plan) so now hocking it off bit by bit

Again, maybe the sum of the parts are more than the ‘value’ of the whole

That be good.

[percy]

Maybe they couldn’t find a buyer for the whole company (the Baker Exit Plan) so now hocking it off bit by bit

Again, maybe the sum of the parts are more than the ‘value’ of the whole

That be good.

More conjecture.
Think it was the usual "conjecture" posters here who came up with [the Baker Exit Plan].
The fact was when the Business Bakery boys went their separate way, Baker made sure he held onto his TRA holding,and if my memory is correct, actually increased his holding.
So many people posting conjecture ,they end up believing their posts.?..lol.
"Again,maybe the sum of the parts are more than the 'value' of the whole."
Seems that way,although it really is that recycled funds from some parts, will be more profitably used growing other parts.Best use of shareholders capital.
I know I often recycle capital,think most of us do.

[Snoopy]

Getting 'well positioned' for what I believe is a big capital inflow to the business and what I believe will be a large payout to current shareholders in the next 3-6 months.

I'm expecting Oxford Finance to sell in the region of $60 million with majority returned to shareholders in one form or another, if not a big acquisition would make things interesting too. Oxford generate about 26% of the underlying earnings for Turners, so the impact vs capital returned isn't too bad.

Regarding the debt of the company, there is a borrowings of $312 million (annual report), but you have to consider that Oxford Finance's loans amount to $254 million, and in total consumer and commercial loans amount to $291 million. So once Oxford is sold off, the borrowings don't actually look that bad.


I see where you have picked up the value of the Oxford 'Finance Book' to be $254m. From AR2019 p8

"Finance book (excluding Turners Finance) grew by 9% to $254m as at 31st March 2019."

That total of $254m are liabilities from a borrowers perspective, but they are 'account receivable assets' from a TRA perspective. If you go to the 'operating segments' section of AR2019 (p52), then total finance assets are $276.356m. My own modelling adjusts for 'inter segment assets' and also adds a proportion of the 'corporate and other assets. That increases finance assets to $313.931m. A similar adjustment to the 'Finance division liabilities' sees them rise from $216.996m to $241.726m.

This means net assets of the finance division are:

1/ $313.931m - $241.726m = $72,205m as a going concern business unit (with appropriate corporate management included) OR

2/ $276.356m - $216.996m = $59.360m looking strictly at the operational loan book, ready to 'bolt on' to another existing acquirer finance company structure.

That latter figure is close enough to your $60m Silverblizzard.

You are quite right about 'losing the debt' on a takeover of subsidiary 'Oxford Finance'. But at the same time, you lose the corresponding 'account receivables' assets as well. If 2/ is the actual sale scenario, then we will lose $60m more assets than we lose liabilities, but that will be 'made up' by the $60m in cash received. That $60m potential sale price you estimate looks like it would not improve the net debt position of the company at all. So where would the resources for a potential capital return come from?

SNOOPY

PS On an EBIT basis, I am modelling 'Finance' to make 48% of company profits.

[silverblizzard888]

I see where you have picked up the value of the Oxford 'Finance Book' to be $254m. From AR2019 p8

"Finance book (excluding Turners Finance) grew by 9% to $254m as at 31st March 2019."

That total of $254m are liabilities from a borrowers perspective, but they are 'account receivable assets' from a TRA perspective. If you go to the 'operating segments' section of AR2019 (p52), then total finance assets are $276.356m. My own modelling adjusts for 'inter segment assets' and also adds a proportion of the 'corporate and other assets. That increases finance assets to $313.931m. A similar adjustment to the 'Finance division liabilities' sees them rise from $216.996m to $241.726m.

This means net assets of the finance division are:

1/ $313.931m - $241.726m = $72,205m as a going concern business unit (with appropriate corporate management included) OR

2/ $276.356m - $216.996m = $59.360m looking strictly at the operational loan book, ready to 'bolt on' to another existing acquirer finance company structure.

That latter figure is close enough to your $60m Silverblizzard.

You are quite right about 'losing the debt' on a takeover of subsidiary 'Oxford Finance'. But at the same time, you lose the corresponding 'account receivables' assets as well. If 2/ is the actual sale scenario, then we will lose $60m more assets than we lose liabilities, but that will be 'made up' by the $60m in cash received. That $60m potential sale price you estimate looks like it would not improve the net debt position of the company at all. So where would the resources for a potential capital return come from?

SNOOPY

PS On an EBIT basis, I am modelling 'Finance' to make 48% of company profits.

Great detailed explanation! Excuse my narrowly written sentence that must have confused anyone reading it thinking I was linking the borrowings directly with the loans, when my inference was meant indirectly. What I mean precisely was that most of the borrowed money is used by Oxford to make their $254 million loans and the high level of borrowings would more or less relate to the financing parts of the business, while the rest of the other parts like the car and insurance businesses do not have as much debt as it may seem, hence when Oxford is sold, the balance sheet will look fine and any other debt is part of the ongoing concerns of the other parts of the business.

Maybe my way of looking at the balance sheet is a bit simple, but the biggest liability is the borrowings, which affirmed by the CEO is majority related to the financing business without that there are not many other liabilities that need urgent attention. The sale proceeds of Oxford would mostly be available to be returned to shareholders if management deemed so. If management are running a highly leveraged situation, then what explains the high dividend payout and share buyback it would seem like a bit silly to do to risk their jobs and the company.

[percy]

I have compared Turners Balance sheet assets/liabilities page 33 with segement assats/liabilities page 53.
Taking the finance assets/liabilities out of the balance sheet I end up with total assets of $377,826,000 and total liabilities of $186,993,000.
Add other reserves of $452,000 and Retained earnings of $19,527,000 I end up with shareholders equity of $186,993,000 which means shareholders equity would improve from current 34.6% to 49.5%.
However should Oxford Finance sell for $100mil plus there would be a further $40mil to be added to shareholders equity.

[Brain]

Turners is a very complex business which breaks one of my rules in investing.

[sb9]

Not sure if there's a webcast for tomorrow's ASM, couldn't find details from their announcement.

[Snoopy]

I have compared Turners Balance sheet assets/liabilities page 33 with segement assats/liabilities page 53.
Taking the finance assets/liabilities out of the balance sheet I end up with total assets of $377,826,000 and total liabilities of $186,993,000.




Balance Sheetless Finance Segment
equals Oxfordless Entity (+ $60m from Oxford Sale)Oxfordless Entity (+ $100m from Oxford Sale)
Agree with Percy?



Assets (A)$654.182m$276.356m
$377.826m + $60m
Yes


Assets: $100m Oxford Sale (C)

$377.826m + $100m


less Liabilities$427.808m$216.996m$210.812m
No



equals Total Shareholder Equity {B}$226.374m$59.360m$167.014m + $60m



Shareholder Equity: $100m Oxford Sale {D}$167.014m + $100m



less Other Reserves$0.452m$0.452m


less Retained Earnings$19.527m$19.527m


equals Shareholder Equity$206.395m$207.035m



Equity Ratio {B}/{A}34.6%51.9%


Equity Ratio {D}/{C}
55.9%







Add other reserves of $452,000 and Retained earnings of $19,527,000 I end up with shareholders equity of $186,993,000


$167.014m + $19.527m +$0.453m = $186.993m

I see where you get your number from Percy, adding back the other reserves of $0.452m and retained earnings of $19.527m at the bottom of the balance sheet on page 33. However, I don't think you need have added those two figures onto the shareholders equity, because they were already in there before you did it!



which means shareholders equity would improve from current 34.6% to 49.5%.


Or from 34.6% to 51.9%? Either way though, anything with equity ratio of around 50% is not a low debt company.



However should Oxford Finance sell for $100mil plus there would be a further $40mil to be added to shareholders equity.

And the equity ratio would improve to 55.9%. With these very low interest rates, there could be a case for a one off 'cash' capital return if Oxford finance is sold for that optimistic $100m figure. But equally likely is that after struggling with high debt, Turners will bank the money and use it to expand their retail footprint. An equity ratio of 55.9% is not low, and the car retail business remains volatile.

SNOOPY

[percy]

Page 53 shows finance assets 276,356 and taking away liabilities of 216,996 leaves 59,360 which is what finance division is in their a/cs or close to the $60 mil we all thought finance was in their books at.So back to page 33 we now know the finance division is nett $59.360.So should a sale of the division go through at $100 mil we have to find a home for $40.64mil, a bit more than the $40 mil I stated.As far as I am concerned it goes straight to the bottom line,as per my previous post.
I would also point out I think the existing equity ratio at 34.6% is adequate,considering how quickly Turners manage to turn over their stock.
Whether or not a sale happens does not really concern me,however I can see the board's point that the recycled capital can be put to more profitable use.

It would also make the business easier for our "Brain" to understand...lol.

[winner69]

That’s amazing ...sell finance arm and it’s likely shareholder equity increases and will be even mor3 above market cap.

Sort of says that market currently thinks the car selling division is not worth anything

Or have I misread percy and snoopy posts

[percy]

Just go on facts you/we know about Turners selling cars.
Your Wellington Pop-Up site holds approx 55 cars.Sold 47 cars in July.
New New Plymouth site holds approx 155 cars.With out any advertising sold 135 cars in July.
We also know Whangarei relocated site is going gang busters.
Joshuatree advises us Tauranga site is too small.
Tomorrow we should hear how well relocated North Shore site is trading.
All the time remember in the next two years Turners are looking to open a further 8 new sites.[was 9 however North Shore site is now trading].

[winner69]

The market valuing the car selling division as almost worthless just highlights why one Turners is a great investment going forward

Look forward to watching tomorrow’s meeting

[sb9]

Not sure if there's a webcast for tomorrow's ASM, couldn't find details from their announcement.

https://www.nzx.com/announcements/341081

Here are webcast details...

Turners Automotive Group Limited (NZX/ASX: TRA) is pleased to advise that the Company’s 2019 annual meeting of shareholders to be held tomorrow commencing at 10.30am will be webcast.
The link to the webcast is as follows: https://www.youtube.com/watch?v=OUplB-b8yK8

[Snoopy]

However should Oxford Finance sell for $100mil plus there would be a further $40mil to be added to shareholders equity.



Page 53 shows finance assets 276,356 and taking away liabilities of 216,996 leaves 59,360 which is what finance division is in their a/cs or close to the $60 mil we all thought finance was in their books at.So back to page 33 we now know the finance division is nett $59.360.So should a sale of the division go through at $100 mil we have to find a home for $40.64mil, a bit more than the $40 mil I stated.As far as I am concerned it goes straight to the bottom line,as per my previous post.


If you are calculating an equity ratio it is not incorrect to say that the extra $40.640m (which you and I both rounded to $40m) 'goes straight to the bottom line'. But it also goes 'straight to the top line' because the extra $40m is both new incremental shareholder equity AND a new incremental asset.

Shareholder Equity Ratio = (Shareholder Equity) / (Total Assets)

SNOOPY

[percy]

Very nice top or bottom,up or down or just sideways.I would just accept it anyway I could, and be very happy.
$40mil extra wealth,realised should they sell finance for $100mil.More if they received more.W69's $159 mil would be extremely well received.Nice.[$59 mil extra on top of my $40mil to be accounted for].lol.

[Snoopy]

That’s amazing ...sell finance arm and it’s likely shareholder equity increases and will be even more above market cap.

Sort of says that market currently thinks the car selling division is not worth anything

Or have I misread percy and snoopy posts?


Your brain might be moving too fast for this ol' dog to follow Winner.

But the way I see things......

1/ The shareholder equity of (Turners - Oxford) will have increased due to the cash payment received from the Oxford Finance buyer (let's say they paid $60m to Turners) BUT....
2/ As a result of the sale, a net: $276.356m - $216.996m = $59.360 (Let's call it $60m) of shareholder equity has been lost by (Turners-Oxford).

That means there is effectively 'no change' in the equity held by (Turners-Oxford) .as a result of selling Oxford Finance for $60m.

NOW, IF Oxford Finance is sold for $100m THEN there is a net $40m gain to (Turners - Oxford). THEN a $40m equity gain will make the net asset backing of (Turners - Oxford) go up. But the reason for this increase is because someone thinks the finance division is worth more than 'book value'. Now what does this say about the car division? I would have thought 'nothing'. (Note that doesn't mean the car division is worth nothing, just that the sale of the finance division says nothing about the value of the car division). So your point Winner has gone way over my head , I am afraid :-(



The market valuing the car selling division as almost worthless just highlights why one Turners is a great investment going forward


????

SNOOPY

[winner69]

Snoops - I’m just bamboozled by your and percy’s big numbers

However what I think I was saying that in round numbers finance might be worth $100m to $150m and if you put a value on the insurance and credit businesses you possibly get $200m in total for the non-car businesses

Turners market cap is about $200m .......so what value is the market putting on the car selling business?

Maybe you’ve both over bamboozled me and I’ve got over excited and the finance business is really only worth $60m

[Snoopy]

The market valuing the car selling division as almost worthless just highlights why one Turners is a great investment going forward


You guys might be interested in the divisional profitability for FY2019 as served up by my own spreadsheet. Note that Turners call 'Earnings Before Tax (EBT)' 'Operating Profit'




EBT As Declared
EBT A.R Finance Adjusted
EBT C&O Apportioned


[/TR]

Automotive Retail
$18.274m
$14.451m
$4.815m


Finance$11.112m
$14.935m.

$12.635m


Credit Management
$6.321m
$6.321m
$5.525m


Insurance
$8.227m
$8.227m
$6.024m


Corporate & Other
($14.885m).

($14.885m)


Total EBT
$20.048m
$20.048m
$20.048m



1/ Turners retain a finance book inside the Automotive business. To truly see divisional profitability, I believe this should be removed and transplanted into the Finance division. This is what I have done in the second column.
2/ I have allocated 'Corporate and Other ' expenses amongst the divisions in proportion to their divisional revenue. I use 'divisional revenue' as an allocation tool, because I believe the more dollars that are involved in any particular deal, the more attention is required from management. This adjustment has produced the third column.

This is what concerns me about the plan to sell the 'finance division'. Looked at this way it is -by far- the most profitable division of Turners. But what this table does not show are any 'transfer pricing ' effects.

When Turners own both the finance company and the car sales company, it must be very tempting to 'knock a few dollars' of the retail price and gain them all back again with a finance deal with interest set at a suitably high rate. With the finance company sold, this tactic won't work for Turners. So I wouldn't be surprised to see Turners firmer on their prices while turning the screws on the new owners of Oxford finance to help 'seal the deal'. Thus the divisional profitability that I have worked out above may not be indicative of what is to come.

If / When a sale of Oxford Finance is announced, equally important as the price will be the 'referral fee' terms on each deal that is due to Turners, and the structure of those 'referral fee' kick back payments going forwards.

SNOOPY

[Beagle]

Snoops - I’m just bamboozled by your and percy’s big numbers...
...Maybe you’ve both over bamboozled me and I’ve got over excited and the finance business is really only worth $60m

Its been in play and on the market now for many, many months. Could it just be that nobody will pay a normal valuation because its riddled with problematic delinquent debtors at ratio's, (using thorough due diligence and independent detailed sampling of loans) far in excess of Turners management's estimates ?
You'd think with funding costs at 100 year lows and those lovely big juicy interest rates Oxford Finance charge their punters the loan book would be a goldmine and banks or other finance companies would be desperate to take it off their hands and a frenzied bidding war would erupt. But as the months tick bye reality bites that one assumes when there's up to 14% delinquency ratio in some parts of the book and rapidly deteriorating even further, that really sucks the wind out of their sails.

[Baa_Baa]

It’s not just selling the profitability, for a one time sugar hit, it’s selling a big ongoing revenue stream as well. One wonders what TRA are doing trying to sell the silver and how that plays out for shareholders accustomed to above average returns. No surprise the SP is weak only propped up by the buy-back scheme, for as long as that lasts.

[RTM]

Its been in play and on the market now for many, many months. Could it just be that nobody will pay a normal valuation because its riddled with problematic delinquent debtors at ratio's, (using thorough due diligence and independent detailed sampling of loans) far in excess of Turners management's estimates ?
You'd think with funding costs at 100 year lows and those lovely big juicy interest rates Oxford Finance charge their punters the loan book would be a goldmine and banks or other finance companies would be desperate to take it off their hands and a frenzied bidding war would erupt. But as the months tick bye reality bites that one assumes when there's up to 14% delinquency ratio in some parts of the book and rapidly deteriorating even further, that really sucks the wind out of their sails.

So are you still holding Beagle and will I see you there tomorrow to ask the cutting questions ?
RTM

[Snoopy]

Snoops - I’m just bamboozled by your and percy’s big numbers

However what I think I was saying that in round numbers finance might be worth $100m to $150m and if you put a value on the insurance and credit businesses you possibly get $200m in total for the non-car businesses

Turners market cap is about $200m .......so what value is the market putting on the car selling business?

Maybe you’ve both over bamboozled me and I’ve got over excited and the finance business is really only worth $60m


I am still haunted by the dismal face of despair put on by the late great Sir John Anderson , the second greatest banker that New Zealand has ever produced (*). As the PGW Chair, he fronted up to PGW shareholders and told us that the well capitalised and well supported by investors PGW finance division (the PGW golden goose) was only worth its 'asset backing' and was to be sold to Heartland.

(*) The greatest banker NZ has ever produced was of course on the other side of that deal, Heartland's soon to be knighted Sir Jeffrey Greenslade!

I understand Todd talking up the $100m valuation for Oxford. It is a negotiating tactic. But I reckon the wisdom of Sir John from beyond the grave might yet carry some kudos here!

SNOOPY

[percy]

It is simple :
If someone wants to buy the finance side at the price Turners want they will sell it.
If not they will hang onto it.

[Beagle]

So are you still holding Beagle and will I see you there tomorrow to ask the cutting questions ?
RTM

I barked up such a storm last year I went "horse" lol.
Not planning on attending tomorrow.

Turners directors think the shares are worth north of $3.20, per last year's annual meeting. The market says otherwise and I am sure the gulf between what they want for Oxford and what its really worth is just as wide so they'll keep owning it and delinquent loans will keep rising this year just like they did last year.

[Snoopy]

You'd think with funding costs at 100 year lows and those lovely big juicy interest rates Oxford Finance charge their punters the loan book would be a goldmine and banks or other finance companies would be desperate to take it off their hands and a frenzied bidding war would erupt. But as the months tick bye reality bites that one assumes when there's up to 14% delinquency ratio in some parts of the book and rapidly deteriorating even further, that really sucks the wind out of their sails.


The banks have taken up some of those Oxford loans Beagle! Isn't that what rolling up 'like loans' and flogging them off to the banks as 'securitized loans ' was all about? IIRC from last years road show, this was how Turners were getting around their shortages of capital, recycling their capital for what is a capital intensive business (doing the loans). So why has the focus this year changed to selling off the whole finance division? Why can't we just roll up those securitized loans for capital efficiency like we did last year? There is a curly question for someone to ask tomorrow at the AGM!

SNOOPY

[Snoopy]

I think this definition insurance companies use will help:

The Difference Between Actual and Assumed Experience — Experience profits/(losses) are realized where actual experience differs from best estimate assumptions. Instances giving rise to experience profits/(losses) include variations in claims, expenses, mortality, discontinuance and investment returns. For example, an experienced profit will emerge when the expenses of maintaining all in-force business in a year are lower than the best estimate assumption in respect of those expenses"

It more or less recognized premiums that were factored into claims, but not claimed and could be recognized as profits. Seems every insurance company uses this way of reporting both in NZ and internationally.


That latter sentence is not my experience. The PGW company owned pension plan was topped up by $10.274m over FY2019

Lump sum contributions to defined benefit plans: $10.274m. (from cashflow statement)
Effect of top up on Annual Profit:: $0

Somehow the insurance scheme there was completely ring fenced away from the underlying company profit.



The company does cite "IMPROVED INSURANCE LOSS RATIOS: Insurance claims loss ratios have improved from 78% to 72%."

(A loss ratio is a ratio of losses to gains, used normally in a financial context. It is the opposite of the gross profit ratio. For insurance, the loss ratio is the ratio of total losses incurred in claims plus adjustment expenses divided by the total premiums earned.)

Less losses more money able to be recognised as profits, seems simple enough.

So how do you explain the table on p86 in Turners AR2019 titled "Surplus after taxation from insurance activities arose from"?
In that table is says that out of a total surplus after tax of $6.990m, only $1.022m is in excess of insurance contract and investment contract liabilities. I read that as shareholders are only allowed to book $1.022m of those insurance profits for themselves.

SNOOPY

[BlackPeter]

It’s not just selling the profitability, for a one time sugar hit, it’s selling a big ongoing revenue stream as well. One wonders what TRA are doing trying to sell the silver and how that plays out for shareholders accustomed to above average returns. No surprise the SP is weak only propped up by the buy-back scheme, for as long as that lasts.

Exactly. Either the finance division is the big golden egg laying goose the books try to tell us, or it just looks that way and the board knows more than what the books say.

If it is the healthy golden egg laying goose option, than Turners board would be stupid in trying to sell it.

Do we think the Turners board is stupid? Some of them might appear arrogant and lazy, but stupid - no, I don't think so.

So, I guess the question is - why do they try to flog of the golden goose? Is it really just because it is too hard for them to focus their mind in between of all these exciting car racing events and car shows on something that boring as finance? I guess - they took the pay rise to monitor this complicated division, didn't they?

[winner69]

Good news ....a really good F20 earnings guidance (upgrade) today

Some will say we knew all along ...others will shake their heads in disbelief and ask themselves ‘what did I not see’


...all while share price surges up

[winner69]

Hope Byrnes not chairing the meeting today ....I’d be going for the stop button if that happens

[trader_jackson]

Good news ....a really good F20 earnings guidance (upgrade) today

Some will say we knew all along ...others will shake their heads in disbelief and ask themselves ‘what did I not see’


...all while share price surges up

I can't see an upgrade...?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/341109/307874.pdf
Must be coming out in a separate announcement

[BlackPeter]

I can't see an upgrade...?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/341109/307874.pdf
Must be coming out in a separate announcement

Winner just teasing. A chocolate for the first taking the bait ;):

10772

[winner69]

Good they remind us that 90% of punters are aware of Turners

So for every 100 punters buying a car 90 know about Turners but only 5 actually buy from them (OK make it 6 as they growing market share)

Doesn’t seem right

[winner69]

I can't see an upgrade...?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/341109/307874.pdf
Must be coming out in a separate announcement

Nice warm fuzzy presentation ...it’ll be like going to a spiritual revival meeting today

[percy]

Nice warm fuzzy presentation ...it’ll be like going to a spiritual revival meeting today

I am sure both believers and non-believers will find salvation.

[LAC]

At the agm today so hopefully leave here a believer...

[sb9]

Well start on positive note, Grant is present at the meeting.

[winner69]

That’s cool 44 watching on YouTube

[winner69]

That’s cool 44 watching on YouTube

Todd must be boring the pants off punters ...only 37 watching it now

Must be a YouTube thing ....44 watching now