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

[percy]

Good point Percy. Yes if TNR are looking to acquire businesses in Oz, there is almost certain to be an element of 'share scrip' in the payment. The Oz market for used cars is rather different. I don't think they allow used imports from Japan as we do here. TRA in NZ sources a lot of their used car stock from Japan. But with the shutdown in local manufacturing in Oz, maybe this will change? Maybe TRA is looking to get in on the ground floor if/when import regulations change? Could be huge for TRA if they can crack the Aus retail market. Yet many kiwi retail companies have tried this in other product categories. The result is not always pretty.



Lots of stories in the media around the ever aging NZ car fleet. One thing you never hear mentioned is how good a fifteen year old Japanese car can still be. Is there really they same pressure to update your car as there once was. I can think quite a few fifteen year old cars (built in 2002) I would be happy to drive around in as my everyday transport. Not sure I could say the same ten, fifteen years ago.



Yes absolutely correct. But the EC credit Control business is now less of the overall business than it was, in percentage terms. That was my point.

SNOOPY

20% of cars in NZ [approx 700,000] are more than 20 years old.
Average age of cars in NZ is 14 years.
Selling used vehicles in Aussie would give Turners profits on sales,finance and insurance.
Should they at any stage be able to import from Japan, would mean they are in the box seat.
EC Credit Control is only less of TRA's overall business, as the other divisions have grown by acquisition.
Good capital allocation. Profit on vehicle sales,finance and insurance.
Agree a 20 year old Jap car can still be great,but very few people hang onto their cars that long.Some people change ever couple or three years.Some at 50,000 klms some at 90,000 klms.
ps.You will note from their last presentation, they pointed out a large number of light commercial vehicles are coming to the end of their useful life.

[Snoopy]

Interest is paid over a year and liabilities go up and down over that same period. The net interest paid, once the year has wrapped up, is a fixed amount. The 'average' amount of the loan on which that interest is paid is more nebulous. A crude way to estimate the average is to:

1/ Take the loan balance at the end of the financial year.
2/ Take the loan balance at the end of the previous financial year.
3/ Work out the average of 1/ and 2/

Take the known interest expense, divide that by the average loan balance (3 above) and you can calculate an implied interest rate paid over the financial year. This is what I have done to compile the table below. For the years 2014 and before, all figures come from the relevant year Dorchester report. For the years 2015 and beyond, the figures come from the 'Turners Limited' [TNR] (from FY2017 onwards renamed 'Turners Automotive Group' [TRA]) annual reports:

	FY2011	FY2012	FY2013	FY2014	FY2015	FY2016
Interest Expense (A)		$3.064m	$2.928m	$3.857m	$7.381m	$11.436m
Total Liabilities	$48.634m	$49.932m	$70.765m	$52.630m	$207,970m	$232,491m
Total Borrowings	$9.197m+$15.666m	$7.248m+$13.787m+$5.286m	$22.784m+$10.857m	$17.565m	$156,995m	$174,816m
Averaged Borrowing Balance (B)		$25.592m	$29.981m	$25.603m	$87.280m	$165.906m
Implied Borrowing Interest Rate (A)/(B)		12.0%	9.8%	15.1%	8.5%	6.9%

Note that the significant drop in borrowings between EOFY2013 and EOFY2014 was largely because $10.857m of 'Optional Convertible Notes' (borrowings) converted into equity over that year.

So why is this information useful?

The FY2016 years interest bill was $11.436m. But what would happen if the interest rate on that increased to the same as that of the previous year (8.5%)? That would mean the interest bill would go up to

$11.436m x (8.5/6.9) = $14.088m

The difference ( $14.088m-$11.436m= $2.652m) adjusted by the 28% company tax rate ( $2.652m x (1-0.28) = $1.909m ) represents the amount that net profit for FY2016 could have gone down with those higher interest rates in place. $1.909m on $15.517m represents a 12% profit drop. It is those kind of headwinds that investors might be facing over the next couple of years that TRA shareholders should know about.

SNOOPY

Interest is paid over a year and liabilities go up and down over that same period. The net interest paid, once the year has wrapped up, is a fixed amount. The 'average' amount of the loan on which that interest is paid is more nebulous. A crude way to estimate the average is to:

1/ Take the loan balance at the end of the financial year.
2/ Take the loan balance at the end of the previous financial year.
3/ Work out the average of 1/ and 2/

Take the known interest expense, divide that by the average loan balance (3 above) and you can calculate an implied interest rate paid over the financial year. This is what I have done to compile the table below. For the years 2014 and before, all figures come from the relevant year Dorchester report. For the years 2015 and beyond, the figures come from the 'Turners Limited' [TNR] (from FY2017 onwards renamed 'Turners Automotive Group' [TRA]) annual reports:

	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017
Interest Expense (A)	$3.064m	$2.928m	$3.857m	$7.381m	$11.436m	$11.350m
Total Liabilities	$49.932m	$70.765m	$52.630m	$207,970m	$232,491m	$384,917m
Total Borrowings	$7.248m+$13.787m+$5.286m	$22.784m+$10.857m	$17.565m	$156,995m	$174,816m	$265,889m
Averaged Borrowing Balance (B)	$25.592m	$29.981m	$25.603m	$87.280m	$165.906m	$220.353m
Implied Borrowing Interest Rate (A)/(B)	12.0%	9.8%	15.1%	8.5%	6.9%	5.2%

Note that the significant drop in borrowings between EOFY2013 and EOFY2014 was largely because $10.857m of 'Optional Convertible Notes' (borrowings) converted into equity over that year.

So why is this information useful?

The FY2017 years interest bill was $11.350m. But what would happen if the interest rate on that increased to the 6.9%? That would mean the interest bill would go up to

$11.350m x (6.9/5.2) = $15.060m

The difference ( $15.060m-$11.350m= $3.711m) adjusted by the 28% company tax rate ( $3.711m x (1-0.28) = $2.672m ) represents the amount that net profit for FY2017 could have gone down with those higher interest rates in place. $2.672m on $17.609m represents a 15% profit drop. It is those kind of headwinds that investors might be facing over the next couple of years that TRA shareholders should know about.

SNOOPY

[percy]

Actually it works the other way.
The higher interest rates go, the better the margins for lenders,such as finance companies and banks.

[Snoopy]

Actually it works the other way.
The higher interest rates go, the better the margins for lenders,such as finance companies and banks.

The effect of rising interest rates depends on how competitive the particular lending market is.

1/ If Turners are not able to pass on any of their own 'borrowing interest rate rises' to customers, then their NPAT will reduce according to the rise in their underlying borrowing rate.
2/ If Turners are able to pass on exactly all their own 'borrowing interest rate rises' to customers, then there will be no NPAT effect from a rise in their underlying borrowing rate.
3/ If Turners are able to pass on more than their own 'borrowing interest rate rises' to customers, then the NPAT at Turners will rise.

I think vehicle finance is quite competitive. So I am not sure that you can jump straight to 'outcome 3' as a dead cert Percy. However, I should point out that I am not forecasting that 'outcome 1' will happen either. I am trying to quantify a possible reduction in profits should interest rate rises not be able to be passed on. Part of an exercise in assessing possible risks.

SNOOPY

[Snoopy]

With the full 'Turners Automotive Group' result due out next week, time for some historical context.

The table below is my answer to the question: "What would the combined profits of 'Turners Limited' have looked like if the merger of DPC and TUA was in place back in FY2012?"

The financial years of DPC and TUA did not match up. However, TUA was definitely on a growth path before DPC took a cornerstone stake. So for FY2014, a financial year which for DPC ended on 31st March 2014, I have added the 1st July 2013 to 30th June 2014 financial year results for TUA. It seemed better to add the slightly higher (constructed) 1st July to 30th June 'annual figure', rather than rely on the lower January to December full year TUA figure 'as published' (Both options contain an unavoidable 3 month timing mismatch due to TUA and TNR having different reporting dates). This involved reconstructing results from the half year TUA reports, to time shift the published 'full year TUA results' forward by six months. The earnings results are generally expressed in EBIT terms as a starting point.

I have also assumed that the capital structure of DPC was in place for the whole period of analysis. This means that the total liabilities on the TUA balance sheet must be funded by borrowing at the DPC 'parent borrowing rate' (see my post 1398).

There are two years (FY2014 and FY2015) of 'Turners Limited' results, where 'Turners Auctions' is included as a equity accounted investment. I have removed this 'equity accounted investment income' from the 'other income' of 'Turners Limited' in both cases. Instead I have included the full year equivalent results of Turners Auctions in both instances, consistent with assuming everything was already combined by FY2012.

I am modelling all tax to be paid at a rate of 28%. Turners Limited is now paying tax at 28%, and, barring any unforseen lending market market meltdown, will continue to do this into the future. Turners Auctions was paying tax at the 28% rate before the Turners Limited takeover. Dorchester was not paying tax because of previous tax losses being carried on the books. In my hypothetical 'early takeover' scenario, as shown in the table, I have ignored Dorchester's past tax losses (they are all used up today for future comparative purposes anyway) and assumed the combined DPC and TUA paid tax at 28% historically. It is best to do this if your objective is a fair comparison with present day earnings, undistorted by the effect of 'past tax losses' on 'historical comparative earnings'.

Five Year History of Turners Limited: Operational NPAT

	FY2012	FY2013	FY2014	FY2015	FY2016
EBIT (Turners Auctions :TUA)	$7.342m	$7.948m	$9.117m
less TUA Liabilities x TNR Interest	$33.272m x 0.12 = ($3.993m)	$36.423m x 0.098 = ($3.570m)	$45.634 x 0.151= ($6.891m)
equals EBT (Turners Auctions)	$3.955m	$4.378m	$2.226m
add EBT (Dorchester)	($1.543m)	($0.133m)	$4.892m
EBIT (Turners Limited)				$26.387m	$32.987m
EBIT (Turners Auctions)				$5.829m(*)
add back Turners Auctions acquisition costs				$0.675m
Interest Expense (Turners Limited)				($7.381m)	($11.436m)
less tax paid equity accounted TUA income			($0.721m)	($0.742m)
less one off paper gain self-caused by TUA takeover				($7.098m)
equals EBT (DPC+TUA)	$2.412m	$4.245m	$6.397m	$17.670m	$21.551m
less tax at 28%	($0.675m)	($1.189m)	($1.791m)	($4.948m)	($6.035m)
equals NPAT (DPC+TUA)	$1.737m	$3.056m	$4.606m	$12.722m	$15.517m

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(*) 'Turners Auctions' was absorbed into 'Turners Limited' on 20th November 2014. This was during the FY2015 Turners Limited financial year which ended on 31st March 2015. Turners Limited FY2015 contained 365 days. For 234 of those days from 1st April 2014, 'Turners Auctions' was an equity accounted investment. Note 18 in Turners Limited AR2015 shows an equity accounted contribution to profit of $0.742m up until 20-11-2014. If we annualise this contribution, assuming a constant earnings rate throughout the year, then we get an annual earnings contribution from this 19.85% strategic stake in TUA of:

$0.742 x 365/234 = $1.157m (EBIT) for that 19.85% stake

This means that 100% of TUA must be making an EBIT of:

$1.157m / 0.1985 = $5.829m

---------

SNOOPY

P.S. Not entirely convinced my table is consistent, but it seemed to make sense as I was compiling it!

I am modelling all tax to be paid at a rate of 28%. Turners Automotive Group is now paying tax at 28%, and, barring any unforseen lending market market meltdown, will continue to do this into the future. Turners Auctions was paying tax at the 28% rate before the Turners Automotive Group takeover. Dorchester was not paying tax because of previous tax losses being carried on the books. In my hypothetical 'early takeover' scenario, as shown in the table, I have ignored Dorchester's past tax losses (they are all used up today for future comparative purposes anyway) and assumed the combined DPC and TUA paid tax at 28% historically. It is best to do this if your objective is a fair comparison with present day earnings, undistorted by the effect of 'past tax losses' on 'historical comparative earnings'.

Five Year History of Turners Automotive Group: Operational NPAT

	FY2013	FY2014	FY2015	FY2016	FY2017
EBIT (Turners Auctions :TUA)	$7.948m	$9.117m
less TUA Liabilities x TNR Interest	$36.423m x 0.098 = ($3.570m)	$45.634 x 0.151= ($6.891m)
equals EBT (Turners Auctions)	$4.378m	$2.226m
add EBT (Dorchester)	($0.133m)	$4.892m
EBIT (Turners Automotive Group)			$26.387m	$32.987m	$35.981m
EBIT (Turners Auctions)			$5.829m(*)
add back Turners Auctions acquisition costs			$0.675m
Interest Expense (Turners Automotive Group)			($7.381m)	($11.436m)	($11.350m)
less tax paid equity accounted TUA income		($0.721m)	($0.742m)
less one off paper gain self-caused by TUA takeover			($7.098m)
less Revaluation gains on Investments				($0.200m)	($1.229m)
equals EBT (DPC+TUA=TRA)	$4.245m	$6.397m	$17.670m	$21.351m	$23.402m
less tax at 28%	($1.189m)	($1.791m)	($4.948m)	($5.978m)	($6.553m)
equals NPAT (DPC+TUA=TRA)	$3.056m	$4.606m	$12.722m	$15.373m	$17.849m

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(* => Note for FY2015) 'Turners Auctions' was absorbed into 'Turners Automotive Group' on 20th November 2014. This was during the FY2015 Turners Limited financial year which ended on 31st March 2015. Turners Automotive Group FY2015 contained 365 days. For 234 of those days from 1st April 2014, 'Turners Auctions' was an equity accounted investment. Note 18 in Turners Limited AR2015 shows an equity accounted contribution to profit of $0.742m up until 20-11-2014. If we annualise this contribution, assuming a constant earnings rate throughout the year, then we get an annual earnings contribution from this 19.85% strategic stake in TUA of:

$0.742 x 365/234 = $1.157m (EBIT) for that 19.85% stake

This means that 100% of TUA must be making an EBIT of:

$1.157m / 0.1985 = $5.829m

--------

Supersleuthers will notice that I have now removed the 'investment revaluation gains' from the net profit figures for FY2016 (and used the same policy for FY2017).

SNOOPY

[Snoopy]

Turners have had a fantastic record of increasing profits since coming out of the naughty corner in the finance company classroom. But they have had an almost equally impressive record of 'increasing the number of shares on issue' as well. Many of these shares have been issued with the ultimate intent of buying new businesses that 'bolt on' to the expanding TNR/TRA group. But if these acquisitions and/or the synergies generated are not 'eps' positive, that means the mum and dad shareholder will be going backwards in 'eps' terms. For this reason it is growth in 'eps', not growth in profit, that really matters to shareholders. So how has TNR been doing?

We are looking for a rising five year 'eps' trend. But one setback along the way is allowed.

	FY2012	FY2013	FY2014	FY2015	FY2016
NPAT (DPC+TUA)=TRA (A)	$1.737m	$3.056m	$4.606m	$12.722m	$15.517m
Adjusted Shares on Issue EOFY (B)	24.088m	27.396m	55.966m	63.077m	63.432m
Earnings Per Share (A)/(B) {D}	7.2c	11.2c	8.2c	20.2c	24.5c
Share Price 31st March {C}	n/a	n/a	n/a	$3.20	$3.03c
PE Ratio {C}/{D}	n/a	n/a	n/a	15.8	12.4

There was a hiccup in FY2014 as the company adjusted to its increased capital base. But otherwise the rising 'eps' trend is clear to see.

Result: Pass Test

SNOOPY

We are looking for a rising five year 'eps' trend. But one setback along the way is allowed.

	FY2013	FY2014	FY2015	FY2016	FY2017
NPAT (DPC+TUA)=TRA (A)	$3.056m	$4.606m	$12.722m	$15.373m	$17.849m
Adjusted Shares on Issue EOFY (B)	27.396m	55.966m	63.077m	63.432m	74.523m
Earnings Per Share (A)/(B) {D}	11.2c	8.2c	20.2c	24.5c	24.0c
Share Price 31st March {C}	n/a	n/a	$3.20	$3.03	$3.55
PE Ratio {C}/{D}	n/a	n/a	15.8	12.4	14.8

There was a hiccup in FY2014 as the company adjusted to its increased capital base. Nevertheless the rising 'eps' trend appears to have plateaued. Here is an example where there is significant divergence between the 'profit growth' and the 'eps' growth. It is the 'eps' growth that is the important figure for investors, not profit growth. Yet the second 'eps' decline is only 0.5cps, or within the margin of error if whole numbers were used. For this reason I am not prepared to say the rising 'eps' trend has ended.

Result: Pass Test

SNOOPY

[Snoopy]

We are looking here to see if we can apply a Warren Buffett style growth model to value Turners. We are looking for an ROE of greater than 15% for five years in a row, with one setback allowed.

	FY2012	FY2013	FY2014	FY2015	FY2016
NPAT (Turners Limited) (A)	$1.737m	$3.056m	$4.606m	$12.722m	$15.517m
Shareholder Equity (Turners Auctions :TUA)	$17.510m	$17.811m	$13.378mm
Shareholder Equity (Dorchester Pacific: DPC)	$26.167m	$33.190m	$74.052m
Shareholder Equity (Turners Limited: TNR)				$121.002m	$129.812m
Total Combined Shareholder Equity (B)	$41.667m	$51.001m	$92.430m	$121.002m	$129.812m
Return On Equity (A)/(B)	4.2%	6.0%	5.0%	10.5%	12.0%

It is clear that despite this indicator going in the right direction, Turners Limited have never achieved an ROE greater than 15%

Result: Fail Test

SNOOPY

We are looking here to see if we can apply a Warren Buffett style growth model to value Turners. We are looking for an ROE of greater than 15% for five years in a row, with one setback allowed.

	FY2013	FY2014	FY2015	FY2016	FY2017
NPAT (Turners Limited) (A)	$3.056m	$4.606m	$12.722m	$15.373m	$17.849m
Shareholder Equity (Turners Auctions :TUA)	$17.811m	$13.378mm
Shareholder Equity (Dorchester Pacific: DPC)	$33.190m	$74.052m
Shareholder Equity (Turners Limited: TNR)			$121.002m	$129.812m	$171.716m
Total Combined Shareholder Equity (B)	$51.001m	$92.430m	$121.002m	$129.812m	$171.716m
Return On Equity (A)/(B)	6.0%	5.0%	10.5%	11.8%	10.4%

Turners Limited have never achieved an ROE greater than 15%. The latest year deterioration looks unfortunate, but is connected to the timing of the capital raising.

Result: Fail Test

SNOOPY

P.S. The equity raising took place in October 2016, approximately half way through the financial year. This means the new equity was only available to work with from that date. This means a more accurate ROE figure could be obtained by simply using the 'average' shareholder equity between the two most recent end of year balance dates. Using this method:

ROE (2017) = $17.849m /($129.812m + $171.716m)*0.5 = 11.8%

That figure exactly matches the figure from FY2016.

[Snoopy]

We are looking here for a company's ability to raise their net profit margin above the rate of inflation, ~2% as I write this. A short term trend will suffice. A company does not have to do this every year.

	FY2012	FY2013	FY2014	FY2015	FY2016
NPAT (Turners Limited) (A)	$1.737m	$3.056m	$4.606m	$12.722m	$15.517m
Operating Revenue (Turners Auctions :TUA)	$77.552m	$82.836m	$97.065m
Incremental Operating Revenue (Turners Auctions :TUA)				$32.287m (*)
Operating Revenue (Dorchester Pacific: DPC)	$9.799m	$19.162m	$31.327m
Operating Revenue (Turners Limited: TNR)				$90.195mm	$171.195m
Total Combined Revenues (B)	$87.351m	$101.998m	$128.392m	$122.482m	$171.195m
Net Profit Margin (A)/(B)	2.0%	3.0%	3.6%	10.4%	9.1%

(*) The incremental revenue comes about because 'Turners Auctions' was brought under the 'Turners Limited' umbrella during FY2015. The TUA accounts were not consolidated within TNR until this point. The revenue added represent the 'pre-consolidation' revenue earned by TUA before the full takeover of the company was complete.

Over FY2015 and FY2016, the profit margin has been taken to -and consolidated at- a new level.

Result: Pass Test

SNOOPY

We are looking here for a company's ability to raise their net profit margin above the rate of inflation, ~2% as I write this. A short term trend will suffice. A company does not have to do this every year.

	FY2013	FY2014	FY2015	FY2016	FY2017
NPAT (Turners Limited) (A)	$3.056m	$4.606m	$12.722m	$15.373m	$17.849m
Operating Revenue (Turners Auctions :TUA)	$82.836m	$97.065m
Incremental Operating Revenue (Turners Auctions :TUA)			$32.287m (*)
Operating Revenue (Dorchester Pacific: DPC)	$19.162m	$31.327m
Operating Revenue (Turners Limited: TNR)			$90.195mm	$171.195m	$249.338m
Total Combined Revenues (B)	$101.998m	$128.392m	$122.482m	$171.195m	$249.338m
Net Profit Margin (A)/(B)	3.0%	3.6%	10.4%	9.1%	7.2%

(*) The incremental revenue comes about because 'Turners Auctions' was brought under the 'Turners Limited' umbrella during FY2015. The TUA accounts were not consolidated within TNR until this point. The revenue added represent the 'pre-consolidation' revenue earned by TUA before the full takeover of the company was complete.

Over FY2015 the profit margin has been taken to a new level. However, this seems to have been a one off jump as the net profit margin has been steadily declining since.

Result: Fail Test

SNOOPY

[Snoopy]

The four tests have been completed and the results are as follows:

Buffett Test 1 (post 1422): 'Top Three' position in chosen market. Result: Pass
Buffett Test 2 (post 1417): Increasing 'eps' Trend. Result: Pass
Buffett Test 3 (post 1400): Return on Equity > 15% for five years. Result: Fail
Buffett Test 4 (post 1401): Ability to increase Net Profit margin faster than inflation: Result: Pass

On the surface, passing three of these four tests looks good. However, in order to use 'company generated earnings' to feed into a Buffett growth model, a pass of all four tests is needed. The key failure point is reprised below.

	FY2012	FY2013	FY2014	FY2015	FY2016
Return On Equity	4.2%	6.0%	5.0%	10.5%	12.0%

Returns like this are not enough to ensure that Turners will be earning more than their cost of capital across the business cycle. So the Buffett growth model cannot be used in this instance to provide a reliable valuation. This doesn't mean that TRA is necessarily a bad investment. In just means we have to find another method to evaluate the company.

The four tests have been completed and the results are as follows:

Buffett Test 1 (post 1422): 'Top Three' position in chosen market. Result: Pass
Buffett Test 2 (post 1528): Increasing 'eps' Trend. Result: Pass
Buffett Test 3 (post 1529): Return on Equity > 15% for five years. Result: Fail
Buffett Test 4 (post 1530): Ability to increase Net Profit margin faster than inflation: Result: Fail

The most disappointing thing in comparison to last year is the deterioration in 'Net Profit Margin'. Some would say three down years in a row is the beginning of a trend.

	FY2013	FY2014	FY2015	FY2016	FY2017
Net Profit Margin (A)/(B)	3.0%	3.6%	10.4%	9.1%	7.2%

Make no mistake that in absolute terms, a net profit margin of 7.2% is still good. But this statistic is based on actual profits to actual sales. So it is difficult to make the excuse that the net profit margin deterioration is just a timing issue in the overall expansion plan.

By contrast, the apparent deterioration in the return on equity: ...

	FY2013	FY2014	FY2015	FY2016	FY2017
Return On Equity	6.0%	5.0%	10.5%	11.8%	10.4%

...very definitely is a timing issue. Because the equity on the books at the end of the year was not available to the company all throughout the year. Yet disregarding this, we are still well short of our investment goal of a 15% return on shareholder equity. ROE returns generated are not enough to ensure that Turners will be earning more than their cost of capital across the business cycle. Lot's of the 'right noises' coming from management of course. But:

1/ more leverage on the balance sheet, (my post 21 on Geneva/Turners/Heartland Story Thread) and
2/ the downside risk from rate rises on that total (my post 1524) and
3/ the wiping out of all tangible assets, (my post 1485) and
4/ the divisional imbalance caused by the much smaller growth in debt collecting compared with the other divisions (my post 1515) and
5/ the 'early listing' in Australia, when the only Australian arm is going backwards (loss making) after all head office costs are apportioned, and
6/ the unusually low provisioning for 'stressed loans' (loans monitored but not impaired), even if the 'impaired loan balance' looks under control (my post 1487) and
7/ the lower profit margins in particular (my post 1530).

are all causes for concern (from the perspective of this hound at least). To me the most sensible strategy for Turners for now is to consolidate and grow their NZ operations. Turners may be the largest pre-owned car retailer in NZ. But there is still plenty of room for growth in the home NZ market. Having said this, I will not be selling out of TRA any time soon. But I will be watching them very carefully.

The Buffett growth model cannot be used in this instance to provide a reliable valuation. This doesn't mean that TRA is necessarily a bad investment. In just means we have to find another method to evaluate the company.

SNOOPY

[Onion]

Interesting, thanks for the replies. It's a good way to do it as otherwise they'd push the share price down trying to sell that much on market, so now both seller and buyer get a good deal. Nice.

At the NZ Shareholder's Association Annual Conference in Wellington last weekend there was concern voiced to a presenter from NZX that there is a huge amount of off-market trading. From memory the proportion of off-market trades was in excess of 50% (probably by value).

The sentiment was that the off-market trading is bad, in particular for small retail investors.

Regarding your point about pushing the share price down -- well isn't that the point of an open trade market? If sellers outnumber buyers then that should be known to the market -- and ALL buyers can make the decision to buy or not.