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

[blackcap]

Definitely it is worth exploring. I had expected a lower interest costs for 2 reasons:
1. The bond interest rate has drop from circa 9% to 6.5%
2. The have started a securitisation program with a bank. This implies lower interest rates as well.

These 2 factors should play out over FY18. After that, we might expect interest costs to follow the trend of bank wholesale rates.

That said, they just said in their announcement that low interest caused "Despite the increase in policies sold, operating profit for the insurance
division decreased year on year. The low and stable interest rate environment
has caused a significant negative impact on life insurance reserves, which
will unwind as interest rates increase."

Although that may not be a material item.
Nice to see profit ahead of schedule and Snoopy will be happy... dividends are going up Looking really good for next year and the conference call at 11am will be interesting.

[Snoopy]

Five Year History of Turners Limited: Operational NPAT

	FY2012	FY2013	FY2014	FY2015	FY2016
NPAT (DPC+TUA)	$1.737m	$3.056m	$4.606m	$12.722m	$15.517m

The raw profit figure I have calculated. But changing these to an 'earnings per share' perspective is not an easy exercise. There have been so many share issues over the years, it takes dogged tracking through the last five years of annual reports to keep track of everything. But there are other conceptual issues too:

1/ 10:1 share consolidation. The recent share consolidation means that all previous share transactions must be 10:1 consolidated as well, to allow a 'like with like' comparison.
2/ Some of the business acquisitions have included a 'cash' and 'share' component. The cash component changes 'come out in the wash'. It is only the 'number of shares on issue changes' that are important when calculating 'earnings per share'.
3/ The takeover of TUA from the perspective of my analysis becomes an internal transaction. This is because I have already assumed that DPC and TUA are combined at the start of my exercise. So they cannot be combined again. This means that the shares issued to what were 'TUA holders' to become part of the new enlarged 'TNR Group' cannot be counted, because I have already considered the shareholder equity within TUA as part of the combined DPC + TUA group.

p58 of AR2015 provides some background numbers on this.

The integration of TUA into what was to become the TNR group was done in two parts. On 17th October 2014 TNR upped their stake in Turners from 19.85% to 86.8%. Later on 27th November 2014 TNR acquired the final outstanding 13.2%, lifeting their shareholding in TUA to 100%.

During the first part of the transaction $13.667m worth of 'identifiable net assets' were transferred. My reading of the accounts is that this represented 86.8% of the company, as the outstanding 13.2% had yet to be transferred at that time. This means the 13.2% 'identifiable net assets' at the time not transferred to TNR must add up to:

$13.667m x (13.2/86.8) = $2.078m

And that brings the total 'identifiable net assets' contained within TUA as at 17th October 2014 to be:

$13.667m + $2.078m = $15.745m

Now look at page 65 of AR2015 and you will see that the total 'new' (sic) share capital issued to TUA shareholders was:

62,119,212 (Shares issued at 25cents for the purchase of Turners) and 3,573,516 (Shares issued at 25 cents in lieu of Turners Group NZ's special dividend). (Note that the 'Shares issued to part fund the Turners Group NZ Limited takeover' 45,254,209 are not included in what I am doing because these shares were issued to TNR shareholders outside of the TUA structure, so these shares are not an internal transaction like the other two categories.)

I like to talk about shares using current parlance. So as a result of the subsequent 10:1 share consolidation, I find it best to consider that a rather lesser number of shares (1/10th) were issued at the (10 times) higher price of $2.50. This means the total shares issued to TUA shares holders had a value of:

(6,211,921*$2.50) + (357,352*$2.50) = $16.423m

There is no requirement for it to be this way. But if you compare the two emboldened totals, you will see that the 'new capital issued' to TUA shareholders is close to the total 'identifiable net assets' that was brought on board as TUA was integrated into the TNR fold. This means that from my perspective of looking at this transaction as 'internal', the transaction looks 'fair' from both sides. And that gives me confidence that even if I am talking through a hole in my head, and my way of looking at this transaction is bollocks, the overall position of the company has not been overly distorted by me considering the TUA takeover in this way.

See, I warned everyone that analysing a combined company in this way would turn into a nightmare analysis. And I was right. But stay with me fellow sharetraders. This particular nightmare is about to unwind.

SNOOPY

[trader_jackson]

https://nzx.com/companies/TRA/announcements/301842

Great results really... knew it was good because the first line they talked about profit, not revenue (and of course the annoucement itself was in capitals

Disclosure: sold HBL @1.71 a month or so back to buy Turner's bonds @ 1.05... look forward to converting them into shares in a year and a bit

[Beagle]

Good solid result and solid outlook. Happy bondholder.

[BlackPeter]

I guess the reported numbers look solid to friendly, but a bit confused when looking at EPS:

They say that NPAT grew by 13% to $17.6m. They have currently 74.5m shares outstanding, which makes in my books 23.6 cts per share.

However - on slide 17 of their results presentation they claim that EPS is 25.5 cents.

Is this some funny partial accounting for shares issued throughout the year?

As well - If I use my method, than their EPS did even slightly drop from FY2016 to FY2017, using their method it marginally increased. Whatever it is - they are obviously not that proud of their EPS growth ... don't crow about it in their overview. Feels a bit dishonest to boast about NPAT growth without clarifying that this is due to new capital and not EPS accredictive.

Ah well, I guess they are human after all - but might justify to have a deeper look into their books ...

[BlackPeter]

Hmm - just used the wait for the conference call to update some of my other indicators.

Noticed that liabilities to total assets have been creeping up from 64.5% to 69.2% while Return on Equity dropped from 12.4% to 10.2%.

I guess nothing catastrophic yet (though the level of liabilities starts to create some discomfort) but might need some closer monitoring.

Discl: hold;

[winner69]

Black Peter - eps calculated on weighted average number of shares on issue

[trader_jackson]

Hmm - just used the wait for the conference call to update some of my other indicators.

Noticed that liabilities to total assets have been creeping up from 64.5% to 69.2% while Return on Equity dropped from 12.4% to 10.2%.

I guess nothing catastrophic yet (though the level of liabilities starts to create some discomfort) but might need some closer monitoring.

Discl: hold;

Do ask thsoe questions... and let us know how the call goes (if you are able to)
Thanks,

[winner69]

Heaps of intangibles on the Balance Sheet - $172m

[Beagle]

Yeap, EPS growth doesn't blow me away but is slightly better than expected. Hoping that FY18 will see genuine EPS momentum with synergies from recent acquisitions.