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

[minimoke]

How can they possibly have two versions. If that one point is different what else is? Which one do you trust and rely on?

[BlackPeter]

Snoopy has made a serious point here. How on earth does TRA management think it is OK to change the Annual Report without an announcement ? Very poor. One wonders if this was the only change.

Absolutely. Just for the record - here is a screenshot of page 87 of the 2018AR Turners released on June 28th to the NZX:

TRA AR pg87.PNG

and here is the link: http://nzx-prod-s7fsd7f98s.s3-websit...060/281878.pdf

Great that NZX is keeping copies these days for more than 6 months - isn't it?

I couldn't find any later announcemnt re an updated report.

Just wondering @Todd.Hunter - any chance you could help us to shed a bit of light into this process and clarify when the report has been changed and what else has been modified?

[winner69]

The one still up on the NZX Announcements is the ‘unrevised’ version as well.

They also stuffed up the last Interim Report and had to put up a new version. At least they told punters about that

Pretty slack

Turners - the company that’s always fixing things up.

Hopeless lot

[winner69]

Must look at the updated Interim to see what they changed .....might have been something major.

[percy]

The one still up on the NZX Announcements is the ‘unrevised’ version as well.

They also stuffed up the last Interim Report and had to put up a new version. At least they told punters about that

Pretty slack

Turners - the company that’s always fixing things up.

Hopeless lot

Should anyone bother to check the share registry's list of shareholders, you will not see either Milford or Salt's holdings.
They are included in NZCSD's holding.

[winner69]

Should anyone bother to check the share registry's list of shareholders, you will not see either Milford or Salt's holdings.
They are included in NZCSD's holding.

Yes but they stuffed up their obligation to list all Substantial Holders >5% and Milford and Salt are those.

Never mind mistakes happen ...but Turners seem to make a lot of them

[BlackPeter]

Yes but they stuffed up their obligation to list all Substantial Holders >5% and Milford and Salt are those.

Never mind mistakes happen ...but Turners seem to make a lot of them

I guess I am more worried about them secretly fixing their mistakes and updating the document and hoping nobody is finding out instead of rereleasing the document ...

Questions would be: When did they find the mistake? When did they update the document? Did they update any other material information we did not discover yet? Why did they not inform the stock exchange about the updates - I guess sending them an email and attaching the updated document (and maybe a list of changes) can't be that hard - can it?

The list of substantial shareholders is clearly material information - and so far I don't see why they tried to conceal their changes and why they thought they can get away with not making sure every shareholder is aware of this information.

[winner69]

Maybe they learnt from their mistakes because when they stuffed up the Interim Report they reissued a new one and told punters where the changes were.

Must look at what changed in the Notes re Fair Value Disclosures .....hmm ....might be important to know.

Turners .,..champions of trying to fix things up.

[McGinty]

Absolutely. Just for the record - here is a screenshot of page 87 of the 2018AR Turners released on June 28th to the NZX:

TRA AR pg87.PNG

and here is the link: http://nzx-prod-s7fsd7f98s.s3-websit...060/281878.pdf

Great that NZX is keeping copies these days for more than 6 months - isn't it?

I couldn't find any later announcemnt re an updated report.

Just wondering @Todd.Hunter - any chance you could help us to shed a bit of light into this process and clarify when the report has been changed and what else has been modified?

Mid Sep last year (just prior to the AGM) I notice the same missing SPH and contacted the company about this and another discrepancy I found.

They agreed that I was correct in the below response, as to updating the market on changes well....

Attachment 10355

[Snoopy]

Despite what I wrote above, 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 excat 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 Cashflows	Year 2 Forecast Cashflows	Year 3 Forecast Cashflows	Year 3-4 Forecast Cashflows	Year 4 to 5 Forecast Cashflows	Terminal Cashflows
FY2017 Perspective	10%	7.5%		5.0%		2.0%
FY2018 Perspective		60%	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.

I guess I am more worried about them secretly fixing their mistakes and updating the document and hoping nobody is finding out instead of re-releasing the document ...

The case of the wildly swinging cash flows used to model the goodwill on the books from 'Buy Right Cars' has not been altered. Refer to page 65 in the annual report to see where I have extracted the information. However, just to show that Turners are not the only entity to get things wrong, I am going to ping myself for not noticing a minus sign (change made in bold) . The table which I wrote, that I wish to correct is republished below:




Valuing the Goodwill on the books for BuyRight Cars

	Year 1 Forecast Cashflows	Year 2 Forecast Cashflows	Year 3 Forecast Cashflows	Year 3-4 Forecast Cashflows	Year 4 to 5 Forecast Cashflows	Terminal Cashflows
FY2017 Perspective	10%	7.5%		5.0%		2.0%
FY2018 Perspective		-60%	8.0%		5.0%	2.0%

The corrected version still looks out of context to me. We all know that BuyRight cars have had stock turn issues. But to be modelling cashflows and hence sales to be down by 60% does seem extreme, particularly when that co-incides with the expansion of the 'BuyRight' chain to Hamilton. I wonder if this is a typo and the true figure is -6%?

SNOOPY

PS I notice that in the HY2019 report (that I was sent), that the revenue from external customers was up to $32.218m from $28.958m for the pcp half year. That is a revenue increase of +11.3%.