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

[Under Surveillance]

Just received an emailed report from Dorchester,

net profit 6 months $5.06 million full year forecast up from $11.4 to $14 million
interim divdend 0.05cps
share buy back offer for blocks under 4000 shares @ 0.25 cps

You're being short changed; the rest of us are getting a 0.4 cps dividend according to DPC's notice to NZX.

[percy]

You're being short changed; the rest of us are getting a 0.4 cps dividend according to DPC's notice to NZX.

Something tells it does not add up.!!!!
100,000 shares at 29cents = $29,000.
Dividend of 0.4 is $40,000.
Maybe it should read 0.004 which would work out at $400.

[Under Surveillance]

Something tells it does not add up.!!!!
100,000 shares at 29cents = $29,000.
Dividend of 0.4 is $40,000.
Maybe it should read 0.004 which would work out at $400.

It is 0.4 cents, or 0.004 dollars, per share. Either way it is $400 gross for 100,000 shares.

[Snoopy]

It is rather curious that despite DPC releasing a rather full set of their accounts to the NZX, these accounts do not contain any explanatory notes. Why would DPC have done that? It looks like I will have to wait until the actual full year report is published before I can assess 'current asset' 'current liability' liquidity issues.

The FY2014 report came out many months ago now. Unfortunately the disclosure of banking arrangements is very poor, and leaves me none the wiser. I have however gone back to the Simmons report issued in late 2013. On page 10 it says this:

"Under the current terms of the OCNs (Optional Convertible Notes) , the Company may not grant a first ranking security over the assets of the Company and its subsidiaries (excluding DPLI) exceeding $25 million, effectively limiting bank borrowings to this level. The Company has current bank facilities of approximately $22 million. The Board is of the view that additional bank funding will be required to fund organic growth and M&A activity over the next 18 months."

We can take it from this that banking facilities at the end of FY2014 were at least $22m.

SNOOPY

[Snoopy]

We are looking here for a 'liquidity buffer' (including undrawn bank lines) of 10% of the loan book. My interpretation of this hurdle is that it requires us to look at how current liabilities are matched to current assets over a 12 month time horizon. It is akin to a 12 month cashflow 'stress test'.

Looking at note 25b in the annual report on liquidity risk, I see that Financial Assets that are held for availability over the next 12 months total:

$16.979m + $5.774m = $22.753m

Financial liabilities due for payment add up to:

$18.443m + $2.345m = $20.788m

That is a deficit of some $2m. Note 23 has detailed information on the bank facilities, but curiously no information on borrowing limits. Perhaps a longer term holder can advise me what is going on there?

Why is the liquidity buffer ratio important? It doesn't matter how profitable a finance company is. If there is a need for cash in the current year, and the company cannot call on enough current assets to pay up, then the company will likely go out of business. This is effectively what happened when almost the whole finance sector in New Zealand collapsed a few years ago. So with that still fresh in the memory of high interest hunting debenture investors (and finance company shareholders) , this is probably the most important financial statistic of all. It is very frustrating when a company's annual report does not detail the headroom in their banking facilities. However, with a little sleuthing I know have it (a minimum of $22m with the banks). So, at last, we can see where DPC stood at the end of their financial year.

From note 26b in AR2014, we can see that the company's Financial Assets that are due to mature in the next twelve months are:

$26.463m + $8.229m = $34.692m

On the same page we see that borrowings that must be repaid or refinanced with Dorchester's banking syndicate amount to:

$0.723m + $7.648m = $8.371m

Under note 24 secured bank borrowings are $17.565m. That still leaves borrowing headroom of:

$22m - $17.565m = $4.435m

This is the extra amount of capital that DPC could borrow at 31-03-2014 -should they need to- without any renegotiations with their bankers.

However, in this case the $34.692m in maturing business more than covers the $8.371m of capital due. So there is no need to resort to borrowing headroom. DPC's liquidity is just fine.

SNOOPY

[Snoopy]

Why is the liquidity buffer ratio important? It doesn't matter how profitable a finance company is. If there is a need for cash in the current year, and the company cannot call on enough current assets to pay up, then the company will likely go out of business. This is effectively what happened when almost the whole finance sector in New Zealand collapsed a few years ago. So with that still fresh in the memory of high interest hunting debenture investors (and finance company shareholders) , this is probably the most important financial statistic of all. It is very frustrating when a company's annual report does not detail the headroom in their banking facilities. However, with a little sleuthing I know have it (a minimum of $22m with the banks). So, at last, we can see where DPC stood at the end of their financial year.

From note 26b in AR2014, we can see that the company's Financial Assets that are due to mature in the next twelve months are:

$26.463m + $8.229m = $34.692m

On the same page we see that borrowings that must be repaid or refinanced with Dorchestewr's banking syndicate amount to:

$0.723m + $7.648m = $8.371m

Under note 24 secured bank borrowings are $17.565m. That still leaves borrowing headroom of:

$22m - $17.565m = $4.435m

This is the extra amount of capital that DPC could borrow at 31-03-2014 -should they need to- without any renegotiations with their bankers.

However, in this case the $34.692m in maturing business more than covers the $8.371m of capital due. So there is no need to resort to borrowing headroom. DPC's liquidity is just fine.

Time to update this most critical of statistics for the just finished half year. On 21st August 2014 Dorchester announced they had renegotiated their banking facilities, presumably to rather more than the previously disclosed $25m ceiling, in anticipation of the takeover of Turners Auctions.

On 9th September 2014, Dorchester announced they had secured a bank debt facility of up to $39.55m to fund the acquisition.

In the same press release the projected debt required to be taken on in repect of 100% acquisition of Turners (which is what happened) was declared as:

(iii) Acquisition of 100% Shareholding
(Purchase of 80% in addition to the current 20% shareholding)
Share issue at $0.25 $30.0m
Bonds $18.0m
Bank Debt $18.0m
$66.0m

So this means the bank debt facility projected to be available to the rest of DPC was:

$39.55m - $18m = $21.55m

Unfortunately the detail in the HY2015 press release, outlining the match or mismatch of maturing customer loans to the underlying bank debt was non existent. So until more detail is published in the half yearly annual report, this is as far as my analysis can go.

SNOOPY

[percy]

Well today's market update had the "smell of money" about it to me.Doubled my holding at 25cents this afternoon.

Above posted 09/09/2014
Always good to know the nose can still "smell the money."
DPC are forecasting a profit before tax of approx. $23mil for year ending 31/3/2016 while the balance sheet at 31/3/2015 should show shareholders' funds of approx. $120mil and total assets of $265mil.

[golden city]

i am looking look 40c sp soon

[janner]

Bubble.. I could be wrong.

Not for me !!..

Have cast my eyes back over this one ..

Now a holder.. ..

[biker]

i am looking look 40c sp soon

I think it's easy to pluck figures out of the air but I'm sure 40c is attainable on current form.
Not so sure about soon, but a nice steady upwards trend would be just fine.