Turners lifts profit 50%, announces share buybacks, seeks acquisitions

Turners Group [NZX: TNR], the financial services firm formerly known as Dorchester Pacific, lifted profit nearly 50 percent as the company considers further acquisition opportunities after a strong trading performance in the first half of the current financial year.

Net profit rose to $7.4 million in the six months ended September 30, from $5.1 million a year earlier, the company said in a statement. Profit before tax was $10.3 million, ahead of Turners' market guidance of $9.5 million.

Current guidance for the year to March 31 2016 is pre-tax profit of $20 million, which Turners expects to achieve or "more likely exceed," the company said.

"Our aspirations are for significant further growth and greater scale, particularly in our finance and insurance activities," said chairman Grant Baker. "The business is in a strong position overall ... and we are actively considering merger and acquisition opportunities consistent with our strategy."

Turners also announced capital structure changes to tidy up its shareholdings. The changes include a compulsory sale of holdings under 1000 shares, a buyback offer of 30c per share for holdings under 5000 shares, and share consolidation of one share per 10 currently on issue.

Last year, the company bought NZX-listed car auction house Turners Auctions for $82 million in cash, scrip and bonds, to complement its largely automotive loan book and insurance business, and took on the Turners name. The company's $4.86 million acquisition of Christchurch-based Southern Finance was completed in August, giving Turners more exposure in South Island vehicle loans. In the six months to September 30, Southern Finance had $100,000 profit on $300,000 revenue, the company said in a note to the accounts.

Turners gained a new lease of life in 2010 when it was recapitalised in a plan that saw 7200 investors, who were owed about $84 million, convert their debenture stock for four different types of security. Since then, it has been on a buying spree, adding Levin-based lender Oxford Finance and Greenwich Life Insurance as it looks to triple the size of its insurance business over the next two years. Chief executive Paul Byrnes said two of its four finance books, Dorchester Finance and Oxford Finance, traded more than 20% ahead of the corresponding period last year, with bad debt write-offs and arrears remaining at satisfactory levels. Finance profit for the first half rose to $6.5 million on revenue of $16 million, from $3 million a year earlier.

The board declared an interim dividend of 6c per share, with a December 8 record date, payable on December 15.

The shares rose 7% to 35c, valuing the company at $181 million and have dropped 10.9% in the past 12 months.

(BusinessDesk)