Turners' profit surges 120% on the back of acquisitions, bolstered loan book

Turners [NZX: TNR], formerly known as Dorchester Pacific, more than doubled annual profit, beating guidance, reflecting its car auction house acquisition and its financing businesses performing ahead of forecast.

Profit rose to $18.1 million in the year ended March 31, up from $8.2 million a year earlier, the Auckland-based company said in a statement. Profit before tax was $19 million, above earlier guidance of $17.5 million and up from $5 million a year earlier. Sales rose 208% to $96.6 million.

The company got a new lease of life in 2010 when Auckland private equity firm the Business Bakery got involved with a recapitalisation plan in which some 7200 investors owed about $84 million converted their debenture stock for four different types of security to keep the firm afloat while many other finance companies were failing in the wake of the global financial crisis and a local recession. Since then it has been on an acquisition spree, buying Levin-based lender Oxford Finance in March last year, while post balance date it also bought Greenwich Life Insurance as it looks to triple the size of its insurance business over the next two years.

It also bought the NZX-listed car auction house Turners Auctions last year, to complement its automotive-centric loan book and insurance business. Since then it has taken the name and delisted the company.

"Trading performance of Turners Group has not missed a beat following acquisition," said chief executive Paul Byrnes. "The rebranding of the business from Turners Auctions was completed in the year and the continuing focus away from wholesale to retail as part of the multi-channel strategy is evolving as planned."

Looking ahead, the company expects its trading profit to increase to $20 million in 2016, from $14 million this year, without any further mergers or acquisitions.

In the past year, operating profit at its finance unit lifted 53% to $5.2 million, while its New Zealand collection services unit increased 49% to $4.7 million.

"All three finance books (Dorchester Finance, Oxford Finance and Turners Finance) performed at or ahead of forecast with acceptable arrears and bad debt write-off metrics maintained over the year," Mr Byrnes said. "Total receivables increased by $105 million primarily as a result of the Oxford Finance and Turners Group acquisitions."

Operating profit for its Australian collection services fell 36% to $223,000, as the strength of the New Zealand dollar against its transtasman counterpart affected earnings. Meanwhile, its insurance division recorded a 33% drop in profit to $799,000 as it was affected by a one-off "reserving rate" due to the lower 10-year interest discount rate, Turners said.

The company will pay a final dividend of 0.6c a share on July 17, up from 0.5cps the previous year.

Turners' shares last traded at 31c, and have fallen 3.1% since the start of the year.

(BusinessDesk)