Turners Group said pretax earnings may rise 14% in the first half, putting the company on track for annual profit growth.
The financial services firm – formerly known as Dorchester Pacific – has built itself into an integrated automotive financial services group, with a retail arm trading in vehicles and equipment that contributed 37% of earnings last year, a finance and insurance business which generated 41% of operating profit, and debt management which contributed 22%.
And even though automotive retail is the main “engine” of the group as stated by chief executive Todd Hunter, the company’s decision to separate trucks and machinery from its car business and invest into two standalone sales yards has proved successful, with a 26% increase in trucks and machinery sales in the past year.
The company gave guidance for pretax profit of $11.6 million in the six months ending September 30, from $10.3 million a year earlier. Earnings on that basis are expected to grow at least 10% in the year ending March 31, it told shareholders at its annual meeting in Auckland yesterday.
Last month, the company announced a new offer of up to $30 million of convertible bonds, subject to approval by shareholders at the meeting.
Proceeds of the new issue will be used to finance the redemption of the existing bonds that aren’t converted, which will amount to about $5.6 million, while the balance would be held for potential acquisition opportunities.
Approval is needed under NZX listing rules covering related parties because the biggest shareholders in Turners, Hugh Green Investments with 22%, the Business Bakery (13%), Harrigens Trustees (7.6%) and Bartel Holdings (6.9%) plan to participate in the bond issue and would increase their shareholdings when they converted.
Those four shareholders own 49.8% of the existing bonds that mature this month and would be entitled to up to 46% of the new issue under the maximum allocation priority for existing bondholders.
