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Turners Auctions’ Six Months Result

19 August, 2005.

Turners Auctions’ Six Months Result To 30 June, 2005

New Zealand’s largest car auction company today announced a half year (to 30 June, 2005) net profit after tax and minority interests of $2.97 million. Turners Auctions’ Chief Executive Officer Graham Roberts described the result as
“satisfactory”. He said that despite a difficult market for used vehicle sales, the company had achieved a recovery of 3 percent ($1.2 million) in revenues compared to the previous six months ended 31 December, 2004.

“ We expect auction volumes and fleet profit margins to firm in the second half of 2005, when a number of our other initiatives taken in the past 12 months will begin to realise benefits”.

“Our moves in North America mean we have secured control of the operations there. We now own 100 percent of Turners Auto Auctions Inc (TAAI), and 100 percent of Ehli Auctions. We have closed down a subsidiary of Ehli Auctions (Turners Van Gordon), to allow us to focus more strongly on the business going forward”.

Turners’ Group revenues for the six months were down 2 percent at $39.6 million ($39.9 million in 2004), while earnings before interest and tax (EBIT) were $3.83 million, down 21.6 percent on the corresponding period ($4.892 million). Total Group Assets were up 30 percent to $42.1 million, and cash from operations up 195% to $4.1 million.

Net surplus for the period was $2.975 million, down 17 percent on the 2004 result ($3.591 million). The company announced an 8cents per share fully imputed net dividend pay-out, at 75 percent of the net surplus. Graham Roberts said the result had to be seen in the context of a record year for the company in 2004.

Mr Roberts said the period had been characterised by the consolidation of a number of key initiatives the company has put in place over the past 12 months, and the continuation of strong positive cash flows generated from the Group’s operations.

“We are seeing signs that the initiatives we have put in place will provide a solid foundation for the future.

“ These include the introduction of two purpose-built branches in Napier and Christchurch, investment in new businesses in Australia and New Zealand, the rationalisation of our North American operations, and the start of the second phase of our auction management system in our New Zealand operations.” Mr Roberts said the outlook for the company looked very positive.

“We are now seeing improving returns for the North American operation. And in New Zealand, new premises for Whangarei and Hamilton will become operational in 2006, and a new generation web site will be implemented later this year”.

“Improved fleet margins and unit sales are forecast from the new Christchurch super site, and a regular Sunday auction programme would begin in all main centres.”

Mr Roberts said Turners fledgling Finance division was projected to hit 1500 contracts (representing gross sales of $11.2 million) for 2005. Group net profit after tax (NPAT) for the full 2005 year was forecast to be $6.3 million compared to $7.0 million in 2004.

ENDS

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