Turners delivers 11% increase in underlying NPBT

Company Announcement
27 November 2019


Turners Automotive Group delivers 11% increase in underlying NPBT


 Underlying NPBT increased 11% to $14.8m
 NPBT down 12% to $14.8m (HY19 NPBT of $16.8m includes gain on sale of property of $3.5m)
 Group revenue increased 1% to $171m
 Solid gains in the finance, insurance & credit management businesses
 Market share gains partially offset North Shore branch closure and a soft used car market
 Quarterly dividend of 4cps declared. Projected 17.0cps annual dividend (FY19: 17.0 cps)
 On-market share buyback concluded, with 4.5% reduction in issued shares at an average price
of $2.32/share
 Continued to progress strategic plan with focus on increasing auto retail market share,
continued site expansion, de-risking of Oxford Finance, and market-leading technology
investments
 Oxford process concluded, significant interest above book value, but in the Board’s view, the
offers did not fully reflect the intrinsic value of the business
 Turners will undertake a strategic review of EC Credit Control in FY21
 NPBT guidance for FY20 is $28-30m. At the mid-point of $29.0m this represents a 12%
improvement on FY19 underlying profit.

Financial results

Turners Automotive Group (NZX: TRA) delivered an 11% increase in underlying net profit before tax
(NPBT) from $13.3m to $14.8m for the six months ended 30 September 2019. Revenue increased by 1%
to $171m (HY19: $168m). Three out of four business segments recorded gains during the period.

“We are pleased with this robust result, with three of four business segments recording gains in
underlying profit.” said CEO Todd Hunter. “Our largest segment, Auto Retail, outperformed market
conditions as we continued to succeed in growing market share. Meanwhile, we started to execute on
our strategic plan, which was communicated to the market in May 2019. “

Excluding the $3.5m gain on property sale in HY19, underlying revenue increased by 3.6% or $6.0m. Auto
Retail delivered higher unit sales of owned stock, up 6% year-on-year, while Finance revenues have
grown as a result of directing Turners origination into Oxford. Both of these offset a small decrease in
Insurance revenue due to implementation of higher underwriting standards and a softer used-car
market.

Reported NPBT, which is the basis for Turners’ full year guidance, decreased to $14.8m (HY19: $16.8m)
with net profit after tax (NPAT) of $10.7m. Excluding the gain on sale of property of $3.5m in HY19,
Underlying NPBT increased by 11% to $14.8m, driven by gains made in the Insurance, Finance and Credit
divisions. NPBT for FY20 is expected to range between $28m and $30m.

Earnings per share were down 18% to 12.4 cents per share for the half year, reflecting a higher average
number of shares on issue in HY20, a higher effective tax rate in HY20, and the property gain of $3.5m
in HY19. Shareholder equity increased to $220m (HY19: $217m) as at 30 September 2019.

Company Announcement
27 November 2019

Dividend
In May 2019 the Board increased the dividend payout ratio to 60-70% of net profit after tax (NPAT).
This reflects their focus to return value to shareholders. The Board declared a second quarter fully
imputed dividend of 4.0 cents per share, resulting in half year dividends of 8.0 cps. The Board is
projecting a 4.0 cps dividend in Q3 and 5.0 cps in Q4, implying a 17.0 cps annual projected dividend
(FY19: 17.0 cps, FY18: 15.5 cps). The projected payout of 17.0 cps (fully imputed) to shareholders
represents a gross dividend yield of 9.4% at an indicative share price of $2.53.
Strategic update
Turners communicated a Strategic Review to the market in May 2019. With a focus on sustainable
growth, Turners’ strategy is to simplify the business, accelerate growth in a capital efficient way and
de-risk the business by focusing on its strengths. Through both increasing market share and establishing
a growth platform that enables swift progress on new opportunities, Turners will continue to focus on
long-term shareholder value and a resilient business model.
Turners has outlined five strategic themes:
1. Market share
Turners currently maintains ~6% market share of the used car retail transactions and will
concentrate on increasing this through optimising existing branch networks, creating new
consignment relationships, expanding its retail footprint and taking advantage of market
consolidation.
2. Car market
Turners remains confident in the medium term demand within the broader market. With nearly
25% of the ~4m cars registered on NZ roads being 20 years or older, there are a large number
of cars that need to be replaced in the medium term.
3. Oxford finance
Successful de-risking of Oxford finance through focusing on higher quality borrowers has led to
a significant improvement in arrears and performance. Turners will continue to drive
profitability from this division.
4. Property investment
Turners strategy to grow its New Zealand footprint and optimise existing sites through strategic
property investment is well underway with four committed projects (new and relocations) over
the next two years and five potential sites being investigated.
5. Technology
With a technology team of 29 and growing, Turners continues to see investment in “Auto-tech”
as critical to building competitive advantage, particularly in the area of data and digital.

Grant Baker, Chairman, commented: “Our new strategic plan positions us well to benefit from our
competitive advantages throughout the cycle. We are well placed to put the foot down to expand our

Company Announcement
27 November 2019

footprint to leverage the growing strength of the Turners brand. We are particularly focused on our own
“auto-tech” initiatives, where we will continue to invest in a disciplined fashion to exploit our advantage
in data and digital.“

Funding and buyback
Turners’ funding capacity is currently $320m with $72m undrawn. The increase in the securitisation
warehouse facility reflects Turners Cars origination directed into Oxford and away from MTF. The
securitisation funding facility limit is at $200m (including capital contribution from TRA), which is
expected to be extended in Q1 2020.

The on-market share buyback scheme reduced issued shares by 4 million (4.5%) at an average price of
$2.32.
Segment results
Turners’ strategy of retail optimisation is delivering good growth in retail market share. Whilst the used-
car industry has softened due to reduced consumer confidence, Turners is confident that its growth plans
will deliver for the company. Further consolidation is expected in the used car market as a result of the
upcoming regulatory changes (mandatory Electronic Stability Control on all imported vehicles) which will
provide further opportunity to build Turners’ retail market share. The Insurance, Finance and Credit
businesses have all performed at or above expectations.

Auto Retail (Turners Group): Revenue $115.9m +4%, Op profit $7.3m -8%
The Automotive Retail division revenue increased by 4% to $115.9m (HY19: $111.8m) reflecting the
higher number of “owned” cars sold. However, operating profit dropped 8% to $7.3m (HY19: $8m),
reflecting reduced margins on used imports, a drop in lease consignment vehicles and the temporary 6-
month closure of the North Shore branch. Meanwhile NPS (customer satisfaction score) increased to 68
from 49 in HY19, reflecting ongoing training and focus on the customer experience provided in-branch
and online.

BuyNow retail sales increased 1% year-on-year with the opening of the New Plymouth and Whangarei
branches. This was offset by the closure and relocation of the North Shore branch. The new site
development has gone very well and North Shore trading is building in-line with expectations.

Inventory values reduced by 15% to $36m, with the focus on being more efficient and ensuring the
business is a high turnover operation. Unit sales of owned stock increased 6%, however, margin per unit
was down 11%. Locally sourced vehicle margin increased by 5%, however, used import margins were
down 16% due to increased supply chain costs and the weakening New Zealand dollar impacting margins
on used import vehicles. There was less consignment stock from lease vendors as Turners’ cycled off a
strong return period in HY19 (1,000 units less in HY20). Damaged vehicle units increased 4% with some
good gains from existing insurance vendors. The division also implemented $500k of cost reduction
initiatives during HY20 largely within the rebranded Buy Right Cars business.

Company Announcement
27 November 2019

Finance (Oxford Finance): Revenue $22.8m +6%, Op profit $6.5m +20%
The Finance division had a solid half-year with revenue up 6% to $22.8m (HY19: $21.6m). Operating
profit increased 20% to $6.5m (HY19: $5.4m), reflecting the significant improvements made in the quality
of loans originated. Consumer loans originated in HY20 has a total arrears percentage of 2.4%, which is
running at half the levels experienced in HY19. This has helped drive an overall improvement in consumer
account balance arrears in the first half to 8.2% (HY19 9.0%).

Initiatives including the introduction of comprehensive credit reporting and implementation of a 3-tier
risk pricing model, have contributed to the improving quality of new business. Turners Cars lending was
particularly strong, ramping up to $24m in HY20 (HY19: $7.0m).

As part of the May 2019 Strategy Refresh, Turners conducted a comprehensive Strategic Review to
consider alternative ownership and growth options for Oxford Finance. Investment bank Jarden were
appointed to run a process for interested parties, which was concluded in September.

Whilst there was significant interest in Oxford Finance above the book value of the business, in the
Board’s view, the offers received did not fully reflect the intrinsic value of the business, both today and
especially factoring in the planned organic growth. This view was supported by separate valuations from
two corporate advisors. The Board therefore decided to conclude the strategic review and is excited to
focus all efforts on the execution of the growth strategy.

Insurance (Autosure): Revenue $22.2m -13%, Op profit (excluding property profit) $2.6m +16%
Insurance revenue decreased 13% to $22.2m (HY19: $25.7m), with General Gross Written Premium
(GWP) down 6% to $17.5m as a result of market conditions and focusing on lower risk portfolios and
vehicles.

Underlying profit increased 16% to $2.6m (HY19: $2.3m) as a result of the improvement in claims loss
ratios and the improvements in risk pricing work that has gone on. The combined claims loss ratio is
currently 60% (HY19: 63%), while the MBI loss ratio is a 68% (HY19: 72%).

All dealers are now transitioned to a new retail policy generation system which has provided further
opportunity to manage portfolio risk. Turners will continue to review dealers’ portfolio performance for
risk pricing. The company is also pleased to have completed a culture and conduct review well ahead of
the timeframe outlined by the Reserve Bank.

In November 2019, Turners agreed a Distribution Agreement with Heartland Bank between their
respective brands, Autosure and MARAC. This enables Autosure products to be sold at point of sale
through Heartland’s consumer intermediary network from mid December 2019. Turners expects this to
increase the dealer network by 20% and $2m additional annual GWP from Q4 FY20.

Credit Management (EC Credit Control): Revenue $9.9m +7%, Op profit $3.6m +17%
Credit management revenue increased by 7% to $9.9m (HY19: $9.3m). Profit up 17% to $3.6m (HY19:
$3.1m). This is largely due an increased debt load up 17% to $133m mostly from New Zealand corporate

Company Announcement
27 November 2019

clients as a result of EC Credit Control’s positive performance in collection metrics. Commission earned
from debt collected increased 21% to $4.5m.

The division recently completed Xero and MYOB integrations and within a few months more than 150
customers have connected. Also pleasingly the business has significantly improved contact center staff
retention with a more concerted effort on leadership training and a review of remuneration. Turners will
undertake a strategic review of EC Credit Control in FY21.


Digital, Data and Disruption
Turners is pleased with the shifts that have been made in the area of digital marketing with a material
increase in social channel marketing. Measurement has been a key area of development and the
objective is to improve the customer conversion rate over the next 24 months. Pleasingly a 5% lift in web
traffic has been seen since the rebranded Buy Right Cars inventory was included on www.turners.co.nz
and digital marketing activity was lifted.

The initial results from the work with KPMG have been promising with the initial focus on developing
tools to help understand vehicle profitability better. This will help target purchasing the right cars.
Turners will continue to invest in this area and sees this being a key competitive advantage for Turners
in the future.

Turners also made its first innovation investment into Collaborate Corp (CL8.ASX) in July this year. CL8
have launched vehicle subscription business Carly, with advanced plans to bring this to NZ in Q4 FY20.
Turners is pleased with the progress seen in the Australian business and the traction it is getting with the
industry and consumers.


Outlook and Guidance
Turners will continue to focus on organic growth in all its business divisions, but in particular is looking
to build on the brand strength in “Turners” and grow the Auto Retail market share. This will come
through branch expansion and continuing to optimise the existing network for retail customers.

With the introduction of ESC (Electronic Stability Control) as a compulsory feature for all vehicles
imported into New Zealand from Mar 2020, Turners expects to see the used car industry consolidate
further over 2019/2020 particularly for smaller dealers selling low priced vehicles. This market
consolidation is seen as a positive for Turners.

Within finance and insurance businesses, Turners current strategy will continue to focus on organic
growth through improving the underwriting standards, in addition to looking for opportunities to
broaden distribution.

The Board is not expecting any significant one-off gains or losses in H2 and gives net profit before tax
guidance of between $28.0m to $30.0m for FY20.

Company Announcement
27 November 2019



ENDS

About Turners

Turners Automotive Group Limited is an integrated financial services group, primarily operating in the
automotive sector www.turnersautogroup.co.nz

For further information, please contact:

Todd Hunter, Chief Executive Officer, Turners Automotive Group Limited, Mob: 021 722 818
Media Liaison and Assistance: Jackie Ellis, Mob: 027 246 2505

---

Results announcement
Results for announcement to the market
Name of issuerTurners Automotive Group Limited
Report period6 months to 30 September 2019
Previous reporting period6 months to 30 September 2018
CurrencyNZD
Amount (000s)Percentage change
Revenue from continuing operations$170,5554%
Total revenue$170,6991%
Net profit from continuing operations$10,724-17%
Total net profit $10,270-19%
Interim dividend
Amount per quoted equity security$0.04000000
Imputed amount per quoted security$0.01555556
Record date20/01/2020
Dividend payment date30/01/2020
Interim dividendCurrent periodPrior comparable period
Net tangible assets per quoted security$0.75$0.74
A brief explanation of any of the figures
above necessary to enable the figures to
be understood
Please refer to accompanying Company Announcement
Authority for this announcement
Name of person authorised to make this
announcement
Barbara Badish
Contact person for this announcement Todd Hunter
Contact phone number021 722 818
Contact email address
Todd.Hunter@turners.co.nz
Date of release through MAP27/11/2019
Unaudited financial statements accompany this announcement

TURNERS AUTOMOTIVE GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2019
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
Note$'000$'000$'000
Revenue from continuing operations 3
170,555
164,573328,358
Other income 3
144
3,7188,221
Cost of goods sold
(72,589)
(65,274)(133,126)
Interest expense
(7,729)
(7,975)(14,952)
Impairment provision expense
(2,617)
(3,951)(7,892)
Subcontracted services expense
(7,166)
(6,839)(12,888)
Employee benefits (short term)
(27,790)
(27,108)(52,756)
Commission
(7,070)
(6,943)(14,581)
Advertising expense
(1,484)
(1,963)(3,918)
Depreciation and amortisation expense
(5,865)
(2,706)(5,785)
Property and related expenses
(975)
(5,693)(10,945)
Systems maintenance
(612)
(784)(1,471)
Claims
(13,094)
(13,527)(26,804)
Movement in life insurance liabilities
(633)
(815)(718)
Insurance deferred acquisition costs
(178)
391(423)
Impairment of intangible brand asset
-
-(4,300)
Other expenses
(8,096)
(8,307)(16,971)
Profit before taxation14,801
16,79729,049
Taxation expense
(4,077)
(3,912)(6,330)
Profit from continuing operations 10,724
12,88522,719
Other comprehensive income for the period (which may subsequently be
reclassified to profit/loss), net of tax
Cash flow hedges
(466)
(121)(364)
Foreign currency translation differences
12
(8)(26)
Total comprehensive income for the period10,270
12,75622,329
Earnings per share (cents per share)
Basic earnings per share 4
12.39
15.1926.21
Diluted earnings per share 4
12.39
14.8927.28
1

TURNERS AUTOMOTIVE GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2019

Share
Capital
Share
Options
Reserve
Translation
Reserve
Cash flow
reserve
Retained
EarningsTotal
$’000$’000$’000$’000$’000$’000
Balance at 31 March 2018 (audited)Note 199,148 701 (21) (164) 14,659 214,323
Change in accounting policy
Impact of NZ IFRS 15 - - - - (345)(345)
Impact of NZ IFRS 9 - - - - (2,292)(2,292)
- - - - (2,637) (2,637)
Balance at 1 April 2018 (restated) 199,148 701 (21) (164) 12,022 211,686
Transactions with shareholders in their capacity as owners
Employee share based payments-163--- 163
Dividend paid8----(8,056)(8,056)
- 163 - - (8,056) (7,893)
Comprehensive income
Profit----12,885 12,885
Other comprehensive income--(8)(121)-(129)
Total comprehensive income for the period, net of tax - - (8) (121) 12,885 12,756
Balance at 30 September 2018 (unaudited) 199,148 864 (29) (285) 16,851 216,549
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs) 13,388 - - - - 13,388
Capital buy back(6,141) - - - - (6,141)
Employee share based payments-163--- 163
Dividend paid8----(7,158)(7,158)
7,247 163 - - (7,158) 252
Comprehensive income
Profit----9,834 9,834
Other comprehensive income--(18)(243)-(261)
Total comprehensive income for the period, net of tax - - (18) (243) 9,834 9,573
Balance at 31 March 2019 (audited) 206,395 1,027 (47) (528) 19,527 226,374
Change in accounting policy
Impact of NZ IFRS 16 9 - - - - (5,665) (5,665)
Balance at 1 April 2019 (restated) 206,395 1,027 (47) (528) 13,862 220,709
Transactions with shareholders in their capacity as owners
Capital contributions (net of issue costs)
97----
97
Capital buy back
(3,192) - - - -
(3,192)
Cancellation of employee share options
-(1,027)--1,027
-
Dividend paid8
----(7,855)
(7,855)
(3,095) (1,027) - - (6,828) (10,950)
Comprehensive income
Profit
----10,724
10,724
Other comprehensive income
--12(466)-
(454)
Total comprehensive income for the period, net of tax
- - 12 (466) 10,724 10,270
Balance at 30 September 2019 (unaudited)
203,300 - (35) (994) 17,758 220,029
2

TURNERS AUTOMOTIVE GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2019
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
Note$'000$'000$'000
Assets
Cash and cash equivalents5
14,592
24,085
15,866
Financial assets at fair value through profit or loss
- Insurance
59,934
51,693
62,657
- Other
3,500
3,579
3,595
Trade receivables
11,856
11,505
12,471
Inventory
36,492
42,877
38,859
Finance receivables6
285,686
289,067
290,017
Other receivables and deferred expenses
13,052
14,291
10,955
Reverse annuity mortgages
5,859
9,287
8,294
Investment property
5,650
4,820
5,650
Investment in associate
1,310
-
-
Property, plant and equipment
52,648
35,122
39,084
Right-of-use assets
26,768
-
-
Intangible assets
166,629
170,843
166,734
Total assets
683,976
657,169
654,182
Liabilities
Other payables
34,967
31,753
33,906
Financial liability at fair value through profit or loss
-
174
116
Contract liability
1,771
2,469
2,642
Deferred tax
11,122
17,269
13,918
Tax payable
1,073
876
4,570
Derivative financial instruments
992
295
524
Borrowings7
319,588
330,291
312,863
Lease liabilities
34,640
-
-
Life investment contract liabilities
7,853
7,573
7,484
Insurance contract liabilities
51,941
49,920
51,785
Total liabilities
463,947
440,620
427,808
Shareholders' equity
Share capital
203,300
199,148
206,395
Other reserves
(1,029)
550
452
Retained earnings
17,758
16,851
19,527
Total shareholders' equity
220,029
216,549
226,374
Total shareholders' equity and liabilities
683,976
657,169
654,182
Total assets per share ($)7.99 7.75 7.53
Net tangible assets ($)0.75 0.74 0.85
3

TURNERS AUTOMOTIVE GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2019
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
Note$'000$'000$'000
Cash flows from operating activities
Interest received 22,314 25,037 45,023
Receipts from customers 146,706 138,210 279,472
Interest paid(6,682) (6,782) (12,184)
Payment to suppliers and employees(141,489) (150,395) (272,052)
Income tax paid(8,190) (8,671) (10,752)
Net cash inflow/(outflow) from operating activities before
changes in operating assets and liabilities 12,659 (2,601) 29,507
Net increase in finance receivables(8,863) (9,770) (34,926)
Net decrease in reverse annuity mortgages 2,787 1,146 2,545
Net decrease/(increase) of financial assets at fair value through profit or loss 3,346 (1,348) (12,163)
Net contribution from life investment contracts(814) 124 16
Changes in operating assets and liabilities arising from
cash flow movements(3,544) (9,848) (44,528)
Net cash (outflow)/inflow from operating activities 9,115 (12,449) (15,021)
Cash flows from investing activities
Proceeds from sale of property, plant, equipment and intangibles 467 8,858 9,388
Purchase of fixed assets and intangible assets(15,808) (5,811) (12,753)
Investment in associate(1,310) - -
Sale/(purchase) of investments - - 41
Net cash (outflow)/inflow from investing activities(16,651) 3,047 (3,324)
Cash flows from financing activities
Net bank loan advances/(repayments) 20,663 16,398 20,570
Principal elements of lease payments(3,352) - -
Proceeds from the issue of shares - - 7,100
Buy back of shares(3,194) - -
Proceeds from the issue of bonds - - (561)
Other borrowings - - (2,837)
Dividend paid(7,855) (8,056) (15,214)
Net cash inflow/(outflow) from financing activities 6,262 8,342 9,058
Net movement in cash and cash equivalents(1,274) (1,060) (9,287)
Add opening cash and cash equivalents 15,866 25,145 25,145
Translation difference - - 8
Closing cash and cash equivalents514,592 24,085 15,866
4

TURNERS AUTOMOTIVE GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2019
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
RECONCILIATION OF NET SURPLUS WITH CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) 10,724 12,885 22,719
Adjustment for Non-cash items
Impairment charge/(release) on finance receivables, reverse annuity
mortgages and other receivables 2,844 3,994 7,943
Net (profit)/loss on sale fixed assets(26) (3,610) (3,660)
Depreciation and amortisation 5,865 2,706 5,785
Capitalised reverse annuity mortgage interest(367) (451) (846)
Deferred revenues(848) 1,702 1,620
Fair value adjustments on assets/liabilities at fair value through profit and loss(604) (548) (799)
Net annuity and premium change to policyholders accounts 1,183 322 341
Non-cash long term employee benefits - 160 330
Non-cash adjustments to finance receivables effective interest rates(344) (42) (209)
Deferred expenses(1,930) (1,129) 2,839
Fair value adjustment on investment property - - (830)
Write off of intangible brand asset - - 4,300
Adjustment for Movements in Working Capital
Net (increase)/decrease receivables and pre-payments(1,549) (2,280) (259)
Net (increase)/decrease in inventories 2,581 (4,281) (263)
Net increase/(decrease) in payables 166 (7,254) (5,220)
Net increase/(decrease) in contract liabilities(871) 132
Net increase in finance receivables(8,863) (9,770) (34,926)
Net decrease in reverse annuity mortgages 2,787 1,146 2,545
Net (increase)/decrease of insurance assets at fair value through profit or loss 3,346 (1,348) (12,163)
Net contributions/(withdrawals) from life investment contracts(814) 124 16
Net (decrease)/increase in deferred tax liability(643) (4,159) (3,565)
Net (decrease)/increase in tax payable(3,522) (616) (851)
Net Cash inflow/(outflow) from Operating Activities 9,115 (12,449) (15,021)
5

TURNERS AUTOMOTIVE GROUP LIMITED
3. REVENUE
Revenue from continuing operations includes:
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
Interest income
23,787 24,713 49,169
Sales of goods
86,073 79,022 159,438
Commission and other sales revenue
25,731 25,130 48,965
Finance related insurance commissions
1,539 3,372 4,199
Loan fee income
1,784 1,601 2,950
Insurance and life investment contract income
20,715 20,265 42,968
Collection income
9,833 9,245 18,187
Bad debts recovered
347 562 897
Other revenue
746 663 1,585
170,555 164,573 328,358
Other income includes:
Revaluation gain on investment property
--830
Dividend income
104 107391
Gain of sale of property, plant and equipment
40 3,611 3,607
Gain on compulsory acquisition on leasehold premise by the NZTA
-- 3,393
144 3,718 8,221
Revenue from contracts with customers
Over time
Automotive retail
Commission and other sales revenue
13,721 11,683 23,352
Insurance
Motor vehicle insurance commissions
940 843 1,731
14,661 12,526 25,083
At a point in time
Automotive retail
Sales of goods
86,073 79,022 159,438
Auction commissions
12,010 13,447 25,613
Credit management
Collection income
9,099 8,322 16,506
Voucher income
734 923 1,681
107,916 101,714 203,238
4. SHARE CAPITAL AND EARNINGS PER SHARE
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
Number of ordinary shares
Opening balance
86,888,064
84,802,61284,802,612
Shares issued for the dealer share scheme
40,752
-79,050
Shares issued for the conversion of bonds
-
-4,646,037
Shares purchased and cancelled under the share buy back
(1,374,106)
-(2,639,635)
85,554,71084,802,61286,888,064
8

TURNERS AUTOMOTIVE GROUP LIMITED
Basic earnings per share
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
Profit for the Period ($'000) 10,724 12,885 22,719
Weighted average number of ordinary shares at the end of the period
86,560,829
84,802,61286,671,483
Basic earnings per share (cents per share)
12.39
15.1926.21
Weighted number of shares
Opening balance
86,888,064
84,802,61284,802,612
Shares issued for the conversion of bonds
-
-2,303,925
Shares issued for the dealer share scheme
5,345
-20,766
Shares purchased and cancelled under the share buy back
(332,580)
-(455,820)
86,560,82984,802,61286,671,483
Diluted earnings per share
Continuing operations ($'000)
10,724 12,885 22,719
Add: interest expense relating to optional convertible bonds, net of tax
-598598
Add: Long term incentive expense relation to options
-163326
Profit for the year ($'000)
10,724 13,646 23,643
Weighted number of ordinary shares (diluted)
Weighted average number of shares (basic)
86,560,829
84,802,61286,671,483
Effect of the conversion of bonds-6,816,220-
Weighted average number of shares (diluted)86,560,82991,618,83286,671,483
Diluted earnings per share (cents per share)
12.39
14.8927.28
5. CASH AND CASH EQUIVALENTS
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
Cash and cash equivalents
14,592 24,085 15,866
6. FINANCE RECEIVABLES
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
Gross finance receivables
299,962 299,558 303,376
Deferred fee revenue and commission expenses
5,808 6,205 6,236
Provision for impairment
(20,084) (16,696) (19,595)
285,686 289,067 290,017
The calculation of basic earnings per share at 30 September and 31 March was based on the profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, as follows:
The calculation of diluted earnings per share at 30 September and 31 March was based on the diluted profit attributable to shareholders and a diluted weighted
average number of ordinary shares outstanding as follows:
The Group's insurance business is required to comply with the solvency standards for licensed insurers issued by the Reserve Bank of New Zealand. The
solvency standards specify the level of assets the insurance business is required to hold in order to meet solvency requirements, consequently all cash and cash
equivalents held in the insurance business may not be available for use by the wider Group. The Group's insurance business' cash and cash equivalents at 30
September 2019 were $3.0m (30 September 2018: $12.8m; 31 March 2019: $2.2m).
Cash and cash equivalents at 30 September 2019 of $2.9m (30 September 2018 :$2.9m; 31 March 2019 : $4.6m) belongs to the Turners Marque Warehouse
Trust 1 and is not available to the Group.
9

TURNERS AUTOMOTIVE GROUP LIMITED
Securitisation
7. BORROWINGS
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
Secured bank borrowings
271,945 247,111 251,282
Deferred borrowing costs(217)(243)(105)
271,728 246,868 251,177
Non-bank borrowings
Motor Trade Finance23,15554,98637,055
Vendor property funding-2,876-
23,155 57,862 37,055
Bonds
25,000 25,561 25,000
Deferred issue costs(295)-(369)
24,705 25,561 24,631
Total borrowings 319,588 330,291 312,863
Secured bank borrowings
Motor Trade Finance
Turners Finance Limited is a shareholder of a motor trade based company called Motor Trade Finance Limited (MTF). MTF provides the services of a finance
company, including funding, on a full recourse basis back to its shareholders.
The Group has a wholesale funding facility with the Bank of New Zealand (BNZ) under which it securitises finance receivables through The Turners Marque
Warehouse Trust 1 (the Trust). Under the facility, BNZ provides funding to the Trust secured by finance receivables sold to the Trust from the finance segment.
The facility is for a 24 month term that will be renewed annually. The facility is for $200m.
The Trust is a special purpose entity set up solely for the purpose of purchasing finance receivables from the finance sector with the BNZ funding up to 92% of the
purchase price with the balance funded by sub-ordinated notes from the Group. The New Zealand Guardian Trust Company Limited has been appointed Trustee
for the Trust and NZGT Security Trustee Limited as the security trustee. The Company is the sole beneficiary.
The Group has the power over the Trust, exposure, or rights, to variable returns from its involvement with the Trust and the ability to use its power over the Trust to
affect the amount of the Group's returns from the Trust. Consequently the Group controls the Trust and has consolidated the Trust into the Group's financial
statements.
The Group retains substantially all the risks and rewards relating to the finance receivables sold and therefore the finance receivables do not qualify for
derecognition and remain on the Group's consolidated statement of financial position.
During the reporting period $67.0m finance receivables were sold to the Trust (30 September 2018: $44.8m; 31 March 2019: $114.5m). As at 30 September 2019
the carrying value of financial receivables in the Trust was $177.8m (30 September 2018: $151.3m; 31 March 2019: $175.3m).
The Group has a syndicated funding facility with the Bank of New Zealand and ASB Bank, a self liquidating trade finance facility with ASB Bank and securitisation
facility with the Bank of New Zealand.
The bank borrowings are secured by a first-ranking general security agreement over the assets of the Company and its subsidiaries, excluding DPL Insurance
Limited, Turners Finance Limited and EC Credit (Aust.) Limited. The Group's securitisation financing arrangement is described under finance receivables.
MTF provides finance to Turners Finance Limited to fund the finance receivables. The MTF funding is secured by a chattel security over the Turners Finance
Limited's customer's asset securing the finance receivable and by a general security over the assets of Turners Finance Limited.
Turners Finance Limited has also given undertakings to MTF as the nature and conduct of its business, and overall quality of the finance receivables and
aggregate. Turners Finance has complied with these undertakings in the current and prior financial year.
10

TURNERS AUTOMOTIVE GROUP LIMITED
Bonds
8. DIVIDENDS
Six monthsSix monthsYear
endedendedended
30/09/201930/09/201831/03/2019
UnauditedUnauditedAudited
$'000$'000$'000
3,489 3,816 3,816
4,366 4,240 4,240
-- 3,596
-- 3,562
Total dividends provided for or paid 7,855 8,056 15,214
Dividends not recognised at the end of the half year:
3,441 3,596-
3,422 3,562-
9. CHANGE IN ACCOUNTING POLICY
Adjustments recognised on adoption of NZ IFRS 16
$'000
Operating lease commitments disclosed as at 31 March 2019 32,511
Discounted using the incremental borrowing rate of at 1 April 2019 26,863
Less: short-terms leases recognised on a straight-line basis as expense (168)
Add: adjustments as a result of a different treatment of extension and termination options 10,080
Lease liability recognised as at 1 April 201936,775
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles
of NZ IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing
rate as of 1 April 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 6.1%.
The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. Other right-of use
assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognised in the balance sheet as at 31 March 2019. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at
the date of initial application.
Interim dividend for the year ended 31 March 2019 of $0.04 per fully paid ordinary share,
imputed, paid on 30 January 2019.
Interim dividend for the year ended 31 March 2020 of $0.04 (31 March 2019: $0.04) per fully
paid ordinary share, imputed, payable on 22 October 2019 (2018: 30 October 2018).
Interim dividend for the year ended 31 March 2020 of $0.04 (31 Mar 2019: $0.04) per fully paid
ordinary share, imputed, payable on 30 January 2020 (2019: 30 January 2019).
Final dividend for the year ended 31 March 2019 of $0.05 (31 March2018: $0.05) per fully paid
ordinary share, imputed paid on 18 July 2019 (2018: 18 July 2018).
Interim dividend for the year ended 31 March 2019 of $0.04 (per fully paid ordinary share,
imputed, paid on 30 October 2018.
Interim dividend for the year ended 31 March 2019 of $0.04 (31 March 2018: $0.045) per fully
paid ordinary share, imputed, payable on 30 April 2019 (2018: 20 April 2018).
On 1 October 2018 Turners Automotive Group issued secured subordinated fixed rate bonds with a fixed maturity on 30 September 2021. Interest is fixed at 5.5%
and is paid quarterly in arrears in equal amounts. The bonds rank behind the indebtedness owing under the bank facilities and are guaranteed by Turners
Automotive Group Limited, Oxford Finance Limited, Buy Right Cars (2016) Limited, EC Credit (NZ) Limited, Estate Management Services Limited, Payment
Management Services Limited, EC Web Services Limited, Turners Group NZ Limited, Turners Fleet Limited and Turners Property Holdings Limited.
In addition to the above dividends, since the end of the period the directors have recommended the payment of the following dividends expected to be paid out of
retained earnings at 30 September 2019, but not recognised as a liability at the end of the period:
This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have been
applied from 1 April 2019.
The Group has adopted IFRS 16 retrospectively from 1 April 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific
transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
balance sheet on 1 April 2019.
11

TURNERS AUTOMOTIVE GROUP LIMITED
The recognised right-of-use assets relate to the following types of assets:
30/09/20191/04/2019
$'000$'000
Properties
26,563
28,279
Equipment
205
250
Total right-of-use assets
26,768
28,529
The change in accounting policy affected the following items in the balance sheet on 1 April 2019:
1/04/2019
$'000
Right-of-use assets presented in property, plant and equipment
28,531
Other payables
(376)
Deferred tax
(2,203)
Lease liabilities
36,775
Retained earnings
(5,665)
Practical expedients applied
In applying NZ IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
• reliance on previous assessments on whether leases are onerous;
• the accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term leases; and
• the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.
Impact of the adoption of NZ IFRS 16 in the Statement of financial position as at 1 April 2019:
31/03/20191/04/2019
As originallyNZ IFRS 161/04/2019
presentedadjustmentsrestated
$'000$'000$'000
Assets
Cash and cash equivalents
15,866
-
15,866
Financial assets at fair value through profit or loss
- Insurance
62,657
-
62,657
- Other
3,595
-
3,595
Trade receivables
12,471
-
12,471
Inventory
38,859
-
38,859
Finance receivables
290,017
-
290,017
Other receivables and deferred expenses
10,955
-
10,955
Reverse annuity mortgages
8,294
-
8,294
Investment property
5,650
-
5,650
Property, plant and equipment
39,084
-
39,084
Right-of-use assets
-
28,531
28,531
Intangible assets
166,734
-
166,734
Total assets
654,18228,531682,713
The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the
transition date the Group relied on its assessment made applying NZ IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.
12

TURNERS AUTOMOTIVE GROUP LIMITED
31/03/20191/04/2019
As originallyNZ IFRS 161/04/2019
presentedadjustmentsrestated
$'000$'000$'000
Liabilities
Other payables
33,906 (376)
33,530
Financial liability at fair value through profit or loss
116 -
116
Contract liability
2,642 -
2,642
Deferred tax
13,918 (2,203)
11,715
Tax payable
4,570 -
4,570
Derivative financial instruments
524 -
524
Borrowings
312,863 -
312,863
Lease liabilities
- 36,775
36,775
Life investment contract liabilities
7,484 -
7,484
Insurance contract liabilities
51,785 -
51,785
Total liabilities
427,80834,196462,004
Shareholders' equity
Share capital
206,395 -
206,395
Other reserves
452 -
452
Retained earnings
19,527 (5,665)
13,862
Total shareholders' equity
226,374(5,665)220,709
Total shareholders' equity and liabilities
654,18228,531682,713
Presentation of the Statement of comprehensive income for the six months ended 30 September 2019 as if NZ IFRS 17 had not been adopted:
30/09/2019Six months ended30/09/2019
reported with30/09/2019reported
adoptingNZ IFRS 16without adopting
NZ IFRS 16adjustmentsNZ IFRS 16
$'000$'000$'000
Revenue from continuing operations 170,555
-
170,555
Other income 144
-
144
Cost of goods sold(72,589)
-
(72,589)
Interest expense(7,729)
1,043
(6,686)
Impairment provision expense(2,617)
-
(2,617)
Subcontracted services expense(7,166)
-
(7,166)
Employee benefits (short term)(27,790)
-
(27,790)
Commission(7,070)
-
(7,070)
Advertising expense(1,484)
-
(1,484)
Depreciation and amortisation expense(5,865)
3,128
(2,737)
Property and related expenses(975)
(4,395)
(5,370)
Systems maintenance(612)
-
(612)
Claims(13,094)
-
(13,094)
Movement in life insurance liabilities(633)
-
(633)
Insurance deferred acquisition costs(178)
-
(178)
Impairment of intangible brand asset -
-
-
Other expenses(8,096)
-
(8,096)
Profit before taxation14,801(224)14,577
Taxation expense(4,077) 63(4,014)
Profit from continuing operations 10,724(161)10,563
Other comprehensive income for the period (which may subsequently be
reclassified to profit/loss), net of tax
Cash flow hedges(466)
-
(466)
Foreign currency translation differences 12
-
12
Total comprehensive income for the period10,270(161)10,109
Earnings per share (cents per share)
Basic earnings per share
12.39 (0.19)
12.20
13

TURNERS AUTOMOTIVE GROUP LIMITED
Presentation of the Statement of financial position as at 30 September 2019 as if NZ IFRS 17 had not been adopted:
30/09/2019Six months ended30/09/20019
presented30/09/2019reported without
with adoptingNZ IFRS 16adopting
NZ IFRS 16adjustmentsNZ IFRS 16
$'000$'000$'000
Assets
Cash and cash equivalents
14,592 -
14,592
Financial assets at fair value through profit or loss
- Insurance
59,934 -
59,934
- Other
3,500 -
3,500
Trade receivables
11,856 -
11,856
Inventory
36,492 -
36,492
Finance receivables
285,686 -
285,686
Other receivables and deferred expenses
13,052 -
13,052
Reverse annuity mortgages
5,859 -
5,859
Investment property
5,650 -
5,650
Investment in associate
1,310 -
1,310
Property, plant and equipment
52,648 -
52,648
Right-of-use assets
26,768 (26,768)
-
Intangible assets
166,629 -
166,629
Total assets
683,976(26,768)657,208
Liabilities
Other payables
34,967 228
35,195
Contract liability
1,771 -
1,771
Deferred tax
11,122 2,140
13,262
Tax payable
1,073 -
1,073
Derivative financial instruments
992 -
992
Borrowings
319,588 -
319,588
Lease liabilities
34,640 (34,640)
-
Life investment contract liabilities
7,853 -
7,853
Insurance contract liabilities
51,941 -
51,941
Total liabilities
463,947(32,272)431,675
Shareholders' equity
Share capital
203,300 -
203,300
Other reserves
(1,029) -
(1,029)
Retained earnings
17,758 5,504
23,262
Total shareholders' equity
220,0295,504225,533
Total shareholders' equity and liabilities
683,976(26,768)657,208
Total assets per share ($)
7.99
7.68
Net tangible assets ($)
0.75
0.84
14

TURNERS AUTOMOTIVE GROUP LIMITED
Presentation of the Segment information as at 30 September 2019 as if NZ IFRS 17 had not been adopted:
Operating profit30/09/2019Six months ended30/09/2019
reported with30/09/2019reported
adoptingNZ IFRS 16without adopting
NZ IFRS 16adjustmentsNZ IFRS 16
$'000$'000$'000
Automotive retail
7,341 (200)
7,141
Finance
6,492 (46)
6,446
Credit management
3,608 2
3,610
Insurance
2,613 29
2,642
Corporate & other(5,253)(9)(5,262)
Profit/(loss) before taxation
14,801 (224)
14,577
Income tax(4,077)63(4,014)
Profit attributable to shareholders
10,724(161)10,563
Interest expense
Automotive retail
(2,198) 961
(1,237)
Finance
(3,551) 14
(3,537)
Credit management
(20) 20
-
Insurance
(47) 47
-
Corporate & other(1,958)1(1,957)
(7,774) 1,043
(6,731)
Eliminations45-45
(7,729)1,043(6,686)
Depreciation and amortisation expense
Automotive retail
(3,848) 2,712
(1,136)
Finance
(382) 172
(210)
Credit management
(114) 74
(40)
Insurance
(1,407) 95
(1,312)
Corporate & other(114)75(39)
(5,865)3,128(2,737)
Segment assets
Automotive retail
154,086 (26,545)
127,541
Finance
285,416 (343)
285,073
Credit management
36,074 (639)
35,435
Insurance
132,943 (1,627)
131,316
Corporate & other196,128(16)196,112
804,647 (29,170)
775,477
Eliminations(120,671)2,402(118,269)
683,976(26,768)657,208
Segment liabilities
Automotive retail
109,438 (31,850)
77,588
Finance
221,927 (398)
221,529
Credit management
7,544 (711)
6,833
Insurance
73,502 (1,698)
71,804
Corporate & other73,256(17)73,239
485,668 (34,674)
450,994
Eliminations(21,721)2,402(19,319)
463,947(32,272)431,675
The Group’s leasing activities and how these are accounted for
The Group leases various offices, warehouses, retail stores, equipment and cars. Rental contracts are typically made for fixed periods of 3 to 8 years but may have
extension options as described in below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
15

TURNERS AUTOMOTIVE GROUP LIMITED
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used,
being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar
terms and conditions.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational
flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases
(net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful
life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease
payments:
The Group has applied judgement to determine lease term for some lease contracts that include renewal options. The assessment of whether the Group is
reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets.
16

---

Distribution Notice



Section 1: Issuer information
Name of issuer Turners Automotive Group Limited
Financial product name/description Ordinary shares
NZX ticker code TRA
ISIN NZVNLE0001S1
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly X
Half Year Special
DRP applies
Record date 20/01/2020
Ex-Date (one business day before the
Record Date)
17/01/2020
Payment date 30/01/2020
Total monies associated with the
distribution
$ 3,422,188.40
Source of distribution Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.05555556
Total cash distribution $0.04000000
Excluded amount (applicable to listed
PIEs)
n/a
Supplementary distribution amount $0.00705882
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed
If fully or partially imputed, please state
imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.01555556
Resident Withholding Tax per financial
product
$0.00277778
Section 4: Authority for this announcement
Name of person

authorised to make this
announcement
Barbara Badish
Contact person for this announcement Todd Hunter
Contact phone number 021 722 818
Contact email address Todd.Hunter@turners.co.nz
Date of release through MAP

27/11/2019