ADDRESS: TUA: TUA -Annual Meeting Chairman's Address and CEO Presentation

22 Apr 2010 2:48 pm

TUA 22/04/2010 ADDRESS

REL: 1448 HRS Turners Auctions Limited

ADDRESS: TUA: TUA -Annual Meeting Chairman's Address and CEO Presentation

Chairmans Address

I am very pleased to be standing in front of you today reviewing a much improved 2009 result. The Group Net Profit after Tax of $3.3 million is up 207% on the 2008 result. Despite the adverse environment the business has grown market share and focused closely on costs to ensure a strong result for the shareholders. This is a very pleasing result from the Directors' perspective. There has been strong profit growth in all the core areas of the business; Auctions, Fleet and Finance which shows real strength across the business.

At last year's AGM I talked about "unprecedented decline" in the NZ Used Vehicle Markets. The slump has continued through most of 2009. The New Zealand used vehicle market has declined a further 5% in 2009 off the back of the 9% decline in 2008. This translates into 140,000 less used vehicles changing hands per annum in the market over this two year period. These declines are unlike any seen before, and have resulted in large numbers of used car dealers going out of business and put related businesses under considerable pressure. In December 2009 there were 2,200 licensed motor vehicle dealers. This has dropped by 25% since the peak levels of just over 3,000 in 2006.

However despite the declines in the used vehicle markets, auction revenues have remained steady at $36.6 million up slightly over $36.5 million in 2008. The large reduction in Japanese imports coming into the country has resulted in fewer imports flowing through the auction business. This reduction has been offset by continued growth in sales of repossessed vehicles, government fleet vehicles, lease and rental company vehicles. In 2009, there was also increased competition in both the damaged vehicle auction and car auction space. 50% of the business of a significant insurance customer was lost to the competition and a public car auction was launched in Auckland to compete with our biggest auction running in Auckland. We now have 100% of the insurance customer's business back and the competitor's Saturday Auction has closed down.

The fleet business unit has been a real turnaround story in 2009. Some hard lessons learnt in 2008 have been applied through more prudent buying in Japan and a tight focus on inventory turn and margin control resulting in a 2009 operating profit of $766,000 up 207% over 2008.

Turners Finance has had an extremely successful year in 2009 as well with the operating profit at $370,000 up 100% on 2008. The strong focus on improving the quality of lending, improved interest margins and sales of add-on products have been the main strategies behind this solid Turners Finance result.

Total expenses for the year are down 13.8% to $65.8 million. These significant savings in business costs have been a major component of the profit result. Whilst there has been an overall conservative approach to spending throughout 2009 there have been deliberate strategic decisions taken which have reduced costs. The change in buying strategy for Turners Fleet has resulted in less units being purchased and therefore the cost of sales coming down by 25%. Also the change to an online advertising strategy has reduced advertising costs by 51% to $1.4 million and importantly delivered an extra 9.4% registered bidders over 2008 levels.

With such a strong result the board decided to go outside of the dividend policy in 2009 allocating 100% of Net Profit after Tax to the dividend pool. This is a strong signal to the shareholders of the level of confidence the board has and a reflection of the positive financial position the business is in. A final dividend of 7.0 cents per share fully imputed was declared bringing the total dividend for the full year to 12.0 cents per share.

2010 will still be challenging for the business. There is still a high degree of uncertainty about many of the markets Turners operate in across New Zealand. However the business remains well positioned for growth and to take advantage of a recovery when it occurs. Cost control will continue to be a focus for everyone in the business to ensure the debt free and strong cash flow positions are maintained.

I would like to conclude by thanking my fellow directors, management and our valued advisors for their work this year and also the shareholders for their continued support. On behalf of the Board, thank you to the Turners Auctions Team for their hard work delivering a very pleasing result in 2009.

I now hand you over to Graham to present an overview of the business and our plans going forward.

[CEO Presentation attached] End CA:00194067 For:TUA Type:ADDRESS Time:2010-04-22:14:48:15

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