28 September 2017
Company Announcements
For Immediate Release
ASX Code: AMA
ANNUAL EPORT FOR AMA GROUP LIMITED
R
In accordance with the Listing Rules of the Australian Securities Exchange (“ASX”), AMA Group
Limited encloses for immediate release the Annual Report for the Year ended 30 June 2017.
If you have a query about any matter covered by this announcement, please contact Mr Ashley Killick
on ashley.killick@amagroupltd.com.
Ends.
AMA Group Limited (ACN 113 883 560)
34 Gilbert Park Drive, Knoxfield, Victoria, 3180 Australia
Email: info@amagroupltd.com
Tel: + 61 7 3897 5780 Fax + 61 7 3283 1168
AMA GROUP LIMITED
ACN 113 883 560
Annual Report for the Year Ended
30 June 2017
AMA Group Limited (ACN 113 883 560)
34 Gilbert Park Drive, Knoxfield, Victoria, 3180 Australia
Email: info@amagroupltd.com
Tel: + 61 7 3897 5780 Fax + 61 7 3283 1168
AMA GROUP LIMITED
(ACN 113 883 560)
TABLE OF CONTENTS
Table of Contents
DIRECTORS’ REPORT ....................................................................................................................................... 1
AUDITORS’ INDEPENDENCE DECLARATION ............................................................................................... 16
CONSOLIDATED INCOME STATEMENT ........................................................................................................ 17
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................................................. 18
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................... 19
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................... 20
CONSOLIDATED STATEMENT OF CASHFLOWS ......................................................................................... 21
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................... 22
DIRECTORS’ DECLARATION .......................................................................................................................... 72
AUDITORS’ REPORT ....................................................................................................................................... 73
CORPORATE GOVERNANCE STATEMENT .................................................................................................. 78
SHAREHOLDER INFORMATION ..................................................................................................................... 84
CORPORATE DIRECTORY .............................................................................................................................. 87
This document contains some statements which are by their very nature forward looking or predictive. Such
forward looking statements are by necessity at least partly based on assumptions about the results of future
operations which are planned by the Company and other factors affecting the industry in which the Company
conducts its business and markets generally. Such forward looking statements are not facts but rather
represent only expectations, estimates and/or forecasts about the future and thereby need to be read bearing
in mind the risks and uncertainties concerning future events generally.
There are no guarantees about the subjects dealt with in forward looking statements. Indeed, actual
outcomes may differ substantially from that predicted due to a range of variable factors.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS’ REPORT
Your Directors submit the consolidated financial statements of AMA Group Limited (“AMA” or the “Company”)
and its controlled entities (the “Group”) for the year ended 30 June 2017. In order to comply with the
provisions of the Corporations Act 2001, the Directors report as follows:
DIRECTORS AND OFFICERS
The names and particulars of the Directors and Company Secretaries of the Company in office at any time
during or since the end of the period are as follows:
Mr Raymond Malone
Mr Brian Austin
Mr Leath Nicholson
Mr Hugh Robertson
Mr Raymond Smith-Roberts Executive Director
Executive Director
Mr Andrew Hopkins
Chairman and Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Mr Phillip Hains
Mrs Terri Bakos
Company Secretary
Company Secretary
REVIEW AND RESULTS OF OPERATIONS
Principal Activities
The principal activity of the Group is the operation and development of complementary businesses in the
automotive aftercare market. It focuses on the wholesale vehicle aftercare and accessories sector, including
vehicle panel repair, vehicle protection products & accessories, automotive electrical & cable accessories and
automotive component remanufacturing.
Significant Changes in the State of Affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
• The Vehicle Panel Repair division increased the number of shops it operates to 86 at 30 June 2017; and
• Subsequent to year end it acquired a further 4 shops and commenced establishment of an additional 3
greenfields sites.
AMA has also achieved a number of important milestones in this reporting period:
• The Automotive Component Remanufacturing division reported turnover in excess of $10 million;
• The Group also performed well in the 2017 Australian Auto Aftermarket Association Excellence Awards:
• FluidDrive won the silver award for 'Excellence in Manufacturing under $10 million turnover';
• East Coast Bullbars won the bronze award for 'Excellence in Manufacturing over $10 million turnover';
• AECAA Pty Ltd won the 'Most innovative new aftermarket electrical product' award; and
• AECAA Pty Ltd won the 'Most innovative employee engagement program' award.
In May 2017, AMA Group also announced a bid to acquire Automotive Solutions Group Ltd (“ASG”). At the
close of the bid on 7 July 2017 AMA controlled 31.3% of the issued capital of ASG.
•
The Directors continue to be proud of the team’s achievements which emphasise the Board’s strategy to
expand the business, take advantage of industry consolidation whilst ensuring shareholder value and returns
are given appropriate focus.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
1
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Operating Results
Reported earnings before interest, tax, depreciation, amortisation and impairment expense (“EBITDA”) has
increased from $24.672 million to $37.205 million; a 50.80% increase. This result, however, has been
significantly impacted by several large non-cash abnormal items. Restating this result for these abnormal
items results in normalised EBITDA increasing to $41.072 million from the prior year comparative of $31.921
million; an increase of 28.66%. Importantly, this normalised EBITDA result exceeds the Company’s previous
market guidance of being “in excess of $40.0 million”.
Reported EBITDA
Greenfield openings
Business acquisition costs
Site integrations
Employee equity plan expense
Redundancies
Litigation settlement
Borrowing costs
Restructuring costs
Site closures
Discontinued operations
Normalised EBITDA
30 June 2017
$’000
30 June 2016
$’000
37,205
24,672
1,250
677
500
403
379
350
133
125
50
-
-
916
500
3,644
1,128
-
-
600
350
111
41,072
31,921
These abnormal items have also impacted on the Group’s reported net profit before tax from continuing
operations attributable to members of AMA (“NPBT”) which has increased to $25.12 million from a prior year
comparative of $13.17 million; an increase of 90.79%. After adjusting this result for the impact of these
abnormal items and the impairment losses, Normalised NPBT becomes $29.29 million; an increase of 25.32%
over the prior year comparative of $23.37 million.
As outlined in the previous year, the abnormal items distorted the effective tax rate. Given the nature of these
items, it was expected at that time that the future effective tax rate will return to a more normal level. This has
occurred to some degree in the current year with the effective tax rate being 31.5% (2016: 46.5%).
With this and the strong underlying improvement in operating result the reported net profit after tax from
continuing activities attributable to members has increased by 145.77% to $17.21 million. After adjusting this
result for the impact of the abnormal items, Normalised NPAT becomes $20.58 million; an increase of 27.73%
over the prior year comparative of $16.11 million.
Even excluding these abnormal items, the underlying results indicate that the key business operations
continue to deliver positive results:
• Vehicle Panel Repair increased its revenue by 53.1% and its Gross Margin increased by 49.9%. A major
contributor to this growth was the full year impact of the acquisitions completed in FY16 and the part year
impact of the current year’s acquisitions. Even so the business was able to increase the FY17 revenue of
the existing portfolio of repair facilities by 4.7% over the FY16 reported revenue. This growth excludes the
additional revenue from Exclusive / Greenfields.
• Vehicle Protection Products & Accessories was impacted by sales declining in some channels. Revenue
decreased by 6.6% but with the operating efficiencies stemming from the reorganisation of the operations
of East Coast Bull Bars and Custom Alloy this division was able to improve its Gross Margin by 2.1%.
• Automotive Electrical & Cable Accessories operates in a difficult market. Its revenue decreased by 3.3%
but the benefits following the restructuring of the operation in FY16 improved its Gross Margin by 6.8%.
• Automotive Component Remanufacturing continued to grow its results with revenue increasing by 33.7%
and Gross Margin increasing by 26.9%. With the majority of this growth being organic, there was some
contribution from the ASNU acquisition in the last quarter.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
2
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Cash Flow
Although underlying cash flow generated from earnings has been strong this is not obvious from the reported
result for Net cash flows used in operating activities. Below is a table that reconciles between the two results.
Reported EBITDA
Discontinued operations
Interest paid
Deferred income amortisation
Equity issued as employment condition
Other non-cash items
Pre Tax Cash Earnings
Income tax paid
Market investment incentive receipt
Repayment of paint rebate
Normalisation of working capital for acquisitions
Other working capital movement
Net cash flows used in operating activities
30 June 2017
$’000
30 June 2016
$’000
37,205
-
(170)
(5,487)
403
(910)
31,041
(9,724)
-
(5,433)
(1,981)
(916)
12,987
24,672
(10)
(207)
(2,981)
3,644
(750)
24,368
(7,247)
23,000
-
-
(3,360)
36,761
Adjusting the pre-tax Cash Earnings of $31.04 million for the non-cash normalisation adjustments this
measure increases to $34.51 million; up 23.35% over the prior comparative period.
As expected AMA’s operating cash flows have been impacted as a result of the receipt in FY16 of the Market
investment incentive, increased corporate tax payments and the repayment of supplier prebates and the
adoption of normal purchasing terms for businesses acquired in FY16 and FY17.
The large cash outflows in FY16 related to the acquisition of businesses (including Gemini) significantly
influenced the prior year Investing cash flows. The current year’s measure reflects the business acquisitions
undertaken during the current period and the capital expenditure relating to the increased investment in
“greenfield” operations as well as the ongoing needs of the business. The on market bid for ASG resulted in
the increased outflow in Other investments.
The timing of the ASG bid around financial year end and the associated ASX settlement terms required the
Company to draw down on its debt facilities to ensure it had sufficient cash reserves to fund this bid. As such
the Group had a cash balance of $14.72 million at year end.
Financial Position
The Current Ratio has declined from 1.06 times to 0.81 times. The reduction in the net cash balance has
been a major factor in this. This ratio is also impacted by the significant non-cash items in other current
liabilities; namely the deferred income and the scrip component of deferred vendor consideration. Reflecting
this ratio for these items, the Current Ratio adjusted for non-cash items has declined from 1.18 times to 0.96
times.
The gearing ratio has risen slightly from 1.73% at June 2016 to 5.47%. While the Company’s market
capitalisation and the amount owing on deferred vendor consideration has increased, the major contributor to
this increased gearing ratio has been the reduction of the net cash balances held by the group. Even so, the
Directors believe that the Group is conservatively geared and that the Group has sufficient capital resources,
including the debt facility, which had $27 million undrawn at balance date.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
3
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
This capital base has enabled the Group to continue to undertake the acquisition programme which has
resulted in an increased asset base; albeit most of this growth is in intangibles reflecting the service industry
businesses we have acquired. The profit retention in the current year has improved the Net Tangible Assets
per share from negative 1.06 cents per share to positive 0.01 cents per share.
Capital Management
In October 2016, AMA paid the 2016 year final dividend of 1.70 cents per share fully franked at 30%. This
bought the total payout related to that year’s result to be 2.20 cents per share fully franked at 30%.
In April 2017, the Company paid the 2017 year interim dividend of 0.5 cents per share fully franked at 30%.
Upon finalising the preliminary final report, the Directors are pleased to announce they have decided to
declare a final dividend, fully franked at 30%, of 2.0 cents per share with a record date of 15 September 2017
and a payment date of 31 October 2017.
On payment of this dividend, shareholders will have received a total payout related to the current reporting
period of 2.5 cents per share; an increase over the previous period of 0.3 cents per share or 13.6%.
Basic earnings per share from continuing operations has increased from 1.53 cents to 3.32 cents; an increase
of 116.67%
The closing price for an AMA Share on the ASX has also increased through the year from 80.50 cents at 30
June 2016 to 97.00 cents at 30 June 2017; an increase of 20.50%.
Business Strategies and Future Prospects
In recent years, the Board and Management have described the Strategic Direction of the Group as focusing
on the growth opportunities presenting themselves to the four key business divisions. It was believed that the
Group could exploit these opportunities with:
• A relatively strong financial position;
• Market leading brands;
• Strong relationships with customers and suppliers across multiple channels; and
•
Industry experienced management with a commitment to operating excellence.
It was anticipated that most business segments would have organic growth potential but given the
consolidation of the Vehicle Panel Repair industry there would be significant opportunities for strategic and
accretive acquisitions in this industry segment. To this end, Management then embarked on the business
growth programme.
The Directors believe that the strong financial performance of AMA in the current reporting period reflects the
ongoing outcomes of this strategic direction. The investments made have resulted in a significant increase in
the scale and scope of the operations. Whilst challenging market conditions have persisted across most of
the Group’s business segments, the results are in line with the Directors’ expectations, which show a
substantial increase in the Group’s operating revenue and EBITDA over the past three years.
Whilst the economic outlook and market conditions across some business segments are likely to remain
challenging, AMA believes that its continued application of key management strategies combined with its
acquisition strategy will continue to boost future earnings.
The Board believe that there are still substantial growth opportunities presenting to the key business divisions.
The consolidation of the Vehicle Panel Repair industry continues and Management are actively involved in
negotiating the acquisition of existing businesses and new “greenfield” sites. These opportunities also exist
for the other operating divisions. The acquisition of further businesses will provide further scale to the
operations.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
4
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
SUBSEQUENT EVENTS
The on market offer to acquire all of the issued capital of Automotive Solutions Group Limited referred to in
Note 14 closed on 7 July 2017. At that time the Group had increased its ownership interest to 31.3% from the
holding at 30 June 2017 of 24.9%.
On 31 August 2017, the Directors declared a dividend, fully franked of 2.0 cents per security which is to be
paid 31 October 2017.
MEETING OF DIRECTORS
The number of meetings of the Company's Board of Directors and of each board committee held during the
year ended 30 June 2017, and the numbers of meetings attended by each director were:
Board Meetings
Committee Meetings
Audit Committee
Remuneration Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Raymond Malone
Raymond Smith-Roberts
Andrew Hopkins
Hugh Robertson
Leath Nicholson
Brian Austin
8
8
8
8
8
8
8
8
6
6
8
6
DETAILS OF DIRECTORS AND OFFICERS
0
0
0
3
3
3
0
0
0
3
3
3
0
0
0
1
1
1
0
0
0
1
1
1
The name and details of the Directors and Officers in office during the financial year and until the date of this
report are as follows. Secretaries were in office for the entire period unless otherwise stated.
Raymond Malone
Chairman and Executive Director
Appointed to the Board
Appointed Executive Chairman
Experience and expertise
Interest in Shares and Options*
23 January 2009
19 March 2015
With over 30 years work experience in the automotive panel repair
industry, Mr Malone has progressed from a spray painter through to
business ownership and senior executive positions. He has
developed many strong relationships with key customers focusing
on excellent customer service. He has developed extensive
business skills which he has consistently applied to AMA’s
development since 2009.
80,417,619 Fully Paid Ordinary Quoted shares and 10,000,000
options
Directorships held in other listed entities Chairman of Money3 Corporation Limited.
Special responsibilities
Chief Executive Officer - Group
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
5
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Hugh Robertson
Non-Executive Director
Appointed to the Board
Experience and expertise
2 June 2015
Mr Robertson has worked in stockbroking for over 30 years with a
variety of firms including Wilson HTM, Investor First and more lately
Bell Potter. Among his areas of interest is a concentration on small
cap industrial stocks and he currently sits on the boards of several
such companies.
280,000 Fully Paid Ordinary Quoted shares and Nil options
Interest in Shares and Options*
Directorships held in other listed entities Non-Executive Director of Centrepoint Alliance Limited and Primary
Special responsibilities
Opinion Limited.
Member of the Audit Committee and the Remuneration Committee
Leath Nicholson
Non-Executive Director
Appointed to the Board
Experience and expertise
23 December 2015
Mr Nicholson holds a Bachelor of Economics (Hons), a Bachelor of
Law (Hons) and a Masters of Law (Commercial Law). He co-
founded Foster Nicholson Lawyers. He has a breadth of experience
with ASX listed entities and has particular expertise in mergers and
acquisitions; IT based transactions, and corporate governance. He
also has significant experience in corporate and commercial based
dispute resolution.
1,673,395 Fully Paid Ordinary Quoted shares and Nil options
Interest in Shares and Options*
Directorships held in other listed entities Non-Executive Director of Money3 Corporation Limited.
Special responsibilities
Member of the Audit Committee and the Remuneration Committee
Brian Austin
Non-Executive Director
Appointed to the Board
Experience and expertise
23 December 2015
With over 30 year’s industry experience, Mr Austin has held senior
executive positions in the insurance industry. Over that time he has
been instrumental in setting the strategy of capital raising and
acquisitions. He has been a Director of ASX listed entities,
enabling him to develop a global network of key relationships.
112,000 Fully Paid Ordinary Quoted shares and Nil options
Interest in Shares and Options*
Directorships held in other listed entities Chairman of PSC Insurance Group Limited
Special responsibilities
Member of the Audit Committee and the Remuneration Committee
Raymond Smith-Roberts
Executive Director
Appointed to the Board
Experience and expertise
Interest in Shares and Options*
28 February 2014
Mr Smith-Roberts has over 25 years work experience in the
automotive industry. He joined ECB many years ago progressing to
general manager and then became managing director when the
Company became part of AMA and played the lead role in making
the business a significantly stronger business. Over the years he
has attained valuable operational knowledge and experience having
been the Group Chief Operating Officer from 2009 to 2016. He is
well positioned to assist the board in developing strategy for the
next phase of the Company’s growth and development.
5,081,684 Fully Paid Ordinary Quoted shares and 2,000,000
options
Directorships held in other listed entities Nil
Special responsibilities
Chief Executive Officer - Automotive Components and Accessories
Divisions
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
6
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Andrew Hopkins
Executive Director
Appointed to the Board
Experience and expertise
Interest in Shares and Options*
17 December 2015
Andrew founded the Gemini Group in Perth in 2009 and built the
Gemini brand into one of the largest privately owned consolidators
offering integrated claims management and repair services to the
insurer, corporate and consumer markets. Andrew brings
extensive management expertise to the AMA group. With over 35
years of experience in finance, acquisitions, strategy and building
insurance relationships, Andrew’s ability to continually innovate will
broaden AMA’s relationships with insurance companies both
domestically and internationally.
35,239,167 Fully Paid Ordinary Quoted shares, 15,102,500 Fully
Paid Ordinary Unquoted shares and Nil options
Directorships held in other listed entities Nil
Special responsibilities
Chief Executive Officer - Vehicle Panel Repair Division
Phillip Hains
Joint Company Secretary
Appointed to the Board
Resigned from the Board
Experience and expertise
9 December 2009
23 June 2017
Mr Hains is a Chartered Accountant and specialist in the public
company environment. He has served the needs of a number of
public company boards of directors and related committees. He
has over 23 years’ experience in providing accounting,
administration, compliance and general management services. He
holds a Masters of Business Administration from RMIT and a Public
Practice Certificate from the Institute of Chartered Accountants.
Terri Bakos
Joint Company Secretary
Appointed
Experience and expertise
2 March 2010
Ms Bakos is a Chartered Secretary and holds a Bachelor of
Business (Accounting) from RMIT University. She has over 20
years’ experience providing accounting and compliance services to
listed and unlisted public companies.
* The relevant interest in the shares or options over shares issued by the Company of each Director, and
other related body corporate, as notified by the Director to the Australian Securities Exchange in
accordance with s 205G(1) of the Corporations Act 2001, as at the date of this report.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
7
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
REMUNERATION REPORT
The remuneration report is set out under the following main headings:
A
B
C
D
Principles used to determine the nature and amount of remuneration
Details of remuneration
Share-based compensation
Service agreements
This remuneration report has been prepared by the Directors of AMA Group Limited to comply with the
Corporations Act 2001 and the Key Management Personnel (“KMP”) disclosures required under AASB 124:
Related Party Disclosures.
A Principles used to determine the nature and amount of remuneration
Key Management Personnel
The following were Key Management Personnel of the entity at any time during the reporting period and
unless otherwise indicated were Key Management Personnel for the entire period:
Directors
Chairman and Executive Director
Raymond Malone
Raymond Smith-Roberts Executive Director
Hugh Robertson
Andrew Hopkins
Brian Austin
Leath Nicholson
Non-Executive Director
Executive Director
Non-Executive Director
Non-Executive Director
Executive Management
Ashley Killick
Chief Financial Officer
Remuneration policies
The Board is responsible for reviewing the remuneration policies and practices of the Company, including the
compensation arrangements of Executive Directors, Non-Executive Directors and Executive Management.
The objective of these policies is to:
• Make AMA Group Limited and its subsidiaries an employer of choice.
• Attract and retain the highest calibre personnel.
• Encourage a culture of reward for effort and contribution.
• Set incentives that reward short and medium term performance for the Company as a whole.
• Encourage professional and personal development.
In the case of Executive Management, any recommendation for compensation review will be made by the
Chief Executive Officer to the Remuneration Committee.
There is no direct link between remuneration of Key Management Personnel and the share price movement.
Remuneration is based on key performance indicators, targets and other benchmarks as determined by the
Board or the Chief Executive Officer.
Non-Executive Directors
The Board determines the Non-Executive Directors’ remuneration based on independent market data for
comparative companies.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
8
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
The remuneration payable from time to time to Non-Executive Directors shall be in an amount not exceeding
in aggregate a maximum sum that is from time to time approved by resolution of the Company, currently
$400,000 per annum.
Non-Executive Directors’ retirement payments are limited to compulsory employer superannuation.
Executive Directors and Executive Management remuneration
The Company’s remuneration policy directs that the remuneration packages appropriately reflect the
executives’ duties and responsibilities and that remuneration levels attract and retain high calibre executives
with the skills necessary to successfully manage the Company’s operations and achieve its strategic and
financial objectives.
The Company also has a policy of rewarding extraordinary contribution to the growth of the Company with the
grant of an annual discretionary cash bonus, shares or options under the Company’s Employee Equity Plan.
Executives are also entitled to be reimbursed for their reasonable travel, accommodation and other expenses
incurred in the execution of their duties.
Remuneration packages for Executives can generally consist of three components:
• Fixed remuneration which is made up of cash salary, salary sacrifice components and superannuation
• Short term incentives which include the issue of shares or options or a cash bonus; and
• Long term incentives which include issuing options.
Fixed remuneration
Executives who possess a high level of skill and experience are offered a competitive base salary. The
performance of each executive will be reviewed annually. Following the review, the Board may in its sole
discretion increase the salary based on that executive’s performance, productivity and such other matters as it
considers relevant.
Superannuation contributions by the Company are limited to the statutory level of 9.50% (2016: 9.50%) of
wages and salaries.
Short-term incentives
The remuneration of Executives includes short-term incentive bonuses, payable as cash or equity, as part of
their employment conditions based on achieving specific measured objectives. The Board may however
approve discretionary bonuses to executives in relation to certain milestones being achieved.
Long-term incentives
The Company has adopted an Employee Equity Plan for the benefit of Directors, full-time and part-time staff
members employed by the Company. Under this Plan there are currently options on issue.
Performance based remuneration
Performance based remuneration is issued to reward individual performance in line with Group objectives.
Consequently, performance based remuneration is paid to an individual where the individual’s performance
clearly contributes to a successful outcome for the Group. This is regularly measured in respect of
performance against key performance indicators (“KPI’s”) and incentive bonuses are paid monthly, quarterly
and yearly to reflect this.
KPI’s used to measure performance include, but are not limited to:
• Completion of set milestones.
• EBIT target achievements.
• Sales target achievements.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
9
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
KPI’s are set in advance in conjunction with Group targets and in consultation with Executives and
employees. The KPI’s chosen reflect the Group’s goals for the year and endeavour to increase shareholder
wealth.
Assessment of KPI’s is undertaken by the Board and Executive Management based on management
accounts and year end audited financial results.
All Executives and employees are eligible to receive incentives whether through employment contracts or by
recommendation of the Chief Executive Officer or Board. Performance based incentive payments are based
on a set monetary value or number of shares or options. There is no fixed portion between incentive and
base remuneration.
Remuneration policy versus Group Performance
The Group’s remuneration policy is based on industry practice. Executive performance based remuneration
issued during the 2017 financial year has been measured against the KPI’s set at the start of the year by the
Board and/or Executive Management to reflect the Group’s objectives for the year. The Board believes that
the performance based remuneration issued to executives during the year reflects the contribution that they
have made to the Group’s performance over the past 12 months.
Service agreements
The Group has entered into service agreements with Key Management Personnel. Details of these
agreements are contained in Part D of this report.
B
Details of remuneration
Details of the remuneration of the Directors, the Key Management Personnel of the Group (as defined in
AASB 124: Related Party Disclosures) are set out in the tables below:
2017
Non-Executive Directors
Hugh Robertson
Brian Austin
Leath Nicholson
Executive Directors
Raymond Malone
Raymond Smith-Roberts
Andrew Hopkins
Executive Management
Ashley Killick
Long-term
benefits2
Post-
employment
benefits3
Equity
settled
benefits4
Total
Short-term benefits
Bonus1 Other
Salary
$
$
$
$
$
$
$
80,000
80,000
80,000
-
-
-
731,500 250,000
299,401 404,994
660,000 250,000
359,135 250,000
2,290,036 1,154,994
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
80,000
80,000
11,655
4,249
-
35,000
30,000
-
116,000 1,144,155
758,644
910,000
20,000
-
929
38,868
-
648,932
16,833
103,868
136,000 3,701,731
Notes:
1 - Represents short term incentives paid or accrued
2 - Represents movement in the provision for long service leave for amounts accrued and not paid
3 - Represents amounts paid for pension and superannuation benefits
4 - Represents the non-cash accounting charge to the Company’s operating result relating to prior year share issues, to compensate for
sign on bonuses, and options granted in the current year - refer to following sections for further details
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
10
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
2016
Non-Executive Directors
Hugh Robertson
Brian Austin5
Leath Nicholson5
Simon Doyle6
Executive Directors
Raymond Malone
Raymond Smith-Roberts
Andrew Hopkins8
Executive Management
Ashley Killick9
Salary
$
81,667
40,000
40,000
34,429
-
-
-
-
383,2507
-
300,000 270,416
-
495,000
167,822
-
1,542,168 270,416
Short-term benefits
Bonus1 Other
Long-term
benefits2
Post-
employment
benefits3
Equity
settled
benefits4
Total
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,271
-
-
-
-
81,667
40,000
40,000
37,700
5,845
21,349
-
35,000 2,066,000 2,490,095
410,000 1,031,765
30,000
495,000
-
-
187
15,900
206,000
389,909
27,381
84,171 2,682,000 4,606,136
Notes
1 – Represents short term incentives paid or accrued
2 - Represents movement in the provision for long service leave for amounts accrued and not paid
3 - Represents amounts paid for pension and superannuation benefits
4 - Represents the non-cash accounting charge to the Company’s operating result relating to prior year share issues, to compensate for
sign on bonuses, and options granted in that year - refer to following sections for further details
5 - Appointed 23 December 2015
6 - Retired 4 November 2015
7 – In consideration of shareholders approving the issue of options to Mr Malone at the 27 November 2015 AGM, Mr Malone agreed not
to be paid a salary in the second half of the financial year.
8 - Appointed 17 December 2015
9 - Appointed 29 September 2015
At the Annual General Meeting held on 27 November 2015, shareholders approved the issue of 10,000,000
options to Mr Raymond Malone and 2,000,000 options to Mr Raymond Smith-Roberts. On 25 April 2016, Mr
Ashley Killick was issued with 2,000,000 options to acquire ordinary shares in the Company. The Company
was required under AASB 2 Share-based Payment to expense the notional cost of these options although the
individuals received no direct cash benefit. The Company had an independent valuer assess the theoretical
value of these options and expensed the resultant amount. The theoretical value of these options has been
included in the 2016 remuneration table as remuneration relating to the options issued to:
• Mr Raymond Malone of $1.950 million;
• Mr Raymond Smith-Roberts of $0.390 million; and
• Mr Ashley Killick of $0.206 million.
In a previous financial year, Mr Raymond Malone and Mr Raymond Smith-Roberts, were issued ordinary
shares as consideration for them separately committing to an amendment and extension of their respective
employment contracts. These shares are conditional on them remaining employed by the group over the term
of the revised contracts. Under AASB 2 Share-based Payment the notional cost of these shares is being
expensed over this term.
The value of $116,000 has been included in the 2016 and 2017 remuneration tables for Mr Raymond Malone
and the value of $20,000 has been included in the 2016 and 2017 remuneration tables for Mr Raymond
Smith-Roberts.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
11
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
C Share-based compensation
Equity Holdings
Fully Paid Ordinary Quoted Shares
The number of shares in the Company held during the financial year by each director and other members of
Key Management Personnel of the Group, including their related parties, is set out below:
Opening
Balance
Balance on
Appointment
Balance on
Retirement
Other
Changes
Closing
Balance
2017
Raymond Malone
Raymond Smith-Roberts
Hugh Robertson
Andrew Hopkins
Brian Austin
Leath Nicholson
2016
Raymond Malone
Raymond Smith-Roberts
Hugh Robertson
Andrew Hopkins
Brian Austin
Leath Nicholson
Simon Doyle
80,417,619
5,081,684
230,000
19,524,167
112,000
1,673,395
107,038,865
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,0001
15,715,0002
-
-
80,417,619
5,081,684
280,000
35,239,167
112,000
1,673,395
15,765,000
122,803,865
80,417,619
8,167,746
230,000
-
-
-
4,161,470
-
-
-
19,524,1674
112,0005
1,673,3955
-
-
-
-
-
-
-
(4,161,470)6
-
(3,086,062)3
-
-
-
-
-
80,417,619
5,081,684
230,000
19,524,167
112,000
1,673,395
-
92,976,835
21,309,562
(4,161,470)
(3,086,062)
107,038,865
Notes:
1 - Shares acquired through open market trade on 21 June 2017
2 – Shares acquired through off market trade on 19 August 2016
3 - Shares sold through open market trade on 21 April 2016
4 - Appointed 17 December 2015 (Initial holdings at appointment date)
5 - Appointed 23 December 2015 (Initial holdings at appointment date)
6 - Retired 4 November 2015 (Balance at date of retirement removed from list)
Fully Paid Ordinary Unquoted Shares
On his appointment as an Executive Director, on 17 December 2015, Mr Andrew Hopkins and his related
parties, held an interest in 8,367,500 ordinary unquoted shares in the Company. On 19 August 2016, a
related entity of Mr Hopkins acquired a further interest in this class of shares in AMA Group Limited. The
current interest of Mr Hopkins is 15,102,500 Fully Paid Ordinary Unquoted shares.
Options over Fully Paid Ordinary Quoted Shares
On 14 September 2015, the Board agreed to the issue of unquoted options to Directors as part of their
remuneration package. At the General Meeting of AMA shareholders held on 27 November 2015, the
shareholders approved the issue of 10,000,000 options to Mr Raymond Malone and 2,000,000 options to Mr
Raymond Smith-Roberts. The terms of the Options include a nil consideration price with an exercise price of
$1.20 each. The Options vest 12 months from the date of Shareholder Approval (i.e. 27 November 2016).
They expire 3 years from issue date. These Options are convertible into 1 fully paid ordinary Share in the
Company. Upon exercise the Shares issued will be quoted and will rank equally with all other fully paid
ordinary Shares.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
12
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
On 25 April 2016, Mr Ashley Killick was issued with 2,000,000 options to acquire ordinary shares in the
Company. The terms of the Options include a nil consideration price with an exercise price of $1.20 each.
The Options vest 12 months from the date of issue (i.e. 25 April 2017). They expire 3 years from issue date.
These Options are convertible into 1 fully paid ordinary Share in the Company. Upon exercise the Shares
issued will be quoted and will rank equally with all other fully paid ordinary Shares.
There were no options issued to Key Management Personnel during the current financial year as part of their
compensation.
D Service agreements
The Group has entered into service agreements with Key Management Personnel. It is a standard
requirement of these contracts that no individual, during the term of their employment agreement, shall
perform work for any other person, corporation or business without the prior written consent of the Company.
Specific details of the service agreements for Key Management Personnel in place as at 30 June 2017 are:
Name:
Raymond Malone
Title:
Agreement commenced:
Agreement extended:
Term of original agreement:
Term of extension:
Other terms:
Executive Chairman and Chief Executive Officer
4 July 2010
1 July 2012
5 Years
5 Years
On 28 September 2017, the Company and Mr Malone agreed to continue
his employment on an ongoing basis with the following variations:
(i) The base remuneration was increased to $950,000 per annum; and
(ii) The arrangement may be terminated by either party after giving twelve
months written notice.
Name:
Brian Austin
Title:
Agreement commenced:
Term of agreement:
Termination period:
Termination payment:
Other terms:
Non-Executive Director
23 December 2015
Ongoing
None
Nil
None
Name:
Leath Nicholson
Title:
Agreement commenced:
Term of agreement:
Termination period:
Termination payment:
Other terms:
Non-Executive Director
23 December 2015
Ongoing
None
Nil
None
Name:
Hugh Robertson
Title:
Agreement commenced:
Term of agreement:
Termination period:
Termination payment:
Other terms:
Non-Executive Director
2 June 2015
Ongoing
None
Nil
None
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
13
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Name:
Title:
Agreement commenced:
Agreement extended:
Term of extension:
Term of original agreement:
Other terms:
Raymond Smith-Roberts
Executive Director and Chief Executive Officer of Automotive Components
and Accessories
1 September 2010
1 July 2012
5 Years
No fixed term
On 28 September 2017, the Company and Mr Smith-Roberts agreed to
continue his employment on an ongoing basis with the following variations:
(i) The remuneration package remained the same subject to the short
term incentive entitlement being subject to adjustment if additional
responsibilities were added in the future; and
(ii) The arrangement may be terminated by either party after giving twelve
months written notice.
Name:
Andrew Hopkins
Title:
Agreement commenced:
Term of agreement:
Termination period:
Termination payment:
Other terms:
Executive Director and Chief Executive Officer of Vehicle Panel Repair
16 December 2015
5 Years
None
None
Mr Hopkins is employed as the Key Person under a consultancy services
agreement with an entity that is a related party to him.
On 28 September 2017, the Company and the related party agreed to
increase the base consultancy fee to $900,000 plus GST per annum.
Name:
Ashley Killick
Title:
Agreement commenced:
Term of agreement:
Termination period:
Termination payment:
Other terms:
Chief Financial Officer
27 February 2017
Ongoing
6 Months’ notice period
Nil
None
Generally, the Company or the individual may terminate employment at any time by giving the other party
appropriate contractual notice in writing.
If either the Company or the individual gives notice of termination, the Company may, at its discretion, choose
to terminate the individual’s employment immediately or at any time during the notice period and pay the
individual an amount equal to the salary due for the residual period of notice at the time of termination.
The employment of each individual may be terminated immediately without notice or payment in lieu in the
event of any serious or persistent breach of the agreement, any serious misconduct or wilful neglect of duties,
in the event of bankruptcy or any arrangement or compensation being made with creditors, on conviction of a
criminal offence, permanent incapacity of the individual or a consistent failure to carry out duties in a manner
satisfactory to the Company.
SHARES UNDER OPTION
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date options granted
Expiry Date
Issue Price of Shares
Number under Option
27 Nov 2015
25 Apr 2016
27 Nov 2018
25 Apr 2019
1.20
1.20
12,000,000
6,875,000
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
14
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
No option holder has any right under the option to participate in any other share issue of the Company or any
other entity.
Included in these options were options granted as remuneration to Key Management Personnel. Details of
options granted to Key Management Personnel are disclosed in the audited remuneration report above.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
No shares were issued on the exercise of options in the financial year ended 30 June 2017 or 30 June 2016.
INSURANCE OF OFFICERS
During the financial year, the Company paid a premium in respect of a contract to insure the Directors of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of coverage and the amount of the premium.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party
for the purpose of taking responsibility, on behalf of the Company, for all or part of those proceedings.
ENVIRONMENTAL REGULATION
Management continues to work with local regulatory authorities to achieve, where practical, best practice
environmental management so as to minimise risk to the environment, reduce waste and ensure compliance
with regulatory requirements. The Group had no adverse environmental issues during the year.
NON-AUDIT SERVICES
No non-audit services were provided by ShineWing Australia.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration, as required under Section 307C of the Corporations Act, in
relation to the review for the Year ended 30 June 2017, is provided with this report.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments
Commission, relating to the “rounding off” of amounts in the Directors’ report and financial report. Amounts in
the Directors’ report and the Year financial report have been rounded off in accordance with that Class Order
to the nearest thousand dollars, unless otherwise indicated.
This report is made in accordance with a resolution of the Board of Directors.
Director
28 September 2017
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
15
Auditor’s Independence Declaration under Section 307C of the Corporations Act
2001 to the directors of AMA Group Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2017 there have been:
(i)
No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit, and
(ii) No contraventions of any applicable code of professional conduct in relation to the audit.
ShineWing Australia
Chartered Accountants
Nick Michael
Partner
Melbourne, 28 September 2017
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing
International Limited – members in principal cities throughout the world.
16
AMA GROUP LIMITED
(ACN 113 883 560)
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED INCOME STATEMENT
Note 30 Jun 2017 30 Jun 2016
Revenue from continuing operations
Raw materials and consumables used
Employment benefits expense
Occupancy expense
Professional services expense
Travel and motor vehicle expense
Advertising and marketing expense
Information technology expense
Communication expense
Insurance expense
Other expense
Earnings before interest, tax, depreciation, amortisation and
impairment (EBITDA)
Depreciation and amortisation expense
Impairment expense
Earnings before interest and tax (EBIT)
Finance costs
Profit from continuing operations before fair value adjustments
Fair value adjustments to financial liabilities
Fair value adjustments to contingent consideration
Profit (loss) before income tax from continuing operations
Profit (loss) before tax from discontinued operations
Profit (loss) before income tax
Income tax benefit / (expense)
Net profit (loss)
Profit (loss) attributable to
Members of AMA Group Limited
Non-controlling interests
Earnings per Share
From continuing operations
Basic earnings per share
Diluted earnings per share
From continuing and discontinuing operations
Basic earnings per share
Diluted earnings per share
4
5
5
5
5
5
5
30
6
22
32
32
32
32
$’000
382,165
(164,200)
(140,851)
(25,480)
(3,999)
(2,946)
(1,787)
(1,559)
(896)
(653)
(2,589)
37,205
(10,612)
(300)
26,293
(170)
26,123
(1,218)
500
25,405
-
25,405
(7,994)
17,411
17,210
201
17,411
Restated
$’000
264,284
(111,514)
(97,985)
(17,810)
(4,010)
(2,165)
(1,625)
(818)
(687)
(757)
(2,241)
24,672
(7,144)
(2,954)
14,574
(207)
14,367
(920)
-
13,447
(18)
13,429
(6,242)
7,187
6,990
197
7,187
Cents
Cents
3.32
3.20
3.32
3.20
1.53
1.50
1.53
1.49
The above consolidated income statement is to be read in conjunction with the attached notes. Certain
amounts shown here do not correspond to the 2016 financial statements and reflect adjustments made, refer
to Note 1.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
17
AMA GROUP LIMITED
(ACN 113 883 560)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net profit (loss)
Other Comprehensive Income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income, net of tax
Note 30 Jun 2017 30 Jun 2016
$’000
Restated
$’000
17,411
7,187
(6)
(6)
11
11
Total comprehensive income, net of tax
17,405
7,198
Total comprehensive income attributable to:
Members of AMA Group Limited
Non-controlling interests
22
17,204
201
7,001
197
17,405
7,198
The above consolidated statement of comprehensive income is to be read in conjunction with the attached
notes. Certain amounts shown here do not correspond to the 2016 financial statements and reflect
adjustments made, refer to Note 1.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
18
AMA GROUP LIMITED
(ACN 113 883 560)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
30 Jun 2017 30 Jun 2016
$’000
Restated
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax assets
Investments
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Other non-current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings (deficit)
Total Group interest
Non – controlling interest
Total equity
7
8
9
10
11
12
13
14
10
15
16
6
17
18
16
17
18
19
20
21
22
14,723
34,965
19,213
3,701
72,602
45,944
159,103
7,205
3,932
3,610
219,794
292,396
49,662
13,597
458
11,590
13,933
89,240
100
6,469
30,223
3,509
40,301
129,541
162,855
181,691
3,054
(22,122)
162,623
232
162,855
22,888
22,781
15,402
1,690
62,761
34,963
149,204
5,227
-
3,639
193,033
255,794
41,179
601
1,828
9,358
6,515
59,481
308
4,375
42,458
2,622
49,763
109,244
146,550
172,149
3,059
(28,855)
146,353
197
146,550
The above consolidated statement of financial position is to be read in conjunction with the attached notes.
Certain amounts shown here do not correspond to the 2016 financial statements and reflect adjustments
made, refer to Note 1.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
19
AMA GROUP LIMITED
(ACN 113 883 560)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Note
Equity Reserves
$’000
$’000
Retained
Earnings
$’000
Total
$’000
Non
Control
Interest
$’000
Total
$’000
At 1 July 2015
74,904
-
(26,534)
48,370
-
48,370
Profit for the period (Restated)
Other comprehensive income
Total comprehensive income
for the period
Transactions with owners in
their capacity as owners:
Non-controlling interest on
acquisition of subsidiary
Shares issued, net of costs
Employee equity plan
Dividends recognised
-
-
-
-
11
6,990
-
6,990
11
197
-
7,187
11
11
6,990
7,001
197
7,198
-
97,245
-
-
-
-
3,048
-
-
-
-
(9,311)
-
97,245
3,048
(9,311)
96
-
-
(96)
96
97,245
3,048
(9,407)
23
97,245
3,048
(9,311)
90,982
-
90,982
As at 30 June 2016
172,149
3,059 (28,855)
146,353
197
146,550
At 1 July 2016
172,149
3,059 (28,855)
146,353
197
146,550
Profit for the period
Other comprehensive income
Total comprehensive income
for the period
Transactions with owners in
their capacity as owners:
Non-controlling interest on
acquisition of subsidiary
Shares issued, net of costs
Employee equity plan
Dividends recognised
23
-
-
-
-
9,149
393
-
9,542
-
(5)
17,210
-
17,210
(5)
201
-
17,411
(5)
(5)
17,210
17,205
201
17,406
-
-
-
-
-
-
-
-
(10,477)
-
9,149
393
(10,477)
30
-
-
(196)
30
9,149
393
(10,673)
(10,477)
(935)
(166)
(1,101)
As at 30 June 2017
181,691
3,054 (22,122)
162,623
232
162,855
The above consolidated statement of changes in equity is to be read in conjunction with the attached notes.
Certain amounts shown here do not correspond to the 2016 financial statements and reflect adjustments
made, refer to Note 1.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
20
AMA GROUP LIMITED
(ACN 113 883 560)
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CASHFLOWS
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income taxes paid
Note
30 Jun 2017
$’000
30 Jun 2016
$’000
362,877
(340,094)
98
(170)
(9,724)
262,973
(219,119)
361
(207)
(7,247)
Net cash flows used in operating activities
31
12,987
36,761
Cash flows from investing activities
Proceeds from sale of property plant and equipment
Proceeds from disposal of business
Payments for purchases of property plant and equipment
Payments for intangible assets
Payments for businesses acquired, net of cash acquired
Loans and other investments
52
-
(11,986)
-
(6,851)
(3,902)
25
841
(8,904)
(4)
(31,185)
1,020
Net cash flows (used in) / provided by investing activities
(22,687)
(38,207)
Cash flows from financing activities
Equity raised
Proceeds from borrowings
Repayment of borrowings
Dividends paid to AMA shareholders
Dividends paid to non-controlling shareholders
-
13,000
(782)
(10,477)
(196)
43,526
2,810
(14,803)
(9,311)
(96)
23
Net cash flows (used in) / provided by financing activities
1,545
22,126
Net (decrease) / increase in cash and cash equivalents
(8,155)
20,680
Cash and cash equivalents, at beginning of year
22,888
2,197
Effects of exchange changes on the balances held in foreign
currencies
(10)
11
Cash and cash equivalents, at the end of year
7
14,723
22,888
The above consolidated statement of cash flows is to be read in conjunction with the attached notes.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
21
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Index of Notes to the Financial Statements
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Note 28
Note 29
Note 30
Note 31
Note 32
Note 33
Note 34
Note 35
Significant Accounting Policies ..................................................................................................... 23
Critical Accounting Estimates and Judgements ............................................................................ 37
Segment Information ..................................................................................................................... 38
Revenue ........................................................................................................................................ 40
Expenses....................................................................................................................................... 40
Income Tax Expense .................................................................................................................... 41
Cash and Cash Equivalents .......................................................................................................... 42
Trade and Other Receivables ....................................................................................................... 42
Inventories ..................................................................................................................................... 43
Other Assets ................................................................................................................................. 43
Property, Plant and Equipment ..................................................................................................... 44
Intangible Assets ........................................................................................................................... 45
Deferred Tax Asset ....................................................................................................................... 47
Investments ................................................................................................................................... 47
Trade and Other Payables ............................................................................................................ 48
Borrowings .................................................................................................................................... 48
Provisions ...................................................................................................................................... 49
Other Liabilities ............................................................................................................................. 50
Deferred Tax Liability .................................................................................................................... 51
Contributed Equity ......................................................................................................................... 51
Reserves ....................................................................................................................................... 53
Non-Controlling Interests .............................................................................................................. 53
Dividends....................................................................................................................................... 53
Financial Instruments .................................................................................................................... 54
Share-Based Payments ................................................................................................................ 59
Related Party Transactions ........................................................................................................... 59
Contingent Liabilities ..................................................................................................................... 61
Commitments for Expenditure....................................................................................................... 61
Investments in Controlled Entities ................................................................................................. 63
Discontinued Operations ............................................................................................................... 66
Reconciliation of Profit after Tax to Operating Cash Flows .......................................................... 66
Earnings per Share ....................................................................................................................... 67
Parent Information ......................................................................................................................... 67
Deed of Cross Guarantee Disclosures ......................................................................................... 68
Events Occurring after the Reporting Period ................................................................................ 71
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
22
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 1
Significant Accounting Policies
Basis of preparation
Basis of accounting
This general purpose financial report, for the year ended 30 June 2017, has been prepared in accordance
with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001, for AMA
Group Limited (“AMA” or the “Company”) and its controlled entities as a consolidated group (the “Group”).
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the financial statements comply with
International Financial Reporting Standards (IFRSs).
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all controlled entities in the
Group as at 30 June 2017 and the results of all controlled entities for the year then ended. A list of the
controlled entities is provided in Note 29 to these financial statements.
Controlled entities are all those entities over which the Group has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one-half of the voting rights.
Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between controlled entities in the
Group are eliminated in full.
Investments in subsidiaries are accounted for at cost less impairment, in the separate financial statements of
the Company.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified where
applicable by the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value
through profit or loss and certain classes of property, plant and equipment.
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
When the Group applies an accounting policy retrospectively, makes a retrospective restatement or
reclassifies items in its financial statements, a statement of financial position as at the beginning of the earliest
comparative period will be disclosed.
Final Acquisition Accounting
Accounting for Customer Contracts acquired as part of the Gemini acquisition was finalised in the current
reporting period. As a result, amortisation charges in respect of these contracts have been calculated and
comparative period balances re-stated to reflect charges which relate to those prior reporting periods.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
23
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Consolidated
30 June 2016
Adjust
$’000
Restated
$’000
Reported
$’000
Statement of profit or loss and other comprehensive income
Revenue
Expenses
264,284
(250,528)
-
(327)
264,284
(250,855)
Profit before income tax expense
13,756
(327)
13,429
Income tax expense
(6,340)
98
(6,242)
Profit after income tax expense
7,416
(229)
7,187
Non-controlling interests, net of tax
(197)
-
(197)
Profit after income tax expense attributable to the owners of AMA
7,219
(229)
6,990
Other comprehensive income, net of tax
11
-
11
Total comprehensive income attributable to the owners of AMA
7,230
(229)
7,001
Earnings per share from continuing operations
Cents
Cents
Cents
Basic
Diluted
1.58
1.55
(0.05)
(0.05)
1.53
1.50
Statement of financial position
$’000
$’000
$’000
Intangible assets
Other assets
Deferred tax liabilities
Other liabilities
Retained earnings
Other equity
Rounding amounts
149,531
106,590
(327)
-
149,204
106,590
256,121
(327)
255,794
2,720
106,622
109,342
146,779
(28,626)
175,405
(98)
-
2,622
106,622
(98)
(229)
(229)
-
109,244
146,550
(28,855)
175,405
146,779
(229)
146,550
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports)
Instrument 2016/191 and in accordance with that Instrument, amounts in the financial statements have been
rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
24
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Critical Accounting Estimates
The preparation of these financial statements in conformity with Australian Accounting Standards requires the
use of certain critical accounting estimates. It also requires Management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 2 to these financial statements.
Summary of principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when
fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of
comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the
extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in
the statement of comprehensive income.
Revenue recognition
Sales revenue represents revenue earned from the sale of the Group’s products and services, net of returns,
trade allowances and duties and taxes paid. All revenues are stated net of goods and services taxes.
In the majority of cases the simple process of delivery of goods or service to a customer, where the risks and
rewards of ownership pass to the customer, give rise to the recognition of income.
The revenue recognition policy follows AASB: 118 Revenue and revenue is recognised when all of the
following criteria are met:
•
•
•
•
•
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods.
the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold.
the amount of revenue can be measured reliably.
it is probable that the economic benefits associated with the transaction will flow to the Group.
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest revenue is recognised using the effective interest method. It includes amortisation of any discount or
premium.
Other revenue is recognised when it is received or when the right to receive payment is established. Grants
and subsidies are recognised as income over the period to which they relate.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
25
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Income tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred
tax expense/(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period.
Current tax liabilities/(assets) are therefore measured at the amounts expected to be paid to/(recovered from)
the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense/(income) is charged or credited directly to equity instead of the
profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also
result where amounts have been fully expensed but future tax deductions are available. No deferred income
tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of
the reporting period. Their measurement also reflects the manner in which Management expects to recover
or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset
can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
Tax consolidation
AMA Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under tax consolidation legislation. Each entity in the Group recognises its own current and deferred tax
assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation.
Current tax liabilities /(assets) and deferred tax assets arising from unused tax losses and tax credits in the
subsidiaries are immediately transferred to the head entity. The Group notified the Australian Taxation Office
that it had formed an income tax consolidated group to apply from 1 September 2006.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
26
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial
position.
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value.
Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead
expenditure. Costs of purchased inventory are determined after deducting rebates and discounts received or
receivable.
Investments and other financial assets
Investments and other financial assets are stated at the lower of their carrying amount and fair value less
costs to sell. The fair values of quoted investments are based on current bid prices. For unlisted investments,
the Group establishes fair value by using valuation techniques. These include the use of recent arms-length
transactions, reference to other instruments that are substantially the same, discounted cash flow analysis,
and option pricing models.
Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less any accumulated depreciation.
The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the
recoverable amount from these assets.
Depreciation is calculated on either a straight line or diminishing value basis (class or asset must have either
a straight line or diminishing value not both) as considered appropriate to write off the net cost or re-valued
amount of each item of plant and equipment over its expected useful life to the Group. The expected useful
lives are as follows:-
Leasehold improvements
The cost of improvements to or on leasehold properties is amortised over the unexpired life of the lease or the
estimated useful life of the improvement to the Group, whichever is the shorter. The diminishing value
method of depreciation was used.
Plant and equipment
The expected useful life of purchased plant and equipment is two to fifteen years. Where items of plant and
equipment have separately identifiable components which are subject to regular replacement, those
components are assigned useful lives distinct from the item of plant and equipment to which they now relate.
The diminishing value method of depreciation was used.
Furniture and equipment
The expected useful life of furniture and equipment is two to ten years. The diminishing value method of
depreciation was used.
Motor vehicles
The expected useful life of motor vehicles is four to eight years. The diminishing value method of depreciation
was used.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
27
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Leases
A distinction is made between finance leases which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating
leases under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the present value of minimum
lease payments. Lease payments are allocated between the principal component of the lease liability and
the finance costs.
The leased asset is depreciated on a straight line basis over the term of the lease, or where it is likely that the
Group will obtain ownership of the asset, the life of the asset. Leased assets held at the reporting date are
being amortised over periods ranging from three to five years.
Other operating lease payments are charged to the statement of comprehensive income in the period in which
they are incurred, as this represents the pattern of benefits derived from the leased assets.
Intangible assets
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the
sum of:
•
the consideration transferred;
• any non-controlling interest; and
•
the acquisition date fair value of any previously held equity interest, over the acquisition date fair value of
net identifiable assets acquired.
The value of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100%
interest will depend on the method adopted in measuring the aforementioned non-controlling interest. The
Group can elect to initially measure the non-controlling interest in the acquiree either at fair value (full goodwill
method) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets
(proportionate interest method). The Group determines which method to adopt for each acquisition based on
the entitlement of non-controlling interest to a proportionate share of the subsidiary net assets.
Under the full goodwill method, the fair values of the non-controlling interests are determined using valuation
techniques which make the maximum use of market information where available. Under this method, goodwill
attributable to the non-controlling interests is recognised in the consolidated financial statements.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates
is included in investments in associates.
Goodwill is tested for impairment annually and is allocated to the Group’s cash generating units or groups of
cash generating units, which represent the lowest level at which goodwill is monitored but where such level is
not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity sold.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect
the carrying values of goodwill.
Research and Development
Expenditure on research activities, undertaken with the prospect of obtaining new or scientific or technical
knowledge and understanding, is recognised in the Statement of Comprehensive Income as an expense
when it is incurred.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
28
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Expenditure on development activities, being the application of research findings or other knowledge to a plan
or design for the production of new or substantially improved products or services before the start of
commercial product or use, is capitalised only when technical feasibility studies identify that the product or
service will deliver future economic benefits and these benefits can be measured reliably. Expenditure on
development activities have a finite life and are amortised on a systematic basis matched to the future
economic benefits over the useful economic life of the product or service.
Patents and trademarks
Patents and trademarks are recognised at the cost of acquisition. Patents and trademarks have a finite life
and are carried at cost less accumulated amortisation and any impairment losses. Patents and trademarks
are amortised over their estimated useful life of 5 years.
Customer contracts
Customer contracts are recognised at the fair value at acquisition. Customer contracts have a finite life and
are carried at cost less accumulated amortisation and any impairment losses. Customer contracts are
amortised over the lesser of the remainder of the contract or their estimated useful life relevant to each
specific contract.
Impairment of non-financial assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of information. If
such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount
of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s
carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. The amounts are unsecured and are usually paid within 30-45 days of
recognition. Other payables not due within a year are measured less cumulative amortisation calculated
using the effective interest method.
Onerous leases
Represents contracts entered into in which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it. The excess of the lease obligations
over the expected economic benefits is expensed in the period that the contract becomes onerous. The
liability represents the present value of the minimum lease payments and is held on the statement of financial
position until it is extinguished.
Finance costs
Finance costs are recognised as expenses in the period in which they are incurred. Finance costs include
interest on:
• Short term and long term borrowings
• Finance leases
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
29
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled
within 12 months of the end of the reporting period are recognised in other payables and provisions in respect
of employees' services up to the end of the reporting period and are measured at the amounts expected to be
paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in provisions and is measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date
at present value. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service.
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured
by use of an option pricing model. The expected value used in the model is adjusted, based on Management’s
best estimate, for the effects of non-transferability, exercise restrictions, other risk factors and behavioural
considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.
For cash-settled share-based payments, a liability equal to the portion of the goods or services received is
recognised at the current fair value determined at the end of the reporting period.
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or
options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase
consideration.
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the Company, on or before the end of the financial year but not distributed at the end of the
reporting period.
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in
the consolidation of its assets and liabilities.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
30
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
A business combination is accounted for by applying the acquisition method, unless it is a combination
involving entities or businesses under common control. The acquisition method requires that for each
business combination one of the combining entities must be identified as the acquirer (i.e. the Company). The
business combination will be accounted for as at the acquisition date, which is the date that control over the
acquiree is obtained by the Company. At this date, the Company recognises, in the consolidated accounts,
and subject to certain limited exceptions, the acquisition date fair value of the identifiable assets acquired and
liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present
obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method
adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be
recognised in the acquiree where less than 100% ownership interest is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall form the cost of the investment in the separate
financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities
incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive
income. Where changes in the value of such equity holdings had previously been recognised in other
comprehensive income, such amounts are recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent
consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either
a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of
consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair
value through the statement of comprehensive income unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the Australian Taxation Office (ATO). In this case it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
31
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the ATO is included in other receivables or other payables in the
Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the ATO, are presented as operating cash flows.
Financial instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits
itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate
method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability
settled, between knowledgeable, willing parties. Quoted prices in an active market are used, where available,
to determine fair value. In other circumstances, valuation techniques are adopted.
Amortised cost is calculated as:
the amount at which the financial asset or financial liability is measured at initial recognition;
less principal repayments;
•
•
• plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised
and the maturity amount calculated using the effective interest method; and
less any reduction for impairment.
•
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or
financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying
value with a consequential recognition of an income or expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being
subject to the requirements of accounting standards specifically applicable to financial instruments.
i. Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the
purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as
such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets
is managed on a fair value basis in accordance with a documented risk management or investment strategy.
Such assets are subsequently measured at fair value with changes in carrying value being included in profit or
loss.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
32
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are
included in current assets, except for those which are not expected to mature within 12 months after reporting
date. (All other loans and receivables are classified as non-current assets.)
All trade receivables are recognised at the amounts receivable as they are due for settlement by no more than
90 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for impairment of receivables is raised when some doubt as to
collection exists.
iii. Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or
determinable payments, and it is the Group’s intention to hold these investments to maturity. They are
subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets,
except for those that are expected to mature within 12 months after reporting date, which are classified as
current assets.
If during the period the Group sold or reclassified more than an insignificant amount of the held-to-maturity
investments before maturity, the entire held-to-maturity investments category would be tainted and
reclassified as available-for-sale.
iv. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be
classified into other categories of financial assets due to their nature, or they are designated as such by
Management. They comprise investments in the equity of other entities where there is neither a fixed maturity
nor fixed or determinable payments.
Available-for-sale financial assets are included in non-current assets, except for those that are expected to be
disposed of within 12 months after reporting date, which are classified as current assets.
v. Financial liabilities
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of
the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30-45 days
of recognition. Other payables not due within a year are measured less cumulative amortisation calculated
using the effective interest method.
Loans are carried at their principal amounts which represent the present value of future cash flows associated
with servicing debt. Interest is accrued over the period it becomes due and unpaid interest is recorded as part
of current payables.
Interest free loans are recorded at their fair value. Discounted cash flow models are used to determine the
fair values of the loans.
All non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised
cost
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value for all unlisted financial instruments, including recent arm’s length
transactions, reference to similar instruments and option pricing models.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
33
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in
the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are
recognised in the statement of comprehensive income.
Financial guarantees
Where material, financial guarantees issued, which require the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are
recognised as a financial liability at fair value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount
initially recognised less, when appropriate, cumulative amortisation in accordance with AASB: 118 Revenue.
Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB: 118 Revenue.
The fair value of financial guarantee contracts has been assessed using a probability weighted discounted
cash flow approach. The probability has been based on:
•
•
•
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting;
and
the maximum loss exposed if the guaranteed party were to default.
De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the
risks and benefits associated with the asset. Financial liabilities are derecognised where the related
obligations are discharged, cancelled or expired. The difference between the carrying value of the financial
liability extinguished or transferred to another party and the fair value of consideration paid, including the
transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
Non-current assets held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use and a sale is considered
highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and
investment property that are carried at fair value and contractual rights under insurance contracts, which are
specially exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to
fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell
of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A
gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is
recognised at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while
they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal
group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are
presented separately from the other assets in the statement of financial position. The liabilities of a disposal
group classified as held for sale are presented separately from other liabilities in the statement of financial
position.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
34
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
A discontinued operation is a component of the entity that has been disposed of or is classified as held for
sale and that represents a separate major line of business or geographical area of operations, is part of a
single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately in the
Statement of Comprehensive Income.
New accounting standards for application in future periods
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by
the Australian Accounting Standards Board (the “AASB”) that are relevant to their operations and effective for
annual reporting periods beginning on 1 July 2016.
The adoption of all new and revised Standards and Interpretations did not affect the amounts reported for the
current or prior periods. In addition, the new and revised Accounting Standards and Interpretations have not
had a material impact and not resulted in change to the Group’s presentation of or disclosure in these
financial statements.
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the
Group, together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
AASB 9: Financial Instruments and associated amending standards (applicable for annual reporting periods
commencing on or after 1 January 2018)
AASB 9 will be applicable retrospectively and includes revised requirements for the classification and
measurement of financial instruments, revised recognition and de-recognition requirements for financial
instruments and simplified requirements for hedge accounting. The key changes made to the Standard that
may affect the Group on initial application include certain simplifications to the classification of financial
assets.
Although the Directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial
instruments, including hedging activity, based on the preliminary assessment performed to date, the effects
are not expected to be material.
AASB 15: Revenue from Contracts with Customers (applicable for annual reporting periods commencing on
or after 1 January 2018)
This standard, when effective, will replace the current accounting requirements applicable to revenue with a
single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue
model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between
entities in the same line of business to facilitate sales to customers and potential customers. The core
principle of AASB 15 is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for the goods or services. AASB 15 also requires enhanced disclosures regarding revenues. This
standard will require retrospective restatement and is available for early adoption.
Although the Directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial
statements, based on the preliminary assessment performed to date, the effects are not expected to be
material.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
35
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
AASB 16: Leases (applicable for annual reporting periods commencing on or after 1 January 2019)
AASB 16 introduces a comprehensive model for the identification of lease arrangements and accounting
treatments for both lessors and lessees. AASB 16 will supersede the current lease guidance including AASB
117 Leases and the related interpretations when it becomes effective. AASB 16 distinguishes leases and
service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of
operating leases (off balance sheet) and finance leases (on balance sheet) are removed for lessee
accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be
recognised for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low
value assets.
The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain
exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the
lease liability. The lease liability is initially measured at the present value of the lease payments that are not
paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the
impact of lease modifications, amongst others.
The classification of cash flows will also be affected as operating lease payments under AASB 117 are
presented as operating cash flows; whereas under the AASB 16 model, the lease payments will be split into a
principal and an interest portion which will be presented as financing and operating cash flows respectively.
Furthermore, extensive disclosures are required by AASB 16.
The Group had as at 30 June 2017, non-cancellable operating lease commitments of $54.57 million (30 June
2016: $41.3 million). AASB 117 does not require the recognition of any right-of-use asset or liability for future
payments for these leases; instead, certain information is disclosed as operating lease commitments in Note
28. A preliminary assessment indicates that these arrangements will meet the definition of a lease under
AASB 16, and hence the Group will recognise a right-of-use asset and a corresponding liability in respect of
all these leases unless they qualify for low value or short-term leases upon the application of AASB 16. The
new requirement to recognise a right-of-use asset and a related lease liability is expected to have a significant
impact on the amounts recognised in the Group’s consolidated financial statements. It is not practicable to
provide a reasonable estimate of the financial effect until a full assessment of the potential impact is
completed by the Group.
AASB 2016-1: Amendments to Australian Accounting Standards – Recognition of Deferred
Tax Assets for Unrealised Losses
This standard is applicable from annual reporting periods beginning on or after 1 January 2017 with earlier
application being permitted. This standard amends AASB 112 Income Taxes to clarify how to account for
deferred tax assets related to debt instruments measured at fair value, particularly where changes in the
market interest rate decrease the fair value of a debt instrument below cost.
This Standard is not expected to significantly impact the Group’s financial statements.
AASB 2016-2: Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
107
This standard is applicable from annual reporting periods beginning on or after 1 January 2017 with earlier
application being permitted. This standard amends AASB 107 Statement of Cash Flows to require entities
preparing financial statements in accordance with Tier 1 reporting requirements to provide disclosures that
enable users of financial statements to evaluate changes in liabilities arising from financing activities, including
both changes arising from cash flows and non-cash changes.
This Standard is not expected to significantly impact the Group’s financial statements.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
36
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
AASB 2016-5: Amendments to Australian Accounting Standards - Classification and Measurement of Share
based Payment Transactions
This Standard is applicable from 1 January 2018 with earlier application being permitted. The Standard
amends AASB 2 Share-based Payment to address:
a) The accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled
share-based payments;
b) The classification of share-based payment transactions with a net settlement feature for withholding tax
obligations; and
c) The accounting for a modification to the terms and conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-settled.
This Standard is not expected to significantly impact the Group’s financial statements.
Note 2
Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the Group and that are believed to
be reasonable under the circumstances.
Critical accounting estimates and assumptions
When preparing the financial statements, Management undertakes various judgements, estimates and
assumptions concerning the recognition and measurement of assets, liabilities, income and expenses. The
resulting accounting estimates will, by definition, seldom equate with the related actual results. The following
are significant judgements, estimates and assumptions made in applying the accounting policies of the Group
that have the most significant effect on the financial statements.
Impairment of Goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating
units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to
calculate present value. Refer to Note 12 for details of key assumptions used to calculate the recoverable
amount of goodwill.
Fair value of financial instruments
Management uses valuation techniques to determine the fair value of financial instruments (where active
market quotes are not available). This involves developing estimates and assumptions consistent with how
market participants would price the instrument. Management bases its assumptions on observable data as
far as possible but this is not always available. In that case, Management uses the best information available.
The carrying value of the deferred vendor consideration, payable as a result of the acquisition of businesses
and entities, incorporate a number of assumptions. In determining this value, Management have applied a
discount factor and a probability factor on the earn-out components to determine the fair value. The interest
expense and the fair value adjustment have been taken to the Statement of Comprehensive Income.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
37
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 3
Segment Information
The Group has identified its operating segments based on the internal reports that are reviewed and used by
the Chief Executive Officer (chief operating decision maker) in assessing performance and determining the
allocation of resources.
The Group is managed primarily on the basis of product category and service offerings since the
diversifications of the Group’s operations inherently have notably different risk profiles and performance
assessment criteria. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are
considered to have similar economic characteristics with respect to the products sold and/or services provided
by the segment.
The Group only operates within one geographical area, Australasia, and has historically been segmented by
the products it provides, being:
• Vehicle Panel Repair - Motor vehicle panel repairs.
• Vehicle Protection Products - Manufacture & distribution of motor vehicle protective bars.
• Automotive Electrical & Cable - Distribution of motor vehicle electrical & cable accessories.
• Automotive Component Remanufacturing - Motor vehicle component remanufacturing & repairs.
Unless stated otherwise, all amounts reported to the Chief Executive Officer as the chief decision maker with
respect to operating segments are determined in accordance with the Group’s accounting policies. The gross
margin of the panel repair segment, as presented to the Chief Executive Officer, does not include direct labour
costs or an allocation of overheads.
All inter-segment transactions are eliminated on consolidation for the Group’s financial statements.
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the
majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable
on the basis of their nature and physical location.
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a
whole and are not allocated. Segment liabilities include trade and other payables and certain direct
borrowings.
The following items of revenue, expense, assets and liabilities are not allocated to operating segments, other
than for direct labour for panel segment, as they are not considered part of the core operations of any
segment:
income tax expense;
• non-recurring items of revenue or expense;
•
• deferred tax assets and liabilities;
• other financial liabilities;
•
•
• dividend payments;
•
intangible assets; and
• discontinued operations.
fixed manufacturing & service costs and other cost of sales adjustments;
finance costs;
The Group has identified its operating segments based on the internal reports that are reviewed and used by
the Board and Executive Management in assessing performance and determining the allocation of resources.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
38
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Year to 30 June 2017
Revenue
External sales
Other income
Total sales & other income
Unallocated revenue
Total revenue
Result
Segment gross margin
Impairment expense
Unallocated expenses
Fair value adjustments
Profit from continuing operations before
income tax
Net assets
Segment assets
Unallocated assets
Total Assets
Segment liabilities
Unallocated liabilities
Total Liabilities
Year to 30 June 2016
Revenue
External sales
Other income
Total sales & other income
Unallocated revenue
Total revenue
Result
Segment gross margin
Impairment expense
Unallocated expenses
Fair value adjustments
Profit from continuing operations before
income tax
Net assets
Segment assets
Unallocated assets
Segment liabilities
Unallocated liabilities
Panel
$’000
Protection
Electrical
Component
$’000
$’000
$’000
Total
$’000
323,769
742
324,511
25,685
791
26,476
14,864
77
14,941
10,340
224
10,564
374,658
1,834
376,492
5,673
382,165
185,459
12,622
4,514
4,067
206,662
107,826
55,468
12,098
9,789
(62,681)
(3,231)
(2,090)
(1,752)
211,549
571
212,120
27,591
977
28,568
123,730
12,579
15,030
208
15,238
4,393
(2,954)
7,732
282
8,014
3,203
197,437
21,024
11,553
3,577
(50,719)
(3,765)
(2,464)
(1,255)
-
(180,539)
(718)
25,405
185,181
107,215
292,396
(69,754)
(59,787)
(129,541)
261,902
2,038
263,940
344
264,284
143,905
(2,954)
(126,584)
(920)
13,447
233,591
22,203
255,794
(58,203)
(51,041)
(109,244)
Gross Margin for the Vehicle Panel Repair segment does not include direct labour or an allocation for overheads. These costs are
allocated to Unallocated.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
39
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 4
Revenue
From continuing operations
Sales revenue
Sale of goods
Service and hire
Other revenue
Interest received
Exchange rate gains
Other revenue
30 Jun 2017 30 Jun 2016
$’000
$’000
50,839
323,819
374,658
50,352
211,550
261,902
98
-
7,409
361
102
1,919
7,507
2,382
Total revenue from continuing operations
382,165
264,284
Note 5
Expenses
30 Jun 2017 30 Jun 2016
$’000
$’000
Profit before income tax includes the following specific expenses:
Rental expense relating to operating leases (minimum lease payments)
Defined contribution superannuation expense
Executive equity plan expense
Consulting and advisory expense
Bad and doubtful debts expense / (recovery)
Inventory obsolescence expense
Loss / (profit) on disposal of assets
Depreciation and amortization expense
- Depreciation of property, plant & equipment
- Amortisation of intangible assets
Impairment expense
- Goodwill
- Other
Interest and finance charges paid / payable
Fees paid or payable to Shine Wing Australia (the Company’s Auditors) or its
related practices:
- Audit or review of the financial reports
- Other services
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
16,165
10,197
403
3,684
(32)
12
(15)
7,168
3,444
-
300
170
316
-
316
12,509
7,386
3,644
3,711
23
50
62
4,515
2,629
2,000
954
207
298
-
298
40
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 6
Income Tax Expense
Income tax expense
Current tax payable
Businesses acquired during the year
Current year tax instalments paid during the year
Deferred tax
Other
(Over)/Under provision in respect of prior year
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Reconciliation of prima facie tax payable to income tax expense:
Profit before income tax (expense)/benefit
Tax at the Australian tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Employee equity plan
Impairment
Fair value adjustments
Non-deductible professional services fees
Other non-deductible items
(Over)/Under provision in respect of prior year
Income tax expense
Income tax expense attributable to:
- Continuing operations
- Discontinued operations
Income tax expense
Income tax expense attributable to:
- Members of the Company
- Non-controlling interests
Income tax expense
Notes 30 Jun 2017 30 Jun 2016
$'000
$'000
457
-
8,267
(450)
-
(279)
7,995
(236)
(214)
(450)
1,828
(360)
6,400
(1,491)
-
(37)
6,340
101
(1,592)
(1,491)
25,405
13,429
7,622
4,029
121
90
215
226
-
(279)
7,995
7,995
-
7,995
7,909
86
7,995
1,093
600
276
275
6
(37)
6,242
6,248
(6)
6,242
6,157
85
6,242
30
The applicable weighted average effective tax rates are as follows:
31.5%
46.5%
The Group is part of a tax consolidation group. See the income tax accounting policy in Note 1.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
41
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 7
Cash and Cash Equivalents
Cash on hand
Cash at bank
Note 8
Trade and Other Receivables
Current
Trade receivables
Less provision for impairment of receivables
Other receivables
30 Jun 2017 30 Jun 2016
$'000
$'000
65
14,658
14,723
28
22,860
22,888
30 Jun 2017 30 Jun 2016
$'000
$'000
28,711
(269)
18,704
(130)
28,442
18,574
6,523
4,207
34,965
22,781
There were no non-current trade or other receivables in either reported year.
Bad and doubtful trade receivables
The Group has recognised a provision of $269,000 (2016: $130,000) in respect of bad and doubtful trade
receivables during the year ended 30 June 2017.
Impairment of receivables
The ageing of the provision for impairment of trade receivables recognised above is as follows:
3 to 6 months
Over 6 months
Movements in the provision for impairment of trade receivables are as
follows:
Opening balance
Business acquisition
Additional provisions recognised/(released)
Receivables written off/(back-in) during the year as uncollectible
Discontinuing operation
Closing balance
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
30 Jun 2017 30 Jun 2016
$'000
$'000
269
-
269
130
20
127
(8)
-
269
130
-
130
48
69
20
(7)
-
130
42
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Past due but not impaired
The ageing of the past due but not impaired receivables is shown below:
1 to 3 months
3 to 6 months
Over 6 months
Closing balance
30 Jun 2017 30 Jun 2016
$'000
$'000
4,899
-
-
4,899
4,772
-
-
4,772
Customers with balances past due but without provision for impairment at 30 June 2017 amount to
$4,899,000 (2016: $4,772,000). Management do not consider that there is any credit risk on the aggregate
balances after reviewing credit agency information and recognising a tacit extension to the recorded credit
terms of customers based on recent collection practices.
The balances of receivables that remain within initial trade terms (as detailed in table) are considered to be of
high credit quality.
Note 9
Inventories
Raw materials and consumables
Work in progress
Finished goods
Note 10 Other Assets
Current
Deferred Employee Equity Plan
Prepayments
Non-Current
Deferred Employee Equity Plan
Prepayments
Vendor loans
30 Jun 2017 30 Jun 2016
$'000
$'000
8,212
5,844
5,157
6,019
4,143
5,240
19,213
15,402
30 Jun 2017 30 Jun 2016
$'000
$'000
170
3,531
3,701
205
1,246
2,159
3,610
265
1,425
1,690
120
1,475
2,044
3,639
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
43
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 11 Property, Plant and Equipment
Leasehold improvements - at cost
less accumulated amortisation
Plant & equipment - at cost
less accumulated depreciation
Less impairment provision
Furniture & equipment - at cost
less accumulated depreciation
Motor vehicles - at cost
less accumulated depreciation
30 Jun 2017 30 Jun 2016
$'000
$'000
16,105
(4,317)
12,006
(3,824)
11,788
8,182
52,069
(21,073)
(1,651)
38,926
(14,330)
(1,651)
29,345
22,945
4,319
(1,946)
3,451
(1,807)
2,373
1,644
4,754
(2,316)
4,398
(2,206)
2,438
2,192
45,944
34,963
Movements in the fair values of Property, Plant & Equipment are set out below:
Leasehold
improvements
$'000
Plant &
Equipment
$'000
Furniture &
Fittings
$'000
Motor
vehicles
$'000
Total
$'000
Balance at 1 July 2015
Additions
Business acquisition
Disposals
Depreciation expense
Discontinued operations
1,700
3,830
2,798
(39)
(107)
-
5,432
4,971
16,802
(18)
(4,242)
-
564
523
676
(11)
(108)
-
378
481
1,411
(20)
(58)
-
8,074
9,805
21,687
(88)
(4,515)
-
Balance at 30 June 2016
8,182
22,945
1,644
2,192
34,963
Balance at 1 July 2016
Additions
Business acquisitions
Disposals
Depreciation expense
Discontinued operations
8,182
3,956
65
-
(415)
-
22,945
6,983
5,951
(2)
(6,532)
-
1,644
824
18
-
(113)
-
2,192
312
77
(35)
(108)
-
34,963
12,075
6,111
(37)
(7,168)
-
Balance at 30 June 2017
11,788
29,345
2,373
2,438
45,944
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
44
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 12
Intangible Assets
Goodwill - at cost
Less impairment
Patents & Trademarks
Less amortisation
Customer contracts
Less amortisation
30 Jun 2017 30 Jun 2016
$'000
$'000
161,594
(8,545)
153,049
629
(212)
417
11,977
(6,340)
5,637
148,251
(8,545)
139,706
629
(192)
437
11,977
(2,916)
9,061
159,103
149,204
Movements in the carrying amounts of Intangible Assets are set out below:
Balance at 1 July 2015
Additions and adjustment
Acquired
Impairment expense
Amortisation expense
Balance at 30 June 2016
Additions and adjustment
Acquired
Impairment expense
Amortisation expense
Balance at 30 June 2017
Goodwill
Goodwill
$'000
Patents &
Trademarks
$’000
Customer
Contracts
$’000
Total
$,000
47,235
1,139
93,332
(2,000)
-
139,706
96
13,247
-
-
153,049
79
4
384
-
(30)
437
-
-
-
(20)
417
732
48,046
-
10,929
-
(2,600)
1,143
104,645
(2,000)
(2,630)
9,061
149,204
-
-
-
(3,424)
96
13,247
-
(3,444)
5,637
159,103
Goodwill is allocated to cash-generating units (“CGU”) which are based on the Group’s operating segments:
Vehicle Panel Repair
Vehicle Protection Products & Accessories
Automotive Electrical & Cable Accessories
Automotive Component Remanufacturing
30 Jun 2017 30 Jun 2016
$'000
$'000
134,826
11,414
5,349
1,460
121,639
11,414
5,349
1,304
153,049
139,706
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
45
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a
discounted cash flow model, based on 5-year cash projection budgets approved by the Board, using the
following key assumptions:
Vehicle Panel
Repair
Vehicle
Protection
Products &
Accessories
Automotive
Electrical &
Cable
Accessories
Automotive
Component
Remanufacturing
Growth Rate %
Pre-tax discount rate %
0.00
7.80
0.00
8.30
0.00
9.10
0.00
9.10
The value in use calculations use weighted average growth rates to project revenue & costs and
Management’s best estimates of what it believes will occur in future years. Due to the current effects of the
economic environment on the automotive industry, the Company has adopted a conservative approach and
used growth rates of 0.00%.
The pre-tax discount rates of 7.80% to 9.10% reflect Management’s estimate of the time value of money and
the Group’s weighted average cost of capital adjusted for additional risk factors associated with each
segment.
Impact of possible changes in key assumptions
Vehicle Panel Repair Segment
If the base EBIT used in the value-in-use calculation for this CGU had decreased by 10% and then remained
constant with no further growth applied, the group would not be required to recognise any further impairment
of goodwill in relation to this CGU.
If the estimated pre-tax discount rate for this CGU had been 1% higher than Management’s estimates (8.80%
instead of 7.80%), the group would not be required to recognise any further impairment of goodwill in relation
to this CGU.
Vehicle Protection Products & Accessories Segment
If the base EBIT used in the value-in-use calculation for this CGU had decreased by 10% and then remained
constant with no further growth applied, the group would not be required to recognise any further impairment
of goodwill in relation to this CGU.
If the estimated pre-tax discount rate for this CGU had been 1% higher than Management’s estimates (9.30%
instead of 8.30%), the group would not be required to recognise any further impairment of goodwill in relation
to this CGU.
Automotive Electrical & Cable Accessories Segment
If the base EBIT used in the value-in-use calculation for this CGU had decreased by 10% and then remained
constant with no further growth applied, the group would be not required to recognise any further impairment
of goodwill (2016: $Nil) in relation to this CGU.
If the estimated pre-tax discount rate for this CGU had been 1% higher than Management’s estimates
(10.10% instead of 9.10%), the group would be not required to recognise any further impairment of goodwill
(2016: $Nil) in relation to this CGU.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
46
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Automotive Component Remanufacturing Segment
If the base EBIT used in the value-in-use calculation for this CGU had decreased by 10% and then remained
constant with no further growth applied, the group would not be required to recognise any further impairment
of goodwill in relation to this CGU.
If the estimated pre-tax discount rate for this CGU had been 1% higher than Management’s estimates
(10.10% instead of 9.10%), the group would not be required to recognise any further impairment of goodwill in
relation to this CGU.
Note 13 Deferred Tax Asset
The balance comprises temporary differences attributable to:
Amounts recognised in the statement of comprehensive income:
Employee benefits
Provisions
Accrued expenses
Inventory
Doubtful debts
Other
Amounts recognised in equity:
Transaction costs on share issue
30 Jun 2017 30 Jun 2016
$'000
$'000
4,158
368
1,211
197
81
925
6,940
265
265
3,102
1,070
394
134
39
100
4,839
388
388
Deferred tax asset
7,205
5,227
At 30 June 2017, the Group has estimated un-recouped revenue losses of $334,000 (2016: $nil).
At 30 June 2017, the Group has estimated un-recouped capital losses of $3,528,900 (2016: $3,747,900) none
of which have been brought to account as a deferred tax asset.
The benefit of these losses will only be obtained if:
• The companies derive future assessable income of a nature and an amount sufficient to enable the
benefits from the deductions for the losses to be realised.
• The companies continue to comply with the conditions for deductibility imposed by the law.
• No changes in tax legislation adversely affect the companies in realising the benefit from the deductions for
the losses.
Note 14
Investments
Investment in associates
30 Jun 2017 30 Jun 2016
$'000
$'000
3,932
-
On 23 May 2017, AMA announced that it would seek to acquire all of the shares in Automotive Solutions
Group Limited (“ASG”). This Offer lapsed on 7 July 2017. At 30 June 2017, the Company had acquired
12,532,376 fully paid ordinary shares in ASG which represents 24.9% of the issued capital of ASG. At
completion of the offer, AMA held 15,755,471 fully paid ordinary shares in ASG which represents 31.3% of the
issued capital of ASG.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
47
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 15
Trade and Other Payables
Trade payables
Other payables
Note 16 Borrowings
Current
Bank loan
Lease liability
Non-current
Bank loan
Lease liability
Total
Bank loan
Lease liability
At year end the Group had unrestricted access to the following lines of credit:
Bank loan facility
Unutilised at balance date
Financing arrangements
30 Jun 2017 30 Jun 2016
$'000
$'000
37,182
12,480
28,531
12,648
49,662
41,179
30 Jun 2017 30 Jun 2016
$'000
$'000
13,000
597
13,597
-
100
100
13,000
697
13,697
-
601
601
-
308
308
-
909
909
30 Jun 2017 30 Jun 2016
$'000
$'000
40,000
12,000
27,000
12,000
On 24 August 2016, the Company entered into a new Facility Agreement with National Australia Bank Limited.
The key terms of this agreement are:
• a $40 million facility, with a 36 months tenor, to assist in funding acquisitions and general corporate needs;
• a $6.5 million lease facility to assist with the purchase of capital equipment;
• a $3.0 million bank guarantee facility to assist with securing property rental leases; and
• a $0.4 million letter of credit facility.
The Facility is secured by a fixed and floating charge over all of the assets of the Company and its wholly
owned subsidiaries and is subject to standard covenants. At year end, the Company was in compliance with
these covenants.
The lease liabilities are effectively secured as the rights to the leased assets recognised in the statement of
financial position revert to the lessor in the event of default.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
48
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 17 Provisions
Current
Annual leave
Long service leave
Dividends
Onerous lease
Non-current
Long service leave
Make good
Onerous lease
Movements in provisions
30 Jun 2017 30 Jun 2016
$'000
$'000
8,604
2,408
190
388
11,590
2,847
3,153
469
6,469
6,603
2,604
151
-
9,358
1,132
1,865
1,378
4,375
Movements in each class of provision during the current financial year, other than employee benefits, are set
out below:
Dividends Make
Good
Onerous
Lease
Total
Carrying amount at beginning of year
151
1,865
1,378
3,394
Arising during the year
Utilised
39
-
1,330
(42)
209
(730)
1,578
(772)
Carrying amount at end of year
190
3,153
857
4,200
Amounts not expected to be settled within the next 12 months
The current provision for annual leave is presented as current, since the Group does not have an
unconditional right to defer settlement. However, based on past experience, the Group does not expect all
employees to take the full amount of accrued leave within the next 12 months.
The current provision for long service leave includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments in
certain circumstances. The entire amount is presented as current, since the Group does not have an
unconditional right to defer settlement. However, based on past experience, the Group does not expect all
employees to take the full amount of accrued long service leave or require payment within the next 12
months.
The following amounts reflect leave that is classified as a current liability but is not expected to be taken within
the next 12 months:
Annual leave obligation expected to be settled after 12 months
Long service leave obligation to be settled after 12 months
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
30 Jun 2017 30 Jun 2016
$'000
$'000
1,473
792
2,265
4,728
365
5,093
49
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 18 Other Liabilities
Current
Deferred income
Deferred vendor consideration
Non-current
Deferred income
Deferred vendor consideration
Deferred Vendor Consideration
30 Jun 2017 30 Jun 2016
$'000
$'000
6,000
7,933
13,933
5,100
1,415
6,515
8,532
21,691
14,919
27,539
30,223
42,458
The Company has recorded deferred and contingent consideration to Business Vendors for $31.208 million
(2016: $31.200 million) which, as per the relevant business purchase agreement includes amounts for
performance based earn-outs to be paid in a mixture of shares and cash. The present value of the liability is
$29.624 million (2016: $28.954 million). Refer to Note 24 for further information on how fair value has been
determined for contingent consideration. An analysis of this liability by type of consideration follows:
Current
Cash Settlement
Share Settlement
Non-Current:
Cash Settlement
Share Settlement
Deferred Income
30 Jun 2017 30 Jun 2016
$’000
$’000
4,143
3,790
624
791
7,933
1,415
19,319
2,372
21,691
29,624
20,706
6,833
27,539
28,954
In a previous financial year, the Group entered into an agreement with a key supplier to purchase product and
services from the supplier over an agreed period of time and receives various preferential benefits; one of
which is a market investment incentive. To satisfy the requirements of this agreement, the Group must
purchase from this supplier in accordance with agreed terms. The incentive is being amortised as this liability
reduces. At 30 June 2017, an amount of $6.0 million (2016: $5.1 million) has been classified as current
representing the anticipated reduction in this incentive over the next twelve months.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
50
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 19 Deferred Tax Liability
The balance comprises temporary differences attributable to:
Amounts recognised in statement of comprehensive income:
Sundry debtors
Customer contracts
Sundry items
Deferred tax liability
Note 20 Contributed Equity
30 Jun 2017 30 Jun 2016
$'000
$'000
1,818
1,691
-
3,509
997
1,625
-
2,622
Fully Paid Ordinary shares
Quoted
Unquoted
30 Jun 2017
Number
30 Jun 2016
Number
30 Jun 2017
$’000
30 Jun 2016
$’000
488,892,102
30,100,428
473,196,686
25,000,000
161,691
20,000
157,149
15,000
518,992,530
498,196,686
181,691
172,149
Quoted Fully Paid Ordinary shares entitle the holder to participate in dividends and the proceeds on winding
up the Company in proportion to the number of and amounts paid on the shares held. On a show of hands
every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote and, upon a
poll, each share is entitled to one vote.
Unquoted Fully Paid Ordinary shares entitle the holder to all the same benefits and responsibilities of holders
of Quoted Fully Paid Ordinary shares with exception that they do not entitle the holder to participate in
dividends or vote at general meetings of the Company. As such they are not listed for trade on the ASX.
They have been issued as part consideration for the acquisition of various entities and are subject to a
restriction period. In the event that the business has met its earnings target at the completion of this
restriction period, the shares are then eligible to participate in dividends.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
51
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Movements in ordinary share capital
Quoted:
Opening balance
Shares issued
Institutional placement
Employee share issue
Employee share issue
Employee share issue
Employee share issue
Vendor share issue
Vendor share issue
Vendor share issue
Vendor share issue
Vendor share issue
Date
Number
Issue Price
(Cents)
$’000
1 Jul 2015
334,250,963
1 Jul 2015
15 Oct 2015
25 Apr 2016
19 May 2016
19 May 2016
6 Nov 2015
10 Dec 2015
4 Jan 2016
29 Jan 2016
19 May 2016
75,000,000
721,796
106,383
374,264
53,191
249,252
58,333,333
655,308
1,576,905
1,875,291
58.6
37.4
94.0
37.4
94.0
100.3
60.0
76.3
82.4
35.6
74,904
43,968
270
100
140
50
250
35,000
500
1,300
667
Closing balance
30 Jun 2016
473,196,686
157,149
Shares issued
Employee share issue
Employee share issue
Employee share issue
Employee share issue
Employee share issue
Vendor share issue
Vendor share issue
Vendor share issue
Vendor share issue
17 Oct 2016
17 Oct 2016
25 Nov 2016
25 Nov 2016
25 Nov 2016
16 Feb 2017
21 Mar 2017
21 Mar 2017
3 Apr 2017
18,026
62,005
181,181
181,181
49,363
12,750,000
1,875,291
393,184
185,185
90.1
43.4
82.8
82.8
101.3
23.5
35.3
76.3
106.8
16
27
150
150
50
2,989
662
300
198
Closing balance
30 Jun 2017
488,892,102
161,691
Unquoted:
Opening balance
Shares issued
Vendor share issue
1 Jul 2015
-
10 Dec 2016
25,000,000
60.0
Closing balance
30 Jun 2016
25,000,000
Shares issued
Vendor share issue
5,100,428
98.3
Closing balance
30 Jun 2017
30,100,428
Total
518,992,530
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
-
15,000
15,000
5,000
20,000
181,691
52
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 21 Reserves
Equity Based Remuneration Reserve
Foreign Exchange Translation Reserve
Note 22 Non-Controlling Interests
30 Jun 2017
$’000
30 Jun 2016
$’000
3,048
6
3,054
3,048
11
3,059
On 1 July 2015, the Group acquired 60.0% of the issued capital of Woods Auto Shops (Dandenong) Pty Ltd;
the operator of the Trackright businesses. The owners of the other 40.0% of issued capital are the
management of the Trackright business.
Opening Balance
Entity joins the Group
Share of result for the period
Dividends paid
Closing Balance
Note 23 Dividends
Dividends paid or declared during the period ended were:
Final dividend of 1.7 cents per share, fully franked, paid 30 Oct 2015
Interim dividend of 0.5 cents per share, fully franked, paid 7 Apr 2016
Final dividend of 1.7 cents per share (fully franked), paid 30 Oct 2016
Interim dividend of 0.5 cents per share, fully franked, paid 13 Apr 2017
30 Jun 2017
$’000
30 Jun 2016
$’000
197
30
201
(196)
232
-
96
197
(96)
197
30 Jun 2017
$’000
30 Jun 2016
$’000
-
-
8,045
2,432
10,477
6,957
2,354
-
-
9,311
Franking credits available for subsequent financial years based on tax
rate of 30%
14,884
4,748
The aforementioned amounts represent the balance of the franking account as at the end of the reporting
period, adjusted for:
•
•
•
franking credits that will arise from the payment of the amount of the provision for income tax
franking credits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
53
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 24
Financial Instruments
Financial risk management
The Group's activities expose it to a variety of financial risks. These include market risk (including foreign
currency risk, price risk and interest rate risk), credit risk, and liquidity risk. The Group's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. The Group uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest
rate risk and ageing analysis for credit risk.
Risk management is carried out by Executive Management under policies approved by the Board. Executive
Management identifies, evaluates and mitigates financial risks within the Group's operating units.
Market risk
Foreign currency risk
The Group continues to make purchases in foreign currencies and is therefore exposed to foreign currency
risk through foreign exchange rate fluctuations.
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at
the end of the reporting period are set out below:
Consolidated
US Dollar
NZ Dollar
Assets
Liabilities
30 Jun 2017
$'000
30 Jun 2016
$'000
30 Jun 2017
$'000
30 Jun 2016
$'000
-
147
147
-
-
-
202
205
407
739
-
739
The Group had financial assets denominated in NZ Dollars of AUD $147,000 as at 30 June 2017 (2016:
A$Nil). Based on this exposure, had the Australian Dollar weakened/strengthened by 10% against the NZ
Dollar with all other variables held constant, the Group's result for the year and equity would have been
$16,000 higher/lower (2016: A$Nil).
The Group had financial liabilities denominated in US Dollars of AUD $202,000 as at 30 June 2017 (2016:
A$739,000). Based on this exposure, had the Australian Dollar weakened/strengthened by 10% against the
US Dollar with all other variables held constant, the Group's result for the year and equity would have been
$22,000 higher/lower (2016: A$82,000).
The Group had financial liabilities denominated in NZ Dollars of AUD $205,000 as at 30 June 2017 (2016:
A$Nil). Based on this exposure, had the Australian Dollar weakened/strengthened by 10% against the NZ
Dollar with all other variables held constant, the Group's result for the year and equity would have been
$23,000 higher/lower (2016: A$Nil).
There were no assets or liabilities denominated in any other foreign currencies, other than NZ or US Dollars
as at 30 June 2017 or as at 30 June 2016.
The foreign exchange (loss)/gain for the year ended 30 June 2017 was a loss of $41,000 (2016: $102,000
gain).
The Group does not employ foreign currency hedges and has no official foreign currency policy. If the
transactional value, net asset position and overall exposure were to increase it is likely that a policy will be
adopted to mitigate risk.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
54
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Price risk
The Group and the Company are not exposed to any significant price risk.
Interest rate risk
The Group and the Company's main interest rate risk arises from short and long-term borrowings. All
borrowings are issued at variable rates and this exposes the Group and the Company to interest rate risk.
The Group and the Company attempt to mitigate this interest rate risk exposure by maintaining an adequate
interest cover ratio and gearing ratio that ensures financing costs are not significant costs. At the end of the
financial year, the Group had bank loans outstanding of $13.0 million (2016: $Nil).
Credit risk
Credit risk is managed on a Group basis. Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit and
obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk, excluding
the value of any collateral or other security, at the end of the reporting period to recognised financial assets, is
the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Statement of
Financial Position and the Notes to the Financial Statements.
As at 30 June 2017 the Group had no significant concentration of credit risk.
Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets
and liabilities.
The Group has a process of monitoring overall cash balances on a strategic long term basis and at an
operational level on a weekly basis. This is to ensure ongoing liquidity, prompt decision making and allow
proactive communication with its funders.
The Group’s current focus is to ensure it meets debt covenants, reduces debt, reduces costs and focuses on
its current operations in the automotive aftercare market.
Financing arrangements
On 24 August 2016, the Company executed a new finance Facility Agreement with the National Australia
Bank. This agreement has a tenor of 3 years and will allow the Company to draw-down up to $40.0 million in
debt, $6.5 million in finance leases, $3.0 million in guarantees and $0.4 million in letters of credit. During the
2017 financial year, the Group has met all of its obligations under the financing arrangements.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
55
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Remaining contractual maturities
The following table details the Group's remaining contractual maturity for its non-derivative financial
instruments. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The tables include both interest and
principal cash flows, disclosed as remaining contractual maturities and these totals differ from their carrying
amount in the statement of financial position for interest-bearing liabilities due to the interest component.
Weighted
average
interest
rate
%
1 year or
less
Over 1 to 2
years
Over 2 to 5
years
Over 5
years
Total
contractual
maturities
$'000
$'000
$'000
$'000
$'000
2017
Non-interest bearing
Trade payables
Other payables
Deferred cash consideration
Interest bearing - variable rate
Lease liability
Bank bills commercial loan
2016
Non-interest bearing
Trade payables
Other payables
Deferred vendor consideration
Interest bearing - variable rate
Lease liability
Bank bills commercial loan
5.76%
5.76%
37,182
12,480
8,070
617
13,000
-
-
300
108
-
-
-
22,838
-
-
71,349
408
22,838
28,531
12,648
1,455
696
-
-
-
10,429
336
-
-
-
19,316
-
-
43,330
10,765
19,316
-
-
-
-
-
-
-
-
-
-
-
-
37,182
12,480
31,208
725
13,000
94,595
28,531
12,648
31,200
1,032
-
73,411
Fair value of financial instruments
The carrying value of financial instruments as shown in the Statement of Financial Position reflects their fair
value. These financial instruments have been analysed and classified using a fair value hierarchy reflecting
the significance of the inputs used in making the measurements. The fair value hierarchy consists of the
following levels:
• quoted prices in active markets for identical assets or liabilities (Level 1);
•
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level
3).
•
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
56
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
2017
Financial Liabilities
Deferred Vendor Consideration
2016
Financial Liabilities
Deferred Vendor Consideration
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
29,624
29,624
29,624
29,624
28,954
28,954
28,954
28,954
The fair value of the financial instruments included in Level 3 of the hierarchy has been determined using
valuation techniques incorporating observable direct and indirect market data relevant to the Company and an
estimation of the probability on paying the full amount.
During the 2016 and 2017 financial years, the Group has acquired various operations. In undertaking these
acquisitions, the Group has incurred a contingent consideration liability consisting of an obligation to provide
shares in the Company and make an additional cash payment to the vendor if the average profits of the
acquisition for the earn-out period exceed a pre-specified target level. The fair value of this contingent
consideration is measured using a discounted cash flow methodology and determined on the basis of the
possible average profits of the acquisition, weighted by the probability of each scenario. The discount rate
used is based on the Group’s weighted average cost of capital.
The movement through these Level 3 items is reconciled below:
Carrying amount at beginning of year
Arising during the year
Fair Value adjustment
Payments
Charge to Profit
Carrying amount at end of year
30 Jun 2017
$'000
30 Jun 2016
$'000
28,954
5,822
(424)
(5,314)
586
10,254
21,057
(2,116)
(1,173)
932
29,624
28,954
During the 2017 financial year, the Group acquired various entities and businesses. In making these
acquisitions, the Group incurred a contingent consideration liability consisting of an obligation to provide
shares in the Company and / or make additional cash payments to the vendors if the average profits of the
acquired business exceeded a pre-specified target level. For certain acquisitions, this contingent
consideration is capped at a maximum amount payable.
The fair value of this contingent consideration liability was measured using a discounted cash flow
methodology applying the Group’s cost of capital. In making this assessment, it has been assumed, that
where the arrangement is subject to a cap, the business will meet the pre-specified target and the maximum
will be payable. Where the arrangement is not subject to a cap, Management have determined an estimate of
the likely outcome, based on the possible average profit outcomes that may be achieved, weighted by the
probability of each scenario.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
57
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
The following table provides quantitative information regarding the significant unobservable inputs, the ranges
of those inputs and the relationships of unobservable inputs to the fair value measurement for two larger
acquisitions; Geelong Consolidated Repairs (“GCR”) and Smash Repair Canberra (“SRC”):
Significant Unobservable
Inputs Used
Unobservable Inputs
Used
Estimated Sensitivity of Fair Value Measurement
to Changes in Unobservable Inputs
If GCR failed to meet its
earning target
Anticipated growth rate
in EBIT of 5%
If growth rate was 1.0% higher / lower, the fair value
of the total deferred consideration would increase /
decrease by $69,000 / $68,000
The GCR Discount rate
Discount rate of 2.6%
If discount rate was 0.1% (10 bps) higher, the fair
value of the total deferred consideration would
decrease by $7,000
If SRC failed to meet its
earning target
Anticipated growth rate
in EBIT of 5%
If growth rate was 1.0% higher / lower, the fair value
of the total deferred consideration would increase /
decrease by $93,000 / $92,000
The SRC Discount rate
Discount rate of 2.6%
If discount rate was 0.1% (10 bps) lower, the fair
value of the total deferred consideration would
increase by $16,000
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so
that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimum capital structure to reduce the cost of capital.
The Group’s capital includes ordinary share capital, debt facilities, vendor loans and lease liabilities supported
by financial assets. There are no externally imposed capital requirements.
Debt
Borrowings
Deferred Vendor Consideration
Cash & cash equivalents
Net debt
Fully Paid Ordinary Shares
Quoted (at market price)
Unquoted (at issue price)
Total capital
Gearing ratio
Note
30 Jun 2017
$'000
30 Jun 2016
$'000
16
18
7
13,697
29,624
(14,723)
28,598
474,225
20,000
494,225
522,823
5.47%
909
28,954
(22,888)
6,975
380,923
15,000
395,923
402,898
1.73%
Fully Paid Ordinary Shares Quoted value has been calculated using the closing share prices as at 30 June
each year.
The Group may issue new shares or sell assets to either reduce debt or to invest in income producing assets.
This is decided on the basis of maximising shareholder returns over the long term.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
58
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 25 Share-Based Payments
On 14 September 2015, the Company agreed to the new AMA Group Limited Employee Equity Plan (the
“Employee Equity Plan”). It was subsequently approved by shareholders at the annual general meeting held
on 27 November 2015. It replaces the old Employee Share Option Plan which was last approved by
Shareholders at the 2013 AGM. The Employee Equity Plan was adopted by the Board to ensure it meets the
July 2015 changes to Australian Taxation laws regarding deferred taxation on employee options and
performance rights and to adopt the requirements of ASIC Class Order 14/1000.
The Employee Equity Plan is for the benefit of all staff members employed by the Group, including Directors
and Executive Management. Under the Employee Equity Plan an eligible participant is invited to accept a
right to receive a share or option.
Shares
During the year ended 30 June 2017, the Company issued fully paid ordinary shares to employees in
consideration of these employees agreeing to enter into long term contracts with the Company and accepting
significant post-employment restraint provisions. These 491,756 shares were issued for non-cash
consideration at an average deemed price of $0.80 per share.
Options
During the year ended 30 June 2016, 18,875,000 options were issued and these options remained
unexercised at the end of that financial year. Each option vests after 12 months, is exercisable for $1.20 each
over the next 24 months and is convertible into 1 Fully Paid Ordinary Quoted Share in the Company. As
detailed in the Remuneration Report contained in the Directors’ Report, 14,000,000 of these options had been
issued to Key Management Personnel.
No options were issued during the financial year ended 30 June 2017 and no options were exercised during
that financial year. At the date of this report, 18,875,000 options remained unexercised.
Note 26 Related Party Transactions
The Company
The ultimate holding entity is AMA Group Limited.
Controlled Entities
Investments in Controlled Entities are set out in Note 29.
Key Management Personnel
Further disclosures relating to Key Management Personnel are set out in the audited Remuneration Report
contained in the Directors’ Report.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
59
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Compensation
The aggregate compensation made to Directors and other members of Key Management Personnel of the
Group is set out below:
Short-term employee benefits
Long-term benefits
Post-employment benefits
Share-based payments
Termination benefits
Total
Payments for Other Expenses
30 Jun 2017
$'000
30 Jun 2016
$'000
2,495
17
104
136
-
2,752
1,813
27
84
2,682
-
4,606
Payments were made during the year to the following related entities of Mr Raymond Malone.
Silvan Bond Pty Ltd - Rental fees
Malone Superannuation Fund - Rental fees
30 Jun 2017
$'000
30 Jun 2016
$'000
183
61
244
168
56
224
Payments were made during the year to the following related entities of Mr Andrew Hopkins.
AV Ventures Pty Ltd – Rental fees
Keyspace Developments Pty Ltd – Rental fees
A&R Property Developments Pty Ltd – Rental fees
30 Jun 2017
$'000
30 Jun 2016
$'000
161
43
316
520
130
308
-
438
Payments were made during the year to the following related entities of Mr Raymond Smith-Roberts.
30 Jun 2017
$'000
30 Jun 2016
$'000
SRFE Pty Ltd – Rental Fees
258
155
On 23 June 2015, the Company engaged the services of Wilson HTM Corporate Finance Limited to act as a
joint lead manager in the placement of 75,000,000 shares. Mr Hugh Robertson was, at that time, associated
with this firm. The placement was completed during July 2015 and a fee of $691,875 was paid to Wilson HTM
Corporate Finance Limited.
As detailed in Note 14 during the year the Group acquired shares in ASG and in this process utilised the
services of Bell Potter Securities Limited. Mr Hugh Robertson is currently associated with this firm. The
Group paid fees to Bell Potter Securities Limited, for their assistance in this matter, of which Mr Robertson
was entitled to $25,077.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
60
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
On 12 February 2016, the Company appointed PSC Insurance Brokers (Aust) Pty Ltd as its General
Insurance Broker. Mr Brian Austin is associated with this firm. A fee of $38,500 (2016 $Nil) was paid by the
Group for these services during the financial year.
The Group utilises Foster Nicholson Lawyers for legal and advisory services. Mr Leath Nicholson is
associated with this firm. The Group has paid Foster Nicholson fees totalling $536,755 (2016: $435,264) for
these services.
Trade Receivables from and Trade Payables to related parties
There are no trade receivables from or trade payables to related parties at the end of the reporting period.
Loans to/from related parties
As part of the acquisition of Gemini Accident Repair Centres Pty Ltd in a prior year, the Group acquired loans
to certain vendors of that entity. These loans have not been repaid and it is proposed that they will be
extinguished on completion of the “earn-out” of that entity. As such, at 30 June 2017 there are loans to
entities associated with Mr Andrew Hopkins totalling $1,270,884 (2016: $1,270,884).
There are no other loans with related parties outstanding at the end of the reporting period.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates, except for loans
to subsidiaries which are non-interest bearing.
Note 27 Contingent Liabilities
Unsecured guarantees, indemnities and undertakings have been given by the Company in the normal course
of business in respect of financial trade arrangements entered into by its subsidiaries and a Deed of Cross
Guarantee (Note 34) was entered into with its continuing subsidiaries during the financial year ended 30 June
2017. It is not practicable to ascertain or estimate the maximum amount for which the Company may become
liable in respect thereof. At 30 June 2017 no subsidiary was in default in respect of any arrangement
guaranteed by the Company and all amounts owed have been brought to account as liabilities in the financial
statements.
Bank guarantees
Note 28 Commitments for Expenditure
Capital commitments - property, plant & equipment
Committed at the end of the reporting period but not recognised as
liabilities, payable:
Within one year
One to five years
After more than five years
30 Jun 2017
$’000
30 Jun 2016
$’000
2,652
1,863
2,652
1,863
30 Jun
2017
$'000
30 Jun
2016
$'000
Note
1,100
-
-
1,970
-
-
1,100
1,970
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
61
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Lease commitments – operating
Committed at the end of the reporting period but not recognised as
liabilities, payable:
Within one year
One to five years
After more than five years
Lease commitments – finance
Committed at the end of the reporting period but not recognised as
liabilities, payable:
Within one year
One to five years
After more than five years
less future finance charges
Represented as:
Current commitment
Non-current commitment
17,570
32,895
4,105
12,800
22,869
5,607
54,570
41,276
617
108
-
696
336
-
725
1,032
(28)
(123)
697
909
597
100
697
601
308
909
16
16
Property leases periods 1 to 5 years (shown as operating leases) are non-cancellable with rent payable
monthly in advance. Contingent rental provisions within lease agreements generally require minimum lease
payments be increased by CPI or a percentage factor. Certain agreements have option arrangements to
renew the lease for an additional term and an option to purchase the premises at the market price at time of
option exercise.
During a previous financial year, the Group acquired businesses that had non-cancellable leases for property
that were deemed by Management to be onerous contracts. In these instances a provision was raised to
reflect the least net cost of exiting from the contract; which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it. This provision will unwind over the remaining period
of the lease terms.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
62
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 29
Investments in Controlled Entities
Name of entity
A.C.N. 107 954 610 Pty Ltd (*) (a)
A.C.N. 122 879 814 Pty Ltd (*) (b)
A.C.N. 124 414 455 Pty Ltd (*)
AECAA Pty Ltd (c)
Custom Alloy Pty Ltd
ECB Pty Ltd
FluidDrive Holdings Pty Ltd
Mr Gloss Holdings Pty Ltd
Phil Munday’s Panel Works Pty Ltd (d)
Repair Management Australia Pty Ltd (d)
Repair Management Australia Bayswater Pty Ltd (d)
Repair Management Australia Dandenong Pty Ltd (d)
BMB Collision Repairs Pty Ltd
Shipstone Holdings Pty Ltd
Woods Auto Shops (Dandenong) Pty Ltd (e)
Gemini Accident Repair Centres Pty Ltd (f)
Repair Management New Zealand Limited (f) (g)
Ripoll Pty Ltd (*) (h)
Woods Auto Shops (Holdings) Pty Ltd (h)
Rapid Accident Management Services Pty Ltd (h)
Woods Auto Shops (Cheltenham) Pty Ltd (*) (h)
Micra Accident Repair Centre Pty Ltd (i)
Direct One Accident Repair Centre Pty Ltd (j)
Smash Repair Canberra Pty Ltd (l)
Geelong Consolidated Repairs Pty Ltd (m)
Accident Management Australia Pty Ltd (n)
Gemini Accident Repair Centres NZ Limited (*) (o)
Carmax New Zealand Limited (*) (p)
Country of Class of Equity holding %
2016
incorporation shares
2017
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
New Zealand Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
New Zealand Ordinary
New Zealand Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
100
100
100
100
100
100
-
-
-
-
-
-
Note:
(*) Dormant
(a) Previously known as Alanco Australia Pty Ltd
(b) Previously known as Perth Brake Parts Pty Ltd. Name changed when business disposed on 1 February 2016
(c) Previously known as KT Cable Accessories Pty Ltd
(d) Acquired on 01 July 2014
(e) Acquired on 01 July 2014
(f) Acquired on 01 October 2015
(g) Previously known as Gemini Accident Repair Centres Limited
(h) Acquired on 1 November 2015
(i) Acquired on 4 January 2016
(j) Acquired on 1 July 2016
(l) Acquired on 1 February 2017
(m) Registered on 8 February 2017
(n) Registered on 3 February 2017
(o) Registered on 11 November 2016
(p) Registered on 11 November 2016
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
63
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Business Combinations
During the financial year, the Group successfully acquired:
• On 1 July 2016, 100.0% of the issued capital of Direct One Accident Repair Centre Pty Ltd; the operator of
the Direct One businesses;
• On 1 February 2017, 100% of the issued capital of Smash Repair Canberra Pty Ltd; the operator of the
Autoco businesses;
• And the following businesses:
o Highland Smash Repairs on 1 July 2016;
o Trend Smash Repairs on 1 July 2016;
o Joondalup Smash Repairs on 1 October 2016;
o Woollard’s Auto Body Works on 1 October 2016;
o ZZ Auto on 5 December 2016;
o Colour Code Automotive Refinishing on 1 January 2017;
o Winter & Taylor on 1 February 2017;
o Soldani Bros on 1 February 2017;
o South City Panels on 1 February 2017;
o Mark McHugh Body Works on 1 February 2017;
o ASNU Transmission Products on 1 April 2017; and
o City Crash Repairs on 30 June 2017.
Direct One Accident Repair Centre Pty Ltd is a vehicle panel repairer and has two facilities located in the
northern suburbs of Melbourne. This acquisition is expected to increase the Group’s product offering and
market share and reduce costs through economies of scale. The Group acquired 100% of the issued capital
for a nominal cash payment and a deferred settlement based on an “earn-out” over the next four years. From
the date of acquisition to 30 June 2017, this entity generated revenue of $10.04 million and gross margin of
$5.40 million.
Smash Repair Canberra Pty Ltd is a vehicle panel repairer and has two facilities located in the Australian
Capital Territory. This acquisition is expected to increase the Group’s product offering and market share and
reduce costs through economies of scale. The Group acquired 100% of the issued capital for a nominal cash
payment of and a deferred settlement based on an “earn-out” over the next three years and five months.
From the date of acquisition to 30 June 2017, this entity generated revenue of $4.47 million and gross margin
of $2.00 million.
As part of the Geelong Consolidated Repairs acquisition, the group acquired the vehicle panel repair
businesses of Winter & Taylor, Soldani Bros and South City Panels. These businesses operate from various
sites in Geelong Victoria. These businesses will continue to trade using their current names from their
existing facilities. The group was acquired for a purchase price that includes an initial amount of $2.2 million
(less any working capital adjustments) and a deferred settlement based on an “earn-out” over the next three
years and five months. From the date of acquisition to 30 June 2017, these acquisitions generated revenue of
$4.90 million and gross margin of $2.47 million.
During the financial year, the Group also acquired various operating businesses. These acquisitions are
expected to increase the Group’s product offering and market share and reduce costs through economies of
scale.
Highland Smash Repairs and Trend Smash Repairs were acquired as part of the same transaction. Highland
Smash Repairs has been operating since 1953 and is located in Salisbury, Queensland. Trend Smash
Repairs was founded in 1979 is based in Rocklea, Queensland. These businesses will continue to trade
using their current names from their existing facilities. These businesses were acquired for $1.2 million less
any working capital adjustments.
Joondalup Smash Repairs operates from a workshop located 18km north of Perth in Wangara. This business
will continue to trade using its current name from its existing facility. The business was acquired for a
purchase price that includes an initial amount of $500,000 (less any working capital adjustments) and a
deferred settlement based on an “earn-out” over the next four years.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
64
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Woollard’s Auto Body Works operates a vehicle panel repair business located in Shepparton, Victoria. This
business will continue to trade using its current name from its existing facility. The business was acquired for
a purchase price that includes an initial amount of $500,000 (less any working capital adjustments) and a
deferred settlement based on an “earn-out” over the next three years.
Mark McHugh Body Works operates a site in Bundall, Gold Coast, Queensland. This business will continue to
trade using its current name from its existing facility. The business was acquired for a purchase price that
includes an initial amount of $500,000 (less any working capital adjustments) and a deferred settlement based
on an “earn-out” over the next three years.
ZZ Auto which has a panel repair facility in Invermay, Tasmania. This business will continue to operate from
its existing facilities and was acquired for a cash payment of $150,000 (less any working capital adjustments).
Colour Code Automotive Refinishing which operates a vehicle panel repair facility in Kelmscott, Western
Australia. This business will operate as Gemini Kelmscott and was acquired for a cash payment of $80,000.
City Crash Repairs operates a vehicle panel repair facility in Townsville Queensland. This business will
continue to operate from its existing facilities and was acquired for a cash payment of $150,000 (less any
working capital adjustments).
ASNU Transmission Products has established itself as Australia’s largest remanufacturer and creator of
standard and performance torque converters. As part of our Automotive Component Remanufacturing
division, ASNU will partner with FluidDrive; Australia’s largest OEM remanufacturer of Automatic
transmissions. This business will continue to operate from its existing facilities and was acquired for
approximately $900,000 (including inventory and working capital).
From the date of acquisition to 30 June 2017, these acquisitions generated revenue of $19.17 million and
gross margin of $10.11 million.
Details of these acquisitions are as follows:
Direct One
Accident
Repair Centre
$’000
Smash
Repair
Canberra
$’000
Geelong
Consolidated
Repairs
$’000
Other
Total
$’000
$’000
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Plant and equipment
Deferred tax assets
Trade payables and accruals
Provisions
Borrowings
Net tangible assets acquired
Intangible
4
290
108
23
931
105
(2,504)
(351)
(292)
(1,686)
2,382
518
-
249
-
1,076
38
(635)
(131)
-
1,115
4,885
-
-
89
-
1,431
126
-
(415)
(279)
952
3,115
-
147
652
9
2,674
202
(33)
(673)
-
2,978
2,865
522
437
1,098
32
6,112
471
(3,172)
(1,570)
(571)
3,359
13,247
Total consideration
696
6,000
4,067
5,843
16,606
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
65
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Representing:
Cash paid or payable
Shares issued
Cash to be paid
Shares to be issued
Fair value adjustments
Acquisition costs
Note 30 Discontinued Operations
-
-
774
-
(78)
696
57
1,000
5,000
-
-
1,999
-
2,261
-
(193)
3,911
198
1,888
-
(154)
6,910
5,198
4,923
-
(425)
6,000
4,067
5,843
16,606
70
71
167
365
On 10 December 2015, the Company announced that it had entered into a binding contract to sell the
business and assets of Perth Brake Parts, a business based at 20 Bellows Street, Welshpool, Western
Australia. The sale of this business was completed on 1 February 2016. As such the sale was completed
during the previous financial period. Financial information relating to this disposal group for that respective
reporting period was been classified as a discontinued operation and is set out below.
Revenue
Expenses
Profit before income tax
Income tax expense
Profit (loss) from discontinued operations
30 June 2016
$’000
1,437
(1,455)
(18)
6
(12)
Note 31 Reconciliation of Profit after Tax to Operating Cash Flows
30 Jun 2017
$'000
30 Jun 2016
$'000
Profit after income tax
Non-controlling interest
Income tax expense
Income tax paid
Depreciation and amortisation expense
Impairment expense
Deferred income amortisation
Equity issued in consideration of employment obligations
Onerous leases
Fair value adjustments
Other
(Increases)/decreases in accounts receivable
(Increases)/decreases in inventories
(Increases)/decreases in prepayments
(Increases)/decreases in other assets
Increases/(decreases) in accounts payable
Increases/(decreases) in current provisions
Increases/(decreases) in non-current provisions
Increases/(decreases) in other liabilities
Net operating cash flows
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
17,210
201
7,995
(9,725)
10,612
300
(5,487)
403
(775)
718
(134)
(11,864)
(2,775)
(5)
(1,835)
5,308
657
2,183
-
12,987
7,134
282
6,340
(7,247)
6,825
2,954
(2,981)
3,644
(775)
920
24
305
(3,495)
(165)
643
8,222
(287)
(142)
14,560
36,761
66
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 32 Earnings per Share
Profit after income tax attributable to members of AMA Group Ltd
- From continuing operations
- From discontinued operations
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share
Continuing operations:
- Basic earnings per share
- Diluted earnings per share
Discontinued operations:
- Basic earnings per share
- Diluted earnings per share
Continuing and discontinued operations:
- Basic earnings per share
- Diluted earnings per share
Note 33 Parent Information
30 Jun 2017
$'000
30 Jun 2016
$'000
17,210
-
17,210
7,002
(12)
6,990
Number
Number
518,992,530
18,875,000
457,536,805
10,777,397
537,867,530
468,314,202
Cents
Cents
3.32
3.20
-
-
3.32
3.20
1.53
1.50
-
-
1.53
1.49
The following information has been extracted from the books and records of the Company and has been
prepared in accordance with accounting standards.
Assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Profit/(loss) for the year
Total comprehensive income /(loss)
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
30 Jun 2017
$'000
30 Jun 2016
$'000
7,952
163,076
29,977
115,649
47,427
17,456
109,385
11,819
51,139
58,246
181,691
3,048
(137,312)
172,149
3,048
(116,951)
47,427
(9,982)
(9,982)
58,246
(9,086)
(9,086)
67
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Guarantees and contingent liabilities
Refer to Note 27 for details of guarantees and contingent liabilities.
Contractual commitments
Refer to Note 27 for details of contractual commitments.
Note 34 Deed of Cross Guarantee Disclosures
The consolidated financial statements of the Group incorporate the assets, liabilities and results of the
controlled entities detailed in Note 29 prepared in accordance with the accounting policy described in Note 1.
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, relief has been granted
from the Corporations Act 2001 requirements for the preparation, audit and lodgement of financial reports for
the controlled entities detailed below.
Name of entity
A.C.N. 124 414 455 Pty Ltd
A.C.N. 107 954 610 Pty Ltd
Custom Alloy Pty Ltd
ECB Pty Ltd
FluidDrive Holdings Pty Ltd
AECAA Pty Ltd
Mr Gloss Holdings Pty Ltd
BMB Collision Repairs Pty Ltd
Shipstone Holdings Pty Ltd
Repair Management Australia Pty Ltd
Phil Munday’s Panel Works Pty Ltd
Repair Management Australia Bayswater Pty Ltd
Repair Management Australia Dandenong Pty Ltd
Gemini Accident Repair Centres Pty Ltd
Ripoll Pty Ltd
Woods Auto Shops (Holdings) Pty Ltd
Rapid Accident Management Services Pty Ltd
Woods Auto Shops (Cheltenham) Pty Ltd
Country of
incorporation
Equity holding
2017
%
2016
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
As a condition of the Instrument, the above entities entered into a Deed of Cross Guarantee on 31 March
2017. The effect of the deed is that AMA Group Limited has guaranteed to pay any deficiency in the event of
winding up of a controlled entity detailed above or if they do not meet their obligations under the terms of
overdrafts, loans, leases or other liabilities subject to guarantee. The controlled entities detailed above have
also given a similar guarantee in the event that AMA Group Limited is wound up or if it does not meet its
obligations under the terms of overdrafts, loans, leases, or other liabilities subject to the guarantee.
The Trustee to this deed of cross guarantee is Ripoll Pty Ltd; which is a member of the consolidated group.
The Alternate Trustee to this deed of cross guarantee is Woods Auto Shops (Cheltenham) Pty Ltd; which is
also a member of the consolidated group. The continuing entities and only the continuing entities are included
in the deed of cross guarantee.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
68
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
If the Deed of Cross Guarantee and the subsequent closed group disclosures were contained in the accounts
of AMA Group Limited, then an assessment would need to be made as to the fair value of the Deed of Cross
Guarantee (as a financial guarantee to the Company) and the details of the valuation and significant
assumptions, estimate and judgements used within that valuation would need to be disclosed. Please refer to
the disclosure surrounding financial guarantees in the financial statements of AMA Group Limited (see Note
27 for further information on financial guarantees).
The Statement of Comprehensive Income of the entities that are members of the Closed Group is shown
below.
Revenue from continuing operations
Raw materials and consumables used
Employment benefits expense
Occupancy expense
Travel and motor vehicle expense
Professional services expense
Advertising and marketing expense
Insurance expense
Research and development expense
Information technology expense
Communication expense
Other expense
Earnings before interest, tax, depreciation and
amortisation (EBITDA)
Depreciation and amortisation expense
Impairment expense
Earnings before interest and tax (EBIT)
Finance costs
Profit from continuing operations before fair value adjustments
Fair value adjustments to financial liabilities
Fair value adjustments to contingent consideration
Profit (loss) before income tax from continuing operations
Profit (loss) before tax from discontinued operations
Profit (loss) before income tax
Income tax benefit / (expense)
Net profit (loss)
30 Jun 2017 30 Jun 2016
$’000
$’000
354,960
(150,702)
(130,767)
(23,717)
(2,714)
(3,717)
(1,738)
(610)
(219)
(1,448)
(810)
(2,122)
36,396
(10,297)
(300)
25,799
(169)
25,630
(1,191)
500
24,939
-
24,939
(7,850)
17,089
257,260
(108,146)
(95,756)
(17,518)
(2,124)
(3,781)
(1,607)
(741)
(259)
(806)
(674)
(1,410)
24,438
(6,767)
(3,281)
14,390
(205)
14,185
(920)
-
13,265
-
13,265
(6,030)
7,235
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
69
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
The Consolidated Statement of Financial Position of the entities that are members of the Closed Group is as
shown below:
Statement of Financial Position as at
30 Jun 2017
$'000
30 Jun 2016
$'000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangibles
Investment in controlled entities
Receivables from related entities
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Current tax payable
Provisions
Other
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax Liabilities
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
12,801
30,654
18,152
3,561
65,168
39,732
7,035
147,953
11,379
5,762
3,495
22,751
21,907
15,209
1,708
61,575
34,463
5,228
148,611
605
391
3,640
215,356
192,938
280,524
254,513
43,798
13,222
455
10,134
13,933
81,542
100
3,452
5,140
28,130
36,822
40,507
601
1,792
9,335
6,515
58,750
308
2,617
4,375
42,458
49,758
118,364
108,508
162,160
146,005
181,691
3,048
(22,579)
172,149
3,039
(29,183)
162,160
146,005
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
70
AMA GROUP LIMITED
(ACN 113 883 560)
NOTES TO THE FINANCIAL STATEMENTS
Note 35 Events Occurring after the Reporting Period
The on market offer to acquire all of the issued capital of Automotive Solutions Group Limited referred to in
Note 14 closed on 7 July 2017. At that time the Group had increased its ownership interest to 31.3% from the
holding at 30 June 2017 of 24.9%.
On 31 August 2017, the Directors declared a fully franked dividend of 2.0 cents per security, which is to be
paid on 31 October 2017.
No other matters or circumstances have arisen since 30 June 2017 that have significantly affected, or may
significantly affect the Group's operations in future financial years, the results of those operations in future
financial years, or the Group's state of affairs in future financial years.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
71
AMA GROUP LIMITED
(ACN 113 883 560)
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS’ DECLARATION
In the Directors' opinion:
a. the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including:
i.
ii.
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
giving a true and fair view of the Group's financial position as at 30 June 2017 and of its performance
for the financial Year ended on that date; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
c. at the date of this declaration, there are reasonable grounds to believe that the members of the closed
group identified in Note 34 will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the deed of cross guarantee described in Note 34.
Note 1 confirms that the financial statements also comply with the International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer
required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to section 303(5) of the Corporations
Act 2001.
On behalf of the Directors
Director
28 September 2017
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
72
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AMA GROUP LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of AMA Group Limited (“the Company”) and its controlled entities (“the
Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. ShineWing Australia is an independent member of ShineWing
International Limited – members in principal cities throughout the world.
73
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
Valuation of goodwill
Note 12
At 30 June 2017 the Group’s Statement of Financial
Position includes goodwill amounting to $153.049m,
representing the Group’s largest asset.
We have determined this is a key audit matter due
to the judgement required by management in
preparing a value in use model to satisfy the
impairment test as prescribed in AASB 136
Impairment of Assets, including the forecasting of
future cash flows and applying an appropriate
discount rate which inherently involves a high
degree of estimation and judgement by
management.
How the matter was addressed during the audit
Our procedures included, amongst others:
Reviewed the model for compliance with AASB 136
Impairment of Assets;
Assessed management’s determination of the
Group’s cash generating units based on our
understanding of the nature of the Group’s business,
the economic environment in which the segments
operate and the Group’s internal reporting structure;
Analysed future cash flow forecasts and developed
an understanding of the process by which they were
prepared, including testing the underlying
calculations of the models;
o Checked mathematical accuracy; and
o Critically assessed the key assumptions in the
forecasts by comparing them to historical results
and business strategies.
Performed sensitivity analysis on the discount rate
and EBITDA assumptions and considered the
likelihood that changes in assumptions, either
individually or collectively, would result in goodwill to
be impaired; and
Assessed the adequacy of the Group’s disclosures
within the financial statements.
Deferred Vendor Consideration
Our procedures included, amongst others:
Note 18
The group has acquired a number of businesses
during recent financial periods. Certain business
purchase agreements contain provisions for the
payment of further consideration should certain
targets be met. The measurement of the liability is
based on an estimate of the likely quantum of
consideration which will ultimately be paid.
We have determined this is a key audit matter due
to the judgement required by management in
forecasting future cash flows relevant to the
calculation of deferred vendor consideration
liabilities which inherently involves a high degree of
estimation and judgement.
Reviewed the assumptions used and the basis on
which the forecasts have been prepared;
Assessed the accuracy and reliability of forecasts
with reference to historical financial performance;
Understood the synergies arising through acquisition
and impact on forward forecasts;
Ensured calculations are based on terms of
respective business agreements; and
Disclosures regarding assumptions used are
adequately disclosed in the financial statements.
74
Key Audit Matter
How the matter was addressed during the audit
Acquisition Accounting
Our procedures included, amongst others:
Note 29
During the year, the Group acquired new
businesses, as disclosed in Note 29, in line with its
business strategy. The group has determined these
acquisitions to be business combinations for which
the purchase price is to be allocated between
acquired assets and liabilities at their respective fair
values. The identification of such assets and
liabilities and their measurement at fair value is
inherently judgemental and thus we consider this to
be a key audit matter.
Obtained valuations prepared by management or
independent valuers engaged by the Group;
Assessed the competence and objectivity of valuers
engaged;
Assessed the reasonableness of their conclusions
having regard to key assumptions;
Assessed the Group’s determination of the fair value
of assets and liabilities having regard to the
completeness of assets and liabilities identified and
the reasonableness of any underlying assumptions
in their respective valuations; and
Ensured these acquisitions were accounted for and
disclosed in accordance with the provisions of AASB
3 Business Combinations.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
75
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit.
We identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them, all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
76
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 14 of the directors’ report for the year ended 30
June 2017.
In our opinion, the Remuneration Report of AMA Group Limited for the year ended 30 June 2017 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
ShineWing Australia
Chartered Accountants
Nick Michael
Partner
Melbourne, 28 September 2017
77
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
The Board of Directors (Board) of AMA Group Limited (Company) is responsible for the corporate governance
of the group. The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
Commensurate with the spirit of the ASX Corporate Governance Principles and Recommendations (3rd
Edition) (principles or recommendations)), the Company has followed each recommendation where the Board
has considered the recommendation to be an appropriate benchmark for the corporate governance practices,
taking into account factors such as the size of the Company and the Board, resources available and activities
of the Company. Where the Company’s corporate governance practices depart from the recommendations,
the board has offered full disclosure of the nature and reason for the departure.
All Charters and Policies are available from the Company or on its website at www.amagroupltd.com.
Principle 1: Lay solid foundations for management and oversight.
Role of the Board and Executive Management
The Board's role is to govern the Company rather than to manage it. In governing the Company, the Directors
must act in the best interests of the Company as a whole. It is the role of Executive Management to manage
the Company in accordance with the direction and delegations of the Board and the responsibility of the Board
to oversee the activities of Executive Management in carrying out these delegated duties. The Board's
responsibilities are detailed in its Board Charter.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director or putting that
person forward as a candidate to ensure that person is competent, experienced, and would not be impaired in
any way from undertaking the duties of director. The Company provides relevant information to shareholders
for their consideration about the attributes of candidates together with whether the Board supports the
appointment or re-election.
The terms of the appointment of a Non-Executive Director, Executive Directors and Senior Executives are
agreed upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with
the proper functioning of the Board, including agendas, Board papers and minutes, advising the Board and its
Committees (as applicable) on governance matters, monitoring that the Board and Committee policies and
procedures are followed, communication with regulatory bodies and the ASX and statutory and other filings.
Diversity
The Company is committed to increasing diversity amongst its employees, not just gender diversity. Our
workforce is employed based on the right person for the right job regardless of their gender, age, nationality,
race, religious beliefs, cultural background, sexuality or physical ability.
Executive and board positions are filled by the best candidates available without discrimination. The
Company is committed to increasing gender diversity within these positions when appropriate appointments
become available. It is also committed to identifying suitable persons within the organisation and where
appropriate opportunities exist, advance diversity and to support promotion of talented employees into
management positions.
The Company has not set any gender specific diversity objectives as it believes that all categories of diversity
are equally as important within its organisation.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
78
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
The following table demonstrates the Company’s gender diversity amongst employees and contractors as at
30 June 2017.
Board
Executive Team
Employees
Women (Qty.) 2017
Women (Qty.) 2016
0
0
Encourage Enhanced Performance
1
1
237
197
The performance of the Board, individual Directors and Executive Officers of the Company is monitored and
evaluated by the Board. The Board is responsible for conducting evaluations on a regular basis in line with
these policy guidelines.
An evaluation of the performance of the board was conducted during the year. The evaluation has provided
the board with valuable feedback for future development.
During the year, all Directors have full access to all Company records and receive Financial and Operational
Reports at each Board Meeting.
Independent Advice
Directors collectively or individually have the right to seek independent professional advice at the Company's
expense, up to specified limits, to assist them to carry out their responsibilities. All advice obtained is made
available to the full Board.
Principle 2: Structure the Board to add value.
Structure and Composition of the Board
The Board has been formed so that it has an effective mix of personnel who are committed to discharging
their responsibilities and duties and being of value to the Company.
The names of the Directors, their independence, qualifications and experience are stated on in the Directors’
Report along with the term of office held by each.
The Board believes that the interests of all Shareholders are best served by:
• Directors having the appropriate skills and experience;
• A number of the Directors being independent as defined in the ASX Corporate Governance Guidelines;
and
• Some major Shareholders being represented on the Board.
Where any Director has a material personal interest in a matter, the Director will not be permitted to be
present during discussion or to vote on the matter. The enforcement of this requirement is in accordance with
the Corporations Act and aims to ensure that the interests of Shareholders, as a whole, are pursued and that
their interest or the Director's Independence is not jeopardised.
The Board consists of six Directors of whom three Directors, Hugh Robertson, Leath Nicholson and Brian
Austin, are considered independent non-executive Directors by the Company. During the current year, the
Company had a commercial relationship with Companies associated with each of the non-executive Directors.
The fees paid to each of these Companies were on an arms-length commercial basis and not considered
material in light of the Company’s overall expenditure for the period (refer Note 26. Each of the non-executive
Directors were not present or able to vote when the Board discussed or voted on the contracts/fees paid to
the Directors associated companies.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
79
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
The Board believes the existence of three independent directors on the Board provides sufficient independent
judgement to the Board at this time.
The Board is chaired by Raymond Malone who is also the Company’s Chief Executive Officer. The Board
believes that although Mr Malone is not considered independent, he is the appropriate person to lead the
Company. The Board has delegated certain responsibilities from the Chairman to non-executive directors to
minimize any conflict that may arise from the Chairman and Chief Executive Officer roles being exercised by
the same individual.
The Company currently has no Nomination Committee as it believes that due to the size of the Board and the
Company and the nature of the Company’s current activities, this function is best served by the full Board.
The Board is responsible for considering board succession issues and reviewing Board composition to assist
in ensuring the Board has the appropriate balance of skills, knowledge, experience and independence to
enable it to discharge its duties and responsibilities effectively.
The Board has a skills matrix covering the competencies and experience of each member. When the need for
a new director is identified, the required experience and competencies of the new director are defined in the
context of this matrix and any gaps that may exist.
Induction of New Directors and Ongoing Development
Any new Directors will be issued with a formal Letter of appointment that sets out the key terms and
conditions of their appointment, including Director's duties, rights and responsibilities, the time commitment
envisaged, and the Board's expectations regarding involvement with any Committee work.
A new director induction program is in place and Directors are encouraged to engage in professional
development activities to develop and maintain the skills and knowledge needed to perform their role as
Directors effectively.
Principle 3: Act ethically and responsibly
Ethical and Responsible Decision-Making
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has adopted a
Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
80
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
The Company has a share trading policy that regulates the dealings by Directors, Officers and Employees, in
shares, options and other securities issued by the Company. The policy has been formulated to ensure that
Directors, Officers, Employees and Consultants who work on a regular basis for the Company are aware of
the legal restrictions on trading in Company securities while in possession of unpublished price-sensitive
information.
As a good Corporate Citizen, the Company encourages compliance with and commitment to appropriate
corporate practices that are fair and ethical, via its Code of Conduct.
Principle 4: Safeguard integrity in corporate reporting.
Audit Committee
The Company has a duly constituted Audit Committee currently consisting of three Non-Executive Directors,
with the Committee Chairman being an Independent Non-Executive Director. The current members of the
Committee, as at the date of this report, and their qualifications are detailed in the Directors' Profiles on in the
Directors’ Report.
The Committee holds a minimum of two meetings a year. Attendance to these meetings by the members of
the Audit Committee is detailed in the Directors’ Report.
The Company's external auditor attends each annual general meeting and is available to answer any
questions with regard to the conduct of the audit and their report.
Chief Executive Officer and Chief Financial Officer Declarations
The Chief Executive Officer and Chief Financial Officer have provided the Board with a declaration that, in
their opinion, the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial
position and performance of the entity and that the opinion has been formed on the basis of a sound system
of risk management and internal control which is operating effectively.
Principle 5: Making timely and balanced disclosure.
The Company has procedures in place to ensure that the Company’s Continuous Disclosure obligations under
ASX Listing Rules and Corporations Act are met and that the market is properly informed of matters which
may have a material impact on the price at which securities are traded.
The Board has designated the Company Secretary as the person responsible for overseeing and co-
ordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with
ASX Listing Rules, the Company immediately notifies the ASX of information concerning the Company:
1 That a reasonable person would or may expect to have a material effect on the price or value of the
Company's securities; and
2 That would, or would be likely to, influence persons who commonly invest in securities in deciding whether
to acquire or dispose of the Company's securities.
Principle 6: Respect the rights of shareholders.
The Company is committed to providing current and relevant information to its shareholders.
The Company respects the rights of its Shareholders, and to facilitate the effective exercise of the rights, the
Company is committed to:
1 Communicating effectively with Shareholders through ongoing releases to the market via ASX information
and General Meetings of the Company;
2 Giving Shareholders ready access to balanced and understandable information about the Company and
Corporate Proposals;
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
81
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
3 Making it easy for Shareholders to participate in General Meetings of the Company; and
4 Requesting the External Auditor to attend the Annual General Meeting and be available to answer
Shareholder's questions about the conduct of the audit, and the preparation and content of the Auditor's
Report.
Any Shareholder wishing to make inquiries of the Company is advised to contact the registered office. All
public announcements made by the Company can be obtained from the ASX's website www.asx.com.au
Shareholders may elect to, and are encouraged to, receive communications from the Company and its
securities registry electronically.
The Company maintains information in relation to its corporate governance documents, Directors and Senior
Executives, Board and Committee charters and annual reports on the Company’s website.
Principle 7: Recognise and managing risk.
The Board is committed to the identification, assessment and management of risk throughout the Company’s
business activities.
The Audit Committee operates pursuant to a charter which provides for risk oversight and management within
the Company. This is periodically reviewed and updated. Executive Management reports risks identified to
the Committee on a periodic basis.
The Company’s Risk Management Policy recognises that risk management is an essential element of good
corporate governance and fundamental in achieving its strategic and operational objectives. Risk
management improves decision making, defines opportunities and mitigates material events that may impact
security holder value.
The Board reviews the entity’s risk management framework at least annually to satisfy itself that it continues
to be sound. A review of the Company’s risk management framework was conducted during the 2017
financial year.
Executive Management reports risks identified to the Board through regular operations reports, and via direct
and timely communication to the Board where and when applicable. During the reporting period, Executive
Management has reported to the Board as to the effectiveness of the Company’s management of its material
business risks. The Company does not have an internal audit function.
The Company faces risks inherent to its business, including economic risks, which may materially impact the
Company’s ability to create or preserve value for security holders over the short, medium or long term. The
Company has in place policies and procedures, including a risk management framework (as described in the
Company’s Risk Management Policy), which is developed and updated to help manage these risks. The
Board does not consider that the Company currently has any material exposure to environmental or social
sustainability risks.
The Chief Executive Officer and the Chief Financial Officer have given a statement to the Board that the
integrity of the financial statements is founded on a sound system of risk management and internal
compliance and controls based on the Company's Risk Management policies.
Principle 8: Remunerate fairly and responsibly
Profiles of the members and details of meetings of the Remuneration Committee are outlined in the Director's
Report. The Committee’s responsibilities are detailed in the Remuneration Committee Charter.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
82
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE GOVERNANCE STATEMENT
The Company is committed to remunerating its Senior Executives in a manner that is market-competitive and
consistent with “Best Practice” as well as supporting the interests of Shareholders. Senior Executives may
receive a remuneration package based on fixed and variable components, determined by their position and
experience. Shares and/or Options may also be granted based on an individual's performance, with those
granted to Directors subject to Shareholder approval.
Non-Executive Directors are paid their fees out of the maximum aggregate amount approved by Shareholders
for the remuneration of Non-Executive Directors. Non-Executive Directors do not receive performance based
bonuses and do not participate in Equity Schemes of the Company without prior Shareholder approval.
Current remuneration is disclosed in the Remuneration Report and in Note 26: Related Party Transactions.
Key Management Personnel or closely related parties of Key Management Personnel are prohibited from
entering into hedge arrangements that would have the effect of limiting the risk exposure relating to their
remuneration.
In accordance with the Company’s share trading policy, participants in any equity based incentive scheme are
prohibited from entering into any transaction that would have the effect of hedging or otherwise transferring
the risk of any fluctuation in the value of any unvested entitlement in the Company’s securities to any other
person.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
83
AMA GROUP LIMITED
(ACN 113 883 560)
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
In accordance with the ASX Listing Rules the following information, as at 27 September 2017, is provided:
Substantial holders
The Company hold current substantial holder notifications in accordance with section 671B of the
Corporations Act for the following:
Celeste Funds Management Limited (Notice dated 1 Sep 2017)
Greencape Capital Pty Ltd (Notice dated 6 Jun 2017)
Cedarfield Holdings Pty Ltd ATF The Cedarfield Trust (Notice dated 24 Oct 2016)
Schroder Investment Management Australia Limited (Notice dated 22 Oct 2016)
25,058,448 5.13%
29,560,266 6.05%
35,239,167 7.45%
16,499,849 5.77%
Number of holders of equity securities
489,306,052 Fully Paid Ordinary Quoted shares are held by 2,547 individual holders.
25,000,000 Fully Paid Ordinary Unquoted shares are held by 11 individual holders; with all holders having in
excess of 100,000 units.
12,000,000 unquoted options over Fully Paid Ordinary Quoted shares exercisable at $1.20 each before 27
November 2018 held by 2 holders; with all holders having in excess of 100,000 units.
6,875,000 unquoted options over Fully Paid Ordinary Quoted shares exercisable at $1.20 each before 25 April
2019 held by 9 holders; with all holders having in excess of 100,000 units.
Voting rights
The voting rights attached to Fully Paid Ordinary shares are set out below:
Fully Paid Ordinary Quoted shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
Fully Paid Ordinary Unquoted shares
No voting rights
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Holders
Ordinary
Shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Holding less than a marketable parcel
245
598
440
1,022
111,685
1,870,114
3,524,927
36,092,447
242 447,706,879
2,547 489,306,052
136
16,618
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
84
AMA GROUP LIMITED
(ACN 113 883 560)
SHAREHOLDER INFORMATION
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Shareholder
Number Held
% of Total
Shares Held
Mr Gloss Pty Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Cedarfield Holdings Pty Ltd
UBS Nominees Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Ltd
Mr Raymond Malone & Mrs Leona Malone
Citicorp Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Phil Munday Investments Pty Ltd
Washington Motors Pty Ltd
Sherdley Investments Pty Ltd
Mr Richard John Calver
Birdlake Holdings Pty Ltd
Yerrus Holdings Pty Ltd
Magnacon Pty Ltd
Missy Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
67,961,015
51,835,435
49,346,929
35,239,167
28,681,955
20,232,298
17,261,501
14,478,221
8,490,335
7,188,000
6,876,771
6,375,000
6,375,000
6,189,167
5,840,000
4,958,333
4,947,404
4,013,334
3,540,833
3,224,264
353,054,962
13.89
10.59
10.09
7.20
5.86
4.13
3.53
2.96
1.74
1.47
1.41
1.30
1.30
1.26
1.19
1.01
1.01
0.82
0.72
0.66
72.14
Unquoted equity shareholders
The names of security holders who hold 20% or more of the unquoted equity share class are as follows:
Cedarfield Holdings Pty Ltd
15,102,500
60.41%
Securities subject to escrow
Class of Security
Number
Date Escrow period ends
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Quoted
Fully Paid Ordinary Unquoted
12,750,000
185,185
106,383
58,333,333
1,576,905
491,484
413,950
25,000,000
29 Sep 2017
31 Mar 2018
25 Apr 2019
10 Jun 2019
28 Jul 2019
3 Jan 2020
20 Jul 2021
10 Jun 2019
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
85
AMA GROUP LIMITED
(ACN 113 883 560)
SHAREHOLDER INFORMATION
Shareholder enquiries
Shareholders with enquiries about their shareholdings should contact the share registry:
Computershare Investor Services Pty Ltd
Yarra Falls, 452 Johnston Street,
Abbotsford, Victoria 3067
Phone: +61 3 9415 4000
Fax: +61 3 9473 2500
Email: essential.registry@computershare.com.au
Change of address, change of name, consolidation of shareholdings
Shareholders should contact the Share Registry to obtain details of the procedure required for any of these
changes.
Annual report
Shareholders do not automatically receive a hard copy of the Company’s Annual Report unless they notify the
Share Registry in writing. An electronic copy of the Annual Report can be viewed on the Company’s website
www.amagroupltd.com
Tax file numbers
It is important that Australian resident shareholders, including children and corporate entities, have their tax
file number, ABN or exemption details noted by the Share Registry.
CHESS (Clearing House Electronic Sub-register System)
Shareholders wishing to move to uncertified holdings under the Australian Stock Exchange CHESS system
should contact their stockbroker.
Uncertified share register
Shareholding statements are issued at the end of each month that there is a transaction that alters the
balance of an individual/company’s holding.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
86
AMA GROUP LIMITED
(ACN 113 883 560)
CORPORATE DIRECTORY
CORPORATE DIRECTORY
Directors
Mr Raymond Malone (Chairman and Executive Director)
Mr Brian Austin (Non-Executive Director)
Mr Leath Nicholson (Non-Executive Director)
Mr Hugh Robertson (Non-Executive Director)
Mr Andrew Hopkins (Executive Director)
Mr Raymond Smith-Roberts (Executive Director)
Executive Management
Mr Raymond Malone (Chief Executive Officer)
Mr Andrew Hopkins (Chief Executive Officer – Vehicle Panel Repair Division)
Mr Raymond Smith-Roberts (Chief Executive Officer - Automotive Components & Accessories Divisions)
Mr Ashley Killick (Chief Financial Officer)
Mrs Terri Bakos (Company Secretary)
Registered Office
34 Gilbert Park Drive, KNOXFIELD,VICTORIA, 3180, AUSTRALIA
Email: info@amagroupltd.com
Telephone: +61 3 9723 1788
Facsimile: +61 3 9725 3883
Principal Place of Business
31 Snook Street, CLONTARF, QUEENSLAND, 4019, AUSTRALIA
P.O. Box 122, MARGATE, QUEENSLAND, 4019, AUSTRALIA
Telephone: +61 7 3897 5780
Facsimile: +61 7 3283 1168
Web: www.amagroupltd.com
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street, ABBOTSFORD, VICTORIA, 3067, AUSTRALIA
GPO Box 2975, MELBOURNE VICTORIA 3001 AUSTRALIA
Telephone: +61 3 9415 4000
Telephone: 1300 787 272 (Within Australia)
Facsimile: +61 3 9473 2500
Auditor
Shine Wing
Level 10, 530 Collins Street, MELBOURNE VICTORIA 3000 AUSTRALIA
Solicitors
Foster Nicholson Lawyers
Level 7, 420 Collins Street, MELBOURNE VICTORIA 3000 AUSTRALIA
Bankers
National Australia Bank
Westpac Banking Group
Stock Exchange Listing
AMA Group Limited shares are listed on the Australian Securities Exchange, code AMA.
ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
87