ANNUAL
FINANCIAL
REPORT
For the Year Ended
30 June 2022
AMA Group Limited ABN 50 113 883 560
Enduring Mobility:
Our vision for our customers, our people,
our industry and our shareholders.
Contents
BUSINESS REVIEW
About this report
FY22 highlights
Our people
Letter from the Chair and CEO
Who is AMA Group?
Our business
ENVIRONMENT, SOCIAL AND GOVERNANCE REPORT
Environment
Social
Governance
DIRECTORS’ REPORT
Introduction
Review and results of operations
Directors and Officers
Annual statement by the People Committee Chair
Remuneration report
Auditor’s independence declaration
FINANCIAL REPORT
Consolidated financial statements
Notes to the consolidated financial statements
Directors’ declaration
Independent Auditor’s report
SHAREHOLDER INFORMATION
Additional information
Glossary
3
3
4
6
8
10
12
22
24
26
29
30
30
31
35
40
42
56
57
58
63
117
118
126
126
127
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2
AMA Group
About this report
The FY22 Annual Report is a consolidated summary of
AMA Group’s operations, performance, and financial
position for the year ended 30 June 2022. In this report,
unless otherwise stated, references to ‘AMA’, ‘Group’,
‘company’, ‘parent entity’, ‘we’, ‘us’ and ‘our’ refer to
AMA Group Limited and its controlled entities (refer to
Note E2 for a list of controlled entities).
References in this report to a ‘year’ relate to the financial
year ended 30 June 2022. All dollar figures are expressed
in Australian dollars (AUD) unless otherwise stated.
The consolidated financial statements included in this
report were authorised for issue by the Directors on
23 August 2022. The Directors have the power to amend
and reissue the Financial Statements.
All press releases, financial reports and other information
are available at our Investor Centre on our website
amagroupltd.com
Reporting suite
This annual report forms part of our annual reporting
suite, which is available on our website amagroupltd.com.
In addition to this annual report, the other documents that
form part of the reporting suite are:
■ Appendix 4E
■ FY22 Results Presentation
■ Corporate Governance Statement
■ Modern Slavery Statement
AMA Group acknowledges Aboriginal and Torres Strait
Islander peoples, the Traditional Owners of the lands and
waters of Australia on which we live and work, and pay our
respects to their Elders past and present.
3
Annual Report | 30 June 2022
FY22 highlights
Cash on hand
Group revenue
Net debt
$52m
following positive
operating cash flow in Q4
$845m
▼ (8.8%) on pcp
$156m
▼ (24.3%) on pcp
Normalised Group EBITDAI
(post-AASB 16)
Growth in Supply
revenues
$21.8m
>10%
100% Insurers approached
for repricing of contracts
Launch of
Take The LEAD
cultural health, safety and environment program
Network optimisation
late in FY22 to improve margins
4
AMA Group Group safety rating (LTIFR)
4.27
17.0% improvement on pcp
Average repair days
(Drive)
Average repair days
(Non-Drive)
Average repair days
(Heavy Motor)
4.0
▲ 11.1% on pcp
10.0
▲ 7.5% on pcp
11.3
▼ 9.6% on pcp
Rectification (Drive)
Rectification (Non-Drive)
Rectification (Heavy Motor)
2.2%
▼ 0.3% on pcp
3.3%
▲ 0.4% on pcp
0.3%
▲ 0.1% on pcp
Customer satisfaction
(Drive)
Customer satisfaction
(Non-Drive)
Customer satisfaction
(Heavy Motor)
8.6/10
▲ 0.1 on pcp
9.3/10
▲ 0.2 on pcp
9.7/10
▲ 0.4 on pcp
Customer satisfaction
(Supply)
32NPS
▲ 19 on pcp
5
Annual Report | 30 June 2022
Our people
Team members
3,426
Apprentices
317
Frontline leaders
through course
Online compliance
training completion rate
118
93%
AMA Group’s code of conduct
'The AMA Way'
Shares issued to
AMA Group Team members
100%
9.22m
rolled out to Team members
through Employee Share Plan
Initiatives launched:
AMA Group's code of conduct: The AMA Way
Employee Share plan
Frontline Leadership Program
Pulse Survey, leading to “Building Better” engagement program
Online training modules
6
AMA Group
“I really enjoyed the opportunity to attend the
Frontline Leadership Program. The program
has been awesome for me. It has opened my
eyes to things I can do differently and has
motivated me to be a better leader. I will be
applying everything I have learnt into my
workplace, and I am ready to take my shop
and team to the next level. I am proud to
be a part of AMA Group.”
Nazeer Ali – Centre Manager,
Capital S.M.A.R.T Carrum Downs
“Working with AMA Group the past year has
been so incredibly rewarding. They have
been super supportive with my continued
training and preparation for the WorldSkills
International Special Edition. Not only that,
they have given me the opportunity to
complete my qualification as a vehicle spray
painter. I joined the company during a rough
patch for me, and they have been there for
me, allowing me to grow as an individual
and become me. Through AMA I have been
nominated for TAFE Excellence Awards
and won Student e-commerce of the year,
Apprentice of the Year and overall Student
of the Year. I can’t thank the community
within the industry enough. With AMA
you can go anywhere.”
Isabella Turrise – Spray Painter,
ARM Mt Druitt
7
Annual Report | 30 June 2022 Letter from the Chair and CEO
On behalf of the Board, we present AMA Group Limited’s
Annual Report for the year ended 30 June 2022.
Introduction
We commence by acknowledging that the financial year
ended 30 June 2022 (FY22) was not the year we had hoped
for, or expected. Like many of our stakeholders, we are
frustrated by the impact that the external environment
has had on the Company’s operations. However, we have
a clear pathway focused on prioritising delivering margin
expansion, rather than absolute site numbers, repair
volumes and revenue.
FY22 Financial performance
FY22 was significantly impacted by the continuing
effects of COVID-19. The Group reported Normalised
EBITDA of $21.8 million (financial year ended 30 June 2021
(FY21), $116.4 million) and revenue and other income from
continuing operations of $845.1 million (FY21 $919.9 million).
The Group reported a net loss after tax of $148.0 million
(FY21, net loss after tax of $99.1 million). The net loss after
tax was significantly impacted by the $80.7 million
impairment of goodwill related to both Capital S.M.A.R.T
and other Drive sites and $24.8 million impairment for sites
closed or planned to close. The Board has not declared a
final FY22 dividend.
The first half of the year (1H22) was characterised by
ongoing COVID-19 pandemic related lockdowns, which
resulted in low traffic levels and therefore, low repair
volume. This was particularly notable in Melbourne and
Sydney, the Group’s largest network areas.
Board and Management had expected to see
more "normal" operating conditions in the second half
of the year (2H22). However, the early months of 2H22
saw continuing COVID-19-related low traffic volumes,
as its lingering effects, including self-isolation to avoid
contracting COVID-19 materialised. This quickly evolved
from a scarcity of volume to a scarcity of labour. Although
repair volumes began to return, COVID-19 infections and
associated isolation requirements combined with the flu
season and skilled labour force shortage, led to reduced
repair volume throughput. This impacted the Group’s ability
to absorb overheads, therefore negatively affecting margins.
FY22 also saw significant inflationary pressures due to
the global environment and the increasing complexity
and cost of repairs, which coupled with historic fixed price
models, impacted margins.
The Group reduced net debt by $60.5 million, mainly
through the repayment of $72.5 million in debt
following a successful capital raising in 1H22. The capital
raising comprised of an accelerated 1 for 2.80 pro rata
non-renounceable entitlement offer which raised
approximately $100 million at an offer price of $0.375 per
new ordinary share and a $50 million senior unsecured
convertible notes offer, convertible into ordinary shares
and maturing in March 2027 unless otherwise redeemed,
repurchased, or converted earlier in accordance with
their terms and conditions.
FY22 Operational Achievements
As AMA Group navigated the impact of COVID-19 and saw
the return of volumes into a constrained labour market
in 2H22, operational priorities swiftly evolved. The Group
completed the establishment of the new management
team, recruited an additional Board member, and
transitioned the corporate head office to Melbourne from
the Gold Coast, delivering a depth of talent and experience,
suitable to the execution of the strategy and governance
of the company.
Execution of the Group’s parts and procurement strategy
commenced in earnest, with annualised savings of
$10 million expected from improved terms. ACM Parts
opened a new warehouse in Somerton and the supply
service model was enhanced to support the expansion of
ACM Parts’ offering.
In an environment characterised by significant inflationary
pressures, a constrained skilled labour force and the
increasing cost and complexity of repairs, the Group
approached all insurer partners with new rates and
charges in late FY22. There was broad recognition by the
Group’s insurer partners of the need to realign pricing to
reflect the current environment and the majority have
agreed to new pricing.
AMA Group is no longer willing to accept profitless
repair volume to build scale and has chosen to exit some
contracts where insurers were unwilling to adjust pricing
adequately to reflect the current inflationary environment.
As a result, network optimisation activities in FY22 saw the
rationalisation of several sites.
The Group’s people strategy continued with the "One
AMA" commitment. The year saw the development of
the "Building Better" employee value proposition and the
inaugural employee share plan gift of shares to employees.
8
AMA Group Anthony Day
Chair of the Board
Carl Bizon
Group Chief
Executive Officer
In the face of a nationwide skilled labour shortage, AMA
Group is committed to building the "workforce of the future"
through a record apprentice intake, and a commitment
to training and development. Skilled migration also
recommenced with the opening of international borders.
The Group is committed to ensuring absolute, best in
class, health and safety for our Team. This resulted in a
17% reduction in Lost Time Injury Frequency Rate in FY22.
The roll out of Take the LEAD, a cultural Health, Safety
and Environment program in late FY22 ensures that this
remains a top priority for the business.
FY23 outlook and guidance
FY23 is expected to be a transition year. We will embed
the priorities identified and completed to "phase 1" in
late FY22/early FY23. This includes network
optimisation, ongoing contract pricing discussions,
and early engagement for 1 July 2023 repricing of
Capital S.M.A.R.T contract.
Further, as the Group corrects historical commercial
legacies, the support structure of the business will
continue to adjust as the Group maximises cost
efficiencies through centralisation of business support
functions. An active focus on cost reductions as we
continue the centralisation and eliminate some transitional
duplication of costs, will align fixed overheads to expected
revenues and deliver margin expansion.
Given the significant impact of inflation on the Group’s
input costs, the focus remains on margin and operating
cash flows. Following recent pricing initiatives, the Group
will continue to redeploy its scarce direct labour force
to maximise the efficiency of the network and focus on
profitable repair volumes. This positions the Group to
reacquire repair volume under contemporary revenue
arrangements that fairly compensates the Company
for value delivered.
The key operational priorities for FY23 are:
■ Progressing the parts & procurement strategy,
■ Revenue growth and diversification, and
■ Pursuit of ADAS opportunities.
Further, the Group will embed priorities already
completed to Phase 1 status:
■ Adjustments to organisational structure,
■ Optimising the network, and
■ Contract pricing – including the renegotiation of
the Capital S.M.A.R.T contract for FY24.
The Group will also continue working toward its strategic
priorities of:
■ Retention and engagement,
■ Operational improvements,
■ Organic and acquisition growth, and
■ Workforce of the future.
Management has rebased the company to focus on
profitable work in the short-term, rather than being
measured on absolute repair volumes and site numbers.
Following this, the Group expects to embark on acquisitions,
and profitable network and capacity growth to pursue the
company’s strategic objectives.
We affirm FY23 and FY24 post-AASB 16 EBITDA guidance
of $70 million – $90 million and $120 million – $140 million,
respectively.
Close
With a network of over 160 sites and approximately 3,500
employees, AMA Group is the leader in the Australian and
New Zealand collision repair industry, support by Australia’s
leading distributor of vehicle parts.
Our workforce comprises highly skilled professionals and
operating technicians who drive the Group’s performance
outcomes and achievement of the Group’s strategic goals
to deliver shareholder value.
We thank all our employees for their ongoing commitment
and hard work. We also thank the Board, our customers,
insurance partners, investors, and all stakeholders for their
ongoing support of AMA Group.
In FY23, our sights are set on executing our strategic
priorities, continuously improving the health and safety
of our Team, and delivering shareholder value.
Anthony Day
Non-Executive Director
& Chair of the Board
Carl Bizon
Executive Director
& Group Chief Executive Officer
9
Annual Report | 30 June 2022
Who is AMA Group?
We are the leader in the
Australian and New Zealand
collision repair industry.
Founded in 2005 as Allomak Ltd, to acquire
automotive aftercare businesses, the Group
was listed on the Australian Securities
Exchange in 2006. In 2007, we acquired our
first collision repair business, Mr Gloss in
Victoria, which the company still owns
and operates today.
In 2009, we became AMA Group. Since then,
through acquisition, AMA Group has become
the largest collision repair network across
Australia and New Zealand, supported by
Australia’s leading distributor of vehicle parts
and accessories. We are Australia’s only
publicly listed dedicated collision repair and
automotive supply business.
Our people are the foundation of everything
we do. Our success is underpinned by
our Team of highly skilled and committed
technicians, customer service and support
staff who are driven to deliver for our
customers. Working together, we get more
than 300,000 people and businesses back
on the road every year.
Supply
Heavy
Motor
7 %
6 %
$845m
12 months to
June 2022
%
7
8
Vehicle
collision
(Drive +
Non-Drive)
10
~3,500
Team
members
~280k
Vehicles
repaired
per year
~220k
Recycled & new
parts supplied
per year
~7.5k
Vehicles
reclaimed
per year
AMA Group Our Australian &
New Zealand
network
156
Collision
repair sites
10
Supply
centres
2
Support
offices
11
Annual Report | 30 June 2022 Our business
We are an integrated business that creates value
for our stakeholders
Vehicle owners
Our Team
Investors & lenders
We keep vehicle owners
moving and extend the
life of their vehicles, while
delivering high quality
service and workmanship.
We support our Team
to develop enduring and
sustainable careers as
One AMA, and care for
their health and safety.
We are future focused,
embracing change
and adapting to meet
it, targeting sustained
growth for our investors
and lenders.
Customer partners
Collision repair industry
Communities
We contribute to the
broader Collision Repair
Industry by training
‘more than our share’
and showing leadership
on key industry issues,
as well as improving
parts and consumables
supply options.
We build enduring and
sustainable partnerships
with the Communities
where our people live and
work through grassroots
community engagement
and we protect the
local environment.
We develop enduring
relationship with our
customer partners -
such as insurers, brokers,
fleet operators, and
Government - through an
integrated national network
and provide certainty of
service, compliance
and governance.
Suppliers
We are a trusted partner
to our Suppliers, building
enduring, collaborative
relationships.
12
AMA Group Four business units & groupwide functions
Through four business units, our Team provides repairs for light to high-severity collisions –
on everything from small private vehicles and prestige cars to commercial trucks and buses.
Rapid repair specialists across Australia and New Zealand for cars that are still
drivable, using state-of-the-art technologies and innovative processes. Focused on
consistent, high-quality service with fast vehicle turnaround times.
Addressing higher severity collisions, where more complex repairs are required
for cars with significant damage using the latest training, methodologies, and
technology to deliver a quality and safe repair. The Non-Drive business unit also
incorporates specialist prestige repairers for luxury car repairs.
Heavy vehicle repairers, specialising in trucks and buses. Combining specialist
expertise and ongoing investment in equipment, technology, and people to deliver
outstanding quality of repair and customer service to get our clients’ businesses
back on the road safely, faster.
Supply works in tandem with our other business units, providing essential support in
resourcing and distributing parts to our collision repair sites as well as the broader
collision repair and mechanical industries. Our Supply business unit is an integral
part of the collision repair supply chain, reclaiming end-of-life vehicles and delivering
parts back into the collision repair and mechanical industries as well as providing
alternative parts sourcing opportunities to the market. AMA Group's Supply business
operates primarily through ACM Parts, offering four product ranges: Genuine,
Reclaimed and Aftermarket parts, as well as Collision Repair Consumables.
13
Annual Report | 30 June 2022 Our vision and mission
During FY22, following a period of significant change,
AMA Group defined our vision, mission, and values to
take us into the future.
Our vision
Enduring Mobility
14
AMA Group Our mission
AMA Group extends the life of vehicles through
an integrated network of repairers, dismantlers, and
distributors so our customers can keep moving.
15
Annual Report | 30 June 2022
Our values
The way we run our business is underpinned
by the Group’s core value that
Together we do it right
16
AMA Group Care
One Team
Ownership
Resilience
Performance
We treat
everyone
with empathy
and respect
We are
One AMA,
working
together to a
common goal
We own our
decisions and
actions
We embrace
change and
adapt as
needed
We deliver
value through
performance,
innovation,
and quality
17
Annual Report | 30 June 2022 Strategy
Strategic objectives
Great place
to work
Organic
growth
Acquisition
growth
Cash flow
generation
Margin
expansion
Strategic pillars – the three Ps
Partnerships
Production
Procurement
Focus areas
Reset the Base Business
Grow
Minimise Disruption
Adjustments to
organisational structure
Accelerate third-party parts
and consumables business
Reset contract
pricing
Optimise network
ADAS opportunities
Disintermediation of parts
Groupwide procurement to
leverage benefits of scale
Revenue
diversification
Workforce of
the future
Retention and engagement
Organic and
acquisition growth
Operational improvements
18
AMA Group Operating environment
The Group has also seen a
trend towards lower levels
of ‘low impact’ collisions due
to advancements in vehicle
technology, resulting in
reduced volumes and longer
average repair days.
During the current year,
the Group did not receive
any Government assistance
in relation to the
COVID-19 Pandemic
(2021: $28.4 million).
FY22 was a challenging year
for the Group. The impact
of the COVID-19 pandemic
continued throughout the
year. The first half of the year
was impacted by lockdowns
and lack of traffic, reducing
repair volumes. This flowed
into the early months of the
second half, which was then
impacted by substantial
labour shortages and
absenteeism - driven by
COVID-19 infections, close
contact rules (in the third
quarter) and other illnesses -
reducing the labour available
to deliver volumes.
Significant parts and labour
inflation impacted collision
repair margins. The Group
is committed to increasing
margins and ensuring the
Group is paid fairly for
the value delivered to our
customers through active,
regular negotiations on
pricing agreements.
The Group, like many
other industries has been
substantially impacted
by the shortage of skilled
labour. This has exacerbated
the challenges posed by
COVID-19 and impacted our
businesses’ profitability even
in the face of returning
demand for collision repair.
Site utilisation is expected
to improve from that
experienced in FY22 as
a result of lower levels of
COVID-19 absenteeism,
opening of international
labour markets and
other employee related
initiatives that the Group
has implemented as
well as ongoing network
optimisation.
19
Annual Report | 30 June 2022 The road so far
2013
Acquired commercial
vehicle alloy bull-bar
specialist Custom Alloy.
‘13
‘09
2009
Allomak Ltd changed
name to AMA Group Ltd.
‘14
2014
Acquired Repair
Management
Australia
(4 sites in Victoria).
2007
Acquired auto parts
distributor Alanco
Australia and our
first collision repair
business Mr Gloss.
2005
Allomak Ltd
established to acquire
automotive aftercare
businesses.
‘05
‘07
‘06
2006
Acquired auto protection
accessories company, ECB;
Allomak listed on ASX.
20
AMA Group 2018
Acquired auto aftermarket
group Automotive
Solutions Group.
2020
Acquired Fully Equipped
Group (New Zealand),
Western Trucks (Victoria) and
9 other repair sites; Disposed
ACAD & Fully Equipped to
GUD Holdings.
2015
Acquired Woods Auto Group
(including 14 GoRapid repair
sites, Victoria) and Gemini
Accident Repairs (42 repair
sites across Australia and
New Zealand).
‘15
‘18
‘16
2016
Acquired 6 more
collision repair sites
(3 in Victoria,
2 in Queensland,
1 in Western Australia).
‘20
‘19
2019
Acquired 90% of
Suncorp’s Capital S.M.A.R.T,
100% of ACM Parts, and
30 other collision repair
sites across Australia
(including heavy motor).
‘21
2021
Carl Bizon appointed
Group Chief Executive
Officer (CEO); Acquired
Perth Parts Solutions
(Western Australia)
and National Trucks
(New South Wales).
2014
Acquired Repair
Management
Australia
(4 sites in Victoria).
21
Annual Report | 30 June 2022 Environment, Social
and Governance Report
AMA Group's vision is for Enduring Mobility.
This is reflected in three key pillars of
Sustainability, Innovation, and Community.
At our core, AMA Group’s operations
promote socially responsible outcomes
in an environmentally sustainable manner.
Through our collision repair, end-of-life
vehicle dismantling and parts distribution
businesses, we repair to extend vehicle
life, reuse and renew components,
and reduce waste.
Through our employment and training of our
culturally diverse, geographically dispersed
teams we promote economic advancement
in the communities in which we operate.
This is AMA Group’s first Sustainability
Report. While we are at the beginning of our
environmental, social and governance (ESG)
program formalisation and reporting journey,
our operations already support positive
environmental and social outcomes as
detailed later.
This report is organised in three sections:
> Environment
> Social
> Governance
22
AMA Group 23
Annual Report | 30 June 2022 Environment, Social and Governance Report
24
Environment
Extending the life of vehicles
268k
Repairs
completed
Through vehicle repair, AMA Group contributes to
limiting new vehicle production and to waste reduction, as
vehicles stay on the road longer instead of being replaced.
We contribute by extending the vehicle’s useful life, even
after significant collision damage, through manufacturer
approved repair techniques.
AMA Group is committed to careful consideration and
increase in "repairing" instead of "replacing" a greater
proportion of components as part of its longer-term
production systems. A part repaired is a part that is
not required to be produced.
Reclaiming and refurbishing parts from
end-of-life vehicles
At target based on
current capacity –
Plan to increase
targets line with
capacity increases
+60%
target
over FY23
7,593
Vehicles
dismantled
+35%
over FY22
Total number
of components
we reclaim
and refurbish
from a vehicle
Through our ACM Parts business, we are actively involved
in the return of components from end-of-life (written off)
vehicles to the collision and mechanical repair industries.
Key components reclaimed by ACM Parts in FY22 were
engines, transmissions, doors, panels, and headlamps.
The reclamation of components for sale back into collision
and mechanical repair lifecycles, and the refurbishment of
select parts, reduces waste directed to landfill and reduces
the demand for new parts production, saving materials
and energy used in the manufacturing process.
ACM Parts has increased the proportion of parts reclaimed
from end-of-life vehicles by 112% over FY22, with a target of
150% increase over FY23.
Our ACM Parts dismantling operations also include
separation of recyclable materials from true “scrap” in
end-of-life vehicles, and focuses on safe, environmentally
conscious reclamation and disposal of end-of-life vehicle
products including fuel, oils, coolant, batteries, and
air conditioner gas.
In FY22, ACM Parts also introduced parts refurbishment,
where partially damaged parts are returned to replacement
quality condition for resale. This program has commenced
with a focus on headlamps, and we plan to expand into
plastic bumper bars and metal panel products in FY23.
AMA Group
Environment, Social and Governance Report
Environment
28 sites have completed works and are fully compliant with
two sites in progress, requiring more extensive work, which
is targeted for completion in 1Q23.
Environmental Awareness training was also delivered to
every site manager to begin the education of all managers
regarding the Group’s potential environmental impacts.
The training focused on our three greatest environmental
risks; wastewater, chemical spills, and air emissions. Site
managers gained a strong understanding of the correct
processes and equipment required to protect stormwater
drains from pollution, how to safely clean up chemical spills
and how to contain any emissions released by ensuring
air extraction units remain in good working condition.
Supporting new technologies
AMA Group is committed to supporting new technologies
for the betterment of our environment, by ensuring
our network is equipped for the repair of these new
technologies. While electronic vehicles currently only
account for a very small number of the total cars on
Australian and New Zealand roads, AMA Group’s Porsche,
Mercedes-Benz and Tesla facilities, as well as our Eagle
Farm facility are already equipped with electric vehicle
charging units. Our Mercedes-Benz and Tesla accredited
repair facilities are equipped with the required isolation bays
and technicians at these sites have undertaken specialised
training for electric vehicle disconnection and reconnection
by our OEM partners. We will continue to ensure our
technicians and facilities are equipped to support the
ongoing evolution of cars on Australian and New Zealand
roads to increasingly sustainable solutions and will continue
to scale capacity in our operations to meet demand.
Environment & Sustainability Policy
We recently confirmed our commitment to meeting our
high standard of business excellence in an environmentally
responsible and sustainable way through a formalised
Environment & Sustainability Policy.
Production environmental efficiency
Through production techniques and facilities-based
initiatives, AMA Group seeks to minimise the impact of our
operations on the environment. We have identified three
key areas of focus which we can influence, and which will
make a difference to our environmental impact.
■ Waste reduction and recycling: we have recycling in
place across 119 sites, as well as metal and cardboard
programs in 96 and 154 sites, respectively to facilitate
recycling efforts. The Group plans to expand these
initiatives across the network.
■ Energy reduction (LED lighting): Since 2020, 11 sites
across the network have transitioned to LED lighting
options, instead of fluorescent or incandescent lighting
sources. We plan to investigate and develop business
cases to transition additional sites across the network
to LED lighting each year.
■ Green energy (solar): In FY22, the Group leased a
Somerton warehouse for ACM Parts, which is equipped
with solar panels. Due consideration will be given to
future leases and the availability of sites with solar
options. In the medium-term the Group plans to
explore additional solar options across the network.
Water-based paint
AMA Group, partnering with our paint supplier, uses
water-based paint technology throughout our whole
repair network. The water-based product releases less
volatile organic solvents (<10%) into the atmosphere
compared to solvent-based paint, which is a significant
environmental benefit, as well as supporting the safety
and wellbeing of our employees.
The product also provides optimal colour accuracy and
ease of application, improving our efficiency, resulting in
less overall product needed per job whilst delivering
a high-end result.
Environmental compliance
AMA Group is dedicated to good corporate citizenship and
is committed to ensuring compliance with all statutory and
government requirements pertaining to environment
and sustainability.
Wash bays were the main environmental focus for the
Group in FY22, with 30 sites originally identified as targets
for upgrades. Upgrades varied from new oil separators,
to physical bunding and drain guards across these sites.
25
Annual Report | 30 June 2022 Our Social Sustainability Strategy, while in its infancy, is
founded on four core tenets:
■ Reflecting the Community
■ Enhancing the Community
■ Protecting the Community
■ Supporting the Community
Gender diversity
We are committed to improving the gender balance at all
levels of the organisation and particularly in traditionally
male-dominated roles. We will continue to review our
policies and practices to ensure these are inclusive.
There has been a focus on flexible rostering and working
arrangements at sites through FY22 as a key part of
attracting greater diversity.
Of 13 AMA Group employees nominated for the 2022 Paint
and Panel Women in Collision Awards, two won their
categories, highlighting the important roles that women
play in our business and industry.
The following table represents the current gender
breakdown of our workforce:
Level
Non-Executive Directors
(Board)
Senior Executives 1
Other Levels
Total
Proportion of
women %
Proportion of
men %
33%
29%
15%
15%
67%
71%
85%
85%
1 Senior Executives are defined as the Group CEO and direct reports to the
Group CEO.
Environment, Social and Governance Report
Social
AMA Group’s Social strategy is founded on Community,
one of the three pillars of our vision of Enduring Mobility.
We are committed to helping communities be more
mobile, more resilient, and more sustainable.
When referring to community, we mean the communities
in which we operate, the communities we serve and the
community of people who make up the AMA Group Team.
Reflecting the community
Diversity, equity and inclusion
We are committed to building a diverse workforce that
recognises and embraces differences, and provides a safe,
respectful, and inclusive environment for all our people.
We recognise the benefits gained from having a workforce
that reflects the communities that we work in; including
attraction and retention of talent, improved engagement,
increased productivity and access to broader perspectives
and ideas.
AMA Group operates in a traditionally male-dominated
industry. We currently have 15% female participation across
the company. AMA Group is focusing on building female
participation in the industry by identifying and promoting
female role models such as our 2022 Women in Collision
winners, Isabella Turrise and Sheridan Gibson.
AMA Group also has 266 Team members who are skilled
migrants, and we have partnerships to better attract and
include Indigenous staff and people with disabilities.
We are an equal opportunity employer and are committed
to ensuring our processes and policies are inclusive for all,
regardless of age, religion, national origin, disability, sexual
orientation, or gender identity. This includes ensuring we
follow best practice recruitment processes which base key
selection criteria on experience, merit, and competency for
each role with a focus on gender equality.
Recruitment practices
AMA Group is continually reviewing and updating our
recruitment practices to attract a broader talent pool.
We have expanded our advertising to print and radio in
targeted areas, attended career expos in regions where
we have higher apprentice vacancies, and expanded our
employee referral program.
We recognise that there are people from a wide variety of
backgrounds with the desire and talents to contribute to
our business. To that end, we have developed partnerships
with groups and industry bodies to attract candidates from
diverse backgrounds including people with disabilities,
ex-prisoners, Aboriginal and Torres Strait Islander
peoples and refugees.
Age diversity
Age diversity brings a wealth of experience and knowledge
and enables skills to be taught organically. Our experienced
tradespeople act as mentors to apprentices and new Team
members. Our Team members represent all age groups
with most being aged 20-49 years old. 4% are aged
15-19 years old and 25% over 50 years. While apprentices
are typically school leavers, 9.6% are mature age i.e., over
25 years old.
26
AMA Group Environment, Social and Governance Report
Social
Enhancing the community
Workforce of the future
AMA Group is focussed on building our future workforce
by growing our apprentice program, building leadership
capability, and ensuring our people are at the forefront of
their trade.
Apprentices
We are committed to developing the next generation of
tradespeople for our business and the industry, and aim
to hire an additional 300 apprentices in FY23. This is in
addition to the 317 apprentices that we currently have.
In FY22 we appointed an Apprentice Program Manager to
oversee the apprentice program and provide end-to-end
support for apprentices and their managers with a focus on
attraction, progression, and retention.
Skilled migration
Skilled migrants currently make up 8% of our workforce.
There has been a strong focus on international recruitment
following the reopening of borders in H2 FY22, with activity
across over 16 countries. We support new team members
through their arrival in Australia with assistance provided to
settle them into their new country and AMA Group.
Technical training
We will continue to invest in technical skills training to
ensure our people remain future ready.
As our industry advances, so must our technical skills
and we continue to provide dedicated training to upskill
our workforce. Our tradespeople participate in a variety
of training delivered through I-CAR, OEM providers and
industry training alliance partners such as BASF and
Car-O-Liner. Training courses are conducted online,
virtually and face to face. We will continue to expand
the training offering across AMA Group.
Leadership training
We will continue to build leadership capability across all
levels of the company. The focus for FY22 has been on
building the capability of our frontline leaders.
Frontline Leadership Training
The Frontline Leaders Program has been designed to
build leadership foundations and ensure that leaders
understand their responsibilities beyond the technical
aspects of their roles.
In addition to building leadership capability, participants are
able to develop their internal networks and leverage broad
experience and knowledge from across the organisation.
27
Annual Report | 30 June 2022 Environment, Social and Governance Report
Social
Protecting the community
Employment standards
AMA Group is committed to meeting
employment standards for our
employees. We meet and regularly
review our employer obligations
towards our employees.
Remuneration practices
We meet our employer obligations by:
■ providing fair remuneration
for employees' skills and
experience. This Is reviewed upon
commencement of employment
and through the newly introduced
annual remuneration review across
the entirety of AMA Group
■ regularly reviewing remuneration
practices to ensure we meet our
obligations, including but not
limited to minimum wage and
award compliance reviews
■ upskilling and training our
people on employment standards
and obligations.
Remuneration equality
In FY22, for the first time, AMA Group
provided a group-combined report
to the Workplace Gender Equality
Agency (WGEA). This has given us
the opportunity to review and identify
gender pay equity anomalies across
the whole Group and spectrum
of roles.
As a result, we have implemented two
immediate actions; firstly awareness
training on gender pay equity for the
Talent Acquisition team to ensure that
gender pay equity forms part of every
hiring consideration, and secondly an
elevation to internal benchmarking
and relativity reviews by the Chief
People Officer upon any appointment
of a woman into senior
management roles. As a result, we
have seen an uplift in remuneration
for internal appointment of women
into senior roles to ensure their
remuneration is commensurate with
those of externally hired men.
This is the start to a broader focus for
the Group on gender equity reviews.
Together with our desire to increase
female participation in our workforce,
this will set AMA Group up as an
attractive employer for women.
Workplace health and safety
Take the LEAD is a behavioural
change program, specifically
designed by and for AMA Group.
The key focus of the program is to
empower all Team members to take
the lead on their health and safety.
The program aims to improve overall
safety culture from being reactive and
dependent, to independent where all
employees lead by example, lead with
care and lead by choice.
LEAD is an acronym for:
■ LOOK out for hazards and
unsafe practices to create a safe
working environment
■ ENGAGE with Team members so
everyone is aware of risks and can
recognise safe behaviours
■ ACT quickly to manage incidents
and injuries and
■ DEBRIEF and share learnings
from incidents by consulting all
Team members.
New collateral has been developed
and received by every site including
new Safety boards, a Take the LEAD
Leader’s Guide, and posters targeted
28
at AMA Group’s highest risk activities
to ensure safety messaging is clearly
visible and front of mind throughout
each of our sites.
The program is accompanied by a
monthly Toolbox Talk that targets
key themes affecting sites across
our network. The Health, Safety and
Environment team will continue
to develop monthly campaigns to
ensure focus and risk mitigation is
being completed at all sites.
Responsible Repair
Standards – repairing to
manufacturer requirements
The design and construction of motor
vehicles is continually evolving, and
it is critical that all repairs are carried
out in accordance with the latest
applicable industry standards and
codes of practice to ensure the safety
of our Team and the vehicle owner.
Due to the complexity of different
types of substrates used in the
construction of vehicles, OEM repair
methods must be followed as the
vehicles are designed to react in a
specific way in an accident. Once
repaired, the vehicle must react
the same way if involved in another
accident. Even windscreens are part
of the overall makeup of the vehicle
strength. Further, the explosion
of Automated Driver Assistance
Systems (ADAS) has added another
dimension to repair requirements.
Following repair methods and
standards take the guesswork out
of the repair process and ensures
that we return our vehicles in a safe,
pre-accident condition.
Following repair methods also ensures
the safety of our Team. For example,
disengagement / reengagement of
electric vehicles must be completed
by trained technicians before and
after repair, following specific steps.
Another example is the use of mixed
materials. When repairing mixed
materials, the repair methods specify
dust and fume exhaust requirements.
Failure to do this can result in the
ignition of the dust.
We are also encouraging insurers to
adopt world best practice standards
and scan all vehicles pre and post
repairs to ensure any fault codes are
identified and were consistent with
the accident repaired. Where fault
codes are not consistent with the
accident, the vehicle owner is advised
to ensure full safety of the vehicle.
Many of our insurance partners have
now adopted this practice with our
centres equipped to complete the
scanning service.
AMA Group
Environment, Social and Governance Report
Social and Governance
Supporting the community
AMA Group Welfare Fund
Through the AMA Group Welfare Fund, we support the
welfare of our employees and their families. The Welfare
Fund delivers a tangible benefit to our employees who are
facing financial hardship or unforeseen circumstances.
Supported by employee and AMA Group contributions,
the Welfare Fund is accessible by all employees of the
Group and their families in emergencies such as, but not
limited to, natural disasters, medical emergencies, severe
illnesses or death.
In FY22, the Fund continued to support our Team
members and their families through bereavement,
illness, and natural disasters.
Sponsorships and partnerships
A key pillar in AMA Group’s vision is community. Our goal
is to be a positive force in every community in which our
Team lives and works, by helping those communities to be
more mobile, more resilient, and more sustainable. We will
empower individuals and teams all over our network to give
back to their local communities. Our Team members will
identify local causes that are meaningful to them and will
play an active role in forging partnerships between those
causes and AMA Group.
While at an early stage in this journey, the Group has a
well-established partnership with the Cowboys Foundation
in Queensland, which embodies the spirit of grassroots
community partnerships we aim to replicate throughout.
In FY22, AMA Group also rolled out a group-wide defibrillator
partnership, with a number of these life-saving devices
donated to community groups as nominated by our Team.
Governance
Governance
AMA Group’s governance framework plays an important
role in helping our business deliver on its strategy. AMA
Group’s governance framework, including our statement
of compliance with the 4th edition of the ASX Corporate
Governance Council’s Principles and Recommendations,
is detailed in our 2022 Corporate Governance Statement,
which is available on our website together with key
governance documents, including charters and policies.
Modern slavery
AMA Group’s Modern Slavery Statement details the policies
and practices in place to reduce the risk of modern slavery
and other unethical behaviour in both our operations and
supply chain. AMA Group respects ethical labour practices
and has a zero-tolerance for any form of human rights
abuses, including in our operations and supply chains.
Whistleblower
AMA Group recognises the importance of identifying
wrongdoing or conduct that is not consistent with the
Group’s corporate culture and values. Our Whistleblower
Policy encourages Directors, employees, contractors
and suppliers who have witnessed, or know about, any
misconduct or suspected misconduct to raise such matters
without fear of intimidation, disadvantage or reprisal.
The AMA Way
The AMA Way is AMA Group’s Code of Conduct and
articulates the behaviours expected of our Directors and
Team Members. All Directors and employees are expected
to align their actions with our Code of Conduct and AMA
Group’s values whenever they are representing the Group.
29
Annual Report | 30 June 2022 Directors’
Report
Introduction
Your Directors present their report on the consolidated
entity (referred to hereafter as the “Group”) consisting
of AMA Group Limited (“AMA” or the “Company”) and its
controlled entities for the Financial Year (FY) ended
30 June 2022.
This Directors’ Report has been prepared in accordance
with the requirements of Division 1 of Part 2M.3 of the
Corporations Act 2001.
Board of Directors
The Directors of AMA Group Limited during the year and
up to the date of this report were (full financial year
unless specified):
■ Anthony Day (Chair of the Board)
■ Carl Bizon (Chief Executive Officer)
■ Nicole Cook
■ Kyle Loades
■ Simon Moore
■ Paul Ruiz
■ Caroline Waldron (from 1 March 2022)
■ Leath Nicholson (until 18 November 2021)
Principal activities
The principal activity of the Group is the operation and
development of complementary businesses in the
automotive aftercare market. The Group is a leader in the
Australian and New Zealand collision repair industry and
a national supplier in the vehicle accessories market.
30
AMA Group Review and results of operations
The following table shows the year-on-year performance of the relative segments of the Group:
Segment
Vehicle collision repairs
Heavy motor
Supply
Corporate / Eliminations
Total Group
Revenue
$'000
EBITDAI (pre AASB-16)
$'000
FY22
FY21
Change
734,011
53,956
96,849
(39,689)
845,127
799,685
54,088
87,194
(21,047)
919,920
(65,674)
(132)
9,655
(18,642)
(74,793)
FY22
(17,779)
6,572
(3,181)
(17,361)
(31,749)
FY21
Change
50,846
9,283
(1,485)
(4,239)
54,405
(68,625)
(2,711)
(1,696)
(13,122)
(86,154)
Vehicle collision repairs – revenue decrease of $65.7 million is reflective of a 14% volume reduction. This revenue
reduction, along with the removal of COVID-19 Government support and higher operating expenses, resulted in a
$68.6 million reduction in EBITDAI for this segment.
Heavy motor – revenue and volumes were consistent with FY21, while EBITDAI was impacted by the mix of work and
cost increases.
Supply – increased internal sales resulted in an over 10% revenue increase for this segment. EBITDAI was impacted by the
consolidation and establishment of new warehousing space in Victoria.
Corporate – centralisation of key support functions such as People and IT as well as establishment of a number of people
retention initiatives including a company-wide employee share scheme increased corporate costs.
Refer to the "Operating Environment" section of the Annual Report for further information in relation to operational
outcomes in FY22.
31
Annual Report | 30 June 2022 Directors’ Report Financial results
The Group’s results for the year are as follows.
Revenue
Operating expenses
Fair value adjustments on contingent vendor consideration
Depreciation & amortisation
Impairment expense
Operating loss before interest and tax
Finance costs
Income tax benefit
Discontinued operations
Net loss after tax
Revenue decreased 8% for FY22 reflecting 13.5% lower
repair volumes driven by a combination of first half
lockdowns and second half labour/parts availability.
Refer to note B2 for disaggregation of revenue and other
income by reporting segment.
Operating expenses – The Group is focused on the
procurement of paint, parts and consumables and
securing the quality products needed to execute
operations on industry leading terms. The Group finished
FY22 with approximately 3,500 employees (FY21: 3,700),
with lower numbers due to a number of vehicle repair
site closures in FY22. Gross employee benefits expense
(before the benefit of wage subsidies) decreased 1% from
FY21, with the 5% decrease in employee numbers partly
offset by wage growth and other employee costs such as
the Employee Share Scheme. In the prior year, the Group
benefited from the Australian Federal Government’s
JobKeeper Assistance Program and the New Zealand
Wage Subsidy, which contributed a $28.4 million reduction
to operating expenses. The Group continues to manage
its operating expenses by working continuously to identify
costs savings. Other expenses include items such as
occupancy costs, professional services (compliance, legal,
audit, tax, and recruitment costs), information technology,
operational expenditure, insurance, replacement tools,
registrations and subscriptions.
Fair value adjustments on contingent vendor
consideration – For the year ending 30 June 2022,
the Group recognised a $13.7 million gain on fair value
adjustment on contingent vendor consideration for
continuing operations (2021: $6.0 million expense).
Acquisition earn-outs are generally contingent on profit
measures such as EBITDAI or EBIT. The net gain primarily
represents earn outs that either underperformed against
the earn out expectation or were earn outs settled by a
fixed number of AMA shares, with the AMA share price
declining during the earn out period resulting in a gain
for the group as the earn out settlement was a lower
value of shares.
Depreciation and amortisation – Depreciation of
right-of-use assets represents 55% of the total depreciation
and amortisation expense. Amortisation of intangibles,
specifically the customer contract between Capital
S.M.A.R.T and Suncorp represents 22% of the total
depreciation and amortisation expense (see note B3(A)).
FY22
$'000
845,127
(826,076)
13,729
(78,754)
(105,513)
(151,487)
(31,339)
34,818
-
(148,008)
FY21
$'000
919,920
(813,648)
(5,977)
(81,289)
(102,465)
(83,459)
(30,054)
2,283
12,151
(99,079)
Change
$'000
(74,793)
(12,428)
19,706
2,535
(3,048)
(68,028)
(1,285)
32,535
(12,151)
(48,929)
Impairment expense – FY22 impairment relates to
impairment of goodwill of $80.7 million and right-of-use
assets and property, plant & equipment for sites that
have been closed during the year or are hibernated and
expected to permanently close. Prior year included a
$102.5 million impairment ($95.8 million goodwill,
$4.9 million non-current assets such as property, plant, and
equipment and $1.4 million right-of-use assets). Further
details of impairment expense is set out in note B3(C).
Finance costs – $18.3 million of finance costs relate to
interest expense on lease liabilities (2021: $19.5 million).
Interest and finance charges on the senior debt and
convertible notes increased compared to the prior
comparative period. This was caused by the effective
interest rate on borrowings increasing to 4.3% (FY21: 3.1%)
as a result of the 4% fixed rate convertible note issuance
during the year as well as base rate increases on working
capital facilities. Fixed rate swaps on senior debt facilities
were in place during both current and prior year. This rate
increase more than offset the impact of lower average
debt levels in FY22 arising from the repayment of debt
following the October 2021 rights issue.
Income tax benefit – Income tax benefit represents
approximately 30% of the loss before tax (after adjusting
for impairment of goodwill). In the prior year, the Group
had several permanent differences and items which are
not assessable or deductible, including impairment
expense, fair value adjustments on contingent vendor
consideration and the divestment of ACAD and Fully
Equipped group of businesses.
The Group has revenue losses of $31.9 million and capital
losses of $12.3 million.
Discontinued operations – In prior year, $12.2 million of
profit arose from the operations and gain on sale (net of
transaction costs) of ACAD and Fully Equipped businesses
(excluding ACM Parts and FluidDrive) to GUD Holdings
Limited, which was completed on 31 December 2020.
32
AMA GroupDirectors’ Report Normalised EBITDAI
Normalised EBITDAI is used by the Group to define the underlying results, adjusted for abnormal and non-recurring costs
which are determined as not in the ordinary course of business.
Non-IFRS measures, including Normalised EBITDAI, are financial measures used by management and the Directors as the
primary measures of assessing the financial performance of the Group and individual segments. The Directors also believe
that these non-IFRS measures assist in providing additional meaningful information for stakeholders and provide them with
the ability to compare against prior periods in a consistent manner.
The table below provides a reconciliation to Normalised EBITDAI for the Group and is unaudited, non-IFRS financial
information. There are no normalisations for the impact of the COVID-19 pandemic.
Reconciliation to normalised EBITDAI
Operating loss before interest and tax
Adjustments:
Depreciation, amortisation & impairment
Fair value adjustments on contingent vendor consideration
ACAD and Fully Equipped businesses sold
Post-AASB 16 Earnings before interest, tax, depreciation, amortisation, impairment and
fair value adjustments (“Post-AASB 16 EBITDAI”, unaudited, non-IFRS term)
Normalisations:
Occupancy costs and obsolete inventory on hibernated sites
Professional services costs on investigations and earn outs
Supplier termination fee
FY22
$'000
FY21
$'000
(151,487)
(83,459)
184,267
(13,729)
-
19,051
183,754
5,977
6,971
113,243
1,938
836
-
-
737
9,437
Normalised Post-AASB 16 EBITDAI (unaudited, non-IFRS term)
21,825
123,417
Capital management
The Group has maintained a sustainable balance sheet and cashflow liquidity has been effectively managed across
the business.
The financial position of the Group is strong with net assets of $219.8 million. As at 30 June 2022, the Group had
$52.2 million in cash and cash equivalents.
During the year, the Group raised $150 million through a rights issue and a convertible note issuance and repaid
$72.5 million of borrowings.
The Group paid earn-outs in respect of existing acquisitions totalling $10.8 million.
In response to the slower COVID-19 recovery, the Group’s financiers agreed to waive covenant testing until 30 September
2022 and provide a revised covenant testing regime in FY23 to reflect the projected volume recovery and commercial
re-pricing activities. No restrictions were imposed by the financiers during the reporting period and the Group was
compliant with all covenants during the period or waivers were received, including as at 30 June 2022.
The net debt calculation, which is presented consistently to the calculation requirements of the Group’s Syndicated Facility
Agreement is set out in the table below.
Net debt
Financial liabilities – drawn cash facilities
Cash and cash equivalents
Net Debt
Contingent vendor consideration – 50% of cash portion
Net debt used in covenant calculations
Jun 2022
$'000
165,000
(52,189)
112,811
1,220
114,031
Dec 2021
$'000
165,000
(81,302)
83,698
3,460
87,158
Jun 2021
$'000
237,500
(64,203)
173,297
7,010
180,307
33
Annual Report | 30 June 2022 Directors’ Report Dividends
As a result of the prolonged and continuing impact of the
COVID-19 pandemic, and the Group’s targeted capital
structure, a final dividend has not been declared. This also
allows the business to focus on capital management and
other investment, growth and expansion plans.
Key risks
The Board is responsible for setting the overall risk culture of
the business. The Group has a risk management framework
in place to identify, understand and manage key strategic,
financial and operational risks.
The Board reviews and guides the Group’s system of risk
management, compliance and internal controls, including
the setting of risk appetite. The Audit and Risk Committee
(ARC) assists the Board in discharging these responsibilities.
The ARC oversees the adequacy and effectiveness of
AMA Group’s internal audit program, risk management
processes and internal control systems. This includes
the monitoring of material business risks and corporate
compliance activities.
The Board is cognisant of the following principal risks that
may materially impact the execution and achievement of our
business strategy and financial performance and position:
■ Growth – Failure to deliver on AMA Group’s strategic
plan including market opportunities and maintaining
a positive brand / reputation.
■ Macroeconomic pressures – Elevated levels of cost
inflation impacting parts and labour costs and ability
to pass on increases to customers.
■ Capital management and funding costs – Inability to
gain and maintain access to cost effective capital for
growth and development opportunities. Short term
liquidity constraints limiting availability of, or ability
to deploy growth funding. Higher costs of funding
with rising interest rates and potential movements in
margins as the Group navigates the recovery period.
■ Insurance pricing/relationships – Exposure to
contractual risks which are not appropriately
identified and/or priced.
■ People management – Inability to hire and retain
the necessary level of skills and experience within
the Group.
These risks are managed and mitigated through various
controls and programs including the bolstering of
corporate commercial, financial and people teams, who are
responsible for actively managing these risks. In addition,
the Company continues to monitor government policies,
regulatory changes and industry trends, and undertakes
regular risk register reviews and updates.
Outlook
The business environment remains challenging and repair
volume remains variable throughout the various states in
which the Group operates.
The Company will continue to work to mitigate the effect
of the current economic downturn on its operations. It is
difficult to predict the severity and duration and when
trading volumes will return to normal run rates.
The Board remains confident in the executive team,
systems and experience and is committed to use of best
practices, economies of scale and infrastructure and
systems to enhance profitability and achieve operational
excellence. The Company remains vigilant when
considering the impact on team members, customers,
suppliers, and the communities we serve.
Accretive growth will remain the Company’s long-term
focus, whether it is through organic growth from the
Company’s existing operations or business acquisitions.
The Directors are confident that AMA Group is well
positioned for success into the future.
Matters subsequent to the end of the
Financial Year
Subsequent to year end, as a result of the prolonged
financial recovery from COVID-19 and to align with the
pathway to implement commercial outcomes and other
measures to improve profitability, the Group further
renegotiated its financial covenants and net senior debt
limit. The revision simplifies the covenants with existing
net senior leverage and fixed charge cover ratio covenants
replaced by a minimum EBITDA requirement, which will be
first tested in December 2022, followed by March 2023 and
June 2023 testing before reverting back to original covenant
requirements in September 2023. The net senior debt limit
that is currently in place also extends through to September
2023. As a result of these revisions, margin increases and
payment-in-kind interest has been added to Facility B and
D ($165,000,000 drawn) over the period that the covenants
are revised (from 19 August 2022 until 30 September 2023).
No other matters or circumstances have occurred
subsequent to period end that have significantly affected,
or may significantly affect, the operations of the Group,
the results of those operations or the state of affairs of the
Group or economic entity in subsequent financial years.
34
AMA GroupDirectors’ Report Directors and Officers
Anthony Day
Non-Executive Chair of the Board
since 1 September 2019
Non-Executive Director
since 28 November 2018
With over 40 years in the insurance industry,
Anthony has a breadth of experience in all areas of
the insurance industry.
His most recent role, until October 2017, was as the Chief
Executive Officer of Suncorp Group’s Insurance Business.
He brings to the Board leadership capability, business
judgement and an intimate understanding of our key
customers, Australasia’s auto insurance companies.
Anthony has a 20-year track record of producing
market-leading results in both growth and profitability,
whilst delivering continuous improvement in operations.
Anthony founded advisory business Elevate CEOs, which
focusses on developing leadership and strategic skills of
senior executives.
Board Committees:
Member of Audit and Risk Committee and
Member of People Committee
Carl Bizon
Executive Director and Group Chief Executive Officer
since 1 February 2021
Non-Executive Director
3 February 2020 to 31 January 2021
Carl’s career in the manufacturing and automotive
industries spans more than 25 years. Carl has held senior
executive roles with world-leading manufacturing
and distribution businesses in various sectors of the
automotive industry.
Carl most recently served as President and CEO of
Horizon Global and prior to that was CEO of Jayco
Corporation and President and Managing Director of
TriMas Corporation’s Cequent subsidiaries in Asia Pacific,
Europe and Africa.
Carl’s expertise and experience extends to mergers
and acquisitions, manufacturing, operations, sales, large
scale project management and IT. He has successfully
led global businesses, improving profitability and
operational performance, delivering efficiencies and
increasing margins.
35
Annual Report | 30 June 2022 Directors’ Report Directors and Officers
Simon Moore
LLB (Hons), BCom (Hons)
Non-Executive Director
since 28 November 2018
Nicole Cook
BA, MBA
Non-Executive Director
since 1 December 2019
Simon founded Colinton Capital Partners in 2017. He is an
experienced private equity investor with significant public
company Board experience. Prior to founding Colinton
Capital Partners, he was a Managing Director and Global
Partner of The Carlyle Group for 12 years.
Nicole is an experienced executive and management
consultant, having spent most of her career in
professional services roles in both established and
start-up businesses, with a particular focus on the
Human Resources sector.
He brings to the Board strong corporate finance skills
and experience having held senior roles in investment,
financial, private equity, investment banking and
academic sectors. Simon has extensive experience in
successfully developing and implementing plans to
assist the growth potential of businesses.
Board Committees:
Member of Audit and Risk Committee (Chair of Audit
and Risk Committee until 19 November 2021)
Other directorships (current and recent):
Simon is currently a Non-Executive Director of Alexium
International Group Limited and has previously served
as Non-Executive Director of Palla Pharma Limited
(resigned 23 May 2022), Firstwave Cloud Technology
Limited (resigned 30 August 2019) and Megaport Limited
(resigned 23 September 2019).
Nicole is currently CEO of SBE Australia. Prior to that,
as CEO of Jobs for NSW, Nicole focussed on driving
innovation through growing Australian businesses in
order to create jobs and skills of the the future. In her role
as Managing Director of innovative global outsourced
recruitment and HR firm PeopleScout, she oversaw the
delivery and growth of their solutions in the APAC region.
Nicole has over 20 years’ experience growing, scaling and
transforming businesses. She is a trusted management
consultant, focuses on driving innovation through
technology and has deep domain expertise in Human
Resources, energy efficiency, supply chain and more.
Board Committees:
Chair of People Committee
Other directorships (current and recent):
Nicole has served as a Non-Executive Director of
Intellihr Limited (resigned 29 October 2020).
36
AMA GroupDirectors’ Report Paul Ruiz
BSc (Economics), FCA, GAICD
Non-Executive Director
since 17 May 2021
Kyle Loades
MBA, FAICD
Non-Executive Director
since 24 May 2021
Paul is a highly regarded professional with a 30 year career
at KPMG, including as a Senior Partner specialising in the
insurance and financial services sectors. During his career
at KPMG, Paul held senior roles at KPMG Australia and
Asia Pacific and was Risk Management Partner for NSW.
Paul’s experience in the financial services sector extends
to private sector insurers, banks, fund managers and
superannuation as well as Government and NGOs.
His industry experience also includes the manufacturing
and motor industries.
Kyle is a seasoned Non-Executive Director and
Advisory Board Member with over two decades of
Board experience in a broad range of industry sectors
including financial services, the automotive, mobility
and transport sectors, infrastructure, emergency
services and technology.
Kyle has deep experience in developing and
implementing transformational growth strategies.
Most notably he was recently Chairman of the NRMA,
where he led a significant and successful operational
and cultural transformation of the business.
Board Committees:
Chair of Audit and Risk Committee (from 19 November
2021, previously Member of Audit and Risk Committee)
Board Committees:
Member of People Committee
Other directorships (current and recent):
Other directorships (current and recent):
Paul also serves as a Non-Executive Director of
Dai-ichi Life Australia/TAL Life and is a member of
NSW Government Audit and Risk Committees. He
also held previous directorships with the Fred Hollows
Foundation and its controlled entity Alina Vision.
Kyle also serves as Independent Chair of Active Super,
Non-Executive Director of Great Southern Bank,
and Non-Executive Chair of Hunter Medical
Research Institute.
37
Annual Report | 30 June 2022 Directors’ Report Directors and Officers
Former Directors
Leath Nicholson, former Non-Executive Director, resigned
from the Board on 18 November 2021. He had served as a
Non-Executive Director since 23 December 2015.
Caroline Waldron
LLB (Hons), GAICD, FGIA
Non-Executive Director
since 1 March 2022
Mark Licciardo
BBus (Accounting), FAICD, FGIA
Company Secretary
since 30 August 2021
Caroline is a Non-Executive Director and cross-border
advisor with over 30 years’ experience in regulated
consumer sectors such as technology, retail, and health.
Her executive experience includes leadership roles in
law, human resources, marketing, risk and internal audit
gained from ASX100 and bluechip organisations. Caroline’s
formal training is in law, and she has been admitted to
the Bar of England and Wales, and the courts of various
jurisdictions including in Australia and New Zealand.
Mark joined AMA Group Limited as Company Secretary
in August 2021. Mark was the founder and Managing
Director of Mertons Corporate Services, and is now
Managing Director, Listed Company Services for Acclime.
Acclime provides company secretarial and corporate
governance consulting services to ASX listed and
unlisted public and private companies.
He is also a former Company Secretary of ASX listed
companies Transurban Group and Australian Foundation
Investment Company Limited.
Board Committees:
Member of Audit and Risk Committee
Other directorships (current and recent):
Caroline currently serves on the Boards of Resimac Group
Limited (since 2020), Genetic Signatures Limited (since
2022) and Southern Cross Care (NSW and ACT).
38
AMA GroupDirectors’ Report Directors interests
Directors’ interest in shares of AMA Group Limited as at the date of this report are set out in the table below.
Director
Anthony Day
Caroline Waldron
Simon Moore
Nicole Cook
Carl Bizon
Paul Ruiz
Kyle Loades
Ordinary Shares Number
704,797
-
41,555,153
135,128
842,858
531,778
172,668
Meetings 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 2022, and the number of meetings attended by each Director are as follows:
Anthony Day
Simon Moore
Nicole Cook
Carl Bizon
Paul Ruiz
Kyle Loades
Caroline Waldron 1
Leath Nicholson 2
Board
meetings
Audit & Risk
Committee meetings
People
Committee meetings
A
14
14
14
14
14
14
4
7
B
14
14
14
14
14
14
4
7
A
6
6
-
-
6
-
1
4
B
6
6
-
-
6
-
1
4
A
6
-
6
-
-
6
-
-
B
6
-
6
-
-
6
-
-
Key:
A Number of meetings attended.
B Number of meetings held during the time the Director held office or was a member of the committee during the period.
- Not a member of the relevant committee
1 Caroline Waldron was appointed as a Non-Executive Director on 1 March 2022, and a member of the Audit & Risk Committee effective 26 May 2022.
2 Leath Nicholson resigned as a Non-Executive Director on 18 November 2021.
39
Annual Report | 30 June 2022 Directors’ Report Directors’ Report
Remuneration Report
Annual statement by the
People Committee Chair
On behalf of the Board, we are pleased to present the AMA
Group FY22 Remuneration Report. This report focuses on
our remuneration approach and outcomes, and our people
highlights for the financial year ended 30 June 2022.
Operating conditions
Entering the FY22 financial year, the Board and
Management were optimistic about setting goals aligned
to a post-pandemic recovery. With the recruitment of new
Board members expanding our diversity and skills profile
and the recruitment of a new management team, we were
ready to return the business to pre-pandemic levels.
However, the FY22 year was characterised by ongoing
challenges presented by the COVID-19 pandemic.
The first half of the year was impacted by lockdowns and
reduced traffic movement, driving substantially reduced
repair volumes in the first half and into the early months
of the second half.
As traffic volumes and repair demand increased, the
impact of the pandemic on our workforce was significant.
Our workforce was affected by absenteeism and labour
shortages driven by shrinking talent pools, increased
competition for local and global talent, and reduced
migration of skilled trades.
The highly competitive labour market, resulting wage
pressures, and parts supply chain disruptions continue to
present capacity constraints as repair demand continues
to increase.
New Board and Management
Following a thorough recruitment process, Caroline
Waldron, a Non-Executive Director and cross-border
advisor with over 30 years’ experience joined the Board in
March 2022 as an independent Non-Executive Director,
demonstrating the Board’s long-term strategy of growing
the capability, diversity, and independence of its members.
The Group appointed Geoff Trumbull as Group Chief
Financial Officer. Previously at Transurban, Geoff will ensure
the Group’s financial structures are well set up to support
our growth ambitions. Mathew Cooper was appointed as
Group Chief Operating Officer. He joined us from Bapcor
and has extensive experience in branch networks and the
automotive parts industry to support and facilitate the
acceleration of the Group’s operational strategy. Information
regarding the remuneration structure for the CFO and
COO is provided in the Executive Remuneration section
of this report.
During the year, the Board reviewed the executive
remuneration framework including the short and long-term
variable pay plans to ensure focus on key deliverables in the
areas of growth, quality, and people.
We reweighted STI and LTI opportunities to concentrate
the new Executive team on priority objectives of the Group.
For the STI, we refined financial and non-financial measures
and added a deferral into equity to further align executives
with the shareholder interests. For the LTI, it means a
complete focus on Shareholder Value by changing the EPS
measure to an absolute TSR measure and extending the
comparator group for the relative TSR. For FY22, no STI was
awarded to the Group CEO, COO and CFO as the EBITDA
gateway was not met.
As we look to FY23, we will continue to set incentive
measures that align all stakeholders including
management, employees and shareholders, driving
outcomes that further stabilise the business post-pandemic.
40
AMA GroupRemuneration ReportDirectors’ Report Attracting & retaining the workforce
AMA Group is committed to addressing labour shortage
issues through focused initiatives targeting attraction
and retention of our workforce, as we seek to create the
workforce of the future.
Recognising the reduced overall domestic and global talent
pool, AMA Group is leading the charge in building the next
generation of talent for the entire collision repair industry,
starting with the apprenticeships and international hiring
programs. As of June 30 2022, we had 317 apprentices and
266 international hires across our network. In addition to
attracting and building new talent pools, we aim to retain
the talent we bring into the organisation. The launch of
the Employee Share Plan is directly linked to ensuring
our workforce are both rewarded for their hard work and
invested in the Group’s success. Finally, we are refining our
Employee Value Proposition at all levels of the organisation
to ensure we are an employer of choice for the industry.
One AMA
Throughout the FY22 year, we continued our focus on
People and Culture, and the delivery of One AMA, a
behavioural and cultural change that seeks to realise
the benefits of belonging to a large organisation such
as AMA Group.
Our commitment to an accountable culture
In FY22 we were committed to improving the safety of
our workplaces, reducing our LTIFR to 4.27 from 5.14 in
FY21. Exceeding our safety targets was one of the most
significant achievements of the entire team. We also
increased our training and compliance programs, and
streamlined policies and internal processes.
Close
During the year, the People, Culture, Remuneration and
Nominations Committee simplified its name to the
People Committee while maintaining a comprehensive
remit on all things related to the workforce and in
recognition of the significance human capital has in the
overall success of the AMA Group business. Through this
lens, progress was also made in the areas of Diversity
& Inclusion in an industry that is not traditionally
characterised by its diverse nature. Achieving 33% and
29% female representation of Non-Executive Directors
and senior executives respectively is demonstrative of
our commitment to progress in this area now and
into the future.
We trust this Remuneration
Report provides insight into the
high priority the Board places
on listening and responding
to our stakeholders, including
shareholders, employees, and
the broader community.
Nicole Cook
Chair of the People Committee
41
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report
Introduction
This Remuneration Report provides shareholders with an understanding of our remuneration strategy and outcomes for our
KMP for the year ended 30 June 2022.
This report is presented in accordance with the requirements of the Corporations Act 2001 and its regulations. Information
has been audited as required by Section 308 (3C) of the Corporations Act 2001.
Key Management Personnel
The KMP of the Group comprise all Directors (Executive and Non-executive) and other members of AMA Group’s Executive
Management who have authority and responsibility for planning, directing and controlling the activities of the Group.
The table below sets out the details of those persons who were KMP during FY22.
Name
Position
Dates
Chair of the Board and Non-Executive Director
Full Financial Year
Non-Executive Directors
Anthony Day
Simon Moore
Nicole Cook
Paul Ruiz
Kyle Loades
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Caroline Waldron 1
Non-Executive Director
Former Non-Executive Directors
Leath Nicholson
Non-Executive Director
Full Financial Year
Full Financial Year
Full Financial Year
Full Financial Year
From 1 March 2022
Until 18 November 2021
Executive Directors
Carl Bizon
Group CEO and Executive Director
Full Financial Year
Executive Management
Geoff Trumbull 2
Mathew Cooper 3
Former Executive Management
David Marino 4
Campbell Jones 4
Steven Becker 5
Darren Basford 6
Group CFO
Group COO
EGM Drive
EGM Non-Drive
Group CFO
Interim Group CFO
From 1 February 2022
From 1 September 2021
Until 31 August 2021
Until 31 August 2021
Until 3 August 2021
From 3 August 2021
until 1 February 2022
People
Committee
ARC
-
Chair
-
-
-
Chair
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Caroline Waldron was appointed as Independent Non-Executive Director on 1 March 2022.
2 Geoff Trumbull was appointed Group CFO on 1 February 2022.
3 Mathew Cooper was appointed Group COO on 1 September 2021.
4 David Marino and Campbell Jones were no longer considered KMP upon the appointment of Mathew Cooper.
5 Steven Becker resigned on 2 July 2021 was no longer considered KMP upon the appointment of Darren Basford.
6 Darren Basford was appointed interim Group CFO on 3 August 2021 and left the Company on 1 March 2022 following the appointment of Geoff Trumbull.
Our remuneration approach
The Board is committed to clear and transparent communication of remuneration arrangements. Our remuneration
approach is focused on appropriately motivating and retaining Executives while ensuring alignment with shareholder
outcomes and delivery against Group strategy.
Remuneration is competitive with Executives in comparable companies and roles and is reviewed against a mix of financial
and non-financial measures designed to reward the achievement of both short and long-term objectives. Our performance
metrics are aligned with the growth and development of all areas of the business including operational performance,
customer satisfaction and our longer-term people strategy.
42
AMA GroupRemuneration ReportDirectors’ Report Remuneration framework
Our strategic priorities
Organic
Growth
Acquisition
Growth
Margin
Expansion
Cashflow
Generation
Great Place
to Work
Our remuneration framework is designed to support the Group’s strategic priorities, attract, retain and motivate
appropriately skilled and talented Executives to drive the business forward, instill a strong performance and governance
culture, and provide a link between executive remuneration, group performance and shareholder return. The Group has a
clear set of principles which guide our remuneration decisions and design.
The Group reviews its remuneration framework regularly to ensure it continues to evolve and be fit-for-purpose ensuring
alignment to market expectations and the businesses' strategic priorities.
Our remuneration principles
Fair and Market
Competitive
Linked to our
Strategic Priorities
Linked to Performance
and Culture
Simple and
Transparent
Aligned to our
Shareholders
Our remuneration framework for FY22
TFR
STI
LTI
Purpose
Link to
performance
Attract and retain Executives
with the capability and
experience to deliver our
strategic objectives and
contribute to the Group’s
financial and operational
performance.
Appropriately compensate
Executives for driving a
performance and governance
culture and delivering on the
business strategy.
Performance
measures
Considerations
■ Skills and experience
■ Accountability
■ Role complexity
■ Market competitive
Reward Executives for
performance against agreed
annual objectives aimed at
achieving the financial and
strategic objectives of
the Group.
Strategic annual objectives are
embedded in the Executive
STI Plan.
Financial Gateway
A minimum Group normalised
EBITDAI of at least 80% of target
must be achieved before any
STIs are payable.
Financial criteria
Group EBITDAI:
Non-Financial criteria
Customer satisfaction:
People initiatives:
Safety:
Operational excellence:
STI at risk
Group CEO and CFO:
up to 100% of TFR
70%
10%
10%
5%
5%
Align performance with the
long-term business strategy to
drive sustained earnings and
long-term shareholder returns.
Performance hurdles are set
by the Board and tested at
the end of the three-year
period to deliver sustained
shareholder value.
Performance measures are
independently tested.
Absolute TSR
50% of LTI allocation
Relative TSR
50% of LTI allocation
LTI at risk
Group CEO and COO:
up to 100% of TFR
Group COO: up to 50% TFR
Group CFO: up to 50% of TFR
Alignment
Attract and retain the best
people based upon the
competitive landscape
among relevant peers.
Reward year-on-year
performance in a balanced and
sustainable manner.
Delivery
Competitive, market-based
fixed remuneration. (Base salary,
statutory superannuation, long
service leave and other minor
fringe benefits)
Performance based incentives
delivered in 50% cash and
50% deferred into equity vesting
after 12 and 24 months.
Performance conditions
must be satisfied before
the conditional rights vest.
Encourages sustainable,
long-term value creation
through equity ownership.
Performance Rights with
allocation calculated at
Face Value.
43
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report
Executive remuneration in detail
Remuneration mix and composition
The level and mix of remuneration is designed to reward the achievement of both short and long-term objectives of the
business. This provides strong alignment between Executive outcomes and performance.
During the year the Board reviewed the Executive Remuneration Framework to ensure it drives the right outcomes for the
Group. As a result of this review, variable pay opportunities were reweighted in favour of short-term outcomes, however
delivery of entitlements arising under the STI has been stretched over a two-year period, including deferral of 50% of any
entitlements into equity.
Year 1
Year 2
Year 3
Year 4
Total Fixed
Remuneration (cash)
Includes Base Salary
and Superannuation
STI
(cash & rights)
50% paid in cash at end
of performance year
25% deferred in rights
for 1 year
25% deferred in rights
for 2 years
LTI
(Performance Rights)
50% subject to relative TSR and 50% subject to absolute TSR
Key:
Grant / Award date
Vesting date
Performance period
Deferral period
The graph to the right represents the
target remuneration mix for Executive
KMP for FY22. The FY22 STI and LTI
represent maximum opportunities
available for Executives assuming the
performance requirements are satisfied.
Key:
TFR
STI
LTI
Group CEO
Carl Bizon
Group CFO
Geoff Trumbull
Group COO
Mathew Cooper
33%
33%
33%
40%
40%
20%
40%
20%
40%
Executive employment agreements
Remuneration and other terms of employment for Executive KMP are formalised in employment agreements and are
summarised in the table below.
Executive KMP
Carl Bizon
Geoff Trumbull
Mathew Cooper
Base salary inclusive of
statutory superannuation
$900,000
$470,000
$650,000
Term of agreement
Ongoing contract
Ongoing contract
Ongoing contract
Notice period and
termination entitlement
Review period 1
6 months
6 months
6 months
Annual
Annual
Annual
1 This review will have regard to such matters as the responsibilities, performance, and remuneration of the employee.
Total fixed remuneration
Total Fixed Remuneration considers the complexity and expertise required of individual roles. To assess the competitiveness
of fixed remuneration, the People Committee considers market data by reference to appropriate independent and externally
sourced comparable benchmark information, as required.
Total Fixed Remuneration comprises cash salary, superannuation and long service leave. Additional annual benefits may
include minor fringe benefits.
44
AMA GroupRemuneration ReportDirectors’ Report Short-term incentives
STI’s are based on the Group’s business and growth strategies and are set annually by the Board at the beginning of the
performance period. Executive KMP and other eligible senior management are entitled to participate in the STI Plan.
STI entitlements are assessed after the end of each financial year and in conjunction with the completion of the external
audit of the Group’s Financial Statements.
Any cash entitlements will be paid at a date determined by the Board following the release of the Group’s financial results to
the ASX and performance rights issued for any deferral into equity.
The below table summarises the objectives of the Group’s STI plan and identifies the performance measures and relevant
weightings for FY22.
Purpose
Motivate and reward employees for contributing to the delivery of annual business performance.
Participation
Executive KMP and other eligible senior management.
Performance
period
Opportunity
The performance period is for the 12 months ended 30 June.
The target STI opportunity for executive KMP is 100% of fixed remuneration with the exception of the
COO (please refer to the Performance and Remuneration Outcomes section of this report).
Where significant outperformance is achieved the Board has discretion to pay above target amounts.
A sliding scale element is incorporated into the relevant performance measures to motivate Executives
to outperform base targets set by the Board.
Financial
gateway
A minimum Group budgeted EBITDAI of at least 80% of target must be achieved before any STIs
are payable.
Performance
targets
The achievement of individual performance targets (once the financial gateway has been achieved)
shall determine the proportion of the potential incentive that will be awarded. Set out below are the
performance goals and weightings that were applied in respect of FY22.
Measure
Category
Weighting
Goals
Financial
Financial
70%
Non-financial
Customer
satisfaction
10%
People
10%
Safety
Operational
excellence
5%
5%
Achieve budgeted EBITDAI 1, Revenue and Cash
flow targets improvement.
Represents how well the Group is meeting the
expectations of our customers and key external
stakeholders. Key strategic measures include
execution of business strategy and delivery of key
business priorities.
Ensures a focus on delivering on key people
activities such as retention, engagement
and compliance.
Ensures focus on delivering on our safety and
wellbeing initiatives, keeping our employees save.
Drives focus on continued process improvement
and the delivery of strong operational and
environmental discipline aligned to the Group’s
business strategy to create sustainable value
for shareholders.
Deferral
50% of any entitlement will be deferred into equity using performance rights.
50% of the deferred portion will vest after 12 months and the other 50% will vest after 24 months
subject to the recipient being still employed by the Group.
1 Budgeted EBITDAI is measured considering the financial impact of any acquisition, and any other significant restructuring cost or normalisations within the
Group, or changes in accounting standards, in order that the target is measured on a comparable basis.
45
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report Long term incentives
During the year the Group introduced a new Performance Rights Plan under which the FY21 and FY22 grants have been
made. The key aspects of the plan are summarised in the table below.
Purpose
Eligibility
Instrument
Assist in attracting, motivating, and retaining Executive talent; focus Executives attention on driving
sustainable long-term growth; and align the interest of Executives with those of shareholders.
LTI grants are generally restricted to Executive KMPs and senior management who are most able to
influence shareholder value. Non-executive Directors are not eligible to participate in the LTI plan.
Awards under this plan are made in the form of performance rights which are granted by the Company
for nil consideration. A performance right is a right to acquire one fully paid AMA share provided
specified performance hurdles are met. No dividends/distributions are paid on unvested LTI awards.
Allocation
methodology
The number of performance rights allocated to each participant is set by the Board. Accounting
standards require the estimated valuation of the grants be recognised over the performance period.
The maximum value is based on the estimated fair value calculated at the time of the grant and
amortised in accordance with the accounting standard requirements.
Opportunity
The maximum LTI opportunity is equivalent to 100% of fixed remuneration for the Group CEO and
Group COO and up to 50% of fixed remuneration for the CFO.
Performance
period
Performance
hurdles
Performance measures are tested at the end of the three-year period.
The People Committee review the performance conditions annually to determine appropriate hurdles
based on the Group’s strategy and prevailing market practice. The following performance measures apply
to the LTI grants:
Relative TSR
(50% of LTI
Allocation)
TSR is an objective measure of shareholder value creation and is widely understood
and accepted by various key stakeholders. The Company’s TSR over the performance
period must be equal to or greater than the median TSR performance of the
Comparator Group. The Comparator Group consists of ASX201-300 companies,
excluding non-comparable companies from the Materials, Energy, Information
Technology, Financial and Real Estate sectors.
Absolute TSR
(50% of LTI
allocation)
Absolute TSR measures the growth in the price of shares (modified to account for capital
adjustments where appropriate) together with the value of the dividends over the
Performance Period, assuming that all those dividends are re-invested into new shares.
The absolute TSR growth calculation is a three-year compound annual growth rate (CAGR).
Vesting
schedule
Relative TSR
Relative TSR
(percentile)
Percentage of TSR-tested
rights to vest
Absolute TSR
TSR CAGR
Percentage of absolute
TSR-tested rights to vest
<50th
50th
Nil
50%
75th and above
100%
<8%
8%
12%
Nil
50%
75%
15% and above
100%
Vesting/
delivery
Straight line pro-rate vesting form 50%-100%
Straight line pro-rate vesting between each point
Vesting of LTI grants is dependent on achieving relative and absolute TSR performance targets
which are tested at the end of the three-year period. The performance rights will automatically vest
and be exercised if, and when, the Board determines the performance conditions are achieved.
If the performance rights vest, entitlements may be satisfied by either an allotment of new shares to
participants or by the purchase of existing shares on-market. The Board retains a discretion to pay a
cash amount, equivalent in value to the Shares that would have been issued, acquired or transferred.
Any performance rights that do not vest at the end of the performance period will lapse. The terms of
the performance rights do not include re-testing provisions.
Termination/
forfeiture
Executive KMP must be employed at the time of vesting to receive an entitlement to shares.
The Board has discretion on vesting of unvested performance rights where an employee leaves due
to retirement, retrenchment or redundancy, or termination by mutual consent. Where an employee
leaves due to resignation or termination all unvested performance rights will lapse.
Employee share plan
The company introduced and made a maiden grant under the new General Employee Share Plan in March 2022.
Eligible employees can receive up to $1,000 worth of AMA Group Shares each year for no cash payment under the General
Employee Share Plan. The number of Shares received is calculated by dividing $1,000 by the Volume Weighted Average Price
(VWAP) of AMA Shares five trading days before the Allocation Date.
The Shares carry all the same rights as fully owned Shares, however, they cannot be sold, transferred, or otherwise disposed
of or dealt with for a period of three years after the Allocation Date (Restriction Period). Following the expiry of the Restriction
Period, participants will be free to sell their Shares (subject to the terms of the AMA Group Securities Trading Policy).
If a participant ceases employment with the Company the restriction will no longer apply, and the Shares may be sold or
transferred at the participant’s discretion.
46
AMA GroupRemuneration ReportDirectors’ Report Performance and remuneration outcomes for FY22
Company performance
The Group has operated under a challenging environment over the past three years as a result of COVID-19 lockdowns and
ongoing labour availability and supply chain issues. During FY22 there has been a number of vehicle collision repair site
closures and commercial reviews undertaken to improve financial performance.
The table below shows historical Company performance across a range of key measures. Performance across earnings
and individual measures is reflected directly in STI awards. LTI outcomes are aligned with shareholder returns over the last
three years.
Company Performance
Revenue and other income ($M)
Net Profit/(loss) ($M)
Normalised EBITDAI pre AASB 16 ($M)
Total Shareholder Return
Basic EPS (cents)
Annual TSR (%)
Dividends (cents)
Share price at 30 June ($)
FY18
FY19
FY20
FY21
FY22
509.8
15.4
52.2
2.9
10.8
2.50
1.05
606.7
21.7
58.2
3.4
38.8
2.75
1.43
825.4
(71.5)
53.2
(9.7)
(58.0)
-
0.60
919.9
(99.1)
71.5
(14.8)
(4.2)
-
0.58
845.1
(148.0)
(29.0)
(15.1)
(70.4)
-
0.17
Fixed remuneration outcomes
Both the CFO and COO were newly appointed this year on 1 February 2022 and 1 September 2021 respectively.
CFO
COO
The remuneration structure for the CFO includes a fixed remuneration component of
$470,000 (inclusive of superannuation); a maximum STI opportunity of 100% of fixed remuneration;
and a maximum LTI opportunity of 50% of fixed remuneration
The remuneration structure for the COO includes a fixed remuneration component of
$650,000 inclusive of superannuation), a maximum STI opportunity of 50% and a maximum
LTI opportunity of 100%.
The COO’s remuneration structure differs from the CFO’s and other senior executives due to
contractual agreements entered prior to changes made to the Executive Remuneration Framework.
Furthermore, under the contractual agreements, the Group acknowledged the COO’s unvested
LTI opportunities from his prior employment that were to be forfeited upon joining the Group.
The COO’s LTI opportunity vests over two tranches. Tranche 1 will vest if the Group meets its
STI gateway for the year. Should the STI gateway not be met, Tranche 1 will be retested under the
performance conditions and timings of Tranche 2.
Tranche 2 is aligned to the Executive LTI structure as outlined above.
There have been no adjustments to Executive KMP fixed remuneration in FY22. The People Committee considers that the
current fixed remuneration for Executive KMP appropriately reflects their skills and experience at this time.
Long term incentive outcomes
Under the new PRP, grants were made during the year to the Group CEO, Carl Bizon relating to FY21 and FY22. Performance
rights for both years were granted on 9 December 2021 following the resolution that passed at the Company’s AGM.
Furthermore, grants were made to the Group CFO and COO, reflecting their time in role from 1 February 2022 and
1 September 2021 respectively.
Performance rights under the PRP were granted on 10 March 2022 to the CFO and on 27 June 2022 to the COO.
All grants were awarded at no cost to the participants and are subject to performance conditions which will be tested at the
end of the three-year performance period except as outlined below.
Accounting standards require the grant date fair value be recognised over the performance period.
For further details on the number of performance rights awarded to Executive KMP during the year refer to the Executive
Remuneration Disclosure section of this report.
Tranche 1 of the COO's LTI was tested following the end of the financial year. As the STI gateway was not met, no rights
vested. The unvested rights will be attached to Tranche 2 of his LTI which is due to be performance tested at the end of FY24
along with the unvested performance rights granted in FY22.
The first grant under the LTI made to the CEO will be tested at the end of FY23.
47
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report
STI outcomes
During the year the Board reviewed the appropriateness of the performance measures linked to the STI’s for Executives.
A main area of the review focused on identifying performance metrics that were measurable, understood and appropriate,
aligned with the growth and development of the business, and to the interests of our shareholders.
In addition to financial performance targets, including a financial performance gateway of achieving 80% of budgeted
EBITDAI, the Board introduced the following clear and measurable non-financial performance metrics for Executives to
achieve their target STI:
■ Customer satisfaction;
■ Operational excellence;
■ Safety, and
■ People initiatives aimed at attracting, developing, motivating and retaining key talent required for the current and
future growth of the business
Further information on the performance goals attached to these non-financial performance metrics can be found in the
Executive Remuneration in Detail section of this report.
STI outcomes for Group executives including the Group CEO, CFO and COO are determined based on performance against
the Group STI scorecard. The table below outlines the Group STI performance measures that applied to the FY22 STI, and the
performance achieved.
Group scorecard category
and performance measures
Weighting
(at target)
Overall FY22
outcome
Performance
assessment
80% of Group normalised EBITDAI
EBITDAI gateway performance was not met
Financial
Group normalised EBITDAI
70%
Revenue
Operating cashflow
Customer
Customer Satisfaction Metric
10%
Rework improvement
Operational excellence
Environmental Plan and Targets established
5%
Safety
Group LTIFR
People
Engagement survey participation
Compliance training module completion
Increasing retention by stabilising
voluntary attrition
5%
10%
Group normalised pre-AASB 16 EBITDAI was
$(29.0m), revenue was $845.1m and operating
cashflow (pre-AASB16) was $(21.4m), all below
threshold performance.
Customer satisfaction metrics target were
achieved in all while rework improved in
only one of the Business Units.
Environmental Plans were established
focussing on Stormwater protection and
Environmental Awareness training across
the entire Group.
Group LTIFR targets were exceeded in
FY22 with an LTIFR of 4.27
Compliance training module completion was
ahead of targets, however the engagement
survey and retention targets were not met.
Key: FY22 outcome
Above target
At target
Between threshold
and target
Not achieved
The following table outlines the FY22 STI outcomes for executive KMP. In line with the STI outcomes for executive KMP,
no STI payments were made to other Executives of the Group.
Executive KMP
Carl Bizon
Geoff Trumbull
Mathew Cooper
Target STI
as a % of fixed
remuneration
Total STI
awarded
($)
Payable
in cash
(50%)
Deferred
into equity,
vesting after
12 months
Deferred
into equity,
vesting after
24 months
% of target
STI awarded
% of target
STI forfeited
100%
100%
50%
-
-
-
-
-
-
-
-
-
-
-
-
0%
0%
0%
100%
100%
100%
48
AMA GroupRemuneration ReportDirectors’ Report Executive remuneration disclosures
FY22 Executive remuneration
The table below sets out the executive remuneration for FY22. Amounts represent the payments relating to the period
during which the individuals were KMP.
Salary 1
Bonus 2
Non-
Monetary
Benefits 3
Long-
Term
Benefits 4
Post-
Employment
Benefits 5
Performance
Rights 6
Total
Performance
related
-
5,437
14,579
135,135
1,055,151
23,568
9,039
-
-
-
-
561,691
12.8%
29.5%
-
-
-
-
12,655
(430,412)
322,461
(133.5%)
Executive Director
Carl
Bizon
2022
2021
876,432
386,836
Former Executive Directors
Andrew
Hopkins
2022
2021
-
740,218
Executive Management
Geoff
Trumbull 7
Mathew
Cooper 8
2022
2021
2022
2021
186,013
-
522,026
-
Former Executive Management
165,816
-
-
-
-
-
-
-
Steven
Becker 9
Steven
Bubulj
David
Marino 10
Campbell
Jones 10
Darren
Basford 11
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
53,166
598,905
239,877
-
263,846
92,917
573,796
93,352
428,564
233,746
-
-
-
-
241,384
-
196,115
-
-
-
-
-
3,135
-
3,135
-
-
641
-
41,624
-
-
-
-
939
-
3,088
9,820
11,633
213,689
-
-
-
-
8,701
19,640
9,154
562,656
-
-
2,266
-
-
-
56,141
709
(557)
-
(333)
1,579
6,296
9,359
580
3,190
-
20,607
(170,140)
689,333
-
-
-
18,058
4,583
25,000
4,532
21,977
11,784
-
(70,745)
(21,795)
(26,547)
(10,278)
(16,397)
-
-
252,450
77,284
819,929
96,965
630,839
249,659
-
5.4%
-
1.6%
-
-
10.1%
-
(28.0%)
(28.2%)
26.2%
(10.6%)
28.5%
-
-
Consolidated Remuneration
2022
2021
2,057,652
2,992,165
843,192
12,646
42,265
41,205
5,986
76,193
107,336
123,849
2,311,545
(714,241)
3,276,703
1 Salary includes short-term absences.
2 Bonuses represent the cash component of the STI awarded.
3 Non-monetary benefits represent the effective net cost to the Group, consisting of the taxable value of fringe benefits aggregated with the associated fringe
benefit tax payable of those benefits.
4 Long-term benefits represents the movement in the provision for long service leave for amounts accrued and paid.
5 Post-employment benefits represent amounts paid for pension and superannuation benefits.
6 Performance Rights represents the accounting expense recognised in relation to performance rights granted in the year. For details on the valuation of the
performance rights including models and assumptions used, please refer to Note F1(A)(iii) in the Consolidated Financial Statements.
These values may not represent the future value that the Executive KMP will receive, as the vesting of the Rights is subject to the achievement of performance
conditions. The probability of the performance conditions being satisfied is assessed at the end of each reporting period to reflect the most current expectation
of vesting. The FY22 amount includes the write-back of the accounting expense recognised in FY20. This is as a result of either the service condition not being
met or a re-assessment that the EPS hurdle will not be achieved.
The Performance Rights granted to Andrew Hopkins, Steven Bubulj, Steven Becker, David Marino and Campbell Jones were forfeited on cessation of employment.
Any share-based payment expense previously recognised under AASB 2 Share-based Payments in respect of the Performance Rights has been reversed.
7 Geoff Trumbull was appointed KMP on 1 February 2022.
8 Mathew Cooper was appointed KMP on 1 September 2021.
9 Steven Becker resigned from the Group CFO position on 2 July 2021.
10 David Marino and Campbell Jones were deemed KMP for the period 1 July 2021 to the appointment of the Group COO on 1 September 2021.
11 Darren Basford served as interim CFO and was not eligible to participate in the Group's variable pay plans.
49
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report
Executive KMP shareholdings
The table below summarises the movements in holdings of interests in shares of AMA Group Limited relating to the period
during which individuals were KMP.
KMP
Executive Directors
Carl Bizon
Executive Management
Geoff Trumbull
Mathew Cooper
Former Executive Management
Steven Becker
Campbell Jones
Total
Opening
Balance
Balance on
appointment
Other changes
(net) 1
Balance on
resignation
Closing
Balance
400,000
-
-
61,112
33,266
494,378
-
-
-
-
-
442,858
-
350,000
-
792,858
-
-
-
(61,112)
(33,266)
(94,378)
842,858
-
350,000
-
1,192,858
1 Other changes (net) represent shares that were purchased or sold during the year.
Executive KMP performance rights
The terms and conditions of each grant of performance rights affecting remuneration in the current or a future reporting
period are set out in the table below:
Executive
KMP
Carl
Bizon
Geoff
Trumbull
Mathew
Cooper
Grant
FY22
FY21 4
FY22
FY22
FY22
Grant date 1
9/12/21
9/12/21
18/2/22
14/6/22
14/6/22
Performance
period
start date
Performance
period
end date
1/7/21
1/7/20
1/7/21
1/7/21
1/7/21
30/6/24
30/6/23
30/6/24
30/6/22
30/6/24
Vesting
date 2
31/8/24
31/8/23
31/8/24
31/8/22
31/8/24
Performance
rights as at
30 June
2,004,900
903,034
218,125
394,753
811,900
Fair value
per
instrument 3
FY22
expense /
(write-back)
RTSR
ATSR
EPS
($)
0.18
0.04
0.14
0.03
0.03
0.21
-
0.18
0.01
0.01
-
0.42
130,319
4,816
-
-
-
11,633
2,995
6,159
1 Grant date is the date on which there is a shared understanding of the terms and conditions of the share-based payment arrangement.
2 Vesting date refers to the date at which the performance conditions are met.
3 The fair value of the performance rights at grant date is determined using appropriate models including a Monte-Carlo simulation for the relative TSR
component and Black Scholes Model for the EPS and ATSR component, and dependent on the vesting conditions. The value of each performance rights is
recognised evenly over the service period ending at the vesting date. For details on the valuation of the performance rights including models and assumptions
used, please refer to Note F1(A)(iii) in the Consolidated Financial Statements.
4 Issued under the previous vesting conditions of EPS (80%) and relative TSR (20%).
The table below summarises the movements during the reporting period in the number of performance rights over ordinary
shares in AMA Group Limited held by each Executive KMP.
Opening
Balance
Granted as
compensation
Lapsed
or forfeited
Closing
Balance
Vested and
exercisable
Executive KMP
Executive Directors
Carl Bizon
Executive Management
Geoff Trumbull
Mathew Cooper
Former Executive Management
Steven Becker 1
David Marino 1
Campbell Jones 1
-
-
-
2,907,934
218,125
1,206,653
-
-
-
2,907,934
218,125
1,206,653
2,129,137
1,225,935
890,637
-
-
584,762
(2,129,137)
(1,225,935)
(1,475,399)
-
-
-
-
-
-
-
-
-
-
Total
4,245,709
4,917,474
(4,830,471)
4,332,712
1 David Marino, Steven Becker and Campbell Jones ceased employment during the year and forfeited performance rights granted to them in prior years upon
cessation of their employment.
Options over unissued shares
No options were granted as remuneration during FY22. As at 30 June 2022 there are no unvested or unexercised options
held by Executive KMP.
50
AMA GroupRemuneration ReportDirectors’ Report
Non-Executive Directors’
arrangements
Policy and approach to setting fees
The remuneration policy for Non-executive Directors aims
to ensure the Group can attract and retain suitably skilled,
experienced and committed individuals to serve on the
Board and remunerate them appropriately for their time
and expertise.
The remuneration policy is reviewed annually by the People
Committee taking into consideration the size and scope of
the Group’s activities, the responsibilities and liabilities of
Directors, and demands placed upon them.
Non-Executive Director fees were reviewed in FY21 and
adjusted effective 1 June 2021. No changes have been
made during FY22.
Changes to Board composition
Following a thorough recruitment process aimed at
enhancing the diversity of skills and expertise of the Board,
and to demonstrate the Board’s long-term strategy of
growing the composition, capability and independence
of its members, Caroline Waldron was appointed as an
independent Non-Executive Director with effect
from 1 March 2022.
Current fee structure
Fees paid to Non-executive Directors are inclusive of
superannuation and reflect the commitment, demands
and responsibilities of the position. Fees are benchmarked
against an appropriate group of comparator companies and
determined within the aggregate Directors’ fee pool limit
of $1,100,000, approved by shareholders at the 2019 AGM.
Non-Executive Directors do not receive variable
remuneration.
Non-Executive directors are entitled to reimbursement for
reasonable business-related expenses and are covered by
the Group’s Directors and Officers liability insurance policy.
Under the Group’s ‘Conflicts of Interest and Related Party
Transaction Policy’, Directors are prohibited from earning
success and other incentive fees from the provision of
professional advisory services.
The table set out below provides a summary of the FY22
Board and Committee fees (inclusive of superannuation).
Fees for being a Committee member are included in the
Non-Executive Director fee.
Position
Chair of the Board
Non-Executive Director
Committee Chair
Fee from 1 June 2021
$
275,000
120,000
15,000
51
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report Non-Executive Directors’ remuneration disclosures
FY22 Non-Executive Directors’ remuneration
The table below sets out the remuneration of Non-Executive Directors of the Group. Amounts represent the payments
relating to the period during which the individuals were KMP.
Non-Executive Directors
Anthony Day
Simon Moore
Nicole Cook
Carl Bizon 1
Paul Ruiz
Kyle Loades
Caroline Waldron 2
Former Non-Executive Directors
Leath Nicholson 3
Consolidated remuneration
2022
$
2021
$
275,000
126,250
135,000
-
129,202
120,000
40,000
46,000
871,452
275,000
52,917
102,917
58,333
15,077
12,500
-
101,667
618,411
1 Carl Bizon transitioned from Non-Executive Director to Group CEO and Executive Director on 1 February 2021. Remuneration included above is up to 31 January 2021.
2 Caroline Waldron was appointed Non-Executive Director on 1 March 2022.
3 Leath Nicholson resigned as Non-Executive Director on 18 November 2021.
Non-Executive Directors’ shareholdings
The table below summarises the movements of interests in shares of AMA Group Limited relating to the period during which
individuals were KMP.
Non-Executive Directors
Anthony Day
Simon Moore
Nicole Cook
Paul Ruiz
Kyle Loades
Caroline Waldron 2
Former Non-Executive Directors
Leath Nicholson
Total
Opening
Balance
Balance on
appointment
Balance on
retirement /
resignation
Other changes
(net) 1
Closing
Balance
519,324
30,577,186
55,000
271,739
43,297
-
1,616,873
33,083,419
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,616,873)
185,473
10,977,967
80,128
260,039
129,371
704,797
41,555,153
135,128
531,778
172,668
-
-
-
-
(1,616,873)
11,632,978
43,099,524
1 Other changes (net) represent shares that were purchased or sold during the year or removal of balances for former NED.
2 Caroline Waldron was appointed Non-Executive Director on 1 March 2022.
Remuneration governance
The role of the People Committee
The role of the Committee is to assist the Board in fulfilling its governance and oversight responsibilities relating to:
■ People: management programs to optimise the contributions of AMA Group employees and further corporate
objectives including succession and leadership development, talent management, diversity, organisational culture,
employee engagement and wellbeing;
■ Remuneration: AMA Group’s remuneration framework, practices and disclosures for the Chair and other Non-Executive
Directors, plus the remuneration, incentives and performance of the Group Chief Executive Officer (CEO); and
■ Nomination: Board and Board Committee composition and succession planning, diversity, perform
52
AMA GroupRemuneration ReportDirectors’ Report
Governance framework
The Group has a robust remuneration governance framework overseen by the Board. This ensures that remuneration
arrangements are appropriately managed and that the agreed frameworks and policies are applied across the Group.
The Board is supported by the People Committee and Audit and Risk Committee. Each committee has its own Charter
setting out its role and responsibilities, composition and how it operates. Further information on these committees is
available on the Company’s website: amagroupltd.com/corporate-governance
The diagram below provides an overview of the remuneration governance framework that has been established by the Group.
Group
Board
Role
The Board maintains overall accountability for oversight
of remuneration policies.
The Board reviews, challenges, applies judgement and,
as appropriate, approves the recommendations made
by the People Committee.
It approves remuneration of Executive KMP and
Non-Executive Directors and the policies and
frameworks that govern both.
People
Committee
The People Committee is the main governing body for
key people and remuneration strategies across the Group.
The role of the People Committee is to provide advice
and assistance to the Board in relation to people
management and remuneration policies, so that
remuneration outcomes for Executives are
appropriate and aligned to Company performance
and shareholder expectations.
Management
Provides recommendations on remuneration
design and outcomes to the People Committee.
Implements remuneration policies.
Independent
external
remuneration
advisors
The People Committee may seek advice from
independent remuneration consultants in determining
appropriate remuneration polices for the Group.
EY is the Board's current independent
remuneration advisor.
Other governance practices
Category
Detail
Board
People
Committee
Management
Independent
External
Remuneration
Advisors
Use of external
advisors
To assist in performing its duties and making recommendation to the Board, the People Committee
has access to independent external consultants to seek advice on various remuneration related
matters as required.
Any recommendations made by consultants in relation to remuneration arrangements for KMP
must be made directly to the Board without any influence from management to ensure any advice is
independent of management. No remuneration recommendations as defined in the
Corporations Act 2001 (Cth) were provided to the People Committee during FY22.
Clawback
policy and
discretion
The Group’s new LTI plan include claw-back provisions. This enables the Board to claw back
remuneration outcomes in the event of material non-compliance with any financial reporting
requirement, misconduct, or breach of obligations. The Board retains discretion to adjust
remuneration outcomes upwards or downwards to ensure incentives are not provided where it
would be inappropriate or would provide unintended outcomes. The Board balances judgement on
remuneration outcomes with consideration to all stakeholders.
Securities
trading policy
AMA has adopted a Securities Trading Policy that applies to all employees of the Group including
Non-Executive Directors, Executive KMP and their associated persons. The policy ensures compliance
with insider trading laws, to protect the reputation of the Group and maintain confidence in trading
in AMA Group Limited securities. The policy also prohibits specific types of transactions being made
which are not in accordance with market expectations or may otherwise give rise to reputational risk.
Remuneration
Report
approval
The People Committee will continue to encourage an open and constructive dialogue with
shareholders and their representative bodies and will consult with major stakeholders on any material
changes to the remuneration policy or how it is implemented. Of the eligible votes cast at the
Company’s 2021 AGM, 91.17% were in favour of the FY21 Remuneration Report. The Company did not
receive specific feedback at the AGM on its remuneration practices.
53
Annual Report | 30 June 2022 Remuneration ReportDirectors’ Report Other transactions and balances with KMP
In addition to specific disclosure requirements, the Group continuously re-assesses judgmental matters surrounding
relationships with KMP and completeness of its related party disclosures.
Loans provided to KMP
There were no loans provided or outstanding to KMP at the end of the financial year.
Amounts recognised as expenses
A number of KMP hold directorships or are associated with other entities. During the year the Group transacted with entities
that were controlled or significantly influenced by members of the KMP.
The table below summarises the details of other transactions which occurred between members of the KMP and the Group
and are recognised in the Consolidated Statement of Profit or Loss.
Service, entity and nature of transaction
KMP
2022
$
2021
$
Legal and advisory services
The Group utilises Nicholson Ryan Lawyers for ongoing
legal and advisory services.
Property rental fees and outgoings
The Group has incurred rental fees and outgoing
expenses, and made payments to AV Ventures Pty Ltd,
A&R Property Developments Pty Ltd, A&R Development
Holdings Pty Ltd and Bundall Road Pty Ltd.
Claims management
The Group transacts with A & R Insurance Management
(t/a Unity Specialised Services), a claims management
business which handles and allocates insurance claims
from a number of major insurers into vehicle accident
repair facilities around Australia.
Training and recruitment
The Group has incurred expenses and made payments
to I-CAR Australia, an industry based not-for-profit
organisation that provides training to the collision
repair industry and entities within the AMA Group.
Leath Nicholson 1
544,192
930,697
Andrew Hopkins 2
Andrew Hopkins 2
Steven Bubulj 3
-
-
-
1,357,234
437,983
141,599
Total expenses
544,192
2,867,513
1 Amounts disclosed are for the period 1 July 2020 to 18 November 2021, which is the date Leath Nicholson ceased being a KMP.
2 Amounts disclosed are for the period 1 July 2020 to 31 January 2021, which is the date Andrew Hopkins ceased being a KMP.
3 Amounts disclosed are for the period 1 July 2020 to 26 March 2021, which is the date Steven Bubulj ceased being a KMP.
Amounts recognised as assets and liabilities
No balances are outstanding in relation to entities controlled by current KMP at 30 June 2022 (2021: $114,328).
54
AMA GroupRemuneration ReportDirectors’ Report Other items
Corporate governance statement
The Board believes that genuine commitment to good
corporate governance is essential to the performance and
sustainability of the Company’s business.
The Board has given due consideration to the ASX
‘Corporate Governance Principles and Recommendations’,
which offer a framework for good corporate governance.
The Board has approved the Corporate Governance
Statement for the year ended 30 June 2022 which can be
viewed on the Company’s website at amagroupltd.com/
corporate-governance/
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.
Insurance of officers and indemnities
Insurance of officers
During the financial year, the Company paid a premium in
respect of a contract insuring the directors, the company
secretaries, and all executive officers of the Company and
of any related body corporate against a liability incurred as
such a director, secretary or executive officer to the extent
permitted by the Corporations Act 2001.
The directors have not included details of the nature of
the liabilities covered or the amount of the premium paid
in respect of the directors’ and officers’ liability, costs and
charges, as such disclosure is prohibited under the terms
of the contract.
Indemnity of auditors
The Company has not during or since the end of the
financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor
of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
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.
Non-audit services
Details of the amounts paid or payable to the auditor
(KPMG) for audit and non-audit services provided during
the year are set out in note F3 to the Consolidated Financial
Statements.
The Board of Directors has considered the position
and, in accordance with advice received from the Audit &
Risk Committee, is satisfied that the provision of the
non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations
Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor did not compromise
the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
■ All non-audit services have been reviewed by the Audit
& Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
■ None of the services undermine the general principles
relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants.
Auditor's independence declaration
A copy of the auditor's independence declaration as
required under section 307C of the Corporations Act 2001 is
set out on page 56.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, relating to the 'rounding off' of amounts in the
Directors' Report. Amounts in the Directors' Report have
been rounded off in accordance with the instrument to
the nearest thousand dollars, or in certain cases, to the
nearest dollar.
This Directors’ Report is signed in accordance with a
resolution of the Board of Directors.
Carl Bizon
Executive Director
& Group Chief Executive Officer
23 August 2022
55
Annual Report | 30 June 2022 Directors’ Report
56
56
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 AMA Group Financial Report
Contents
FINANCIAL REPORT
Consolidated Statement of Profit or Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
A
A1
A2
A3
B
B1
B2
B3
B4
C
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
D
D1
D2
D3
D4
D5
D6
D7
D8
E
E1
E2
E3
E4
E5
E6
F
F1
F2
F3
F4
F5
F6
BASIS OF PREPARATION
Basis of preparation
Significant accounting policies
Critical accounting estimates and judgements
PERFORMANCE FOR THE YEAR
Segment information
Revenue and other income
Other expense items
Taxes
ASSETS AND LIABILITIES
Receivables and contract assets
Inventories
Other financial assets
Other assets
Property, plant and equipment
Intangible assets
Right-of-use assets and lease liabilities
Trade and other payables
Other liabilities
Provisions
CAPITAL STRUCTURE, FINANCING AND FINANCIAL RISK MANAGEMENT
Capital management
Earnings / (loss) per share
Dividends
Contributed equity
Other reserves
Cash and cash equivalents
Borrowings and contingent vendor consideration
Financial risk management
GROUP STRUCTURE
Parent entity information
Investments in controlled entities
Non-controlling interests
Deed of cross guarantee
Discontinued operations
Business combinations
OTHER INFORMATION
Share-based payments
Related party transactions
Auditor's remuneration
Commitments
Contingent liabilities
Events occuring after the reporting date
Directors’ Declaration
Independent Auditor’s Report
57
58
59
60
61
62
63
63
63
64
65
66
66
68
70
71
75
75
76
77
78
78
80
85
88
88
89
91
91
92
92
93
94
95
97
100
105
105
106
107
108
110
110
111
111
114
115
115
116
116
117
118
These Financial Statements are Consolidated Financial Statements for the Group consisting of AMA Group Limited and its controlled
entities. A list of controlled entities is included in note E2. The Financial Statements are presented in the Australian currency.
The Financial Statements were authorised for issue by the Directors on 23 August 2022. The Directors have the power to amend
and reissue the Financial Statements.
AMA Group Limited is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal
place of business is: Level 13, 484 St Kilda Road, Melbourne Victoria 3004
All press releases, financial reports and other information are available at our Investor Centre on our website: https://amagroupltd.com/
57
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead 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, in relation to the audit of AMA Group Limited for the financial year ended 30 June 2022 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. KPMG Adam Twemlow Partner Bundall 23 August 2022 Annual Report | 30 June 2022 Consolidated Statement of Profit or Loss
For the year ended 30 June 2022
Revenue and other income
Raw materials and consumables used
Employee benefits expense
Occupancy expense
Supplier termination fee
Professional services expense
Other expense
Fair value adjustment on contingent vendor consideration
Depreciation and amortisation expense
Impairment expense
Operating loss before interest and tax
Finance costs
Loss before income tax
Income tax benefit
Loss after income tax
Profit after income tax from discontinued operations
Loss for the year
Loss is attributable to:
Members of AMA Group
Non-controlling interests
Earnings / (loss) per share
From continuing operations
Basic and diluted earnings / (loss) per share
From continuing and discontinued operations
Basic and diluted earnings / (loss) per share
Notes
B2
2022
$’000
2021
$’000
845,127
919,920
B3(A)
B3(C)
B3(B)
B4(A)
(424,365)
(340,161)
(25,792)
-
(10,777)
(24,981)
13,729
(78,754)
(105,513)
(151,487)
(31,339)
(182,826)
34,818
(148,008)
-
(148,008)
(436,609)
(314,189)
(22,207)
(9,437)
(8,198)
(23,008)
(5,977)
(81,289)
(102,465)
(83,459)
(30,054)
(113,513)
2,283
(111,230)
12,151
(99,079)
(144,214)
(3,794)
(148,008)
(96,950)
(2,129)
(99,079)
Notes
2022
Cents
2021
Cents
D2(C)
(15.10)
(14.32)
D2(C)
(15.10)
(12.72)
The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes.
58
AMA GroupFinancial Report Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Loss for the period
Other comprehensive income / (expense)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Changes in fair value of cash flow hedges
Other comprehensive income / (expense), net of tax
Notes
2022
$’000
2021
$’000
(148,008)
(99,079)
(76)
4,575
4,499
442
475
917
Total comprehensive loss, net of tax
(143,509)
(98,162)
Total comprehensive loss is attributable to:
Members of AMA Group Limited
Non-controlling interests
E3(B)
(139,714)
(3,795)
(143,509)
(96,035)
(2,127)
(98,162)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
59
Annual Report | 30 June 2022 Financial Report Consolidated Statement of Financial Position
As at 30 June 2022
ASSETS
Current assets
Cash and cash equivalents
Receivables and contract assets
Inventories
Other financial assets
Current tax receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other financial assets
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Other financial liabilities
Lease liabilities
Provisions
Other liabilities
Tax payable
Total current liabilities
Non-current liabilities
Other financial liabilities
Lease liabilities
Provisions
Other liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Convertible notes
Other reserves
Retained deficit
Total Group interest
Non-controlling interests
Total equity
Notes
D6
C1
C2
C3
B4(C)
C4
C5
C7
C6
C3
B4(E)
C8
D7
C7
C10
C9
B4(C)
D7
C7
C10
C9
B4(E)
2022
$’000
2021
$’000
52,189
67,428
39,565
3,067
14,405
7,820
184,474
53,013
266,889
454,162
5,212
20,942
800,218
64,203
72,912
32,354
1,555
-
6,019
177,043
72,729
306,877
551,912
712
17,879
950,109
984,692
1,127,152
102,164
2,940
34,076
42,593
29,058
-
210,831
205,088
255,227
25,292
33,841
34,630
554,078
119,169
32,547
33,784
32,773
14,007
1,456
233,736
237,691
293,134
12,853
47,550
51,270
642,498
764,909
876,234
219,783
250,918
D4(A)
D7(B)
D5
E3(A)
531,504
5,197
5,145
(332,482)
209,364
10,419
424,404
-
568
(188,268)
236,704
14,214
219,783
250,918
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
60
AMA GroupFinancial Report Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Attributable to owners of AMA Group Limited
Share
capital
$’000
Convertible
notes
$’000
Other
reserves
$’000
Notes
Retained
deficit
$’000
(91,318)
(96,950)
-
Total
$’000
326,679
(96,950)
915
Non-
controlling
interests
$’000
Total
equity
$’000
16,341
(2,129)
2
343,020
(99,079)
917
880
-
915
915
(96,950)
(96,035)
(2,127)
(98,162)
Balance at 1 July 2020
Loss for the year
Other comprehensive expense
Total comprehensive expense
for the year
Transactions with owners in
their capacity as owners:
Shares issued, net of
transaction costs
Employee equity plan
Share buy-back and fair value
adjustment on contingent
vendor consideration
Balance at 30 June 2021
417,117
-
-
-
D4
8,537
F1(C)
-
(1,250)
7,287
424,404
-
-
-
-
-
-
-
-
(1,227)
-
-
(1,227)
-
-
-
-
8,537
(1,227)
(1,250)
6,060
-
-
-
-
8,537
(1,227)
(1,250)
6,060
- 568
(188,268)
236,704
14,214
250,918
Balance at 1 July 2021
Loss for the year
Other comprehensive expense
Total comprehensive expense
for the year
Transactions with owners in
their capacity as owners:
Shares issued, net of
transaction costs
Equity component of convertible
bond, net of transaction costs
Employee equity plan
Service rights vesting
Attributable to owners of AMA Group Limited
Share
capital
$’000
Convertible
notes
$’000
Other
reserves
$’000
Retained
deficit
$’000
Notes
Non-
controlling
interests
$’000
Total
$’000
Total
equity
$’000
424,404
-
-
-
-
-
568
-
4,500
(188,268)
(144,214)
-
236,704
(144,214)
4,500
14,214
(3,794)
(1)
250,918
(148,008)
4,499
-
- 4,500
(144,214)
(139,714)
(3,795)
(143,509)
D4
103,662
-
-
-
103,662
-
103,662
D7
-
5,197
-
-
5,197
-
5,197
F1(C)
F1(B)
3,184
254
107,100
-
-
5,197
331
(254)
77
-
-
-
3,515
-
112,374
-
-
-
3,515
-
112,374
Balance at 30 June 2022
531,504
5,197
5,145
(332,482)
209,364
10,419
219,783
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
61
Annual Report | 30 June 2022 Financial Report Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other costs of finance paid
Income taxes paid
Government grants received
Net cash (outflows) / inflows from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from disposal of business (net of costs and cash disposed)
Payments for purchases of property, plant and equipment
Payments for intangible assets
Payments for businesses acquired (including earn-outs)
Net cash inflows / (outflows) from investing activities
Cash flows from financing activities
Repayment of borrowings
Principal elements of lease payments
Payment of new borrowings transaction costs
Equity raised, net of costs
Proceeds from convertible notes
Net cash (outflows) / inflows from financing activities
Notes
2022
$’000
2021
$’000
946,798
(948,183)
198
(26,387)
(1,158)
501
(28,231)
229
-
(6,793)
(546)
(10,840)
(17,950)
(72,500)
(32,531)
(6,006)
95,285
50,000
34,248
1,042,324
(1,000,166)
267
(26,969)
(7,243)
43,891
52,104
670
63,184
(12,514)
(191)
(17,885)
33,264
(102,500)
(31,560)
-
-
-
(134,060)
B4(C)
D6(B)
D6(C)
D6(C)
D6(C)
D7(B)
Net (decrease) / increase in cash and cash equivalents
(11,933)
(48,692)
Cash and cash equivalents, at the beginning of the financial year
Effects of exchange changes on the balances held in foreign currencies
Cash and cash equivalents, at end of the financial year
D6(A)
64,203
(81)
52,189
112,916
(21)
64,203
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
62
AMA GroupFinancial Report Notes to the Consolidated Financial Statements
A
BASIS OF PREPARATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards and
other pronouncements but is not directly related to individual line items in the financial statements.
A1 Basis of preparation
This section describes the financial reporting framework within which the Consolidated Financial Statements
are prepared and a statement of compliance with the Corporations Act 2001 and Australian Accounting
Standards and Interpretations.
The Group is a for-profit entity which is incorporated and domiciled in Australia. The Consolidated Financial Report of the Group
for the year ended 30 June 2022 (FY22) was authorised for issue in accordance with a resolution of directors on 23 August 2022.
The Consolidated Financial Statements have been prepared on the historical cost basis except for derivative financial
instruments and contingent vendor consideration which have been measured at fair value.
Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial
year presentation. Note B1 Segment Information has been re-presented to be consistent with current year presentation
following changes to the operating model and reporting in FY22.
The Consolidated Financial Statements are presented in Australian dollars and amounts have been rounded to the nearest
thousand dollars unless otherwise stated, in accordance with ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191.
The Consolidated Financial Statements of the Group are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, and Australian Accounting Standards and Interpretations.
Compliance with Australian Accounting Standards ensures that the Consolidated Financial Report complies with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Consequently, this Financial Report has been prepared in accordance with and complies with IFRS as issued by the IASB.
Going concern
(A)
This general purpose Consolidated Financial Report has been prepared on a going concern basis, which assumes that the
Group will be able to meet its debts as and when they become due and payable.
The rebound from the COVID-19 pandemic has been slower than expected and while traffic volumes in major cities
continues to increase, AMA continues to see negative effects on costs inputs such as labour (staff absenteeism, labour
shortages and fewer skilled migrant workers), and supply chain (parts and consumables inflation). These factors have
substantially reduced the Group’s revenue and profitability in FY22. As a result, continuing adverse cost inputs may cast
significant doubt on the Group’s ability to continue as a going concern in the event that they cannot be adequately
recovered from customers.
Management has prepared cash flow forecasts for the next twelve months that support the ability of the Group to continue
as a going concern. The cash flow forecasts assume that the adverse impacts experienced in FY22 will ease, and AMA will
continue to work closely and constructively with its major customers. The Board approved budget for FY23 is based on the
last two months of FY22, which reflects current experience, and considered a range of scenarios and management actions
available to remain cash flow positive.
The Group's liquidity remains strong, with a net senior debt position as at 30 June 2022 of $114,031,000. As at 30 June 2022,
the Group had $52,189,000 in cash and cash equivalents.
As at 30 June 2022, the Group has current liabilities exceeding current assets by $26,357,000. This is impacted by the:
■ market incentive that will be amortised against future purchases from a key supplier that is included in other current
liabilities ($14,119,000, refer note C9(A));
■ AASB 16 Leases (refer note C7) which requires of the right-of-use asset to be entirely classified in non-current, whilst
future lease payments are split between current ($34,076,000) and non-current, resulting in a mismatch.
Management expects any working capital deficiency will be met out of operating cash flows.
The Group is required to comply with financial covenants under the terms of its borrowing facilities including a net leverage
ratio and a fixed charge cover ratio. In response to COVID-19, the Group’s financiers agreed to waive covenant testing until
30 September 2022. Subsequent to year end, the Group’s financiers agreed to a revised covenant testing regime until 30
September 2023, which involves a minimum EBITDA covenant (first tested at 31 December 2022) and a maximum net debt
reporting obligation (which is reported monthly until 31 December 2023). The Group has prepared both EBITDA and cash
forecasts for the testing period and based on these forecasts, including under a risk adjusted scenario, expects to be able to
meet these revised covenants.
The Group acknowledges the inherent uncertainty in any earnings forecast, which includes assumptions around labour and
parts availability, cost inflation, repair pricing agreed with customers, as well as insurers providing expected volumes and
other economic factors. These assumptions are predicated on no further material adverse COVID-19 impacts that would
impact level of driving activity. In the event that severe volume impacts occur due to unforeseen circumstances, the Group
would need to undertake further network consolidation and cost optimisation activities in order to achieve revised covenants.
(Continues next page)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
63
Annual Report | 30 June 2022
A1
(A)
Basis of preparation (Cont.)
Going concern (Cont.)
Management is also potentially able to undertake alternative actions such as raising equity, securing additional financing,
restructuring operations or the sale of assets to assist in meeting of revised covenants if required.
Whilst the Group’s path to expected profitability and ongoing compliance with covenant requirements is inherently
uncertain and so may cast significant doubt upon the Group’s ability to continue as a going concern, Management believes
that the range of actions available to it means that the uncertainty is being managed. In the event the Group does not
achieve the above outlined initiatives, it may not be able to continue its operations as a going concern and therefore may not
be able to realise its assets and extinguish its liabilities in the ordinary course of operations and at the amounts stated in the
Consolidated Financial Report.
Despite the current year results, the factors impacting the recovery from the COVID-19 pandemic on the Group and
continued uncertainty as to future impacts, the Directors’ are of the opinion that, as at the date of approving this report,
the cash flow forecasts support the Group’s ability to continue as a going concern including ongoing compliance with
requirements of the Group’s finance facilities.
A2 Significant accounting policies
This section sets out the significant accounting policies upon which the Consolidated Financial Statements are
prepared as a whole. Where a significant accounting policy is specific to a note to the Consolidated Financial
Statements, the policy is described within that note. This section also shows information on new accounting
standards, amendments, and interpretations not yet adopted and the impact they will have on the
Consolidated Financial Statements.
Basis of consolidation
(A)
The Consolidated Financial Statements incorporate the assets and liabilities of all controlled entities in the Group as at
30 June 2022 and the results of all controlled entities for the year then ended. A list of the controlled entities is provided in
note E2 to these financial statements.
The Group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date
that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
Non-controlling interests are shown separately in the Consolidated Statement of Profit or Loss, Consolidated Statement of
Comprehensive Income, Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity.
Goods and Services Tax (GST)
(B)
Revenues, expenses, assets and liabilities are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
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 taxation authority is included with other receivables or payables in the Consolidated
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 taxation authority, are presented as operating cash flows.
New and amended standards adopted by the Group
(C)
The accounting policies applied in these Consolidated Financial Statements are the same as those applied in the Group's
Consolidated Financial Statements for the annual reporting period ended 30 June 2021. A number of new standards are
effective from 1 July 2021 but they do not have a material effect on the Group's Financial Statements.
New and amended standards not yet adopted by the Group
(D)
Certain new accounting standards and amendments to standards have been published that are not mandatory for
reporting periods commencing 1 July 2021 and have not been early adopted by the Group. These standards are not expected
to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
64
AMA GroupNotes to the Consolidated Financial Statements
A3 Critical accounting estimates and judgements
This section describes the critical accounting estimates and judgements that have been applied and may have a
material impact on the Consolidated Financial Statements.
In applying the Group's policies, the Directors are required to make estimates, judgements, and assumptions that affect
amounts reported in this Consolidated Financial Report. The estimates, judgements, and assumptions are based on
historical experience, adjusted for current market conditions, and other factors that are believed to be reasonable under
the circumstances, and are reviewed on a regular basis. Actual results may differ from estimates.
The estimates and judgements which involve a higher degree of complexity or that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next period are included in the following notes:
■ Note A1(A) - Going concern
■ Note B4(F)(i) - Recoverability of deferred tax assets
■ Note C6(B)(iv) - Estimation of recoverable amounts of assets and CGUs
■ Note C7(H) - Estimation of lease term contracts with renewal options
■ Note C10(C) - Estimation of make good provisions
■ Note D7(C) - Estimation of fair values of contingent vendor consideration
Detailed information about each of these estimates and judgements is included in other notes together with information
about the basis of calculation for each affected line item.
65
Annual Report | 30 June 2022 A Basis of preparation
B
PERFORMANCE FOR THE YEAR
This section provides information that is most relevant to explaining the Group's performance during the year and where
relevant, the accounting policies that have been applied.
B1 Segment information
The Group identifies different business divisions that are regularly reviewed by the Board and executive
management in order to allocate resources and assess performance. These divisions offer different products and
services and are managed separately. The segment disclosures present the financial performance of each division
and other material items.
Description of segments
(A)
The Group's operating segments are organised and managed separately according to the nature of the products and
services provided. Geographically, the Group operates in Australia and New Zealand.
The Board and Executive Management Team, the Chief Operating Decision Maker (CODM), monitor the operating results
of the business units separately for the purpose of making decisions about resource allocation and performance assessment.
On 2 July 2021, following a change in the management reporting structure, the Group announced the realignment of its
operating segments. This new structure reflects the Group's significant growth and provides a platform for the Group to
execute its strategic and operational objectives. The new segment presentation provides improved visibility into the Group's
underlying performance and results, and aligns to the internal reports that are regularly reviewed and used by the CODM.
The Group identifies and presents three new reportable segments - Vehicle Collision Repairs, Heavy Motors and Supply.
Reportable segments 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.
A description of the operations in each of the Group's reportable segments is outlined below.
Vehicle Collision Repairs
Drive Business Unit
Specialises in performing rapid repairs on cars that have sustained low-to-medium collision damage and are
still driveable. Includes Capital S.M.A.R.T and rapid repair business previously part of AMA Panel.
Non-Drive Business Unit
Provides larger, more complex repairs of cars that have sustained high severity collision damage and are both
drivable and undriveable.
Heavy Motor
Provides dedicated and highly specialised facilities for all commercial vehicle repairs, from light commercial to
prime movers, B-doubles, buses and earthmoving equipment.
Supply
Provides a large range of recycled and new automotive parts and accessory solutions to a wide range of customer
segments, including panel repair sites, wholesale and retail. Includes ACM Parts previously part of APAS.
The Group excludes certain corporate costs from its segment profitability measures which consist largely of general and
administrative expenses not allocated to an operating segment. The Group reports these costs within Unallocated Other,
which is designed to provide increased transparency and comparability of our operating segment performance.
The change in Group operating structure and subsequent realignment of operating segments solely impacts the Group's
segment reporting and there is no change to previously reported consolidated results. Comparative information has been
re-presented to reflect the above changes.
Unless stated otherwise, all amounts reported are determined in accordance with the Group's accounting policies.
All inter-segment transactions are eliminated on consolidation for the Consolidated Financial Statements.
66
AMA GroupNotes to the Consolidated Financial Statements
B1
Segment information (Cont.)
Adjusted EBITDAI from reportable segments
(B)
In addition to using profit as a measure of the Group, the Board and CODM use adjusted EBITDAI (Earnings Before Interest,
Tax, Depreciation, Amortisation and Impairment) as a measure to assess the performance of the segments.
Adjusted EBITDAI excludes discontinued operations and the effects of significant items which may have an impact on the
quality of earnings such as fair value adjustments or items that are the result of an isolated, non-recurring event.
A reconciliation of adjusted EBITDAI to loss before income tax from continuing operations is provided below:
Vehicle Collision
Repairs
Heavy
Motor
Supply
Corporate /
Eliminations
Total
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Revenue and
other income
Revenue from
external customers
Other income
Total group
revenue from
external customers
and other income
EBITDAI
AASB 16 Leases
impact to
occupancy costs
and other income
Adjusted segment
EBITDAI (excluding
impact of AASB 16
Leases)
727,573 796,597
53,873
54,061
96,467
87,075 (39,836)
(21,226) 838,077 916,507
6,438
3,088
734,011 799,685
83
53,956
27
54,088
382
96,849
119
87,194
147
(39,689)
179
3,413
7,050
(21,047) 845,127 919,920
24,364
95,699
10,781
12,598
(42,143)
(44,853)
(4,209)
(3,315)
1,191
(4,371)
2,214
(3,700)
(17,285)
(77)
(4,239)
-
19,051
(50,800)
106,273
(51,868)
(17,779)
50,846
6,572
9,283
(3,180)
(1,485)
(17,361)
(4,239)
(31,749)
54,405
AASB 16 Leases impact to occupancy costs and other income
Depreciation and amortisation
Impairment expense
Finance costs
Fair value adjustments on contingent vendor consideration
Loss before income tax from continuing operations
50,800
(78,754)
(105,513)
(31,339)
13,729
51,868
(81,289)
(102,465)
(30,054)
(5,977)
(182,826)
(113,513)
Segment assets and liabilities
(C)
Segment assets and liabilities are not directly reported to the CODM when assessing the performance of the operating
segments and are therefore not disclosed.
Geographical information
(D)
The Group operates in two geographic locations, being Australia and New Zealand. The table below provides information on
the geographical location of revenue from external customers which is allocated to a geography based on the location of the
operation it was derived. Revenue related to discontinued operations has been excluded. All revenue in New Zealand relates
to the vehicle collision repair segment.
Australia
New Zealand
Total
Revenue from external customers
Other income
2022
$’000
815,668
6,869
2021
$’000
895,023
3,407
2022
$’000
22,409
181
2021
$’000
21,485
5
Total Group revenue from external customers and other income
2022
$’000
838,077
7,050
845,127
2021
$’000
916,508
3,412
919,920
67
Annual Report | 30 June 2022 B Performance for the year
B2 Revenue and other income
The Group is Australia's largest vehicle accident repairer and generates revenue primarily from its panel repair
services. Other revenue is derived from the sale of automotive parts.
Set out below is the disaggregation of the Group's revenue and other income. The Group derives revenue from the transfer of
goods and services over time and at a point in time.
From continuing
operations
Revenue
Vehicle panel
repair services
Truck and
bus repairs
Sale of goods
Other services
Total revenue
Other income
Interest income
Other income
Total other income
Revenue and
other income
Timing of revenue
recognition
Over time
At a point in time
Revenue
Geographical
markets
Australia
New Zealand
Revenue
Vehicle Collision
Repairs
Heavy
Motor
Supply
Corporate /
Eliminations
Total
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
727,573
796,597
-
-
-
-
53,873
54,061
-
-
-
-
(39,836)
(21,226) 687,737
775,371
-
-
53,873
54,061
-
-
727,573
-
-
796,597
-
-
53,873
-
-
54,061
96,201
266
96,467
86,746
330
-
-
87,075 (39,836)
-
-
96,201
266
(21,226) 838,077
86,746
330
916,507
97
6,341
6,438
139
2,950
3,088
2
81
83
2
25
27
2
380
382
8
111
119
97
50
147
181
(2)
179
198
6,852
7,050
330
3,083
3,413
734,011 799,685
53,956
54,088
96,849
87,194 (39,689)
(21,047)
845,127
919,920
727,573
-
727,573
796,597
-
796,597
53,873
-
53,873
54,061
-
54,061
266
96,201
96,467
330 (39,836)
86,746
-
87,075 (39,836)
(21,226)
-
741,876
96,201
(21,226) 838,077
829,762
86,746
916,507
705,164
22,409
727,573
775,112
21,485
796,597
53,873
-
53,873
54,061
-
54,061
96,467
-
96,467
87,075 (39,836)
-
87,075 (39,836)
-
(21,226) 815,668 895,022
21,485
22,409
916,507
(21,226) 838,077
-
In respect of vehicle collisions repairs and heavy motor segments:
■ approximately 88% of revenue is derived from insurers (2021: approximately 80%);
■ approximately 60% of revenue is derived from the top two customers (2021: approximately 68%).
68
AMA GroupNotes to the Consolidated Financial Statements
B2
Revenue and other income (Cont.)
Significant accounting policies
Revenue
Revenue from contracts with customers is recognised to depict the transfer of promised goods or services to
customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services.
Revenue is recognised for the major business activities as follows:
Vehicle Collision Repair Services
Revenue arising from these services relate to performance obligations satisfied over time and in future
periods. The output method, based on completed vehicle repairs, is used to recognise revenue from
such contracts for the services rendered during the period. All vehicle repairs are invoiced upon
completion, with payment terms between 1 and 7 days for insurers, cash on delivery for private work
and up to 30 days payment terms for fleet and other commercial customers.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances
change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss
in the period in which the circumstances that give rise to the revision become known by management.
Jobs completed not invoiced are reflected as a contract asset including jobs still in progress within other
receivables until billed.
Sale of goods
The Group manufactures and sells automotive parts and accessories online, in the wholesale market and
through retail premises. Sales are recognised when control of the goods has transferred, that is, when the
goods are delivered to the wholesaler or sold to the end customer.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration
is unconditional because only the passage of time is required before the payment is due.
Interest income
Interest income is recognised on a time proportional basis, taking into account the effective interest
rates applicable to the financial assets. It includes amortisation of any discount or premium.
Other income
Other income is recognised when it is received or when the right to receive payment is established.
69
Annual Report | 30 June 2022 B Performance for the year
B3 Other expense items
The Group has identified a number of items which are material due to the significance of their nature and/or amount.
They are listed separately below to provide a better understanding of the financial performance of the Group.
(A)
Depreciation and amortisation expense
Depreciation expense on property, plant and equipment
Depreciation expense on right-of-use assets
Amortisation on intangibles
Total depreciation and amortisation expense
2022
$’000
17,413
43,618
17,723
78,754
2021
$’000
22,276
41,064
17,949
81,289
Depreciation and amortisation expense from discontinued operations
-
2,018
(B)
Finance costs
Interest and finance charges
Interest expense on lease liabilities
Unwind of discount on make good provision
Amortisation of borrowing costs
Total finance costs
2022
$’000
9,577
18,269
309
3,184
31,339
2021
$’000
8,943
19,521
280
1,310
30,054
Interest expense on lease liabilities from discontinued operations
-
613
Significant accounting policy
Finance costs
Finance costs are recognised as expenses in the period in which they are incurred. Finance costs comprise
interest on borrowings calculated using the effective interest method, interest expense on lease liabilities, and
amortisation of capitalised borrowing costs over the term of the borrowings.
(C)
Impairment expense
The Group recognised the following non-cash impairment expense:
Impairment of goodwill – Drive – Capital Smart
Impairment of goodwill – Drive – Non-Capital Smart
Impairment of goodwill – Non-Drive
Impairment of goodwill – Heavy
Impairment of non-current assets
Impairment of right-of-use assets
Impairment of financial assets
Total impairment expense
Notes
C6(B)(ii)
C6(B)(ii)
C5
C7(E)
2022
$’000
41,400
39,300
-
-
8,315
16,498
-
105,513
2021
$’000
90,580
-
4,190
1,013
4,923
1,428
331
102,465
During FY22, the Group has recognised impairment charges in respect of goodwill against two operating segments.
The carrying value of the CGUs has been reduced to the recoverable amount. Refer to note C6 for further details.
70
AMA GroupNotes to the Consolidated Financial Statements
B4 Taxes
This section presents the total income tax expense charged to the Group in respect of amounts currently
owing/receivable for taxable profits/losses and future income taxes recoverable or payable in respect of temporary
differences. The Group presents a reconciliation of accounting profit or loss to income tax and a summary of
changes in future income tax recoverable or payable by major category.
(A)
Income tax benefit
Current tax
Current tax (benefit)/expense
Adjustments for current tax of prior periods
Total current tax (benefit)/expense
Deferred tax
Increase/(decrease) in deferred tax assets
Decrease in deferred tax liabilities
Total deferred tax benefit
2022
$’000
(14,270)
400
(13,870)
(5,552)
(15,396)
(20,948)
2021
$’000
9,914
467
10,381
6,480
(17,648)
(11,168)
Income tax benefit
(34,818)
(787)
Income tax benefit is attributable to:
Continuing operations
Discontinued operations
(B)
Reconciliation of accounting profit/(loss) to income tax benefit
Loss before tax from continuing operations
Profit / (loss) before tax from discontinued operations
(34,818)
-
(34,818)
2022
$’000
(182,826)
-
(182,826)
(2,283)
1,496
(787)
2021
$’000
(113,513)
13,647
(99,866)
Tax at the Australian tax rate of 30% (30 June 2021: 30%)
(54,848)
(29,960)
Tax effect of amounts which are not (assessable) / deductible in calculating taxable income:
Non-deductible impairment expense
Non-deductible expenses
Fair value adjustments on contingent vendor consideration
Employee equity plan expense
Non-assessable income (gain on sale of discontinued operations)
Adjustments for current tax of prior periods
Recognition of previously unrecognised tax losses
Derecognition of previously recognised deductible temporary differences
Effect of tax rates in foreign jurisdictions
Other
Income tax benefit
24,210
49
(4,119)
99
(495)
400
80
(202)
10
(2)
(34,818)
28,735
188
1,688
(368)
(2,219)
467
(205)
853
15
19
(787)
71
Annual Report | 30 June 2022 B Performance for the year
B4
(C)
Taxes (Cont.)
Reconciliation of income tax payable / (receivable)
Balance at 1 July
Movement:
Income taxes payable/(receivable) for the period
Adjustments for current tax of prior periods
Income tax paid
(Disposed) / acquired through business combinations
Balance at 30 June
(D)
Amounts recognised directly through equity
Hedging reserve
Share Capital (equity raising costs)
Total recognised directly through equity
2022
$’000
2021
$’000
1,456
(3,338)
(14,270)
(332)
(1,158)
(101)
(14,405)
2022
$’000
(1,930)
1,408
(522)
9,914
2,154
(7,243)
(31)
1,456
2021
$’000
(194)
-
(194)
(E)
Deferred tax assets and deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Receivables and contract assets
Inventories
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Lease liabilities
Provisions - employee benefits
Provisions - other
Deferred income
Capitalised expenditure
Tax losses
Other items
Deferred tax assets / (liabilities) - before set-off
2022
$’000
334
-
1,293
-
38
2,455
86,650
11,295
9,323
2,314
2,380
8,961
250
125,293
2021
$’000
263
-
1,662
-
-
1,775
97,901
11,309
3,034
-
2,134
2,269
325
120,672
Set-off of tax
Net deferred tax assets / (liabilities) - after set-off
(104,351)
20,942
(102,793)
17,879
2022
$’000
2021
$’000
-
(816)
(1,687)
(79,930)
(54,500)
-
-
-
-
-
-
-
(2,048)
(138,981)
104,351
(34,630)
-
(696)
(1,324)
(91,841)
(60,027)
-
-
-
-
(60)
-
-
(115)
(154,063)
102,793
(51,270)
Balance at 1 July
Movement:
Adjustments for tax of prior periods
To profit or loss
Through equity
Acquired through business combinations
Discontinued operations
Balance at 30 June
120,672
127,685
(154,063)
(172,992)
(409)
5,552
(522)
-
-
125,293
3,646
(6,480)
(194)
3,090
(7,075)
120,672
(314)
15,396
-
-
-
(138,981)
(1,980)
17,648
-
(2,893)
6,154
(154,063)
72
AMA GroupNotes to the Consolidated Financial Statements B4
(F)
Taxes (Cont.)
Tax losses
Unused tax losses for which a deferred tax asset has been recognised
Unused revenue losses
Tax benefit @ 30%
Unused tax losses for which no deferred tax asset has been recognised
Unused revenue losses
Unused capital losses
Total unused tax losses
Potential tax benefit @ 30%
2022
$’000
29,869
8,961
2,032
12,264
14,296
2021
$’000
7,562
2,269
2,126
10,154
12,280
4,289
3,684
Critical accounting estimates and judgements
(i)
All unused tax losses can be carried forward indefinitely subject to the loss utilisation tests and have no expiry date.
The unused losses for which a deferred tax asset has been recognised represent revenue losses for the Company's
partially-owned subsidiary, Capital Smart Group Holdings Pty Ltd (refer to (G)). Management considers it probable that future
taxable profits would be available against which these tax losses can be recovered and, therefore, the related deferred tax
asset can be recognised.
The unused revenue losses for which no deferred tax asset has been recognised represent transferred revenue losses of the
Company and its wholly-owned Australian resident entities. Management has determined that a deferred tax asset should
not be recognised for these losses as they have restricted rates of utilisation.
The unused capital losses for which no deferred tax asset has been recognised represent capital losses of the Company and
its wholly-owned Australian resident entities. Management has determined a deferred tax asset on unused capital losses
should not be recognised on the basis that it is not probable that future capital gains would be available against which the
capital losses can be utilised.
73
Annual Report | 30 June 2022 B Performance for the year B4
Taxes (Cont.)
Tax consolidation
(G)
The Company and its wholly-owned Australian resident entities formed a tax consolidated group with effect from
1 September 2006. AMA Group Limited is the head entity of the tax consolidated group and has assumed the current tax
liabilities of the members in its tax consolidated group.
The Australian resident entities of the Capital Smart Group of companies formed a separate tax consolidated group with
effect from 31 October 2019. Capital Smart Group Holdings Pty Ltd is the head entity of the tax consolidated group and has
assumed the current tax liabilities of the members in its tax consolidated group. The consolidated financial statements
incorporate the tax balances of both tax consolidated groups.
Income tax expense or benefit, deferred tax assets, and deferred tax liabilities arising from temporary differences of the
members of the tax consolidated groups are recognised by each subsidiary where the subsidiary would have been able to
recognise the deferred tax asset or deferred tax liability on a standalone basis.
The members of the tax consolidated groups have entered into tax funding agreements with each head entity which sets
out the funding obligations in respect of income tax amounts. The agreements require payments by the subsidiaries to the
head entity equal to the income tax liability assumed by the head entity. The head entity is required to make payments to
the subsidiaries equal to the current tax asset assumed by the head entity.
In respect of carried forward tax losses brought into the tax consolidated groups on consolidation by subsidiary members, the
head entity will pay the subsidiary member for such losses when these losses are transferred to the tax consolidated groups,
where the subsidiary member would have been entitled to recognise the benefit of these losses on a standalone basis.
Significant accounting policies
Income tax
Income tax expense in the Consolidated Statement of Profit or Loss for the period presented comprises current
and deferred tax.
Income tax is recognised in the Consolidated Statement of Profit or Loss except to the extent that it relates to
items recognised in other comprehensive income, or directly in equity, in which case the tax is also recognised in
other comprehensive income, or directly in equity, respectively.
Current tax
Current tax payable represents the amount expected to be paid to taxation authorities on taxable income for the
period, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable
in respect of previous periods.
Deferred tax
Deferred tax is calculated using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting and taxation purposes. Deferred tax is measured
at the rates that are expected to apply in the period in which the liability is settled, or asset realised, based on tax
rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit or in relation to the initial recognition of goodwill.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the deductible temporary differences or unused tax losses and tax offsets can be utilised. Deferred
tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
The benefit of intangible assets with an indefinite useful life will flow to the Group on an annual basis, therefore the
carrying amount will be recovered through use.
Deferred tax assets and liabilities are offset when there is a legally enforcable right to offset current tax assets and
liabilities, and they relate to income taxes levied by the same taxation authority and the same taxable entity.
74
AMA GroupNotes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
C
ASSETS AND LIABILITIES
This section provides information about the working capital of the Group and major balance sheet items including the
accounting policies, judgements and estimates relevant in understanding these items.
C1 Receivables and contract assets
Receivables and contract assets predominantly consist of amounts owed to the Group by customers for sales of
goods and services in the ordinary course of business.
Trade receivables
Allowance for expected credit losses
Other receivables
Contract assets
2022
$’000
34,133
(526)
33,607
1,491
32,330
33,821
2021
$’000
37,285
(304)
36,981
5,627
30,304
35,931
Total receivables and contract assets
67,428
72,912
Allowance for expected credit losses on trade receivables
(A)
Current trade receivables of the Group were assessed for impairment at each reporting date. Movements in the allowance
for expected credit losses of receivables are set out below:
Balance at 1 July
Movement:
Additional expected credit losses recognised / (released)
Receivables written off / (written back) during the year as uncollectible
Disposals - discontinued operations
Balance at 30 June
2022
$’000
304
307
(85)
-
526
2021
$’000
394
(68)
(1)
(21)
304
Trade receivables past due but not impaired
(B)
As at 30 June 2022, trade receivables of $4,167,000 (30 June 2021: $13,337,000) were past due but not impaired. These relate
to a number of customers for whom there is no recent history of default and for which full payment is expected.
An ageing analysis of trade and other receivables past due but not impaired is set out below:
Up to 3 months
Greater than 3 months
Total
2022
$’000
3,044
1,123
4,167
2021
$’000
10,131
3,206
13,337
Fair value disclosure
(C)
Due to the short-term nature of these receivables, their carrying amount is considered to approximate their fair value.
For information about the methods and assumptions used in determining the fair value of the Groups receivables refer to
note D8(D)(i).
75
Annual Report | 30 June 2022
C1
Receivables and contract assets (Cont.)
Risk exposure
(D)
Information concerning the credit risk of receivables is set out in note D8(B)(ii).
Significant accounting policies
Trade and other receivables
Trade and other receivables are recognised initially at fair value and are subsequently measured at amortised cost
using the effective interest method, less an allowance for expected credit loss. They generally have credit terms
ranging up to 30 days.
Allowance for expected credit losses on trade and other receivables
The Group assesses the expected credit losses associated with its trade and other receivables on a forward-looking
basis. The Group applies the simplified approach to measuring expected credit losses, which requires expected
lifetime losses to be recognised from initial recognition of the receivables. To measure the expected credit losses,
trade and other receivables that share similar credit risk characteristics and days past due are grouped and then
assessed for collectability as a whole.
Contract assets
The Group presents any unconditional rights to consideration separately as a receivable while those rights
arising from satisfaction of performance obligations in a contract are presented as contract assets. A right to
consideration is unconditional if only the passage of time is required before payment of that consideration is due.
Contract assets are measured at the actual amount of transaction price.
C2 Inventories
Raw materials and consumables
Finished goods
Total inventories
2022
$’000
21,614
17,951
39,565
2021
$’000
17,777
14,577
32,354
Finished goods
The Group periodically reviews the value of items in inventory and records write-downs or write-offs based on its assessment
of slow moving or obsolete inventory. Allowances are recorded against finished goods for any such declines. As at
30 June 2022, the Group has recognised an allowance for inventory obsolescence of $3,702,000 (30 June 2021: $2,428,000).
Finished goods - gross
Provision for inventory obsolescence
Finished goods - net
Significant accounting policies
2022
$’000
21,653
(3,702)
17,951
2021
$’000
17,005
(2,428)
14,577
Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion necessary to make the sale.
Reviews are made periodically by management for excess inventories, obsolescence and decline in net realisable
value below cost. Allowances are recorded against inventories for any such declines based on historical experience
on obsolescence and slow-moving inventory.
Costs incurred in bringing each product to its present location and condition are determined after deducting
rebates and discounts received or receivable and are accounted for, as follows:
■ Raw materials - purchase cost on a first-in / first-out basis
■ Finished goods - cost comprises direct materials, direct labour and an appropriate proportion of variable
and fixed overhead expenditure.
76
AMA GroupNotes to the Consolidated Financial Statements
C3 Other financial assets
Other financial assets consist of loans provided to a former related party and other employees and derivative
financial instruments.
Other financial assets
Current
Loans provided to a former related party and other employees
Derivative - financial instrument
Total current
Non-current
Derivative - financial instrument
Total non-current
Total other financial assets
2022
$’000
2021
$’000
1,460
1,607
3,067
5,212
5,212
1,555
-
1,555
712
712
8,279
2,267
Loans provided to a former related party and other employees
(A)
Employee loans outstanding at the end of the current and prior year include a loan to the former Group CEO and Executive
Director, Andrew Hopkins. For further information refer to note F2(E).
Derivatives
(B)
The Group is party to derivatives in the normal course of business in order to hedge exposure to fluctuation in interest rates.
In accordance with the Group's financial risk management policies, the Group does not hold or issue derivatives for
trading purposes.
The Group entered into interest rate swap contracts to fix the interest rate at 0.43% (excluding margin and line fees) on
$193,500,000 of borrowings (which represented approximately 80% of floating rate borrowings at the time of entering
into the derivatives). Interest is payable based on a margin over bank bill swap rate. The swap contract matures on
30 October 2024 (with a step-down to 60% on 30 October 2022). During the year the notional value of this swap was
reduced to $147,500,000 to align with the amount of floating rate debt in the Group.
Fair value disclosures
(i)
The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months. It is classified as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months. For information about the methods and assumptions used in determining the fair value of
derivatives refer to note D8(D)(iii).
Risk exposure
(ii)
For information about the Groups net exposure to cash flow interest rate risks refer to note D8(A)(ii).
Significant accounting policies
Loans provided to related parties
Loans provided to related parties are recognised initially at fair value plus transaction costs and, in subsequent
period are stated at amortised cost. The Group assess the expected credit losses associated with loans provided
to related parties on a forward-looking basis. The Group applies the simplified approach to measuring expected
credit losses, which requires expected lifetime losses to be recognised from initial recognition of the loan. Gains
and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in
fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged.
The Group designates its interest rate swap as a cash flow hedge. The Group documents at the inception of
the hedging transaction the relationship between hedging instruments and hedged items, as well its risk
management objective and strategy for undertaking various hedge transactions. The Group also documents
its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transaction have been and will continue to be highly effective in offsetting changes in fair values or
cash flows of hedged items.
77
Annual Report | 30 June 2022 C Assets and liabilities
C4 Other assets
Acquisition deposits
Prepayments and other assets
Total other assets
C5 Property, plant and equipment
Property, plant and equipment represents the investment by the Group in tangible assets.
Leasehold
improvements
$’000
Plant and
equipment
$’000
Furniture
and fittings
$’000
1 July 2020
Cost
Accumulated depreciation and impairment
Net book amount
34,903
(20,134)
14,769
155,949
(85,541)
70,408
Movement:
Additions
Acquired through business combinations
Disposals
Disposals – discounted operations
Depreciation
Impairment
Effect of foreign exchange
Asset reclassification
Reclass to intangible assets
Closing net book amount
1 July 2021
Cost
Accumulated depreciation and impairment
Net book amount
Movement:
Additions
Depreciation
Impairment
Effect of foreign exchange
Closing net book amount
2022
Cost
Accumulated depreciation
Net book amount
2,268
-
(5)
(1,153)
(3,873)
(828)
(4)
-
-
11,174
33,995
(22,821)
11,174
1,533
(2,758)
(3,327)
(14)
6,608
29,256
(22,648)
6,608
8,509
1,064
(222)
(3,795)
(15,731)
(3,490)
(16)
(686)
(414)
55,627
143,568
(87,941)
55,627
3,578
(12,934)
(4,315)
(48)
41,908
127,589
(85,681)
41,908
8,421
(4,857)
3,564
707
-
-
(339)
(1,154)
(187)
-
(14)
(55)
2,522
5,495
(2,973)
2,522
413
(904)
(420)
(1)
1,610
4,369
(2,759)
1,610
2022
$’000
300
7,520
7,820
2021
$’000
600
5,419
6,019
Motor
vehicles
$’000
9,197
(4,848)
4,349
922
44
(313)
(373)
(1,518)
(399)
(1)
700
(5)
3,406
6,628
(3,222)
3,406
551
(817)
(253)
-
2,887
6,574
(3,687)
2,887
Total
$’000
208,470
(115,380)
93,090
12,406
1,108
(540)
(5,660)
(22,276)
(4,904)
(21)
-
(474)
72,729
189,686
(116,957)
72,729
6,075
(17,413)
(8,315)
(63)
53,013
167,789
(114,776)
53,013
Property, plant and equipment are reviewed for impairment in accordance with AASB 136 Impairment of Assets. During
the year, the Group recognised an impairment charge of $8,315,000 (2021: $4,904,000) relating to the carrying amount
of property, plant and equipment. The impairment charge is on assets which are no longer expected to generate future
economic benefits primarily due to closure of sites.
78
AMA GroupNotes to the Consolidated Financial Statements
C5
Property, plant and equipment (Cont.)
Significant accounting policies
Property, plant and equipment
Each class of property, plant and equipment is carried at cost less any accumulated depreciation. Cost includes
expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and maintenance are charged to the profit or loss during
the reporting period in which they are incurred.
Depreciation
Assets are depreciated from the date the asset is brought to use, or in business combinations, the date of
acquisition. Depreciation is calculated on either a straight line or diminishing value basis as considered appropriate
to write off the net cost of each item of plant and equipment over its expected useful life to the Group.
The expected useful lives are as follows:
■ Plant and equipment: 2 to 15 years
■ Motor vehicles: 4 to 8 years
■ Furniture and fittings: 2 to 10 years
■ Leasehold improvements: 5 to 15 years
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.
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 depreciation and amortisation rates are reviewed annually and adjusted if appropriate. An asset's carrying
amount is written down to its recoverable amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Derecognition
An item of property, plant and equipment is derecognised when it is disposed of or no future economic benefits
are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with
the carrying amount and are recognised in the profit or loss.
Impairment
The carrying amounts of the Group's property, plant and equipment are reviewed for impairment where there is
an indication that the asset may be impaired (assessed at least each reporting date) or when there is an indication
that a previously recognised impairment may need to be reversed.
79
Annual Report | 30 June 2022 C Assets and liabilities
C6 Intangible assets
Intangible assets represent goodwill, customer contracts, other intangibles and software. Goodwill arises when
the Group acquires a business where consideration exceeds the fair value of net assets acquired and represents
the future benefits expected to arise from the purchase.
(A)
Net book amounts and movements in intangible assets
Customer
contracts
$’000
Other
intangibles
$’000
Software
$’000
Total
$’000
2,517
(275)
2,242
-
-
(241)
-
-
-
(9)
1,992
2,400
(408)
1,992
10
(241)
-
1,761
2,410
(649)
1,761
7,721
(5,045)
2,676
787,541
(93,454)
694,087
-
-
(1,001)
(19)
-
474
(19)
2,111
7,874
(5,763)
2,111
799
(775)
-
2,135
(608)
8,733
(17,949)
(95,802)
47
474
(37,070)
551,912
749,773
(197,861)
551,912
673
(17,723)
(80,700)
454,162
6,949
(4,814)
2,135
749,735
(295,573)
454,162
1 July 2020
Cost
Accumulated amortisation and impairment
Net book amount
Movement:
Additions and adjustments
Acquired through business combinations
Amortisation
Impairment
Effect of foreign exchange
Reclass from property, plant and equipment
Disposals - discontinued operations
Goodwill
$’000
537,260
(63,398)
473,862
(608)
8,733
-
(95,783)
47
-
(37,042)
240,043
(24,736)
215,307
-
-
(16,707)
-
-
-
-
Closing net book amount
349,209
198,600
1 July 2021
Cost
Accumulated amortisation and impairment
Net book amount
499,456
(150,247)
349,209
240,043
(41,443)
198,600
Movement:
Additions and adjustments
Amortisation
Impairment
Closing net book amount
(136)
-
(80,700)
268,373
-
(16,707)
-
181,893
2022
Cost
Accumulated amortisation and impairment
Net book amount
500,333
(231,960)
268,373
240,043
(58,150)
181,893
80
AMA GroupNotes to the Consolidated Financial Statements
C6
Intangible assets (Cont.)
Goodwill and indefinite life intangibles
(B)
For the purpose of impairment testing, goodwill acquired through business combinations is allocated to each of the Group's
CGUs (or group of CGUs) and represents the lowest level within the Group at which management monitors goodwill.
Allocation of goodwill to groups of cash-generating units
(i)
Goodwill has been allocated to the Group's CGU's as follows:
Reporting segment
Vehicle Collision Repairs
Heavy Motor
Supply
Total goodwill
Business unit
Drive
Non-Drive
CGU
(where not the reporting
segment or business unit)
Capital Smart
Non-Capital Smart
Fluid Drive
2022
$’000
57,970
30,649
135,114
43,180
1,460
2021
$’000
99,472
69,949
135,114
43,214
1,460
268,373
349,209
Impairment of goodwill
(ii)
Goodwill is assessed for impairment on an annual basis, or more frequently when there is an indication that the CGU to
which it belongs may be impaired. Where indicators exist, impairment testing is undertaken by comparing the carrying and
recoverable amounts of goodwill. Impairment losses are recognised in the profit or loss when carrying amounts are higher
than recoverable amounts.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining
fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified,
an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded companies or other available fair value indicators.
In FY22, the Group has impaired two CGUs as follows:
The Drive – Capital Smart CGU goodwill was impaired by $44,000,000 (2021: $96,806,000). The Group has taken its
proportionate share of the impairment charge, with a net impact to the Group accounts of $41,400,000. The Capital
Smart business continues to see lower than expected completed volumes, due to labour and parts constraints
impacting ability to complete repairs. Capital Smart also has a fixed price contract with its major customer, which
in a higher inflation environment as is currently being experienced has resulted in reduced operating margins for
Capital Smart. The uncertainty surrounding labour availability given ongoing COVID-19 waves and supply chain
issues have prompted the Group to revise down annual repair volumes (in line with recent experience), which
impacts future cash inflows and has resulted in this impairment.
The Drive (Non-Capital Smart) CGU goodwill was impaired by $39,300,000. Due to site closures in the current
year, this CGU now has reduced capacity. The impairment reflects approximately 40% of the goodwill value.
The Group has completed a number of acquisitions in previous years. In most instances, the consideration is made up of
an upfront amount and a deferred amount based on profitability over a period. The deferred consideration is generally
contingent on profit measures such as EBITDAI or EBIT. For any acquisition (business, share, individual site or group
of sites) where contingent vendor consideration is still outstanding, the measurement of that liability is an indication
that management monitors the goodwill at the acquisition level. Therefore, for any acquisition with contingent vendor
consideration outstanding, the Group has considered the recoverability of goodwill recorded in the acquisition accounting.
Any impairment loss recognised is a direct result of the contingent vendor consideration decreasing and offsets any gain
in the profit or loss recorded within fair value adjustments. Once the contingent vendor consideration period has ended,
goodwill in relation to the acquisition is aggregated with the remaining goodwill in the CGU.
81
Annual Report | 30 June 2022 C Assets and liabilities
C6
(B)
Intangible assets (Cont.)
Goodwill and indefinite life intangibles (Cont.)
Key assumptions used in the calculation of the recoverable amount
(iii)
The Group's annual impairment testing is performed using the fair value less costs of disposal methodology. The recoverable
amount was determined using a discounted cash flow (DCF) model. This was based on the present value of cash flow
projections over a five-year period with the period extending beyond five years extrapolated using an estimated growth
rate. Management has considered probability weighted cash flow scenarios and market evidence to help corroborate the
resulting value by comparing to relevant market multiples.
The value assigned to key assumptions represent management’s assessment of future trends in the industry and are based
on historical data from both external and internal sources. The approach and key assumptions used in the calculation of the
recoverable amount are summarised in the following table:
Assumption
Approach used to determine values
Pre-tax
discount rates
The discount rate is a pre-tax measure estimated based on past experience, industry average weighted
average cost of capital and adjusted to incorporate risks associated with each CGU. The cash flows are
discounted using the pre-tax discount rate at the beginning of the budget period.
FY23
(Year 1)
EBITDAI
growth rate
FY23 EBITDAI is based on a risk-adjusted scenario of the Board approved budget which is expected
to be consistent with a market participant's perspective. This has been based on past and current
experience, with adjustments where future activities are expected to differ materially from past
performance or market participant's perspective.
FY24 to FY27
EBITDAI
FY24 to FY27 EBITDAI is calculated using an EBITDAI growth rate based on past experience, industry
trends and adjusted to reflect assumptions reasonably expected to be available to a market participant.
Terminal
growth rate
The terminal growth rate is used to extrapolate cash flows beyond the forecast period. The terminal
value is calculated using a perpetual growth model.
Costs of
disposal
The costs of disposal are estimated based on the Group's experience with disposal of assets and on
industry benchmarks.
AASB 16
Leases impact
EBITDAI used in the discounted cashflow model is based on a pre-AASB 16 basis, such that rental
payments are included in the cashflows. Right-of-use assets and lease liabilities have been included
in the carrying value of the CGU as it is assumed that a potential buyer or market participant would
assume both the right-of-use assets and lease liabilities.
The goodwill allocated to the CGU's, and the values assigned to a number of key assumptions are as follows:
CGU
Goodwill
$'000
Terminal growth rate
(%)
Pre-tax discount rate
(%)
Year 1 volume growth rate
(%) 1
Non-Drive
Heavy Motor
Capital Smart
Non-Capital Smart
Fluid Drive
135,114
43,180
57,970
30,649
1,460
2022
2.5
2.5
2.5
2.5
2.5
2021
2.5
N/A
2.5
N/A
2.5
2022
11.6
11.6
11.6
11.6
12.9
2021
10.9
N/A
10.9
N/A
12.4
2022
11
22 1
13
(15) 2
10 1
2021
10
N/A
10
N/A
(25)
1 EBITDAI growth rates used for Heavy Motor and Fluid Drive CGUs as volumes are not a key assumption for these CGUs.
2 Reduced volume assumption due to closing sites.
Critical accounting estimates and judgements
(iv)
Determining whether goodwill is impaired requires an estimation of the value in use or fair value less cost of disposal of
the cash-generating units to which goodwill has been allocated. The Group’s impairment testing estimates the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value of
those cash flows.
82
AMA GroupNotes to the Consolidated Financial Statements C6
(B)
Intangible assets (Cont.)
Goodwill and indefinite life intangibles (Cont.)
Significant estimate: impact of possible changes in key assumptions
(v)
Management assessed whether any CGU could be impaired as a result of a possible change in a key assumption and the
following table provides quantitative information illustrating the impact of possible changes in key assumptions (with all
other inputs remaining the same). The Heavy Motor and Fluid Drive CGUs have sufficient headroom that there was no
impairment from the assessment undertaken. However, given impairment has been recognised in the current year for the
Capital Smart and Non-Capital Smart Drive CGUs and minimal (approximately $10m) headroom exists for Non-Drive CGU,
any adverse change in assumptions would lead to further impairment. The following table shows the further impairment
that would be recognised by a change in key assumption:
CGU
Carrying value of
goodwill allocated
to the CGU
$’000
Change in
key assumption
Additional Impairment that
would be recognised under
change in key assumption
$’000
Capital Smart
57,970
Non-Capital Smart
30,649
Non-Drive
135,114
Pre-tax discount rate increase of 1%
Terminal growth rate decline of 1%
FY23 to FY27 volume decline of 5%
Pre-tax discount rate increase of 1%
Terminal growth rate decline of 1%
FY23 to FY27 volume decline of 5%
Pre-tax discount rate increase of 1%
Terminal growth rate decline of 1%
FY23 to FY27 volume decline of 5%
26,992
22,058
34,371
4,145
3,363
8,330
7,360
3,888
17,239
Significant accounting policies
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost and subsequently measured
at cost less accumulated amortisation and impairment losses. Where acquired in a business combination, cost
represents the fair value at the date of acquisition.
Intangible assets with finite lives are amortised on a straight-line basis over their estimated useful lives and tested
for impairment whenever there is an indication that they may be impaired. The amortisation period and method
are reviewed at each financial year-end. Intangible assets with indefinite lives are tested for impairment in the
same way as goodwill.
Goodwill
Goodwill acquired in a business combination is initially measured at cost. Cost is measured as the cost of the
business combination less the net fair value of the acquired and identifiable assets, liabilities and contingent
liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. If fair
value of the net assets acquired is in excess of the aggregate consideration transferred, the Group recognises the
gain in the profit or loss.
Customer contracts
Customer contracts are recognised at cost, being fair value at the date of 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. The Group amortises customer contracts using the straight-line method over a period of 4 to 15 years.
Other intangibles
Other intangibles consist of customer relationships, brands, patents and trademarks and are recognised at
cost, being fair value at the date of acquisition. These intangibles have a finite life and are carried at cost less
accumulated amortisation and any impairment losses. The Group amortises other intangibles using the straight-
line method over 10 years.
Software
Costs associated with maintaining software programmes are recognised as an expense as incurred. Development
costs that are directly attributable to the design and testing of identifiable and unique software products
controlled by the group are recognised as intangible assets.
Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate
portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset
is ready for use.
(Continues next page)
83
Annual Report | 30 June 2022 C Assets and liabilities
C6
(B)
(v)
Intangible assets (Cont.)
Goodwill and indefinite life intangibles (Cont.)
Significant estimate: impact of possible changes in key assumptions (Cont.)
Significant accounting policies (Cont.)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
84
AMA GroupNotes to the Consolidated Financial Statements
C7 Right-of-use assets and lease liabilities
The Group leases various offices, warehouses, site premises, equipment and vehicles. Lease terms are negotiated
on an individual basis and contain a wide range of different terms and conditions including extension options.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
The Group's leasing activities
(A)
Property leases are generally 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 additional terms.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the
lease and non-lease components based on their relative stand-alone prices.
The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the
lessor. Leased assets may not be used as security for borrowing purposes.
Amounts recognised in the Consolidated Statement of Financial Position
(B)
The Consolidated Statement of Financial Position includes the following amounts relating to leases:
Right-of-use assets
Leased properties
Leased equipment
Leased motor vehicles
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
2022
$’000
2021
$’000
266,810
79
-
266,889
34,076
255,227
289,303
306,691
153
33
306,877
33,784
293,134
326,918
The total additions to right-of-use assets for the year ended 30 June 2022 were $54,981,000 (30 June 2021: $20,198,000).
Refer to Note C7(E) on the following page.
Amounts recognised in the Consolidated Statement of Profit or Loss
(C)
The Consolidated Statement of Profit or Loss shows the following amounts relating to leases:
Depreciation charge on right-of-use assets
Leased properties
Leased equipment
Leased motor vehicles
Make good
Total
Impairment expense
Interest expense (included in finance costs)
COVID-19 rent concession (included as a benefit in occupancy expenses) 1
Expense relating to short-term leases (included in occupancy expenses)
Expense relating to leases of low-value assets (included in occupancy expenses)
Total
2022
$’000
38,388
74
29
5,127
43,618
16,498
18,269
(525)
885
53
35,180
2021
$’000
40,532
217
46
269
41,064
1,428
19,521
(1,536)
922
156
20,491
Depreciation, impairment and interest expense from discontinued operations
-
1,850
1 The Group has elected to apply the practical expedient to assess whether a COVID-19-related rent concession is a lease modification.
Amounts recognised in the Consolidated Statement of Cash Flows
(D)
The total cash outflow for leases for the year ended 30 June 2022 was $50,800,000 (30 June 2021: $51,694,000).
85
Annual Report | 30 June 2022 C Assets and liabilities
C7
(E)
Right-of-use assets and lease liabilities (Cont.)
Net book amounts and movements in right-of-use assets
Leased
properties
$’000
Leased
equipment
$’000
Leased
motor vehicles
$’000
1 July 2020
Cost
Accumulated depreciation and impairment
Net book amount
Movement:
Acquired through business combinations
Additions
Disposals
Disposals - discontinued operations
Depreciation
Modification to lease terms
Variable lease payments reassessment
Impairment
Effect of foreign exchange
Net book amount
1 July 2021
Cost
Accumulated depreciation and impairment
Net book amount
Movement:
Additions
Disposals
Depreciation
Modification to lease terms
Variable lease payments reassessment
Impairment
Effect of foreign exchange
Net book amount
2022
Cost
Accumulated depreciation and impairment
Net book amount
390,719
(45,776)
344,943
9,642
20,198
(5,800)
(20,603)
(40,801)
13,499
(12,931)
(1,428)
(28)
306,691
384,570
(77,879)
306,691
54,981
-
(43,515)
(37,429)
2,869
(16,498)
(289)
266,810
385,645
(118,835)
266,810
510
(141)
369
-
-
-
-
(217)
1
-
-
-
153
455
(302)
153
-
-
(74)
-
-
-
-
79
220
(141)
79
123
(26)
97
-
-
(15)
-
(46)
-
(3)
-
-
33
98
(65)
33
-
(2)
(29)
(2)
-
-
-
-
-
-
-
Total
$’000
391,352
(45,943)
345,409
9,642
20,198
(5,815)
(20,603)
(41,064)
13,500
(12,934)
(1,428)
(28)
306,877
385,123
(78,246)
306,877
54,981
(2)
(43,618)
(37,431)
2,869
(16,498)
(289)
266,889
385,865
(118,976)
266,889
86
AMA GroupNotes to the Consolidated Financial Statements C7
Right-of-use assets and lease liabilities (Cont.)
Short-term leases and leases of low-value assets
(F)
The Group applies the recognition exemptions to its short-term and low-value leases of property, equipment and motor
vehicles. Short-term leases are leases with a lease term of 12 months or less. Lease payments on short-term leases and leases
of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Extension and termination options
(G)
Extension and termination options are included in a number of property and equipment leases across the Group. These
terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination
options held are exercisable only by the Group and not by the respective lessor.
Critical accounting estimates and judgements
(H)
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
In determining the lease term, the Group applies judgement and considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
At the end of each lease term, the Group assumes the lease arrangements will be automatically renewed regardless of
whether the lease is no longer enforceable. The lease will remain in effect until one of the parties gives notice to terminate
with no more than an insignificant penalty.
The initial lease term assessment is reviewed if a significant event or a significant change in circumstances occurs which
affects this assessment and that is within the control of the lessee.
Significant accounting policies
Lease liabilities
At commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance
fixed payments) less any lease incentives receivable and variable lease payments that depend on an index or rate.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the
Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option
to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense
in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the
lease commencement date as the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses and adjusted for any remeasurement of lease liabilities.
The cost of the right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received. The recognised
right-of-use assets are depreciated on a straight-line basis over the shorter of useful life and the lease term.
Right-of-use assets are tested for impairment which replaces the previous requirement to recognise a provision of
onerous lease contracts. Any identified impairment loss is accounted for in line with the Group's accounting policy
for property, plant and equipment which is set out in note C5.
87
Annual Report | 30 June 2022 C Assets and liabilities
C8 Trade and other payables
Trade and other payables mainly consist of amounts owing to the Group's suppliers that have been invoiced or accrued.
Trade payables
Accrued expenses
Payroll and statutory liabilities
Other payables
Total trade and other payables
2022
$’000
74,631
16,440
8,736
2,357
102,164
2021
$’000
86,939
17,880
10,101
4,249
119,169
Fair value disclosure
(A)
Due to the short-term nature, the carrying amount of trade and other payables is considered to approximate their fair value.
For information about the methods and assumptions used in determining the fair value of the Group's payables refer to
note D8(D)(i).
Significant accounting policies
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.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the
reporting date. Other payables not due within a year are measured less cumulative amortisation calculated using
the effective interest method. The carrying amounts of trade and other payables are considered to be the same as
their fair values, due to their short-term nature.
C9 Other liabilities
Current
Market incentive
Deferred revenue
Total current
Non-current
Market incentive
Deferred revenue
Total non-current
Total other liabilities
2022
$’000
14,119
14,939
29,058
33,841
-
33,841
2021
$’000
14,000
7
14,007
46,800
750
47,550
62,899
61,557
(A) Market incentive
In a previous financial year, the Group entered into an agreement with a key supplier to purchase the supplier's products
on an exclusive basis over an agreed period of time. In exchange for this exclusive arrangement, and subject to certain
conditions, the Group receives preferential benefits including the upfront payment of the market incentive and the
ongoing competitive price of the products.
The incentive is being amortised based on a percentage of the purchased product. Termination of the arrangement by the
Company, or the occurrence of an event of default requires the Company to repay all unamortised balances.
As at 30 June 2022, an amount of $14,119,000 (30 June 2021: $14,000,000) has been classified as current representing the
anticipated reduction in this incentive over the next twelve months.
A reconciliation of the movement of the market incentive liability is set out below:
Balance at 1 July
Movement:
Offset against inventory
Charged to profit or loss - raw materials and consumables used
Balance at 30 June
88
2022
$’000
60,800
(20)
(12,820)
47,960
2021
$’000
74,431
(340)
(13,291)
60,800
AMA GroupNotes to the Consolidated Financial Statements
C10 Provisions
Provisions are a liability recorded when there is uncertainty over the timing or amount that will be paid but the
expected settlement amount can be reliably estimated by the Group. The main provisions held are in relation to
employee benefits and make good onsite premises.
Current
Annual leave
Long service leave
Make good
Other
Total current
Non-current
Long service leave
Make good
Total non-current
Total provisions
2022
$’000
21,364
13,471
7,091
667
42,593
2,843
22,449
25,292
2021
$’000
21,516
10,030
939
288
32,773
6,177
6,676
12,853
67,885
45,626
Carrying amounts and movements in provisions
(A)
Movements in make good and other provisions during the financial year are set out below:
Balance at 1 July 2020
Movement:
Additional provisions recognised
Unused amounts reversed
Unwind of discount
Amounts used during the year
Disposal – discontinued operations
Balance at 30 June 2021
Movement:
Additional provisions recognised
Unused amounts reversed
Unwind of discount
Amounts used during the year
Balance at 30 June 2022
Other
$'000
288
Make good
$’000
8,988
-
-
-
-
-
288
379
-
-
-
667
527
(109)
280
(1,005)
(1,066)
7,615
22,388
(85)
309
(687)
29,540
Total
$’000
9,276
527
(109)
280
(1,005)
(1,066)
7,903
22,767
(85)
309
(687)
30,207
89
Annual Report | 30 June 2022 C Assets and liabilities
C10 Provisions (Cont.)
Amounts not expected to be settled within the next 12 months
(B)
The following amounts reflect employee benefits that are classified as a current liability, since the Group does not have an
unconditional right to defer settlement for this obligation, but are not expected to be taken within the next 12 months:
Annual leave obligation expected to be settled after 12 months
Long service leave obligation expected to be settled after 12 months
Total
2022
$’000
5,794
10,136
15,930
2021
$’000
5,619
6,872
12,491
Significant accounting policies
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
it is probable the Group will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave
and leave loading that are expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service, are recognised 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. The short-term employee benefit obligations are recognised in the provision for
employee benefits.
The current provision for employee benefits includes accrued annual leave and long service leave.
Long service leave includes all unconditional entitlements where employees have completed the
required period of service. Employee benefits are 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.
Other long-term employee benefit obligations
The liability for long service leave that are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service, are 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.
The non-current employee benefit represents a long-service leave provision which covers conditional
entitlements where employees have not completed their required period of service, adjusted for the
probability of likely realisation.
(C)
Critical accounting estimates and judgements
Make good
The Group is required to restore the leased premises of its sites to their original condition at the end of the respective lease
terms. A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of leasehold improvements and are depreciated over
the shorter of the term of the lease and the useful life of the assets.
90
AMA GroupNotes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
D
CAPITAL STRUCTURE, FINANCING AND
FINANCIAL RISK MANAGEMENT
Capital and financial risk management provides information about the capital management practices of the Group,
shareholder returns for the year and discusses the Group's exposure and management to various financial risks.
D1 Capital management
This section provides a summary of the capital management activities of the Group during the period. The Group
manages its capital structure with the objective of enhancing long-term shareholder value through funding its
business at an optimised weighted average cost of capital.
The Group's objectives when managing capital are to:
■ safeguard its ability to continue as a going concern, so as to provide returns for shareholders and benefits for
other stakeholders, and
■ maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. The gearing ratio
has been calculated with reference to net senior debt which is presented in accordance with the requirements of the
syndicated facility agreement.
The Group’s capital includes ordinary share capital, financial liabilities at amortised cost (drawn facilities), cash and cash
equivalents and 50% of the cash portion of contingent vendor consideration (consistent with the calculation for debt
covenants under the syndicated facility agreement).
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares, secure additional financing, restructure operations or sell assets to reduce
debt. This is decided on the basis of maximising shareholder returns over the long term.
Net debt
Financial liabilities - drawn cash facilities
Contingent vendor consideration - 50% of cash portion
Cash and cash equivalents
Net senior debt used in covenant calculations
Convertible notes (face value)
Net debt
Fully paid ordinary shares
Quoted (at market price) 1
Unquoted (at issue price)
Total fully paid ordinary shares
Total capital
Gearing Ratio
Gearing Ratio (net senior debt)
Notes
D7(A)
D7(C)
D6
D4(A)
2022
$’000
2021
$’000
165,000
1,220
(52,189)
114,031
50,000
164,031
182,072
1,611
183,683
347,714
47.2%
32.8%
237,500
7,010
(64,203)
180,307
-
180,307
427,262
5,000
432,262
612,569
29.4%
29.4%
1 Fully Paid Ordinary Shares Quoted value has been calculated using the closing share prices as at 30 June each year.
91
Annual Report | 30 June 2022
D2 Earnings / (loss) per share
Earnings / (loss) per share presents the amount of profit / (loss) generated for the reporting period attributable to
shareholders divided by the weighted average number of shares on issue. The potential for any share rights issued
by the Group to dilute existing shareholders' ownership when the share rights are exercised are also presented.
The convertible notes have no dilution effect on earnings per share.
(A)
Reconciliations of earnings used in calculating earnings / (loss) per share
Profit / (loss) attributable to the ordinary equity holders of the Company:
Continuing operations
Discontinued operations
2022
$’000
2021
$’000
(144,214)
-
(144,214)
(109,101)
12,151
(96,950)
(B) Weighted average number of shares used as the denominator
In October 2021, AMA completed a placement and a rights issue. Under the entitlement offer for the rights issue, eligible
shareholders were invited to subscribe for 1 new AMA share for every 2.8 existing AMA shares. All new shares were offered
at 37.5 cents per share, which represented a 9.2% discount to the last close price on 6 September 2021. As the rights issue
contained a bonus element and the rights issue was offered to all existing shareholders, basic and diluted EPS have been
adjusted retrospectively for the bonus element for all periods presented.
Weighted average number of shares used as denominator in calculating both basic and
diluted earnings / (loss) per share
2022
Shares
2021
Shares
955,285,449
762,000,853
Earnings / (loss) per share
(C)
Basic earnings / (loss) per share is calculated by dividing the profit / (loss) attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares outstanding during the period. The average market value of
the Company’s shares for the purpose of calculating the dilutive effect of share options and performance rights is based on
quoted market prices for the period that the options and performance rights were outstanding.
Continuing operations
Discontinued operations
Earnings / (loss) per share
D3 Dividends
2022
Cents
(15.10)
-
(15.10)
2021
Cents
(14.32)
1.59
(12.72)
Dividends are distributions of the Group's profit after tax to shareholders and represent one of the ways the Group
distributes returns to its shareholders.
No dividends have been declared or paid in the current and previous year.
Franking credit balance
Franking credits available for subsequent reporting period based on tax rate of 30%
2022
$’000
32,462
2021
$’000
33,511
The above amounts represent the balances of the franking account as at the end of the financial year, adjusted for:
■ franking credits that will arise from the payment of the amount of the provision for income tax;
■ franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
■ franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The Group expects the franking credit balance to decrease during FY23 due to the receipt of a refund of tax receivable (refer
to Note B4(C)) which will generate a franking debit resulting in a new balance of approximately $18 million.
92
AMA GroupNotes to the Consolidated Financial Statements
D4 Contributed equity
Contributed equity represents the number of ordinary shares on issue. A reconciliation is presented to show the
movement in ordinary shares on issue.
(A)
Ordinary share capital
Fully paid ordinary shares
Quoted
Unquoted
Total share capital
(B) Movements in ordinary shares
Quoted
Opening balance
Equity raising 1
Employee share issue
Vendor share issue
Convert from unquoted shares
Share buy-back
Transaction costs, net of tax
Total quoted
Unquoted
Opening balance
Fair value adjustment on contingent shares
Convert to quoted shares
Total unquoted
2022
Shares
1,071,009,343
1,642,329
2022
$’000
529,893
1,611
2021
Shares
743,063,799
6,139,929
1,072,651,672
531,504
749,203,728
2021
$’000
419,404
5,000
424,404
2022
Shares
2022
$’000
2021
Shares
2021
$’000
743,063,799
266,616,996
9,710,433
48,573,966
4,497,600
(1,453,451)
-
1,071,009,343
6,139,929
-
(4,497,600)
1,642,329
419,404
99,981
3,438
6,768 2
3,389
-
(3,087)
529,893
5,000
-
(3,389)
1,611
733,903,518
-
-
8,711,730
1,039,501
(590,950)
-
743,063,799
7,179,430
-
(1,039,501)
6,139,929
410,117
-
-
8,537
1,000
(250)
-
419,404
7,000
(1,000)
(1,000)
5,000
Total share capital
1,072,651,672
531,504
749,203,728
424,404
1
In FY22, AMA Group Limited completed a fully underwritten institutional placement which raised approximately $53,000,000 at an issue price of $0.375 per
share and a non-underwritten retail entitlement offer which raised approximately $47,000,000.
2 The value represents share price at grant date of 17c less amount of vendor grant that relates to future service periods
Significant accounting policies
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.
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
be converted to quoted fully paid ordinary shares.
93
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management
D5 Other reserves
Other reserves represents the cumulative gains or losses that have been recognised in the Consolidated Statement
of Other Comprehensive Income.
Share-based payments
Foreign currency translation
Hedging
Total other reserves
The nature and purpose of each reserve is as follows:
2022
$’000
290
(10)
4,865
5,145
2021
$’000
214
64
290
568
Share-based payments reserve
(i)
The share-based payments reserve is used to recognise the fair value of equity-settled share-based payments issued to
employees, including key management personnel, as part of their remuneration. Equity instrument disclosures relating to
key management personnel can be found in note F1 and within the Remuneration Report.
Foreign currency translation reserve
(ii)
The foreign currency translation reserve is used to recognise foreign currency translation differences arising on the
translation of financial statements of the Group’s foreign entities into Australian Dollars.
Hedging reserve
(iii)
Records fair value movements in cash flow hedges to the extent the cash flow hedges are deemed effective. The balance is
reclassified to net profit when the hedged expense is recognised. Ineffective portions of cash flow hedges are recognised in
net profit immediately.
Significant accounting policies
Cash flow hedge
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair
value of the derivative is recognised in the Consolidated Statement of Comprehensive Income and accumulated in
the hedging reserve. Any ineffective portion of changes in the fair value of the derivative is immediately charged to
the profit or loss within finance costs.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, the hedge accounting is discontinued prospectively. If the forecast
transaction is no longer expected to occur, then the amount accumulated in equity is recognised in the profit or loss.
94
AMA GroupNotes to the Consolidated Financial Statements
D6 Cash and cash equivalents
This section presents cash and cash equivalents in the Consolidated Statement of Financial Position and a
reconciliation of the Group's profit for the period to net cash flows provided by operating activities.
(A)
Cash and cash equivalents as presented in the Consolidated Statement of
Financial Position
Cash at bank and cash equivalents
2022
$’000
52,189
2021
$’000
64,203
(B)
Reconciliation of loss before income tax to net cash (outflows)/inflows from
operating activities
Loss for the period
Adjustment for:
Non-cash market incentive
Non-cash employee remuneration
Fair value adjustments (including discontinued operations)
Amortised borrowing costs
Depreciation and amortisation (including discontinued operations)
Impairment (including discontinued operations)
(Gain) / loss on disposal of property, plant, equipment and leases
Gain on sale of discontinued operations, net of tax
Other
Income tax benefit (including discontinued operations)
Income tax paid
Total adjustments
(Increase) / decrease in assets:
Receivables and contract assets
Inventories
Other assets
Total decrease in assets
Increase / (decrease) in liabilities:
Trade and other payables
Provisions
Other liabilities
Total (decrease) / increase in liabilities
2022
$’000
2021
$’000
(148,008)
(99,079)
(12,820)
3,515
(13,729)
3,184
78,754
105,513
-
-
(1,406)
(34,818)
(1,158)
127,035
5,484
(7,212)
(1,801)
(3,529)
(17,005)
(236)
13,512
(3,729)
(13,291)
(1,227)
5,602
1,310
83,307
102,465
(1,982)
(7,397)
(315)
(787)
(7,243)
160,442
(614)
6,816
1,766
7,968
1,574
(1,614)
(17,187)
(17,227)
Net cash (outflows)/inflows from operating activities
(28,231)
52,104
95
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management
D6
Cash and cash equivalents (Cont.)
Changes in liabilities arising from financing activities
(C)
The following table provides a reconciliation between opening and closing balances on the face of the Consolidated
Statement of Financial Position arising from financing activities.
Lease liabilities
Long-term borrowings
Total liabilities from
financing activities
2022
$'000
2021
$'000
2022
$'000
2021
$'000
2022
$'000
2021
$'000
Balance at 1 July
326,918
355,512
234,751
335,941
561,669
691,453
Movement:
Cash inflows
Apportionment of convertible
note to equity
Cash outflows – principal
Cash outflows – borrowing costs
Non-cash additions/(disposals)
Balance at 30 June
-
-
(32,531)
-
(5,084)
289,303
-
-
(31,560)
-
2,966
326,918
50,000
(5,197)
(72,500)
(6,006)
4,040
205,088
-
-
(102,500)
-
1,310
234,751
50,000
(5,197)
(105,031)
(6,006)
(1,044)
494,391
-
-
(134,060)
-
4,276
561,669
Significant accounting policies
Cash and cash equivalents
Cash and cash equivalents include 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.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral
part of the Group's cash management.
96
AMA GroupNotes to the Consolidated Financial Statements
D7 Borrowings and contingent vendor consideration
This section provides a summary of the capital management activity of the Group during the period, including
the Group's borrowings. The Group manages its liquidity requirements with a bank loan and interest rate swap.
Current
Contingent vendor consideration
Derivative - financial instrument
Total current
Non-current
Bank loan, net of capitalised borrowing costs
Contingent vendor consideration
Convertible notes
Total non-current
Total
(A)
Borrowings
2022
$’000
2,940
-
2,940
161,047
-
44,041
205,088
2021
$’000
32,220
327
32,547
234,751
2,940
-
237,691
208,028
270,238
(i) Syndicated Facility Agreement
During the year the Group Syndicated Facility Agreement decreased to $165,000,000 (2021: $305,000,000) and $72,500,000
of borrowings repaid using proceeds from issuance of shares and convertible notes.
As at 30 June 2022, the Syndicated Facility was drawn exclusive of bank guarantees at $165,000,000 (2021: $237,500,000).
Facility
Limit
$’000
Cash drawn
$’000
Guarantees
drawn
$’000
Available
to be drawn
$’000
Maturity Purpose
Facility B
147,500
147,500
-
-
Oct 2024 For general corporate purposes, including
permitted acquisitions, growth capital
expenditure and associated fees, costs and
expenses and working capital advances up
to a sublimit of $35,000,000. Interest rate is
BBSY + 3.65% margin.
Facility D
35,000
17,500
12,037
5,463
Oct 2024 For working capital, general corporate
purposes, bank guarantees and letters of
credit. At reporting date $12 million of bank
guarantees had been issued under Facility D.
This is not included in the Consolidated
Statement of Financial Position (refer note F5).
Interest rate is BBSY + 3.65% margin.
Total
182,500
165,000
12,037
5,463
The Group is required to make interest payments on the drawn debt. The repayment of principal is at maturity date.
The effective interest rate on borrowings for the year ended 30 June 2022 was 4.32% (30 June 2021: 3.10%).
The Group is required to comply with financial covenants under the terms of its borrowing facilities including a net senior
leverage ratio and a fixed charge cover ratio. In response to COVID-19, the Group’s financiers agreed to waive covenant
testing until 30 September 2022. Subsequent to year end, the Group’s financiers agreed to a revised covenant testing
regime until 30 September 2023, refer to Note F6 for further details.
While expecting to comply with revised covenants, in the event that this is not possible, the Group may need to request
further waivers or deferrals from its financiers in relation to covenant testing. Management is able to undertake alternative
actions such as raising equity, securing additional financing, restructuring operations or the sale of assets.
Security and fair value disclosures
(ii)
The Syndicated Facility is secured by a fixed and floating charge over all of the assets of the Company and its wholly
owned subsidiaries.
The carrying amount of the Group's borrowings approximates their fair values, as commercial rates of interest are paid, and
the impact of discounting is not significant. For information about the methods and assumptions used in determining the
fair value of the Groups borrowings refer to note D8(D)(i).
Risk exposures
(iii)
Details of the Group's exposure to risks arising from borrowings are set out in note D8(A)(ii).
97
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management
D7
(A)
Borrowings and contingent vendor consideration (Cont.)
Borrowings (Cont.)
Significant accounting policies
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost, using the effective interest rate method. Interest is accrued over the period it
becomes due and unpaid interest is recorded as part of current payables.
Borrowings are removed from the Consolidated Statement of Financial Position when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability
that has been extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in the Consolidated Statement of Profit or Loss as other
income or finance costs.
Convertible notes
(B)
On 21 September 2021, the Group completed the issuance of $50,000,000 Senior Unsecured Convertible Notes ("Notes") to
strengthen its balance sheet and liquidity position as part of its response to the financial impacts resulting from COVID-19.
The net proceeds from the offer of the Notes and $100,000,000 equity raising were used in part to repay $72,500,000 of the
Company's existing term debt, enabling the Company to extend remaining term debt maturity.
The Notes are convertible at the option of the Noteholders into ordinary shares of AMA Group Limited based on an initial
conversion price of $0.4688 per share at any time on or after 21 September 2021 up to (but excluding) the date falling
5 business days prior to the maturity date. The Noteholder has the option to require the Company to redeem all or some of
the Noteholder's Notes on 22 March 2025 for an amount equal to 100% of the principal amount of the Notes plus any accrued
but unpaid interest. Any Notes not converted will be redeemed on 21 March 2027, being the maturity date, at the principal
amount of the Notes plus any accrued but unpaid interest. The Notes carry an interest rate of 4.0% per annum which is paid
semi-annually in arrears on 22 March and 22 September.
The Convertible Notes are presented in the Condensed Consolidated Statement of Financial Position as follows:
Balance at 1 July 2021
Movement:
Proceeds from issue of convertible notes
Transaction costs
Net proceeds
Accrued interest
Interest paid
Amortisation of transaction costs - debt component
Balance at 30 June 2022
Significant accounting policies
Debt
$’000
-
44,597
(1,875)
42,722
2,063
(1,000)
256
44,041
Equity
$’000
-
5,403
(206)
5,197
-
-
-
5,197
Total
$’000
-
50,000
(2,081)
47,919
2,063
(1,000)
256
49,238
Convertible notes are compound financial instruments, which require separation of debt and equity components
at inception as follows:
Debt component
The fair value of the debt component of the Notes was estimated at the issuance date using an equivalent market
interest rate of a similar instrument. The Notes are initially recognised at a discounted amount of $44,596,820.
The discount is amortised as interest expense using the effective interest method over the terms of the Notes
at an effective interest rate of 6.10%.
Equity component - Conversion feature
The conversion feature of the Notes is required to be separated from the Notes and is recognised in shareholders
equity, net of income tax, and not subsequently remeasured. The conversion feature represents the Group's
obligation to issue AMA Group Limited shares at a fixed price should Noteholders exercise their conversion option.
Settlement of Convertible Notes
Where Notes are settled by issue of shares, the related financial liabilities are derecognised at their carrying value
with the corresponding increase to share capital. Any costs incurred are recognised in profit or loss.
Capitalised transaction costs
AMA Group Limited incurred $2,081,000 of transaction costs upon issuance of the Notes. Transaction costs relating
to the Notes have been allocated between the debt component and the equity component using the relative
proportions of these on initial measurement of the instruments. Costs attributed to the debt component are
amortised to finance expense over the term of the Notes using the effective interest method.
98
AMA GroupNotes to the Consolidated Financial Statements
D7
(C)
Borrowings and contingent vendor consideration (Cont.)
Contingent vendor consideration
Contingent vendor consideration represents the fair value of amounts which may become payable in connection
with business combinations. Payment is dependent on achieving predetermined targets based on future
performance and profitability.
The Group has recorded contingent vendor consideration to business vendors in accordance with relevant business and
share purchase agreements. The amounts are performance based and can be paid in a mixture of shares and/or cash,
depending on the agreement. An analysis of this liability by type of consideration is set out below:
Current
Cash settlement 1
Share settlement
Total current
Non-current
Cash settlement
Share Settlement
Total non-current
2022
$’000
2,440
500
2,940
-
-
-
2021
$’000
11,080
21,140
32,220
2,440
500
2,940
Total contingent vendor consideration
2,940
35,160
1 The cash settlement amount disclosed above represents arrangements where some or all of the consideration may be paid in cash and/or shares. Such
contingent payment arrangements depend on the specific terms and conditions of the agreement and are only agreed when the earn out period has finished.
Movement in contingent vendor consideration
(i)
A reconciliation of the fair value of the contingent vendor consideration is provided below. Refer to note D8(D)(ii) for further
information on how the fair value has been determined.
Balance at 1 July
Movement:
Arising during the year
Cash settlements
Share settlements
Offset against other current assets
Charged to profit or loss - fair value adjustments
Total continuing operations
Cash settlements
Charged to profit or loss - fair value adjustments and realised foreign currency
Total discontinued operations
Balance at 30 June
2022
$’000
35,160
-
(10,840)
(5,914)
-
(15,466)
(32,220)
-
-
-
2021
$’000
49,462
5,163
(9,866)
(8,537)
(5,000)
6,977
(11,263)
(2,674)
(365)
(3,039)
2,940
35,160
Critical accounting estimates and judgements
(ii)
The carrying value of the contingent 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
forecasted future profitability. The interest expense and the fair value adjustment have been taken to the Consolidated
Statement of Profit or Loss.
Significant accounting policies
Contingent vendor consideration
Contingent vendor consideration is classified as a financial liability and is recognised at fair value at the acquisition
date. Amounts classified as a financial liability that are subsequently not required to be paid at the end of the earn
out period or are re-estimated during the period are recognised in the Consolidated Statement of Profit or Loss.
99
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management
D8 Financial risk management
This section provides a summary of the Group's exposure to market, liquidity, and credit risks, along with the
Group's policies and strategies in place to mitigate these risks.
Exposure to market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk arises in the
normal course of the Group's business.
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 risk management of the Group is carried out by executive management and conducted in a manner consistent with
policies approved by the Board. Executive management identifies, evaluates and mitigates financial risks within the
Group's operating units.
The Group holds the following financial instruments:
Financial assets at amortised cost
Cash and cash equivalents
Receivables and contract assets
Loans to a former related party and other employees
Acquisition deposits
Financial assets at fair value
Derivative - financial instrument
Total financial assets
Financial liabilities at amortised cost
Trade and other payables
Lease liabilities
Borrowings (including convertible notes)
Financial liabilities at fair value
Derivative - financial instrument
Contingent vendor consideration
Total financial liabilities
Notes
D6
C1
C3
C4
C3
C8
C7
D7
D7
D7
2022
$’000
52,189
67,428
1,460
300
2021
$’000
64,203
72,912
1,555
600
6,819
128,196
712
139,982
102,164
289,303
205,088
-
2,940
599,495
119,169
326,918
234,751
327
35,160
716,325
100
AMA GroupNotes to the Consolidated Financial Statements
D8
Financial risk management (Cont.)
(A) Market risk
Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will fluctuate because of
changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and price risk.
The Group's exposure to market risk arises from adverse movements in foreign exchange and interest rates which affect
the Group's financial performance. The Group is not exposed to any significant price risk.
Foreign exchange risk
(i)
Foreign exchange risk is the risk that a change in foreign exchange rates may negatively impact the Group's cash flow or
profitability because the Group has an exposure to a foreign currency or has foreign currency denominated obligations.
The Group's exposure to foreign exchange risk arises from its future commercial transactions, and recognised assets and
liabilities denominated in a currency that is not the entity's functional currency.
The Group has a US dollar bank account and US dollar payables at 30 June 2022, with a net US dollar denominated liability
of $424,000. The impact of a 10% movement in exchange rate has a minimal impact on net profit after tax.
The Group does not employ foreign currency hedges. 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.
The aggregate net foreign exchange gains / losses recognised in profit or loss were a net loss of $4,000 (2021: $173,000 loss).
Significant accounting policies
Functional presentation currency
Items included in the Consolidated Financial Statements are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The Consolidated Financial
Statements are presented in Australian dollars (AUD).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the Consolidated Statement of
Profit or Loss, within finance costs. All other foreign exchange gains and losses are presented in the Consolidated
Statement of Profit or Loss on a net basis within other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and
liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair
value gain or loss.
Group companies
The results and financial position of foreign operations that have a functional currency different from the
presentation currency are translated in the presentation currency as follows:
■ Assets and liabilities for each statement of financial position presented are translated at the closing rate at
the date of that statement of financial position;
■ Income and expenses for each consolidated statement of profit and loss and statement of comprehensive
income are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transactions; and
■ All relating exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in
other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and are translated at the closing rate.
Interest rate risk
(ii)
The Group holds both interest-bearing assets and interest bearing-liabilities, and therefore the Group's income and cash
flows are subject to changes in market interest rates.
The Group's main interest rate risk arises from long-term borrowings which expose the Group to interest rate risk. Borrowings
issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to
fair value risk.
The Group uses derivative financial instruments to hedge its exposure to fluctuations in interest rates and manages its cash
flow interest rate risk by using floating to fixed interest rate swaps. The Group agrees to exchange, at specified intervals, the
difference between fixed and variable interest rate amounts calculated by reference to an agreed notional principal amount.
These swaps are designated to hedge interest costs associated with underlying debt obligations. The interest swap contract
is designated as a cash flow hedging instrument.
101
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management
D8
Financial risk management (Cont.)
(A) Market risk (Cont.)
Interest rate risk (Cont.)
(ii)
The Group entered into an interest rate swap contract in June 2020 to fix the interest rate at 0.43% rather than being exposed
to changes in BBSY on $193,500,000 of borrowings. In January 2022, an amendment was made to align with drawn senior
debt (excluding bank guarantee facility).
The swap will reduce to $88,500,000 in October 2022. Interest payments are net settled every 6 months.
At reporting date, the Group has exposure to the following variable rate borrowings and interest rate swap contracts:
Syndicated facility agreement 1
Interest rate swaps - syndicated loans 2
Net exposure to cash flow interest rate risk
Interest rate
Interest rate
2022
%
3.07
0.43
2022
$'000
165,000
(147,500)
17,500
2021
%
0.13
0.43
2021
$'000
237,500
(193,500)
44,000
1
Interest rate for Syndicated facility agreement is BBSY at latest rate setting notice (19 July 2022 and 22 March 2021 respectively). The rate presented does not
include any margin and line fees applicable under the loan agreement.
2 The rate presented does not include any margin and line fees applicable under the loan agreement.
An analysis by maturities is provided in note D8(C)(i). This maturity analysis assumes Noteholders do exercise their put
option on 21 March 2025 and are repaid the principal amount in full. In the event that AMA’s share price increases above the
conversion price, the Group would expect that the conversion option would be taken up by some or all Noteholders and the
cash outflow to repay Noteholders would not be required.
The following table summarises the impact of interest rate changes, relating to existing borrowings and financial
instruments, on net profit before tax and equity, net of tax. For the purpose of this disclosure, sensitivity analysis is isolated to
a 100 basis points increase / decrease in interest rates assuming all other variables remain constant.
Floating rate
Increase of 100 bps
Decrease of 100 bps
(Increase) / decrease
on profit before tax
(Increase) / decrease
on equity, net of tax
2022
$'000
548
(548)
2021
$'000
294
(289)
2022
$'000
(1,630)
1,654
2021
$'000
(3,990)
4,052
Credit risk
(B)
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities,
including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount, net of any provisions for
impairment for each class of the following financial assets:
Cash and cash equivalents
(i)
Credit risk from cash arises from balances held with counterparty financial institutions. Credit risk is managed by the Group's
finance department which restrict the Group's exposure to financial institutions by credit rating band. For banks and
financial institutions, only independently rated parties with a minimum rating of "A" are accepted.
Receivables and contract assets
(ii)
Customer credit risk is managed by each division's established policies, procedures and controls relating to customer credit
risk management. Credit risk arising on trade and other receivables is monitored on an ongoing basis, mitigating exposure
to impairment of trade and other receivables.
The Group applies the AASB 9 Financial instruments simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables and contract assets. Historically, there has been no significant
change in customers' credit risk and the lifetime expected loss assessment of the Group remains unchanged.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses
based on historical credit loss experience, adjusted for forward looking factors specific to the debtor and the economic
environment. The provision rates are based on days past due for groupings of various customer segments with similar
loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and
supportable information that is available at the reporting date about past events, current conditions and forecasts of
future economic conditions.
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include failure to make contractual payments for a period of greater than 60 days past due.
The Group does not hold any collateral in relation to these receivables.
The Group is exposed to material concentrations of credit risk with its top two customers representing approximately
31% of total trade receivables (30 June 2021: 27%). The Group’s receivables are largely due from Australian regulated insurers
who have strong long-term credit ratings. The Group focuses largely on experienced payment history and does not expect
that these customers will fail to meet their obligations.
For the year ended 30 June 2022, the Group recognised an expected credit loss of $526,000 (30 June 2021: $304,000).
102
AMA GroupNotes to the Consolidated Financial Statements
D8
Financial risk management (Cont.)
Liquidity risk
(C)
Liquidity risk is the risk the Group will encounter difficulties in meeting the obligations associated with its financial liabilities.
The Group's approach to managing liquidity is to ensure, as far as possible, sufficient liquidity is available to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group's reputation.
Management monitors rolling forecasts of the Group's liquidity reserve (comprising the undrawn borrowing facilities and
cash and cash equivalents) on the basis of expected cash flows. This is generally carried out at an operational level on a
weekly basis in accordance with practice and limits set by the Group. This is to ensure ongoing liquidity, prompt decision
making, and allow proactive communication with its financiers.
Details of financing arrangements are disclosed in note D7(A). At the reporting date, the Group has $5,463,000 of undrawn
committed facilities available for bank guarantees subject to approval from financiers (30 June 2021: $57,720,000).
Maturities of financial instruments
(i)
The tables below provide an analysis of the Group's financial assets and liabilities into relevant maturity groupings based on
the remaining period between the reporting date and the contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of
discounting is not significant.
Contractual maturities of financial instruments
2022
Non-derivatives
Financial assets realisable cash flows
Cash and cash equivalents
Receivables and contract assets
Financial assets
Acquisition deposits
Total inflow on financial assets
Financial liabilities due for payment
Trade and other payables
Lease liabilities
Borrowings
Contingent vendor consideration - cash settlement
Total outflow on financial liabilities
Derivatives
Interest rate swaps (net settled)
Total (outflow) / inflow on derivatives
Within
1 year
$’000
Between
1 and 5 years
$’000
Over
5 years
$’000
Total contractual
cash flows
$’000
52,189
67,428
1,460
300
121,377
-
-
-
-
-
-
-
-
-
-
52,189
67,428
1,460
300
121,377
(102,164)
(50,835)
(9,156)
(2,440)
(164,595)
-
(177,362)
(227,333)
-
(404,695)
-
(183,113)
-
-
(183,113)
(102,164)
(411,310)
(236,489)
(2,440)
(752,403)
1,607
1,607
5,212
5,212
-
-
6,819
6,819
Total outflow on financial instruments
(41,611)
(399,483)
(183,113)
(624,207)
2021
Financial assets realisable cash flows
Cash and cash equivalents
Receivables and contract assets
Loans to a former related party and other employees
Acquisition deposits
Total inflow on financial assets
Financial liabilities due for payment
Trade and other payables
Lease liabilities
Borrowings
Contingent vendor consideration - cash settlement
Total outflow on financial liabilities
Derivatives
Interest rate swaps (net settled)
Total (outflow)/inflow on derivatives
64,203
72,912
1,555
600
139,270
(119,169)
(51,405)
(5,384)
(11,080)
(187,038)
-
-
-
-
-
-
-
-
-
-
-
(182,554)
(246,326)
(2,940)
(431,820)
-
(195,329)
-
-
(195,329)
64,203
72,912
1,555
600
139,270
(119,169)
(429,288)
(251,710)
(14,020)
(814,187)
(327)
(327)
712
712
-
-
385
385
Total outflow on financial instruments
(48,095)
(431,108)
(195,329)
(674,532)
103
Annual Report | 30 June 2022 D Capital structure, financing and financial risk management D8
Financial risk management (Cont.)
Fair value measurement of financial instruments
(D)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Group measures certain financial instruments at fair value at each reporting date using a hierarchy based on the
lowest level of input that is significant to the fair value measurement.
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 / liability, either directly
(as prices) or indirectly (derived from prices) (Level 2); and
■ inputs for the asset / liability that are not based on observable market data (unobservable inputs) (Level 3).
There were no transfers between levels during the financial year.
Carrying amount approximate fair values
(i)
The carrying amount of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature. The fair value of non-current borrowings is estimated by discounting the future
contractual cash flows at the current market interest rates that are available to the Group for similar financial instruments.
The carrying amount of the Group's borrowings approximates their fair values, as commercial rates of interest are paid, and
the impact of discounting is not significant. However, convertible notes are fixed price with conversion options at a fixed
price per AMA Group share. These convertible notes are tradeable on the Singapore Stock Exchange, however given low
levels of trading activity in AMA convertible notes, a fair value is not readily obtainable at 30 June 2022. In the event of interest
rates increasing or AMA share price falling, it would be expected the fair value of convertible notes would decline.
Fair value of contingent vendor consideration
(ii)
The Group has acquired various entities and businesses. In undertaking these acquisitions, the Group has incurred contingent
vendor consideration which consists of an obligation to settle purchase consideration either by shares or cash in the future.
The carrying value of the contingent vendor consideration reflects its fair value and is classified as Level 3 of the fair value
hierarchy. The fair value of the financial liabilities included in Level 3 of the hierarchy has been determined using valuation
techniques incorporating observable direct and indirect market data relevant to the Group.
The expected payment is determined separately in respect of each individual earn-out agreement taking into consideration
the expected level of profitability of each acquisition.
Fair value of derivative financial instruments
(iii)
The fair value of the interest rate swap is the estimated amount that the entity would receive or pay to terminate the
swap at the balance sheet date, taking into account current interest rates, forward interest yield curves and the current
creditworthiness of the swap counterparties. The fair value of the interest rate swap is calculated as the present value of
the estimated future cash flows and is classified as Level 2 under the fair value hierarchy. Refer to D8(A)(ii) for sensitivity on
floating interest rates.
104
AMA GroupNotes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
E
GROUP STRUCTURE
Group structure provides information about subsidiaries and how changes have affected the financial position and
performance of the Company, AMA Group Limited.
E1 Parent entity information
This section presents the stand-alone financial information of AMA Group Limited.
(A)
Summary financial information
Assets
Current assets
Non-current receivables from related entities
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Convertible notes
Other reserves
Retained deficit
Total equity
Profit / (Loss) for the year
Total comprehensive loss
2022
$’000
2021
$’000
27,968
194,409
478,112
30,694
119,598
436,623
21,342
258,329
20,787
301,746
219,783
134,877
531,504
5,197
64,704
(381,622)
424,404
-
60,054
(349,581)
219,783
134,877
(32,041)
(36,613)
(104,484)
(104,959)
Guarantees entered into by the parent entity
(B)
The Parent entity has given unsecured guarantees in respect of financial trade arrangements entered into by its subsidiaries.
It is not practical to ascertain or estimate the maximum amount for which the Company may become liable. As at 30 June
2022, 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.
Significant accounting policies
Parent entity
Financial information for the parent entity has been prepared on the same basis as the Consolidated
Financial Statements with the exception of investments in controlled entities which are accounted for at cost
less any impairment.
105
Annual Report | 30 June 2022
E2 Investments in controlled entities
The following section sets out the list of the Group's significant investments in controlled entities.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. The financial statements of controlled entities are included
in the Consolidated Financial Statements from the date on which control commences until the date on which control ceases.
Significant investments in controlled entities
(A)
The Consolidated Financial Statements incorporate the assets, liabilities and results of the following principal subsidiaries in
accordance with the accounting policy described in note A2(A):
Name of entity
A.C.N. 107 954 610 Pty Ltd 1,2
A.C.N. 124 414 455 Pty Ltd 1,2
A.C.N. 624 750 045 Pty Ltd 1,2
A.C.N. 624 895 772 Pty Ltd 1,2
A.C.N. 624 896 000 Pty Ltd 1,2
A.C.N. 624 747 646 Pty Ltd 1,2
A.C.N. 073 318 519 Pty Ltd 1,2
Accident Management Australia Pty Ltd 1,2
Accident Repair Management Pty Ltd 1
Accident Repair Management No. 2 Pty Ltd 1
Accident Repair Management No. 3 Pty Ltd 1
ACM Parts Pty Ltd 1
AMA1 Pty Ltd 1,2
AMA Group Solutions Pty Ltd 1
AMA Procurement Pty Ltd 1
Automotive Solutions Group Pty Ltd 1,2
BMB Collision Repairs Pty Ltd 1
Capital Smart Group Holdings Pty Ltd
Capital S.M.A.R.T. Repairs Australia Pty Ltd
Capital S.M.A.R.T. Repairs New Zealand Pty Ltd
Carmax Australia Pty Ltd 1,2
Carmax New Zealand Limited 2
Deering Autronics Australia Pty Ltd 1,2
Direct One Accident Repair Centre Pty Ltd 1
Fleet Alliance Pty Ltd 1,2
FluidDrive Holdings Pty Ltd 1
Geelong Consolidated Repairs Pty Ltd 1
Gemini Accident Repair Centres NZ Limited 2
Micra Accident Repair Centre Pty Ltd 1
Mr Gloss Holdings Pty Ltd 1
Mt Druitt Autobody Repairs Pty Ltd 1
Phil Munday’s Panel Works Pty Ltd 1
QPlus Production Pty Ltd 2
Rapid Accident Management Services Pty Ltd 1,2
Repair Management Australia Pty Ltd 1
Repair Management Australia Bayswater Pty Ltd 1
Repair Management Australia Dandenong Pty Ltd 1
Repair Management New Zealand Limited
Ripoll Pty Ltd 1,2
Shipstone Holdings Pty Ltd 1
Smash Repair Canberra Pty Ltd 1
Woods Auto Shops (Cheltenham) Pty Ltd 1,2
Woods Auto Shops (Dandenong) Pty Ltd 1
Woods Auto Shops (Holdings) Pty Ltd 1
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Class of shares
Equity holding
2022
%
2021
%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
90
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
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
1 These companies are parties to the Deed of Cross Guarantee and members of the Closed Group as at 30 June 2022 (refer note E4).
2 These companies are dormant.
Significant accounting policies
Unless otherwise stated, the Group's controlled entities have share capital consisting solely of ordinary shares that
are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the
Group. The country of incorporation or registration is also their principal place of business.
106
AMA GroupNotes to the Consolidated Financial Statements
E3 Non-controlling interests
On 25 October 2019, the Group incorporated Capital Smart Group Holdings Pty Ltd with 90% of the issued capital held by
the Company. Capital Smart Group Holdings Pty Ltd is the head company of the Capital Smart group of entities.
Set out below is summarised financial information for this entity. The amounts disclosed are before intercompany eliminations.
(A)
Summarised Statement of Financial Position
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current assets
Net assets
Accumulated non-controlling interests
(B)
Summarised Statement of Comprehensive Income
Revenue
Loss for the year
Other comprehensive income
Total comprehensive loss
2022
$’000
33,158
(66,165)
(33,007)
405,146
(250,983)
154,163
2021
$’000
41,279
(61,489)
(20,210)
433,668
(254,278)
179,390
121,156
159,180
10,419
14,214
2022
$’000
2021
$’000
313,222
334,445
(79,338)
12
(79,326)
(118,091)
15
(118,076)
Loss allocated to non-controlling interests (excludes goodwill impairment)
(3,795)
(2,127)
(C)
Summarised Statement of Cash Flows
Net cash inflows provided by operating activities
Net cash outflows used in investing activities
Net cash (outflows) / inflows from financing activities
Net (decrease) / increase in cash and cash equivalents
Balance at 1 July
Movement:
Share of result for the year
Balance at 30 June
2022
$’000
3,673
(3,234)
(1,092)
(653)
2022
$’000
14,214
(3,795)
10,419
2021
$’000
8,491
(6,344)
(9,987)
(7,840)
2021
$’000
16,341
(2,127)
14,214
The Group elected to recognise the non-controlling interests in respect of Capital Smart Group Holdings Pty Ltd as the
proportionate share of the acquired entity's net identifiable assets. As part of the annual impairment test, Capital Smart
Group Holdings Pty Ltd recognised an impairment charge of $44,000,000 (2021: $96,806,000) against the carrying value
of goodwill. The Group has taken its proportionate share of the impairment expense, with a net impact to Group's accounts
of $41,400,000 (2021: $90,580,000). The non-controlling interest share of the result for the period excludes the impairment
charge recognised on goodwill.
107
Annual Report | 30 June 2022 E Group structure E3
(C)
Non-controlling interests (Cont.)
Summarised Statement of Cash Flows (Cont.)
Significant accounting policies
Non-controlling interest
The Group recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling
interests' proportionate share of the acquired entity's net identifiable assets. The decision is made on an
acquisition-by-acquisition basis. For the non-controlling interests in Capital Smart Group Holdings Pty Ltd the
Group elected to recognise the non-controlling interest as its proportionate share of the acquired net
identifiable assets.
Where the non-controlling interests are acquired or sold without loss of control, any excess or deficit of
consideration paid over the carrying amount is recognised in equity transactions. The Group has elected to
recognise this effect in retained earnings.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
E4 Deed of cross guarantee
The following section presents the Consolidated Statement of Profit or Loss and the Consolidated Statement of
Financial Position of the Company and certain wholly-owned companies that are parties to a deed of cross guarantee.
The Company and each of the Australian wholly-owned subsidiaries identified in note E2 (together referred to as the Closed
Group) has entered into a Deed of Cross Guarantee (the Deed), as defined in ASIC Corporations (Wholly-owned Companies)
Instrument 2016/785 (the Instrument). The effect of the Deed is that each entity in the Closed Group guarantees the payment
in full of all debts of the other entities in the Closed Group in the event of their winding up. The Closed Group has also given
a similar guarantee in the event that the Company 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.
Pursuant to the Instrument, the wholly-owned subsidiaries within the Closed Group are relieved from the requirement to
prepare, audit, and lodge separate financial reports. The Trustee to this deed of cross guarantee is Ripoll Pty Ltd, 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.
(A)
Consolidated Statement of Profit or Loss and movement in retained deficit of
the closed group
Revenue and other income from continuing operations
Raw materials and consumables used
Employee benefits expense
Occupancy expense
Professional services expense
Other expense
Fair value adjustments on contingent vendor consideration
Depreciation and amortisation expense
Impairment expense
Operating loss before interest and tax
Finance costs
Loss before income tax from continuing operations
Profit / (loss) before tax from discontinued operations
Loss before income tax
Income tax (expense) / benefit
Loss for the year
Retained deficit at the beginning of the financial year
Loss for the year
Retained deficit at the end of the financial year
108
2022
$’000
2021
$’000
528,524
572,096
(248,079)
(219,750)
(16,657)
(9,071)
(13,404)
13,729
(41,920)
(105,119)
(111,747)
(21,585)
(133,332)
-
(133,332)
18,630
(114,702)
(248,305)
(204,464)
(15,257)
(6,400)
(10,457)
(6,352)
(42,866)
(158,369)
(120,374)
(20,619)
(140,993)
13,315
(127,678)
(6,345)
(134,023)
2022
$’000
2021
$’000
(207,370)
(73,347)
(114,702)
(322,072)
(134,023)
(207,370)
AMA GroupNotes to the Consolidated Financial Statements
E4
(B)
Deed of cross guarantee (Cont.)
Consolidated Statement of Financial Position of the closed group
Current assets
Cash and cash equivalents
Receivables and contract assets
Inventories
Other financial assets
Other assets
Current tax receivable
Receivables from related entities
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other financial assets
Deferred tax assets
Receivables from related entities
Investments in controlled entities
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other financial liabilities
Lease liabilities
Tax payable
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Other financial liabilities
Lease liabilities
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Retained deficit
Convertible notes
Total equity
2022
$’000
31,617
47,190
36,693
5,475
3,067
14,604
-
138,646
34,806
170,455
209,184
5,212
20,919
69,548
118,706
628,830
2021
$’000
43,217
56,950
29,580
1,555
3,762
-
1,641
136,705
46,845
204,750
249,907
712
17,868
101,581
118,706
740,369
767,476
877,074
64,346
2,940
24,607
-
29,946
8,910
130,749
205,088
161,227
16,788
33,841
416,944
75,924
32,547
24,830
1,511
23,162
14,007
171,981
237,691
193,480
9,598
46,800
487,569
547,693
659,550
219,783
217,524
531,504
5,154
(322,072)
5,197
219,783
424,404
490
(207,370)
-
217,524
109
Annual Report | 30 June 2022 E Group structure E5 Discontinued operations
During the prior year, the Group completed the divestment of the ACAD and Fully Equipped businesses (excluding
ACM Parts and FluidDrive) to GUD Holdings Limited. The sale was completed on 31 December 2020 for a gross purchase
consideration of $70,000,000.
E6 Business combinations
The following section provides a summary of the businesses acquired by the Group during the year including
details of the purchase consideration, net assets acquired and goodwill of each acquisition.
The Group did not enter into any new acquisitions during FY22. The Group has finalised the acquisition accounting for the
following prior year acquisitions:
■ National Trucks (acquired 5 February 2021)
■ Perth Parts Solutions (acquired 30 October 2020)
■ Western Trucks (acquired 25 September 2020)
There were no significant adjustments to acquisition accounting of these entities in FY22.
110
AMA GroupNotes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
F
OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards and
other pronouncements, but that is not immediately related to individual line items in the financial statements.
F1 Share-based payments
This section presents the Group's benefits provided to employees through share-based incentives. Eligible employees
are remunerated for their services or incentivised for their performance in part through shares or rights to shares.
The Employee Equity Plan (the "Plan") was approved by shareholders at the Annual General Meeting on 22 November 2018.
The Plan is designed to align employee and shareholder interests through share ownership. The Plan is for the benefit of all
employees (including Executive Directors) of the Company. Awards under the Plan are issued to eligible participants by way of:
■ a Right;
■ a Share;
■ a Performance Share.
Performance rights program
(A)
The Performance Rights Program (PRP) was implemented in FY20 (in accordance with the Plan) and acts as the Group’s
long-term incentive scheme to reward participants through variable remuneration. Under the PRP, executives and other
eligible senior employees are invited to receive performance rights in the Company. Detailed remuneration disclosures
including the link between the PRP and shareholder wealth are provided in the Remuneration Report.
Under the PRP, each performance right enables the participant to acquire a share in the Company, at a future date, subject
to agreed vesting conditions. The number of performance rights allocated to each participant is set by the Board and based
on individual circumstances and performance.
Movements during the year
(i)
Allocation of performance rights under the PRP were granted during FY22. The grants were awarded at no cost to the
participants and are subject to performance conditions over a three-year period ending 30 June 2024.
Set out in the table below is a summary of movements in the number pf performance rights under the PRP at the end of
the financial year.
Grant date
FY20
FY21
9 December 2021
20 December 2021
18 February 2022
14 June 2022
Total
Balance at the
start of the year
Granted
during the year
Forfeited
during the year
Balance at the
end of the year
Unvested at the
end of the year
2,045,088
6,208,300
-
-
-
-
8,253,388
-
-
2,907,934
2,821,382
396,802
1,206,653
(2,045,088)
(5,534,034)
-
(951,525)
-
-
7,332,771
(8,530,647)
-
674,266
2,907,934
1,869,857
396,802
1,206,653
7,055,512
-
674,266
2,907,934
1,869,857
396,802
1,206,653
7,055,512
Vesting conditions of rights
(ii)
Vesting of the performance rights is subject to continued employment with the Group and achievement of performance
hurdles. These performance hurdles for grants relating to performance periods up until the end of June 2023 were based on
the Group's Total Shareholder Return (TSR) (20%) and EPS (80%) performance over a three-year period. For grants relating
to the three-year performance period to June 2024, these conditions are based on the Group’s relative TSR (50%) and
absolute TSR (50%). Further details regarding these performance measures and how they are calculated can be found in the
Remuneration Report on page 46.
111
Annual Report | 30 June 2022
F1
(A)
Share-based payments (Cont.)
Performance rights program (Cont.)
Fair value of rights granted
(iii)
The fair value of the EPS rights has been determined based on a Black Scholes Model as they are subject to non-market
performance conditions. Under this method the fair value is based on the share price at the valuation date with an
adjustment for the dividends foregone during the vesting period.
To reflect the impact of the market-based performance conditions, the fair value of the rights subject to the TSR have been
calculated using Monte-Carlo simulation techniques. The variables in the table below are used as inputs into the model to
determine the fair value of performance rights.
Grant date 1
23 November 2020
23 November 2020
9 December 2021
9 December 2021
20 December 2021
18 February 2022
14 June 2022
Performance
period
Share
price on
grant date
Share
price
volatility 2
Risk
free
rate
Annual
dividend
yield
Fair
value per
relative
TSR right
Fair
value per
absolute
TSR right
Fair
value per
EPS right
Vesting
date
Jul 2020 -
Jun 2023
Jul 2020 -
Jun 2023
Jul 2020 -
Jun 2023
Jul 2021 -
Jun 2024
Jul 2021 -
Jun 2024
Jul 2021 -
Jun 2024
Jul 2021 -
Jun 2024
$0.75
40%
0.91%
1.0%
$0.34
N/A
$0.72
31 August 2023
$0.75
40%
0.91%
1.0%
$0.34
N/A
$0.72
31 August 2023
$0.43
42.5%
0.47%
0.8%
$0.04
N/A
$0.42
31 August 2023
$0.43
42.5%
0.83%
0.8%
$0.18
$0.21
N/A 31 August 2024
$0.43
42.5%
0.78%
0.8%
$0.22
$0.20
N/A 31 August 2024
$0.36
42.5%
1.31%
0.8%
$0.14
$0.18
N/A 31 August 2024
$0.17
50%
3.87%
0.8% $0.034
$0.01
N/A 31 August 2024
1 For the purposes of valuation, the grant date is determined in accordance with AASB 2 Share Based Payments.
2 The Company share price volatility is based on the Company's average historical share price volatility at the grant date.
Service rights granted under the Employee Equity Plan
(B)
In June 2021, 909,090 Service Rights were granted to a senior Executive of the Group in lieu of fixed remuneration.
Each Service Right enables the participant to acquire a share in the Company at a future date and exercise price subject
to vesting conditions. The Service Rights were issued under two tranches.
Movements during the year
(i)
Set out in the table below is a summary of movements in the number of Service Rights under the Employee Equity Plan at
the end of the financial year.
Grant date
28 June 2021
Balance at the
start of the year
Granted
during the year
Exercised
during the year
Forfeited
during the year
Balance at the
end of the year
Unvested at the
end of the year
909,090
-
(454,545)
-
454,545
454,545
Vesting conditions of Service Rights
(ii)
For both tranches, the service condition requires the participant to be continuously contracted/engaged to/by the Company
or a Group Company from 13 May 2021 to the Vesting Date. The Service Rights will expire if vesting conditions are not
satisfied. Service Rights that vest are subject to the Company's Securities Trading Policy.
Should the participant cease to be contracted to or engaged by the Company or a Group Company prior to the vesting
dates, the Service Rights will vest in relation to the number of days contracted to the Company on a straight-line basis.
In November 2021, 454,545 Service Rights vested with a fair value of $254,000 upon vesting.
Fair value of rights granted
(iii)
The Group uses the Black Scholes pricing methodology to measure the fair value of the Service Rights at grant date.
Key assumptions and judgements are set out in the table below.
Grant date
28 June 2021
Service rights
granted
Share price on
grant date
454,545
$0.56
Risk free
rate
0.021%
Annual
dividend yield
Fair value
per right
Vesting
date
0.00%
$0.56
1 July 2022
112
AMA GroupNotes to the Consolidated Financial Statements F1
Share-based payments (Cont.)
Expenses arising from share-based payment transactions
(C)
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefit
expense were as follows:
Share-based payments (write-back) / expense
Employee share acquisition plan (including transaction costs)
Total Share-based payments (write-back) / expense
2022
$’000
331
3,184
3,515
2021
$’000
(1,227)
-
(1,227)
Critical accounting estimates and judgements
(D)
The cost of share-based payments plans is determined on the basis of the fair value of the equity instrument at grant date.
Determining the fair value assumes choosing the most suitable valuation model for these equity instruments, by which the
characteristics of the grant have a decisive influence. The input into the valuation model includes relevant judgments such
as the estimated probability of vesting and the volatility of the underlying share.
Significant accounting policies
Share-based payments
The grant date fair value of equity-settled share-based payments is recognised as an expense proportionally over
the vesting period, with a corresponding increase in equity.
The fair value of instruments with market-based performance conditions (TSR) is calculated at the date of grant
using a Monte Carlo simulation model. The probability of achieving market-based performance conditions is
incorporated into the determination of the fair value per instrument.
The fair value of instruments with non-market-based performance conditions (EPS) and service conditions and
retention rights are calculated using a Black-Scholes option pricing model.
At each statement of financial position date, the entity revises its estimate of the number of options and
performance rights that are expected to become exercisable. The employee benefit expense recognised each
period takes into account the most recent estimate.
General Employee Share Plan (GESP)
(E)
Eligible Australian employees were offered the opportunity to receive part of their salary in the form of shares. All permanent
employees who were an employee at the date the offer was made were eligible to participate in the scheme. Employees
may elect not to participate in the scheme.
GESP is administered by the Board. Shares granted to the employees by the Board were acquired on-market via a third party
trustee plan company.
Under the plan, participating employees were allocated an aggregate market value up to $1,000 worth of fully paid ordinary
shares in AMA Group limited. Subsequent offers under GESP are at the Board's discretion.
Shares issued under the scheme may not be sold until the earlier of three years after issue or cessation of employment. In all
other respects shares rank equally with other fully-paid ordinary shares on issues.
Number of shares purchased on-market under the plan to participating employees
2022
Shares
9,255,888
The shares were allocated on 28 March 2022 at the 5-day volume weighted average price (VWAP) of $0.3439 of calculated up
to and including 24 March 2022.
113
Annual Report | 30 June 2022 F Other information
F2 Related party transactions
This section highlights the Group's transactions with its related parties and the extent these transactions
impacted the Group's financial performance and position.
Parent entity
(A)
The ultimate holding entity is AMA Group Limited. Information about the Group's structure, including details of the
controlled entities and holding company are set out in note E2.
Key management personnel compensation
(B)
The total remuneration for KMP of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Other benefits
Equity settled benefits
Total KMP compensation
2022
$
2,929,104
76,193
41,205
12,646
123,849
3,182,997
2021
$
3,849,732
107,336
5,986
42,265
(714,241)
3,291,078
Detailed remuneration disclosures and information regarding compensation of individual Key Management Personnel are
provided in the Remuneration Report on pages 49 to 52.
Amounts recognised as expenses
(C)
A number of KMP hold directorships or are associated with other entities. During the year the Group transacted with entities
that were controlled or significantly influenced by members of the KMP.
The table below summarises the details of other transactions which occurred between members of the KMP and the Group
and are recognised in the Consolidated Statement of Profit or Loss.
Service, entity and nature of transaction
KMP
2022
$
2021
$
Legal and advisory services
The Group utilises Nicholson Ryan Lawyers for ongoing
legal and advisory services.
Property rental fees and outgoings
The Group has incurred rental fees and outgoing
expenses and made payments to AV Ventures Pty Ltd,
A&R Property Developments Pty Ltd, A&R Development
Holdings Pty Ltd and Bundall Road Pty Ltd.
Claims management
The Group transacts with A & R Insurance Management
(t/a Unity Specialised Services), a claims management
business which handles and allocates insurance claims
from a number of major insurers into vehicle accident
repair facilities around Australia.
Training and recruitment
The Group has incurred expenses and made payments
to I-CAR Australia, an industry based not-for-profit
organisation that provides training to the collision
repair industry and entities within the AMA Group.
Leath Nicholson 1
544,192
930,697
Andrew Hopkins 2
Andrew Hopkins 2
Steven Bubulj 3
-
-
-
1,357,234
437,983
141,599
Total other transactions with KMP
544,192
2,867,513
1 Amounts disclosed in relation to Leath Nicholson are for the period to 18 November 2021, which is the date Mr Nicholson ceased being a KMP.
2 Amounts disclosed in relation to Andrew Hopkins are for the period to 31 January 2021, which is the date Mr Hopkins ceased being a KMP.
3 Amounts disclosed in relation to Steven Bubulj are for the period to 26 March 2021, which is the date Mr Bubulj ceased being a KMP.
(D)
Balances outstanding to entities controlled by Key Management Personnel
No balances are outstanding in relation to entities controlled by current KMP at 30 June 2022 (2021: $114,328).
114
AMA GroupNotes to the Consolidated Financial Statements
F2
Related party transactions (Cont.)
Loans provided to a former related party
(E)
Loans outstanding at the end of the current and prior year include a loan to the former Group Chief Executive Officer and
Executive Director, Andrew Hopkins.
Mr Hopkins’ loan accrues interest at a rate consistent to the 'Indicator Lending Rates - Bank variable housing loans interest
rate' published by the Reserve Bank of Australia. Mr Hopkins has defaulted on his loan and as at 30 June 2022, the balance
outstanding on his loan is $1,460,000 (30 June 2021: $1,399,493).
The Group has assessed recoverability and has not impaired the value of the loan largely due to the existence of a signed
loan deed and litigation on foot.
There are no other loans with related parties outstanding as at the date of this report.
F3 Auditor's remuneration
This section presents the total remuneration of the Group's external auditors for audit, assurance, and other services.
During the year the following fees were paid or payable for services provided by KPMG:
Audit and other assurance services
Audit and review of financial statements - Group
Audit and review of financial statements - controlled entities
Total remuneration for audit and other assurance services
Other non-audit services
Transactional services
Tax compliance services
Other services
Total remuneration for audit and other assurance services
2022
$
2021
$
723,651
222,525
946,176
218,684
-
-
218,684
679,972
216,315
896,287
888,160
39,093
-
927,253
Total auditor's remuneration
1,164,860
1,823,540
It is the Group's policy to employ KPMG on assignments additional to their statutory audit duties where KPMG's expertise
and experience with the Group are important. These assignments are principally tax advice and transactional services
(e.g. due diligence on acquisitions or services relating to sale of business). It is the Group's policy to seek competitive
quotes for all major consulting projects.
F4 Commitments
This section presents the Group's contractual obligation to make a payment in the future in relation to purchases
of property, plant and equipment, and lease commitments.
Capital expenditure commitments
Committed at the end of the reporting period but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
Total capital expenditure commitments
Operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable operating
leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Total operating lease commitments
Total commitments for expenditure
2022
$’000
2021
$’000
367
-
-
367
241
542
-
783
1,150
21
-
-
21
161
341
-
502
523
115
Annual Report | 30 June 2022 F Other information
F5 Contingent liabilities
Contingent liabilities are potential future cash payments where the likelihood of payment is not considered
probable or cannot be measured reliably.
Legal claims
(A)
During FY21, a business vendor issued a Notice of Dispute against the Group in relation to their earn-out calculation.
The parties agreed to mediate which at the date of this report is still ongoing. Management considers the claims brought
to be unjustified, and the probability that the settlement will exceed the amount already provisioned for, to be less than
probable. The Directors are of the view that no material losses will arise in respect of the legal claim at the date of these
Financial Statements. Further information on this contingency is omitted so as not to prejudice the Group's position in
the related dispute.
In May 2021, the Company filed proceedings in the Federal Court of Australia against the former Group CEO and Executive
Director, Andrew Hopkins. The litigation remains on foot at the date of this report and is not considered a contingent liability
as the Group is the plaintiff.
F6 Events occurring after the reporting period
This section outlines events which have occurred between the reporting date and the date the Financial Report is
authorised for issue.
Subsequent to year end, as a result of the prolonged financial recovery from COVID-19 and to align with the pathway to
implement commercial outcomes and other measures to improve profitability, the Group further renegotiated its financial
covenants and net senior debt limit. The revision simplifies the covenants with existing net senior leverage and fixed charge
cover ratio covenants replaced by a minimum EBITDA requirement, which will be first tested in December 2022, followed
by March 2023 and June 2023 testing before reverting back to original covenant requirements in September 2023. The net
senior debt limit that is currently in place also extends through to September 2023. As a result of these revisions, margin
increases and payment-in-kind interest has been added to Facility B and D ($165,000,000 drawn) over the period that the
covenants are revised (from 19 August 2022 until 30 September 2023).
No other matters or circumstances have occurred subsequent to 30 June 2022 that have significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or
economic entity in subsequent financial years.
116
AMA GroupNotes to the Consolidated Financial Statements
Directors’ Declaration
In the opinion of the Directors of AMA Group Limited (the Company):
(a)
the Financial Statements and notes thereto are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and
other mandatory professional reporting requirements, and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
performance for the financial year ended on that date, and
(b)
(c)
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
at the date of this declaration, there are reasonable grounds to believe that the members of the closed group 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 E4.
Note A1 confirms that the Financial Statements also comply with 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 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.
Carl Bizon
Executive Director
& Group Chief Executive Officer
23 August 2022
117
Annual Report | 30 June 2022
118
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders 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). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2022; • Consolidated statement of profit or loss, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors' Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. Material uncertainty related to going concern We draw attention to Note A1, “Going Concern” in the financial report. The conditions disclosed in Note A1, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report. Our opinion is not modified in respect of this matter. In concluding there is a material uncertainty related to going concern we evaluated the extent of uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going concern. This included: • Analysing the cash flow projections by: • Evaluating the underlying data used to generate the projections for consistency with other information tested by us, our understanding of the Group’s intentions, and past results and practices; • Assessing the planned levels of operating cash inflows and outflows, including capital expenditures, for feasibility, timing, consistency of relationships and trends to the Group’s historical results, particularly in light of recent loss making operations, results since year end, and our understanding of the business, industry and economic conditions of the Group; • Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and timing. We used our knowledge of the client, its industry and current status of those initiatives to assess the level of associated uncertainty; • Reading correspondence with existing financiers to understand the post year end renegotiation of existing debt facilities and amendments to loan covenant requirements; and • Evaluating the Group’s going concern disclosures in the financial report by comparing them to our understanding of the matter, the events or conditions incorporated into the cash flow projection assessment, the Group’s plans to address those events or conditions, and accounting standard requirements. We specifically focused on the principle matters giving rise to the material uncertainty. Key Audit Matters In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the Key Audit Matters: • Goodwill and intangible assets; and • Revenue. 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. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders 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). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2022; • Consolidated statement of profit or loss, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors' Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. AMA Group 119
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders 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). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2022; • Consolidated statement of profit or loss, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors' Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. Material uncertainty related to going concern We draw attention to Note A1, “Going Concern” in the financial report. The conditions disclosed in Note A1, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report. Our opinion is not modified in respect of this matter. In concluding there is a material uncertainty related to going concern we evaluated the extent of uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going concern. This included: • Analysing the cash flow projections by: • Evaluating the underlying data used to generate the projections for consistency with other information tested by us, our understanding of the Group’s intentions, and past results and practices; • Assessing the planned levels of operating cash inflows and outflows, including capital expenditures, for feasibility, timing, consistency of relationships and trends to the Group’s historical results, particularly in light of recent loss making operations, results since year end, and our understanding of the business, industry and economic conditions of the Group; • Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and timing. We used our knowledge of the client, its industry and current status of those initiatives to assess the level of associated uncertainty; • Reading correspondence with existing financiers to understand the post year end renegotiation of existing debt facilities and amendments to loan covenant requirements; and • Evaluating the Group’s going concern disclosures in the financial report by comparing them to our understanding of the matter, the events or conditions incorporated into the cash flow projection assessment, the Group’s plans to address those events or conditions, and accounting standard requirements. We specifically focused on the principle matters giving rise to the material uncertainty. Key Audit Matters In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the Key Audit Matters: • Goodwill and intangible assets; and • Revenue. 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. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders 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). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2022; • Consolidated statement of profit or loss, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors' Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. Annual Report | 30 June 2022 120
Goodwill and intangible assets (Goodwill - $268.4m, Impairment - $80.7m) Refer to Note C6 Intangible assets to the financial report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s annual testing of goodwill assets for impairment, given the size of the balance (being 27% of total assets) and the significantly higher estimation uncertainty continuing from the business disruption impact resulting from the ongoing COVID-19 global pandemic and turnover in senior members of management. Certain conditions impacting the Group increased the judgement applied by us when evaluating the evidence available. We focussed on the significant forward-looking assumptions the Group applied in their fair value less costs of disposal models including: • Forecast cash flows, growth rates and terminal growth rates – the Group has experienced significant business disruption and incurred continuing losses during the year as a result of COVID-19 and other market forces. This impacted the Group through the hibernation/closure of selected businesses, labour difficulties, increase in parts costs and a reduction in the demand for certain products and services. These conditions and the uncertainty of their continuation increase the possibility of goodwill and intangible assets being impaired, plus the risk of inaccurate forecasts or a significantly wider range of possible outcomes for us to consider. We focused on the expected rate of recovery for the Group and what the Group considers as their future business model as a result of expected cost savings and pricing negotiations when assessing the feasibility of the Group’s forecast cash flows. Assumptions included in the Group’s forecast cash flows are also sensitive to market changes; • Forecast growth rates and terminal growth rates – In addition to the uncertainties described above, the Group’s models are highly sensitive to small changes in these assumptions, reducing available headroom. This drives additional audit effort specific to Working with our valuation specialists, our procedures included: • We considered the appropriateness of the fair value less costs of disposal method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards; • We assessed the integrity of the fair value less costs of disposal models used, including the accuracy of the underlying calculation formulas; • We considered the Group’s determination of their CGUs in light of the segment re-alignment that occurred during the year, based on our understanding of the operations of the Group’s business and how independent cash inflows were generated, against the requirements of the accounting standards; • We made enquiries of management to understand the continuing impacts of COVID-19 to the Group and other operating condition challenges; • We compared the forecast cash flows contained in the fair value less costs of disposal models to forecasts approved by the Board; • We assessed the accuracy of previous Group forecasts to inform our evaluation of forecasts incorporated in the models. We applied increased scepticism to current period forecasts in areas where previous forecasts were not achieved and/or where future uncertainty is greater or volatility is expected; • We considered the sensitivity of the models by varying key assumptions, such as expected rate of recovery for the Group, forecast growth rates, terminal growth rates and discount rates, within a reasonably possible range. We considered the interdependencies of key assumptions when performing the sensitivity analysis and what the Group consider to be reasonably possible. We did their feasibility and consistency of application to the Group’s strategy; and •Discount rates - these are complicated innature and vary according to the conditionsand environment the specific CashGenerating Unit (CGU) is subject to fromtime to time, and the models approach toincorporating risks into the cash flows ordiscount rates. The Group’s modelling ishighly sensitive to small changes in thediscount rate.The Group uses complex models to perform their annual testing of goodwill for impairment. The models are largely manually developed and use a range of internal and external sources as inputs to the assumptions. Complex modelling, using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. The Group has a large number of operating businesses necessitating our consideration of the Group’s determination of CGUs, based on the smallest group of assets to generate largely independent cash inflows. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. In addition to the above, the Group recorded an impairment charge of $41.4m against goodwill in relation to Drive – Capital Smart and $39.3m in relation to Drive – Non Capital Smart, increasing the sensitivity of the models to small changes. This further increased our audit effort in this key audit area. this to identify those CGUs at higher risk of impairment and those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures; •We challenged the Group’s forecast cash flowand growth assumptions in light of the expectedcontinuation of unprecedented uncertainty ofbusiness disruption from the COVID-19 pandemicand other uncertain economic conditions. Wecompared forecast growth rates and terminalgrowth rates to authoritative published studies ofindustry trends and expectations, and considereddifferences for the Group’s operations. Weassessed key assumptions such as expected rateof recovery for the group and what the groupconsiders as their future business model. Weused our knowledge of the Group, business andcustomers, and our industry experience. Wesourced authoritative and credible inputs from ourspecialists and market advisors;•We checked the consistency of the growth ratesto the Group’s plans and our experienceregarding the feasibility of these in the industry inwhich they operate;•We assessed the impact of market changes onthe Group’s key assumptions, specificallyforecast EBIT growth expected to be achievedthrough identified synergies, growth initiatives,capital spend requirements and head office costs,for indicators of bias and inconsistent application,using our industry knowledge;•We independently developed a discount raterange considered comparable using publiclyavailable market data for comparable entities,adjusted by risk factors specific to the Group andthe industry it operates in;•We recalculated the impairment charge againstthe recorded amount disclosed; and•We assessed the disclosures in the financialreport using our understanding of the issuesobtained from our testing and against therequirements of the accounting standards.AMA Group 121
Goodwill and intangible assets (Goodwill - $268.4m, Impairment - $80.7m) Refer to Note C6 Intangible assets to the financial report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s annual testing of goodwill assets for impairment, given the size of the balance (being 27% of total assets) and the significantly higher estimation uncertainty continuing from the business disruption impact resulting from the ongoing COVID-19 global pandemic and turnover in senior members of management. Certain conditions impacting the Group increased the judgement applied by us when evaluating the evidence available. We focussed on the significant forward-looking assumptions the Group applied in their fair value less costs of disposal models including: • Forecast cash flows, growth rates and terminal growth rates – the Group has experienced significant business disruption and incurred continuing losses during the year as a result of COVID-19 and other market forces. This impacted the Group through the hibernation/closure of selected businesses, labour difficulties, increase in parts costs and a reduction in the demand for certain products and services. These conditions and the uncertainty of their continuation increase the possibility of goodwill and intangible assets being impaired, plus the risk of inaccurate forecasts or a significantly wider range of possible outcomes for us to consider. We focused on the expected rate of recovery for the Group and what the Group considers as their future business model as a result of expected cost savings and pricing negotiations when assessing the feasibility of the Group’s forecast cash flows. Assumptions included in the Group’s forecast cash flows are also sensitive to market changes; • Forecast growth rates and terminal growth rates – In addition to the uncertainties described above, the Group’s models are highly sensitive to small changes in these assumptions, reducing available headroom. This drives additional audit effort specific to Working with our valuation specialists, our procedures included: • We considered the appropriateness of the fair value less costs of disposal method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards; • We assessed the integrity of the fair value less costs of disposal models used, including the accuracy of the underlying calculation formulas; • We considered the Group’s determination of their CGUs in light of the segment re-alignment that occurred during the year, based on our understanding of the operations of the Group’s business and how independent cash inflows were generated, against the requirements of the accounting standards; • We made enquiries of management to understand the continuing impacts of COVID-19 to the Group and other operating condition challenges; • We compared the forecast cash flows contained in the fair value less costs of disposal models to forecasts approved by the Board; • We assessed the accuracy of previous Group forecasts to inform our evaluation of forecasts incorporated in the models. We applied increased scepticism to current period forecasts in areas where previous forecasts were not achieved and/or where future uncertainty is greater or volatility is expected; • We considered the sensitivity of the models by varying key assumptions, such as expected rate of recovery for the Group, forecast growth rates, terminal growth rates and discount rates, within a reasonably possible range. We considered the interdependencies of key assumptions when performing the sensitivity analysis and what the Group consider to be reasonably possible. We did their feasibility and consistency of application to the Group’s strategy; and •Discount rates - these are complicated innature and vary according to the conditionsand environment the specific CashGenerating Unit (CGU) is subject to fromtime to time, and the models approach toincorporating risks into the cash flows ordiscount rates. The Group’s modelling ishighly sensitive to small changes in thediscount rate.The Group uses complex models to perform their annual testing of goodwill for impairment. The models are largely manually developed and use a range of internal and external sources as inputs to the assumptions. Complex modelling, using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. The Group has a large number of operating businesses necessitating our consideration of the Group’s determination of CGUs, based on the smallest group of assets to generate largely independent cash inflows. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. In addition to the above, the Group recorded an impairment charge of $41.4m against goodwill in relation to Drive – Capital Smart and $39.3m in relation to Drive – Non Capital Smart, increasing the sensitivity of the models to small changes. This further increased our audit effort in this key audit area. this to identify those CGUs at higher risk of impairment and those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures; •We challenged the Group’s forecast cash flowand growth assumptions in light of the expectedcontinuation of unprecedented uncertainty ofbusiness disruption from the COVID-19 pandemicand other uncertain economic conditions. Wecompared forecast growth rates and terminalgrowth rates to authoritative published studies ofindustry trends and expectations, and considereddifferences for the Group’s operations. Weassessed key assumptions such as expected rateof recovery for the group and what the groupconsiders as their future business model. Weused our knowledge of the Group, business andcustomers, and our industry experience. Wesourced authoritative and credible inputs from ourspecialists and market advisors;•We checked the consistency of the growth ratesto the Group’s plans and our experienceregarding the feasibility of these in the industry inwhich they operate;•We assessed the impact of market changes onthe Group’s key assumptions, specificallyforecast EBIT growth expected to be achievedthrough identified synergies, growth initiatives,capital spend requirements and head office costs,for indicators of bias and inconsistent application,using our industry knowledge;•We independently developed a discount raterange considered comparable using publiclyavailable market data for comparable entities,adjusted by risk factors specific to the Group andthe industry it operates in;•We recalculated the impairment charge againstthe recorded amount disclosed; and•We assessed the disclosures in the financialreport using our understanding of the issuesobtained from our testing and against therequirements of the accounting standards.Annual Report | 30 June 2022 122
Revenue Recognition (Revenue $845.1m) Refer to Note B2 of the financial report The key audit matter How the matter was addressed in our audit The Group has revenue streams across each of its different operating segments. The Group’s significant revenue streams include: - Vehicle panel repair services; and - Sale of automotive parts and accessories. Revenue recognition was a key audit matter due to the value of the balance, significant audit effort and judgment we have applied in assessing the Group’s recognition and measurement of revenue. This was driven from the: • High volume of revenue transactions; • Complexity involved in applying the requirements of AASB15, including consideration of the timing of revenue recognition based on underlying arrangements with customers; and • Opportunity for manual intervention and the interfaces of multiple systems with the general ledger presenting conditions for transactions to be recorded incorrectly. Our procedures included: • Evaluating the appropriateness of the Group’s accounting policies for revenue recognition for each significant revenue stream against the requirements of AASB 15 and our understanding of the business; • Reading a sample of customer contracts to understand the key terms of the arrangements and the performance obligations; • On a sample basis, we tested the existence, accuracy and timing of revenue recognised by the Group. This involved agreeing transactions to underlying documentation such as signed customer collection notes, photographs of vehicles in stages of repair, invoices and customer prepared remittance statements. We also checked customer receipts to bank statements; and • Evaluating the adequacy of the disclosures made in Note B2 in light of the requirements by the Australian Accounting Standards. Other Information Other Information is financial and non-financial information in AMA Group Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • Preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • Implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and • Assessing the Group and Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • 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. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. Revenue Recognition (Revenue $845.1m) Refer to Note B2 of the financial report The key audit matter How the matter was addressed in our audit The Group has revenue streams across each of its different operating segments. The Group’s significant revenue streams include: - Vehicle panel repair services; and - Sale of automotive parts and accessories. Revenue recognition was a key audit matter due to the value of the balance, significant audit effort and judgment we have applied in assessing the Group’s recognition and measurement of revenue. This was driven from the: • High volume of revenue transactions; • Complexity involved in applying the requirements of AASB15, including consideration of the timing of revenue recognition based on underlying arrangements with customers; and • Opportunity for manual intervention and the interfaces of multiple systems with the general ledger presenting conditions for transactions to be recorded incorrectly. Our procedures included: • Evaluating the appropriateness of the Group’s accounting policies for revenue recognition for each significant revenue stream against the requirements of AASB 15 and our understanding of the business; • Reading a sample of customer contracts to understand the key terms of the arrangements and the performance obligations; • On a sample basis, we tested the existence, accuracy and timing of revenue recognised by the Group. This involved agreeing transactions to underlying documentation such as signed customer collection notes, photographs of vehicles in stages of repair, invoices and customer prepared remittance statements. We also checked customer receipts to bank statements; and • Evaluating the adequacy of the disclosures made in Note B2 in light of the requirements by the Australian Accounting Standards. AMA Group 123
Revenue Recognition (Revenue $845.1m) Refer to Note B2 of the financial report The key audit matter How the matter was addressed in our audit The Group has revenue streams across each of its different operating segments. The Group’s significant revenue streams include: - Vehicle panel repair services; and - Sale of automotive parts and accessories. Revenue recognition was a key audit matter due to the value of the balance, significant audit effort and judgment we have applied in assessing the Group’s recognition and measurement of revenue. This was driven from the: • High volume of revenue transactions; • Complexity involved in applying the requirements of AASB15, including consideration of the timing of revenue recognition based on underlying arrangements with customers; and • Opportunity for manual intervention and the interfaces of multiple systems with the general ledger presenting conditions for transactions to be recorded incorrectly. Our procedures included: • Evaluating the appropriateness of the Group’s accounting policies for revenue recognition for each significant revenue stream against the requirements of AASB 15 and our understanding of the business; • Reading a sample of customer contracts to understand the key terms of the arrangements and the performance obligations; • On a sample basis, we tested the existence, accuracy and timing of revenue recognised by the Group. This involved agreeing transactions to underlying documentation such as signed customer collection notes, photographs of vehicles in stages of repair, invoices and customer prepared remittance statements. We also checked customer receipts to bank statements; and • Evaluating the adequacy of the disclosures made in Note B2 in light of the requirements by the Australian Accounting Standards. Other Information Other Information is financial and non-financial information in AMA Group Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • Preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • Implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and • Assessing the Group and Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • 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. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. Revenue Recognition (Revenue $845.1m) Refer to Note B2 of the financial report The key audit matter How the matter was addressed in our audit The Group has revenue streams across each of its different operating segments. The Group’s significant revenue streams include: - Vehicle panel repair services; and - Sale of automotive parts and accessories. Revenue recognition was a key audit matter due to the value of the balance, significant audit effort and judgment we have applied in assessing the Group’s recognition and measurement of revenue. This was driven from the: • High volume of revenue transactions; • Complexity involved in applying the requirements of AASB15, including consideration of the timing of revenue recognition based on underlying arrangements with customers; and • Opportunity for manual intervention and the interfaces of multiple systems with the general ledger presenting conditions for transactions to be recorded incorrectly. Our procedures included: • Evaluating the appropriateness of the Group’s accounting policies for revenue recognition for each significant revenue stream against the requirements of AASB 15 and our understanding of the business; • Reading a sample of customer contracts to understand the key terms of the arrangements and the performance obligations; • On a sample basis, we tested the existence, accuracy and timing of revenue recognised by the Group. This involved agreeing transactions to underlying documentation such as signed customer collection notes, photographs of vehicles in stages of repair, invoices and customer prepared remittance statements. We also checked customer receipts to bank statements; and • Evaluating the adequacy of the disclosures made in Note B2 in light of the requirements by the Australian Accounting Standards. Annual Report | 30 June 2022 124
Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of AMA Group Limited for the year ended 30 June 2022, complies with Section 300A of the Corporations Act 2001. Directors’ 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 responsibilities We have audited the Remuneration Report included in pages 40 to 54 of the Directors’ report for the year ended 30 June 2022. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Adam Twemlow Partner Bundall 23 August 2022 AMA Group 125
Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of AMA Group Limited for the year ended 30 June 2022, complies with Section 300A of the Corporations Act 2001. Directors’ 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 responsibilities We have audited the Remuneration Report included in pages 40 to 54 of the Directors’ report for the year ended 30 June 2022. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Adam Twemlow Partner Bundall 23 August 2022 Annual Report | 30 June 2022 Shareholder information
Additional Information
In accordance with ASX Listing Rules the shareholder information set out below is current as of 4 August 2022.
Distribution of shareholdings
The total number of shareholders in AMA Group Limited (ASX: AMA) was 3,959. The voting rights are one vote per fully paid
ordinary share. There were 1,066,368,183 shares on issue. The distribution of shareholders was as follows:
Share grouping
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Total
holders
Number of
shares
Percentage of
issued shares
473
1,111
596
1,416
363
206,237
3,062,280
4,593,869
48,249,594
1,010,256,203
0.02
0.29
0.43
4.52
94.74
3,959
1,066,368,183
100.00
There were 1,198 shareholders holding less than a marketable parcel of $500 worth of shares, based on the closing market
price on 4 August 2022 of $0.16 per share.
Twenty largest shareholders
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ACN 162 128 501 PTY LTD
BNP PARIBAS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
SANDMAN 1 NOMINEES PTY LTD
BNP PARIBAS NOMS(NZ) LTD
SANDHURST TRUSTEES LTD
THORNEY OPPORTUNITIES LTD
DDH GRAHAM LIMITED
COLINTON CAPITAL PARTNERS PTY LTD
VENN MILNER SUPERANNUATION PTY LTD
MISSY NOMINEES PTY LTD
WINTER & TAYLOR PTY LTD
AUSTIN SUPERANNUATION PTY LTD
Total
Number of
shares
Percentage of
issued shares
179,645,909
141,283,974
91,515,985
81,675,421
75,060,766
64,597,908
43,478,261
41,735,687
32,349,929
27,500,000
13,269,843
13,237,345
12,711,080
12,000,000
11,050,624
6,847,351
5,000,000
4,544,555
4,070,772
3,762,065
865,337,475
16.85
13.25
8.58
7.66
7.04
6.06
4.08
3.91
3.03
2.58
1.24
1.24
1.19
1.13
1.04
0.64
0.47
0.43
0.38
0.35
81.15
Substantial shareholders
Substantial holders in AMA Group Limited as detailed in the most recent public filings of Form 604 - Notice of change of
interests of substantial holder are set out below.
Name
Mittleman Investment Management, LLC and its associates
AustralianSuper Pty Ltd
IBV Capital Ltd
Securities subject to escrow
Name
Fully Paid Ordinary Quoted
* Subject to non-date escrow terms.
126
Number of
shares
Percentage of
issued shares
117,470,917
102,121,099
74,581,418
11.59
11.50
7.29
Number of
shares
530,634
Date escrow
period ends
*
AMA Group Shareholder information
Glossary
Abbreviation
Meaning
Abbreviation
Meaning
ADAS
AGM
APAS
ARC
ASX
ATSR
AUD
BBSY
CEO
CFO
CGU
COO
Advanced Driver Automation System
Annual General Meeting
Automotive Parts and Services
(previously a division of AMA Group)
Audit and Risk Committee
Australian Stock Exchange
Absolute Total Shareholder Return
Australian dollar
Bank Bill Swap Rate
Chief Executive Officer
Chief Financial Officer
Cash Generating Unit
Chief Operating Officer
CODM
Chief Operating Decision Maker
CPI
DCF
EBIT
EBITDAI
Consumer Price Index
Discounted cash flow
Earnings before interest and tax
Earnings before interest, tax,
depreciation, amortisation and
impairment
EPS
Earnings Per Share
ESG
GESP
GST
KMP
LTI
NPS
NZ
OEM
PC
PCP
PRP
RIFR
RTRS
STI
TFR
TSR
USD
Environmental, Social & Governance
General Employee Share Plan
Goods and Services Tax
Key Management Personnel
Long-term incentive
Net Promoter Score
New Zealand
Original equipment manufacturer
People Committee
Prior comparative period
Performance Rights Plan
Relative Injury Frequency Rate
Relative Total Shareholder Return
Short-term Incentive
Total Fixed Remuneration
Total Shareholder Return
US Dollar
VWAP
WGEA
Volume Weighted Average Price
Workplace Gender Equality Agency
Designed and produced by Tim Hamilton
127
Annual Report | 30 June 2022 AMA Group Limited
ABN 50 113 883 560
Level 13
484 St Kilda Road
Melbourne VIC 3004
amagroupltd.com
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