2017
Annual Report
Corporate Directory
30 June 2017
Directors
Thomas (‘Tom’) Pockett - Chairman
Nicholas (‘Nick’) Pagent
Ian Pagent
Robert Quant
Marina Go
Company secretary
Leonie Chapman
Registered office
Share register
Auditor
565 Parramatta Road
Leichhardt NSW 2040
Tel: +61 2 8753 2873
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Tel: 1300 554 474
Deloitte Touche Tomatsu
Grosvenor Place, 225 George Street
Sydney NSW 2000
Stock exchange listing
Autosports Group Limited shares are listed on the Australian Securities Exchange
(ASX code: ASG)
Website
www.autosportsgroup.com.au
Corporate Governance Statement
The Corporate Governance Statement which is approved at the same time as the Annual
Report can be found at www.investors.autosportsgroup.com.au/investors
Corporate Directory
1
Contents
Corporate directory
Letter from the Chairman
and CEO
Key facts
Highlights
Financial highlights
Director’s Report
Auditor’s independence
declaration
Financial statements
Notes to the consolidated
financial statements
Directors’ declaration
Independent auditor’s
report
Shareholder information
Glossary
1
4
6
8
10
13
41
42
46
76
77
81
83
Contents
3
Letter from the Chairman and CEO
Dear Shareholders,
On behalf of the Board, it is our pleasure to deliver to
you our first results following our successful IPO and
listing on the ASX on 16 November, 2016.
We are pleased to report Autosports
Group has achieved its Prospectus
forecasts on a Statutory and Pro forma
basis (as set out in the Prospectus).
These results include the accretive
acquisition of Doncaster BMW
(incorporating Doncaster BMW,
Bundoora BMW, Mini Doncaster, BMW
Motorrad, Bundoora BMW Bodyshop
and Alpina Australia) in April 2017 which
contributes $1.3m profit before tax to the
result since acquisition. It is important
to note that we achieved our Prospectus
forecasts on EBITDA, EBIT, NPBT, NPAT
and NPATA even if we exclude the
Doncaster BMW acquisition.
From our listing on 16 November 2016
to 30 June 2017, Autosports Group made
a Statutory Net Profit before tax of
$18.4m. On a pro forma basis, the net
profit before tax of the Group grew by
45% on the prior year reaching $38.7m.
Throughout the Financial Period (means
the period from incorporation on
29 August 2016 to 30 June 2017) we
successfully executed on our growth
strategies. Upon listing we were clear
in outlining our continuing focus on the
Prestige and Luxury segments on the
East Coast of Australia and to grow
both organically and via acquisition.
Our results have come on the back of
a consistent and disciplined approach
to the application of this strategy. We
commenced in November 2016 by
growing in Brisbane via the successful
acquisition of the Willims Motor Group
comprising Audi Centre Brisbane,
Audi Indooroopilly, Bentley Brisbane,
Lamborghini Brisbane and Maserati
Brisbane. In October 2016 and April 2017,
we respectively began opening up the
Melbourne market with the acquisitions
of Volvo Cars Brighton and Doncaster
BMW. In Sydney, we consolidated our
footprint with investments to unlock
organic growth and capacity expansion
at Audi Five Dock, Audi Sutherland,
Volvo Cars Parramatta and Leichhardt
Volkswagen.
Operationally we continue to develop
Autosports Group’s reputation for
excellence. In 2017, ASG dealerships
were again highly recognised as leaders
with the following awards: Audi Centre
Parramatta 1st place Audi Major Metro
Dealer of the Year; Audi Centre Mosman
2nd place Audi Major Metro Dealer of
the Year; Audi Five Dock 3rd place Audi
Major Metro Dealer of the Year; Volvo
Cars Sydney 1st place Volvo Major
Metro Dealer of the Year; Volvo Cars
Parramatta 2nd place Major Metro Dealer
of the Year; Leichhardt Volkswagen 1st
place Volkswagen Dealer of the Year;
Mercedes-Benz Toowong 3rd place
Mercedes-Benz Dealer of the Year.
4
Autosports Group | Annual Report 2017
Our outlook for FY2018 remains positive.
We expect stable economic and market
conditions to continue. We believe
Autosports Group is well positioned to
capitalise on acquisition, greenfield and
organic growth opportunities. The year
will commence with our development of
a greenfield site for Volvo at Rushcutters
Bay and the acquisition in the last quarter
of the 2017 calendar year of Melbourne
BMW. This acquisition (which is subject
to settlement) provides the opportunity
for us to consolidate our representation
of the BMW group of brands and our
position in the Victorian market.
The Australian Automotive Dealership
industry continues to be highly
fragmented and Autosports Group
believes that there is a pipeline of
potential acquisition targets within
Prestige and Luxury brands as well as
continuing organic growth opportunities.
Finally, we would like to thank our Board
and our employees for their continuing
dedication and operational excellence
during the Financial Period. We are
confident that we continue to have the
right management and strategy in place
and look forward to discussing these
results in our AGM in November 2017.
Yours faithfully,
Tom Pockett
Nick Pagent
Independent Chairman
Chief Executive Officer
Chairman and CEO’s Letter
5
Key facts
$887m
ASSETS
$1.446B
FY17 PRO FORMA
REVENUE
34
BUSINESSES
6
Autosports Group | Annual Report 2017
1080
EMPLOYEES
$906.1m
FY17 STATUTORY REVENUE
Key facts
7
Highlights
September 2016
• Settled first dealership in
Melbourne opening up 28%
of the new car market for ASG
with Volvo Cars Brighton
October 2016
• Opened our 4th Volvo site with a greenfields
site in Brisbane at Mt Gravatt
2017
February 2017
• ASG 1st, 2nd and 3rd in
Audi Major Metropolitan
Dealer of the Year
• ASG 1st and 2nd in Volvo
Major Metropolitan Dealer
of the Year
8
Autosports Group | Annual Report 2017
November 2016
• 18th November
Settled the Willims Motor Group in Brisbane adding
Audi, Bentley, Maserati and Lamborghini to our
Brisbane business
• Listed on the ASX
2016
March 2017
• Completed the
redevelopment of
Volkswagen Leichhardt
expanding aftersales and
showroom capacity
April 2017
• Completed extension of Audi
Sutherland showroom facility
• Settled BMW Doncaster adding
the brands of BMW, Mini, Alpina
and BMW Motorcycles to our
Melbourne business
May 2017
• ASG 1st in Volkswagen
Dealer of the Year
Highlights
9
Financial highlights
PRO FORMA
Finance & Insurance
revenue growth of
34.3% on prior year
Service revenue
growth of 44.0% on
prior year
Maturing greenfield
sites and increase in
demand for service
and parts resulted
in organic growth
contributing to
57.8% of the overall
revenue growth
Revenue growth of
14.2% on prior year.
Revenue CAGR of
30.5% over FY14 to
FY17 period.
Achieved
prospectus forecast
at EBITDA, EBIT,
NPBT, NPAT &
NPATA excluding
contribution from
Doncaster BMW
Gross profit
increase of 21.4%
on prior year period
with improvement
in gross margin to
14.9% exceeding
prior year of 14.0%
EBITDA growth
of 34.8% on prior
year with a CAGR
of 36.9% over FY14
to FY17 period.
EBITDA Margin of
3.8% exceeding the
prospectus forecast
of 3.6%
Net profit before tax
growth of 45.0%
with a CAGR of
48.5% over FY14
to FY17 period.
NPBT margin of
2.7% exceeding
prospectus forecast
of 2.6%
Strong cash
conversion rate
of 92.7%
Net Debt 40% of
EBITDA (excluding
floorplan finance)
Doncaster BMW
acquisition
contributing profit
before tax of $1.3m
1,446m
REVENUE
906m
REVENUE
55.1m
EBITDA
28.4m
EBITDA
38.7m
NPBT
27.1m
NPAT
A N
IN
F
Basis of preparation: The pro forma financials have been prepared consistent with the prospectus forecast with
Doncaster BMW being added to current year result from settlement date of 1st April 2017.
10
Autosports Group | Annual Report 2017
18.4m
NPBT
12.4m
NPAT
H
L
I
G
T
U
T
O
R
Y
H
T
S
C
I A L HIG
R M A STA
O F O
R
P
406080100120140160180 STATUTORY
Exceeded
prospectus forecast
on all lines
Revenue of
906.1m exceeding
prospectus forecast
by 0.5%
Gross profit of
142.6m exceeding
prospectus forecast
by 11.1%
EBITDA of
28.4m exceeding
prospectus forecast
by 22.9%
1,446m
REVENUE
906m
REVENUE
55.1m
EBITDA
28.4m
EBITDA
NPBT of 18.4m
exceeding
prospectus forecast
by 40.5%
Fully franked
dividend of 4.6c per
share to be paid
38.7m
NPBT
27.1m
NPAT
C
A N
O F O
R
P
IN
F
I A L HIG
R M A STA
T
H
L
I
G
U
T
O
R
Y
H
T
S
18.4m
NPBT
12.4m
NPAT
Financial Highlights
11
406080100120140160180 About Autosports Group Limited
Autosports Group Limited commenced operations in 2006 with the establishment of the Audi Autosports Dealership as a
greenfield site. Through execution of a well-defined and consistent growth strategy underpinned by disciplined acquisitions and
developments in strategic locations, ASG’s Dealership portfolio has grown from a single Dealership to 29 franchised New Car
Dealerships, two used car outlets and three collision repair workshops today diversified across 15 different brands.
The Difference
Our purpose at Autosports Group Limited is to deliver individualised attention to our customers; the automotive brands we
represent and our staff. This commitment translates to operational excellence and a culture we refer to as ‘The Difference’. This
culture underpins the group and helps us deliver the brand, sales and experiential expectations of each of our brand partners.
Annual General Meeting
Our 2017 Annual General Meeting will be held the offices of Deloitte Touche Tomatsu at Grosvenor Place - Level 9, 225 George
Street, Sydney 2000 on Friday 17 November 2017 at 2.00pm.
About this Report
This annual report is a summary of the operations, activities and financial position at 30 June 2017 of Autosports Group Limited
(ABN 54 614 505 261) and its subsidiary companies. In this annual report references to “ASG”, “the Group”, “Group”, “we”, “us”,
“our” and “ours” refer to Autosports Group Limited unless otherwise stated. Further definitions are listed in the Glossary on
page 84. ASG is committed to reducing the environmental effects of producing its annual reports and printed copies are only
posted to shareholders who have elected to receive them.
12
Autosports Group | Annual Report 2017
Directors’ Report
30 June 2017
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
‘Group’) consisting of Autosports Group Limited (referred to hereafter as the ‘Company’ or ‘ASG’) and the entities it controlled at
the end of, or during, the period ended 30 June 2017.
The Company was incorporated on 29 August 2016 and was listed on the ASX on 16 November 2016. Therefore, the Group’s Trading
Results are from listing to 30 June 2017. Between 29 August 2016 and listing, the Company had minimal administrative expenses.
Directors
The following persons were directors of Autosports Group Limited since its incorporation on 29 August 2016 and up to the date of
this report, unless otherwise stated:
Thomas Pockett - Chairman (appointed 29 August 2016)
Nicholas Pagent (appointed 29 August 2016)
Ian Pagent (appointed 29 August 2016)
Robert Quant (appointed 29 August 2016)
Marina Go (appointed on 28 October 2016)
Malcolm Tilbrook (appointed on 29 August 2016 resigned on 3 July 2017)
Principal activities
During the Financial Period, the Group’s principal activities were primarily focused on the retail automotive industry. The core
business focusses on the sale of new and used Motor Vehicles, distribution of finance and insurance products on behalf of Retail
Financiers and Automotive Insurers, sale of aftermarket products and spare parts, Motor Vehicle servicing and collision repair
services. There have been no significant changes in the nature of the Group’s principal activities since listing.
The Group’s operations comprise of:
• 29 franchised Dealerships selling new and used Prestige and Luxury Motor Vehicles;
• 2 used Motor Vehicle outlets, focused primarily on the sale of Prestige and Luxury Motor Vehicles; and
• 3 specialist prestige Motor Vehicle collision repair facilities.
Brands
The Group represents the following brands:
OEM-appointed Dealerships
Luxury
Prestige
Used car
dealerships
Collision repair
facilities
Acquisitions
Greenfields FY18
BMW Melbourne
BMW Melbourne
BMW Motorrad
22
7
2
3
OEM
Number of
Dealerships
Directors’ Report
13
Directors’ Report (continued)
30 June 2017
Dividends
On 29 August 2017, the directors declared a fully franked final dividend of 4.6 cents per ordinary share, to be paid on 31 October
2017 to eligible shareholders on the register as at 17 October 2017. This equates to a total estimated distribution of $9.3m based on
the number of ordinary shares on issue as at 30 June 2017. The financial effect of dividends declared after the reporting date are not
reflected in the 30 June 2017 financial statements and will be recognised in subsequent financial reports.
During the Financial Period $25.8m was paid to the pre-IPO Autosports Group shareholders to settle the dividend liability acquired
by the Company.
Operating and Financial Review
How does ASG generate
its income
ASG’s generates its income from:
• the sale of new and used Motor Vehicles;
• the sale or distribution of ancillary products and services, such as finance, insurance and
aftermarket products;
• the sale of Motor Vehicle spare parts;
• the provision of Motor Vehicle servicing; and
• the provision of collision repair services.
What is ASG’s growth strategy ASG’s strategy is to continue to grow both organically and via acquisition within Prestige and
Luxury Brands.
Organic growth includes:
• expansion of new Motor Vehicle sales and increased sales of used Motor Vehicles;
• growth of back-end services (e.g. servicing and sale of Motor Vehicle spare parts);
• capacity expansion at existing Dealerships to meet demand; and
• establishment of new greenfield Dealerships.
• Acquisition growth will focus on opportunities both in ASG’s existing brands and in Prestige
and Luxury brands where ASG does not currently have a presence.
ASG’s statutory and proforma
financial performance
We are pleased to report a Statutory Net Profit Before Tax (NPBT) of $18.4m for the Financial
Period. This result exceeded prospectus forecast NPBT of $13.1m by 40%. This covers the
period from incorporation of Autosports Group Limited to the period ended 30 June 2017.
Trading did not commence until listing date.
Net Profit After Tax (NPAT) for the Financial Period was $12.4m, exceeding prospectus forecast
of $6.1m NPAT. Earnings per share for the Financial Period were 6.07c per share.
14
Autosports Group | Annual Report 2017
The following tables demonstrate both our statutory financial performance and a reconciliation of the Pro forma prospectus
forecast against Pro forma prospectus actual.
Profit before tax excluding non-recurring items
Profit before tax excluding non-recurring items noted below is a financial measure which is not prescribed by Australian
Accounting Standards (‘AAs’) and represents the statutory profit under AAS adjusted for certain one-off items. The directors
consider profit before tax excluding non-recurring items to reflect the core earnings of the Group.
Revenues from ordinary activities
Profit before tax excluding non‐recurring items (refer below)
Profit for the period attributable to the owners of Autosports Group Limited
Comments
Period ended
30 June 2017
$’000
906,080
29,159
12,198
The profit for the Group after providing for income tax and non-controlling interest amounted to $12,198,000.
The profit for the period was impacted by one-off items associated with the Initial Public Offering (‘IPO’), namely, IPO offer costs,
acquisition expenses and director / employee gift offer shares, as follows:
Statutory profit after tax attributable to the owners of Autosports Group Limited
Add: Non-controlling interest (1)
Add: Income tax expense
Profit before income tax expense
Add: IPO listing expenses (2)
Add: Acquisition expenses (3)
Add: Employee gift offer of shares (4)
Add: Director gift offer of shares (4)
Profit before tax excluding non-recurring items
12,198
190
6,035
18,423
6,155
3,828
503
250
29,159
(1) Represents the 20% minority interest in New Centenary Mazda Pty Ltd held by the dealer principal.
(2) Reflects the amounts expensed to profit or loss in relation to IPO offer (fees payable to advisors, joint lead managers and tax, accounting and
legal fees).
(3) Relates to the stamp duty payable on the acquired Willims acquistion explained in note 27 to the consolidated financial statements.
(4) Share-based payment expense relating to the employee and director gift offer.
Directors’ Report
15
Directors’ Report (continued)
30 June 2017
Pro forma prospectus forecast against Pro forma prospectus actual (unaudited)
The use of the term pro forma relates to the period 1 July 2016 to 30 June 2017. All acquisitions during the period have been included
in the pro forma financial reports as if owned for the full period. The pro forma financial reports in the director’s report have been
calculated to exclude one off IPO related costs and one off acquisition costs. The directors believe the presentation of the pro forma
prospectus actual is useful for the users of this financial report as the results of the business can be directly compared to the pro
forma prospectus forecast. Given the change in structure of the business, comparison to the forecasts per the pro forma actual
prospectus is considered to be of more relevance than the comparative statutory financial information.
Revenue & Other income
EBITDA
Depreciation & amortisation
EBIT
Floorplan & Corporate interest
NPBT
Income Tax Expense
NPAT
EBITDA to revenue
FY17
Pro Forma
Prospectus
Forecast
$’000
FY17
Pro Forma
Prospectus
Actual
$’000
FY17
Doncaster
BMW
$’000
FY17
Total ASG
Group
Pro Forma
Prospectus
Actual
$’000
(1)
(2)
(3)
(4)
1,445,107
1,394,752
51,443
1,446,195
52,410
52,729
(7,301)
45,109
(8,014)
37,095
(7,400)
45,328
(7,995)
37,333
(11,128)
(11,200)
25,966
26,133
2,405
(242)
2,163
(823)
1,339
(402)
938
55,134
(7,643)
47,491
(8,818)
38,673
(11,602)
27,071
3.6%
3.8%
4.7%
3.8%
(1) Represents the pro forma prospectus forecast on page 61 of the prospectus dated 28 October 2016.
(2) Represents the actual pro forma result using the same methodology as that determined in (1) FY17 pro forma prospectus forecast.
(3) Represents the trading result from settlement to 30 June 2017 for Doncaster BMW
(4) Represents the total of (2) FY17 proforma prospectus actual and (3) Doncaster BMW.
16
Autosports Group | Annual Report 2017
Non-financial Highlights
Operational excellence
Whilst ASG’s focus is on building a consolidated group capable of delivering consistent standards of customer satisfaction and
brand representation, individual dealership awards provide an industry wide measure of success. Some individual ASG Dealership
achievements in 2017 included:
• Audi Centre Parramatta 1st place Audi Major Metro Dealer of the Year;
• Audi Centre Mosman 2nd place Audi Major Metro Dealer of the Year;
• Audi Five Dock 3rd place Audi Major Metro Dealer of the Year;
• Volvo Cars Sydney 1st place Volvo Dealer of the Year;
• Volvo Cars Parramatta 2nd Place Major Metro Dealer of the Year;
• Leichhardt Volkswagen 1st place Volkswagen Dealer of the Year; and
• Mercedes Benz Toowong 3rd place Mercedes Benz Dealer of the Year.
Other highlights
Other highlights are as follows:
• Listing on the 16 November 2016.
• Growth consistent with dual pillars of East Coast Major Cities and Luxury brands.
• Growing in Brisbane via the successful acquisition of the Willims Motor Group comprising Audi Centre Brisbane, Audi
Indooroopilly, Bentley Brisbane, Lamborghini Brisbane and Maserati Brisbane.
• Consolidation in Sydney with the greenfield appointment of Volvo Rushcutters Bay and investments to unlock organic growth
and capacity expansion at Audi Five Dock, Audi Sutherland, Volvo Parramatta and Leichardt Volkswagen.
• Opening up the Melbourne market with the opening of Volvo Cars Brighton and acquisition of the In Motion Group comprising
Doncaster BMW, Bundoora BMW, Doncaster Mini Garage, Doncaster Motorrad and BMW Bundoora Bodyshop.
Significant change in the state of affairs
The Company was incorporated on 29 August 2016 and listed on the ASX on 16 November 2016, with the code ‘ASG’ and
commenced trading on listing.
On listing, the Company issued 66,408,274 ordinary shares as part of the IPO raising a total of $159.4m, before transaction costs.
On listing, the Company acquired 15 companies representing 18 Original Equipment Manufacturer (‘OEM’) authorised new vehicle
dealerships, 2 used vehicle dealerships, 2 authorised collision repair businesses and finance brokerage (collectively referred to as
the ‘Pre-IPO Autosports Group’) for a total consideration transferred of $349.5m. The Company also acquired an additional business
representing 5 OEM authorised new vehicle dealerships (referred to as ‘Willims’) for a total consideration transferred of $66.9m.
Both of these acquisitions were settled by a combination of cash and issue of ordinary shares and were accounted for as business
combinations.
On 1 April 2017, the Group acquired certain assets and liabilities of Doncaster BMW, Bundoora BMW, BMW Motorrad Doncaster,
BMW Motorrad Bundoora, Doncaster Mini Garage, Alpina Australia and Alpina Victoria from The In Motion Group Pty Ltd and
Bundoora Prestige Panels Pty Ltd (collectively referred to as ‘Doncaster BMW’). The total consideration transferred amounted to
$52.3m.
Refer to note 27 to the financial statements for further details relating to the acquisitions.
There were no other significant changes in the state of affairs of the Group during the Financial Period.
Matters subsequent to the end of the Financial Year
• ASG Melbourne Pty Ltd, a wholly owned subsidiary of Autosports Group Limited (ASG), has entered in to an agreement with
BMW Melbourne Pty Ltd to purchase the businesses operating as BMW Melbourne, Mini Garage Melbourne, BMW Motorrad
Melbourne, Melbourne BMW Bodyshop and Kings Way Mini Garage (BMW Melbourne businesses). ASG has guaranteed ASG
Melbourne Pty Ltd’s payment obligations under the agreement.
The transaction is subject to a number of conditions prior to completion, including approval by BMW Australia Financial
Services. Subject to the conditions being met, it is expected to complete in the final quarter of the 2017 calendar year.
It operates from fully brand compliant leasehold premises in City Road, Southbank and Kings Way, South Melbourne.
Directors’ Report
17
Directors’ Report (continued)
30 June 2017
We are currently expecting to pay consideration of $22.0m for the BMW Melbourne businesses in addition to fixed assets at
valuation plus or minus industry standard adjustments. The acquisition will be funded by a combination of cash drawn from
reserves and new debt facilities.
• On 29 August 2017, the directors declared a fully franked final dividend of 4.6 cents per ordinary share, to be paid on 31 October
2017 to eligible shareholders on the register as at 17 October 2017. This equates to a total estimated distribution of $9.3m based
on the number of ordinary shares on issue as at 30 June 2017. The financial effect of dividends declared after the reporting date
are not reflected in the 30 June 2017 financial statements and will be recognised in subsequent financial reports.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
Likely developments and expected results of operations
On 28 August 2017, ASG Melbourne Pty Ltd, a wholly owned subsidiary of the Group, has entered into an agreement with BMW
Melbourne Pty Limited to purchase the businesses operating as BMW Melbourne, Mini Garage, Southbank Motorcycles and BMW
Body shop. The acquisition is expected to settle in the last quarter of calendar year 2017.
Apart from the dividend declared as disclosed in note 19, no other matter or circumstance has arisen since 30 June 2017 that has
significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of
affairs in future financial years.
Focus areas for FY2018
Our focus areas for FY18 are as follows:
• Delivering further EPS growth from acquisition.
• Complete the acquisition of the BMW Melbourne business and integrate this business successfully. Deliver improvements in
synergies and logistics in our Victorian division.
• Continue to drive organic growth in like for like sites by expanding aftersales capacity in Sydney & Brisbane. Continued focus on
targeted acquisitions on the East Coast in Luxury and Prestige Brands.
• Explore organic growth opportunities in used cars by utilising ASG’s used car hub model and taking advantage of the Groups
growth in supply of vehicle trade-ins and business to business opportunities.
• Continue to improve the performance of greenfield sites to richen margins and bring these greenfield businesses through to
maturity.
• Launch a new Greenfields site for Volvo in Rushcutters Bay in Sydney.
• Expand our Queensland super-luxury representation with Bentley and Maserati on the Gold Coast.
• Ensure ASG complies with regulatory changes announced by ASIC in March 2016 (to be phased in by October 2018) in relation
to regulatory changes in the sale of Finance and Insurance. ASG will do this through staff training and education.
Risk Management
ASG’s risk management process analyses and manages business risks, based on the estimation of the potential impact and
likelihood of risk occurrence on financial results. The group has set out below a summary of those risks.
Industry Outlook
ASG’s revenue and growth are susceptible to contractions in the domestic economy, including those resulting from economic and
regulatory changes. The group have automotive retail operations across multiple prestige and luxury brands and are geographically
diversified across Eastern Australia to mitigate this risk.
Key Relationships
The group’s principal activities involves key relationships with manufacturers, banks and financiers in the provision of funding
facilities, including bailment finance. The financial performance of the group is susceptible to adverse changes in any of these key
relationships. ASG proactively engages in maximising its key relationships to mitigate such risks.
18
Autosports Group | Annual Report 2017
Regulatory Change
The Federal Government has confirmed on 16 August 2017 that it has decided not to proceed with legislative changes to allow the
private importing of new motor vehicles from the United Kingdom and Japan.
ASIC announced it will prohibit ‘flex commissions’ in the car finance market. The impact of these changes (to be phased in by
October 2018) are in line with disclosures in our Prospectus dated 28 October 2016.
ACCC reviews into Consumer Guarantees are continuing.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Directors’ Report
19
Directors’ Report (continued)
30 June 2017
Current directors
Thomas (‘Tom’) Pockett
Title:
Independent Chairman (appointed to the Board on
29 August 2016)
Qualifications:
Fellow of the Institute of Chartered Accountants
Australia and New Zealand and a Bachelor of
Commerce from the University of New South Wales
Experience and expertise:
Tom was appointed to the Board on 29 August 2016. He is the Chairman of Stockland
Corporation and a Non-Executive Director of Insurance Australia Group Limited (appointed
1 January 2015), O’Connell Street Associates Limited (appointed 1 November 2014) and
Sunnyfield, a not-for-profit disability services provider in New South Wales. Tom was Chief
Financial Officer of Woolworths Limited from August 2002 to February 2014. He was an
Executive Director of Woolworths Limited from November 2006 to 1 July 2014. He previously
held the position of Deputy Chief Financial Officer at the Commonwealth Bank of Australia
and prior to that held several senior finance roles within the Lend Lease Group following
a successful career with Deloitte. Tom was formerly Chairman of The Quantium Group
Holdings Pty Limited (September 2014 to February 2016), a Director of ALH Group Pty
Ltd (September 2014 to February 2016) and Hydrox Holdings Pty Ltd (September 2014 to
December 2015). Tom was a member of the Financial Reporting Council from March 2003
to March 2006 and National President of G100 from August 2000 to January 2003. Tom is a
Chartered Accountant.
Other current directorships:
Chairman of Stockland Corporation Limited (ASX: SGP) (from 1 September 2014) and
Non-Executive director of Insurance Australia Group (ASX: IAG) (from 1 January 2015)
Former directorships
(last 3 years):
Woolworths Limited (ASX: WOW) (from 24 November 2006 to 1 July 2014)
Special responsibilities:
Chairman, Member of Audit and Risk Committee and People and Remuneration Committee
Relevant Interests in shares:
166,667 ordinary shares held directly
Interests in options:
Interests in rights:
None
None
Nicholas (‘Nick’) Pagent
Title: Managing Director and Chief Executive Officer (appointed on
29 August 2016)
Experience and expertise:
Nick has over 20 years’ experience in the motor vehicle industry across Australia and the
United Kingdom. Prior to founding Autosports Group, Nick worked in the United Kingdom in
senior roles including Director of Sales and Dealer Principal with Mercedes-Benz London and
Executive Audi, St Albans.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Managing Director and Chief Executive Officer
Relevant interests in shares:
38,645,474 ordinary shares held indirectly
Interests in options:
Interests in rights:
None
187,500 rights to ordinary shares
20
Autosports Group | Annual Report 2017
Ian Pagent
Title: Executive Director (appointed on 29 August 2016)
Experience and expertise:
Ian has over 47 years’ experience in the motor vehicle industry across Australia, Asia and
the United States. Between 1988 and 2002, Ian was co-owner and director of Trivett Classic
Group. During this period, he was the dealer principal for BMW, Audi, Volvo, Jaguar, Land
Rover, Aston Martin, Porsche, Lamborghini, Lotus, Mazda, Honda, Peugeot, Toyota and
MG Rover.
Other current directorships:
Former directorships
(last 3 years):
None
None
None Special responsibilities:
Executive Director
Relevant interests in shares:
64,352,018 ordinary shares held indirectly
Interests in options:
Interests in rights:
None
75,000 rights to ordinary shares
Robert Quant
Title:
Qualifications:
Independent Non-Executive Director (appointed on
29 August 2016)
Fellow of the Institute of Chartered Accountants
Australia and New Zealand and a Bachelor of
Accounting from the University of Technology,
Sydney
Experience and expertise:
Robert was appointed to the Board on 29 August 2016. His executive roles included the CEO
of Grant Thornton Australia Limited from 2008 to 2015. Robert has over 35 years’ experience
in Chartered Accounting including corporate and business advisory and taxation services
supporting a range of public and private entities in the areas of professional services, property,
technology and automotive retail. During his time at Grant Thornton, he was a Director and
subsequently member of the global leadership team of Grant Thornton International and a
Director of Grant Thornton Australia.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Chair of Audit and Risk Committee and member of People and Remuneration Committee
Relevant interests in shares:
62,499 ordinary shares held indirectly
Interests in options:
Interests in rights:
None
None
Directors’ Report
21
Directors’ Report (continued)
30 June 2017
Marina Go
Title:
Qualifications:
Independent Non-Executive Director (appointed on
28 October 2016)
Master of Business Administration from the
Australian Graduate School of Management
(‘AGSM’) and a Bachelor of Arts from Macquarie
University
Experience and expertise:
Marina was appointed to the Board on 28 October 2016. She is currently the Chair of the
Wests Tigers NRL Club (appointed September 2014), Non-Executive Director of Energy
Australia (appointed April 2017), Chair of Office Brands, Australia’s largest independent
network of business supplies dealers (appointed February 2017). She is also Chair of Advisory
Board – Centre for Media Transition, UTS and sits on the Australian Republican Movement
advisory board. Marina’s executive roles included CEO of magazine publisher Hearst Australia,
CEO of Private Media and Group Publishing Director of Independent Digital Media. She has
over 25 years’ experience in the media industry, with a focus on global brands for the female
consumer and luxury sectors across print, digital and events. Marina has also held senior
roles at Fairfax and Pacific Publications. Marina is a mentor with the Women In Media and
NRL Women programs and a University of New South Wales (‘UNSW’) Alumni Leader and
Ambassador.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Chair of People and Remuneration Committee and Member of the Audit and Risk Committee
Relevant interests in shares:
20,833 ordinary shares held directly
Interests in options:
Interests in rights:
None
None
‘Other current directorships’ quoted above are current directorships for listed entities only.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Former Directors
Malcolm Tilbrook
Title:
Non-Executive Director (appointed 29 August 2016
and resigned 3 July 2017)
Qualifications:
MBA, Graduate Diploma of Management and
Graduate Certificate of Corporate Management
from Deakin University.
Experience and Expertise:
Malcolm has over 30 years’ experience as a senior banking executive with diverse experience
in Australian, New Zealand and international markets. Malcolm was managing director of the
Esanda motor vehicle finance business at ANZ and held various senior roles within ANZ and
Esanda.
22
Autosports Group | Annual Report 2017
Other Key Management
Aaron Murray
Title: Chief Financial Controller
Experience and Expertise:
Company Secretary
Aaron has over 20 years’ experience in accounting and the motor vehicle industry. Aaron has
held the role of ASG CFO since 2009, after joining the business in 2007. Prior to joining ASG,
Aaron held accounting and finance roles with Trivett Classic, McMillan Volkswagen and Audi
Centre Parramatta.
Leonie Chapman
Title:
Company Secretary
Qualifications:
Bachelor of Laws and Bachelor of Commerce from
Flinders University and Master of Laws from the
University of New South Wales
Experience and Expertise:
Leonie Chapman is an experienced banking and finance lawyer specialising in consumer
credit and mortgage lending, contract negotiation, trade practices and fair trading legislation,
intellectual property and trademarks, and financial services. Leonie has worked in private
practice and as a senior in-house lawyer for Bluestone Group Pty Ltd and Macquarie Bank
Limited, and in July 2013 founded and currently operates Lawyal Solicitors, a virtual law firm
supporting companies and financial institutions. Leonie was first engaged by Autosports to
provide legal and compliance services in September 2013, and has continued to work with the
company on a variety of matters since.
Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the period
ended 30 June 2017, and the number of meetings attended by each director were:
Tom Pockett
Nick Pagent
Ian Pagent
Robert Quant
Marina Go
Malcolm Tilbrook
Full Board
People and Remuneration
Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
9
9
9
9
8
8
9
9
9
9
8
9
1
-
-
1
1
1
1
-
-
1
1
1
3
-
-
3
3
3
3
-
-
3
3
3
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
Governance
The ASG Board has adopted a framework of corporate governance, reflected through ASG’s policies and practices.
Our Corporate Governance Statement, which meets the requirements of ASX Listing Rule 4.10.3, can be viewed at:
http://investors.autosportsgroup.com.au/investors/
Directors’ Report
23
Directors’ Report (continued)
30 June 2017
Shares under option
There were no unissued ordinary shares of Autosports Group Limited under option outstanding at the date of this report.
Shares under performance rights
There were unissued ordinary shares of Autosports Group Limited under performance rights at the date of this report.
Shares issued on the exercise of options
There were no unissued ordinary shares of Autosports Group Limited issued on the exercise of options during the period ended
30 June 2017 and up to the date of this report.
Shares issued on the exercise of performance rights
There were ordinary shares of Autosports Group Limited issued on the vesting of performance rights during the period ended
30 June 2017 and up to the date of this report.
Indemnity and insurance of officers
The Company has entered into Deeds of Indemnity, Insurance and Access with each of the directors as well as the Company
Secretary and Chief Financial Officer of the Company to indemnify them for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the Financial Period, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the Financial Period, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the Financial Period, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or
any related entity.
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 for non-audit services provided during the Financial Period by the auditor are
outlined in note 23 to the financial statements.
The directors are satisfied that the provision of non-audit services during the Financial Period, by the auditor (or by another person
or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001.
The directors are of the opinion that the services as disclosed in note 23 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor;
•
the amount paid to the auditors in relation to non-audit services includes a non-recurring fee in relation to the IPO of the Group.
These services were undertaken by personnel distinct from the audit team undertaking the statutory audit of the group; 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 issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the
Company or jointly sharing economic risks and rewards.
Officers of the Company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
24
Autosports Group | Annual Report 2017
Remuneration Report
Overview
The Board is pleased to present you with Autosports Group Limited’s (ASG’s or the Company’s) first Remuneration Report for the
Financial Period. This Remuneration Report has been audited in accordance with the Corporations Act 2001 (Cth) (Corporations Act).
The 2017 Financial Period has been a significant and exciting year for ASG with the Company’s listing on the Australian Securities
Exchange (ASX) on 16 November 2016.
On listing, the Board adopted a remuneration framework for the Company that is appropriate for the listed environment and aligns
with the Company’s strategy. The Company’s remuneration framework for the executive team comprises the following 3 key
components:
(1) fixed remuneration - comprising base salary, superannuation contributions and other benefits;
(2) short-term incentive (STI) – an ‘at risk’ component of remuneration where, if individual and Group performance measures
are met, senior executives are awarded performance rights which are deferred for one year and are subject to a service
condition; and
(3) long-term incentive (LTI) - an ‘at risk’ component of remuneration where senior executives are awarded performance rights
which are subject to an earnings per share (EPS) performance condition and a service condition.
The Board believes that this remuneration framework ensures that remuneration outcomes link to Company performance and the
long-term interests of Shareholders.
ASG has had a strong performance and has achieved pro forma net profit after tax forecasts as outlined in the Prospectus. This
achievement was set as a gateway for all senior executives to enter the STI reward system.
Based on this result and on subsequent satisfaction of KPIs within the CEO balanced scorecard, the CEO received 85% of his
‘target’ STI award, which is 37% of his ‘maximum’ STI award opportunity, and other senior executives received an average of 81%
of their target STI award based on achievement against their individualised balance scorecards. As noted above, the STI award will
be delivered in the form of equity and deferred for one year.
ASG recognises that the strong results it has achieved in the lead up to and post IPO reflect the contribution made by each and
every staff member, not just the directors and executives. To recognise and reward our people and the contribution they make
to the Group’s success, ASG offered $1000 worth of “free” shares to each eligible employee in the IPO. This gives employees
an opportunity to hold shares in the Company and directly benefit from the Group’s performance in the same way as other
Shareholders.
Remuneration Report
25
Remuneration Report (continued)
Contents
Section
1. Remuneration essentials
What does this report cover?
Who does this report cover?
Remuneration governance and framework
Remuneration policy and guiding principles
Remuneration mix and components
Company performance
2. Executive remuneration in detail
Fixed remuneration
Short - term incentive
Long - term incentive
Executive service agreements
3. Non-executive director remuneration
Principles of non-executive director remuneration
Non-executive director remuneration in the Financial Period
Non-executive director remuneration in FY2018
4. Statutory remuneration disclosures
Senior executive and non-executive director remuneration
Movements in performance rights held by senior executives
KMP shareholdings
5. Transactions with KMP
Other KMP transactions
Page
27
27
27
27
28
28
30
31
31
31
33
35
36
36
36
36
37
37
37
38
38
38
26
Autosports Group | Annual Report 2017
1.
Remuneration essentials
What does this report cover?
The directors of Autosports Group Limited are pleased to introduce to shareholders the Company’s Remuneration Report for the
Financial Period.
As this is the Company’s first Remuneration Report as a listed entity, no comparative data is provided in the Report.
Who does this report cover?
This report sets out the remuneration arrangements for ASG’s key management personnel (KMP). Throughout the Remuneration
Report, KMP are referred to as either senior executives or non-executive directors.
The following table sets out ASG’s KMP for the Financial Period. All non-executive directors and senior executives held their
positions for the whole of the Financial Period (unless otherwise indicated).
Senior executives
Name
Nick Pagent
Position
Managing Director and Chief
Executive Officer (CEO)
Ian Pagent
Executive Director
Aaron Murray
Chief Financial Officer (CFO)
Non-executive directors
Name
Tom Pockett
Malcolm Tilbrook1
Marina Go2
Robert Quant
Position
Chair and independent
non-executive director
Independent non-executive
director1
Independent non-executive
director
Independent non-executive
director
1 Mr Tilbrook retired from the Board on 3 July 2017.
2 Ms Go was appointed to the Board on 28 October 2016.
Remuneration governance and framework
Role of the Board and People and Remuneration Committee
The Board is responsible for establishing, and overseeing the implementation of, the Company’s remuneration policies and
frameworks and ensuring that it is aligned with the long-term interests of ASG and its shareholders.
The People and Remuneration Committee was established at the time of listing to assist the Board with these responsibilities. The
role of the People and Remuneration Committee is to review key aspects of ASG’s remuneration structure and arrangements and
make recommendations to the Board. In particular, the Committee reviews and recommends to the Board:
• arrangements for the senior executives (including annual remuneration and participation in short-term and long-term
incentive plans);
• key performance indicator (KPI) targets for senior executives;
•
remuneration arrangements for non-executive directors;
• major changes and developments to the Company’s equity incentive plans; and
• whether offers are to be made under the Company’s employee equity incentive plans in respect of a financial year and the
terms of any offers.
Remuneration Report
27
Remuneration Report (continued)
Use of remuneration consultants and other advisors
Prior to listing, the Board engaged an independent external advisor to advise on the remuneration of the senior executives. The
scope of the engagement included the provision of remuneration assistance as requested by the Board, including but not limited
to, providing data and commentary on market trends, industry comparisons, developing the Company’s remuneration framework
for the listed environment, and advising on remuneration structuring. As part of this engagement, the independent consultant
provided remuneration recommendations to the Company during the Financial Period.
Remuneration policy and guiding principles
Executive remuneration
ASG’s remuneration framework is designed to be competitive and to focus senior executives on executing the Group’s strategy and
achieving our business objective to increase shareholder value.
The Board and the People and Remuneration Committee are guided by the following objectives when making decisions regarding
senior executive remuneration:
Attract and retain skilled
executives
Structure short & long-
term incentives that are
challenging and linked to
the creation of sustainable
shareholder returns
Ensure remuneration
structures are equitable &
aligned with the long-term
interests of ASG and
its shareholders
Ensure any termination
benefits are in
accordance with policy
REMUNERATION
POLICY OBJECTIVES
Non-executive director remuneration
In remunerating non-executive directors ASG aims to ensure that it can attract and retain qualified and experienced directors having
regard to:
•
•
•
the specific responsibilities and requirements for the ASG Board;
fees paid to non-executive directors of other comparable Australian companies; and
the size and complexity of ASG’s operations.
Remuneration mix and components
The Company’s executive remuneration framework, which was put in place from listing, is summarised below and includes
components of remuneration which are structured to motivate executives to deliver sustained returns through a mix of short-term
and long-term incentives.
28
Autosports Group | Annual Report 2017
Executive remuneration framework
Fixed remuneration - Cash
Short-term incentive (at risk) - Equity
Long-term incentive (at risk) - Equity
• Base salary plus
• STI is subject to performance hurdles
• Granted in performance rights
superannuation and other
benefits
(including NPAT)
• The 2017 STI award was also subject to
• Base salary was formally
a financial gateway hurdle
• Vesting subject to an EPS
performance condition
• Performance generally measured over
benchmarked at the time of
listing
• Influenced by individual
performance
• Reviewed annually
• Performance generally measured over
3 years
12 months
• Granted in performance rights which will
vest following a 12 month deferral period
subject to the executive’s continuous
service
Market competitive base reward
Encourages sustainable performance in the medium to longer term and provides a
retention element
The tables below illustrate the remuneration mix for the senior executives at target performance.
Remuneration mix at target for Nick
Pagent for the Financial Period
Remuneration mix at target for Ian
Pagent for the Financial Period
Remuneration mix at target for Aaron
Murray for the Financial Period
LTI, 20.4%
LTI, 13.8%
LTI, 13.7%
STI, 18.0%
Fixed
REM, 61.6%
Fixed
REM, 73.9%
Fixed
REM, 74.1%
STI, 12.3%
STI, 12.2%
The tables below illustrate the remuneration mix for the senior executives at maximum performance.
Remuneration mix at maximum
performance for Nick Pagent for the
Financial Period
Remuneration mix at maximum
performance for Ian Pagent for the
Financial Period
Remuneration mix at maximum
performance for Aaron Murray for the
Financial Period
LTI, 28.5%
Total Fixed
REM, 43.0%
STI, 28.5%
LTI, 21.4%
LTI, 21.3%
STI, 21.4%
Total Fixed
REM, 57.2%
STI, 21.3%
Total Fixed
REM, 57.4%
Remuneration Report
29
Remuneration Report (continued)
Company performance
ASG has had a strong year and has achieved pro forma NPAT forecasts as outlined in the Prospectus. The Company continued to
grow organically, as well as through strategic acquisitions and the opening of an additional greenfield dealership. The Company’s
remuneration structure was established to drive these outcomes and, as a result, a total of 81% of the target STI has been paid to
senior executives.
The table below shows the Company’s financial performance using a number of key measures during the Financial Period.
Comparative numbers for the previous four years are not shown as this is the Company’s first Remuneration Report as a listed
entity.
Share Performance ($)
Earnings Performance
Liquidity
Closing Share
price1 (A$)
Dividend per
Share (c)
2.09
4.6
EPS
(c)
6.07
EBIT
($m)
23.8
NPAT
($m)
12.4
ROE
(%)
2.5
Cash flow from
Operations
($m)
24.2
Debt
Equity
Ratio (%)
80.3
1 Opening share price on listing on the ASX was $2.40. Closing share price is at 30 June 2017.
30
Autosports Group | Annual Report 2017
2.
Executive remuneration in detail
Fixed remuneration
The remuneration of all senior executives includes a fixed component comprised of base salary and employer superannuation
contributions. Other benefits include:
• motor vehicle;
• motor vehicle insurance;
•
•
fringe benefit tax on motor vehicle; and
fuel allowance.
Fixed remuneration is regularly reviewed by the People and Remuneration Committee with reference to each senior executive’s
individual performance and as appropriate, relevant comparative compensation in the market.
Benchmarking of fixed remuneration of the senior executives was conducted prior to listing against peer companies. Fixed
remuneration for senior executives is market-aligned to similar roles in companies of a comparable size, complexity and scale to
ASG.
Short-term incentive
The table below provides an explanation of the terms and conditions applying to the STI plan since listing.
Overview of the STI plan
Participation
Performance period
The STI plan is an ‘at-risk’ component of executive remuneration whereby, if the applicable
performance conditions are met, STI awards will be delivered in the form of performance rights
which will vest after a further deferral of one year subject to the executive’s continued service.
Executive directors and other members of senior management are eligible to participate in the
STI plan.
The initial grant was measured from listing (16 November 2016) to 30 June 2017. Future grants
will be measured over a 12 month period.
STI opportunity
The STI opportunities of the senior executives are set out below:
Nick Pagent
Ian Pagent
Aaron Murray
Level of performance
At target
Maximum
33% of base salary
75% of base salary
20% of base salary
45% of base salary
20% of base salary
45% of base salary
Performance conditions
Performance conditions for the initial grant include:
If performance is assessed as below target, no STI award will be awarded.
• a “gateway hurdle” of achieving the proforma FY2017 NPAT contained in the ASG Prospectus
dated 28 October 2016. If the gateway hurdle is not met, no STI is awarded. This gateway
was chosen as an entry criteria into the STI as it is a measurable financial performance
criteria strongly linked to shareholder value.
• in addition, each senior executive has an individualised balanced scorecard that determines
their STI awards. These scorecards primarily focus on the financial objectives of ASG
and include targets measured against total revenue, EBIT, EBITDA, NPBT and NPAT. The
scorecards also include operational KPIs such as sales and margin related matrices, as well
as non-financial KPIs predominantly in the areas of risk and corporate governance to ensure
the business continues to be well managed.
The Board has determined that the combination of financial and non-financial conditions
provides the appropriate balance between short-term financial measures and the more
strategic non-financial measures which in the medium to long-term will ultimately drive further
growth and returns for shareholders.
Remuneration Report
31
Remuneration Report (continued)
Measurement of performance
conditions
Delivery of STI awards
Performance rights
Number of performance rights
to be granted
Following the end of the Financial Period, the People and Remuneration Committee assesses
the performance of senior executives against the performance conditions set by the Board
and determines the actual level of award for the senior executives for the initial grant and,
therefore, the number of performance rights to be granted. The Board believes this method is
most efficient and results in the most accurate outcomes.
Following measurement against performance conditions, STI awards are delivered in the form
of performance rights which will vest following a deferral period of 12 months subject to a
continuous service condition.
Upon vesting, each performance right entitles the senior executive to one ordinary share in
the Company. The Board has the discretion to settle performance rights with a cash equivalent
payment.
Performance rights are granted for nil consideration and no amount is payable on vesting.
The number of performance rights to be granted to senior executives is determined by dividing
any STI award that they become entitled to receive by the volume weighted average price
(VWAP) of shares traded on the ASX during the 10 trading days following the release of the
Group’s 2017 audited results.
Dividend and voting rights
Performance rights do not carry dividend or voting rights prior to vesting. Shares allocated on
vesting carry the same dividend and voting rights as other shares.
Treatment on cessation of
employment
If a senior executive ceases to be employed during the 12 month deferral period, the following
treatment will apply, unless the Board determines otherwise:
• if they resign or are summarily terminated, all of their rights will lapse; or
• if they cease employment in any other circumstances, a pro rata portion (for the portion of
the performance period elapsed) of unvested rights will remain on foot and will vest in the
ordinary course.
Change of control
The Board may determine that all or a specified number of a senior executive’s performance
rights will vest or cease to be subject to restrictions where there is a change of control event.
Clawback and preventing
inappropriate benefits
The Board has broad clawback powers if, for example, the senior executive has acted
fraudulently or dishonestly or there is a material financial misstatement.
32
Autosports Group | Annual Report 2017
Percentage of STI awarded and forfeited for senior executives during the Financial Period
Details of the STI outcomes received by senior executives during the Financial Period are outlined in the table below.
Senior executives
Minimum
potential STI
bonus
Maximum
potential STI
bonus ($)1
STI award
($)2
% of target
STI award
granted
% of
maximum
STI award
granted
% of
maximum
STI award
forfeited
Nick Pagent
Ian Pagent
Aaron Murray
-
-
-
276,174
110,465
103,562
103,285
41,732
29,918
85%
85%
65%
37%
38%
29%
63%
62%
71%
1. The maximum potential bonus is determined by reference to the maximum STI opportunity available to each executive as a percentage of their
base salary.
2. 100% of the STI award will be delivered in the form of performance rights. The number of performance rights will be determined following
the release of the Group’s 2017 results (or in the case of the Executive Directors after the Annual General Meeting subject to shareholder
approval) but will not vest until 30 June 2018, subject to continued service. As at 30 June 2017, the STI award has been calculated in
accordance with AASB2.
Long-term incentive
Set out below is an explanation of the terms and conditions applying to the LTI awards for senior executives since listing.
Overview of the LTI plan
The LTI plan is an ‘at-risk’ equity component of executive remuneration which is subject to the
satisfaction of a long-term performance condition.
Participation
Instrument
Executive directors and other members of senior management are eligible to participate in
the LTI plan.
Upon vesting, each performance right entitles the senior executive to one ordinary share in
the Company. The Board has the discretion to settle performance rights with a cash equivalent
payment.
Performance rights are granted for nil consideration and no amount is payable on vesting.
Number of performance rights
to be granted
The number of performance rights granted to each senior executive for their 2017 award was
determined by dividing the award amount by the offer price on listing of $2.40 per share.
For future grants, the number of performance rights granted to each Senior Executive will be
determined by dividing the LTI award opportunity by the VWAP of shares traded on the ASX
during the 10 trading days following the release of the group’s full year results for that financial
year.
Performance period
The initial grant will be measured from listing (16 November 2016) to 30 June 2019. Future
grants will have a three year performance period.
Remuneration Report
33
Remuneration Report (continued)
Performance conditions
Performance rights will be tested against the compound annual growth rate (CAGR) of ASG’s
underlying EPS.
The percentage of performance rights that vest, if any, will be determined by reference to the
following vesting schedule, subject to any adjustments for abnormal or unusual profit items
that the Board, in its absolute discretion, considers appropriate:
CAGR of the Company’s underlying EPS
over the performance period
Percentage of performance rights that vest
Less than 7%
7% (threshold performance)
Between 7% and 15%
Nil
50%
Straight-line pro rata vesting between 50%
and 100%
15% or above (maximum performance)
100%
The Board will arrange for the performance condition to be tested following the release of the
Company’s full year results. Any rights that remain unvested at the end of the performance
period will lapse immediately.
A continuous service condition also applies to the performance rights, subject to the cessation
of employment provisions described below.
The EPS performance condition has been chosen as it provides evidence of the Company’s
growth in earnings and is directly linked to shareholder returns.
Measurement and testing of
performance conditions
To measure the EPS performance condition, financial results are extracted by reference to the
Company’s audited financial statements. The use of financial statements ensures the integrity
of the measure and alignment with the true financial performance of the Company.
EPS is calculated having regard to underlying profit, which measures profit from ASG's ongoing
operations adjusted, where the Board considers it appropriate.
Dividend and voting rights
The performance rights do not carry dividend or voting rights prior to vesting. Shares allocated
on vesting carry the same dividend and voting rights as other shares.
Treatment on cessation of
employment
If an executive ceases to be employed before their performance rights vest, the following
treatment will apply, unless the Board determines otherwise:
• if they resign or are summarily terminated, all their performance rights will lapse; or
• if they cease employment in any other circumstances, a pro rata portion (for the portion of
the performance period elapsed) of their rights will remain on foot and will be tested after the
end of the performance period against the performance condition.
Change of control
The Board may determine that all or a specified number of a senior executive’s performance
rights will vest or cease to be subject to restrictions where there is a change of control event.
Clawback and preventing
inappropriate benefits
The Board has broad clawback powers if, for example, the senior executive has acted
fraudulently or dishonestly or there is a material financial misstatement.
34
Autosports Group | Annual Report 2017
Executive service agreements
Each of the senior executives is party to a written executive service agreement with ASG which was entered into prior to listing.
The key terms of these agreements are set out below.
Duration
Ongoing term
Base salary
Nick Pagent – $600,000 per annum base salary plus other benefits valued at $79,950.
Periods of notice required to
terminate and termination
payments
Ian Pagent – $400,000 per annum base salary plus other benefits valued at $80,980.
Aaron Murray – $375,000 per annum base salary plus other benefits valued at $80,760.
Nick Pagent - either party may terminate the contract by giving 12 months’ notice.
Ian Pagent - either party may terminate the contract by giving 12 months’ notice.
Aaron Murray - either party may terminate the contract by giving 3 months’ notice.
The Company may terminate immediately in certain circumstances, including where the
relevant senior executive engages in serious or wilful misconduct.
Remuneration Consultant Fees Prior to listing, Egan Associates was engaged to advise on the remuneration of the
non-executive directors and senior executives. The scope of the engagement included the
provision of remuneration assistance as requested by the Board, including but not limited to,
providing data and commentary on market trends, developing the Company’s remuneration
framework for the listed environment, and advising on remuneration structuring. As part of
this engagement, Egan Associates provided remuneration recommendations to the Company
during the Financial Period.
The engagement of Egan Associates was based on an agreed set of protocols that would be
followed by the consultant so that it would be able to carry out its work, including information
capture and the formation of its recommendations, free from undue influence by members of
the KMP to whom the recommendations may relate. Under the engagement, Egan Associates
reports to the Chair of the Board.
The Board undertook its own inquiries and review of the processes and procedures followed
by Egan Associates and is satisfied that the remuneration recommendations were made free
from undue influence by members of the KMP about whom the recommendations may relate.
In addition, Egan Associates has confirmed that, in its view, it was acting independently of
management.
Egan Associates was paid $56,910 during the Financial Period for their services. No other
advice was provided by Egan Associates during the period.
Remuneration Report
35
Remuneration Report (continued)
3.
Non-executive director remuneration
Principles of non-executive director remuneration
As outlined in section 2, in remunerating non-executive directors, ASG aims to ensure that it can attract and retain qualified and
experienced directors having regard to:
•
•
•
the specific responsibilities and requirements for the ASG Board;
fees paid to non-executive directors of other comparable Australian companies; and
the size and complexity of ASG’s operations.
Non-executive director remuneration in the Financial Period
Board fees
The current non-executive director fee pool has been set by ASG at $800,000 per annum.
ASG’s annual directors’ fees are $200,000 for the Chair and $100,000 for other non-executive directors (including superannuation).
These fees were only payable to directors following listing.
Directors may be remunerated for reasonable travel and other expenses incurred in attending to ASG’s affairs and any additional
services outside the scope of Board and Committee duties they provide.
In order to maintain their independence, non-executive directors do not have any ‘at risk’ remuneration component. ASG does not
pay benefits (other than statutory entitlements) on retirement to non-executive directors.
Committee fees
Non-executive directors are paid Committee fees of $20,000 (including superannuation) per year for each Board Committee of
which they are a Chair. These fees were only payable to directors following listing. Directors do not receive additional fees for being
a member of a Board Committee.
One-off IPO arrangements
As disclosed in the Prospectus, on completion of the IPO, each of the non-executive directors received a one-off grant of shares in
the Company.
These grants were made in recognition of the work done by the non-executive directors in the context of the IPO and achieving
listing. Non-executive directors were allocated shares on 18 November 2016 equivalent in value to 50% of their annual base fees
(rounded down to the nearest whole share) for nil consideration. The issue of shares further enhanced the alignment of interests
between non-executive directors and shareholders.
The shares are not subject to any vesting conditions in order to preserve the directors’ impartiality. Directors are free to deal with
these shares, subject to the requirements of the Company’s Securities Dealing Policy.
Non-executive director remuneration in FY2018
In FY2018, in line with our considered approach to remuneration, there is no intention to change the base fees for the Chairman
and Non-Executive Directors or for Board committee fees.
36
Autosports Group | Annual Report 2017
4.
Statutory remuneration disclosures
Senior executive and non-executive director remuneration
The following table sets out the statutory disclosures in accordance with the Accounting Standards for the Financial Period.
Comparative numbers for the previous financial year are not shown as this is the Company’s first Remuneration Report as a
listed entity.
Short-term employee benefits
Post-employment
benefits
Share-based payments
Total
Cash salary/
Fees $
Non-monetary
benefits $1
Superan nuation
benefits $
Rights $2
Shares $
367,885
246,538
230,173
105,374
64,960
52,853
64,981
28,963
36,221
36,984
-
-
-
-
32,756
21,959
20,496
10,010
5,005
5,021
5,007
154,368
62,164
49,073
-
-
-
-
-
-
-
100,000
50,000
50,000
50,000
$
583,971
366,882
336,726
215,384
119,965
107,874
119,988
1,132,763
102,168
100,254
265,605
250,000
1,805,791
Nick Pagent
Ian Pagent
Aaron Murray
Tom Pockett
Malcolm Tilbrook
Marina Go
Robert Quant
TOTAL
1. The amounts disclosed as non-monetary benefits includes things such as motor vehicle, motor vehicle insurance, fringe benefit tax on motor
vehicle and fuel allowance.
2. The value of rights granted to the senior executives is based on the fair value estimate on grant date.
There were no termination benefits provided in the Financial Period.
Movements in performance rights held by senior executives
As at 30 June 2017, no senior executive (or their related parties) held any performance rights and no performance rights were
granted, vested or lapsed during the Financial Period.
The number of 2017 STI performance rights (representing the deferred STI for the period ended 30 June 2017) will be determined
following the release of the Group’s 2017 audited results (or in the case of the Executive Directors, after the Annual General
Meeting subject to Shareholder approval).
The LTI performance rights for the 2017 award were granted on 9 August 2017. Under this award, 187,500 performance rights were
granted to Nick Pagent, 75,000 performance rights were granted to Ian Pagent and 70,312 performance rights were granted to
Aaron Murray.
Remuneration Report
37
Remuneration Report (continued)
KMP shareholdings
The following table outlines the movements in KMP ordinary shareholdings in the Company (including their related parties) for the
Financial Period.
Held at
29 August
2016
Held at
listing
date1
Shares
granted in
relation to
IPO2
Received
on vesting
of STI
Received
on vesting
of LTI
Received as
remuneration
Other net
changes
Non-executive directors
Tom Pockett
Malcolm Tilbrook
Marina Go
Robert Quant
Senior executives
Nick Pagent
Ian Pagent
Aaron Murray
-
-
-
-
-
-
-
125,000
20,833
-
41,666
41,667
20,833
20,8331
20,833
38,540,093
64,249,375
1,650,508
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at
30 June
2017
166,667
41,666
20,833
62,499
-
-
-
-
209,106
38,749,199
146,166 64,395,541
-
1,650,508
1. This includes shares held prior to listing as well as shares subscribed for under the IPO.
2. This reflects the one-off grant of shares in the Company to the Non-executive directors in recognition of the work done in the context of the IPO
and achieving listing.
5.
Transactions with KMP
Other KMP Transaction
Management fees
During the Financial Period the Group received Property management fees on a salary allocation basis for administration and
management of properties owned by lan & Nick Pagent. The Group was charged and received management fees in relation to
shared service techicians & parts interpreters. The Group received administration service fees in relation to shared administration
staff managing a dealership outside of the Group and owned by lan & Nick Pagent.
Related party management fee
Fee Type
GFB Properties Pty Ltd
Property management service
Autohaus Prestige Five Dock Pty Ltd
Property management service
Audi Parramatta Property Holdings Pty Ltd Property management service
Audi Parramatta Properties 2 Pty Ltd
Property management service
Autosports Properties Leichhardt Pty Ltd
Property management service
New Centenary Properties Pty Ltd
Property management service
Five Dock DJC Pty Ltd
TOTAL
Service Technicians,
Parts Interpreters &
Administration services
The company paid
management fees $
The company received
management fees $
-
-
-
-
-
-
8,055
8,055
5,018
9,195
4,341
5,012
9,195
2,700
114,375
149,836
38
Autosports Group | Annual Report 2017
Related Party leases
During the Financial Period the company had operating lease agreements on commercial terms with various entities owned by
Ian & Nicholas Pagent.
Related party operating leases
Property Location
GFB Properties Pty Ltd
3-7 Parramatta Rd, Five Dock NSW
Autohaus Prestige Five Dock Pty Ltd
34-36 Spencer St, Five Dock NSW & Unit C 2 Packard Ave,
Castle Hill
Audi Parramatta Property Holdings Pty Ltd
49-51 Church St, Parramatta NSW
Audi Parramatta Properties 2 Pty Ltd
13 Church St, Parramatta NSW
Autosports Properties Leichhardt Pty Ltd
531-571 Parramatta Rd, Leichhardt NSW
New Centenary Properties Pty Ltd1
135 Moggill Rd, Toowong QLD1
TOTAL
The Company
Paid Rental
fees $
418,804
291,470
391,373
292,450
293,617
736,667
2,424,380
1. During the Financial Period an entity owned by Ian Pagent & Nick Pagent acquired the freehold title of Toowong Mercedes-Benz & Toowong
Mazda premises. The terms of the existing lease, which are on commercial terms have been transferred.
Related Party Loans
Prior to listing Betar Prestige Cars Pty Ltd, a wholly owned subsidiary of the company, obtained a loan from a company owned
by Ian & Nick Pagent. The aggregate amount of the recognised loan was $920,000. As at 30 June 2017, there was an amount
outstanding of $297,207 which is recognised in the financial statements as a current liability. There is no interest payable on
the loan.
End of Remuneration Report
Remuneration Report
39
Directors’ Report (continued)
30 June 2017
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
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
immediately after this directors’ report.
Auditor
Deloitte Touche Tohmatsu was appointed auditor during the Financial Period and continues in office in accordance with section 327
of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors:
Tom Pockett
Independent Chairman
29 September 2017
Nick Pagent
Chief Executive Officer
40
Autosports Group | Annual Report 2017
Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Phone +61 2 9322 7000
www.deloitte.com.au
The Board of Directors
Autosports Group Limited
565 Parramatta Road
Leichhardt NSW 2040
29 September 2017
Dear Directors
Autosports Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Autosports Group Limited.
As lead audit partner for the audit of the financial statements of Autosports Group Limited for the
financial period ended 30 June 2017, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Carlo Pasqualini
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
41
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the period ended 30 June 2017
Revenue
Expenses
Changes in inventories
Raw materials and consumables purchased
Employee benefits expense
Depreciation and amortisation expense
Occupancy costs
Acquisition expenses
Initial public offering (‘IPO’) listing expenses
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the period
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Profit for the period is attributable to:
Non-controlling interest
Owners of Autosports Group Limited
Total comprehensive income for the period is attributable to:
Non-controlling interest
Owners of Autosports Group Limited
Basic earnings per share
Diluted earnings per share
Consolidated
Period ended
30 June 2017
$’000
906,080
Note
5
8,171
(771,635)
(62,852)
(4,613)
(14,304)
(3,828)
(6,155)
(27,021)
(5,420)
18,423
(6,035)
12,388
-
12,388
190
12,198
12,388
190
12,198
12,388
Cents
6.07
6.06
6
6
7
18
18
30
30
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
42
Autosports Group | Annual Report 2017
Consolidated Statement of Financial Position
As at 30 June 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Employee benefits
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Retained profits
Equity attributable to the owners of Autosports Group Limited
Non-controlling interest
Total equity
Consolidated
30 June 2017
Note
$’000
8
9
10
11
12
7
13
14
7
15
16
17
18
14,903
70,366
256,213
5,519
347,001
36,240
499,678
3,897
539,815
886,816
65,361
287,477
4,980
7,530
3,724
369,072
23,536
2,534
26,070
395,142
491,674
475,637
392
12,198
488,227
3,447
491,674
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Consolidated Statement of Financial Position
43
Consolidated Statement of Changes in Equity
For the period ended 30 June 2017
Issued capital
Share-based
payments
reserve
$’000
$’000
Consolidated
Balance at 29 August 2016
Profit after income tax expense for the period
Other comprehensive income for the period,
net of tax
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction
costs (note 16)
Share-based payments (notes 6 and 31)
Non-controlling interest arising on business
combinations (note 27)
-
-
-
-
475,637
-
-
Balance at 30 June 2017
475,637
Retained
profits
$’000
-
12,198
-
12,198
-
-
-
12,198
Non-
controlling
interest
$’000
-
190
-
190
-
-
3,257
3,447
Total equity
$’000
-
12,388
-
12,388
475,637
392
3,257
491,674
-
-
-
-
-
392
-
392
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
44
Autosports Group | Annual Report 2017
Consolidated Statement of Cash Flows
For the period ended 30 June 2017
Cash flows from operating activities
Profit before income tax expense for the period
Adjustments for:
Depreciation and amortisation
Share-based payments
Interest received
Interest and other finance costs paid
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease in other operating assets
Increase in trade and other payables
Increase in employee benefits
Decrease in deferred revenue
Increase in bailment finance
Increase in other operating liabilities
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Net payment for the acquisition of businesses
Payments for property, plant and equipment
Payments for security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from borrowings
Repayment of borrowings
Dividends paid to pre-IPO Autosports Group shareholders
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the Financial Period
Cash and cash equivalents at the end of the Financial Period
Consolidated
Period ended
30 June 2017
Note
$’000
6
6
6
27
11
16
16
19
18,423
4,613
1,145
(46)
5,420
29,555
(36,262)
(8,171)
670
25,613
421
(1,510)
23,820
2,225
36,361
46
(5,420)
(6,760)
24,227
(136,759)
(10,577)
(1,416)
(148,752)
159,380
(9,662)
21,457
(5,973)
(25,774)
139,428
14,903
-
14,903
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
Consolidated Statement of Cash Flows
45
Notes to the Consolidated Financial Statements
30 June 2017
Note 1. General information
The financial statements cover Autosports Group Limited as a
consolidated entity consisting of Autosports Group Limited (the
‘Company’ or ‘parent entity’) and the entities it controlled at
the end of, or during, the Financial Period (collectively referred
to as the ‘Group’). The financial statements are presented
in Australian dollars, which is Autosports Group Limited’s
functional and presentation currency.
Autosports Group Limited is a listed public company limited by
shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
565 Parramatta Road, Leichhardt NSW 2040
A description of the nature of the Group’s operations and its
principal activities are included in the directors’ report, which is
not part of the financial statements.
The Company was incorporated on 29 August 2016. On
16 November 2016, the Company was listed on the Australian
Securities Exchange (‘ASX’) with the code ‘ASG’. On 18
November 2016, the Company acquired 15 Companies (‘Pre-
IPO Autosports Group’) and an additional business (‘Willims’)
and commenced trading. Refer to note 27 for further details.
The financial statements were authorised for issue, in
accordance with a resolution of directors, on 25 September
2017. The directors have the power to amend and reissue the
financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below.
New or amended Accounting
Standards and Interpretations
adopted
The Group has adopted all of the new or amended Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for
the current reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant
impact on the financial performance or position of the Group
during the Financial Period.
Accounting period
The relevant accounting period is from the date of Incorporation
on 29 August 2016 to 30 June 2017.
Working capital deficiency
The directors have prepared the financial statements on the
going concern basis, which assumes continuity of normal
business activities and the realisation of assets and the
46
Autosports Group | Annual Report 2017
settlement of liabilities in the ordinary course of business. The
statement of financial position reflects an excess of current
liabilities over current assets of $22,071,000 as at 30 June 2017.
The funding structure results in a working capital deficiency that
is consistent and as anticipated at the time of listing.
The directors have reviewed the cash flow forecast for the
Group through to 30 June 2019. The forecast indicates that
the Group will generate net positive operating cash flows and
operate within its overall finance facilities and that the Group
will, therefore, be able to pay its debts as and when they fall
due after considering the following factors:
•
Included in current liabilities, are capital loans amounting
to $14,957,000, whilst are repayable on demand, are not
expected to require settlement in full within the next
12 months;
• An amount of $3,724,000 is included in current liabilities
which relate to deferred revenue and no cash outflow is
expected in relation to this amount;
• As at 30 June 2017, the Group has undrawn finance facilities
amounting to $36,509,000; and
• The Group has cash and cash equivalents amounting to
$14,903,000 as at 30 June 2017.
The directors have concluded that it is appropriate to prepare
the financial statements on the going concern basis, as they
are confident that the Group will be able to pay its debts as and
when they become due and payable from positive cash flows
from operations and available finance facilities for at least
12 months from the date of signing the financial statements.
Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) and the Corporations Act 2001,
as appropriate for for-profit oriented entities. These financial
statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards
Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the
historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Note 2. Significant accounting policies (continued)
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed
in note 32.
Revenue recognition
Revenue is recognised when it is probable that the economic
benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the
consideration received or receivable.
Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Autosports Group Limited as
at 30 June 2017 and the results of all subsidiaries for the period
then ended.
New, demonstrator and used vehicles
Revenue from the sale of vehicles is recognised when the
buyer has accepted the risks and rewards of ownership,
generally by taking delivery of the vehicle. Amounts disclosed
as revenue are net of sales returns and trade discounts.
Subsidiaries are all those entities over which the Group
has control. 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 de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries
are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position
and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling
interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it
derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received
and the fair value of any investment retained together with any
gain or loss in profit or loss.
Operating segments
Operating segments are presented using the ‘management
approach’, where the information presented is on the same
basis as the internal reports provided to the Chief Operating
Decision Makers (‘CODM’). The CODM is responsible for the
allocation of resources to operating segments and assessing
their performance.
Parts and service
Revenue from the sale of parts is recognised when the buyer
has accepted the risks and rewards of ownership, generally by
taking delivery of the goods. Amounts disclosed as revenue are
net of sales returns and trade discounts.
Service work on customers’ vehicles is carried out under
instructions from the customer. Service revenue is recognised
based upon the percentage completion of the work requested.
The percentage completion is measured by reference to labour
hours incurred to date as a percentage of estimated total labour
hours for the service to be performed. Revenue arising from
the sale of parts fitted to customers’ vehicles during service
is recognised upon delivery of the fitted parts to the customer
upon completion of the service.
Aftermarket accessories and other revenue
Aftermarket accessories and other revenue are recognised
when they are received or when the right to receive payment
is established. Aftermarket accessories relate to items fitted
at the dealership and include products such as window tinting,
mud flaps and paint protection.
Finance and insurance revenue
Finance and insurance commissions are recognised in the
period in which the related sale or rendering of service is
provided. Finance and insurance commissions are received
from finance companies and insurance companies as
commission payments on products sold to customers.
Interest
Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.
Notes to the Consolidated Financial Statements
47
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 2. Significant accounting policies (continued)
Commercial income and rebates
Volume related and vehicle specific bonuses and rebates are
credited to the carrying value of inventory to which they relate.
Once the inventory is sold, the amount is then recognised in
cost of goods sold. Bonuses and rebates are recognised when
the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax
payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes
in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised
for prior periods, where applicable.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision
for impairment of trade receivables is raised when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation
and default or delinquency in payments (more than 90 days
overdue) are considered indicators that the trade receivable
may be impaired. The Group provides 100% of trade receivables
over 120 days due and 50% of trade receivables over 90 days
due.
Other receivables are recognised at amortised cost, less any
provision for impairment.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those
tax rates that are enacted or substantively enacted, except for:
Current and non-current classification
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
• When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at
the time of the transaction, affects neither the accounting
nor taxable profits; or
• When the taxable temporary difference is associated
with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse in
the foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
The carrying amount of recognised and unrecognised deferred
tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover
the asset.
Deferred tax assets and liabilities are offset only where there is
a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred
tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which
intend to settle simultaneously.
An asset is classified as current when: it is either expected to
be realised or intended to be sold or consumed in the Group’s
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either expected
to be settled in the Group’s normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-
current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Inventories
Trade and other receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade
receivables are generally due for settlement within 30 days.
New and demonstrator vehicles
New and demonstrator vehicles are stated at the lower of cost
and net realisable value. Costs are assigned on the basis of
specific identification. Cost comprises of purchase and delivery
costs, net of rebates and discounts received or receivable.
48
Autosports Group | Annual Report 2017
Note 2. Significant accounting policies (continued)
Used vehicles
Used vehicles are stated at the lower of cost and net realisable
value on a unit-by-unit basis. Cost comprises of purchase
and delivery costs, net of rebates and discounts received or
receivable.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and
the estimated costs necessary to make the sale. The age of the
car is considered in determining selling price of used cars.
Spare parts and accessories
Spare parts and accessories are stated at the lower of cost
and net realisable value. Costs are assigned to individual
items on the basis of weighted average cost. Cost comprises
of purchase and delivery costs, net of rebates and discounts
received or receivable.
Other inventory
Other inventory includes work in progress and are stated at
cost. Costs are assigned to individual customers on the basis of
specific identification. Cost includes labour incurred to date and
consumables utilised during the service.
Property, plant and equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items. 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. All other repairs and
maintenance are charged to profit or loss during the Financial
Period in which they are incurred.
Depreciation is calculated on a straight-line basis to write off
the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
Shorter of unexpired period
of the lease or the estimated
useful life
Plant and equipment
3 - 20 years
Furniture, fixtures and fittings
3 - 20 years
Motor vehicles
4 - 8 years
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon
disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the
disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains
a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively
transfer from the lessor to the lessee substantially all the risks
and benefits incidental to the ownership of leased assets, and
operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are
established at the fair value of the leased assets, or if lower, the
present value of minimum lease payments. Lease payments
are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate
of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated
over the asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty
that the Group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from
the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination,
other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired
separately are initially recognised at cost. Indefinite life
intangible assets are not amortised and are subsequently
measured at cost less any impairment. Finite life intangible
assets are subsequently measured at cost less amortisation
and any impairment. The gains or losses recognised in profit
or loss arising from the derecognition of intangible assets are
measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method and
useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life
are accounted for prospectively by changing the amortisation
method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not
amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill
are taken to profit or loss and are not subsequently reversed.
Notes to the Consolidated Financial Statements
49
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 2. Significant accounting policies (continued)
Customer relationships
Customer relationships acquired in a business combination
are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of five years.
Customer assets are made up of complementary customer
relationships and databases in the servicing and parts business.
Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually
for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other non-
financial assets are reviewed 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.
Recoverable amount is the higher of an asset’s fair value less
costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to
the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do
not have independent cash flows are grouped together to form
a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the Financial Period
and which are unpaid. Due to their short-term nature they
are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of
recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value
of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Loans and borrowings are removed from the statement of
financial position when the obligation specified in the contract
is discharged, cancelled or expired. The difference between the
carrying amount and any consideration paid is recognised in
profit or loss.
Vehicles secured under bailment plans are provided to the
Group under bailment agreements with floorplan loan providers.
The Group obtains title to the vehicles immediately prior to
sale. Vehicles financed under bailment plans are recognised
as inventory with the corresponding floorplan liability owing to
the finance providers. Floorplan finance facilities are available
for drawdown by specified dealerships on a vehicle by vehicle
basis, with repayment as it relates to an individual vehicle
required immediately after the vehicle is sold.
50
Autosports Group | Annual Report 2017
Finance costs are expensed in the period in which they are
incurred.
Provisions
Provisions are recognised when the Group has a present
(legal or constructive) obligation as a result of a past event, it
is probable the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best
estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current
pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance
cost.
Provision for warranties
Provision is made for the estimated claims in respect of
extended warranties provided on the majority of the Group’s
retail new and used vehicle sales. These claims are generally
expected to settle in the next financial year but some may be
extended into the following year if claims are made late in the
warranty period.
Deferred revenue
Deferred revenue represents finance and insurance income
received in advance. It is recognised as a liability in the
statement of financial position, until the revenue has been
earned.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are
measured at the amounts expected to be paid when the
liabilities are settled.
Long-term employee benefits
The liability for annual leave and long service leave not
expected to be settled within 12 months of the reporting date
are measured at the present value of expected future payments
to be made in respect of services provided by employees up
to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted
using market yields at the reporting date on corporate bonds
with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Note 2. Significant accounting policies (continued)
Defined contribution superannuation
expense
Contributions to defined contribution superannuation plans are
expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided
to employees.
Equity-settled transactions are awards of shares, or options
over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair
value on grant date. Fair value is independently determined
using the Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield
and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine
whether the Group receives the services that entitle the
employees to receive payment. No account is taken of any
other vesting conditions.
The cost of equity-settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to
vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative
amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining
fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that
market condition has been met, provided all other conditions
are satisfied.
If equity-settled awards are modified, as a minimum an
expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining
vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Group
or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the
Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has
vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is
substituted for the cancelled award, the cancelled and new
award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured
at fair value for recognition or disclosure purposes, the fair value
is based on 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; and assumes
that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-
financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate
in the circumstances and for which sufficient data are available
to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Issued capital
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.
Dividends
Dividends are recognised when declared during the Financial
Period and no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date
fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the
acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree’s identifiable net assets. All
acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the
financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the
contractual terms, economic conditions, the Group’s operating
or accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages, the
Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is
recognised in profit or loss.
Notes to the Consolidated Financial Statements
51
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 2. Significant accounting policies (continued)
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration
classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity.
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 tax authority is included in other
receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax
authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report
have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases,
the nearest dollar.
New Accounting Standards and
Interpretations not yet mandatory or
early adopted
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual
reporting period ended 30 June 2017. The Group’s assessment of
the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning
on or after 1 January 2018. The standard replaces all previous
versions of AASB 9 and completes the project to replace IAS
39 ‘Financial Instruments: Recognition and Measurement’.
AASB 9 introduces new classification and measurement
models for financial assets. A financial asset shall be measured
at amortised cost, if it is held within a business model whose
objective is to hold assets in order to collect contractual cash
flows, which arise on specified dates and solely principal and
interest. All other financial instrument assets are to be classified
and measured at fair value through profit or loss unless the
entity makes an irrevocable election on initial recognition to
present gains and losses on equity instruments (that are not
held-for-trading) in other comprehensive income (‘OCI’). For
financial liabilities measured at fair value, the standard requires
the portion of the change in fair value that relates to the entity’s
own credit risk to be presented in OCI (unless it would create
an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity.
New impairment requirements will use an ‘expected credit loss’
(‘ECL’) model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk
on a financial instrument has increased significantly since initial
The difference between the acquisition-date fair value of assets
acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquiree
is recognised as goodwill. If the consideration transferred
and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
acquirer, the difference is recognised as a gain directly in profit
or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer’s previously
held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional
assets or liabilities during the measurement period, based on
new information obtained about the facts and circumstances
that existed at the acquisition-date. The measurement period
ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of Autosports Group Limited,
excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares
outstanding during the Financial Period, adjusted for bonus
elements in ordinary shares issued during the Financial Period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax (‘GST’) and
other similar taxes
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised
as part of the cost of the acquisition of the asset or as part of
the expense.
52
Autosports Group | Annual Report 2017
Note 2. Significant accounting policies (continued)
recognition in which case the lifetime ECL method is adopted.
The standard introduces additional new disclosures. The Group
will adopt this standard from 1 June 2018 but it is not expected
to significantly impact the financial statements on the basis
that the main financial assets recognised represent cash
and cash equivalent and trade receivables that do not carry a
significant financing component and involve a single cash flow
representing the repayment of principal, which in the case of
trade receivables is the transaction price. Both asset classes
will continue to be measured at face value. Other financial
asset classes are not material to the Group. Financial liabilities
of the Group are not materially impacted by this standard.
AASB 15 Revenue from Contracts with
Customers
This standard is applicable to annual reporting periods beginning
on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the
standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate
performance obligations within the contract; determine the
transaction price, adjusted for the time value of money excluding
credit risk; allocation of the transaction price to the separate
performance obligations on a basis of relative stand-alone selling
price of each distinct good or service, or estimation approach if
no distinct observable prices exist; and recognition of revenue
when each performance obligation is satisfied. Credit risk will
be presented separately as an expense rather than adjusted
to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods.
For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer
services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of
progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with
customers will be presented in an entity’s statement of financial
position as a contract liability, a contract asset, or a receivable,
depending on the relationship between the entity’s performance
and the customer’s payment. Sufficient quantitative and
qualitative disclosure is required to enable users to understand
the contracts with customers; the significant judgements made
in applying the guidance to those contracts; and any assets
recognised from the costs to obtain or fulfil a contract with a
customer. The Group will adopt this standard from 1 June 2018
but it is not expected to significantly impact the Group on the
basis that most of the its revenue is recognised at the time of
transfer of service to customer which represents the satisfaction
of the primary performance obligation.
operating leases and finance leases. Subject to exceptions, a
lease liability will be capitalised in the statement of financial
position, measured at the present value of the unavoidable
future lease payments to be made over the lease term. The
exceptions relate to short-term leases of 12 months or less and
leases of low-value assets (such as personal computers and
small office furniture) where an accounting policy choice exists
whereby either a ‘right-of-use’ asset is recognised or lease
payments are expensed to profit or loss as incurred. A ‘right
of use’ asset corresponding to the lease liability will also be
recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any
future restoration, removal or dismantling costs. Straight-
line operating lease expense recognition will be replaced
with a depreciation charge for the leased asset (included in
operating costs) and an interest expense on the recognised
lease liability (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under
AASB 16 will be higher when compared to lease expenses
under AASB 117. However, EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortisation) results will be improved
as the operating expense is replaced by interest expense and
depreciation in profit or loss under AASB 16. For classification
within the statement of cash flows, the lease payments will be
separated into both a principal (financing activities) and interest
(either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a
lessor accounts for leases. The Group will adopt this standard
from 1 July 2019 and the actual impact will depend on the
operating leases held by the Group as at 1 July 2019 and the
transitional elections made at that time. Please refer to note 25
for commitments as at 30 June 2017.
Note 3. Critical accounting
judgements, estimates and
assumptions
The preparation of the financial statements requires
management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities,
revenue and expenses. Management bases its judgements,
estimates and assumptions on historical experience and
on other various factors, including expectations of future
events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results. The
judgements, estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts
of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning
on or after 1 January 2019. The standard replaces AASB 117
‘Leases’ and for lessees will eliminate the classifications of
Acquisition of the pre-IPO Autosports Group
The Group accounted for the acquisition of the pre-IPO
Autosports Group on 18 November 2016 as a business
combination, with Autosports Group Limited being the acquirer.
The directors have determined that, as the IPO-Autosports
Notes to the Consolidated Financial Statements
53
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Group did not constitute a group in accordance with Australian Accounting Standards, the transaction should be accounted for as a
business combination rather than a group reorganisation and Autosports Group Limited was identified as the acquirer on the basis
that this new entity transferred both cash and equity interests as consideration and the acquisition was conditional on the IPO.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision
is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory
obsolescence.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has
suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash- generating
units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including
estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all available information
at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where
applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and
amortisation reported.
Note 4. Operating segments
The Group’s operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who
are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of
resources.
The directors have determined that there is only one operating segment identified and located in Australia, being motor vehicle
retailing. The information reported to the CODM is the consolidated results of the Group. The segment results are therefore shown
throughout these financial statements and not duplicated here.
Note 5. Revenue
Sales revenue
New and demonstrator vehicles
Used vehicles
Parts
Service
Aftermarket accessories
Finance and insurance revenue
Other revenue
Interest
Other revenue
Revenue
54
Autosports Group | Annual Report 2017
Consolidated
Period ended
30 June 2017
$’000
561,592
213,648
55,486
46,817
7,509
15,984
901,036
46
4,998
5,044
906,080
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Furniture, fixtures and fittings
Motor vehicles
Total depreciation
Amortisation
Customer relationships
Total depreciation and amortisation
Share-based payments expense
Employee gift offer of shares
Director gift offer of shares
Share-based payment incentive to directors, executives and employees
Total share-based payments expense
Finance costs
Floorplan interest
Corporate interest
Finance costs expensed
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Other provisions
Inventory provision expenses
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent tax differences
Share-based payments
Stamp duty on acquisitions
Other items
Income tax expense
Consolidated
Period ended
30 June 2017
$’000
794
823
543
182
2,342
2,271
4,613
503
250
392
1,145
4,853
567
5,420
18,217
7,142
1,569
5,162
873
6,035
873
18,423
5,527
71
128
1,148
(839)
6,035
Notes to the Consolidated Financial Statements
55
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Consolidated
Period ended
30 June 2017
$’000
(2,899)
611
75
3,019
226
397
1,642
907
(38)
(86)
(462)
(5,258)
(35)
998
2,899
3,897
(873)
2,899
1,871
3,897
4,980
Note 7. Income tax (continued)
Amounts credited directly to equity
Deferred tax assets
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised other than in equity:
Tax losses
Impairment of receivables
Employee benefits
Provision for warranties
Accrued expenses
Deferred income
IPO transaction costs
Work in progress
Prepayments
Provision for inventories
Customer relationships
Other items
Amounts recognised in equity:
Transaction costs on share issue
Deferred tax asset
Movements:
Charged to profit or loss
Credited to equity
Additions through business combinations (note 27)
Closing balance
Provision for income tax
Provision for income tax
56
Autosports Group | Annual Report 2017
Note 8. Current assets – trade and other receivables
Trade receivables
Other receivables
Less: Provision for impairment of receivables
Consolidated
30 June 2017
$’000
65,633
4,982
(249)
70,366
Impairment of receivables
The Group has recognised a loss of $315,000 in profit or loss in respect of impairment of receivables for the period ended
30 June 2017.
The ageing of the impaired receivables provided for above are as follows:
Over 6 months overdue
Movements in the provision for impairment of receivables are as follows:
Provisions recognised
Receivables written off during the year as uncollectable
Closing balance
249
315
(66)
249
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $6,762,000 as at 30 June 2017.
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent
collection practices.
The ageing of the past due but not impaired receivables are as follows:
under 30 days overdue
over 30 days overdue
Note 9. Current assets – inventories
New and demonstrator vehicles - at cost
Less: Write-down to net realisable value
Used vehicles - at cost
Less: Write-down to net realisable value
Spare parts and accessories - at cost
Less: Write-down to net realisable value
Other inventory - at cost
3,367
3,395
6,762
200,410
(3,018)
197,392
46,497
(583)
45,914
12,090
(351)
11,739
1,168
256,213
Notes to the Consolidated Financial Statements
57
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Consolidated
30 June 2017
$’000
Note 10. Current assets – other assets
Prepayments
Security deposits
Other cash deposits
Note 11. Non-current assets – property, plant and equipment
Leasehold improvements
Less: Accumulated depreciation
Plant and equipment
Less: Accumulated depreciation
Furniture, fixtures and fittings
Less: Accumulated depreciation
Motor vehicles
Less: Accumulated depreciation
Capital work in progress - at cost
Reconciliations
Reconciliations of the written down values at the beginning and end of the current Financial Period are set out below:
Leasehold
improvements
Plant and
equipment
Furniture,
fixtures and
fittings
Motor
vehicles
Capital work
in progress
Consolidated
Balance at 29 August 2016
Additions
Additions through business
combinations (note 27)
Depreciation expense
Balance at 30 June 2017
$’000
-
4,837
13,768
(794)
17,811
$’000
-
646
7,970
(823)
7,793
$’000
-
727
4,671
(543)
4,855
$’000
-
182
1,371
(182)
1,371
$’000
-
4,185
225
-
4,410
Property, plant and equipment secured under finance leases
Refer to note 25 for further information on property, plant and equipment secured under finance leases.
58
Autosports Group | Annual Report 2017
1,813
924
2,782
5,519
18,605
(794)
17,811
8,616
(823)
7,793
5,398
(543)
4,855
1,553
(182)
1,371
4,410
36,240
Total
$’000
-
10,577
28,005
(2,342)
36,240
Consolidated
30 June 2017
$’000
Note 12. Non-current assets – intangibles
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Reconciliations
Reconciliations of the written down values at the beginning and end of the current Financial Period are set out below:
Consolidated
Balance at 29 August 2016
Additions through business combinations (note 27)
Amortisation expense
Balance at 30 June 2017
Customer
Goodwill
relationships
$’000
-
482,125
-
482,125
$’000
-
19,824
(2,271)
17,553
482,125
19,824
(2,271)
17,553
499,678
Total
$’000
-
501,949
(2,271)
499,678
Goodwill acquired through business combinations has been allocated to one operating segment which consists of the Group’s
cash-generating units (‘CGU’s’).
The recoverable amount of the Group’s goodwill has been determined by value-in-use calculations. The calculations use cash flow
projections based on the business plan, prior to any future restructuring to which the Group is not yet committed, approved by
management covering a four year period. Cash flows beyond the four year period are extrapolated using the estimated growth
rates stated below.
Key assumptions
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model:
• Pre-tax discount rate: 12.27%;
• Projected growth rate of 2.5% beyond four year period; and
•
Increase in operating costs and overheads based on current levels adjusted for inflationary increases.
For the Financial Period ended 30 June 2017, the recoverable amount of net assets for the CGU’s exceeded the carrying value and
therefore, goodwill is not considered to be impaired.
Sensitivity analysis
Management estimates that any reasonable changes in the key assumptions would not cause the CGU’s carrying amount to
exceed its recoverable amount.
Remaining amortisation period
The remaining amortisation period for customer relationships is 4.38 years for pre-IPO Autosports and 4.75 years from
Doncaster BMW.
Notes to the Consolidated Financial Statements
59
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 13. Current liabilities – trade and other payables
Trade payables
Related party payable
GST payable
Accrued expenses
Refer to note 20 for further information on financial instruments.
Note 14. Current liabilities – borrowings
Bailment finance
Capital loans
Hire purchase
Refer to note 15 for further information on assets pledged as security and financing arrangements.
Refer to note 20 for further information on financial instruments.
Note 15. Non-current liabilities – borrowings
Capital loans
Hire purchase
Refer to note 20 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bailment finance
Capital loans
Hire purchase
Bailment finance
Consolidated
30 June 2017
$’000
45,892
297
9,038
10,134
65,361
271,736
14,957
784
287,477
21,531
2,005
23,536
271,736
36,488
2,789
311,013
Bailment is provided largely by the Original Equipment Manufacturer finance companies on a vehicle by vehicle basis and secured
over the underlying vehicle.
Capital loans
Capital loans are secured by a fixed and floating charge over the assets of the Group, except for certain entities within the Group
whereby security interest is held by a charge over the inventory and the proceeds from the sale of that inventory.
Hire purchase
The hire purchase liabilities are effectively secured over the hire purchase assets, recognised in the statement of financial position,
revert to the financier in the event of default.
60
Autosports Group | Annual Report 2017
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bailment finance
Capital loans
Hire purchase
Used at the reporting date:
Bailment finance
Capital loans
Hire purchase
Unused at the reporting date:
Bailment finance
Capital loans
Hire purchase
Consolidated
30 June 2017
$’000
305,700
39,033
2,789
347,522
271,736
36,488
2,789
311,013
33,964
2,545
-
36,509
Note 16. Equity – issued capital
Ordinary shares - fully paid
Movements in ordinary share capital
Consolidated
30 June 2017
30 June 2017
Shares
201,000,000
$’000
475,637
Details
Date
Shares
Issue price
Balance
Issue of shares on IPO capital raising
Issue of shares to acquire Pre-IPO Autosports Group
(note 27)
Issue of shares to acquire Willims (note 27)
Employee gift issue of shares
Director gift issue of shares
Share issue transaction costs(1)
Income tax relating to share issue transaction costs
Balance
29 August 2016
18 November 2016
-
66,408,274
18 November 2016
18 November 2016
18 November 2016
18 November 2016
30 June 2017
124,902,804
9,375,000
209,756
104,166
-
-
201,000,000
$2.40
$2.40
$2.40
$2.40
$2.40
$0.00
$0.00
$’000
-
159,380
299,767
22,500
503
250
(9,662)
2,899
475,637
(1) Reflects the IPO offer costs (fees payable to advisors, joint lead managers and tax, accounting and legal fees) that are attributable to the issuing
of new equity.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to
the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not
have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Notes to the Consolidated Financial Statements
61
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 16. Equity – issued capital (continued)
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of
capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
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 or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to
the current Company’s share price at the time of the investment. The Group is not actively pursuing additional investments in the
short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management
decisions. There have been no events of default on the financing arrangements during the Financial Period.
Note 17. Equity – share-based payments reserve
Share-based payments reserve
Consolidated
30 June 2017
$’000
392
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration,
and other parties as part of their compensation for services.
Movements in reserves
Balance at 29 August 2016
Share-based payments
Balance at 30 June 2017
-
392
392
Note 18. Equity – non-controlling interest
The non-controlling interest represents the 20% minority interest in New Centenary Mazda Pty Ltd held by the Dealer Principal.
62
Autosports Group | Annual Report 2017
Note 19. Equity – dividends
Dividends
On 29 August 2017, the directors declared a fully franked final dividend of 4.6 cents per ordinary share, to be paid on 31 October
2017 to eligible shareholders on the register as at 17 October 2017. This equates to a total estimated distribution of $9,272,000,
based on the number of ordinary shares on issue as at 30 June 2017. The financial effect of dividends declared after the reporting
date are not reflected in the 30 June 2017 financial statements and will be recognised in subsequent financial reports.
During the Financial Period $25,774,000 was paid to the pre-IPO Autosports Group shareholders to settle the dividend liability
acquired by the Company.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
30 June 2017
$’000
15,555
The above amounts represent the balance of the franking account as at the end of the Financial Period, adjusted for:
•
•
•
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note 20. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate risk and ageing analysis for credit risk.
Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of Directors (‘the
Board’). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls
and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance reports to the
Board on a regular basis.
Market risk
Foreign currency risk
The Group is not exposed to any significant foreign currency risk. Vehicles are purchased in Australian Dollars.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group’s main interest rate risk arises from its borrowings and cash at bank. Borrowings obtained at variable rates expose the
Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.
Notes to the Consolidated Financial Statements
63
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 20. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate borrowings:
Consolidated
Bailment finance
Capital loans
Cash at bank
Net exposure to cash flow interest rate risk
30 June 2017
Balance
$’000
271,736
36,488
(14,903)
293,321
An official increase/decrease in interest rates of 50 basis points per annum would have an adverse/favourable effect on profit
before tax of $1,467,000 and equity of $1,027,000 (assuming 30% tax). The percentage change is based on the expected volatility
of interest rates using market data and analyst’s forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate
credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at
the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as
disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and
available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bailment finance
Capital loans
33,964
2,545
36,509
64
Autosports Group | Annual Report 2017
Note 20. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities
are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and
therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 30 June 2017
$’000
$’000
$’000
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
$’000
Remaining
contractual
maturities
$’000
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bailment finance
Capital loans
Interest-bearing - fixed rate
Hire purchase
Total non-derivatives
45,892
297
272,433
5,252
864
324,738
-
-
-
-
-
-
-
-
-
6,074
19,277
10,140
746
6,820
1,288
20,565
61
10,201
45,892
297
272,433
40,743
2,959
362,324
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Note 21. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their
short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial liabilities.
Note 22. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Shares issued on IPO
Consolidated
Period ended
30 June 2017
$
1,234,931
100,254
265,605
250,000
1,850,791
Notes to the Consolidated Financial Statements
65
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 23. Remuneration of auditors
During the Financial Period the following fees were paid or payable for services provided by Deloitte Touche
Tohmatsu, the auditor of the Company:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmatsu
Due diligence relating to the IPO
Tax compliance
Note 24. Contingent liabilities
Bank guarantees
All bank guarantees are to cover landlord deposits on leased property.
Note 25. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Hire purchase commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
More than five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Hire purchase - current (note 14)
Hire purchase - non-current (note 15)
66
Autosports Group | Annual Report 2017
Consolidated
Period ended
30 June 2017
$
613,000
2,073,877
75,000
2,148,877
2,761,877
Consolidated
30 June 2017
$
2,356
24,008
96,095
120,103
864
2,034
61
2,959
(170)
2,789
784
2,005
2,789
Note 25. Commitments (continued)
Operating lease commitments includes contracted amounts for dealership operating premises under non-cancellable operating
leases expiring within one to five years with, in some cases, options to extend. The leases have various escalation clauses. On
renewal, the terms of the leases are renegotiated.
Hire purchase commitments includes contracted amounts for various plant and equipment with a written down value of $758,000
under finance leases expiring within 2 to 6 years. Under the terms of the leases, the Group has the option to acquire the leased
assets for predetermined residual values on the expiry of the leases.
Note 26. Related party transactions
Parent entity
Autosports Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the directors’
report.
Transactions with related parties
The following transactions occurred with related parties:
Other income:
Management fees received from entities owned by the directors Ian Pagent and Nick Pagent
Payment for other expenses:
Management fees paid to entities owned by the directors Ian Pagent and Nick Pagent
Lease payment on properties to entities owned by the directors Ian Pagent and Nick Pagent
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the reporting date.
Consolidated
Period ended
30 June 2017
$
149,836
8,055
2,424,380
Loans from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Loans from an entity owned by the directors Ian Pagent and Nick Pagent
297,204
Terms and conditions
All transactions were made on commercial terms.
For more detail on KMP transactions refer to note 5 of the remuneration report.
Notes to the Consolidated Financial Statements
67
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 27. Business combinations
Details of the acquisitions are as follows:
Pre-IPO
Autosports
Group
Willims
Motor Group
Fair value
Fair value
Doncaster
BMW Fair
value
Total
Fair value
$’000
10,007
33,907
$’000
$’000
-
-
-
-
44,776
30,622
248,041
80
113
4,653
3,540
903
(774)
(258)
-
(1,062)
(875)
-
111
-
3,772
2,315
629
(376)
(230)
-
(696)
(1,817)
-
(46,082)
(27,458)
-
-
(2,478)
-
2,536
64,368
-
-
-
-
6,872
45,414
2,483
2,290
28,005
19,824
7,819
(29,419)
(7,905)
(6,579)
(5,948)
(9,643)
(25,774)
(247,917)
(20,383)
(378)
(3,411)
(5,232)
(10,213)
482,125
$’000
10,007
33,907
172,643
2,292
2,177
19,580
13,969
6,287
(28,269)
(7,417)
(6,579)
(4,190)
(6,951)
(25,774)
(174,377)
(20,383)
(378)
(933)
(5,232)
(19,621)
372,343
352,722
66,904
52,286
471,912
349,465
3,257
352,722
66,904
52,286
-
-
66,904
52,286
468,655
3,257
471,912
349,465
66,904
52,286
468,655
(299,767)
(10,007)
378
40,069
(22,500)
-
-
-
-
-
(322,267)
(10,007)
378
44,404
52,286
136,759
Cash and cash equivalents
Trade receivables
Inventories
Prepayments
Security deposits
Property, plant and equipment
Customer relationships
Deferred tax asset
Trade payables
Other payables
Provision for income tax
Deferred tax liability
Employee benefits
Dividends payable
Bailment finance
Capital loans
Bank overdraft
Lease liability
Other provisions
Net assets/(liabilities) acquired
Goodwill
Acquisition-date fair value of the total consideration
transferred
Representing:
Acquisition-date fair value of the total consideration
transferred
Non-controlling interest
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration
transferred
Less: shares issued by the Company as part of the
consideration (note 16)
Less: cash and cash equivalents acquired
Add: Bank overdraft acquired
Net cash used
68
Autosports Group | Annual Report 2017
Note 27. Business combinations (continued)
The goodwill of $482,125,000 represents profitability of the acquired business and the synergistic opportunities it offers and
intangible assets that do not qualify for separate recognition. None of the goodwill is expected to be deductible for tax purposes.
The non-controlling interest (20% ownership interest in New Century Mazda Pty Ltd) recognised at acquisition date was measured
at fair value and amounted to $3,257,000. Fair value of the non-controlling interest was determined by using the market value of
the 80% interest acquired by the Group adjusted for a discount to reflect the lack of control and marketability of the non-controlling
interest.
Acquisition-related costs amounting to $6,155,000 have been excluded from the consideration transferred and have been
recognised in Initial public offering (‘IPO’) expenses in profit or loss, together with $3,828,000 relating to the Doncaster BMW
acquisition that has been recognised in Acquisition expenses in profit or loss.
Pre-IPO Autosports Group
On 18 November 2016, the Group acquired 100% of the ordinary shares of 14 companies and 80% of the ordinary shares in a
further company (collectively referred to as the ‘Pre-IPO Autosports Group’) representing 18 Original Equipment Manufacturer
(‘OEM’) authorised new vehicle dealerships, 2 used vehicle dealerships, 2 authorised collision repair businesses and finance
brokerage for the total consideration transferred of $349,465,000. These car dealerships sell new and used prestige and luxury
motor vehicles across Sydney, Brisbane and Melbourne.
Refer to note 28 for the companies that represent the Pre-IPO Autosports Group. Included in the Pre-IPO Autosports Group
business combination was the Volvo Brighton business, which was acquired by Autosports Castle Hill Pty Ltd in October 2016, prior
to the acquisition by the Group.
Willims Motor Group
On 18 November 2016, the Group acquired certain assets and liabilities of the Willims Motor Group business representing 5 OEM
authorised new vehicle dealerships for the total consideration transferred of $66,904,000. These car dealerships sell new and used
prestige and luxury motor vehicles in Brisbane.
Doncaster BMW
On 1 April 2017, the Group acquired certain assets and liabilities of Doncaster BMW, Bundoora BMW, BMW Motorrad Doncaster,
BMW Motorrad Bundoora, Doncaster Mini Garage, Alpina Australia and Alpina Victoria from The In Motion Group Pty Ltd and
Bundoora Prestige Panels Pty Ltd (collectively referred to as ‘Doncaster BMW’). The total consideration transferred amounted to
$52,286,000.
Notes to the Consolidated Financial Statements
69
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 28. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries:
Name
Autosports Brisbane Pty Ltd*
Autosports Castle Hill Pty Ltd*
Autosports Five Dock Pty Ltd*
Autosports Leichhardt Pty Ltd*
Autosports Prestige Pty Ltd*
Autosports Sutherland Pty Ltd*
Betar Prestige Cars Pty Ltd*
Birchgrove Finance Pty Ltd*
Modena Trading Pty Ltd*
Mosman Prestige Cars Pty Ltd*
New Centenary Mercedes-Benz Pty Ltd*
Prestige Auto Traders Australia Pty Ltd*
Prestige Group Holdings Pty Ltd*
Prestige Repair Works Pty Ltd*
ASG Brisbane Pty Ltd
ASG Melbourne Pty Ltd
* Pre-IPO Autosports Group
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership
interest
30 June 2017
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The consolidated financial statements also incorporates the assets, liabilities and results of the following subsidiary with
non-controlling interests:
Name
Principal place of
business/Country
of incorporation
New Centenary Mazda Pty Ltd
Australia
Parent Ownership
interest
30 June 2017
Non-controlling
interest Ownership
interest
30 June 2017
Principal activities
Motor vehicle
dealership
%
80%
%
20%
Summarised financial information of the subsidiary with non-controlling interests has not been included as it is not material to the
Group.
70
Autosports Group | Annual Report 2017
Note 29. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
• Autosports Group Limited
• Autosports Brisbane Pty Ltd
• Autosports Castle Hill Pty Ltd
• Autosports Five Dock Pty Ltd
• Autosports Leichhardt Pty Ltd
• Autosports Prestige Pty Ltd
• Autosports Sutherland Pty Ltd
• Betar Prestige Cars Pty Ltd
• Modena Trading Pty Ltd
• Mosman Prestige Cars Pty Ltd
• New Centenary Mercedes-Benz Pty Ltd
• Prestige Auto Traders Australia Pty Ltd
• Prestige Group Holdings Pty Ltd
• Prestige Repair Works Pty Ltd
• ASG Brisbane Pty Ltd
• ASG Melbourne Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and
directors’ report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Corporations Instrument, and as there are no other
parties to the deed of cross guarantee that are controlled by Autosports Group Limited, they also represent the ‘Extended Closed
Group’.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of
the ‘Closed Group’.
Statement of profit or loss and other comprehensive income
Revenue
Expenses
Changes in inventories
Raw materials and consumables purchased
Employee benefits expense
Depreciation and amortisation expense
Occupancy costs
Acquisition expenses
Initial public offering (‘IPO’) listing expenses
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the period
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Retained profits at the beginning of the Financial Period
Total comprehensive income for the period
Retained profits at the end of the Financial Period
Period ended
30 June 2017
$’000
864,783
8,171
(737,624)
(60,060)
(4,572)
(13,599)
(3,828)
(6,155)
(24,962)
(5,048)
17,106
(5,640)
11,466
-
11,466
-
11,466
11,466
Notes to the Consolidated Financial Statements
71
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 29. Deed of cross guarantee (continued)
30 June 2017
$’000
17,646
66,688
250,711
4,362
339,407
35,750
491,276
3,459
530,485
869,892
63,697
279,211
4,582
7,276
3,724
358,490
21,373
2,534
23,907
382,397
487,495
475,637
392
11,466
487,495
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Employee benefits
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Retained profits
Total equity
72
Autosports Group | Annual Report 2017
Note 30. Earnings per share
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of Autosports Group Limited
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Estimated options over ordinary shares to be issued post reporting date
Weighted average number of ordinary shares used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
Consolidated
Period ended
30 June 2017
$’000
12,388
(190)
12,198
Number
201,000,000
187,394
201,187,394
Cents
6.07
6.06
Note 31. Share-based payments
The Group has established an Equity Incentive Plan (‘EIP’) to assist in the motivation, reward and retention of senior management
and other employees.
The share-based payment expense for the period was $392,000. The number of performance rights to be granted is determined by
dividing any STI award that they become entitled to receive by the volume weighted average price (VWAP) of shares traded on the
ASX during the 10 trading days following the release of the audited results.
EIP will be delivered in the form of performance rights which will vest after a further deferral of one year subject to the executive’s
continued service.
The rights are measured from listing to 30 June 2017. Future grants will be measured over a 12 month period.
Performance conditions for the initial grant include:
• a ‘gateway hurdle’ of achieving the pro forma 2017 NPAT contained in the Company Prospectus dated 28 October 2016. If the
gateway hurdle is not met, no performance right is awarded. This gateway was chosen as an entry criteria as it is a measurable
financial performance criteria strongly linked to shareholder value.
•
in addition, each senior executive has an individualised balanced scorecard that determines their awards. These scorecards
primarily focus on the financial objectives of the Group and include targets measured against total revenue, EBIT, EBITDA, NPBT
and NPAT. The scorecards also include operational KPIs such as sales and margin related matrices, as well as non-financial KPIs
predominantly in the areas of risk and corporate governance to ensure the business continues to be well managed.
The Board has determined that the combination of financial and non-financial conditions provides the appropriate balance between
short term financial measures and the more strategic non-financial measures which in the medium to long term will ultimately drive
further growth and returns for shareholders.
Upon vesting, each performance right entitles the senior executive to one ordinary share in the Company. The Board has the
discretion to settle performance rights with a cash equivalent payment. Performance rights are granted for nil consideration and no
amount is payable on vesting.
If a senior executive ceases to be employed during the 12 month deferral period, the following treatment will apply, unless the
Board determines otherwise:
•
•
if they resign or are summarily terminated, all of their rights will lapse; or
if they cease employment in any other circumstances, a pro rata portion (for the portion of the performance period elapsed) of
unvested rights will remain on foot and will vest in the ordinary course.
Notes to the Consolidated Financial Statements
73
Notes to the Consolidated Financial Statements (continued)
30 June 2017
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
Period ended
30 June 2017
$’000
(181)
(181)
127,749
477,804
98
98
477,495
392
(181)
477,706
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees the
debts of the others. Refer to note 29 for further details.
The parent entity had no other guarantees in relation to the debts of its subsidiaries as at 30 June 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2017 other than that disclosed in Note 24.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of
an impairment of the investment.
74
Autosports Group | Annual Report 2017
Note 33. Events after the reporting period
• ASG Melbourne Pty Ltd, a wholly owned subsidiary of Autosports Group Limited (ASG), has entered in to an agreement with
BMW Melbourne Pty Ltd to purchase the businesses operating as BMW Melbourne, Mini Garage Melbourne, BMW Motorrad
Melbourne, Melbourne BMW Bodyshop and Kings Way Mini Garage (BMW Melbourne businesses). ASG has guaranteed ASG
Melbourne Pty Ltd’s payment obligations under the agreement.
The transaction is subject to a number of conditions prior to completion, including approval by BMW Australia Financial
Services. Subject to the conditions being met, it is expected to complete in the final quarter of the 2017 calendar year.
It operates from fully brand compliant leasehold premises in City Road, Southbank and Kings Way, South Melbourne.
We are currently expecting to pay consideration of $22.0m for the BMW Melbourne businesses in addition to fixed assets at
valuation plus or minus industry standard adjustments. The acquisition will be funded by a combination of cash drawn from
reserves and new debt facilities.
• On 29 August 2017, the directors declared a fully franked final dividend of 4.6 cents per ordinary share, to be paid on 31 October
2017 to eligible shareholders on the register as at 17 October 2017. This equates to a total estimated distribution of $9.3m based
on the number of ordinary shares on issue as at 30 June 2017.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
Notes to the Consolidated Financial Statements
75
Directors’ Declaration
30 June 2017
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2017 and of
its performance for the Financial Period ended on that date;
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 Extended 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 29 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Tom Pockett
Chairman
29 September 2017
Sydney
Nick Pagent
Chief Executive Officer
76
Autosports Group | Annual Report 2017
Independent Auditor’s Report
30 June 2017
D eloitte T ouche Tohmatsu
A BN 7 4 4 90 1 21 0 60
G ros venor P lace
2 2 5 G eorge Street
Sydney, N SW, 2 0 00
A us tralia
P hone: +6 1 2 9 3 22 7 000
www.deloitte.c om.au
Independent Auditor’s Report to the members of
Autosports Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Autosports Group Limited (the “Company”), and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit and loss and other comprehensive income ,
consolidated statement of changes in equity and consolidated statement of cash flows for the period
then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the period then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
L iability limited by a s c heme approved under P rofessional Standards L egislation.
M ember of D eloitte T ouche T ohmatsu L imited
Independent Auditor’s Report
77
Independent Auditor’s Report (continued)
30 June 2017
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Identification and measurement of
Intangibles
On the initial public offering (“IPO”) of the
Group on 17 November 2016 and for the
subsequent acquisitions which took place on
the 18 November 2016 (‘Willims”) and 20
February 2017 (“BMW Melbourne”) as
disclosed in note 27, the Group is required to
identify and measure the fair value of
intangible assets acquired in accordance with
AASB 3: Business combinations.
identification of
The
intangible assets
acquired involves judgement as to whether
the intangible asset can meet the criteria as
separable assets which can be reliably
measured.
The measurement of
intangible assets
acquired involves judgement, in particular in
estimating future growth rates, discount
rates and the expected cash flows of the
intangible assets acquired.
Carrying value of Goodwill
As detailed in note 27, the Group has
recognised goodwill of $482,125,000 as at 30
June 2017 as a result of the IPO and
acquisitions noted above.
the
As set out
in note 3, the director’s
assessment of the recoverability of goodwill
requires
significant
exercise
judgement, in particular in estimating future
growth rates, discount rates and the
expected cash flows of the components (cash
generating unit (CGU)) to which goodwill has
been allocated.
of
Estimating the cash flows requires the
exercise of judgement as to the likely impact
of:
Our procedures included, but were not limited to
the following:
Reading the acquisition agreements to obtain
an understanding of the nature of the
acquisitions;
Evaluating the competency, capabilities and
objectivity of management experts used to
fair value of
identify and measure the
intangible assets acquired;
Evaluating
the criteria applied by
the
management expert when identifying intangible
assets acquired;
In conjunction with our valuation specialists,
assessing the valuation methodology, cash-flow
assumptions
including contributory asset
charges, discount rates and the reasonableness
of the valuation outputs; and
Assessed
the adequacy of the Group’s
disclosures of the acquisitions.
Our procedures included, but were not limited to
the following:
Evaluating the Group’s categorisation of CGUs
and the allocation of goodwill to the carrying
value of CGUs based on our understanding of
the Group’s business. This evaluation included
performing an analysis of the Group’s internal
reporting and consultation with our accounting
technical specialists;
Comparing growth rates with 3rd party data for
the motor industry;
Comparing the Groups forecast cash flows to
the board approved budget;
Evaluating management’s historical forecasting
accuracy but comparing actual results to
budget;
Competitive pressures in specific markets;
Performing sensitivity analysis on the growth
and
Changes resulting from regulatory review
of finance and insurance practices across
the automotive industry.
and discount rates;
In conjunction with our valuation specialists
comparing
the discount rate utilised by
management to an independently calculated
discount rate; and
Evaluating the adequacy of the related
disclosures in the financial statements.
78
Autosports Group | Annual Report 2017
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the period ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other informatio n is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstat ement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
Independent Auditor’s Report
79
Independent Auditor’s Report (continued)
30 June 2017
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit e vidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our indep endence, and where applicable, related
safeguards.
From the matters communicated with directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse conse quences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 25 to 39 of the director’s report for the
period ended 30 June 2017.
In our opinion, the Remuneration Report of Autosports Group Limited, for the period ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Carlo Pasqualini
Partner
Chartered Accountants
Sydney, 29 September 2017
80
Autosports Group | Annual Report 2017
Shareholder Information
30 June 2017
The shareholder information set out below was applicable as at 13 September 2017.
The Company confirms that, for the period from admission to the ASX until 30 June 2017, it has used the cash and assets held in a
form of readily convertible to cash which it had at the time of admission in a manner consistent with its business objectives.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
JIP PARRAMATTA PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
SASTEMPO PTY LTD
LIVIST PTY LTD
AUDI PARRAMATTA HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
NIP PARRAMATTA PTY LTD
BARBIZON PTY LTD
PAGENT FAMILY INVESTMENTS PTY LTD
FIVE DOCK DJC PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
OGLE INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
AALHUIZEN NOMINEES PTY LTD
RICGAZ PTY LTD
BNP PARIBAS NOMS PTY LTD
LIVERPOOL STREET INVESTMENTS
BNP PARIBAS NOMINEES PTY LTD
DANIARON PTY LTD
Number of
holders of
ordinary shares
632
228
89
130
54
1,133
-
Ordinary shares
Number held
% of total
shares issued
23,199,693
21,994,934
21,285,348
15,455,897
15,310,969
11,414,123
10,401,678
9,375,000
7,193,635
6,436,189
6,034,135
5,439,605
5,147,053
4,904,789
4,722,374
4,406,237
2,731,536
2,453,632
1,839,245
1,644,259
11.54
10.94
10.59
7.69
7.62
5.68
5.17
4.66
3.58
3.20
3.00
2.71
2.56
2.44
2.35
2.19
1.36
1.22
0.92
0.82
181,390,331
90.24
Shareholder Information
81
Unquoted equity securities
There are no unquoted equity securities.
Substantial holders
Substantial holders in the Company are set out below:
JIP PARRAMATTA PTY LTD
J P MORGAN NOMINESS AUSTRALIA LIMITED
SASTEMPO PTY LTD
LIVIST PTY LTD
AUDI PARRAMATTA HOLDINGS LTD
CITICORP NOMINESS PTY LIMITED
NIP PARRAMATTA PTY LTD
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Ordinary shares
% of total
shares
Number held
issued
23,199,693
21,994,934
21,285,348
15,455,897
15,310,969
11,414,123
10,401,678
11.54
10.94
10.59
7.69
7.62
5.68
5.17
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
There are no other classes of equity securities.
Restricted securities - Escrowed shares
Class
Expiry date
Number of
shares
On release of Company’s results for 30 June 2019
64,189,522
Ordinary shares - Ian Pagent, together with his
nominated holding vehicles
Ordinary shares - Nick Pagent, together with his
nominated holding vehicles
On release of Company’s results for 30 June 2019
Ordinary shares - other management shareholders
On release of Company's results for 30 June 2019
Ordinary shares - Willims Vendors
On release of Company's results for 30 June 2019
Performance Rights
The following performance rights unissued at reporting date:
Nick Pagent
Ian Pagent
Aaron Murray
Other management (non KMP)
82
Autosports Group | Annual Report 2017
38,320,477
22,392,805
9,375,000
134,277,804
187,500
75,000
70,312
70,312
403,124
Glossary
$
AASB
ACCC
Arms Length
means Australian currency
means the Australian Accounting Standards Board
means Australian Competition and Consumer Commission
means Commercial transaction done in accordances with market values, disregarding any connection
such as common ownership
Automotive Insurer
means a provider or manufacturer of Motor Vehicle related insurance products, which may include
CTP greenslip and comprehensive car insurance
Autosports Group or the
Company
means Autosports Group Limited ACN 614 505 261, the ultimate holding company of ASG
ASG
ASIC
ASX
means Autosports Group and its subsidiaries, and where the context requires, the business
conducted by those entities.
means the Australian Securities and Investments Commission
means the Australian Securities Exchange
ASX Listing Rules
means the listing rules of ASX, as amended, modified or waived from time to time
Australian Accounting
Standards or AAS
means the Australian Accounting Standards and other authoritative pronouncements issued by the
AASB
Automotive Dealership
or Dealership
means a business that sells new or used Motor Vehicles along with other ancillary products and
services, which may include the sale of aftermarket products, provision of servicing, parts sales and
collision repair services as well as distribution of finance and insurance products
Board
CEO
Chairman
means the board of Directors of the Company
means Chief Executive Officer
means the chairman of the Board
Commercial terms
means terms and conditions conducted at arms length
Constitution
means the constitution of the Company
Corporations Act
means the Corporations Act 2001 (Cth)
Dealer
Dealer Group
means a person or entity that manages and operates one or more Dealerships
means a collection of Dealerships that are owned, managed or operated under a common entity or
business name
Dealer Principal
means an employee of a Dealer who is responsible for the overall management of the Dealership
Director
EBIT
EBITDA
EPS
means each of the directors of the Company from time to time
means earnings before interest and tax
means earnings before interest, tax, depreciation and amortisation
means earnings per Share
Financial Period
means the period from incorporation on 29 August 2016 to 30 June 2017
Floorplan Financier
means a provider of floorplan financing (bailment financing) to Automotive Dealers to fund Motor
Vehicle inventory at a Dealership
FY2018
Group
means the full financial year ended 30 June 2018
Autosports Group Limited
Group Trading Result
means trading result for the period from listing to 30 June 2017
GST
IFRS
IPO
KMP
Listing
Listing date
LTI Plan
means the goods and services tax
means the International Financial Reporting Standards and interpretations issued by the International
Accounting Standards Board
means initial public offering
means key management personnel
means admission to Australian Securities exchange on 16 November 2016
means the date Autosports Group Limited was listed on the ASX, being 16 November 2016.
means long term incentive plan
Luxury Motor Vehicles
means Motor Vehicles manufactured by luxury branded OEMs
Glossary
83
Glossary (continued)
Motor Vehicle or Vehicle means a road vehicle powered by a motor or engine
NPAT
NPATA
NPBT
OEM
means net profit after tax attributable to shareholders
means net profit after tax excluding amortisation pertaining to acquired intangibles
means net profit before tax
means original equipment manufacturer
Pre-IPO Autosports
Group
means the group of operating entities within the “Autosports Group” of Automotive Dealerships,
being:
(a) ASG Brisbane Pty Ltd ACN 614 297 684;
(b) Autosports Brisbane Pty Ltd ACN 603 332 752;
(c) Autosports Castle Hill Pty Ltd ACN 163 974 481;
(d) Autosports Five Dock Pty Ltd ACN 118 786 762;
(e) Autosports Leichhardt Pty Ltd ACN 161 160 765;
(f) Autosports Prestige Pty Ltd ACN 096 909 698;
(g) Autosports Sutherland Pty Ltd ACN 125 720 998;
(h) Betar Prestige Cars Pty Ltd ACN 118 667 913;
(i) Birchgrove Finance Pty Ltd ACN 165 682 057;
(j) Modena Trading Pty Ltd ACN 140 018 015;
(k) Mosman Prestige Cars Pty Ltd ACN 149 346 476;
(l) New Centenary Mazda Pty Ltd ACN 168 183 800
(m) New Centenary Mercedes Benz Pty Ltd ACN 168 183 864;
(n) Prestige Auto Traders Australia Pty Ltd ACN 105 105 771;
(o) Prestige Group Holdings Pty Ltd ACN 073 650 512; and
(p) Prestige Repair Works Pty Ltd ACN 611 760 126.
Prestige Motor Vehicles means Motor Vehicles manufactured by prestige branded OEMs
PMA
means prime market area
Pro forma accounts
means trading results from 1 July 2016 to 30 June 2017 with the Willims and Volvo Brighton
acquisitions included as if they were owned from 1 July 2016
Prospectus
means the prospectus document (including the electronic form of this Prospectus) which was lodged
with ASIC on 28 October 2016 in association with the group’s initial public offering
Retail Financier
means a provider of retail finance products to purchasers of Motor Vehicles
Rights
Share
means rights to receive Shares (or an equivalent cash payment)
means a fully paid ordinary share in the Company
Share Registry
means Link Market Services Limited
Shareholder
means the registered holder of a Share from time to time
Substantial Shareholder
any Shareholder with a holding greates than 5%
STI
means short term incentive plan
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Autosports Group | Annual Report 2017
www.autosportsgroup.com.au