2018
Annual Report
Contents
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
Corporate directory
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6
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Contents
1
Letter from the Chairman and CEO
Dear Shareholders,
On behalf of the Board,
we are pleased to have
delivered a strong result
for the full year ended
2018.
Autosports Group has delivered a strong result for FY2018.
Against 2017 pro forma results, normalised revenue was
$1.75b (2017:$1.45b) up 21% and EBITDA increased 11%
to $61.0m (2017:$55.1m). This result was achieved through
consistent and disciplined delivery of our strategy focused
on the prestige and luxury segments in metropolitan areas
across the East Coast of Australia.
The prestige and luxury segments were resilient with
strong performances in some of our newer brands despite a
lagging total new vehicle market. Overall, market conditions
for new vehicle sales were challenging with marginal growth
since the previous year.
This Financial Year we grew our BMW presence with the
acquisitions of Melbourne BMW in November 2017 and
Canterbury BMW in Sydney’s inner South West in April 2018
further diversifying our brand reach. We acquired our first
parcel of automotive real estate in Macgregor Queensland.
The property houses our Mercedes Benz Macgregor
dealership which sits on a prominent Queensland
intersection. We complemented this acquisition with an
agreement to purchase the adjoining property (scheduled
to settle November 2018). The amalgamation of these
properties provides a unique opportunity to consolidate the
Group’s retail activities on Brisbane’s southside into one
prime location.
During the year we restructured our Queensland and
Victorian corporate offices to streamline our operations and
take advantage of the operational synergies that came with
our acquisitions.
Operationally we continue to develop Autosports Group’s
reputation for excellence. In 2018 we achieved Audi
Indooroopilly Metro Dealer of the Year 1st place; Audi
Sutherland Major Metro Dealer of the Year 1st place;
Doncaster BMW Metro Dealer of the Year 1st place; MINI
Garage Doncaster 1st place MINI Excellence Award; Volvo
Cars Parramatta Major Metro Dealer of the Year 1st place.
The Board is committed to delivering excellence in
governance. This year our Group made significant progress
in the areas of corporate governance, people, culture
and diversity. We adopted a risk appetite statement,
Compliance and Risk Management Framework and data
breach response plan. Our gender diversity survey indicated
positive attitudes towards creating a more gender diverse
workplace at Autosports Group. We built on this with five
gender diversity think tanks conducted nationally during the
year and voluntarily completed our first Workplace Gender
Equality Agency report for our Dealership division.
We invested significantly in the development and rollout of
the Salesforce customer relationship management platform
to better manage customer data and deliver analytics back
to the business to drive revenue growth.
We are pleased with our results despite an overall
challenging market in FY2018, and we believe Autosports
Group is positioned for further growth in FY2019.
We will continue to build our market share in new vehicle
sales in the prestige and luxury segments. In addition, we
will focus on the strong profit margin areas in aftersales
including parts, service and collision repair delivering greater
earning diversity. We will also continue to streamline our
operations and capitalise on post-acquisition synergies.
We see market conditions for consolidation as improving
with an increasing number of high-quality acquisition
opportunities at sensible valuation multiples.
Finally, we would like to thank our Board and our employees
for their continuing dedication and operational excellence
during the Financial Year. We are confident that we continue
to have the right management and strategy in place and
look forward to discussing these results at our AGM in
November 2018.
Yours faithfully,
Tom Pockett
Nick Pagent
Independent Chairman
Chief Executive Officer
2
Autosports Group | Annual Report 2018
Chairman and CEO’s Letter
3
Key facts
39
business
operating in
New South
Wales,
Queensland
and Victoria
6
Dealer
of the
Year /
Excellence
awards in
2018
Since listing, Autosports Group pursued
a clear and focused strategy evenly balanced
between acquisitions, organic and greenfields growth
37,780
cars sold
1,336
employees
Established
2006
15
prestige
and luxury
brands
represented
4
Autosports Group | Annual Report 2018
Key facts
5
Highlights
Autosports Group dual strategy concentrates on luxury and
prestige brands and the resilient major East Coast markets
2017
2018
September
• Launched Volvo Rushcutters Bay greenfield
dealership in Sydney’s Eastern Suburbs
November
• Acquired landmark metropolitan BMW dealership;
Melbourne BMW incorporating locations at
Southbank and Kings Way
January
• Launched new Autosports Group headquarters
and training facility in Leichhardt, Sydney
February
• 5 Dealer of the Year awards and MINI Excellence
award
April
• Acquired Canterbury BMW in Sydney being the
Group’s first BMW dealership in NSW
August
• Declared final dividend of 4.8 cents per share (9.0
cents per share FY18 total)
September
• Launch of new luxury Maserati and Bentley
dealership on the Gold Coast
November
• Expected launch of MINI Canterbury greenfield
6
Autosports Group | Annual Report 2018
Highlights
7
Financial highlights
Normalised
1.75
billion
REVENUE
61.0
million
EBITDA
32.1
million
NPAT1
15.95c
EPS
1. Normalised NPAT exclude amortisation of intangibles of $4.3m.
8
Autosports Group | Annual Report 2018
Statutory
1.69
billion
REVENUE
59.6
million
EBITDA
26.1
million
NPAT
12.99c
EPS
Financial Highlights
9
Directors’ Report
30 June 2018
The Directors present their report, together with the financial statements, on the consolidated entity (‘Autosports Group’or ‘Group’)
consisting of Autosports Group Limited (‘Company’) and the entities it controlled at the end of, or during, the year ended 30 June
2018.
Directors
The following persons were directors of Autosports Group Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Thomas Pockett – Chairman
Nicholas Pagent – Executive director and CEO
Ian Pagent – Executive director
Robert Quant – Non-executive director
Marina Go – Non-executive director
Malcolm Tilbrook – Non-executive director (resigned on 3 July 2017)
Principal activities
During the financial year, the Group’s principal activities were focused on the retail automotive industry. The core business focuses
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.
The Group’s operations comprise of:
• 33 franchised dealerships selling new and used prestige and luxury motor vehicles;
• 2 used motor vehicle outlets, focused primarily on the sale of used prestige and luxury motor vehicles; and
• 4 specialist prestige motor vehicle collision repair facilities.
Brands
The Group represents the following brands and dealerships:
AUTOSPORTS GROUP BRANDS & DEALERSHIPS
6
1
5
1
4
1
Motorrad
2
1
2
1
4
1
2
1
2
1
The number below each brand is represents the number of dealerships held by the Group.
Dividends
On 27 August 2018, the directors declared a fully franked final dividend of 4.8 cents per ordinary share (2017: 4.6 cents), to be paid
on 31 October 2018 to eligible shareholders on the register as at 17 October 2018. When combined with the interim dividend of 4.2
cents per share paid in May 2018, the total dividend based on 2018 earnings is 9.0 cents per share fully franked. The financial effect
of the dividends declared after the reporting date are not reflected in the 30 June 2018 financial statements and will be recognised
in subsequent financial reports.
Operating and Financial Review
How does Autosports Group
generate its income
The Group 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
• the provision of collision repair services
FY2018 Financial Performance
Key Metrics
Statutory
Normalised
Revenue
EBITDA
NPAT
NPATA
EPS
$1.692b
$59.6m
$26.1m
$30.4m
12.99c
$1.754b1
$61.0m2
$32.1m3
$31.7m4
15.95c
1. Movement to normalised revenue represents Original Equipment Manufacturer (‘OEM’) bonuses
received which are included in cost of goods sold for statutory reporting purposes.
2. Movement to normalised earnings before interest, tax, depreciations and amortisation (‘EBITDA’) relates
to add back of one-off acquisition expenses of $1,334,000.
3. Normalised net profit after tax (‘NPAT’) attributable to owners of Autosports Group Limited excludes
amortisation of intangibles of $4,300,000 and one-off acquisition expenses of $1,334,000.
4. Movement to normalised net profit after tax excluding amortisation (‘NPATA’) relates to one-off
acquisition expenses of $1,334,000.
10
Autosports Group | Annual Report 2018
Directors’ Report
11
Directors’ Report (continued)
30 June 2018
The following tables demonstrate the Group’s statutory financial performance normalised to include non-recurring items.
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
Profit before tax excluding non‐recurring items (refer below)
Profit for the period attributable to the owners of Autosports Group Limited
Year ended
30 June
2018
$’000
Period
ended
30 June
2017
$’000
1,692,038
906,080
37,445
38,779
26,102
18,423
29,159
12,198
Comments
The profit for the Group after providing for income tax and non-controlling interest amounted to $26,102,000 (2017:$12,198,000).
The profit for the year was impacted by one-off items associated with acquisition expenses as follows:
Statutory profit after tax attributable to the owners of Autosports Group Limited
Add: Non-controlling interest1
Add: Income tax expense
Profit before income tax expense
Add: Acquisition expenses2
Add: IPO listing expenses
Add: Employee gift offer of shares
Add: Director gift offer of shares
Profit before tax excluding non-recurring items
Year ended
30 June
2018
Year ended
30 June
2018
$’000
26,102
332
11,011
$’000
12,198
190
6,035
37,445
18,423
-
1,334
-
-
6,155
3,828
503
250
38,779
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 of loss in relation to acquisition costs (accounting and legal) and optimisation of workforce attached to
acquisition.
Operational overview
Growth
Since listing Autosports Group has pursued a clear and focused strategy evenly balanced between acquisitions, organic and
greenfield growth.
In the financial year, the Group acquired BMW and MINI Southbank, BMW and MINI Kingsway, Motorrad Southbank and BMW
Melbourne Body Shop. This acquisition consolidated the Group’s representation with the luxury brands of BMW, BMW Motorrad,
MINI and ALPINA. Furthermore, it consolidated Autosports Group’s move into the Victorian market, which commenced in August
2016 with the acquisition of Volvo Cars Brighton and in April 2017 the acquisition of BMW Doncaster and BMW Bundoora.
The Group expanded its BMW footprint to New South Wales acquiring Canterbury BMW in Sydney’s inner South-West in April 2018.
The financial year saw continued activity in greenfields growth for the Group. In September 2017 Autosports Group expanded its
Volvo representation with the opening of Volvo Rushcutters Bay in Sydney’s Eastern Suburbs. Gold Coast Bentley and Maserati is
nearing the end of its showroom development and is scheduled to open in October 2018 in Southport. The Group also received
approval for a greenfields MINI franchise at Canterbury. Canterbury MINI Garage is scheduled to open in November 2018.
The above activity has further diversified our brand presence across the luxury and prestige segments.
A number of facilities were upgraded during the financial year including Audi at Five Dock and Indooroopilly and Volvo Parramatta.
A second service facility opened in Leichhardt for Volvo and Fiat customers and allowing for increased service capacity at the
original Leichhardt facility for Volkswagen service. The Lamborghini service department relocated to a larger location in Five Dock to
accommodate the service demand the Group expects to see for the popular Huracan and Urus models. In Queensland, Mercedes
Benz Toowong upgraded its AMG facilities and Mercedes Benz Macgregor refurbished its showroom to cater for its new range of
commercial vans.
During the financial year the Group purchased the property where the Mercedes Benz Macgregor dealership is located. It also
entered into an agreement to purchase the adjoining property (scheduled to settle in November 2018).
The Group performed well in the luxury and prestige segments despite an overall lagging new vehicle market.
Market conditions
Market conditions during the financial year were challenging seeing only modest growth in the total new vehicle sales market
across the Eastern Seaboard where the Group operates and a decline in some States. Victoria saw the most growth at 3.4%
against the prior year followed by Queensland with 2.7%. In New South Wales new vehicle sales fell 2.7% compared to 2017. The
bulk of Autosports Group’s acquisition led growth was in Victoria with BMW and MINI.
The most dominant market theme in new vehicles has been the substantial fall in some of the main volume brands. New vehicle
sales for Holden and Ford fell 22.6% and 10.5%, respectively against the prior year.
SUV models continue an upward trend increasing by 25,000 units (10.7%) in the 6 months to 30 June 2018 after ending the
calendar year to 31 December 2017 up 24,658 units (5.6%). SUV models’ share of the total new vehicle market has increased to
43.1% from 38.9%. Autosports Group is well placed to take advantage of this growing market with the brands that the Group
represents having increased their share of the SUV market from 27.3% to 29% over the 6 months to 30 June.
Operational excellence
Autosports Group strives to consistently deliver excellence. In 2018, the Group achieved:
• Audi Indooroopilly 1st place Audi Metro Dealer of the Year;
• Audi Centre Sutherland 1st place Major Metro Dealer of the Year;
• Volvo Cars Sydney 1st place Major Metro Dealer of the Year;
• Doncaster BMW 1st place Major Metro Dealer of the Year;
• MINI Garage Doncaster MINI Excellence Award (Group 2); and
• Volvo Cars Parramatta 2nd Place Major Metro Dealer of the Year.
12
Autosports Group | Annual Report 2018
Directors’ Report
13
Directors’ Report (continued)
30 June 2018
Integration and centralisation of activities
Autosports Group has acquired numerous businesses since listing. A vital element of acquisitive growth is the ability to integrate
these businesses into the broader Autosports Group network.
The Group’s strategy is to develop lean and centralised head-office support at one location backed by a corporate branch in each
State. This was achieved with the development of a new national head-office at Leichhardt which accommodates the Group’s
management team, finance, marketing, human resources and legal functions. The Group also centralised its marketing, accounting
and administration teams in Victoria and Queensland.
These internal restructures have resulted in efficient use of resources and cost reductions of approximately $1.5m. In FY2019 the
Group will focus on further cost saving and integration initiatives across finance and payroll.
People and diversity
Autosports Group proudly employs 1,336 people from Capalaba in Queensland to Bundoora in Victoria. During the financial year the
Group appointed a new national role, ‘Manager – People, Culture and Strategy’. This year the Group conducted a Gender Diversity
Survey finding that most employees felt that there was equal opportunity for both men and women at Autosports Group. More
than 50% of those surveyed felt that having a more gender balanced workplace was personally important to them.
After collecting the data from the Gender Diversity Survey, five think tanks were conducted across Queensland, New South Wales
and Victoria. The think tanks brought together a diverse group of employees to discuss gender diversity hurdles, how the Group
compares to its competitors and other industries and what the Group can do to improve gender balance.
According to the Workplace Agenda Equality Agency (WGEA) Report prepared for the financial year, Autosports Group’s gender
composition was 18.6% females and 81.4% males. 58.3% of employees awarded promotions were women and 41.7% were men.
Of this, 53.3% of all manager promotions were awarded to women and 66.7% of all non-manager promotions were awarded to
women. This report covers 1,245 employees in the Car Retailing industry (ANZSIC Code 3911) out of a total of 1,336 employees.
The full WGEA Report is available on the Group’s website at http://investors.autosportsgroup.com.au/investors/?page=corporate-
governance. The executive team will continue its focus on gender diversity in FY2019.
Marketing and technology
Over the past couple of years the Group has invested significantly in the development and rollout of the Salesforce Customer
Relationship Management (CRM) platform and improving its digital footprint. This investment has enabled the Group to better
manage customer data and has empowered the marketing team to deliver insights back to the business which are driving positive
business outcomes. In November 2017 the Group invested in building an in-house digital marketing function which now consists of
three digital specialists that are providing strategy and support for the Group. The Group will continue to invest in strengthening its
digital platforms and using these to deliver increased vehicle and service sales and positive customer experiences.
Giving program
Community giving is at the core of Autosports Group’s values. Autosports Group is pleased to have formally introduced a three-
tiered Giving Program. The Group’s support of the Audi, Mazda and Honda Foundations, have helped leading charities such as The
Smith Family and RUOK Day. The Group’s dealerships have supported many deserving charities during the financial year, some of
which include: Australian Mitochondrial Disease Foundation; Royal Women’s Hospital; MS Society; St Vincent’s Hospital Curran
Foundation; Food 4 Thought; The Ireland Funds Australia; Kids with Cancer Foundation; Mater Foundation; Hotels with Hearts and a
number of Australian schools and sporting teams.
Likely developments and expected results of operations in future years
Organic growth will comprise:
• expansion of the Group’s wholesale used vehicle business, Prestige Auto Traders, into the Victorian market;
• growth of back-end services (e.g. servicing and sale of motor vehicle spare parts);
• driving aftersales demand through consolidating parts warehousing and distribution logistics;
• capacity expansion at existing dealerships to meet demand; and
• establishment of new greenfield dealerships when the mix of brand, location and demand is right.
Acquisition growth will focus on:
• opportunities both in the Group’s existing brands and in prestige and luxury brands where it does not currently have a presence;
and
• collision and repair acquisitions to expand the Group’s OEM approved repairer facilities to include more brands within its
portfolio.
Other focus areas include:
launch Bentley and Maserati on the Gold Coast;
launch MINI Canterbury greenfield;
•
•
• deliver improvements in synergies and logistics across all businesses;
• continue focus on high-quality and well-priced acquisition targets on the East Coast in luxury and prestige brands;
• explore organic growth opportunities in used cars by utilising Autosports Group’s used car hub model and taking advantage of
the Group’s growth in supply of vehicle trade-ins and business to business opportunities;
• continue to improve the performance of greenfield sites to increase margins and bring these greenfield businesses through to
maturity;
• progress gender diversity initiatives;
•
review work health and safety practices and procedures; and
•
review and monitor environmental impact.
Risk and Governance
During the financial year, the Group formalised and adopted its Risk Management and Compliance Framework. Autosports Group
recognises that risk management is an essential element in the framework of good corporate governance.
The Group identified its key risk areas as:
OEM risk – The Group’s supportive and collaborative approach to its relationships with OEMs has cultivated the Group’s
excellent reputation amongst OEMs.
Work Health and Safety (‘WHS’) – The Group has a zero risk tolerance for death and total and permanent disablement of its
staff and customers. During the financial year the Group introduced Safety Navigator to centralise the dissemination of safety
information and reporting across all dealerships and business units in each State. Autosports Group will continue its focus on
WHS in the 2019 financial year.
Reliance on key personnel – During the financial year the Group implemented a succession plan and training initiatives to
progress selected employees across the business.
Credit risk – The Group will continue to ensure it adheres to the terms of financier floorplan terms, meets the requirements of
financier floorplan audits as well as monitor interest rate fluctuations.
Regulatory compliance – The Group is prepared for the introduction of flex commission reforms and does not expect the
changed model to have a significant impact on revenue streams for point of sale finance products. The Group has implemented
procedures under the Takata airbag recall and works closely with its OEMs in this regard.
Changes to market trends – The Group continues to monitor market trends to prepare itself for changes to consumer
preferences and new technologies.
14
Autosports Group | Annual Report 2018
Directors’ Report
15
Directors’ Report (continued)
30 June 2018
Environmental regulation
The Group is committed to continually improving its operations to deliver better environmental outcomes. The Group is subject to
environmental regulation and this year has implemented 15 minimum environmental standards at its dealerships and service and
panel shops. These standards range from changes to LED lighting, use of recycling facilities and recyclable materials, use of water
restriction fittings; monitoring air conditioner use and using low emission fuels. The Group will further review its environmental
practices in FY2019.
Significant change in the state of affairs
The key changes to the business during the year included the Melbourne BMW and Canterbury BMW acquisitions discussed above
and the Group’s entry into the automotive property market with the purchase of a property in Macgregor, Queensland, for the
purpose of automotive retailing. Refer to note 29 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 year.
Matters subsequent to the end of the financial year
Apart from the dividend declared as disclosed above, no other matter or circumstance has arisen since 30 June 2018 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.
Regulatory Change
The Australian Securities and Investments Commission (ASIC) reforms relating to flex commissions take effect in November 2018.
These reforms impose restrictions on the interest rates offered to consumers on the purchase of a motor vehicle. Under the new
model lenders are required to set the interest rate which can be discounted up to 2.0 basis points by the dealer. The Group has
been in discussions with its lenders and is prepared to operate under the new model. No material change to income is expected as
a result of these reforms.
The Australian Competition and Consumer Commission (ACCC) published its report on the new car retailing industry in
December 2017. The key observations arising from the study related to the way consumers enforce their rights under the Australian
Consumer Law, access to information and data for vehicle repair and service and the accuracy of fuel consumption and emissions
performance. The ACCC has recommended that a mandatory scheme should be introduced in Australia for car manufacturers to
share technical service and repair information. Autosports Group will monitor developments in this space.
New South Wales introduced the Modern Slavery Act 2018 (NSW) requiring companies with revenue exceeding $50 million to
publish a modern slavery statement on the occurrence of modern slavery in their supply chain. Similar Commonwealth legislation is
also under review.
In 2018 the ACCC issued a Takata airbag inflator recall notice. The recall requires all defective airbags to be replaced by 31
December 2020. The dealerships have been working closely with OEMs to carry out airbag replacements. The Group has
introduced procedures across its portfolio in relation to the recall.
Current directors
Experience and expertise:
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
Tom 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.
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):
None
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 22 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:
38,951,855 ordinary shares held indirectly (103,389,396 ordinary shares when combined with
Ian Pagent’s holding for the purpose of substantial holder declarations)
Interests in options:
Interests in rights:
None
375,000 LTI performance rights convertible into 375,000 ordinary shares
43,035 STI performance rights convertible into 43,035 to ordinary shares
16
Autosports Group | Annual Report 2018
Directors’ Report
17
Directors’ Report (continued)
30 June 2018
Ian Pagent
Title: Executive Director (appointed on 29 August 2016)
Experience and expertise:
Ian has over 49 years’ experience in the motor vehicle industry across Australia, Asia and the
United States. Between 1988 and 2002, Ian was co-owner and Managing 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:
Non-executive director – Friends of Mater Foundation
Former directorships
(last 3 years):
None
Special responsibilities:
Executive Director
Relevant interests in shares:
64,437,541 ordinary shares held indirectly (103,389,396 ordinary shares when combined with
Nick Pagent’s holding for the purpose of substantial holder declarations)
Interests in options:
Interests in rights:
None
150,000 LTI performance rights convertible into 150,000 ordinary shares
17,388 STI performance rights convertible into 17,388 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 has over 35 years’ experience in professional accounting in advisory and leadership
roles having developed sector expertise in retail automotive and professional services.
His most recent executive roles include Global Leader - Asia Pacific for Grant Thornton
International Limited and CEO of Grant Thornton Australia Limited. As well as sitting on and
chairing a number of private boards, he advises in the areas of strategy development and
organisational change.
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
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 is currently the Chair of the Wests Tigers NRL Club (appointed September 2014),
Non-Executive Director of Energy Australia (appointed April 2017), Non-executive director
of 7-Eleven Stores Pty Ltd (appointed February 2018), Non-executive director of Pro-Pac
Packaging Limited (appointed August 2018), 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. 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 University of New South Wales (‘UNSW’) Alumni Leader and Ambassador.
Other current directorships:
None, other than those listed above.
Former directorships
(last 3 years):
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.
18
Autosports Group | Annual Report 2018
Directors’ Report
19
Directors’ Report (continued)
30 June 2018
Other Key Management and Company Secretary
Aaron Murray
Title: Chief Financial Officer
Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year
ended 30 June 2018, and the number of meetings attended by each director were:
Experience and Expertise:
Aaron has over 21 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.
Relevant interests in shares:
1,650,508 ordinary shares held indirectly
Interests in options:
None
Caroline Raw
Title:
Qualifications:
Company Secretary and General Counsel (appointed
23 February 2018)
Fellow of the Institute of Chartered Secretaries
and Administrators, Bachelor of Laws and Bachelor
of Commerce from Western Sydney University,
Graduate Diploma of Applied Corporate Governance
from Governance Institute
Experience and Expertise:
Caroline Raw has over 13 years’ experience as a corporate lawyer advising listed companies
and funds on initial public offerings (‘IPOs’), capital raising, funds management and mergers
and acquisitions. Prior to joining Autosports Group, Caroline held a senior role at a national law
firm in the equity capital markets and merger and acquisitions practice group. Caroline sat on
the Capital Markets Committee of the Property Council of Australia and has previously acted
as group company secretary and legal counsel for an ASX-listed property funds management
company and an Australian real estate investment trust (‘A-REIT’).
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
10
10
10
10
10
-
10
10
10
10
10
-
6
-
-
6
6
-
6
-
-
6
6
-
7
-
-
7
7
-
7
-
-
7
7
-
* Malcolm Tilbrook resigned on 3 July 2017.
Governance
The Board has adopted a framework of corporate governance, reflected through Autosports Group’s policies and practices.
The Group’s Corporate Governance Statement, which meets the requirements of ASX Listing Rule 4.10.3, can be viewed at:
http://investors.autosportsgroup.com.au/investors/
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 766,340 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 ordinary shares of Autosports Group Limited issued on the exercise of options during the year ended 30 June 2018
and up to the date of this report.
Shares issued on the exercise of performance rights
In August 2018 the Board approved the issue of 10,417 ordinary shares in Autosports Group Limited in relation to the vesting of
employee performance rights. These shares will be issued in September 2018. There were no other ordinary shares issued during
or since the end of the financial year.
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 year, 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 year, indemnified or agreed to indemnify the auditor of the Company
or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any
related entity.
20
Autosports Group | Annual Report 2018
Directors’ Report
21
Directors’ Report (continued)
30 June 2018
Remuneration Report (audited)
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 year by the auditor are
outlined in note 25 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, 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 25 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
Overview
This remuneration report, which is an integral part of the directors’ report, sets out information about the remuneration of
Autosports Group Limited key management personnel ('KMP') for the year ended 30 June 2018. The term ‘key management
personnel’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, including any director (whether executive or otherwise) of the Group.
This Remuneration Report has been audited in accordance with the Corporations Act.
Autosports Group Limited’s Board of Directors has 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 three 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
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
(3) long-term incentive (LTI) – an ‘at risk’ component of remuneration where senior executives are awarded performance rights
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.
which are subject to an earnings per share (EPS) performance condition and a service condition.
The Board believes that this remuneration framework ensures a pay for performance model whereby remuneration outcomes are
linked to Company performance and the long-term interests of Shareholders.
It is important to note that whilst this year’s remuneration report represents remuneration activity over a full 12-month period, last
year’s remuneration report represented remuneration activity from the date of the Company’s incorporation on 29 August 2016.
22
Autosports Group | Annual Report 2018
Remuneration Report
23
Remuneration Report (audited) (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 year
Non-executive director remuneration in FY2019
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
Management fees
Related party leases
Related party loans
Page
25
25
25
25
26
26
28
29
29
29
31
33
34
34
34
34
35
35
35
36
37
37
37
37
1.
Remuneration essentials
What does this report cover?
The directors of Autosports Group Limited (ASG) are pleased to introduce to shareholders the Company’s remuneration report for
the performance period 1 July 2017 to 30 June 2018 (financial year).
Who does this report cover?
This report sets out the remuneration arrangements for the Company’s KMP. Throughout the remuneration report, KMP are referred
to as either senior executives or non-executive directors.
The following table sets out the Company’s KMP for the financial year. All non-executive directors and senior executives held their
positions for the whole of the financial year (unless otherwise indicated).
Non-executive directors
Name
Tom Pockett
Marina Go
Robert Quant
Malcolm Tilbrook1
Position
Chair and independent
non-executive director
Independent non-executive
director
Independent non-executive
director
Independent non-executive
director
1 Mr Tilbrook retired from the Board on 3 July 2017.
Senior executives
Name
Nick Pagent
Position
Managing Director and Chief
Executive Officer (CEO)
Ian Pagent
Executive Director
Aaron Murray
Chief Financial Officer (CFO)
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 the Company and its shareholders.
The People and Remuneration Committee was established at the time of Listing in November 2016 to assist the Board with
these responsibilities. The role of the People and Remuneration Committee is to review key aspects of the Group’s remuneration
structure and arrangements and make recommendations to the Board. In particular, the People and Remuneration 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.
24
Autosports Group | Annual Report 2018
Remuneration Report
25
Remuneration Report (audited) (continued)
Use of remuneration consultants and other advisors
Executive remuneration framework
Prior to Listing on 16 November 2016 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. The Board agreed to maintain this
structure for the first two years from Listing to assess the performance of the executive team on a year on year basis.
Remuneration policy and guiding principles
Executive remuneration
The Company’s remuneration framework is designed to be competitive and to focus senior executives on executing the Group’s
strategy and achieving its 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
Fixed remuneration - Cash
Short-term incentive (at risk) - Equity
Long-term incentive (at risk) - Equity
• Base salary plus
superannuation and other
benefits
• Base salary was formally
benchmarked at the time of
Listing
• Influenced by individual
performance
• Reviewed annually
• STI is subject to performance hurdles
(including NPAT) and other benefits
• The 2018 STI award was also subject to
a culture and values gateway hurdle
• Granted in performance rights
• Vesting subject to an EPS
performance condition
• Performance generally measured over
• 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 Year
Remuneration mix at target for Ian
Pagent for the Financial Year
Remuneration mix at target for Aaron
Murray for the Financial Year
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%
Non-executive director remuneration
In remunerating non-executive directors the Group aims to ensure that it can attract and retain qualified and experienced directors
having regard to:
•
•
•
the specific responsibilities and requirements for the Board;
fees paid to non-executive directors of other comparable Australian companies; and
the size and complexity of the Group’s operations.
Remuneration mix and components
The Group'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.
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 Year
Remuneration mix at maximum
performance for Ian Pagent for the
Financial Year
Remuneration mix at maximum
performance for Aaron Murray for the
Financial Year
LTI, 28.5%
Fixed
REM, 43.0%
STI, 28.5%
LTI, 21.4%
LTI, 21.2%
STI, 21.4%
Fixed
REM, 57.2%
STI, 21.3%
Fixed
REM, 57.5%
26
Autosports Group | Annual Report 2018
Remuneration Report
27
Remuneration Report (audited) (continued)
Company performance
The Group had a solid year and achieved results in line with market expectations. The Group continued to grow organically, as
well as through strategic acquisitions and the opening of an additional greenfield dealership. The Group's remuneration structure
was established to drive these outcomes and, as a result, a total of 72% (2017:81%) 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 since Listing.
Share Performance
Earnings performance
Liquidity
Closing
Share Price
(A$)
Dividend Per
Share (c)
Basic EPS
(c)
EBIT
$M
NPAT
$M
ROE
%
Cash flow from
Operations
$M
Interest
coverage
(EBITDA)
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 and other benefits associated with the provision and use of motor vehicles.
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
Autosports Group.
20181
1 Jul 2017 –
30 Jun 2018
2017
16 Nov 17 –
30 Jun 17
1.70
9.0
12.99
50.7
26.4
5.3
46.1
4.51
Short-term incentive
Overview of the STI plan
2.09
4.6
6.07
23.8
12.4
2.5
24.2
5.25
Participation
1
2018 is a full year from 1 July 2017 to 30 June 2018 whereas 2017 is the period from Listing 16 November 2016 to 30 June 17.
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.
Performance period
1 July 2017 to 30 June 2018.
STI opportunity
The STI opportunities of the senior executives are set out below:
Nick Pagent
Ian Pagent
Aaron Murray
Level of performance
At target
At 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
Each senior executive’s STI opportunity is assessed against individually weighted financial and
non-financial performance hurdles.
In the FY2018 performance period, if performance is assessed as below target, no STI is
awarded. If performance is assessed to be between target and maximum, a straight line pro-
rata STI award is awarded.
For the FY2019 Performance Period, the Board has determined that performance will be
assessed from 95% of target whereby if performance is determined to be between 95%
and 100% of target, senior executives will be rewarded with 30% of the relevant individually
weighted STI opportunity. As with FY2018, if performance is assessed to be between target
and maximum, a straight line pro-rata STI award is awarded.
Also for the FY2019 performance period, the Board has determined that all performance
matrices will exclude new or unbudgeted acquisitions.
Performance conditions
Performance conditions for the initial grant include:
• a “gateway hurdle” of upholding the Company’s culture and values. If the gateway hurdle is
not met, no STI is awarded.
• in addition, each senior executive has an individualised balanced scorecard that determines
their STI awards. These scorecards incorporate individually weighted financial and non-
financial performance hurdles determined by the Board annually. The financial hurdles
primarily focus on the financial objectives of the Group and include targets measured against
Revenue, EBITDA, NPBT and NPAT. The non-financial performance hurdles are aligned to
each senior executive’s role and include growth, stakeholder relationships, 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.
28
Autosports Group | Annual Report 2018
Remuneration Report
29
Remuneration Report (audited) (continued)
Measurement of performance
conditions
Delivery of STI awards
Performance rights
Number of performance rights
to be granted
Following the end of the financial year, 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 2018 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:
Percentage of STI awarded and forfeited for senior executives during the financial year
Details of the STI outcomes received by senior executives during the financial year are outlined in the table below.
Senior executives
Year
Minimum
potential STI
bonus
Maximum
potential STI
bonus ($)1
STI award
($)2
% of target
STI award
granted
Nick Pagent
Ian Pagent
Aaron Murray
2018
2017
2018
2017
2018
2017
-
-
-
-
-
-
450,000
276,174
180,000
110,465
168,750
103,562
129,115
103,285
75,806
41,732
48,568
29,918
40%
85%
70%
85%
40%
65%
% of
maximum
STI award
granted
% of
maximum
STI award
forfeited
29%
37%
42%
38%
29%
29%
71%
63%
58%
62%
71%
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 2018 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 2019, subject to continued service. As at 30 June 2018, the STI award has been calculated in accordance with
AASB2 ('Share-based Payments').
• if they resign or are summarily terminated, all of their rights will lapse; or
• if they cease employment in any other circumstance, 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.
Long-term incentive
Set out below is an explanation of the terms and conditions applying to the LTI awards for senior executives during the
performance period.
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.
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.
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.
Participation
Instrument
Number of performance rights
to be granted
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.
The number of performance rights granted to each Senior Executive will be determined by
dividing the LTI award opportunity (calculated as a percentage of the Senior Executive’s base
salary) 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.
30
Autosports Group | Annual Report 2018
Remuneration Report
31
Remuneration Report (audited) (continued)
Performance conditions
Performance rights will be tested against the compound annual growth rate (CAGR) of the
Group’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 the executive’s performance rights vest, the
following treatment will apply, unless the Board determines otherwise:
• if the executive resigns or is summarily terminated, all their performance rights will lapse; or
• if the executive ceases 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.
Executive service agreements
Each of the senior executives is party to a written executive service agreement with the Company which was entered into prior to
Listing. The key terms of these agreements are set out below.
Duration
Base salary
Periods of notice required to
terminate and termination
payments
Ongoing term
Nick Pagent – $600,000 per annum base salary plus other benefits valued at $79,950.
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.
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
reported 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.
The Board agreed to retain the remuneration structure recommended by Egan Associates and
no other advice was provided in relation to executive remuneration during the Performance
Period. The Board has agreed to review the arrangements with an independent consultant in
FY2019.
32
Autosports Group | Annual Report 2018
Remuneration Report
33
Remuneration Report (audited) (continued)
3.
Non-executive director remuneration
4.
Statutory remuneration disclosures
Principles of non-executive director remuneration
As outlined in section 2, in remunerating non-executive directors, the Group aims to ensure that it can attract and retain qualified
and experienced directors having regard to:
•
•
•
the specific responsibilities and requirements for the Board;
fees paid to non-executive directors of other comparable Australian companies; and
the size and complexity of the Group’s operations.
Non-executive director remuneration in the financial year
Board fees
The current non-executive director fee pool has been set at $800,000 per annum. The non-executive directors’ fees are $200,000
for the Chair and $100,000 for other non-executive directors (including superannuation) per annum.
Directors may be remunerated for reasonable travel and other expenses incurred in attending to the Group’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. The Group does
not pay benefits (other than statutory entitlements) on retirement to non-executive directors.
Committee fees
Senior executive and non-executive director remuneration
The following table sets out the statutory disclosures in accordance with the Accounting Standards for the financial year.
Nick Pagent
Ian Pagent
Aaron Murray
Tom Pockett
Marina Go
Robert Quant
Short-term employee benefits
Post-employment
benefits
Share-based payments
Total
Cash salary/
Fees $
Non-monetary
benefits $2
Superan nuation
benefits $
Rights $3
Shares $4
$
599,999
367,885
392,307
246,538
375,000
230,173
182,648
105,374
109,508
52,853
109,508
64,981
-
64,960
59,950
28,963
60,980
36,221
60,760
36,984
-
-
-
-
-
-
-
-
21,613
32,756
20,049
21,959
20,049
20,496
17,351
10,010
10,403
5,021
10,211
5,007
-
5,005
300,380
154,368
144,312
62,164
112,792
49,073
-
-
-
-
-
-
981,942
583,972
617,648
366,882
568,601
336,726
-
-
-
-
-
-
-
-
-
199,999
100,000
215,384
-
119,911
50,000
107,874
-
119,719
50,000
119,988
-
-
50,000
119,965
Year1
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Non-executive directors are paid Committee fees of $20,000 (including superannuation) per annum for each Board Committee of
which they are a Chair. Directors do not receive additional fees for being a member of a Board Committee.
Malcolm Tilbrook5
Non-executive director remuneration in FY2019
In FY2019, the Board has agreed to review the base fees and terms of engagement for non-executive directors.
1. 2018 is a full year from 1 July 2017 to 30 June 2018 whereas 2017 is the period from incorporation 29 August 2016 to 30 June 2017.
2. 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.
3. The value of rights granted to the senior executives is based on the fair value estimate on grant date.
4. 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. The shares are not subject to any vesting conditions in order to preserve the directors' impartiality.
5. Malcom Tilbrook resigned on 3 July 2017.
There were no termination benefits provided in the financial year.
Movements in performance rights held by senior executives
STI performance rights for the 2017 award were granted on 20 November 2017. Under this award, 43,035 performance rights were
granted to Nick Pagent, 17,388 performance rights were granted to Ian Pagent and 12,465 performance rights were granted to
Aaron Murray.
The LTI performance rights for the 2018 award were granted on 20 November 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.
The following table shows the changes in performance rights granted to senior executives during the financial year. The
non-executive directors do not hold performance rights. The rights referred to in the table below include performance rights under
the STI plan and LTI plan.
34
Autosports Group | Annual Report 2018
Remuneration Report
35
Remuneration Report (audited) (continued)
Rights
held at
1 July 2017
Rights granted
during Reporting
Period
Rights exercised
during Reporting
Period
Rights resulting
from any other
change
Rights
held at
30 June 2018
Management fees
5.
Transactions with KMP
Nick Pagent
STI
LTI
Total
Ian Pagent
STI
LTI
Total
Aaron Murray
STI
LTI
Total
-
187,500
187,500
-
75,000
75,000
70,312
70,312
43,035
187,500
230,535
17,388
75,000
92,388
12,465
70,312
82,777
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,035
375,000
418,035
17,388
150,000
167,388
12,465
140,624
153,089
There were no rights vested and or exercisable as at 30 June 2018.
KMP shareholdings
During the financial year the Group received property management fees on a salary allocation basis for administration and
management of properties owned by lan & Nick Pagent. The Group received management fees in relation to shared service
technicians & 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
Related party leases
Service Technicians,
Parts Interpreters & Administration services
The Company received
management fees $
11,124
24,288
11,124
11,124
23,268
11,124
90,000
182,052
The following table outlines the movements in KMP ordinary shareholdings in the Company (including their related parties) for the
financial year.
During the financial year the Group had operating lease agreements on commercial terms with various entities owned by Ian &
Nicholas Pagent.
Non-executive directors
Tom Pockett
Marina Go
Robert Quant
Malcolm Tilbrook
Senior executives
Nick Pagent
Ian Pagent
Aaron Murray
1. On market purchase of shares
Held at
1 July 2017
Received
as part of
remuneration
Additions
Other net
changes1
Held at
30 June 2018
166,667
20,833
62,499
41,666
38,749,199
64,395,541
1,650,508
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
166,667
20,833
62,499
41,666
202,656
38,951,855
42,000
64,437,541
-
1,650,508
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 $
834,210
279,360
653,928
488,639
952,946
2,291,030
5,500,114
1. During the financial year an entity owned by Ian Pagent and Nick Pagent acquired the freehold title of Toowong Mercedes-Benz & Toowong
Mazda premises. The terms of the existing lease have been assumed.
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 2018, there was
an amount outstanding of $505,319 which is recognised in the financial statements as a current liability. There is no interest
payable on the loan.
End of Remuneration Report
36
Autosports Group | Annual Report 2018
Remuneration Report
37
Directors’ Report (continued)
Auditor’s Independence Declaration
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 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
27 August 2018
Nick Pagent
Chief Executive Officer
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
27 August 2018
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 year ended 30 June 2018, 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.
Member of Deloitte Touche Tohmatsu Limited
25
38
Autosports Group | Annual Report 2018
Auditor's Independence Declaration
39
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2018
Consolidated Statement of Financial Position
As at 30 June 2018
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 year/period
Other comprehensive income for the year/period, net of tax
Total comprehensive income for the year/period
Profit for the year/period is attributable to:
Non-controlling interest
Owners of Autosports Group Limited
Total comprehensive income for the year/period is attributable to:
Non-controlling interest
Owners of Autosports Group Limited
Basic earnings per share
Diluted earnings per share
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
Note
5
$’000
1,692,038
$’000
906,080
46,639
8,171
(1,472,690)
(771,635)
6
6
7
20
20
32
32
(121,435)
(8,951)
(29,467)
(1,334)
-
(54,130)
(13,225)
37,445
(11,011)
26,434
-
(62,852)
(4,613)
(14,304)
(3,828)
(6,155)
(27,021)
(5,420)
18,423
(6,035)
12,388
-
26,434
12,388
332
26,102
26,434
332
26,102
26,434
Cents
12.99
12.95
190
12,198
12,388
190
12,198
12,388
Cents
6.07
6.06
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
Income tax payable
Employee benefits
Deferred revenue
Borrowings
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 2018
30 June 2017
Note
$’000
$’000
8
9
10
11
12
7
13
7
14
15
16
17
18
19
20
14,302
104,166
352,658
4,940
476,066
59,895
535,203
7,268
602,366
1,078,432
75,439
5,721
11,012
4,547
414,013
510,732
65,530
1,488
67,018
577,750
500,682
14,903
70,366
256,213
5,519
347,001
36,240
499,678
3,897
539,815
886,816
65,361
4,980
7,530
3,724
287,477
369,072
23,536
2,534
26,070
395,142
491,674
475,637
475,637
894
20,612
497,143
3,539
500,682
392
12,198
488,227
3,447
491,674
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
40
Autosports Group | Annual Report 2018
Consolidated Statement of Financial Position
41
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Issued capital
Share-based
payments
reserves
$’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 18)
Share-based payments (notes 6 and 34)
Non-controlling interest arising on business
combinations
-
-
-
-
475,637
-
-
Balance at 30 June 2017
475,637
Consolidated
Balance at 1 July 2017
Profit after income tax expense for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (notes 6 and 34)
Dividends paid to non-controlling interest
Dividends paid (note 21)
Balance at 30 June 2018
Issued capital
$’000
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
$’000
12,198
26,102
-
26,102
-
-
(17,688)
20,612
$’000
3,447
332
-
332
-
(240)
-
3,539
$’000
491,674
26,434
-
26,434
502
(240)
(17,688)
500,682
-
-
-
-
-
392
-
392
$’000
392
-
-
-
502
-
-
Share-based
payments
reserve
Retained
profits
Non-
controlling
interest
Total equity
475,637
894
Cash flows from operating activities
Profit before income tax expense for the year/period
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Share-based payments
Interest received
Interest and other finance costs
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease/(increase) in other operating assets
Increase in trade and other payables
Increase in employee benefits
Increase/(decrease) in deferred revenue
Increase in bailment finance
Increase/(decrease) 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
Proceeds from release of 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
Dividends paid to pre-IPO Autosports Group shareholders
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year/period
Cash and cash equivalents at the end of the financial year/period
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
Note
$’000
$’000
37,445
18,423
6
6
6
29
18
18
33
33
21
21
8,951
58
502
(58)
13,225
60,123
(33,800)
(46,639)
(159)
9,452
556
823
82,957
(392)
72,921
58
(13,225)
(13,636)
46,118
(41,920)
(20,524)
-
920
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)
-
(61,524)
(148,752)
-
-
41,290
(8,797)
(17,688)
-
14,805
(601)
14,903
14,302
159,380
(9,662)
21,457
(5,973)
-
(25,774)
139,428
14,903
-
14,903
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
42
Autosports Group | Annual Report 2018
Consolidated Statement of Cash Flows
43
Notes to the Consolidated Financial Statements
30 June 2018
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 year (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 financial statements were authorised for issue, in
accordance with a resolution of directors, on 27 August 2018.
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. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
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 year.
Accounting period
The financial statements cover the financial year from 1 July
2017 to 30 June 2018. The comparatives are presented from 29
August 2016, the date of incorporation of the Company, 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
settlement of liabilities in the ordinary course of business. The
statement of financial position reflects an excess of current
liabilities over current assets of $34,666,000 as at 30 June 2018
(2017: $22,071,000).
The directors have reviewed the cash flow forecast for the
Group through to 31 August 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:
• An amount of $4,547,000 (2017: $3,724,000) is included in
current liabilities which relate to deferred revenue and no
cash outflow is expected in relation to this amount;
• The Group generated $46,118,000 (2017: $24,227,000) of
cash flow from operating activities;
• During the year the Group used $18,800,000 of available
cash to fund business acquisitions and $3,000,000 in capital
improvements;
• As at 30 June 2018, the Group has undrawn finance
facilities amounting to $32,737,000 (2017: $36,509,000); and
• The Group has cash and cash equivalents amounting to
$14,302,000 as at 30 June 2018 (2017: $14,903,000).
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 35.
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 2018 and the results of all subsidiaries for the year
then ended.
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.
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.
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 delivered to the customer 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.
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.
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.
44
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
45
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
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:
• 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.
Trade and other receivables
Inventories
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.
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.
Current and non-current classification
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
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.
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.
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
Property, 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
(excluding land) over their expected useful lives as follows:
Buildings
Plant and equipment
Furniture, fixtures and fittings
Motor vehicles
Leasehold improvements
40 years
3 - 20 years
3 - 20 years
4 - 8 years
Shorter of unexpired period
of the lease or the estimated
useful life
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.
46
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
47
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
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 year
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.
recognised as inventory with the corresponding floor plan
liability owing to the finance providers. Floor plan 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.
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
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.
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
Vehicles secured under bailment plans are provided to the
Group under bailment agreements with floor plan loan
providers. The Group obtains title to the vehicles immediately
prior to sale. Vehicles financed under bailment plans are
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 high
48
Autosports Group | Annual Report 2018
quality corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash
outflows.
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.
Assets and liabilities measured at fair value are classified,
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of
the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value
of an asset or liability from one period to another, an analysis
is undertaken, which includes a verification of the major
inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
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
year 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
Notes to the Consolidated Financial Statements
49
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
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.
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 year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax (‘GST’) 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.
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.
Comparatives
Comparatives in the notes to the financial statements have
been realigned to the current period presentation. There has
been no effect on the profit for the year.
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 2018. 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. 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 recognition in
which case the lifetime ECL method is adopted. The standard
introduces additional new disclosures. The Group will adopt this
standard from 1 July 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. The Group currently does not anticipate
any material provisioning for expected credit losses related to
its receivables having regard to historical changes in credit risk
since initial recognition to reporting date. 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, with the Group adopting
this standard from 1 July 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.
Management’s assessment of the new standard are as follows:
Warranties: Used car warranty provided to customers is a
performance obligation to repair or replace the product if
necessary during the warranty period. As per AASB 15 the
Group is required to allocate a portion of the total transaction
price to the performance obligation. The impact of AASB 15
will result in deferral of revenue associated with the sale of
warranties, which will need to be recognised over the life of the
warranty.
The Group performed an assessment of the impact of the new
standard and based on the results the standard will not have
a material impact on the financial statements. The Group will
adopt the standard from 1 July 2018 and the comparatives will
not be restated.
50
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
51
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 2. Significant accounting policies (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods
beginning on or after 1 January 2019. 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.
The Group expects to adopt this standard from 1 July 2019 and
the impact of its adoption will be that operating leases, such as
those detailed in note 27, will be brought onto the statement
of financial position with a corresponding liability. The actual
amount will depend on the operating leases held on the date of
adoption and any transitional elections made.
IASB revised Conceptual Framework for
Financial Reporting
The revised Conceptual Framework has been issued by the
IASB and is applicable for annual reporting periods on or after
1 January 2020. The Australian equivalent is yet to be published.
The application of the new definition and recognition criteria
may result in future amendments to several accountings
standards. Furthermore, entities who rely on the conceptual
framework in determining their accounting policies for
transactions, events or conditions that are not otherwise dealt
with under Australian Accounting Standards may need to revisit
such policies. The Group will apply the revised conceptual
framework from 1 July 2020 and is yet to assess its impact.
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.
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.
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
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Furniture, fixtures and fittings
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
Floor plan 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
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$’000
$’000
1,027,382
416,176
105,387
96,309
13,884
25,810
561,592
213,648
55,486
46,817
7,509
15,984
1,684,948
901,036
58
7,032
7,090
46
4,998
5,044
1,692,038
906,080
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$’000
$’000
1,819
1,544
997
794
823
543
4,673
2,342
4,278
8,951
-
-
502
502
10,968
2,257
13,225
2,271
4,613
503
250
392
1,145
4,853
567
5,420
27,204
18,217
9,788
7,142
1,028
1,569
52
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
53
Notes to the Consolidated Financial Statements (continued)
30 June 2018
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/(increase) 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
Adjustments from pre-acquisition period
Current year tax losses not recognised
Prior year temporary differences not recognised now recognised
Income tax expense
Amounts credited directly to equity¹
Deferred tax assets
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$’000
$’000
14,377
(3,366)
11,011
5,162
873
6,035
(3,366)
873
37,445
11,234
32
151
-
-
11,417
81
(487)
11,011
18,423
5,527
71
128
1,148
(839)
6,035
-
-
6,035
Note 7. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised other than in equity:
Tax losses
Impairment of receivables
Property, plant and equipment
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:
Consolidated
Unamortised transaction costs on share issue
Year ended
30 June 2018
Period ended
30 June 2017
$’000
$’000
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss
-
(2,899)
Credited to equity
¹ Deferred tax assets credited directly to equity 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.
Additions through business combinations (note 29)
Closing balance
Provision for income tax
Provision for income tax
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$’000
$’000
1,390
150
1,109
3,978
276
164
3,029
1,225
(168)
-
(927)
(4,763)
64
5,527
1,741
7,268
3,897
3,366
-
5
7,268
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
Consolidated
30 June 2018
30 June 2017
$’000
$’000
5,721
4,980
54
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
55
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 8. Current assets – trade and other receivables
Trade receivables
Other receivables
Less: Provision for impairment of receivables
Consolidated
30 June 2018
30 June 2017
$’000
$’000
98,448
5,865
(147)
104,166
65,633
4,982
(249)
70,366
Impairment of receivables
The Group has recognised a gain of $102,000 in profit or loss in respect of reversal of impairment of receivables for the year ended
30 June 2018 (2017: loss of $315,000).
The ageing of the impaired receivables provided for above are as follows:
90 to 120 days overdue
Over 120 days overdue
Movements in the provision for impairment of receivables are as follows:
Opening balance
Provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Past due but not impaired
Consolidated
30 June 2018
30 June 2017
$’000
$’000
39
108
147
66
183
249
Consolidated
30 June 2018
30 June 2017
$’000
249
-
-
(102)
147
$’000
-
315
(66)
-
249
Customers with balances past due but without provision for impairment of receivables amount to $5,565,000 as at 30 June 2018
($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
Consolidated
30 June 2018
30 June 2017
$’000
2,354
3,211
5,565
$’000
3,367
3,395
6,762
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
Note 10. Current assets – other assets
Prepayments
Security deposits
Other cash deposits
Consolidated
30 June 2018
30 June 2017
$’000
$’000
289,706
(3,891)
285,815
49,423
(866)
48,557
16,901
(502)
16,399
1,887
200,410
(3,018)
197,392
46,497
(583)
45,914
12,090
(351)
11,739
1,168
352,658
256,213
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,855
4
3,081
4,940
1,813
924
2,782
5,519
Consolidated
30 June 2018
30 June 2017
$’000
$’000
Note 11. Non-current assets – property, plant and equipment
Land and buildings - at cost¹
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
12,086
27,271
(2,757)
24,514
14,747
(2,739)
12,008
7,442
(1,523)
5,919
2,096
(430)
1,666
3,702
-
18,605
(794)
17,811
8,616
(823)
7,793
5,398
(543)
4,855
1,553
(182)
1,371
4,410
59,895
36,240
56
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
57
¹
Land and buildings represents owner occupied premises at 601 Mains Road, Macgregor, Queensland from which Macgregor Mercedes-Benz
trades from.
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 11. Non-current assets – property, plant and equipment (continued)
Note 12. Non-current assets – intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Leasehold
improvements
Plant and
equipment
Furniture,
fixtures
and
fittings
$’000
$’000
$’000
Land and
buildings
$’000
Consolidated
Balance at 29 August 2016
Additions
Additions through business
combinations (note 29)
Depreciation expense
Balance at 30 June 2017
-
-
-
-
-
Additions
12,086
Additions through business
combinations (note 29)
Disposals
Transfers in/(out)
Depreciation expense
-
-
-
-
Balance at 30 June 2018
12,086
-
4,837
13,768
(794)
17,811
2,000
624
-
5,898
(1,819)
24,514
-
646
7,970
(823)
7,793
2,588
-
727
4,671
(543)
4,855
615
3,105
1,450
(36)
102
(1,544)
12,008
(7)
3
(997)
5,919
Motor
vehicles
$’000
-
182
1,371
(182)
1,371
618
5
(15)
-
(313)
1,666
Capital
work
in progress
$’000
-
Total
$’000
-
4,185
10,577
225
-
4,410
5,295
-
-
(6,003)
-
3,702
28,005
(2,342)
36,240
23,202
5,184
(58)
-
(4,673)
59,895
Property, plant and equipment secured under finance leases
Refer to note 27 for further information on property, plant and equipment secured under finance leases.
Note 12. Non-current assets – intangibles
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Consolidated
30 June 2018
30 June 2017
$’000
$’000
519,327
482,125
22,425
(6,549)
15,876
19,824
(2,271)
17,553
535,203
499,678
Consolidated
Balance at 29 August 2016
Additions through business combinations (note 29)
Amortisation expense
Balance at 30 June 2017
Additions through business combinations (note 29)
Amortisation expense
Balance at 30 June 2018
Customer
Goodwill
relationships
$’000
-
482,125
-
482,125
37,202
-
519,327
$’000
-
19,824
(2,271)
17,553
2,601
(4,278)
15,876
Total
$’000
-
501,949
(2,271)
499,678
39,803
(4,278)
535,203
Goodwill acquired through business combinations has been allocated to one operating segment which consists of the Group’s
cash-generating units (‘CGU’).
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:
(a) Organic EBITDA growth rate;
(b) Pre-tax discount rate: 12.2% (2017: 12.27%);
(c) Projected growth rate of 2.5% beyond four year period (2017: 2.5%); and
(d) Increase in operating costs and overheads based on current levels adjusted for inflationary increases.
For the financial year ended 30 June 2018, the recoverable amount of net assets for the CGU 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 Group’s CGU carrying amount to
exceed its recoverable amount.
Remaining amortisation period
The remaining amortisation period for customer relationships is 3-5 years (2017: 4-5 years).
58
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
59
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 13. Current liabilities – trade and other payables
Trade payables
Related party payable
GST payable
Accrued expenses
Refer to note 22 for further information on financial instruments.
Note 14. Current liabilities – employee benefits
Employee entitlements
Movements in employee entitlements are set out below:
Carrying amount at the start of the year
Additions through business combinations
Movements during the year
Carrying amount at the end of the year
Note 15. Current liabilities – borrowings
Bailment finance
Capital loans
Hire purchase
Refer to note 16 for further information on assets pledged as security and financing arrangements.
Refer to note 22 for further information on financial instruments.
Consolidated
30 June 2018
30 June 2017
$’000
7,530
1,399
2,083
11,012
$’000
-
6,989
541
7,530
Consolidated
30 June 2018
30 June 2017
$’000
$’000
405,095
7,640
1,278
271,736
14,957
784
414,013
287,477
Note 16. Non-current liabilities – borrowings
Capital loans
Hire purchase
Refer to note 22 for further information on financial instruments.
Consolidated
30 June 2018
30 June 2017
$’000
$’000
62,467
3,063
65,530
21,531
2,005
23,536
Consolidated
30 June 2018
30 June 2017
$’000
$’000
53,598
505
10,045
11,291
75,439
45,892
297
9,038
10,134
65,361
Consolidated
30 June 2018
30 June 2017
$’000
$’000
Note 16. Non-current liabilities – borrowings (continued)
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 2018
30 June 2017
$’000
405,095
70,107
4,341
479,543
$’000
271,736
36,488
2,789
311,013
11,012
7,530
Bailment is provided largely by the Original Equipment Manufacturer finance companies on a vehicle by vehicle basis and secured
over the underlying vehicle. The current weighted average interest rate is 3.6% (2017: 2.9%).
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. The current
weighted average interest rate is 4.2% (2017: 3.8%).
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. The current weighted average interest rate is 4.7% (2017: 4.2%).
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 2018
30 June 2017
$’000
$’000
436,400
71,539
4,341
512,280
405,095
70,107
4,341
479,543
31,305
1,432
-
32,737
305,700
39,033
2,789
347,522
271,736
36,488
2,789
311,013
33,964
2,545
-
36,509
60
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
61
Bailment Finance – Floorplan financing will increase in line with business expectations.
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 17. Non-current liabilities – employee benefits
Employee benefits
Movements in employee entitlements are set out below:
Carrying amount at the start of the year
Additions through business combinations
Movements during the year
Carrying amount at the end of the year
Consolidated
30 June 2018
30 June 2017
$’000
$’000
Note 18. Equity – issued capital
30 June 2018
30 June 2017
30 June 2018
30 June 2017
Consolidated
1,488
2,534
Ordinary shares - fully paid
201,000,000
201,000,000
Shares
Shares
$’000
475,637
$’000
475,637
Consolidated
30 June 2018
30 June 2017
$’000
2,534
481
(1,527)
1,488
$’000
-
2,654
(120)
2,534
Movements in ordinary share capital
Details
Date
Shares
Issue price
Balance
Issue of shares on IPO capital raising
Issue of shares to acquire Pre-IPO Autosports Group
Issue of shares to acquire Willims
Employee gift issue of shares
Director gift issue of shares
Share issue transaction costs
Income tax relating to share issue transaction costs
Balance
Balance
29 August 2016
18 November 2016
18 November 2016
18 November 2016
18 November 2016
18 November 2016
30 June 2017
30 June 2018
-
66,408,274
124,902,804
9,375,000
209,756
104,166
-
-
201,000,000
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
475,637
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.
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 year.
The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.
62
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
63
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 19. Equity – share-based payments reserve
Share-based payments reserve
Consolidated
30 June 2018
30 June 2017
$’000
$’000
894
392
Note 21. Equity – dividends
Dividends
Dividends paid during the financial year were as follows:
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
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 29 August 2016
Share-based payments
Balance at 30 June 2017
Share-based payments
Balance at 30 June 2018
Share-based
payments
$’000
-
392
392
502
894
Note 20. Equity – non-controlling interest
The non-controlling interest represents the 20% minority interest in New Centenary Mazda Pty Ltd held by the dealer principal.
Movements in the non-controlling interest are as follows:
Opening balance
Non controlling interest arising on business combinations
Profit after income tax expense for the year
Dividend declared to non-controlling interest
Closing balance
Consolidated
30 June 2018
30 June 2017
$’000
3,447
-
332
(240)
3,539
$’000
-
3,257
190
-
3,447
Consolidated
Year ended
Period ended
30 June 2018
30 June 2017
$’000
9,246
8,442
17,688
$’000
-
-
-
Final dividend for the period ended 30 June 2017 of 4.6 cents per ordinary share
Interim dividend for the year ended 30 June 2018 of 4.2 cents per ordinary share
On 27 August 2018, the directors declared a fully franked final dividend for the year ended 30 June 2018 of 4.8 cents per ordinary
shares, to be paid on 31 October 2018 to eligible shareholders on the register as at 17 October 2018. This equates to a total
estimated distribution of $9,648,000, based on the number of ordinary shares on issue as at 30 June 2018. The financial effect of
dividends declared after the reporting date are not reflected in the 30 June 2018 financial statements and will be recognised in
subsequent financial reports.
During the previous 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%
Consolidated
30 June 2018
30 June 2017
$’000
22,183
$’000
15,555
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
•
•
•
franking credits that will arise from the payment of the amount of the provision for income tax 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 22. 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.
64
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
65
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 22. Financial instruments (continued)
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.
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
Balance
$’000
405,095
70,107
(14,302)
460,900
Balance
$’000
271,736
36,488
(14,903)
293,321
An official increase/decrease in interest rates of 50 (2017: 50) basis points per annum would have an adverse/favourable effect on
profit before tax of $2,305,000 (2017: $1,467,000) and equity of $1,614,000 (2017: $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
Note 22. 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.
30 June 2018
30 June 2017
Consolidated - 30 June 2018
$’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
53,598
505
409,470
10,400
1,482
475,455
-
-
-
-
-
-
-
-
-
17,823
33,683
19,705
53,598
505
409,470
81,611
1,476
19,299
1,824
35,507
-
4,782
19,705
549,966
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
6,442
864
325,928
-
-
-
-
-
-
-
-
-
6,705
22,268
4,737
746
7,451
1,288
23,556
61
4,798
45,892
297
272,433
40,152
2,959
361,733
Consolidated
30 June 2018
30 June 2017
$’000
31,305
1,432
32,737
$’000
33,964
2,545
36,509
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Note 23. 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.
66
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
67
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 24. 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
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$
$
1,950,660
1,234,931
99,677
557,484
100,254
515,605
2,607,821
1,850,790
Note 25. Remuneration of auditors
During the financial year 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
Due diligence relating to acquisitions
Consolidated
Year ended
30 June 2018
Period ended
30 June 2017
$
$
582,000
613,000
-
2,073,877
100,000
88,000
188,000
770,000
75,000
-
2,148,877
2,761,877
Consolidated
30 June 2018
30 June 2017
$’000
$’000
Note 27. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than 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 15)
Hire purchase - non-current (note 16)
Consolidated
30 June 2018
30 June 2017
$’000
$’000
30,186
78,980
27,429
136,595
22,222
71,942
35,907
130,071
1,482
3,300
-
4,782
(441)
4,341
1,278
3,063
4,341
864
2,034
61
2,959
(170)
2,789
784
2,005
2,789
Operating lease commitments includes contracted amounts for dealership operating premises under non-cancellable operating
leases expiring within one to eight 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 $4,170,000
(2017: $758,000) under finance leases expiring within one to five 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 28. Related party transactions
Parent entity
Autosports Group Limited is the parent entity.
Note 26. Contingent liabilities
Bank guarantees
All bank guarantees are to cover landlord deposits on leased property.
3,580
2,356
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the directors’
report.
68
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
69
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 28. Related party transactions (continued)
Note 29. Business combinations
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
Year ended
Period ended
30 June 2018
30 June 2017
$
$
Other income:
Management fees received from entities owned by the directors Ian Pagent
and Nicholas Pagent
182,052
149,836
Payment for other expenses:
Management fees paid to entities related to the directors Ian Pagent and Nicholas Pagent
-
8,055
BMW Melbourne
On 1 November 2017, the Group acquired certain assets and liabilities of BMW and Mini Southbank, BMW and Mini Kingsway,
Motorrad Southbank, and BMW Bodyshop from BMW Australia Limited (collectively ‘BMW Melbourne’). The total consideration
transferred amounted to $25,741,000. The goodwill of $21,271,000 represents profitability of the acquired business and the
synergistic opportunities it offers and cross-selling opportunities that will arise from the acquisition. The acquired business
contributed revenues of $127,367,000 and profit before tax of $2,461,000 to the Group for the period from 1 November 2017 to
30 June 2018.
Canterbury BMW
On 3 April 2018, the Group acquired certain assets and liabilities of Canterbury BMW from Baldacchino 888 Prestige Autohaus Pty
Limited (‘Canterbury BMW’). The total consideration transferred amounted to $16,179,000. The goodwill of $15,931,000 represents
profitability of the acquired business and the synergistic opportunities it offers and cross selling opportunities that will arise from
the acquisition. The acquired business contributed revenues of $17,301,000 and profit before tax of $926,000 to the Group for the
period from 3 April 2018 to 30 June 2018.
Lease payments on properties to entities owned by the directors Ian Pagent
and Nicholas Pagent
5,500,114
2,424,380
Details of the acquisition are as follows:
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Consolidated
30 June 2018
30 June 2017
$
$
Current borrowings:
Loans from an entity owned by the directors Ian Pagent and Nicholas Pagent
505,319
297,204
Terms and conditions
Other than the loans from entities related to Ian Pagent and Nicholas Pagent where no interest is charged or payable, all
transactions were made on normal commercial terms and conditions and at market rates.
Inventories
Prepayments
Plant and equipment
Customer contracts and relationships
Deferred tax asset
Trade payables
Deferred tax liability
Employee benefits
Other provisions
Bailment finance
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Acquisition costs expensed to profit or loss
Cash used to acquire business, net of cash acquired:
BMW
Melbourne
Canterbury
BMW
Total
Fair value
Fair value
Fair value
$’000
42,128
-
4,516
2,214
-
(524)
(109)
(1,477)
(133)
(42,145)
4,470
21,271
25,741
25,741
728
$’000
7,678
182
668
387
114
(102)
-
(403)
(19)
(8,257)
248
15,931
16,179
16,179
144
$’000
49,806
182
5,184
2,601
114
(626)
(109)
(1,880)
(152)
(50,402)
4,718
37,202
41,920
41,920
872
Acquisition-date fair value of the total consideration transferred
25,741
16,179
41,920
70
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
71
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries:
Note 31. 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:
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
Principal place of business /
Country of incorporation
30 June 2018
%
30 June 2017
%
Ownership interest
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The consolidated financial statements also incorporates the assets, liabilities and results of the following subsidiary with non-
controlling interests:
Parent
Non-controlling interest
Principal
place of
business/
Country of
incorporation
Principal
activities
Ownership
interest
30 June 2018
Ownership
interest
30 June 2017
%
%
Name
New Centenary
Mazda Pty Ltd
Australia
Motor vehicle
dealership
80%
80%
Ownership
interest
30 June
Ownership
interest
30 June
2018
%
20%
2017
%
20%
Summarised financial information of the subsidiary with non-controlling interests has not been included as it is not material to the
Group.
• 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
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
Other comprehensive income for the year/period, net of tax
Total comprehensive income for the year/period
Equity - retained profits
Retained profits at the beginning of the financial year/period
Profit after income tax expense
Dividends paid
Retained profits at the end of the financial year/period
Year ended
Period ended
30 June 2018
30 June 2017
$’000
1,630,053
46,639
(1,422,612)
(116,811)
(8,880)
(28,472)
(1,334)
-
(50,752)
(12,710)
35,121
(10,291)
24,830
-
24,830
$’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
Year ended
Period ended
30 June 2018
30 June 2017
$’000
11,466
24,830
(17,688)
18,608
$’000
-
11,466
-
11,466
72
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
73
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 31. Deed of cross guarantee (continued)
Note 32. Earnings per share
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangibles
Deferred tax
Total assets
Current liabilities
Trade and other payables
Income tax payable
Employee benefits
Deferred revenue
Borrowings
Non-current liabilities
Borrowings
Employee benefits
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Retained profits
Total equity
30 June 2018
30 June 2017
$’000
$’000
13,954
102,339
344,768
4,956
466,017
18,342
59,422
507,276
6,977
592,017
1,058,034
73,636
5,448
10,717
4,546
402,931
497,278
64,129
1,488
65,617
562,895
495,139
475,637
894
18,608
495,139
17,646
66,688
250,711
4,362
339,407
18,342
35,750
472,934
3,459
530,485
869,892
63,697
4,582
7,276
3,724
279,211
358,490
21,373
2,534
23,907
382,397
487,495
475,637
392
11,466
487,495
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of Autosports Group Limited
Consolidated
Year ended
Period ended
30 June 2018
30 June 2017
$’000
26,434
(332)
26,102
$’000
12,388
(190)
12,198
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
201,000,000
201,000,000
Adjustments for calculation of diluted earnings per share:
Estimated options over ordinary shares to be issued post reporting date
525,602
187,394
Weighted average number of ordinary shares used in calculating diluted earnings per share
201,525,602
201,187,394
Basic earnings per share
Diluted earnings per share
Note 33. Cash flow information
Non-cash investing and financing activities
Acquisition of plant and equipment by means of finance leases
Shares issued under employee share plan
Shares issued in relation to business combinations
Changes in liabilities arising from financing activities
Consolidated
Balance at 29 August 2016
Net cash from/(used in) financing activities
Changes through business combinations (note 29)
Balance at 30 June 2017
Net cash from/(used in) financing activities
Acquisition of plant and equipment by means of finance leases
Balance at 30 June 2018
Cents
12.99
12.95
Cents
6.07
6.06
Consolidated
Year ended
Period ended
30 June 2018
30 June 2017
$’000
2,678
-
-
2,678
Hire
purchase
$’000
-
(621)
3,410
2,789
(1,126)
2,678
4,341
$’000
-
753
322,267
323,020
Total
$’000
-
15,484
23,793
39,277
32,493
2,678
74,448
Capital
loans
$’000
-
16,105
20,383
36,488
33,619
-
70,107
74
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
75
Notes to the Consolidated Financial Statements (continued)
30 June 2018
Note 34. 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 $502,000 (2017: $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 Group’s 30 June 2018 audited full year results.
EIP is 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 over a 12 month period.
Performance conditions for the initial grant include:
• a ‘gateway hurdle’ of upholding the Group’s culture and values of individualised attention. Operating with honesty, integrity
and accountability at all times and in accordance with the Group’s Code of Conduct. If the gateway hurdle is not met, no STI is
awarded.
•
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.
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity.
Note 35. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Retained profits/(accumulated losses)
Total equity
Parent
30 June 2018
30 June 2017
$’000
128,813
478,868
203
203
$’000
127,749
477,804
98
98
477,495
477,495
894
276
392
(181)
478,665
477,706
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017.
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 31 for further details.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.
Statement of profit or loss and other comprehensive income
Significant accounting policies
Profit/(loss) after income tax
Total comprehensive income
Parent
Year ended
Period ended
30 June 2018
30 June 2017
$’000
18,145
18,145
$’000
(181)
(181)
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.
Investments in associates 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.
Note 36. Events after the reporting period
Apart from the dividend declared as disclosed in note 21, no other matter or circumstance has arisen since 30 June 2018 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.
76
Autosports Group | Annual Report 2018
Notes to the Consolidated Financial Statements
77
Directors’ Declaration
30 June 2018
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 2018 and of
its performance for the financial year 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 31 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
Thomas Pockett
Independent Chairman
27 August 2018
Sydney
Nicholas Pagent
Chief Executive Officer
Independent Auditor’s Report
30 June 2018
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
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 2018, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year 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 year. 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
66
78
Autosports Group | Annual Report 2018
Independent Auditor’s Report
79
Independent Auditor’s Report
30 June 2018
Independent Auditor’s Report
30 June 2018
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Carrying value of Goodwill
As at 30 June 2018 the Group has recognised
goodwill of $519m of which $482m relates to
acquisitions made in the financial year ended 30
June 2017.
During the financial year ended 30 June 2018,
the Group further acquired BMW Melbourne and
BMW Canterbury as disclosed in Note 29.
Consequently, goodwill of $21m and $16m
respectively were
these
acquisitions.
recognised
on
As disclosed in Note 3, the directors’ assessment
of the recoverability of goodwill requires the
exercise of significant 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.
Estimating the cash flows requires the exercise
of judgement as to the likely impact of:
Competitive pressures in specific markets;
and
Changes resulting from regulatory review of
finance and insurance practices across the
automotive industry.
Our procedures included, but were not limited to:
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 Group’s forecast cash flows to the
board approved budget;
Evaluating management’s historical forecasting
accuracy including comparing actual results to
budget;
Performing sensitivity analysis on the growth and
discount rates;
In conjunction with our valuation specialists
rate utilised by
independently calculated
the discount
to an
comparing
management
discount rate; and
Assessing the appropriateness of the disclosures in
Note 12 to the financial statements.
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 year ended 30 June 2018, but does not include the financial
report and our auditor’s report thereon. The annual report is expected to be made available to us after the
date of this auditor's report.
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 identified
above when it becomes available and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
When we read the annual report, if we conclude that there is a material misstatement therein, we are required
to communicate the matter to the directors and use our professional judgement to determine the appropriate
action.
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 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 evidence 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 independence, 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 year and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
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68
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Autosports Group | Annual Report 2018
Independent Auditor’s Report
81
Independent Auditor’s Report
30 June 2018
Shareholder Information
30 June 2018
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included pages 23 to 37 of the Director’s Report for the year ended
30 June 2018.
In our opinion, the Remuneration Report of Autosports Group Limited, for the year ended 30 June 2018,
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, 27 August 2018
69
82
Autosports Group | Annual Report 2018
The shareholder information set out below was applicable as at 1 August 2018.
The Company confirms that, for the period from admission to the ASX until 30 June 2018, 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, other
than the purchase of an automotive property disclosed in the directors’ report.
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
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
SASTEMPO PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
LIVIST PTY LTD
AUDI PARRAMATTA HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NIP PARRAMATTA PTY LTD
NATIONAL NOMINEES LIMITED
BARBIZON PTY LTD
PAGENT FAMILY INVESTMENTS PTY LTD
FIVE DOCK DJC PTY LTD
OGLE INVESTMENTS PTY LTD
AALHUIZEN NOMINEES PTY LTD
RICGAZ PTY LTD
LIVERPOOL STREET INVESTMENTS
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
DANIARON PTY LTD
AUTOSPORTS HOLDINGS PTY LTD
Number of
holders of
ordinary shares
124
178
79
122
50
553
-
Ordinary shares
Number held
% of total
shares issued
23,199,693
21,285,348
20,782,930
15,455,897
15,310,969
12,835,132
10,710,704
10,401,678
10,200,444
9,375,000
7,193,635
6,436,189
5,147,053
4,722,374
4,406,237
2,453,632
2,279,154
2,139,000
1,644,259
1,454,269
11.54
10.59
10.34
7.69
7.62
6.39
5.33
5.17
5.07
4.66
3.58
3.20
2.56
2.35
2.19
1.22
1.13
1.06
0.82
0.72
187,433,597
93.23
Shareholder Information
83
Substantial holders
Substantial holders1 in the Company are set out below:
IAN AND NICHOLAS PAGENT
IAN PAGENT
NICK PAGENT
AUSTRALIAN SUPER PTY LTD2
COMMONWEALTH BANK OF AUSTRALIA3
Ordinary shares
% of total
shares
Number held
issued
103,389,396
64,437,541
38,951,855
10,087,287
10,050,854
51.44
32.06
19.38
5.02
5.00
1. At the time of IPO the Company escrowed certain holdings of shares being 66.8% of shares that were issued . As a result, the Company is
deemed to have a relevant interest however the Company does not control the voting rights of those escrowed shares.
2. Based on substantial holder notice lodged on 27 June 2018
3. Based on substantial holder notice lodged on 8 May 2018
Voting rights
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.
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 number of performance rights on issue as at the reporting date are:
Nick Pagent
Ian Pagent
Aaron Murray
Other management (non KMP)
There are no other unquoted equity securities on issue.
Buy-back
There is no current on-market buy-back.
38,320,477
22,392,805
9,375,000
134,277,804
418,035
167,388
153,089
27,828
766,340
Glossary
$
AASB
ACCC
means Australian currency
means the Australian Accounting Standards Board
means Australian Competition and Consumer Commission
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
Group
includes:
(a) Autosports Group Limited ACN 614 505 261;
(b) ASG Brisbane Pty Ltd ACN 614 297 684;
(c) Autosports Brisbane Pty Ltd ACN 603 332 752;
(d) Autosports Castle Hill Pty Ltd ACN 163 974 481;
(e) Autosports Five Dock Pty Ltd ACN 118 786 762;
(f) Autosports Leichhardt Pty Ltd ACN 161 160 765;
(g) Autosports Prestige Pty Ltd ACN 096 909 698;
(h) Autosports Sutherland Pty Ltd ACN 125 720 998;
(i) Betar Prestige Cars Pty Ltd ACN 118 667 913;
(j) Birchgrove Finance Pty Ltd ACN 165 682 057;
(k) Modena Trading Pty Ltd ACN 140 018 015;
(l) Mosman Prestige Cars Pty Ltd ACN 149 346 476;
(m) New Centenary Mazda Pty Ltd ACN 168 183 800
(n) New Centenary Mercedes Benz Pty Ltd ACN 168 183 864;
(o) Prestige Auto Traders Australia Pty Ltd ACN 105 105 771;
(p) Prestige Group Holdings Pty Ltd ACN 073 650 512; and
(q) Prestige Repair Works Pty Ltd ACN 611 760 126.
Autosports Group
Limited or the Company
means Autosports Group Limited ACN 614 505 261, the ultimate holding company of the Group.
ASIC
ASX
means the Australian Securities and Investments Commission
means the Australian Securities Exchange
Australian Accounting
Standards or AAS
means the Australian Accounting Standards and other authoritative pronouncements issued by the
AASB
Corporations Act
means the Corporations Act 2001 (Cth)
Dealer Principal
means an employee of a Dealer who is responsible for the overall management of the Dealership
EBIT
EBITDA
EPS
means earnings before interest and tax
means earnings before interest, tax, depreciation and amortisation
means earnings per Share
Financial Year or FY2018 means the year commencing 1 July 2017 and ending 30 June 2018
FY2019
GST
IFRS
IPO
KMP
Listing
LTI
NPAT
NPATA
NPBT
OEM
STI
VWAP
means the full financial year ended 30 June 2019
means 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 of the Company to the Official List of the Australian Securities Exchange on 16
November 2016
means long term incentive
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
means short term incentive
means volume weighted average price
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Autosports Group | Annual Report 2018
Glossary
85
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Directors
Thomas (‘Tom’) Pockett - Chairman
Nicholas (‘Nick’) Pagent
Ian Pagent
Robert Quant
Marina Go
Corporate Directory
Company secretary
Caroline Raw
Registered office
Share registry
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 was approved at the same time as the
2018 Financial Report can be found at www.investors.autosportsgroup.com.au/investors
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Autosports Group | Annual Report 2018
Corporate Directory
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