Aurora Spine
Annual Report 2024

Plain-text annual report

ANNUAL REPORT 2024 Drive Endless Possibilities ii AUTOSPORTS GROUP 03 The year at a glance 04 Chairman’s Letter 06 CEO’s Letter 09 Our Purpose & Values 10 Group Portfolio and Dealerships 12 Directors’ Report 36 Auditor’s Independence Declaration 37 Financial Statements 41 Notes to the Consolidated Financial Statements 77 Directors’ Declaration 78 Independent Auditor’s Report 82 Shareholder Information 85 Corporate Directory CONTENTS ANNUAL REPORT 2024 1 Drive Endless Possibilities 2 AUTOSPORTS GROUP 1. Normalised NPBT excludes acquisition and restructure costs and acquisition amortisation. Revenue $2,647 million 11.6%PCP Gross Profit $515 million 8.3%PCP EBITDA $204.5 million 6.5%PCP Normalised NPBT1 $93.1 million 19.6%PCP Statutory NPAT $61.5 million 7.8%PCP FY dividend (fully franked) 18 cents 5.3%PCP THE YEAR AT A GLANCE ANNUAL REPORT 2024 3 CHAIRMAN’S LETTER Dear Shareholders, I am pleased to introduce to you Autosports Group’s 2024 Annual Report. Over the past year, we have continued to remain disciplined in executing our strategy, demonstrating resilience in a complex external environment. Economic headwinds persist, as geopolitical events continue to impact global economies with inflationary pressures and rising interest rates resulting in increased cost of living pressures on the consumer and an impact on spending. We are seeing a corresponding impact on new car sales, in particular across the broader market. With luxury market conditions buoyant, yet competitive, the diversity of Autosports Group’s business model and our mix of brands has provided some resilience against these headwinds. Pleasingly, customer orders for new vehicles have increased and we have delivered record Aftersales turnover. The automotive industry in general continues to transform as greater numbers of consumers opt to drive battery electric vehicles (BEVs) including the luxury models represented by Autosports Group. We continue to be well-positioned in this market segment, due to our strong relationships with the leading luxury brands, who continue to bring to market a growing range of BEVs. The regulatory landscape is rapidly evolving, notably with the New Vehicle Efficiency Standard Act 2024 passed by Parliament during the year, and heightened focus on cyber security following the CDK Global cyber incident affecting retail car dealerships in the US in June. We are focussed on progressively maturing our processes and procedures to keep pace with these important regulatory expectations. Further information about Autosports Group’s progress in these areas is included in our Directors’ Report. FY24 performance Against this backdrop, Autosports Group delivered $2.65 billion in revenue, up 11.6%, and Gross Profit was up 8.3% resulting in EBITDA of $204.5 million up 6.5% on last year. Impacting our trading result was increased interest costs of $56.8 million resulting in a statutory Net Profit After Tax of $61.5 million down 7.8% on last year. A final dividend of 8 cents per share has been determined, which brings the total dividend for FY2024 to 18 cents per share. Further information about Autosports Group’s financial results is contained within the CEO’s Letter. FY24 strategic progress This year we continued with our consistent approach to growing the business through both organic and acquisitive strategies, which has positively contributed to this year’s financial results. 4 AUTOSPORTS GROUP After the financial year end, we entered into an agreement to acquire Stillwell Motor Group SMG for circa $55 million. The transaction is expected to settle on 1 October 2024, growing our representation of BMW, BMW Motorrad, Volvo, MINI, MG and Ducati brands and expanding our footprint in Victoria. Corporate Governance and Board updates In achieving our strategic objectives, we are committed to ensuring we operate within a framework of sound corporate governance. This is achieved through our commitment to continually review and improve our governance frameworks which are supported by the valuable contribution of the Board’s People and Remuneration Committee and Audit and Risk Committee. Our 2024 Corporate Governance Statement sets out our approach to corporate governance in more detail. In February and August of this year, Anna Burgdorf and Gareth Turner respectively joined the Autosports Group Board as non-executive directors and are pleased to have their skills and experience to further enhance the expertise of the Board. Anna and Gareth have joined the Audit and Risk Committee and the People and Remuneration Committee. Both will stand for election at the 2024 Annual General Meeting. I also wanted to take this opportunity to acknowledge the retirement of Robert Quant, a founding director of Autosports Group. Robert has made a significant contribution to the Autosports Group Board over the last 8 years, including as Chair of our Audit and Risk Committee. Robert will retire at the end of the 2024 Annual General Meeting, with our sincerest thanks and best wishes. I would like to take this opportunity to sincerely thank our CEO, Nick Pagent, our management team, our employees and our loyal customers for their support and contribution to our solid results for FY24. I would also like to acknowledge and thank my fellow Board members for their leadership and guidance during the year. Our Shareholders remain a vital part of our business and growth strategy and we thank them for their continued investment. While the external market challenges of the past year have tempered our performance, we have nonetheless continued to execute a well- considered business strategy. As we look ahead, the Board remains focused on supporting our CEO and management team to position the business for positive future expansion. We will keep progressing our organic and acquisitive growth strategy as we partner with luxury brands, consolidate and build relationships with existing manufacturers and enter new geographic locations to build scale, and create greater efficiencies within our portfolio of businesses. We will continue to live our values daily and be guided by our mission to ‘drive endless possibilities’ for our customers. James Evans Chairman ANNUAL REPORT 2024 5 CEO’S LETTER Dear Shareholders, I am pleased to share with you our results for this past financial year which has been characterised by the return of pre-COVID levels of vehicle stock, price competitiveness, and rising interest rates. The return of these normalised market conditions has given our company the opportunity to ‘road test’ our luxury- focused business strategy. Quality Results Achieved Our results are both sound and indicative that we have set ourselves on the right path to continued business growth. Pleasingly, we have achieved record turnover and EBITDA and we are entering the new year with an increased order write over FY2023, along with a new vehicle order bank that is outperforming the first half of FY2024. Last year, I reported that our ‘lowest cost of acquisition’ strategy for Used Vehicle stocks remained a focus, so I am pleased to report we have also achieved record results in this core area of the business. Despite volatility in pricing, we have achieved improvements in sales and will continue to drive this as a focus in the coming financial period. Our Aftersales revenue has outperformed last year’s result supported by our recent and on-going investment in capacity and driven by record new car deliveries. This strong performance is assured by the continued penetration of service plan contracts, delivering both value and security to customers and also ensuring we have a consistent stream of pre-paid customer business in the highest margin area of our company. Additionally, our eight high- tech authorised panel repair shops have also rebounded following the post-COVID consumer buoyancy and freedom that we are all enjoying. Normalised supply conditions and another record year in Aftersales has led to record turnover of $2.65 billion, record EBITDA of $204.5 million and underlying Net Profit Before Tax1 of $96.0 million. Unsurprisingly, the most significant drag on our net profit was the marked increase in interest costs of $23.1 million for the period although pleasingly, our high vehicle stock holdings peaked in April 2024 and are now being reduced as our luxury brand partners react to the new market dynamics with changing vehicle arrival patterns which we expect to continue this year. Prime Positioning Secured The new vehicle market is performing strongly, with registrations for the first 6 months of the calendar year to June 2024 up by 8.7% per VFACTS. This growth is primarily driven by the brands with a strong light commercial offering. As expected, there have been significant shifts in the New Vehicle Energy Scheme (NVES) with impressive new entrants, resulting in volatility in market share from the existing players. Within the luxury segment the major headline continues to be the growth in the NVES. Battery Electric Vehicle (BEV) sales within the luxury brands represented by Autosports Group are up 34% YoY per VFACTS with several new models on the horizon. We see this shift as further evidence that the established luxury competitors remain extremely well-placed to respond to the changing customer landscape, and again validating our luxury-focused corporate strategy. 1. Underlying NPBT excludes impacts of AASB 16, acquisition amortisation and acquisition and restructure costs. 6 AUTOSPORTS GROUP Investments Driving Revenue Growth Autosports Group continues to invest in capacity. In the next few months we will open our state-of- the-art Volkswagen Dealership in Macgregor, South Brisbane enabling us to increase the yield from an existing real estate asset, exiting leased premises and increasing our Aftersales capacity and therefore our customer offer, in this market. As with last year, delivering growth from our existing resources will be a key priority in FY2025. We were also pleased to recently announce a significant acquisition that we expect to complete in October 2024. The Stillwell Motor Group represents the BMW, BMW Motorrad, Volvo, MINI, MG and Ducati brands and adds significant additional Aftersales capacity to our business. It is an acquisition of meaningful scale contributing in excess of $345 million in annualised revenue in the blue-ribbon locations of Brighton, Doncaster, South Yarra and Mornington. It also allows us to deepen our relationship with BMW Group and Volvo Cars Australia. The Road Ahead Our luxury-focused corporate strategy can be articulated simply as representing the world’s great luxury and prestige automotive brands, from the best locations. Acquisitive growth underpins this strategy as we continue to focus on securing sensibly priced assets with the right brands and the right locations that allow us to unlock margin improvements through our scale and our significant experience. Importantly our strong cashflow, balance sheet strength and supportive OEM finance partners leave the business well-placed to continue our growth strategy. We expect FY2025 to continue to present challenges however we remain confident in our strategy as we continue to see the positive signs of resilience from our luxury consumer, evidenced by increased enquiry, larger order banks and an order write that is stronger when compared to H1 2024. Our mature back-end operations, untapped capacity and high service plan contract penetrations mean that we are poised for continued Aftersales growth in FY2025. Importantly, this provides a foundation for sustained profitability and the maintenance of our strong margin profile. The prevailing macroeconomic environment creates opportunity for on-strategy, accretive, acquisition- led growth. Our scale, operating cash flows and luxury acquisition runway leave us well-positioned to progress our growth strategy in FY2025 with the published aim of growing by $250m in acquisition led growth annually. Our Sincere Appreciation In closing, I would like to pay special tribute to Robert Quant, a foundation Board Member who is retiring at the end of the AGM this year. Robert has been an outstanding contributor as Chair of the Audit and Risk Committee and the growth of Autosports Group since listing is in no small part due to his care and attention as a Non-Executive Director. I would like to thank our OEM partners for their continued support, and the entire team at Autosports Group for their collective efforts in delivering another strong result in FY2024. Finally, a warm Thank You to our shareholders. There is so much to look forward to in this next year as we continue to deliver on our strategy and our purpose to Drive Endless Possibilities. Nick Pagent Chief Executive Officer ANNUAL REPORT 2024 7 Strive for excellence We set goals with clear direction and defined outcomes • We hold ourselves to account • We are proactive in our approach • We exceed expectations in everything we do • We make decisions with consideration of our key stakeholders – employees, customers, shareholders, community and manufacturers Village We are united in purpose through people • We coach and mentor our people to be their best • We are visible, approachable and connected across the Group • We embrace diversity and inclusion • We are part of a large Group retaining a family feel Care We demonstrate care towards our customers and their experience • We invest in our people for training and development • We recognise the role you play – everyone is important to our success • We do what is right by our people, customers and communities • We are eager to help each other and create a safe environment for our people Leading change We leverage our scale and collective intelligence to drive change • We deliver the changes required for growth • We embrace the use of technology to deliver the optimum experience for our customers and stakeholders • We move with the times – taking into account tomorrow, today • We are resilient and embrace change OUR PURPOSE & VALUES 8 AUTOSPORTS GROUP ANNUAL REPORT 2024 9 GROUP PORTFOLIO 10 AUTOSPORTS GROUP GROUP DEALERSHIPS This reflects our dealerships as at the date of this report and includes dealerships acquired after 30 June 2022. ALPINA ASTON MARTIN AUDI BENTLEY 3 1 6 3 BMW BMW MOTORRAD DUCATI JAGUAR 9 3 1 2 KIA LAND ROVER LAMBORGHINI MASERATI 2 2 2 2 MAZDA MCLAREN MERCEDES-BENZ MINI 2 1 3 7 ROLLS-ROYCE SUBARU VOLVO VOLKSWAGEN 2 1 3 4 ANNUAL REPORT 2024 11 12 AUTOSPORTS GROUP DIRECTORS’ REPORT 30 JUNE 2024 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 2024. 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: James Evans Chairman Nicholas Pagent Chief Executive Officer Anna Burgdorf Independent Non-Executive Director (appointed on 13 February 2024) Marina Go Independent Non-Executive Director Ian Pagent Non-Executive Director Robert Quant Independent Non-Executive Director Gareth Turner Independent Non-Executive Director (appointed on 9 August 2024) Principal activities During the financial year, our principal activities included 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 principal activities. Our operations comprise of: ● 54 dealerships selling new and used prestige and luxury motor vehicles; ● 3 used motor vehicle outlets, primarily on the sale of used prestige and luxury motor vehicles; ● 4 motorcycle dealerships selling new and used motorcycles; and ● 8 specialist prestige motor vehicle collision repair facilities. Dividends Dividends paid during the financial year were as follows: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Final dividend for the year ended 30 June 2023 of 10.0 cents (2022: 9.0 cents) per ordinary share 20,100 18,090 Interim dividend for the year ended 30 June 2024 of 10.0 cents (2023: 9.0 cents) per ordinary share 20,100 18,090 40,200 36,180 On 22 August 2024, the directors declared a fully franked final dividend for the year ended 30 June 2024 of 8.0 cents per ordinary share, to be paid on 15 November 2024 to eligible shareholders on the register as at 1 November 2024. This equates to a total estimated distribution of $16,080,000, based on the number of ordinary shares on issue as at 30 June 2024. The financial effect of the dividends declared after the reporting date are not reflected in the 30 June 2024 financial statements and will be recognised in the subsequent financial period. Operating and financial review The Group generates income from: ● the sale of new and used motor vehicles; ● the sale or distribution of ancillary products and services, such as finance, insurance and aftermarket products; ● the sale of motor vehicle spare parts; ● the provision of motor vehicle servicing; and ● the provision of collision repair services. ANNUAL REPORT 2024 13 The profit for the Group after providing for income tax and non-controlling interest amounted to $60,872,000 (2023: $65,426,000). The following tables demonstrate the Group’s financial performance normalised to exclude the impact of acquisition, impairment and restructure expenses ('other items'). The profit for the financial year was impacted by other items as follows: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Statutory profit after tax attributable to the owners of Autosports Group Limited 60,872 65,426 Add: Non-controlling interest¹ 608 1,223 Add: Income tax expense 26,878 33,652 Profit before income tax expense 88,358 100,301 Add: Intangible amortisation² 3,990 3,367 Add: Acquisition expenses³ 681 4,871 Add: Restructure and relocation expenses ⁴ - 1,156 Add: Property impairment ⁵ - 6,004 Profit before tax excluding other items 93,029 115,699 1 Represents the 20% non-controlling interest in New Centenary Mazda Pty Ltd held by the dealer principal and 20% non-controlling interest in John Newell Holdings Pty Ltd held by the dealer principal. 2 Relates to non-cash amortisation of customer contracts arising on acquisitions made by the Group. 3 Current year expense relates to due diligence costs incurred. Prior year acquisition expenses relates to purchase taxes incurred on the acquisition of Auckland City BMW Ltd and Motorline BMW, Motorline MINI, Motorline Bodyshop, Gold Coast BMW and Gold Coast MINI. 4 Prior year restructure and relocation expenses relate to costs associated with relocation to the new Kings Way BMW dealership. ⁵ Prior year property impairment arose as a result of the acquisition of 586 Wickham Street, Fortitude Valley on 15 June 2023. Due to the proximity of the acquisition to year end there has been no opportunity for appreciation in value of the property and as such capitalised acquisition costs including stamp duty resulted in the carrying value of the property exceeding its valuation. Profit before tax excluding other items noted above is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the statutory result under AAS adjusted for certain items. The directors consider profit before tax excluding other items (being items adjusted above) to reflect the core earnings of the Group. Operational overview Market conditions The Australian automotive retailing sector operated in a relatively stable economic environment during the 2024 financial year, closing the first six months of calendar year 2024 with new vehicle registrations up 8.7% according to Vfacts, as normalised market conditions returned post-covid. The national economy experienced modest GDP growth and relatively low unemployment rates. Consumer confidence in the luxury segment remained high; reflected in increased volumes of new vehicle order writes for Autosports Group in the second half of Financial Year 2024 ('H2 FY2024'). FY2024 brought new entrants to the New Energy Vehicle (NEV) market in Australia and New Zealand, and market share volatility amongst existing brands. Within the Luxury brands represented by Autosports Group, new Battery Electric Vehicle (BEV) registrations are up 34% in calendar year 2024 (January to June) according to Vfacts, with further new models on the horizon. Strategic acquisitions As announced on 19 August 2024, Autosports Group has entered into an Agreement through its wholly owned subsidiary ASG Investment Holdings Pty Ltd to acquire 100% of shares in B S Stillwell Motor Group Pty Ltd, known as the Stillwell Motor Group, for approximately $55 million. The Stillwell Motor Group is a family-owned business founded in 1949 that represents the BMW, BMW Motorrad, MINI, Volvo, MG and Ducati brands with dealerships in 4 Victorian locations. The purchase consideration consists of $45 million for goodwill and approximately $10 million for assets, plant and equipment, subject to usual adjustments. The seller of the Stillwell Motor Group can elect to receive up to 15% of the purchase consideration in the form of Autosports Group shares to be issued at a price of $2.09 per share. The cash portion of the purchase consideration will be funded by cash and new and existing debt facilities. The acquisition is expected to settle in October 2024. 14 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Our acquisitive growth was also complemented by organic growth. Victoria is where Autosports Group acquired its first BMW dealerships at Doncaster and Bundoora in 2017. This was followed by Melbourne BMW in November 2017 which was recently upgraded to a state-of- the-art facility, the first of its kind in Australia representing BMW’s latest Retail Next corporate identity. In early 2023, the Group opened Ringwood BMW in the Eastern Suburbs of Melbourne. Now, approximately six years after acquiring its first BMW dealership, post completion the Group will have grown to represent 11 BMW dealerships and 9 MINI dealerships across Victoria, New South Wales, Queensland and Auckland, New Zealand. Another element of Autosports Group’s growth strategy is to control strategically important retail sites. Supported by Original Equipment Manufacturers (OEM) financiers, over time the business is expected to benefit from capital accretion and gradually reduce occupancy costs. In the coming months Autosports Group is planning to open a new Volkswagen site in South Brisbane. The new Dealership has been built on an existing, owned location adding operational synergy, raising yields from real estate assets and allowing us to exit two leases. Environment, social and governance This section of our report sets out our progress in the areas of environment, social responsibility and governance. Environment Through our relationships with well-established vehicle manufacturers, Autosports Group has expanded the range of vehicles, catering to the growing demand for alternatives to traditional internal combustion engines. Beyond our vehicle offering, incorporating more environmentally conscious options in our retail facility developments is an area of opportunity. One example is the newly opened Ringwood BMW Dealership which incorporated several initiatives to help reduce environmental impact, such as solar and rainwater harvesting while incorporating low-energy consumption lighting solutions. Autosports Group is currently planning for several Dealership upgrades that will incorporate more energy efficient solutions. Social Health and well-being During FY2024, the safety focus progressed by further embedding our safety culture across the Group. Our safety program is supported by three Australian state-based safety committees and one in New Zealand. The Committees meet eight times a year with a focus on consulting with members of their workgroup, discussing reported hazards and their corrective actions with a view to reducing the number of incidents and meeting legislative requirements across the Group. The regular reporting of safety hazards and communicating incidents and near misses across the Group assists with keeping safety front of mind and provides shared learnings for all employees. Key learnings, incidents and hazards are shared in the Committees and at Monthly Senior Leadership meetings. We conduct regular safety inspections measuring the Group’s performance against safety benchmarks with demonstrated improvement in safety practices. These regular safety inspections provide an opportunity for face-to-face discussion about safety issues and the early identification of hazards. We have continued to embed our Safe Work Procedures through training to demonstrate how work and hazardous tasks are to be carried out safely. With the introduction of Battery Electric Vehicles Autosports has engaged in additional training and PPE to ensure our team members are equipped with the right equipment and knowledge to respond in an emergency situation. Conducting a Psychosocial risk assessment opened the discussion on wellbeing across Autosports and the need to provide additional support for both leaders and workers. Upcoming wellbeing initiatives will provide the opportunity for individuals to access information if desired. Ongoing health, safety and wellbeing programs will continue to provide positive outcomes for Autosports. Mental health and wellbeing remained a priority on the safety agenda during the year. We continue to educate our employees with wellbeing information including webinars, a newsletter and access to our Employee Assistance Program (EAP) for themselves and their families. In FY24 we introduced a wellbeing app via our EAP provider where employees can access tools to assist and educate them on their wellbeing journey. This program offers support on a range of topics including counselling, mental health, relationships, health, and financial counselling. People and Diversity Career Development, Talent and Training The senior leadership team invest time in reviewing our talent and succession plans to identify and assess our talent across the Group. This process helps identify our emerging and top talent through a consultative process engaging different parts of the business. These tools and plans are used when making decisions on talent for development programs and in our succession planning. Diversity and Inclusion We have prioritised Diversity and Inclusion (D&I) through our D&I Council which has developed a strategy with measurable outcomes. Our D&I Council is in its fourth year of operation and meets monthly to discuss, plan and execute activities to foster diversity and inclusion. The Council is accountable for delivering its strategy and the Council’s progress is reported through various channels including to the Board. ANNUAL REPORT 2024 15 Our Diversity and Inclusion Strategy has five key areas including: (1) senior leaders proactively foster D&I; (2) our people understand the importance of diversity and practise inclusive behaviour; (3) workforce diversity increases at all levels; (4) attract, develop and retain diverse individuals to maximise performance and adapt to market changes; and (5) educate our business with learning initiatives around D&I. Community and Values Our purpose statement of ‘Drive Endless Possibilities’ links to our growth path and was developed to provide meaning to our employees, customers, business partners and shareholders. Our purpose statement sits alongside our values of Village, Care, Leading Change and Strive for Excellence which are embedded in our communications, performance discussions and a model for the way we strive to operate our business, including within the community. Our values are embodied in the accomplishments we achieved during the year. Strive for Excellence The outstanding performance of our people was recognised through the many personal and team awards achieved during the year including Audi Service Manager of the Year, Audi Parts Manager of the Year, Audi Business Manager of the Year, BMW Marketing Manager of the Year, Audi Dealer of the Year, Audi Financial Services Dealer of the Year, Mercedes-Benz Circle of Excellence, Mercedes-Benz Star Guild Sales, MINI Dealer of the Year, MINI Diamond League Sales, BMW Sustainability Dealer of the Year, BMW Digital Transformation, BMW Excellence in Financial Services, BMW Diamond League Sales Manager, Lamborghini Dealer Excellence Award APAC, McLaren Dealer of the Year ANZ, Volkswagen Premium Dealer, Volvo Retailer of the Year, Volvo Customer Champion of the Year, Mazda Master Guild Sales, Mazda Guild Service, Mazda Guild Master Technician and Rolls-Royce Digital Content Champion. Village Our village is our collective spirit. We celebrated various causes and events including International Women’s Day, Ramadan, NAIDOC Week, Harmony Week, Lunar New Year and Pride Month celebrations. We took a snapshot of cultural demographics and representation at Autosports Group through a survey to gain better insights and drive the diversity program. Our village also includes our community. This year we participated in community partnerships and events such as Norton Street Festival, Bucklands Beach Yacht Club, MINI World Pride, Southport School, Gregory Terrace, St Joseph’s Nudgee College, Big Red Bash, Lions Football Club, St Ignatius School, The Hills Police Area Command, Kings Cross Police Area Command and Parramatta Police Area Command. Leading Change The Diversity and Inclusion Council surveyed our female employees to help understand what they enjoyed about working at Autosports Group and importantly, what they perceived to be the barriers to females progressing in the automotive industry. The results of this survey led us to create and launch the Women of Autosports Group Network, to provide career support, peer and mentor connection, professional development training and facilitate the career progression of more women at Autosports Group. Our Council drove several projects during the year to challenge stereotypes and lead change through greater understanding and awareness. These included video on accessibility which outlined the experience of one of our employees purchasing a vehicle and having it modified to accommodate a disability and Day in the Life videos of our staff working in various roles across the business. Care Over 200 Autosports Group employees took part in STEPtember in 2023, stepping their way to over $21,000 for the Cerebral Palsy Alliance, while our Volkswagen and Lamborghini businesses support Movember to raise awareness for Men’s mental Health raising over $40,000. Our value of care extends to our community as we supported the following charities and events during the year - Audi Foundation, Mazda Foundation, RU OK?, Movember, Sunnyfield, Ronald McDonald House Charities, Mercy Hospice Auckland, Starship Foundation NZ, Tour De Cure, Chappel Foundation, MyRoom, Jreissati Pancreatic Centre, Rotary Club of Beaumaris & Black Rock Sports Auxiliary, Sydney Children’s Hospital Foundation, Royal Flying Doctors, Children’s Cancer Institute and Sydney Breast Cancer Foundation. Modern slavery The Group prepared a Modern Slavery Statement in respect of the 2024 financial year which is available at http://investors.autosportsgroup.com.au/investors/?page=corporate-governance. Governance The Autosports Group Board is committed to conducting the business of the Group in accordance with high standards of corporate governance and with a view to creating and delivering value for the Group’s shareholders. The Board is responsible for setting and monitoring compliance with the Group’s governance framework. The Board and its Committees regularly review governance arrangements and practices to ensure continued compliance with regulatory requirements, and to ensure that they continue to support business objectives. The Chief Executive Officer is responsible for the implementation of the strategic objectives and for the day-to-day management of the Group, with the support of the Executive Team. 16 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 During the year, we further strengthened our governance framework, by: ● undertaking an annual review of our Board and Committee Charters; ● reporting on our progress in addressing the matters allocated to the Board and delegated to the Committees; and ● regularly reviewing our key governance policies and reporting regulatory changes through these channels. In FY2024, we welcomed Anna Burgdorf to the Board as a Non-Executive Director in February and Gareth Turner was most recently appointed by the Board as a new Non-Executive Director on 9 August 2024. Both Anna and Gareth are members of the Audit and Risk Committee and the People and Culture Committee. Founding Non-Executive Director Robert Quant will retire from the Board at the end of the 2024 Annual General Meeting. Profiles of all our current Directors are set out in the section ‘Current Directors’ and Profiles of our Executive KMP and Company Secretary are set out in the section ‘Other key management personnel and company secretary’ in this 2024 Annual Report. The Board considers that the Group’s corporate governance practices in FY2024 have been consistent with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Fourth edition). The Group’s 2024 Corporate Governance Statement is available on our website at https://investors.autosportsgroup.com.au/investors/?page=corporate-governance. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Likely developments in operations in future years The Group’s diverse revenue model supports both resilience and growth through the Financial Year 2025 ('FY25') as: ● New vehicle market is expected to remain competitive with consumer incentives and marketing initiatives in place to maintain like for like new vehicle revenue; ● Used vehicles, servicing, parts and collision repair revenue streams are expecting to grow on trend with stable margins and costs; ● Like for like vehicle inventory levels are expected to reduce as Autosports Group works with its OEM partners to improve stock turn ratios; ● Acquisition of Stillwell Motor Group is expected to complete in October 2024, adding approximately $260 million revenue in FY25 for the 9 months October 2024 to June 2025; and ● Autosports Group continues to actively assess further luxury branded acquisition opportunities. ANNUAL REPORT 2024 17 Risk The Group identified its key risk areas as: Macroeconomic risks As the products sold by Autosports Group are discretionary for many customers, the Group’s financial performance can be impacted by current and future economic conditions which it cannot control. Increasing interest rates and inflationary pressure can put pressure on consumer spending and reduce purchasing power. The Group monitors the external environment and its impact on the business. Privacy and Data Breach The Group handles personal and sensitive information. Our Data Breach Response Plan is designed so we are ready to take prompt action to contain and address data security incidents. Our privacy management framework is built around awareness, governance and continuous improvement whilst also being inherently connected with our cybersecurity framework. Cyber Security and Information technology (‘IT’) infrastructure FY2024 saw a continuation of the Group’s Cyber Security Maturity Uplift Program as cyber security risks remain a risk for businesses globally. During the year, further cyber security training was issued and progress was made in vendor security assessments and IT infrastructure risk remediation. Work, Health and Safety (‘WHS’) The Group has a zero-risk tolerance for serious safety incidents. During the financial year, the Group continued to improve its WHS practices through regular safety committee meetings, safety inspections and regular reporting to the Board. The Group commenced its own training on Electric Vehicles (EVs), additional to EV training provided by OEMs, and an audit of all Personal Protective Equipment (PPE) and the correct resources to carry out work on EVs also commenced in the reporting period. Reliance on key personnel The Group engaged in activities during the financial year to develop the skills and experience of potential successors as part of its succession planning initiatives. Original equipment manufacturer (‘OEM’) risk The Group relies on its relationships with OEMs to offer its range of luxury and prestige vehicles to consumers. The automotive industry is also experiencing a change in OEM business models including some manufacturers adopting an agency model. The Group’s supportive and collaborative approach to its relationships with OEMs has cultivated the Group’s excellent reputation amongst OEMs and we will continue to work with our business partners in this way. Regulatory compliance The Group is subject to a number of Australian and New Zealand laws and regulations such as consumer protection laws, consumer finance laws, laws relating to the sale of insurance products, importation laws, privacy laws and those relating to workplace health and safety. The Group monitors the regulatory landscape for regulatory change. Changes to market trends As consumer preferences continue to trend upward towards electric in FY2024, the Group is well positioned to take advantage of the trend as we partner with many OEMs that are delivering new ranges of electric vehicles. The Group regularly monitors market trends for changes to consumer preferences including investment in new technologies. Supply chain Vehicle supply shortages can arise from various factors including macroeconomic events affecting global supply chains and delays due to quarantine restrictions at Australian ports. The Group actively manages its supply chain to mitigate risk and control inventory balances. Environmental regulation The Group is subject to environmental regulation and is required to maintain licences and comply with local planning, State-based and federal environmental laws to operate its dealerships, service and collision facilities. Matters subsequent to the end of the financial year On 1 July 2024, Autosports Group acquired the 20% minority shareholding in John Newell Holdings Pty Ltd. As announced on 19 August 2024, the Group has entered into an Agreement through its wholly owned subsidiary ASG Investment Holdings Pty Ltd to acquire 100% of shares in B S Stillwell Motor Group Pty Ltd, known as the Stillwell Motor Group, for approximately $55 million. The Stillwell Motor Group is a family-owned business founded in 1949 that represents the BMW, BMW Motorrad, MINI, Volvo, MG and Ducati brands with dealerships in four Victorian locations. The purchase consideration consists of $45 million for goodwill and approximately $10 million for net tangible assets, subject to usual adjustments. The seller of the Stillwell Motor Group can elect to receive up to 15% of the purchase consideration in the form of the Company's shares to be issued at a price of $2.09 per share. The cash portion of the purchase consideration will be funded by cash and new and existing debt facilities. The acquisition is expected to settle in October 2024. No other matter or circumstance has arisen since 30 June 2024 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. 18 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Current directors Name: James Evans Title: Chairman Qualifications: Bachelor of Economics, a member of the Chartered Accountants Australia and New Zealand, a Fellow of the Financial Services Institute of Australasia and a Fellow of the Australian Institute of Company Directors Experience and expertise: James has over 40 years' executive experience in retailing, and banking and financial services. Recently, James served as the Chair of Global Fund Manager Pendal Group Limited and the Chair of ME Bank, until its sale to the Bank of Queensland and was a Non-Executive Director of Investa Group, including Investa Wholesale Funds Management Limited and ICPF Holdings Limited. He was also the former Chair of Suncorp Portfolio Services Limited and a Non-Executive Director of Australian Infrastructure Fund Limited and Hastings Funds Management Limited. Other current directorships: None Former directorships (last 3 years): Independent Director of Pendal Group Limited (ASX: PDL) from 2010-2022. Chairman from 2013 - 2022 Special responsibilities: Member of Audit and Risk Committee and People and Remuneration Committee Interests in shares: 88,612 ordinary shares held indirectly Interests in options: None Interests in rights: None ANNUAL REPORT 2024 19 Name: Nicholas ('Nick') Pagent Title: Chief Executive Officer Experience and expertise: Nick has over 28 years' experience in the motor vehicle industry across Australia and the United Kingdom. Prior to founding Autosports, 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: None Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 40,746,757 ordinary shares held indirectly Interests in options: None Interests in rights: 602,905 LTI performance rights and 202,495 STI performance rights convertible into ordinary shares Name: Anna Burgdorf Title: Independent Non-Executive Director (appointed on 13 February 2024) Qualifications: Bachelor of Arts from the University of Technology, Sydney Experience and expertise: Anna has held several senior strategic marketing roles at Flight Centre Travel Group and is currently the Global Brand and Marketing Director of its Luxury Leisure Division. Prior to this, Anna spent 21 years with German luxury automotive manufacturer, Audi Australia Pty Ltd in senior leadership positions. Anna is a founding Board Member of the Audi Foundation Australia and is a member of the Australian Institute of Company Directors. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of Audit and Risk Committee and People and Remuneration Committee Interests in shares: None Interests in options: None Interests in rights: None Name: Marina Go Title: Independent Non-Executive Director Qualifications: 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 Chair of Adore Beauty and a Non-Executive Director of Energy Australia and Transurban Group. She is also a member of the UNSW Business Advisory Council, and author of the business book for women, 'Break Through: 20 Success Strategies for Female Leaders'. Marina has over 26 years’ of leadership experience in the media industry, having started her career as a journalist. She is the former Chair of Ovarian Cancer Australia and Super Netball Limited. She is also a member of the Australian Institute of Company Directors. Other current directorships: Chair of Adore Beauty Group Ltd (ASX: ABY) - since 2 November 2021 and Non-Executive Director - since 6 October 2020 and Non-Executive Director of Transurban Group (ASX: TCL) - since 1 December 2021. Former directorships (last 3 years): Non-Executive Director of Booktopia Group Limited (ASX: BKG) - resigned on 31 March 2022, Non-Executive Director of Pro-Pac Packaging (Aust) Pty Ltd (ASX: PPG) - resigned on 23 November 2021. Special responsibilities: Chair of People and Remuneration Committee and Member of Audit and Risk Committee Interests in shares: 40,833 ordinary shares held directly Interests in options: None Interests in rights: None 20 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Name: James (‘Ian’) Pagent Title: Non-Executive Director Qualifications: Bachelor of Arts (Hons) in Politics from Melbourne University and LLB from Sydney University Experience and expertise: Ian has over 54 years' experience in the motor vehicle industry across Australia, Asia and the United States of America. 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. Ian is a Co-Founder of Autosports Group. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of Audit and Risk Committee and People and Remuneration Committee Interests in shares: 65,995,799 ordinary shares held indirectly Interests in options: None Interests in rights: 42,894 LTI performance rights convertible into ordinary shares Name: Robert Quant Title: Independent Non-Executive Director Qualifications: Bachelor of Business from the University of Technology, Sydney Experience and expertise: Robert has over 40 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 Chief Executive Officer 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: None Former directorships (last 3 years): None Special responsibilities: Chair of Audit and Risk Committee and Member of People and Remuneration Committee Interests in shares: 62,499 ordinary shares held indirectly Interests in options: None Interests in rights: None Name: Gareth Turner Title: Independent Non-Executive Director (appointed on 9 August 2024) Qualifications: Bachelor of Commerce (Hons) from the University of Natal, South Africa, and Master of Business Administration from the University of Oxford, UK. Experience and expertise: Gareth has over 20 years’ experience in financial and leadership positions, including an executive career in Chief Financial Officer roles in the telecommunications and technology sectors. His most recent executive roles include Chief Financial Officer and Chief Commercial Officer at Infomedia Limited. Other current directorships: Non-Executive Director of Superloop (ASX: SLC) since 2 March 2023 Former directorships (last 3 years): None Special responsibilities: Member of Audit and Risk Committee and People and Remuneration Committee Interests in shares: None Interests in options: 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 three years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ANNUAL REPORT 2024 21 Board composition as at 30 June 2024 *Board tenure chart excludes Chief Executive 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 2024, and the number of meetings attended by each director were: Full Board People and Remuneration Committee Audit and Risk Committee Attended Held Attended Held Attended Held James Evans 8 8 8 8 7 7 Nick Pagent* 8 8 8 8 7 7 Marina Go 8 8 8 8 7 7 Ian Pagent 8 8 8 8 7 7 Robert Quant 8 8 8 8 7 7 Anna Burgdorf ** 3 3 3 3 3 3 Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. * Whilst Nick Pagent is not members of the People and Remuneration Committee or Audit and Risk Committee, they attended each meeting. ** Anna Burgdorf was appointed a director on 13 February 2024. 22 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Other key management and company secretary Name: Brent Polites Title: Head of Franchised Automotive Qualifications: Bachelor of Commerce from Deakin University and Master of Business Administration from the University of Melbourne Experience and expertise: Brent has more than 20 years’ experience in automotive including more than 12 years leading some of Australia’s largest dealerships. Brent has won multiple Dealer of the Year awards across different brands and States. He has a broad automotive experience that spans retail, importation and OEM wholesale. Interests in shares: 156,752 ordinary shares held indirectly Interests in options: None Interests in rights: 142,989 LTI performance rights and 73,205 STI performance rights convertible into ordinary shares Name: Aaron Murray Title: Chief Financial Officer and Company Secretary (effective from 25 January 2024) Experience and expertise: Aaron has over 25 years' experience in accounting and the motor vehicle industry. He has held the role of Autosports Chief Financial Officer since 2009, after joining the business in 2007. Prior to joining Autosports, he held accounting and finance roles with Trivett Classic, McMillan Volkswagen and Audi Centre Parramatta. Interests in shares: 2,070,741 ordinary shares held directly and indirectly Interests in options: None Interests in rights: 219,626 LTI performance rights and 125,453 STI performance rights convertible into ordinary shares Name: Caroline Gatenby Title: General Counsel and Company Secretary (appointed on 20 June 2024) Qualifications: Bachelor of Laws (Hons) and Bachelor of Communication from the University of Technology, Sydney, Graduate Diploma from the Governance Institute of Australia. Experience and expertise: Caroline has over 16 years’ experience as a lawyer with legal, governance and compliance experience in private practice and across retail, professional services, FMCG and healthcare. Prior to joining Autosports Group, Caroline was Global Compliance Officer and Deputy General Counsel at Cochlear Limited. Former Company Secretary Caroline Raw resigned on 25 January 2024. 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 1,428,459 unissued ordinary shares of Autosports Group Limited under performance rights at the date of this report. ANNUAL REPORT 2024 23 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 2024 and up to the date of this report. Shares issued on the exercise of performance rights No shares were issued on the exercise of performance rights during or since the end of the financial year. Instead, the Company arranged to purchase shares on-market through a facility offered by its Share Registry, Link Market Services, which satisfied vested performance rights during the financial year. 964,248 ordinary shares were provided from the shares purchased on-market during the year. 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. Chief Financial Officer and Head of Franchised Automotive 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 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. 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: ● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and ● none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards) 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. 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. 24 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Remuneration report (audited) Sections The remuneration report is set out under the following main headings: 1 Remuneration essentials 2 Senior Executive remuneration in detail 3 Non-Executive Director remuneration 4 Statutory remuneration disclosures 5 Transactions with key management personnel (1) Remuneration essentials What does this report cover? The directors of Autosports Group Limited are pleased to introduce to shareholders the Company’s remuneration report for the performance period 1 July 2023 to 30 June 2024 (‘financial year’ or ‘FY24’). Gareth Turner was appointed as a Non-Executive Director of Autosports Group Limited on 9 August 2024 and did not receive any compensation during the year ended 30 June 2024. Who does this report cover? This report sets out the remuneration arrangements for the Company’s key management personnel (‘KMP’). The term KMP 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). Throughout the remuneration report, KMP are referred to as either Senior Executives (who are members of KMP performing an executive role) or Non-Executive Directors. The following table sets out the Company’s KMP for the financial year. All KMP held their positions for the whole of the financial year, unless otherwise indicated. Name Position Non-Executive Directors James Evans Chairman Marina Go Independent Director Ian Pagent Non-Executive Director Robert Quant Independent Director Anna Burgdorf Independent Director (appointed on 13 February 2024) Senior Executives Nick Pagent Chief Executive Officer (‘CEO’) Brent Polites Head of Franchised Automotive Aaron Murray Chief Financial Officer (‘CFO’) Remuneration governance and framework Role of the Board and People and Remuneration Committee The Board of Directors (the ‘Board’) is responsible for establishing, and overseeing the implementation of, the Company’s remuneration policies and frameworks and ensuring that they are aligned with the long-term interests of the Company and its shareholders. The People and Remuneration Committee assists the Board with these responsibilities. The role of the People and Remuneration Committee is to review key aspects of the KMP 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 that align with short and long-term goals and cultural expectations; ● 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. Recommendations are made based on annual reviews of Senior Executives' performance against KPIs. Use of remuneration consultants and other advisors The Board recognises the need to motivate, attract and retain employees to deliver excellent business performance. In FY24, the People and Remuneration Committee commissioned a report from an independent remuneration consultant, Godfrey Remuneration Group Pty Limited, to provide guidance in relation to the Group’s remuneration policy and the rewards levels for the Senior Executives and Non- Executive Directors. The report considered remuneration structures in companies with comparable size and scale across relevant sectors. ANNUAL REPORT 2024 25 The People & Remuneration Committee and Board agreed to retain the current remuneration structure for Senior Executives and Non- Executive Directors in FY25. An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free from undue influence from KMP. These protocols include requiring that the consultant not communicate with affected KMP without a member of the People and Remuneration Committee being present, and that the consultant not provide any information relating to the outcome of the engagement with the affected KMP. The Board is also required to make inquiries of the consultant’s processes at the conclusion of the engagement to ensure that they are satisfied that any recommendations made have been free from undue influence. The Board is satisfied that these protocols were followed and as such there was no undue influence. Godfrey Remuneration Group Pty Limited was paid $88,000 for its services. Voting and comments made at the Company's 2023 Annual General Meeting ('AGM') At the 2023 AGM, 99.67% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2023. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Remuneration policy and guiding principles In accordance with best practice corporate governance, the structure of Senior Executive and Non-Executive Director remuneration is separate. Senior Executive remuneration Our remuneration framework is designed to be competitive and encourage Senior Executives to execute the Group’s strategy and achieve business objectives 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: Non-Executive Director remuneration In remunerating Non-Executive Directors, we aim to ensure that we 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 Our executive remuneration framework 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. 26 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Executive remuneration framework Fixed remuneration (‘Fixed REM’) – Cash Short-term incentive (‘STI’) (at risk) – Equity Long-term incentive (‘LTI’) (at risk) – Equity Base salary plus superannuation and other benefits STI is subject to financial and non-financial performance hurdles Granted in performance rights at the start of the performance period Influenced by individual skills, qualifications, experience and performance Subject to a culture and values gateway hurdle Vesting subject to an earnings per share ('EPS') performance condition Reviewed annually Performance measured over 12 months Performance measured over three years Granted in performance rights which will vest following a 12-month deferral period subject to the Senior 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. The tables below illustrate the remuneration mix for Senior Executives at maximum award. ANNUAL REPORT 2024 27 Company performance In FY24, revenue grew 11.6% (2024: $2.65 billion, 2023: $2.37 billion) and service and parts revenue grew 13.8% (2024: $379 million, 2023: $333 million). Profit before tax was down 11.9% to $88.4 million. Net profit after tax was down 7.8% to $61.5 million compared to $66.6 million for the prior year. At year end our cash at bank was $36.29 million (2023: $41.99 million) and corporate debt was $206.6 million (2023: $222.6 million). Our remuneration structure was established to reward both short-term and long-term growth with gateway hurdles of upholding cultural and value expectations for continual improvement in corporate governance, compliance, risk management and stakeholder relationships. It is also intended to retain skilled executives in the long-term interests of the business. The table below shows our financial performance for the last five years. Share performance Earnings performance Liquidity Financial year ended Closing share price Dividend per share Basic earnings per share ('EPS') Earnings Before Interest and tax ('EBIT') Net profit after tax ('NPAT') Return on Equity ('ROE') Cash flow from operations Interest coverage (Earnings before interest and tax ('EBITDA')) 30 June ($) (cents)* (cents) $M $M % $M 2024 2.17 18.0 30.28 145.1 61.5 12.3 119.5 3.60 2023 2.03 19.0 32.55 133.9 66.6 13.8 166.0 5.53 2022 1.52 16.0 26.56 96.8 54.6 10.8 135.0 9.10 2021 2.55 9.0 20.86 79.8 42.4 10.2 125.8 7.13 2020 1.17 - (50.97) (76.1) (102.3) (27.1) 83.8 3.54 * 100% franked at 30% corporate income tax. (2) Senior Executive remuneration in detail Fixed remuneration The remuneration of Senior Executives includes a fixed component comprised of base salary, 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. Fixed remuneration for Senior Executives is market-aligned to similar roles in companies of a comparable size, complexity and scale to Autosports. Short-term incentive Set out below is an explanation of the terms and conditions applying to the STI awards for Senior Executives during the performance period. Overview of the STI plan 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. Participation Executive directors and other members of senior management are eligible to participate in the STI plan. Performance period 1 July 2023 to 30 June 2024 STI opportunity The STI opportunities of the Senior Executives are set out below: 28 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Level of performance Level of performance Name At target At maximum Nick Pagent 50% of base salary 75% of base salary Brent Polites 50% of base salary 75% of base salary Aaron Murray 50% of base salary 75% of base salary Each Senior Executive’s STI opportunity is assessed against individually weighted financial and non-financial performance hurdles. In relation each financial key performance indicator comprising PBT and inventory efficiency, the STI opportunity is awarded as follows: (i) 90% - no award (ii) > 90% and 100% - 30% of ‘target’ amount awarded (iii) 100% (at target) - 100% of ‘target’ amount awarded (iv) > 100% and less than 110% - straight line pro rata between ‘target’ and ‘maximum’ amount awarded (v) 110% or greater - ‘maximum’ amount awarded. Additionally, all performance metrics were assessed exclusive of new or unbudgeted acquisitions. Non-financial KPIs were assessed based on the achievement of individual strategic objectives and performance against set criteria. The Board retained its discretion to determine each Senior Executive’s award including having regard to performance. Performance conditions Performance conditions for the initial grant include: (i) a “gateway hurdle” of upholding our culture and values. Our culture is underpinned by our values of Village, Care, Leading Change and Strive for Excellence and, alongside our Code of Conduct, provide a framework for how we work and interact together. If this gateway hurdle is not met, no STI is awarded; and (ii) in addition, each Senior Executive has a 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 relate to the financial objectives of the Group and include targets measured against PBT and inventory efficiency. The non-financial performance hurdles are aligned to each Senior Executive’s role and include items such as reporting, safety, business and property acquisitions, culture and employee engagement, diversity, investor relations, cybersecurity, capital management, internal audit, operational management and contract management. 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. Measurement of performance conditions 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 award for the Senior Executives for the initial grant and, therefore, the number of performance rights to be granted. Delivery of STI awards Following measurement against performance conditions, STI awards are delivered in the form of performance rights which vest following a deferral period of 12 months subject to a continuous service condition. Performance rights Upon vesting, each performance right entitles the Senior Executive to one ordinary share in the Company. The Board has the discretion to settle performance rights with a cash equivalent payment. Performance rights are granted for nil consideration and no amount is payable on vesting. Number of performance rights to be granted The number of performance rights to be granted to Senior Executives is determined by dividing any STI award that the executive becomes 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 FY24 audited results. ANNUAL REPORT 2024 29 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: (i) if they resign or are summarily terminated, all of their rights will lapse; or (ii) 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. 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. 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. Maximum potential STI bonus STI award Percentage of target STI award Percentage of maximum STI award Percentage of maximum STI award Senior Executives Year ($)* ($) granted granted forfeited Nick Pagent 2024 525,000 212,333 55% 40% 60% 2023 525,000 514,500 100% 98% 2% Ian Pagent 2024 - - - - - 2023** 180,000 - - - 100% Brent Polites 2024 375,000 164,167 60% 44% 56% 2023*** 187,500 186,000 100% 99% 1% Aaron Murray 2024 318,750 152,610 67% 48% 52% 2023 318,750 318,750 100% 100% - * The maximum potential bonus is determined by reference to the maximum STI opportunity available to each Senior Executive as a percentage of their base salary. ** In accordance with terms of STI Plan, Ian Pagent’s entitlement to participate in the FY23 STI Plan was forfeited upon retiring from his executive position on 31 January 2023. *** Brent Polites' participation in the STI Plan commenced on 1 January 2023. 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. Overview of the LTI plan The LTI plan is an ‘at-risk’ equity component of executive remuneration which is subject to the satisfaction of a long-term performance condition. Participation Executive directors and other members of senior management are eligible to participate in the LTI plan. LTI opportunity The LTI opportunity of the Senior Executives is set out below: Nick Pagent 75% of base salary Brent Polites 45% of base salary Aaron Murray 45% of base salary 30 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 Instrument Upon vesting, each performance right entitles the Senior Executive to one ordinary share in the Company. The Board has the discretion to settle performance rights with a cash equivalent payment. Performance rights are granted for nil consideration and no amount is payable on vesting. Number of performance rights to be granted The number of performance rights granted to each Senior Executive 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 LTI grants have a three-year performance period, which commences on 1 July of the year they are granted. 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% Nil 7% (threshold performance) 50% Between 7% and 15% 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 financial performance of the Company. EPS is calculated having regard to underlying profit, which measures profit from the Group’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: (i) if the executive resigns or is summarily terminated, all their performance rights will lapse; or (ii) if the executive ceases employment in any other circumstances including retirement, 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. ANNUAL REPORT 2024 31 Executive service agreements Each Senior Executive is party to a written executive service agreement with the Company. The key terms are set out below. Base salary Nick Pagent – $700,000 per annum base salary plus other benefits valued at $97,606. Brent Polites - $500,000 per annum base salary plus other benefits valued at $90,395. Aaron Murray – $425,000 per annum base salary plus other benefits valued at $110,387. Periods of notice required to Nick Pagent – either party may terminate the contract by giving 12 months’ notice. terminate and Brent Polites – either party may terminate the contract by giving 6 months’ notice. termination payments 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. FY25 Senior Executive remuneration A change to the STI Gateway for executive remuneration has been included for ESG Reporting for FY25. This is to establish the ESG reporting framework ahead of compulsory reporting in FY26. Board to use discretion as to the results based on the development of the framework and report compared to ASX listed peers. (3) Non-Executive Director remuneration Principles of Non-Executive Director remuneration As outlined in section 2, in remunerating Non-Executive Directors, we aim to attract and retain qualified and experienced directors having regard to: ● the specific responsibilities and requirements for the Board; ● fees paid to Non-Executive of other comparable Australian companies; and ● the size and complexity of the Group’s operations. Non-Executive Director remuneration for the financial year Board fees The current Non-Executive Director fee pool is set at $800,000 per annum. The Non-Executive Directors’ fees are $200,000 for the Chairman 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. We do not pay benefits (other than statutory entitlements) on retirement to Non-Executive Directors. Committee fees Non-Executive Directors are paid Committee fees of $20,000 (including superannuation) per annum for the Chair of each Board Committee. Directors do not receive additional fees for being a member of a Board Committee. 32 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 (4) Statutory remuneration disclosures KMP remuneration The following table sets out the statutory disclosures in accordance with the Accounting Standards for the financial year. Short-term employee benefits Post- employment benefits Share-based payments Cash paid salary/fees Non- monetary¹ Super- annuation Long service leave Rights² Total $ $ $ $ $ $ Non-Executive Directors James Evans 2024 180,180 - 19,820 - - 200,000 2023 180,989 - 19,011 - - 200,000 Marina Go 2024 108,108 - 11,892 - - 120,000 2023 108,590 - 11,410 - - 120,000 Robert Quant 2024 108,108 - 11,892 - - 120,000 2023 108,590 - 11,410 - - 120,000 Ian Pagent 2024 90,090 - 9,910 - - 100,000 20233 31,326 - 3,289 - - 34,615 Anna Burgdorf 20244 30,839 - 3,392 - - 34,231 Senior Executives Nick Pagent 2024 700,000 70,207 27,399 11,282 737,333 1,546,221 2023 700,000 62,115 25,292 11,800 1,039,500 1,838,707 Ian Pagent 2024 - - - - - - 20235 259,357 37,489 17,492 (35,453) (266,990) 11,895 Brent Polites 2024 500,000 62,996 27,399 8,059 389,167 987,621 20236 230,769 16,566 12,646 6,514 298,500 564,995 Aaron Murray 2024 425,000 82,988 27,399 6,850 343,860 886,097 2023 425,000 70,126 25,292 7,167 510,000 1,037,585 1 The amounts disclosed as non-monetary benefits includes things such as motor vehicle, motor vehicle insurance, fringe benefit tax on motor vehicle and fuel allowance. 2 The value of rights granted to the Senior Executives is based on the fair value estimate on grant date. 3 Represents remuneration from 1 February 2023. 4 Represents remuneration from 13 February 2024. 5 Represents remuneration until 31 January 2023. 6 Represents remuneration from 1 January 2023. There were no termination benefits provided in the financial year. Movements in performance rights held by KMPs The following table shows the changes in performance rights granted to KMPs during the financial year including the performance rights on issue and subject to exercise at a later date. The Non-Executive Directors do not hold performance rights, except for Ian Pagent who continues to hold a pro-rated portion of performance rights that were entitled to remain in the applicable STI and LTI Plan in accordance with its terms following his retirement from his executive position. Brent Polites was appointed as KMP on 1 January 2023 and is entitled to participate in the FY23 STI Plan and FY23 LTI Plan pro-rated for the applicable performance periods from 1 January 2023. Performance rights in respect of these plans were granted in FY24 and included in the table below. ANNUAL REPORT 2024 33 Performance rights awarded, vested and lapsed/forfeited during the year and available for exercise in future years are detailed below. Grant date Performance period Fair value on grant date Rights held at the start of the financial year Rights granted Rights exercised Rights forfeited Rights held at the end of the financial year Nick Pagent LTI - FY21 9 Dec 2020 1 July 2020 - 30 June 2023 $1.40 350,467 - (350,467) - - LTI - FY22 15 Dec 2021 1 July 2021 - 30 June 2024 $2.18 232,419 - - (90,168) 142,251 LTI - FY23 16 Dec 2022 1 July 2022 - 30 June 2025 $2.05 254,028 - - - 254,028 STI - FY22 16 Dec 2022 1 July 2022 - 30 June 2023 $2.05 197,803 - (197,803) - - LTI - FY24 27 Oct 2023 1 July 2024 - 30 June 2026 $2.54 - 206,626 - - 206,626 STI - FY23 27 Oct 2023 1 July 2023 - 30 June 2024 $2.54 - 202,495 - - 202,495 1,034,717 409,121 (548,270) (90,168) 805,400 Ian Pagent* LTI - FY21 9 Dec 2020 1 July 2020 - 30 June 2023 $1.40 120,982 - (120,982) - - LTI - FY22 15 Dec 2021 1 July 2021 - 30 June 2024 $2.18 42,169 - - (16,360) 25,809 LTI - FY23 16 Dec 2022 1 July 2022 - 30 June 2025 $2.05 17,085 - - - 17,085 STI - FY22 16 Dec 2022 1 July 2022 - 30 June 2023 $2.05 40,186 - (40,186) - - 220,422 - (161,168) (16,360) 42,894 Brent Polites LTI - FY23 1 Dec 2023 1 July 2022 - 30 June 2025 $2.07 54,435 - - - 54,435 LTI - FY24 23 Oct 2023 1 July 2024- 30 June 2026 $2.54 - 88,554 - - 88,554 STI - FY23 23 Oct 2023 1 July 2023 - 30 June 2024 $2.54 - 73,205 - - 73,205 54,435 161,759 - - 216,194 Aaron Murray LTI - FY21 9 Dec 2020 1 July 2020 - 30 June 2023 $1.40 131,425 - (131,425) - - LTI - FY22 15 Dec 2021 1 July 2021 - 30 June 2024 $2.18 84,662 - - (32,845) 51,817 LTI - FY23 16 Dec 2022 1 July 2022 - 30 June 2025 $2.05 92,538 - - - 92,538 STI - FY22 16 Dec 2022 1 July 2022 - 30 June 2023 $2.05 123,385 - (123,385) - - LTI-FY24 27 Oct 2023 1 July 2023 - 30 June 2026 $2.54 - 75,271 - - 75,271 STI - FY23 27 Oct 2023 1 July 2023 - 30 June 2024 $2.54 - 125,453 - - 125,453 432,010 200,724 (254,810) (32,845) 345,079 All performance rights outstanding at year end were unvested. * Upon Ian Pagent’s retirement as an executive on 31 January 2023, Ian was entitled to retain a pro-rated number of performance rights proportionate to the part of the performance period served, and the balance was forfeited in accordance with the terms of the STI and LTI plans. 34 AUTOSPORTS GROUP DIRECTORS’ REPORT CONTINUED 30 JUNE 2024 KMP shareholdings The following table outlines the movements in KMP ordinary shareholdings in the Company (including their related parties) for the financial year. Shares held at the start of the financial year Received as part of remuneration3 Additions¹ Disposals/ others2 Shares held at the end of financial year Non-Executive Directors James Evans 88,612 - - - 88,612 Marina Go 40,833 - - - 40,833 Ian Pagent 65,834,631 161,168 - - 65,995,799 Robert Quant 62,499 - - - 62,499 Anna Burgdorf - - - - - Senior Executives Nick Pagent 40,177,947 548,270 20,540 - 40,746,757 Brent Polites 156,752 - - - 156,752 Aaron Murray 1,890,931 254,810 - (75,000) 2,070,741 108,252,205 964,248 20,540 (75,000) 109,161,993 1 On-market purchase of shares. 2 On-market sale of shares 3 From the vesting of performance rights (5) Transactions with KMP Management fees The Group received administration service fees in relation to shared administration staff managing properties outside of the Group that are owned by Ian and Nick Pagent. The Group received management fees Related party management fee Fee type $ GFB Properties Pty Ltd Property management service 10,737 Autohaus Prestige Five Dock Pty Ltd Property management service 21,474 Audi Parramatta Property Holdings Pty Ltd Property management service 10,737 Audi Parramatta Properties 2 Pty Ltd Property management service 10,737 Autosports Properties Leichhardt Pty Ltd Property management service 21,474 New Centenary Properties Pty Ltd Property management service 10,737 NDI Properties Pty Ltd Property management service 10,737 96,633 ANNUAL REPORT 2024 35 Related party leases During the financial year, the Group had operating lease agreements on normal commercial terms with various entities owned by Ian and Nick Pagent. The Group paid rental fees Related party operating leases Property location $ GFB Properties Pty Ltd 3-7 Parramatta Rd, Five Dock NSW 1,025,457 Autohaus Prestige Five Dock Pty Ltd 34-36 Spencer St, Five Dock NSW, Unit C 2 Packard Ave, Castle Hill NSW, and 26-28 Chard Road, Brookvale NSW 884,943 Audi Parramatta Property Holdings Pty Ltd 49-51 Church St, Parramatta NSW 803,845 Audi Parramatta Properties 2 Pty Ltd 13 Church St, Parramatta NSW 600,662 Autosports Properties Leichhardt Pty Ltd 531-571 Parramatta Rd, Leichhardt NSW 1,437,497 New Centenary Properties Pty Ltd 135 Moggill Rd, Toowong QLD and 45 Dickson Avenue, Artarmon NSW 3,260,345 8,012,749 This concludes the remuneration report, which has been audited. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ ___________________________ James Evans Nicholas Pagent Chairman Chief Executive Officer 22 August 2024 Sydney 36 AUTOSPORTS GROUP AUDITOR’S INDEPENDENCE DECLARATION Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Organisation. Deloitte Touche Tohmatsu ABN 74 490 121 060 Quay Quarter Tower 50 Bridge Street Sydney, NSW, 2000 Australia Phone: +61 2 9322 7000 www.deloitte.com.au 22 August 2024 The Board of Directors Autosports Group Limited 555 Parramatta Road Leichhardt NSW 2040 Dear Directors Auditor’s Independence Declaration to 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 report of Autosports Group Limited for the year ended 30 June 2024, 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 faithfully DELOITTE TOUCHE TOHMATSU Tara Hill Partner Chartered Accountants 26 ANNUAL REPORT 2024 37 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2024 Consolidated Note 30 June 2024 30 June 2023 $'000 $'000 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes Revenue 5 2,646,763 2,371,296 Interest revenue 100 129 Expenses Changes in inventories 115,961 (123,069) Raw materials and consumables purchased (2,247,816) (1,772,724) Employee benefits expense (203,996) (188,993) Depreciation and amortisation expense 6 (59,360) (52,028) Impairment of property, plant and equipment 11 - (6,004) Occupancy costs 6 (8,909) (7,964) Acquisition and restructure expenses (681) (6,027) Other expenses (96,917) (80,657) Finance costs 6 (56,787) (33,658) Profit before income tax expense 88,358 100,301 Income tax expense 7 (26,878) (33,652) Profit after income tax expense for the year 61,480 66,649 Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation 19 1,966 (579) Other comprehensive income for the year, net of tax 1,966 (579) Total comprehensive income for the year 63,446 66,070 Profit for the year is attributable to: Non-controlling interest 608 1,223 Owners of Autosports Group Limited 60,872 65,426 61,480 66,649 Total comprehensive income for the year is attributable to: Non-controlling interest 608 1,223 Owners of Autosports Group Limited 62,838 64,847 63,446 66,070 Cents Cents Basic earnings per share 30 30.28 32.55 Diluted earnings per share 30 30.07 32.28 38 AUTOSPORTS GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024 Consolidated Note 30 June 2024 30 June 2023 $'000 $'000 The above consolidated statement of financial position should be read in conjunction with the accompanying notes Assets Current assets Cash and cash equivalents 36,289 41,999 Trade and other receivables 8 105,337 89,569 Inventories 9 489,716 373,755 Other assets 10 20,315 17,660 Total current assets 651,657 522,983 Non-current assets Property, plant and equipment 11 307,294 295,519 Right-of-use assets 12 199,854 227,846 Intangibles 13 548,603 551,638 Deferred tax 7 20,977 21,343 Total non-current assets 1,076,728 1,096,346 Total assets 1,728,385 1,619,329 Liabilities Current liabilities Trade and other payables 14 211,846 189,396 Contract liabilities 643 970 Income tax payable 7 1,310 13,723 Employee benefits 15 25,487 25,141 Borrowings 16 581,342 449,104 Lease liabilities 17 39,094 38,194 Total current liabilities 859,722 716,528 Non-current liabilities Trade and other payables 14 - 4,594 Deferred tax 7 - 332 Employee benefits 15 3,490 3,792 Borrowings 16 177,340 195,070 Lease liabilities 17 194,171 220,608 Total non-current liabilities 375,001 424,396 Total liabilities 1,234,723 1,140,924 Net assets 493,662 478,405 Equity Issued capital 18 475,637 475,637 Reserves 19 4,894 2,761 Retained profits/(accumulated losses) 14,008 (5,914) Equity attributable to the owners of Autosports Group Limited 494,539 472,484 Non-controlling interest (877) 5,921 Total equity 493,662 478,405 ANNUAL REPORT 2024 39 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2024 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes Issued Accumulated Non- controlling Total equity capital Reserves losses interest Consolidated $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2022 475,637 4,506 (35,978) 5,328 449,493 Profit after income tax expense for the year - - 65,426 1,223 66,649 Other comprehensive income for the year, net of tax - (579) - - (579) Total comprehensive income for the year - (579) 65,426 1,223 66,070 Transactions with owners in their capacity as owners: Share-based payments (note 19) - (348) - - (348) Transfer to accumulated losses - (818) 818 - - Dividends paid (note 20) - - (36,180) (630) (36,810) Balance at 30 June 2023 475,637 2,761 (5,914) 5,921 478,405 Issued (Accumulated losses)/ retained Non- controlling Total equity capital Reserves profits interest Consolidated $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2023 475,637 2,761 (5,914) 5,921 478,405 Profit after income tax expense for the year - - 60,872 608 61,480 Other comprehensive income for the year, net of tax - 1,966 - - 1,966 Total comprehensive income for the year - 1,966 60,872 608 63,446 Transactions with owners in their capacity as owners: Share-based payments (note 19) - (583) - - (583) Transfer from accumulated losses - 750 (750) - - Transactions with non-controlling shareholders - - - (6,069) (6,069) Dividends paid (note 20)  - - (40,200) (1,337) (41,537) Balance at 30 June 2024 475,637 4,894 14,008 (877) 493,662 40 AUTOSPORTS GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2024 Consolidated Note 30 June 2024 30 June 2023 $'000 $'000 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes Cash flows from operating activities Profit before income tax expense for the year 88,358 100,301 Adjustments for: Depreciation and amortisation 6 59,360 52,028 Impairment of property, plant and equipment - 6,004 Net loss on disposal of property, plant and equipment 483 2,667 Share-based payments 6 1,828 938 Interest received (100) (129) Interest and other finance costs 6 56,787 33,658 206,716 195,467 Change in operating assets and liabilities: Increase in trade and other receivables (15,768) (25,414) Increase in inventories (115,961) (123,069) Increase in other operating assets (2,655) (2,443) Increase in trade and other payables 12,341 28,913 Decrease in contract liabilities (327) (640) Increase in employee benefits 44 2,539 Increase/(decrease) in bailment finance 130,594 164,275 214,984 239,628 Interest received 100 129 Interest and other finance costs paid (56,787) (33,658) Income taxes paid (38,764) (40,097) Net cash from operating activities 119,533 166,002 Cash flows from investing activities Payment for purchase of business, net of cash acquired 27 - (116,791) Payments for property, plant and equipment 11 (29,179) (133,666) Net cash used in investing activities (29,179) (250,457) Cash flows from financing activities Proceeds from borrowings 31 11,399 136,049 Repayment of borrowings 31 (27,485) (25,709) Repayment of lease liabilities 31 (36,019) (36,861) Dividends paid 20 (40,200) (36,180) Dividends paid to non-controlling interest (1,337) (630) On market share purchase to settle share-based payments 19 (2,411) (1,182) Net cash from/(used in) financing activities (96,053) 35,487 Net decrease in cash and cash equivalents (5,699) (48,968) Cash and cash equivalents at the beginning of the financial year 41,999 90,817 Effects of exchange rate changes on cash and cash equivalents (11) 150 Cash and cash equivalents at the end of the financial year 36,289 41,999 ANNUAL REPORT 2024 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2024 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: Autosports Group Head Office 555 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 22 August 2024. The directors have the power to amend and reissue the financial statements. Note 2. Material accounting policy information The accounting policies that are material to the Group are set out below. The accounting policies adopted are consistent with those of the previous financial year, 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 ended 30 June 2024. Net current asset 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 $208,065,000 as at 30 June 2024 (2023: $193,545,000). During the financial year ended 30 June 2024, the Group made a profit after income tax expense of $61,480,000 (2023: profit after income tax expense of $66,649,000). The directors have reviewed the cash flow forecast for the Group at least through to 30 August 2025. The forecast indicates that the Group will generate net positive operating cash inflows 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: ● during the financial year the Group generated $119,533,000 (2023: $166,002,000) of cash flow from operating activities; ● during the financial year the Group used $29,179,000 to fund additions to property, plant and equipment; ● as at 30 June 2024, the Group has undrawn capital finance facilities of $103,813,000 (2023: $15,200,000) which is available for specific purposes, including acquisitions, property construction and upgrade of existing facilities and undrawn bailment finance facilities of $277,002,000 (2023: $196,352,000); ● as at 30 June 2024, the Group has cash and cash equivalents amounting to $36,289,000 (2023: $41,999,000); ● the Group has the continuing support of its financiers. The directors have concluded that it is appropriate to prepare the financial statements on the going concern basis, as they believe that the Group will comply with its future financial covenants and be able to pay its debts as and when they become due and payable from cash flows from operations and available finance facilities for at least 12 months from the date of approval of these 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. 42 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 2. Material accounting policy information (continued) 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. 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 33. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Autosports Group Limited as at 30 June 2024 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. 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. Foreign currency translation The financial statements are presented in Australian dollars, which is Autosports Group Limited's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. ANNUAL REPORT 2024 43 Note 2. Material accounting policy information (continued) Revenue recognition The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability. New, demonstrator and used vehicles Revenue from the sale of vehicles is recognised at the point in time when the buyer obtains control of the goods, which is generally at the time of delivery of the vehicle. Parts and service Revenue from the sale of parts is recognised at the point in time when the buyer obtains control of the goods, which is generally at the time of delivery of the goods. Service work on customers' vehicles is carried out under instructions from the customer. Service revenue is recognised over time based on either a fixed price or an hourly rate. Revenue arising from the sale of parts fitted to customers’ vehicles during service is recognised at the point in time upon delivery of the fitted parts to the customer upon completion of the service. Other revenue i) Aftermarket accessories and other revenue Aftermarket accessories and other revenue are recognised at the point in time when they are delivered to the customer. Aftermarket accessories relate to items fitted at the dealership and include products such as window tinting, mud flaps and paint protection. ii) Finance and insurance revenue Finance and insurance commissions are recognised at the point in time, usually 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. iii) Agency commission Agency commission represents fees from third parties where the Group acts as an agent by arranging a third party to provide goods and services to a customer. In such cases, the Group is not primarily responsible for providing the underlying good or service to the customer. Agency commission is recognised on an accrual basis on completion of the referral or when the commission is received. 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. 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 raw materials and consumables purchased (cost of goods sold) in profit or loss. Bonuses and rebates are recognised when the right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. 44 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 2. Material accounting policy information (continued) 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 Trade receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses (ECL), which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables Other receivables are recognised at amortised cost, less any allowance for expected credit losses. 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. Inventories 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. ANNUAL REPORT 2024 45 Note 2. Material accounting policy information (continued) Used vehicles Used vehicles are stated at the lower of cost and net realisable value on a unit-by-unit basis. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The age of the car is considered in determining the 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 held at the lower of cost and net realisable value. 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 40 years Leasehold improvements over the estimated useful life Plant and equipment 3 - 10 years Furniture, fixtures and fittings 2 - 10 years Motor vehicles 4 - 8 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. 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 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 2. Material accounting policy information (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. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 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 Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. 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. Contract liabilities Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer. 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 derecognised from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount and any consideration paid is recognised in profit or loss. Vehicles secured under bailment plans are provided to the Group under bailment agreements with floor plan loan providers. The Group obtains title to the vehicles immediately prior to sale. Vehicles financed under bailment plans are recognised as inventory with the corresponding 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. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. ANNUAL REPORT 2024 47 Note 2. Material accounting policy information (continued) Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 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. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high 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. 48 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 2. Material accounting policy information (continued) 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. 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 additional ordinary shares that would have been outstanding assuming conversion of all 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. 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 2024. 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 18 Presentation and Disclosure in Financial Statements This standard is applicable to annual reporting periods beginning on or after 1 January 2027, with early adoption permitted. The standard replaces AASB 101 'Presentation of Financial Statements', although many of the requirements have been carried forward unchanged and is accompanied by limited amendments to the requirements in AASB 107 ‘Statement of Cash Flows’. The standard will affect presentation and disclosure in the financial statements, including introducing five categories in the statement of profit or loss and other comprehensive income: operating, investing, financing, income taxes and discontinued operations. The standard introduces two mandatory sub-totals in the statement: 'Operating profit' and 'Profit before financing and income taxes'. There are also new disclosure requirements for 'management-defined performance measures', such as earnings before interest, taxes, depreciation and amortisation ('EBITDA') or 'adjusted profit'. The standard provides enhanced guidance on grouping of information (aggregation and disaggregation), including whether to present this information in the primary financial statements or in the notes. The Group will adopt this standard from 1 July 2027 and it is expected that there will be a significant change to the layout of the statement of profit or loss and other comprehensive income. ANNUAL REPORT 2024 49 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. Refer to note 13 for further information. Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. 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 and New Zealand, 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. Refer to note 5 for information on revenue from the Group's products and services. Major customers There are no major customers for the Group representing more than 10% of the Group’s revenue. 50 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 5. Revenue Consolidated 30 June 2024 30 June 2023 $'000 $'000 Revenue for contracts with customers New and demonstrator vehicles 1,568,050 1,435,427 Used vehicles 635,179 543,348 Parts 204,087 175,147 Service 174,629 157,508 Other revenue 64,818 59,866 Revenue 2,646,763 2,371,296 Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Geographical regions Australia 2,461,233 2,204,258 New Zealand 185,530 167,038 2,646,763 2,371,296 Timing of revenue recognition Revenue recognised at a point in time 2,472,134 2,213,788 Revenue recognised over time 174,629 157,508 2,646,763 2,371,296 ANNUAL REPORT 2024 51 Note 6. Expenses Consolidated 30 June 2024 30 June 2023 $'000 $'000 Profit before income tax includes the following specific expenses: Depreciation Buildings 3,085 1,454 Leasehold improvements 6,263 5,432 Plant and equipment 5,405 3,035 Furniture, fixtures and fittings 985 1,598 Motor vehicles 1,158 1,563 Right-of-use assets 38,474 35,579 Total depreciation 55,370 48,661 Amortisation Customer relationships 3,990 3,367 Total depreciation and amortisation 59,360 52,028 Share-based payments expense Share-based payment expenses in relation to directors, executives and employees 1,828 938 Finance costs Floor plan interest 28,117 15,126 Interest charges on lease liabilities 11,537 9,408 Corporate interest 17,133 9,124 Total finance costs expensed 56,787 33,658 Net loss on disposal Net loss on disposal of property, plant and equipment - 2,667 Leases Variable lease payments (32) 843 Short-term lease payments 1,829 293 Rental outgoings 7,112 6,828 8,909 7,964 Superannuation expense Defined contribution superannuation expense 18,083 15,719 Other provisions Inventory write down/(reversal) to net realisable value (1,015) 1,565 Included in 'raw materials and consumables' in profit or loss is $28,006,000 (2023: $25,839,000) of salaries and wages relating to direct service labour costs. 52 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 7. Income tax Consolidated 30 June 2024 30 June 2023 $'000 $'000 Income tax expense Current tax 26,844 35,042 Deferred tax - origination and reversal of temporary differences 34 (1,390) Aggregate income tax expense 26,878 33,652 Deferred tax included in income tax expense comprises: Decrease/(increase) in deferred tax assets 366 (1,067) Decrease in deferred tax liabilities (332) (323) Deferred tax - origination and reversal of temporary differences 34 (1,390) Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense 88,358 100,301 Tax at the statutory tax rate of 30% 26,507 30,090 Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Permanent tax differences 128 3,065 Share-based payments 543 281 27,178 33,436 Prior year temporary differences now recognised (31) 554 Tax rate differential (59) (114) Other (210) (224) Income tax expense 26,878 33,652 ANNUAL REPORT 2024 53 Note 7. Income tax (continued) Consolidated 30 June 2024 30 June 2023 $'000 $'000 Net deferred tax asset Net deferred tax asset comprises temporary differences attributable to: Amounts recognised other than in equity: Right-of-use assets 9,458 8,457 Employee benefits 10,107 9,821 Tax losses 776 826 Property, plant and equipment 3,849 2,915 Contract liabilities 1,403 993 Provision for warranties 515 830 Allowance for expected credit losses 276 477 Accrued expenses 109 250 Inventories (3,163) 4 Customer relationships (1,480) (2,099) Work in progress (224) (197) Other items (649) (934) Deferred tax asset 20,977 21,343 Movements: Opening balance 21,343 21,721 Credited/(charged) to profit or loss (366) 1,067 Additions through business combinations (note 27) - (1,445) Closing balance 20,977 21,343 Consolidated 30 June 2024 30 June 2023 $'000 $'000 Net deferred tax liability Net deferred tax liability comprises temporary differences attributable to: Amounts recognised other than in equity: Customer relationships - 770 Property, plant and equipment - (2) Other items - (3) Accrued expenses - (6) Inventories - (116) Right-of-use assets - (118) Employee benefits - (193) Deferred tax liability - 332 Movements: Opening balance 332 - Credited to profit or loss (332) (323) Additions through business combinations (note 27) - 655 Closing balance - 332 54 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 7. Income tax (continued) Consolidated 30 June 2024 30 June 2023 $'000 $'000 Provision for income tax Provision for income tax 1,310 13,723 Note 8. Trade and other receivables Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current assets Trade receivables 95,980 79,657 Other receivables 9,927 11,108 Less: Allowance for expected credit losses (570) (1,196) 105,337 89,569 Allowance for expected credit losses The Group has recognised a gain of $520,000 in profit or loss in respect of the expected credit losses for the year ended 30 June 2024 (2023: Loss of $141,000). The ageing of the receivables and allowance for expected credit losses provided for above are as follows: Expected credit loss rate Carrying amount Allowance for expected credit losses 30 June 2024 30 June 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023 Consolidated % % $'000 $'000 $'000 $'000 Not overdue 0.01% 0.04% 85,090 68,101 11 31 0 to 2 months overdue 2.52% 6.77% 5,467 5,357 137 363 2 to 3 months overdue 0.20% 0.42% 2,712 2,513 6 11 3 to 4 months overdue 10.96% 13.57% 1,266 1,943 139 264 Over 4 months overdue 19.20% 30.26% 1,445 1,743 277 527 95,980 79,657 570 1,196 The profile of the Group's trade debtors has improved throughout the period due to improvement of supply chains and increased level of Original Equipment Manufacturer (OEM) receivables. As a result, the calculation of expected credit loss has been revised. Movements in the allowance for expected credit losses are as follows: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Opening balance 1,196 1,107 Provisions recognised 226 372 Receivables written off during the year as uncollectable (106) (52) Unused amounts reversed (746) (231) Closing balance 570 1,196 ANNUAL REPORT 2024 55 Note 9. Inventories Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current assets New and demonstrator vehicles - at cost 388,195 271,815 Less: Write-down to net realisable value (5,786) (6,361) 382,409 265,454 Used vehicles - at cost 76,845 80,472 Less: Write-down to net realisable value (1,659) (1,668) 75,186 78,804 Spare parts and accessories - at cost 28,945 27,928 Less: Write-down to net realisable value (1,008) (1,440) 27,937 26,488 Other inventory - at cost 4,184 3,009 489,716 373,755 Note 10. Other assets Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current assets Prepayments 7,980 5,008 Other cash deposits 12,335 12,652 20,315 17,660 56 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 11. Property, plant and equipment Consolidated 30 June 2024 30 June 2023 $'000 $'000 Non-current assets Land and buildings - at cost* 203,121 203,121 Less: Accumulated depreciation (5,961) (2,876) Less: Impairment (6,004) (6,004) 191,156 194,241 Leasehold improvements 94,690 84,265 Less: Accumulated depreciation (25,891) (19,548) 68,799 64,717 Plant and equipment 47,434 38,044 Less: Accumulated depreciation (23,085) (16,748) 24,349 21,296 Furniture, fixtures and fittings 15,630 14,699 Less: Accumulated depreciation (6,061) (5,251) 9,569 9,448 Motor vehicles 6,736 6,318 Less: Accumulated depreciation (3,301) (2,764) 3,435 3,554 Capital work in progress - at cost 9,986 2,263 307,294 295,519 * Land and buildings represents owner-occupied premises at: ● 601 Mains Road, Macgregor, Queensland and the adjoining land 581, Mains Road, Macgregor, Queensland, from which Macgregor Mercedes-Benz operates; ● 120 - 124 Pacific Highway, Waitara, NSW, from which Mercedes-Benz Hornsby operates; ● 363 Nepean Highway, Brighton, Victoria, from which Brighton Jaguar Land Rover operates; ● 62 Enterprise Drive, Bundoora, Victoria 3083 from which Bundoora BMW dealership operates; ● 98 O'Riordan Street, Alexandria from which Sydney City Subaru and Sydney City Kia operates; and ● 586 Wickham Street and 10 Light Street Fortitude Valley from which Audi Centre Brisbane, Bentley Brisbane, Maserati Brisbane and Lamborghini Brisbane operate. ANNUAL REPORT 2024 57 Note 11. Property, plant and equipment (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Land and Leasehold improve- Plant and Furniture, fixtures and Motor Capital work in buildings ments equipment fittings vehicles progress Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2022 98,762 34,053 13,747 4,671 6,166 14,899 172,298 Additions 103,877 1,141 1,866 4,151 429 22,202 133,666 Additions through business combinations (note 27) - 6,556 4,113 586 21 181 11,457 Disposals - - (1,023) (145) (1,499) - (2,667) Exchange differences - (108) (27) (14) - - (149) Impairment of assets (6,004) - - - - - (6,004) Transfers in/(out) (940) 28,507 5,655 1,797 - (35,019) - Depreciation expense (1,454) (5,432) (3,035) (1,598) (1,563) - (13,082) Balance at 30 June 2023 194,241 64,717 21,296 9,448 3,554 2,263 295,519 Additions - 2,502 7,276 484 1,473 17,444 29,179 Disposals - (9) (40) - (434) - (483) Exchange differences - (18) (5) (2) - - (25) Transfers in/(out) - 7,870 1,227 624 - (9,721) - Depreciation expense (3,085) (6,263) (5,405) (985) (1,158) - (16,896) Balance at 30 June 2024 191,156 68,799 24,349 9,569 3,435 9,986 307,294 Included in capital work in progress are construction costs of a dealership on the Groups owned land at 581 Mains Road, Macgregor, Queensland. Committed future capital expenditure amounts to $9,270,000. Note 12. Right-of-use assets Consolidated 30 June 2024 30 June 2023 $'000 $'000 Non-current assets Right-of-use asset 443,730 433,248 Less: Accumulated depreciation (243,876) (205,402) 199,854 227,846 The Group leases dealership operating premises under agreements of between 1 to 16 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. 58 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 12. Right-of-use assets (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Property lease Consolidated $'000 Balance at 1 July 2022 203,147 Additions/changes * 1,342 Additions through business combinations (note 27) 58,126 Exchange differences 810 Depreciation expense (35,579) Balance at 30 June 2023 227,846 Additions/changes * 10,577 Exchange differences (95) Depreciation expense (38,474) Balance at 30 June 2024 199,854 * Additions/changes include lease renewals, exercise of option and rent reviews. For other AASB 16 lease-related disclosures refer to the following: ● note 6 for details of interest on lease liabilities and other lease expenses; ● note 17 and note 31 for details of lease liabilities at the beginning and end of the reporting period; ● note 21 for the maturity analysis of lease liabilities; and ● consolidated statement of cash flows for repayment of lease liabilities. Note 13. Intangibles Consolidated 30 June 2024 30 June 2023 $'000 $'000 Non-current assets Goodwill - at cost 648,820 647,894 Less: Accumulated impairment (109,174) (109,174) 539,646 538,720 Customer relationships - at cost 41,677 41,610 Less: Accumulated amortisation (32,720) (28,692) 8,957 12,918 548,603 551,638 ANNUAL REPORT 2024 59 Note 13. 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: Customer Goodwill relationships Total Consolidated $'000 $'000 $'000 Balance at 1 July 2022 438,952 6,832 445,784 Additions through business combinations (note 27) 99,771 9,454 109,225 Exchange differences (3) (1) (4) Amortisation expense - (3,367) (3,367) Balance at 30 June 2023 538,720 12,918 551,638 Exchange differences 926 29 955 Amortisation expense - (3,990) (3,990) Balance at 30 June 2024 539,646 8,957 548,603 Goodwill acquired through business combinations is allocated to one group of cash-generating unit ('CGU') according to the business segment, being motor vehicle retailing which is the lowest level at which management monitors goodwill. The recoverable amount of the Group’s goodwill has been determined by value-in-use calculations ('VIU'). 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 five year period and a terminal growth rate. Key assumptions Key assumptions are those to which the recoverable amount of an asset or cash-generating unit is most sensitive. The following key assumptions were used in the VIU model: (a) Earnings before interest, tax, depreciation and amortisation ('EBITDA'); (b) Terminal growth rate of 2.0% beyond five year period (2023: 2.0%); (c) Post tax discount rate of 10.8% (2023: 10.7%) (d) Pre-tax discount rate of 14.95% (2023: 14.84%); and (e) New vehicle motor growth between FY25 to FY29 including other income and rebates of -1.6% - 12.8% (2023: 1.5% - 20.0% FY24 to FY28). As a result of the impairment testing, management has concluded that the recoverable amount of the CGU is higher than the carrying value of the assets, and therefore goodwill is not considered to be impaired. Sensitivity analysis The Group has conducted an analysis of the sensitivity of the impairment test to changes in key assumptions used to determine the recoverable amount of goodwill. The recoverable amount exceeds the carrying amount by $141 million. The directors believe that any reasonably possible change in any of the key assumptions below on which the recoverable amount is based will cause the carrying amount to equal the recoverable amount of the CGU. VIU model equals Sensitivity VIU assumptions carrying amount Change EBITDA % 5.1% - 5.6% 4.6% - 4.9% 0.6% Post tax discount rate 10.8% 12.4% 1.6% Pre-tax discount rate 14.9% 17.2% 2.3% Terminal growth rate 2.0% -0.5% 2.5% New vehicle motor growth (including rebates, aftermarket and finance and insurance) between FY2025 to FY2029 -1.6% - 12.8% -3.5% - 10.1% 1.9% Notwithstanding the above, should market conditions deteriorate further than forecast, it may cause the carrying amount of the CGU to be lower than recoverable amount at a future date, which may result in an impairment. 60 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 13. Intangibles (continued) Remaining amortisation period The remaining amortisation period for customer relationships is 1-4 years (2023: 1-4 years). Note 14. Trade and other payables Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current liabilities Trade and other payables 113,300 107,441 GST payable 43,162 37,381 Accrued expenses 50,474 44,574 Deferred consideration on business combinations 4,910 - 211,846 189,396 Non-current liabilities Deferred consideration on business combinations - 4,594 211,846 193,990 Refer to note 21 for further information on financial instruments. The average credit period on purchase of goods is 30 days. Note 15. Employee benefits Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current liabilities Employee benefits 25,487 25,141 Non-current liabilities Employee benefits 3,490 3,792 28,977 28,933 Note 16. Borrowings Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current liabilities Bailment finance 552,126 421,532 Capital loans 29,216 27,572 581,342 449,104 Non-current liabilities Capital loans 177,340 195,070 758,682 644,174 ANNUAL REPORT 2024 61 Note 16. Borrowings (continued) Refer to note 21 for further information on financial instruments. Total secured liabilities The total secured liabilities are as follows: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Bailment finance 552,126 421,532 Capital loans 206,556 222,642 758,682 644,174 Bailment finance 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 6.25% (2023: 5.99%). 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 7.30% (2023: 6.49%). Financing arrangements Access was available at the reporting date to the following lines of credit: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Total facilities Bailment finance 829,128 617,884 Capital loans 310,369 237,842 1,139,497 855,726 Used at the reporting date Bailment finance 552,126 421,532 Capital loans 206,556 222,642 758,682 644,174 Unused at the reporting date Bailment finance 277,002 196,352 Capital loans 103,813 15,200 380,815 211,552 Unused capital loans are available for specific purposes including acquisitions, property construction and upgrade of existing facilities. 62 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 17. Lease liabilities Consolidated 30 June 2024 30 June 2023 $'000 $'000 Current liabilities Lease liability 39,094 38,194 Non-current liabilities Lease liability 194,171 220,608 233,265 258,802 Refer to note 21 for information on the maturity analysis of lease liabilities. Note 18. Issued capital Consolidated 30 June 2024 30 June 2023 30 June 2024 30 June 2023 Shares Shares $'000 $'000 Ordinary shares - fully paid 201,000,000 201,000,000 475,637 475,637 Ordinary shares Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the Company be wound up, in proportions that consider both the number of shares held and the extent to which those shares are paid up. 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 pursuing additional investments in the short term and continues to integrate and grow its existing businesses in order to maximise synergies. The Group is subject to certain covenants on its financing arrangements 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 2023 Annual Report. ANNUAL REPORT 2024 63 Note 19. Reserves Consolidated 30 June 2024 30 June 2023 $'000 $'000 Foreign currency reserve 1,387 (579) Share-based payments reserve 3,507 3,340 4,894 2,761 Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. 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 the reserve during the current and previous financial year are set out below: Foreign currency Share-based reserve payments Total Consolidated $'000 $'000 $'000 Balance at 1 July 2022 - 4,506 4,506 Foreign currency translation (579) - (579) Share-based payments - 938 938 On market share purchase in the Company to settle vested long term incentives - (1,182) (1,182) Cash settled - (104) (104) Transfer to accumulated losses - (818) (818) Balance at 30 June 2023 (579) 3,340 2,761 Foreign currency translation 1,966 - 1,966 Share-based payments - 1,828 1,828 On market share purchase in the Company to settle vested long term incentives - (2,411) (2,411) Transfer from accumulated losses - 750 750 Balance at 30 June 2024 1,387 3,507 4,894 Note 20. Dividends Dividends Consolidated 30 June 2024 30 June 2023 $'000 $'000 Final dividend for the year ended 30 June 2023 of 10.0 cents (2022: 9.0 cents) per ordinary share 20,100 18,090 Interim dividend for the year ended 30 June 2024 of 10.0 cents (2023: 9.0 cents) per ordinary share 20,100 18,090 40,200 36,180 On 22 August 2024, the directors declared a fully franked final dividend for the year ended 30 June 2024 of 8.0 cents per ordinary share, to be paid on 15 November 2024 to eligible shareholders on the register as at 1 November 2024. This equates to a total estimated distribution of $16,080,000, based on the number of ordinary shares on issue as at 30 June 2024. The financial effect of the dividends declared after the reporting date are not reflected in the 30 June 2024 financial statements and will be recognised in the subsequent financial period. 64 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 20. Dividends (continued) Franking credits Consolidated 30 June 2024 30 June 2023 $'000 $'000 Franking credits available for subsequent financial years based on a tax rate of 30% 96,355 89,370 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 21. 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 the subsidiaries' functional currency being Australian dollars or New Zealand dollars. Price risk The Group is not exposed to any significant price risk. Interest rate risk The Group's main interest rate risk arises from its borrowings and cash at bank. Borrowings obtained at variable rates expose the Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value risk. As at the reporting date, the Group had the following variable rate borrowings: 30 June 2024 30 June 2023 Balance Balance Consolidated $'000 $'000 Bailment finance 552,126 421,532 Capital loans 206,556 222,642 Cash at bank (36,289) (41,999) Net exposure to cash flow interest rate risk 722,393 602,175 An official increase/decrease in interest rates of 50 (2023: 50) basis points per annum applied to borrowing at the reporting date would have an adverse/favourable effect on the profit before tax of $3,612,000 (2023: $3,011,000) and equity of $2,528,000 (2023: $2,108,000) (assuming 30% tax). The percentage change is based on the expected volatility of interest rates using market data and analyst's forecasts. ANNUAL REPORT 2024 65 Note 21. Financial instruments (continued) 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. The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. 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: Consolidated 30 June 2024 30 June 2023 $'000 $'000 Bailment finance 277,002 196,352 Capital loans 103,813 15,200 380,815 211,552 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. 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities Consolidated - 30 June 2024 $'000 $'000 $'000 $'000 $'000 Non-derivatives Non-interest bearing Trade payables 113,300 - - - 113,300 Deferred consideration 4,955 - - - 4,955 Interest-bearing - variable Bailment finance 553,493 - - - 553,493 Capital loans 43,263 57,050 126,646 21,814 248,773 Interest-bearing - fixed rate Lease liability 49,235 44,884 88,651 98,708 281,478 Total non-derivatives 764,246 101,934 215,297 120,522 1,201,999 66 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 21. Financial instruments (continued) 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities Consolidated - 30 June 2023 $'000 $'000 $'000 $'000 $'000 Non-derivatives Non-interest bearing Trade payables 107,441 - - - 107,441 Deferred consideration - 4,594 - - 4,594 Interest-bearing - variable Bailment finance 421,532 - - - 421,532 Capital loans 40,917 34,282 166,678 30,963 272,840 Interest-bearing - fixed rate Lease liability 48,742 45,639 102,118 114,968 311,467 Total non-derivatives 618,632 84,515 268,796 145,931 1,117,874 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Note 22. Fair value measurement The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. Note 23. Contingent liabilities All bank guarantees are provided to cover landlord deposits on leased property. Liabilities relating to landlord deposits are included in the total lease liabilities as disclosed in note 17. 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: Consolidated 30 June 2024 30 June 2023 $ $ Short-term employee benefits 2,358,516 2,230,917 Post-employment benefits 139,103 125,842 Long-term benefits 26,191 (9,972) Share-based payments 1,470,360 1,581,010 3,994,170 3,927,797 ANNUAL REPORT 2024 67 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, and its network firms: Consolidated 30 June 2024 30 June 2023 $ $ Audit services - Deloitte Touche Tohmatsu Audit or review of the financial statements 637,500 647,000 Other services - Deloitte Touche Tohmatsu Tax review and compliance 157,552 101,000 Training - leadership development program 99,761 158,000 257,313 259,000 894,813 906,000 Other services - network firms Deloitte New Zealand - due diligence - 29,000 Deloitte New Zealand - tax compliance 25,834 15,000 25,834 44,000 Note 26. Related party transactions Parent entity Autosports Group Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 28. Key management personnel Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the directors' report. Transactions with related parties The following transactions occurred with related parties: Consolidated 30 June 2024 30 June 2023 $ $ Other income: Management fees received from entities owned by the directors Ian Pagent and Nicholas Pagent 96,633 113,400 Payment for other expenses: Lease payments on properties to entities owned by the directors Ian Pagent and Nicholas Pagent 8,012,749 7,729,897 Marketing - customer events to entity controlled by Ian Pagent* - 211,841 * The event is a luxury dining experience that Autosports Group will use to enhance customer relationships. The amount is within the current marketing budget and strategy and will also attract marketing rebates from some of the OEMs whose customers the experience is offered to. 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 There were no loans to or from related parties at the current and previous reporting date. 68 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 26. Related party transactions (continued) Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 27. Business combinations (prior year acquisition) Auckland City BMW Ltd ('Auckland BMW') On 1 August 2022, the Group acquired 100% of the shares in Auckland City BMW Ltd. The total consideration transferred amounted to $61,807,000 (NZ$ 68,873,000), including a $4,487,000 (NZ$ 5,000,000) payment deferred for two years. The acquisition was funded by existing cash reserves and $12,115,000 (NZ$ 13,500,000) debt facility. The goodwill of $46,650,000 represents the future potential profits of the acquired business. Motorline BMW, Motorline MINI, Motorline Bodyshop, Gold Coast BMW and Gold Coast MINI ('Motorline and Gold Coast') On 1 February 2023, the Group acquired trading assets and liabilities of Motorline BMW, Motorline MINI, Motorline Bodyshop, Gold Coast BMW and Gold Coast MINI ("Motorline Group"). The total consideration transferred amounted to $65,754,000, funded by existing cash reserves and $30,000,000 debt facility. The goodwill of $53,121,000 represents the future potential profits of the acquired business. Details of the acquisitions are as follows: Auckland Motorline and BMW Gold Coast Fair value Fair value Total $'000 $'000 $'000 Cash and cash equivalents 6,283 - 6,283 Trade receivables 5,424 - 5,424 Inventories 21,209 12,023 33,232 Prepayments 358 242 600 Property, plant and equipment 6,531 4,926 11,457 Right-of-use assets 24,803 33,323 58,126 Customer relationships 3,355 6,099 9,454 Trade and other payables (5,086) (1,682) (6,768) Provision for income tax (1,692) - (1,692) Deferred tax liability (655) (1,445) (2,100) Employee benefits (884) (1,284) (2,168) Bailment finance (19,686) (6,111) (25,797) Other provisions - (135) (135) Lease liability (24,803) (33,323) (58,126) Net assets acquired 15,157 12,633 27,790 Goodwill 46,650 53,121 99,771 Acquisition-date fair value of the total consideration transferred 61,807 65,754 127,561 Acquisition costs expensed to profit or loss 173 4,066 4,239 Cash paid net of cash acquired: Acquisition-date fair value of the total consideration transferred 61,807 65,754 127,561 Less: cash and cash equivalents acquired (6,283) - (6,283) Less: deferred consideration payable (4,487) - (4,487) Net cash used 51,037 65,754 116,791 ANNUAL REPORT 2024 69 Note 28. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries: Ownership interest Principal place of business / 30 June 2024 30 June 2023 Name Country of incorporation % % ASG Brisbane Pty Ltd Australia 100% 100% ASG Melbourne Pty Ltd Australia 100% 100% Autosports Brisbane Pty Ltd Australia 100% 100% Autosports Castle Hill Pty Ltd Australia 100% 100% Autosports Five Dock Pty Ltd Australia 100% 100% Autosports Leichhardt Pty Ltd Australia 100% 100% Autosports Prestige Pty Ltd Australia 100% 100% Autosports Sutherland Pty Ltd Australia 100% 100% Betar Prestige Cars Pty Ltd Australia 100% 100% Birchgrove Finance Pty Ltd Australia 100% 100% Modena Trading Pty Ltd Australia 100% 100% Mosman Prestige Cars Pty Ltd Australia 100% 100% New Centenary Pty Ltd Australia 100% 100% Prestige Auto Traders Australia Pty Ltd Australia 100% 100% Prestige Group Holdings Pty Ltd Australia 100% 100% Prestige Repair Works Pty Ltd Australia 100% 100% Auckland City BMW Ltd New Zealand 100% 100% Autosports NZ Ltd New Zealand 100% 100% The consolidated financial statements also incorporates the assets, liabilities and results of the following subsidiaries with non-controlling interests: Parent Non-controlling interest Principal place of business / Ownership interest Ownership interest Ownership interest Ownership interest Country of Principal 30 June 2024 30 June 2023 30 June 2024 30 June 2023 Name incorporation activities % % % % New Centenary Mazda Pty Ltd Australia Motor vehicle dealership 80% 80% 20% 20% John Newell Holdings Pty Ltd Australia Motor vehicle dealership 80% 80% 20% 20% Summarised financial information of the subsidiary with non-controlling interests has not been included as it is not material to the Group. Note 29. Deed of cross guarantee The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others: Autosports Group Limited Autosports Sutherland Pty Ltd ASG Brisbane Pty Ltd Betar Prestige Cars Pty Ltd ASG Melbourne Pty Ltd Modena Trading Pty Ltd Autosports Brisbane Pty Ltd Mosman Prestige Cars Pty Ltd Autosports Castle Hill Pty Ltd New Centenary Pty Ltd Autosports Five Dock Pty Ltd Prestige Auto Traders Australia Pty Ltd Autosports Leichhardt Pty Ltd Prestige Group Holdings Pty Ltd Autosports Prestige Pty Ltd Prestige Repair Works 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'. 70 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 29. Deed of cross guarantee (continued) Entities controlled by the Group not party to the deed of cross guarantee are New Centenary Mazda Pty Ltd, Birchgrove Pty Ltd, A.C.N 633 925 050 Pty Ltd, John Newell Holdings Pty Ltd, Auckland City BMW Ltd and Autosports NZ Ltd. Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of the 'Closed Group'. 30 June 2024 30 June 2023 Statement of profit or loss and other comprehensive income $'000 $'000 Revenue 2,341,622 2,077,256 Changes in inventories 119,330 (123,069) Raw materials and consumables purchased (1,994,572) (1,528,753) Employee benefits expense (181,676) (166,598) Depreciation and amortisation expense (51,679) (44,587) Impairment of property, plant and equipment - (6,004) Occupancy costs (7,725) (6,968) Acquisition and restructure expenses (668) (5,997) Other expenses (86,362) (71,114) Finance costs (50,782) (29,038) Profit before income tax expense 87,488 95,128 Income tax expense (23,489) (27,989) Profit after income tax expense 63,999 67,139 Other comprehensive income for the year, net of tax - - Total comprehensive income for the year 63,999 67,139 30 June 2024 30 June 2023 Equity - retained profits/(accumulated losses) $'000 $'000 Accumulated losses at the beginning of the financial year (11,510) (43,287) Profit after income tax expense 63,999 67,139 Dividends paid (40,200) (36,180) Transfer from share premium reserve (750) 818 Retained profits/(accumulated losses) at the end of the financial year 11,539 (11,510) 30 June 2024 30 June 2023 Statement of financial position $'000 $'000 Current assets Cash and cash equivalents 31,110 36,879 Trade and other receivables 94,218 79,744 Inventories 451,822 338,598 Other assets 18,056 16,014 595,206 471,235 Non-current assets Other financial assets 81,694 75,625 Property, plant and equipment 298,188 287,241 Right-of-use assets 156,746 178,218 Intangibles 460,940 463,629 Deferred tax 20,153 20,320 1,017,721 1,025,033 Total assets 1,612,927 1,496,268 ANNUAL REPORT 2024 71 Note 29. Deed of cross guarantee (continued) 30 June 2024 30 June 2023 Statement of financial position $'000 $'000 Current liabilities Trade and other payables 201,872 190,082 Contract liabilities 168 271 Income tax payable 871 12,899 Employee benefits 22,609 23,077 Borrowings 537,329 407,469 Lease liabilities 34,564 32,695 797,413 666,493 Non-current liabilities Employee benefits 3,243 2,744 Borrowings 169,986 185,914 Lease liabilities 151,602 173,650 324,831 362,308 Total liabilities 1,122,244 1,028,801 Net assets 490,683 467,467 Equity Issued capital 475,637 475,637 Reserves 3,507 3,340 Retained profits/(accumulated losses) 11,539 (11,510) Total equity 490,683 467,467 72 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 30. Earnings per share Consolidated 30 June 2024 30 June 2023 $'000 $'000 Profit after income tax 61,480 66,649 Non-controlling interest (608) (1,223) Profit after income tax attributable to the owners of Autosports Group Limited 60,872 65,426 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: Performance rights over ordinary shares 1,428,459 1,687,149 Weighted average number of ordinary shares used in calculating diluted earnings per share 202,428,459 202,687,149 Cents Cents Basic earnings per share 30.28 32.55 Diluted earnings per share 30.07 32.28 Note 31. Cash flow information Changes in liabilities arising from financing activities Capital Lease loans liabilities Total Consolidated $'000 $'000 $'000 Balance at 1 July 2022 112,302 235,385 347,687 Net cash from/(used in) financing activities 110,340 (36,861) 73,479 Acquisition/changes to leases - 1,342 1,342 Changes through business combinations (note 27) - 58,126 58,126 Exchange differences - 810 810 Balance at 30 June 2023 222,642 258,802 481,444 Net cash used in financing activities (16,086) (36,019) (52,105) Acquisition/changes to leases - 10,577 10,577 Exchange differences - (95) (95) Balance at 30 June 2024 206,556 233,265 439,821 Note 32. 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 year was $1,828,000 (2023: $938,000). The number of performance rights to be granted is determined by dividing any STI or LTI 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 2024 audited full-year results. A performance right is a right to acquire a share at a nil exercise price upon the achievement of performance hurdles and the fair value was estimated by taking the market price of the Company’s shares on the grant date. 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. ANNUAL REPORT 2024 73 Note 32. Share-based payments (continued) 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 or LTI is awarded. ● in addition, each senior executive has an individualised balanced scorecard that determines their awards. These scorecards primarily focus on a combination of financial and non-financial objectives of the Group and include targets measured against total revenue, earnings before interest and taxation, EBITDA, net profit before taxation and net profit after taxation. The scorecards also include operational key performance indicators ('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 and sustainable. 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. LTI performance is measured against the compound annual growth rate ('CAGR') of the Group's underlying EPS. The rights are measured over a 3-year period. 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. Movements in performance rights during the year 2024 2023 Number Number Balance at the beginning of the year 1,687,149 2,019,979 Granted during the year 844,930 856,942 Exercised during the year (964,248) (860,356) Cancelled during the year (139,372) (329,416) Balance at the end of the year 1,428,459 1,687,149 Performance rights vested and exercisable as at 30 June 2024 was 18,892 (2023: nil). As at year end, the weighted average remaining contractual life for the performance rights awarded were LTI - FY22: 0.17 years, LTI - FY23: 1.17 years and LTI - FY24: 2.17 years(2023: STI – FY23: 2.18 years; LTI FY 22 - 1.18 years and LTI – FY21: 0.17 year). 74 AUTOSPORTS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 30 JUNE 2024 Note 33. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Parent 30 June 2024 30 June 2023 $'000 $'000 Profit after income tax 42,610 32,709 Total comprehensive income 42,610 32,709 Statement of financial position Parent 30 June 2024 30 June 2023 $'000 $'000 Total current assets 74,738 70,103 Total assets 378,940 368,469 Total current liabilities 7,418 793 Total liabilities 7,418 793 Equity Issued capital 477,495 477,495 Share-based payments reserve 3,507 3,340 Accumulated losses (109,480) (113,159) Total equity 371,522 367,676 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 2024 and 30 June 2023. The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees the debts of the others. Refer to note 29 for further details. Contingent liabilities The parent entity had no material contingent liabilities as at 30 June 2024 and 30 June 2023. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 and 30 June 2023. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. ● Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Note 34. Events after the reporting period On 1 July 2024, Autosports Group acquired the 20% minority shareholding in John Newell Holdings Pty Ltd. As announced on 19 August 2024, the Group has entered into an Agreement through its wholly owned subsidiary ASG Investment Holdings Pty Ltd to acquire 100% of shares in B S Stillwell Motor Group Pty Ltd, known as the Stillwell Motor Group, for approximately $55 million. The Stillwell Motor Group is a family-owned business founded in 1949 that represents the BMW, BMW Motorrad, MINI, Volvo, MG and Ducati brands with dealerships in four Victorian locations. ANNUAL REPORT 2024 75 Note 34. Events after the reporting period (continued) The purchase consideration consists of $45 million for goodwill and approximately $10 million for net tangible assets, subject to usual adjustments. The seller of the Stillwell Motor Group can elect to receive up to 15% of the purchase consideration in the form of the Company's shares to be issued at a price of $2.09 per share. The cash portion of the purchase consideration will be funded by cash and new and existing debt facilities. The acquisition is expected to settle in October 2024. Apart from the dividend declared as disclosed in note 20, no other matter or circumstance has arisen since 30 June 2024 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 CONSOLIDATED ENTITY DISCLOSURE AGREEMENT 30 JUNE 2024 Place formed / Ownership interest Entity name Entity type Country of incorporation % Tax residency A.C.N. 633 925 050 Pty Ltd Body Corporate Australia 100% Australia ASG Brisbane Pty Ltd Body Corporate Australia 100% Australia ASG Doncaster Pty Ltd Body Corporate Australia 100% Australia ASG EV Prestige Pty Ltd Body Corporate Australia 100% Australia ASG Investment Holdings Pty Ltd Body Corporate Australia 100% Australia ASG Melbourne Pty Ltd Body Corporate Australia 100% Australia Autosports Brisbane Pty Ltd Body Corporate Australia 100% Australia Autosports Castle Hill Pty Ltd Body Corporate Australia 100% Australia Autosports Five Dock Pty Ltd Body Corporate Australia 100% Australia Autosports Leichhardt Pty Ltd Body Corporate Australia 100% Australia Autosports Prestige Pty Ltd Body Corporate Australia 100% Australia Autosports Sutherland Pty Ltd Body Corporate Australia 100% Australia Betar Prestige Cars Pty Ltd Body Corporate Australia 100% Australia Birchgrove Finance Pty Ltd Body Corporate Australia 100% Australia John Newell Holdings Pty Ltd Body Corporate Australia 80% Australia John Newell Pty Ltd Body Corporate Australia 80% Australia Modena Trading Pty Ltd Body Corporate Australia 100% Australia Mosman Prestige Cars Pty Ltd Body Corporate Australia 100% Australia New Centenary Mazda Pty Ltd Body Corporate Australia 80% Australia New Centenary Pty Ltd Body Corporate Australia 100% Australia Prestige Auto Traders Australia Pty Ltd Body Corporate Australia 100% Australia Prestige Group Holdings Pty Ltd Body Corporate Australia 100% Australia Prestige Repair Works Pty Ltd Body Corporate Australia 100% Australia Auckland City BMW Ltd Body Corporate New Zealand 100% New Zealand Autosports NZ Ltd Body Corporate New Zealand 100% New Zealand ANNUAL REPORT 2024 77 DIRECTORS’ DECLARATION 30 JUNE 2024 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 2024 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; ● at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 29 to the financial statements; and ● the information disclosed in the attached consolidated entity disclosure statement is true and correct. 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 ___________________________ ___________________________ James Evans Nicholas Pagent Chairman Chief Executive Officer 22 August 2024 Sydney 78 AUTOSPORTS GROUP INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTOSPORTS GROUP LIMITED Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. Deloitte Touche Tohmatsu ABN 74 490 121 060 Quay Quarter Tower 50 Bridge 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 2024, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information, the directors’ declaration and the Consolidated Entity Disclosure Statement. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:  Giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its financial performance for the year then ended; and  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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have 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. 68 ANNUAL REPORT 2024 79 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 for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How the scope of our audit responded to the Key Audit Matter Recoverability of Goodwill As disclosed in Notes 2,3 and 13, the Group has recognised Goodwill with a carrying value of $539.6 million as at 30 June 2024. The assessment of the recoverable amount of goodwill and other intangible assets allocated to the dealership group of CGUs requires management to exercise significant judgement, including:  the identification of and allocation of goodwill to the dealership group of CGUs; and  the determination of the following key assumptions used in the calculation of the recoverable amount of the group of CGUs:  the dealership group of CGU cash flow forecasts approved by the directors;  future growth rates;  terminal growth factors; and discount rates. In conjunction with our valuation specialists, our procedures included, but were not limited to:  Obtained an understanding of management’s process of evaluating the recoverable amount of goodwill and other intangible assets and approval by the board of directors;  Evaluated the Group’s identification of CGUs and the allocation of goodwill to the carrying value of the dealership group of CGUs based on our understanding of the Group’s business and the requirements of the relevant accounting standard. This evaluation included an analysis of the Group’s internal reporting process;  Compared the Group’s forecast cash flows to the board approved budget, including the consideration of relevant factors such as the impact of supply chain constraints on current and future vehicle availability;  Evaluated management’s historical forecasting accuracy by comparing actual results to budget;  Compared growth rates with third party independent data for the Australian motor industry;  Challenged key inputs to the discount rate utilised by management to external data sources;  Performed sensitivity analysis on the growth and discount rates; and  Assessed the appropriateness of the disclosures in Notes 2, 3 and 13 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 2024, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 69 80 AUTOSPORTS GROUP INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTOSPORTS GROUP LIMITED CONTINUED Responsibilities of the Directors for the Financial Report The directors of the Company are responsible:  For the preparation of the financial report in accordance with the Corporations Act 2001, including giving a true and fair view of the financial position and performance of the Group in accordance with Australian Accounting Standards; and  For such internal control as the directors determine is necessary to enable the preparation of the financial report in accordance with the Corporations Act 2001, including giving a true and fair view of the financial position and performance of the Group, and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has 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 70 ANNUAL REPORT 2024 81 be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 25 of the Directors’ Report for the year ended 30 June 2024. In our opinion, the Remuneration Report of Autosports Group Limited, for the year ended 30 June 2024, 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 Tara Hill Partner Chartered Accountants Sydney, 22 August 2024 71 82 AUTOSPORTS GROUP SHAREHOLDER INFORMATION 30 JUNE 2024 The shareholder information set out below was applicable as at 1 August 2024. Distribution of equity securities Analysis of number of equitable security holders by size of holding: Ordinary shares % of total Number shares of holders issued 1 to 1,000 585 0.2 1,001 to 5,000 675 1.0 5,001 to 10,000 339 1.4 10,001 to 100,000 412 5.5 100,001 and over 58 91.9 2,069 100.0 Holding less than a marketable parcel 144 Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares % of total shares Number held issued JIP Parramatta Pty Ltd (JIP PARRAMATTA) 23,657,626 11.8 Sastempo Pty Ltd (NICHOLAS PAGENT FAMILY) 22,114,671 11.0 Citicorp Nominees Pty Limited 18,964,043 9.4 Livist Pty Ltd (VARINIA) 15,455,897 7.7 Audi Parramatta Holdings Pty Ltd (AUDI PARRAMATTA) 15,310,969 7.6 UBS Nominees Pty Ltd 12,252,578 6.1 NIP Parramatta Pty Ltd (NIP PARRAMATTA) 10,401,678 5.2 Netwealth Investments Limited (WRAP SERVICES A/C) 8,423,442 4.2 JP Morgan Nominees Australia Pty Limited 8,000,404 4.0 Pagent Family Investments Pty Ltd (PAGENT FAMILY INVESTMENT) 7,193,635 3.6 Five Dock Djc Pty Ltd 6,436,189 3.2 HSBC Custody Nominees (Australia) Limited 6,011,270 3.0 Aalhuizen Nominees Pty Ltd (RENE AALHUIZEN FAMILY) 4,442,439 2.2 Ogle Investments Pty Ltd (OGLE DISCRETIONARY UNIT) 4,000,000 2.0 Ricgaz Pty Ltd (RWG FAMILY) 2,866,808 1.4 B & F Investments Pty Ltd 2,359,305 1.2 Liverpool Street Investments (WARIMOO) 2,078,757 1.0 Daniaron Pty Ltd (DANIARON FAMILY) 1,674,863 0.8 Autosports Holdings Pty Ltd (AUTOSPORTS INVESTMENT) 1,454,269 0.7 Nick Pagent 1,377,292 0.7 174,476,135 86.8 ANNUAL REPORT 2024 83 Substantial holders Substantial holders in the Company are set out below: Ordinary shares % of total shares Number held issued Ian and Nicholas Pagent - Ian Pagent 65,995,799 32.8 - Nick Pagent 40,746,757 20.3 OC Funds Mgt* 14,693,475 7.3 Regal Funds Management** 17,340,570 8.6 * Based on the substantial shareholder notice lodged 19 April 2021 ** Based on the substantial shareholder notice lodged on 18 June 2024 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. Performance rights The number of performance rights on issue as at the reporting date are: Name Number held Nick Pagent 805,400 Ian Pagent 42,894 Brent Polites 216,194 Aaron Murray 345,079 1,409,567 There are no other unquoted equity securities on issue. Buy-back There is no current on-market buy-back. Securities purchased on-market 964,248 ordinary shares were purchased on-market under or for the purposes of an employee incentive scheme, with the average price paid per ordinary share of $2.50. 84 AUTOSPORTS GROUP This page has been intentionally left blank. ANNUAL REPORT 2024 85 CORPORATE DIRECTORY Directors James Evans Nicholas ('Nick') Pagent Marina Go Anna Burgdorf James ('Ian') Pagent Robert Quant Gareth Turner Company Secretary Caroline Gatenby Registered office 555 Parramatta Road Leichhardt NSW 2040 Telephone: +61 2 8753 2873 Website: www.autosportsgroup.com.au Shareholder enquiries Link Market Services Locked Bag A14 Sydney South NSW 1235 Telephone: 1300 554 474 Website: www.linkmarketservices.com.au Auditor Deloitte Touche Tohmatsu Quay Quarter Tower, 50 Bridge Street Sydney NSW 2000 Telephone: +61 2 9322 7000 Website: www.deloitte.com.au Stock exchange listing Autosports Group Limited ordinary shares are listed on the Australian Securities Exchange (ASX under code: ASG) Corporate Governance Statement The Corporate Governance Statement is located on our website. Visit www.autosportsgroup.com.au. Annual General Meeting The 2024 Annual General Meeting of Autosports Group Limited will be held on Friday 22 November 2024 at 11:00am. Further details will be provided in the Notice of Meeting, which will be provided to shareholders in mid-October 2024. The Notice of Meeting will also be available on the ASX Company Announcements Platform and Autosports Group’s website, www.autosportsgroup.com.au. For the purposes of ASX Listing Rule 3.13.1 the Company gives notice that the last day to receive director nominations is 19 September 2024.

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