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Annual Report
2015
carsales.com Limited – Annual Report – 30 June 2015 | 1
Corporate directory
Directors
Wal Pisciotta
(Non-Executive Chairman)
Greg Roebuck
(Managing Director)
Richard Collins
(Non-Executive Deputy Chairman)
Jeffrey Browne
(Non-Executive Director)
Pat O’Sullivan
(Non-Executive Director)
Kim Anderson
(Non-Executive Director)
Steve Kloss
(Alternate Non-Executive Director)
Company secretary
Nicole Birman
Registered office
Level 4, 449 Punt Road
Richmond Vic 3121
T: +61 3 9093 8600
F: +61 3 9093 8697
W: www.carsales.com.au
Share registry
Computershare Ltd
452 Johnston Street
Abbotsford Vic 3067
T: +61 3 9415 4000
F: +61 3 9473 2500
W: www.computershare.com
External auditor
PricewaterhouseCoopers
Freshwater Place
2 Southbank Boulevard
Southbank Vic 3006
Stock exchange
carsales.com Ltd is a public company listed with the Australian Stock
Exchange Limited
ASX:CAR
The previous ASX code was “CRZ”
2 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Ltd ABN 91 074 444 018
Annual report – 30 June 2015
Contents
Chairman’s update
Managing Director’s update
Directors’ report
Financial report
Directors’ declaration
Independent auditor’s report to the members
Shareholder information
Page
7
11
15
41
83
87
91
carsales.com Limited – Annual Report – 30 June 2015 | 3
Results for
Announcement
to the Market
4 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Ltd ABN 91 074 444 018
Full-year ended 30 June 2015
(Previous corresponding period: Full-year ended 30 June 2014)
Results for Announcement to the Market
Revenue from ordinary activities
Profit from ordinary activities after tax attributable
to members
Net profit for the period attributable to members
Up
Up
Up
32%
8%
8%
to
to
to
$’000
311,756
103,167
103,167
Dividends / Distributions
Amount per security
Franked amount per
security
2014 Final Dividend paid
2015 Interim Dividend paid
2015 Final Dividend declared
2015 Special Dividend declared
17.4 cents
16.2 cents
17.7 cents
1.4 cents
17.4 cents
16.2 cents
17.7 cents
1.4 cents
Record date for determining entitlements to the dividends
18th September 2015
Dividend payable
15th October 2015
Net tangible assets
Net tangible assets backing per ordinary share is 30.64 cents (2014: 39.99 cents)
Other information required by Listing Rule 4.3A
Other information requiring disclosure to comply with Listing Rule 4.3A is contained in the 30
June 2015 Financial Report.
Dealer revenue up 7%
year on year
Increased private seller revenue
up 8% year on year
International business
delivered 45% increase
in profit
year on year
carsales.com Limited – Annual Report – 30 June 2015 | 5
Chairman’s
Update
6 | carsales.com Limited – Annual Report – 30 June 2015
Dear Shareholders,
The Board is pleased to present to shareholders the carsales.com Ltd
Annual Report for the financial year ending 30 June 2015. It has been
another year of exceptional achievement at carsales and we are
pleased to be presenting to shareholders another year of record
financial performance.
Some of the major financial
highlights of the past 12 months
include:
Revenue up 32%
on previous corresponding
period (pcp) from
$235.6m to $311.8m.
EBITDA up 12%
on pcp from $138.4m to $154.3m.
EBITDA margin 50%, reflecting the
acquisition of
Stratton Finance.
Proforma Operating cash flow
(excluding the timing impact of a
one-off change to tax payments)
up 12% on pcp
from $101.0m to $112.9m.
Due to sufficient cash and confidence in
future earnings, the Directors have declared
a final 2015 dividend of 17.7 cents per share
fully franked plus a special 2015 dividend of
1.4 cents per share fully franked, taking the
total dividends paid for the year to 35.3 cents
per share. The dividend payment will have
a record date of 18 September 2015 and a
payment date of 15 October 2015.
FY15 was a year characterised by continued
innovation in our core business, further
expansion into adjacent domestic markets
and tremendous progress in our global
investment portfolio.
Domestically, the new car market remains
buoyant with over 1.1 million new cars sold
in the 2014 calendar year, and 2015 on track
to exceed that number. We have invested
significantly in our relationships with OEMs
and our dealer customers in the last year and
delivered significant improvements to our
product portfolio across all of our verticals.
We are the auto classifieds market leader and
this year we continued to increase our lead
over our nearest competitors.
Innovation remains at the heart of our DNA
and we have continued to invest to increase
value for our customers, consumers and
a strengthening of our market position as
a result of this investment. Our innovation
leverages the best of the Group’s IP and
knowledge, whilst we also keep an eye
on new developments both in local and
overseas markets.
The proposed introduction of GST on all
internet based services provided to Australians
(not just local companies, like carsales)
will ensure a fairer marketplace for online
classified sites going forward.
Our acquisition of 50.1% of Stratton Finance, a
leading finance broker and services provider,
in July 2014 is the most obvious example of
our expansion into complementary markets
and has performed above our expectations
since acquisition, with more to come in
FY16. Products launched in the year such as
Instant Offer and the continued expansion
of tyresales continued to diversify our
business and provide strong engines for
future growth. Our acquisition of 50.1% of
Auto Inspect, a leading vehicle inspection
business in June will provide our customers
with additional value and confidence to make
vehicle purchases.
Our international businesses have
demonstrated both pleasing growth and
resilience this year. Webmotors (Brazil) has
demonstrated strong revenue growth despite
a challenging economic backdrop, with the
distraction of a World Cup, a controversial
federal election and a decrease in new car
sales over the year providing challenges.
SKENCARSALES (South Korea) has grown
profitably whilst transforming the business,
despite the outbreak of MERS, and is well
positioned to benefit from positive trends
in the automotive market. The carsales
management team has invested a significant
amount of time working with local
management and it is pleasing these efforts
are starting to bear fruit.
Our people make carsales what it is and will
continue to remain an area of great focus
for the management team. carsales has a
wonderful team and a high performance
culture which is evident in our results. We
are committed to creating a challenging,
rewarding and diverse working environment
for our people.
As a Board we are confident that we are
well positioned to continue to develop the
business in all markets to take advantage of
our numerous growth opportunities. I say
this every year but the best is still to come for
carsales.com Ltd.
On behalf of the Board of Directors, I would
like to once again thank our customers
for their continued endorsement and
business; our shareholders for their ongoing
encouragement and support and Greg
Roebuck and his team for their ongoing
passion, commitment and dedication to the
Company producing yet another great year of
record achievement.
Wal Pisciotta
Chairman
11 August 2015
carsales.com Limited – Annual Report – 30 June 2015 | 7
“There’s no
point being an
interesting number two;
you need to be a
compelling
number one”
8 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Limited – Annual Report – 30 June 2015 | 9
Managing Director’s
update
10 | carsales.com Limited – Annual Report – 30 June 2015
Dear Shareholders,
Another financial year has rushed by and again it has been an
exciting and eventful year for our great business. We’ve made
a number of new investments as well as delivered world class
technology, innovation and market leadership. Our team continues
to expand and we’re looking forward to the challenges FY16 will
undoubtedly bring.
SK Encar – EBITDA
margins expanded
from 51% for pcp
to 64% and we are
very confident about
the opportunity for
further business
development in the
coming months and years
Our Stratton Finance acquisition in July last
year has delivered great synergies to private
car buyers through very tight integration
across the carsales website. Stratton and
carsales have also acquired 20% of the
Ratesetter business – an innovative peer-
to-peer financier that provides excellent
synergies for short term or low priced vehicle
finance. Check these two great businesses
out at www.stratton.com.au and www.
ratesetter.com.au.
Most recently we’ve acquired a controlling
stake in a vehicle inspection business, Auto
Inspect. This rapidly growing business is
another great fit for us as consumers look for
more surety around vehicle quality.
Our International investments are growing
well. In Brazil, the webmotors.co.br business
continues to be the market leader and we’re
progressing positively towards a business
model more aligned with the Australian
operation. There’s plenty of changes required
behind-the-scenes to achieve this, but the
team in Brazil are motivated and FY16 will see
us very close to delivering on an accountable
solution to our dealer customers. During FY15,
Webmotors acquired a services company –
very similar to the Dealer and Data Services
division of carsales.com.au – called vMotors.
This is a very synergistic fit for Webmotors
and provides inventory and lead management
services for its dealers.
Our Korean business – www.encar.com – is
also progressing very well. They’ve more
recently moved to a chargeable private seller
model similar to carsales.com.au and work
towards an accountable dealer environment
is on track. The relationships with the teams
in Korea and Brazil are excellent and this will
ensure a great long term outcome for us all.
The www.tyresales.com.au business is driving
significant change in the previously non-
transparent tyre retailing marketplace. While
currently a very low margin business for
us, our revenue growth is very positive and
we’re extremely proud of building a fantastic
product that benefits consumers, dealers and
the broader carsales Network.
Our New Car business has stabilised after the
first half of FY15 saw a number of additional
car companies require their dealers to
remove their inventory from third party sites
such as carsales.com.au. While we strongly
believe that this action negatively impacts
consumers and therefore the car company
and their dealers, we’re very pleased we’re
working closely with the industry to navigate
the challenges being faced. Our New Car
inventory is once again climbing and this in
turn is driving better results for our consumer
and dealer customers.
Private sellers continue to see
carsales.com.au as the place to sell their
car. The most important metric – generally
overlooked by our competitors – is not how
many cars are being advertised, but how many
sales! Our average time to sell continues to
trend downwards, clearly demonstrating if
you want to get a sale, there’s only one place
to get a result: carsales.com.au!! In fact when
averaged out over the last financial year, we
sold 100 cars an hour.
Innovation continues to be a hallmark of
our great business. The passion from the
entire team to deliver world class product
and continually challenge the status quo is a
huge component of our culture. Our Ryvuss
search engine technology has now been
licensed into a number of businesses; our
photo serving platform is in use in all of our
international investment companies and our
advanced telephony products will join the
growing list of technologies we are marketing
outside of our core business. Our philosophy
of one hundred 1% changes are better than
one 100% change keeps us well ahead of
the competition – who despite numerous
aggressive campaigns continue to lag behind.
In closing, we’ve had another great year, more
world class innovations, more investment in
exciting businesses, and continued growth
across all areas of the Company. As a team we
strive to be the best in the world and while it
is a high benchmark, I continue to be amazed
and extremely proud of what truly talented
people we have delivering on this objective.
I’d like to publicly thank each and every one
of them.
Yours sincerely,
Greg Roebuck
Managing Director and CEO
11 August 2015
carsales.com Limited – Annual Report – 30 June 2015 | 11
Over the
course of this
year on average
we sold a car
every minute
12 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Limited – Annual Report – 30 June 2015 | 13
Directors’
report
14 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Directors’
report
Your directors present their report on the consolidated entity (referred
to hereafter as the Group) consisting of carsales.com Ltd, the entities
it controlled and the investments in associates at the end of, or during,
the year ended 30 June 2015.
Dividends – carsales.com Ltd
Dividends paid to members during the financial year were as follows:
Final fully franked dividend for the year ended 30 June
2014 of 17.4 cents (2013 – 15.6 cents) per share paid
on 22 October 2014.
Interim fully franked ordinary dividend for the year
ended 30 June 2015 of 16.2 cents (2014 – 14.7 cents)
per share paid on 15 April 2015.
2015
$’000
2014
$’000
41,472
37,052
38,812
34,957
80,284
72,009
In addition to the above dividends, since the end of the financial year,
due to sufficient cash and confidence in future earnings, the Directors
have recommended the payment of a fully franked final ordinary
dividend of $45,856,000 (17.7 cents per fully paid ordinary share plus
1.4 cents special dividend per fully paid ordinary share) to be paid on
15 October 2015 out of retained profits at 30 June 2015.
Directors
The following persons were directors of carsales.com Ltd during
the financial year and up to the date of this report unless indicated
otherwise:
Wal Pisciotta
(Non-Executive Chairman)
Greg Roebuck
(Managing Director)
Richard Collins
(Non-Executive Deputy Chairman)
Jeffrey Browne
(Non-Executive Director)
Pat O’Sullivan
(Non-Executive Director)
Kim Anderson
(Non-Executive Director)
Steve Kloss
(Alternate Non-Executive Director)
Principle activities
carsales.com Ltd’s principle activities during the course of the financial
year consisted of online classified and display advertising. As well as
this carsales provides a number of software, data, finance and other
services predominantly sold to customers in the automotive industry.
Aside from the acquisition of Stratton Finance Pty Ltd on 15 July 2014
as set out in Note 20, there have been no significant changes in these
activities during the course of the last financial year.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 15
Operating and
financial review
Group Financial Highlights
•
•
•
•
FY15 was another year of record financial performance with Group
operating revenue rising to $311,756,000, up 32% on the prior
comparative period.
Group earnings remained very strong with EBITDA up 12% on the
prior comparative period to $154,338,000 and EBITDA margins of
50%.
Profit attributable to the owners of carsales.com Ltd, excluding
one-off gain on associate dilution was $99,720,000, up 4% on the
prior comparative period.
Reported profit attributable to the owners of carsales.com Ltd was
$103,167,000, up 8% on prior comparative period.
carsales Domestic Highlights
There were a number of highlights during the course of the year
which contributed to the overall performance of the business
including:
Dealer revenue up 7% on pcp overall. Key growth drivers being
yield and growth in premium advertising products.
Private revenue grew by 8% on pcp, with positive yield growth
through price rises premium product growth in automotive and
strong growth in the B2C segment from tyresales.
Non-automotive verticals performing well.
Mediamotive up 3% on pcp in a challenging market.
Data, Research and Services (previously Dealer and Data Services)
once again performed strongly with revenue up 14% on pcp.
Finance and Related Services recorded revenue of $59.4m,
principally due to the acquisition of Stratton Finance Pty Ltd on the
15th July 2014.
•
•
•
•
•
•
•
•
•
take advantage of the opportunities that exist in licensing carsales’
world leading technology into the Korean market and good
progress is being made in executing strategic priorities.
Webmotors S.A. – Revenue growth of 21% pcp attributable dealer,
private and display advertisement volume growth. carsales share
of net profit after tax was $3,478,000. Acquired vMotors (a dealer
and data services business) in December 2014 which is on track
to be integrated into Webmotors’ product portfolio. Webmotors
continues to grow its market share with its combined inventory
(MeuCarango, CompreAuto and WebMotors) now almost double
that of its closest competitor. carsales’ share on net profit after tax
decreased 24% on pcp reflecting one-off costs and investment in
the business, with earnings growth expected to return in FY16.
iCar Asia Limited – carsales’ share of net loss after tax is estimated
to be ($3,288,000). carsales continues to support iCar’s business
as it evolves. carsales’ investment was diluted from 22.9% to 20.2%
due to the capital raise to fund the acquisition of one2Car in
Thailand, resulting in a one-off gain on dilution of $3,447,000.
Outlook
•
•
•
Domestic trading conditions in the first 6 weeks of FY15 have
remained solid. A more detailed trading update will be provided at
the October Annual General Meeting.
Expect to continue seeing further growth from newer domestic
investments in tyresales and Stratton along with new investment in
Auto Inspect. Anticipate EBITDA margins being maintained around
current levels.
Expect ongoing development of the business models in Korea
and Brazil to continue and, subject to market conditions being
maintained in these markets, we expect to see solid earnings
growth for each.
Strategy
The strategy of the Company is to continue to strengthen and grow
its core business units through ongoing product innovation, while
proactively seeking opportunities to leverage developed intellectual
property in other adjacent or geographic high growth markets.
Acquired stakes in Ratesetter Australia Pty Ltd (peer to peer
lending) and Auto Inspect Pty Ltd (vehicle inspections) during the
year which will drive future growth.
Risk
carsales International Highlights
The Company holds interests in online automotive advertising
companies operating in high growth international markets. These
interests include:
•
•
•
•
49.9% in the equity of SK ENCARSALES.COM Ltd (South Korea),
the number one online automotive classifieds company in South
Korea.
30% in the equity of Webmotors S.A. (Brazil), the number one
online automotive classifieds company in Brazil.
20.2% as at 30 June 2015 in the equity of iCar Asia Limited
(ASX:ICQ). iCar is the largest online automotive classifieds network
in South East Asia owning the number one online automotive
classifieds sites in Malaysia and Thailand, and the number two site
in Indonesia.
SK ENCARSALES.COM Ltd – Strong underlying revenue growth
of 31% on pcp for the year. Revenue growth largely as a result of
growth in dealer yield, customer acquisition and display revenue.
The Company started charging for private adverts in April 2015
and expanded EBITDA margins to 64% (from 51% pcp). carsales’
share of net profit after tax was $4,736,000. We have started to
Being a complex business in a growth market carries with it a number
of risks that the Company manages including, but not limited to:
•
•
Maintenance of professional reputation and brand name – The
success of carsales is heavily reliant on its reputation and branding.
Unforeseen issues or events, which place carsales’ reputation at
risk, may impact on its future growth and profitability.
Relationship with Dealers and OEMs – carsales derives a
significant proportion of its revenue from motor vehicle dealers
and automotive manufacturers (OEMs). A change in the size and/
or structure of this market could impact carsales’ earnings. In
particular, consolidation of the dealer market with fewer, larger
dealers or increased manufacturer control of dealers’ online
advertising activity may impact upon the prospects of carsales.
In addition, the majority of carsales’ revenue is generated
under monthly agreements with motor vehicle dealers. Should
a significant number of dealers cancel or fail to renew their
agreements, this may have an adverse effect on the financial
performance of carsales.
•
Competition – the online automotive advertising industry is highly
competitive. carsales’ performance could be adversely affected if
existing or new competitors reduce carsales’ market share from its
current level.
16 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
•
•
•
•
Downturn in the motor vehicle or general advertising market – the
performance of carsales will continue to be influenced by the
overall condition of the motor vehicle market. The motor vehicle
market is influenced by the general condition of the Australian
economy, which by its nature is cyclical and subject to change.
In addition, carsales derives a significant proportion of its revenue
from display advertisers on its network of websites. A decline or
significant change in the advertising market as a result of broader
economic influences or changing advertiser trends that the
Company does not respond to could have a negative impact on
carsales’ earnings.
Information Technology – carsales’ business operations rely
on owned and 3rd party IT infrastructure and systems. Any
interruptions to these operations or loss of customer data could
impair carsales’ ability to operate its customer facing websites
which could have a negative impact on carsales’ financial
performance and reputation.
carsales’ future performance will also depend on its ability to
monitor and manage major projects such as website upgrades
and other projects involving its IT infrastructure.
International expansion – with the expansion of the business
into new high growth international geographies, the Company
becomes exposed to the macroeconomic environment of these
markets outside of the traditional markets the Company has
operated in. The Company may not be able to fully recoup its
investment in these markets should it not be able to accelerate the
growth of its businesses through the implementation of carsales’
business models, intellectual property and technologies.
Significant changes in the state of affairs
During the financial year the Company continued to expand into
adjacent markets by investing in Stratton Finance Pty Ltd an Australian
based automotive finance broker. The consideration for this
investment was $58,995,000. The Company entered into a $325m
syndicated bank facility in February 2015 repayable in tranches over a
5-year period.
Matters subsequent to the end of the financial year
On 7 August 2015 the Company announced that it has agreed to
acquire a 65% controlling shareholding in SoloAutos (www.soloautos.
mx), a leading automotive classifieds website in Mexico, for an
investment of up to US $9m.
No other matter or circumstance has arisen since 30 June 2015 that
has significantly affected, or may affect:
charity fundraising, its commitment to reducing its carbon footprint
and its focus on areas such as waste management and becoming a
paperless office environment.
Environment
Whilst the nature of the carsales business has a low environmental
impact, the Company always aims to minimise its environmental
footprint. In all company offices, carsales promotes recycling by
having bins throughout our offices with clear explanation on how to
correctly recycle; purchases only 100% recycled paper and enforces
printing limits including default double sided, black and white printing;
and has implemented timed lights in all meeting rooms. The carsales
head office in Richmond is certified as a 4.5 star NABERS rated
building.
As part of carsales’ continued efforts to minimise its environmental
footprint, it has offset emissions for its fleet vehicles. carsales has offset
these emissions through Greenfleet (Australia’s most respected source
of biodiverse carbon offsets). As a result of this relationship, Greenfleet
will plant enough native trees on behalf of carsales to absorb 193.50
tonnes of CO2-e and to restore native forests in Australia, to protect
our climate and unique biodiversity.
Also, this year carsales supported Earth Hour by encouraging all staff
and customers to support the initiative of saving power by switching
off lights, televisions and computers at home for one hour on Saturday
March 28th. The prominent carsales signs on the Company’s Punt
Road offices was switched off for an hour to visibly show its support.
The Group is not subject to any significant environmental regulation in
respect of its activities.
Community
carsales has a number of initiatives designed to provide the Company
and employees with avenues to support both charity and community
based causes.
All carsales team members are encouraged to get together and take a
day to support the community by volunteering for a community based
charity. Staff have contributed hundreds of hours volunteering in the
community supporting organisations such as Sacred Heart Mission,
Salvation Army and the Million Paws Walk.
Each year the entire workforce votes on the charities that it will
support throughout that calendar year. Over the past twelve months
the Company and employees have actively participated in raising
money for:
(a)
the Group’s operations in future financial years, or
(b)
the results of those operations in future financial years, or
(c)
the Group’s state of affairs in future financial years.
Beyondblue – works to reduce the impact of depression and
anxiety in the community by raising awareness and understanding,
empowering people to seek help, and supporting recovery,
management and resilience.
Sustainability
carsales.com Ltd is committed to good corporate citizenship and
social responsibility, and believes that implementing practical
sustainability programs is central to this. The Company’s goal is to
have the lowest possible negative impact on the global and local
environments, community, society and economy. carsales’ core values
of enjoyment, respect, integrity, trust, communication and honesty
(ENRITCH) underpin its culture of ethical conduct.
Over the past year the Company has reviewed its sustainability
programs and engaged key stakeholders throughout the Company
to build focus and involvement. carsales contributes to the wider
community through initiatives such as its community day program,
Epilepsy Foundation of Victoria – provides services to
people living with epilepsy and their families, and works to
raise awareness of epilepsy in organisations and the broader
community to reduce the stigma and create a more welcoming
and inclusive society.
Challenge – a not-for-profit organisation that delivers daily
support to children and families living with cancer.
Lort Smith – which is a not-for-profit passionately committed to
caring for the animals of poor and disadvantaged people.
Over the year, carsales.com Ltd has donated over $160,000 in cash
and advertising campaigns in kind to various charitable organisations.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 17
Diversity
A diverse and inclusive working environment is central to the carsales
corporate values and the senior management team has developed
programs which support this key objective. The carsales leadership
team knows that businesses with a diverse workforce operate more
efficiently and effectively and is committed to bridging any gaps that
exist. As part of the diversity focus, carsales has a company-wide
specific gender diversity strategy in place that covers a range of
areas including keeping in touch programs for when members of its
team go on parental leave, increasing paid parental leave provisions,
analysing on-boarding and exit data to identify any bias, ensuring that
women are represented when shortlisting prospective candidates and
unconscious bias training for senior leadership and executives. Our
CEO is also a proud Pay Equity Ambassador supporting the Daughter
Water Campaign which is aimed at bridging the gender pay gap that
exists in Australia.
The Company has established a Diversity Policy which is publicly
available in the Investor Centre of the Company website at
http://shareholder.carsales.com.au/Investor-Centre/.
The policy includes requirements for the Board to establish
measurable objectives for achieving gender diversity and for the Board
to assess annually both the objectives and progress in achieving them.
These objectives and the Company’s progress towards achieving them
are outlined below:
‘Lovehack’ the 2015
Carsales.com Ltd. Hackathon.
Objective
Initiatives
Outcomes
Continue to grow the number of women
performing senior roles from external
appointments.
Educating managers on the importance of a
diverse workforce. Set quotas for recruitment
shortlists.
In FY15, 42% of our senior leadership
appointments are women.
Continue to implement career development
programs to prepare women within the carsales
business to take on more senior roles.
Mentoring program, training and development
programs including communication, presentation,
management and influence skills training.
Create an environment in which women network
and mentor each other to progress their careers
within carsales.
Women in Leadership Program and women’s
networking group.
Implement workplace flexibility programs to
create a workplace in which women can meet
both family and work responsibilities
Paid parental leave increased in FY15, part time
options, child care referrals and flexible re-entry
into the business from a period of parental leave.
The Company’s mentoring program consists of
35% women. Of its career development programs,
49% of attendees were women and 38% of FY15
promotions have been female.
This program has membership of 22 females
in leadership positions across the business. A
networking group has also been created which is
open to all females in the business. Sessions have
involved attending external leadership events and
guest speakers attending carsales functions.
In FY15, 6 members of the carsales team took
parental leave and the company is currently
supporting 12 women with flexible working
arrangements.
On 27 May 2015, in accordance with the Workplace Gender Equality
Act 2012, carsales submitted a report to the Workplace Gender
Equality Agency. This report provided information on carsales’ policies
and gender diversity numbers across the business. This report is
available in the Investor Centre on the Company website at
http://shareholder.carsales.com.au/Investor-Centre/.
carsales is also proud to have signed up as one of approximately 387
organisations that have joined together to support marriage equality
in Australia. carsales actively supports the right for everyone to have
equal opportunities in life and is proud to support marriage equality for
all Australians.
18 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
People and Culture
carsales endeavours to be an employer of choice and strives to
continually attract and retain the most talented people that can be
found in the market. We measure this through skill, expertise and the
right values that fit the carsales culture.
The culture of carsales is one of inclusion, where staff are provided
with extensive opportunities to learn and evolve in a fast-paced and
dynamic business environment.
carsales commitment to its people can be seen through the ‘carsales
People Promise’ which is an ongoing program and commitment of
the Company to employees in the areas of culture and benefits, career
development, health and wellbeing, community, work life balance
and reward and recognition. Each area contains initiatives designed
to ensure carsales is a workplace where people work hard and are
rewarded through things other than just financial incentives.
carsales management sees employee engagement as a critical
success factor. Over time the Company has developed a number
of initiatives that build engagement. Each year all team members
are invited to complete an Employee Opinion Survey that covers
areas such as reward and recognition, communication, personal
development and training, business ethics, leadership and
engagement. The survey results are reviewed by management and
communicated to the business where employees discuss results and
develop strategies to ensure the Company continuously improves and
develops.
Senior executives conduct ‘Discussion Groups’ annually with all
employees of the Company in small groups. The objective of these
sessions is to provide people with a forum where they can be updated
on the performance of carsales, its strategy and initiatives. People are
actively encouraged to challenge and ask questions on these topics
and feedback is discussed and actioned by senior management.
Innovation has always been part of carsales’ corporate DNA. carsales
actively encourages our people to come up with solutions to improve
the business. One of the ways carsales encourages innovation is
through Hackathons. A Hackathon is a two day event where the
carsales team are given full creative freedom to come up with
concepts and working prototypes to benefit the Company and both
its customers and consumers. Whilst running a Hackathon doesn’t
alone make an organisation innovative, it certainly goes a long way
to fostering creativity and the benefits of Hackathons go way beyond
innovation.
In the area of training and development there are a number of
programs designed to support the learning and development of
employees to support both the retention and succession of our
most valuable asset being our people. Some of these programs
include mentoring programs, CEO Scholarship awards and extensive
availability of internal training programs.
Ethical Conduct and Corporate Governance Policy
carsales’ core values of integrity and honesty are central to the culture
of the business. The business through the Employee Opinion Survey
directs employees to respond to questions relating to ethical business
behaviour, and company performance in this area is annually assessed
by management.
The Company has also developed a Code of Conduct that is
published on the Company shareholder website and a Whistle blower
policy to ensure that employees understand available avenues for the
reporting and handling of ethical and business related issues.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 19
Information
on directors & officers
Wal Pisciotta
Pat O’Sullivan
(Non-Independent Non-Executive Chairman)
Appointed: 25 June 1996
(Independent Non-Executive Director)
Appointed: 29 June 2007
Experience and expertise
Experience and expertise
Pat was the Chief Operating Officer and Finance Director of Nine
Entertainment Co Pty Limited (formerly PBL Media Pty Ltd) a position
he held from February 2006 before resigning on 29 June 2012. Before
that, Pat was the Chief Financial Officer of Optus, a position he held for
over five years. Previously, he held a number of positions at Goodman
Fielder and Burns Philp. Pat is a member of The Institute of Chartered
Accountants in Ireland and The Institute of Chartered Accountants in
Australia, and is a graduate of the Harvard Business School’s Advanced
Management Program. He also served as a Director and Company
Secretary of Nine Entertainment Co Pty Limited and was Chairman
of Ninemsn. Pat is currently a non-executive director of iiNet, iSentia,
APN Outdoor, Little Company of Mary Health Care and chairman of
HealthEngine.
Interests in shares and options
7,350 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in
carsales.com Ltd.
Kim Anderson
(Independent Non-Executive Director)
Appointed: 16 June 2010
Experience and expertise
Kim is the Chief Executive Officer of The Reading Room
(thereadingroom.com), a community/social networking site for
readers and is a Non-Executive Director of the STW Group, and a
member of the Sydney University Press Advisory Board. Kim has more
than 29 years experience in various advertising and media executive
positions within companies such as Southern Star Entertainment, PBL
and Ninemsn.
Interests in shares and options
10,000 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in carsales.
com Ltd.
Wal has over 41 years experience in supplying computer services
to the automotive industry and is also the Chairman of Pentana
Solutions Pty Ltd. Wal holds a Bachelor of Science Degree in Business
Administration from the University of Alabama (United States) and has
been the Chairman of carsales.com Ltd since its inception.
Interests in shares and options
14,770,700 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in
carsales.com Ltd.
Greg Roebuck
(Managing Director)
Appointed: 25 June 1996
Experience and expertise
Greg was the original architect of carsales.com Ltd; has been on its
Board since inception and Managing Director and CEO since May
of 2002. Greg is a Fellow of the Australian Institute of Company
Directors. He has over 32 years experience in providing technology
solutions to the Australian Automotive Industry. Greg studied
computer science at RMIT (Melbourne). In July 2009 Greg won the
Ernst & Young Entrepreneur of the Year Award for the Southern Region
of Australia in technology & emerging industries: software, hardware,
telecommunications, digital media and health sciences. He then
went on to win the Ernst & Young Entrepreneur of the Year Award for
Australia in November 2009.
Interests in shares and options
4,852,681 ordinary shares held in carsales.com Ltd.
373,387 options and 93,150 performance rights held over ordinary
shares in carsales.com Ltd.
Richard Collins
(Independent Non-Executive Deputy Chairman)
Appointed: 17 July 2000
Experience and expertise
Richard has been a director of carsales.com Ltd since 2000 and has
over 36 years experience as Dealer Principal, currently holding Ford,
Toyota, Subaru, Suzuki, and Isuzu Franchises. Richard holds a Bachelor
of Commerce Degree from Melbourne University.
Interests in shares and options
1,003,276 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in
carsales.com Ltd.
20 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Jeffrey Browne
Steve Kloss
(Independent Non-Executive Director)
Appointed: 16 December 2013
Experience and expertise
(Alternate Non-Executive Director)
Appointed: 28 October 2005
Experience and expertise
Jeffrey practiced as a commercial lawyer in Sydney and Melbourne
for 22 years before joining the Nine Television Network, initially as
Executive Director and later becoming Managing Director, with
responsibility for all Network operations. His legal experience saw him
involved in a wide range of matters concerning dealers and motor
vehicle manufacturers as well other multi-national OEMs. Jeffrey
is also Chairman of Holden Special Vehicles where he has been a
director or Chairman for over 13 years. Jeffrey’s media experience
includes broad management responsibilities and the development and
implementation of new broadcast and digital platforms.
Steve has more than 25 years experience in supplying computer
services to the automotive industry and is currently Chief Executive
Officer at Pentana Solutions Pty Ltd. Steve holds a Bachelor of
Business degree from Monash University.
Interests in shares and options
2,774,500 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in carsales.
com Ltd.
Interests in shares and options
13,650 ordinary shares held in carsales.com Ltd.
No options or performance rights held over ordinary shares in
carsales.com Ltd.
Company Secretary
Nicole Birman holds the role of Company Secretary and is the
General Counsel of carsales.com Ltd. Nicole joined carsales in 2010
and has over 12 years experience in the legal field, including 7 years
advising leading online companies as in-house counsel. Nicole
holds a Bachelor of Laws (Hons) and a Bachelor of Arts from Monash
University.
Interests in shares and options
6,821 ordinary shares held in carsales.com Ltd.
17,233 options and 5,464 performance rights held over ordinary shares
in carsales.com Ltd.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 21
Meetings
of directors
The numbers of meetings of the Company’s Board of directors and of each Board committee held during the year ended 30 June 2015 and the
numbers of meetings attended by each director were:
Full meetings
of directors
Meetings of committees
Audit and Risk
Management
Remuneration and
Nomination
A
19
20
20
19
19
19
12
B
20
20
20
20
20
20
20
A
**
**
4
4
**
4
**
B
**
**
4
4
**
4
**
A
1
**
1
**
1
**
**
B
1
**
1
**`
1
**
**
Wal Pisciotta (Board Chairman)
Greg Roebuck
Richard Collins
Pat O’Sullivan (Chairman – Audit and Risk Management)
Jeffrey Browne (Chairman – Remuneration and Nomination)
Kim Anderson
Steve Kloss (Alternate Director)
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
** = Not a member of the relevant committee
Committee
Membership
The following directors have been members of Board committees for the full financial year unless otherwise stated below:
Remuneration and Nomination Committee
Mr Richard Collins – committee chairman (independent) (resigned 26 October 2014)
Mr Wal Pisciotta
Mr Jeffrey Browne – committee chairman (independent) (chairman from 26 October 2014)
Mr Pat O’Sullivan (independent) (appointed 26 October 2014)
Audit and Risk Management Committee
Mr Pat O’Sullivan – Committee Chairman (Independent)
Mr Richard Collins (Independent)
Ms Kim Anderson (Independent)
22 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Remuneration
report
The remuneration report is set out under the following main headings:
•
•
•
•
•
Principles used to determine the nature and amount of
remuneration.
Details of remuneration.
Service agreements.
Share-based compensation.
Additional information.
The information provided in this remuneration report has been audited
as required by section 308(3C) of the Corporations Act 2001.
Non-executive directors
Fees and payments to non-executive directors reflect the demands
which are made on, and the responsibilities of, the Directors.
Directors’ fees
The current base remuneration pool was last approved by
shareholders at the Annual General Meeting held on 26 October 2014.
Non-executive directors’ fees are determined within an aggregate
directors’ fee pool limit, which is periodically recommended for
approval by shareholders. The maximum payable to be shared by all
non-executive directors currently stands at $1,100,000 per annum.
The Directors determine how these are to be shared by the Directors.
The Board will from time to time invite a remuneration specialist to
conduct a review and benchmarking of fees. The annualised fees paid
to the Board are comfortably below the $1,100,000 pool approved by
shareholders.
Principles used to determine the nature and
amount of remuneration
The following fee table applies:
The objective of the Group’s executive reward framework is to ensure
reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with achievement
of strategic objectives, the creation of value for shareholders and
conforms with market practice for delivery of reward.
The Board ensures that executive reward satisfies the following key
criteria for good reward governance practices:
• Competitiveness and reasonableness.
• Acceptability to shareholders.
Chairman fee
Deputy Chairman fee
Base Director fee
Alternate Director fee
First Committee
Second Committee
• Performance linkage / alignment of executive compensation.
• Transparency.
Executive pay
$
155,000
140,000
120,000
110,000
25,000
30,000
In consultation with external remuneration consultants, the Company
has structured an executive remuneration framework that is market
competitive and complimentary to the reward strategy of the
organisation.
Alignment to shareholders’ interests:
• Has economic profit as a core component of plan design.
•
Focuses on sustained growth in shareholder wealth, consisting
of dividends, growth in share price and delivering constant return
on assets as well as focusing the executive on key non-financial
drivers of value.
• Attracts and retains high calibre executives.
Alignment to program participants’ interests:
• Rewards capability and experience.
The executive pay and reward framework has five components:
• Base pay and benefits
•
Short-term performance incentive
• Deferred short-term incentive
•
Long-term incentive
• Other remuneration such as superannuation
There are no significant changes to the reward framework in the
current year from the framework determined in May 2013, when the
Board concluded a review of the carsales.com Short-term Incentive
(“STI”) and Long-term Incentive (“LTI”) programs. The review was
conducted with the assistance of remuneration consultant Hay Group.
The objective of the Hay Group engagement was to critically evaluate
the executive incentive program in particular the LTI program to
ensure that its structure:
• Reflects competitive reward for contribution to growth in
•
Supports the retention of Key Management Personnels (“KMP”).
shareholder wealth.
• Drives long-term Shareholder value creation.
• Provides a clear structure for earning rewards.
• Provides recognition for contribution to operational performance.
• Aligns broadly with the expectations of Shareholders, while at the
same time not hindering the strategic objectives of the Company.
The framework provides a mix of fixed and variable pay along with
a blend of short-term and long-term incentives. As executives gain
seniority within the Group, the balance of this mix shifts to a higher
proportion of ‘’at risk’’ rewards.
The Board has established a remuneration and nomination committee
which provides advice on remuneration, incentive policies and
practices, as well as specific recommendations on remuneration
packages and other terms of employment for the Managing Director,
other senior executives and non-executive directors.
As a result of this review the Board identified a number of
enhancements to the Company’s remuneration framework outlined
below including the introduction of a Deferred Short-term incentive
(“DSTI”) structure. The objective of the DSTI is to more closely align
executive remuneration to best practice, strengthen alignment to
long-term shareholder interests and support the longer term retention
of key executives.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 23
Base pay and benefits
Structured as a total employment cost package which may be
delivered as a combination of cash and prescribed non-financial
benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the fixed
component of pay and rewards. External remuneration consultants are
engaged from time to time to provide analysis and advice to ensure
base pay is set to reflect the market for a comparable role. Base pay
for executives is reviewed annually to ensure the executive’s pay is
competitive within the market. An executive’s pay is also reviewed on
promotion.
There are no guaranteed base pay increases included in any
executive’s contract.
Benefits
Executives receive salary continuance insurance cover that is also
provided to all other carsales employees. The policy is held with
OnePath Life Ltd.
Executives may structure their remuneration to include benefits such
as car allowances.
In addition, the Managing Director was provided with a paid travel
benefit during the year.
Superannuation
Retirement benefits are provided via defined contributions to approved
superannuation funds. Under current legislation carsales permits
superannuation choice for all employees. The Company default
superannuation fund is held with Asteron. Other retirement benefits
may be provided directly by the Group if approved by shareholders.
Short-term incentives (STI)
Short-term incentives (STI) are paid to key executives in the form
of an annual cash payment on the achievement of objectives as
described below.
Budgeted financial objectives are always set in the context of ensuring
that the Company is mindful of expected consensus earnings.
•
•
Project delivery (15 – 50% of On-target Earnings Value): The
project objectives set involve the execution of pre-determined
project targets the delivery which each key executive is
responsible. Projects will include the deployment of new products,
large business initiatives or market objectives.
There is no ability for a key executive to earn more than the
on-target KPI value in this section of the plan.
People & culture (10 – 15% of On-target Earnings Value): carsales
is a business that prides itself on having a highly engaged and
motivated workforce with a strong sense of values, culture and
passion for what it does. The people and culture section of the
plan is designed to ensure that key management are incentivised
to nurture and build on these principles and values. Each key
executive has performance objectives which include:
(a)
Development and maintenance of succession plans
(b)
Salary and performance reviews being completed on a
timely basis
(c)
Staff retention rates
(d)
Annual Employee Opinion Survey results performance
There is no ability for a key executive to earn more than the on-target
KPI value in this section of the plan.
The Remuneration and Nomination Committee is responsible for
assessing whether the KPIs are met and whether or not STIs will
be paid.
The STI payments may be adjusted up or down in line with under or
over achievement against the target performance levels. This is at the
discretion of the Remuneration and Nomination Committee.
The review of STI targets and payments is conducted on an
annual basis.
The size of the STI opportunity available to each key executive is based
on their accountabilities and impact of the role on the organisation or
business unit(s) that they lead.
Key executives that leave during the financial year are paid a pro-
rata share of their STI entitlements unless their departure is under
adverse conditions.
The Remuneration and Nomination Committee regularly considers
appropriate targets and key performance indicators (KPIs) to link the
STI plan and the level of payout if targets are met. This includes setting
any maximum payout under the STI plan and minimum levels of
performance to trigger payment of an STI. The Committee may also
make recommendations to the Board for discretionary STI payments
in rare circumstances where an executive’s performance warrants it.
The KPIs linked to STI plans contain 3 major components and within
each component are a series of objectives:
•
Financial performance (50 – 75% of On-target Earnings Value):
The financial objectives set against key executives relate to
performance against the Board approved annual budget. The
targets set in this component of the plan will normally relate to the
achievement against:
(a) Company Revenue
(b) Company EBITDA
Deferred Short-term Incentive (DSTI)
Deferred Short-term Incentives (DSTI) are paid to key executives in the
form of an annual award of performance rights on the achievement
of the objectives outlined below and are not exercisable for a further
12 months.
The size of the DSTI opportunity available to each executive, like the
STI, is based on the accountabilities and impact of the executive role in
the organisation.
The vesting of a DSTI award is linked entirely to the achievement of an
Earnings Per Share (EPS) objective that is set each year by the Board.
The EPS target value established takes into consideration both the
annual budget earnings objectives and market determined consensus
earnings expectations.
Further information is set out in the ‘Share-Based Compensation’
Section on page 30.
(c) Business Revenue and EBITDA, where relevant.
Long-term incentives (LTI)
This section of the plan also enables the executive to earn up to an
additional 75% of on-target earnings for over achievement against
each of the above mentioned objectives.
Long-term incentives are provided to certain employees via the
carsales.com Ltd Employee Option Plan. Further information is set out
in the ‘Share-Based Compensation’ Section on page 30.
24 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Group
Performance
The graph below shows the Group’s profitability (Revenue and EBIT) over the past five years.
FY
2015
FY
2014
FY
2013
FY
2012
FY
2011
$149.6
$135.1
$311.8
$235.6
$215.1
$184.2
$152.5
$ Millions
Revenue
EBIT
$117.6
$97.9
$81.1
The EBIT excludes the share of gains and losses from associates.
The following table shows the relationship between remuneration of key management personnel and carsales.com Ltd’s performance:
Profit for the year attributable to owners of carsales.com Ltd ($’000)
58,260
71,589
83,516
95,457
103,167
2011
2012
2013
2014
2015
Basic earnings per share (cents)
Dividend payments ($’000)
Dividend payout ratio (%)
Increase/(decrease) in share price (%)
Total KMP incentives as percentage of profit for the year (%)
25.0
30.6
35.5
40.2
43.2
41,346
51,035
75,086
72,009
80,284
71.0
(1.3)
4.2
71.3
27.7
4.4
89.9
57.2
3.4
75.4
15.5
3.8
81.4
(3.8)
3.0
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 25
Details of remuneration
Amounts of remuneration
Key management personnel
Details of the remuneration of directors, key management personnel
of the Group (as defined in AASB 124 Related Party Disclosures)
and specified executives of carsales.com Ltd and the carsales.com
Ltd Group are set out in the following tables. The cash bonuses are
dependent on the satisfaction of performance conditions as set out in
the sections headed “Short-term incentives” and “Deferred Short-term
incentives” above and payments against performance caps are set out
below. LTIs are dependent on the satisfaction of EPS and employment
conditions as set out in the section headed “Share-based payments”
later in the report. All other elements of remuneration are not directly
related to performance.
The key management personnel of the Group are the Directors of
carsales.com Ltd (see pages 20 - 21) and those key executives that
report directly to the Managing Director being:
Cameron McIntyre
Chief Operating Officer
Anthony Saines
Director – Media & OEM
Ajay Bhatia
Paul Barlow
Chris Polites
Chief Product and Information Officer
Director – International
Director – Dealer
The Group restructured the reporting structure of senior executives
in the 2015 financial year resulting in the creation of the Executive
Leadership Team comprising the 5 senior executives above, in addition
to the Managing Director. This has resulted in a change to the FY15
key management personnel with Chris Polities being included and
Damian Hardy being removed.
Key management personnel have service agreements determining
base salary, performance based cash bonuses and participation in the
Company Employee Option Plan. They have no fixed employment
terms and no special termination payment conditions. All agreements
provide for dismissal due to gross misconduct. Remuneration is
reviewed annually by the Remuneration and Nomination Committee.
We’ve seen
continued strong
domestic revenue
growth well supported
by new business
initiatives.
The carsales
Apple Watch app
Launched in May, the carsales
Apple Watch app short-listed
for the Best Connected
Device and Wearable Tech
Award at the 2015 [app]
design awards AUS.
26 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
G Roebuck
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites
Managing
Director
Chief Operating
Officer
Chief Product
and Information
Officer
Director –
Media & OEM
Director –
International
Director –
Dealer
Base Salary *
1,694,134
1,000,000
600,000
600,000
500,000
384,000
Participation in cash bonus plans
Strategy Group
STI plan
Strategy Group
STI plan
Strategy Group
STI plan
Strategy Group
STI plan
Strategy Group
STI plan
Strategy Group
STI plan
Participation in DSTI plans
Performance
Rights
Performance
Rights
Performance
Rights
Performance
Rights
Performance
Rights
Performance
Rights
Participation in LTI plans
Termination notice period
Non-compete period
Performance
Rights and
Options
Performance
Rights and
Options
Performance
Rights and
Options
Performance
Rights and
Options
Performance
Rights and
Options
Performance
Rights and
Options
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
6 month by
either party
* Base Salary (including superannuation) as at 30 June 2015. Key management personnel received a salary increase on 1 July 2014.
2015
Short-term
employee benefits
Deferred
short-term
incentive
Post-
employment
benefits
Cash salary
and fees
Cash
bonus
Non-
monetary
benefits
Performance
rights
Superannuation
Long-
term
benefits
Long
service
leave
Share-based
payments
Options
Performance
rights
Name
$
Non-executive directors
Wal Pisciotta
175,804
Richard Collins
182,172
Pat O’Sullivan
140,945
Kim Anderson
122,680
Jeffrey Browne
122,045
Steve Kloss
(Alternate)
Sub-total
non-executive
directors
Executive director
90,417
834,063
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Greg Roebuck
1,675,351
680,500
129,744
Other key management personnel and executives (Group)
Cameron
McIntyre
981,217
186,125
Anthony Saines
581,217
102,360
Ajay Bhatia
581,217
107,192
Paul Barlow
481,217
105,000
Chris Polites
365,217
107,850
-
-
-
-
-
Total key
management
personnel
compensation
(Group)
5,499,499
1,289,027
129,744
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
17,306
13,390
11,655
-
-
42,351
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Total
$
175,804
199,478
154,335
134,335
122,045
90,417
876,414
18,783
243,414
402,464
484,041
3,634,297
18,783
61,355
149,557
212,035
1,609,072
18,783
18,783
18,783
18,783
20,870
87,845
122,190
933,265
20,363
66,959
101,535
896,049
12,226
44,591
65,298
727,115
5,069
5,339
52,548
554,806
155,049
363,297
756,755
1,037,647
9,231,018
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 27
2014
Name
Short-term
employee benefits
Deferred
short-term
incentive
Post-
employment
benefits
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Performance
rights
$
Superannuation
$
Long-
term
benefits
Long
service
leave
$
Share-based
payments
Options
$
Performance
rights
$
Total
$
Non-executive directors
Wal Pisciotta
167,412
Richard Collins
127,154
Pat O’Sullivan
103,201
Ian Law
28,927
Kim Anderson
103,201
Jeffrey Browne
51,249
Steve Kloss
(Alternate)
Sub-total
non-executive
directors
Executive director
51,250
632,394
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,762
9,546
2,676
9,546
-
-
33,530
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
167,412
138,916
112,747
31,603
112,747
51,249
51,250
665,924
Greg Roebuck
1,184,880
660,000
4,366
81,521
17,775
155,196
422,269
448,185
2,974,192
Other key management personnel and executives (Group)
Cameron
McIntyre
582,225
210,325
Damian Hardy
302,225
75,208
Anthony Saines
382,225
193,775
Ajay Bhatia
387,225
157,881
Paul Barlow
352,225
103,844
-
-
-
-
-
67,934
17,775
20,303
173,047
203,321
1,274,930
35,597
37,500
37,364
22,418
17,775
17,775
17,775
17,775
8,429
85,361
99,292
623,887
13,413
106,979
122,214
873,881
13,470
83,481
98,249
795,445
11,381
56,376
64,956
628,975
Total key
management
personnel
compensation
(Group)
3,823,399
1,401,033
4,366
282,334
140,180
222,192
927,513
1,036,217
7,837,234
28 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
STI & DSTI Payments (cash & performance right) achievement against on-target earning.
Greg Roebuck
Cameron McIntyre
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
Actual STI Payment
Actual DSTI Payment
$
% Paid
% Forfeited
680,500
186,125
102,360
107,192
105,000
107,850
194%
124%
73%
143%
91%
108%
0%
0%
27%
0%
9%
0%
$
-
-
-
-
-
-
% Paid
% Forfeited
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
STI & DSTI Payments (cash & performance rights) achievement against maximum entitlement
All Key Management Personnel and Executives received grants which were less than their maximum potential STI & DSTI entitlements.
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Fixed remuneration
At risk – STI
At risk – DSTI
At risk – LTI
2015
%
2014
%
2015
%
2014
%
2015
%
2014
%
2015
%
2014
%
Directors of carsales.com Ltd
Wal Pisciotta
Greg Roebuck
Richard Collins
Pat O’Sullivan
Ian Law*
Kim Anderson
Steve Kloss
Jeffrey Browne
Other key management
personnel of the Group
Cameron McIntyre
Damian Hardy**
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites**
100
57
100
100
-
100
100
100
66
-
66
69
71
67
100
46
100
100
100
100
100
100
49
52
48
52
60
-
-
19
-
-
-
-
-
-
12
-
11
12
14
18
-
22
-
-
-
-
-
-
16
12
22
20
17
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
5
6
4
5
4
-
-
24
-
-
-
-
-
-
22
-
23
19
15
15
-
29
-
-
-
-
-
-
30
30
26
23
19
-
* Ian Law retired as a Director on 30 September 2013.
** As set out above Chris Polites is considered a KMP for 2015, replacing Damian Hardy.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 29
Service agreements
There are no service agreements between the Company and its non-executive directors. The Company’s constitution requires that director’s
remuneration be determined at Annual General Meetings. There are no agreements to pay benefits to non-executive directors upon
termination.
Remuneration and other terms of employment for the Managing Director and key management personnel are formalised in service
agreements. Unless otherwise stated each of these agreements provide for the provision of base salary and in some circumstances the
provision of other benefits such as commissions, cash bonuses, car allowances and where eligible participation in the Company’s Employee
Option Plan. None of the agreements provide for any payment of benefits upon termination of employment, other than for accrued employee
benefits and statutory or contractual notice periods. Details of payments made under the agreements are shown earlier in this report.
All executives have on-going terms of agreement with the Group. Agreements can be terminated on the basis of performance, long-term illness
or otherwise by agreement.
Employee Share Trust
In July 2011 carsales.com Ltd established an Employee Share Trust (EST) to oversee the administration of all current and future share option and
performance rights plans. The Trustee of the EST is Computershare Plan Manager Pty Ltd.
As well as streamlining administration of the plans, the structure enables the Trustee to buy carsales.com Ltd shares on market, or issue new
carsales shares for delivery to employees exercising vested share options or performance rights. The establishment of the EST does not have
any negative change to the rights of employees in the various plans, or on Shareholders.
Share-based compensation
Options and performance rights
Options and performance rights are granted under the carsales.com Ltd Employee Option Plan which was established via a prospectus lodged
with ASIC in 2000. The Board of Directors determines who shall be invited to participate in the plan. Options and performance rights under this
plan are issued for no cash consideration. Options and performance rights are issued subject to vesting rules and expiry periods. Options and
performance rights vest on fixed dates provided that employment has not been terminated, and for senior executives, when EPS targets have
been achieved.
EPS targets relating to senior executive options and performance rights, together with the Company’s actual achievements are as follows:
LTI
Grant
DSTI
Grant
Minimum Entitlement
Maximum Entitlement
Actual Achieved
Vesting Date
% payable
EPS target
% payable
EPS target
% payable
Year ending 30 June 2013
Aug-15
50%
0.353
100%
0.380
74%
Minimum and maximum EPS targets for the Options and Performance Rights were set for the period ending 30 June 2015 at the 2013 AGM on
26 October 2012, at a minimum aggregate growth rate over a three year period of 15.2% and a maximum aggregate growth rate over a three
year period of 24.0%.
EPS targets exclude any corporate activity associated with mergers and acquisitions, corporate or capital re-organisations.
The actual EPS achieved for the LTI grant vesting in August 2015 of $0.366 per share is below the reported FY15 EPS of $0.432 per share
principally as the LTI award excludes the income and incremental costs related to the iCar Asia, Webmotors, SKENCARSALES and Stratton
acquisitions as these occurred after the LTI grant was awarded.
Minimum Entitlement
Maximum Entitlement
Actual Achieved
Vesting Date
% payable
EPS target
% payable
EPS target
% payable
Year ending 30 June 2015
Aug-16
50%
0.4424
100%
0.465
0%
EPS
0.366
EPS
0.417
The exercise price of each option is fixed by the Board of Directors when the options and performance rights are issued. Amounts received on
the exercise of options are recognised as share capital. The performance rights have a $0.00 exercise price and are converted to shares when all
vesting conditions have been met. Options and performance rights granted under the plan carry no dividend or voting rights until vested.
Senior executives who leave the Company have 30 days from their date of departure to exercise any vested options they may be holding unless
such departure is under adverse conditions. In exceptional circumstances, and at the Board’s discretion, senior executives may be allowed to
exercise unvested options in future periods when they vest.
30 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Alignment of Managing Director and senior executive
employees
Options and performance rights issued to the Managing Director
contain the same terms, conditions and performance targets as those
issued to senior executive employees.
The Company has each year also used its Long-Term Incentive plan
to issue options and performance rights to a select number of key
staff members to support retention of talent. These awards are not
linked to particular performance targets and vest three years from the
grant date.
The Deferred Short-Term Incentive (DSTI) program is only available to
the Managing Director and senior executive employees.
Since listing on the ASX in September 2009 the Board has reviewed
a number of different incentive structures that align the terms and
performance target methodologies with those of respected peers
in our sector, as well as the interests of shareholders in ensuring
management are incented to deliver high performance outcomes
over the long-term.
The Company has selected EPS to be the most appropriate target
on which to apply its Long-Term Incentive and Deferred Short-Term
Incentive programs. The rationale for this choice has historically been
as a result of having only a small pool of relevant peers, being other
ASX listed online businesses, and the lack of liquidity in the stock of
both the Company until March 2011 and some appropriate peers.
The Board continues to believe that EPS is the most appropriate
measure that best aligns the interest of shareholders with those of
management.
The following award details are outlined for all unvested grants.
Deferred Short-Term Incentive (DSTI)
The vesting of performance rights is subject to the achievement of
a financial year ending 30 June 2015 earnings per share target. The
Board, in considering appropriate performance targets, believes EPS is
the most effective measure in ensuring alignment with the interests of
shareholders.
The minimum and maximum EPS target for the performance rights
to vest has been set by the Board. In considering the appropriate EPS
target, the Board has used the historical earnings performance of the
Company, forward looking market consensus earnings expectations
and other internal forward looking plans as inputs for determining the
appropriate objective.
Performance Rights will not be capable of exercise if at the testing
date the minimum targeted growth rate has not been achieved.
12,332 performance rights were issued to the Managing Director on
24 October 2014, with an exercise price of $0.00. These performance
rights were approved by shareholders at the AGM held on 24
October 2014.
In addition, 44,963 performance rights were issued to senior
executives on 24th October 2014, with an exercise price of $0.00, and
with the same conditions as those of the Managing Director.
Performance Rights will be capable of exercise if at the testing date the
EPS target has been achieved or exceeded as follows;
•
•
If the EPS achieved is equal to the minimum target, 50% of the
performance rights will be capable of exercise.
If the EPS achieved is between the minimum and maximum
targets, vested performance rights will be capable of exercise on a
pro-rata basis between 50% and 100%.
•
If the EPS achieved is equal to or exceeds the maximum target,
100% of the performance rights will be capable of exercise.
The performance conditions applying to the Performance Rights will
be tested at 30 June 2015.
Subject to the performance conditions being satisfied, performance
rights may be exercised after the Board releases the 2015 Annual
Report to the ASX.
FY2013 Award (Issue date 26 October 2012 Managing
Director, and senior executive employees)
198,603 options and 69,640 performance rights were issued to the
Managing Director on 26 October 2012, with an exercise price of
$5.93 for employee share options and $0.00 for performance rights.
These options were approved by shareholders at the AGM held on 26
October 2012.
In addition, 346,406 options and 121,466 performance rights were
issued to senior executives on 26 October 2012, with an exercise price
of $5.93 for employee share options and $0.00 for performance rights,
and with the same conditions as those of the Managing Director.
Subject to the performance conditions being satisfied, options and
performance rights may, unless otherwise waived by the Board, be
exercised as follows:
• 40% with a testing date 30 June 2014 (Year 2), exercisable after the
Board releases the 2014 Annual Report to the ASX.
• 60% with a testing date 30 June 2015 (Year 3), exercisable after the
Board releases the 2015 Annual Report to the ASX.
Attributable options and performance rights which have not achieved
the EPS target on the applicable testing date:
•
in Year 2, will be carried forward in aggregate to the testing date
for Year 3,
•
in Year 3, will lapse.
Minimum and maximum EPS targets for the options and performance
rights have been set for each of the 2 years of the vesting period. The
target for the third year, namely the period ending 30 June 2015, has
been set at a minimum aggregate growth rate over the three year
period of 15.2% and a maximum aggregate growth rate over the three
year period of 24.0%.
Options and performance rights will be capable of exercise in tranches
if, at the relevant testing date, the EPS target for the relevant period has
been achieved or exceeded as follows:
•
•
•
If the EPS achieved is equal to the minimum target, 50% of the
vested options and performance rights will be capable of exercise.
If the EPS achieved is equal to or exceeds the maximum target,
100% of the vested options and performance rights will be
capable of exercise.
If the EPS achieved is between the minimum and maximum
targets, vested options and performance rights will be capable of
exercise on a pro-rata basis between 50% and 100%.
182,863 options and 66,117 performance rights were issued to several
other select employees on the 26th October 2012.
The expiry date of this award is five years from the grant date.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 31
FY2014 Award (Issue date 25 October 2013 Managing
Director and senior executive employees)
FY2015 Award (Issue date 24 October 2014 Managing
Director and senior executive employees)
134,213 options and 50,874 performance rights were issued to the
Managing Director on 25 October 2013, with an exercise price of
$9.10 for employee share options and $0.00 for performance rights.
These options were approved by shareholders at the AGM held on 25
October 2013.
204,063 options and 55,603 performance rights were issued to the
Managing Director on 24 October 2014, with an exercise price of
$10.71 for employee share options and $0.00 for performance rights.
These options were approved by shareholders at the AGM held on 24
October 2014.
In addition, 168,404 options and 63,835 performance rights were
issued to senior executives on 25th October 2013, with an exercise
price of $9.10 for employee share options and $0.00 for performance
rights, and with the same conditions as those of the Managing
Director.
In addition, 385,604 options and 94,821 performance rights were
issued to senior executives on 24th October 2014, with an exercise
price of $10.71 for employee share options and $0.00 for performance
rights, and with the same conditions as those of the Managing
Director.
The vesting of the options and performance rights issued are subject
to the achievement of an EPS target with a testing date of 30 June
2016 and are exercisable after the Board releases the 2016 Annual
Report to the ASX.
The vesting of the options and performance rights issued are subject
to the achievement of an EPS target with a testing date of 30 June
2017 and are exercisable after the Board releases the 2017 Annual
Report to the ASX.
The minimum and maximum EPS target for the Options and
Performance Rights have been set by the Board. In considering the
appropriate EPS target, the Board has used the historical earnings
performance of the Company, forward looking market consensus
earnings expectations and other internal forward looking plans as
inputs for determining the appropriate objective.
The minimum and maximum EPS target for the Options and
Performance Rights have been set by the Board. In considering the
appropriate EPS target, the Board has used the historical earnings
performance of the Company, forward looking market consensus
earnings expectations and other internal forward looking plans as
inputs for determining the appropriate objective.
The minimum EPS target required for any of the awarded Options and
Performance Rights to vest is a target that will require the Company to
achieve an EPS value that will reflect double digit compound annual
growth rate (“CAGR”) in EPS between the baseline year ending 30
June 2013 and the testing year ending 30 June 2016.
The minimum EPS target required for any of the awarded Options and
Performance Rights to vest is a target that will require the Company to
achieve an EPS value that will reflect double digit compound annual
growth rate (“CAGR”) in EPS between the baseline year ending 30
June 2014 and the testing year ending 30 June 2017.
The Company will publish in the FY2016 Annual Report the minimum
and maximum EPS target that was applicable to the grant, along with
the actual EPS achieved by the Company in that relevant year.
The Company will publish in the FY2017 Annual Report the minimum
and maximum EPS target that was applicable to the grant, along with
the actual EPS achieved by the Company in that relevant year.
Options and performance rights will be capable of exercise, at the
relevant testing date, the EPS target for the relevant period has been
achieved or exceeded as follows:
Options and performance rights will be capable of exercise, at the
relevant testing date, the EPS target for the relevant period has been
achieved or exceeded as follows:
•
•
•
If the EPS achieved is equal to the minimum target, 50% of the
vested options and performance rights will be capable of exercise.
If the EPS achieved is equal to or exceeds the maximum target,
100% of the vested options and performance rights will be
capable of exercise.
If the EPS achieved is between the minimum and maximum
targets, vested options and performance rights will be capable of
exercise on a pro-rata basis between 50% and 100%.
•
•
•
If the EPS achieved is equal to the minimum target, 50% of the
vested options and performance rights will be capable of exercise.
If the EPS achieved is equal to or exceeds the maximum target,
100% of the vested options and performance rights will be
capable of exercise.
If the EPS achieved is between the minimum and maximum
targets, vested options and performance rights will be capable of
exercise on a pro-rata basis between 50% and 100%.
105,456 options and 82,331 performance rights were issued to several
other select employees on the 25th October 2013.
71,222 options and 17,536 performance rights were issued to several
other select employees on the 24th October 2014.
The expiry date of this award is five years from the grant date.
The expiry date of this award is five years from the grant date.
32 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
The terms and conditions of each grant of options and performance rights affecting remuneration in the current or a future reporting period are
as follows:
Grant date
Date
exercisable
Expiry date
Exercise
price
Value
at
grant date
%
Vested
Performance
achieved
October 2010
August 2013
October 2015
October 2010
October 2013
October 2015
October 2011
August 2012
October 2016
October 2011
August 2013
October 2016
October 2011
August 2014
October 2016
October 2011
August 2013
October 2016
October 2011
August 2014
October 2016
October 2012
August 2014
October 2017
October 2012
August 2015
October 2017
October 2012
August 2014
October 2017
October 2012
August 2015
October 2017
October 2013
August 2015
October 2018
October 2013
August 2016
October 2018
October 2013
August 2016
October 2018
October 2014
August 2017
October 2019
October 2014
August 2016
October 2019
October 2014
August 2017
October 2019
$4.90
$4.90
$4.69
$4.69
$4.69
$0.00
$0.00
$5.93
$5.93
$0.00
$0.00
$0.00
$9.10
$0.00
$10.71
$0.00
$0.00
$1.32
$1.44
$0.96
$1.10
$1.19
$4.54
$4.36
$2.33
$2.43
$6.96
$6.73
$10.58
$3.91
$10.32
$2.36
$9.41
$9.12
100
100
100
100
100
100
100
100
75%
100%
100%
75%
N/A
N/A
N/A
N/A
N/A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Part
Yes
Yes
Part
To be determined
To be determined
To be determined
To be determined
To be determined
$0.00 exercise price represents performance rights.
When exercisable, each option is convertible into one ordinary share upon
payment of the exercise price by the option holder, provided that the
option holder complies with the rules of the carsales.com Ltd Employee
Option Plan. Performance rights will automatically be converted to one
ordinary share upon the vesting date provided the holder complies with
the rules of carsales.com Ltd Employee Option Plan.
Options and performance rights not exercised expire where (a)
the expiry date applicable to the option or performance right is
reached, (b) 30 days post the employee ceasing to be employed by
carsales.com Ltd or their employment is terminated, (c) where EPS
vesting conditions are not met, or (d) where there has been a special
circumstance, then within 90 days after that special circumstance has
occurred or as specified by the Board.
Details of options and performance rights granted over ordinary
shares in the Company provided as remuneration to each director of
carsales.com Ltd and each of the key management personnel of the
Parent Entity and the Group are set out below.
Further information on the options and performance rights is set out
in Note 24 to the financial statements.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 33
Name
Executive director
Greg Roebuck
Other Key management personnel and executives (Group)
Cameron McIntyre
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
Number
of options
granted
during the
year 2015
Number of
performance
rights
granted
during the
year 2015
$ Value of
options at
grant date
2015
$ Value of
performance
rights at
grant date
2015
Number of
options and
performance
rights vested
during the
year 2015
204,063
67,935
481,815
623,233
312,646
77,902
44,515
33,387
22,258
18,363
29,812
16,829
14,067
8,988
7,444
183,935
274,997
152,730
105,105
155,199
95,456
78,830
129,999
52,554
43,357
82,996
68,744
70,216
50,019
27,489
Shares provided on exercise of remuneration options and performance rights
Details of ordinary shares in the Company provided as a result of the exercise of options by each director of carsales.com Ltd and other key
management personnel of the Group are set out below.
Name
Directors of carsales.com Ltd
Greg Roebuck
Other key management personnel and executives of the Group
Cameron McIntyre
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
Date of exercise
of options and
performance rights
Number of ordinary
shares issued on
exercise of options and
performance rights
during the year
Value at
exercise date *
August 2014
March 2015
August 2014
August 2014
August 2014
August 2014
June 2015
August 2014
70,642
471,034
152,730
95,456
70,216
11,275
38,744
6,313
786,245
2,554,477
1,102,504
689,061
505,466
125,491
201,870
70,264
* The value at the exercise date of options and performance rights that were granted as part of remuneration and were exercised during the year has been determined
as the intrinsic value of the options and performance rights at that date.
The amounts paid per ordinary share by each director and other key
management personnel on the exercise of options and performance
rights at the date of exercise were as follows:
Exercise date
Amount paid per share
August 2014
August 2014
August 2014
March 2015
June 2015
June 2015
$0.00
$4.69
$5.93
$4.69
$4.69
$5.93
No amounts are unpaid on any shares issued on the exercise of
option.
Additional information
Details of remuneration: Share-based compensation benefits
For each grant of options and performance rights, the percentage
of the available grant that vested, in the financial year, and the
percentage that was forfeited because the person did not meet the
service and performance criteria is set out below. The vesting periods
for options and performance rights are detailed above. No options and
performance rights will vest if the conditions are not satisfied, hence
the minimum value of the options and performance rights yet to vest
is nil. The value of the options and performance rights yet to vest has
been determined as the amount of the grant date fair value of the
options and performance rights that is yet to be expensed.
34 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Name
Greg Roebuck
Cameron McIntyre
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
Share-based compensation benefits (options and performance rights)
Financial year
granted
Vested
%
Forfeited
%
Financial years in
which grant may
vest
Minimum total
value of grant yet
to vest
$
Maximum total
value of grant yet
to vest
$
2012
2013
2013
2014
2014
2015
2015
2012
2013
2013
2014
2014
2015
2015
2012
2013
2013
2014
2014
2015
2015
2012
2013
2013
2014
2014
2015
2015
2012
2013
2013
2014
2014
2015
2015
2012
2013
2013
2014
2014
2015
2015
100
100
-
-
-
-
-
100
100
-
-
-
-
-
100
100
-
-
-
-
-
100
100
-
-
-
-
-
100
100
-
-
-
-
-
100
100
-
-
-
-
-
-
-
26
26
-
-
-
-
-
26
26
-
-
-
-
-
26
26
-
-
-
-
-
26
26
-
-
-
-
-
26
26
-
-
-
-
-
26
26
-
-
-
2016*
2016*
2017*
2017*
2018*
2016*
2016*
2017*
2017*
2018*
2016*
2016*
2017*
2017*
2018*
2016*
2016*
2017*
2017*
2018*
2016*
2016*
2017*
2017*
2018*
2016*
2016*
2017*
2017*
2018*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,148
5,563
432,352
73,845
756,300
-
-
10,588
4,637
144,118
63,635
274,479
-
-
6,618
2,538
82,351
35,126
156,845
-
-
5,294
2,550
61,765
35,000
117,633
-
-
3,468
1,530
41,175
21,000
78,420
-
-
2,648
1,275
33,969
17,497
64,698
*Vesting is contingent upon board approval. Options are exercisable after the Board release the results to ASX in August each year.
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 35
The following tables show the number of:
(i) Option holdings and performance rights
The numbers of options and performance rights over ordinary shares in the Company held during the financial year by each director of carsales.
com Ltd and other key management personnel of the Company, including their personally related parties, are set out below.
2015
Name
Granted as
compensation
(including
performance
rights)
Balance at start
of the year
Directors of carsales.com Ltd
Exercised
Forfeited
Balance at end
of the year
Vested and
exercisable
Unvested
Wal Pisciotta
Richard Collins
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Greg Roebuck
979,059
271,998
(541,676)
(45,425)
663,956
81,487
582,469
Pat O’Sullivan
Steve Kloss (Alternate)
Kim Anderson
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel of the Group
Cameron McIntyre
291,023
107,714
(152,730)
(21,418)
224,589
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
177,893
135,428
92,755
61,416
61,344
47,454
31,246
25,807
(95,456)
(13,048)
130,733
(70,216)
(10,941)
101,725
(50,019)
(6,313)
(7,026)
(5,470)
66,956
75,440
-
-
-
-
-
-
-
21,176
-
-
-
224,589
130,733
101,725
66,956
54,264
(ii) Share holdings
The numbers of shares in the Company held during the financial year by each director of carsales.com Ltd and other key management
personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period
as compensation.
Balance at the start
of the year
Received during the
year on the exercise
of options
Other changes
during the year
Balance at end of
the year
2015
Name
Directors of carsales.com Ltd
Ordinary shares
Wal Pisciotta
Richard Collins
Greg Roebuck
Steve Kloss (Alternate)
Kim Anderson
Pat O’Sullivan
Jeffrey Browne
-
-
-
11,526
541,676
(727,500)
14,770,700
991,750
5,038,505
2,774,500
10,000
5,376
-
-
-
-
-
14,770,700
1,003,276
4,852,681
2,774,500
10,000
7,350
13,650
366,019
37,001
3,000
63,264
6,313
-
-
1,974
13,650
(10,360)
(73,939)
(70,287)
(19,210)
-
Other key management personnel of the Group
Ordinary shares
Cameron McIntyre
Anthony Saines
Ajay Bhatia
Paul Barlow
Chris Polites
223,649
152,730
15,484
3,071
32,455
-
95,456
70,216
50,019
6,313
36 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Other transactions with key management personnel
(i) Directors of carsales.com Ltd
W Pisciotta is a director and shareholder of Pentana, which entered into a relationship agreement with carsales.com Ltd in 2010 for the supply
of data and services. Under the contract, Pentana supplies data for the exclusive use of carsales.com Ltd in return for a fixed annual payment,
plus a percentage of revenues generated through Pentana Solutions. This was re-signed with a 2-year term from March 2015.
R Collins is a shareholder of automotive dealerships which utilised the Group’s services under terms and conditions no more favourable than
dealing with other customers at arm’s length in the same circumstances.
Shares under option and performance rights
Unissued ordinary shares of carsales.com Ltd under option at the date of this report are as follows:
Date options granted
Expiry date
Issue price of shares
Number under options
Number under
performance rights
Oct-2010
Mar-2011
Oct-2011
Mar-2012
Oct-2012
Oct-2012
Oct-2013
Oct-2013
Oct-2014
Oct-2014
Oct-2015
Oct-2015
Oct-2016
Oct-2016
Oct-2017
Oct-2017
Oct-2018
Oct-2018
Oct-2019
Oct-2019
$4.90
$4.90
$4.69
$4.69
$5.93
$0.00
$9.10
$0.00
$10.71
$0.00
25,000
45,000
33,662
69,244
482,823
394,759
657,376
1,707,864
136,196
172,179
224,523
532,898
No option or performance rights holder has any right under the options or performance rights to participate in any other share issue of the
Company. No options or performance rights have been issued post 30 June 2015.
Shares issued on the exercise of options and performance rights
The following ordinary shares of carsales.com Ltd were issued during the year ended 30 June 2015 on the exercise of options granted under
the carsales.com Ltd Employee Option Plan. No amounts are unpaid on any of the shares.
Date options and performance rights exercised
Issue price of shares
Number of shares issued
Aug-2014
Aug-2014
Oct-2014
Oct-2014
Nov-2014
Dec-2014
Mar-2015
May-2015
Jun-2015
$0.00
$2.00 – $5.93
$0.00
$1.75 – $4.69
$4.69 – $4.90
$4.69 – $5.93
$4.69 – $5.93
$4.69
$4.69 – $5.93
208,613
337,408
52,379
37,952
38,275
51,874
576,057
5,172
38,744
1,346,474
Directors’ report
carsales.com Limited – Annual Report – 30 June 2015 | 37
Insurance of officers
Auditor’s independence declaration
During the financial year, carsales.com Ltd paid a premium to insure
the directors and officers of the Company and its Australian-based
controlled entities. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
Indemnification of directors and officers
All current directors and officers are indemnified under a deed of
indemnity, insurance and access.
Non-audit services
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s expertise
and experience with the Company are important.
Details of the amounts paid or payable to the auditor (PwC) for non-
audit services provided during the year are set out below.
The Board of Directors has considered the position and, in accordance
with advice received from the Audit and Risk Management Committee,
is satisfied that the provision of the non-audit services is compatible
with the general standard of independence for auditors imposed
by the Corporations Act 2001. The Directors are satisfied that the
provision of non-audit services by the auditor, as set out below, did
not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed by the Audit and Risk
Management Committee to ensure they do not impact the
impartiality and objectivity of the auditor.
• none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
During the year the following fees were paid or payable for non-
audit services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Consolidated
2015
$
2014
$
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 39.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued
by the Australian Securities and Investments Commission, relating
to the ‘rounding off’ of amounts in the Director’s Report. Amounts in
the Director’s Report have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
Auditor
PwC continues in office in accordance with section 327 of the
Corporations Act 2001.
Corporate governance report
As allowed under the ASX Corporate Governance Principles and
Recommendations (Third Edition) the Company has included its report
on compliance with the principles in the year to 30 June 2015 in the
Corporate Governance section of the Investor Centre on the carsales
website. The full report can be found at the following URL: http://
shareholder.carsales.com.au/Investor-Centre/?page=Corporate-
Governance
This report is made in accordance with a resolution of directors.
Wal Pisciotta
Chairman
Other assurance services
PwC Australian firm
Controls assurance services
25,028
-
Due diligence services
241,879
165,543
Total remuneration for other assurance services
266,907
165,543
Greg Roebuck
Managing Director and CEO
Sydney
11 August 2015
Taxation services
PwC Australian firm
Tax compliance services
77,000
64,439
Tax consulting and tax advice on acquisitions
84,264
61,880
Total remuneration for taxation services
161,264
126,319
Other advisory services
Due diligence fees paid to PricewaterhouseCoopers
network firms
Other services
-
91,755
8,000
-
Total remuneration for non-audit services
436,171
383,617
38 | carsales.com Limited – Annual Report – 30 June 2015
Directors’ report
Auditor’s Independence Declaration
As lead auditor for the audit of carsales.com Ltd for the year ended 30 June 2015, I declare that to the
best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of carsales.com Ltd and the entities it controlled during the period.
Anton Linschoten
Partner
PricewaterhouseCoopers
Melbourne
11 August 2015
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
41
carsales.com Limited – Annual Report – 30 June 2015 | 39
Financial
report
40 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Ltd ABN 91 074 444 018
Annual report – 30 June 2015
Contents
Financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
About this report
Notes to the financial statements
Basis of preparation
Page
42
43
44
45
46
47
Key performance
Capital and financial
risk management
Other assets and liabilities
Group structure
Other
1.
Segment information
7.
Capital risk management
14. Receivables
19. Interest in other entities
23. Remuneration of
auditors
2.
Revenue
8.
Cash
15. Property, plant and
equipment
20. Business combination
24. Share based payments
3. Expenses
9.
Borrowings
16. Intangible assets
21. Related party
transactions
25. Parent entity financial
information
4. Income tax
10. Contributed equity
17. Other liabilities
22. Deed of cross guarantee
5. Reconciliation of profit to
11. Reserves and retained
cash flow
earnings
18. Commitments
6. Earnings per share
12. Dividends
13. Financial risk
management
26. Other accounting
policies
27. Events occurring after
the reporting period
Signed reports
Directors’ declaration
Independent auditor’s report to the members
ASX information
83
87
carsales.com Limited – Annual Report – 30 June 2015 | 41
Consolidated statement of comprehensive income
For the year ended 30 June 2015
Revenue from continuing operations
Sale of goods and services
Revenue from continuing operations
Expenses
Cost of sale of goods
Sales and marketing expenses
Operations and administration
Service development and maintenance
Earnings before interest, taxes, depreciation and amortisation
Depreciation and amortisation expense
Finance income
Finance costs
Share of net profit/(loss) from associates accounted for using the equity method
Gain on associate dilution
Profit before income tax
Income tax expense
Profit from continuing operations
Other comprehensive income
Items that may be reclassified to profit or loss:
Notes
2
9
9
19(c)
19(c)
4
2015
$’000
311,756
311,756
(28,485)
(86,855)
(19,836)
(22,242)
154,338
(4,689)
688
(9,204)
4,926
3,447
149,506
(42,339)
107,167
Exchange differences on translation of foreign operations
11(a)
2,212
Total comprehensive income for the year
Profit is attributable to:
Owners of carsales.com Ltd
Non-controlling interests
Total comprehensive income for the year is attributable to:
Owners of carsales.com Ltd
Non-controlling interests
Earnings per share based on profit from continuing operations, attributable to the ordinary
equity holders of the parent entity:
Basic earnings per share
Diluted earnings per share
109,379
103,167
4,000
107,167
105,379
19(b)
4,000
109,379
Cents
43.2
42.9
6
6
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
2014
$’000
235,603
235,603
(2,461)
(56,564)
(18,151)
(20,017)
138,410
(3,309)
474
(3,388)
3,434
-
135,621
(39,349)
96,272
(1,047)
95,225
95,457
815
96,272
94,410
815
95,225
Cents
40.2
40.0
42 | carsales.com Limited – Annual Report – 30 June 2015
Consolidated statement of financial position
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Notes
2015
$’000
2014
$’000
8
14
26,823
39,176
1,870
67,869
26,042
35,384
-
61,426
Investments accounted for using the equity method
19(c)
257,251
240,426
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Borrowings
Current tax liabilities
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
15
4
16
17
9
17
17
9
17
10
11(a)
11(b)
5,949
5,171
155,948
424,319
492,188
4,402
5,916
92,269
343,013
404,439
33,552
22,740
1,876
2,237
5,412
5,940
9,842
9,349
3,818
5,535
49,017
51,284
212,493
1,165
213,658
262,675
229,513
91,905
21,471
113,829
2,308
229,513
164,841
938
165,779
217,063
187,376
77,603
17,695
90,946
1,132
187,376
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
carsales.com Limited – Annual Report – 30 June 2015 | 43
Consolidated statement of changes in equity
For the year ended 30 June 2015
Attributable to owners of carsales.com Ltd
Contributed
equity
$’000
Other
reserves
$’000
Retained
earnings
$’000
Notes
Non-
controlling
interest
$’000
Balance at 1 July 2013
Profit for the year
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
70,104
14,908
67,498
-
-
-
-
95,457
(1,047)
-
(1,047)
95,457
Contributions of equity upon exercise of employee
share options
10(b)
7,499
Non-controlling interest on acquisition of subsidiary
Dividends paid to members of the parent
12
Increase in share-based payment reserve inclusive of tax
-
-
-
-
-
-
-
-
(72,009)
3,834
-
Total
equity
$’000
152,510
96,272
(1,047)
95,225
7,499
317
(72,009)
3,834
187,376
107,167
-
815
-
815
-
317
-
-
1,132
4,000
Balance at 30 June 2014
Profit for the year
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity upon exercise of employee share
options
10(b)
5,252
Non-controlling interest on acquisition of subsidiary
-
Dividends paid to members of the parent
12
9,050
Dividends paid to non-controlling interest
Increase in share-based payment reserve inclusive of tax
-
-
77,603
17,695
90,946
-
103,167
-
-
-
2,212
2,212
-
-
-
-
1,564
-
-
2,212
103,167
4,000
109,379
-
-
-
5,252
(1,119)
(1,119)
(80,284)
-
(71,234)
-
-
(1,705)
(1,705)
-
1,564
Balance at 30 June 2015
91,905
21,471
113,829
2,308
229,513
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
44 | carsales.com Limited – Annual Report – 30 June 2015
Net cash inflow from operating activities
5
Consolidated statement of cash flows
For the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (incl GST)
Payments to suppliers and employees (incl GST)
Income taxes paid
Cash flows from investing activities
Investment in subsidiaries (net of cash acquired)
Investment in associates
Payments for property, plant and equipment
Proceeds from disposal of other assets
Dividends received from associates
Interest received
Payments for intangible assets
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Repayment of borrowings
Interest paid
Dividends paid to non-controlling interests
Dividends paid to company shareholders
Loan arrangement fees paid
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
8
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes
2015
$’000
2014
$’000
338,458
(185,770)
(50,879)
101,809
(55,751)
(10,042)
(676)
-
4,153
688
(1,065)
(62,693)
5,252
80,080
(41,035)
(8,843)
(1,705)
254,341
(118,734)
(34,323)
101,284
(8,400)
(133,897)
(948)
1
665
474
(860)
(142,965)
7,499
183,500
(63,342)
(3,065)
-
(850)
(38,335)
781
26,042
26,823
-
52,583
10,902
15,140
26,042
12
(71,234)
(72,009)
carsales.com Limited – Annual Report – 30 June 2015 | 45
About this
report
This financial report covers the consolidated financial statement of
the consolidated entity consisting of carsales.com Ltd, its subsidiaries
and investments in associates. The financial report is presented in the
Australian currency.
carsales.com Ltd is a company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of
business is:
carsales.com Ltd
Level 4, 449 Punt Road
Richmond Vic 3121
A description of the nature of the consolidated entity’s operations
and its principle activities is included in the Chairman’s Update to
shareholders on page 7, the Managing Director’s Update on page 11,
and in the Directors’ Reports on page 15-38, each of which are not
part of this financial report.
The financial report was authorised for issue by the directors on 11
August 2015. The directors have the power to amend and reissue the
financial report.
Through the use of the internet, we have ensured that our corporate
reporting is timely and complete. All press releases, financial reports
and other information are available at our shareholder’s centre on our
website: www.carsales.com.au
For queries in relation to our reporting please call +61 (3) 9093 8600.
These financial statements have been prepared on a streamlined basis
where key information is grouped together for ease of understanding
and readability. The notes include information which is required to
understand the financial statements and is material and relevant to
the operations, financial position and performance of the Group.
Information is considered material and relevant if, for example:
Navigating this report
The notes are organised into the following sections:
• Key performance: provides a breakdown of the key individual line
items in the financial statements that the directors consider most
relevant to understanding performance and shareholder returns
for the year and summarises the accounting policies, judgements
and estimates relevant to understanding these line items;
• Capital and Financial Risk Management: provides information
about the capital management practices of the Group, the Group’s
exposure and management of various financial risks and explains
how these affect the Group’s financial position and performance;
• Other assets and liabilities: Provides information on other
balance sheet assets and liabilities that do not materially affect
performance or give rise to material financial risk;
• Group structure: explains aspects of the group structure, such as
our portfolio of associate accounted investments and acquisitions
and how these have affected the financial position and
performance of the Group; and
• Other: provides information on items which require disclosure to
comply with Australian Accounting Standards and other regulatory
pronouncements however, are not considered critical in
understanding the financial performance or position of the Group.
Significant and other accounting policies that summarise the
measurement basis used and presentation policies and are relevant to
an understanding of the financial statements are provided throughout
the notes to the financial statements.
Key reporting highlights
Notes containing information relevant to understanding significant
changes to the Group’s affairs and performance in the current year are
as follows:
•
•
•
•
the amount in question is significant because of its size or nature;
• The Group recorded record revenue and EBITDA – Note 1;
it is important for understanding the results of the Group;
it helps to explain the impact of significant changes in the Group’s
business – for example, acquisitions; or
•
50.1% of Stratton Finance Pty Ltd was acquired during the year –
Note 20;
• The Group entered into a 5-year $325m syndicated borrowing
it relates to an aspect of the Group’s operations that is important
to its future performance.
facility to support future growth – Note 9;
•
Full year dividend proposed – Note 12.
Key estimates and judgements
The preparation of financial statements in conformity with AIFRS
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 set out below:
• Goodwill impairment testing – Note 16(a);
• Valuation of share based payments – Note 24.
46 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
Basis of
preparation
These general purpose financial statements have been prepared in
accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board,
Urgent Issues Group Interpretations and the Corporations Act 2001.
carsales.com Ltd is a for-profit entity for the purpose of preparing the
financial statements.
(i) Compliance with International Financial Reporting Standards
The financial report of carsales.com Ltd complies with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
(ii) Historical cost convention
These financial statements have been prepared under the historical
cost convention.
(iii) Financial statement presentation
The accounting policies adopted are consistent with those of the
previous financial year except as set out in the “New accounting
standards and interpretation” section below and as follows:
Interest received in the consolidated statement of comprehensive
income has been reclassified from revenue to be presented adjacent
to finance costs for the 12 months to 30 June 2014 consistent
with the presentation adopted for the year to 30 June 2015 as this
better reflects the management of interest income and expenses
as a net expense to the Group. The interest received and paid in the
consolidated statement of cash flows has been reclassified for the
12 months to 30 June 2014 to present interest received under ‘Cash
flows from investing activities’ and interest paid under ‘Cash flows
from financing activities’ consistent with the 12 months to 30 June
2015 as management believes this better reflects the nature of the
interest cash flows.
The classification of expenses in the FY14 year has been restated to
match the classification adopted for the FY15 year for comparability
purposes. This principally reflects the split out of cost of sale of
goods and a reclassification of costs from sales and marketing
expenses to service development and maintenance to reflect an
internal headcount restructuring made in FY15 where staff are better
considered as development heads.
(iv) Going concern
The financial statements have been prepared on a going concern
basis.
Basis of consolidation
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of carsales.com Ltd (‘’Company’’ or ‘’parent
entity’’) as at 30 June 2015 and the results of all subsidiaries for the
year then ended. carsales.com Ltd and its subsidiaries together are
referred to in this financial report as the Group or the Consolidated
Entity.
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Australian
dollars, which is carsales.com Ltd’s functional and presentation
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency 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 year-end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the consolidated statement of
comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of
which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
• Assets and liabilities for each consolidated statement of financial
position presented are translated at the closing rate at the date of
that balance sheet.
•
Income and expenses for each consolidated statement of
comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the
transactions).
• All resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings are taken
to other comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment are repaid, a
proportionate share of such exchange differences are recognised in
the consolidated statement of comprehensive income, as part of the
gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 47
Goods and Services Tax (GST)
New accounting standards and interpretations
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
acquisition of the asset or as part of the expense.
Certain new accounting standards and interpretations have been
published that are mandatory for 30 June 2015 reporting periods and
have been adopted by the Group. The Group’s assessment of the
impact of these new standards and interpretations is set out below.
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 with other receivables or
payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as
operating cash flow.
Rounding of amounts
The Company is of a kind referred to in Class order 98/0100, issued by
the Australian Securities and Investments Commission, relating to the
‘’rounding off’’ of amounts in the financial report. Amounts in the financial
report have been rounded off in accordance with that Class Order to the
nearest thousand dollars, or in certain cases, the nearest dollar.
The Group has applied the following standards in their year-end
reporting commencing 1 July 2014:
• Annual Improvements to IFRSs 2010-2012 Cycle and Annual
Improvements to IFRSs 2011-2013 Cycle (effective 1 July 2014).
• AASB 2012-3 Amendments to Australian Accounting Standard
– Offsetting Financial Assets and Financial Liabilities (effective 1
January 2014).
• AASB 2013-3 Amendments to AASB 136 – Recoverable Amount
Disclosures for Non-Financial Assets (effective 1 January 2014).
There is no material impact in the financial statements as a result of
the adoption of the above standards.
48 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
Key
Performance
1 Segment information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker. The
chief operating decision maker has been identified as the Managing
Director.
Management has determined the operating segments based on the
reports reviewed by Key Management Personnel that are used to make
strategic decisions.
(a) Description of segments
The Group principally operates in four business segments: namely
Online Advertising Services, Data and Research Services, International
and Finance and Related Services.
Online Advertising Services
carsales.com Ltd online advertising offerings can be broken into two
key product sets being classified advertising and display advertising
services.
Classified Advertising allows customers (including dealers and
consumers) to advertise automotive and non-automotive goods and
services for sale across the carsales Network. Classified advertising
typically allows a customer to advertise their red Brand X, model Y
car with 20,000km for $10,000 on a carsales website. This segment
includes services such as subscriptions, lead fees and priority
placement services across automotive and non-automotive websites.
Display advertising, typically involves corporate customers such
as automotive manufacturers/importers, finance and insurance
companies etc, placing advertisements on carsales Network websites.
These advertisements typically display the product or service offerings
of the corporate advertiser such as a special offer on new utes by
manufacturer X, or save 10% on insurance this month only etc, as
banner advertisements or other sponsored links.
Online advertising includes carsales’ investment in tyresales which
is an online tyre advertisement website that allows consumers to
transact and purchase tyres.
Data and Research Services
The carsales.com Ltd divisions of Redbook, LiveMarket, DataMotive
and DataMotive Business Intelligence provide various solutions to
a range of customers including manufacturers/importers, dealers,
industry bodies, finance and insurance companies offering products
including software, analysis, research and reporting, valuation services,
website development and hosting as well as photography services.
This segment also includes display and consumer advertising related
to these divisions.
International
carsales.com Ltd has operations in overseas countries through both
subsidiaries and equity accounted associate investments as set out
below:
Automotive Data Services:
• Auto Information Limited (New Zealand) – 100%
• Red Book Automotive Services (M) Sdn Bhd (Malaysia) – 100%
• Red Book Automotive Data Services (Beijing) Limited (China) –
100%
• Automotive Data Services (Thailand) Company Limited – 100%
Online automotive classifieds:
• Webmotors S.A.(operation in Brazil) – 30%
•
iCar Asia Limited (operations in Indonesia, Malaysia and Thailand)
– 20.2%
•
SK ENCARSALES.COM Ltd (operation in South Korea) – 49.9%
Finance and Related Services
Finance and Related Services includes the Stratton Finance Pty Ltd
subsidiary which provides innovative vehicle finance arrangements,
vehicle procurement and other related services to customers.
Segment revenues arise from commissions paid by finance providers
and other related service providers.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 49
(b) Segment analysis
2015
Segment revenue
Segment revenue
Total segment revenue
EBITDA
Depreciation and amortisation
Net interest expense
Profit before income tax
Income tax expense
Share of profit from associates
Gain on associate dilution
Non-controlling interests
Profit for the year
Segment assets
Deferred tax assets
Unallocated assets
Total assets
2014
Segment revenue
Segment revenue
Total segment revenue
EBITDA
Depreciation and amortisation
Net interest income
Profit before income tax
Income tax expense
Share of profit from associates
Non-controlling interests
Profit for the year
Segment assets
Deferred tax assets
Unallocated assets
Total assets
Online
Advertising
$’000
Data and
Research
$’000
International
$’000
Finance and
Related Services
$’000
216,463
216,463
122,067
33,037
33,037
19,041
59,370
59,370
11,651
2,886
2,886
1,579
4,926
3,447
Total
$’000
311,756
311,756
154,338
(4,689)
(8,516)
141,133
(42,339)
4,926
3,447
(4,000)
103,167
99,724
18,321
247,024
71,361
436,430
Online
Advertising
$’000
Data and
Research
$’000
International
$’000
Finance and
Related Services
$’000
203,864
203,864
120,256
29,131
29,131
16,747
-
-
-
2,607
2,607
1,407
3,434
100,463
19,393
240,426
-
5,171
50,587
492,188
Total
$’000
235,602
235,602
138,410
(3,309)
(2,914)
132,187
(39,349)
3,434
(815)
95,457
360,282
5,916
38,241
404,439
50 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(c) Notes to, and forming part of, the segment information
(iii) Finance and related services
(i) Segment revenues
Segment revenues are derived from sales to external customers as
set out in the table above. The nature of the segment revenues are as
described in Note 1(a) above.
(ii) Segment EBITDA
The consolidated entity’s chief operating decision maker assesses the
performance of the segments based on a measure of EBITDA. Interest
revenue and expense, depreciation and amortisation are not reported
to the chief operating decision maker by segment. These items are
assessed at a consolidated entity level.
Fees and commissions are recognised on an accruals basis when
the service has been provided or on completion of the underlying
transaction. Used car disposal revenue and cost of goods are
recognised gross (revenue being the fair value of the cash received for
the sale of the vehicle, and the cost of goods being the trade in price
of the vehicle).
(iv) Dividends
Dividends are recognised as revenue when the right to receive
payment is established.
(v) R&D Tax Rebate
(iii) Segment assets
The R&D 10% tax rebate is recognised as other income.
Segment assets include goodwill and trade receivables. Unallocated
assets include property, plant and equipment, intangibles and other
assets utilised across multiple segments. All unallocated assets are
assessed by the chief operating decision maker at a consolidated
entity level.
3 Expenses
2015
$’000
2014
$’000
(iv) Liabilities
Liabilities are not reported to the chief operating decision maker by
segment. All liabilities are assessed at a consolidated entity level.
2 Revenue
From continuing operations
Sales revenue
Sale of services
Sale of goods
2015
$’000
2014
$’000
280,927
232,819
30,829
2,784
311,756
235,603
Recognition and measurement
Revenue is measured at the fair value of the consideration received
or receivable. Amounts disclosed as revenue are net of returns, trade
allowances and amounts collected on behalf of third parties. Where
services have not been provided but the Company is obligated to
provide the services in the future, revenue recognition is deferred.
Where the Group has utilised the services of a sales agency to sell
advertising services on behalf of the Group, the sale is recorded at a
value net of sales commissions paid to the sales agency.
Revenue is recognised for the major business activities as follows:
(i) Advertising services
A sale is recorded when a customer’s advertisement has been
displayed or when a referral has been generated leading to an
enforceable claim by the Group. Subscription services are recognised
across the period to which they relate.
(ii) Sale of goods – retail
A sale is recorded when goods have been provided to a customer
leading to an enforceable claim by the Group.
Profit before income tax includes the
following specific expenses:
Total employee benefits
63,924
43,559
Defined contribution superannuation
expense
Research and development
Minimum lease payments
4,992
10,870
4,645
3,391
8,115
3,858
Recognition and measurement
(i) Retirement benefit obligations
All employees of the Group are entitled to benefits on retirement,
disability or death from the Group’s superannuation plan. The Group
has a defined contribution plan. The defined contribution plan
receives fixed contributions from Group companies and the Group’s
legal or constructive obligation is limited to these contributions.
The employees of the parent entity are all members of the defined
contribution section of the Group’s plan.
Past service costs are recognised immediately in profit or loss, unless
the changes to the superannuation fund are conditional on the
employees remaining in service for a specified period of time (the
vesting period). In this case, the past service costs are amortised on a
straight-line basis over the vesting period.
(ii) Research and development
Research expenditure is recognised as an expense as incurred. Costs
incurred on development projects (relating to the design and testing
of new or improved services) are recognised as intangible assets when
it is probable that the project will, after considering its commercial
and technical feasibility, be completed and generate future economic
benefits and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable costs, including costs
of materials, services, direct labour and an appropriate proportion of
overheads. Other development expenditures that do not meet these
criteria are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset in
a subsequent period. Capitalised development costs are recorded as
an intangible asset and amortised from the point of which the asset
is ready for use on a straight line basis over its useful life, which varies
from 3 to 5 years.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 51
(iii) Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a
straight-line basis over the period of the lease.
4 Income tax
(a) Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Deferred income tax expense included in income tax expense comprises:
Decrease in deferred tax assets
2015
$’000
41,275
1,000
64
42,339
1,000
1,000
2014
$’000
38,934
450
(35)
39,349
450
450
Current tax expense of $50,000 (2014: deduction of $2,331,000) has been directly recognised in equity, related to share based payments.
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2014 – 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Tax offset for R&D
Deferred tax on share options transferred to the Employee Share Trust
Sundry items
Difference in overseas tax rates
Adjustments for current tax of prior periods
Tax on share of (profit)/losses from associates
Non-taxable gain on associate dilution
Total income tax expense
2015
$’000
149,506
44,852
(150)
104
83
(103)
64
(1,477)
(1,034)
42,339
2014
$’000
135,621
40,686
(140)
(320)
188
-
(35)
(1,030)
-
39,349
52 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(c) Deferred tax assets
The balance comprises temporary differences attributable to:
At 1 July 2013
(Charged)/credited to the profit or loss
Credited directly to equity
At 30 June 2014
Acquisition of subsidiary
(Charged)/credited to the profit or loss
Credited directly to equity
At 30 June 2015
Employee
benefits
$’000
Employee Share
Trust
$’000
Doubtful debts
$’000
1,217
(200)
-
1,017
170
757
-
1,944
4,108
19
(272)
3,855
-
(2,292)
(50)
1,513
313
-
-
313
-
(120)
-
193
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
Recognition and measurement
Tax consolidation legislation
Expense
accruals
$’000
1,000
(269)
-
731
135
655
-
1,521
2015
$’000
3,771
1,400
5,171
Total
$’000
6,638
(450)
(272)
5,916
305
(1,000)
(50)
5,171
2014
$’000
4,683
1,233
5,916
carsales.com Ltd and its wholly-owned Australian controlled entities
have implemented the tax consolidation legislation.
The head entity, carsales.com Ltd, and the controlled entities in the
tax consolidated group account for their own current and deferred tax
amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts,
carsales.com Ltd also recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax
consolidated entities are recognised as amounts receivable from or
payable to other entities in the Company.
The income tax expense or revenue for the period is the tax payable
on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to
unused tax losses.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if
it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income
tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
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.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments
in foreign operations where the Company is able to control the timing
of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 53
5 . Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Profit on sale of assets
Non-cash employee benefits expense – share-based payments
Net finance related costs
Share of (profit)/losses of associates
Gain on associate dilution
Net exchange differences
Change in operating assets and liabilities:
Decrease/(Increase) in trade debtors
Decrease in deferred tax assets
(Increase)/Decrease in other operating assets
(Decrease)/Increase in trade creditors
Increase/(Decrease) in other operating liabilities
(Decrease)/Increase in provision for income taxes payable
Increase in other provisions
Net cash inflow from operating activities
6 Earnings per share
2015
$’000
107,167
4,689
-
1,614
8,516
(4,926)
(3,447)
164
2,725
1,050
(5,426)
(574)
338
(11,109)
1,028
101,809
2014
$’000
96,272
3,309
(1)
1,775
2,749
(3,434)
-
(22)
(4,437)
722
315
4,749
(3,219)
1,805
701
101,284
Basic earnings
per share
Diluted earnings
per share
2015
2014
2015
2014
Profit attributable to equity holders of the Company
103,167,000
95,457,000
103,167,000
95,457,000
Weighted average number of ordinary shares
238,911,085
237,466,757
238,911,085
237,466,757
Dilutive impact of potential ordinary shares
-
-
1,530,744
1,322,631
Total weighted average number of ordinary shares used in EPS calculation
238,911,085
237,466,757
240,441,829
238,789,388
Earnings per share
Adjusted earnings per share excluding gain on associate dilution
43.2
41.7
40.2
40.2
42.9
41.5
40.0
40.0
Recognition and measurement
Basic earnings per share is calculated by dividing:
•
the profit attributable to equity holders of the Company, excluding
any costs of servicing equity other than ordinary shares
• by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
Diluted earnings per share 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 the conversion of all
dilutive potential ordinary shares.
Options and performance rights granted to employees under the
carsales.com Ltd Employee Option Plan are considered to be potential
ordinary shares and have been included in the determination of
diluted earnings per share to the extent to which they are dilutive.
The options and performance rights have not been included in the
determination of basic earnings per share. Details relating to the
options are set out in Note 24.
54 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
Capital & Financial
Risk Management
7 Capital risk management
The Company’s capital position at 30 June is as follows:
Payables (Note 17)
Borrowings (Note 9)
Less: cash and cash equivalents (Note 8)
Net debt
Contributed equity (Note 10)
Reserves (Note 11(a))
Retained profits (Note 11(b))
Non-controlling interests
Total equity
Total capital
2015
$’000
33,552
214,369
(26,823)
221,098
91,905
21,471
113,829
2,308
229,513
2014
$’000
22,740
174,683
(26,042)
171,381
77,603
17,695
90,946
1,132
187,376
450,611
358,757
The Company’s objectives when managing capital are to safeguard
their ability to continue as a going concern, so that they can continue
to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of
capital.
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.
Consistent with others in the industry, the Group monitors its capital
on an ongoing-basis.
There are no externally imposed capital requirements.
Investments and other financial assets
The Group classifies its investments in the following categories:
financial assets at fair value, loans and receivables and held-to-
maturity investments. The classification depends on the purpose for
which the investments were acquired. Management determines the
classification of its investments at initial recognition and re-evaluates
this designation at each reporting date.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are included in current assets, except for those with maturities greater
than 12 months after the reporting date which are classified as non-
current assets. Loans and receivables are included in trade and other
receivables (Note 14) and receivables in the consolidated statement of
financial position.
8 Cash and cash equivalents
Cash on hand
Bank balances
2015
$’000
7
26,816
26,823
2014
$’000
7
26,035
26,042
Recognition and measurement
For cash flow statement presentation purposes, cash and cash
equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk
of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the consolidated statement
of financial position.
(a) Risk exposure
The Company’s exposure to interest rate risk is discussed in Note
9. The maximum exposure to credit risk at the reporting date is
the carrying amount of each class of cash and cash equivalents
mentioned above.
(b) Cash at bank and on hand
Cash on hand is non-interest bearing. Bank balances attracted interest
at an average rate of 2.7% (2014: 2.6%).
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 55
9 Borrowings
Interest rate risk
The Group’s main interest rate risk arises from long-term borrowings.
The Group’s fixed rate borrowings and receivables are carried at
amortised cost. They are therefore not subject to interest rate risk as
defined in AASB7 since neither the carrying amount nor the future
cash flows will fluctuate because of a change in market rates.
The consolidated entity’s exposure to the cash flow risk of changes in
market interest rates relates primarily to the cash at bank and the cash
advance facility. The interest rate applicable at year end on the cash
at bank was 2.5%, while the interest on the cash advance facility was
3.4% (2014 – 4.0%). As at reporting date, the Group had $215,219,000
(2014 – $175,000,000) variable rate borrowings at a weighted average
interest rate of 3.4% (2014 – 3.9%). The variable interest rate may have
an impact on cash flow, but this impact is not considered material.
carsales.com Ltd has a Board approved treasury policy and treasury
strategy for the management of interest rate risk. The Company does
not currently hedge against interest rate risk. The Board keeps the
decision to actively hedge interest rate risk under regular review and
this will be reassessed during the 2016 financial year. Any derivative
contracts will be entered into solely for interest rate risk management
and no speculative hedging is permitted under the policy.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability
to close out market positions. The Group manages liquidity risk by
continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at
the end of the reporting period:
2015
$’000
2014
$’000
Floating rate
- Expiring within one year (overdraft)
3,000
3,000
- Expiring within two to five years
110,000
-
113,000
3,000
Bank loan – current
Bank loan – non-current
2015
$’000
1,876
212,493
214,369
2014
$’000
9,842
164,841
174,683
The Group’s principal funding is a $325m rolling syndicated banking
facility entered into in February 2015 with tranches maturing at
2, 3 and 5 years. Establishment fees of $1.3m are net against the
borrowings set out above.
Finance income
Finance costs
2015
$’000
688
(9,204)
(8,516)
2014
$’000
474
(3,388)
(2,914)
Finance income
Finance income is recognised on a time proportionate basis using the
effective interest method. When a receivable is impaired, the Group
reduces the carrying amounts to its recoverable amount, being the
estimated future cash flow discounted at the original effective interest
rate of the instrument, and continues unwinding the discount as
finance income. Finance income on impaired loans is recognised
using the original effective interest rate.
Recognition and measurement
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in the profit or loss over
the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities, which are not incremental
costs relating to the actual draw-down of the facility, are recognised
net against the loan and amortised on a straight-line basis over the
term of the facility.
Borrowings are removed from the consolidated statement of financial
position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of
a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in other income or
other expenses.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the balance sheet date.
Borrowing costs incurred for the construction of any qualifying asset
are capitalised during the period of time that is required to complete
and prepare the asset for its intended use or sale. Other borrowing
costs are expensed.
56 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
Maturities of financial liabilities
The following table sets out the Group’s exposure to liquidity risk. The amounts disclosed in the table are the contractual undiscounted cash
flows.
Contractual maturities of financial liabilities
Group – at 30 June 2015
Non-derivatives
Non-interest bearing payables
Variable rate borrowings
Fixed rate borrowings
Total non-derivatives
Group – at 30 June 2014
Non-derivatives
Non-interest bearing payables
Variable rate borrowings
Fixed rate borrowings
Total non-derivatives
0 – 12 months
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets)/
liabilities
$’000
33,552
1,859
135
-
-
33,552
33,552
63,803
165,797
231,459
214,137
88
19
242
232
35,546
63,891
165,816
265,253
247,921
22,740
10,000
-
-
-
22,740
22,740
12,540
171,803
194,343
174,683
-
-
-
-
32,740
12,540
171,803
217,083
197,423
Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and non-interest bearing financial liabilities of
the consolidated entity approximates their carrying amounts. There are no off-balance sheet financial instruments in place.
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk.
At 30 June 2015
Financial assets
Interest rate risk
-100 bps
+100 bps
Carrying
amount
$’000
Profit
$’000
Other equity
$’000
Profit
$’000
Other equity
$’000
Cash and cash equivalents
26,823
(188)
(188)
188
188
Financial liabilities
Borrowings
Total increase/(decrease)
At 30 June 2014
Financial assets
(215,219)
1,506
1,318
1,506
1,318
(1,506)
(1,318)
(1,506)
(1,318)
Interest rate risk
-100 bps
+100 bps
Carrying
amount
$’000
Profit
$’000
Other equity
$’000
Profit
$’000
Other equity
$’000
Cash and cash equivalents
26,042
(168)
(168)
168
168
Financial liabilities
Borrowings
Total increase/(decrease)
(175,000)
1,750
1,582
1,750
1,582
(1,750)
(1,582)
(1,750)
(1,582)
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 57
10 Contributed equity
(a) Share capital
Ordinary shares
Fully paid
Recognition and measurement
Ordinary shares are classified as equity.
Notes
2015
Shares
2014
Shares
10(b)
240,081,596
237,828,965
240,081,596
237,828,965
2015
$’000
91,905
91,905
2014
$’000
77,603
77,603
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of,
and amounts paid on, the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Incremental costs directly attributable to the issue of new shares, options or performance rights are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new shares or options or performance rights for the acquisition of a
business are not included in the cost of the acquisition as part of the purchase consideration.
The carsales.com.au
iPhone and Android app
The carsales app received an exceptional 5 star rating from the Apple
App Store and 4.5 stars from Google Play. The carsales mobile site and
app were also awarded ‘Best Mobile Expanded Service or Application’ at
the 2014 Australian Mobile and App Design Awards.
58 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(b) Movements in ordinary share capital
Date
Details
Number of shares
Issue price
1 July 2013
Opening balance
236,181,964
July 2013
Exercise of employee options
20,000
$2.00-$3.89
August 2013
Exercise of employee options
1,231,682
$1.75-$4.90
August 2013
Exercise of employee performance rights
September 2013
Exercise of employee options
October 2013
Exercise of employee options
November 2013
Exercise of employee options
December 2013
Exercise of employee options
March 2014
Exercise of employee options
May 2014
Exercise of employee options
67,819
12,500
165,000
85,000
10,000
30,000
25,000
-
$2.00-$3.89
$4.90
$4.90
$4.90
$4.90
$4.90
30 June 2014
Balance
237,828,965
Date
Details
Number of shares
Issue price
1 July 2014
Opening balance
237,828,965
August 2014
Exercise of employee options
August 2014
Exercise of employee performance rights
October 2014
Exercise of employee options
October 2014
Exercise of employee performance rights
October 2014
Dividend Reinvestment Plan
November 2014
Exercise of employee options
December 2014
Exercise of employee options
March 2015
Exercise of employee options
April 2015
May 2015
June 2015
Dividend Reinvestment Plan
Exercise of employee options
Exercise of employee options
337,408
208,613
37,952
52,379
446,293
38,275
51,874
576,057
459,864
5,172
38,744
$3.89-$5.93
-
$1.75-$4.69
-
$9.78
$4.69-$4.90
$4.69-$5.93
$4.69-$5.93
$10.19
$4.69
$4.69-$5.93
30 June 2015
Balance
240,081,596
$’000
70,104
59
5,857
-
39
808
417
49
147
123
77,603
$’000
77,603
1,669
-
156
-
4,363
183
256
2,768
4,687
24
196
91,905
Information relating to the carsales.com Ltd Employee Option Plan, including details of options and performance rights issued, exercised and
lapsed during the financial year and options and performance rights outstanding at the end of the financial year, is set out in Note 24.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 59
11 Reserves and retained earnings
(a) Reserves
Share-based payment reserve
Foreign currency translation reserve
(i) Share-based payment reserve
Balance 1 July
Option expense
Tax on Employee Share Trust charged to equity
Balance 30 June
2015
$’000
20,299
1,172
21,471
18,735
1,614
(50)
20,299
The share-based payments reserve is used to recognise the fair value of options and performance rights issued but not exercised.
(ii) Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
(1,040)
2,212
1,172
2014
$’000
18,735
(1,040)
17,695
14,901
1,775
2,059
18,735
7
(1,047)
(1,040)
Exchange differences arising on translation of the foreign operations are taken to the foreign currency translation reserve, as described in “Basis
of preparation” and accumulated within a separate reserve within equity. The reserve is recognised in profit and loss when the net investment is
disposed of.
(b) Retained earnings
Movements in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends
Balance 30 June
2015
$’000
90,946
103,167
(80,284)
113,829
2014
$’000
67,498
95,457
(72,009)
90,946
60 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
12 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or
before the end of the financial year but not distributed at balance date.
(a) Ordinary shares
Final fully franked cash dividend for the year ended 30 June 2014 of 17.4 cents (2013 – 15.6 cents) per share
paid on 22 October 2014.
Final fully franked dividend for the year ended 30 June 2014 of 17.4 cents (2013 – 15.6 cents) per share –
satisfied through issuance of shares under the Dividend Reinvestment Plan.
Interim ordinary dividend for the year ended 30 June 2015 of 16.2 cents (2014 – 14.7 cents) per fully paid share
paid on 15 April 2015 (2 April 2014). Fully franked (2014 – fully franked) based on tax paid @ 30%.
Interim ordinary dividend for the year ended 30 June 2015 of 16.2 cents (2014 – 14.7 cents) per share – satisfied
through issuance of shares under the Dividend Reinvestment Plan.
Total dividends paid
(b) Dividends not recognised at year end
In addition to the above dividends, since year end, due to sufficient cash and confidence in future earnings, the
Directors have recommended the payment of 17.7 cents per fully paid ordinary share (2014 – final dividend 17.4
cents) plus a special dividend of 1.4 cents per fully paid ordinary share (2014: nil cents), fully franked based on
tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 15 October 2015 out
of retained earnings at 30 June 2015, but not recognised as a liability at year end, is
(c) Franked dividends
Franking credits available for subsequent financial years based on a tax rate of 30.0% (2014 – 30.0%)
2015
$’000
37,109
4,363
41,472
34,125
4,687
38,812
80,284
2014
$’000
37,052
-
37,052
34,957
-
34,957
72,009
2015
$’000
2014
$’000
45,856
41,408
2015
$’000
34,428
2014
$’000
31,853
The above amounts represent the balance of the franking account as
at the end of the reporting period, adjusted for:
(a)
(b)
(c)
franking credits that will arise from the payment of the
amount of the provision for income tax
franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date, and
franking credits that will arise from the receipt of dividends
recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be
available to the parent entity if distributable profits of subsidiaries were
paid as dividends.
(d) Dividend Reinvestment Plan (“DRP”)
The carsales.com Ltd DRP will be maintained for the 2015 final
dividend, offering shareholders the opportunity to acquire further
ordinary shares in carsales. The DRP will not be offered at a discount
and the price will be calculated using the daily volume weighted
average sale price of carsales.com Ltd shares sold in the ordinary
course of trading on the ASX during the 5 days after, but not including,
the Record Date (18 September 2015). The last date for shareholders
to nominate their participation in the DRP is 5:00pm (AEST) on
21 September 2015. Shares issued under the DRP will rank equally
with carsales.com Ltd existing fully paid ordinary shares. Shareholders
eligible to participate in the DRP are currently limited to those whose
registered address on the carsales.com Ltd share registry is in Australia
or New Zealand.
Eligible shareholders who wish to participate in the DRP can make
their elections online at www.computershare.com.au/easyupdate/
CAR or complete the DRP form which will be sent to shareholders for
completion and submission to Computershare Investor Services Pty
Ltd (carsales share registry). Further information can be obtained from
Computershare on 1300 850 505.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 61
13 Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk,
interest rate risk and liquidity and foreign exchange 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.
Risk management is the responsibility of the Chief Financial Officer
(CFO) and follows approved policies of the Board of Directors.
The CFO identifies, evaluates and hedges financial risks in close
cooperation with the Group’s operating units.
(a) Market risk
(i) Foreign exchange risk
Refer to Note 19(d) for exposure to foreign exchange risk.
(ii) Price risk
The Group is not exposed to significant equities price risk.
(b) Credit risk
The Group’s credit risk on its receivables is recognised on the
consolidated statement of financial position at the carrying amount
of those receivable assets, net of any provisions for doubtful debts.
There are no significant concentrations of receivables within the
Group. Receivable balances are monitored on an ongoing basis with
the result that the Group’s exposure to bad debts is not considered to
be material.
Details of impaired and past due receivables are disclosed in Note 14.
Credit risk also arises from cash and cash equivalents and deposits
with banks and financial institutions. For banks and financial
institutions, only independently rated parties with a minimum rating of
‘A’ are accepted by carsales.com Ltd.
(c) Interest rate risk
Interest rate risk is set out in Note 9.
(d) Liquidity risk
Liquidity risk is set out in Note 9.
Fair value estimation
Credit risk of the Group arises predominantly from outstanding
receivables from customers.
There are no financial assets or liabilities that are measured at fair value
at 30 June 2015.
62 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
Other Assets
and Liabilities
14 Trade and other receivables
Current
1-3 months
3-6 months
Over 6 months
Trade receivables
Other receivables
Prepayments
Trade and other receivables
Impaired
receivables
2015
$’000
Not impaired
receivables
2015
$’000
Total
receivables
2015
$’000
Provision
2015
$’000
Carrying value
2015
$’000
Carrying value
2014
$’000
130
31
92
410
663
26,752
5,267
596
72
26,882
5,298
688
482
32,687
33,350
(129)
(31)
(92)
(410)
(662)
26,753
5,267
596
72
26,979
5,329
400
-
32,688
32,708
3,205
3,283
1,205
1,471
39,176
35,384
Recognition and measurement
(a) Impaired trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for impairment. Trade
receivables are due for settlement generally within 30 days following
the provision of advertising, data services or finance services.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectable are written off
by reducing the carrying amount directly. An allowance account
(provision for impairment of trade receivables) is used when there
is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation and default or
delinquency in payments (more than 30 days overdue) are considered
indicators that the trade receivable is impaired. The amount of the
impairment allowance is the difference between the asset’s carrying
amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to
short-term receivables are not discounted if the effect of discounting
is immaterial.
The amount of the impairment loss is recognised in the consolidated
statement of comprehensive income within the ‘operations and
administration’ expense. When a trade receivable for which an
impairment allowance had been recognised becomes uncollectable
in a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off
are credited against other expenses in the consolidated statement of
comprehensive income.
The individually impaired receivables mainly relate to customers
which are in unexpectedly difficult economic situations. The
creation and release of the provision for impaired receivables has
been included in ‘operational and administration’ expenses in the
consolidated statement of comprehensive income. Amounts charged
to the provision account are generally written off when there is no
expectation of recovering additional cash.
(b) Other receivables
These amounts generally arise from transactions outside the usual
operating activities of the Group. Interest is not charged and collateral
is not normally obtained.
The other classes within trade and other receivables do not contain
impaired assets and are not past due. Based on the credit history of
these other classes, it is expected that these amounts will be received
when due.
(c) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying
amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the
carrying amount of each class of receivables mentioned above.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 63
15 Property, plant and equipment
At 30 June 2015
Cost
Accumulated depreciation
Net book amount
At 30 June 2014
Cost
Accumulated depreciation
Net book amount
Plant and
equipment
$’000
Motor vehicles
$’000
Leasehold
improvements
$’000
5,763
(3,955)
1,808
3,442
(2,572)
870
210
(95)
115
94
(45)
49
6,455
(2,429)
4,026
5,143
(1,660)
3,483
Total
$’000
12,428
(6,479)
5,949
8,679
(4,277)
4,402
Recognition and measurement
Property, plant and equipment is stated at historical cost less
depreciation. 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 the profit or loss during the
financial period in which they are incurred.
Depreciation on assets is calculated using the straight line method
to allocate their cost, net of their residual values, over their estimated
useful lives, as follows:
Vehicles
3–5 years
Furniture, fittings and equipment
3–10 years
Computer hardware and peripherals
3–5 years
Leased plant and equipment
10–15 years
Leasehold improvements
3–10 years or minimum
lease period if shorter
The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in the consolidated
statement of comprehensive income.
Leases of property, plant and equipment where the Group has
substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s inception
at the fair value of the leased property or, if lower, the present value of
the minimum lease payments. The corresponding rental obligations,
net of finance charges, are included in other short-term and long-
term payables. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to the profit or loss over
the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The property,
plant and equipment acquired under finance leases is depreciated
over the asset’s useful life or over the shorter of the asset’s useful life
and the lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term.
64 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
16 Intangible assets
At 1 July 2013
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Acquisition of subsidiary
Amortisation charge
Closing net book amount
At 30 June 2014
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2015
Opening net book amount
Additions
Acquisition of subsidiary
Amortisation charge
Closing net book amount
At 30 June 2015
Cost
Accumulated amortisation and impairment
Net book amount
* Other intangible assets include database, domain names and other.
Goodwill
$’000
Computer
Software
$’000
Other intangible
assets
$’000
77,444
-
77,444
77,444
-
8,421
-
85,865
85,865
-
85,865
85,865
-
60,978
-
146,843
146,843
-
146,843
7,547
(5,251)
2,296
2,296
3,617
494
(1,374)
5,033
11,704
(6,671)
5,033
5,033
6,000
-
(2,828)
8,205
17,704
(9,499)
8,205
3,825
(2,373)
1,452
1,452
529
-
(610)
1,371
4,343
(2,972)
1,371
1,371
99
12
(582)
900
4,453
(3,553)
900
Total
$’000
88,816
(7,624)
81,192
81,192
4,146
8,915
(1,984)
92,269
101,912
(9,643)
92,269
92,269
6,099
60,990
(3,410)
155,948
169,000
(13,052)
155,948
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 65
Recognition and measurement
Recognition and measurement
(i) Goodwill
(i)
Impairment
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition. Goodwill on acquisitions
of subsidiaries is included in intangible assets. Goodwill is not
amortised. Instead, goodwill is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing. Each of those cash-generating units represents
the Group’s investment in each primary operating segment (Note 1).
(ii) IT development: Software, domain names and database
Software includes capitalised development costs being an internally
generated intangible assets.
Costs incurred in developing products or systems and costs incurred
in acquiring software and licenses that will contribute to future period
financial benefits through revenue generation and/or cost reduction
are capitalised to software and systems. Redbook database costs
capitalised to date include direct payroll and payroll related costs of
employees’ time spent on developing the database. These intangible
assets have finite lives and are subject to amortisation on a straight line
basis. The useful lives for these assets are as follows:
Software
Domain Names
Database
4-5 years
5 years
10 years
(a) Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs)
identified according to segment.
A segment-level summary of the goodwill allocation is presented
below.
2015
Online Advertising
Data and Research
Finance and related services
2014
Online Advertising
Data and Research
Australia
$’000
70,715
15,823
60,305
Total
$’000
70,715
15,823
60,305
146,843
146,843
Australia
$’000
70,715
15,150
85,865
Total
$’000
70,715
15,150
85,865
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value
in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units).
(ii) Estimated impairment of goodwill
The Company tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in “basis
of preparation”. The recoverable amounts of cash-generating units
have been determined based on value-in-use calculations. These
calculations require the use of assumptions.
The recoverable amount of a CGU is determined based on value-in-
use calculations. These calculations use cash flow projections based
on financial budgets covering a five-year period. Cash flows beyond
the five-year period are extrapolated using the estimated growth rates
stated below. The growth rate does not exceed the long-term average
growth rate for the business in which the CGU operates.
Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate
that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets
or groups of assets (cash-generating units). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
(b) Key assumptions used for value-in-use calculations
The recoverable amount of a CGU is determined based on value-in-
use calculations. These calculations use cash flow projections based
on approved budgets.
CGU
Growth rate **
Discount rate ***
Online Advertising
Data and Research
Finance and related services
2015
%
2014
%
2015
%
2014
%
2.0
2.0
2.5
2.5
2.5
-
4.8
4.8
4.8
4.3
4.3
-
** Weighted average growth rate used to extrapolate cash flows beyond the
budget period.
*** In performing the value-in-use calculations for each CGU, the Company has
applied pre-tax discount rates to discount the forecast future attributable pre-tax
cash flows.
(c) Impact of possible changes in key assumptions
Management do not consider that a reasonable change in any of the
key assumptions would lead to impairment.
66 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
17 Other liabilities
18 Commitments
Trade payables
Accrued expenses
Other payables
Total payables
Employee benefits – current
Employee benefits – non-current
Total employee benefits
Deferred advertising services revenue
Recognition and measurement
(i) Payables
2015
$’000
14,167
15,451
3,934
33,552
5,412
1,165
6,577
5,940
2014
$’000
6,477
14,482
1,781
22,740
3,818
938
4,756
5,535
Non-cancellable operating leases
The Group leases offices in a number of locations. The most
significant of these leases is the Melbourne head office where the
lease is a non-cancellable operating lease expiring within 5 years.
Upon renewal date, the Company has the option to renew the
lease for a further 2 years at terms which are negotiable. The Group
also leases various motor cars and printers under non-cancellable
operating leases.
2015
$’000
2014
$’000
Commitments for minimum lease payments in
relation to non-cancellable operating leases are
payable as follows:
Within one year
4,538
3,828
Later than one year but not later than five years
14,953
14,621
These amounts represent liabilities for goods and services provided
to the Group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of
recognition.
Later than five years
(ii) Short-term obligations
Bank guarantee facility
3,204
598
22,695
19,047
Guarantees in respect of bank facilities drawn down but not included
in the accounts of the Group are $2.7m (2014: $2.1m)
Liabilities for wages and salaries, including non-monetary benefits,
annual leave and accumulating sick leave expected to be settled
within 12 months after the end of the period in which the employees
render the related service are recognised in respect of employees’
service up to the end of the reporting period and are measured at
the amount expected to be paid when the liabilities are settled. The
liability for annual leave and accumulating sick leave is recognised in
the provision for employee benefits. All other short-term employee
benefit obligations are presented as payables.
(iii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not
expected to be settled within 12 months after the end of the period
in which the employees render the related services is recognised in
the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using
the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures
and period of service. Expected future payments are discounted
using market yields at the end of the reporting period on national
government bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
(iv) Bonus plans
The Group recognises a liability and an expense for bonuses and
profit-sharing based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after
certain adjustments. The Company recognises a provision where
contractually obliged or where there is a past practice that has created
a constructive obligation.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 67
Group
structure
19 Interests in other entities
(a) Material subsidiaries
The Group’s principal subsidiaries at 30 June 2015 are set out below. Unless otherwise stated, they have share capital consisting solely of
ordinary shares that are held directly by the Group and the proportion of ownership interests held equals the voting rights held by the Group.
The country of incorporation or registration is also their principal place of business.
Name of entity
Webpointsclassified Pty Ltd
Equipment Research Group Pty Ltd
Discount Vehicles Australia Pty Ltd
Automotive Data Services Pty Ltd
Place of business/ country
of incorporation
Ownership interest
held by the Group *
Ownership interest
held by non-
controlling interests
Principal
activities
2015
%
2014
%
2015
%
2014
%
Australia
Australia
Australia
Australia
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Auto Information Limited
New Zealand
100.0
100.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100.0
100.0
100.0
100.0
50.0
50.0
50.0
50.0
100.0
100.0
100.0
100.0
-
-
-
-
50.0
50.0
50.0
50.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0
50.1
50.1
50.1
50.1
-
-
-
-
-
-
-
-
49.9
49.9
49.9
49.9
-
-
-
-
-
-
-
-
(1)
(2)
(1)
(2)
(2)
(2)
(2)
(3)
(2)
(4)
(1)
(4)
(4)
(5)
(4)
(6)
(6)
(6)
(7)
Red Book Automotive Services (M) Sdn Bhd
Red Book Automotive Data Services (Beijing) Limited
Tyresales Pty Ltd
Automotive Data Services (Thailand) Company Limited
Auto Exchange Holdings Pty Ltd
Automotive Exchange Pty Ltd
carsales.com Investments Pty Ltd
carsales Holdings Pty Ltd
carsales.com Ltd Employee Share Trust
carsales Finance Pty Ltd
Stratton Finance Pty Ltd
Stratton Fleet Services Pty Ltd
Stratton Franchise Pty Ltd
Auto Inspect Pty Ltd
Malaysia
China
Australia
Thailand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
* The proportion of ownership interest is equal to the proportion of voting power held.
(1) Classified advertising.
(2) Data and research.
(3) Online retail.
(4) Holding company.
(5) Share trust company.
(6) Finance and related services.
(7) Car inspection.
68 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(i) Subsidiaries
(ii) Employee Share Trust
The Group has formed a trust to administer the Group’s employee
share scheme. This trust is consolidated, as the substance of the
relationship is that the trust is controlled by the Group.
(b) Non-controlling interests (NCI)
Set out below is summarised financial information for each subsidiary
that has non-controlling interests that are material to the Group. The
amounts disclosed for each subsidiary are before inter-company
eliminations.
Subsidiaries are all those entities over which the Group has the
power to govern the financial and operating policies, generally
accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the Group controls another 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.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Company (refer to Note 20).
Intercompany transactions, balances and unrealised gains on
transactions between companies 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 Company.
Non-controlling interests in the results and equity of subsidiaries are
shown separately in the consolidated income statement, statement of
comprehensive income, statement of changes in equity and balance
sheet respectively.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 69
30 June 2015
Summarised balance sheet
Current assets
Current liabilities
Non-current assets
Non-current liabilities
Net assets
30 June 2014
Summarised balance sheet
Current assets
Current liabilities
Non-current assets
Net assets
30 June 2015
Summarised statement of comprehensive income
Profit/(loss) for the period
Profit/(loss) allocated to NCI
30 June 2014
Summarised statement of comprehensive income
Profit/(loss) for the period
Profit/(loss) allocated to NCI
30 June 2015
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increases/(decrease) in cash and cash equivalents
30 June 2014
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increases/(decrease) in cash and cash equivalents
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
1,780
4,190
13,316
(1,873)
(2,038)
(15,654)
287
-
194
214
-
10,518
(3,058)
2,366
5,122
75
(63)
36
(52)
(4)
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
1,420
(1,275)
428
573
2,827
(1,220)
102
1,709
-
-
-
-
-
-
-
-
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
(360)
(180)
656
328
7,719
3,852
-
-
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
80
40
1,550
775
-
-
-
-
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
340
(138)
-
202
820
(127)
-
693
10,892
(8,548)
239
2,583
-
-
-
-
Tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
Auto Inspect
$’000
536
(358)
200
378
182
(68)
-
114
-
-
-
-
-
-
-
-
70 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(c) Interests in associates and joint ventures
Name of entity
Place of
business/ country
of incorporation
Webmotors S.A.
Brazil
iCar Asia Limited
Indonesia
SK ENCARSALES.
COM Ltd
South Korea
RateSetter
Australia
Total equity accounted investments
% of ownership
interest
Quoted fair value
Carrying amount
2015
%
30.0
20.2
49.9
20.0
2014
%
Nature of
relationship
Measurement
method
2015
$’000
2014
$’000
2015
$’000
2014
$’000
30.0
22.9
Associate
Equity method
-
-
82,811
93,323
Associate
Equity method
31,191
57,106
19,362
19,146
49.9
Associate
Equity method
-
Associate
Equity method
-
-
-
-
144,851
127,957
10,227
-
257,251
240,426
The carsales.com Limited ownership for iCar Asia was 22.9% for the period from 1 July 2014 to 19 November 2014 and 20.2% from 20
November 2014 to 30 June 2015.
(i) Associates
(ii) Commitments and contingent liabilities in respect of associates
Contingent liabilities – associates
Contingent liabilities relating to liabilities
of the associate for which the Company is
severally liable
2015
$’000
2014
$’000
599
1,230
Associates are all entities over which the Group has significant
influence but not control or joint control, generally accompanying
a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method
of accounting, after initially being recognised at cost. The Group’s
investment in associates includes goodwill identified on acquisition.
Acquisition related costs of associates are capitalised.
The Group’s share of its associates’ post-acquisition profits or losses
is recognised in profit or loss, and its share of post-acquisition other
comprehensive income is recognised in other comprehensive
income. The cumulative post-acquisition movements are adjusted
against the carrying amount of the investment. Dividends receivable
from associates are recognised as reduction in the carrying amount of
the investment.
When the Group’s share of losses in an associate equals or exceeds
its interest in the associate, including any other unsecured long-term
receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates
are eliminated to the extent of the Group’s interest in the associates.
Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting
policies of associates have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 71
(iii) Summarised financial information for significant associates
Summarised balance sheet
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Net assets
Group’s share in %
Group’s share in $
Goodwill
Carrying amount
Reconciliation of carrying value
Webmotors S.A.
iCar Asia Limited*
SK ENCARSALES.COM Ltd
30 June 2015
$’000
30 June 2014
$’000
30 June 2015
$’000
30 June 2014
$’000
30 June 2015
$’000
30 June 2014
$’000
91,063
18,341
(9,056)
-
98,753
16,059
(5,569)
-
8,504
27,083
(3,462)
(527)
15,593
7,391
(1,523)
(1,831)
20,592
33,124
(6,858)
(7,968)
100,348
109,242
31,598
19,630
38,890
30.0
30,104
52,707
82,811
30.0
32,773
60,550
93,323
20.2
6,383
12,979
19,362
13,955
30,818
(5,327)
(8,184)
33,062
49.9
49.9
19,406
16,499
125,445
111,458
144,851
127,957
127,957
-
314
4,736
-
14,024
(2,180)
126,475
815
-
667
-
22.9
4,495
14,651
19,146
13,431
7,705
(1,990)
-
-
-
19,362
19,146
144,851
127,957
Opening carrying value
93,323
90,535
19,146
Investment in associate
Profit/(loss) for the period
Gain on dilution
Other comprehensive income
Dividends received
Closing carrying value
15
3,478
-
(12,032)
(1,973)
82,811
430
4,609
-
(1,607)
(644)
93,323
* These numbers are management estimates based on market available data.
1
(3,288)
3,447
56
-
Summarised statement of comprehensive
income
30 June 2015
$’000
30 June 2014
$’000
30 June 2015
$’000
30 June 2014
$’000
30 June 2015
$’000
30 June 2014
$’000
Webmotors S.A.
iCar Asia Limited*
SK ENCARSALES.COM Ltd
Revenue
Profit from continuing operations
Other comprehensive income
Total comprehensive income
carsales share
Profit from continuing operations
Comprehensive income
Total
Dividends received from associates and
joint venture entities
37,437
12,431
-
12,431
3,478
(12,032)
(8,554)
35,455
15,363
(1,607)
13,756
4,609
(1,607)
3,002
4,443
1,991
(15,889)
(9,448)
-
-
35,490
9,519
-
(15,889)
(9,448)
9,519
(3,288)
(1,990)
-
-
(3,288)
(1,990)
4,736
14,024
18,760
4,923
1,633
667
2,300
815
667
1,482
1,973
644
-
-
2,180
-
* These numbers are management estimates based market available data.
72 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(d) Foreign Exchange Risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily with
respect to the Brazilian Real (BRL) and the Korean Won (KRW).
hedged unless the cash flows are significant and the amount and
future payment date is certain. No foreign currency derivatives were
entered into in the year.
Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities denominated in foreign currency that
is not the entity’s functional currency.
Hedging contracts are sometimes used to manage foreign currency
exchange risk. The Company has a treasury strategy and a treasury
policy and will actively hedge any major known commitments using
forward exchange contracts. The Company does not net investment
hedge the carrying value of associates in the balance sheet. Trading
and dividend cash flows between associates and the Group are not
The analysis below reflects management’s view of possible
movements in relevant foreign currencies against the Australian dollar.
The table summarises the range of possible outcomes that would
affect the Group’s net profit and equity as a result of foreign currency
movements.
The estimated impact on carsales.com Ltd share of the reported net
profits of our overseas associates through potential movements in
exchange rates are as follows:
Impact on profit:
AUD to KRW (+5% to -5%)
AUD to BRL (+5% to -5%)
Net Movement
Impact on equity:
AUD to KRW (+5% to -5%)
AUD to BRL (+5% to -5%)
Net Movement
2015
$’000
-5%
254.6
184.6
439.2
2015
$’000
-5%
4,238
7,621
11,859
2014
$’000
-5%
38.9
219.5
258.4
2014
$’000
-5%
6,686
4,855
11,541
2015
$’000
+5%
(281.4)
(204.0)
(485.4)
2015
$’000
+5%
(3,834)
(6,895)
2014
$’000
+5%
(43.0)
(242.6)
(285.6)
2014
$’000
+5%
(6,049)
(4,393)
(10,729)
(10,442)
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 73
20 Business combination
a) Stratton acquisition
On 15 July 2014 carsales.com Ltd acquired 50.1% of Stratton Finance
Pty Ltd (Stratton), an innovative vehicle finance business and long-
term customer of carsales.com Ltd.
$’000
(iii) Non-controlling interest
The Group will recognise the non-controlling interests in Stratton
at fair value rather than at the proportionate share of net identifiable
assets. The fair value of the non-controlling interest will be determined
with reference to the purchase price of the acquired interest, as this
represented a transaction between a willing buyer and independent
willing sellers.
58,995
The current ownership structure of Stratton is as follows:
Purchase consideration:
Cash Paid
The assets and liabilities acquired are estimated as
follows:
Cash and cash equivalents
Trade and other receivables
Plant and equipment
Inventory
Deferred tax assets
Intangible assets
Trade and other payables
Provisions
External loans
Tax liabilities
Net liabilities
Outside shareholders interests
Goodwill
Net assets acquired
3,929
2,684
1,670
1,376
305
12
(7,085)
(793)
(588)
(3,997)
(2,487)
1,117
60,365
58,995
The goodwill is attributable to the workforce, Stratton’s strong position
in a high growth market, its customer database, the high profitability
of the business and synergistic benefits expected to be created by
this acquisition. The goodwill is not expected to be deductible for tax
purposes.
(i) Initial accounting
Both the net asset value and the allocation of the purchase price
to acquired assets are still preliminary. In particular, the fair values
assigned to intangible assets are still being assessed and may be
subject to change. The acquisition accounting will be finalised within
12 months of the acquisition date.
(ii) Acquired receivables
The fair value of trade and other receivables is $1,681,000 which
includes trade receivables with a fair value of $1,527,000. No trade
receivables are considered uncollectable.
carsales.com Ltd
Non-controlling interests
D’Azur Holdings Pty Ltd
Other minor shareholders
50.1%
35.4%
14.5%
100.0%
Business combinations
The acquisition method of accounting is used to account for all
business combinations, including business combinations involving
entities or businesses under common control, regardless of whether
equity instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the fair values
of the assets transferred, the liabilities incurred and the equity interests
issued by the Company. The consideration transferred also includes
the fair value of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary. Contingent
payments classified as debt are subsequently remeasured through
profit or loss. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the Company recognises any
non-controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition-date fair value
of any previous equity interest in the acquiree over the fair value of the
Company’s share of the net identifiable assets acquired is recorded
as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired and the measurement of
all amounts has been reviewed, the difference is recognised directly
in profit or loss as a discount on purchase. If the Company recognises
previously acquired deferred tax assets after the initial acquisition
accounting is completed these will be recorded directly in profit or loss.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under
comparable terms and conditions.
74 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
21 Related party transactions
(a) Subsidiaries
Interests in subsidiaries are set out in Note 19.
(b) Key management personnel compensation
Short-term employee benefits
Deferred short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
2015
$
2014
$
6,918,270
5,228,798
-
155,049
363,297
282,334
140,180
222,192
1,794,402
1,963,730
9,231,018
7,837,234
(c) Transactions with other related parties
The following transactions occurred with related parties, the nature of which are described in the remuneration report.
Sales of goods and services
Sale of services to related parties
Purchases of goods and services
2015
$
2014
$
858,996
772,284
Purchases of goods and services from related parties
3,434,710
3,652,135
All transactions were made on normal commercial terms and conditions, at market rates and includes transactions with associates.
(d) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables (sales of goods and services)
Other related parties
Current payables (purchases of goods and services)
2015
$
2014
$
108,392
135,710
Other related parties
850,521
805,886
There is no allowance account for impaired receivables in relation to any outstanding balances, and no expense has been recognised in respect
of impaired receivables due from related parties.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 75
22 Deed of cross guarantee
The following controlled entities have entered into a Deed of Cross Guarantee:
Company
carsales.com Limited
carsales Holdings Pty Ltd
carsales Finance Pty Ltd
Auto Exchange Holdings Pty Ltd
Automotive Data Services Pty Ltd
carsales.com Investments Pty Ltd
Discount Vehicles Australia Pty Ltd
Equipment Research Group Pty Ltd
Webpointclassifieds Pty Ltd
Financial year entered into
agreement
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
The companies that are party to this deed guarantee the debts of the others and represent the “Closed Group” from the date of entering into
the agreement.
These wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order
98/1418 (as amended) issued by the Australian Securities and Investments Commission.
(a) Consolidated statement of comprehensive income
Set out below is a consolidated income statement for the year ended 30 June 2015 of the Closed Group.
Consolidated statement of comprehensive income
Revenue from continuing operations
Sale of goods and services
Revenue from continuing operations
Expenses
Sales and marketing expenses
Operations and administration
Service development and maintenance
Earnings before interest, taxes, depreciation and amortisation
Depreciation and amortisation expense
Finance income
Finance costs
Dividends received to date
Profit before income tax
Income tax expense
Profit from continuing operations
Total comprehensive income for the year
2015
$’000
238,303
238,303
(55,120)
(19,543)
(21,931)
141,709
(4,004)
571
(8,772)
6,231
135,735
(38,526)
97,209
97,209
76 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(b) Consolidated statement of financial position
Set out below is a Consolidated statement of financial position as at 30 June 2015 of the Closed Group.
Consolidated statement of finance position
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Investments
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2015
$’000
16,177
36,998
53,175
313,556
3,576
4,806
85,545
407,483
460,658
18,836
584
4,622
5,413
29,455
209,151
1,031
210,182
239,637
221,021
91,905
20,299
108,817
221,021
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 77
Other
23 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-
related audit firms:
(a) PricewaterhouseCoopers
PricewaterhouseCoopers firm
Audit and review of financial reports
Controls and assurance services
Due diligence services
Total remuneration for audit and other assurance services
Taxation services
Tax compliance services, including review of Company income tax returns
International tax consulting and tax advice on mergers and acquisitions
2015
$
2014
$
349,000
190,000
25,028
241,879
615,907
77,000
84,264
-
165,543
355,543
64,439
61,880
Total remuneration for taxation services
161,264
126,319
Other services
Due diligence fees paid to PricewaterhouseCoopers network firms
Other services
Total remuneration of PricewaterhouseCoopers
(b) Non-PwC audit firms
Audit and other assurance services
Audit and review of financial statements
Total remuneration for audit and other assurance services
Total auditors’ remuneration
-
8,000
91,755
-
785,171
573,617
79,683
79,683
11,705
11,705
864,854
585,322
It is the Company’s policy to employ PwC on assignments additional to their statutory audit duties where PwC’s expertise and experience with
the Company are important. These assignments are principally tax advice and due diligence reporting on acquisitions, or where PwC is awarded
assignments on a competitive basis. It is the Company’s policy to seek competitive tenders for all major consulting projects.
24 Share-based payments
Share-based compensation benefits are provided to employees via the carsales.com Ltd Option Plan.
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were
$1,614,000 (2014: $1,775,000)
78 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
(a) Employee Option Plan
Set out below are summaries of options and performance rights granted under the plan:
2015
Grant
date
Expiry
date
Exercise
price
Balance at
start of the
year
Options
granted
during the
year
Performance
rights granted
during the year
Total
exercised
during
the year
Expired
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of the
year
Number
Number
Number
Number
Number
Number
Number
Jul 2007
Sep 2014
$1.75
5,000
Mar 2010
Oct 2014
$3.89
30,625
Oct 2010
Oct 2015
$4.90
175,000
Mar 2011
Oct 2015
$4.90
100,000
Oct 2011
Oct 2016
$4.69
659,375
Oct 2011
Oct 2016
$0.00
133,725
Mar 2012
Oct 2016
$4.69
164,283
Mar 2012
Mar 2017
$0.00
52,379
Oct 2012
Oct 2017
$5.93
710,410
Oct 2012
Oct 2017
$0.00
250,912
Oct 2013
Oct 2018
$9.10
406,156
Oct 2013
Oct 2018
$0.00
207,656
Oct 2014
Oct 2019
$10.71
Oct 2014
Oct 2019
$0.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
660,349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,255
(5,000)
(30,625)
(150,000)
(55,000)
(625,713)
(133,725)
-
-
-
-
-
-
-
-
-
-
25,000
25,000
45,000
45,000
33,662
33,662
-
-
(92,453)
(2,586)
69,244
69,244
(52,379)
-
-
-
(126,691)
(100,896)
482,823
96,927
(74,888)
(39,828)
136,196
-
-
-
-
(11,397)
394,759
(35,477)
172,179
(2,973)
657,376
(732)
224,523
-
-
-
-
-
Total
2,895,521
660,349
225,255
(1,346,474)
(193,889)
2,240,762
269,833
Weighted average exercise price
$4.57
$10.71
$0.00
$3.90
$3.85
$6.39
$5.19
2014
Grant
date
Expiry
date
Exercise
price
Balance at
start of the
year
Options
granted
during the
year
Performance
rights granted
during the year
Total exercised
during
the year
Expired
during the
year
Balance at
the end of
the year
Vested and
exercisable at
end of the year
Number
Number
Number
Number
Number
Number
Number
Jul 2007
Jun 2014
$1.75
Jul 2007
Sep 2014
$1.75
2,000
5,000
Sep 2008
Sep 2013
$2.00
20,000
Mar 2010
Oct 2014
$3.89
157,500
Oct 2010
Oct 2015
$4.90
1,067,347
Mar 2011
Oct 2015
$4.90
450,000
Oct 2011
Oct 2016
$4.69
882,347
Oct 2011
Oct 2016
$0.00
201,554
Mar 2012
Mar 2017
$4.69
208,247
Mar 2012
Mar 2017
$0.00
66,399
Oct 2012
Oct 2017
$5.93
727,850
Oct 2012
Oct 2017
$0.00
257,223
Oct 2013
Oct 2018
$9.10
Oct 2013
Oct 2018
$0.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
408,073
-
-
-
-
-
-
-
-
-
-
-
-
-
-
208,383
(2,000)
-
(20,000)
(126,875)
(892,347)
-
-
-
-
-
-
-
5,000
5,000
-
-
30,625
30,625
175,000
175,000
(315,000)
(35,000)
100,000
100,000
(222,960)
(67,819)
-
-
659,387
167,933
133,735
-
-
-
-
-
-
(43,964)
164,283
(14,020)
52,379
(17,462)
710,388
(6,311)
250,912
(1,917)
406,156
(727)
207,656
-
-
-
-
-
-
-
Total
4,045,467
408,073
208,383
(1,647,001)
(119,401)
2,895,521
478,558
Weighted average exercise price
$4.33
$9.10
$0.00
$4.55
$4.18
$4.57
$4.71
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 79
The estimate of the weighted average share price at the date of
exercise of options exercised regularly during the year ended 30 June
2015 is estimated to be approximately $10.49 (2014: approximately
$10.61).
The weighted average remaining contractual life of share options
outstanding at the end of the period was 3.17 years (2014 – 2.99 years).
The establishment of the carsales.com Ltd Employee Option Plan was
undertaken under a prospectus lodged with ASIC in 2000. Staff eligible
to participate in the plan are those invited by the Board of Directors.
Options and performance rights are granted under the plan for no
consideration with conditions including a vesting period and expiry
date. Senior executives vesting conditions, including EPS targets, are
noted in the Remuneration Report on page 30.
Options and performance rights granted under the plan carry no
dividend or voting rights.
When exercisable, each option is convertible into one ordinary share
in return for payment of the option’s exercise price. Each performance
rights is convertible into one ordinary share for $0.00 exercise price,
upon satisfaction of all vesting requirements.
The exercise price of options is set in advance by the Board of
Directors.
Fair value of options and performance rights granted
The assessed fair value at grant date of options granted during the
year ended 30 June 2015 is $2.36 (2014 – $3.91). The assessed value
at grant date of performance rights granted during the year ended 30
June 2015 ranged between $9.12 and $9.41 (2014 – between $10.32
and $10.58). The fair value at grant date is determined using a Black-
Scholes option pricing model that takes into account the exercise
price, the term of the option and performance right, 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.
The model inputs for options and performance rights granted during
the year ended 30 June 2015 included:
Exercise price
Grant date
Expiry date
Share price at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
Options
Performance rights
2015
$10.71
2014
$9.10
2015
$0
2014
$0
October 2014
October 2013
October 2014
October 2013
October 2019
October 2018
October 2019
October 2018
$10.33
33.9%
3.1%
3.6%
$10.55
34.1%
2.5%
4.1%
$10.33
33.9%
3.1%
3.6%
$10.55
34.1%
2.5%
4.1%
The expected price volatility is based on historical volatility adjusted for any expected changes to future volatility due to publicly available
information.
80 | carsales.com Limited – Annual Report – 30 June 2015
Notes to the consolidated financial statements
25 Parent entity financial information
(a) Summary financial information
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Total equity
Profit or loss for the year
Total comprehensive income
2015
$’000
2014
$’000
62,759
409,698
472,457
63,047
210,182
273,229
91,905
20,299
87,024
199,228
102,700
102,700
53,553
344,352
397,905
60,190
166,008
226,198
77,603
17,711
76,393
171,707
81,759
81,759
Recognition and measurement
The financial information for the parent entity, carsales.com Ltd,
has been prepared on the same basis as the consolidated financial
statements, except as set out below.
(i)
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial
statements of carsales.com Ltd. Dividends received from subsidiaries
are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments. Investments
in subsidiaries are tested for impairment whenever changes in events
or circumstances indicate that the carrying amount may not be
recoverable. Such events may include receipt of dividends, refer Note
16 for details of impairment accounting policies.
The following standards are not applicable to carsales.com Ltd and
therefore there is no impact on the Group:
• AASB 2013-5 Amendments to Australian Accounting Standards –
Investment Entities (effective 1 January 2014).
• Transitioning between tiers (AASB 2014-2) (effective date 1 July
2014).
• AASB Interpretation 21 Levies (effective 1 January 2014).
• AASB 2013-4 Amendments to Australian Accounting Standards –
Novation of Derivatives and Continuation of Hedge Accounting
– [AASB 139] (effective 1 January 2014).
• Hedge Accounting and Amendments to IFRS 9, IFRS 7 and IAS 39.
• Defined Benefit Plans: Employee Contributions – Amendments to
IAS 19 (effective 1 January 2014).
(b) Contingent liabilities of the parent entity
• Accounting for Levies (Interpretation 21) (effective 1 January 2014).
The parent entity did not have any contingent liabilities as at 30 June
2015 or 30 June 2014.
• Consolidation and interest of policy holders (AASB 2013-7)
(effective 1 January 2014).
•
Superannuation Entities (AASB 1056) (effective 1 January 2016).
26 Other accounting policies
The following standards will be applicable in future reporting periods
and the Group will adopt the standards upon the operative date. The
Group is assessing the impact of these standards however they are not
expected to have significant impact:
• AASB 9 Financial Instruments addresses the classification,
measurement and de-recognition of financial assets and financial
liabilities (effective 1 January 2015).
• AASB 9 Financial Instruments (effective 1 January 2018).
• Clarification of acceptable methods of depreciation and
amortisation (AASB 2014-4) (effective 1 January 2016).
• Accounting for acquisitions of interests in joint operations (AASB
2014-3) (effective 1 January 2016).
27 Events occurring after the reporting period
Except as set out below no matter or circumstance has occurred
subsequent to period end that has significantly affected, or may
significantly affect, the operations of the Group the results of those
operations or the state of affairs of the Group or economic entity in
subsequent financial years.
On 7 August 2015 the Company announced that it has agreed to
acquire a 65% controlling shareholding in SoloAutos (www.soloautos.
mx), a leading automotive classifieds website in Mexico, for an
investment of up to US $9m.
Notes to the consolidated financial statements
carsales.com Limited – Annual Report – 30 June 2015 | 81
Directors’
declaration
82 | carsales.com Limited – Annual Report – 30 June 2015
Directors’
declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 41 to 81 are in accordance
with the Corporations Act 2001, including:
(i) Complying with Accounting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements.
(ii) Giving a true and fair view of the consolidated entity’s financial position as
at 30 June 2015 and of its performance for the financial year ended on that
date.
(b) there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
The basis of preparation confirms that the financial statements also comply with
International Financial Reporting Standards as issued by the International Accounting
Standards Board.
The Directors have been given the declarations by the Managing Director and Chief
Financial Officer required by section 295A of the Corporations Act 2001.
Greg Roebuck
Managing Director
Sydney
11 August 2015
Directors’ declaration
carsales.com Limited – Annual Report – 30 June 2015 | 83
Innovation is core to
everything we do and we are
constantly searching for new ways
to add value for our customers.
As one of the country’s original
disruptors, we see our investment
in RateSetter Australia and the
budding local P2P market as a
great opportunity to deliver
returns for our stakeholders.
84 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Limited – Annual Report – 30 June 2015 | 85
Auditor’s
report
86 | carsales.com Limited – Annual Report – 30 June 2015
Independent auditor’s report to the members of carsales.com
Ltd
Report on the financial report
We have audited the accompanying financial report of carsales.com Ltd (the company), which
comprises the consolidated statement of financial position as at 30 June 2015, the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year ended on that date, a summary of significant accounting policies,
other explanatory notes and the directors’ declaration for carsales.com Ltd (the consolidated entity).
The consolidated entity comprises the company and the entities it controlled at year’s end or from time
to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In the basis of
preparation section, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
98
carsales.com Limited – Annual Report – 30 June 2015 | 87
Auditor’s opinion
In our opinion:
(a)
the financial report of carsales.com Ltd is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the consolidated entity's financial position as at 30 June
2015 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in the basis of preparation section.
Report on the Remuneration Report
We have audited the remuneration report included in pages 23 to 37 of the directors’ report for the
year ended 30 June 2015. 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.
Auditor’s opinion
In our opinion, the remuneration report of carsales.com Ltd for the year ended 30 June 2015 complies
with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
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99
88 | carsales.com Limited – Annual Report – 30 June 2015
carsales.com Limited – Annual Report – 30 June 2015 | 89
Shareholder
information
90 | carsales.com Limited – Annual Report – 30 June 2015
Shareholder information
The shareholder information set out below was applicable as at 31 July 2015.
A. Distribution of equity securities
Class of equity security
Ordinary shares
Options and
performance
rights
Redeemable
preference
shares
Convertible
notes
7
38
9
28
6
88
-
-
-
-
-
-
-
-
-
-
-
-
Shares
10,294
7,419
969
565
86
19,333
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
There were 241 holders of less than a marketable parcel of ordinary shares.
carsales.com Limited – Annual Report – 30 June 2015 | 91
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Clear-Way Investments Pty Ltd
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