Appendix 4E
carsales.com Ltd
ABN 91 074 444 018
Results for Announcement to the Market
Full-year ended 30 June 2017
(Previous corresponding period: Full-year ended 30 June 2016)
Revenue from ordinary activities
Profit from ordinary activities after tax attributable to members
Net profit for the period attributable to members
Dividends / Distribution
2016 Final Dividend paid
2017 Interim Dividend paid
2017 Final Dividend declared
2017 final dividend dates
Up
Up
Up
8.2%
0.2%
0.2%
to
to
to
A$’000
372,114
109,479
109,479
Amount per
security
19.5 cents
Franked amount
per security
19.5 cents
18.7 cents
21.5 cents
18.7 cents
21.5 cents
Record date for determining entitlements to the dividends
Latest date for dividend reinvestment plan participation
Dividend payable
22nd September 2017
25th September 2017
19th October 2017
Net tangible assets backing per ordinary share
31.93 cents
27.60 cents
30 June 2017
30 June 2016
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
2017 Financial Report.
For personal use only Appendix 4E - carsales.com Ltd
ABN 91 074 444 018 CONTINUED
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For personal use only
ANNUAL REPORT
2017
ABN 91 074 444 018
For personal use only $372.1m revenue
up 8%
$176.5m
$119.1m
group
EBITDA
up 4%
adjusted
NPAT
up 8%
02
CARSALES.COM LIMITED
ABN 91 074 444 018
CONTENTS
Our Vision
Our Business
Our Performance
Our Financial Performance
Chair and Chief Executive Officer’s Report
Our Strategy
Our Customers
Our Global Business
Our Brands
Building Our Brands
Our Future
The carsales World
Directors’ Report
Our People
Corporate Governance
Our Leadership Team
Our Remuneration Chair’s Report
Remuneration Report
Other Directors’ Disclosures
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the
Members of carsales.com Limited
Shareholder Information
Corporate Directory
03
04
05
06
08
10
12
14
15
16
18
20
22
26
33
34
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67
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113
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123
For personal use only 03
OUR VISION
Every day carsales helps thousands of people across the world buy and sell vehicles. Our vision is to
make buying and selling vehicles easy and frictionless – for consumers, dealers and manufacturers alike.
From a first car to a dream car; from a tool of trade to a leisure vehicle, we empower consumers of all
types giving them confidence when they transact online, regardless of how much they know about cars
(or boats or bikes or caravans or trucks).
We strive to be the compelling,
trusted leader in every market in which
we operate – whether in Australia or
other regions around the world as we
extend the reach of our business. We
do this by empowering our people
to deliver world-class customer-centric
solutions which help all our customers
buy and sell with confidence. Whether
it is a car, motorbike, caravan, truck,
boat or combine harvester, we bring
the same level of technology and
knowledge to ensure buyers and
sellers have rewarding outcomes.
We aim to deliver superior results
for all our customers, whether
they are consumers, dealers
or manufacturers.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 04
OUR
BUSINESS
Today in our home market of Australia,
more vehicles are sold using the
carsales Network than anywhere else.
We are one of Australia’s original
disruptors and have expanded to
include a large number of market-
leading brands. Our business began
in 1997 with carz.com.au, which grew
into carsales.com.au, Australia’s
leading automotive classifieds site.
In 2009 the Company floated on
the Australian Securities Exchange
(ASX) as carsales.com Ltd.
Today, the carsales Network is Australia’s
number one online destination for
buying and selling cars, motorbikes,
trucks, boats, caravans and machinery.
Our market-leading Australian news
and classifieds sites are augmented
by classifieds businesses in Argentina,
Brazil, Chile, Colombia, Mexico and
South Korea. Our RedBook valuation
and data business has operations in
Australia, New Zealand, China, Thailand
and Malaysia. Our software is used by
thousands of vehicle dealers to manage
inventory and enquiries and to access
market intelligence.
Our businesses around the world
are underpinned by data and content.
Our unique vehicle data taxonomy is
used around the world to classify,
report on and value vehicles. Our market
intelligence is second to none, and helps
both manufacturers and dealers with
planning and sales strategies.
Our data also underpins an innovative
suite of targeted advertising solutions,
used by a range of industry partners
to provide relevant offers to consumers.
Data science and artificial intelligence
are deployed across the business
to assist with processing improvements
and time-saving opportunities.
We publish editorial content on our
site including reviews, road tests,
comparisons and industry news,
ensuring our users are fully informed.
It is the power of the whole that drives
carsales forward.
As one of Australia’s original technology
innovators, we understand how vital
continuous improvement is to our
success. We have a global outlook
and strive to attract, retain, empower
and celebrate a truly diverse workforce
that is empowered to deliver world-
class solutions.
The Company is committed to having
a positive impact on the community.
We achieve this through a diverse range
of initiatives and employment practices
and through our charitable arm, the
carsales Foundation.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
OUR
PERFORMANCE
05
25.3m*
Unique visitors
to our sites around
the world as at
30 June 2017
(Nielsen Digital Ratings, June 2017,
Google Analytics, June 2017)
29,864*
Dealers around
the world
733,219*
Cars for sale
around the world
Up 20%**
over 125,000
RBI inspections performed
carsales Australian
network monthly audience
9,440,522
across all devices 30 June
( Google Analytics)
Higher
engagement
carsales visitors spend
over 4x more time
on site than visitors to
our nearest competitor
(Nielsen Digital Ratings, June 2017)
up 19%
4.7 million carsales members**
a car sold every
minute on
carsales.com.au
More than 16.3
equivalent years
of video
viewed on and
off site in FY17
Commanding content
11.3x
more page views than
our nearest competitor
(Nielsen Digital Ratings, June 2017)
carsales.com.au
4 times
more preferred than
our nearest competitor
(Nature Research Australia, June 2017)
Australia’s most visited
2x the traffic
(across desktop, mobile
and app) than our
nearest competitor
(Nielsen Digital Ratings, June 2017)
* Excludes iCar Asia.
** PCP.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 06
OUR
FINANCIAL PERFORMANCE
Revenue
EBITDA
Adjusted NPAT*
$372.1m $176.5m $119.1m
up 8% year on year
up 4% year on year
up 8% year on year
CAGR** 14.7%
372.1
CAGR 10.1%
176.5
170.3
CAGR 9.3%
119.1
110.5
154.3
138.4
120.1
101.8
95.5
83.5
344.0
311.8
235.6
215.1
FY13 FY14 FY15 FY16
FY17
FY13 FY14 FY15 FY16
FY17
FY13 FY14 FY15 FY16
FY17
(millions)
(millions)
(millions)
** Cumulative Annual Growth Rate.
“IT HAS BEEN AN AMAZING YEAR AT
CARSALES, DURING WHICH MANY NEW
MILESTONES WERE REACHED AND
CHALLENGES CRISPLY OVERCOME.
WE ARE IN EXCELLENT SHAPE AND
FOCUSED ON THE YEAR AHEAD.”
CAMERON MCINTYRE, CEO
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 07
Year ending 30 June 2017
Revenue
– Online Advertising Services
– Data, Research and Services
– International
– Finance and Related Services
Total revenue
Total operating expenses (before interest and depreciation and amortisation)
EBITDA
EBITDA margin
Depreciation and amortisation
EBIT
Net finance costs
Profit before tax
Income tax expense
Profits from associates
Gain on sale of business
(Loss)/gain on associates fair value adjustment and investment dilution
Non-controlling interest (NCI)
Reported net profit after tax
Reported earnings per share (cents)
Adjusted net profit after tax*
Adjusted earnings per share (cents)*
A$ Millions
Growth
FY17
FY16
$M
269.1
39.3
8.3
55.4
372.1
(195.6)
176.5
47%
(10.0)
166.5
(6.9)
159.6
(48.3)
8.5
-
(6.8)
(3.5)
109.5
45.4
119.1
49.4
240.7
35.9
4.4
63.0
344.0
(173.7)
170.3
50%
(7.5)
162.8
(8.4)
154.4
(47.4)
5.3
0.9
0.9
(4.8)
109.3
45.4
110.5
45.9
28.4
3.4
3.9
(7.6)
28.1
(21.9)
6.2
(2.5)
3.7
1.5
5.2
(0.9)
3.2
(0.9)
(7.7)
1.3
0.2
-
8.6
3.5
%
12
10
87
(12)
8
(13)
4
(33)
2
18
3
(2)
61
n/a
n/a
27
-
-
8
8
* Adjusted NPAT and earnings per share above are post non-controlling interests and exclude gain on associate dilution, one-off gain on sale of business,
associate one-off tax gain, associate fair value revaluation loss, and non-cash acquired intangible asset amortisation. See Note 6 of the financial statements
for reconciliation to reported NPAT and earnings per share.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
08
CHAIR AND CHIEF EXECUTIVE
OFFICER’S REPORT
customers to differentiate their
offerings and where possible reduce
the number of friction points in the buy/
sell process. Products such as advertising
depth, instant offer and the launch of
our natural language search are three
clear examples of the effort going into
strengthening our market leading
products. There is plenty more to come
with our investments in data science
and artificial intelligence providing
further opportunities to create more
compelling personalised experiences
for consumers and our commercial
customers.
The Stratton management team have
worked tirelessly over the past 12 months
to reset the business back onto a path
of growth by making a number
of operational and product changes.
There is still much to be done but the
business has been able to demonstrate
the positive impact of the changes
made by delivering solid pcp revenue
growth in the 4th quarter.
We see our international expansion as
one of the key contributors to our long
term growth strategy, and over the past
twelve months we have continued to
see some very positive developments.
In February this year we acquired the
online automotive classifieds business
Demotores in Argentina, Chile and
Colombia, which further consolidated
our strong position in Latin America.
We have continued to work well with
our partners in Brazil and South Korea
and have seen excellent growth in these
markets as the management teams
of both Webmotors and SK Encar
continue to extend their market leading
positions. A number of times this year
we visited each of these important
operations and have established closer
operational and governance links with
our partners. In all of our Latin American
markets our customers are looking to
build on their digital selling capability.
We believe that with our technology
and IP, we are in a strong position to
support the evolution of these markets
over time.
Cameron McIntyre
Managing Director and CEO
Jeffrey Browne
Non-Executive Chair
Thank you for your support of our world
class organisation this year. It has been
an amazing year at carsales, during
which many new milestones were
reached and challenges overcome.
We are in excellent shape and
focused on the year ahead.
It’s very pleasing to report yet another
year of record financial performance
with revenue up 8% on the previous
corresponding period (pcp) to $372.1m.
There have been key contributions from
carsales, core domestic business units;
with Stratton Finance moving back into
revenue growth in the 4th quarter,
and our other adjacent business
opportunities such as Redbook Inspect
and tyresales continuing to demonstrate
strong ongoing revenue growth.
Earnings before interest, tax and
depreciation/amortisation (EBITDA)
was up 4% to $176.5m with EBITDA
margins contracting slightly to 47%.
This performance reflects the ongoing
expansion of core business margins,
as the company continues to utilise its
operating leverage, offset by our fast
growing, early stage, lower margin
businesses, such as tyresales.
Adjusted Net Profit After Tax (NPAT)
increased 8% to $119.1m and total
dividend payments in the FY17
year were $92.2m; up 4% on the
previous year.
This year marked the company’s 20th
birthday. From our suburban beginnings
on Blackburn Road in Mount Waverley,
Melbourne, with the idea of developing
a parts exchange product, we could not
have imagined we would become the
world class organisation of over 1,250
people around the globe (and growing)
we are today.
Our operational performance
Domestic automotive selling conditions
have remained consistent over the past
twelve months, despite some month
to month patchiness in new car sales
volumes. We have seen consistent
performance in metrics such as used
car lead volumes and average time
to sell with both steady.
Across both our consumer and
commercial business units, we have
continued to drive new product
innovation in a bid to improve
consumer experience, enable
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 09
Board changes
2017 marked the year Greg Roebuck,
our carsales co-founder, decided that it
was time to conquer his travel bug, his
long list of hobbies and interests, and
his desire to spend more time with his
wonderful family. In March this year
Greg retired from his position with the
Company, and Cameron McIntyre was
appointed to the position of Managing
Director and CEO. While the departure
of a very successful founder can be
difficult, the Board has been very
pleased with the smooth transition
between Greg and Cameron and the
positive response received to the
change both internally and externally.
The Board would like to express its
deep gratitude to Greg for his years
of leadership and the passion and
energy he brought to the business every
day. Greg developed a dynamic and
talented leadership team, and he has
left the Company in the best of hands.
Executive changes
in responsibilities
As a result of the change of Managing
Director and CEO there were several
changes in Key Management Personnel
(KMP) responsibilities, which have
supported the ongoing development
of our KMP talent and succession
planning. We have brought together
all of our commercial customer
operations under Anthony Saines,
Managing Director Commercial,
reflecting the converging demand
for innovative data-rich products
and services across our dealer and
manufacturer customers. Our consumer
businesses have been brought together
under Ajay Bhatia, Managing Director
Consumer Business, which will increase
our focus on providing frictionless buy/
sell/own services to consumers at every
point of their journey.
As the Company’s size and complexity
have continued to evolve, we also
made some very positive changes to
the Executive Leadership Team (ELT).
Michael Holmes our Executive Director
Dealer, Nicole Birman, General Counsel
and Company Secretary, Lisa Sheehan,
Chief People Officer and Jason
Blackman, Chief Information Officer,
were all appointed to the ELT. They
bring with them extensive carsales and
industry experience, which has further
enhanced the capability and diversity
of the team. Andrew Demery and Kellie
Cordner, our most capable CFO and
CMO, continued to maintain their
positions on the ELT throughout the year.
Capital management
carsales regularly reviews its capital
structure to ensure it is maximising
returns to shareholders. Continued
solid earnings growth, coupled with
prudent balance sheet management
which includes relatively low gearing
enable the Company to consider
capital management initiatives
on an ongoing basis.
People and community
People are at the heart of carsales’
success and we pride ourselves on
developing a collaborative and
innovative culture. We have invested
(and will continue to do so) in the
development of a strong and highly
capable team to ensure we are in the
best position possible to leverage the
growth opportunities ahead.
In addition to continuing our sponsorship
of two university students through
our carsales Foundation scholarships,
this year we launched the ‘Next Gear’
Graduate Program, which will see the
intake of eight university graduates
from early 2018 in both commercial
and technology disciplines. We had
an overwhelming response to our first
formal graduate offering and we are
very pleased with the graduates who
will be joining us in 2018. The intake
selection program involved many
of our senior business leaders who
were enormously impressed with
the level of talent they saw. We are
pleased to be closely supporting
the development of local talent
while building generations
of carsales leadership to come.
Our support of community is an
important part of who we are and
we have once again continued to
strongly advocate for the White Ribbon
program. Given the importance of the
prevention of domestic violence against
women and the large male audience
we having using our sites every day,
we are in a strong position to enhance
and promote community awareness
of this important program.
The Board has declared a final FY17
dividend payment of 21.5 cents per
share fully franked, up 10% on pcp,
bringing the total FY17 dividends to
40.2 cents per share and representing
an increase year on year of 2.9 cents per
share – or 8%. The Board believes that
the current dividend payout ratio of
adjusted earnings of 81% reflects an
appropriate balance between profit
distribution to shareholders and
reinvestment in the future growth
in earnings.
Towards a successful FY18
We are extremely grateful to the team
we have at carsales. Our success is a clear
and direct result of their passion and
dedication to the Company. Our people
are the envy of the markets they serve
and we would like to publically thank
each and every one of them for what
they bring to our business each day.
Finally, on behalf of the Board we would
like to thank all of our customers and
partners around the world for their
support and engagement over the past
12 months and we look forward to
working with them all again in FY18.
Thank you for your support of our
world-class organisation.
Jeffrey Browne
Non-Executive Chair
Cameron McIntyre
Managing Director
and CEO
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
10
OUR
STRATEGY
OUR STRATEGY IS TO GROW THE THREE PILLARS OF OUR BUSINESS: CORE ADVERTISING
AND DATA SERVICES, COMPLEMENTARY ADJACENT BUSINESSES, AND INTERNATIONAL
OPERATIONS. THIS STRATEGY ALLOWS US TO MAXIMISE VALUE FOR OUR CUSTOMERS
AND SHAREHOLDERS BY EXPANDING THE BREADTH AND DEPTH OF SERVICES WE
OFFER ACROSS NEW MARKETS AND GEOGRAPHIES.
Advertising and data services are the
foundation of our business and we
will continue to provide a compelling
world-class experience for consumers
and customers as we bring together
buyers and sellers. Innovation is vital
to ensuring our network of sites is
the No.1 destination for auto intenders
in the markets in which we operate.
Our core products include classified
advertising, display advertising and
data and research services.
But connecting buyers and sellers is
only one part of our business. We strive
to provide a frictionless end-to-end
buying and selling experience and
leverage our trusted brand and
customer relationships throughout the
ownership period. We have a number of
adjacent businesses and services, such
as Stratton Finance, RedBook Inspect,
RedBook Warranty, PayProtect and
tyresales.com.au, that all extend the
core services we offer and increasingly
engage with the consumer during the
ownership period.
Over the next year we will continue to
invest in new products and businesses
to benefit our consumers and customers.
We anticipate growing these businesses
and services and expanding the range
of ownership services we provide over
the coming years.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 11
operations in
12 countries
worldwide
To reflect the evolving needs of our
customers and provide a seamless
range of integrated services, in March
2017 we brought together all of our
Australian customer-facing operations
into two divisions – commercial and
consumer. The commercial division
comprises our dealer, agency and
manufacturer focused teams,
reflecting the increasing
closeness between manufacturers
and dealers and the alignment in
the demand for data driven advertising
solutions. Our consumer team brings
together all of our membership,
consumer classified products and
adjacencies into a single division to
focus on providing a frictionless buying,
selling and ownership experience.
We have operations in 12 countries
around the world and our strategy
to leverage and extend the 20 years’
experience carsales has in Australia into
developing markets globally continues.
We seek to be a compelling No.1 in
the markets in which we operate and
utilise our global technology platform
and IP to bring the same experience
to consumers and customers no matter
where they live.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 12
OUR
CUSTOMERS
OUR CUSTOMERS ARE THE LIFE BLOOD OF OUR BUSINESS AND THIS YEAR HAS SEEN US
INCREASE OUR FOCUS ON THEM. WE HAVE CONCENTRATED ON SEAMLESS CUSTOMER
OUTCOMES BY BRINGING TOGETHER ALL OUR CUSTOMER FACING TEAMS INTO TWO DIVISIONS
– CONSUMER AND COMMERCIAL. WE HAVE OVER 250 PEOPLE IN AUSTRALIA WHO INTERACT
WITH CUSTOMERS DAILY AND ARE DEDICATED TO MAKING THEIR EXPERIENCE WITH CARSALES,
A GREAT ONE.
4.7 million members. This audience
drives higher engagement. Investment
in greater personalisation and one-to-
one member marketing capability is
yielding good results. This year has seen
us grow both active members and
member sign-in rates.
tyresales has continued to grow its
market share and is now cementing
itself as a significant player in the
Australian tyre market. tyresales
continues to delight consumers
by being a transparent, safe and
cost-efficient place to buy the right
tyres for their vehicle. This year has
seen accelerated growth, almost
doubling the volume of tyres sold
year on year. We have worked to
expand our consumer offering whilst
maintaining a customer satisfaction
rating of well over four stars on
productreview.com.au.
4.7m
members in
Australia
over
125,000
inspections carried
out this year
Consumer
This year has seen us increase our
focus on the consumer and put our
goal of delivering a frictionless buy/
sell/own experience at the centre
of all we do. This has been positively
reflected in customer satisfaction
metrics as well as the performance
of our complementary adjacent
products and services.
Our peace of mind offering was
extended this year to help consumers
buy and sell with greater trust and
certainty. For those consumers who
want to get an immediate sales result
or are not confident about dealing
with buyers in a traditional sale process,
our instant offer product has proved
popular. The introduction of RedBook
Warranty enables buyers to cover their
cars outside manufacturer warranty
periods, to avoid unexpected costs.
PayProtect, an escrow service powered
by Assembly, has been integrated into
the transaction journey to help remove
payment risks for both buyers and
sellers transacting online.
Our RedBook Inspect vehicle
inspections service continues to
resonate with buyers, driving solid
consumer growth, and with business
customers such as Uber. RedBook
Inspect retail pre-purchase, asset
finance inspection services and private
inspections have all performed well,
with over 125,000 inspections carried
out this year alone. More RedBook
Inspect Approved Roadworthy Stations
have been rolled out in QLD, NSW and
ACT, which will allow us to maximise
utilisation of the assets of the business.
One of the major opportunities that
carsales has in Australia lies with our
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 13
functionality for our dealer customers,
whilst also migrating the platform to the
cloud in order to scale globally. In adding
more mobile solutions for dealers, we
aim to put the most relevant information
into dealers’ hands in real time.
Our focus on depth products for dealers
has delivered good growth this year and
the demand for these products across
our customer base bodes well for the
growth opportunity in coming years.
Our dealer customers now receive more
information than ever into the
performance of their businesses on our
platforms and the quality of consumer
interactions generated. We aim to
constantly improve the depth and
breadth of these insights as we invest
further in data science and
data visualisation tools.
We are training more and more dealers
and sharing knowledge at more and
more events so our customers can make
smarter business decisions. This year saw
the advent of more training seminars
for our dealer clients, and the registered
numbers exceeded expectation. There
were over 180 attendees from dealers
nationally, and the attendee mix of each
session included employees from both
franchised and independent businesses.
The training commitment will continue
into FY18, with sessions conducted
quarterly throughout the country.
We continue to evolve our non-
classified advertising products and
services to be more data-centric and
provide attribution, whether they are
for dealer, agency or OEM customers.
Our relationships with manufacturers
have continued to improve and our
wider suite of advertising solutions
and insightful products are all gaining
increased traction. The increased take-
up of clearance centres, website builds,
certified pre-owned programs, click-to-
buy sales and one-off consumer events
such as the Hyundai Hail Sale have
delivered our manufacturers and
dealers pleasing results.
We continue to expand our portfolio
of bespoke ‘native’ ad units that
are focused on delivering strong
commercial outcomes rather than
simply generating ad impressions.
We help our manufacturers save money
as well as spend money more wisely.
Clients can target consumers more
effectively to reach the right audience
at the right time in the right context
as we continue to add value from
our investments in insights and
data science. Our investment in
programmatic solutions takes advantage
of the structural change sweeping the
advertising industry whilst maintaining
our laser-like focus on data integrity
and protection.
Commercial
carsales is helping to change the way
the automotive industry works, bringing
manufacturers, dealers and media
agencies closer together. Our philosophy
of ‘genuine buyers, authentic data,
products that work’ is paying dividends
in the results delivered to all our
customers, and our financial
performance. Our focus more than ever
is around creating innovative, data-rich
products and services that provide
unmatched insights into industry and
consumer behaviour, as well as helping
our customers achieve their commercial
goals in a way that works for them.
Our commercial customers are
increasingly seeing carsales as a
business partner to help them achieve
success in all areas of their business,
rather than just a supplier of leads,
advertising space and raw data.
The vast reservoir of valuable data our
business generates is transforming the
way our commercial customers make
decisions and interact with consumers.
Consumers move effortlessly between
desktops, tablets and smartphones
and our data enables us to assist our
commercial customers to interact
with consumers via a more
personalised experience.
Our unparalleled commitment to dealers
over the years has been rewarded
with strong beneficial relationships
and a focus on delivering successful
outcomes for all parties. This year we
have made further investments in our
relationships by setting up the Dealer
Comparison Board and Dealer Advisory
Board to enable us to work together
more closely, and roll out mutually
beneficial products and services.
We are continually investing in
our platforms to deliver better
performance and increased
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
14
OUR
GLOBAL BUSINESS
THIS YEAR HAS SEEN CARSALES INCREASE ITS
COMMITMENT TO OUR OVERSEAS BUSINESSES
AS WE BUILD FOR FUTURE GROWTH.
Our strategy is to be the compelling
and trusted market leader in every
market in which we operate and to
act as a truly global business. FY17 has
seen us strengthen the management
and processes in our international
businesses, and continue the roll out
of our technology and IP, making us
the number one auto classifieds
network in Latin America.
We are seeing positive signs that our
focus on improving operational metrics
and customer experience is positioning
us well to deliver growth for all our
international investments.
We have significant interests in the
top three economies in Latin America.
The purchase of Demotores (with
operations in Argentina, Chile and
Colombia) in 2017 helped extend
our presence in the region and
strengthened our market position
in Chile. Our confidence in the region
underpins our investment strategy
of taking full or majority ownership
of investments.
Mexico has a strong new car market
with production now at an all-time high.
The Mexican market saw its best ever
year in terms of new car sales in the
calendar year 2016, and 2017 is promising
to be just as impressive. We continue to
strengthen our position in the Mexican
market as we extend into Mexico City,
and have seen significant increases in
dealer numbers, leads and conversion
across the country.
We have delivered a new retail site
and app in Mexico, a new retail site
in Chile and our leading technology
has been installed across the region,
underpinning our performance and
improved customer experience.
Webmotors is continuing to extend its
position as the number one auto portal
in Brazil with strong traffic and lead
growth. Investments in product and
technology together with a strategic
focus and operational excellence sees
Webmotors well positioned to benefit
for a rebound in macro-economic
conditions.
Our Latin American businesses are
now working collaboratively across
the region. This has been significantly
aided by seconding senior carsales
staff from head office into the region
to strengthen the teams, share our
knowledge and facilitate collaboration.
SK Encar has delivered strong growth
through continued deployment of
dealer products, including inspections
and depth products, combined with
growth in display advertising. South
Korean turmoil both domestically and
within the region, has failed to deter
the business from achieving strong
results during the year.
We are seeing positive signs that
our focus on improving operational
metrics and customer experience is
positioning us well to deliver growth
for all our international investments.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
OUR
BRANDS
Domestic
Domestic products and services
International
15
Acelera hacia tu próximo auto
cl
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 16
BUILDING
OUR BRANDS
carsales attracts more web visitors in
Australia every month than any other
competitor and our visitors spend
more time within the site.
carsales’ sponsorships across a number
of sporting codes (AFL, NRL, State
of Origin, V8s and the Melbourne
Renegades BBL Team), continue to
be an important part of our marketing
mix, delivering top of mind awareness
and allowing us to reach a broad and
engaged Australian audience. These
sponsorships put us in the top rating
Australian TV programs for the year,
giving us invaluable prime time
exposure within an environment
which talks right to the beating
heart of Australia’s passion for sport.
We reached a cumulative audience
of over 55 million people with our
AFL sponsorship.
Our sponsorship of the State of Origin
reached a similar audience across
the three games and culminated with
Australia’s most watched TV program
so far in 2017.
In February 2017, carsales announced a
global ambassadorship with F1 Red Bull
driver Daniel Ricciardo. The relationship
was established to support carsales’
overall brand strategy of helping
Australians buy, sell and own a car with
ease and confidence. The connection
between Daniel and carsales was a clear
one – he knows cars and we know cars.
Working with Daniel from a marketing
perspective has enabled us to bring
together speed, success and innovation,
which are key traits that align Daniel
with the carsales brand. The campaign
reinforced our position as the market-
leading destination for buying and
selling cars, with over 200,000 cars
for sale and millions of data points
available to help inform consumer
purchase decisions.
In November 2016, we launched an
extension to our content offering –
Carpool. As part of our deep
understanding of our customers,
we realised that our existing editorial
offering had allowed us to establish
a relationship with car enthusiasts,
however we needed to broaden our
offering to cater to those who see cars
as primarily a utility. By creating this
destination, we empower every-day car
buyers and sellers with information and
advice to help them make better car
buying decisions. Carpool content and
our video watch time is over 75,000
hours. This time spent engaging with
the brand on a 1-1 level allows us to
deepen our customer relationships.
We have also seen a significant shift
in our make-up of engaged audience
in social – prior to Carpool, our
demographic split was 85% male/15%
female – our split has now moved to
58% male/42% female, delivering on
one of our core brand objectives.
In June 2017 we signed an agreement
with News Corp Australia to sponsor
the company’s new look Motoring
section across its major metro and
regional titles. The print sponsorship
deal also includes integration of
carsales branded content into the
publication. The agreement includes
a direct link to carsales.com.au from the
news.com.au website. The sponsorship
sees two leaders coming together to
enable better customer access to cars
and further amplification of the carsales
brand. This is another route to carsales
for consumers and grows our audience
even further, cementing our leadership
in the market.
PREFERENCE
4X more preferred than our
nearest competitor
(i)
(ii)
TRAFFIC
2X the traffic (across
desktop, mobile and app)
of our nearest competitor
(iii)
VISITATION
6.5 minutes spent on site
38% more time than
any other competitor
BOUNCE RATE
2.3X lower than our
nearest competitor
(iv)
(i) Nature Research Australia, 2017.
(ii) Nielsen, 2017.
(iii) Market Intelligence, 2017.
(iv) Similarweb, 2017.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 17
Global ambassadorship
F1 Red Bull driver
Daniel Ricciardo
“I really admire the success carsales
has had in Australia and more
recently at an international level.
It’s for these reasons that this
ambassador role feels like
a very natural fit for me. I will
be very proud to race with the
carsales brand on my helmet
and cap across the 2017 season.”
SUBARU’S
NEW BABY
SOFT-ROADER
ROOM TO GROW FAMILY SIZE:
HONDA’S BIGGER CR-V
ROAD TESTANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 18
OUR
FUTURE
FOR 20 YEARS CARSALES HAS BEEN A LEADING INNOVATOR
IN AUTOMOTIVE DIGITAL ADVERTISING IN AUSTRALIA.
lead this evolution with strong
relationships with dealers, manufacturers,
and all the other participants in the
automotive value chain.
A.I. in action – Cyclops
Cyclops Image Recognition Software
was developed this year to improve the
efficiency, accuracy and consistency of
photos uploaded to ads on site.
The cutting-edge software, with
97.2% accuracy, automatically selects
and assigns angles to each image
uploaded by our photographers
directly onto the carsales platform
to help showcase various aspects
of the vehicle. Cyclops also has
an AI feedback mechanism so it
automatically learns from its mistakes
and improves accuracy over time.
Prior to the implementation of Cyclops
on the carsales platform, every image
of a car uploaded into our carsales
Media Library by Photo Services staff
was manually categorised according
to the angle featured in the image.
Now with Cyclops, each image is
automatically assigned an angle.
For example, a user who is selling an
SUV and has uploaded images of the
front exterior, side exterior, front seats
and dashboard will be prompted to
upload an image of the backseat too.
This is because Cyclops knows this
is one of the most common features
people research when purchasing
an SUV.
Innovation will be central to the next
era of carsales as we maximise the
value of the data we generate. Our
investment in data science and insights
means we are delivering more and more
insightful data to our customers. This is,
in turn, building stronger relationships
with manufacturers and dealers and
giving consumers better experiences.
We will continue to invest in innovation
in order to streamline experiences
for customers and make the process
of buying, selling or advertising easier.
Machine learning and artificial
intelligence will be significant
technologies that we can exploit
to deliver benefits to customers
and the Company.
Our in-house developed products like
Cyclops (an artificial intelligence-based
product that reads photographs),
Ryvuss (our intelligent search engine)
and Pegasus (the latest version of our
website), will be augmented by our
natural language search interface
– a first for automotive classifieds in
Australia. Our new recommendation
engine will make searching and
researching faster and simpler, further
augmenting the consumer experience.
Year after year, our business pushes
technological boundaries and optimises
processes. We are investing in a suite
of data management and marketing
activation tools so we can develop a
unified real-time view of our customers
– a ‘single source of truth’ – leading to
a deeper, more anticipatory customer
relationship.
The automotive market is evolving
powered by technological change
and demands from consumers.
carsales is uniquely placed in the
Australian automotive market to
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
19
We will continue to invest in innovation in order to
streamline experiences for customers and make the
process of buying, selling or advertising easier.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 20
THE CARSALES
WORLD
carsales.com Ltd
Staff: 502
Offices: Melbourne, Sydney, Perth,
Adelaide and Brisbane
SK Encar – South Korea*
Staff: 125
Office: Seoul
Stratton Finance
Staff: 230
Offices: Melbourne and Sydney
tyresales
Staff: 14
Offices: Melbourne and Perth
Auto Exchange
Staff: 16
Offices: Perth and Melbourne
RedBook Inspect
Staff: 52
Office: Sydney
SoloAutos – Mexico
Staff: 53
Office: Guadalajara
Chileautos – Chile
Staff: 36
Office: Santiago
Demotores – Argentina
Staff: 27
Office: Buenos Aires
Webmotors – Brazil*
Staff: 206
Office: São Paulo
* Reflects minority shareholding investments.
RedBook International
Staff: 28
China
Office: Beijing
Thailand
Office: Bangkok
Malaysia
Office: Kuala Lumpur
New Zealand
Office: Auckland
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
21
EXPANDING
GLOBAL NETWORK
AUSTRALIA/
NEW ZEALAND
223,805*
cars
LATIN AMERICA
509,414*
cars
THE CLOSE OF FY17 SEES OUR
INTERNATIONAL PORTFOLIO WELL
POSITIONED WITH STRONG ORGANIC
GROWTH CONTINUING IN SK ENCAR,
POSITIVE MOMENTUM BUILDING
IN WEBMOTORS AND OUR LATAM
STRATEGY ENHANCED BY THE
ACQUISITION OF DEMOTORES,
GIVING US ACCESS TO THE LARGE
ARGENTINIAN MARKET AND
CONSOLIDATING OUR NO.1
POSITION IN CHILE.
*Cars advertised for sale on carsales network sites as at 30 June 2017.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 22
DIRECTORS’
REPORT
YOUR DIRECTORS PRESENT THEIR REPORT ON THE CONSOLIDATED ENTITY (REFERRED
TO HEREAFTER AS THE GROUP) CONSISTING OF CARSALES.COM LTD AND THE ENTITIES
IT CONTROLLED AT THE END OF, OR DURING, THE YEAR ENDED 30 JUNE 2017.
Operational and Financial
Review
Principle Activities
carsales is the Australian automotive
classified market leader and facilitates
anyone to buy and sell a car, bike, boat,
caravan and much more across our
network of sites (set out on page 15).
Online advertising includes carsales’
investment in tyresales.com.au which
is an online tyre retailer that allows
consumers to transact and purchase
tyres; and RedBook Inspect which
provides inspection services
published online as part of
classified advertisements.
Data, Research and Services
The carsales divisions of RedBook,
LiveMarket, DataMotive and
DataMotive Business Intelligence
provide various solutions to a range
of customers including manufacturers/
importers, dealers, industry bodies,
and finance and insurance companies.
They offer products including software,
analysis, research and reporting,
valuation services, website development
and hosting as well as photography
services.
Finance and Related Services
Finance and Related Services includes
the Stratton Finance Pty Ltd subsidiary
which provides innovative finance
arrangements for vehicles, boats, and
other leisure items, vehicle procurement
and other related services to customers.
Revenues arise from commissions paid
by finance providers and other related
service providers. It also includes the
equity accounted associates RateSetter
Australia Pty Ltd and PromisePay Pte Ltd.
Our key services, customers
and geographies include:
Online Advertising Services
carsales Online Advertising Services
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
(depth products) 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 Z, or save 10% on
insurance this month only etc, as
banner advertisements or other
sponsored links.
International
carsales has operations in overseas
countries through subsidiaries, equity
accounted associate investments and
available-for-sale financial assets as set
out below:
Online Automotive Classifieds:
• Webmotors S.A. (operations in Brazil)
– 30%
• SK ENCARSALES.COM Ltd
(operations in South Korea) – 49.9%
• carsales Mexico SAPI de CV
(SoloAutos) (operations in Mexico)
– 65%
• Chileautos SpA (operations in Chile)
– 83.3%
• Demotores Chile SpA (operations in
Chile) – 100%
• Demotores S.A. (operations in
Argentina) – 100%
• Demotores Colombia S.A.S.
(operations in Colombia) – 100%
• iCar Asia Limited (operations in
Indonesia, Malaysia and Thailand)
– 15.6%
Automotive Data Services:
• Auto Information Limited
(New Zealand) – 100%
• RedBook Automotive Services
(M) Sdn Bhd (Malaysia) – 100%
• RedBook Automotive Data Services
(Beijing) Limited (China) – 100%
• Automotive Data Services
(Thailand) Company Limited – 100%
This year has seen solid contributions from carsales’ core domestic
business units and very pleasingly Stratton Finance moved back into
revenue growth in the fourth quarter. Our other adjacent business
opportunities such as RedBook Inspect and tyresales are continuing
to demonstrate strong ongoing revenue growth potential.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
23
Group Financial Results
2017 was a strong year in most parts
of the business as we continued
to strengthen our domestic market
position and deliver on our strategy
of growth in core digital advertising
and data services, complementary
adjacent businesses and international
markets. FY17 was another year of
record financial performance with
Group operating revenue rising to
$372.1m, up 8% on the prior
comparative period (pcp).
Group earnings remained solid with
EBITDA up 4% on pcp to $176.5m
and EBITDA margins of 47%.
Excluding the Finance and Related
Services segment, revenue growth
was 13% on pcp and EBITDA growth
was 7% on pcp.
Adjusted NPAT attributable to the
owners of carsales.com Ltd was
$119.1m, up 8% on the pcp. Reported
NPAT attributable to the owners
of carsales.com Ltd was $109.5m,
up $0.2m on pcp.
The Directors believe the additional
information on International Financial
Reporting Standards (IFRS) measures
included in this report is relevant and
useful in measuring the financial
performance of the Group. In particular,
the presentation of ‘adjusted net profit’
and ‘adjusted earnings per share’
provides the best measure to assess
the performance of the Group by
excluding gain on associate dilution,
one-off gain on sale of business,
associate one-off tax gain, associate fair
value revaluation loss, and non-cash
acquired intangible asset amortisation
from the reported IFRS measures.
carsales Domestic Highlights
Core domestic segments of Online
Advertising Services and Data, Research
and Services exhibited good revenue
growth of 12% and 10% respectively,
reflecting a solid performance from
core digital advertising products.
Growth was enhanced by acceleration
in our adjacent businesses (particularly
tyresales and Redbook Inspect)
and premium listing/depth products.
Online Advertising Services
• Dealer revenue was up 8% on pcp
to $133.5m reflecting both solid
growth in revenue from traditional
transactional revenue products
(subscriptions, leads and listings)
as well as continued growth in the
demand for premium listing and
depth products. The introduction
of free leads for used cars under
$4k positively impacted used car
inventory levels.
• Private revenue is was up 27% on pcp
to $65.0m reflecting both strong
growth from adjacent markets
(particularly tyresales and Redbook
Inspect) and an improved performance
in core private online ads, which
benefited from an increase in the
take up of premium listing products.
Private automotive ad volumes were
up 8% in the second half supported
by the extension of the basic free
ad threshold to cars under $5k.
• Display revenue up 7% to $70.6m
reflecting the continued demand from
OEMs for our evolving product set.
Our insights and analytics capability
is being integrated with the core
display product set making our
products stickier and enabling
better targeting of our solutions.
Our relationships with OEMs
continue to improve across the
board with refreshed products
such as clearance centres, certified
pre-owned programmes and ‘main
events’ continuing to deliver
significant value for customers.
Data, Research and Services
Data, Research and Services revenue
was up 10% to $39.3m. There was
strong demand for our Data, Research
and Services from OEMs, with the
business demonstrating its agility
in responding to changing customer
needs in an increasingly data driven
market place. There was continued
solid growth from Livemarket, driven
by volume growth and yield. Our
RedBook business continues to expand
its product range and capability and
to display pleasing growth.
Finance and Related Services
Finance and Related Services revenue
is down 12% to $55.4m, with gross
profit down 5% on pcp to $44.7m,
reflecting volume capacity constraints
experienced by a major lender
throughout the year. The business
responded well to this challenge
with overall core finance broking
revenue declining by only 3% on pcp
and 8% up on pcp in the second half.
Underlining this improvement, the
volume of loans financed still grew
between FY16 and FY17. However,
this was offset by lower yields being
achieved on reduced average volume
bonuses. Finance lead generation
remains strong and initiatives are being
put in place to improve conversion
rates, with a lower cost to serve.
Domestic Operations
Costs were well controlled across
the business leading to EBITDA up
4% on pcp to $176.5m. EBITDA margins
declined from 50% to 47% reflecting
the issues experienced in the Finance
segment, and the increased contribution
of lower margin adjacent services,
particularly tyresales and Redbook
Inspect. Underlying core domestic
business margins improved 1% on
pcp. Depreciation and amortisation
increased by $2.5m on the prior period
reflecting acquisition intangible asset
amortisation and depreciation of
capitalised labour supporting group
wide integration and globalisation
projects. Net finance costs fell
by $1.5m to $6.9m reflecting lower
average debt levels through the year.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only • 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,
or constrain carsales’ ability to
command market-leading prices for
products and services.
• Downturn in the Australian economy,
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
24
DIRECTORS’
REPORT CONTINUED
carsales International Highlights
carsales holds a number of investments
across the Latin American and Asian
regions. Its two major investments are
equity accounted stakes in South Korea
(SK Encar) and Brazil (Webmotors) with
both businesses showing promising
signs in FY17. SK Encar recorded an
outstanding result in FY17 with
underlying local currency revenue
and EBITDA increasing by 29% and
32% respectively. Webmotors recorded
an underlying local currency full year
revenue and EBITDA growth of 9%
and 8% in FY17, with a strong H2
performance where revenue and
EBITDA were up 15% and 44% on
pcp respectively.
The Company also holds controlling
interests in online automotive
advertising companies operating in
the Latin American region (Mexico,
Chile, Argentina and Colombia) and
operates its RedBook data business
throughout Asia. The international
segment contributed $8.3m to Group
revenue – up 87% on the prior year.
The acquisition of Demotores has
cemented carsales’ position as the
number one automotive classified
network in Latin America. Given the
significant opportunity in this region,
our focus is to grow market leadership
and strengthen product and technology
capabilities through implementation
of carsales’ IP and technology.
Outlook
Domestic core business performance in
July has remained solid. We expect our
domestic adjacent businesses to
continue to build scale and breadth
consistent with FY17 and our premium
listing and depth products to continue
growing well.
Assuming market conditions remain
stable, we anticipate revenue, EBITDA
and NPAT growth will remain solid in
the domestic core business. Our Finance
and Related Services business has
demonstrated signs of stabilising in
Q4 which we anticipate will continue
into FY18.
In terms of international outlook,
assuming market conditions remain
stable, SK Encar is expected to
experience continued good local
currency revenue and earnings growth.
In Brazil, there have been some recent
improvements in the macroeconomic
environment. Subject to the continued
stabilisation of the economy, we expect
to see solid local currency revenue and
earnings growth in FY18. The continued
integration of core carsales IP and
technology into the Chilean, Mexican
and Argentinian businesses will continue,
which should provide a solid uplift in
their revenue and earnings in FY18.
Risk
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 and its businesses
around the world 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 motor
vehicle dealers and automotive
manufacturers (OEMs) – carsales
derives a significant proportion of its
revenue from motor vehicle dealers
and 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, a significant proportion
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
25
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 could have a
negative impact on carsales’ earnings.
• Cyber Security – the cyber threat
to companies around the world is
growing and unrelenting, carsales as
an online business is not immune to
these risks. carsales is vigilant and
proactive in its approach to cyber
security, investing resources to meet
the challenges of a complex cyber
environment in order to protect our
customers’ data. A cyberattack or
hack of carsales systems could have
serious impact on the Company’s
reputation, operational and financial
performance.
• Information Technology – carsales’
business operations rely on owned
and 3rd party IT infrastructure and
systems, including reliance on
Amazon Web Services and other
cloud service providers. Any
interruption 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 as well as to
fluctuations in exchange rates.
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
26
OUR
PEOPLE
160
new staff joined
in Australia
OVER
4,000
hours of training attended
7,900
applicants for
vacant roles
80
people
learning Spanish
OVER
300
people attended
discussion group sessions
150,582
phone calls answered by
customer service team
59,486
customer emails
responded to
OVER
400
Graduate Program
applications
84%
customer service
team Customer
Satisfaction score
1,879,692
Australian customer ads
and edits approved by staff
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 27
WE WORK IN A FAST-PACED AND DYNAMIC BUSINESS ENVIRONMENT, WHICH MEANS THAT ATTRACTING
AND RETAINING THE BEST GLOBAL TALENT IS ESSENTIAL TO OUR SUSTAINED SUCCESS.
Our people are highly skilled, experienced and have our values and behaviours at their core. We are always looking
at ways to provide more opportunities for our team to learn and evolve, and we work hard to provide a diverse
environment that is inclusive and collaborative with a strong social conscience. To achieve this environment, we
promote a culture of feedback so we can continuously improve. Some of our more formal feedback initiatives
include our annual engagement survey and discussion groups.
Agostino Giramondo
Sales and Strategy Director –
OEM and Media
carsales is an extraordinary
business, the opposite of ordinary,
and filled with people exceptional
in character. I know this as I can
compare it to other organisations
I’ve worked with that have all been
good, but not in the league of
carsales. I love being a part of
something that makes a difference
to its customers and employees.
I love that everyone cares and that
you have flexibility when needed.
Every day we have our tasks, but
the workplace is open and I get
to interact with so many smart
and passionate people across
the business. It means I am
always learning.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 28
OUR
PEOPLE CONTINUED
Diversity
We are committed to creating a diverse
and inclusive work environment, with
particular focus on gender equality.
A diverse and inclusive working
environment provides a wide range
of perspectives, innovation and
engagement, and improved operational
performance. To achieve this
environment, we promote a workforce
that embraces and respects diversity
and inclusion through our Diversity
and Inclusion Council, as well as our
Diversity Strategy.
We are proud to have been awarded
the Workforce Gender Equality
Employer of Choice citation for 2016
in recognition of our systematic and
strategic approach to achieving
a gender diverse workplace. We
will continue to strive to exceed
the expectations of WGEA year on
year. In accordance with the Workplace
Gender Equality Act 2012, carsales
submitted a report to WGEA. 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
shareholder.carsales.com.au/Investor-
Centre/.
Katherine Barrett
Senior Product Manager –
Membership
I was a terrible lawyer so I was relieved
to find a home in technology. The
technology network introduced
me to carsales (via a stop with the
government and a start-up), and
now I get to spend my days working
with the research, development and
operations teams to create the best
consumer experience possible. Since
joining carsales I’ve attended my first
AFL game, debated the best beer,
celebrated birthdays, babies, product
releases, perfected my high-five and
taken road trips to see the Toyota
factory and Star Wars.
carsales has really supported my
career development. Last year
when I spoke at the 2016 Product
Management Festival in Switzerland
I stood on stage with a ‘good luck’
card signed by our CEO, COO
and CIO and knew that the whole
team was behind me.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
29
Engaging our people in driving
social change
In 2016 carsales’ began its
commitment to the White Ribbon
Accreditation Program. The ambition
is to prevent men’s violence against
women through raising awareness,
education and support. We are proud
to be taking a corporate leadership
role in what is a significant social
issue in Australia and we recognise this
confronting issue may be impacting our
people and the 2.6 million consumers
we connect with online each month.
We have invested extensively in raising
awareness and have educated all
people managers on how to identify
and support staff directly or indirectly
impacted by domestic of family violence.
Objective 3
Foster an inclusive culture and
environment in which women network
and mentor each other to progress
their careers within carsales.
Initiative
We continued providing women
with mentoring opportunities and
encouraging the women’s networking
group. We also celebrated International
Women’s Day.
Outcome
The FY17 mentor program has over
40 female participants involved.
Our female networking groups hosted
several sessions and the business
collectively celebrated International
Women’s Day with a networking event
and inspiring guest speakers.
Objective 4
Continue to enhance flexible workplace
arrangements for both women and
men. Enabling our people to manage
work/life commitments and preferences.
Initiative
The company continue to provide 12
weeks parental leave and 2 weeks Dad/
Partner leave, as well as supporting part
time options, child care referrals and
flexible re-entry into the business from
a period of parental leave.
Outcome
In FY17, 11 members of the carsales
team took parental leave and carsales
is currently supporting 12 members
of staff with formal flexible working
arrangements.
In addition to our diversity strategy,
we also have a set of specific gender
equality objectives we focus on, as
set out below.
Objective 1
Continue to grow the number
of women in senior roles and
professions where women are
traditionally under represented.
Initiative
Initiatives include ongoing education
of managers on the importance of a
diverse workforce and an executive-led
Diversity Steering Committee.
Continue to maintain quotas for
recruitment shortlists and review all
job advertisements for gender bias.
Outcome
In FY17 64% of appointments
were female and 35% of managerial
appointments were female.
Objective 2
Continue to implement career
development programs to prepare
women within the business to take
on more senior roles.
Initiative
This year we developed a new
leadership program, focused on the
accountabilities of a leader and leading
a high performance team. Additionally
we continued providing training
and development programs including
communication, presentation,
management and influence
skills training.
Created and launched recruitment
for the Next Gear Graduate Program.
Outcome
Our development programs had 35%
female attendance, and 64% of FY17
promotions have been female.
The 2018 Graduate intake has a 50/50
gender split.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
30
OUR
PEOPLE CONTINUED
Community impact
We strive to positively impact the
community and make positive changes
in all markets in which we operate.
The carsales Foundation is a registered
charity, launched in early 2016. It has
embarked on a two year partnership
with Swinburne University and Curtin
University aimed at educating the next
generation, and donates to local
charities through community grants
nominated by our employees.
We are proud to have raised
and contributed close to $50,000 to
our community through these initiatives.
Our people are our best advocates
to drive social impact. One way we
support them is contributing to causes
they care about through the provision
of community days. Over the course
of 2016, our staff participated in
community activities such as the RSPCA
Million Paws Walk, the Cancer Council
warehouse packaging, and the
Melbourne Marathon supporting
White Ribbon.
Engagement
We pride ourselves on having highly
engaged people across the globe.
We are committed to attracting,
retaining, engaging and developing
the best people. We know creating
an engaged workforce will enable
us to continue to lead in product
innovation and customer experience.
Mike Sinclair
Editor in Chief
One measure of a company’s success
is its bottom line. Too often for
commentators and analysts, it is the
only measure. The other, all too easily
glossed over, but arguably just as
important in the long term, is the
capability and the spirit of its people.
As one of those in on the ground floor
of the digital wave, when the ‘modern’
carsales was created with the purchase
of online assets from Nine and PBL, I
arrived from the ‘other side’. My brief
was to create an editorial arm for the
new, bigger and burgeoning business.
To create a public ‘voice’. Truth be
known, even then carsales already had
a compelling voice – its people. With
their enthusiasm and engagement
they spoke clearly to the Company’s
future. But most of all, in their attitude
and actions, they created our future
ASX100 Company’s culture. carsales
is very clearly an automotive business.
It’s very clearly a technology business.
For those of us who have been here
for the duration, it is above all a
people business. In the early days
those people strived to build the
business, to give it a face and an
identity. They spoke of a commitment
to innovation, but, equally and crucially,
acted upon it. Of the original teams
that built the components that created
the carsales we know today, only a
relative handful remain. But much
more importantly, the commitment
to constant growth and improvement
they lived and breathed is embedded
in carsales’ corporate culture.
carsales is a multi-faceted business,
a business whose success will be a
case study for future generations of
commerce students. We have unique
technologies. We have enviable IP.
But most of all, the vital ingredient, the
multiplier that makes it so much more
than the sum of its parts; is its people.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
Learning and development
Our continued commitment to
learning and development has
seen our team attend over 4,000
hours of training and development.
Some of these include mentoring
programs, our annual CEO
scholarship award, leadership
development, conferences, online
learning plus internal and external
training programs.
Graduate Program
The carsales Next Gear Graduate
Program launched this year. Eight
of four hundred applicants will
commence in the commercial,
consumer and technology areas
of business in 2018.
Hackathons
Hackathons are an opportunity
for our people to engage cross
functionally in a freestyle format
aimed at promoting collaboration
and innovation. This year
participation levels were at
a record high, with global first
technology created and launched
in our business.
Engagement survey
Annually we conduct an Employee
Opinion Survey, with improvements
seen year on year. Pleasingly in a
year of significant internal change,
our engagement increased by 6%
and outperformed the specific
‘tech’ industry benchmark.
31
David Campsell
Director International Operations
I joined carsales in 2007 as part
of the merger with CarPoint (and
related businesses) having started
my career back in 1994 with what
was then known as Equipment
Research Group (ERG) before that
business was purchased by Trader
Classifieds in 2000. I’ve seen plenty
of changes in the business during
that time, which have significantly
changed the way we all operate:
changes such as not waiting for
Thursdays, when the Trading Post
was released, to find your next car,
the widespread acceptance of
mobile phones, and the introduction
of social media such as Facebook.
Along the way carsales has always
worked hard to stay up with and
generally ahead of the curve, being
willing to try something new, and
listening to our customers. carsales
has great leaders that provide
a vision for the business
to see it succeed not only here
in Australia, but now in many
countries around the world.
4,000
hours of training and
development attended
by our team
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32
OUR
PEOPLE CONTINUED
I can proudly say working over here
helped me transition comfortably.
It always feels great to be a part
of a workforce that has an amazing
culture and making friends who
are now ‘my mates’.
Over this period, I have witnessed the
change in language of a lot of people
encouraging user centred design; our
users being buyers, sellers, owners,
dealers, etc. Coming from a pure user
experience background, I was always
a strong advocate of understanding
users’ thinking, feelings and emotions
and then translating all of that into
engaging user interfaces and
interactions. With our team having
grown from a very small number to
a large bunch of great UX designers
working cross functionally in this
business, it feels great to spread
all of that research work amongst
everyone here and assist in
design direction.
Richa Khera
Lead UX Researcher
My journey at carsales has been
an interesting two-year rollercoaster so
far. Apart from the challenge
of moving to a new country and
switching to a whole new culture,
Environment
We understand that our resources are
finite and it is important for us to protect
the world we operate in. Whilst the
nature of the carsales business has
a low environmental impact, and we
are not subject to any specific
environmental legislation, the Company
aims to minimise its environmental
footprint. In all Company offices,
carsales promotes recycling by having
bins throughout our offices with a clear
explanation on how to correctly recycle.
We purchase only 100% recycled paper,
enforce printing limits including default
double-sided, black and white printing,
and have implemented timed lights in
all meeting rooms. The carsales head
office in Richmond is certified as
a 4.5 star NABERS-rated building and
the new state of the art Sydney office
is certified as yet to be rated.
carsales has introduced policies to
reduce air travel and increased our use
of video conferencing by implementing
Skype for Business across the
organisation, which are having
a significant impact on both the
Company’s environmental commitments
and our financial targets. We replaced
old mechanical hard drives in our
storage area network with low-power
SSDs (solid state discs) and renewed
our complete bank of printers with
new low-power ENERGY STAR certified
and rated EPEAT Gold devices.
The Company’s move to cloud-based
solutions such as Amazon Web Services
(AWS) helps deliver on our commitment
to reduce our environmental footprint.
Our key partner AWS’s long term goal
is to power the global AWS infrastructure
with 100% renewable energy. AWS
exceeded its goal of 40% renewable
energy by the end of 2016, and has set
a new goal to be powered by 50%
renewable energy by the end of 2017.
By working with AWS, we benefit from
its continuous desire to increase the
energy efficiency of its facilities and
equipment, the innovation of the design
and manufacture of its servers, storage,
and networking equipment to reduce
energy. AWS works with its various
power providers that supply AWS
datacentres around the world to
increase the availability of renewables
in their power supply while maintaining
low prices. AWS has funded 10 wind
and solar power purchase agreement
(PPA) to increase the overall amount
of renewable energy available on the
grids that serve AWS datacentres.
purchasing
100%
recycled paper
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
CORPORATE
GOVERNANCE
33
carsales is committed to being ethical,
transparent and accountable in
everything that the Company does.
We believe this is essential for the long
term performance and sustainability
of our Company and supports the
interests of our shareholders and other
stakeholders. The Board of Directors
is responsible for ensuring that the
Company has an appropriate corporate
governance framework to protect and
enhance Company performance and
build sustainable value for shareholders.
This corporate governance framework
acknowledges the ASX Corporate
Governance Council’s Corporate
Governance Principles and
Recommendations (ASX Principles
and Recommendations) and is
designed to support our business
operations, deliver on our strategy,
monitor performance and manage risk.
Our Corporate Governance
Statement addresses the
recommendations contained
in the third edition of the
ASX Principles and
Recommendations and is
available on our website at
http://shareholder.carsales.com.
au/Investor-Centre/?page=Corpo-
rate-Governance
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 34
OUR LEADERSHIP TEAM
BOARD OF DIRECTORS
Jeffrey Browne
Non-Executive Chair
Cameron McIntyre
Managing Director
and CEO
(from 17 March 2017)
Richard Collins
Non-Executive Deputy
Chair
Wal Pisciotta OAM
Non-Executive Director
and Co-Founder
Kim Anderson
Non-Executive Director
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
as other multi-national
OEMs. Jeffrey is also
Chair of Holden
Special Vehicles and
Moelis Australia.
Jeffrey’s media
experience includes
broad management
responsibilities and
the development
and implementation
of new broadcast
and digital platforms.
Jeffrey brings a wealth
of automotive industry
experience to the
Board, as well as legal
expertise and his
renowned capability
as a strategic thinker
and astute negotiator.
Cameron McIntyre was
appointed Managing
Director and CEO of
carsales.com Limited
in 2017. Prior to this,
Cameron held the
positions of Chief
Operating Officer
(since October 2014),
and Chief Financial
Officer and Company
Secretary for the
previous seven years,
including for the IPO
of the company in
2009. Cameron has
over 23 years of finance
and operational
experience and was
a Non-Executive
Director of iCar Asia
Limited from 2013
until December 2016.
Cameron holds a
degree in Economics
from La Trobe
University, Melbourne,
is a graduate of the
General Management
Program at Harvard
Business School and
is a Certified Practicing
Accountant (CPA).
Cameron’s appointment
enhances the Board’s
financial and regulatory
expertise. Cameron
also brings unparalleled
knowledge of the
business and significant
experience in strategy
and management.
Richard has been a
Director of carsales.
com Limited since
2000 and currently
holds the position
of Deputy Chair of
the Board. Richard
holds a degree in
Commerce from
Melbourne University,
majoring in Economics
and Company Law. He
spent 10 years with the
Ford Motor Company
and has over 30 years’
experience as a Dealer
Principal, currently
holding Ford, Toyota,
Subaru, Suzuki, Isuzu
Ute and Skoda
franchises. Richard
is also a member of
the Board of AADA
(Australian Automotive
Dealer Association)
and the Deputy Chair
of Stratton Finance.
Richard has long acted
as the voice of the
automotive dealer
on the Board,
providing insight into
the Company’s largest
customer segment
with a distinguished
career as a dealer
principal and a
business operator.
Wal has more than
35 years’ experience
in supplying computer
services to the
automotive industry
and is also the Chair
of Pentana Solutions
Pty Ltd. Wal holds a
Bachelor of Science
degree in Business
Administration from
the University of
Alabama (United
States) and was the
Chair of carsales.com
Limited since its
inception until
August 2015. Wal was
recognised with the
Medal of the Order
of Australia for his
services to the
Australian Automotive
Industry in the 2016
Queen’s Birthday
Honours.
Wal brings to the
Board extensive
knowledge of the
IT needs of the
automotive industry
as well as his extensive
knowledge of the
business, having been
a driving force from its
inception.
Kim is the former CEO
and founder of
Reading Room Inc/
Bookstr.com, a
community/social
networking site for
readers. Kim is also
a Non-Executive
Director of WPP
Australia and New
Zealand, Billabong,
and The Sax Institute
and a former Fellow
of the University of
Sydney Senate. Kim
has more than 25
years’ experience
in various advertising
and media executive
positions within
companies such
as Southern Star
Entertainment,
the Nine Network,
PBL and Ninemsn.
Kim provides an
abundance of
experience and
knowledge in the
advertising and
marketing industries.
Kim also has extensive
experience on ASX
listed Boards,
including as Chair
of Remuneration
Committees.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 35
Patrick O’Sullivan
Non-Executive Director
Edwina Gilbert
Non-Executive Director
Steve Kloss
Alternate Non-Executive
Director
Nicole Birman
Company Secretary
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 and is an
experienced board
Director, currently
sitting on six boards in
addition to his position
as Alternate Director
of carsales.com
Limited.
Nicole is an
experienced corporate
lawyer who holds the
position of General
Counsel and Company
Secretary at carsales.
com Limited. Nicole
has a Bachelor of Laws
(Hons) and Bachelor
of Arts from Monash
University. Before
joining carsales, Nicole
acted as in-house legal
counsel with Medibank
Private and REA
Group. Previous to
this Nicole worked
for Minter Ellison, one
of Australia’s premier
legal firms where
her areas of specialty
included intellectual
property law.
Edwina has worked in
the automotive
industry since 2003,
and is currently Dealer
Principal of Gillen
Motors and Director
of Phil Gilbert Motor
Group, managing 200
staff with two brands in
two busy metropolitan
locations. Edwina was
the Chair of the
Hyundai NSW Dealer
Council and a member
of the Hyundai
National Dealer
Council from 2010 -
2015. Edwina holds a
Bachelor of Laws and
Bachelor of Arts from
Sydney University and
practiced commercial
law before moving into
the automotive
industry.
Edwina brings
significant OEM
knowledge along with
experience operating
dealerships with a
`digital first’ marketing
approach. Edwina’s
background in law also
contributes to the
regulatory capabilities
of the Board.
Pat has been a Director
of the Company since
2007 and 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 until 29
June 2012. Pat is a
member of The
Institute of Chartered
Accountants in Ireland
and Australia. He 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 Chair
of Ninemsn. Pat is
currently a Non-
Executive Director of
iSentia, APN Outdoor,
Little Company of
Mary Health Care and
Chair of HealthEngine
and LocalAgentFinder.
Pat brings immense
financial and regulatory
expertise to the Board,
Chairing the Audit and
Risk Management
Committee. Pat also
provides the Board
with insights relating to
operations of global
companies.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 36
OUR LEADERSHIP TEAM CONTINUED
EXECUTIVE LEADERSHIP TEAM
Michael Holmes
Executive Director
Dealer
Kellie Cordner
Chief Marketing Officer
Jason Blackman
Chief Information
Officer
Lisa Sheehan
(contract – maternity
leave cover for Jo Allan)
Chief People Officer
Cameron McIntyre
Managing Director
and CEO
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 37
Ajay Bhatia
Managing Director
Consumer Business
Paul Barlow
Managing Director
International
Nicole Birman
General Counsel and
Company Secretary
Anthony Saines
Managing Director
Commercial
Andrew Demery
Chief Financial Officer
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 38
OUR REMUNERATION CHAIR’S REPORT
Dear Shareholder
As Chair of carsales’ Remuneration and Nomination Committee, I am pleased to present
our Remuneration Report for FY17.
The objective of our remuneration principles is to attract and retain talented Senior
Executives who will create sustainable shareholder value. As a Board, we firmly believe
that reward for performance should be competitive but not excessive and should be
appropriate for the results delivered in the short and long term, aligning with shareholder
outcomes.
The company’s ability to attract and retain the high-calibre executives required to lead
this growing and increasingly complex and global business is important for shareholders.
We are mindful of this and have tried to balance these competitive pressures with the
requirements of shareholders when determining Senior Executive pay.
The 2016 AGM remuneration vote was a clear message to the Board about how Senior Executive pay is managed and disclosed.
The Committee made a commitment to respond in a constructive way and has undertaken a comprehensive review of the
remuneration policies for our Senior Executives.
Since the AGM, we have appointed new independent remuneration advisers and approached our review with an open mind.
We have held extensive dialogue with many of our largest shareholders as well as representative bodies and proxy advisors
during the year. We have listened and sought to respond to your concerns. I would like to thank all those who took part in the
process for their time and insight. It is clear that shareholders and other stakeholders would like our remuneration policy to be
simpler and more transparent, and for us to reduce the perceived high levels of fixed remuneration for the CEO in FY16.
We have made a number of significant changes to our remuneration policies, plans and disclosures which will make them
simpler and better align pay and performance. We have brought forward many of these improvements into FY17 and where
relevant used principles from our new policies in making our decisions for pay in FY17 ahead of the introduction of the Short
Term Incentive (STI) and Long Term Incentive (LTI) plans in FY18.
As set out in the following report the key changes to the policies include:
• a simplified remuneration package for the incoming CEO comprising salary, STI and LTI components,
with clear caps for the maximum that can be earned under each;
• increasing the proportion of variable ‘at risk’ compensation in the incoming CEO’s package; and
• increased transparency through disclosure of the caps applied to the STIs awarded to Senior Executives,
including more information in circumstances where discretion has been applied.
The change in CEO during the year gave us the opportunity to demonstrate our commitment to enhanced transparency
of remuneration packages, with full details of Mr McIntyre’s salary package disclosed upon his appointment.
The Board considers the total remuneration outcome for each Senior Executive is commensurate with the overall performance
of the Group in FY17 and the increased responsibilities resulting from the appointment of the new CEO in March 2017.
carsales is committed to ensuring the Remuneration Report presents Senior Executive remuneration in a consistent, transparent
and straightforward manner, while complying with the Corporations Act 2001. As in previous years, in this report the Company
is voluntarily disclosing the actual cash remuneration received by Senior Executives, in addition to the statutory reporting
obligations. The Remuneration and Nomination Committee believes that carsales’ remuneration framework is fully aligned
with and supports the Group’s financial and strategic goals now and into the future.
Yours sincerely
Kim Anderson
Chair of the Remuneration and Nomination Committee
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 39
REMUNERATION REPORT
The remuneration report is set out under the following main headings:
1. Addressing shareholder feedback from the 2016 AGM
2. Remuneration principles
3. Company 5 year financial performance
4. Remuneration snapshot
5. Remuneration outcomes
6. Non-Executive Directors’ remuneration
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 CEO, Senior Executives and Non-Executive Directors (together Key Management Personnel).
The term ‘Senior Executives’ refers to the CEO and those executives with responsibility and authority for planning, directing and
controlling the activities of the Company throughout the year, namely:
Greg Roebuck
Cameron McIntyre Managing Director and Chief Executive Officer (appointed 17 March 2017)
Managing Director and Chief Executive Officer (retired 17 March 2017)
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites
– formerly Chief Operating Officer
Managing Director Consumer Business
Managing Director Commercial
Managing Director International
Director – Dealer (resigned 22 March 2017)
There were no changes in KMPs between 30 June 2017 and the date of publication.
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
1. Addressing shareholder feedback from the 2016 AGM
Following the 2016 AGM, the Remuneration and Nomination Committee and entire Board reviewed the Company’s
remuneration practices and instituted a number of changes, detailed below.
1.1 Shareholder feedback and action taken to address concerns
As a result of shareholder concerns expressed last year, the Board has engaged with various stakeholders (including investors
and proxy advisors) and a remuneration advisor (Ernst & Young) during the year to consider how best to address the issues
raised. As a direct result of this, the Board has instituted changes in the Company’s remuneration practices and disclosures.
Details of the shareholder concerns and the Company’s actions to address those concerns are set out in the following table:
Shareholder Feedback / Concern
Company’s Response
CEO’s package: perceived above
market fixed remuneration for
the CEO; non-monetary benefits
provided to the CEO.
The salary of the CEO in FY16 was unique given the circumstances of the CEO
at the time (Greg Roebuck). As a founder of the business and the long term CEO,
Mr Roebuck was already a significant shareholder in the Company and as he was
approaching retirement the Board took unusual measures to provide Mr Roebuck
with remuneration in a form that would keep him engaged as long as possible.
These measures involved awarding Mr Roebuck a fixed base salary and non-monetary
benefits such as a travel allowance that was higher in comparison to the relative
amounts awarded under the variable share based incentive plans. The travel allowance
was designed to promote regular breaks from the business for Mr Roebuck to increase
his longevity as CEO and allow him the opportunity to consider strategic issues
affecting the business away from the day to day demands of his role.
In designing the remuneration package for the new CEO, Mr McIntyre, the Board
took into account shareholders’ concerns over Mr Roebuck’s package. Mr McIntyre’s
package comprises a fixed salary significantly lower than Mr Roebuck’s salary. Further,
the ratio between Mr McIntyre’s fixed vs variable salary is 35% fixed vs 65% variable
(30% short term incentive and 35% long term incentive). The Board considers that
Mr McIntyre’s remuneration is appropriate, is in line with his peers and reflects his
experience and shareholding in the Company.
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40
REMUNERATION REPORT
CONTINUED
Short Term Incentive: significant
discretion applied by the Board in
determining the CEO’s short term
incentive payment with a lack of
transparency in how the discretion was
applied; limited disclosures on
maximum STI opportunity.
The Board has undertaken a wholesale review of the Company’s short term incentive
(STI) and long term incentive (LTI) plans with a view to creating a simpler and more
transparent plan. Due to the timing of the 2016 AGM and period of review, which
included obtaining advice from remuneration experts, these changes were not able
to be introduced in time for FY17, and will be in effect from FY18. Specific details
of the Company’s FY18 STI and LTI plans are set out below in section 1.2.
In relation to the discretion applied to the CEO’s STI payment, the previous Company
STI plan included a portion that was reserved for Board discretion separate to the
measures used to determine the other payments under the plan. The new Company
STI (from FY18) removes this separate Board discretion component, and applies Board
discretion as an overlay, or a ‘sanity check’ to ensure the outcome of the plan is in line
with overall company and individual performance. To ensure transparency, when the
Board uses discretion in the awarding of an STI, an explanation will be provided.
In response to the concerns over the inability of shareholders to determine the
maximum STI opportunity for the CEO and other Senior Executives of the Company,
the Company has introduced disclosures setting out the dollar amount of the maximum
STI opportunity for each Senior Executive and showing the outcome of the STI as
a dollar amount, as a percentage of the on target earnings and of the maximum
STI opportunity for the relevant Senior Executive.
Long term incentive: limited disclosure
of performance targets.
The Company has considered feedback from some shareholders wishing to see
the performance targets for STI and LTI plans upfront. The Company also received
feedback from other shareholders who accept the sensitivity in disclosing targets
in the circumstances that the Company does not provide guidance on its results.
The Company believes that its current practice of disclosing its targets retrospectively
is appropriate and will continue to do so. However, the Company will make efforts to
provide further explanation on how the targets were determined when disclosing the
targets retrospectively.
The Company only refers to general statements around specific projects relevant to its
STI and LTI plans. The Company will continue this practice to ensure it does not reveal
important strategic information to its competitors.
Senior Executives have not received any LTI over the past two years despite the
Company delivering record results. As a result the Board has overhauled the LTI
plan, to better reflect the Company’s strategic objectives, and simplified the incentive
program to ensure it provides adequate incentives and recognises an executive’s
contribution to the overall performance of the Company.
Throughout this Remuneration Report, the Company has provided additional
commentary around matters on which shareholders indicated a desire for more
transparency.
This includes commentary around application of Board discretion; explanations
of role changes that contributed to remuneration decisions; and details of maximum
payment caps of STIs. This new approach was first evidenced in the ASX announcement
of the new CEO, which contained additional disclosures than in previous Remuneration
Reports. The announcement included Mr McIntyre’s fixed remuneration, maximum STI
opportunity (both as a dollar value and as a percentage of fixed remuneration) and the
maximum LTI opportunity subject to shareholder approval.
Disclosures and transparency: general
appetite for further disclosures by the
Company on relevant matters,
increasing the transparency of
remuneration practices.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
41
1.2 New STI and LTI plans from FY18
Following feedback from the 2016 AGM on the FY16 Remuneration Report, the Company has adopted a new incentive plan
for its Senior Executives to be applied from FY18.
1.2.1 FY18 Short Term Incentive Plan
From FY18, the Company will make awards under a new STI plan with the major components being, 70% financial, and
30% company-wide strategic, personal, and cultural objectives.
70% Financial Measures
Under the new STI plan, 70% of the award will be measured against two separate financial metrics (each comprising 35%
of the total STI award). For each measure there will be a minimum threshold – if this is not achieved, there will not be any award
for that portion of the STI. These financial metrics will be look-through revenue and Adjusted Net Profit After Tax (adjusted NPAT).
30% Strategic Objectives
The 30% Strategic Objectives portion of the STI will be measured against:
• successful project delivery recognising the importance of strategic projects which may not have an immediate financial impact
on the Company;
• achievement of people and culture targets recognising the vital role the Company’s culture plays in its success; and
• individual goals of the executive recognising the unique role each of our executives play in the Company’s operations.
The FY18 plan does not include a DSTI. Instead, 25% of the total STI payable to each Senior Executive will be deferred
for an additional 12 months in equity, subject to a continued service condition.
In addition, the previous Board discretion as a separate component will be removed from the STI plan. The Board will maintain
discretion to review the performance against individual targets and the overall outcome of the STI award and ensure it is
congruent with the overall performance of the Company and of the individual Senior Executive, within the participant’s
maximum STI opportunity.
The maximum STI payable for Senior Executives will be capped at 60% of base salary (including superannuation), except for the
CEO, who has a cap of 87% of base salary (including superannuation).
1.2.2 FY18 Long Term Incentive Plan
From FY18, the Company will make awards under a new LTI plan.
Under the new LTI plan, 70% of the award will be determined by a revenue and earnings matrix and will be awarded in
performance rights. The remaining 30% of the award will be determined by reference to achievement of clearly identified
strategic milestones and will be awarded in options. The performance period for the LTI will remain at three years.
The revenue and earnings matrix recognises the importance of both of revenue and earnings growth to the Company’s long
term financial performance and by including a minimum ‘gate’ threshold for both these metrics that must be achieved in the
performance period prior to any performance rights vesting, ensures that executives are incentivised to grow both earnings
and revenue, and not sacrifice one over the other. Similarly, it aligns the objectives of the Senior Executives with those of the
Company’s shareholders.
The inclusion of strategic milestones recognises that there are important projects the Company is undertaking to promote
future sustainability and growth, and these should not be sacrificed for short term return. The fact that the award for the
successful completion of the strategic milestones will be paid in options aligns with the expected long term benefit
of these projects.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
42
REMUNERATION REPORT
CONTINUED
2. Remuneration principles
2.1 Principles used to determine the nature and amount of remuneration for FY17
The governance of Senior Executive remuneration is a core focus of the Remuneration and Nomination Committee, which
ensures that remuneration outcomes for our Senior Executives align with Company performance. The objective of the
Company’s executive remuneration framework is to ensure reward for performance is competitive and appropriate for the
results delivered. The framework aligns Senior Executive remuneration with the achievement of strategic objectives,
the creation of value for shareholders and is informed by market practice for delivery of reward.
The Board ensures that the Senior Executive remuneration framework satisfies the following key criteria for good remuneration
governance practices:
Alignment to shareholders’ interests:
• Has economic profit as a core component of plan design.
• Focuses on sustained growth in shareholder return, consisting of dividends, growth in share price, constant return on assets
as well as focuses on key non-financial drivers of value such as innovation and culture.
• Attracts and retains high caliber executives.
• Transparency.
Alignment to participants’ interests:
• Rewards capability and experience.
• Reflects competitive remuneration for contribution to growth in shareholder wealth.
• Provides a clear structure and goals for earning remuneration.
• Provides recognition for contribution to operational performance.
To ensure the remuneration framework is market competitive and therefore most likely to ensure the retention of talent,
the Company will from time to time benchmark remuneration structures against relevant peers.
The Company considers relevant peers to be ASX listed companies that are similar in size, structure and industry to that of
carsales. The Company accepts that while this peer group is small it is the most relevant group from which talent competition
arises. Increasingly the Company considers global competitors for talent to be relevant, but has focused on companies with
an Australian presence for the purposes of this remuneration framework in the current year.
So that the Remuneration and Nomination Committee is fully informed of market best practices, trends, regulatory
developments and shareholder views, the Company engaged Ernst & Young (EY) to conduct a number of remuneration reviews
during the financial year including:
• benchmarking of the remuneration of the Senior Executives;
• a review of the Company’s Short Term Incentive program (STI); and
• a review of the Company’s Long Term Incentive (LTI) program.
EY was engaged by and reported directly to the Chair of the Remuneration and Nomination Committee. The report prepared
by EY was provided directly to the Chair of the Remuneration and Nomination Committee and did not include remuneration
recommendations. The Company notes that no remuneration recommendations were received from external parties in 2017.
The report by EY provided input into the Remuneration Committee’s decision-making processes and was considered along
with other factors in establishing the Company’s new STI and LTI programs.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
43
2.2 Service conditions
All Senior Executives have service agreements determining cash salary, superannuation, 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. The termination notice period is 6 months
by either party and there is a 6 month non-compete period.
All Senior Executives are entitled to participate in the STI, DSTI and LTI plans. The separate DSTI plan has been removed for
FY18. From FY18 a portion of the STI achievement will be deferred for 12 months.
2.3 Executive remuneration for FY17
The Senior Executive remuneration framework for FY17 had five components:
• Cash salary and superannuation.
• Short term incentives.
• Deferred incentives.
• Long term incentives.
• Other benefits.
2.3.1 Cash salary and superannuation
Senior Executives are offered a competitive cash salary and superannuation package. These are structured as a total employment
cost package that may be delivered as a combination of cash and prescribed non-financial benefits at the Senior Executive’s
discretion. Each Senior Executive’s package is reviewed annually, or subsequent to promotion, by the Remuneration
and Nomination Committee, to ensure the Senior Executive’s pay is competitive within the market and is in line with
Company policies.
There is no guaranteed cash salary and superannuation increase included in any Senior Executive’s contract.
Statutory retirement benefits are provided via contributions to approved superannuation funds. Under current legislation
carsales permits superannuation choice for all employees. The Company default superannuation fund is held with MLC.
2.3.2 Short Term Incentives
STIs are paid to Senior Executives in the form of an annual cash payment on the achievement of objectives as described below.
The size of the STI opportunity available to each Senior Executive is based on their accountabilities and impact of their role on
the organisation or business unit(s) which they lead.
The Remuneration and Nomination Committee annually considers appropriate targets and key performance indicators (KPIs)
to link the STI plan and the level of payout if targets are met. This includes recommending to the Board the maximum payout
under the STI plan and minimum levels of performance to trigger payment of an STI.
The Remuneration and Nomination Committee is responsible for assessing whether the KPIs are met and whether or not STIs
will be paid. The STI plan makes provision for adjustments up or down in line with under or over achievement against the target
performance levels. In addition, the Board, in consultation with the Remuneration and Nomination Committee, has discretion
to adjust STI payments on the basis of performance of the individual or the Company as a whole, subject always to the
maximum STI opportunity of the Senior Executive.
Senior Executives that leave during the relevant period may be paid a portion of their STI at the Board’s discretion. In the case
of a good leaver the Board may grant a pro-rata share of their STI entitlements. Where a Senior Executive is a bad leaver and
departs under adverse circumstances no pro-rata share is granted.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 44
REMUNERATION REPORT
CONTINUED
2.3.2.1 FY17 STI Plan Structure
The KPIs linked to STI plans contain 3 major components and within each component are a series of objectives:
• Financial performance (70% of On-target Earnings Value): The financial objectives set against key financial targets relate
to performance against Board approved annual financial objectives of the Company. The targets set in this component
of the plan will normally relate to the achievement against:
1. Company EBITDA and
2. Company Net Profit After Tax (NPAT).
This section of the plan enables the Senior Executive to earn up to an additional 70% of on-target earnings for over achievement
against each of the above mentioned objectives.
Financial objectives are always set ensuring that the Company is mindful of expected consensus earnings expectations.
• Project delivery (20% of On-target Earnings Value): The project objectives involve the execution of pre-determined project
targets for which each Senior Executive is responsible. Projects may include the deployment of new products and technology,
developing new markets or improving particular important performance metrics.
This section of the plan enables the Senior Executive to earn up to an additional 4% of on-target earnings for over achievement
against each of the above mentioned objectives.
• People and culture (10% 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 Senior Executives are incentivised to nurture and build on these principles and values.
Each Senior Executive has performance objectives to ensure there is ongoing development and enhancement of Company
culture. The performance of this is measured through the annual Employee Engagement Survey.
This section of the plan enables the Senior Executive to earn up to an additional 2% of on-target earnings for over achievement
against the above mentioned objective.
2.3.3 Deferred Short Term Incentives
Deferred Short Term Incentives (DSTI) are paid to Senior Executives in the form of an annual award of performance rights
on the achievement of determined objectives and are not exercisable for a further 12 months after the testing date.
2.3.3.1 FY17 DSTI Plan Structure
The vesting of performance rights is subject to the achievement of a financial year ending 30 June 2017 earnings per share
(EPS) target but is only exercisable 12 months post that testing date.
The minimum and maximum EPS targets for the performance rights to vest have been set by the Board. In considering the
appropriate EPS targets, 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,
including the level of investment required in early stage adjacent businesses over the year.
Performance rights will not be capable of exercise if at the testing date the minimum targeted growth rate has not been
achieved.
Performance rights are 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, 70% 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 70% 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 are tested at 30 June 2017.
Subject to the performance conditions being satisfied, performance rights may be exercised after the Board releases the 2018
Annual Report to the ASX.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
45
2.3.4 Long Term Incentives
LTIs are provided to eligible employees via the carsales.com Ltd Employee Option Plan which was established via a prospectus
lodged with ASIC in 2000. Upon recommendation by the Remuneration and Nomination Committee, the Board determines who
shall be eligible to participate in the plan. The LTI is intended to incentivise management to deliver high performance outcomes
over the long term in a structure that aligns with the interests of shareholders.
The LTI awards are a combination of options and performance rights under this plan and 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 targets have been achieved. The Company’s LTI presently
has a 3-year vesting period.
Options and performance rights issued to the CEO contain the same terms, conditions and performance targets as those issued
to Senior Executives.
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 retain unvested options and performance rights and exercise them in a future period
when they vest.
There are three years of unvested LTI awards which have performance periods that include the FY17 financial year as follows:
Financial year of grant
FY15
FY16
FY17
Performance period
1 July 2014 – 30 June 2017
1 July 2015 – 30 June 2018
1 July 2016 – 30 June 2019
Relevant performance
year to determine vesting
FY17
FY18
FY19
Vesting date
August 2017
August 2018
August 2019
The FY15 award has been performance tested in the FY17 year and the amount of the award vesting is set out in section 5.4.
The vesting of the LTI is subject to the achievement of an EPS target (FY15, FY16 and FY17 awards) and a Relative Total Shareholder
Return (RTSR) target (FY17 award only) with a testing date of 30 June in the relevant year and are exercisable after the Board
releases the Annual Report to the ASX for that year. The minimum and maximum EPS and RTSR targets for the options and
performance rights have been set by the Board. The rationale for the choice of EPS as a target has been historically as a result
of having only a small pool of relevant comparable peers, being other ASX listed online corporations, and the direct alignment
to changes in shareholder wealth. However following feedback from shareholders who sought an additional performance metric
be added by the Company to the LTI plan, the Board introduced a second performance measure being Relative Total Shareholder
Return (RTSR) for awards made under the FY17 LTI plan, as well as the EPS target.
In considering the appropriate EPS target, the Board uses 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 a significant compound annual growth rate (CAGR) in EPS between
the baseline year and the testing year.
The Company will publish in its 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 46
REMUNERATION REPORT
CONTINUED
Options and performance rights subject to the EPS target will be capable of exercise, at the relevant testing date if the EPS
target for the relevant period has been achieved or exceeded as follows:
• if the EPS achieved is equal to the minimum target, 70% 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; and
• 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 70% and 100%.
The RTSR metric measures the returns provided to carsales.com Ltd shareholders over a 3 year period from 1 July 2016
to 30 June 2019, including movements in share price and dividends paid. The RTSR metric is adjusted for any significant
corporate share capital restructuring (for example a stock split or rights issue). The company’s actual TSR is then compared
against a comparator group to create a RTSR metric.
The comparator group used in the RTSR calculation is the ASX200 as at 30 June 2016. The company has selected this
comparator group as there are not enough similar domestic peers of appropriate size and risk profile to make a customised
comparator group meaningful.
Options and performance rights subject to the RTSR target will be capable of exercise, at the relevant testing date if the
RTSR target for the relevant period has been achieved or exceeded as follows:
• if the relative ranking against the comparator group is below the 50th percentile no performance rights or options
will be capable of exercise;
• if the relative ranking against the comparator group is at the 50th percentile 50% performance rights or options will be
capable of exercise;
• if the relative ranking against the comparator group is between the 50th percentile and the 75th percentile performance rights
or options will be capable of exercise on a straight line pro-rata basis from 50% to 100%; and
• if the relative ranking against the comparator group is at or above the 75th percentile 100% performance rights or options will
be capable of exercise.
The expiry date of the FY15 and FY16 awards are five years from the grant date and the FY17 award is 15 years from the grant
date. The expiry date for the FY17 and all future equity based awards was extended to 15 years as a result of the review by
EY to bring the award program into line with market best practice.
2.3.5 Other benefits
Senior Executives receive salary continuance insurance cover that is also provided to all other carsales employees. The policy
is held with OnePath Life Ltd, but is not allocated on an individual employee basis.
In addition, the former CEO was provided with a paid travel benefit during the year which includes the cost
of fringe benefit tax (FBT).
2.4 Non-Executive Directors
Fees and payments to Non-Executive Directors are determined by the demands that are made on their time, as well as their
responsibilities. Non-Executive Directors receive fixed, rather than variable pay.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 47
3. Company 5 year financial performance
The graphs below demonstrate carsales’ financial performance over the past five years along with how that performance has
translated to shareholders in the form of earnings per share (EPS), share price performance and to Key Management Personnel
(KMP) total remuneration shown as a percentage of adjusted profit for the year.
Adjusted EPS and KMP
remuneration
Dividend payment
and ratio
Share price and movement
percentage
s
t
n
e
c
S
P
E
d
e
t
s
u
d
A
j
50
40
30
20
10
0
10
100
%
o
i
t
a
R
m
$
’
8
6
4
2
0
90
80
70
60
50
40
30
100
90
14.0
12.0
10.0
80
%
o
i
t
a
R
$
70
60
8.0
6.0
4.0
2.0
0.0
60
40
20
0
-20
-40
%
t
n
e
m
e
v
o
M
FY13
FY14 FY15 FY16 FY17
FY13
FY14 FY15 FY16 FY17
FY13
FY14 FY15 FY16 FY17
Adjusted EPS
Dividend payments in respective year
Closing share price
KMP % of adjusted NPAT
Dividend payout ratio %
Share price movement (cents)
Dividend payment for FY15 includes a special dividend of 1.4 cents per share ($3,361,000).
4. Remuneration snapshot
4.1 Cash based benefits that were realised in FY17
To make it easier for our shareholders to understand the actual amounts the Company’s KMPs received in the current financial
year, the Company has opted to include additional disclosures to those required under the Australian Accounting Standards
and the Corporations Act 2001.
The figures in the tables below are in addition to the disclosures made in section 4.2 (which provides a breakdown of Senior
Executive remuneration in accordance with statutory requirements and Australian Accounting Standards) The following tables
below are designed to reflect value of benefits that have actually been received by the Non-Executive Directors and Senior
Executives in FY16 and FY17 rather than the value received on an accounting treatment basis and have not been prepared
in accordance with the Australian Accounting Standards.
The approach to presenting the tables below has been as follows:
• The amounts shown in the table include cash salary (which includes superannuation), non-monetary benefits and STI payable
in cash under the STI plan in respect of that year.
• The DSTI and LTI that has been earned as a result of performance in previous financial years but was subject to a restriction
period that ended either in June or August 2017 (June or August 2016 for the FY16 financial year).
• The DSTI value in the table reflects the net value of shares received by the Senior Executive. The net value is calculated
as the quantity of shares received at the 30 June 2017 closing share price (30 June 2016 closing share price for the FY16
financial year).
• The LTI values in the table reflect the net value of options and shares received by the Senior Executive. The net value is
calculated as the quantity of shares and options received at the 30 June 2017 share price (30 June 2016 closing share price
for the FY16 financial year), less the exercise cost of converting options to shares.
• The 2016 table is presented on the same basis as 2017 unless specified otherwise.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
48
REMUNERATION REPORT
CONTINUED
2017
Name
Jeffrey Browne
Richard Collins
Wal Pisciotta
Pat O’Sullivan
Kim Anderson
Edwina Gilbert
Steve Kloss (Alternate)
Sub-total Non-Executive
Directors
Executive Directors
Greg Roebuck
(Retired 17/03/2017)
Cameron McIntyre (i)
(Appointed 17/03/2017)
Other Senior Executives
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites (ii)
Total Key Management
Personnel compensation
(Group)
Cash salary
(includes
super-
annuation)
$
290,909
216,250
120,000
175,000
171,023
140,833
110,000
Non-
monetary
benefits
$
-
-
-
-
-
-
-
Value of DSTI
performance
rights that
became
unrestricted
$
-
-
-
-
-
-
-
Value of
LTI that
became
unrestricted
$
-
-
-
-
-
-
-
Other
$
-
-
-
-
-
-
-
STI payable
as cash
$
-
-
-
-
-
-
-
1,224,015
-
-
-
1,400,461
61,387
2,245,215
257,250
-
-
1,189,196
743,751
669,876
561,126
309,959
-
-
-
-
-
-
-
-
-
-
322,500
105,403
155,575
208,250
161,700
102,900
57,969
58,181
42,163
28,984
6,098,384
61,387
2,245,215
1,208,175
292,700
-
-
-
-
-
-
-
-
FY17
total $
290,909
216,250
120,000
175,000
171,023
140,833
110,000
1,224,015
3,964,313
1,617,099
957,295
936,307
764,989
441,843
9,905,861
Cameron McIntyre was a Senior Executive for the entire year, as Chief Operating Officer up until his appointment as Managing Director and CEO on 17 March 2017.
(i)
(ii) Chris Polites resigned on 22 March 2017 and ceased being a Senior Executive from that date.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
2016
Name
Jeffrey Browne
Richard Collins
Wal Pisciotta
Pat O’Sullivan
Kim Anderson
Edwina Gilbert
Steve Kloss (Alternate)
Sub-total Non-Executive Directors
Executive Director
Greg Roebuck
Other Senior Executives
Cameron McIntyre
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites
Total Key Management Personnel
compensation (Group)
Cash salary
(includes
super-
annuation)
$
227,871
216,266
129,538
175,000
166,253
21,428
110,000
1,046,356
Non-
monetary
benefits
$
-
-
-
-
-
-
-
-
STI payable
as cash
$
-
-
-
-
-
-
-
-
Value of DSTI
performance
rights that
became
unrestricted $
-
-
-
-
-
-
-
-
1,900,000
268,093
970,000
1,100,000
700,000
630,000
530,000
500,000
19,127
-
-
-
-
350,000
165,000
226,000
165,000
200,000
6,406,356
287,220
2,076,000
-
-
-
-
-
-
-
Value of
LTI that
became
unrestricted
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
FY16
total $
227,871
216,266
129,538
175,000
166,253
21,428
110,000
1,046,356
3,138,093
1,469,127
865,000
856,000
695,000
700,000
8,769,576
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REMUNERATION REPORT
CONTINUED
4.2 Accounting based benefits
The tables below have been prepared in accordance with the requirements of the Corporations Act and relevant Australian
Accounting Standards. The figures provided under the share based payments columns are based on accounting values and
do not reflect actual cash amounts received by Senior Executives in FY17.
2017
Short term
employee benefits
Deferred
Short Term
Incentive
Post-
employment
benefits
Long
term
benefits
Share-based
payments (i)
Other
Cash
salary
and fees
$
Non-
monetary
benefits
$
Cash
bonus
$
Performance
rights
$
Superannuation
$
Long service
leave
$
Options
$
Performance
rights
$
Other
$
Total
$
Non-Executive
Directors
Jeffrey Browne
Richard Collins
Wal Pisciotta
Pat O’Sullivan
Kim Anderson
Edwina Gilbert
Steve Kloss
(Alternate)
290,909
197,489
120,000
159,817
159,636
128,615
110,000
Sub-total Non-
Executive Directors 1,166,466
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,761
-
15,183
11,387
12,218
-
57,549
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
290,909
216,250
120,000
175,000
171,023
140,833
110,000
- 1,224,015
Executive Directors
Greg Roebuck
(Retired
17/03/2017)
Cameron McIntyre (ii)
(Appointed
17/03/2017)
Other Senior
Executives
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites (iii)
Total Key
Management
Personnel
compensation
(Group)
1,375,942
257,250
61,387
(19,637)
24,519
141,160
(382,245)
(446,583) 986,107 1,997,900
1,169,580
322,500
724,135
650,260
541,510
295,901
155,575
208,250
161,700
102,900
-
-
-
-
-
92,643
19,616
80,037
(5,880)
15,241
- 1,693,737
50,951
51,136
37,059
15,000
19,616
19,616
19,616
14,058
14,669
12,946
10,198
3,593
1,963
(1,555)
2,427
(35,857)
8,975
12,100
6,486
(33,322)
-
-
-
-
975,884
952,753
778,996
362,273
5,923,794 1,208,175
61,387
227,152
174,590
262,603 (421,147)
(437,103) 986,107 7,985,558
(i)
The negative share based payments reflect the reversal of the accounting provision for the FY17 Long Term Incentive award which did not meet the minimum
threshold required for performance rights to vest, and for Mr Roebuck the lapsing of the FY18 LTI award on his retirement.
(ii) Cameron McIntyre was a Senior Executive for the entire year, as Chief Operating Officer up until his appointment as Managing Director and CEO on 17 March 2017.
(iii) Chris Polites resigned on 22 March 2017 and ceased being a Senior Executive from that date.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
51
Total
$
227,871
216,266
129,538
175,000
166,253
21,428
110,000
1,046,356
Non-Executive
Directors
Jeffrey Browne
Richard Collins
Wal Pisciotta
Pat O’Sullivan
Kim Anderson
Edwina Gilbert
Steve Kloss
(Alternate)
Sub-total Non-
Executive Directors
Executive Directors
Greg Roebuck
(Retired 17/03/2017)
Other Senior
Executives
Cameron McIntyre
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites
Total Key
Management
Personnel
compensation
(Group)
2016
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 (i)
Options
$
Performance
rights
$
227,871
197,503
129,538
159,817
155,280
19,569
110,000
999,578
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,763
-
15,183
10,973
1,859
-
46,778
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,880,692
970,000
268,093
54,386
19,308
52,149
(27,475)
38,314
3,255,467
1,080,692
680,692
610,692
510,692
480,692
350,000
165,000
226,000
165,000
200,000
19,127
-
-
-
-
46,309
25,470
25,562
16,428
12,733
19,308
19,308
19,308
19,308
19,308
15,413
28,690
19,531
14,938
6,526
9,581
5,625
5,574
4,033
2,704
10,258
4,377
6,207
2,348
2,366
1,550,688
929,162
912,874
732,747
724,329
6,243,730
2,076,000
287,220
180,888
162,626
137,247
42
63,870
9,151,623
(i)
The negative share based payments reflect the reversal of the accounting provision for the FY16 Long Term Incentive award which did not meet the minimum
threshold required for performance rights to vest.
5. Remuneration outcomes
5.1 Salary
Annual cash salary and superannuation entitlements of Senior Executives for FY17 is set out below:
Name
G Roebuck (i)
C McIntyre(ii)
A Bhatia
A Saines
P Barlow
C Polites (i)
(ii)
Annual cash salary and superannuation
from 1 July 2016 to 31 March 2017
$1,900,000
$1,150,000
$730,000
$656,500
$551,500
$532,500
Annual cash salary and superannuation
from 1 April 2017 to 30 June 2017
-
$1,269,615
$785,000
$710,000
$590,000
-
(i) Greg Roebuck and Chris Polites resigned effective 17 March and 22nd March 2017 respectively and were no longer considered Senior Executives from those dates.
(ii) Cameron McIntyre’s CEO salary of $1,269,615 changed on 17 March 2017 when he was appointed to the role.
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52
REMUNERATION REPORT
CONTINUED
The figures in each column of the table above are presented as annualised salary figures, rather than the actual amount paid
in respect of each period. Actual cash paid to each Senior Executive is shown in the cash remuneration tables in section 4.1.
All Senior Executives except for Greg Roebuck received a salary increase on 1 July 2016. The increases in cash salary and
superannuation awarded by the Board for the period commencing 1 July 2016 were less than 10% compared to the salary
for the FY16 financial year.
As a result of the appointment of a new CEO from 17 March 2017 the Executive Leadership Team was restructured along
with the roles and responsibilities of the Senior Executives impacted effective from 1 April 2017 and annual cash salary and
superannuation was increased for each of the Senior Executives reflecting their increased responsibilities. The salaries set
out above for the period 1 April 2017 to 30 June 2017 will continue to apply for the FY18 year.
As part of the new structure the role of Chief Operating Officer was not replaced. Anthony Saines (previously responsible for
media and manufacturer revenue) was promoted to Managing Director Commercial and took responsibility for all of the Group’s
domestic revenue from commercial customers. Ajay Bhatia (previously CIO) was promoted to Managing Director Consumer
Business and took responsibility for all of the Group’s domestic consumer revenue. Paul Barlow was promoted to Managing
Director International and continues his responsibilities for the Group’s expanding international businesses and revenues.
No Senior Executive elected to receive any proportion of their salary package in the form of non-financial benefits.
5.2 FY17 STI payments (cash bonus) plan outcomes
The Board has conducted an assessment of the performance of plan objectives and the information below describes each
component of the plan’s performance outcomes.
To protect the commercial sensitivity of each objective outcome the Company has used the following references and applied
a relevant reference to the plan objective:
Exceeded – The actual objective outcome exceeded the target objective outcome.
On target – The actual objective outcome was equal to the target objective outcome.
Partial achievement – The actual objective outcome while below the target objective outcome was still high enough
that some achievement was reported.
Missed – The actual objective outcome was materially below the target objective outcome.
• Financial Performance
– Company EBITDA – Partially Achieved
– Company NPAT – Exceeded
• Project Delivery – There were 5 projects that were part of this section of the STI plan, including objectives relating to
customer satisfaction, technology development objectives, new revenue streams and new commercial products. Due to
commercial sensitivity each specific project objective is not outlined below only the statuses recorded against the overall
project numbers are provided:
– One project objective was – Exceeded
– Three project objectives were – On Target
– One project objective was – Missed
• People and Culture
– Employee Engagement – Exceeded
2017
G Roebuck *
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites*
Actual STI
payment
$
257,250
322,500
155,575
208,250
161,700
102,900
% of
target paid
98
108
98
98
98
98
% of target
forfeited
2
-
2
2
2
2
STI cap
$
750,000
540,000
247,125
358,500
253,500
165,000
% of STI
cap paid
34
60
63
58
64
62
* Greg Roebuck and Chris Polites resigned on 17 March and 22nd March 2017 respectively. The targets and cap set out above are the pro-rated annual targets and
caps that applied and the actual STI payment was pro-rated to reflect the period of the year that the individuals were employed by the Company.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
53
As a result of the appointment of the new CEO, in addition to changes in the annual cash salary and superannuation as set out in
section 5.1 above, Senior Executives were given an increased STI target opportunity (and STI cap) reflecting their increased
responsibilities and the importance of their roles to overall Group financial performance. The STI targets and caps set out in the
table above reflect the pro-rata of the Senior Executives’ previous roles’ targets and caps, and new positions’ targets and caps
for the relevant period in each role.
The overall financial results for FY17 were once again record results. For the purposes of determining the STI outcomes above,
the Company EBITDA KPI was partly achieved and the Company NPAT KPI was exceeded. In assessing the KPI achievement the
Board considered that the financial performance for the majority of the Group has been strong with achievements materially
in line or ahead of the expectations of the Board in setting the FY17 KPIs for Senior Executives. The reported results were
significantly impacted by the performance of Stratton Finance which suffered an unexpected material impact caused by
constraints from a major lender. These constraints were outside the control of both that business and the Group, with the
ability to mitigate restricted by the nature of the requirements on a consumer finance broking business. Therefore the Board
concluded it was appropriate to adjust the FY17 financial KPI targets to take account of these constraints, as well as the
corporate and non-recurring gains and losses set out in the reconciliation of reported to adjusted NPAT on page 82.
In addition, in determining the STI award for Cameron McIntyre, the Board has considered the transition between CEOs
and his performance as CEO in leading the Company to a strong second half result.
The Board notes that after applying the discretion described above with the exception of the CEO, the payments awarded
under the STI plan in FY17 are less than 100% of the on-target earnings opportunity and below those awarded to each Senior
Executive last year.
When a Senior Executive leaves the Company the Board will assess the nature of their departure and therefore whether they are
deemed a ‘good leaver’ or a ‘bad leaver’. In the case of Greg Roebuck and Chris Polities the Board deemed that both had been
good leavers of the company and in making that determination awarded them a short term incentive which was based on
entitlements.
5.3 DSTI plan outcomes
5.3.1 FY17 award outcomes
Under the FY17 DSTI award 12,155 performance rights were issued to Mr Roebuck as the CEO on 28 October 2016, with
an exercise price of $0.00. These performance rights were approved by shareholders at the AGM held on 28 October 2016.
The performance rights lapsed when Mr Roebuck retired on 17 March 2017.
25,375 performance rights were issued to Senior Executives on 28 October 2016, with an exercise price of $0.00.
The performance period for the FY17 award is for the FY17 year, with vesting deferred for a further year to August 2018.
The performance achieved in the FY17 is set out below:
DSTI
Grant
Year ending 30 June 2017
Minimum entitlement
Maximum entitlement
Actual achieved
Vesting date % payable EPS target ($) % payable EPS target ($) % payable
78%
August 2018
100%
0.474
0.499
70%
EPS ($)
0.480
The actual EPS achieved for the DSTI grant vesting in August 2017 of $0.480 per share is above the minimum entitlement
requirement of $0.474 per share. In calculating the achieved EPS of $0.480 the Company included the earnings and related
costs from all acquisitions that occurred up until 28 October 2016 and specifically excludes:
• Demotores Group – Acquired 100% interest in February 2017
In addition, all of the one-off items of a corporate nature incurred in the FY17 year excluded in calculating adjusted NPAT (such
as the associate fair value revaluation loss) as set out on page 82 have been excluded from the calculation of the achieved EPS.
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REMUNERATION REPORT
CONTINUED
5.3.2 FY16 award outcomes
The 2016 DSTI award was performance tested at 30 June 2016 and met the minimum EPS target as set out in the 2016 Annual
Report with 80% of the award vesting, subject to the continued vesting condition. This award vests immediately after the Board
released the 2017 Annual Report to the ASX. The amounts payable under this award based on the accounting Black Scholes
valuations are as follows:
2017
G Roebuck *
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites
Actual DSTI award vesting
Paid
%
-
80%
80%
80%
80%
80%
Forfeited
%
100%
20%
20%
20%
20%
20%
Forfeited
$
120,000
20,000
11,000
11,040
8,000
5,500
$
-
80,000
44,000
44,160
32,000
22,000
* As set out in section 4.6 Mr Roebuck forfeited his 2016 DSTI award in return for a cash payment of $95,915 on retirement at 17 March 2017.
The cash value to each Senior Executive of the 2016 DSTI vesting based on the 30 June 2017 share price is as follows:
2017
G Roebuck
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites
Actual DSTI cash value at 30 June 2017
$
-
105,403
57,969
58,181
42,163
28,984
Paid
%
-
80%
80%
80%
80%
80%
Forfeited
%
100%
20%
20%
20%
20%
20%
Forfeited
$
158,100
26,351
14,492
14,545
10,541
7,246
5.4 LTI plan outcomes for FY17
5.4.1 LTI plan outcome for the FY15 award vesting in FY17
EPS targets relating to Senior Executive options and performance rights, together with the Company’s actual achievements
are as follows:
LTI
Grant
Year ending 30 June 2015
Minimum entitlement
Maximum entitlement
Actual achieved
Vesting date % payable EPS target ($) % payable EPS target ($) % payable
0%
August 2017
100%
0.572
0.602
70%
EPS ($)
0.493
The exercise price of each option is fixed by the Board 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. The option price is based on a 5 day volume weighted average price from
June 30 of the corresponding financial year. Options and performance rights granted under the plan carry no dividend or voting
rights until vested.
Minimum and maximum EPS targets for the options and performance rights were set for the period ending 30 June 2017
and the award of options and performance rights was approved by shareholders at the 2014 AGM on 24 October 2014.
EPS targets exclude any corporate activity associated with mergers and acquisitions, corporate or capital re-organisations
that have occurred after 24 October 2014.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
55
The actual EPS achieved for the LTI grant vesting in August 2017 of 0.493 per share is above the reported FY17 EPS
of 0.454 per share. In calculating the achieved EPS of 0.493 the Company excluded the earnings and related costs
from the following acquisitions and investments that occurred after 24 October 2014:
• RateSetter – acquired March 2015
• RedBook Inspect (formerly Auto Inspect) – acquired June 2015
• SoloAutos – acquired October 2015
• Chileautos – acquired March 2016
• PromisePay – acquired May 2016
• Demotores Group – acquired February 2017
In addition, all of the one-off items of a corporate nature incurred in the FY17 year excluded in calculating adjusted NPAT (such
as the associate fair value revaluation loss) as set out on page 82 have been excluded from the calculation of the achieved EPS.
The amounts payable (cash value at 30 June 2017) under the LTI grant vesting in August 2017 are as follows:
2017
G Roebuck
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites
Actual LTI payment
Forfeited
Paid
%
%
100%
-
100%
-
100%
-
100%
-
100%
-
100%
-
Forfeited
$
805,838
284,112
121,761
162,351
81,170
66,967
$
-
-
-
-
-
-
5.4.2 Unvested Plan Structure for FY16 and FY17 awards (vesting beyond FY17)
The following award details are outlined for all unvested grants.
Award
date
23/10/2015
23/10/2015
28/10/2016
28/10/2016
Number of
options
96,972
129,339
149,907
221,113
Number of
performance
rights
20,133
24,860
31,287
46,150
Options
exercise
price
$
10.24
10.24
12.23
12.23
Performance
rights exercise
price
$
0
0
0
0
Vesting
date
August 18
August 18
August 19
August 19
Financial
year
granted
FY16
FY16
FY17
FY17
Managing Director*
Other Senior Executives
Managing Director*
Other Senior Executives
* The Managing Director refers to Cameron McIntyre.
Other Senior Executives included in the table above are only those Senior Executives at 30 June 2017.
5.5 Non-monetary benefits and other payments
The following payments were made to Greg Roebuck on his retirement as Managing Director and CEO on the 17th March 2017
in accordance with his employment contract and within appropriate limits:
Payment of notice period on retirement
Cash payment in lieu of FY17 vesting DSTI
Payout of accrued annual leave and long service leave
Total other payments
Other benefits –
cash paid
$
890,192
95,915
1,259,108
2,245,215
Other benefits –
accounting basis
$
890,192
95,915
-
986,107
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56
REMUNERATION REPORT
CONTINUED
Mr Roebuck had a 6 month notice period which was paid in full. In addition, as a good leaver the awarded cash value of the
DSTI due to vest in August 2017 after publication of the FY17 annual report was also paid and the performance rights lapsed
accordingly. The payout of accrued annual leave and long service leave is reflected in the cash payment on retirement but has
been included in salary in the accounting benefits table in the current and previous financial years as the annual leave accrued.
Non-monetary benefits of $61,387 (including FBT) were paid to Greg Roebuck during the year comprising a small travel
allowance taken in the early part of the FY17 year ahead of the AGM and the value of gifts presented to Mr Roebuck on his
retirement.
5.6 Additional information
5.6.1 STI, DSTI and LTI Payments (cash, options & performance rights) achievement against maximum entitlement
All Senior Executives received grants that were equal to or less than their maximum potential STI & DSTI entitlements. The relative
proportions of remuneration which are linked to performance and those that are fixed based on the accounting values table in
section 4.2 are as follows:
Name
Non-Executive Directors
Jeffrey Browne
Richard Collins
Wal Pisciotta
Pat O’Sullivan
Kim Anderson
Edwina Gilbert
Steve Kloss (Alternate)
Executive Directors
Greg Roebuck
(Retired 17/03/2017)
Cameron McIntyre
(Appointed 17/03/2017)
Other Senior Executives
Ajay Bhatia
Anthony Saines
Paul Barlow
Chris Polites
Cash salary and
superannuation
2017
%
2016
%
At risk – STI
2017
%
2016
%
At risk – DSTI
2017
%
2016
%
At risk – LTI
2017
%
2016
%
100
100
100
100
100
100
100
91
75
78
72
73
73
100
100
100
100
100
100
100
68
73
78
71
74
70
-
-
-
-
-
-
-
9
19
16
22
21
24
-
-
-
-
-
-
-
30
23
18
25
23
28
-
-
-
-
-
-
-
*
5
5
5
5
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*
1
1
1
1
*
-
-
-
-
-
-
-
2
4
4
4
3
2
* Percentage of relative proportion of remuneration related to performance not disclosed as the total amount of DSTI and LTI was negative reflected by forfeiture
of options and performance rights due to the executives ceasing of employment on 17 March 2017 and 22 March 2017.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
57
5.6.2 Share based compensation disclosures
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
October 2011
October 2011
October 2012
October 2012
October 2014
October 2014
October 2015
October 2015
October 2015
October 2016
October 2016
October 2016
October 2016
October 2016
Date exercisable
August 2013
August 2014
August 2014
August 2015
August 2017
August 2017
August 2017
August 2018
August 2018
August 2018
August 2019
August 2019
August 2019
August 2019
Expiry date
October 2016
October 2016
October 2017
October 2017
October 2019
October 2019
October 2020
October 2020
October 2020
October 2031
October 2031
October 2031
October 2031
October 2031
Exercise price
$
$4.69
$4.69
$5.93
$5.93
$10.71
$0.00
$0.00
$10.24
$0.00
$0.00
$0.00
$0.00
$12.23
$12.23
Value at
grant date
$
$1.10
$1.19
$2.33
$2.43
$2.36
$9.12
$8.74
$1.86
$8.44
$9.86
$9.49
$4.87
$1.10
$0.98
Vested
%
100
100
100
75
-
-
80
n/a
n/a
78
n/a
n/a
n/a
n/a
Performance
achieved
Yes
Yes
Yes
Yes
No(i)
No(i)
Yes(ii)
To be determined
To be determined
Yes(iii)
To be determined
To be determined
To be determined
To be determined
(i)
LTI options and performance rights granted in October 2014 that are exercisable in August 2017 will not vest as a result of the Company not meeting
the minimum EPS target which had been set.
(ii) Subject to satisfactory completion of the remaining service period 80% of this award is expected to vest based on the performance achievements
tested at 30 June 2016 as set out in the FY16 annual report.
(iii) Subject to satisfactory completion of the remaining service period 78% of this award is expected to vest in August 2018 based on the performance
achievements tested at 30 June 2017 as set out in on page 53.
$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 at the earliest of (a) the expiry date applicable to the option or performance
right, (b) 30 days post the employee ceasing to be employed by carsales.com Ltd, (c) where EPS or RTSR vesting conditions are
not met at the relevant date, 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.
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58
REMUNERATION REPORT
CONTINUED
Details of options and performance rights granted over ordinary shares in the Company provided as remuneration to each
of the Senior Executives are set out below:
Number of
options granted
during the
year 2017
Number of
performance rights
granted during the
year 2017
Value of options at
grant date 2017
$
Value of
performance rights
at grant date 2017
$
Number of
options
and performance
rights vested
during the year
2017
260,825
149,907
74,953
93,692
52,468
37,477
100,917
41,429
21,222
25,153
15,008
10,611
278,345
160,000
80,000
100,000
56,000
40,000
812,239
339,995
175,001
205,199
124,006
87,500
-
-
-
-
-
-
Name
Executive Directors
G Roebuck
(Retired 17/03/2017)
C McIntyre (Appointed
17/03/2017)
Senior Executives
A Bhatia
A Saines
P Barlow
C Polites
Further information on the options and performance rights is set out in Note 24 to the financial statements.
5.6.3 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 Senior Executive are set
out below.
Name
Directors of carsales.com Ltd
G Roebuck (Retired 17/03/2017)
C McIntyre (Appointed 17/03/2017)
Senior Executives
A Bhatia
A Saines
P Barlow
C 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
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
59
5.6.4 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.
Name
G Roebuck
C McIntyre
A Bhatia
A Saines
P Barlow
C Polites
Share-based compensation benefits (options and performance rights)
Financial year
granted
2015
2016
2016
2017
2017
Vested
%
-
-
-
-
-
Forfeited
%
100
20
100
100
100
Financial years in
which grant may
vest
2017*
2017*
2018*
2018*
2019*
Minimum
total value
of grant yet
to vest
$
-
-
-
-
-
Maximum
total value
of grant yet
to vest
$
-
-
-
-
-
2015
2016
2016
2017
2017
2015
2016
2016
2017
2017
2015
2016
2016
2017
2017
2015
2016
2016
2017
2017
2015
2016
2016
2017
2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
20
-
22
-
100
20
-
22
-
100
20
-
22
-
100
20
-
22
-
100
20
100
100
100
2017*
2017*
2018*
2018*
2019*
2017*
2017*
2018*
2018*
2019*
2017*
2017*
2018*
2018*
2019*
2017*
2017*
2018*
2018*
2019*
2017*
2017*
2018*
2018*
2019*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,091
144,118
48,286
303,026
-
5,000
61,764
26,557
151,518
-
5,018
82,352
26,652
189,395
-
3,637
41,177
19,315
106,062
-
2,500
-
-
-
* Vesting is contingent upon Board approval. Options are exercisable after the Board releases the results to ASX in August each year.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
60
REMUNERATION REPORT
CONTINUED
(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.
Granted as
compensation
(including
performance
rights) Exercised Forfeited
Other
change (i)
Balance at
end of the
year
Vested and
exercisable (ii) Unvested
2017
Name
Non-Executive Directors
J Browne
R Collins
W Pisciotta
P O'Sullivan
K Anderson
E Gilbert
S Kloss (Alternate)
Executive Directors
G Roebuck
(Retired 17/03/2017)
C McIntyre
(Appointed 17/03/2017)
Other Senior Executives
A Bhatia
A Saines
P Barlow
C Polites
Balance at
start of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
740,144
361,742
223,342
191,336
98,870
127,118
66,779
53,664
96,175
118,845
67,476
48,088
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(270,645) (831,241)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(97,087)
-
317,591
9,150
308,441
(41,609)
(55,478)
(27,739)
(22,885)
-
-
-
(76,351)
153,436
190,485
106,516
2,516
5,032
5,050
3,660
2,516
148,404
185,435
102,856
-
(i) Other change reflects options and performance rights outstanding at cessation of employment.
(ii) Represents performances rights under the 2016 DSTI award that will vest immediately after the release of the 2017 annual report to the ASX.
(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 Company, including their personally related parties, are set out below. There were no shares
granted during the reporting period as compensation.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
61
Received
during
the year on
the exercise
of options
Balance at
end of the
year/on
cessation of
employment*
Other changes
during the year
Balance at the start
of the year
26,762
914,131
14,654,733
9,650
15,000
25,000
2,774,500
4,841,902
225,762
26,135
26,915
75,248
23,000
-
-
-
-
-
-
-
-
-
-
-
-
3,238
(322,849)
(3,500,000)
-
-
-
-
30,000
591,282
11,154,733
9,650
15,000
25,000
2,774,500
(1,000,000)
3,841,902
(55,000)
170,762
(25,000)
(10,915)
(45,248)
-
1,135
16,000
30,000
23,000
2017
Name
Non-Executive Directors
Ordinary shares
J Browne
R Collins
W Pisciotta
P O'Sullivan
K Anderson
E Gilbert
S Kloss (Alternate)
Executive Directors
G Roebuck
(Retired 17/03/2017)
C McIntyre
(Appointed 17/03/2017)
Other Senior Executives
Ordinary shares
A Bhatia
A Saines
P Barlow
C Polites
* Greg Roebuck and Chris Polites resigned effective 17 March and 22 March 2017 respectively and were no longer considered Senior Executives from those dates.
The total balance represents the total shareholding at the date they ceased to be Senior Executives.
5.6.5 Other transactions with Key Management Personnel
(i) Directors of carsales.com Ltd
W Pisciotta and S Kloss (Alternate Director) are Directors and shareholders of Pentana Solutions Pty Ltd, which entered into
a relationship agreement with carsales.com Ltd in 2010 for 5 years for the supply of data and services, which was subsequently
extended to March 2017. Under the contract, Pentana Solutions 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. Heads of agreement have
been signed with Pentana to further extend the supply of data and services to 2021.
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.
E Gilbert is a Director 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.
The Company does not disclose the exact value of its contracts with R Collins or E Gilbert so as not to reveal information that
is commercially sensitive to the relevant automotive dealerships. However, the Company can disclose that the total value
of contracts between the Company and automotive dealerships in which R Collins is a shareholder for the financial year was
less than $0.75m; and the total value of contracts between the Company and the automotive dealerships of which E Gilbert
is a Director for the financial years was less than $0.25m.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
62
REMUNERATION REPORT
CONTINUED
5.6.6 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
October 2012
October 2012
October 2013
October 2014
October 2014
October 2015
October 2015
October 2016
October 2016
Expiry date
October 2017
March 2018
October 2018
October 2019
October 2019
October 2020
October 2020
October 2031
October 2031
Issue price
of shares
$
$5.93
$5.93
$9.10
$10.71
$0.00
$10.24
$0.00
$12.23
$0.00
Number under
options
26,527
168,621
61,141
50,819
-
587,456
-
886,824
-
1,781,388
Number under
performance
rights
-
-
-
-
12,512
-
162,019
-
215,336
389,867
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 2017.
5.6.7 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 2017 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
September 2016
October 2016
November 2016
February 2017
March 2017
May 2017
June 2017
Issue price
of shares
$
4.69 – 5.93
0.00
9.10
5.93 – 9.10
5.93 – 9.10
5.93 – 9.10
5.93 – 9.10
Number
of shares
issued
47,557
30,200
6,071
11,279
2,625
4,862
3,972
106,566
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only OTHER DIRECTORS’ DISCLOSURES
63
6. Non-Executive Directors’ remuneration
The current base remuneration pool was last approved by shareholders at the Annual General Meeting held on 23 October 2015.
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 $1,500,000
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 $1,500,000 pool approved by shareholders.
The following fee table applies:
Chair fee
Deputy Chair fee
Base Director fee
Alternate Director fee
First committee
Second committee
Subsidiary Board Director Fee
$
295,000
140,000
120,000
110,000
25,000
30,000
51,250
The Board has determined that the Second Committee fee should be slightly higher than the First Committee fee to recognise
the significant additional time required of members serving on two Board committees.
The Non-Executive Directors had the following committee and other roles during the year:
Name
J Browne
R Collins
W Pisciotta
P O'Sullivan
K Anderson
E Gilbert
S Kloss (Alternate)
Board Chair
✓
Board Deputy
Chair
✓
Audit and Risk
Management
Committee
member
Nomination and
Remuneration
Committee
member
✓
✓
✓
✓
✓
✓
Subsidiary
Board member
✓
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 64
OTHER DIRECTORS’ DISCLOSURES
CONTINUED
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:
Jeffrey Browne Non-Executive Chair
Greg Roebuck Managing Director – Resigned from the Board on 17 March 2017
Cameron McIntyre Managing Director – Appointed to the Board on 17 March 2017
Wal Pisciotta Non-Executive Director
Richard Collins Non-Executive Deputy Chair
Pat O’Sullivan Non-Executive Director
Kim Anderson Non-Executive Director
Edwina Gilbert Non-Executive Director
Steve Kloss Alternate Non-Executive Director
Meetings of Directors
Full meetings of
Directors
Jeffrey Browne (Board Chair)
Richard Collins
Wal Pisciotta
Greg Roebuck (retired 17/3/2017)
Cameron McIntyre (appointed 17/3/2017)
Pat O’Sullivan (Chair – Audit and Risk Management)
Kim Anderson (Chair – Remuneration and Nomination)
Edwina Gilbert
Steve Kloss (Alternate Non-Executive Director)
A
14
12
15
12
3
13
15
15
12
B
15
15
15
12
3
15
15
15
15
Audit and Risk
B
A
**
**
4
4
**
**
**
**
**
**
4
4
4
4
**
**
**
**
Remuneration and
Nomination
B
A
**
**
**
**
**
**
**
**
**
**
5
5
5
5
5
5
**
**
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.
Dividends – carsales.com Ltd
Dividends paid to members during the financial year were as follows:
Final fully franked ordinary dividend for the year ended 30 June 2016 of
19.5 cents (2015: 17.7 cents plus a special dividend 1.4 cents)
per share paid on 17 October 2016.
Interim fully franked ordinary dividend for the year ended 30 June 2017
of 18.7 cents (2016: 17.8 cents) per share paid on 20 April 2017.
2017
$’000
2016
$’000
47,028
45,898
45,146
92,174
42,878
88,776
At the end of the financial year the Directors have recommended the payment of a fully franked final ordinary dividend
of $51,984,000 (21.5 cents per share) to be paid on 19 October 2017 out of retained profits at 30 June 2017.
Significant changes in the state of affairs
During the financial year the Company continued to expand into new geographic markets by investing in controlling
stakes in the Demotores Group with operations in Argentina, Chile and Colombia, a leading automotive classified business
in its respective markets. Further details are set out in Note 20 to the financial statements. Further matters are set out
in the Operating and Financial Review on pages 22 to 25.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
65
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may affect:
(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.
Insurance of officers
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; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants.
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:
Other assurance services
PwC Australian firm
Due diligence services
Total remuneration for other assurance services
Taxation services
PwC Australian firm
Tax compliance services
Tax consulting and tax advice on acquisitions
Total remuneration for taxation services
Other advisory services
Other services
Total remuneration for non-audit services
2017
$’000
2016
$’000
238,454
238,454
224,566
224,566
86,526
63,102
149,628
143,350
88,124
231,474
37,850
88,472
425,932
544,512
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 66
OTHER DIRECTORS’ DISCLOSURES
CONTINUED
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 67.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
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 2017 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.
Jeffrey Browne
Chair
Cameron McIntyre
Managing Director and CEO
Melbourne
8 August 2017
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only AUDITOR’S INDEPENDENCE DECLARATION
67
Auditor’s Independence Declaration
As lead auditor for the audit of carsales.com Limited for the year ended 30 June 2017, 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 Limited and the entities it controlled during the period.
Anton Linschoten
Partner
PricewaterhouseCoopers
Melbourne
8 August 2017
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 68
CARSALES.COM LIMITED
ANNUAL REPORT 2017
FINANCIAL STATEMENT CONTENTS
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
69
70
71
72
73
Key performance
Capital and financial
risk management
Other assets and liabilities
Group structure
Other
1. Segment information 7. Capital risk management
14. Trade and other receivables 19. Interest in other
2. Revenue
8. Cash and cash equivalents 15. Property, plant
and equipment
3. Expenses
9. Borrowings
16. Intangible assets
entities
20. Business
combinations
and disposals
21. Related party
transactions
23. Remuneration
of auditors
24. Share-based
payments
25. Parent entity
financial
information
4. Income tax
10. Contributed equity
17. Payables and provisions
22. Deed of cross
guarantee
26. Contingent
liabilities
5. Reconciliation of
11. Reserves and
18. Commitments
profit after income
tax to net cash inflow
from operating
activities
retained earnings
6. Earnings per share
12. Dividends
13. Financial risk
management
Directors’ declaration
Independent auditor’s report
to the members of carsales.com Ltd
Shareholder information
113
114
120
27. Other
accounting
policies
28. Events
occurring
after the
reporting
period
For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
69
Revenue from continuing operations
Sale of goods and services
Revenue from continuing operations
Expenses
Costs of sale
Sales and marketing expenses
Service development and maintenance
Operations and administration
Earnings before interest, taxes, depreciation and amortisation
Depreciation and amortisation expense
Finance income
Finance costs
Share of net profit from associates accounted for using the equity method
(Loss)/gain on associates fair value adjustment and investment dilution
Gain on sale of business
Profit before income tax
Income tax expense
Profit from continuing operations
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Share of remeasurement of net defined benefit liability of associates
Changes in the fair value of available-for-sale financial assets
Other comprehensive income for the year
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
Notes
2
2017
$’000
2016
$’000
372,114
372,114
344,010
344,010
(34,030)
(98,055)
(31,059)
(32,473)
176,497
(9,966)
640
(7,517)
8,498
(6,877)
-
161,275
(48,261)
113,014
(30,195)
(88,817)
(26,132)
(28,556)
170,310
(7,527)
537
(8,903)
5,223
955
931
161,526
(47,450)
114,076
(8,575)
148
29
(8,398)
(1,374)
(333)
-
(1,707)
104,616
112,369
109,479
3,535
113,014
101,145
3,471
104,616
Cents
45.4
45.3
109,249
4,827
114,076
107,782
4,587
112,369
Cents
45.4
45.3
9
9
19(c)
19(e)
20(d)
4(a)
11(a)
11(a)
6
6
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 70
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Investments accounted for using the equity method
Available-for-sale financial assets
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
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
Notes
2017
$’000
2016
$’000
8
14
19(c)
19(d)
15
4(d)
16
17
9
17
9
4(e)
17
39,795
48,404
833
89,032
224,472
13,301
7,289
5,144
199,954
450,160
28,709
44,722
1,112
74,543
266,976
-
6,608
6,078
191,569
471,231
539,192
545,774
42,002
1,755
9,982
6,040
6,713
66,492
191,299
2,923
1,318
195,540
36,184
1,784
6,633
6,310
6,601
57,512
225,126
1,729
1,037
227,892
262,032
285,404
277,160
260,370
10
11(a)
11(b)
105,861
14,149
151,607
5,543
277,160
99,026
22,862
134,302
4,180
260,370
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
71
Balance at 1 July 2015
Profit for the year
Exchange differences on translation of
foreign operations
Share of remeasurement of net defined
benefit liability of associates
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Contributions of equity upon exercise of
employee share options
Non-controlling interest on acquisition of
subsidiaries
Dividends paid to members of the parent
Dividends paid to non-controlling interest
Increase in share-based payment reserve
inclusive of tax
Balance at 30 June 2016
Balance at 1 July 2016
Profit for the year
Exchange differences on translation
of foreign operations
Share of remeasurement of net defined
benefit liability of associates
Changes in the fair value of available-for-
sale financial assets
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Contributions of equity upon exercise
of employee share options
Share capital contributed by
non-controlling interest
Dividends paid to members of the parent
Dividends paid to non-controlling interest
Decrease in share-based payment reserve
inclusive of tax
Balance at 30 June 2017
Attributable to owners of carsales.com Ltd
Notes
Contributed
equity
$’000
91,905
-
-
Other
reserves
$’000
21,471
-
(1,134)
Retained
earnings
$’000
113,829
109,249
-
Non-
controlling
interests
$’000
2,308
4,827
(240)
Total
equity
$’000
229,513
114,076
(1,374)
-
-
(333)
-
-
(333)
(1,467)
109,249
4,587
112,369
10(b)
2,173
12
-
4,948
-
-
-
-
-
-
2,858
-
-
(88,776)
-
-
-
2,589
-
(5,304)
-
2,173
2,589
(83,828)
(5,304)
2,858
99,026
22,862
134,302
4,180
260,370
Notes
Contributed
equity
$’000
99,026
-
Other
reserves
$’000
22,862
-
Retained
earnings
$’000
134,302
109,479
Non-
controlling
interests
$’000
4,180
3,535
Total
equity
$’000
260,370
113,014
-
-
-
-
(8,511)
148
29
(8,334)
-
-
(64)
(8,575)
-
148
-
109,479
-
3,471
29
104,616
11(a)
10(b)
467
12
-
6,368
-
-
-
-
-
-
(92,174)
-
-
105,861
(379)
14,149
-
151,607
-
-
467
150
-
(2,258)
-
5,543
150
(85,806)
(2,258)
(379)
277,160
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 72
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Receipts from customers (including GST)
Payments to suppliers and employees (including GST)
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Investment in subsidiaries, net of cash acquired
Investment in associates
Payments for property, plant and equipment
Payments for intangible assets
Interest received
Proceeds from sale property, plant and equipment
Proceeds from sale of business
Dividends received from associates
Capital reduction in associates
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Repayment of borrowings
Dividends paid to non-controlling interests
Dividends paid to company shareholders
Interest paid
Net cash (outflow) from financing activities
Effects of exchange rates on cash and cash equivalents
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
Notes
2017
$’000
2016
$’000
403,815
(235,272)
(43,767)
124,776
376,501
(213,518)
(43,437)
119,546
5
(6,654)
(1,040)
(2,395)
(469)
640
38
1,402
11,994
13,511
17,027
467
73,510
(107,576)
(2,258)
(85,806)
(7,561)
(129,224)
(28,466)
(10,743)
(3,440)
(881)
537
-
100
5,649
-
(37,244)
2,173
82,402
(70,423)
(5,304)
(83,828)
(8,496)
(83,476)
(1,493)
3,060 *
11,086
28,709
39,795
1,886
26,823
28,709
12
8
* Prior year cash flow was reclassified to present the effect of foreign exchange rate changes on the cash and cash equivalents balances.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
73
About this report
This Financial Report covers the consolidated financial statements 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 principal activities is included in the Chair and Chief
Executive Officer’s Report on page 8, and in the Directors’ Reports on page 22, each of which are not part of this Financial
Report.
The Financial Report was authorised for issue by the Directors on 8 August 2017. 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 streamlined 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:
• the amount in question is significant because of its size or nature;
• 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
• it relates to an aspect of the Group’s operations that is important to its future performance.
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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 Group recorded record revenue and EBITDA – Note 1; and
• full year dividend declared – 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; and
• carrying value of Webmotors associate – Note 19(c).
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 unless otherwise stated.
(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 2017 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
75
(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); and
• 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.
Foreign currency translation
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.
Goods and Services Tax (GST)
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.
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 ASIC Corporations Instrument 2016/191, 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 Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations
The Group has applied the following standard which have had no impact in the current reporting period commencing
1 July 2016:
• Clarification of acceptable methods of depreciation and amortisation (AASB 2014-4) (effective 1 January 2016).
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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 CEO.
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, Research and Services,
International and Finance and Related Services.
Online Advertising Services
carsales Online Advertising Services 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 Z, or save 10% on insurance
this month only, etc, as banner advertisements or other sponsored links.
Online Advertising Services includes carsales’ investment in tyresales.com.au, which is an online tyre advertisement website
that allows consumers to transact and purchase tyres.
Data, Research and 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 subsidiaries, equity accounted associate investments
and available-for-sale financial assets as set out below:
Online Automotive Classifieds:
• Webmotors S.A.(operations in Brazil) – 30%
• SK ENCARSALES.COM Ltd (operations in South Korea) – 49.9%
• carsales Mexico SAPI de CV (operations in Mexico) – 65%
• Chileautos SpA (operations in Chile) – 83.3%
• Demotores Chile SpA (operations in Chile) – 100%
• Demotores S.A. (operations in Argentina) – 100%
• Demotores Colombia S.A.S. (operations in Colombia) – 100%
• iCar Asia Limited (operations in Indonesia, Malaysia and Thailand) – 15.6%
Automotive Data Services:
• Auto Information Limited (New Zealand) – 100%
• RedBook Automotive Services (M) Sdn Bhd (Malaysia) – 100%
• RedBook Automotive Data Services (Beijing) Limited (China) – 100%
• Automotive Data Services (Thailand) Company Limited – 100%
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
77
Finance and Related Services
Finance and Related Services includes the Stratton Finance Pty Ltd subsidiary that 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. It also includes the equity accounted associate RateSetter
Australia Pty Ltd and PromisePay Pte Ltd.
(b) Segment analysis
2017
Segment revenue
Segment revenue (Note 1(c)(i))
Total segment revenue
Gross profit
EBITDA
Depreciation and amortisation
Net finance costs
Profit before income tax
Income tax expense
Share of profit/(loss) from associates
Associate fair value revaluation loss
Gain on associate dilution
Non-controlling interests
Profit for the year
Segment assets
Deferred tax assets
Unallocated assets
Total assets
2016
Segment revenue
Segment revenue (Note 1(c)(i))
Total segment revenue
Online
Advertising
Services
$’000
Data,
Research
and Services
$’000
International
$’000
Finance
and Related
Services
$’000
269,131
269,131
245,904
39,314
39,314
39,119
8,313
8,313
8,313
55,356
55,356
44,748
142,710
23,378
(93)
10,502
9,992
(7,145)
(1,494)
268
111,847
15,687
236,397
78,626
Online
Advertising
Services
$’000
Data,
Research
and Services
$’000
International
$’000
Finance and
Related
Services
$’000
Total
$’000
372,114
372,114
338,084
176,497
(9,966)
(6,877)
159,654
(48,261)
8,498
(7,145)
268
(3,535)
109,479
442,557
5,144
91,491
539,192
Total
$’000
240,699
240,699
35,850
35,850
4,434
4,434
63,027
63,027
344,010
344,010
Gross profit
226,482
35,731
4,434
47,168
313,815
EBITDA
Depreciation and amortisation
Net finance costs
Gain on sale of business
Profit before income tax
Income tax expense
Share of profit/(loss) from associates
Gain on associate dilution
Non-controlling interests
Profit for the year
Segment assets
Deferred tax assets
Unallocated assets
Total assets
131,783
21,357
1,332
15,838
931
6,230
955
(1,007)
104,728
17,861
276,179
74,922
170,310
(7,527)
(8,366)
931
155,348
(47,450)
5,223
955
(4,827)
109,249
473,690
6,078
66,006
545,774
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(c) Notes to, and forming part of, the segment information
(i) Segment revenue and gross profit
Segment revenue is derived from sales to external customers as set out in the table above. The nature of the segment
revenue is as described in Note 1(a) above. Gross profit is revenue less costs of sale.
(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.
(iii) Segment assets
Segment assets include goodwill, trade receivables and investments accounted for using equity method. 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.
(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
2017
$’000
2016
$’000
338,250
33,864
372,114
314,627
29,383
344,010
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
Group 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
Revenue 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
Revenue is recorded when goods have been provided to a customer leading to an enforceable claim by the Group.
(iii) Finance and related services
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
The research and development claim of the company gives rise to a tax offset and this tax offset is recognised as other income.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
3. Expenses
Profit before income tax includes the following specific expenses:
Total employee benefits
Defined contribution superannuation expense
Research and development
Minimum lease payments
79
2017
$’000
87,978
7,376
6,044
6,275
2016
$’000
77,058
6,034
5,130
5,534
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 three to five years.
(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
Adjustments for current tax of prior periods
Deferred tax
Adjustments for deferred tax of prior periods
Deferred income tax expense included in income tax expense comprises:
Decrease/(Increase) in deferred tax assets
Decrease in deferred tax liabilities
2017
$’000
49,244
(1,464)
(903)
1,384
48,261
808
(327)
481
2016
$’000
47,698
218
(1,009)
543
47,450
(256)
(210)
(466)
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(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% (2016: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-assessable income (R&D tax offset)
Share options
Sundry items
Adjustment for prior periods
Share of (profit)/losses from associates
Non-taxable gain on associate dilution
Non-deductible impairment
Income tax expense
2017
$’000
161,275
48,383
(300)
168
576
(80)
(2,549)
(80)
2,143
48,261
2016
$’000
161,526
48,458
(255)
22
317
761
(1,567)
(286)
-
47,450
(c) Amounts recognised directly into equity
Aggregate current and deferred tax arising in the reporting period and not recognised in the income statement or other
comprehensive income but directly (credited) or debited to equity:
Current tax – (credited) directly to equity
Net deferred tax – debited/(credited) directly to equity
(d) Deferred tax assets
The balance comprises temporary differences attributable to:
2017
$’000
(474)
598
124
At 1 July 2015
Acquisition of subsidiary
(Charged)/credited to the
profit or loss
Credited directly to equity
At 30 June 2016
(Charged)/credited to the
profit or loss
Debited directly to equity
Exchange differences
At 30 June 2017
Employee
benefits
$’000
1,944
7
Employee
Share Trust
$’000
1,513
-
Doubtful
debts
$’000
193
-
Expense
accruals
$’000
1,521
-
Intangibles
$’000
-
-
Tax losses
$’000
-
-
Other
$’000
-
-
194
-
2,145
(475)
-
-
1,670
(443)
644
1,714
(474)
(124)
-
1,116
371
-
564
(305)
-
-
259
235
-
1,756
97
-
-
1,853
(490)
(490)
(670)
-
-
(1,160)
215
-
215
1,166
-
(2)
1,379
2016
$’000
(489)
(155)
(644)
Total
$’000
5,171
7
256
644
6,078
(808)
(124)
(2)
5,144
2016
$’000
4,184
1,894
6,078
174
-
174
(147)
-
-
27
2017
$’000
3,338
1,806
5,144
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
Certain liability balances are shown as part of deferred tax assets, as they originate in the same jurisdiction as, and can be offset
against, other deferred tax assets. The liability balance for intangibles shown as part of deferred tax assets relates to in house
software in Australia.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only (e) Deferred tax liabilities
The balance comprises temporary differences attributable to:
At 1 July 2015
(Credited) to the profit or loss
Intangibles recognised from business acquisition
At 30 June 2016
At 1 July 2016
(Credited) to the profit or loss
Intangibles recognised from business acquisition
At 30 June 2017
Deferred tax liabilities expected to be settled within 12 months
Deferred tax liabilities expected to be settled after more than 12 months
81
Intangibles
$’000
-
(210)
1,939
1,729
1,729
(327)
1,521
2,923
2017
$’000
342
2,581
2,923
Total
$’000
-
(210)
1,939
1,729
1,729
(327)
1,521
2,923
2016
$’000
210
1,519
1,729
Recognition and measurement
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.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to tax authorities.
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 nor 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 controlled entities 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.
Where there are current and deferred tax balances attributable to amounts recognised directly in equity, there are also
recognised directly in equity.
Tax consolidation legislation
The Company and its wholly-owned Australian 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 Group.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Accounting estimates and assumptions used for income tax
Uncertain tax positions
The Group applies its current understanding of the tax law to estimate tax liabilities where the ultimate tax position is uncertain.
When the tax position is ultimately determined or tax laws change, the actual tax liability may differ from this current estimate.
Research and development claim
The research and development claim available to the Company is estimated in the accounts because a full assessment of the
position cannot be made by the year end. It is the policy of the Company to only bring to account that preliminary portion of
expenses that is reasonably expected to be claimable at period end.
5. Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Non-cash employee benefits expense – share-based payments
Loss on disposal of assets
Net finance related costs
Share of (profit) of associates
Loss/(gain) on associate fair value adjustment and investment dilution
Net exchange differences
Change in operating assets and liabilities:
(Increase) in trade debtors
Decrease in inventories
Decrease/(Increase) in deferred tax assets
(Increase) in other operating assets
Capitalised labour
Increase in trade creditors
Increase in other operating liabilities
Increase in provision for income taxes payable
Increase in deferred tax liabilities
Increase in other provisions
Net cash inflow from operating activities
6. Earnings per share
(a) Reported earnings per share
2017
$’000
113,014
9,966
(255)
90
7,137
(8,498)
6,877
(84)
(1,660)
279
934
(2,944)
(9,218)
1,541
3,415
3,349
822
11
124,776
2016
$’000
114,076
7,527
2,214
-
8,893
(5,223)
(955)
(96)
(4,955)
758
(900)
(2,612)
(8,264)
1,544
2,108
4,686
-
745
119,546
Reported profit attributable to equity holders of the Company
Weighted average number of ordinary shares
Dilutive impact of potential ordinary shares*
Total weighted average number of ordinary shares used
in EPS calculation
Reported earnings per share
2017
Basic earnings per share
2016
109,479,000 109,249,000
241,383,158 240,645,736
-
-
2017
Diluted earnings per share
2016
109,479,000 109,249,000
241,383,158 240,645,736
742,315
491,188
241,383,158 240,645,736
45.4
45.4
241,874,346 241,388,051
45.3
45.3
*The dilutive impact of potential ordinary shares represents unexercised options and performance rights as at the balance date 30 June 2017 (2016: 30 June 2016).
(b) Adjusted earnings per share
Reported profit attributable to equity holders of the Company
Less: gain on associate dilution
Less: gain on sale of business
Less: associate one-off tax gain
Add: associate fair value revaluation loss
Add: acquired intangibles amortisation
Adjusted profit attributable to equity holders of the Company
Adjusted earnings per share*
2017
Basic earnings per share
2016
109,479,000 109,249,000
(955,000)
(931,000)
-
-
3,180,000
119,130,000 110,543,000
45.9
(268,000)
-
(804,000)
7,145,000
3,578,000
49.4
2017
Diluted earnings per share
2016
109,479,000 109,249,000
(955,000)
(931,000)
-
-
3,180,000
119,130,000 110,543,000
45.8
(268,000)
-
(804,000)
7,145,000
3,578,000
49.3
* The Directors believe the presentation of ‘adjusted earnings per share’ provides the best measure to assess the performance of the Group by excluding gain
on associate dilution, one-off gain on sale of business, associate one-off tax gain, associate fair value revaluation loss, and non-cash acquired intangible asset
amortisation from the reported IFRS measure.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
83
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.
CAPITAL AND FINANCIAL RISK MANAGEMENT
7. Capital risk management
The Company’s capital position at 30 June is as follows:
Borrowings (Note 9)
Less: cash and cash equivalents (Note 8)
Net debt
Contributed equity (Note 10)
Reserves (Note 11(a))
Retained earnings (Note 11(b))
Non-controlling interests
Total equity
Total capital
2017
$’000
193,054
(39,795)
153,259
105,861
14,149
151,607
5,543
277,160
2016
$’000
226,910
(28,709)
198,201
99,026
22,862
134,302
4,180
260,370
430,419
458,571
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it 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) in the consolidated statement of financial position.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
8. Cash and cash equivalents
Cash on hand
Bank balances
2017
$’000
2
39,793
39,795
2016
$’000
7
28,702
28,709
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 that 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.
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.
9. Borrowings
Bank loan – carsales.com Ltd
Bank loan – Stratton Finance Pty Ltd
Finance lease – RedBook Inspect Pty Ltd
Less: Unamortised borrowing costs
Comprising:
Current borrowings
Non-current borrowings
2017
$’000
187,500
5,545
508
193,553
(499)
193,054
1,755
191,299
193,054
2016
$’000
220,000
7,197
182
227,379
(469)
226,910
1,784
225,126
226,910
In December 2016, carsales.com Ltd entered into a $265 million syndicated revolving loan facility agreement (‘the agreement’).
The loan facility consists of two commitments of $175 million and $90 million which become due in August 2019 and February
2020 respectively. The loan is provided by a syndicate comprising National Australia Bank, Australia and New Zealand Bank and
HSBC. Borrowings under the loan facility bear interest at a floating rate of BBSY Bid plus a margin, with margin determined by
reference to the leverage ratio of the Gearing Group. In addition to two commitments, the loan facility also
has an accordion feature which enables further commitments of up to $135 million to be added under the agreement.
In March 2015, Stratton Finance Pty Ltd entered into a $10 million loan with the principal repayable in equal monthly instalments
over a period of 5 years. The loan was provided by the National Australia Bank and is described as a NAB Business Markets
Flexible Rate Loan. The interest rate is the weighted average of the interest rates applicable to each of the Business Markets
Facility Components (being the Fixed Amount, the Flexible Maturity Fixed Amount, the Cap Amount, the Range Amount and/or
the Floating Amount) for that 30 day pricing period. As at 30 June 2017, a principal of $5,545,000 was outstanding.
Finance income
Finance costs
2017
$’000
640
(7,517)
(6,877)
2016
$’000
537
(8,903)
(8,366)
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 85
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 are recognised net against the loan and amortised on a straight-line basis over the term of the facility.
Borrowings are derecognised 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.
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 AASB 7 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. Cash and cash equivalents draw interest at variable interest rates, while the interest on
the overdraft facility was 8.8% (2016: 8.9%). As at reporting date, the Group had $193,045,000 (2016: $227,197,000) variable rate
borrowings at a weighted average interest rate of 3.0% (2016: 3.3%). 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 2018
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:
Floating rate
Expiring within one year
Expiring beyond one year
2017
$’000
3,400
77,500
80,900
2016
$’000
63,000
45,000
108,000
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Contractual maturities of financial liabilities
Group – at 30 June 2017
Non-derivatives
Non-interest bearing payables
Variable rate borrowings
Fixed rate borrowings
Total non-derivatives
Group – at 30 June 2016
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
-
1,741
262
2,003
-
193,714
262
193,976
42,002
197,210
526
239,738
Carrying
amount
(assets)/
liabilities
$’000
42,002
192,546
508
235,056
-
134,187
63
134,250
-
94,302
63
94,365
36,184
230,297
194
266,675
36,184
226,728
182
263,094
42,002
1,755
2
43,759
36,184
1,808
68
38,060
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 2017
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
At 30 June 2016
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
10. Contributed equity
(a) Share capital
Ordinary shares
Fully paid
Interest rate risk
-100 bps
+100 bps
Carrying
amount
$’000
Profit
$’000
Other
equity
$’000
Profit
$’000
Other
equity
$’000
39,795
(325)
(325)
325
325
(193,045)
2,097
1,772
2,097
1,772
(2,097)
(1,772)
(2,097)
(1,772)
Interest rate risk
-100 bps
+100 bps
Carrying
amount
$’000
Profit
$’000
Other
equity
$’000
Profit
$’000
Other
equity
$’000
28,709
(307)
(307)
307
307
(227,197)
2,291
1,984
2,291
1,984
(2,291)
(1,984)
(2,291)
(1,984)
Notes
2017
Shares
2016
Shares
2017
$’000
10(b) 241,785,292 241,123,298
241,785,292 241,123,298
105,861
105,861
2016
$’000
99,026
99,026
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
87
Recognition and measurement
Ordinary shares are classified as equity.
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.
(b) Movements in ordinary share capital
Date
1 July 2015
August 2015
August 2015
September 2015
October 2015
October 2015
October 2015
November 2015
December 2015
February 2016
March 2016
April 2016
April 2016
May 2016
June 2016
30 June 2016
Date
1 July 2016
September 2016
October 2016
October 2016
November 2016
February 2017
March 2017
April 2017
May 2017
June 2017
30 June 2017
Details
Opening balance
Exercise of employee options
Exercise of employee performance rights
Exercise of employee options
Exercise of employee options
Exercise of employee performance rights
Dividend Reinvestment Plan
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Dividend Reinvestment Plan
Exercise of employee options
Exercise of employee options
Details
Opening balance
Exercise of employee options
Exercise of employee performance rights
Dividend Reinvestment Plan
Exercise of employee options
Exercise of employee options
Exercise of employee options
Dividend Reinvestment Plan
Exercise of employee options
Exercise of employee options
Number of
shares
240,081,596
61,237
123,739
40,433
55,172
50,146
300,352
11,301
107,443
12,860
47,257
13,923
174,860
16,125
26,854
241,123,298
Number of
shares
241,123,298
47,557
30,200
206,250
6,071
11,279
2,625
349,178
4,862
3,972
241,785,292
Issue price
$4.69–$5.93
-
$4.69–$5.93
$4.69–$4.90
-
$9.65
$5.93
$5.93
$4.69–$5.93
$5.93
$4.69–$5.93
$11.72
$5.93
$4.69–$5.93
Issue price
$4.69–$5.93
$0.00
$11.92
$9.10
$5.93–$9.10
$5.93–$9.10
$11.20
$5.93–$9.10
$5.93–$9.10
$’000
91,905
333
-
211
269
-
2,898
67
637
73
280
73
2,050
96
134
99,026
$’000
99,026
237
-
2,459
55
84
21
3,909
41
29
105,861
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
11. Reserves and retained earnings
(a) Reserves
Share-based payment reserve
Foreign currency translation reserve
Share of remeasurement of net defined benefit liability of associates
Available-for-sale asset revaluation reserve
(i) Share-based payment reserve
Balance 1 July
Option expense
Tax on Employee Share Trust charged to equity
Balance 30 June
2017
$’000
22,778
(8,473)
(185)
29
14,149
23,157
(255)
(124)
22,778
2016
$’000
23,157
38
(333)
-
22,862
20,299
2,214
644
23,157
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
38
(8,511)
(8,473)
1,172
(1,134)
38
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.
(iii) Share of remeasurement of net defined benefit liability of associates
Balance 1 July
Share of remeasurement of net defined benefit liability of associates
Balance 30 June
(iv) Available-for-sale asset revaluation reserve
Balance 1 July
Changes in the fair value of available-for-sale financial assets
Balance 30 June
(b) Retained earnings
Movements in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends
Balance 30 June
(333)
148
(185)
-
29
29
-
(333)
(333)
-
-
-
134,302
109,479
(92,174)
151,607
113,829
109,249
(88,776)
134,302
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 89
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 2016 of 19.5 cents
(2015: 17.7 cents per fully paid ordinary share plus a special dividend of 1.4 cents)
per fully paid ordinary share paid on 17 October 2016.
Final fully franked ordinary dividend for the year ended 30 June 2016 of 19.5 cents
(2015: 17.7 cents plus a special dividend of 1.4 cents) – satisfied through the issuance
of shares under the Dividend Reinvestment Plan.
Interim fully franked cash dividend for the year ended 30 June 2017 of 18.7 cents
(2016: 17.8 cents) per fully paid share paid on 20 April 2017 (2016: 15 April 2016).
Interim fully franked ordinary dividend for the year ended 30 June 2017 of 18.7 cents
(2016: 17.8 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, the Directors have recommended the payment
of a final dividend of 21.5 cents per fully paid ordinary share (2016: final dividend 19.5 cents).
The aggregate amount of the declared dividend expected to be paid on 19 October 2017
out of retained earnings at 30 June 2017, 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% (2016: 30.0%)
2017
$’000
2016
$’000
44,569
43,000
2,459
47,028
2,898
45,898
41,237
40,828
3,909
45,146
92,174
2,050
42,878
88,776
2017
$’000
2016
$’000
51,984
47,019
2017
$’000
45,860
2016
$’000
42,176
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) 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 2017 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 five days after, but not including, the Record Date (22 September 2017). The last date for shareholders to nominate
their participation in the DRP is 5:00pm (AEST) on 25 September 2017. 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the Brazilian Real (BRL), the Korean Won (KRW), the Mexican Peso (MXP), the Chilean Peso (CLP) and Argentine
Peso (ARS).
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
net investment hedge quasi-equity intercompany loans used to fund investments in subsidiaries, but 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 hedged unless the cash flows are significant and the amount and future payment date are certain. No foreign currency
derivatives were entered into in the year.
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’s share of the reported net profits of our significant overseas associates and
subsidiaries through potential movements in exchange rates are as follows:
Impact on profit:
AUD to KRW
AUD to BRL
AUD to MXP
AUD to CLP
AUD to ARS
Net Movement
Impact on equity:
AUD to KRW
AUD to BRL
AUD to MXP
AUD to CLP
AUD to ARS
Net Movement
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
2017
$’000
-5%
390.7
144.2
(81.3)
34.8
(29.5)
458.9
2017
$’000
-5%
6,893
3,032
284
1,037
209
11,455
2016
$’000
-5%
252.3
160.8
(22.2)
13.7
-
404.6
2016
$’000
-5%
6,911
3,971
464
936
-
12,282
2017
$’000
5%
(390.7)
(144.2)
81.3
(34.8)
29.5
(458.9)
2017
$’000
5%
(6,893)
(3,032)
(284)
(1,037)
(209)
(11,455)
2016
$’000
5%
(252.3)
(160.8)
22.2
(13.7)
-
(404.6)
2016
$’000
5%
(6,911)
(3,971)
(464)
(936)
-
(12,282)
(ii) Price risk
The group’s exposure to equity securities price risk arises from the 15.6% investment in iCar Asia Limited held by the group and
classified in the balance sheet as an available-for-sale financial asset (see Note 19(d)). Changes in the fair value are recognised
directly in other comprehensive income.
Other than the investment in iCar Asia Limited, the Group is not exposed to significant price equities risk.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 91
(b) Credit risk
Credit risk of the Group arises predominantly from outstanding receivables from customers.
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.
(e) Fair value estimation
There are no financial assets or liabilities that are measured at fair value at 30 June 2017 other than the available-for-sale
investment in iCar Asia Limited which is listed on the ASX and therefore has a readily determinable fair value.
OTHER ASSETS AND LIABILITIES
14. Trade and other receivables
Current
1–3 months
3– 6 months
Over 6 months
Trade receivables
Accrued income
Other receivables
Prepayments
Trade and other receivables
Impaired
receivables
2017
$’000
255
154
172
490
1,071
Not impaired
receivables
2017
$’000
36,916
2,223
691
64
39,894
Total
receivables
2017
$’000
37,171
2,377
863
554
40,965
Provision
2017
$’000
255
154
172
490
1,071
Carrying
value
2017
$’000
36,916
2,223
691
64
39,894
3,312
2,033
3,165
48,404
Carrying
value
2016
$’000
34,324
1,861
738
36
36,959
1,948
2,657
3,158
44,722
Recognition and measurement
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 that 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.
(a) Impaired trade receivables
The individually impaired receivables mainly relate to customers that are in unexpectedly difficult economic situations.
The creation and release of the provision for impaired receivables has been included in ‘operations 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(b) Accrued income
Services provided in the current reporting period are recognised on accrual basis. Settlement is generally within 30 days.
(c) 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.
(d) 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.
15. Property, plant and equipment
At 30 June 2017
Cost
Accumulated depreciation
Net book amount
At 30 June 2016
Cost
Accumulated depreciation
Net book amount
Plant and
equipment
$’000
Motor
vehicles
$’000
Leasehold
impro-
vements
$’000
8,076
(6,126)
1,950
6,704
(4,949)
1,755
705
(213)
492
363
(154)
209
8,763
(3,916)
4,847
8,032
(3,388)
4,644
Total
$’000
17,544
(10,255)
7,289
15,099
(8,491)
6,608
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 or minimum lease period if shorter
• 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
93
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.
16. Intangible assets
As at 1 July 2015
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2016
Opening net book amount
Acquisition of subsidiaries
Additions
Disposals
Amortisation charge
Reclassifications to brand intangibles (ii)
Exchange differences
Closing net book amount
At 30 June 2016
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2017
Opening net book amount
Acquisition of subsidiaries
Additions
Disposals
Amortisation charge
Reclassifications to brand intangibles (ii)
Exchange differences
Closing net book amount
At 30 June 2017
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
146,843
-
146,843
146,843
26,543
-
-
-
(4,524)
895
169,757
169,757
-
169,757
169,757
4,686
-
-
-
(3,329)
(1,433)
169,681
169,681
-
169,681
Computer
Brands and
customer
software relationships
$’000
$’000
Other
intangible
assets(i)
$’000
17,704
(9,499)
8,205
8,205
-
8,942
(186)
(4,106)
-
-
12,855
26,438
(13,583)
12,855
12,855
707
9,908
-
(6,104)
-
(47)
17,319
37,899
(20,580)
17,319
-
-
-
4,453
(3,553)
900
-
3,245
-
-
(868)
6,463
(455)
8,385
9,253
(868)
8,385
8,385
1,140
-
-
(1,099)
4,469
(25)
12,870
14,838
(1,968)
12,870
900
-
135
-
(463)
-
-
572
4,588
(4,016)
572
572
-
71
-
(546)
-
(13)
84
4,647
(4,563)
84
Total
$’000
169,000
(13,052)
155,948
155,948
29,788
9,077
(186)
(5,437)
1,939
440
191,569
210,036
(18,467)
191,569
191,569
6,533
9,979
-
(7,749)
1,140
(1,518)
199,954
227,065
(27,111)
199,954
(i)
(ii)
Other intangible assets include database, domain names and other.
Reclassifications reflect the fair value adjustment of the brand and customer relationships intangibles acquired as part of business combinations. The reclassification
from goodwill includes the net deferred tax effect of the brand intangibles being reclassified.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Recognition and measurement
(i) Goodwill
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.
(ii) Computer software
Software includes capitalised development costs being an internally generated intangible asset.
Costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute
to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems.
(iii) Brands and customer relationships
Acquired brands represent the value of brands in acquired subsidiaries and businesses that are separately fair valued
at the date of acquisition from the remaining goodwill. Acquired brands are written off over a 10-year period.
Acquired customer relationships have a finite useful life and are carried at fair value at acquisition date less accumulated
depreciation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of the
asset over its estimated useful life, which is between seven to 10 years.
(iv) Other intangible assets
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
• Brand intangibles
• Customer relationships
4 – 5 years
5 – 10 years
10 years
10 years
7 – 10 years
(a) Cash generating units
Goodwill is allocated to the Group’s cash-generating units (CGUs) and tested annually to determine whether they have suffered
any impairment. 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).
A segment-level summary of the goodwill allocation is presented below.
2017
Online Advertising Services
Data, Research and Services
Finance and Related Services
Mexico
Chile
Argentina
International
Total
$’000
72,076
14,541
58,698
145,315
4,112
17,324
2,930
24,366
169,681
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
2016
Online Advertising Services
Data, Research and Services
Finance and Related Services
Mexico
Chile
International
95
Total
$’000
72,076
14,541
58,415
145,032
4,778
19,947
24,725
169,757
(b) Impairment testing and key assumptions
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,
which includes carsales’ equity held associate investments. 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.
Key assumptions
Both value in use and fair value less cost to sell valuation methods have been employed in determining the recoverable
amounts of CGUs. Both methods are predicated on cash flow projections which necessitates the adoption of assumptions
and estimates. The key assumptions and estimates used in management’s calculations primarily relate to:
• five or ten year cash flow forecasts sourced from internal budgets and long term forecasts;
• terminal value growth rates applied to the period beyond the five to ten year cash flow forecasts; and
• pre-tax discount rates, used to discount the cash flows to present value.
‘Best estimates’ have been used in formulating the assumptions and estimates. However, changes in any of the key
assumptions, including increases in discount rates or changes in operating conditions may cause the recoverable
amount of CGUs to fall below their carrying amounts, resulting in an impairment loss being recognized.
The key assumptions for each CGU are detailed as follows:
CGU
Online Advertising Services
Data, Research and Services
Finance and Related Services
Chile
Mexico
Argentina
Valuation method
Value in use
Value in use
Value in use
Value in use
Fair value less costs to sell
Fair value less costs to sell
Years of
cash flow
projection
5
5
5
5
10
-
2017
2016
2017
2016
Terminal
growth rate
2.5%
2.5%
3.0%
3.0%
3.0%
-
2.0%
2.0%
2.5%
-
-
-
Pre-tax
discount rate
13.8%
13.8%
14.0%
13.8%
15.9%
-
10.6%
10.6%
10.6%
-
-
-
Given the recent nature of the Demotores acquisition in Argentina, the recoverable amounts for Argentina have been based on
fair values less costs to sell supported with reference to the transaction price.
(c) Impact of possible changes in key assumptions
Management does not consider that a reasonable change in any of the key assumptions would lead to impairment.
During the year Stratton Finance (part of the Finance and Related Services segment) experienced a revenue and profitability
decline as a result of significant volume capacity reduction at a major lender. The approved budgets used in the preparation
of the value in use models show a recovery in revenue and profitability based on increasing volumes of finance written by
Stratton and other cash flow generative action plans put in place by management. Management does not believe that
a reasonably possible change in the key assumptions would lead to impairment in the carrying value of the Finance and
Related Services CGU, however the performance of the business continues to be kept under review.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
17. Payables and provisions
Payables
Trade payables
Accrued expenses
Other payables
Total payables
Provisions
Employee benefits – current
Employee benefits – non-current
Total employee benefits
2017
$’000
18,133
20,739
3,130
42,002
6,040
1,318
7,358
2016
$’000
15,731
17,159
3,294
36,184
6,310
1,037
7,347
Recognition and measurement
(i) Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year that are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(ii) Short term obligations
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 that 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 high-quality corporate 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.
18. Commitments
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 five years. Upon renewal date, the Company has the option to renew
the lease for a further five years at terms which are negotiable. The Group also leases various motor cars and printers under
non-cancellable operating leases.
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
2017
$’000
2016
$’000
6,223
11,934
1,044
19,201
5,223
12,518
2,266
20,007
Bank guarantee facility
Guarantees in respect of bank facilities drawn down but not included in the accounts of the Group are $3,650,000
(2016: $3,200,000).
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
97
GROUP STRUCTURE
19. Interests in other entities
(a) Material subsidiaries
The Group’s principal subsidiaries at 30 June 2017 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
Place of
business/
country of
incorporation
Ownership
interest held by
the Group (i)
Ownership
interest held by
non-controlling
interests
Principal
activities
Australia
Australia
Australia
Australia
New Zealand
Malaysia
China
Webpointclassifieds Pty Ltd
Equipment Research Group Pty Ltd
Discount Vehicles Australia Pty Ltd
Automotive Data Services Pty Ltd
Auto Information Limited
RedBook Automotive Services (M) Sdn Bhd
RedBook Automotive Data Services (Beijing) Limited
Automotive Data Services (Thailand) Company Limited Thailand
Australia
tyresales Pty Ltd
Australia
Auto Exchange Holdings Pty Ltd
Australia
Automotive Exchange Pty Ltd
Australia
carsales.com Investments Pty Ltd
Australia
carsales Holdings Pty Ltd
Australia
carsales.com Ltd Employee Share Trust
Australia
carsales Finance Pty Ltd
Carconnect Pty Ltd (ii)
Australia
Australia
Stratton Finance Pty Ltd
Australia
Stratton Franchise Pty Ltd
Australia
Stratton Marine And Outdoor Finance Pty Ltd
RedBook Inspect Pty Ltd (iii)
Australia
Australia
carsales Latam Pty Ltd
Mexico
carsales Mexico SAPI de CV
Chile
carsales Chile SpA
Chile
Chileautos SpA
Australia
carsales Foundation Pty Ltd
Australia
carsales Argentina Pty Ltd
United States
of America
Chile
Argentina
Colombia
Demotores Holdings LLC
Demotores Chile SpA
Demotores S.A.
Demotores Colombia S.A.S.
2017
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
50.0
100.0
100.0
100.0
100.0
50.1
50.1
50.1
43.8
50.1
100.0
65.0
100.0
83.3
100.0
100.0
100.0
100.0
100.0
100.0
2016
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
50.0
100.0
100.0
100.0
100.0
50.1
50.1
50.1
37.6
50.1
100.0
65.0
100.0
83.3
100.0
-
-
-
-
-
2017
%
-
-
-
-
-
-
-
-
50.0
-
50.0
-
-
-
-
49.9
49.9
49.9
56.2
49.9
-
35.0
-
16.7
-
-
-
-
-
-
2016
%
-
-
-
-
-
-
-
-
50.0
-
50.0
-
-
-
-
49.9
49.9
49.9
62.4
49.9
-
35.0
-
16.7
-
-
-
-
-
-
(1)
(2)
(1)
(2)
(2)
(2)
(2)
(2)
(3)
(4)
(1)
(4)
(4)
(5)
(4)
(6)
(6)
(6)
(6)
(7)
(4)
(1)
(4)
(1)
(8)
(4)
(4)
(1)
(1)
(1)
(i) The proportion of ownership interest is equal to the proportion of voting power held.
(ii) Stratton Fleet Services Pty Ltd has been renamed to Carconnect Pty Ltd during the year ended 30 June 2017.
(iii) Auto Inspect Pty Ltd has been renamed to RedBook Inspect Pty Ltd during the year ended 30 June 2017.
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.
8. Trustee company.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(i) Subsidiaries
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.
(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 intercompany eliminations.
30 June 2017
Summarised balance sheet
Current assets
Current liabilities
Non-current assets
Non-current liabilities
Net assets
Accumulated NCI
30 June 2016
Summarised balance sheet
Current assets
Current liabilities
Non-current assets
Non-current liabilities
Net assets
Accumulated NCI
30 June 2017
Summarised statement
of comprehensive income
Profit/(loss) for the period
Profit/(loss) allocated to NCI
Dividends paid to NCI
Other comprehensive income
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
3,113
(3,007)
175
-
281
140
4,064
(1,525)
163
-
2,702
1,351
12,724
(18,546)
20,737
(3,894)
11,021
1,994
1,892
(832)
776
(506)
1,330
663
1,201
(647)
4,379
(17)
4,916
1,107
1,922
(365)
117
-
1,674
288
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
2,050
(2,051)
285
-
284
(8)
2,602
(553)
173
-
2,222
1,111
10,530
(15,792)
18,905
(5,425)
8,218
654
1,068
(754)
196
(119)
391
195
3,933
(761)
4,598
(56)
7,714
2,036
1,250
(101)
4
-
1,153
192
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
(4)
(2)
-
-
2,581
1,290
1,050
-
4,674
2,348
1,008
-
1,339
668
200
-
(2,627)
(919)
-
(10)
881
150
-
(54)
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 99
30 June 2016
Summarised statement
of comprehensive income
Profit/(loss) for the period
Profit/(loss) allocated to NCI
Dividends paid to NCI
Other comprehensive income
30 June 2017
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 2016
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
(c) Interests in associates
Name of entity
Webmotors S.A.
iCar Asia Limited*
SK ENCARSALES.COM Ltd
RateSetter Australia Pty Ltd
PromisePay Pte Ltd
Total equity accounted investments
Name of entity
Webmotors S.A.
iCar Asia Limited *
SK ENCARSALES.COM Ltd
RateSetter Australia Pty Ltd
PromisePay Pte Ltd
Total equity accounted investments
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
(210)
(105)
-
-
557
278
350
-
8,470
4,290
4,667
-
1,114
556
287
-
(718)
(251)
-
(373)
346
59
-
133
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
1,127
(51)
9
3,294
(123)
(2,100)
6,265
(1,377)
(3,749)
893
(760)
(74)
(2,012)
(35)
-
1,085
1,071
1,139
59
(2,047)
576
-
-
576
tyresales
$’000
Auto
Exchange
$’000
Stratton
Finance
$’000
RedBook
Inspect
$’000
SoloAutos
$’000
Chileautos
$’000
670
(68)
-
602
447
(113)
(700)
(366)
12,665
(5,093)
(7,806)
1,056
(169)
(789)
(234)
98
(722)
17
-
(705)
217
-
-
217
Place of
business/
country of
incorporation
Brazil
Australia
South Korea
Australia
Singapore
% of ownership interest
2016
%
30.0
20.2
49.9
20.0
10.1
2017
%
30.0
-
49.9
20.5
10.1
Nature of
relationship
Measurement
method
Associate Equity method
Associate Equity method
Equity method
Associate
Equity method
Associate
Equity method
Associate
Quoted fair value
2016
2017
$’000
$’000
-
-
42,665
-
-
-
-
-
-
-
42,665
-
Carrying amount
2016
2017
$’000
$’000
83,381
63,678
21,658
-
145,710
144,759
9,237
9,520
6,990
6,515
266,976
224,472
Share of profit/(loss)
2016
2017
$’000
$’000
3,376
3,028
(2,456)
(1,241)
5,309
8,204
(1,006)
(1,019)
-
(474)
5,223
8,498
* As set out in Note 19(e) the investment in iCar Asia Limited was reclassified to available-for-sale financial assets during the year.
RateSetter and PromisePay are both equity accounted for as carsales exercises significant influence over these entities through the right to appoint a Director to the
respective Boards.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(i) Associates
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.
(ii) Contingent liabilities in respect of associates
Contingent liabilities – associates
Contingent liabilities relating to liabilities of the associate for which the Company is severally liable
(iii) Summarised financial information for significant associates
2017
$’000
2016
$’000
482
568
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
Acquired intangibles
Carrying amount
Reconciliation of carrying value
Opening carrying value
Investment in associate/capital return
Profit/(loss) for the period
Amortisation of intangibles
Gain on dilution
Other comprehensive income
Dividends received
Impairment loss
Transfer to available-for-sale financial asset
Closing carrying value
Webmotors S.A.
iCar Asia Limited *
SK ENCARSALES.COM
Ltd
30 June
2017
$’000
31,553
23,002
(9,933)
-
44,622
30%
13,387
42,865
7,426
63,678
83,381
(13,511)
3,632
(604)
-
(2,377)
(6,843)
-
-
63,678
30 June
2016
$’000
95,996
15,166
(9,408)
-
101,754
30 June
2017
$’000
-
-
-
-
-
30 June
2016
$’000
14,489
26,811
(3,294)
(486)
37,520
30%
30,526
44,518
8,337
83,381
82,811
-
3,922
(546)
-
(1,055)
(1,751)
-
-
83,381
-
-
-
-
-
21,658
-
(1,241)
-
-
-
-
(7,145)
(13,272)
-
20.2%
7,579
14,079
-
21,658
19,362
3,797
(2,456)
-
955
-
-
-
-
21,658
30 June
2017
$’000
25,164
10,029
(8,496)
(5,446)
21,251
49.9%
10,604
120,530
13,625
144,759
145,710
-
9,963
(1,759)
-
(4,004)
(5,151)
-
-
144,759
30 June
2016
$’000
25,042
3,978
(8,050)
(7,261)
13,709
49.9%
6,841
123,186
15,683
145,710
144,851
-
7,064
(1,755)
-
(552)
(3,898)
-
-
145,710
* These numbers are management estimates based on available market data.
The intangibles and goodwill recognised on acquisition have now been separately identified in the table above.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
101
Summarised statement
of comprehensive income
Revenue
Profit from continuing operations
Webmotors S.A.
30 June
2017
$’000
44,568
12,108
30 June
2016
$’000
37,023
11,255
iCar Asia Limited
30 June
2017*
$’000
2,911
(7,166)
30 June
2016
$’000
6,811
(12,159)
SK ENCARSALES.COM Ltd
30 June
2016
$’000
35,120
10,640
30 June
2017
$’000
45,016
19,965
(665)
9,975
5,309
(552)
4,757
Other comprehensive income
Total comprehensive income
-
12,108
-
11,255
-
(7,166)
-
(12,159)
129
20,094
carsales share
Profit from continuing operations
Other comprehensive income
Total
Dividends received from associates
and joint venture entities
3,028
(2,377)
651
3,376
(1,055)
2,321
(1,241)
-
(1,241)
(2,456)
-
(2,456)
8,204
(4,004)
4,200
6,843
1,751
-
-
5,151
3,898
* These numbers are management estimates of the financial performance of iCar Asia Limited between 1 July 2016 and 9 December 2016, the period over which
carsales held the asset as an associate.
(iv) Webmotors
Under accounting standards, there is no requirement to annually test for impairment in relation to carsales’ equity held associate
investments. Nevertheless, each year the Company does consider whether there are any triggers for impairment in relation to
these investments. In light of the continued decline of the economy in Brazil, management has impairment tested
the carrying value of the equity accounted investment in Webmotors. This review was performed using a value in use cash flow
model. This model was prepared on the same basis as the impairment testing model used for goodwill (as set out earlier in
this note) and incorporates cash flow projections based on approved budgets for the next 5 years, which show higher cash flow
growth rates than those observed in FY17 which in part are predicated on an improvement in the Brazilian economy. A growth
rate beyond the budget period of 4.5% and a pre-tax discount rate of 21.6% has been used in the model.
The value indicated by the value in use model exceeded the carrying value of the investment in Webmotors by more than
20% at 30 June 2017. As such, no impairment charge has been recognised.
However, the valuation outcome is sensitive to the underlying performance of the Brazilian economy which manifests itself
in the model in two key areas:
1.
2.
The timing of the recovery of the Brazilian economy has a significant impact on the operating cash flow growth that
Webmotors is able to generate; and
The current macro-economic environment (specifically key inputs such as market risk premium, inflation/interest rates)
has a significant impact on the discount rate.
Management does not believe that a reasonably possible change in these key assumptions would lead to impairment
in the carrying value of the investment in Webmotors.
However, should the Brazilian economy continue to decline resulting in an increase in the discount rate of 2%, or a reduction
in the assumed growth rate of cash flows of 7% per annum over the budget period, the valuation indicated by the value in use
model would be approximately equal to the carrying value of the investment in Webmotors.
(d) Available-for-sale financial assets
Name of Entity
iCar Asia Limited
Total available-for-sale financial assets
At 1 July
Transfer from equity accounted associates
Gain recognised through other comprehensive income
At 30 June
Ownership interest %
15.6
Carrying Amount
2017
$’000
13,301
13,301
-
13,272
29
13,301
2016
$’000
-
-
-
-
-
-
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Recognition and measurement
Investments are designated as available-for-sale financial assets if they do not have fixed maturities and fixed or determinable
payments, and management intends to hold them for the medium to long term. Financial assets that are not classified into any
of the other categories (at FVPL, loans and receivables or held-to-maturity investments) are also included in the available-for-
sale category.
The financial assets are presented as non-current assets unless they mature, or management intends to dispose of them within
12 months of the end of the reporting period.
(e) Fair value adjustment and investment dilution
Name of entity
Associate dilution
Fair value adjustment on transfer to available-for-sale financial assets
Total fair value adjustment and investment dilution
2017
$’000
268
(7,145)
(6,877)
2016
$’000
955
-
955
Associate dilution
As a result of a change in the Company’s holding of investments in associates, there is a gain on associate dilution of $268,000
(2016: $955,000).
Fair value adjustment on transfer to available-for-sale financial assets
The fair value adjustment arose from the change in accounting treatment from equity accounting the Group’s investment 15.6%
in iCar Asia Limited to an available-for-sale financial asset as a result of carsales non-executive directors stepping down from the
Board of iCar Asia Limited on 9 December 2016 and no longer having significant influence.
20. Business combinations and disposals
(a) Demotores acquisition
On 24 February 2017, carsales.com Ltd acquired 100% acquisition of the Demotores Group which consists of Demotores Chile
SpA, Demotores S.A, Demotores Colombia S.A.S and Demotores Holding LLC.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Cash paid
Working capital adjustment
The assets and liabilities acquired are estimated as follows:
Cash and cash equivalents
Accounts receivable
Plant and equipment
Intangible assets
Trade and other payables
Deferred tax liabilities
Net Assets
Add: Goodwill
Net assets acquired
$’000
6,667
(216)
6,451
80
1,275
78
1,847
(861)
(372)
2,047
4,404
6,451
(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 assessed are still being assessed and may be subject to change. The acquisition accounting will
be finalised within 12 months of the acquisition date.
(ii) Working capital adjustment
A working capital adjustment of $216,000 is receivable by carsales.com Ltd from the vendor. The working capital adjustment
remained outstanding at 30 June 2017.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only (b) Chileautos acquisition
On 25 March 2016 carsales.com Ltd acquired 83.3% of Chileautos SpA (Chileautos).
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Cash paid
The assets and liabilities acquired are estimated as follows:
Cash and cash equivalents
Accounts receivable
Plant and equipment
Intangible assets
Trade and other payables
Tax liabilities
Deferred tax liability
Net assets
Less: Non-controlling interests
Add: Goodwill
Net assets acquired
103
$’000
19,657
342
193
3
4,469
(68)
(5)
(1,140)
3,794
(77)
15,940
19,657
(i) Finalisation of Chileautos acquisition accounting
Given that the acquisition occurred close to the previous financial year end, the final net asset valuation and allocation
of the purchase price to acquired assets was preliminary. In accordance with the Group’s accounting policy, the accounting
for the acquisition of Chileautos was finalised during the current year and the preliminary step acquisition balances have
been updated accordingly.
The intangible assets acquired comprises brands and customer relationships.
Revised goodwill is $15,940,000 (preliminary goodwill $19,024,000).
(ii) Option to purchase remaining shares
carsales retains an option to purchase the remaining 16.7% stake in Chileautos at its election at any time during the next
three years at a fixed price.
(iii) Non-controlling interest
The Group has recognised the non-controlling interests in Chileautos at proportionate share of net identifiable assets.
The current ownership structure of Chileautos is as follows:
carsales Chile SpA
Non-controlling interests
Carlos Gonzalo Prieto Concha
Andres Cooper Ochsenius
Juan Francisco Bettancourt Mujica
83.3%
7.5%
1.7%
7.5%
100%
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Recognition and measurement
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.
(c) SoloAutos acquisition
On 2 October 2015 carsales.com Ltd acquired 65% of carsales Mexico SAPI de CV (SoloAutos).
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Cash paid
The assets and liabilities acquired are estimated as follows:
Cash and cash equivalents
VAT receivable
Plant and equipment
Intangible assets
Net assets
Less: Non-controlling interests
Add: Goodwill
Net assets acquired
$’000
10,624
4,269
877
88
3,245
8,479
(2,661)
4,806
10,624
(i) Finalisation of SoloAutos acquisition accounting
Given that the acquisition occurred close to the previous financial year end, the final net asset valuation and allocation
of the purchase price to acquired assets was preliminary. In accordance with the Group’s accounting policy, the accounting
for the acquisition of SoloAutos was finalised during the current year and the preliminary step acquisition balances have
been updated accordingly.
The intangible assets acquired comprises brands and customer relationships.
(ii) Earn-out agreement
As part of the inducement agreement there is a portion of deferred consideration that is payable to the other shareholder
in respect of the purchase of the trade and assets of the business from SoloAutos. The earn-out is calculated on the basis
of the entity’s performance over a three-year period after the acquisition date provided the other shareholder is in continuous
employment. This amounts to a maximum of USD $2.15 million and is treated as employee compensation expense in the
post-combination period.
carsales has the option to purchase the remaining 35% of the shares subject to satisfaction of the terms and conditions
at a price that approximates the fair value of the non-controlling interest at the date of exercise of the option.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only (iii) Non-controlling interest
The Group has recognised the non-controlling interests in SoloAutos at proportionate share of net identifiable assets.
The current ownership structure of SoloAutos is as follows:
carsales Latam Pty Ltd
Non-controlling interests
Jose Antonio Ramirez (and other legacy shareholders)
(d) Sale of business
The profit from sale of business of $931,000 represents the net profit of sale of Homesales business on 30 June 2016.
105
65%
35%
100%
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
Other termination
2017
$
7,193,356
227,152
174,590
262,603
(858,250)
986,107
7,985,558
2016
$
8,606,950
180,888
162,626
137,247
63,912
-
9,151,623
(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
Purchases of goods and services from related parties
2017
$
2016
$
1,318,262
988,588
3,461,834
3,471,979
All transactions were made on normal commercial terms and conditions at market rates and include 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)
Other related parties
2017
$
2016
$
164,996
137,367
923,774
876,268
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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
carsales Latam Pty Ltd
carsales Foundation Pty Ltd
carsales Argentina 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
30 June 2016
30 June 2016
30 June 2017
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 2017 of the Closed Group.
Consolidated statement of comprehensive income
Revenue from continuing operations
Sale of goods and services
Revenue from continuing operations
Expenses
Costs of sale
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
Loss on associate fair value adjustment
Gain on sale of business
Profit before income tax
Income tax expense
Profit from continuing operations
Total comprehensive income for the year
2017
$’000
2016
$’000
271,510
271,510
254,953
254,953
(195)
(57,013)
(22,319)
(28,182)
163,801
(7,251)
992
(7,053)
14,109
(11,656)
-
152,942
(45,493)
107,449
107,449
(119)
(54,369)
(21,543)
(24,875)
154,047
(5,437)
656
(8,598)
10,972
-
931
152,571
(43,287)
109,284
109,284
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only (b) Consolidated statement of financial position
Set out below is a consolidated statement of financial position as at 30 June 2017 of the Closed Group.
Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Investments
Available-for-sale financial assets
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
107
2017
$’000
22,001
56,488
78,489
307,540
13,301
2,885
3,102
91,830
418,658
2016
$’000
13,517
55,894
69,411
338,920
-
2,953
5,323
89,319
436,515
497,147
505,926
21,068
8,818
4,718
6,107
40,711
21,359
6,312
5,266
5,990
38,927
187,000
989
187,989
219,531
784
220,315
228,700
259,242
268,447
246,684
105,861
22,838
139,748
268,447
99,026
23,185
124,473
246,684
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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
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
Total remuneration for taxation services
Other services
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
2017
$’000
407,610
238,454
646,064
2016
$’000
370,616
224,566
595,182
86,526
63,102
149,628
143,350
88,124
231,474
37,850
833,542
88,472
915,128
33,039
33,039
33,097
33,097
866,581
948,225
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
109
24. Share-based payments
Share-based compensation benefits are provided to employees via the carsales.com Ltd Employee Option Plan.
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were ($255,000) (2016: $2,214,000).
Employee Option Plan
Set out below are summaries of options and performance rights granted under the plan:
2017
Oct 2013
Oct 2013
Oct 2014
Oct 2014
Oct 2015
Oct 2015
Oct 2016
Oct 2016
Total
Grant date Expiry date
Oct 2011
Oct 2012
Oct 2016
Oct 2017/
Mar 2018
Oct 2018
Oct 2018
Oct 2019
Oct 2019
Oct 2020
Oct 2020
Oct 2031
Oct 2031
Balance at
start of the
year
Number
36,257
216,720
Exercise
price
$4.69
$5.93
Options
granted
during the
year
Number
-
-
$9.10
$0.00
$10.71
$0.00
$10.24
$0.00
$12.23
$0.00
374,626
142,001
638,459
219,865
862,520
269,774
-
-
2,760,222
-
-
-
-
-
-
1,377,659
-
1,377,659
Perfor-
mance
rights
granted
during the
year
Number
-
-
-
-
-
-
-
-
-
332,612
332,612
Total
exercised
during the
year
Number
(36,257)
(21,572)
Expired
or lapsed
during the
year
Number
-
-
(18,537)
(30,200)
-
-
-
-
-
-
(106,566)
(294,948)
(111,801)
(215,375)
(115,683)
(251,360)
(94,273)
(3,636)
(632)
Balance
at the
end of
the year
Number
-
195,148
61,141
-
423,084
104,182
611,160
175,501
886,824
215,336
Other*
-
-
-
-
-
-
-
-
(487,199)
(116,644)
(1,087,708)
(603,843) 2,672,376
Vested
and
exercisable
at end
of the
year
Number
-
195,148
61,141
-
-
-
-
-
-
-
256,289
Weighted average exercise price
$7.44
$12.23
$0.00
$4.38
$7.00
$8.74
$6.69
* Other change reflect options and performance rights outstanding at cessation of employment.
2016
Grant date Expiry date
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 2015
Oct 2015
Oct 2016
Oct 2016
Oct 2017
Oct 2017
Oct 2018
Oct 2018
Oct 2019
Oct 2019
Oct 2020
Oct 2020
Total
Exercise
price
$4.90
$4.90
$4.69
$4.69
$5.93
$0.00
$9.10
$0.00
$10.71
$0.00
$10.24
$0.00
Balance at
start of the
year
Number
25,000
45,000
33,662
69,244
482,823
140,654
394,759
183,511
657,376
224,523
-
-
2,256,552
Options
granted
during the
year
Number
-
-
-
-
-
-
-
-
-
-
864,041
-
864,041
Performance
rights
granted
during the
year
Number
-
-
-
-
-
-
-
-
-
-
-
270,134
270,134
Total
exercised
during the
year
Number
(25,000)
(45,000)
(12,598)
(54,051)
(255,956)
(136,614)
-
(37,271)
-
-
-
-
(566,490)
Expired
or lapsed
during the
year
Number
-
-
-
-
(10,147)
(4,040)
(20,133)
(4,239)
(18,917)
(4,658)
(1,521)
(360)
(64,015)
Balance at
the end of
the year
Number
-
-
21,064
15,193
216,720
-
374,626
142,001
638,459
219,865
862,520
269,774
2,760,222
Vested and
exercisable at
end of the
year
Number
-
-
21,064
15,193
216,720
-
-
-
-
-
-
-
252,977
Weighted average exercise price
$6.35
$10.24
$0.00
$3.84
$6.97
$7.44
$5.75
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
The estimate of the weighted average share price at the date of exercise of options exercised regularly during the year
ended 30 June 2017 is estimated to be approximately $11.56 (2016: approximately $10.47).
The weighted average remaining contractual life of share options outstanding at the end of the period was 8.58 years
(2016: 3.34 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 44.
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 2017 is $1.10 (2016: $1.86). The
assessed fair value at grant date of options based on the Relative Total Shareholder Return (RTSR) measure during the
year ended 30 June 2017 is $0.98 (2016: n/a).The assessed value at grant date of performance rights granted during the year
ended 30 June 2017 ranged between $9.49 and $9.86 (2016: between $8.44 and $8.74). The assessed fair value at grant
date of performance rights based on the Relative Total Shareholder Return (RTSR) measure granted during the year ended
30 June 2017 is $4.87 (2016: n/a). 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 options and performance rights, 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 2017 included:
Options
Performance rights
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
2017
$12.23
October 2016
October 2031
$11.05
23.0%
3.8%
1.8%
2016
$10.24
2017
$0.00
October 2015 October 2016
October 2020 October 2031
$11.05
23.0%
3.8%
1.7%
$9.71
31.8%
3.5%
2.8%
2016
$0.00
October 2015
October 2020
$9.71
31.8%
3.5%
2.8%
The expected price volatility is based on historical volatility adjusted for any expected changes to future volatility due to publicly
available information.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
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
111
2017
$’000
2016
$’000
57,443
433,914
491,357
28,501
188,215
216,716
105,861
22,864
145,916
274,641
59,648
413,557
473,205
15,909
220,556
236,465
99,026
23,213
114,501
236,740
123,589
131,569
123,618
131,569
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.
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.
26. Contingent liabilities
The Group and the parent entity from time to time may incur obligations arising from litigation or other contracts entered
into in the normal course of business. Neither the Group or parent entity have any material contingent liabilities where the
probability of outflow in any settlement is greater than remote as at 30 June 2017 or 30 June 2016 other than the associates
contingent liabilities as set out in Note 19(c).
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
27. 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 aside from as specifically set out below:
• AASB 9 Financial Instruments (effective 1 January 2018).
• AASB 15 Revenue from Contracts with Customers (effective 1 January 2018).
– The Group will be reporting revenue based on the new standard in the December 2018 half-year report.
The Group has assessed the new standard impact on the 30 June 2017 consolidated income statement and
the impact is not material.
• IFRS 16 Leases (effective 1 January 2019).
– The Group will be reporting revenue based on the new standard in the December 2018 half-year report.
The Group has assessed the new standard impact and it is expected to be not material.
The following standards are not applicable to carsales.com Ltd and therefore there is no impact on the Group:
• Superannuation Entities (AASB 1056) (effective 1 January 2016).
• Accounting for acquisitions of interests in joint operations (AASB 2014-3) (effective 1 January 2016).
28. Events occurring after the reporting period
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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 113
DIRECTORS’ DECLARATION
30 JUNE 2017
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 68 to 112 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 2017 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 CEO, and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
Cameron McIntyre
Managing Director and CEO
Melbourne
8 August 2017
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
114
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CARSALES.COM LTD
Independent auditor’s report
To the shareholders of carsales.com Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of carsales.com Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
a)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated statement of financial position as at 30 June 2017
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the director’s declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 115
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
Carrying value of goodwill
Carrying value of
Webmotors S.A. equity
accounted investment
Accounting for iCar Asia
Limited investment.
These are further described in
the Key audit matters section of
our report.
For the purpose of our audit we
used overall Group materiality
of $8.0 million which
represents approximately 5% of
the Group’s profit before tax.
We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
We chose Group profit before
tax because, in our view, it is
the metric against which the
performance of the Group is
most commonly measured and
is a generally accepted
benchmark.
We selected 5% based on our
professional judgement noting
that it is also within the range
of commonly acceptable profit
related thresholds.
Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
The Group operates in
Australia and in a number of
countries in Asia and the
Americas, and has a corporate
accounting function based in
Melbourne.
The audit procedures were
predominantly performed at
the Group’s corporate office in
Melbourne.
For certain overseas associate
entities, local auditors were
instructed to perform specified
risk focused audit procedures.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 116
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CARSALES.COM LTD CONTINUED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular
audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill
(Refer to note 16)
The Group recognised a goodwill balance of $169.7m,
which represents approximately a third of the total
assets of the Group. The Group’s goodwill
predominately relates to 4 Cash Generating Units
(CGUs) – Online Advertising ($72.1m); Data and
Research ($14.5m); Finance and Related Services
($58.7m); and Chile ($17.3m).
At 30 June 2017, the Group performed an impairment
assessment over these goodwill balances by:
1.
Calculating the ‘Value in Use’ for each CGU,
using discounted cash flow models (the
models).
2. Comparing the resulting ‘Value in Use’ to the
CGUs’ carrying values to determine the need
for any impairment.
The impairment models included cash flows for each
CGU for a forecast 5 year period. A terminal growth
rate was applied in determining the terminal value.
The assessment by the Group did not identify a need
for impairment.
We considered the carrying value of goodwill to be a
key audit matter as the balance is material and there
was significant judgement involved by the Group in
the impairment assessment, particularly with respect
to determining appropriate:
Discount rates
Annual growth rates (short-term)
Terminal growth rates.
The Group performed a sensitivity analysis for each
CGU, with particular focus on the Finance and
Related Services CGU due to the reduction in
profitability of Stratton during FY2017, and did not
identify any impairment.
We compared the Group’s net assets as at 30 June 2017 to
its market capitalisation and noted headroom.
We assessed the allocation of assets, liabilities and cash
flows to the CGUs and were satisfied they were directly
attributable to the individual CGU.
We performed a number of procedures over these 4
CGU’s including the following:
Compared the forecasted cash flows for 2018
used in the models with the FY2018 budget
formally approved by the Board.
Assessed the cash flow forecasts for each CGU in
the models by considering the key factors and
underlying drivers for growth in the context of
the Group’s future plans.
Considered the historical accuracy of the
Group’s cash flow forecasts by comparing the
forecasts used in the prior year to the actual
performance of each CGU in the current year.
Compared the terminal growth rates in the
models to historical growth rates and economic
forecasts.
With the assistance of PwC valuation experts, we assessed
the discount rates used in the models by comparing them
to our expected range based on market data, comparable
companies and industry research.
We performed a sensitivity analysis for the CGU’s by
reducing the annual growth rates and increasing the
discount rates within a range viewed as reasonably
foreseeable.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 117
Key audit matter
How our audit addressed the key audit matter
Carrying value of Webmotors S.A. equity
accounted investment
(Refer note 19)
The carrying value of the Webmotors S.A. equity
accounted investment was a key audit matter due to
the financial significance of the investment ($63.7m)
and the continued decline of the economy in Brazil
resulting in underperformance against budget in
FY2017.
As required by Australian Accounting Standards, the
Group assessed whether there were any indicators of
impairment for each of their equity accounted
investments and concluded there were none with the
exception of the Webmotors S.A. investment.
The Group prepared a ‘Value in Use’ discounted cash
flow model to assess the carrying value of the
Webmotors S.A investment as at 30 June 2017 (VIU
Model).
The VIU Model included cash flows for a forecast 5
year period. A terminal growth rate was applied in
determining the terminal value.
The VIU Model did not identify the need for
impairment of the Webmotors S.A. investment.
We compared the historical performance of the
Webmotors S.A. investment against the corresponding
revenue and profitability forecasts used in the initial
valuation of the business underpinning the initial
investment.
To assess the VIU Model, we performed a number of
procedures including the following:
Compared the forecasted cash flows used in the
VIU Model with the budget formally approved
by the Webmotors S.A. Board.
Assessed the 5 year cash flow forecasts in the
VIU Model by considering the key factors and
underlying drivers for growth in the context of
Webmotors S.A. future plans.
Considered the historical accuracy of the
Group’s cash flow forecasts by comparing the
forecasts used in the prior year to the actual
performance in the current year.
Compared the terminal growth rate in the VIU
Model to historical growth rates and economic
forecasts.
With the assistance of PwC valuation experts, we assessed
the discount rate used in the Webmotors S.A. impairment
assessment by comparing it to our expected range based
on market data, comparable companies and industry
research.
We performed a sensitivity analysis by reducing the cash
flow growth rate and increasing the discount rate within a
range viewed as reasonably foreseeable.
Accounting for iCar Asia Limited investment
(Refer to note 19)
During the first half of FY2017, the Group’s ownership
stake in iCar Asia Limited (iCar) was diluted to 15.6%
as a result of additional capital raising by iCar. On 9
December 2016, the Group’s two nominee directors
stepped down from the iCar board and at this time the
Group concluded that they no longer held significant
influence over iCar and ceased to equity account for
this investment.
In accordance with Australian Accounting Standards,
the Group is now required to account for the iCar
investment as an available-for-sale financial asset and
To assess whether the investment in iCar was
appropriately classified as available-for-sale in
accordance with Australian Accounting Standards, we
obtained the original purchase agreement and considered
the board composition, ownership control and
participation in the operational decisions of iCar.
We compared the iCar share price used in the Group’s
impairment calculation to the listed share price at 9
December 2016.
We recalculated the closing carrying value of the
investment as at 30 June 2017 using the listed share price
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 118
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CARSALES.COM LTD CONTINUED
Key audit matter
How our audit addressed the key audit matter
at 30 June 2017 and reconciled this to the corresponding
movement within the Group’s other comprehensive
income.
measure it at fair value at each reporting date.
During the first half of FY2017 there was a significant
fall in the iCar share price from 85 cents as at 30 June
2016 to 26.5 cents as at 9 December 2016 (the date
the Group ceased having significant influence over the
investment). This resulted in a write down of the
carrying amount of the equity accounted investment
($20.4m) at 9 December 2016 to its fair value
($13.2m). The impairment loss of $7.1m was
recognised in the Group’s profit and loss.
The subsequent share price movements since 9
December 2016 to 30 June 2017 have been accounted
for through other comprehensive income to reserves.
We considered this to be a key audit matter due to the
financial significance of the impairment and the
judgement involved in determining the appropriate
classification and corresponding accounting for the
investment.
Other information
The directors are responsible for the other information. The other information comprises the Financial
performance, Chairman’s And Chief Executive Officer’s Report, Business overview, Directors’ Report
and Shareholder information included in the Group’s annual report for the year ended 30 June 2017,
but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal controls as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 119
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 38 to 62 of the directors’ report for the year
ended 30 June 2017.
In our opinion, the remuneration report of carsales.com Limited, for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
PricewaterhouseCoopers
Anton Linschoten
Partner
Melbourne
8 August 2017
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only 120
SHAREHOLDER INFORMATION
30 JUNE 2017
The shareholder information set out below was applicable as at 10 July 2017.
A. Distribution of equity securities
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Class of equity security
Number of
ordinary
shareholders
9,486
6,500
847
486
81
17,400
Number of
options and
performance
rights holders
4
37
14
32
7
94
There were 274 holders of less than a marketable parcel of ordinary shares. There were no redeemable preference shares or
convertible notes outstanding.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
B. Equity security holders
Twenty largest quoted equity security holders
The names of the 20 largest holders of quoted equity securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
BNP Paribas Nominees Pty Ltd
National Nominees Limited
Citicorp Nominees Pty Limited
Clear-Way Investments Pty Ltd
BNP Paribas Noms Pty Ltd
Essena Pty Ltd
AMP Life Limited
Billkaren Pty Ltd
Four Us Pty Ltd
Citicorp Nominees Pty Limited
Steven Kloss Pty Ltd
Gregory Paul Roebuck
Kilienz Pty Ltd
Mr Andrew Gajtan Curmi
RBC Investor Services Australia Nominees Pty Ltd
Mrs Anne Beirne
Milton Corporation Limited
Australian Foundation Investment Company Limited
Options and performance rights issued under the carsales.com Ltd Employee Option Plan
to take up ordinary shares
121
Ordinary shares
Number held
75,651,623
31,069,325
15,634,242
14,908,236
14,880,269
10,993,662
3,579,372
3,281,284
2,329,379
2,250,000
1,926,555
1,908,559
1,787,000
1,605,347
1,240,000
1,160,500
1,133,342
1,000,000
995,000
790,000
188,123,695
Percentage of
issued shares
31.3
12.8
6.5
6.2
6.1
4.5
1.5
1.4
1.0
0.9
0.8
0.8
0.7
0.7
0.5
0.5
0.5
0.4
0.4
0.3
77.8
Number
on issue
Number
of holders
2,672,376
94
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
122
SHAREHOLDER INFORMATION CONTINUED
30 JUNE 2017
C. Substantial holder
Substantial holder in the Company is set out below:
Yarra Capital Management
D. Voting rights
The voting rights attaching to each class of equity securities are set out below:
Number held
16,166,023
Percentage
6.7
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
(b) Options
No voting rights.
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only
CORPORATE DIRECTORY
123
Directors
Jeffrey Browne
(Non-Executive Chair)
Greg Roebuck
(Managing Director and CEO)
(Retired 17 March 2017)
Cam McIntyre
(Managing Director and CEO)
(Appointed 17 March 2017)
Richard Collins
(Non-Executive Deputy Chair)
Wal Pisciotta OAM
(Non-Executive Director)
Pat O’Sullivan
(Non-Executive Director)
Kim Anderson
(Non-Executive Director)
Edwina Gilbert
(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
carsales.com.au
Share registry
Computershare Ltd
452 Johnston Street
Abbotsford Vic 3067
T +61 3 9415 4000
F +61 3 9473 2500
computershare.com
External auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank Vic 3006
Stock Exchange
carsales.com Ltd is a public
company listed with the Australian
Securities Exchange Limited
ASX: CAR
ANNUAL REPORT 2017 CARSALES.COM LIMITEDFor personal use only For personal use only